Calgary, August 12, 2020: Valeura Energy Inc. (TSX:VLE, LSE:VLU) (“Valeura” or the “Company”), the upstream natural gas company focused on the Thrace Basin of Turkey, reports its financial and operating results for the three and six month periods ended June 30, 2020.


Highlights from Q2 2020

  • A safe quarter, with no serious incidents and no reported cases of COVID-19 among Valeura personnel or contractors;
  • Resumption of normal office work and preparations underway to resume field operations in Q3, as pandemic-related restrictions are eased, but the Company remains vigilant to the COVID-19 situation;
  • A strong financial position, with net working capital surplus of US$33.2 million at June 30, 2020 (including US$30.5 million cash), and no debt;
  • Average Q2 2020 production of 561 boe/d which increased to at exit rate of 672 boe/d;
  • Realised prices unchanged on a Turkish Lira basis, equating to US$6.24/Mcf;
  • Revenue of US$1.9 million and average operating netbacks of US$18.33 per boe (excluding one-off costs for testing Devepinar-1 from operating costs);
  • Completion of a thorough desktop study of opportunities in the Company’s conventional gas production business, with a development drilling programme expected to commence late 2020/early 2021; and
  • Extension of Valeura’s three exploration licences at Banarli and West Thrace until June 27, 2022, and the engagement of Stellar Energy Advisors Limited with a mandate to secure a partner for the deep tight gas play.


Sean Guest, President and CEO commented:

“I am pleased to report a quarter that demonstrates the resilience of our business.  We exited Q2 with our conventional gas production business ramping back up to volumes in the range of 672 Mcf/d, a continuing strong financial position, and fresh extensions to our key exploration licenses. 

Despite the challenging circumstances the global oil and gas industry has faced during the last several months, our strategy remains intact and poised to deliver value for shareholders.  We are resuming activities to improve the efficiency of our conventional gas business and are focused on increasing production to maximise value.  We have a unique opportunity to layer inorganic growth into our strategy and are actively pursuing opportunities to build production growth from new sources.  We continue to see our deep tight gas play as a key part of our long-term value story and have started our search for a new partner, while preparing in the background to resume appraisal activities, with new well locations selected, and extensions granted for our key exploration licences.”


Financial and Operating Results Summary

Three Months Ended June 30, 2020 Three Months Ended March 31, 2020 Six Months Ended June 30, 2020 Three Months Ended June 30, 2019 Six Months Ended June 30, 2019
Financial (thousands of US$ except share amounts)
Petroleum and natural gas revenues 1,918 2,808 4,726 2,440 5,358
Adjusted funds flow (1) 339 52 391 774 1,115
Net loss from operations (1,899) (192) (2,901) (1,603) (3,913)
Exploration and development capital 1,734 1,882 3,616 3,050 7,323
Net working capital surplus 33,231 34,054 33,231 39,825 39,825
Cash 30,469 32,554 30,469 38,536 38,536
Common shares outstanding












Share trading (CDN$)












Crude oil (barrels (“bbl”)/d) 18 17 17 10
Natural Gas (one thousand cubic feet (“Mcf”)/d) 3,260 4,200 3,730 4,202 4,344
boe/d 561 716 639 700 734
Average reference price

Brent ($ per bbl)
BOTAS Reference ($ per Mcf) (2)











Average realised price

Crude oil ($ per bbl)
Natural gas ($ per Mcf)











Average Operating Netback ($ per boe) (1) 15.27 24.95 20.70 21.34 23.40


See the Company’s Management’s Discussion and Analysis for the three and six months ended June 30, 2020 and 2019 filed on SEDAR for further discussion.
  1. The above table includes non-GAAP measures, which may not be comparable to other companies. Adjusted funds flow is calculated as net income (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.
  2. BOTAS regularly posts prices and its Level-2 Wholesale Tariff benchmark is shown herein as a reference price. See the Company’s Annual Information Form for the year ended December 31, 2019 (the “AIF”) filed on SEDAR for further discussion.


