Valeura Energy Inc. - Q4 2024 Ops & Financial Update, 2025 Guidance

Q4 2024 Operations and Financial Update and 2025 Guidance

Singapore, January 8, 2025: Valeura Energy Inc. (TSX:VLE, OTCQX:VLERF) ("Valeura" or the "Company") is pleased to provide an operational and financial update for Q4 2024 and its guidance outlook for 2025. 

Q4 2024 Highlights

·    Record oil production, averaging 26,109 bbls/d in Q4 2024, resulting in full year average oil production of 22,825 bbls/d⁽¹⁾;

·    2.95 million bbls of oil sold in Q4 2024, with 8.35 million bbls for the full year 2024;

·    Q4 average price realisations of US$76.7/bbl, resulting in Q4 revenue of US$226 million, or US$679 million for the full year 2024;

·    Cash at December 31, 2024 of US$259.4 million, and no debt;

·    Completion of an internal restructuring of the Company's Thailand subsidiary companies, giving rise to operating and tax efficiencies from November 5, 2024 onward;

·    Continued success in development and appraisal drilling including completion of a five well programme on the Jasmine asset;

·    Ongoing strong safety performance, with no lost time injuries in 2024;

·    Recorded a 17% reduction in greenhouse gas ("GHG") emissions intensity for the full year 2024, compared to the previous year; and

·    Repurchase of 348,400 shares in Q4 2024, following the commencement of the Company's normal course issuer bid ("NCIB") in mid-November 2024.

2025 Guidance Highlights

·    Full year oil production of 23,000 - 25,500 bbls/d⁽¹⁾;

·    Capex of US$125 - 150 million;

·    Exploration Expense of approximately US$11 million; and

·    Adjusted Opex of US$215 - 245 million (of which US$33 million relates to leases)⁽²⁾.

(1) Working interest share production, before royalties.
(2) Adjusted Opex is a non-IFRS financial measure which does not have a standardised meaning prescribed by IFRS.  The most directly comparable financial measure to Adjusted Opex is operating expenses.  The measure differs from operating expenses by including the leases that are associated with operations, such as bareboat contracts for key operating equipment including Floating Storage and Offloading vessels ("FSOs"), Floating Production, Storage and Offloading vessels ("FPSOs"), Mobile Offshore Production Units ("MOPUs"), and warehouses, and adjusting for non-cash items.  Management uses Adjusted Opex to analyse cash generation and financial performance of the Company. Adjusted Opex per bbl is a non-IFRS financial ratio and is calculated by dividing Adjusted Opex by the mid-point of the Company's production guidance range for the applicable period.

Dr. Sean Guest, President and CEO commented:

"I am pleased to share preliminary details of our Q4 and full year 2024 performance, which demonstrate that our business is performing as intended.  We achieved all of our guidance estimates for 2024, including Capex where we reduced our guidance to the low end mid-year.

With record oil production and sales volumes in Q4, we have strengthened our cash position to US$259 million.  This creates a solid platform for our Company as we start 2025, which entails another ambitious work programme focussed on continued growth in value, funded entirely with our cash and cash flow. 

We are also publishing our guidance outlook for 2025, which underscores our ongoing commitment to add reserves to our assets and to extend the economic life of our fields. 

Having completed our corporate restructuring in Q4, our ability to generate cash flow has shifted into high gear.  We will deploy resources toward adding reserves to grow the ultimate potential and life of our assets, will continue pursuing value-accretive inorganic growth, and will continue providing direct shareholder returns by way of our ongoing share buyback programme."

Operations Update

Oil production averaged 26.1 mbbls/d during Q4 2024 (Valeura's working interest share, before royalties), an increase of 18% from the prior quarter and 36% over Q4 2023. 

Q4 production rates benefitted from a full quarter of operations at the Nong Yao C field extension, which came online in August 2024.  In addition, aggregate production was lifted by an infill drilling programme at the Jasmine field, with the last three wells of the programme coming onstream in late November 2024.  In addition to adding new production, the Jasmine programme also evaluated several secondary appraisal targets which will be the subject of further infill development drilling in due course.

Following the Jasmine infill drilling programme, the Company's contracted drilling rig was mobilised to the Manora field to drill a five-well programme including both development and appraisal targets.  The Manora drilling programme is expected to conclude in February 2025.

Financial Update

Oil sales totalled 2.95 million bbls during Q4 2024, 67% above the prior quarter and 48% above Q4 2023.  Sales were in excess of production during the quarter as a result of a larger-than-usual inventory position at the end of Q3 2024.  As of December 31, 2024, Valeura held crude oil in inventory of 0.64 million bbls.

