The complete reporting package for the Company, including the audited financial statements and associated management's discussion and analysis ('MD&A') and the 2023 annual information form ('AIF'), are being filed on SEDAR+ at www.sedarplus.ca and posted to the Company's website at www.valeuraenergy.com.
2023 Highlights
Closed the Mubadala Acquisition(1) for cash consideration of
Four producing fields yielded average oil production of 20,440 bbls/d(2);
Restarted production from the Wassana field and drilled appraisal wells which confirmed the presence of oil deeper than previously proven, leading to a potential re-development of the field and extension of field life beyond 2030; Drilling activity extended the economic life of all fields in the Company's
Importantly, we have also created a clean and resilient balance sheet. The cash flow capacity of our assets has allowed us to rapidly pay off all debt and exit the year with
Drilling activity and studies performed in 2023 resulted in our independent third-party reserves evaluator significantly increasing reserves volumes and value. The life of all fields was extended on the back of a reserves replacement ratio of 219%. Additionally, appraisal of the Wassana field has proven more oil than previously reported which will underpin a 2024 decision on field expansion. This increase in 2P reserves value, when coupled with our cash, generates a net asset value of over
The complementary nature of our assets is becoming increasingly apparent as we completed the process to merge the companies into a single organisation. We reduced unit operating costs in 2023 and the team are enthusiastically seeking further synergies in cost optimisation and tax efficiency as we look to 2024.
We intend to continue to aggressively pursue value through our growth-oriented strategy, which continues to include aspirations to growth both organically and inorganically by way of mergers and acquisitions opportunities, which we continue to see in our core
We continue to drive safety and sustainability as a priority throughout our operations and will publish our inaugural sustainability report in the near term to articulate key performance metrics for the business in 2023. Through the sustainability report we aspire to be transparent about our performance and to create a baseline from which to measure improvement over time, so as to best assure the ongoing sustainability of our business.'
Financial Update
The table above shows a comparison of key financial and operating metrics for both Q4 and the full year, to the same periods in 2022. However, as Valeura established active production operations following the close of the Mubadala Acquisition on
The Company's Q4 2023 financial performance reflects ongoing oil production which averaged 19,165 bbls/d leading to sales of 1.987 million bbls and generating oil revenue of
For the full year of 2023 (which effectively covers the period of
Valeura's average realised price for crude oil sales was
In Q4 2023, operating expenses were
During Q4 2023 and full year 2023, the Company generated Adjusted Cash Flow from Operations (a non-IFRS measure which is more fully described in the 'Non-IFRS Financial Measures and Ratios' section of this news release) of
Valeura incurred total tax expenses of
Valeura's current and non-current debt at
As at
As the Company's current and non-current debt at
Operations Update and Outlook
During Q4 2023, the Company had ongoing production operations on its Jasmine/
One drilling rig was actively drilling across all of the assets for the full year.
Jasmine
Production from the Jasmine/
During 2023, the Company conducted two separate drilling campaigns on the Jasmine field, one on the Jasmine B platform which was in progress at the time of closing the Mubadala Acquisition and completed in
During 2023, Valeura also completed a study into power generation and emissions efficiency opportunities at the Jasmine field, culminating in a project 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 intended to both reduce the field's greenhouse gas emissions and diesel consumption, and thus reduce operating costs.
2P Gross Reserves (working interest share, before royalties) at the Jasmine/
The Company believes that with continued infill drilling and ongoing well workovers on the Jasmine/
Oil production from the Nong Yao oil field, in Licence G11/48 (90% Valeura working interest) averaged 6,436 bbls/d during Q4 2023 and 7,134 bbls/d from
During the year the Company conducted two drilling campaigns on the Nong Yao field, one in Q2 on the Nong Yao B wellhead platform, and one in Q4 on
The overall effect of Valeura's
Also during the year, the Company conducted groundwork for the expansion of the Nong Yao oil field through development of the new field known as
In addition to the development drilling, the Company intends to drill one exploration well (0.9 net) on the nearby
Manora
Oil production at the Manora oil field, in Licence G1/48 (70% Valeura working interest) averaged 3,420 bbls/d during Q4 2023, and 3,336 bbls/d from
In Q2 2023, the Company conducted a successful infill drilling programme of three development wells (2.1 net) to commercialise bypassed oil downdip of existing wells in one of the field's deeper intervals, as well as multiple attic or bypassed accumulations in shallower reservoirs. The Company also conducted one well workover during the year.
