Replacement ratio of 2.2 !! and contingent increased by a factor of 3.
We keep extending the field life and a 10 year reserve life now seems achievable ..
Year-End 2023 Reserves and Resources, Strong Growth and Value Creation
CALGARY, AB / ACCESSWIRE / February 20, 2024 / Valeura Energy Inc. (TSX:VLE)(OTCQX:VLERF) ("Valeura" or the "Company"), the upstream oil and gas company with assets in the Gulf of Thailand and the Thrace Basin of Trkiye, is pleased to announce the results of its third-party independent reserves and resources assessment for its Thailand assets.
Highlights
· Reserves increased across all fields - 29.9 MMbbl 1P, 37.9 MMbbl 2P and 46.5 MMbbl 3P
· 1P and 2P Reserves Replacement more than double the volume of oil produced in 2023 - 219%
· 2P net present value before tax of US$616 million and US$429 million after tax(1)
· Considering year end 2023 cash position of US$150.9 million, 2P net asset value after tax of US$579 million, equating to C$7.56 per share(2)
· More than three-fold increase in best estimate (2C) contingent resources, on a risked basis.
(1) Discounted at 10% discount rate (NPV10)
(2) Proved plus probable (2P) NPV10 plus net cash of US$150.9 million at December 31, 2023 (cash US$150.9, debt nil), assuming C$/US$ exchange rate of 0.742, and 103.3 million shares outstanding
Sean Guest, President and CEO commented:
"I am very pleased to announce the results of our end 2023 reserves and resources evaluation, which show substantial increases on all fronts, whether expressed as volumes of barrels or dollars of value. Through our work programme in 2023 we have replaced more than double the oil we produced, extended the anticipated economic life of our portfolio, and recorded a significant up-tick in NPV. This is an additional year of results that supports our thesis that these assets will continue to deliver cashflow well into the future.
Not only has the value of our assets increased from US$261 million at end 2022 to US$429 million at end 2023 (on a 2P after-tax NPV10 basis), but during the intervening calendar year, cash flow from the assets' 7.5 MMbbls(1) production has enabled us to fully pay down our debt while also accumulating US$151 million in cash by December 31, 2023. Together that creates a net asset value of US$579 million, which, based on our current shares outstanding and foreign exchange rates, equates to approximately C$7.56 per share.
Importantly, our performance in 2023 has resulted in 1P and 2P reserves growth at every one of our assets. For the more mature fields, Manora and Jasmine, our infill drilling programmes have increased reserves and extended field life. For the growth fields, Nong Yao and Wassana, these estimates underscore the value potential of pursuing further development opportunities. 2024 will serve as a proving ground for us to increase output from the Nong Yao field, with development of the Nong Yao C accumulation already well underway. At Wassana, largely as a result of our appraisal work in 2023, we have recorded a two-fold increase in 2P reserves, thereby validating our view that the field offers substantially more oil to commercialise than initially envisaged when we acquired the asset.
Our strategy is to continue pursuing value through growth in all its forms. That includes working to unlock contingent resources (which have also increased 3 ½-fold, year-on-year on a risked basis) and through an active near-field exploration programme this year.
We take great pride in our asset base in Thailand and are pleased to have such a high quality portfolio to continue driving further value growth for our stakeholders."
(1) Including amounts relating to the period January 1, 2023 through March 22, 2023, prior to completion of the Company's Gulf of Thailand acquisition from Mubadala Energy.
Valeura commissioned Netherland, Sewell & Associates, Inc. ("NSAI") to assess reserves and resources for all of its Thailand assets as of December 31, 2023. NSAI's evaluation is presented in a report dated February 19, 2024 (the "NSAI 2023 Report"). This follows a previous evaluation whereby NSAI assessed reserves and resources for the same assets as of December 31, 2022, as disclosed in an NSAI report dated April 17, 2023 (the "NSAI 2022 Report") and announced by the Company on April 18, 2023. Note that as the acquisition of a portion of Valeura's Gulf of Thailand assets (Jasmine, Manora and Nong Yao) from Mubadala Energy was only completed on March 22, 2023, the NSAI 2022 Report is used as the basis for comparison, thereby comparing to the reserves at year end 2022 on a proforma asset basis.
Summary of Valeura's Aggregate Thailand Reserves and Resources as of December 31, 2023
· Proved (1P) reserves of 29.9 MMbbls
· 1P NPV10 of US$301.4 million before tax / US$193.9 million after tax;
· Proved and probable (2P) reserves of 37.9 MMbbls,
· 2P NPV10 of US$616.4 million before tax / US$428.5 million after tax;
· Best estimate (2C) aggregate unrisked contingent resources of 19.9 MMbbls, or 8.9 MMbbls on a risked basis.
