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Bullboard - Stock Discussion Forum 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... see more

TSX:VLE - Post Discussion

Valeura Energy Inc > Excellent Endorsement
View:
Post by retiredcf on Jul 18, 2024 8:26am

Excellent Endorsement

Keystone Financial examine over 3000 companies per year and only select about 10 for their clients. GLTA

YSOT Valeura Energy (VLE:TSX)

1) Valeura Energy symbol VLE on the TSX, is an oil and exploration, development and production company focused in Thailand and Turkey. Currently, the production is offshore based in Thailand after the company sold its shallow conventional gas business in Turkey in 2021. The company underwent a major transformation in 2022 shifting its focus to Thailand.  The company operates in 4 off-shore oil fields in Thailand.

2) The stock is trading up 100% over the past year at $4.20 a share with a $450 million market cap.

3) Looking at the operations in the Gulf of Thailand. The Manora and Jasmine fields are mid-life while the Nong Yao and Wassana fields are actively undergoing expansion and exploration.

The company has 37.9 million, in proven and probable reserves.

Combined, the fields are expected to produce approximately 23 thousand barrels daily in 2024. During Q2 the company produced 21.1 thousand barrels per day.

The company is expecting a 50% production bump for the Nong Yao field, providing a significant portion of the organic growth for 2024 exiting the year at approximately 11 thousand barrels per day.

I will note as well the Wassana mobile offshore production unit, has been found to have a crack, which puts the current production at 17 thousand barrels per day at this time. The crack may be superficial which means no risk to structural integrity and a shorter turnaround to production if it is structural repairs need to occur. The company expects to know the severity by the end of July.

4) For 2024, the company is expecting production of 21.5 to 24.5 thousand barrels per day, 13% year-over-year.

The company’s benchmark oil is Brent, but during the last quarter, it is notable that the company actually received a premium of $2.7 over Brent.

The current guidance implies a netback of $45.0 per barrel after expected royalties of 13%, operating expenditure of $220 million, and flat general and admin of roughly $25 million. Putting the annual net back at approximately $378 million.

5) Looking at the preliminary results for Q2 2024, Oil production was 21.1 thousand barrels per day, at a realized price of $87.7 per barrel resulting in revenue of $164 million.

The company closed out the quarter with $145 million in net cash after having a combined outlay of $109 million for taxes, the purchase of the Nong Yao Floating Storage and Offloading Vessal, and its final contingent consideration for the acquisition of KrisEnergy.

At $145 million US  or $199 million Canadian with no debt past leases, the cash is roughly 44% of the market cap. So cash rich to say the least.

6) Switching to valuation looking at external analyst expectations, the company is trading at only 0.2 times EV/EBITDA. Quite cheap to say the least due to the high cash balance and expected strength in EBITDA given the current oil price.

7) However, the company does have some key risks.

The Manora and Jasmine oil fields are mid-life and production has been trending down for multiple years, the company can extend the economic life with infill wells, but ultimately other production sources need to be found to keep the same level.

Near term the company is also seeing lower production due to the Wassana crack, which if it is structural will lower cash flow for the year.

Of course, this is on top of the commodity risk with oil.

8) Concluding,

If you are an oil bull, Valeura appears to be appealing due to its strong financial position which is further supported by the strong cash flows expected if oil prices remain steady or higher. The company is trading at an overall discount.  While we would never invest for the expectation of a takeover the combination of valuation and production growth expected in 2024 creates the potential for the company to be acquired.

So overall I would say if you want to speculate on Oil Veleura can be a method to do so.

Comment by firstworld on Jul 18, 2024 11:16am
LOL two poorly educated guys from 4th tier uni in a low end office not even disclosing assets under management or institutional investors is an endorse!ent?   One an ex journalist existed on govt subsidies for years....Freeland calibre LOL. More like a paid pump RUN. RUN. RUN. The cracks in VLEs model are literally there less than a year after the "non dilutive" transaction ...more  
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