Join today and have your say! It’s FREE!

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.
Please Try Again
{{ error }}
By providing my email, I consent to receiving investment related electronic messages from Stockhouse.

or

Sign In

Please Try Again
{{ error }}
Password Hint : {{passwordHint}}
Forgot Password?

or

Please Try Again {{ error }}

Send my password

SUCCESS
An email was sent with password retrieval instructions. Please go to the link in the email message to retrieve your password.

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.
Quote  |  Bullboard  |  News  |  Opinion  |  Profile  |  Peers  |  Filings  |  Financials  |  Options  |  Price History  |  Ratios  |  Ownership  |  Insiders  |  Valuation

Valeura Energy Inc T.VLE

Alternate Symbol(s):  VLERF

Valeura Energy Inc. is an upstream oil and gas company engaged in the production, development, and exploration of petroleum and natural gas in the Gulf of Thailand and the Thrace Basin of Turkiye. The Company holds an operating working interest in four shallow water offshore licenses in the Gulf of Thailand, which include G10/48 (Wassana field), B5/27 (Jasmine and Ban Yen fields), G1/48 (Manora field) and G11/48 (Nong Yao field). It holds a 100% operating interest in license B5/27 containing the producing Jasmine and Ban Yen oil fields. It holds an operated 70% working interest in license G1/48 containing the Manora oil field, which produces approximately 2,935 barrels per day (bbls/d) of medium-weight sweet crude oil. The Company holds interests ranging from 63% through 100% in various leases and licenses in the Thrace basin. The Company also operates Floating Storage and Offloading (FSO) vessel Aurora, location at Nong Yao field, offshore Gulf of Thailand.


TSX:VLE - Post by User

Bullboard Posts
Post by MEGat2buckson Sep 12, 2018 10:36am
183 Views
Post# 28604342

One part of the story

One part of the storyThis evening after market close, Valeura Energy (VLE.TO, last at C$6.05) released the results of the first-ever independent resource assessment of the newly discovered Thrace Basin basin centred gas accumulation (BCGA) and it did not disappoint. This assessment was carried out by the same firm that does Statoil and Saudi Aramco's reserves reports. By all measures, it appears to be the largest gas discovery I have seen in the hands a junior for a very long time. You can, and should, link to the full press release and read it in its entirety here (it is a very detailed and balanced description of the project) before reading further. DeGolyer and MacNaughton, a renowned Texas-based petroleum consulting firm with an 80-year history and offices around the world, estimates an Unrisked Mean Prospective Gas Resource of 10.1 TCF (net recoverable to Valeura's interest). The P10 (high) unrisked estimate was pegged at 20 TCF net recoverable, with a P90 (low) unrisked estimate of 3.2 TCF net recoverable. These are gigantic numbers. Even after applying economic and geological risk factors to get to a "discounted" number, the P90-P50-P10 prospective resource ranges from 1.6 TCF net-risked-recoverable (P90) to 10 TCF net-risked-recoverable (P10), with a Mean (mid-case) estimate of 5.1 TCF net-risked-recoverable gas. These numbers are nearlytriple what I had been estimating on my own. I had previously (quietly) hoped for a P50 case of around 3.75 TCF net recoverable based on what I thought was fairly aggressive math. I believe that the difference is mostly due to higher recovery factors than those in my initial estimates (that speaks to reservoir quality). In any case, more gas is good, and my best-guess type curve has been adjusted to account for that. Oh, and there are 236 million barrels of condensate and NGLs estimated in the (mid-case) Net Unrisked Mean Estimate. It's funny when 236 million barrels of liquids almost seems like a footnote, isn't it? For those wanting me to cut right to the point, the most simple rule of thumb that was used when I worked in the oil industry some 15 years ago (back when gas was US$5+ per mcf in North America), was that a TCF of gas was worth about a billion U.S. dollars "in the ground" in an acquisition scenario. That was not for reserves, that was for an undeveloped play that was generally understood and had shown commercial potential. Using that real of thumb, the lowest reasonable fair value I can arrive at for Valeura is US$1.6 billion, or around C$25/share (based on 79.5 million shares out fully diluted). If I assume 10% share dilution from these levels, maybe it's more like C$22/share.Now, on a takeover, a buyer isn't just going to step in and pay "full" price, but we're only talking about the P90 net risked number here. If we were talking about this actually going into development (i.e., risk factors removed) that potential value goes to US$3.2 billion net to VLE's interest based on the P90 (most conservative case)... that's around C$45-50/share. If I use the P50 numbers (mid-case), the values become ludicrous, even the net-risked P50 suggests US$5 billion is on the table... try out the per share math on that (hint, it is around $70/share). So, the way I see it, the supermajors that are surely circling this story have a choice: 1) pay something based on a modest discount to P90 net risked value today, or 2) let VLE and Statoil tie-in Yamalik-1 in Q2 and drill their planned 3-well program in Q3 at which point the unrisked fair value very likely goes up by 100%, to somewhere around $45-50/share. Note that these are not to be considered as "price targets" as that's not something that I do... I'm just illustrating what the math suggests from a rule-of-thumb valuation method and don't expect this to happen overnight. My illustrations are meant to highlight the fact that Valeura has serious potential from these levels and, as it turns out, my rule-of-thumb compares quite well with my full discounted cash flow model that I get into later in this (long) note.
Bullboard Posts

USER FEEDBACK SURVEY ×

Be the voice that helps shape the content on site!

At Stockhouse, we’re committed to delivering content that matters to you. Your insights are key in shaping our strategy. Take a few minutes to share your feedback and help influence what you see on our site!

The Market Online in partnership with Stockhouse