Valeura Energy Inc. T.VLE

A Mispriced O&G Growth Story VLE

[traderlong2]

The valuation certainly seem cheap also when comparing with peers. Valeura is currently valued at around $6,800 per flowing barrel versus an average of $14,800 for a peer group made up of Jadestone Energy, Pharos Energy, EnQuest, and International Petroleum, and I would argue that none of them are richly priced at the moment.

Cash flow generation is significant

Oil production in Q1 2023 averaged 20,475 bbls/d and is forecast to average between 20,000 and 22,300 bbls/d according to guidance. Valeura, however, seems to track well in advance of its target, with average production of 23,700 bbls/d in June. This is the result of its recent successful drilling campaign at the Nong Yao and Jasmine fields.

Valeura benefits from Brent pricing and relatively low costs. Operating expenses are expected to be around $220 - 240 million, or around $30 per barrel. With Brent prices around $80 per barrel, netbacks are around $29 per barrel. Looking forward, the company aims to bring production to a target level of around 25,000 bbls/d and beyond.

While short-term capital expenditures may impact free cash flow, the potential for significant cash flow generation is undeniable. Management has provided guidance of $30 million per month in free cash flow from the Mubadala assets alone.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of VLE:CA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

[BERationale]

Production metrics don't matter. Cash flow is king and this report is littered with errors unfortunately. "Management has provided guidance of $30 million per month in free cash flow from the Mubadala assets alone."  FREE cash flow is less taxes and capex. Taxes are upwards of 50% on certain fields and capex is ~$20mm a month. Managemnt guided to pre tax cash flwo

[AucontraireII]

It does seem that the share price is trading more or less on the price of crude which hasn't cooperated much since the purchase.  I suppose if the economies of the world really tank that is going to maybe harm our income substantially.  Where is nozzpak when we need him?   He was posting about 20 times a day for a couple months and now nothing for a couple months.

[firstworld]

VLE has an integrity crises.  Whatever they say today is meaningless because in a week or few they will have material changes and there seems to be extreme incompetence as @ BERational points out.  E.g.  no dilution to two dilutions. two rigs now one, late closing, late priject completions, borderline deception on finances. Keep in mind the mgmt have a ten+ year rwcord of failure

[Suppe11]

Petroleum Tax is 50% on net profit. Where do you get >50% ? Capex 20m a month ? 240m a year ? They guided for 180m-200m and now dropped a rig, because they don't need it (should lower capex 30-40m). In their guidance included is the growth capex for the Nong Yao field (50-70m). Imho your 20m/month capex is far off.