Oil and Gas Reserves by Field Based on Forecast Prices and Costs
| Reserves By Field | Gross (Before Royalties) Reserves, Working Interest Share (Mbbls) |
| Jasmine
(Light/Medium) | Manora
(Light/Medium) | Nong Yao
(Light/Medium) | Wassana
(Heavy) | Total |
| Proved | Producing Developed | 5,071 | 1,350 | 3,228 | 1,297 | 10,945 |
| Non-Producing Developed | 236 | 170 | - | - | 406 |
| Undeveloped | 1,517 | 220 | 6,738 | 10,048 | 18,522 |
| Total Proved (1P) | 6,823 | 1,740 | 9,965 | 11,345 | 29,872 |
| Total Probable (P2) | 3,599 | 451 | 2,396 | 1,569 | 8,015 |
| Total Proved + Probable (2P) | 10,422 | 2,191 | 12,361 | 12,914 | 37,888 |
| Total Possible (P3) | 4,161 | 533 | 2,405 | 1,551 | 8,651 |
| Total Proved + Probable + Possible (3P) | 14,583 | 2,723 | 14,767 | 14,466 | 46,538 |
Net Present Values of Future Net Revenue Based on Forecast Prices and Costs
Net present values of future net revenue from oil reserves are based on cost estimates as of the date of the NSAI 2023 Report, and forecast Brent crude oil reference prices of US$78.00, US$79.18, US$80.36, US$81.79 and US$83.43 per bbl for the years ending December 31, 2024, 2025, 2026, 2027 and 2028 respectively, with 2% escalation thereafter. NSAI assumes cost inflation of 2% per anum.
Values estimated by NSAI assume tax loss carry-forwards associated with ownership of the Wassana field are applied only to taxes levied in respect of that asset, resulting in no taxes payable for the Wassana field in the 1P and 2P cases. The remaining assets are assumed by NSAI to carry their full statutory tax burden.
| Future Net Revenue By Field | Before Tax NPV10 (US$ million) |
| Jasmine | Manora | Nong Yao | Wassana | Total |
| Proved | Producing Developed | (20.8) | (0.9) | (32.8) | (88.2) | (142.7) |
| Non-Producing Developed | 5.5 | 9.0 | - | - | 14.5 |
| Undeveloped | 13.9 | 1.9 | 265.9 | 147.9 | 429.6 |
| Total Proved (1P) | (1.4) | 10.0 | 233.1 | 59.7 | 301.4 |
| Total Probable (P2) | 125.6 | 20.5 | 88.7 | 80.3 | 315.0 |
| Total Proved + Probable (2P) | 124.2 | 30.5 | 321.8 | 139.9 | 616.4 |
| Total Possible (P3) | 158.5 | 21.6 | 86.6 | 78.5 | 345.3 |
| Total Proved + Probable + Possible (3P) | 282.7 | 52.1 | 408.4 | 218.5 | 961.7 |
| Future Net Revenue By Field | After Tax NPV10 (US$ million) |
| Jasmine | Manora | Nong Yao | Wassana | Total |
| Proved | Producing Developed | (35.3) | (2.1) | (55.9) | (88.2) | (181.4) |
| Non-Producing Developed | 3.2 | 9.1 | - | - | 12.4 |
| Undeveloped | 23.6 | 1.7 | 189.7 | 147.9 | 362.9 |
| Total Proved (1P) | -8.4 | 8.8 | 133.8 | 59.7 | 193.9 |
| Total Probable (P2) | 90.2 | 12.4 | 51.8 | 80.3 | 234.7 |
| Total Proved + Probable (2P) | 81.8 | 21.2 | 185.6 | 139.9 | 428.5 |
| Total Possible (P3) | 106.6 | 12.5 | 46.9 | 72.3 | 238.4 |
| Total Proved + Probable + Possible (3P) | 188.4 | 33.7 | 232.5 | 212.3 | 666.9 |
Summary of Reserves Replacement, Value and Field Life
As compared to the NSAI 2022 Report, the NSAI 2023 Report indicates an addition of 16.4 MMbbls of proved (1P) reserves and 16.3 MMbbls of proved plus probable (2P) reserves, after having produced 7.5 MMbbls of oil in 2023. On both 1P and 2P reserves, this reflects a reserves replacement ratio of 219%.
Based on the mid-point of the Company's 2024 production guidance of 21.5 - 24.5 Mbbls/d (23.0 Mbbls/d), on a 2P reserves basis as of December 31, 2023, the Company estimates its reserves life index to be approximately 4.5 years. Using the same production estimate and 2P reserves as of December 31, 2022, the reserves life index was approximately 3.5 years.
The net present value of estimated future revenue after income taxes, based on a 10% discount rate has increased between the NSAI 2022 Report and the NSAI 2023 Report from US$49.1 million to US$193.9 million on a 1P basis, an increase of 295%. On a 2P basis, the net present value of estimated future revenue after income taxes, based on a 10% discount rate have increased from US$261.0 million to US$428.5 million, an increase of 64%.
