Calgary, August 12, 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 toreport its financial and operating results for the three month period ended June 30, 2019, and to report a positive production test at the Inanli-1 appraisal well, where the Company has successfully flowed natural gas from the first stimulated zone.

Highlights from Q2 2019 and beyond

  • Achieved a safety milestone of 801 days of continuous operations without a lost time incident;
  • Q2 2019 average production of 700 boe/d, down 5% from Q2 2018 and down 9% from Q1 2019;
  • Q2 2019 operating income of $1.8 million was 20% higher than Q2 2018 and 21% lower than Q1 2019;
  • Q2 2019 average realised gas price of $8.54/Mcf, 15% higher than Q2 2018 and down 7% from Q1 2019;
  • BOTAS reference gas price increased 15% on August 1, 2019, equivalent to $10.35/Mcf;
  • Net working capital surplus of $52.3 million at June 30, 2019 ($56.1 million at March 31, 2019);
  • Completed drilling operations on the Devepinar-1 appraisal well safely and well under budget.


Highlights from Inanli-1 Appraisal Well Testing

  • A 21 metre gross interval, between 4,263 and 4,284 metres was stimulated;
  • The well has been flowing since August 3, 2019 and is still cleaning up using artificial lift;
  • Gas flow is currently stable and the average rate for the first eight days of production is 643 Mcf/d;
  • Water is currently being recovered at a low rate of 44 bbls/d and hascontinued to decline daily;
  • Condensate-gas ratio is low in this zone at 5 bbl/MMcf.


The Company’s focus for Q3 and Q4 2019 is to continue testing the flow potential of the significant, interpreted gas columns encountered in its new appraisal wells to de-risk the commerciality of its 10 Tcfe (286 BCM) of unrisked gas resource, including 236 MMbbl (32 MMTonnes) of condensate, net to Valeura. The stimulation and production testing is being conducted on a zone-by-zone basis to provide more definitive flow characteristics. Identifying specific zones that can sustain gas flow will be important to demonstrate the commerciality of the Company’s Basin Centred Gas Accumulation (“BCGA”) play and will underpin the work programme for the next stage of appraisal.


Sean Guest, President and CEO commented:

“I am very pleased with our second quarter results.  Price realisations and operating netbacks remain strong and are getting stronger with the recent increase in BOTAS’ reference price.  At the same time, our team has done an excellent job offsetting natural declines and maintaining production from our conventional shallow reservoirs, which is helping to preserve our strong financial position, including our net working capital surplus of $52.3 million. 

“These favourable netbacks help illuminate the long-term economics for gas production in Turkey.  Meanwhile, the substantial value of our BCGA play is becoming clearer with every step of our appraisal programme. At the Inanli-1 well, we have stimulated the deepest reservoir zone ever tested in the BCGA, and initial results have been very encouraging with a good, stable gas flow and minimal water production. We are excited by the indications of potential commerciality at this depth and look forward to the results from shallower zones.”

Financial and Operating Results Summary

Three Months Ended June 30, 2019 Three Months Ended March 31, 2019 Six Months Ended June 30, 2019 Three Months Ended June 30, 2018 Six Months Ended June 30, 2018
(thousands of CDN$ except share amounts)
Petroleum and natural gas revenues 3,265 3,880 7,145 2,949 6,418
Adjusted funds flow (1) 1,034 454 1,488 461 1,006
Net loss from operations (2,148) (3,070) (5,218) (1,404) (3,839)
Exploration and development capital 4,081 5,682 9,763 1,128 2,002
Banarli Farm-in Proceeds (3) 1,930 1,930
Net working capital surplus 52,272 56,060 52,272 60,296 60,296
Cash 50,581 63,847 50,581 55,945 55,945
Common shares outstanding
.  Basic
.  Diluted
Share trading
.  High
.  Low
.  Close
   Crude oil (barrels (“bbl”)/d) 20 10 9 12
   Natural Gas (one thousand cubic feet (“Mcf”)/d) 4,202 4,488 4,344 4,360 4,711
   boe/d 700 768 734 736 797
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 box ) (1) 28.55 33.64 31.20 22.53 24.05


