CALGARY, Aug. 25, 2011 /CNW/ -- CALGARY, Aug. 25, 2011 /CNW/ -
Valeura Energy Inc. ("Valeura" or the "Corporation") (TSXV: VLE) is
pleased to report highlights of its unaudited financial and
operating results for the three and six month periods ended June
30, 2011, and to provide an update on subsequent developments. The
complete quarterly reporting package for the Corporation, including
the unaudited financial statements and associated management's
discussion and analysis, has been filed on SEDAR at www.sedar.com
and posted on the Corporation's website at www.valeuraenergy.com.
HIGHLIGHTS Operational -- Transformed the Corporation with
completion of the acquisition of producing assets in Turkey from
Thrace Basin Natural Gas (Turkiye) Corporation ("TBNG") and
Pinnacle Turkey Inc. ("PTI") on June 8, 2011 at a final adjusted
purchase price of $53.7 million: o Increased proforma petroleum and
natural gas sales to 1,874 BOE/d (93% natural gas in Turkey) in the
second quarter of 2011, assuming the TBNG-PTI volumes were booked
for the full quarter, which is a seven-fold increase from the same
period in 2010 at the start-up of the Corporation. o Increased land
holdings in Turkey to approximately 2.6 million gross acres (1.0
million net), assuming all farm-in interests are earned. o Acquired
an established shallow gas production and marketing business in the
Thrace Basin of Turkey, which is currently realizing wellhead
prices of approximately US$7.00/Mcf and includes wells, gathering
and sales lines, compression and a diverse direct-sales customer
base. o Increased exposure to a potentially significant tight gas
resource play in the Thrace Basin below the existing shallow gas
production. The Corporation now holds interests in approximately
972,000 gross acres (481,000 net) of onshore lands in the Thrace
Basin, assuming all farm-in lands are earned. -- Financed the
TBNG-PTI acquisition with $81.1 million in proceeds (net of share
issuance costs) from a subscription receipts financing which closed
on February 28. Funds were released from escrow on June 8 upon
closing the acquisition. At June 30, 2011, the Corporation had a
working capital surplus of $37.1 million. -- Executed an active
shallow gas exploration and development program on the onshore
TBNG-PTI lands (40% Valeura working interest): o Completed 12
workovers and recompletions (gross) on existing wells in the
shallow Danismen and Osmancik formations during the second quarter
and eight (gross) in July. The aggregate initial production rate
for these 20 workovers and recompletions (gross) was approximately
8,000 Mcf/d (gross) (533 BOE/d net). o Spudded eight wells (gross)
in the second quarter and three wells (gross) in July, of which
seven are in various stages of completion, one is suspended with
plans to deepen, one was drilling at the end of July and two were
abandoned. Four of these wells were drilled into the deeper
Mezardere formation. All wells were drilled on existing 2D seismic
control. o Commenced two 3D seismic surveys in late July in the
Tekirdag and Hayrabolu areas on the TBNG-PTI lands covering an area
of 263 km(2) and 200 km(2), respectively, at an expected cost of
approximately US$4.7 million (net). Fully interpreted results are
expected in the first quarter of 2012. These are the first 3D
seismic surveys on the TBNG-PTI lands and are designed to build the
drillable prospect inventory in the shallow gas play and in the
deeper tight gas play. o Completed single-stage fracs on the Bati
Kazanci-3 and Bati-Kazanci-4 wells in relatively tight sand
intervals in the shallow Osmancik formation. These wells had been
previously suspended after recovering only minor amounts of gas.
Bati Kazanci-3 achieved an initial flow rate of approximately 100
Mcf/d (gross). Bati Kazanci-4 is currently shut-in due to high
formation water production. -- Initiated a "proof-of-concept"
modern fracture stimulation ("frac") program in late July 2011 in
the deeper, undeveloped tight gas sands in the Mezardere formation
on the TBNG-PTI lands: o Completed a two-stage frac on the Yazir-2
well in two tight sand intervals in the Mezardere formation at
depths of approximately 1,100 metres and 885 metres. The frac
appears to have intersected a high pressure water zone and only a
trace amount of gas was produced. o Preparatory work is underway on
the second well re-entry and frac in the Mezardere formation on the
Kayi-15 well. The planned frac interval has been perforated at a
depth of approximately 1,230 metres. A pre-frac injection test and
a swabbing operation to confirm producible gas have been completed.
