Valeura Energy (TSX: VLE): Tax restructuring adds cash flow and showcases Thailand’s operating environment
• Valeura has completed the restructuring of its Thailand subsidiary companies.• Valeura’s working interests in all its Thai III fiscal contracts, covering the Nong Yao, Manora and Wassana fields will now be held in a single subsidiary. This will allow Valeura to use its US$397 mm tax losses at Wassana against the profits at Nong Yao and Manora.
• The amount of tax losses is higher than we anticipated (~US$350 mm). Under our Brent price assumptions (US$70/bbl from 4Q25), we estimate that Valeura will not pay corporate tax on these assets over the foreseeing future.
• The value of these tax assets increases dramatically at higher oil prices, particularly over US$80/bbl.
• Valeura will make a payment related to the tax due at Nong Yao, Manora and Wassana for the July-October period in 1Q25. We estimate this payment at US$15 mm.
• While we had already factored the restructuring in our forecasts, this showcases Thailand’s operating environment for upstream oil and gas. This also showcases the execution capability of Valeura’s management.
• We re-iterate our target price of C$10.00 per share in line with our ReNAV. We estimate that Valeura will hold >US$400 mm in net cash at YE25. This assumes ~US$75/bbl for Brent in 2025.
Valuation
Our Core NAV for the company (based on the YE23 2P reserves only) is broadly unchanged at ~C$7.15 per share. Our ReNAV of ~C$9.61 per share reflects the risked value of resources associated with the redevelopment of Wassana and Nong Yao D and exploration drilling at Ratree.
Valeura Energy is engaged in the exploration, development and production of petroleum and natural gas in Turkey and Western Canada. As of Dec 31 2010, proven gross reserves for light and medium oil was 116 thousand barrels (net reserves of 104 thousand barrels); proven gross reserves for heavy oil was 10 thousand barrels (net reserves of 9 thousand barrels); proven gross reserves for natural gas was 1,047 million cubic feet (net reserves of 938 million cubic feet); and proven gross reserves for natural gas liquids was 26 thousand barrels (net reserves of 19 thousand barrels).
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
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