TIDMVLU

RNS Number : 0234Z

Valeura Energy Inc.

20 January 2022

VALEURA ENERGY

TRADING UPDATE

Calgary, January 20, 2022 : Valeura Energy Inc. (TSX:VLE, LSE:VLU) (the "Company" or "Valeura"), an upstream oil and gas company with deep tight gas assets in the Thrace Basin of Turkey, is pleased to provide a trading update.

Financial Position and Royalty

As of December 31, 2021, Valeura had no debt and held cash and cash equivalent resources totalling US$40.8 million, before accounting for anticipated receivables relating to Q4 2021. Upon selling its shallow gas producing business in Turkey in May 2021, Valeura retained a royalty on ongoing production to capture potential price upside for the benefit of shareholders. The Company has been notified by the buyer that it will receive a total of US$780,000 in royalty payments for Q4 2021. Further, Valeura expects that it will ultimately receive total royalty payments of US$2.5 million under this arrangement, representing the maximum possible royalty payment under its contractual arrangements with the buyer, and that based on current gas prices and estimated production, the remainder of this amount should be fully recovered by the end of 2022.

During 2021, Valeura reshaped its organisation structure and downsized to best support its forward strategy, resulting in a significant reduction in corporate costs. In Q4 2021, the combined effect of reduced ongoing corporate costs together with anticipated royalty payments resulted in net cash consumption of just over US$400,000 for that quarter.

Strategy

Valeura's 20 Tcfe unrisked mean prospective resource deep tight gas appraisal play in Turkey remains a core part of the Company's portfolio and represents a significant source of potential long term value. Given the continued historically high gas prices in Europe and Turkey, Valeura has resumed its search for a suitable farm-in partner for the tight gas appraisal play and has re-engaged a London-based advisor to assist in the search. The Company believes securing a partner is the most prudent first step before committing significant capital to the next phase of appraisal drilling. Valeura is poised to resume deep drilling operations rapidly upon securing a partner, with several locations in the advanced permitting stage.

As a result of the ongoing COVID-19 situation in Turkey, local regulators have extended both the current phase of exploration licences and the timeline to fulfil licence commitments, including drilling obligations, by one year. The current phase of the Company's exploration licences will now expire on June 27, 2023, after which the Company has the option to apply for two additional two-year exploration periods. In particular, this extension provides additional flexibility with respect to Valeura's obligations to drill two Banarli exploration wells and one West Thrace exploration well to maintain its deep gas rights, meaning the Company will have no material capital commitments until mid 2023.

In the nearer-term, Valeura intends to leverage its strong financial position toward growing by way of mergers and acquisitions ("M&A"). The collective international experience of the Company's management and board defines a broad focus area, including jurisdictions with significant deal flow and expected relatively low competition for assets. Valeura is actively pursuing several M&A opportunities, targeting near-term production and cash flow, plus follow-on investment opportunities to enable mid-term growth. The Company is currently in discussions on several opportunities, and will disclose further details on these transactions in due course as appropriate.

For further information please contact:

   Valeura Energy Inc. (General and Investor Enquiries)                    +1 403 237 7102 

Sean Guest, President and CEO

Heather Campbell, CFO

Robin Martin, Investor Relations Manager

Contact@valeuraenergy.com , IR@valeuraenergy.com

   Auctus Advisors LLP (Corporate Broker)                                        +44 (0) 7711 627 449 

Jonathan Wright

Valeura@auctusadvisors.co.uk

   CAMARCO (Public Relations, Media Adviser)                                +44 (0) 20 3757 4980 

Owen Roberts, Billy Clegg, Monique Perks, Hugo Liddy

Valeura@camarco.co.uk

Resources

Resource disclosure in this announcement is based on an independent resources evaluation as at December 31, 2018 conducted by DeGolyer and MacNaughton in its report dated March 13, 2019, which was prepared using guidelines outlined in the Canadian Oil and Gas Evaluation Handbook and in accordance with National Instrument 51-101, Standards of Disclosure for Oil ang Gas Activities, as adjusted to reflect Equinor's withdrawal in Q1 2020. Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. The unrisked estimates of prospective resources referred to in this announcement have not been risked for either the chance of discovery or the chance of development. There is no certainty that any portion of the prospective resources will be discovered. If a discovery is made, there is no certainty that it will be developed or, if it is developed, there is no certainty as to the timing of such development or that it will be commercially viable to produce any portion of the prospective resources. Additional resources information is included in the Company's annual information form for the year ended December 31, 2018.

Advisory and Caution Regarding Forward-Looking Information

Certain information included in this news release constitutes forward-looking information under applicable securities legislation. Such forward-looking information is for the purpose of explaining management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project", "target" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this news release includes, but is not limited to: the Company's expectations regarding the anticipated amount and timing of royalty payments in respect of Q4 2021 and by the end of 2022; the Company's anticipated amount of net cash consumption in Q4 2021; statements with respect to the Company's deep tight gas play strategy, including management's belief that the play represents a material value proposition for shareholders, its ability to find another farm-in partner for the play, and its ability to resume appraisal drilling rapidly upon securing a partner; and statements with respect to the Company's inorganic growth strategy, including its ability to leverage its strong financial position and identify M&A targets. In addition, statements related to "resources" are deemed to be forward-looking information as they involve the implied assessment, based on certain estimates and assumptions, that the resources can be discovered and profitably produced in the future.

Forward-looking information is based on management's current expectations and assumptions regarding, among other things: stability of gas prices and production from the shallow assets used to determine the amount of the royalty payments; approvals forthcoming from the Turkish government in a manner consistent with past conduct; future drilling activity on the required/expected timelines; the prospectivity of the Company's lands, including the deep potential; future economic conditions; future currency exchange rates; the ability to meet drilling deadlines and other requirements under licences and leases; the ability to attract a new partner in the deep play; the ability to identify attractive merger and acquisition opportunities to support growth; and the Company's continued ability to obtain and retain qualified staff and equipment in a timely and cost efficient manner.. Although the Company believes the expectations and assumptions reflected in such forward-looking information are reasonable, they may prove to be incorrect.

Forward-looking information involves significant known and unknown risks and uncertainties. Exploration, appraisal, and development of oil and natural gas reserves are speculative activities and involve a degree of risk. A number of factors could cause actual results to differ materially from those anticipated by the Company including, but not limited to: reduction in gas prices or production from the shallow assets that impacts the amount of the royalty payments; inability to secure a new partner for the deep play and execute potential M&A transactions; inability to meet drilling deadlines to hold licences; the risks of further disruptions from the COVID-19 pandemic; the risks of currency fluctuations; uncertainty regarding the contemplated timelines and costs for the deep evaluation; potential changes in laws and regulations, the uncertainty regarding government and other approvals; counterparty risk or payment risk for the royalty; and the risk associated with international activity. The forward-looking information included in this news release is expressly qualified in its entirety by this cautionary statement. See the AIF for a detailed discussion of the risk factors.

The forward-looking information contained in this news release is made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward-looking information contained in this news release is expressly qualified by this cautionary statement.

Additional information relating to Valeura is also available on SEDAR at www.sedar.com .

This Announcement contains inside information as defined in EU Regulation No. 596/2014, part of UK law by virtue of the European Union (Withdrawal) Act 2018, and is in accordance with the Company's obligations under Article 17 of that Regulation.

This announcement does not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction, including where such offer would be unlawful. This announcement is not for distribution or release, directly or indirectly, in or into the United States, Ireland, the Republic of South Africa or Japan or any other jurisdiction in which its publication or distribution would be unlawful.

Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this news release.

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January 20, 2022 02:00 ET (07:00 GMT)

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