Producer Celebrates Turkish Price Hike
Valeura Energy, a Canadian junior producer developing a potentially major natural gas project in Turkey, has welcomed the hike in natural gas prices from August 1.
Valeura’s power generation customers will now pay the equivalent of C$9.82/’000 ft3 (US$7.55/’000 ft3) and its prices for other customers have also gone up 14%, to C$7.49/’000 ft3 (US$5.76/’000 ft3). This is the third increase set by Botas this year, following a 10% hike in April 2018 and 14% on January 1, Valeura said.
Botas also announced that while the prices will remain locally denominated in Turkish lira, power generation customers will transact with Botas in US dollars, at daily exchange rates, Valeura said. According to an industry source, the new price for power generators will be lira 1,312.20/'000 m³ or lira 0.12332707/kWh, based on an exchange rate of lira 4.86 to US$1.00.
“Price increases by Turkey’s regulators are very welcome news,” Valeura CEO Sean Guest said. “This ongoing trend gives us greater confidence in the long-term value of the Basin Centred Gas Accumulation (BCGA) resource we are appraising in Turkey, as we anticipate Turkish pricing to continue to track broadly in line with European import prices.”
The increase will have an immediate positive impact on Valeura’s revenues, Guest added, with the company’s overall price realisation expected to rise by at least 14%, since its production is currently sold to a mix of commercial, industrial and power generation customers.
Valeura is preparing for a major appraisal phase of its unconventional gas discovery in Turkey, which has been evaluated by DeGolyer and MacNaughton at some 10.1 trillion ft3 of estimated working interest unrisked mean prospective resources (5.2 trillion ft3 risked), as at December 31, 2017. The appraisal program will include further production testing of the Yamalik-1 well, expected to commence shortly, and three additional deep delineation wells, the first of which is expected to start drilling around the end of September.