Valeura Energy, the upstream natural gas company focused on the Thrace Basin of Turkey, has announced an increase in its working interest in the Banarli and West Thrace exploration licenses and re-affirmed its commitment to appraisal of its deep unconventional gas play. Highlights 	Working interest in the deep play increases to 100% in the Banarli exploration licences, and 63% in the West Thrace exploration licence and production leases 	Management and Directors remain committed to the deep play and believe that further appraisal is warranted 	Intend to re-start production from the Devepinar-1 well with a longer-term production test than was previously conducted 	Data sharing and cooperation arrangements with other operators in the region initiated 	Enviable financial position, with no debt and approximately $36 million of cash at year-end 2019 	Seeking an additional partner to participate in the deep unconventional play Working interest doubled Valeura announced on February 4, 2020 that its joint venture partner Equinor intended to discontinue participation in the deep unconventional gas appraisal programme. Â Equinor elected to relinquish their interests under the terms of the joint operating agreements ('JOAs') between the parties, and as such their working interests and rights transfer to the remaining parties, Valeura and Pinnacle Turkey Inc. ('PTI'), at no cost. On April 2, 2020 the Government of Turkey provided notice that it has approved the transfer of Equinorâs working interests and rights to Valeura and PTI. This doubles Valeuraâs working interest in the deep play. Â In the Banarli exploration licences, Valeura will hold 100%, and in the West Thrace exploration licence and production leases the Company will increase its holdings to 63% of the deep rights. Â Ownership in shallow rights is unchanged (100% at Banarli and 81.5% at West Thrace) and Valeura remains operator of all of the blocks. Having completed the exit of Equinor from all of the blocks, the Company will now apply for the first extension to the Banarli and West Thrace exploration licences. Â Exploration licences in Turkey have an initial 5-year phase followed by up to three 2-year phases, for a maximum of 11 years, prior to being converted to production leases. The first 5-year phase of these three exploration licences ends on June 26, 2020, and the first extension phase would then extend until June 26, 2022. Committed to the play Valeura remains committed to the appraisal of the deep play, as the management and directors continue to see the potential for significant long-term gas production.Â  Taking into account all technical data gathered to date, the Company believes that further appraisal is warranted.Â  The clear objective is to demonstrate stable commercial long-term flow potential by identifying the production sweet spots within the play, and optimising drilling and completion techniques and associated cost. Valeura also recognises that the play is at an early phase of its life cycle and will ultimately require more drilling and testing.Â  Of the 11 deep wells that have penetrated the deep gas play to date, only the most recent three of these have been subjected to stimulation and production testing, all which resulted in gas flowing to surface. Â This yields a drilling density of 0.02 wells per 1,000 acres over the approximately 450,000 acres play area, which is extremely low compared to proven North American unconventional basins, which generally have well densities ranging between 5 and 50 wells per 1,000 acres. Fit-for-purpose near-term plan The data that has been acquired through drilling and testing has increased the Companyâs understanding of the subsurface and these learnings are pointing to new areas for appraisal. Valeura has been encouraged by identifying deep zones with dryer gas where hydrocarbon maturity, reservoir quality, saturation and natural fracturing are all improved.Â  Short-term production testing from these deepest zones suggest that they may have the potential to be economically developed. In the near term, Valeura will focus its efforts on low cost data collection while it plans the next part of the appraisal programme. The Company intends to re-start production from the Devepinar-1 well with a longer-term production test than was previously conducted. Â The Company expects testing will cost only a few thousand dollars per day, compared with just under $100,000 per day incurred during the earlier testing campaign when a larger complement of personnel and equipment conducted the stimulation and testing operation. All produced gas during testing will be sold to Valeuraâs customers.Â  Timing for this operation is currently uncertain given the cascading effect of the ongoing Covid-19 global pandemic. The Company also recognises the importance of gathering as much data as possible about the scope of the deep unconventional gas play. Valeura has initiated data sharing and cooperation arrangements with other operators in the region to benefit from the collective learnings gathered through all deep wells drilled in the basin.Â  The Company anticipates no material spending associated with these arrangements. Partnering for the long-term Valeura is in excellent financial shape, with no debt and approx. $36 million of cash at year-end 2019.Â  While management sees this as an enviable position, they recognise that the substantial potential of the deep, unconventional gas play justifies an ongoing and extensive work programme. The Company will seek an additional partner to participate in the deep unconventional play.Â  The target will be a partner who brings both financial and technical capability to the joint venture, for a work programme that is expected to include drilling new vertical and horizontal wells, reservoir stimulation, and production testing operations. Until such a partner is in place, the Company anticipates only minimal capital spending towards the deep play and a focus on fit-for-purpose data collection, as noted above. Sean Guest, President and CEO commented: 'We are doubling our interest in the deep play and reaffirming our conviction that this presents an opportunity to add substantial value. The character of our business will evolve to ensure we have the resources and the longevity to see through a meaningful ongoing appraisal programme.Â  In the near term, we will be cautious with our spending and creative when it comes to opportunities to learn more from our existing well stock and from our neighbouring operators.Â  There are exciting days ahead for Valeura and its shareholders.' Original article link Source: Valeura Energy
Valeura Energy, the upstream natural gas company focused on the Thrace Basin of Turkey, has announced an increase in its working interest in the Banarli and West Thrace exploration licenses and re-affirmed its commitment to appraisal of its deep unconventional gas play. Highlights Working interest in the deep play increases to 100% in the Banarli exploration licences, and 63% in the West Thrace exploration licence and production leases