Valeura Energy announces operational update and 2024 guidance outlook

Valeura Energy, the upstream oil and gas company with assets in the Gulf of Thailand and the Thrace Basin of Turkey, has provided an operational update and its guidance outlook for 2024.

Highlights

• Q4 2023 average oil production of 19,165 bbls/d, resulting in a full year 2023 average of 20,420 bbls/d, net to Valeura’s working interest(1)
• Net Cash at December 31, 2023 of US$150.9 million(2)
• Anticipated Capex and Opex performance within or below guidance for the full year 2023(1)(3)
• Wassana field returned to production in December 2023 yielding total average portfolio oil production to date in January 2024 of approximately 22,600 bbls/d, net to Valeura working interest
• 2024 oil production guidance of 21,500 – 24,500 bbls/d, net to Valeura’s working interest
• 2024 Capex guidance of US$135 – 155 million, plus Exploration Expense of approximately US$8 million
• 2024 Opex guidance of US$205 – $235 million, equating to approximately US$26/bbl(3).

(1) Pro-forma basis (full calendar year 2023 performance of the assets), including amounts relating to the period January 1, 2023 through March 22, 2023, prior to completion of the Company’s Gulf of Thailand acquisition from Mubadala Energy.

(2) Net Cash: Is a non-IFRS financial measure which does not have a standardised meaning prescribed by IFRS. This non-IFRS financial measure is provided because management uses the information to a) analyse financial strength and b) manage the capital structure of the Company. This non-IFRS measure is used to ensure capital is managed effectively in order to support the Company’s ongoing operations and needs. Financial measures disclosed in this announcement are unaudited.

(3) Opex and Opex per bbl: Are a Non-IFRS financial measure and non-IFRS financial ratio, respectively, which do not have standardised meanings prescribed by IFRS. The most directly comparable financial measure to Opex is operating expenses. The measure differs from operating expenses by including the leases that are associated with operations, such as bareboat contracts for key operating equipment, such as Floating Storage and Offloading vessels (“FSOs”), Floating Production, Storage and Offloading vessels (“FPSOs”), Mobile Offshore Production Units (“MOPUs”), and warehouses, and adjusting for non-cash items. Opex is divided by production in the period to arrive at Opex per bbl.

Operational Update

The Company’s net working interest oil production averaged 19,165 bbls/d during Q4 2023, resulting in full year pro-forma net oil production from its assets of 20,420 bbls/d.  Q4 2023 oil sales totalled 1.987 million bbls; pro-forma full year oil sales from the assets were 7.321 million bbls.  At the end of the quarter, production was restarted at the Wassana field, meaning all four of the Company’s fields were in active production at year-end 2023.  With the contribution of production from the Wassana field, the average production for January 2024 to date has been approximately 22,600 bbls/d.

During Q4 2023, Valeura completed an infill drilling programme on the Jasmine field, and thereafter an infill drilling programme on the Nong Yao field, both as previously announced.  Valeura drilled a total of 26 wells throughout 2023, with drilling campaigns on each of its fields.  All campaigns were successful in adding additional production, and, in all instances, management anticipates that the results of drilling activity will lead to an extension to the economic life of the fields through both sustainment of current production and appraisal successes which give rise to future drilling opportunities.  In mid-December 2023, the Company mobilised its drilling rig to the Wassana field, where a production-oriented infill drilling programme of three horizontal development wells is currently underway.

Valeura significantly strengthened its balance sheet in 2023, building to a Net Cash position of US$150.9 million(1) as of December 31, 2023, versus a Net Cash position of US$5.0 million at December 31, 2022.  During Q4 2023, the Company repaid the final US$12.9 million of its outstanding debt, meaning the December 31, 2023 Net Cash balance is comprised entirely of cash and cash equivalents, including approximately US$17.3 million which is held as restricted cash.

The Company intends to release its financial and operating results for the full year 2023 and the three-month period ended December 31, 2023 in mid-March 2024, along with its reserves and resources estimates as of December 31, 2023. Relative to the Company’s revised 2023 guidance as announced on August 9, 2023, the Company expects to announce final Opex at the lower end of the guidance range, Capex below the range, and reserves and resources estimates that reflect an extension to economic field lives across the portfolio.

2024 Guidance Outlook

Valeura is forecasting average 2024 full year oil production of 21,500 – 24,500 bbls/d, based on the assumption that Nong Yao C development drilling will start in late Q1 2024 and continue for approximately four months.  Accordingly, the Company anticipates higher production in the second half of the year 2024.

Consistent with past oil sales from its assets, Valeura is forecasting price realisations approximately equivalent to the Brent crude oil benchmark.

Valeura has planned total Capex in 2024 of US$135 – 155 million, in addition to approximately US$8 million in planned exploration drilling (Exploration Expense).

Opex guidance in 2024 is US$205 – 235 million, which equates to approximately US$26/bbl.  This includes the additional costs to lease and operate the new Nong Yao C production facility. Across its portfolio, the Company has initiated a programme to pursue greater operating efficiencies, while maintaining its high standards for safety and operational excellence.  This includes a broad array of endeavours focused on capturing synergies between the businesses it integrated in 2023 and enhancing legacy facilities to improve both cost and emissions intensity.

The Company intends to fund its 2024 spending through cash on hand and cash flow generated from ongoing operations.  All guidance estimates provided above reflect Valeura’s net working interest share, relating to the full year 2024.  Valeura intends to maintain a strong balance sheet, in support of its growth-oriented strategy, which includes the potential for further mergers and acquisitions.