The effect of infill drilling has been an increase in production output from the Manora field, and an increase of reserves. 2P Gross Reserves (working interest share, before royalties) increased from 1.8 million bbls at year end 2022 to 2.2 million bbls at year end 2023, after having produced 1.2 million bbls during the year. This constitutes 132% reserves replacement and has resulted in a further extension to the estimated economic life of the field to
Wassana
Production of oil at the Wassana field, in Licence G10/48 (100% Valeura working interest) started in
In
In addition to the year-end development drilling campaign, which continued into 2024, Valeura drilled two appraisal wells (gross and net) on the Wassana field in Q3 2023 and conducted three well workovers, targeting deeper portions of the reservoir. The wells were successful in proving the presence of oil deeper than previously demonstrated and as a result, the Company has commenced a review of development options to expand the field's production infrastructure, which could increase production and extend the field life beyond 2030. Valeura has commissioned a project team to select a suitable development concept for re-development of the field and anticipates making a final investment decision in 2024.
As a result of the 2023 appraisal drilling and studies, 2P Gross Reserves (before royalties) at the Wassana field have increased from 6.1 million bbls at year end 2022 to 12.9 million bbls at year end 2023 and the economic field life has been extended to
Webcast
Valeura's management team will host an investor and analyst webcast at 09:00 Calgary /15:00
Conference ID: 770 213 036
Dial-in numbers:
Turkiye: 00800142034779
For further information, please contact:
Contact@valeuraenergy.com
IR@valeuraenergy.com
CAMARCO (Public Relations, Media Adviser to Valeura) +44 (0) 20 3757 4980
Valeura@camarco.co.uk
Contact details for the Company's advisors, covering research analysts, and joint brokers, including
About the Company
Additional information relating to Valeura is also available on SEDAR+ at www.sedarplus.ca.
Non-IFRS Financial Measures and Ratios
This news release includes references to financial measures commonly used in the oil and gas industry such as adjusted EBITDAX, net debt / net cash, outstanding debt, net working capital, adjusted net working capital, adjusted cashflow from operations, adjusted opex, and adjusted capex which are not generally accepted accounting measures under International Financial Reporting Standards ('IFRS Accounting Standards') and do not have any standardised meaning prescribed by IFRS and, therefore, may not be comparable with similar definitions that may be used by other public companies. Management believes that adjusted EBITDAX, net debt / net cash, outstanding debt, net working capital, adjusted net working capital, adjusted cashflow from operations, adjusted opex, and adjusted capex are useful supplemental measures that may assist shareholders and investors in assessing the financial performance and position of the Company. Non-IFRS financial measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS.
Reconciliations of these non-IFRS financial measures to the most directly comparable financial measures in Valeura's annual financial statements, are incorporated by reference from the 'Non-IFRS Financial Measures and Ratios' section in Valeura's MD&A dated
Adjusted EBITDAX: is a non-IFRS financial measure which does not have a standardised meaning prescribed by IFRS. This non-IFRS financial measure is included because management uses the information to analyse the financial performance of the Company. Adjusted EBITDAX is calculated by adjusting Profit (loss) for the year before other items as reported under IFRS to exclude the effects of Other income, exploration, SRB, finance income and expenses, transaction costs, and DD&A, restructuring and other costs, and certain non-cash items (such as impairments, foreign exchange, unrealised risk management contracts, reassessment of contingent consideration, and share-based compensation) and gains or losses arising from the disposal of capital assets. In addition, other unusual or non-recurring items are excluded from Adjusted EBITDAX, as they are not indicative of the underlying financial performance of the Company.
