As of June 30, 2020, Valeura Energy was in a strong financial position, with no debt and a cash balance of US$30.7 million. Spending during the second quarter related to drilling two shallow exploration commitment wells and conducting testing operations on the Devepinar-1 well in the deep gas play. The Company continues to manage its capital and operating costs aggressively to protect Valeura’s strong net cash position.

The Company’s cash value is over 50% higher than its current market capitalisation, which is approximately US$20.0 million(1). As a result, management believes Valeura shares offer compelling value based on:

• Cash of US$30.7 million at June 30, 2020;
• A producing conventional shallow gas business in a strong gas price market with externally evaluated NPV10 of US$23.8 million at December 31, 2019, based on after-tax value of 1P reserves;
• Upside value attributable to its unconventional deep gas play; and
• The expectation that inorganic opportunities such as mergers and acquisitions will play a role in the Company’s growth, as the Company seeks to leverage its strong financial position.

Growth Strategy

The Company is evaluating several potential inorganic growth transactions, including mergers and acquisitions, and has engaged RBC Capital Markets to support certain of these opportunities. Management believes the conditions are favourable for inorganic growth to play a significant role in the forward strategy as the current market environment is generating a flow of new deal opportunities which the Company is well-positioned to pursue given its enviable financial position.

1 Based on June 30, 2020 TSX closing price of C$0.315/share and C$/US$ exchange rate of 0.7367

KeyFacts Energy: Valeura Energy Turkey country profile