Valeura Gains on Higher Prices in Turkey

Turkey-focused explorer Valeura has successfully flowed natural gas from the first stimulated zone, the Canadian explorer said as it announced second-quarter results. A rise in the gas price was further good news. Average production was 700 barrels of oil equivalent/d, down 5% from Q2 2018 and down 9% from Q1 2019, owing to natural decline from its conventional wells.

Its appraisal well Inanli-1 found a 21-metre gross interval, between 4,263 and 4,284 metres was stimulated and has been flowing since August 3. Gas flow is stable and the average rate for the first eight days of production is 643,000 ft³/d. Water is being recovered at a low rate of 44 b/d and has continued to decline daily while the condensate-gas ratio is low, at 5 barrels/’000 ft³ of gas.

Operating income of C$1.8 ($1,36)mn was 20% higher than Q2 2018 and 21% lower than Q1 2019 as the average price at which it sold to national monopoly Botas rose 15% to C$8.54/’000 ft³, relative to the same period last year but 9% lower than it had been in Q1 2019. And the Botas reference gas price rose again by 15% on August 1, bringing it to C$10.35/’000 ft³, pointing to better income in Q3.

Valeura made a net loss from operations of C$2.15mn, about a third more than the C$1.4mn in Q2 2019. Its exploration and development costs rose from C$1.1mn to $4.1mn. It has also completed drilling operations on the Devepinar-1 appraisal well safely and well under budget.

Valeura said its 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 trillion ft³ of unrisked gas resource, including 236mn barrels of condensate, net to Valeura.

CEO Sean Guest said that “prices 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.

"At the Inanli-1 well, we have stimulated the deepest reservoir zone ever tested in the basin-centred gas accumulation, 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."