Earnings call transcript: Valeura Energy sees strong Q4 2024 growth

Valeura Energy reported significant growth in its Q4 2024 earnings call, with production and revenue increases highlighting its performance. The company’s strategic initiatives and operational efficiencies have positioned it well in the competitive energy market. According to InvestingPro data, the company has achieved an impressive 52% return over the past year, with a perfect Piotroski Score of 9, indicating exceptional financial strength.

Key Takeaways

• Q4 2024 production up 18% to 26,100 barrels per day.
• Total revenue reached $680 million for the year.
• Ended 2024 with $259 million in cash reserves.
• Recognized as Energy Company of the Year in Asia Pacific.

Company Performance

Valeura Energy demonstrated robust performance in Q4 2024, with production increasing by 18% to 26,100 barrels per day. This growth contributed to a full-year production average increase of 43% compared to 2023. The company’s strategic focus on drilling and operational efficiencies has yielded positive results, enhancing its competitive stance in the energy sector.

Financial Highlights

• Revenue: $680 million for the year.
• EBITDAX: $380 million.
• After-tax cash flow: $273 million.
• Cash reserves: $259 million.
• Book value: Increased by 86% to approximately $1 billion.

Outlook & Guidance

Valeura Energy’s forward guidance suggests continued growth, with a 2025 production guidance and an adjusted OpEx expectation of $26 per barrel. The company projects free cash flow between $112 million and $227 million. Trading at a P/E ratio of 13.46 and demonstrating strong momentum with the stock trading near its 52-week high, Valeura continues to show promising potential. Access complete financial metrics and expert analysis through InvestingPro’s comprehensive research tools. Strategic initiatives include the Wassana redevelopment FID in early Q2 2025 and potential M&A opportunities to expand the portfolio.

Executive Commentary

CEO Sean Guest emphasized the company’s growth trajectory, stating, "We’ve seen almost doubling that again." COO Greg Kalowski added, "We do expect this to continue," highlighting confidence in sustained performance. Guest also noted, "It’s really about what is the cash flow that those barrels yield," underscoring the focus on cash flow generation.

Risks and Challenges

• Market volatility in oil prices could impact revenue.
• Regulatory changes in key markets may pose challenges.
• Supply chain disruptions could affect operational efficiency.
• Increased competition in the energy sector.
• Potential geopolitical tensions impacting operations in certain regions.

Valeura Energy’s Q4 2024 earnings call reflects a period of strong growth and strategic positioning, with a focus on expanding production capabilities and exploring new opportunities in the energy market.

Full transcript - Volvere PLC (VLE) Q4 2024:

Robin Martin, Vice President, Investor Relations, Valeura Energy: Hi, everyone. Welcome to Valeura Energy’s twenty twenty four Results Webcast. I’m Robin Martin, Vice President, Investor Relations. And joining me here in Bangkok is Sean Guest, our CEO Greg Kalowski, our COO and joining from Singapore is Yacine Ben Mariam, our CFO. We are recording the event today, March 26, and we’ll make a replay available through our website later today.

Running order for the day, I’m going to hand over to Sean and Greg, and you’ve seen in just a moment to take you through some prepared slides that we’ve got. They’re also available on our website if you’d like to download a copy. After that, we’ll get into a Q and A session. There’s two options for that. We can take your Q and A in typed form by using the MS Teams Q and A feature you see at the top of your screen or you can press the button with a hand that says raise, which will be a queue to meet to make your microphone available and then you can ask your question live.

So with that, I will hand it over to Sean. Go ahead.

Sean Guest, CEO, Valeura Energy: Thank you very much, Robin. Thank you very much, everyone, for joining us here this evening or this morning wherever you’re located. So a lot of the results for us in Q4 sorry, 2024 will have come out over the past few months, our production results, our cash at year end, and then people will have seen that reserves were announced just over a month ago. So that information is out there. But what’s kind of important today beyond the financials and the other financials is also just to recap that because it was an extremely good year for the company.

So, if I just step down to really the results, if you look at production, production in 2024 was up 12% on the year before 2023. And this was on the back of bringing Wassana on and having the Wassana Field on for most of the year, but we also developed a new area of the Nongyao Field, Nongyao Sea, and that was successfully brought on in August. Now, important also was that we had a drill rig working for the full year doing a lot of infill development drilling, which really supported that production. Important for us as a company is really on the reserves, and we had another stellar year of reserve replacement in that area. Even though production was up, we actually had almost a 250% reserve replacement ratio on the 2P numbers and the life of all of the four fields that we’re operating were all extended and that’s taken them out into now the 2030s, all of the fields.

