Valeura Energy Inc. (VLE:TSX; PNWRF:OTCMKTS) continues growing its cash position, having US$103.4 million (US$103.4M) at the end of Q3/23, reported Research Capital Corp. analyst Bill Newman in an Oct. 6 research note.
"We expect Valeura to quickly build up a large cash resource that can be redeployed into maintaining and growing production from its current assets or into an acquisition of additional assets in Southeast Asia or returned to shareholders through a dividend and share buyback program," Newman wrote.
164% projected return
The Canadian oil and gas producer has a share price now of about CA$3.12, noted Newman. Research Capital's target price on it is CA$8.25 per share.
As such, the potential return for investors is significant, at 164%.
Valeura is a Buy.
Production in line
In his report, Newman summarized a Q3/23 operational update provided by Valeura. Production during the quarter ended Sept. 30, 2023 averaged 19,961 barrels per day (19,961 bbl/d), just above Research capital's estimate of 19,850 bbl/d.
"Production from Valeura's oilfields is performing to expectations," Newman wrote.
Also during Q3/23, the energy company successfully drilled seven wells. Two of these were appraisal wells at Wassana in the Gulf of Thailand, "which we expect have substantial increased reserves," Newman commented.
Bolstering the balance sheet
Newman wrote that Valeura's "cash is building" and Research Capital expects this to continue.
During Q3/23, reported Newman, Valeura paid US$29M in petroleum income taxes, the first installment. The deadline for payment of the second one is end of May 2024. Also, the company paid down its debt by US$21.2M, reducing it to US$12.9M.
Valeura's net cash at quarter's end, after these transactions, was US$103.4M, noted Newman. This amount reflects the company's cash and cash equivalents in addition to restricted cash minus outstanding debt.
What to watch for
The next catalyst for this company with operations in Turkey and the Gulf of Thailand, expected this quarter, is the restart of production at Wassana.
Moving into 2024, another event, expected in Q1, is the release of a reserves and contingent resources report.
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