Valeura Energy Eyes Transformational Deal With $700 Million in Liquidity

Key Points

• Valeura Energy has more than $700 million in liquidity, including $385 million in cash and no debt, and is evaluating Southeast Asian acquisitions producing 25,000–50,000 barrels per day. It aims to pursue a transformational deal without diluting shareholders, while targeting debt of around one times EBITDA if borrowing is needed.
• The Wassana redevelopment lifted estimated reserves from 6 million to about 20 million barrels and is expected to raise production from roughly 3,000 to 10,000 barrels per day by mid-2027, with first output anticipated around late Q1 or early Q2.
• Valeura reported about $100 million in second-quarter free cash flow, though the quarter benefited from high oil prices and selling more oil than it produced. It also cited reserve replacement above 200% annually and is advancing gas development with PTTEP, targeting initial production at Bussabong from late 2028.

Valeura Energy TSE: VLE is pursuing acquisitions in Southeast Asia while investing in its existing Thai oil and gas assets, President and CEO Sean Guest said during an Oil and Gas Conference presentation.

Guest said the company had $385 million in cash and no debt, with total liquidity of just over $700 million after putting a debt facility in place. Valeura is examining potential acquisitions producing roughly 25,000 to 50,000 barrels of oil per day, which he said could be transformational for the company.

“What we are trying to do is assure we can do a major transformational deal without actually having to dilute the shareholders,” Guest said. In response to a question, he said Valeura would be willing to use debt for an acquisition but would aim for a debt-to-EBITDA ratio of around one times.

Wassana redevelopment targets production increase

A central part of Valeura’s organic growth plan is the redevelopment of its Wassana oil field in the Gulf of Thailand. The field was suspended when Valeura acquired it from KrisEnergy, Guest said.

Guest said Valeura’s decision to install a new central processing platform and redevelop the field increased its reserves estimate from 6 million to about 20 million barrels and extended its expected life from 2027 into the early 2040s.

Construction and offshore installation were completed about two months ahead of schedule, he said. Valeura expects to begin drilling by the end of this year, with first production from the redevelopment around the end of the first quarter or early in the second quarter of 2027. Guest said the company expects Wassana production to rise from about 3,000 barrels per day currently to 10,000 barrels per day by the end of the second quarter of 2027.

Guest also said the redevelopment is expected to lower operating costs and that Valeura sees potential for satellite developments around the field. Those future extensions would require further work.

Exploration partnership with PTTEP

Valeura holds a 20% interest in exploration blocks in the Gulf of Thailand alongside PTTEP, Thailand’s national oil company. Guest said the partnership is intended to combine Valeura’s oil operating experience with PTTEP’s gas expertise.

At Bussabong, the partners have made a final investment decision to install two platforms and develop gas discoveries. Guest said the initial development is expected to produce about 40 million standard cubic feet of gas per day gross, beginning at the end of 2028. He said additional discoveries and platforms could expand the project, although the upper end of that potential would depend on exploration success.

Near Valeura’s Nong Yao oil field, Guest said he expects an exploration rig to begin work in the first quarter of next year. The company sees potential for oil discoveries that could be tied back to its existing facilities.

Cash flow and reserves

Guest said Valeura generated about $154 million in operating cash flow in the second quarter and spent about $54 million on capital expenditures, leaving approximately $100 million in free cash flow. He cautioned that the quarter benefited from high oil prices and from the company selling more oil than it produced.

Valeura is fully unhedged, Guest said, and its oil is benchmarked against international pricing. He also said a restructuring involving KrisEnergy tax losses meant three of Valeura’s four fields were not currently paying taxes.

Guest said Valeura had replaced more than 200% of its reserves each year and held 58 million barrels of reserves at the end of last year, compared with 29 million when it began the journey. He acknowledged that the company was not currently demonstrating production growth, but said cash generation and reserve additions had extended the potential life of its assets.

About Valeura Energy (TSE:VLE)

Valeura Energy Inc is a Canadian public company engaged in the exploration, development and production of petroleum and natural gas in Thailand and Türkiye. The Company is executing a growth-oriented strategy, reinvesting into its producing asset portfolio while deploying capital toward further organic and inorganic growth across Southeast Asia. Valeura is committed to delivering value-accretive growth for all stakeholders, underpinned by high standards of environmental, social and governance responsibility.

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