Valeura Energy Inc. (VLE:TSX; PNWRF:OTCMKTS) increased its oil production 16% over the Q1/23 average rate due to two successful drill programs carried out so far this year, reported Research Capital Corp. analyst Bill Newman in a June 13 research note.
"Corporate oil production has increased to about 23,700 barrels per day (23.7 Mbbl/d)" from 20.475 Mbbl/d," Newman wrote.
Possible Return Noteworthy
Accordingly, Research Capital maintained its Buy rating and CA$8.25 per share price target on the Canadian oil and gas explorer-producer, currently trading at about CA$1.89 per share, Newman pointed out.
This price difference implies a significant potential gain for investors in Valeura of about 336%.
Offshore Well Success
The most recently finished drill program consisted of two infill horizontal wells in the Nong Yao oilfield in the Gulf of Thailand, relayed Newman. Valeura owns a 90% working interest in the related license. After being completed ahead of schedule and under budget, the wells were put into production at a combined rate of about 1.35 Mbbl/d, slightly higher than management expected.
Previously this year, nine wells were successfully drilled in the Jasmine oilfield (100% working interest), also in the Gulf.
More Production Expected
Current plans for the rest of 2023 call for two more drill programs in the Gulf of Thailand, which are expected to boost oil production and potentially positively catalyze the company's stock price, wrote Newman.
Given drilling success so far this year, Valeura decided to finish out 2023 using only one rig. It is already at the Manora oilfield (70% working interest), where the drilling of three infill wells will commence soon.
"The program is expected to add production and could extend the life of the [Manora] field beyond 2025," Newman wrote.
Following Manora, five infill wells are slated to be drilled, starting around August, in the Wassana oilfield (100% working interest).
The Wassana program is "expected to increase field production to about 5 Mbbl/d in late Q4/23," added Newman.
Another upcoming catalyst, expected in August, is the release of Valeura's Q2/23 financial and operational results.
Further Cost Savings Likely
In a final comment in his report, Newman purported that while Valeura has not revised its 2023 capital budget of between US$180 million (US$180M) and US$200M, it is likely it could achieve additional cost savings due to further synergies created by the integration of the KrisEnergy and Mubadala Energy assets.
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Disclosures for Research Capital Corp., Valeura Energy Inc., June 13, 2023
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