Valeura evolved from two predecessor companies operating in Canada: PanWestern Energy Inc. ("PanWestern"), a public company that was listed on the TSX Venture Exchange ("TSXV"), and Northern Hunter Energy Inc. ("Northern Hunter"), a private oil and gas company. PanWestern was originally incorporated under the Business Corporations Act (Alberta) ("ABCA"), on June 7, 2000 under the name "Sasha Corp". Northern Hunter was incorporated under the ABCA on September 1, 2006.
On April 9, 2010, PanWestern and Northern Hunter completed a plan of arrangement (the "Arrangement") under the ABCA whereby PanWestern acquired all of the assets and liabilities of Northern Hunter. Because the shareholders of Northern Hunter acquired more than 50% of the shares in the merged entity, the transaction was accounted for as a reverse take-over whereby Northern Hunter was considered the acquirer for accounting purposes. As part of the Arrangement, the board of directors of PanWestern was reconstituted with members from Northern Hunter’s board of directors and the management team became that of Northern Hunter. Subsequent to completion of the Arrangement, PanWestern filed articles of amendment on June 29, 2010 to change its name to Valeura Energy Inc., as approved at PanWestern’s annual and special meeting of Shareholders on June 29, 2010.
As a first step in its international growth strategy, Valeura entered into a farm-in agreement, as announced on September 2, 2010, with Aladdin Middle East Ltd. ("AME") and Guney Yildizi Petrol Uretim Sondaj, Muteahhitlik ve Ticaret A.S. ("GYP") (the "AME-GYP Farm-in Agreement") for properties located in southeast Turkey. The terms of the agreement allowed Valeura to potentially earn beneficial interests in one production lease and eight exploration licences by funding a minimum work program of US$8.8 million (Phase I) with an option to fund a maximum work program of US$17.6 million (Phase I + Phase II) by the end of 2011. Valeura carried out an active seismic, well recompletion and drilling earning program of approximately US$9.7 million and pursuant to a binding letter agreement executed by Valeura, AME and GYP on November 14, 2011, Valeura earned a final agreed participating interest of 27.5% in two exploration licences (2674 and 2677) in the Karakilise area. Six other exploration licences included in the original scope of the farm-in agreement were relinquished or expired, and Valeura chose not to pursue a re-development program on the production lease. GYP is the operator of these licences.
As announced on December 14, 2010, Valeura executed the Edirne Acquisition Agreement to purchase certain non-operated producing natural gas assets in the Thrace Basin in northwest Turkey owned by Edirne Enerji Petrol Arama Uretim Ve Ticaret Limited Sirketi ("Edirne"), which was a wholly-owned affiliate of Australia-based Otto Energy Ltd. ("Otto"), with an effective date of October 1, 2010. The negotiated purchase price was US$3.1 million subject to certain operating adjustments to be made at the closing date. The assets consisted of a 35% working interest in the Edirne Exploration Licence 3839 (41,694 net acres). The acquisition closed on March 24, 2011 for a final cash payment of approximately $1.9 million. An affiliate of TransAtlantic Petroleum ("TransAtlantic") is the operator of the licence.
As announced on February 9, 2011, Valeura executed an acquisition with an affiliate of TransAtlantic to jointly acquire producing natural gas assets and lands in the Thrace Basin of Turkey and other interests in exploration lands in the Anatolian Basin of Turkey from Thrace Basin Natural Gas Turkiye Corporation ("TBNG") and Pinnacle Turkey, Inc. ("PTI"), effective October 1, 2010 (the "TBNG Joint Venture" or "TBNG JV"). The transaction closed on June 8, 2011, at a final purchase price of approximately $53.7 million (Valeura's 40% share), following the execution of definitive agreements. An affiliate of TransAtlantic is the operator of the TBNG JV lands.