The Company estimates that, based on the 2P net present value of estimated future revenue after income taxes, based on a 10% discount rate, plus the Company's 2023 year-end net cash position of US$150.9 million, as disclosed on January 16, 2024, the Company has a 2P net asset value (NAV) of US$579.4 million. Using the current count of shares outstanding, being 103.3 million shares and current foreign exchange rates, Valeura's NAV equates to approximately C$7.56/share.
| | 1P Before Tax | 2P Before Tax | 1P After Tax | 2P After Tax |
| NPV10 (US$ million) | 301.4 | 616.4 | 193.9 | 428.5 |
| Net debt at December 31, 2023 (US$ million)(1) | 150.9 | 150.9 | 150.9 | 150.9 |
| Net Asset Value (US$ million) | 452.3 | 767.6 | 344.8 | 579.4 |
| Net Asset Value (C$ million)(2) | 609.6 | 1,034.1 | 464.7 | 780.9 |
| Common shares (million)(3) | 103.3 | 103.3 | 103.3 | 103.3 |
| Estimated NAV per basic share (C$ per share) | 5.90 | 10.01 | 4.50 | 7.56 |
(1) Cash at December 31, 2023 of US$150.9 million, debt nil.
(2) C$/US$ exchange rate of 0.742
(3) Issued and outstanding as of February 20, 2024
The NSAI 2023 Report indicates an extension in the anticipated end of field life for all assets in Valeura's Thailand portfolio, whether evaluated on 1P or 2P reserves as compared to the NSAI 2022 Report.
| | 2P Reserves (Gross WI) | End of Field Life | 2P Net Revenue (NPV10 US$ million) |
| Fields | December 31, 2022 (MMbbls) | 2023 Production (MMbbls) | Additions (MMbbls) | December 31, 2023 (MMbbls) | Reserves Replacement Ratio (%) | NSAI 2022 Report | NSAI 2023 Report | December 31, 2022 | December 31, 2023 |
| Jasmine | 10.0 | (3.4) | 3.8 | 10.4 | 112% | 26-Jun | 28-Dec | 37.1 | 81.8 |
| Manora | 1.8 | (1.2) | 1.6 | 2.2 | 132% | 26-Jan | 27-Jul | 12.1 | 21.2 |
| Nong Yao | 11.2 | (2.7) | 3.9 | 12.4 | 147% | 27-Jul | 28-Dec | 145.5 | 185.6 |
| Wassana(1) | 6.1 | (0.2) | 7 | 12.9 | 3,500% | 27-Sep | Jun-32 | 66.3 | 139.9 |
| Total | 29.1 | (7.5) | 16.3 | 37.9 | 219% | | | 261.0 | 428.6 |
(1) Valeura's working interest in Wassana was 89% at December 31, 2022 and 100% at December 31, 2023.
Contingent Oil Resources
NSAI assessed the Company's contingent resources for additional reservoir accumulations and reported estimates in both the NSAI 2023 Report and the NSAI 2022 Report. Contingent resources are heavy crude oil and light/medium crude oil, and are further divided into two subcategories, being Development Unclarified and Development Not Viable. Each subcategory is assigned a percentage risk, reflecting the estimated chance of development. Aggregate totals are provided below.
| Contingent Resources | NSAI 2022 Report (Gross WI) | NSAI 2023 Report (Gross WI) |
| | Unrisked (MMbbls) | Risked (MMbbls) | Unrisked (MMbbls) | Risked (MMbbls) |
| Low Estimate (1C) | 10.4 | 1.8 | 15.2 | 6.5 |
| Best Estimate (2C) | 14.1 | 2.5 | 19.9 | 8.9 |
| High Estimate (3C) | 22.1 | 3.9 | 27.9 | 11.6 |
Of the best estimate 2C contingent resources estimated in the NSAI 2023 Report, on a risked basis: 59% of the estimated volumes are light/medium crude oil, with the remainder being heavy oil; 83% are categorised as Development Unclarified, with the remainder being Development Not Viable. Development Unclarified resources have been assigned risks ranging from 25% to 63%, while Development Not Viable resources have been assigned risks ranging from 14% to 34%.
Comparing the NSAI 2022 Report to the NSAI 2023 Report, the Company has recorded an increase in the best estimate (2C) risked contingent resources of more than three-fold. Valeura's management regards this as a substantial increase in the potential upside within its portfolio.
Further Disclosure and Webcast
Valeura intends to disclose a summary of the NSAI 2023 Report to Thailand's upstream regulator later in February 2024. Thereafter, the Company will publish its estimates of reserves and resources in accordance with the requirements of National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities along with its Annual Information Form for the year ended December 31, 2023 on approximately March 13, 2024.
The Company last completed an independent assessment of its prospective resources in Trkiye, effective December 31, 2018, which is available under Valeura's issuer profile on SEDAR+ at www.sedarplus.com. Valeura has no reserves or contingent resources associated with its properties in Trkiye.
Valeura's management team will host an investor and analyst webcast at 08:00 Calgary /15:00 London / 22:00 Bangkok on Wednesday, February 21