It is planned to carry out a more directed, limited-entry frac into
the five sets of perforations in September. o The proof-of-concept
program is expected to include up to eight well re-entries with at
least a single-stage frac and up to seven new drills and an
associated frac. The 2011 program will target various tight sand
intervals in the Mezardere formation and test a range of frac
volumes and frac geometries to build a learning curve and optimize
the expected go-forward program in 2012. -- Drilled two gross
exploration wells on the Edirne Licence in the Thrace Basin in the
second quarter of 2011 of which one is awaiting completion and one
was abandoned. In addition, three workovers and recompletions were
carried out. -- Executed a farm-in agreement on May 4, 2011 with
Marhat Marmara Boru Hatlari Ins. Muh Taahh.san.Tic.Ltd.sti.
("Marhat") to earn a 100% working interest and operatorship of
Exploration Licence 4201. The licence covers an area of 122,000
acres (gross) in the Thrace Basin. The working interest is subject
to overriding royalties of 6.0% to Marhat and 0.6% to an affiliate
of TransAtlantic Petroleum Ltd. ("TransAtlantic"). Under the
farm-in terms, Valeura will be required to drill two exploration
wells into the Mezardere formation. -- Executed a farm-in agreement
on June 13, 2011 with an affiliate of TransAtlantic to earn a 50%
working interest in two exploration licences 4094 and 4532 in the
Thrace Basin. The licences cover an area of approximately 242,000
acres (gross). Under the farm-in terms, Valeura will be required to
fund acquisition of 150 km(2) of 3D seismic and two exploration
wells to a depth of at least 1,500 metres. -- Filed an application
with the Toronto Stock Exchange ("TSX") on July 20, 2011 to
graduate to a TSX listing. Subject to the TSX's approval of this
application, the Corporation plans to consolidate its issued and
outstanding common shares on a 10:1 basis at that time. -- Valeura
is one of five companies that submitted conforming bids for an
exploration licence on the area previously encompassed by Licence
2600, one of the cancelled Rubai Licences near the borders with
northern Iraq and Syria, as published in Turkey's Official Gazette
on June 25. The timing of a decision on the award of this licence
is unknown. -- An application by Aladdin Middle East Ltd. ("AME")
and Guney Yildizi Petrol Uretim Sondaj, Muteahhitlik ve Ticaret
A.S. ("GYP") to extend the term of the Karakilise Exploration
Licence 2674 to May 30, 2014 was published in Turkey's Official
Gazette on June 26. This is a positive development but the timing
of a final GDPA decision is unknown. If the licence extension is
granted, it is expected that Valeura will fund the deepening of the
Altinakar-1 well to the primary exploration target in the Bedinan
Formation. -- Petroleum and natural gas sales in the second quarter
of 2011 averaged 692 BOE/d (net), including 129 BOE/d in Canada,
242 BOE/d from Valeura's 35% interest in the Edirne Licence for the
full quarter and 321 BOE/d from Valeura's 40% interest in the
TBNG-PTI lands for the post-closing period June 9 to 30.
