SINGAPORE - Aug. 08, 2024 (GLOBE NEWSWIRE) -- Valeura Energy Inc. (TSX: VLE, OTCQX: VLERF) ("Valeura" or the "Company"), reports its unaudited financial and operating results for the three and six month periods ended June 30, 2024.
Q2 2024 Highlights
- Adjusted cashflow from operations of US$65.7 million(1);
- Oil production of 21.1 mbbls/d(2) and oil sales of 1.9 million bbls;
- Average realised price of US$87.7/bbl, generating revenue of US$164.0 million;
- Adjusted EBITDAX of US$99.6 million(1); and
- Cash and net cash balance as of June 30, 2024 of US$146.8 million(1),(3), with no debt.
(1) Non-IFRS financial measure or non-IFRS ratio - see "Non-IFRS Financial Measures and Ratios" section below.
(2) Working interest share production, before royalites.
(3) Includes restricted cash of US$17.3 million.
Recent Achievements
- Restart of production from the Wassana field, following thorough inspection of the production facility's underwater components, with production rates now ramped up to pre-suspension levels;
- Completion of drilling operations on the Nong Yao C development, which was completed under budget, and with all wells having encountered their objectives as planned in addition to successfully appraising several additional zones;
- Mechanical completion of the Nong Yao C production facility, with final assurance checks and certification underway in preparation for first production in August 2024;
- Narrowing of full-year production guidance range estimate and reiteration of opex and pricing expectations, but with reduced capex; and
- Receipt of the prestigious 2024 EIA Monitoring Award from Thailand's Office of Natural Resources and Environmental Policy and Planning in respect of three of the Company's fields.
Sean Guest, President and CEO of Valeura commented:
"I am pleased to share details of our Q2 2024 performance, which includes ongoing strong cash generation of US$65.7 million, up 37% from the previous quarter.
This performance follows near-record quarterly revenue of US$164 million based on 1.9 million barrels in oil sales achieving a premium to the Brent oil benchmark of US$2.8/bbl, meaning average price realisations of US$87.7/bbl. With strong margins, we are continuing to contribute to our balance sheet. We ended the quarter with US$147 million in cash on hand, even after having substantial cash outflows during the quarter for taxes, the important purchase of the Nong Yao field's floating storage and offloading vessel, and final contingent payments in relation to our 2022 acquisition from KrisEnergy.
While the operating characteristics of our business remain strong, we are constantly mindful of safety and sustainability, and will not compromise on making tough decisions when required. At the end of Q2 we opted to suspend production at our Wassana field to fully investigate a perceived structural threat to the production facility. As reported last week, we were pleased to confirm that the anomaly is superficial in nature, and as a result, we have resumed production operations, with volumes now back at pre-suspension levels. I feel this response reflects our overall commitment to ensuring the sustainability of our business, a sentiment which is further bolstered by our receipt of the 2024 EIA Monitoring Award.
I'm also pleased to report that we are very close to being able to start up production at our Nong Yao C development, which is our largest growth project this year. We have drilled the planned six horizontal development wells, plus an appraisal well on a new target, and one water injection well. While final results of the wells will only be known once they are on production, we have been pleased with drilling performance, and expect to demonstrate that the drilling programme has met all its technical expectations and has come in under budget. In addition to the development targets, the drilling programme has successfully appraised one additional target, and has identified at least two further zones which may form the basis for future infill drilling. The production facility at Nong Yao C is in the final stages of certification for oil production, which we intend to achieve in August 2024.
With half the year 2024 completed, we have also narrowed our guidance assumptions and are forecasting lower spending on capex, while at the same time we expect to deliver more wells than contemplated by the original guidance. Given the optionality in our portfolio, we have tailored our work to increase production where possible, and are able to maintain our full-year production guidance despite the recent downtime at the Wassana field and the expectation of first oil from Nong Yao C occurring slightly later than our initial forecast. Our business continues to deliver substantial optionality along with strong cash flow, and we are maintaining our laser focus on delivering value through growth."