In addition, the 2C was increased 140% and we drilled three exploration wells and a number of appraisal wells while doing our infill drilling and had success across all of those, which are going to support more appraisal and development drilling in the future. On the efficiency side, we reduced the OpEx down to 25.7. Percent. We came in on our CapEx below our guidance. And even with that, we actually drilled more wells than were planned.

So, the efficiency we saw in the drilling really came not just in cost savings, but also in more activity. And finally, with some very good work by the team, we saw we were able to reduce our emissions intensity by approximately 20% in our first year of operation, and we’ve got more coming on that in the current year. Now, all of those elements then really lead into the cash flow, and that’s what we saw exiting the year end with $259,000,000 in cash. But importantly, we also completed in Q4 the corporate restructuring to bring the tie three companies together and that will actually access about $400,000,000 in tax losses. And as we kind of say, that’s really going to supercharge our cash flow in the near future.

When you put that together then, we’ve really seen the net asset value, and that’s the value of the cash in the 2P reserves value, is just over $1,000,000,000 now. And if you look at that in share price, that’s over C13 dollars a share. Now, in doing all of that and all of that activity, we’re also extremely pleased. We had no environmental or serious safety incidents, a very good result for the year as well. Now, how does that work out for shareholders?

Well, if we look back to January 2024, actually, we were trading at under $3 a share at that time. So, now we’re seeing ourselves bounce around $8 there’s been a significant increase there. We also saw recognition in 2024 externally. We from the Energy Council, we were the Energy Company of the Year in the Asia Pacific region, Executive of the Year. And then when you look at our environmental performance, we were awarded by the ministry here in Thailand for actually our work on two of the fields in our environmental monitoring on those fields and our performance there.

And finally, then, with that strong share price growth, with the revenue growth that we’ve seen, we recognized in Canada, I think we were number eight out of over 400 public companies they analyzed for the top growing companies in Canada. So again, a very good performance for the year. But really, what’s important as we look at this is also the value of the company going forward. And what underpins that and the increases in share price is really down to the reserves, right, and the future of the field. So, looking at that and just reiterating what we put out just over a month ago, when we took over these fields just over two years ago, we had about 29,000,000 barrels of reserves.

We now at the end of year 2024 are having 50,000,000 barrels of reserves. So, we found about 37 new barrels of reserves. And really, it’s important to note that because that’s actually more than we actually acquired with the Criss Energy and the Mubadala acquisitions at the time. So, we’ve seen very good over 200% reserve replacement and then we got almost 250% last year. When you look at that, of course, converting value, you’d expect an increase, but recognize the increase in the 2P value to $7.52 is actually you’re looking at a slight decline in oil price during that period.

I also want to note there too, important as the 2P is, you can see the significant increase in the 1P reserves value, which is up over 400% from 68,000,000 to three fifty nine million barrels. So, very good result across reserves. And really, the thing we’ve been trying to address that is important for everyone is extending the field life. And we can see just under two years of operations to get to the end of last year, Manorfield was extended out into the 2030s over four years and you can see Wassana at the most was actually extended by over eight years of reserve life. And we like to emphasize too as we go towards the Wassana FID on the redevelopment that we expect more reserves to come in once we take that final FID decision.

So, extending that field out well beyond 02/1935, likely towards 02/1940. So, all in all, extremely pleased with the operational performance, the safety performance, emissions, reserves additions, it’s been a very good year for the company. And at that point, I’ll hand over to Youssef, to take you through the financial numbers. Youssef?

Yacine Ben Mariam, CFO, Valeura Energy: Thanks, Sean. Greetings, everyone. I guess, as Sean mentioned, 2024 and I’d say even Q4 ’twenty four has been an extraordinary period for us for the company. And I think what you have in front of you is just some highlights that can substantiate how extraordinary this year has been for us. So I’d like to do is really walk you through first on Q4 and then kind of move and then expand on what the financial looks like for the full year in 2024.

So during the last quarter in Q4, our production averaged around 26,100 barrels a day, which was higher 18% compared to last period. This resulted for the full year of an average production of around 22.8%, which is as you can see here on the screen, it’s pointing towards a 43% increase compared to 23%. But bear in mind that these are the in 2023 we only had production for the since we closed the transaction with Bouvardilouches in March. On a pro form a basis as Sean mentioned earlier on is a 12% increase. Q4 also we’ve seen quite a large number in terms of lifting.

