Valeura Seeks Assets, Partners for Turkey
Canadian producer Valeura is looking to use its cash to add to its Turkish gas output through mergers and acquisitions, it said as it announced its Q2 2020 results August 12. However, its practice of frequent well workovers has yielded quick results and kept output rising overall, setting aside the crisis of this year.
With $33.2mn in working capital and no debt, Valeura has engaged RBC Capital Markets to support certain deal opportunities. The preference is for assets that generate near-term cash flow and provide opportunities for development in the Mediterranean basin.
Although gas production rose over Q2, it was down on a daily average basis as customer demand fell. And although it received a multiple of spot LNG wholesale prices for its conventional gas output at $6.24/'000 ft³, the regulated price is falling. Revenues were therefore down 21% at $1.9mn year on year and down 32% quarter on quarter.
CEO Sean Guest said the company exited Q2 with conventional gas production business ramping back up to volumes in the range of 672 barrels of oil equivalent (boe)/day, while the quarterly average was 561 boe/d, a fifth lower than Q2 2019, and 22% lower than Q1 2020.
He said the company enjoyed a continuing strong financial position and had received extensions to key exploration licences until June 2022. Valeura has engaged Stellar Energy Advisors with a mandate to secure a partner with technical and commercial expertise suited to a tight gas appraisal play, following the departure of its Norwegian partner Equinor earlier this year.
Valeura has confirmed an inventory of 12 higher priority locations in its portfolio that could be drilled in the near term and it will submit some shortly to regulators for permitting, with a view to starting work late this year or early next.
Valeura is continuing to pursue appraisal of its very large deep tight gas play, having studied the results from its Inanli-1 and Devepinar-1 wells. The best gas flow results have been achieved at around 4,000 metres where the gas is very dry and flows without condensate and minimal water. Well locations are being prepared for submission to the government for environmental approval to allow for drilling in the first half of 2021, along with joint venture partners, Valeura said.