Q2 2024 Performance Summary Table
| Three Months ending June 30, 2024 | Three Months ending March 31, 2024 | ||
| Average Daily Oil Production(1) | (bbls/d) | 21,068 | 21,882 |
| Oil Volumes Sold | ('000 bbls) | 1,870 | 1,765 |
| Realised Price | (US$/bbl) | 87.7 | 84.6 |
| Oil Revenues | (US$ '000) | 163,960 | 149,408 |
| Adjusted EBITDAX(2) | (US$ '000) | 99,594 | 88.721 |
| Adjusted cashflow from operations(2) | (US$ '000) | 65,686 | 47,855 |
| Adjusted opex(2) | (US$ '000) | 54,171 | 52,264 |
| Adjusted capex(2) | (US$ '000) | 30,641 | 29,257 |
| Net earnings/(loss) | (US$ '000) | 11,309 | 19,418 |
| Weighted average shares outstanding - basic | ('000 shares) | 105,919 | 103,229 |
| As at June 30, 2024 | As at March 31, 2024 | ||
| Cash & Cash equivalent and Restricted cash | (US$ '000) | 146,819 | 193,683 |
| Debt(2) | (US$ '000) | Nil | Nil |
| Net Cash(2) | (US$ '000) | 146,819 | 193,683 |
| Adjusted Net Working Capital(2) | (US$ '000) | 144,244 | 141,877 |
(1) Working interest share production, before royalites.
(2) Non-IFRS financial measure or non-IFRS ratio - see "Non-IFRS Financial Measures and Ratios" section below.
Financial Update
The Company's Q2 2024 financial performance was influenced by higher revenue, driven by both more oil volumes sold during the quarter, and higher realised prices.
Oil production averaged 21.1 mbbls/d during Q2 2024 (Valeura's working interest share, before royalties), a decrease of 4% from the prior quarter. Production was stable throughout the quarter and benefitted from the impact of infill wells drilled at the Wassana field in Q1 2024 and two infill wells at Nong Yao drilled in Q2 2024, however most drilling activity during Q2 2024 did not have an immediate impact on production, as the drilling activity mostly consisted of either exploration wells or development of the Nong Yao C accumulation, which is expected to come on production in August 2024. All of the Company's four fields were in production throughout the majority of the quarter, with the Wassana field's production being suspended on June 28, 2024.
Despite slightly lower average production, oil sales totalled 1.87 million bbls during Q2 2024, which was 6% higher than Q1 2024. Additionally, at the end of the quarter, the Company held crude oil inventory of 0.92 million bbls, 5% higher than the previous quarter-end's 0.88 million bbls. All of the Company's oil production is held in floating vessels before being sold and the Company has crude oil inventory on hand at all times.
Price realisations averaged US$87.7/bbl during Q2 2024, reflecting a US$2.8/bbl premium over the Brent crude oil benchmark average price. Premiums increased due to deliberate actions on the Company's part, in particular the Company's work to find more lucrative local markets for its heavier crudes. The Company has no hedging arrangements in place in respect of its crude oil sales.
The resulting oil revenue during Q2 2024 was US$164.0 million, a 10% increase over Q1 2024, reflecting increased oil sales, coupled with higher realised prices.
Operating expenses during Q2 2024 were US$41.7 million, relatively unchanged from the US$41.8 million recorded in Q1 2024. Adjusted opex during Q2 2024 was US$54.2 million(1), or US$28.3/bbl on a per barrel basis, an 8% increase over Q1 2024 as a result of lower production rates, and more planned activities in the quarter.
Valeura generated adjusted EBITDAX of US$99.6 million(1) in Q2 2024, approximately 12% higher than Q1 2024, due primarily to higher oil sales revenue. Adjusted cashflow from operations was US$65.7 million, up 37 % from the previous quarter.