Net petroleum and natural gas sales in Q2 2020 averaged 561 boe/d, approximately 7% higher than the preliminary production figure disclosed in the Company’s July 13, 2020 trading update announcement.  Q2 production was 20% lower than Q2 2019, and 22% lower than Q1 2020 as a result of reduced customer demand for natural gas due to lower industrial activity caused by the COVID-19 pandemic and Turkish national holidays during the period.  Production volumes have since recovered as industrial activity in Turkey normalises, resulting in an exit rate for Q2 of 672 boe/d.

Price realisations in Q2 2020 were effectively unchanged from Q1 2020 on a Turkish Lira basis.  When expressed in US dollars this equates to US$6.24/Mcf, which is 2% lower than in Q2 2019, and 12% lower than the first quarter of 2020.  Subsequent to the end of the quarter, BOTAS lowered Turkey’s natural gas reference price (Turkish lira basis) by 10%, effective July 1, 2020.

Production revenue in Q2 2020 was US$1.9 million, a decrease of 21% relative to Q2 2019, and a decrease of 32% from Q1 2020.  The decrease reflects the combined impact of lower production during the quarter and reduced gas price realisations, when expressed in US dollars.

Exploration and development capital spending was US$1.7 million in Q2 2020 comprised primarily of costs associated with drilling two shallow exploration commitment wells, Kuzey Atakoy-4 and Bati Sariyer-1 resulting in spending which was 8% less than the prior quarter.

Valeura’s reported average operating netback in Q2 2020 was US$15.27/boe, which reflects the inclusion of one-off costs for production testing of the Devepinar-1 well as an operating expense (a requirement due to the well having associated proved plus probable (2P) reserves).  If the one-off costs for testing Devepinar-1 were removed from operating costs, the Q2 2020 average operating netback would have been US$18.33/boe, which is 14% lower than Q2 of 2019, and 27% lower than Q1 2020, largely driven by the reduction in the realised price.

As of June 30, 2020, the Company had a net working capital surplus of US$33.2 million compared to US$34.1 million at March 31, 2020 primarily due to capital expenditure incurred in connection with drilling two shallow exploration commitment wells.


Strategy Update

Valeura is pursuing a three-pronged strategy intended to leverage the Company’s assets, financial strength, and differentiated capabilities, toward delivering shareholder value.  This strategy is crafted to provide immediate stability through the conventional gas production business, near- and mid-term growth through inorganic opportunities, and exposure to substantial long-term upside through the Company’s tight gas play.

Conventional gas production business

Valeura intends to maximise the efficiency and near-term value of its producing conventional gas business through operations focused at converting reserves into production.

The Company’s efforts to maintain gas production over the last two years has been both technically and commercially successful.  Prior to the impact of COVID-19 related restrictions, Valeura’s programme of well workovers and reperforations more than offset natural declines and generated an increase in production.  Individual investments have generally delivered payback in the order of a few weeks or months.  With most personnel now returning to normal work, the Company will resume this programme starting in Q3 2020 and will also conduct production testing to confirm the commerciality of its two recently drilled exploration wells.

The Company sees potential for further activity as it continues to commercialise its 7.9 million boe of 2P reserves, the majority of which relate to its conventional gas production business, and which were valued at US$66.1 million (net present value of future net revenue discounted at 10% after deducted taxes) as of December 31, 2019 by its external, independent reserves evaluator. During Q2 2020, Valeura completed a thorough desktop study of existing opportunities in its conventional gas business, which confirmed an inventory of 12 higher priority drilling locations that could be drilled in the near term.  Several of these near-term locations will be submitted shortly to regulators for permitting, and the Company anticipates resuming an active development drilling programme around the end of 2020 or early 2021, subject to permits and procurement of requisite equipment and services.

Inorganic growth

Valeura is actively seeking opportunities to grow its business through the mergers and acquisitions market.

With an enviable financial position including US$33.2 million in working capital and no debt, the Company has capacity to layer in inorganic growth as part of its forward strategy.  Valeura has engaged RBC Capital Markets to support certain deal opportunities and continues to believe conditions are favourable for the current environment to continue generating a flow of potential M&A targets.

In keeping with the management team’s international expertise, the Company is focusing on the greater Mediterranean region, and has a strong preference for assets that generate near-term cash flow and provide opportunities for further development to ensure follow-on organic growth.  

Deep gas upside

Valeura is continuing to pursue appraisal of its very large deep tight gas play.

