Calgary, May 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 month period ended March 31, 2020.

The complete quarterly reporting package for the Company, including financial statements and associated management’s discussion and analysis (“MD&A”), are being filed on SEDAR at and have been posted on the Company’s website at All dollar amounts are in US dollars unless otherwise stated.


Financial and Operating Results Highlights

  • Maintained gas production operations in light of the COVID-19 pandemic by implementing measures to protect the health and well-being of Valeura personnel and contractors;
  • Valeura net Q1 2020 average production increased to 716 boe/d, up 11% from Q4 2019;
  • Average realised Q1 2020 gas prices unchanged on a Turkish Lira basis versus the prior quarter, equivalent to $7.08/Mcf, down 5% from Q4 2019;
  • Revenue in Q1 2020 of $2.8 million, an increase of 6% over the prior quarter;
  • Operating netback of $24.95/boe in Q1 2020, up 2% from Q4 2019;
  • Net working capital surplus at March 31, 2020 of $34.1 million, including cash of $32.6 million;
  • Valeura’s interest in the Thrace deep rights doubled effective April 2, 2020, following the Government of Turkey approval for the transfer of Equinor’s working interest to Valeura and partner Pinnacle Turkey Inc.;
  • Successfully drilled two commitment wells on the West Thrace Exploration Licence with preliminary indications of hydrocarbons in both wells;
  • All Valeura lands remain in good standing with no unsatisfied work commitments; and
  • The Company is exploring the potential for mergers and acquisitions to grow its portfolio, capitalising on the current market environment.

Valeura remains committed to safe ongoing operations and has taken precautious both to protect the well-being of its staff and to sustain its ongoing production and revenue generation in Turkey. At the same time, the Company continues to pursue appraisal of the deep unconventional gas play and following the doubling of its working interest after Equinor’s exit and is commencing the process to seek a new partner for the play.  The Company’s strong financial position, with an end-Q1 2020 working capital surplus of $34.1 million and no debt, affords it significant flexibility to support its strategy to extract maximum value from both its shallow conventional production and deep unconventional plays in the Thrace basin of Turkey.



Sean Guest, President and CEO commented:

“Keeping our people safe is our highest priority, and we are taking direction from public health authorities and medical professionals on how to both remain safe and continue operations. Our Q1 2020 results are an example of how even in the face of substantial new challenges due to the COVID-19 pandemic, we can maintain our health and safety record while continuing critical operations to maintain the supply of gas to our customers. By having direct control of the value chain all the way from the wellhead to the customer, coupled with pricing that has not been influenced by the recent sharp decline in crude oil prices, our shallow gas business is fundamentally well-positioned to remain resilient in these times.

“At the same time, we remain committed to our deep, tight gas play, and are commencing the process of securing a new partner to participate in an ongoing appraisal work programme. In the near term we will continue to work toward more low-cost data collection, including plans to resume long-term production testing at Devepinar-1.

“Valeura remains in a strong financial position, with a gas production asset that generates cash flow even in times of economic turmoil, and significant option value on a potentially very large unconventional gas play. We will continue to closely monitor economic conditions in Turkey, and to course-correct our operations as required to protect our ongoing revenue generation.  With appropriate safeguards in place, we are well positioned to ride out the current economic turmoil and expect to emerge strong.”


Financial and Operating Results Summary

 Three Months Ended March 31, 2020Three Months Ended December 31, 2019Three Months Ended March 31, 2019
Financial (thousands of US$ except share amounts)   
Petroleum and natural gas revenues2,8082,6532,918
Adjusted funds flow (1)521,595341
Net loss from operations(192)(735)(2,310)
Exploration and development capital1,8823,6694,273
Banarli Farm-in proceeds (2)(1,452)
Net working capital surplus34,05437,64543,811
Cash 32,55436,11147,800
Common shares outstanding


Share trading (CDN$ per share)
Crude oil (barrels (“bbl”)/d)1720
Natural Gas (one thousand cubic feet (“Mcf”)/d)4,2003,8774,488
Average reference price
  Brent ($ per bbl)
  BOTAS Reference ($ per Mcf) (3)

Average realised price
  Crude oil ($ per bbl)
  Natural gas ($ per Mcf)

Average Operating Netback ($ per boe) (1)24.9524.5325.30


See the MD&A filed on SEDAR for further discussion.