Oil revenue during Q4 2024 was US$226 million, up 62% from the prior quarter due to higher volumes sold (an increase of approximately US$90 million), but was also affected by lower realised prices (a decrease of approximately US$3 million).  Price realisations averaged approximately US$76.7/bbl during Q4 2024, equating to an approximate US$2.0/bbl premium to the average Brent crude oil benchmark during the period. 

No taxes were paid during Q4 2024, reducing cash outflows in the quarter.  As a result, the net revenue generated in Q4 2024 contributed strongly to the Company's cash balance.  As of December 31, 2024 the Company had a cash position of US$259.4 million, which includes US$22.8 million held as restricted cash.  Valeura remains debt free.

2025 Guidance Synopsis

Valeura forecasts average 2025 full year oil production of 23,000 - 25,500 bbls/d (working interest share, before royalties), based on continuing production operations at its four Gulf of Thailand licences and an active drilling programme throughout the year. 

The Company continues to guide for price realisations approximately in line with the Brent crude oil benchmark price.

The Company is planning total capex of US$125 - 150 million in 2025, in addition to approximately US$11 million in planned exploration drilling.  Approximately 85% of the Company's capex plus exploration spending is directed toward drilling, and is based on the plan of having one drilling rig on contract for the full year.  The balance of planned capex is related to certain brownfield developments.  Capex guidance does not include any post Final Investment Decision ("FID") costs for the Wassana redevelopment, and will be updated should the FID be approved.   

Adjusted Opex guidance in 2025 (a non-IFRS measure, as more fully described above) is US$215 - 245 million, which equates to approximately US$26/bbl, based on the mid-point of the Company's production guidance range (Adjusted Opex per bbl is a non-IFRS ratio, as more fully described above).  This includes the cost of leasing certain vessels as part of its ongoing operations, including the Nong Yao C MOPU, the Jasmine field's FPSO vessel, as well as FSO vessels at the Manora and Wassana fields, and a warehouse.  Such leases are expected to total approximately US$33 million. 

The Company intends to fund its 2025 spending through cash on hand plus cash flow generated from ongoing operations, and estimates that these sources will also continue to strengthen the Company's balance sheet.  Valeura's financial position provides capacity for ongoing shareholder returns through share buybacks and for inorganic growth.

2025 Work Programme

Nong Yao

Following its expansion in 2024, the Nong Yao field on Licence G11/48 (90% working interest) is now the Company's largest source of production, accounting for approximately 40% of the Company's total guidance production in 2025.  The Company plans to drill 11 development and appraisal wells, which will include targets drilled from each of the field's three producing facilities Nong Yao A, B, and C.  These wells are intended to more thoroughly sweep incremental oil from producing reservoirs, and to access additional fault blocks and reservoir layers not currently penetrated with the existing production wells. 

In addition, following the Company's exploration discovery in the Nong Yao D area in 2024, further seismic interpretation has identified additional follow-up exploration opportunities in the vicinity which are being further evaluated for inclusion in a future drilling programme.  The Company's objective is to amass sufficient volumes to justify a future development. 

Jasmine

On Licence B5/27, the Jasmine field (100% working interest) is expected to account for approximately 35% of the Company's total guidance production in 2025.  The Company intends to drill 13 development and appraisal wells on the licence in 2025, covering the Jasmine C, Jasmine D, and Ban Yen production facilities, with the primary objective of drilling new horizontal laterals into producing reservoirs to optimise the sweep of oil and thereby add reserves. 

Around the end of Q1 2025 the Company also plans to commission its low BTU gas generator, an innovative project which will redirect a waste gas stream to be used for power generation, thereby reducing the field's GHG emissions intensity and reducing its reliance on diesel-fired power generation.  Further projects to reduce the field's GHG emissions intensity are also being evaluated.

In addition, the Company is pursuing the Ratree exploration prospect, which is further to the South on Licence B5/27.  While the prospect constitutes a relatively higher-risk opportunity on the licence, success could unlock the potential for an entirely new field development.  Timing for exploration wells is subject to continual optimisation of the Company's drilling schedule.

Manora

The Manora field, on Licence G1/48 (70% working interest) is expected to account for approximately 10% of the Company's total guidance production in 2025.  Production rates are expected to increase later in Q1 upon completion of an infill drilling programme which is currently underway.  The programme entails five wells, including both infill development and appraisal targets.  Much of the work being conducted on the Manora field represents follow-up activity to the Company's successful drilling over the last two years, which has served to extend the field's economic life by several years. 