Management regards the tight gas play as a core constituent of the Company’s portfolio, and a material upside value proposition for shareholders. The government has recently approved extensions to its key exploration licences through to June 27, 2022, which offers ample time for the next phase of appraisal that in turn could position additional licence extensions of four years.

Valeura has a clear vision for how to execute the next phase of appraisal after having now integrated the significant learnings from the drilling and testing of the Inanli-1 and Devepinar-1 wells.  The Company has observed that the best reservoir quality in all wells is encountered in the upper few hundred metres of the Kesan Formation.  However, the best gas flow results have been achieved deeper in the wells, where the gas is very dry and flows without condensate and minimal water – as seen in the first production test in Inanli-1 at approximately 4,275 metres.  The next appraisal wells will target sweet spots which have both of these characteristics; in particular, locations that are closer to the centre of the basin where the high quality reservoir at the top of the Kesan Formation is deeper, and therefore within the dry gas maturity window.  Final well locations within this broader area will then focus on regions of more intense natural fracturing, as interpreted on 3D seismic data.

Well locations are currently 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 intends to farm out a portion of its interest in the deep gas play, and has engaged Stellar Energy Advisors Limited, with a mandate to secure a partner with technical and commercial expertise suited to a tight gas appraisal play of this magnitude.  The Company anticipates this process will run from late Q3 through at least Q4 2020.  With the addition of a new partner, Valeura will be poised to resume appraisal activities rapidly.


Organisation Structure and COO Retirement

Valuera has adjusted its corporate organisation and reporting structure to enhance the efficiency of its production operations by delegating more autonomy to the in-country team.  These changes are intended to free up senior management resources and reduce costs at the corporate centre, while equipping the local team to be nimble and decisive in executing day-to-day operations.  This adjustment also creates a distributed organisational model which can be replicated for other potential assets in the future.

In connection with these changes, the Company has appointed a new Turkey Country Manager, and Valeura’s Chief Operating Officer (“COO”) Peter Sider, has opted to retire.  Mr. Sider assumed the role of COO in Q4 2019 in order to ensure smooth ongoing operations during a busy phase of operations, after having previously held other senior roles with the Company.  His contribution has led to a safe and reliable performance on both conventional production enhancement activities as well as the technically challenging deep unconventional testing programme.  The directors and management team are all greatly appreciative for Mr. Sider’s tireless efforts.


Annual Meeting

Valeura will hold an annual and special meeting of shareholders (the “Meeting”) today, August 12, 2020 at 09:00 (Calgary time) in the Calgary Petroleum Club, 319-5th Ave. S.W., Calgary, Alberta, Canada.  The meeting will include a business update presentation by Sean Guest, President and Chief Executive Officer.

The Company will be following all public health recommendations, including social distancing requirements at the Meeting due to the ongoing COVID-19 pandemic.  Physical access will be restricted to registered shareholders and formally appointed proxyholders and any others will not be permitted to attend (including beneficial shareholders that hold their common shares through a broker or other intermediary).

Rather than attending in person, shareholders are strongly encouraged to listen to the Meeting proceedings via live webcast using the following link:


For further information, please contact:

Valeura Energy Inc. (General and Investor Enquiries)                       +1 403 237 7102
Sean Guest, President and CEO
Heather Campbell, CFO
Robin Martin, Investor Relations Manager,

Canaccord Genuity Limited (Corporate Broker)                                +44 (0) 20 7523 8000
Henry Fitzgerald-O’Connor, James Asensio

CAMARCO (Public Relations, Media Adviser)                                   +44 (0) 20 3757 4980
Owen Roberts, Monique Perks, Hugo Liddy, Billy Clegg


Oil and Gas Advisories

A boe is determined by converting a volume of natural gas to barrels using the ratio of 6 Mcf to one barrel.  Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf:1 boe is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Further, a conversion ratio of 6 Mcf:1 boe assumes that the gas is very dry without significant natural gas liquids. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilising a conversion on a 6:1 basis may be misleading as an indication of value



Reserves disclosure in this announcement is based on an independent reserves evaluation as at December 31, 2019 conducted by DeGolyer and MacNaughton (“D&M”) in its report dated February 25, 2020, which was prepared using guidelines outlined in the Canadian Oil and Gas Evaluation Handbook and in accordance with National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities (“NI 51-101”).  The forecast prices used to calculate reserves value are $7.53/Mcf for natural gas and $65.77/bbl for light and medium crude in 2020, and these prices both escalate at 2% per year going forward. This natural gas price forecast is for the TBNG assets, and the realised price for the Banarli assets is approximately 97% of this price.  Additional reserves and pricing information, as required under NI 51-101, is included in the AIF.

