CALGARY, April 9, 2014 /CNW/ - Valeura Energy Inc. ("Valeura" or the "Corporation") (TSX: VLE) is pleased to provide an operational update for the first
quarter of 2014.
NET SALES UP 10% IN THE FIRST QUARTER OF 2014 AND TRACKING GUIDANCE
Net corporate petroleum and natural gas sales in the first quarter of
2014 averaged approximately 1,306 barrels of oil equivalent per day ("boe/d"), up 10% from the fourth quarter of 2013 reflecting the contribution
from two new horizontal wells completed with multi-stage fracs, frac
completions on two vertical wells drilled in 2013 and six shallow gas
well recompletions in the Thrace Basin of Turkey. This is the third
consecutive quarter of increasing net sales.
Net sales in Turkey in the first quarter of 2014 averaged 1,274 boe/d,
including 7.6 million cubic feet per day ("MMcf/d") of natural gas at an average wellhead price of $9.64 per thousand
cubic feet ("Mcf") and 7 barrels of oil per day. Net sales in Canada averaged 32 boe/d.
First quarter 2014 net sales are tracking 2014 annual guidance, which
targets 5 to 10% annualized growth from fourth quarter 2013 sales
(1,250 to 1,310 boe/d average sales in 2014) based on a self-funded
capital expenditure program of $14 to 17 million (net).
The average wellhead price realization in Turkey of $9.64 per Mcf in the
first quarter of 2014 was down 3% from the fourth quarter of 2013
reflecting some further weakening in the Turkish Lira ("TL"), which is the pricing basis for Turkish gas sales. In the fourth
quarter of 2013, the average Canadian dollar ("CAD") to TL exchange rate was 1.93. The exchange rate subsequently peaked
in January 2014 at 2.10 before the Central Bank of Turkey intervened on
January 28, 2014 to stabilize the currency by lifting interest rates.
In the first quarter of 2014, the CAD/TL exchange rate averaged 2.00.
The TL has further strengthened to the current CAD/TL exchange rate of
approximately 1.92 following the results of the March 30 local
elections in Turkey, in which the ruling AK Party received the
strongest support, winning more than 43% of the popular vote.
THRACE BASIN OPERATIONAL HIGHLIGHTS
The Corporation drilled and fracked two new horizontal wells BTD-2H and
TDR-11H in the Tekirdag area on joint venture lands acquired from
Thrace Basin Natural Gas (Turkiye) Corporation ("TBNG") and Pinnacle Turkey Inc. ("PTI") (the "TBNG JV") (Valeura 40%). These wells are the fourth and fifth horizontal wells
drilled in the TBNG JV and the first horizontal wells drilled into the
Mezardere Formation, building on the success of an earlier 17-well
re-entry frac program in this formation in existing wells. Drilling
times and costs for the BTD-2H and TDR-11H wells showed continued
improvement from earlier horizontal wells and bettered budget
The BTD-2H well was drilled in 13 days to a vertical depth of 635 metres
into the Mezardere Formation with a horizontal section of 476 metres
and was subsequently completed with an eight-stage frac on March 4. The
well is tied into the gathering system and over the initial 30 days
since tie-in, flowed at an average rate of 1.5 MMcf/d (gross) ("IP30") through a range of choke sizes from 28/64" to 42/64". The well has
recovered all of the completion load fluid and is currently flowing at
a restricted rate of approximately 2.3 MMcf/d through a 42/64" choke.
(Note that the initial production rates stated throughout this press
release are not necessarily indicative of long term performance or
ultimate recovery and are subject to decline rates stated below).
The TDR-11H well was drilled in 11 days to a vertical depth of 518
metres into the Mezardere Formation with a horizontal section of 678
metres and was subsequently completed with an ten-stage frac on March
25. The well is tied into the gathering system and flowed at an initial
restricted rate of approximately 2 MMcf/d (gross) through a 32/64"
choke. The well is continuing to clean up with approximately 45% of the
completion load fluid recovered to date.
The final costs to drill, frac and tie-in the BTD-2H and TDR-11H wells
were approximately $2.4 million and $2.7 million (gross), respectively.
These costs are below the Corporation's budgeted average cost of $3.0
million (gross) per well.
The Corporation has budgeted up to 10 additional drill wells in 2014,
including up to six horizontal or vertical wells into the Mezardere and
Teslimkoy Formations in the Tekirdag area targeting tight gas, and up
to four vertical wells targeting conventional shallow gas, likely in
the Osmanli area on new 3D seismic acquired in the fourth quarter of
The well re-entry frac program of up to 13 wells and the shallow gas
recompletion program is expected to continue at a relatively steady
pace through the remainder of 2014.
ABOUT THE CORPORATION
Valeura Energy Inc. is a Canada-based public company currently engaged
in the exploration, development and production of petroleum and natural
gas in Turkey and Western Canada.
OIL AND GAS ADVISORIES
When used herein, the term "boe" means barrels of oil equivalent on the
basis of one boe being equal to one barrel of oil or NGLs, or 6,000
cubic feet of natural gas. Barrel of oil equivalent may be misleading,
particularly if used in isolation. A boe conversion ratio of 6.0
Mcf:1.0 bbl is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value
equivalency at the well head.
