2023 Highlights
- Closed the Mubadala Acquisition(1) for cash consideration of US$10.4 million, adding three producing offshore Gulf of Thailand fields to the Valeura portfolio;
- Four producing fields yielded average oil production of 20,440 bbls/d(2);
- Restarted production from the Wassana field and drilled appraisal wells which confirmed the presence of oil deeper than previously proven, leading to a potential re-development of the field and extension of field life beyond 2030;
- Drilling activity extended the economic life of all fields in the Company’s Thailand portfolio;
- Replaced more than double the volume of oil produced by all fields in 2023 – 219% through proved (1P) and proved plus probable (2P) reserves additions (reserves replacement ratio);
- Generated adjusted cash flow from operations of US$152 million(3);
- Fully paid off debt and had accumulated cash of US$151 million as of December 31, 2023;
- Further strengthened the balance sheet by reassessing and reducing decommissioning obligation on the balance sheet by 30% to US$129 million(4);
Increased 2P net present value (NPV) before tax to US$616 million and US$429 million after tax(5); and
- Considering year end 2023 cash position, increased 2P net asset value (NAV) after tax to US$579 million, equating to C$7.56 per share(6).
The Company’s Q4 2023 financial performance reflects ongoing oil production which averaged 19,165 bbls/d leading to sales of 1.987 million bbls and generating oil revenue of US$169.9 million. Production during the quarter was primarily from the Company’s Jasmine, Nong Yao, and Manora oil fields, with the Wassana field contributing only minor volumes due to being offline for much of Q4. The Company implemented operating changes at the third-party operated storage vessel to enhance safety, and production at the Wassana field was restarted on December 8, 2023. Production rates, as shown, are the Company’s working interest share, before royalties.Sean Guest, President and CEO commented:
“I am very pleased to present our first full year financial results which reflect the true scale of our now-transformed business. Through the Gulf of Thailand acquisitions we completed in 2022 and 2023 and the hard work our team has performed throughout the year, Valeura has become a strongly cash flow generating business, with assets that are exceeding expectations on all fronts.
Importantly, we have also created a clean and resilient balance sheet. The cash flow capacity of our assets has allowed us to rapidly pay off all debt and exit the year with US$151 million in cash. We have also seen our decommissioning obligations drop to US$129 million, a 30% reduction from the total we reported just after closing the Mubadala Acquisition. Valeura’s financial position is exceptional and positions us very well for further growth.
Drilling activity and studies performed in 2023 resulted in our independent third-party reserves evaluator significantly increasing reserves volumes and value. The life of all fields was extended on the back of a reserves replacement ratio of 219%. Additionally, appraisal of the Wassana field has proven more oil than previously reported which will underpin a 2024 decision on field expansion. This increase in 2P reserves value, when coupled with our cash, generates a net asset value of over C$7/share.
The complementary nature of our assets is becoming increasingly apparent as we completed the process to merge the companies into a single organisation. We reduced unit operating costs in 2023 and the team are enthusiastically seeking further synergies in cost optimisation and tax efficiency as we look to 2024.
We intend to continue to aggressively pursue value through our growth-oriented strategy, which continues to include aspirations to growth both organically and inorganically by way of mergers and acquisitions opportunities, which we continue to see in our core Southeast Asia region.
We continue to drive safety and sustainability as a priority throughout our operations and will publish our inaugural sustainability report in the near term to articulate key performance metrics for the business in 2023. Through the sustainability report we aspire to be transparent about our performance and to create a baseline from which to measure improvement over time, so as to best assure the ongoing sustainability of our business.”
For the full year of 2023 (which effectively covers the period of March 22, 2023 through December 31, 2023 during which Valeura operated the assets acquired via the Mubadala Acquisition), total oil sales were 5.854 million bbls, generating oil revenue of US$493.5 million. This equates into an average oil production rate of 20,440 bbls/d for the 285-day period from March 22, 2023, the date on which Valeura closed the Mubadala Acquisition.
Valeura’s average realised price for crude oil sales was US$85.5/bbl in Q4 2023, reflecting an average premium to the Brent crude oil benchmark of approximately US$1.2/bbl. For the year ended December 31, 2023, Valeura’s average realised price was US$84.3/bbl, which was a premium of US$2.2/bbl above the Brent crude oil benchmark. Realised prices during both Q4 and the full year 2023 were broadly in line with the Company’s guidance expectation for realised prices throughout the year being approximately on par with the Brent crude oil benchmark.
In Q4 2023, operating expenses were US$49.6 million, and Adjusted Opex (a non-IFRS measure which is more fully described in the “Non-IFRS Financial Measures and Ratios” section of this news release) were US$51.8 million, or US$29.4/bbl on a unit basis. Q4 operating costs reflect a relatively higher volume of maintenance activity and well workovers than previous quarters and was consistent with the Company’s plans and included in its 2023 guidance estimates. For the year ended December 31, 2023, Adjusted Opex averaged US$28.4/bbl on a unit basis.
During Q4 2023 and full year 2023, the Company generated Adjusted Cash Flow from Operations (a non-IFRS measure which is more fully described in the “Non-IFRS Financial Measures and Ratios” section of this news release) of US$58.2 million, and US$137.3 million, respectively. During Q4 2023, Valeura generated comprehensive income of US$57.4 million, compared to a comprehensive loss of US$7.9 million in Q4 of 2022. For the full year ended December 31, 2023, comprehensive income was US$246.0 million, compared to a comprehensive loss of US$15.2 million for the full year ended December 31, 2022.
Valeura incurred total tax expenses of US$71.2 million during the year ended December 31, 2023.
Valeura’s current and non-current debt at December 31, 2023 was nil, compared to US$11.1 million at December 31, 2022. During the year 2023, the Company increased its debt through draws from a facility arrangement (more fully described in the AIF), then fully repaid the debt during Q4 2023.
As at December 31, 2023, Valeura had cash and cash equivalents of US$151.2 million (including restricted cash of US$17.3 million), compared to US$17.6 million as at December 31, 2022. The change in cash position reflects the combined effect of net cash inflows as a result of closing the Mubadala Acquisition just before the end of Q1 2023, and positive after-tax net cash flows from its ongoing oil production business throughout the remainder of 2023.
As the Company’s current and non-current debt at December 31, 2023 was nil, the Company’s December 31, 2023 net cash balance was comprised of only its cash and cash equivalents, of US$151.2 million.