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TICKERS: VLE; PNWRF

Oil & Gas Producer Builds Up Cash
Research Report

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The company is expected to continue amassing cash given strong oil prices, in line production and two wells restarting soon, noted a Research Capital Corp. report.

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 October 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 September 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, Valeura paid US$29M in petroleum income taxes, the first installment. The deadline for payment of the second one is the 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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Important Disclosures:

  1. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
  2. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

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Disclosures for Research Capital Corp., Valeura Energy Inc., October 6, 2023

Analyst Certification I, Bill Newman, CFA, certify the views expressed in this report were formed by my review of relevant company data and industry investigation, and accurately reflect my opinion about the investment merits of the securities mentioned in the report. I also certify that my compensation is not related to specific recommendations or views expressed in this report. Research Capital Corporation publishes research and investment recommendations for the use of its clients. Information regarding our categories of recommendations, quarterly summaries of the percentage of our recommendations which fall into each category and our policies regarding the release of our research reports is available at www.researchcapital.com or may be requested by contacting the analyst. Each analyst of Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst’s personal views and (ii) no part of the research analyst’s compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.

Relevant Disclosures Applicable to Companies Under Coverage Relevant disclosures required under IIROC Rule 3400 applicable to companies under coverage discussed in this research report are available on our website at www.researchcapital.ca

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RC USA INC. Information about Research Capital Corporation’s Rating System, the distribution of our research to clients and the percentage of recommendations which are in each of our rating categories is available on our website at www.researchcapital.com. The information contained in this report has been drawn from sources believed to be reliable but its accuracy or completeness is not guaranteed, nor in providing it does Research Capital Corporation assume any responsibility or liability. Research Capital Corporation, its directors, officers and other employees may, from time to time, have positions in the securities mentioned herein. Contents of this report cannot be reproduced in whole or in part without the express permission of Research Capital Corporation. US Institutional Clients – Research Capital USA Inc., a wholly owned subsidiary of Research Capital Corporation, accepts responsibility for the contents of this report subject to the terms and limitations set out above. US firms or institutions receiving this report should effect transactions in securities discussed in the report through Research Capital USA Inc., a Broker – Dealer registered with the Financial Industry Regulatory Authority (FINRA).





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