CALGARY, Dec. 4, 2014 /CNW/ - Valeura Energy Inc. ("Valeura" or the "Corporation") (TSX: VLE) is pleased to announce strong natural gas price realizations in Turkey of $10.62 per thousand cubic feet ("Mcf") in November and tie-in of three recent natural gas discoveries in the Thrace Basin, which are projected to boost fourth quarter net sales to approximately 1,160 barrels of oil equivalent per day ("boe/d"), up 16% from the third quarter of 2014.
Q4 2014 NATURAL GAS PRICE REALIZATIONS EXCEEDING EXPECTATIONS
Natural gas price realizations in October and November were $10.42 and $10.62 per Mcf, respectively, up significantly from the average of $9.66 per Mcf in the third quarter of 2014. These increases have exceeded earlier projections reflecting both a 9% increase in the reference price for domestic gas sales in Turkey (priced in Turkish Lira), effective October 1, 2014, and the positive impact of a strengthening Turkish Lira as compared to the Canadian dollar.
THREE SUCCESSFUL EXPLORATION WELLS TIED-IN AND PRODUCING 5.3 MMCF/D (GROSS)
As previously announced, the Corporation made natural gas discoveries in three new vertical exploration wells drilled in the Osmanli area in the third quarter on the joint venture lands acquired from Thrace Basin Natural Gas (Turkiye) Corporation ("TBNG") and Pinnacle Turkey Inc. ("PTI") (the "TBNG JV") (Valeura 40%). These wells were drilled on new 3D seismic acquired in late 2013 and were part of a five-well exploration and development program in the Osmanli area targeting conventional natural gas in the Osmancik formation.
The three successful exploration wells (Gurgen-1, Tavanli-1 and Biyikali-2) were tied-in to the gathering system at various times in November and in aggregate are currently producing 5.3 million cubic feet per day ("MMcf/d") (gross).
The Gurgen-1 well is the most productive well and has been on-stream for 28 days at an average restricted rate of 3.2 MMcf/d at choke sizes ranging from 18/64 to 20/64 inches. Only 12 metres of the 47 metres of net pay measured in the well have been perforated to date, providing the opportunity to recomplete additional behind-pipe net pay in the future.
A fourth development well in the program, Guney Osmanli-3, is currently being completed.
A fifth exploration well, Dogu Osmanli-1, is expected to be completed and tested on a sole risk basis by Valeura in mid-December targeting indicated net gas pay in the Mezardere formation as identified on the electrical logs.
TWO-WELL APPRAISAL DRILLING PROGRAM UNDERWAY ON GURGEN DISCOVERY
The TBNG JV partners have approved two follow-up appraisal wells on the Gurgen discovery, the first of which, Gurgen-2, was spudded on November 30. Gurgen-3 is expected to spud in the third week of December. The target depth of both wells is approximately 2,000 metres in the Osmancik formation. The estimated cost to drill, complete and tie-in each vertical well is approximately US$1.5 million (success case).
The Gurgen-1 discovery well is located 500 metres south of the boundary of Valeura's 100% owned and operated Banarli licence where new 3D seismic and at least one exploration commitment well are planned for 2015 targeting similar play types in the Osmancik and deeper Mezardere formations.
Q4 2014 PROJECTED SALES OF 1,160 BOE/D UP 16% FROM Q3 2014
Net petroleum and natural gas sales in Turkey in October and November of 2014 averaged 1,119 boe/d, including 6.7 MMcf/d of natural gas and 7 barrels of oil per day. The outlook for average net sales for the full fourth quarter is approximately 1,160 boe/d, which is an increase of 16% from average sales of 997 boe/d in the third quarter of 2014.
ABOUT THE CORPORATION
Valeura Energy Inc. is a Canada-based public company currently engaged in the exploration, development and production of petroleum and natural gas in Turkey.
OIL AND GAS ADVISORIES
When used herein, the term "boe" means barrels of oil equivalent on the basis of one boe being equal to one barrel of oil or NGLs, or 6,000 cubic feet of natural gas. Barrel of oil equivalent may be misleading, particularly if used in isolation. A boe conversion ratio of 6.0 Mcf:1.0 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.
