Valeura Energy Inc. (TSX:VLE, OTCQX:VLERF) has provided 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, Valeura Energy 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 Energy 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.