During Q2 2024, the Company paid taxes of US$83.4 million, relating primarily to the full year 2023 in respect of its Jasmine field, and second half 2023 in relation to its other fields, but also included payment of an US$11.3 million tax obligation on the Company's Thai assets, relating to a reassessment made in respect of the 2018/2019 time frame, which was before the effective date of Valeura's acquisition of its Thai assets. The Company is currently communicating with the former owner of the assets and is intent on pursuing all potential remedies in relation to these historic tax payments.
As of June 30, 2024, Valeura had cash and cash equivalents of US$146.8 million, including restricted cash of US$17.3 million, compared to US$193.6 million as of March 31, 2024. This follows a quarter involving above-normal outflows of US$109 million, comprised primarily of cash tax payments, the US$19.0 million purchase of the Nong Yao floating storage and offloading ("FSO") vessel, final contingent payments totalling US$7.0 million under the 2022 KrisEnergy acquisition, as well as adjusted capex of US$30.6 million(1) and US$5.2 million spent on exploration.
Valeura had an adjusted net working capital surplus of US$144.2 million(1) at June 30, 2024, versus US$141.9 million at March 31, 2024.
(1) Adjusted opex, adjusted EBITDAX, adjusted capex, and adjusted net working capital are non-IFRS measures which are more fully described in the "Non-IFRS Financial Measures and Ratios" section of this news release.
Operations Update
During Q2 2024, the Company had ongoing production operations on all of its Gulf of Thailand fields including the Jasmine, Nong Yao, Manora, and Wassana fields. One drilling rig and one workover rig were under contract throughout the quarter.
Jasmine/Ban Yen
Oil production before royalties from the Jasmine/Ban Yen field, in Licence B5/27 (100% operated interest) averaged 7.4 mbbls/d during Q2 2024, a decrease of 3% from Q1 2024. No wells were drilled on Licence B5/27 in Q2 2024, but Valeura began a six-well workover campaign, with two well workovers being completed by end of the quarter.
An infill drilling programme on the Jasmine field is planned to commence immediately with the imminent release of the drilling rig from Nong Yao C, and will include five development wells intended to increase production volumes as well as up to two appraisal wells to assess potential future development targets. Valeura is continually optimising its drilling schedule, and still anticipates drilling the Ratree exploration prospect, on Licence B5/27 in due course, while constantly seeking to maximise value through its drilling operations.
Nong Yao
At the Nong Yao field, in Licence G11/48 (90% operated working interest), Valeura's working interest share of oil production before royalties averaged 6.3 mbbls/d during Q2 2024, which represents a decrease of 14% from Q1 2024. This reflects planned downtime for construction work and modifications in connection with tying in the Nong Yao C mobile offshore production unit ("MOPU") to the field's pre-existing infrastructure. Following the work, and with production contributions from the two infill wells drilled from the Nong Yao A facility, oil production at Nong Yao has increased to an average of 7.6 mbbls/d for July 2024 (average working interest share rate before royalties).
Following infill wells, drilling operations focused on the new Nong Yao C development for the remainder of the quarter. To date, Valeura has drilled the six planned horizontal development wells, with reservoir intervals encountered in line with expectations, one appraisal well which was successful and will be converted to a seventh production well, and one water injection well. Two of the development wells were also extended to test appraisal targets, with both being successful and forming an early basis for potential future infill drilling. Even with the expanded scope of the drilling programme to include appraisal work, the Company anticipates that the Nong Yao C drilling programme has been delivered approximately 25% under budget. The drilling rig is being released from the Nong Yao field imminently, and will mobilise to the Jasmine field next.
The Company is in the final stages of preparing the Nong Yao C production facility to receive oil for the first time, and anticipates achieving full operational readiness and first production in August 2024. Nong Yao C is planned to be Valeura's single biggest source of organic production growth in 2024, and will increase oil production from the greater Nong Yao area to peak rates of approximately 11 mbbls/d (Valeura's working interest share, before royalties).