The initial on-stream production rates for wells stated herein are not necessarily indicative of long term performance or ultimate recovery. To date, shallow gas conventional wells and fracked unconventional tight gas wells have exhibited relatively high decline rates at more than 50% and 75%, respectively, in their first year of production.
ADVISORY AND CAUTION REGARDING FORWARD-LOOKING INFORMATION
This news release contains certain forward-looking statements including, but not limited to: expected net sales in the fourth quarter of 2014; the planned appraisal drilling program at Gurgen and testing of the Dogu Osmanli-1 well; the ability to recomplete additional net pay in the Gurgen-1 well in the future; the planned seismic and drilling program on the Banarli licence in 2015; the availability of operating cash flow and the ability to finance development; tieing-in the new wells and getting these on-stream; and the timing, estimated costs and ability to fund each of the foregoing. Forward-looking information typically contains statements with words such as "anticipate", "estimate", "expect", "target", "potential", "could", "should", "would" or similar words suggesting future outcomes. The Corporation cautions readers and prospective investors in the Corporation's securities to not place undue reliance on forward-looking information, as by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by the Corporation.
Forward looking information is based on management's current expectations and assumptions regarding, among other things: continued political stability of the areas in which the Corporation is operating and completing transactions; continued operations of and approvals forthcoming from the General Directorate of Petroleum Affairs of the Republic of Turkey ("GDPA") in a manner consistent with past conduct; future seismic, drilling, fracking and re-completion activity; future production rates, capital efficiencies and associated cash flow; future capital and other expenditures (including the amount and nature thereof); future sources of funding; future economic conditions; future currency and exchange rates; and, the Corporation's continued ability to obtain and retain qualified staff and equipment in a timely and cost efficient manner. In addition, the Corporation's 2014 work program and budget are based upon the current work programs proposed by partners and associated exploration, development and marketing plans and anticipated costs and sales prices, which are subject to change based on, among other things, the actual results of drilling and related activity, availability of fracking and other specialized oilfield equipment and service providers, and unexpected delays and changes in market conditions. Although the Corporation believes the expectations and assumptions reflected in such forward-looking information are reasonable, they may prove to be incorrect.
Forward-looking information involves significant known and unknown risks and uncertainties. Exploration, appraisal, and development of oil and natural gas reserves are speculative activities and involve a significant degree of risk. A number of factors could cause actual results to differ materially from those anticipated by the Corporation including, but not limited to: risks associated with the oil and gas industry (e.g. operational risks in exploration, inherent uncertainties in interpreting geological data, and changes in plans with respect to exploration or capital expenditures, the uncertainty of estimates and projections in relation to costs and expenses, and health, safety, and environmental risks); uncertainty regarding the sustainability of initial production rates and decline rates thereafter; uncertainty regarding the ability to address technical drilling challenges and manage water production; uncertainty regarding the state of capital markets; uncertainty regarding the amount of operating cash flow and the ability to reduce costs and achieve capital efficiencies; the risks of disruption to operations and access to worksites, threats to security and safety of personnel and potential property damage related to political issues, terrorist attacks, insurgencies or civil unrest; the risks of increased costs and delays in timing related to protecting the safety and security of Valeura's personnel and property; the risk of fluctuations in commodity pricing and BOTAS pricing (in Turkish Lira); the risk of fluctuations in foreign exchange rates, particularly the Turkish Lira, which has weakened in the past year; the uncertainty associated with negotiating with third parties in countries other than Canada; the risk of partners having different views on work programs and potential disputes among partners and service providers; the uncertainty regarding government and other approvals; potential changes in laws and regulations; risks associated with weather delays and natural disasters; and, the risk associated with international activity. The forward-looking information included in this news release is expressly qualified in its entirety by this cautionary statement. The forward-looking information included herein is made as of the date hereof and Valeura assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances, except as required by law. See Valeura's 2013 Annual Information Form for a detailed discussion of the risk factors.
Additional information relating to Valeura is also available on SEDAR at www.sedar.com
Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this news release.
SOURCE Valeura Energy Inc.
Jim McFarland, President and CEO, Valeura Energy Inc., (403) 930-1150, jmcfarland@valeuraenergy.com; Steve Bjornson, CFO, Valeura Energy Inc., (403) 930-1151, sbjornson@valeuraenergy.com; www.valeuraenergy.comCopyright CNW Group 2014