Adjusted opex and adjusted opex per bbl: are a Non-IFRS financial measure, and a non-IFRS financial ratio, respectively, which do not have standardised meanings prescribed by IFRS. These are included because management uses the information to analyse cash generation and financial performance of the Company. Operating Cost represents the operating cash expenses incurred by the Company during the period including the leases that are associated with operations, such as bareboat contracts for key operating equipment, such as FSOs, FPSOs, and warehouses. Adjusted opex is calculated by effectively adjusting non-cash items from the Operating Cost and adding lease costs. Adjusted opex is divided by production in the period to arrive at Adjusted opex per bbl. Adjusted cashflow from operations: Is a non-IFRS financial measure which does not have a standardised meaning prescribed by IFRS. This non-IFRS financial measure is included because management uses the information to analyse cash generation and financial performance of the Company. Adjusted cashflow from operations is calculated by subtracting from oil revenues, royalties, Opex, general and administrative costs which are adjusted for non-recurring charges, and accrued petroleum income tax act tax and special remuneratory benefit expenses.
Adjusted cashflow from operations: is a non-IFRS financial measure which does not have a standardised meaning prescribed by IFRS. This non-IFRS finance measure is included because management uses the information to analyse cash generation and financial performance of the Company. Adjusted Cashflow from operations is calculated by subtracting from Oil revenues, Royalties, Adjusted opex, General and administrative costs which are adjusted for non-recurring charges, and accrued PITA tax and SRB expenses. Debt & Net Debt / Net cash: Are non-IFRS financial measures which do not have standardised meanings prescribed by IFRS. These non-IRFS financial measures are provided because management uses the information to a) analyse financial strength and b) manage the capital structure of the Company. These measures are used to ensure capital is managed effectively in order to support the Company's ongoing operations and needs.
Outstanding debt and net debt / Net cash: are non-IFRS financial measures which do not have a standardised meaning prescribed by IFRS. These non-IRFS financial measures are provided because management uses the information to a) analyse financial strength and b) manage the capital structure of the Company. These non-IFRS measures are used to ensure capital is managed effectively in order to support the Company's ongoing operations and needs.
Net working capital and adjusted net working capital: are non-IFRS financial measures which do not have a standardised meaning prescribed by IFRS. These non-IFRS financial measures are included because management uses the information to analyse liquidity and financial strength of the Company. Adjusted net working capital is calculated by adding back current leases liability to net working capital.
The leases are associated with operations, such as bareboat contracts for key operating equipment, such as FSOs, FPSOs, and warehouses which are included in the Company's disclosed Adjusted opex (and Adjusted opex guidance). Management believes the adjusted net working capital provides a useful data point to the reader to ascertain the business' NTM surplus or deficit capital requirement. It is also a data point that management uses for cash management.
Oil and Gas Advisories
Reserves and contingent resources disclosed in this news release are based on an independent evaluation conducted by the incumbent independent petroleum engineering firm,
This news release contains a number of oil and gas metrics, including 'NAV', 'reserves replacement ratio', and 'end of field life' which do not have standardised meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies. Such metrics are commonly used in the oil and gas industry and have been included herein to provide readers with additional measures to evaluate the Company's performance; however, such measures are not reliable indicators of the future performance of the Company and future performance may not compare to the performance in previous periods.
'NAV' is calculated by adding the estimated future net revenues based on a 10% discount rate to net cash, (which is comprised of cash less debt as of
'Reserves replacement ratio' is calculated by dividing the difference in reserves between NSAI's report on the reserves and resources for all of Valeura's
'End of life' is calculated by NSAI as the date at which the monthly net revenue generated by the field is equal to or less than the asset's operating cost.