  1. The above table includes non-IFRS 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. Proceeds received from Equinor to complete spending commitment for Phase 2 of the Banarli Farm-in. Recorded in the financial statements as a reduction of exploration and evaluation assets.

  3. BOTAS regularly posts prices and its Level-2 Wholesale Tariff benchmark is shown herein as a reference price. See the Company’s AIF filed on SEDAR for further discussion.

Net petroleum and natural gas sales in Q1 2020 averaged 716 boe/d, which was 11% higher than Q4 2019. While the Company experienced reduced gas demand by some of its light industrial customers in the latter part of Q1 2020 due to COVID-19, the reduction was managed primarily by curtailing third-party gas throughput, thereby imposing only minimal reductions to Valeura’s equity gas production. Through this production management, the Company continues to benefit from the impact of successful well workovers performed in late 2019 and early in Q1 2020.

Production revenue in Q1 2020 was $2.8 million, an increase of 6% over Q4 2019 due to the higher production in Q1, partly offset by the impact of a stronger US dollar on price realisations. Turkey’s gas prices were unchanged from the prior quarter, as denominated in Turkish Lira.

Exploration and development capital spending was $1.9 million in Q1 2020, comprised of $1.1 million spent on shallow operations, with the remainder on concluding the Devepinar-1 short-term production test and completing the well in preparation for a long-term production test.

As of March 31, 2020, the Company had a net working capital surplus of $34.1 million, of which $32.6 million was cash. This compares to a net working capital surplus of $37.7 million at December 31, 2019, of which $36.1 million was cash.  The decrease in the Company’s reported cash position was due in part to the strengthening of the US dollar in relation to the Canadian dollar, reflecting the fact that the Company holds its cash in a mix of US dollar and Canadian dollar accounts.  In addition, the Company incurred non-recurring expenses in Q1 2020, including severance payments, which are not expected in the remaining quarters of 2020.


Operations Update

Valeura’s gas production continues to generate strong operating netbacks, most recently averaging $24.95/boe during Q1 2020. This creates a stream of operating income for the business and also underscores the long-term potential value of the Company’s unconventional gas resource.

During the first part of Q1 2020, Valeura continued its programme of selective low-cost well workovers across its conventional production base, leading to increased production capacity. Workover operations, along with other non-critical field work, were suspended in March 2020 as part of the Company’s measures to protect the health of the Company’s employees and contractors due to the COVID-19 pandemic. While Valeura is maintaining its production operations, the Company acknowledges that the combined effect of reduced field activity, the potential for lower industrial gas demand in light of COVID-19, and the upcoming holiday period at the end of Ramadan, is expected to have a negative impact on Q2 2020 production volumes.

The Company has drilled two shallow exploration commitment wells, Kuzey Atakoy-4 and Bati Sariyer-1, on its West Thrace exploration licence.  At Bati Sariyer-1, the Company observed positive indications of hydrocarbons during drilling, and is preparing for wireline evaluation of the objective section.  Wireline logs from Kuzey Atakoy-4 indicate gas zones, but this will need to be confirmed with production testing.  This testing is planned to begin once safe field operations can resume and the Company has constructed pipelines to tie the wells to its gas sales network.

The Company is continuing to assess the potential for further exploitation from its producing fields by converting reserves into production. A technical study will be completed in Q2 2020 with recommendations on further infill drilling opportunities. With suitable equipment and a capable workforce available in country, Valeura can ramp up investment activities rapidly once public health guidelines permit doing so.

All production leases and exploration licences remain in good standing with no unsatisfied work commitments. On March 26, 2020 the Government of Turkey approved a 10-year extension of the Company’s Hayrabolu Production Lease until February 16, 2030. In April, the Company submitted applications for the first 2-year extension period for the Banarli and West Thrace Exploration Licences. Early in Q2 2020, Valeura exited from the non-core Edirne Production Lease, which has not had any production or activity for several years and is no longer deemed prospective.

