Valeura Energy Inc. VLERF

A fine quarter , a little timing difference in cash flow

[Carbonbull]

This company is firing on all cylinders , optimizing the life span of remaining fields. which translates to increased terminal value , not enough disclosure to meaninfully adjust prior estimates , but i suspect over coming quarters there will be.

Quarters continue to produce impressive operating results , forecasts on full year indicate Wassana plus infill wells contibute in current quarter.

Dont quite understand the planned utilization of prior tax losses , (a bonus).

All in all with the announcement of a new institutional investor this name becomes a go to position for growth, if that is the profile you want to invest in , it is mine.

[Suppe11]

You try to convince yourself. The numbers are pretty bad. It's still undervalued, though. Kind of a kitchen sink quarter. In the end, it's a 2024 story.

[Stockwizard10]

This is the week we set new highs .

[BERationale]

Very bad... no free cash flow and opex/bbl up 50%. Just using working capital to make it look like they are paying down debt but net AP-AR exploded $21mm QoQ. I am ususally the bull on this story but shocked the stock is not being punished here. Shows you what the shareholder base is made up of - two large institutions and a whole bunch of retail shareholders. Selling the news and going to buy

[windymayor1]

Thus Resarch Capital reduces target from $8.25 to $7.50 due to mixed results.  Company should be back on track this quarter when Wasanna comes back on and when Nong Yao increases production in Q1-Q2 from 7k to 11k bopd. what a difference a quarter makes but we are still on track for higher production into 2024!   

[AucontraireII]

BER, "very bad",  really?  Are we overanalyzing here a little maybe?  I am probably the least expert here on reading earnings reports, but I saw it as an as expected, non-event.  Non events are often met with a 5 to 10% sell off, so nothing surprising really.  But maybe you can clarify your points a little bit.  So the capex per barrel rose but wouldn't

[BERationale]

Opex - not capex rose 50% per bbl. Opex is your lifting cost which defines your margins and this came in higher than anticipated at $34/bbl. Management guided to $30/bbl annually but the market got head faked in Q2 when they came in at $23/bbl. The debt declined but payables increased by a similiar amount - so if you delay paying your suppliers in order to pay down debt what good does that do

[goldwatch69]

If you read the PR, you would understand why OPEX went up. They planned additional well servicing and inspections. I would expect OPEX to be less next quarter. Guidance remains the same for the year.  Wassana is an unknown at this point.  They need to provide more transparency on Wassana and get it back online.

[Suppe11]

Well, I was the first, who said it was a bad Q, so I obviously agree with the most, of what you said. Can't understand the riddle about the Opex here across the board. The reason is very simple. In Q2, they sold inventory (=sold far more, than produced). In Q 3, they sold less, than produced. More oil...less Opex per bbl.

[BERationale]

Sorry but opex is only based on oil produced - has nothing to do with how much they sell in inventory. Do the math - they had 22k bbl/d of production in Q2 and $45mm of OPEX = $23/bbl. In Q3 they had 20k bbl/d of production and $62mm of OPEX = $34/bbl. I do appreciate that you made the same call though.

[goldwatch69]

Yeah and they sold an extra US$33 million of surplus inventory in the first ten days of Q4 of which didn't hit the books in Q3.  They increased cash position, working capital is higher than cash and they are short about US$17 million in FCF from the surplus sold in the first 10 days.  Net increase is effectively US$34 million in cash, half just a bit late. VLE is making money

[BERationale]

I will give you the benefit that they produced 124k barrels more than they sold / held in inventory so call it FCF understated by C$15mm in Q3. Still FCF of ~C$10mm when oil averaged US$88/bbl in the quarter is pretty dismall for a 20k boe/d producer ... and where the stock currently trades, equates to only an 11% FCF yield vs lower risk Canadian producers that are double that. The smart money is

[Suppe11]

Can you name me some Canadian offshore oilers ?  You extrapolate the 11%  fcf yield for the year, which is not really convincing. Your (smaller) peers...most of them are struggling along with fcf once a year, when they can not drill and most of them pay no taxes, because of Nols (I have the Inplays, Yangarras, Bonterras etc. in mind). A further problem Valeura had this Q was : They

[wajac]

I'd like to see the names of Canadian companies that are peers of VLE that have double an 11% fcf. I've  checked a few companies but no luck.

