Valeura Energy Inc (VLERF) Q4 2024 Earnings Call Highlights: Strong Production Growth and Strategic Gains

Valeura Energy Inc (VLERF) recently reported its financial and operating results for the year ended December 31, 2024, highlighting a 12% increase in production driven by the successful development of the Wassana and Nong Yao fields. The company's 250% reserve replacement ratio on 2P numbers extends the life of all four fields into the 2030s, positioning Valeura for long-term sustainability and growth.



The company's operational efficiency improvements led to a reduction in OpEx to $25.7 per barrel, with CapEx coming in below guidance. Valeura also reduced emissions intensity by approximately 20% in its first year of operation, ending the year with $259 million in cash and completing a corporate restructuring to access $400 million in tax losses, enhancing future cash flow.

Despite these positive financial performance indicators, the share price is perceived to be at a discount to the net asset value. The company faces challenges in aligning production and lifting schedules, which may lead to inventory build-up in Q1 2025. There is also uncertainty regarding the continuation of reserve additions and field life extensions for mature fields. Valeura has not yet implemented a regular dividend, focusing instead on share buybacks and growth. Additionally, the company is still in discussions to recoup a $13 million tax payment related to prior ownership of the Mubadala assets.

During the Q&A session of the earnings call, Yacine Ben-Meriem, CFO, explained that as an offshore producer, there's often a mismatch between production and lifting. In Q4, Valeura lifted more than it produced, reducing inventory. For Q1 2025, the company expects to build some inventory, meaning it will lift less than it produces, but this should normalize shortly after the quarter ends.

Grzegorz Kulawski, COO, and Sean Guest, CEO, discussed the continuation of reserve additions and field life extensions for mature fields. Continued drilling adds volumes, and Valeura has seen over 200% reserves addition two years in a row. This trend is expected to continue, supported by 48 million of 2C resources. Sean Guest added that there are over 100 drill locations, suggesting ongoing reserve additions.

William Guest, CEO, addressed the recent transaction in Thailand, stating that Valeura looked at it early on but was not involved in the process once they completed their initial deals. Regarding Turkey, William Guest mentioned that the company received government approval for the next exploration phase, extending to mid-2026, with a potential appraisal period to 2028. The recent deal with Continental Resources brings excitement and opportunities for exploration in Turkey.

When asked about the possibility of adding a regular dividend with the large cash position, William Guest, CEO, stated that while Valeura implemented a share buyback program, they believe they need to be larger to support a regular dividend. It's a discussion they will continue with the Board.



In conclusion, Valeura Energy Inc's Q4 2024 earnings call highlights strong production growth and strategic gains, positioning the company for long-term sustainability and growth. The 250% reserve replacement ratio on 2P numbers extends the life of all four fields into the 2030s, and the company's operational efficiency improvements and reduced emissions intensity are positive indicators of its commitment to sustainability. However, challenges remain, including aligning production and lifting schedules and uncertainty regarding the continuation of reserve additions and field life extensions for mature fields. Valeura's focus on share buybacks and growth, along with its ongoing discussions to recoup a $13 million tax payment, suggest a strategic approach to maximizing shareholder value.