A smigeon from the Cormark report March 10th 2016
Highlights: Event................................ On Tuesday, Valeura announced 2015YE results and reserves and provided an operational update. Details Valeura had pre-released Q4/15 volumes of 809 BOE/d, resulting CFPS of $0.03 that was in line with our estimates. Spending of $6.1 MM left the company with $7.3 MM of net positive working capital at the end of 2015. Q4/15 activity included the company's first two 100% WI Banarli exploration wells with Bati Gurgen-1 expected to flow first gas imminently and Yayli-1 currently awaiting the second of (potentially) three completions in the Teslimkoy interval of the Mezardere formation. Last year, proved plus probable reserves decreased 6% and 3P reserves decreased 17% on a more conservative future development plan, while proved reserves increased 5% with the successful Bati Gurgen-1 well being booked at year-end. No reserves have yet been booked for Yayli-1 despite encountering 128 m of pay in the Teslimkoy. A coiled tubing unit is expected at Yayli-1 to fracture a 33-35 m interval of the Teslimkoy with results expected soon after month-end. A 2016 outlook update is also expected following the tie-in of Bati Gurgen-1 and Yayli-1. Recommendation We reiterate our Buy rating and $1.25 target on Valeura.