During Q2 2024, the Company also completed its purchase of the Nong Yao FSO vessel for US$19.0 million. Valeura anticipates that the change to owning, rather than leasing, the FSO will yield a reduction in operating expenses going forward.
Wassana
Oil production at the Wassana field, in Licence G10/48 (100% operated interest), averaged 4.7 mbbls/d (before royalties), an increase of 18% over Q1 2024. The increase was largely driven by production contributions from new infill wells drilled in Q1 2024, which increased production rates to approximately 5.0 mbbls/d near the end of Q2 2024.
As part of planned maintenance and asset integrity assurance work, the Company conducted a thorough inspection of the underwater components of the Wassana field's MOPU in June 2024. Thereafter, Valeura implemented a precautionary suspension of production operations at the field starting on June 28, 2024 and lasting for approximately five weeks, while investigating a potential structural anomaly with one of the steel jack-up legs. The anomaly was ultimately determined to be superficial in nature, enabling the safe restart of production operations on August 2, 2024 and production rates have now ramped up to pre-suspension levels.
Separately, Valeura has begun front end engineering and design work for the potential redevelopment of the Wassana field. The Company is targeting to be ready for a final investment decision on the project in early Q1, 2025, with an ultimate goal of more fully commercialising the Wassana field's reserves and resources and extending the economic life of the Wassana field well beyond 2030.
Manora
At the Manora field, in Licence G1/48 (70% operated working interest), Valeura's working interest share of oil production before royalties averaged 2.7 mbbls/d, a decrease of 9% from Q1 2024. No wells were drilled on Licence G1/48 during Q2 2024, but the Company conducted two well workovers.
Following on from the successful drilling in 2023, the Company has now planned further drilling opportunities on the Manora field, which are expected to further extend the field's life. Given efficiencies in the drilling operations to date in 2024, Valeura expects to accelerate the drilling of three infill development wells plus two appraisal wells, to commence in Q4 2024, following infill drilling on the Jasmine field.
Environmental Monitoring Award
Valeura is committed to ensuring the sustainability of its business, and aspires toward world class standards for environmental responsibility, social wellbeing, and governance. The Company was recently awarded the 2024 EIA Monitoring Award from Thailand's Office of Natural Resources and Environmental Policy and Planning. This reflects the Company's strong performance with regard to its environmental monitoring activities and reporting under its formal Environmental Impact Assessment, in respect of its Nong Yao, Manora, and Ban Yen fields. Further details on the Company's commitment to sustainability can be found in Valeura's inaugural Sustainability Report, which is available on the Company's website.
Guidance Update
Valeura has revisited its guidance estimates and has adjusted its outlook to reflect year-to-date performance and expectations for the remainder of the year.
Oil production expectations remain largely unchanged but have been narrowed to a range of 22,000 - 24,000 bbls/d. In the Company's estimation, the impact of deferring production as a result of the precautionary suspension at the Wassana field is offset by demonstrated stronger-than-plan potential rates from the field, when in full operation. In addition, the Company's drilling programme to date has included two infill development wells at Nong Yao A, which were drilled earlier than planned in the year, and serve to offset the later start of first oil from the Nong Yao C development than originally planned. The Company feels its portfolio offers substantial optionality to adjust work programmes to compensate for unanticipated deferrals of production. For this reason, the drilling schedule remains subject to ongoing optimisation.
The Company now anticipates total capital spending of US$135 - 145 million, a slight downward revision. Over 85% of the capex is associated with drilling operations, and as the Company has a drilling rig on contract for the full year, the capex budget is therefore largely fixed. However, given an efficient drilling operations performance to date, additional wells from the Manora campaign are now expected to be realised in 2024 for essentially the same full-year drilling budget.
The Company's opex and price realisation guidance is re-affirmed. For opex, management expects the combined effects of increases due to higher costs of diesel and the additional costs associated with the advanced underwater inspection at the Wassana field to be largely offset by strong underlying operational performance and reductions in connection with owning, rather than leasing, the Nong Yao FSO. On pricing, while recent price realisations have somewhat exceeded management's expectations, the Company considers long-term price performance in forecasting to be more in line with its guidance.
