Calgary, September 5, 2019: Valeura Energy Inc. (TSX:VLE, LSE:VLU) (“Valeura” or the “Company”), the upstream natural gas producer focused on appraising and developing an unconventional gas accumulation play in the Thrace Basin of Turkey in partnership with Equinor, is pleased toannounce a successful natural gas flow test from the second stimulated zone in the Inanli-1 appraisal well.
Based on the positive flow results from the first test (reported on August 12th, 2019), Valeura and its partner Equinor decided to add an additional test zone to the Inanli-1 work programme. The interval 4,176 through 4,217 metres was targeted to test an area of tighter and less fractured rock, slightly shallower than the first zone, to determine gas flow potential and fluid characteristics from rock in the same general stratigraphic unit as the first test, but interpreted based on petrophysics to be of lower reservoir quality. The reservoir stimulation was relatively small with approximately 15 tonnes of proppant deployed into the reservoir.
Once natural gas flow was confirmed post-stimulation by flowing gas up the casing for several hours, production tubing and artificial lift were installed to assist in cleaning up the well. The well was then flowed for approximately four days with an average net gas rate over the flowing period of 185 Mcf/d. The rate for the final 24 hours of flow was 130 Mcf/d. The fluid characteristics from this interval were similar to that produced from the first zone with a condensate-gas ratio of less than 10 bbls/MMcf. While the well was still flowing back some amount of stimulation fluid, water production was minimal with an average of approximately 4 bbl/d for the final 24-hour period of flow.
The Company believes these results are very encouraging given the ability to flow gas from what was interpreted to be a lower quality reservoir section, and the further confirmation of low water rates associated with the gas production at these depths. Attaining stabilised natural gas flow, even at relatively low rates, is the key to defining target areas for potential pilot development programmes. This work will underpin the Company’s next steps to demonstrate the commerciality of its 10 Tcfe (286 BCM) of unrisked gas resource, including 236 MMbbl (32 MMTonnes) of condensate, net to Valeura.
This second test has now concluded and the Company is currently preparing the well for the stimulation and testing of the third zone of interest. Testing in Inanli-1 is expected to extend into in Q4 2019 with all tests fully funded by Equinor.
For further information please contact:
Valeura Energy Inc. (General and Investor Enquiries) +1 403 237 7102
Sean Guest, President and CEO
Steve Bjornson, CFO
Robin Martin, Investor Relations Manager
GMP First Energy (Financial Adviser and Joint Corporate Broker) +44 (0) 20 7448 0200
Jonathan Wright, Hugh Sanderson
Canaccord Genuity Limited (Joint 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, Billy Clegg, Monique Perks, Thayson Pinedo
About Valeura Energy
Valeura Energy Inc. is a Canada-based public company engaged in the exploration, development and production of petroleum and natural gas in Turkey.
Since Valeura was established in 2010, the Company has executed a number of transactions and currently holds interests in 20 production leases and exploration licences in the Thrace Basin of Turkey totalling 0.46 MM acres (gross) or on a net basis 0.37 MM acres of shallow rights and 0.26 MM net acres of deep rights.
Valeura is appraising an unconventional basin-centered gas accumulation (“BCGA”) play in the Thrace Basin on its deep rights, whichhas been evaluated by DeGolyer and MacNaughton, an independent reserves auditor, to hold, effective December 31, 2018, 10.1 Tcfe of estimated working interest unrisked mean prospective resources of natural gas, which includes 236 MMbbl of condensate. By applying 3D seismic, modern reservoir stimulation technology and horizontal and deeper vertical well drilling, Valeura is aiming to achieve commercial scale operations from this tight gas resource.
In addition, the Company owns an extensive network of gas gathering and sales infrastructure to support direct marketing of natural gas to end users, and in Q2 2019, produced an average of 4.2 MMcf/d of natural gas from conventional gas accumulations in its shallower rights.
The Company is listed on both the Toronto Stock Exchange under VLE and on the Main Market of the London Stock Exchange under VLU.
Oil and Gas Advisories
Short Production Test Rates
The short production test rates disclosed in this news release are preliminary in nature and may not be indicative of stabilised on-stream production rates, long-term performance or ultimate recovery. There is currently no long-term flow information for the deep, unconventional BCGA. While the same geological formations that are producing gas in the shallow are being targeted in the deep, unconventional play, they are in a different depth, pressure environment and generally have a low porosity and permeability such that any type curves from the shallow are not expected to be indicative of deep, unconventional well production rates.
Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development.
There is no certainty that any portion of the prospective resources will be discovered. If a discovery is made, there is no certainty that it will be developed or, if it is developed, there is no certainty as to the timing of such development or that it will be commercially viable to produce any portion of the prospective resources.
Please see the Company’s 2018 annual information form (“AIF”), which is available under Valeura’s issuer profile on SEDAR at www.sedar.com, for more information with respect to the Company’s prospective resources, including details regarding risked estimates.
Forward-Looking Statements and Cautionary Statements
This news release contains certain forward-looking statements and information (collectively referred to herein as “forward-looking information”) including, but not limited to: the characteristics and objectives of the Inanli-1 completion programme;Valeura’s intention to continue to stimulate and production test the Inanli-1 well; the anticipated timing for the testing and stimulation of the third zone of interest in the Inanli-1 well; the expectation that Equinor will fund the testing and stimulation programme for the Inanli-1 well; the expectation that future initial production rates and ultimate recoveries per well will increase with horizontal drilling and multi-stage reservoir stimulation; the expectation that sustained flow will increase the chance of commercial development; Valeura’s expectations regarding formation water and frack fluid recovery; the Company’s priorities with respect to its work programme; the assessment of the resources in the test formations; the potential of the Company’s unconventional basin-centered gas accumulation play in the Thrace Basin; and the Company’s intention to achieve commercial scale operations. Forward-looking information typically contains statements with words such as “anticipate”, “estimate”, “expect”, “target”, “potential”, “could”, “should”, “would” or similar words suggesting future outcomes. The Company cautions readers and prospective investors in the Company’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 Company.
Statements related to “prospective resources” are deemed forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the prospective resources can be profitably produced in the future. Specifically, forward-looking information contained herein regarding “prospective resources” include volumes of prospective resources and the ability to finance future development and, the conversion of a portion of prospective resources into reserves.
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 Company is operating; continued safety of operations and ability to proceed in a timely manner; continued operations of and approvals forthcoming from the Turkish government and regulators in a manner consistent with past conduct; future seismic and drilling activity on the expected timelines; 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 licenses 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, reservoir 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; 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 news release is expressly qualified in its entirety by these cautionary statements. 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. See the AIF for a detailed discussion of the risk factors.
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.