Q3 2024 Operations and Financial Update
SINGAPORE, Oct. 03, 2024 (GLOBE NEWSWIRE) - Valeura Energy Inc. (TSX:VLE, OTCQX:VLERF) ("Valeura" or the "Company") is pleased to provide an update on Q3 2024 operations.
Highlights for Q3 2024
- Oil production averaged 22.2 mbbls/d(1) for Q3 2024 and 26.4 mbbls/d during September 2024(1);
- Nong Yao C development was commissioned and put on production, which resulted in a 66% increase in Nong Yao production(1,2);
- Production resumed at Wassana after confirming the safe operating condition of its production facility;
- Oil volumes sold of 1.8 million barrels with increased oil inventory at quarter end of 1.2 million bbls;
- Revenue of US$139 million with an average price realisation of approximately US$79/bbl;
- Cash of US$156 million, after having paid US$30.1 million in petroleum taxes related to H1 2024;
- Valeura remains debt free; and
- Recognised as one of Canada's Top Growing Companies by The Globe and Mail, ranking no. 8 of over 400 companies evaluated.
(1) Working interest share production, before royalties.
(2) 11.6 mbbls/d (last seven days of Q3), compared to 7.0 mbbls/d (the week just prior to starting Nong Yao C).
Dr. Sean Guest, President and CEO commented:
"I am pleased to share preliminary details of our Q3 2024 performance, which illustrates both the financial resilience and the organic growth potential of our portfolio.
Our financial performance has been strong. We recorded gross revenue of US$139 million during the quarter on the back of 1.8 million bbls of oil sold. We closed out the quarter with a cash balance of US$156 million and no debt, and 1.2 million bbls of oil inventory. Two liftings totalling 0.51 million bbls occurred just after the end of the quarter, and will be recorded as revenue in Q4.
From an operations perspective, our Q3 performance demonstrates the value of pursuing organic developments within our portfolio, underscored by our Nong Yao C development, which began bolstering production rates from mid-August onward. The average working interest share oil production for the month of September was 26.4 mbbls/d (before royalties), an increase of 23% over Q2 2024 average production. With continued smooth production operations across the portfolio we forecast rates remaining in the 25 mbbls/d range for the remainder of 2024, in keeping with our full year guidance expectations.
Valeura's portfolio is uniquely pre-disposed to generating strong cash flow, and I see this as a critical differentiating factor within our industry. We are driving toward an even stronger balance sheet, which remains wholly unlevered, thereby providing a distinct competitive advantage in an increasingly distressed market, precipitated by benchmark oil prices which have fallen more than 20% over the course of Q3. While we see volatility in commodity prices as a constant within our industry, we feel the current environment makes it prudent to maximise optionality by preserving a best-in-class financial position, setting ourselves up with an advantaged position when it comes to transacting on future growth opportunities."
Financial Update
Oil production averaged 22.2 mbbls/d during Q3 2024 (Valeura's working interest share, before royalties), an increase of 5% from the prior quarter. Q3 2024 production rates were affected by a precautionary suspension of production operations at the Company's Wassana field throughout July 2024, which was subsequently offset by an increase in output later in the quarter as a result of the Nong Yao C development coming online. The average working interest share oil production rate before royalties over the month of September was 26.4 mbbls/d.
Oil sales / liftings totalled 1.8 million bbls during Q3 2024, 6% below the prior quarter. At the end of the quarter, Valeura held crude oil inventory of 1.2 million bbls, which was approximately 30% higher than the inventory at the start of the quarter, however 0.51 million bbls were lifted on October 1, 2024, and will be recorded as revenue in Q4.
Oil revenue during Q3 2024 was US$139 million, down 17% from Q2 2024 due to lower volumes lifted (a decrease of approximately US$9 million) and lower oil prices (which resulted in a decrease of approximately US$15 million). One of the Company's crude oil liftings (0.18 million bbls) occurred just prior to the end of Q3 2024, and as a result of the timing delay between the lifting of crude oil (i.e recorded as sales) and receipt of the proceeds, the approximately US$14 million value of this lifting / sale (Valeura's working interest share, before royalties) is expected to be received during October 2024. As at September 30, 2024, the expected proceeds have been recorded as a receivable. Price realisations averaged approximately US$79/bbl during Q3 2024, equating to an approximate US$1.4/bbl discount from the daily average Brent crude oil benchmark during the period. This reflects the fact that much of the Company's sales occurred at the tail end of the quarter, under the relatively lower commodity price environment at the time, as compared to the average over the full period. The Company continues to anticipate full year price realisations approximately on par with the Brent benchmark, in keeping with its guidance estimates.