Valeura remains committed to the appraisal of the deep tight gas play, as the management and directors continue to see the potential for significant long-term gas production. During Q1 2020, Equinor announced their intent to discontinue participation in the deep tight gas play, and their exit was completed early in Q2. As a result, Valeura’s working interest in the deep play has effectively doubled, resulting in the Company holding 100% in the Banarli exploration licences, and 63% of the deep rights in the West Thrace Exploration Licence and production leases. Valeura remains operator of all the blocks.

Valeura recognises that the deep gas play is at an early phase of its life cycle and will ultimately require more drilling and testing. The Company has begun seeking an additional partner to participate in the deep unconventional play and intends to engage an advisor, with a mandate to secure a suitable candidate. The target will be a partner who brings both financial and technical capability to the joint venture, for a carried work programme that is expected to include drilling new vertical and horizontal wells, reservoir stimulation, and production testing.

In the near term, the Company is pursuing a programme of low-cost data collection for the deep play and plans to re-start production from the Devepinar-1 well for a longer-term test. Valeura is currently in the process of securing suitable equipment and the timing for field operations is likely to be influenced by restrictions on movement of people and equipment as a result of the global COVID-19 response.

Valeura is also exploring the potential for inorganic opportunities including mergers and acquisitions to play a role in the Company’s growth, particularly in light of recent economic turmoil which may result in new opportunities emerging across the region. In all instances, the Company will evaluate opportunities to assess strategic fit, with a priority on adding value to the portfolio in the near to mid-term and retaining relative balance sheet strength.


Annual and Special Meeting

Valeura has rescheduled its annual and special meeting of shareholders as a result of restrictions on public gatherings due to COVID-19. The Company is now planning to hold the meeting on August 12, 2020 at 9:00 a.m. (MDT), in Calgary. The meeting materials will be mailed in early July 2020.


Webcast and Conference Call

The management team will host an investor and analyst call and question session at 9:00 a.m. Calgary (11:00 a.m. Toronto, 4:00 p.m. London) today, Tuesday, May 12, 2019. A live audio feed of the call will be available via the webcast link below, and those interested in participating in the question session should use the dial-in numbers below. Please register approximately 15 minutes prior to the start of the call. The quarterly results will be made available on the Company’s website at:

Event title: Valeura First Quarter 2020 Results Conference Call
Webcast link:
Calgary dial-in: +1 587 880 2171
Toronto dial-in: +1 416 764 8688
North America toll-free: +1 888 390 0546
UK toll-free: +44 0800 6522 435


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


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: resumption of the Company’s operations following the COVID-19 pandemic; the potential for hydrocarbons at Kuzey Atakoy-4 and Bati Sariyer-1 wells and that production testing will confirm such; the ability to extract maximum value from both its shallow conventional production and deep unconventional plays in the Thrace basin of Turkey; the resiliency of the Company’s shallow gas business; the short-term impact of COVID-19 and the Ramadan holiday period on Q2 2020 production volumes;  the ability to conduct a long term test on Devpinar-1; the completion of geological and geophysical studies on the Banarli Exploration Licences and resulting satisfaction of the work programme obligations thereon in the current term of the licences; the potential of a deep gas play in the Thrace Basin; the completion of the Company’s technical study assessing the potential for further exploitation of its conventional shallow play; management’s belief regarding the potential of the Company’s deep basin-centred gas play and shallow gas business in the Thrace Basin; the optimisation of the Company’s conventional shallow gas assets; the Company’s ability to find another partner for the deep unconventional gas appraisal programme; the ability to secure new equipment; the Company’s commitment to safety, environmentally responsible practices and optimising operational and administrative functions; the Company’s business strategy and outlook, operational plans, and expected capital expenditures; and the potential for inorganic opportunities to play a role in the Company’s growth.

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; the impact of Equinor’s withdrawal from joint operations; continued operations of and approvals forthcoming from the Turkish government in a manner consistent with past conduct; future drilling activity on the expected timelines; the prospectivity of the TBNG JV Lands and Banarli Exploration Licences, 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; 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 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, threats to security and safety of personnel and potential property damage related to political issues or civil unrest in Turkey; 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 2019 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 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.