We’ve lifted more than we produced. As you can see on the screen, we lifted around close to 3,000,000 barrels and at the realized price of around $67.7 a barrel. That translated for the full year of a total lifting of 8,350,000 barrels, which is again 43% higher than last year and an average realized price of 81,300,000.0, which is again at a premium to Brent. On an OpEx side, for Q4 with an increased production, we’ve managed to deliver a $22.8 per barrel in terms of OpEx, which is a significant increase compared to last quarter. And again, you can see that in terms of the year at 25.7%.

OpEx came in at 39% in Q4 and for the full year is $134,000,000 This translated in the again, these extraordinary results for the quarter and for the year. For this quarter, we’ve booked $222,000,000 in revenues. Our EBITDAX was $132,000,000 and our cash flow from operation quite substantially SEK107 million, which resulted in around 114 percent increase compared to last quarter. And for the full year, you see how this can magnify into a SEK680 million in terms of revenues and EBITDAX of SEK300 million close to SEK380 million and importantly in after tax cash flow of around SEK 273 million. As a reminder, as Sean mentioned earlier on, we’ve managed to do the tax consolidation, which I’ll talk a little bit more about it, but that only occurred in November 2024.

So we’ve only had the benefit of two months in terms of those tax consolidation. And maybe looking at the balance sheet, as Sean mentioned earlier, we ended the year with NOK259 million of net cash. Our book value has increased more than 86% to just shy of million and our adjusted working capital of million. Now sorry, Robin, do you mind going to the next slide, please? So this is what in terms of financial for the quarter for the year, you can see, as I said early on sorry, there we go, for the quarter.

And I would like to draw your attention really to the on the waterfall there on the top for the financials in terms of our pre tax adjusted cash flow of BRL134 million. And then after that, you’ll have the tax payment, which consists of SRB and PETA. And I think for people who’ve been with us, who’ve been following us for a while, you can see that like this is an unusual situation where you have a much smaller PETA than SRB. But that’s effectively the benefit of the tax consolidation to a certain extent. We’ve out of the tax losses that we have in when we did the consolidation of just DKK400 million, during this period, we’ve consumed around DKK32 million, all those tax losses.

And that resulted in a very small PITA PEITA accrual of around just NOK1 million. However, SRB, this is the Q4 is usually when the SRB get kicked in just because of the calculation. So we’ve accrued NOK26 million on SRB. And this resulted in post tax adjusted cash flow from operations with a margin of around 47%, significantly higher than we had in any of the previous quarters. It’s really on the back of lower taxes tends to be tax consolidation and as we said earlier on lower operating cost.

And maybe I will not draw much attention on the cash bridge because I think it might be more helpful to look at it from a year to year basis. Next slide please Robin. So for the full year,

Greg Kalowski, COO, Valeura Energy: as I said,

Yacine Ben Mariam, CFO, Valeura Energy: million in terms of revenues with royalty with OpEx and SG and A, we end up with a pre tax cash flow of SEK357 million. During the year, we have accrued and paid some of the taxes that you can see that that you can see on the screen of PETA of around SEK55 million and SRB of SEK29 million, resulting in an adjusted cash flow from operation of around $273,000,000, which equates to around 40% margin. So you can see the difference in terms of that tax consolidation can have in terms of that cash flow from operations margins. Now how does this translate in terms of the cash bridge there at the bottom? We started the year with SEK 151,000,000, our SEK $273,000,000 of adjusted cash flow and spending on CapEx of SEK 130,000,000 and expects and change of minor change of capital.

But in addition to that during this year, this is where we acquired the FSO and the acquisitions is pays and remain a highly accretive one as it helps us optimize and reduce our operating cost. I think as maybe a reminder for everyone, our payback period for acquisitions is two years and we’ve already had one year under operations. We also had an additional tax that’s related to the prior owner of the Mubadala assets and that’s coming at the million. We are still in discussions with the owner in terms of trying to recoup this under the SBA and that discussion is still ongoing. With all in, we end up, as Sean mentioned, as you can see on the screen as well here, we end up with a cash balance at the year end of BRL259 million.

