Valeura: Turkey's new gas supplier

Valeura continues to make good progress in Turkey where the company announced a technical success at the Inanli-1 well in November. The well continues to be tested into 2019.

Turkey is structurally short gas, importing gas by pipeline and LNG - LNG regasification capacity is 12bcm/year with cargoes from Algeria, Nigeria and the Middle East. Domestic gas production is therefore long awaited and with Valeura owning the local pipeline network around its licence areas, it is in a good position to start supplying the grid once it is in a position to proceed to development.

The recent gas price hike by BOTAS is useful as well - not only does it protect the gas price in USD terms, but the price increase for local buyers has incentivised such buyers to turn to Valeura gas which has the freedom to sell directly to end users.

The domestic gas prices for power producers are: USD9/mmbtu for power producers, USD6.8/mmbtu for industrial customers and USD5/mmbtu for domestic users. Valeura can make inroads with buyers who currently take gas at the higher end of the pricing range from BOTAS.

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Valuera nears TDs at Inanli-1

Valeura has reached 4,145m on the Inanli-1 well (TD 5,000m, c.800m deeper than Yamalik-1).

It has encountered over-pressured gas with a c.40% net-to-gross, similar to that of Yamalik-1, with gas flows - all pointing to promising results. In addition, the well has encountered more naturally fractured rock than encountered in Yamalik-1 with increased gas levels recorded at the fractured intervals.

Drilling is continuing to 5,000m with an extensive set of logging and well tests planned. Operations are expected to be completed in January with fracking and flow testing expected to commence around the end of Q1/19. Inanli-1 is the final well to be funded by Equinor.

Devepinar-1 appraisal well is the next scheduled to be drilled following completion of Inanli-1.

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Valeura's value protected by another gas price increase in Turkey

Valeura has announced that BOTAS, which owns the Turkish natural gas network and imports 82% of Turkey’s gas, has announced a fourth natural gas reference price increase. This increase is 14% (63% compounded so far this year) to around USD5.60-6.00. This increase more than compensates for the recent depreciation in the Turkish Lira by maintaining the gas price in USD broadly unchanged.

On a related note, Valeura has drilled the Yamalik-1 well in the Thrace Basin and production tubing will now be fitted for clean-up and testing.

For the next well, Inanli-1, site construction is progressing with the rig being mobilised in location. Spudding is expected end Q3 2018 targeting 5,000m (800m deeper than Yamalik-1). Inanli-1 is the final earn-in well funded by Equinor, the following two appraisal wells will be funded on a working interest basis.

Once appraisal is complete, development should progress expeditiously given the plentiful gas infrastructure to enable monetisation.

#Inanli #Turkey #Valeura #Yamalik

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