The initial production rates for wells stated herein are not necessarily
indicative of long term performance or ultimate recovery. To date,
shallow gas conventional wells and frac'd unconventional tight gas
wells have exhibited relatively high decline rates at more than 50% and
75%, respectively, in their first year of production.
ADVISORY AND CAUTION REGARDING FORWARD-LOOKING INFORMATION
This news release contains certain forward-looking statements including,
but not limited to: the 2014 work program and budget, operational plans
and costs (seismic, drilling and fracing) for the tight gas and
shallow gas development programs in the Thrace Basin; the ability to
reduce costs, achieve capital efficiencies, increase production and the
associated corporate sales outlook; the availability of operating cash
flow and the ability to finance development; the planned drilling of
horizontal and vertical wells, well re-entry fracs and well
recompletions and impact thereof; and the timing, estimated costs and
ability to fund each of the foregoing. Forward-looking information
typically contains statements with words such as "anticipate",
"estimate", "expect", "target", "potential", "could", "should", "would"
or similar words suggesting future outcomes. The Corporation cautions
readers and prospective investors in the Corporation's securities to
not place undue reliance on forward-looking information, as by its
nature, it is based on current expectations regarding future events
that involve a number of assumptions, inherent risks and uncertainties,
which could cause actual results to differ materially from those
anticipated by the Corporation.
Forward looking information is based on management's current
expectations and assumptions regarding, among other things: continued
political stability of the areas in which the Corporation is operating
and completing transactions; continued operations of and approvals
forthcoming from the General Directorate of Petroleum Affairs of the
Republic of Turkey ("GDPA") in a manner consistent with past conduct;
results of future seismic programs; future drilling, fracking and
re-completion activity, including the extent and pace of tight gas
delineation and development drilling in the Tekirdag area and the
funding thereof; the prospectivity of the Osmanli area; future
production rates, capital efficiencies and associated cash flow; future
capital and other expenditures (including the amount and nature
thereof); future sources of funding; future economic conditions; future
currency and exchange rates; and, the Corporation's continued ability
to obtain and retain qualified staff and equipment in a timely and cost
efficient manner. In addition, the Corporation's 2014 work program and
budget are based upon the current work programs proposed by partners
and associated exploration, development and marketing plans and
anticipated costs and sales prices, which are subject to change based
on, among other things, the actual results of drilling and related
activity, availability of fracking and other specialized oilfield
equipment and service providers, and unexpected delays and changes in
market conditions. Although the Corporation believes the expectations
and assumptions reflected in such forward-looking information are
reasonable, they may prove to be incorrect.
Forward-looking information involves significant known and unknown risks
and uncertainties. Exploration, appraisal, and development of oil and
natural gas reserves are speculative activities and involve a
significant degree of risk. A number of factors could cause actual
results to differ materially from those anticipated by the Corporation
including, but not limited to: risks associated with the oil and gas
industry (e.g. operational risks in exploration, inherent uncertainties
in interpreting geological data, and changes in plans with respect to
exploration or capital expenditures, the uncertainty of estimates and
projections in relation to costs and expenses, and health, safety, and
environmental risks); uncertainty regarding the sustainability of
initial production rates and decline rates thereafter; uncertainty
regarding the ability to address technical drilling challenges and
manage water production; uncertainty regarding the state of capital
markets and the availability of future financings; uncertainty
regarding the amount of operating cash flow and the ability to reduce
costs and achieve capital efficiencies; the risks of disruption to
operations and access to worksites, threats to security and safety of
personnel and potential property damage related to political issues,
terrorist attacks, insurgencies or civil unrest; the risks of increased
costs and delays in timing related to protecting the safety and
security of Valeura's personnel and property; the risk of fluctuations
in commodity pricing and BOTAS pricing (in Turkish Lira); the risk of
fluctuations in foreign exchange rates, particularly the Turkish Lira,
which has weakened in the past year; the uncertainty associated with
negotiating with third parties in countries other than Canada; the risk
of partners having different views on work programs and potential
disputes among partners and service providers; the uncertainty
regarding government and other approvals; potential changes in laws and
regulations; risks associated with weather delays and natural
disasters; and, the risk associated with international activity. The
forward-looking information included in this news release is expressly
qualified in its entirety by this cautionary statement. The
forward-looking information included herein is made as of the date
hereof and Valeura assumes no obligation to update or revise any
forward-looking information to reflect new events or circumstances,
except as required by law. See Valeura's 2013 Annual Information Form
for a detailed discussion of the risk factors.
Additional information relating to Valeura is also available on SEDAR at
Neither the Toronto Stock Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the Toronto Stock Exchange)
accepts responsibility for the adequacy or accuracy of this news
SOURCE: Valeura Energy Inc.
For further information:
Jim McFarland, President and CEO
Valeura Energy Inc.
Steve Bjornson, CFO
Valeura Energy Inc.