Next slide please, Robin. Now I mean obviously, I I think we’ve discussed this before and we’ve been flagged in prior discussions. But as a reminder to everyone, when it comes to the RO, how much improvement and how much effort has been put to try to reduce that liability. I think when we first closed the transaction with Mubad, a lot of the investors have been pointing to the size of that liability. But I think the message from our side and based on technical and not just withstanding with extending the field line that these numbers can be revisited.

And you can see on the screen that they have been. This year, unlike the last year, we’ve managed to actually reduce it not just by extending the field lab, I. E. The discount rate, but actually reducing the cost themselves, the engineering cost themselves. So we end up this year with an IRR of around SEK84 million, a 35% reduction from last year and indeed a 54% reduction from the day when we closed the transaction.

And I think what Sean has mentioned earlier on in terms of the transformation and ongoing activities that we’ve been doing over the last couple of years and how does this translate in terms of like the performance of the business. But most importantly and often something that we don’t really discuss much in terms of the status of the balance sheet. And what you see here in front of you is really just a description of the total asset and total liabilities and shareholder equities over the last couple of years starting from 2022 and then how the acquisition of Mubadala has transformed the business in terms of the size. But I think what I would like to draw your attention is really what have we done in 02/2004 to strengthen that balance sheet. And as you can see there in terms of the book value, we were up 86% and that again it’s a reflection of operating delivering on operations.

And at the same time and I’ve just flagged it on previous slide is that reduction in the liability there. So from our side, what we are seeing here is not only an increase in terms of shareholders’ equity but fundamental decrease in terms of the liabilities. And at the same time, on the asset side, you see that not only do we take more cash out of the business, are you rebuilding the cash, but even our asset base is growing. And that’s on the back of just extending the field life, adding more reserves and obviously the tax consolidation has helped as well here. So with the balance sheet in this shapes, it gets us very comfortable in terms of being able to pursue the organic and inorganic opportunities that we see.

But at the same time gives us that flexibility as well that we need, especially as an E and P company. So how does this kind of play it out in terms of the guidance for 2025? And look, these guidelines have not changed in terms of what we presented earlier on when we released this guidance. So again, in terms of the productions and adjusted OpEx and adjusted CapEx, it’s worth highlighting that these numbers exclude any Wassala FID. And I think once we and Kirk can talk a little bit about it later.

But the idea is that like once FID is taken that these numbers will be adjusted. A reminder for everyone that like when we talk about adjusted OpEx and it’s something that we flagged during the Capital Market Day, but it’s worth highlighting it again. Our expectation is that we end up the year at $26 per barrel. But critically, our OpEx do include leases, which for all the companies they are actually excluded and they put it elsewhere in their balance sheets. But for us it’s really true reflection of the actual cash cost of producing those barrels.

And on exploration side, we obviously flagged earlier on that we’re going to be looking at Rajiv prospect on Jasmine and also an additional exploration that potentially could be Nanyad to follow-up on there. Now if you plug all of these numbers into a simple model, as you can see, our really cash flow tends to be quite simple to follow and you see an order price of between $65 and $85 our expectations are on a free cash flow perspective, post tax, post CapEx, post SRBs, post OpEx of a range of $112,000,000 to $227,000,000 I think, I guess with that I’ll pass on to Craig.

Greg Kalowski, COO, Valeura Energy: Thank you, Yacine, and hello, everyone. So let me just share a few of the highlights for our activity plans for 2025. So I think first of all, there’s a lot of activity in our organic portfolio. We are working towards a big milestone, which is the Wassana redevelopment FID. We’ve said earlier, we are planning to take that FID around early Q2.

That’s still our plan. And I will say a bit more about this in a moment. Now we talked many times about how ongoing infill drilling is key to our reserves replacement. And so this year, we are also going to be drilling throughout the full year with our contracted rig. We’ve recently finished the drilling campaign on Manora.

The rig is currently in the juggling field drilling more intervals. Around the middle of the year, the rig will go to Nongjiang with around nine development wells planned there. And then it will be back to Jasmine in Q4. Now in that campaign, we’ve got a couple of exploration wells. Most importantly, we are planning to drill the luxury prospect in the Japanese license towards the end of Q2.

And we’re also having a potential follow-up to Non Yaw D notionally done for Q4 of this year. Now a couple of other projects I will highlight. The low BTO generator adjustment has just been installed in early March. We are now going through the process of hookup and commissioning of that machine. And so we expect in Q2 to start getting the benefit of it, which is using waste gas for power generation to reduce our OpEx and also reduce our greenhouse gas emissions.