See the Company’s Management’s Discussion and Analysis for the three and six months ended June 30, 2019 and 2018 filed on SEDAR for further discussion.
  • 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.
  • BOTAS regularly posts prices and its Level-2 Wholesale Tariff benchmark is shown herein as a reference price. See the Company’s 2018annual information form (“AIF”) filed on SEDAR for further discussion.
  • 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 As


Net petroleum and natural gas sales in Q2 2019 averaged 700 boe/d which was 5% lower than Q2 2018. Production was 9% lower when compared to Q1 2019 as a result of a one-week customer shutdown associated with the Eid holidays, no oil liftings were recorded in the quarter, and natural declines in the reservoirs.

Production revenue in Q2 2019 was $3.3 million, an increase of 11% relative to Q2 2018, but a decrease of 16% from Q1 2019. The recent decrease is primarily the result of lower production during the quarter combined with a reduction in gas price realisations when expressed in Canadian dollars.

On August 1, 2019, BOTAS increased the reference price for gas 14.7%, more than offsetting declines in the value of the Turkish Lira in the first half of 2019. In Canadian dollar terms the BOTAS reference price is $10.35/Mcf as of August 1, 2019. This realised price will vary going forward depending on changes in the Turkish Lira exchange rate.

Exploration and development capital spending was $4.1 million in Q2 2019, a decrease of 28% from Q1 2019 reflecting the end of drilling operations at the Devepinar-1 well in April 2019.

As of June 30, 2019, the Company had a net working capital surplus of $52.3 million compared to $56.1 million at March 31, 2019 primarily due to capital expenditures offset by cash flow from the business.


Testing Results on Inanli-1 First Zone

The first of a series of production tests on Inanli-1 was designed to test a single 21 metre zone between 4,263 and 4,284metres. Petrophysical data indicate the zone is moderately fractured and has 14.2 metres of net sand (above a 3% porosity cutoff) with an average porosity of 5%. Approximately one third of the originally intended volume of proppant was successfully deployed into the reservoir, resulting in a relatively small reservoir stimulation, both in terms of the net reservoir stimulated and the amount of fluid and proppant used.

Despite the relatively small reservoir stimulation, the resulting gas flow is highly encouraging. Production tubing was installed directly after the stimulation and artificial lift was applied to accelerate the cleanup of the well and to improve the quality of the acquired data. Production through tubing commenced on August 3, 2019 and the average gas rate for the first eight days was 643 Mcf/d. The quoted gas rate is the actual gas produced from the reservoir, and does not include any of the gas used for artificial lift. The gas has no material impurities or contaminants and accordingly the majority of the test volumes are being produced into the Company’s gas infrastructure and sold to customers.

The results of the test are also very positive in terms of recovered water. There has been a continual and steady decrease in the amount of water recovered during flowback. The rate on day eight of production had decreased to 44 bbl/d. Importantly, the water rate is decreasing very much in line with general expectations for the recovery of stimulation fluids from an unconventional reservoir. The current low aggregate water rate (stimulation fluids and/or formation water) is interpreted to be relatively insignificant and not a concern for commercial production.

The condensate-gas ratio (“CGR”)was measured as 5 bbls/MMcf, and while the figure has varied slightly over the eight day test, the CGR in this zone is consistently lower than measured in other production tests in the Thrace BCGA. While a lower CGR is naturally expected at deeper depths, conclusions cannot be drawn on CGR variability at this time and will require further test results from both the shallower zones in the Inanli-1 well, and from the Devepinar-1 well testing. The demonstration of the commerciality of the BCGA play is not dependent on the amount of condensate. Unlike North America, gas prices are very strong in Turkey and gas production will drive the commerciality of any development.