During Q3 2024, the Company paid petroleum taxes of US$30.1 million, reflecting the first half-year instalment of petroleum income taxes due in respect of its Nong Yao and Manora fields. After accounting for the impact of ongoing capital spending and operating expenses (which includes certain one-off items relating to underwater inspection work at Wassana), as at September 30, 2024, the Company had a cash position of US$156 million, which includes US$22.5 million held as restricted cash. Valeura remains debt free.
Operations Update
Nong Yao
In early August 2024, the Company completed drilling operations on the Nong Yao C extension, at its 90% working interest Nong Yao field. The drilling operations at the Nong Yao C extension included six planned horizontal development wells, a water injection well and an additional successful appraisal well. The first wells were brought onstream on August 15, 2024, with the remaining wells following shortly thereafter. The additional seventh well was also completed as a producer and is onstream.
The Nong Yao C development has yielded a 66% increase in output from Nong Yao, with recent production rates averaging 11.6 mbbls/d during the last seven days of Q3, as compared to 7.0 mbbls/d during the week just prior to starting Nong Yao C (Valeura working interest share before royalites). From an operational perspective, the Nong Yao C drilling programme exceeded expectations, with total costs coming in approximately 25% below budget, owing largely to faster drilling execution, while still adhering to the Company's strict standards for safe operations.
Wassana
Just prior to the start of Q3 2024, the Company implemented a precautionary suspension of production operations at its 100%-owned Wassana field to ensure a safe situation while the Company investigated a potential risk to the production facility's structural integrity. The inspection and analysis confirmed that the production facility remains in a safe operating condition, and production resumed in the first week of August 2024.
Jasmine
Starting in late August 2024, Valeura drilled two horizontal infill development wells on the Jasmine A facility of its 100%-owned Jasmine field, with both wells achieving their planned objectives. The 41H well encountered 1,982 feet of net oil pay within a reservoir compartment full to base with no apparent bottom aquifer. The 42H well encountered 1,555 feet of net mixed-phase/oil pay. Both wells were completed and brought online as producers, together delivering oil at an initial (three-day average) rate of 1,050 bbls/d (before royalties). Drilling operations have continued to progress efficiently, and with no deviations to the Company's safe operating practices.
Following the drilling of the two Jasmine infill wells, the Company's contracted drilling rig was demobilised in order to conduct scheduled inspection and maintenance work in dry dock. The rig has just returned to the Jasmine field to resume infill development drilling, with three infill wells currently planned.
Manora
As a result of faster-than-planned drilling operations throughout 2024 to date, the Company has revised its work programme to include more drilling than originally envisaged, with no addition to its capital budget. Valeura expects to mobilise the drilling rig to its 70%-owned Manora field before the end of 2024, where it will begin a planned five-well infill drilling and appraisal programme. In the meantime, production operations utilising the existing well stock at Manora are progressing on plan.
Results Timing
Valeura intends to release its full unaudited financial and operating results for Q3 2024 on November 13, 2024, and will discuss the results in more detail through a management webcast, with details to be announced at that time.
For further information, please contact:
Valeura Energy Inc. (General Corporate Enquiries) +65 6373 6940
Sean Guest, President and CEO
Yacine Ben-Meriem, CFO
Contact@valeuraenergy.com
Valeura Energy Inc. (Investor and Media Enquiries) +1 403 975 6752 / +44 7392 940495
Robin James Martin, Vice President, Communications and Investor Relations
IR@valeuraenergy.com
Contact details for the Company's advisors, covering research analysts and joint brokers, including Auctus Advisors LLP, Canaccord Genuity Ltd (UK), Cormark Securities Inc., Research Capital Corporation, and Stifel Nicolaus Europe Limited, are listed on the Company's website at www.valeuraenergy.com/investor-information/analysts/.
About the Company
Valeura Energy Inc. is a Canadian public company engaged in the exploration, development and production of petroleum and natural gas in Thailand and in Türkiye. The Company is pursuing a growth-oriented strategy and intends to re-invest into its producing asset portfolio and to deploy resources toward further organic and inorganic growth in Southeast Asia. Valeura aspires toward value accretive growth for stakeholders while adhering to high standards of environmental, social and governance responsibility.
Additional information relating to Valeura is also available on SEDAR+ at www.sedarplus.ca.