In parallel, we’re working on a deepwater energy project in Manora, which should come on stream around the middle of the year. In parallel to all of the busy organic activity, we are also working on inorganic opportunities. Now let me say a bit more about Wassena FID.

Sean Guest, CEO, Valeura Energy: Okay.

Greg Kalowski, COO, Valeura Energy: So first of all, I think you would recall that our reserves on Wassena at year end ’24 are 12,900,000 barrels. And that’s already a very significant growth since we have taken over the field from the Crystall Energy acquisition. Now that volume of reserves is based on a conservative notional development concept of basically replacing the current MOPO, which is in the field. Now on that graph on the right, you see a sort of gray circle in the middle, which shows the reach of the wells that allow us to access only a portion of the main field in Wassena from the MOB. And so the concept given the success we’ve had in exploration with deeper horizons, the success we’ve had with exploration drilling in 2024 with the ones we joined in North Of Wassena and DMI, there is a lot, lot more volume in the field that we could recover even by replacing the old model.

And so the concept we are working on is a fixed platform, which will be located more or less in the center of the main field. And you see with that red circle that we can recover a lot more volumes just from that main section of the field, right? And that’s why we expect that when we target FID of VASA and VERE development, we should see immediately a significant increase to the 2P reserves, right? So you may recall that in our 2C volumes of Wassena, there is around 12 plus million barrels. We do expect a significant proportion of that 2C volume to be converted to 2P reserves at FIT.

Now I think the way we look at overall development of Wassala is really by analogy with Non GAAP. Non GAAP is our most valuable field and is also the field with the lowest unit OpEx. So in Q4, the OpEx per barrel was significantly lower than the portfolio average, which we have seen top of about $32.8 per barrel. And so we expect a similar story with Wassana, where we take an FID on an initial host facility, which is the first phase of the project. And then this provides a basis just like it did with Nogyao for additional satellite developments where we already have discovered volumes in the North of the license work and also in the South, right?

And that that allows relatively low cost satellite facilities to be connected to the main field. Now in terms of the key value levers for the development, we would expect to more than double current production from Wassana just on that May facility coming on stream. And we see this project as very economically attractive just for the initial development. But bringing in satellites would extend the plateau for a number of years and would add a lot more value to the overall license development. So in terms of the timeline, I mean, as I said, we are now finished the design to work through the contracting process and we expected FID early in Q2.

And then first oil would come early or say Q2 twenty twenty seven. So basically two years more or less from FID. Now, with this, let me hand over back to John.

Sean Guest, CEO, Valeura Energy: Thanks, Craig. And just to touch on the last slide, and we talked about at the beginning of really the increase in NAV that we’ve generated through these assets, through the assets that we acquired. So, with the cash position we’ve generated over the past couple of years, add on net reserves value is where you end up at about $1,000,000,000 value. But, what we’ve seen over the past couple of years is that continual addition onto that NAV, onto the core assets to build up the value of these assets. If we look back a couple of years, while we were about on an asset value, we were about four seventeen.

We were able to almost double that as we went to year end ’twenty ’3, and we’ve seen almost doubling that again. So, while we feel the share price is at a discount to that, the share price is really just chasing that NAV as we move up. And we really want to emphasize to people that we still see more value in these assets. We have good projects and good drilling that is going on now that we see pushing that up even higher. So, it’s been an extremely exciting couple of years in ’twenty three and ’twenty four.

Earnings per share actually in both years of over $2 But now we look ahead at 2025, it’s going to be another exciting year as we move through that. So, with that, I’ll hand back over to Robin. And thank you very much for all joining us here.

Robin Martin, Vice President, Investor Relations, Valeura Energy: Thanks, Sean. Just give us a moment to get organized here for Q and A. And just a reminder of how this works, if you’d like to ask a live question, just press that raise button at the top of your screen and that will be a cue to me to make your microphone available to you. In the meantime, we’ve had a few questions come in by e mail and maybe I’ll address those first. First question, finance related one.

You lifted a lot of oil in Q4 more than your production. How does that affect your expectations for Q1 twenty twenty five?

Yacine Ben Mariam, CFO, Valeura Energy: Thank you, Alban. Good question. I guess, I think it’s worth reminding everyone that as an offshore producer, there’s often this mismatch between production and your lifting. I mean, ultimately every barrel will get sold, but sometimes there is a mismatch between what we recorded in the quarter. So as you said, during the last quarter in Q4, we’ve lifted more than we have produced and that has allowed us to effectively lower our industry.