To finance the TBNG-PTI acquisition, Valeura completed the Subscription Receipts Offering on February 28, 2011 for total gross proceeds of $86.25 million. Valeura issued a total of 265,384,350 Subscription Receipts (pre-Share Consolidation basis) at a price of $0.325 per Subscription Receipt. Each Subscription Receipt entitled the holder thereof to receive one Common Share and one-half of one Financing Warrant. The terms of the Financing Warrants are further described in the 2013 Annual Information Form ("2013 AIF") under "Description of Capital Structure".
Valeura also executed two farm-in agreements in the Thrace Basin in May and June 2011. The first was with Marhat Insaat Enerji Madencilik Taahhut Sanayi Ticaret Ltd. Sti. ("Marhat"), whereby Valeura acquired a 100% working interest and operatorship of Licence 4201 in exchange for an overriding royalty to Marhat. This licence was subsequently relinquished in March 2013 in advance of the next district drilling requirement after one non-commercial well was drilled in 2012 (Dagdere-1). In the second farm-in, Valeura acquired the right to earn a 50% working interest in two licences (4094 and 4532) held by TransAtlantic. This right was relinquished by Valeura in June 2013 after drilling a non-commercial well in November 2011 (Evrenbey-1).
At Valeura’s annual and special meeting of shareholders held on June 15, 2011, shareholders approved the consolidation of the Company’s Common Shares on a 10 for 1 basis (the “Share Consolidation”). The Share Consolidation was subsequently approved by the TSXV and occurred contemporaneously with the Company’s graduation from the TSXV to the TSX.
Under a binding letter agreement executed on November 14, 2011, Valeura also acquired a 24% participating interest from GYP in three exploration licences (3998, 3999, and 4187) in the western reaches of the Thrace Basin, contiguous with Valeura’s existing acreage and extending to the Greece border. The acquisition cost was US$1.5 million and was negotiated concurrently with finalizing the AME-GYP farm-in agreement in southeast Turkey. These licences were relinquished between October 2012 and January 2013 after one well was drilled and abandoned in the third quarter of 2012 (Kavacik-1). Valeura submitted new licence applications to the General Directorate of Petroleum Affairs (“GPDA”) for two of the expired licences (3999 and 4187) in early 2013.
In June 2012, Valeura was awarded two new exploration licences in the Anatolian Basin in southeast Turkey, including Licence 5052 (Valeura 100%) in the Karakilise area contiguous with Licences 2674 and 2677 (Valeura 27.5%), and Licence 4985 (Valeura 100%) in the Bostanci area at the juncture of the Syrian and northern Iraq borders. Given the high exploration risk associated with the interpreted leads and prospects on these licences, the Company sought potential farm-in partners to assist in funding a licence retaining exploration well on each licence prior to mid-October 2013 spudding requirements. These farm-out processes were not successful, and as a result, the Company relinquished licences 4985 and 5052 in October 2013.
On October 10, 2012, Valeura closed a bought-deal financing for gross proceeds of $14.95 million. Valeura issued 11,500,000 Common Shares at a price of $1.30 per Common Share.
In April 2013, the Company was awarded the Banarli Licence 5104 (Valeura 100%) by the GDPA with a four-year initial term and covering an area of 118,598 gross acres located near the centre and deepest part of the Thrace Basin.
In May 2013, the TBNG JV was successful in acquiring exploration Licence 5151 (Valeura 40%) (120,728 gross acres; 48,291 net acres) which encompasses lands in the expired Licence 3734.
In July 2013, the Company was awarded the Copkoy Licence 5147 (Valeura 100%) (20,668 gross acres), which encompasses lands in the expired Licence 4187.
In October 2013, the Company and its partners relinquished three of the four Gaziantep licences (Valeura 26%) originally acquired in the TBNG-PTI acquisition, which were assessed to have limited prospectivity, in addition to the relinquishment of the Bostanci Licence 4985 (Valeura 100%) and Karakilise Licence 5052 (Valeura 100%) in southeast Turkey. The Company has retained Gaziantep Licence 4607 at this time (123,372 gross acres or 32,077 net acres).
