Valeura Energy Inc (LON:VLU), an upstream oil and gas company with assets in the Thrace Basin of Turkey and an announced acquisition in the offshore Gulf of Thailand, has reported the results of an independent third party reserves and resources assessment pertaining to its Gulf of Thailand acquisition announced April 28, 2022 and expected to close this month.
Highlights
· Proved (1P) reserves of 2,749 Mbbl of oil;
· Proved and probable (2P) reserves of 6,456 Mbbl of oil, with an estimated future net revenue after income taxes of US$59.3 million, using a discount rate of 10%;
· Best estimate (2C) unrisked contingent resources of 4,696 Mbbl for the Rossukon oil field, classified as ‘development pending;’ and
· Additional 2C unrisked contingent resources of 8,615 Mboe relating to various other accumulations on the licences, classified as ‘development unclarified.’
The report, dated June 10, 2022, was prepared for Valeura by Netherland, Sewell & Associates, Inc. to assess reserves and contingent resources associated with licences G10/48 and G6/48, in the Gulf of Thailand, as of March 31, 2022. As announced on April 28, 2022, Valeura has signed a share purchase agreement to acquire all of the shares of KrisEnergy International (Thailand) Holdings Ltd. which, through two subsidiary companies, holds an 89% operated working interest in licence G10/48 and a 43% operated working interest in licence G6/48. Unless otherwise noted, reserves and resources estimates are presented on a before royalties, working interest acquired basis.
Reserves and Resources Summary
The following is a summary of the NSAI Report. Unless otherwise noted, all production, reserves and resources estimates are presented on a working interest acquired basis to the Valeura-controlled special purpose vehicle corporation (“SPV”), Panthera Resources Pte. Ltd., which will serve as the buyer entity in respect of the Acquisition. Valeura holds an 85% interest in the SPV. Values may not add due to rounding.
Oil and Gas Reserves Based on Forecast Prices and Costs (Wassana field, licence G10/48)
Oil reserves on licence G10/48 are associated with the Wassana oil field, and have been presented as heavy crude oil volumes, divided amongst the proved, probable and possible reserves categories on a gross working interest (i.e. before royalties) and net working interest (i.e. after royalties) basis.
| Light and Medium Crude Oil Gross | Light and Medium Crude Oil Net | Heavy Crude Oil Gross | Heavy Crude Oil Net | Conventional Natural Gas Gross | Conventional Natural Gas Net | Natural Gas Liquids Gross | Natural Gas Liquids Net | Total Oil Equivalent Gross | Total Oil Equivalent Net | |
| (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (MMcf) | (MMcf) | (Mbbl) | (Mbbl) | (Mboe) | (Mboe) | |
| Proved Developed Producing | – | – | – | – | – | – | – | – | – | – |
| Proved Developed Non-Producing | – | – | 1,838.6 | 1,732.9 | – | – | – | – | 1,838.6 | 1,732.9 |
| Proved Undeveloped | – | – | 910.7 | 858.4 | – | – | – | – | 910.7 | 858.4 |
| Total Proved | – | – | 2,749.3 | 2,591.2 | – | – | – | – | 2,749.3 | 2,591.2 |
| Total Probable | – | – | 3,706.9 | 3,493.7 | – | – | – | – | 3,706.9 | 3,493.7 |
| Total Proved Plus Probable | – | – | 6,456.2 | 6,085.0 | – | – | – | – | 6,456.2 | 6,085.0 |
| Total Possible | – | – | 949.1 | 894.5 | – | – | – | – | 949.1 | 894.5 |
| Total Proved Plus Probable Plus Possible | – | – | 7,405.3 | 6,979.4 | – | – | – | – | 7,405.3 | 6,979.4 |
Net Present Values of Future Net Revenue Based on Forecast Prices and Costs (Wassana field, licence G10/48)
Net present values of future net revenue from oil reserves on licence G10/48 are based on cost estimates as of the date of the NSAI Report, and forecast Brent crude oil reference prices of US$97.50, US$87.07, US$78.25, and US$77.34 per bbl for the years ending December 31, 2022, 2023, 2024, and 2025, respectively, with 2% escalation thereafter, and assuming a differential of (US$4.34) per bbl based on historical realised prices. Given available tax pools, NSAI has anticipated no taxes payable in relation to the reserves and accordingly values are presented as both before and after deducting income taxes.
| Before and After Deducting Income Taxes | |||||
| Discounted At | |||||
| 0% | 5% | 10% | 15% | 20% | |
| (M US$) | (M US$) | (M US$) | (M US$) | (M US$) | |
| Proved Developed Producing | – | – | – | – | – |
| Proved Developed Non-Producing | (25,890.4) | (21,237.6) | (17,465.6) | (14,382.2) | (11,842.8) |
| Proved Undeveloped | 30,898.0 | 25,761.7 | 21,500.3 | 17,937.7 | 14,938.8 |
| Total Proved | 5,007.5 | 4,524.1 | 4,034.7 | 3,555.5 | 3,096.0 |
| Total Probable | 82,568.5 | 67,338.8 | 55,263.6 | 45,605.6 | 37,819.3 |
| Total Proved Plus Probable | 87,576.1 | 71,862.8 | 59,298.3 | 49,161.1 | 40,915.3 |
| Total Possible | 59,380.8 | 51,278.1 | 44,743.7 | 39,407.4 | 34,999.9 |
| Total Proved Plus Probable Plus Possible | 146,956.8 | 123,140.9 | 104.041.9 | 88.568.5 | 75,915.3 |
Contingent Oil Resources, Development Pending (Rossukon oil field, licence G6/48)
Contingent oil resources for the Rossukon oil field on licence G6/48 are light and medium crude Oil classified as “Development Pending” and carry an assessed chance of development of 84%. The Company believes the unrisked best estimate provides the most appropriate indication of volumes that will become 2P oil reserves upon development sanction of the Rossukon field.
