Valeura Energy Inc. (TSX:VLE, OTCQX:VLERF) has announced that along with its partner, PTTEP Energy Development Company Limited, a subsidiary of PTT Exploration and Production Public Company limited, it has taken a Final Investment Decision to proceed with an initial gas development at the Bussabong gas field (Block G3/65, 40% non-operated working interest) in the offshore Gulf of Thailand (Phase 1).
The project will be Valeura’s first organic gas development in its Thailand portfolio. Phase 1 of the Bussabong development establishes a repeatable development template for the eventual full development of the field.
Highlights
- Efficient design: Two gas wellhead platforms with 24 well slots each, tied in to processing infrastructure with a nine km sub-sea pipeline;
- Fully funded: Approximately US$35 million capex for facilities, installation, and pipelines spread over approximately two years, plus capex associated with drilling 25 development wells, estimated at approximately US$20-25 million (net to Valeura 40% share);
- Rapid development: Phase 1 entails deployment of two wellhead facilities with first production approximately year-end 2028;
- Economically resilient: Robust economics, in keeping with Valeura’s strategy to pursue value-accretive growth; and
- Substantial running room: Valeura’s first gas production in Thailand, opening the way to further phases of development in the future.
Dr. Sean Guest, President and CEO commented:
“I am pleased to have rapidly turned our strategic farm-in with PTTEP into tangible development action. Within 14 months of entering into this arrangement, we are taking our first gas FID, which we believe sets us on a course to broaden and diversify our business in the Gulf of Thailand.
Phase 1 is set to unfold quickly, with first gas planned for approximately the end of 2028. This quick action reflects PTTEP’s customary streamlined approach and underscores the importance of establishing this strategic relationship.
Moreover, the capital outlay associated with the project is modest, in part reflecting the resource synergies available through the operator PTTEP, but also reflecting the initial nature of this development. The Bussabong field production area is expected to offer significant appraisal and exploration upside already identified on 3D seismic data, with the potential for further phased development in the future. As such, we see this as just the beginning – an exciting first step in what will be a methodical, phased approach to build production materiality and longevity, both from the Bussabong gas field, and also from the various other oil and gas focus areas we have identified on Block G3/65.”
Bussabong
Bussabong is a gas field in the eastern part of Block G3/65, with geological similarities to many other gas fields in the offshore Gulf of Thailand. The field’s reservoirs are divided into multiple fault-block compartments, which lend themselves to a phased, repeatable development model.
The Bussabong area was fully covered in pre-existing 3D seismic data and contained several historic gas discoveries prior to Valeura entering into the farm-in agreement with PTTEP (the “Farm-in”). An additional exploration well in 2025 was also successful which led PTTEP and Valeura to immediately engage in development planning once the partnership began.
Thailand’s upstream regulator has already approved a defined production area for the Bussabong field, for which full field development could ultimately entail further phased development to fully commercialise the field and identified prospects. Valeura envisages further final investment decisions in the coming years, subject to favourable definition of resources through step-out exploration and appraisal drilling.
Initial Development
Phase 1 entails two wellhead platforms of 24 well slots each, to be deployed toward the northern end of the Bussabong field, in water depths of between 75 and 90 metres, and tied in by way of a short 12” seabed pipeline to gas processing infrastructure at the Bongkot gas field, nine km east in the neighbouring Block G2/61. Bongkot is operated by PTTEP and no new processing capacity is required to accommodate the Bussabong production.
The platforms’ design specifications are consistent with a large number of other facilities in the Gulf of Thailand. Valeura anticipates that both construction and maintenance thereafter will benefit from PTTEP’s optimised supply chain, owing to its position as the dominant gas operator in Thailand.
Capital Investment and Timeline
Phase 1 capital spending associated with the facilities, installation, and pipelines, net to Valeura’s 40% working interest, is expected to be approximately US$35 million, and will be spent in 2027 and 2028. In addition, the Company anticipates drilling capex associated with the currently planned 25 development wells, in the range of US$20-25 million (Valeura 40% working interest share). No material spending is planned for 2026 in connection with the development.
The Company anticipates first gas production at approximately the end of 2028.
Economics and Production Profile
The operator has indicated to Valeura that the facilities and wells planned as part of Phase 1 are intended to deliver sales gas production of approximately 30 mmcf/d (12 mmcf/d Valeura share(2)) in 2029, and then increase to approximately 40 mmcf/d (16 mmcf/d Valeura share(1)) in 2030. Based on samples collected during exploration drilling, the gas is expected to be relatively dry (approximately 20 bbls of condensate per mmcf gas).
In accordance with standard practice in Thailand, the operator will now work with regulators and the gas customer to formalise a gas sales agreement. The gas sales price is expected to reflect established pricing arrangements in the Gulf of Thailand and details will be subject to confidentiality obligations owed to the government, regulators and gas customer.
Thai domestic gas is typically sold under long-term, take-or-pay contracts priced against a basket of commodities including fuel oil and is adjusted for inflation indices. The Company expects that the customary pricing framework will yield terms that support robust project economics for the development, subject to successful negotiation of a gas sales agreement on anticipated terms.
Valeura’s reserves will next be evaluated as of 31 December 2026, at which time the Company expects its external reserves evaluator will, providing a gas sales agreement has been executed, add these volumes to the Company’s reserves.
- Once in operation, Valeura intends to report production as its 40% working interest share of gross sales gas, before government take (including royalties). Valeura and PTTEP entitlement to production revenue is defined by the terms of a production sharing contract which provides a mechanism for cost recovery and for the sharing of profits, as more fully described in the Company’s 25 July 2025 announcement.
Farm-in Status
Valeura’s interest in Bussabong arises through the Farm-in, under which the Company earns a 40% non-operated working interest in each of Blocks G1/65 and G3/65. The cabinet of the government of Thailand has granted executive approval for the transfer of this working interest from PTTEP to Valeura, which is anticipated to occur as an administrative step later in September or early October 2026. The Company does not intend to make a further announcement on the transfer of interest.