The estimated future net revenues contained in this news release do not necessarily represent the fair market  value of the Company’s reserves.


Advisory and Caution Regarding Forward-Looking Information

Certain information included in this new release constitutes forward-looking information under applicable securities legislation.  Such forward-looking information is for the purpose of explaining management’s current expectations and plans relating to the future.  Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions.  Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “estimate”, “propose”, “project”, “target” or similar words suggesting future outcomes or statements regarding an outlook.  Forward-looking information in this new release includes, but is not limited to: statements with respect to the Company’s conventional gas production business strategy, including its ability to maximise the efficiency and near-term value of its producing conventional gas business, the resumption of its workovers and reperforation programme and the timing thereof, the production testing of its most recently drilled exploration wells and the resumption of its drilling programme and the timing thereof, statements with respect to the Company’s inorganic growth strategy, including its ability to identify M&A targets and the geographic area of focus, statements with respect to the Company’s deep tight gas play strategy, including management’s belief that the play represents a material value proposition for shareholders, the sweet spots of the play, its ability to target these sweet spots with the next appraisal well, and its ability to find another partner for the play and the timing thereof, and management’s belief that its three-pronged strategy has the potential to deliver shareholder value.  In addition, statements related to “reserves” are deemed to be forward-looking information as they involve the implied  assessment,  based  on  certain  estimates  and  assumptions,  that  the  reserves can  be profitably  produced  in  the  future.

Forward-looking information is based on management’s current expectations and assumptions regarding, among other things: the resumption of operations following the COVID-19 pandemic; political stability of the areas in which the Company is operating and completing transactions; continued safety of operations and ability to proceed in a timely manner; continued operations of and approvals forthcoming from the Turkish government in a manner consistent with past conduct; future drilling activity on the required/expected timelines; the prospectivity of the Company’s lands, including the deep potential; the continued favourable pricing and operating netbacks in Turkey; future production rates and associated operating netbacks and cash flow; decline rates; future sources of funding; future economic conditions; future currency exchange rates; the ability to meet drilling deadlines and other requirements under licences and leases; the ability to attract a new partner in the deep play; the ability to identify attractive merger and acquisition opportunities to support growth; and the Company’s continued ability to obtain and retain qualified staff and equipment in a timely and cost efficient manner. In addition, the Company’s work programmes and budgets are in part based upon expected agreement among joint venture 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 drilling, high-pressure stimulation and other specialised oilfield equipment and service providers, changes in partners’ plans and unexpected delays and changes in market conditions. Although the Company 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 degree of risk. A number of factors could cause actual results to differ materially from those anticipated by the Company including, but not limited to: the risks of further disruptions from the COVID-19 pandemic; the risks of currency fluctuations; changes in gas prices and netbacks in Turkey; potential changes in joint venture partner strategies and participation in work programmes; uncertainty regarding the contemplated timelines and costs for the deep evaluation; the risks of disruption to operations and access to worksites; potential changes in laws and regulations, the uncertainty regarding government and other approvals; counterparty risk; risks associated with weather delays and natural disasters; and the risk associated with international activity. The forward-looking information included in this new release is expressly qualified in its entirety by this cautionary statement. See the AIF for a detailed discussion of the risk factors.

The forward-looking information contained in this new release is made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws.  The forward-looking information contained in this new release is expressly qualified by this cautionary statement.

Additional information relating to Valeura is also available on SEDAR at

This Announcement contains inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 (“MAR”). Upon the publication of this Announcement, this inside information is now considered to be in the public domain.

This announcement does not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction, including where such offer would be unlawful. This announcement is not for distribution or release, directly or indirectly, in or into the United States, Ireland, the Republic of South Africa or Japan or any other jurisdiction in which its publication or distribution would be unlawful.

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 release.