Valeura Energy today provides an update on Q3 2024 operations.

Highlights for Q3 2024

• Oil production averaged 22.2 mbbls/d(1) for Q3 2024 and 26.4 mbbls/d during September 2024(1);
• Nong Yao C development was commissioned and put on production, which resulted in a 66% increase in Nong Yao production(1,2);
• Production resumed at Wassana after confirming the safe operating condition of its production facility;
• Oil volumes sold of 1.8 million barrels with increased oil inventory at quarter end of 1.2 million bbls;
• Revenue of US$139 million with an average price realisation of approximately US$79/bbl;  
• Cash of US$156 million, after having paid US$30.1 million in petroleum taxes related to H1 2024;
• Valeura remains debt free; and
• Recognised as one of Canada’s Top Growing Companies by The Globe and Mail, ranking no. 8 of over 400 companies evaluated.

(1) Working interest share production, before royalties.
(2) 11.6 mbbls/d (last seven days of Q3), compared to 7.0 mbbls/d (the week just prior to starting Nong Yao C).

Dr. Sean Guest, President and CEO commented:
“I am pleased to share preliminary details of our Q3 2024 performance, which illustrates both the financial resilience and the organic growth potential of our portfolio. 

Our financial performance has been strong. We recorded gross revenue of US$139 million during the quarter on the back of 1.8 million bbls of oil sold. We closed out the quarter with a cash balance of US$156 million and no debt, and 1.2 million bbls of oil inventory. Two liftings totalling 0.51 million bbls occurred just after the end of the quarter, and will be recorded as revenue in Q4.

From an operations perspective, our Q3 performance demonstrates the value of pursuing organic developments within our portfolio, underscored by our Nong Yao C development, which began bolstering production rates from mid-August onward. The average working interest share oil production for the month of September was 26.4 mbbls/d (before royalties), an increase of 23% over Q2 2024 average production. With continued smooth production operations across the portfolio we forecast rates remaining in the 25 mbbls/d range for the remainder of 2024, in keeping with our full year guidance expectations.

Valeura’s portfolio is uniquely pre-disposed to generating strong cash flow, and I see this as a critical differentiating factor within our industry. We are driving toward an even stronger balance sheet, which remains wholly unlevered, thereby providing a distinct competitive advantage in an increasingly distressed market, precipitated by benchmark oil prices which have fallen more than 20% over the course of Q3. While we see volatility in commodity prices as a constant within our industry, we feel the current environment makes it prudent to maximise optionality by preserving a best-in-class financial position, setting ourselves up with an advantaged position when it comes to transacting on future growth opportunities.”

Financial Update

Oil production averaged 22.2 mbbls/d during Q3 2024 (Valeura’s working interest share, before royalties), an increase of 5% from the prior quarter. Q3 2024 production rates were affected by a precautionary suspension of production operations at the Company’s Wassana field throughout July 2024, which was subsequently offset by an increase in output later in the quarter as a result of the Nong Yao C development coming online. The average working interest share oil production rate before royalties over the month of September was 26.4 mbbls/d.

Oil sales / liftings totalled 1.8 million bbls during Q3 2024, 6% below the prior quarter. At the end of the quarter, Valeura held crude oil inventory of 1.2 million bbls, which was approximately 30% higher than the inventory at the start of the quarter, however 0.51 million bbls were lifted on October 1, 2024, and will be recorded as revenue in Q4.

Oil revenue during Q3 2024 was US$139 million, down 17% from Q2 2024 due to lower volumes lifted (a decrease of approximately US$9 million) and lower oil prices (which resulted in a decrease of approximately US$15 million). One of the Company’s crude oil liftings (0.18 million bbls) occurred just prior to the end of Q3 2024, and as a result of the timing delay between the lifting of crude oil (i.e recorded as sales) and receipt of the proceeds, the approximately US$14 million value of this lifting / sale (Valeura’s working interest share, before royalties) is expected to be received during October 2024.  As at September 30, 2024, the expected proceeds have been recorded as a receivable. Price realisations averaged approximately US$79/bbl during Q3 2024, equating to an approximate US$1.4/bbl discount from the daily average Brent crude oil benchmark during the period. This reflects the fact that much of the Company’s sales occurred at the tail end of the quarter, under the relatively lower commodity price environment at the time, as compared to the average over the full period.  The Company continues to anticipate full year price realisations approximately on par with the Brent benchmark, in keeping with its guidance estimates.

During Q3 2024, the Company paid petroleum taxes of US$30.1 million, reflecting the first half-year instalment of petroleum income taxes due in respect of its Nong Yao and Manora fields. After accounting for the impact of ongoing capital spending and operating expenses (which includes certain one-off items relating to underwater inspection work at Wassana), as at September 30, 2024, the Company had a cash position of US$156 million, which includes US$22.5 million held as restricted cash. Valeura remains debt free.

Operations Update 

Nong Yao
In early August 2024, the Company completed drilling operations on the Nong Yao C extension, at its 90% working interest Nong Yao field. The drilling operations at the Nong Yao C extension included six planned horizontal development wells, a water injection well and an additional successful appraisal well. The first wells were brought onstream on August 15, 2024, with the remaining wells following shortly thereafter. The additional seventh well was also completed as a producer and is onstream.

The Nong Yao C development has yielded a 66% increase in output from Nong Yao, with recent production rates averaging 11.6 mbbls/d during the last seven days of Q3, as compared to 7.0 mbbls/d during the week just prior to starting Nong Yao C (Valeura working interest share before royalites). From an operational perspective, the Nong Yao C drilling programme exceeded expectations, with total costs coming in approximately 25% below budget, owing largely to faster drilling execution, while still adhering to the Company’s strict standards for safe operations.

Wassana
Just prior to the start of Q3 2024, the Company implemented a precautionary suspension of production operations at its 100%-owned Wassana field to ensure a safe situation while the Company investigated a potential risk to the production facility’s structural integrity. The inspection and analysis confirmed that the production facility remains in a safe operating condition, and production resumed in the first week of August 2024.

Jasmine
Starting in late August 2024, Valeura drilled two horizontal infill development wells on the Jasmine A facility of its 100%-owned Jasmine field, with both wells achieving their planned objectives. The 41H well encountered 1,982 feet of net oil pay within a reservoir compartment full to base with no apparent bottom aquifer. The 42H well encountered 1,555 feet of net mixed-phase/oil pay. Both wells were completed and brought online as producers, together delivering oil at an initial (three-day average) rate of 1,050 bbls/d (before royalties). Drilling operations have continued to progress efficiently, and with no deviations to the Company’s safe operating practices.

Following the drilling of the two Jasmine infill wells, the Company’s contracted drilling rig was demobilised in order to conduct scheduled inspection and maintenance work in dry dock. The rig has just returned to the Jasmine field to resume infill development drilling, with three infill wells currently planned.

Manora
As a result of faster-than-planned drilling operations throughout 2024 to date, the Company has revised its work programme to include more drilling than originally envisaged, with no addition to its capital budget. Valeura expects to mobilise the drilling rig to its 70%-owned Manora field before the end of 2024, where it will begin a planned five-well infill drilling and appraisal programme. In the meantime, production operations utilising the existing well stock at Manora are progressing on plan.

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