And that was really driven by timing of the lift ticks. I mean, this is a live business. So operationally, we don’t really we can’t always match the or at least meet the quarterly dates. So I think for Q1, our expectation is that like we’re probably going to build a little bit of inventory if I look at the lifting schedules for this quarter and what’s coming up this evening for this week, it’s likely that we’re going to build a little bit of inventory. So effectively that means that we’re going to be lift less than we produce.

And then look, again, looking at that share drills, a lot of these lifting will get done and will probably revert back to normal, what we see as normal inventory couple of weeks after the end of the quarter anyway.

Sean Guest, CEO, Valeura Energy: Thanks, Yousseen.

Robin Martin, Vice President, Investor Relations, Valeura Energy: We’ll take a couple of live questions now. First one will go to Charlie Sharp. Charlie, I’ve made your microphone available. You should be able to unmute yourself and go ahead when you’re ready.

Charlie Sharp, Analyst: Many thanks. Can you hear me now?

Robin Martin, Vice President, Investor Relations, Valeura Energy: Yes, I’m good.

Charlie Sharp, Analyst: Lovely. Thank you. Thanks very much for the presentation. Excellent job. It’s really just a question regarding the mature fields and excluding Wassana.

And obviously, you’ve got a terrific track record so far of increasing reserves and extending field life. That’s terrific. And you point to potential for further increases. I know it’s a bit of a crystal ball question, but how much longer, given the maturity of those producing assets, as I say, aside from Wassana, how much longer can you see that sort of progression in reserves and life extension continuing for another one or two years or even more than that?

Greg Kalowski, COO, Valeura Energy: Look, Charlie, so Greg here. Thanks for the question. I think as we have discussed during our Capital Markets Day, the nature of the geology and the portfolio is such that continued drilling gives us ongoing additions of volumes, right? So we do infill drilling by bringing new wells on stream and we continue to do appraisal objectives whilst we are drilling development wise as well, right? We have seen over a 200% reserves addition two years in a row.

And we don’t think it’s the end of this story, right? So we do expect this to continue, but I would be a little bit careful with giving you exact numbers for the coming years, right? But it is not the end of this term, there’s a lot more in the portfolio. And I would point you to also just 48,000,000 of 2C resources that we currently have, right? And during ’twenty four, we added more 2P reserves than we had 2C volumes at the beginning of the year.

So, these are just couple of the pointers, I would say. Yes, Charlie, it’s Sean.

Sean Guest, CEO, Valeura Energy: I’ll maybe just add on to that too, because if you look at the number of locations, drill locations in our reserves, I think it’s over 100 locations now. So, we really expect that in the drilling of those wells, you also continue to add more with every well that you drill. And just a reminder to everyone that the reserves that NSAI report and the value associated with those reserves and the production profile assume that we will not add a single other barrel to these assets. But we know even with minor effort, you can do 100% reserve replacement every year. So, there’s still lots more upside there and lots more future.

Charlie Sharp, Analyst: That’s terrific. Thank you.

Robin Martin, Vice President, Investor Relations, Valeura Energy: Thanks for that. Next question will come from David Round. David, I’ve made your microphone available. Go ahead.

David Round, Analyst: Perfect. Thanks, guys. Just

Sean Guest, CEO, Valeura Energy: you’re muted again, David.

David Round, Analyst: Sorry. I hope it doesn’t cut out now. I was just asking about the transaction we saw in Thailand earlier this week. Just suppose I was interested in whether that was something you’ve looked at and if you did any reason why that maybe didn’t fit for you guys?

Sean Guest, CEO, Valeura Energy: Yes, a good question. Yes, it is one that we looked at. And in fact, we looked at it, we’re even looking at it by the time that we were doing these initial deals. That process has been ongoing for a significant amount of time, seem to go and then stop and then start up again. And that’s so, congratulations to the guys who’ve managed to get that closed and do that deal with Exxon.

I know it was a challenging deal. But really, we looked at it in the very early stages. But once we got these deals done, it really it wasn’t of interest in us and we were not involved in that process. Okay, great. Thanks.

Robin Martin, Vice President, Investor Relations, Valeura Energy: Thanks for that. Changed gears just a little bit. We’ve had a few questions come in very much along the same theme. I’ll sort of batch a bunch of them together here. And if we

David Round, Analyst: don’t get your specific question, you’ll reach out afterwards. We’ll try and capture what people are asking about.