Wassana

The Wassana field, on Licence G10/48 is planned to account for 15% of total 2025 guidance production.  No new drilling activity is planned for the Wassana field in 2025. 

The Company is continuing to progress front end engineering and design ("FEED") work in connection with a potential redevelopment of the field to commercialise the additional oil volumes discovered through appraisal and exploration drilling in 2023 and 2024.  The Company's 2025 capex budget currently only includes pre-FID costs for surveys, studies and contracting and procurement.  Valeura anticipates being ready for an FID approval at approximately the start of Q2 2025.  The particulars of the redevelopment will define a forward work programme and will ultimately determine reserves for the field as well as capex expectations.  Contingent on FID approval, the Company intends to publish an update to its guidance assumptions, with the expectation that the bulk of any incremental redevelopment spending is likely to occur after 2025. 

Strategy

Valeura is pursuing a growth-oriented strategy, predicated on increasing the ultimate reserves recovery from its assets as a way to extend the assets' economic field life. Valeura plans to publish its third-party evaluated reserves and resources estimates as of December 31, 2024 in mid-February 2025. The Company also seeks to grow its portfolio through mergers and acquisition within the Southeast Asia region and is actively evaluating several such opportunities. 

Valeura has prioritised generating strong cash flow as a means to further enhance its strong balance sheet and, is committed to delivering direct shareholder returns by way of an ongoing share buyback programme.

Underpinning everything the Company does is a steadfast commitment to generating value and to conducting all actions in accordance with world-class standards for operational excellence and safety. 

For further information, please contact:

Valeura Energy Inc. (General Corporate Enquiries)                       +65 6373 6940
Sean Guest, President and CEO
Yacine Ben-Meriem, CFO
Contact@valeuraenergy.com  

Valeura Energy Inc. (Investor and Media Enquiries)                       +1 403 975 6752 / +44 7392 940495
Robin James Martin, Vice President, Communications and Investor Relations
IR@valeuraenergy.com

Contact details for the Company's advisors, covering research analysts and joint brokers, including Auctus Advisors LLP, Canaccord Genuity Ltd (UK), Cormark Securities Inc., Research Capital Corporation, and Stifel Nicolaus Europe Limited, are listed on the Company's website at www.valeuraenergy.com/investor-information/analysts/.

About the Company

Valeura Energy Inc. is a Canadian public company engaged in the exploration, development and production of petroleum and natural gas in Thailand and in Türkiye. The Company is pursuing a growth-oriented strategy and intends to re-invest into its producing asset portfolio and to deploy resources toward further organic and inorganic growth in Southeast Asia. Valeura aspires toward value accretive growth for stakeholders while adhering to high standards of environmental, social and governance responsibility.

Additional information relating to Valeura is also available on SEDAR+ at www.sedarplus.ca.

Advisory and Caution Regarding Forward-Looking Information

Certain information included in this news release constitutes forward-looking information under applicable securities legislation. Such forward-looking information is for the purpose of explaining management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project", "target" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this news release includes, but is not limited to, the Company's ability to realise operating and tax efficiencies from November 5, 2024 onward as a result of the internal restructuring; anticipated 2025 full year oil production rates; anticipated capex and exploration expenses in 2025; anticipated 2025 Adjusted Opex and the proportion thereof relating to leases; the Company's ability to fund its 2025 work programme with cash and cash flow; increased ability to generate cash flow as a result of the corporate restructuring; continuing to provide direct shareholder returns by way of the Company's share buyback programme; the Jasmine field's secondary appraisal targets becoming the subject of further infill development drilling in due course; conclusion of the Manora drilling programme in February 2025; forecasted 2025 price realisations being approximately in line with the Brent crude oil benchmark price; having one drilling rig on contract for the full year 2025; the Company's intent to update capex guidance should the Wassana redevelopment FID be approved; cash on hand plus cash flow generated from operations providing the capacity for ongoing shareholder returns while continuing to strengthen the Company's balance sheet; the proportion of production expected from each of the Company's assets; the allocation of capex to each of the Company's assets; the specific components of the Company's 2025 work programme and the timing thereof, including - at Nong Yao, drilling 11 development and appraisal wells, drilling two further exploration wells, - at Jasmine, drilling 13 development and appraisal wells, commissioning  a low BTU gas generator to reduce the field's GHG emissions intensity and reduce reliance on diesel, drilling the Ratree exploration prospect, - at Manora, drilling five infill development and appraisal targets, - at Wassana, progressing redevelopment FEED studies toward readiness for FID approval; the potential for success at the Ratree prospect to unlock an entirely new field development; the Company's ability to increase the ultimate reserves recovery from its assets as a way to extend the assets' economic field life; timing to publish third-party evaluated reserves and resources estimates; and the ability to grow its portfolio through mergers and acquisitions and the evaluation of such potential opportunities.  Although the Company believes the expectations and assumptions reflected in such forward-looking information are reasonable, they may prove to be incorrect.

