Valeura Energy Inc. ("Valeura" or the "Corporation") (TSX: VLE) is pleased to report highlights of its unaudited financial and operating results for the three month period ended December 31, 2016, audited results for the year ended December 31, 2016, year-end 2016 reserves and an update on subsequent developments. The complete quarterly reporting package for the Corporation, including the audited financial statements and associated management's discussion and analysis ("MD&A") and the 2016 annual information form ("2016 AIF"), have been filed on SEDAR at www.sedar.com and posted on the Corporation's website at www.valeuraenergy.com.
BUSINESS RESET COMPLETE
In the fourth quarter of 2016 the Corporation focused its efforts on transactional activity to reset the business and was successful in subsequently closing four inter-linked transactions in early 2017. These transactions have transformed the Corporation in terms of scaling-up the business, providing operational control and boosting financial capacity, which is expected to enable the Corporation to ramp-up drilling and grow production. The Corporation anticipates that these benefits will be evident through the course of 2017.
As a measure of this transformation, through the acquisition of the Corporation's joint venture partner TBNG, effective February 24, 2017, the Corporation doubled its participating interest in the TBNG JV lands, a core shallow-gas producing asset, and took over operatorship of the TBNG JV. The Corporation's patience in pursuing this long-standing acquisition target was rewarded by the successful negotiation of a series of concurrent transactions with Statoil, which provided cash to effectively fund the TBNG Acquisition in a non-dilutive way.
These pro forma accretion metrics include the impact of an increase of 25% in the shares outstanding associated with the completion of the Offering, which provided gross proceeds of approximately $11 million, concurrent with the close of the TBNG Acquisition. These funds from the Offering and Statoil have boosted working capital to support a ramp-up of drilling in 2017.
"As our attention now turns from this complex transactional work to a focus on safe, efficient and effective operations in 2017, we have brought onboard a capable TBNG operating organization of more than 50 people and have hired a select number of new employees in Turkey as part of a comprehensive transition management plan including the handover of support functions previously provided by TransAtlantic", said Jim McFarland, President and Chief Executive Officer. "This business reset puts us in the best position in our history in terms of operational control. We had a good start to the year with a drilling success at the Dogu Atakoy-3 well and are excited about the catalysts in front of us. We are ready to move forward in the second quarter with an operated multi-well shallow gas drilling program and to spud the first deep 4,000 metre exploration well at Banarli, funded by Statoil, and also operated by Valeura," McFarland added.
Q4 2016 RESULTS AT A GLANCE
West Thrace Deep Rights Sale
Subsequent West Thrace Deep Rights Sale
TBNG JV and Banarli Shallow Gas Program
Banarli Deep Exploration Program
The Corporation is planning a capital expenditure program of $13 to 15 million (net) in 2017 focussed entirely on the shallow gas business. This level of spending is contingent on closing the Subsequent West Thrace Deep Rights Sale, and some stabilization of the Turkish Lira exchange rate and the BOTAS Reference Price (denominated in Turkish Lira). The capital program is expected to include drilling of up to seven wells (gross) in the shallow formations on the TBNG JV lands and Banarli licences, targeting 2017 exit rate sales of approximately 1,500 boe/d (net). This outlook is lower than earlier preliminary projections due to delays in completing the inter-linked transformational transactions, including the Banarli Farm-in, the West Thrace Deep Rights Sale, the TBNG Acquisition and the Offering, reflecting a longer than expected Turkish government approval process.
The Corporation also expects that the Banarli Farm-in program, fully funded by Statoil and operated by Valeura, will commence with the spudding of a deep exploration well in Q2 2017 under Phase 1 of the Banarli Farm-in and the start of the 3D seismic acquisition in Q3 2017 under Phase 2.
ABOUT THE CORPORATION
Valeura Energy Inc. is a Canada-based public company currently engaged in the exploration, development and production of petroleum and natural gas in Turkey.
SOURCE: Valeura Energy Inc.
The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.