Energy Co. to Redevelop Oil Field in Gulf of Thailand
Research Report

Valeura Energy Inc. (VLE:TSX; PNWRF:OTCMKTS) decided to redevelop Wassana in the Gulf of Thailand, "marking a major step forward in unlocking the field's full potential," reported Research Capital Corp. Analyst Bill Newman in a May 14 research note. In other news, the energy company's Q1/25 financial and operational results were slightly ahead of expectations.

"The decision to proceed with the Wassana redevelopment underscores the company's confidence in the long-term value of its portfolio and highlights the additional running room remaining across its asset base," Newman wrote. "Valeura posted a strong [first] quarter, with its Gulf of Thailand assets continuing to deliver steady performance and solid cash flow."

77% Return Potential

Research Capital maintained its CA$14 per share (CA$14/share) target price on the Canadian oil and gas exploration and production (E&P) company, now trading at about CA$7.92/share. From this price, the return to target is 77%.

Valeura remains a Buy.

The company has 106.7 million (106.7M) basic shares outstanding and 108.5M fully diluted shares outstanding. Its market cap is CA$844.70 million (CA$844.70M). Its 52-week range is CA$3.98–9.32 per share.

Maximizing Wassana Asset

Newman discussed the plan for and implications of Valeura's redevelopment in the Wassana oil field, in which the company has a 100% working interest. At Wassana a new central processing platform will be built and in such a way as to optimize production throughout the block. On this, Valeura expects to spend about US$120M, US$40M of it in 2025 and the rest next year. The company will fund all of it internally with existing cash. It updated its 2025 capital budget to US$165–185M to include this project.

Redevelopment of Wassana will increase Proven and Probable reserves to 20,500,000 barrels (20.5 MMbbl), noted Newman, "representing an incremental 18 MMbbl compared to the no-action case." The project will add 16 years to the field life, extending it to 2043.

The post-redevelopment Wassana field economics will be "highly attractive," the analyst pointed out. The pretax net present value discounted at 10% will increase to US$218M from US$127M, thereby adding about CA$1.23/share to net asset value.

The company anticipates first oil in Q2/27 and peak output of 10,000 barrels per day (10 Mbbl/d).  

Operational Advancements

Along with the Wassana investment decision, Valeura made operational progress with other assets in its Gulf of Thailand portfolio during Q1/25, too.

At Jasmine, a seven-well infill drilling campaign is underway. So is installation of a low-British thermal unit gas generator, expected to reduce costs and emissions.

Annual maintenance at the Nong Yao field was finished ahead of schedule. This asset remained the strongest performer during Q1/25 in terms of volume and cost efficiency.

Valeura completed a five well infill program at Manora. The appraisal results were promising and identified potential future drill targets.

Financials a Slight Beat

Q1/25 financial results were slightly ahead of expectations, noted Newman, and he presented the highlights.

Adjusted cash flow was US$74M, higher than Research Capital's US$61.4M estimate, due to lower current taxes and operating costs. The latter averaged US$18.10 per barrel (US$18.10/bbl), down from US$22.76/bbl in the previous quarter.

During Q1/25 Valeura realized an average oil price of US$78.70/bbl, which was a US$2.90/bbl premium to Brent. At quarter's end, the oil and gas E&P had US$238.3M in cash, net of a US$39.2M tax payment related to the November 2024 corporate restructuring. Adjusted net working capital in Q1/25 was US$253.5M.

Previously reported production during the first quarter averaged 23,853 bbl/d. (Nong Yao purposefully was shut down for maintenance for seven days during the quarter.) Total production was 2.15 MMbbl, and oil sales were 1.88 MMbbl.

Valeura reiterated its full-year 2025 production guidance, which is 23–25.5 Mbbl/d.