Financial -- Funds flow from operations in the second quarter
of 2011 was negative ($1,622,240) compared to negative ($885,673)
in the second quarter of 2010, reflecting higher G&A expenses
related to the growth in business activities, partially offset by
higher petroleum and natural gas sales related to the Edirne and
TBNG-PTI asset acquisitions. -- Capital expenditures in the second
quarter of 2011 were $55,650,606 compared to $449,670 in the second
quarter of 2010 reflecting the closing of the TBNG-PTI asset
acquisition in Turkey. -- As at June 30, 2011, the Corporation had
a positive working capital surplus of $37.1 million, including cash
and cash equivalents of $32.5 million. This compares to a working
capital surplus of $27.4 million as at June 30, 2010. RESULTS
SUMMARY (Three and six Three Months Three Months Six Months Six
Months month periods Ended Ended Ended Ended unaudited) June 30,
2011 June 30, 2010 June 30, 2011 June 30, 2010 Financial ($ except
share and per share amounts) Petroleum and natural gas revenues
(net) 2,707,193 892,878 3,269,325 1,754,225 Funds flow from
operations ( (1)) (1,622,240) (885,673) (3,546,565) (1,233,190) Net
loss (4,359,006) (3,194,474) (8,621,015) (4,901,585) Capital
expenditures 55,650,606 449,670 59,848,568 843,847 Net working
capital surplus 37,101,075 27,436,979 Common shares outstanding
Basic 464,061,475 198,327,621 - - Diluted 645,859,765 235,880,121 -
- Share trading High 0.48 0.90 - - Low 0.25 0.37 - - Close 0.25
0.41 - - Operations Production Crude oil & NGLs (bbl/d) 57 97
55 87 Natural Gas (Mcf/d) 3,810 994 2,219 980 BOE/d (@ 6:1) ( (2))
692 263 425 251 Average reference prices Edmonton light (Cdn$/bbl)
AECO-5A Daily Spot (Cdn$/Mcf) BOTAS reference - Turkey 103.07 75.13
95.11 77.59 (Cdn$/Mcf) ( 3.87 3.89 3.82 4.41 (3)) 8.18 8.79 8.22
8.93 Average realized prices Crude oil (Cdn$/bbl) Natural gas
liquids (Cdn$/bbl) Natural gas - Turkey (Cdn$/Mcf) 82.20 66.44
76.35 68.46 Natural gas - 48.97 45.84 51.50 45.52 consolidated 7.05
- 7.05 - (Cdn$/Mcf) 6.68 3.83 6.36 4.32 Average operating netback
(Cdn$ per BOE @ 6:1) ((1) (2) ) 24.82 12.01 22.03 14.60 Notes: (1)
The above table includes non-IFRS measures, which may not be
comparable to other companies. Funds flow from operations is
calculated as net loss for the period adjusted for non-cash items
in the statement of cash flows. Operating netback is calculated as
petroleum and natural gas sales less royalties, production expenses
and transportation costs. See MD&A for further discussion. (2)
BOEs 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.
(3) Boru Hatlari ile Petrol Tasima Anonim Sirketi ("BOTAS") owns
and operates the national crude oil pipeline grid and the national
natural gas pipeline grid in Turkey. BOTAS regularly posts prices
and its Industrial Interruptible Tariff benchmark is shown herein
as a reference price. See the 2010 Annual Information Form for
further discussion. OUTLOOK Operations The Corporation's primary
focus at this time is to "bed-down" the assets acquired in the
TBNG-PTI transaction which is the largest of five transactions
executed in Turkey since September 2010 and the Corporation's
largest source of cash flow. With respect to the shallow gas
business in the Thrace Basin, work is focused on replenishing the
inventory of well recompletions and workovers on existing wells
through an intense effort to look at all producing and suspended
wells. These opportunities have the lowest cost and promise the
quickest payout. To build the inventory of drillable prospects
(both exploration and development) and to improve the drilling
success rate, a large 3D seismic program is underway in two high
potential areas on the TBNG-PTI lands where significant operations
are already in place. The fully interpreted results are not
expected until the first quarter of 2012. In the meantime, the
Corporation is focussed on high-grading the 2011 drilling inventory
on the existing 2D seismic and deferring some earlier planned
drilling until the 3D seismic interpretation is available.
