Valeura Energy Inc. (TSX:VLE, OTCQX:VLERF) has announced that via a wholly-owned subsidiary, and together with its partner, Pinnacle Turkey, Inc., it has entered into an agreement with a subsidiary of Transatlantic Petroleum LLC to explore for and develop hydrocarbons in the deep rights formations of the Thrace basin of northwest Türkiy.
Dr. Sean Guest, President and CEO commented:
“Despite our strategic pivot toward the Asia-Pacific region, we have maintained our conviction that the deep gas play we discovered in northwest Türkiye offers significant potential to add value to the Company. Our drilling programme from 2017 to 2019 demonstrated that there are multiple Tcf of gas in place across Valeura’s lands in a deep tight gas play. We drilled three wells into this play and tested 12 separate zones – every one of which flowed gas. It is my hope that with a reinvigorated push to test the play, we will see this evolve into a commercial success, especially when coupled with the higher European gas prices that exist today.
Valeura has a proven history of creating cost-efficient structures to pursue exploration ventures, and this Joint Venture is no different. Moreover, this agreement will result in near-term action in the field with re-entry and testing of new zones in our key Devepinar-1 well expected this quarter. With success in that testing operation, Transatlantic can fully earn a 50% working interest across the play by drilling and testing a new deep appraisal well.
We are pleased to be working again with Transatlantic, who, given their strong presence in Türkiye and proven unconventional operating credentials both in Türkiye and the United States, are well-placed to operate this next phase of the play to drive value generation for all stakeholders.”
Thrace Deep Gas Play
Valeura has held various blocks and operated in Türkiye for almost 15 years. The Company continues to hold the deep rights (being below 2,500 metres or a pressure gradient of 0.6 psi/ft, whichever is shallower) in various exploration licences and production leases covering a total of 955 km2 (gross) in the Thrace basin, located just west of Istanbul. For the majority of the acreage (those lands held under exploration licences), the current exploration phase expires on June 27, 2026, but discussions are underway with the government in relation to a two-year appraisal period extension.
Between 2017 and 2020, Valeura explored and discovered a ubiquitous, gas-charged, over-pressured sandstone reservoir, believed to represent a basin-centred gas play at depths of approximately 2,900 – 4,775 metres. In conjunction with its partner at the time, Equinor, it drilled the Yamalik-1, Inanli-1, and Devepinar-1 exploration wells, all which demonstrated the presence of hydrocarbons. The Company undertook hydraulic stimulation of 12 separate intervals, all which flowed gas to surface. The testing programme included one long-term test that was flowed and sold into the gas grid for approximately three months. While the drilling programme confirmed multiple Tcf of gas in place, none of the wells were declared a commercial success at that time given the flow rates and local gas price. Since the exit of Equinor from the play in Q2 2020, the assets have remained an operationally dormant part of Valeura’s portfolio.
Joint Venture
Transatlantic have been operating in Türkiye since 2007 and continue to be very active in country including the announcement earlier this year of a joint venture with Continental Resources and Türkiye Petrolleri AO (Türkiye’s state-owned petroleum corporation), to develop unconventional oil and gas resources in Türkiye’s Diyarbakir and Thrace basins. Additionally, Transatlantic have partnered with both Valeura and Pinnacle in the Thrace basin between 2011 and 2017 as operator of the conventional gas production. Given their active operations in Türkiye, Transatlantic will serve as contract operator for the venture, with Valeura remaining the operator of record designated with the Government of Türkiye.
The Joint Venture provides an opportunity for Transatlantic to earn a 50% undivided working interest in the deep rights held by Valeura and Pinnacle through two separate operations.
Devepinar Re-Entry
Valeura drilled and hydraulically stimulated the Devepinar-1 exploration well in 2019 and conducted short-term tests of three separate intervals in the deep part of the Kesan formation at a depth of 4,660 – 4,765 metres. While gas was produced at good initial rates from all intervals, relatively high decline rates were observed that suggested the zones would not support long-term commercial flow rates. Thereafter, the Company preserved the well in a suspended state and performed extensive technical modelling work alongside its search for a new joint venture partner.
Under the terms of the Joint Venture, Transatlantic has agreed to undertake a re-entry of the Devepinar-1 well including hydraulic stimulation and testing of shallower zones in the Kesan. If the results constitute a commercial discovery, Transatlantic shall earn a 50% proportion of the working interest held by each of Valeura (currently 63%) and Pinnacle (currently 37%) in the western portion of the lands (comprised of the West Thrace Production Leases and West Thrace Exploration Licence, as defined in Valeura’s Annual Information Form for the year ended December 31, 2024).
Under the terms of the Joint Venture, Transatlantic will pay 100% of the costs to re-enter the Devepinar-1 well, up to US$2 million. Any costs there above shall be shared amongst the parties, 50% Transatlantic / 31.5% Valeura / 18.5% Pinnacle. Testing operations are expected to commence in Q4 2025.
Deep Appraisal Well
Transatlantic has an option to earn an interest in the eastern portion of the lands (the Banarli Exploration Licences, as defined in Valeura’s Annual Information Form for the year ended December 31, 2024) by drilling a well down to at least 4,000 metres on either the western or eastern portion of the lands. If such well results in a commercial discovery, Transatlantic shall earn a 50% proportion of the interest held by Valeura (currently 100%). Transatlantic will pay 100% of the costs up to US$8 million, and any costs there above shall be shared 50% Transatlantic / 50% Valeura.
Valeura Energy gathered significant learnings in the earlier drilling and testing phase and its technical studies thereafter have identified a well location that could intersect the best quality known reservoir within the dry gas window of the play. Valeura postulates that this combination should improve the flow rates and minimise decline, and hence offers the best chance of yielding a commercial discovery. That well location, which is on the Banarli Exploration Licence and is known as Hanoglu-1, has already been permitted for drilling and may therefore serve as a fast-track opportunity for the deep appraisal well. However, the final decision on the well will be made in collaboration between Valeura, Transatlantic, and Pinnacle, and only after the testing of the Devepinar-1 well.