Robin Martin, Vice President, Investor Relations, Valeura Energy: You mentioned Turkey more than we’ve seen in the past. It’s throughout your year end disclosures, including even a mention in the press release. Is there something new happening in Turkey realizing that we’ve also seen a transaction recently with Continental doing a joint venture in the region?

Sean Guest, CEO, Valeura Energy: Yes. So, a very good question, because you’re right. There was the blocks were very quiet for a while while we waited actually for the government approval of the next expiration phase. We got that late last year. And then in actual fact, when we went back to the government to talk about a force majeure due to the delay, they were very accepting of that and they quickly granted another one year extension.

So, the current expiration phase we’re in on those blocks goes to the middle of twenty twenty six. And then given the discoveries we have there, we would then apply for what is a two year appraisal period on that to take us out to the middle of twenty twenty eight. So, we see that we’ve now got the time that we need in those blocks. And as Robin mentioned, with the exciting deal that was just recently done to bring Continental Resources into Turkey, there’s good opportunity there. There are people who are starting to look at exploration again.

There are companies that are starting to really expand internationally in unconventional. So, that’s an exciting deal. So, yes, we’ll follow-up. Hopefully, we’ll have some news in that area.

Robin Martin, Vice President, Investor Relations, Valeura Energy: Okay. Very good. Next question, a batch of questions here actually, largely operational related. So, this will be you, Greg. Last year, given the program efficiency that you’ve shown, you were able to squeeze out some additional wells beyond what you originally expected.

Where are you on that this year? And should we expect that you’re in line with the program, ahead of the program? Any comment? Yes. I would

Greg Kalowski, COO, Valeura Energy: say, and it’s still early days. At the moment, we are on track. We are kind of on plan. But there’s a lot more time to go and we continue working with that continuous improvement mindset. So I do hope for again a little bit more efficiency as we work through the year.

Robin Martin, Vice President, Investor Relations, Valeura Energy: Okay. Switching to Menorah, can you explain what the Menorah debottlenecking project does to production once executed?

Greg Kalowski, COO, Valeura Energy: Yes. So Menorah, as many of our fleets, have a significant proportion of water production. That’s the nature of this business. And so the volternecking facility allows us to process more total liquids and thereby produce more oil. So we are increasing the capacity to just over 60,000 barrels total liquids, which should translate or which will translate into incremental oil production.

Now I have to say that this debottlenecking is already embedded in our overall production guidance for the year. So it’s not increment or undilided as such.

Robin Martin, Vice President, Investor Relations, Valeura Energy: Okay. And one more question from the same person. Stephane Vucoe, by the way, is asking these questions. The satellites north and south of the Wassano redevelopment, if he’s understanding, sorry, let me review the question as it’s written. The satellites north and south of the Lassana redevelopment would not be part of the upcoming FID and reserve booking.

Is that correct?

Greg Kalowski, COO, Valeura Energy: Yes, this is correct. So the satellites will be additional upside that we will be then working to mature and take FID on in the not too distant future following FID and then the initial house facility.

Robin Martin, Vice President, Investor Relations, Valeura Energy: Okay. Just a couple more questions for the moment. Just a reminder that if you wanted to ask a live question, feel free to press that raise button and we’ll be able to take it live. M and A, in the beginning, you had mentioned, Sean, that there was a long term target of $100,000 BOED for the company’s growth. Is this still a goal and is it still achievable?

Sean Guest, CEO, Valeura Energy: So, we do see that it is achievable in the region. There are the assets out there, there are the changes going on that can lead to this. And that’s why we remain focused on really the larger type of assets. And it kind of ties with the question asked earlier was, why were you not looking at the Exxon divestment? This wasn’t a material enough for us.

It wasn’t going to move the needle. We’re trying to keep our focus on the larger assets. But we will also mention again, I just want to make that point. You can set a target out there of a number of barrels. But really for us, it’s still more about what is the cash flow that those barrels yield and then obviously how that translates into value your NAV and your share price.

So, that’s really what’s driving us.

Robin Martin, Vice President, Investor Relations, Valeura Energy: Us. Okay. And another question is coming in. This one will be for Yacine. Tax related question.

Can you give us some color on forward timing of tax payments and when does the tax consolidation benefits actually start kicking in for us?

