Valeura Energy Inc. (TSX:VLE, LON:VLU), an upstream oil and gas company with assets in the Thrace Basin of Turkey, has reported its financial and operating results for the three month period ended December 31st, 2021 and the year ended December 31, 2021.
The complete quarterly reporting package for the Company, including the audited financial statements and associated management’s discussion and analysis and the 2021 Annual Information Form, are being filed on SEDAR at www.sedar.com and posted on the Company’s website at www.valeuraenergy.com.
• Financial position – Cash position of US$40.8 million at December 31, 2021;
• Royalties – Valeura began receiving royalty payments in connection with the sale of its conventional gas producing business in Turkey, amounting to US$0.8 million being invoiced up to December 31, 2021; and
• Strategy – The Company continues to pursue near-term inorganic international growth opportunities and is seeking a suitable partner to farm in to the Company’s 20 Tcfe unrisked mean prospective resource deep, tight gas play in Turkey.
FINANCIAL POSITION AND ROYALTY
As of the end of Q4 2021, Valeura had cash and cash equivalent resources totalling US$40.8 million and no debt.
Associated with the sale of its conventional gas producing business in Turkey which closed in Q2 2021, Valeura became entitled to a royalty for up to the next five years of a total amount between US$1.0 and US$2.5 million, tied to local Turkish gas prices. As of December 31, 2021, the Company had invoiced total royalty payments of US$0.8 million. Given the continued strong gas prices in Europe and Turkey, Valeura expects to receive the maximum outstanding royalties for the period of US$1.7 million in Q1 2022 with these royalties recorded in accounts receivable.
Valeura’s 20 Tcfe1 tight gas appraisal play in Turkey remains a core part of the Company’s portfolio and represents a significant source of potential long-term value. Valeura is continuing its search for a suitable farm-in partner for the tight gas appraisal play and is working with a London-based advisor to assist in the search. The Company believes securing a partner is the most prudent first step before committing significant capital to the next phase of appraisal drilling. Valeura is poised to resume deep drilling operations rapidly upon securing a partner, with several locations already in the advanced permitting stage.
Valeura’s exploration licences remain in good standing and are scheduled to expire on June 27, 2023 (after receiving a one-year extension from their original expiration date of June 27, 2022 from the Turkish Government as a result of COVID-19), after which the Company has the option to apply for two additional two-year exploration periods, giving the Company the ability to maintain these licences for up to approximately five more years through work programme commitments. During the current extension period, the Company is required to drill one exploration well on each of the three exploration licences. The one-year extension Valeura received on the exploration licences provides additional flexibility with respect to Valeura’s obligations to drill two Banarli exploration wells and one West Thrace exploration well to maintain its deep gas rights, meaning the Company will have no material capital commitments relating to its Turkey assets until mid 2023.
In the nearer-term, Valeura intends to leverage its strong financial position toward growing by way of mergers and acquisitions (“M&A“). The collective international experience of the Company’s management and board defines a broad focus area, including jurisdictions with significant deal flow and expected relatively low competition for assets. Valeura is actively pursuing several M&A opportunities, targeting near-term production and cash flow, plus follow-on investment opportunities to enable mid-term growth. The company remains in discussion on several opportunities and will disclose further details in due course as appropriate. The company remains squarely focussed on only executing transactions that will generate material value for shareholders.
1 Unrisked mean prospective resource
ANNUAL AND SPECIAL MEETING
Valeura has tentatively scheduled its annual and special meeting of shareholders for June 23, 2022. Meeting materials will be mailed in April 2022.
ABOUT THE COMPANY
Valeura Energy Inc. is a Canada-based public company currently engaged in the exploration, development and production of petroleum and natural gas in Turkey.
Resource disclosure in this announcement is based on an independent resources evaluation as at December 31, 2018 conducted by DeGolyer and MacNaughton in its report dated March 13, 2019, which was prepared using guidelines outlined in the Canadian Oil and Gas Evaluation Handbook and in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities, as adjusted to reflect Equinor’s withdrawal in Q1 2020. Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. The unrisked estimates of prospective resources referred to in this announcement have not been risked for either the chance of discovery or the chance of development. There is no certainty that any portion of the prospective resources will be discovered. If a discovery is made, there is no certainty that it will be developed or, if it is developed, there is no certainty as to the timing of such development or that it will be commercially viable to produce any portion of the prospective resources. Additional resources information is included in the Company’s annual information form for the year ended December 31, 2018.