At this time Valeura believes it has acquired all of the key data required from this zone. The Company is reviewing these data with its partner, Equinor, to confirm when to conclude the current test.  While the base plan for Inanli-1 was to stimulate and test four zones, given the positive results from this test, discussions are also ongoing on whether to expand the number of stimulations and/or the number of tests in Inanli-1.


2019 Outlook

The Company’s near-term work programme is focused on reservoir stimulation and production testing of the new wells drilled in the BCGA to understand the flow characteristics and the fluid compositions of the rock across the wide depth range of the BCGA. These data are key to calibrating the petrophysical and core data acquired during drilling operations, and in determining the next steps in the appraisal program to progress the project towards commerciality. The Company believes a rigorous, scientific approach is critical in this early stage of appraisal to increase the chance of a commercial development of the BCGA resource.

The completion programme has been designed to capture as much key data as possible from each individual zone, and not to maximise initial production rates. The primary objectives are to demonstrate that it is possible to achieve sustained gas flow from an individual zone, and to understand the composition of gas, condensate, and potentially any water from each zone. The testing programme will evaluate different zones both vertically down through the BCGA interval and laterally across the basin, to identify those zones which exhibit the potential for commercial development. The Inanli-1 well testing is ongoing and a notional program has been discussed with our partners for the Devepinar-1 well.

Valeura is conducting scenario planning for its next appraisal steps following the ongoing stimulation and testing campaign, which will form the basis of a 2020/2021 work programme. Assuming the Company identifies one or more zones which exhibit the potential for sustained gas flow, the Company’s priority is expected to shift to maximising access to these high-graded stratigraphic intervals via horizontal wells and multi-stage reservoir stimulation, with the potential for much higher flow rates.

Valeura remains very well positioned to finance its ongoing BCGA appraisal and all corporate activities into 2020, and the Company anticipates exiting 2019 with in excess of $40 million of positive working capital.  The Company’s financing needs will be re-evaluated based on the results of the ongoing stimulation and testing programme and the resulting work programme selected for 2020 and beyond.

In all its activities, the Company adheres to a very high standard of environmental, social, and governance stewardship, and believes protecting the health and safety of all those affected by its business is paramount to its sustainability.


Webcast and Conference Call

Valeura’s management team will host an investor and analyst conference call and question session at 09:00 (Calgary) / 11:00 (Toronto) / 16:00 (London) today, Monday August 12, 2019.

Interested listeners can connect via live webcast or dial-in conference call, as indicated below.  Please register approximately 15 minutes prior to the start of the call.

Event title: Valeura Second Quarter 2019 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 6522435

The complete quarterly reporting package for the Company, including financial statements and associated management’s discussion and analysis (“MD&A”), will be filed on SEDAR at www.sedar.comand posted on the Company’s website at


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 BCGA play in the Thrace Basin on its deep rights, whichhas been evaluated by DeGolyer and MacNaughton 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.

Additional information relating to Valeura is also available on SEDAR at www.sedar.comand on the Company’s corporate website at


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


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.

Use of Unrisked Estimates

The unrisked estimates of prospective resources referred to in this news release have not been risked for either the chance of discovery or the chance of development. There is no certainty that any portion of the prospective resources will be discovered. See the 2018 AIF for details regarding risked estimates. 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.

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

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 AIF, which is available under Valeura’s issuer profile on SEDAR at, 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 and Devepinar-1 completion programmes;Valeura’s intention to stimulate and production test the Inanli-1 and Devepinar-1 wells; the timing to commence reservoir stimulation and testing and/or recompletion operations; the number of well tests Valeura intends to conduct; 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; Valeura’s expectations with respect to working capital at the end of 2019; 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 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. See the AIF for a detailed discussion of the risk factors.

Any financial outlook or future oriented financial information in this news release, as defined by applicable securities legislation, has been approved by management of Valeura, including, but not limited to, Valeura’s expectations with respect to working capital at the end of 2019. Such financial outlook or future oriented financial information is provided for the purpose of providing information about 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.

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.