Forward-looking information is based on management's current expectations and assumptions regarding, among other things: political stability of the areas in which the Company is operating; continued safety of operations and ability to proceed in a timely manner; continued operations of and approvals forthcoming from governments and regulators in a manner consistent with past conduct; future drilling activity on the required/expected timelines; the prospectivity of the Company's lands; the continued favourable pricing and operating netbacks across its business; future production rates and associated operating netbacks and cash flow; decline rates; future sources of funding; future economic conditions; the impact of inflation of future costs; future currency exchange rates; interest rates; the ability to meet drilling deadlines and fulfil commitments under licences and leases; future commodity prices; the impact of the Russian invasion of Ukraine; royalty rates and taxes; management's estimate of cumulative tax losses being correct; future capital and other expenditures; the success obtained in drilling new wells and working over existing wellbores; the performance of wells and facilities; the availability of the required capital to funds its exploration, development and other operations, and the ability of the Company to meet its commitments and financial obligations; the ability of the Company to secure adequate processing, transportation, fractionation and storage capacity on acceptable terms; the capacity and reliability of facilities; the application of regulatory requirements respecting abandonment and reclamation; the recoverability of the Company's reserves and contingent resources; future growth; the sufficiency of budgeted capital expenditures in carrying out planned activities; the impact of increasing competition; the availability and identification of mergers and acquisition opportunities; the ability to successfully negotiate and complete any mergers and acquisition opportunities; the ability to efficiently integrate assets and employees acquired through acquisitions; global energy policies going forward; future debt levels; and the Company's continued ability to obtain and retain qualified staff and equipment in a timely and cost efficient manner. In addition, the Company's work programmes and budgets are in part based upon expected agreement among joint venture 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 drilling, offshore storage and offloading facilities and other specialised oilfield equipment and service providers, changes in partners' plans and unexpected delays and changes in market conditions. Although the Company 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 and resources are speculative activities and involve a degree of risk. A number of factors could cause actual results to differ materially from those anticipated by the Company including, but not limited to: the ability of management to execute its business plan or realise anticipated benefits from acquisitions; the risk of disruptions from public health emergencies and/or pandemics; competition for specialised equipment and human resources; the Company's ability to manage growth; the Company's ability to manage the costs related to inflation; disruption in supply chains; the risk of currency fluctuations; changes in interest rates, oil and gas prices and netbacks; the risk that the Company's tax advisors' and/or auditors' assessment of the Company's cumulative tax losses varies significantly from management's expectations of the same; potential changes in joint venture partner strategies and participation in work programmes; uncertainty regarding the contemplated timelines and costs for work programme execution; the risks of disruption to operations and access to worksites; potential changes in laws and regulations, the uncertainty regarding government and other approvals; counterparty risk; the risk that financing may not be available; risks associated with weather delays and natural disasters; and the risk associated with international activity. See the most recent annual information form and management's discussion and analysis of the Company for a detailed discussion of the risk factors.

Certain forward-looking information in this news release may also constitute "financial outlook" within the meaning of applicable securities legislation. Financial outlook involves statements about Valeura's prospective financial performance or position and is based on and subject to the assumptions and risk factors described above in respect of forward-looking information generally as well as any other specific assumptions and risk factors in relation to such financial outlook noted in this news release. Such assumptions are based on management's assessment of the relevant information currently available, and any financial outlook included in this news release is made as of the date hereof and provided for the purpose of helping readers understand Valeura's current expectations and plans for the future. Readers are cautioned that reliance on any financial outlook may not be appropriate for other purposes or in other circumstances and that the risk factors described above or other factors may cause actual results to differ materially from any financial outlook.

The forward-looking information contained in this new release is made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward-looking information contained in this new release is expressly qualified by this cautionary statement.

This news release does not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction, including where such offer would be unlawful. This news release is not for distribution or release, directly or indirectly, in or into the United States, Ireland, the Republic of South Africa or Japan or any other jurisdiction in which its publication or distribution would be unlawful.

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.