Unlocking the potential in the deeper tight gas play in the Thrace
Basin is a major priority for the Corporation. A deliberate program
has been kicked-off to build a comprehensive knowledge base through
acquisition of new seismic, more sophisticated well logging, more
extensive core analysis work, new geological and geophysical
studies and a series of "proof-of-concept" field experiments with
various frac designs and target tight sand intervals in the
Mezardere formation. Accordingly, the Corporation's work program
and budget for 2011 has three main objectives: -- Sustaining the
shallow gas business in the Thrace Basin; -- Proving-up the
potential of the tight gas play in the Thrace Basin; -- Fulfilling
exploration-focused work programs on high potential farm-in acreage
in the Thrace Basin (gas targets) and in the Anatolian Basin (oil
targets). The Corporation has modified its outlook for capital
expenditures in 2011 to approximately $20 million compared to
earlier guidance of $30 to 35 million based on the results of
partner budget meetings in Turkey in late June. This change relates
primarily to deferral of some discretionary exploration
expenditures. The revised budget outlook excludes any capital
invested on the TBNG-PTI and Edirne lands prior to the closing date
of these acquisitions, which amounts were reflected in purchase
price adjustments. The budgeted funds are essentially all directed
to Turkey and include estimates of: $11.7 million for up to 19
drill wells (gross), of which six are shallow gas wells and seven
are deeper Mezardere tests (drill and frac) on the TBNG-PTI lands;
$2.6 million for up to 50 workovers and eight fracs (gross) on
existing wells in the Thrace Basin; and, $5.7 million for up to 463
km(2) of 3D seismic and 100 km of 2D seismic in the Thrace Basin.
The Corporation has essentially completed Phase I of the AME-GYP
farm-in and is in discussion with AME-GYP on next steps, including
possible deepening of the Altinakar-1 well to test the Bedinan
formation, contingent on the GDPA granting an extension to the term
of Licence 2674. Under terms of the farm-in, Valeura must invest a
minimum of US$8.8 million in Phase I to earn a 25% working interest
in two exploration licences at Karakilise and a production lease at
Kahta. The scope of the ultimate investment and earning under the
AME-GYP farm-in is under review for further discussion with
AME-GYP. Business Development The Corporation is pursuing other
farm-in and acquisition opportunities in Turkey. These have
the potential to further expand the Corporation's acreage position,
particularly in the Thrace Basin. The Corporation is also pursuing
other opportunities in the region, particularly oil-weighted
opportunities, to complement its position in Turkey. NEW WEBSITE
LAUNCHED The Corporation has created launched a new website and has
updated its August 2011 corporate presentation, both of which can
be accessed on the Corporation's website at www.valeuraenergy.com.
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. CAUTION REGARDING ENGINEERING TERMS 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. BOEs 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. CAUTION REGARDING FORWARD-LOOKING INFORMATION This news
release contains certain forward‐looking statements including, but
not limited to: the extent and timing of the frac program on the
TBNG-PTI lands; the approval of the GDPA for the extension of the
term on Licence 2674; the resumption of drilling to a deeper target
in the Altinakar-1 well on Licence 2674; the extent of Valeura
investment and earning under the AME-GYP farm-in; anticipated work
programs and operational plans and the timing associated therewith;
and, the Corporation's plans to graduate to a TSX listing and
consolidate its common shares on a 10:1 basis. Forward‐looking
information typically contains statements with words such as
"anticipate", "estimate", "expect", "potential", "could", "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 anticipating completing transactions; continued operations of
and approvals forthcoming from the GDPA in a manner consistent with
past conduct; 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; 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 third party and regulatory approvals for
transactions and the plans of the Corporation. In addition, budgets
are based upon the Corporation's current acquisition plans, work
programs proposed by partners and associated 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. 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; changes in plans with respect to
exploration or capital expenditures; the uncertainty of estimates
and projections in relation to reserves, production, 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 competitive
bidding rounds (including the application made in respect of
Licence 2600 in Turkey) and timing of results, the risk of partners
having different views on work programs and potential disputes
among partners, 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. Additional information
relating to Valeura is also available on SEDAR at www.sedar.com
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release. To view this news
release in HTML formatting, please use the following URL:
http://www.newswire.ca/en/releases/archive/August2011/25/c6094.html
p Jim McFarland, President and CEObr/ Valeura Energy Inc.br/ (403)
930-1150br/ a
href="mailto:jmcfarland@valeuraenergy.com"jmcfarland@valeuraenergy.com/a
/p p align="justify" Steve Bjornson, CFObr/ Valeura Energy Inc.br/
(403) 930-1151br/ a
href="mailto:sbjornson@valeuraenergy.com"sbjornson@valeuraenergy.com/a
/p p align="justify" a
href="http://www.valeuraenergy.com"www.valeuraenergy.com/a /p
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