Advisory and Caution Regarding Forward-Looking Information
Certain information included in this news release constitutes forward-looking information under applicable securities legislation. Such forward-looking information is for the purpose of explaining management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project", "target" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this news release includes, but is not limited to: the Company's anticipated revenue in early Q4 2024 as a result of liftings just before and just after the end of Q3; the Company's drive toward an even stronger balance sheet; forecasted production rates remaining in the 25 mbbls/d range for the remainder of 2024; increased production supporting a full year average production outcome in keeping with its guidance expectation;s plans for infill development drilling on the Jasmine asset, and thereafter on the Manora asset; and the Company's anticipated timing for the release of its full unaudited financial and operating results for Q3 2024.
Forward-looking information is based on management's current expectations and assumptions regarding, among other things: drilling plans for the remainder of 2024; political stability of the areas in which the Company is operating; continued safety of operations and ability to proceed in a timely manner; continued operations of and approvals forthcoming from governments and regulators in a manner consistent with past conduct; future drilling activity on the required/expected timelines; the prospectivity of the Company's lands; the continued favourable pricing and operating netbacks across its business; future production rates and associated operating netbacks and cash flow; decline rates; future sources of funding; future economic conditions; the impact of inflation of future costs; future currency exchange rates; interest rates; the ability to meet drilling deadlines and fulfil commitments under licences and leases; future commodity prices; the impact of the Russian invasion of Ukraine; royalty rates and taxes; future capital and other expenditures; the success obtained in drilling new wells and working over existing wellbores; the performance of wells and facilities; the availability of the required capital to funds its exploration, development and other operations, and the ability of the Company to meet its commitments and financial obligations; the ability of the Company to secure adequate processing, transportation, fractionation and storage capacity on acceptable terms; the capacity and reliability of facilities; the application of regulatory requirements respecting abandonment and reclamation; the recoverability of the Company's reserves and contingent resources; future growth; the sufficiency of budgeted capital expenditures in carrying out planned activities; the impact of increasing competition; the ability to efficiently integrate assets and employees acquired through acquisitions; global energy policies going forward; future debt levels; and the Company's continued ability to obtain and retain qualified staff and equipment in a timely and cost efficient manner. In addition, the Company's work programmes and budgets are in part based upon expected agreement among joint venture partners and associated exploration, development and marketing plans and anticipated costs and sales prices, which are subject to change based on, among other things, the actual results of drilling and related activity, availability of drilling, offshore storage and offloading facilities and other specialised oilfield equipment and service providers, changes in partners' plans and unexpected delays and changes in market conditions. Although the Company believes the expectations and assumptions reflected in such forward-looking information are reasonable, they may prove to be incorrect.
Forward-looking information involves significant known and unknown risks and uncertainties. Exploration, appraisal, and development of oil and natural gas reserves and resources are speculative activities and involve a degree of risk. A number of factors could cause actual results to differ materially from those anticipated by the Company including, but not limited to: the ability of management to execute its business plan or realise anticipated benefits from acquisitions; the risk of disruptions from public health emergencies and/or pandemics; competition for specialised equipment and human resources; the Company's ability to manage growth; the Company's ability to manage the costs related to inflation; disruption in supply chains; the risk of currency fluctuations; changes in interest rates, oil and gas prices and netbacks; potential changes in joint venture partner strategies and participation in work programmes; uncertainty regarding the contemplated timelines and costs for work programme execution; the risks of disruption to operations and access to worksites; potential changes in laws and regulations, the uncertainty regarding government and other approvals; counterparty risk; the risk that financing may not be available; risks associated with weather delays and natural disasters; and the risk associated with international activity. See the most recent annual information form and management's discussion and analysis of the Company for a detailed discussion of the risk factors.
Certain forward-looking information in this news release may also constitute "financial outlook" within the meaning of applicable securities legislation. Financial outlook involves statements about Valeura's prospective financial performance or position and is based on and subject to the assumptions and risk factors described above in respect of forward-looking information generally as well as any other specific assumptions and risk factors in relation to such financial outlook noted in this news release. Such assumptions are based on management's assessment of the relevant information currently available, and any financial outlook included in this news release is made as of the date hereof and provided for the purpose of helping readers understand Valeura's current expectations and plans for the future. Readers are cautioned that reliance on any financial outlook may not be appropriate for other purposes or in other circumstances and that the risk factors described above or other factors may cause actual results to differ materially from any financial outlook. The forward-looking information contained in this new release is made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward-looking information contained in this new release is expressly qualified by this cautionary statement.
This news release does not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction, including where such offer would be unlawful. This news release is not for distribution or release, directly or indirectly, in or into the United States, Ireland, the Republic of South Africa or Japan or any other jurisdiction in which its publication or distribution would be unlawful.
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