Exploration expense remains unchanged at approximately US$8 million. To date, Valeura has drilled three exploration wells. All were successful and as a result there was additional spending for enhanced data acquisition to support future appraisal and development planning. The Company continually seeks to optimise its drilling schedule to maximise value, and as a result, future refinements may have a bearing on the ultimate exploration expense recorded.
| Category | Original 2024 Guidance | Updated 2024 Guidance |
| Average Daily Oil Production(1) | 21,500 - 24,500 bbls/d | 22,000 - 24,000 bbls/d |
| Price realisations | Approximately equivalent to the Brent crude oil benchmark | Approximately equivalent to the Brent crude oil benchmark |
| Opex(2) | US$205 - 235 million | US$205 - 235 million |
| Capex(3) | US$135 - 155 million | US$135 - 145 million |
| Exploration Expense | Approximately US$8 million | Approximately US$8 million |
(1) Working interest share production, before royalites.
(2) Represents adjusted opex which is a non-IFRS financial measure - see "Non-IFRS Financial Measures and Ratios" section below.
(3) Represents adjusted capex which is a non-IFRS financial measure - see "Non-IFRS Financial Measures and Ratios" section below.
Webcast
Valeura's management team will host an investor and analyst webcast on Friday, August 9, 2024 at 08:30 Calgary / 15:30 London / 21:30 Bangkok / 22:30 Singapore to discuss today's announcement. The live audio and video feed can be access via the link below. Written questions may be submitted through the webcast system or by email to IR@valeuraenergy.com.
Webcast link: https://teams.microsoft.com/l/meetup-join/19%3ameeting_MzNiOTRmNzMtZTY2Mi00YzMxLWE3YzItNGUzMzIxY2VmMzdj%40thread.v2/0?context=%7B%22Tid%22%3A%22a196a1a0-4579-4a0c-b3a3-855f4db8f64b%22%2C%22Oid%22%3A%22241f769c-12ae-4efc-8c14-d2e523040a83%22%2C%22IsBroadcastMeeting%22%3Atrue%2C%22role%22%3A%22a%22%7D&btype=a&role=a
An audio only feed of the event is available by phone using the Conference ID and dial-in numbers below.
Conference ID: 169 700 916#
Dial-in numbers:
Canada: 833-845-9589
Singapore: +65 6450 6302
Thailand: +66 2 026 9035
Turkey: 00800142034779
UK: 0800 640 3933
USA: 833-846-5630
For further information, please contact:
| Valeura Energy Inc. (General Corporate Enquiries) | +65 6373 6940 |
| Sean Guest, President and CEO | |
| Yacine Ben-Meriem, CFO | |
| Contact@valeuraenergy.com | |
| Valeura Energy Inc. (Investor Enquiries) | +1 403 975 6752 / +44 7392 940495 |
| Robin James Martin, Vice President, Communications and Investor Relations | |
| IR@valeuraenergy.com | |
| CAMARCO (Public Relations, Media Adviser to Valeura) | +44 (0) 20 3757 4980 |
| Owen Roberts, Billy Clegg | |
| Valeura@camarco.co.uk | |
Contact details for the Company's advisors, covering research analysts and joint brokers, including Auctus Advisors LLP, Canaccord Genuity Ltd (UK), Cormark Securities Inc., Research Capital Corporation, and Stifel Nicolaus Europe Limited, are listed on the Company's website at www.valeuraenergy.com/investor-information/analysts/.
About the Company
Valeura Energy Inc. is a Canadian public company engaged in the exploration, development and production of petroleum and natural gas in Thailand and in Türkiye. The Company is pursuing a growth-oriented strategy and intends to re-invest into its producing asset portfolio and to deploy resources toward further organic and inorganic growth in Southeast Asia. Valeura aspires toward value accretive growth for stakeholders while adhering to high standards of environmental, social and governance responsibility.