Approximately 75% of the Company’s Capex is directed toward drilling.  Valeura intends to have one drilling rig under contract for the entire year, and to conduct a continuous drilling programme covering each of its fields.  The drilling sequence itself is subject to ongoing real-time optimisation.

Approximately US$47 million in Capex, net to Valeura’s 90% working interest, is planned for growth of the Nong Yao field, through development of the Nong Yao C accumulation.  In February 2024, the Company anticipates transporting a Mobile Offshore Production Unit (“MOPU”) to the Nong Yao field, where it will be connected by pipeline to the existing Nong Yao field infrastructure and will serve as the wellhead production platform for the Nong Yao C field extension.  As soon as practical after installation and commissioning, Valeura intends to begin drilling a programme of nine development wells (six producers, three water injectors), and will simultaneously perform debottlenecking works on the existing facilities to accommodate the new production.  First production from the Nong Yao C extension is expected in June 2024, and when fully on stream in the months thereafter, the Company is targeting peak production rates from the greater Nong Yao field totalling approximately 11,000 bbls/d, net to Valeura’s working interest.

The 100% Valeura-owned Wassana field is also a key growth asset for the Company.  Valeura has begun a production-oriented drilling campaign that is targeting reservoir intervals which have been only partially developed. The current drilling campaign of three horizontal development wells is intended to increase production to a target rate of approximately 4,500 bbls/d, and the Company may drill additional development wells later in the year.

In addition, following the success of its 2023 Wassana appraisal drilling programme, where results indicated a possible additional 20 production well locations, the Company is evaluating options to expand the field’s production infrastructure, with a view to making a final investment decision in 2024. Valeura’s objective is to pursue a redevelopment of the field such that further accumulations can be commercialised, thereby increasing production and extending the field’s economic life beyond 2030.

At Valeura’s 100%-owned Jasmine field, the Company is planning 2024 Capex of approximately US$50 million. The bulk of Jasmine’s Capex will be directed toward an infill drilling campaign planned for the second half of 2024.  Further Jasmine infill wells are a direct follow-on from opportunities identified in its 2023 and earlier drilling campaigns.  The Company’s efforts at Jasmine are oriented toward reducing the effect of natural declines and continuing the field’s long history of year-on-year reserves additions.

At the same time, the Company has sanctioned a project to improve both the cost base and greenhouse gas (“GHG”) emissions intensity of its operations at Jasmine.  As part of the US$50 million Capex planned for Jasmine, Valeura will invest approximately US$8 million to install a gas turbine generator tailor-made to utilise the field’s unique waste gas stream as feedstock for power generation.  The project is forecast to reduce the Jasmine field’s GHG emissions and diesel consumption, and thus Opex.  The reduction in Opex is expected to contribute to a further extension of the economic life of the field.

Further detail on Valeura’s commitment to the sustainability of its business will be provided in the Company’s inaugural Sustainability Report, which is in preparation now.

While Valeura’s focus remains primarily on investment opportunities that generate immediate or near-term cash flow, the Company intends to invest approximately US$8 million in pursuing exploration opportunities within its licences. Current exploration opportunities have been identified at Wassana North, Nong Yao D, and the Ratree Prospect, located near the Jasmine field.  Final drilling sequencing and timing will be determined through ongoing work to optimise the drilling programme around the Company’s development drilling plans.  Additional exploration prospects within the Company’s asset portfolio are being evaluated as part of its normal course of business.

The Company is continuing to seek a partner to participate in its tight gas exploration/appraisal play in Turkey and does not intend to commit material spending to the play until such time as a suitable commercial arrangement is in place.

Sean Guest, President and CEO of Valeura commented:

'I am pleased to present our high-level outcomes for 2023 and guidance outlook for 2024.  By delivering average oil production of 20,400 bbls/d, strong operating margins, and managing spending to within or below our guidance range, we are in a very strong financial position.  At year-end 2023, we had no debt, US$150 million in cash, and a suite of growth projects in our sights to deliver further value for our stakeholders. 

With all fields online, we are seeing a strong start to the new year and have recorded 2024 production to date of 22,600 bbl/d.   That start energises our view that 2024 will be a year to both demonstrate the resilience of our legacy assets and also to showcase the growth potential of our business.  Our key organic projects for the year are the development of the Nong Yao C accumulation, which will start with an aggressive drilling campaign later this quarter and further development of the Wassana field – initially through infill drilling, and thereafter through finalising plans for a large-scale re-development of the field. 

We are guiding to average 2024 oil production of between 21,500 and 24,500 bbls/d and planning a Capex programme of US$135 – 155 million plus an US$8 million exploration programme.  Our total Opex guidance is US$205 – 235 million, which equates to approximately US$26/bbl.  While this is a reduction in our unit operating costs from 2023, we will continue to focus on driving even further efficiency into our business, and have embarked on a programme to capture these opportunities across the portfolio.  That includes innovative projects like our bespoke gas turbine installation planned for Jasmine, which not only improves the asset’s GHG emissions profile, but pays out quickly through Opex reductions.

Across the portfolio, we remain mindful of our obligations to ensure the ongoing sustainability of our business and look forward to articulating our priorities in more detail with an inaugural sustainability report this year.  We firmly believe that a world-class operating performance is directly linked to value delivery, and supports our ability to generate cash for the benefit of all stakeholders.

At current spot and forward curve oil prices we foresee surplus cash generation which we intend to retain so as to build even greater balance sheet strength.  As inorganic growth remains a core part of our strategy, and we see compelling opportunities on the horizon, our priority is to not only provide for the ongoing funding needs of the business, but also to maximise our ability to transact.  On all fronts, we remain steadfast in our commitment to deliver value for stakeholders through growth.'

Original announcement link

Source: Valeura Energy