Valeura Still Committed to Turkish Deep Gas Play

Canadian junior Valeura Energy has raised its interest in a deep gas play in western Turkey's Thrace basin following the exit of Norwegian partner Equinor, it said on April 6, adding that it was still committed to the project.

Equinor revealed it wanted to withdraw from the project in February. Its interests have now been transferred to Valeura and its partner Pinnacle Turkey. As a result, Valeura now controls 100% of deep rights at the Banarli exploration licences and a 63% interest in deep rights at the West Thrace licences. Its shallow rights are unchanged at 100% and 81.5% respectively.

Valeura said it "remained committed" to appraising the deep play despite Equinor's withdrawal, as it still sees "potential for significant long-term gas production."

"Taking into account all technical data gathered to date, the company believes that further appraisal is warranted," it said. 'The clear objective is to demonstrate stable commercial long-term flow potential by identifying the production sweet spots within the play, and optimising drilling and completion techniques and associated cost."

The initial five-year phase of the Banarli and West Thrace licences ends on June 26 2020. With Equinor's exit completed, Valeura said it would now apply for the first of three available two-year licence extensions. When Valeura is ready, the licences can be converted into production leases.

Valeura said it was in "excellent financial shape", with no debt and $36mn in cash at the end of 2019. Under the pair's 2016 farm-in agreement, Equinor has funded most of the exploration and appraisal work so far, although Valeura generates some revenue from shallow-gas production at the site.

The company's near-term focus is low-cost data collection. It plans to conduct a longer production test at the Devepinar-1 well, which will cost under $100,000/day and provide gas for sale to Valeura's customers. The timeframe for this work is uncertain, however, given the impact of the Covid-19 pandemic.

Moving forward, Valeura "will seek an additional partner to participate in the deep unconventional play," it said. "The target will be a partner who brings both financial and technical capability to the joint venture, for a work programme that is expected to include drilling new vertical and horizontal wells, reservoir stimulation, and production testing operations."