| Light and Medium Crude Oil Gross | Light and Medium Crude Oil Net | Heavy Crude Oil Gross | Heavy Crude Oil Net | Conventional Natural Gas Gross | Conventional Natural Gas Net | Natural Gas Liquids Gross | Natural Gas Liquids Net | Total Oil Equivalent Gross | Total Oil Equivalent Net | |
| (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (MMcf) | (MMcf) | (Mbbl) | (Mbbl) | (Mboe) | (Mboe) | |
| Unrisked | ||||||||||
| Low Estimate (1C) | 3,231.4 | 3,037.6 | – | – | – | – | – | – | 3,231.4 | 3,037.6 |
| Best Estimate (2C) | 4,696.1 | 4,380.2 | – | – | – | – | – | – | 4,696.1 | 4,380.2 |
| High Estimate (3C) | 6,438.9 | 5,958.4 | – | – | – | – | – | – | 6,438.9 | 5,958.4 |
| Risked, with Chance of Development = 84% | ||||||||||
| Low Estimate (1C) | 2,714.4 | 2,551.5 | – | – | – | – | – | – | 2,714.4 | 2,551.5 |
| Best Estimate (2C) | 3,944.7 | 3,679.4 | – | – | – | – | – | – | 3,944.7 | 3,679.4 |
| High Estimate (3C) | 5,408.7 | 5,005.0 | – | – | – | – | – | – | 5,408.7 | 5,005.0 |
The Rossukon oil field has a regulator-approved development plan which contemplates peak oil production rates of 12,000 bbls/d gross (5,160 bbls/d net working interest basis) and sets a first-oil requirement by November 2023. The development scheme evaluated by NSAI assumes a two-phase drilling programme of 10 horizontal production wells, seven water injection wells, and one water source well connected to a Mobile Offshore Production Unit. The first phase of the development aims to achieve first oil from three horizontal producers in Q4 2023. The second phase will complete the remaining scope of the development plan.
Contingent Oil and Gas Resources, Development Unclarified (licences G6/48 and G10/48)
Contingent oil resources for additional reservoir accumulations on licence G6/48 and G10/48 are heavy crude oil and conventional natural gas classified as “Development Unclarified” and carry an assessed chance of development ranging from 10% to 22%. These accumulations provide a future opportunity to access additional hydrocarbon volumes on the licence interests being acquired.
| Light and Medium Crude Oil Gross | Light and Medium Crude Oil Net | Heavy Crude Oil Gross | Heavy Crude Oil Net | Conventional Natural Gas Gross | Conventional Natural Gas Net | Natural Gas Liquids Gross | Natural Gas Liquids Net | Total Oil Equivalent Gross | Total Oil Equivalent Net | |
| (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (MMcf) | (MMcf) | (Mbbl) | (Mbbl) | (Mboe) | (Mboe) | |
| Unrisked | ||||||||||
| Low Estimate (1C) | – | – | 6,823.7 | n/a | 4,935.1 | n/a | – | – | 7,646.2 | n/a |
| Best Estimate (2C) | – | – | 7,666.7 | n/a | 5,692.5 | n/a | – | – | 8,615.5 | n/a |
| High Estimate (3C) | – | – | 12,602.8 | n/a | 6,608.8 | n/a | – | – | 13,704.3 | n/a |
| Risked, with Chance of Development = 10% – 22% | ||||||||||
| Low Estimate (1C) | – | – | 1,196.4 | n/a | 987.0 | n/a | – | – | 1,360.9 | n/a |
| Best Estimate (2C) | – | – | 1,383.0 | n/a | 1,138.5 | n/a | – | – | 1,572.8 | n/a |
| High Estimate (3C) | – | – | 2,153.6 | n/a | 1,321.8 | n/a | – | – | 2,373.9 | n/a |
Sean Guest, President and CEO of Valeura Energy commented:
“This third party, independent evaluation underscores the tremendous value we are acquiring in Thailand. The externally evaluated 2P reserves associated with the Wassana field in licence G10/48 are 63% larger than we had originally estimated, meaning our deal metrics are even stronger than initially presented.
For total consideration of US$19.3 million (including initial, contingent, and facilities consideration) we are acquiring 6.5 million bbls of 2P oil reserves, valued at US$59.3 million on an after-tax basis, using a 10% discount rate. At current exchange rates of approximately 1.25 US$/C$, that equates to approximately C$0.86 per share in tangible value, demonstrating the highly accretive nature of this transaction.
In addition, 2C contingent oil resource volumes for the Rossukon field are 4.7 million bbls on an unrisked, best estimate basis, and carry an assessed 84% chance of development, reflecting the field’s status as ‘development pending.’ We will provide more details on the Rossukon field development once we take the final investment decision, anticipated in the coming months.
With these values in hand, our team is invigorated to work with our counterparties to progress and complete the transaction and thereafter to pursue both re-activation of Wassana and development of Rossukon as soon as possible. We remain on track to close the Acquisition this month and believe it will solidify significant shareholder value in both the immediate and longer term.”