Yacine Ben Mariam, CFO, Valeura Energy: Good question. Let’s start first in terms of the benefits and then we can talk a little bit about timing of the tax. So the tax benefit, we already are, we’re already getting them now, we’re already benefiting. Since we and I think that’s kind of like highlighted in the PEPA payment that we accrued in Q4. If you remember in the slide, we only accrued SEK1 million, which is really not related to any of the Type three assets.

Effectively, we’re not paying any taxes on these. It’s for something else. So in terms of benefiting, we’re already starting benefiting. In Q4, we’ve already and I think I’ve mentioned it earlier on, we already consumed effectively SEK32 million of those tax losses. Thanks to that consolidation.

Now in terms of timing, now I think we flooded as well early on when we announced the consolidation. Usually our tax payment occurs in Q2 and it’s usually in April where we pay those taxes that’s paid on SRB. However, because we did the consolidation in November, we need to make the payment in Q1. So in Q1, we would be making tax payment, which otherwise would have been paid in April. So just to give an example, in Q1, we would pay the equivalent of around SEK40 million to cover the SRB and the PETA for the various assets, Type three assets up to November.

Then there will be another payment which reflects the period between November and year end, which is December and that will be in usual time, which is April. But yes, there will be a tax payment of around $40,000,000 in Q1 related to the tax consolidation.

Robin Martin, Vice President, Investor Relations, Valeura Energy: Okay. Thanks for that. Next question is, with your large and growing cash position, do you have a plan to add a regular dividend?

Sean Guest, CEO, Valeura Energy: It’s a discussion we’ve had a lot and it’s a question we’ve had a lot too. You know that last year we implemented the share buyback program to start to return some of that capital to shareholders, and that’s been our focus. We still believe that we need to be a larger size. We have more confidence in that cash flow to really get into a regular dividend paying company. So, that’s one thing we’ll kind of be discussing again with the Board as we move forward.

But at the current size we’re at, we didn’t really see that a regular dividend is the way to go. We still need to get to be a larger size.

Robin Martin, Vice President, Investor Relations, Valeura Energy: Okay. Another question on M and A, and I think this is our last question. So, if you have anything that you’d like to ask, get that in now. Otherwise, this one is given your strong cash flow and your net cash position, what type of portfolio expansion best fits with the current strategy? Is your preference to lean more toward a large development asset or are you still looking exclusively at things that are cash flow accretive?

Sean Guest, CEO, Valeura Energy: Yes, a good question. Our preference would always be things that are really cash flow accretive. But as we’ve kind of mentioned before, we would do a development opportunity. So, you’re looking at that kind of delay in cash flow. But if you can get the right opportunity at the right price, then it’s really what’s the cash flow in the near term, how fast would that development opportunity pay back to then start yielding those much stronger cash flows that you get from that new development coming on.

As we do kind of look, as we have our assets, which are really delivering very good cash flow and we’re pushing them out to extend that cash flow further, but you’re looking for things that you want to be coming on at some point in time that you can start to grow that production, grow that cash flow. But, we do have the cash flow now that’s supercharged to really underpin the development activity.

Robin Martin, Vice President, Investor Relations, Valeura Energy: Great. Okay. We’ve had no further questions come in. So, I’ll just remind the audience that if there is anything thing that you’d like to go into more detail on, feel free to reach out to us. Our website addresses and contact information are at the back of this pack and also available on our website.

So, over to you to wrap up, Sean.

Sean Guest, CEO, Valeura Energy: Yes. Just again, I’ll reiterate kind of what we talked about at the beginning. Thank you, everyone, for joining us and supporting us on this journey. It has been an extremely exciting time. We’re very pleased with how the assets have worked out.

And what I can also say is really a hats off to the team that we have in Thailand. We showed how we managed to achieve our guidance in production last year. We achieved our guidance on OpEx. But it wasn’t without the challenges. When we look at production, we know that Wassana was down for about five weeks.

That cuts into your production. Naungya was a key development that was delayed several months. And in actual fact, the team really knowing the portfolio they had, were able to adapt the portfolio, adapt the drilling to fill those gaps that were being created there. So, as we’ve moved now, we’re in our second year of operating with the team in Thailand. They’re extremely good and they’ve really worked out very well for us.

We see lots of opportunities to really leverage the strength of the team as we look to develop further in the region and the country. Thank you very much, Ferran, for joining us. And let’s see how 2025 goes. It’s going to be exciting. Thank you.

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