[BERationale]

Per Eight Capital note below... Free cash flow looks robust: Specifically amongst oil-weighted companies at STRIP, we estimate in 2024 on average a 11% FCF Yield amongst the Senior E&P, Oil Sands & Integrateds, a 23% FCF Yield amongst oil-weighted domestic E&Ps and a 30% FCF Yield amongst oil-weighted Internationals/Multinationals on STRIP. On average, we estimate FCF yields

[Suppe11]

Ok, first of all, one has to question, if the fcf yield should be calculated on the Ev and not the mc.... I don't want to check the numbers, but 2 names I got without research. Gte with a mc of US$201m and with 600+m debt made a 9 month fcf of US$13m...let it be 50m in the end...they kicked the debt can down the road to 2029...wait...6x50m...300m...if they can't refinance then, they'

[BERationale]

So now you are questioning the definition of FCF yield..  please refer to investopedia.com Just live with the fact that you called me out and I answered the bell with independent research. VLE is a good company... just needs to be re-rated based on recent performance and risk profile. That or they need to put up some better numbers, but we won't know that until March. 

[moneysworth]

"we won't know until March"...hmmm, someone is being slightly pessimistic. :) Obviously there's no question,...some folks trying to reload as low as they can...lol!

[wajac]

Oil has been trending down for the past month and, like VLE, share prices of other oil companies are also down. That is why the share price is down. 

[Bigpond]

Seems dead today with volumes under 100k, almost four hours into the trading day. Other O/G are nicely recovering today. GLTA

[energee]

Wassana would have fixed and variable OPEX.  VLE would have paid the fixed Wassana OPEX such as vessel lease (and whatever else they felt needed an upgrade at Wassan that was not CAPEX) with no offsetting production which contributed to their higher corp OPEX in the quarter.

[Suppe11]

They burried some Nong Yao expansion stuff in the Opex (don't know why), but one ting is clear accounting wise: You sell something and what you sell is revenue. You have Opex, and this Opex has nothing to do with the revenue = f.e. if you just produce and sell nothing (everything goes into inventory), than your income statement has zero revenue, but the Opex is there. The Opex/bbl ratio is

[JoeCurragh]

Opex per barrel of $26 in 9 month ytd. Guidance was for less than $30 so still on course to meet guidance. This figure will go lower next year on increased production. Maintenance capex is $70m per annum, or $17.5m per qtr, (not $40-45m). Anything above this is growth capex. Cash flow was down this qtr for 4 main reasons. 1) timing of liftings 2) higher opex due to seasonal factors 3) payment of

[BERationale]

From their presentation: management is guiding to 20 - 22k bbl/d of production this year and $155-$175 million of capex. So there is little to no production growth this year (they started the year at 22k boe/d with Wasanna making up 3k) and they are spending $155-$175mm. You can call it maintenance or growth or fairy dust, but if production is not growing it is not growth capex. It is capex

[Suppe11]

Their Nong Yao expansion costs around 75m and a lot of it is upfront (pipelines, building production unit, preparing etc.)...and even if I can't tell the numbers in detail, your thesis is off.

[wajac]

Opex/bbl up 50% out of context does  not mean much. One would need to know the  norm for the industry before deciding on the significance.

[Hannamuk]

  Thx for good trading advise here!

[BERationale]

No problem - I recall you being there at $0.45 / share with me. Glad we have resolved our differences. 

[bfw]

Yeah, sounds about right Carbonbull.  Oil production costs dropping and 2 quarters of stable production looks good to institutions.  Growth seems baked in for 2024 and will likely be enhanced by another solid transaction.  Perhaps most importantly, they continue to express a firm belief that the life of all their fields (especially Wassana) can be extended. Recent drilling has