In February 2014, the Company sold its 27.5% interest in the two Karakilise Licences 2674 and 2677 for a total consideration of $0.5 million, which included two marginal oil wells producing in aggregate less than 10 bopd (net). Both licences were near expiry at the end of their 11-year term, requiring applications for production leases and relinquishment of the residual exploration areas by May 2014. The Company assessed that there was limited upside potential in retaining these licences.
In the third quarter of 2014, the Company sold its small and non-strategic legacy oil and gas properties in Canada for a total consideration of $0.7 million.
During the course of 2014, Valeura and its joint venture partners made applications to the GDPA under the New Petroleum Law in Turkey to convert essentially all of Valeura's joint venture and 100% owned exploration licences to new exploration licences or new production leases over part of these existing exploration licences.
As at December 31, 2014, Valeura and its partners had been awarded four new production leases in the TBNG JV over part of two existing exploration licences (Valeura 40%), three new production leases in the Edirne area to replace the existing exploration licence (Valeura 35%) and two new exploration licences in the Gaziantep area to replace the existing exploration licence (Valeura 26%).
In June 2015 Valeura relinquised the small Copkoy licence to focus its activities on higher priority licences held by the Company and the TBNG JV.
In 2015 a number of exploration licence conversion applications were approved by the GDPA including two TBNG JV licences (Valeura 40%) and the Banarli Licence 5104 (Valeura 100%), which was converted to two new exploration licences. Also seven new TBNG JV production lease applications were approved. A GDPA decision on one new exploration licence application and two production lease applications by the TBNG JV remain outstanding. Also, a GDPA decision on two new exploration licence applications by Valeura on lands contiguous with the Banarli licences remain outstanding.
On May 15, 2016, Valeura announced a binding letter agreement with Statoil for a farm-in agreement for the exploitation of the deeper formations below approximately 2,500 meters where over-pressure is expected on Valeura's 100% owned and operated Banarli licences. Under terms of the agreements Statoil will have the option to earn 50% in the deep formations by investing in an exploration program that includes payments and carried costs of at least US$36 million for Statoil to earn its interest. Valeura will retain a 100% interest in the shallow formations. Valeura will initially operate the farm-in program, subject to Statoil having the option to become operator once it has earned its 50% interest under the farm-in.
On August 19, 2016, Valeura announced execution of the definitive agreements for the Statoil farm-in. Closing of the farm-in agreement is contingent on receiving Turkish government approvals for the associated license interest transfers.
On October 13, 2016, Valeura announced three concurrent transactions: (i) acquisition of its joint venture partner TBNG, which holds a 41.5% interest in the TBNG JV, for US$22 million in cash effective March 31, 2016, which after closing adjustments is expected to be reduced to approximately US$18.5 million (the "TBNG Acquisition"); (ii) sale of deep rights on certain TBNG JV lands to Statoil (the "West Thrace lands") for US$15 million in two tranches of US$12 million and US$3 million (the West Thrace Deep Rights Sale"); and (iii) underwritten $7.5 million private placement financing of subscription receipts of the Company, to be issued at a price of $0.75 per subscription receipt. Valeura subsequently announced on October 14, 2016 that the size of the private placement was increased to approximately $11 million and on November 3, 2016 that the financing had closed.
The closing of the TBNG Acquisition and West Thrace Deep Rights Sale are subject to customary closing conditions, including obtaining customary Turkish government approvals with respect to the change in control of TBNG and various licence interest transfers. It is expected that the closing of the three transactions will occur by year-end 2016, with the exception of the second tranche deep rights sale to Statoil, which is expected to occur in early 2017.
On the closing of the TBNG Acquisition and West Thrace Deep Rights Sale, Valeura will hold a 31.5% interest in the deep rights and 81.5% in the shallow rights on the West Thrace lands, and 81.5% in all rights on the remainder of the TBNG JV lands. Valeura will operate the shallow rights on the West Thrace lands and all rights on other TBNG JV lands. Valeura will also initially operate the deep rights program, subject to Statoil having a one-time right to become operator of the deep rights provided it has first earned its 50% interest in the Banarli licences under the Banarli farm-in.