CALGARY, Dec. 14 /CNW/ - Valeura Energy Inc. ("Valeura" or the "Corporation") (TSX-V: "VLE") is pleased to announce that it has executed a definitive agreement (the "Agreement") to purchase certain non-operated producing natural gas assets (the "Assets") in Turkey owned by Edirne Enerji Petrol Arama Üretim Ve Ticaret Limited Şirketi ("Edirne"), which is a wholly-owned affiliate of Australia-based Otto Energy Ltd ("Otto") (Australian Securities Exchange: "OEL").
Valeura is a Canada-based public company currently engaged in the exploration, development and production of petroleum and natural gas in Western Canada and Turkey. The Corporation is continuing to pursue a strategy to expand internationally to selected countries in the Middle East and North Africa Region ("MENA"), the Mediterranean Basin and Latin America.
SUMMARY OF KEY TERMS OF AGREEMENT AND ASSETS
- Purchase price including taxes of US$ 3.1 million, subject to certain operating adjustments to be made at closing based on an effective date of October 1, 2010.
- Assets consist of a 35% interest in the Edirne Exploration License 3839 (the "Edirne Licence") in the Thrace Basin, the main natural gas producing region of Turkey.
- Natural gas production from the Edirne Licence in the third quarter of 2010 was approximately 6.3 million cubic feet per day (mmcfd) (gross) or 2.2 mmcfd net to Edirne.
- Edirne realized an average gas price of US$ 7.40 per mcf in the third quarter of 2010 reflecting the premium prices received for natural gas production in Turkey.
- Edirne's revenues from gas sales were approximately US$1.5 million in the third quarter of 2010.
- Closing is expected to occur on or about December 22, 2010, subject to the satisfaction or waiver of certain closing conditions, including but not limited to the waiver or expiration of all rights of first refusal applicable to the Assets and the receipt of certain third party and regulatory approvals.
The Edirne Licence covers an area of 405 km2 (100,080 gross acres) in the Thrace Basin approximately 200 km northwest of Istanbul near the borders with Greece and Bulgaria. An affiliate of TransAtlantic Petroleum Ltd. operates the Edirne Licence. Natural gas is currently produced from 11 wells that are completed in Tertiary-aged sands in the Osmancik formation at a depth of approximately 1,000 feet. The gas is relatively lean and requires only dehydration and compression to meet sales specifications. The gas is processed on a fee basis in a third party owned facility and is tied into the Botas pipeline system located nine km from the plant. The gas is sold to one of Turkey's largest gas and power wholesalers pursuant to a "send and take" contract arrangement, under which sales are nominated by the operator. Sales from the Edirne Licence began in April 2010 following completion of a two phase exploration and development program over the past few years.
The shallow gas accumulations developed to date on the Erdine Licence are relatively small in areal extent. Wells exhibit steep initial declines in production rate under pressure depletion and/or water influx analogous to the performance of many other shallow gas reservoirs around the world. Opportunities exist on the Edirne Licence to carry out well workovers, wellhead compression and additional drilling to mitigate natural declines. Gas accumulations are readily discernable as bright spots on seismic and as a result, exploration drilling success rates in excess of 90% have been achieved. There is good seismic coverage on the licence with more than 200 km2 of recent 3D seismic from which more than 10 prospects and leads have been identified in the shallow (< 1,000 feet) and intermediate depth (1,500 - 6,500 feet) horizons. Drilling costs for the shallow targets are expected to be less than US$ 0.75 million (gross) and less than US$ 2.0 million for intermediate depth targets.
In terms of additional upside, the Thrace Basin is also prospective for deeper conventional and unconventional gas plays (e.g. tight gas and shale gas). In parts of the basin, there are up to 30,000 feet of tertiary-aged sediments with a number of potential exploration targets. Other operators in the region have been pursuing tight gas plays and deploying modern fracturing technology to achieve attractive flow rates. The Corporation will be focusing on determining the potential for these types of high impact plays on the Edirne Licence.
"The Otto deal is an important step in growing and diversifying Valeura's asset base in Turkey to include premium priced natural gas in the Thrace Basin," said Jim McFarland, President and CEO. "The assets provide immediate cash flow and complement the oil focused exploration and development program in southeast Turkey under the AME-GYP farm-in deal announced on September 2, 2010, which is targeting to deliver oil production in 2011."
"The deal also provides a window on Turkey's growing natural gas sector, expands our network of relationships and demonstrates our commitment and ability to expand the business in Turkey."
FORWARD LOOKING INFORMATION
This news release contains certain forward‐looking statements relating, but not limited, to the anticipated closing date for the purchase of the Assets; anticipated transfer of legal title to the Assets to the Corporation; future work to determine the types of plays available on the Edirne Licence; future transaction and operational plans and the timing associated therewith. Forward‐looking information typically contains statements with words such as "anticipate", "estimate", "expect", "potential", "could", 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, the Corporation's growth strategies, plans for and results of future transactions, results of future seismic programs; future drilling activity, future capital and other expenditures (including the amount, nature and sources of funding thereof), future economic conditions, future currency and exchange rates, continued political stability of the areas in which the Corporation is anticipating completing transactions, the Corporation's continued ability to obtain and retain qualified staff and equipment in a timely and cost efficient manner and the receipt of all necessary approvals for transactions. In addition, budgets are based upon the Corporation's current acquisition plans and exploration plans and anticipated costs both of which are subject to change based on, among other things, the actual results of acquisitions, drilling activity, 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. 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; 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), the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with negotiating with third parties in countries other than Canada, the uncertainty regarding government and other approvals 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.
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For further information: For further information:
Jim McFarland, President and CEO
Valeura Energy Inc.
Steve Bjornson, CFO
Valeura Energy Inc.