Reserves
Reserves are estimated remaining quantities of commercially recoverable oil, natural gas, and related substances anticipated to be recoverable from known accumulations, as of a given date, based on the analysis of drilling, geological, geophysical, and engineering data, the use of established technology, and specified economic conditions, which are generally accepted as being reasonable. Reserves are further categorised according to the level of certainty associated with the estimates and may be sub-classified based on development and production status.
Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production.
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.
Developed non-producing reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown.
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g., when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned.
Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of the estimated proved plus probable plus possible reserves.
The estimated future net revenues disclosed in this news release do not necessarily represent the fair market value of the reserves associated therewith.
The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation.
Contingent Resources
Contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies are conditions that must be satisfied for a portion of contingent resources to be classified as reserves that are: (a) specific to the project being evaluated and (b) expected to be resolved within a reasonable timeframe.
Contingent resources are further categorised according to the level of certainty associated with the estimates and may be sub-classified based on a project maturity and/or characterised by their economic status. There are three classifications of contingent resources: low estimate, best estimate and high estimate. Best estimate is a classification of estimated resources described in the Canadian Oil and Gas Evaluation Handbook as the best estimate of the quantity that will be actually recovered; it is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability that the quantities actually recovered will equal or exceed the best estimate.
The project maturity subclasses include development pending, development on hold, development unclarified and development not viable. The contingent resources disclosed in this news release are classified as either development unclarified or development not viable.
Development unclarified is defined as a contingent resource that requires further appraisal to clarify the potential for development and has been assigned a lower chance of development until commercial considerations can be clearly defined. Chance of development is the likelihood that an accumulation will be commercially developed.
Conversion of the development unclarified resources referred to in this announcement is dependent upon (1) the expected timetable for development; (2) the economics of the project; (3) the marketability of the oil and gas production; (4) the availability of infrastructure and technology; (5) the political, regulatory, and environmental conditions; (6) the project maturity and definition; (7) the availability of capital and, ultimately, (8) the decision of joint venture partners to undertake development.
The major positive factor relevant to the estimate of the contingent development unclarified resources referred to in this news release is the successful discovery of resources encountered in appraisal and development wells within the existing fields. The major negative factors relevant to the estimate of the development unclarified contingent resources referred to in this news release are: (1) the outstanding requirement for a definitive development plan (2) current economic conditions do not support the resource development, (3) limited field economic life to develop the resources and (4) the outstanding requirement for a final investment decision and commitment of all joint venture partners.
Development not viable is defined as a contingent resource where no further data acquisition or evaluation is currently planned and hence there is a low chance of development, there is usually less than a reasonable chance of economics of development being positive in the foreseeable future. The major negative factors relevant to the estimate of development not viable referred to in this news release are: (1) current economic conditions do not support the resource development, and (2) availability of technical knowledge and technology within the industry to economically support resource development.
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: potential re-development of the Wassana oil field and the extension of its economic life beyond 2030; Valeura's financial position positioning the Company very well for further growth; the Company's focus on seeking further synergies for cost optimisation and tax efficiency; the Company's intention to continue to aggressively pursue value through a growth-oriented strategy, which includes aspirations to grow both organically and inorganically by way of mergers and acquisitions; Valeura's focus on safety and sustainability and its plan to publish a sustainability report and the timing thereof; the sustainability report being transparent about the Company's performance and allowing the Company to measure its sustainability improvements over time; the installation of a gas turbine generator at the Jasmine oil field reducing the Jasmine fields' greenhouse gas emissions and diesel consumption, leading to a reduction in operating costs; the continued infill drilling and ongoing well workovers on the Jasmine/
In addition, statements related to 'reserves' and 'resources' are deemed to be forward-looking information as they involve the implied assessment, based on certain estimates and assumptions, that the resources can be discovered and profitably produced in the future.
Forward-looking information is based on management's current expectations and assumptions regarding, among other things: 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
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
This information is provided by Reach, the non-regulatory press release distribution service of RNS, part of the
Contact:
Vice President
Email: IR@valeuraenergy.com
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