Multiple drilling ops on Canadian oil & gas firm’s agenda for 2024

Canada-based oil and gas company Valeura Energy has outlined its plans for 2024, which entail a drilling program across multiple offshore fields in the Gulf of Thailand to boost production. The lion’s share of the firm’s multi-million capex has been earmarked to bring these drilling objectives to life.

Valeura’s planned total capex for 2024 is $135 – 155 million, in addition to approximately $8 million in planned exploration drilling. According to the Canadian player, approximately 75% of its capex is directed toward drilling and the firm intends to have one drilling rig under contract for the entire year to conduct a continuous drilling program covering each of its fields. 

However, the drilling sequence is subject to ongoing real-time optimization. The firm’s Opex guidance for 2024 is $205 – 235 million, which equates to approximately $26/bbl, including the extra costs to lease and operate the new Nong Yao C production facility.

Valeura has initiated a program to pursue greater operating efficiencies across its portfolio while maintaining its high standards for safety and operational excellence. This entails a wide array of endeavors focused on capturing synergies between the businesses the firm integrated in 2023 and enhancing legacy facilities to improve both cost and emissions intensity.

The Canadian player intends to fund its 2024 spending through cash on hand and cash flow generated from ongoing operations while maintaining a strong balance sheet, in support of its growth-oriented strategy, which includes the potential for further mergers and acquisitions.

Valeura confirms that around $47 million in capex, net to its 90% working interest, is planned for the growth of the Nong Yao field, through the development of the Nong Yao C accumulation. The company anticipates transporting a mobile offshore production unit (MOPU) to the Nong Yao field in February 2024, where it will be connected by pipeline to the existing field infrastructure and will serve as the wellhead production platform for the Nong Yao C field extension. 

Soon after installation and commissioning, the Canadian player plans to kick off a drilling program of nine development wells – six producers and three water injectors – while simultaneously performing debottlenecking works on the existing facilities to accommodate the new production. 

The first production from the Nong Yao C extension is expected in June 2024, and when fully on stream in the months thereafter, the firm is targeting peak production rates from the greater Nong Yao field totaling about 11,000 bbls/d, net to its working interest.

Located in the central portion of the Pattani basin in the Gulf of Thailand, approximately 160 km offshore, in 75 meters of water depth, the Nong Yao oil field is estimated to contain 12.4 million bbls of 2P oil reserves, on a net working interest acquired basis, as of December 31, 2021.

Since Valeura sees the Wassana field as one of its key growth assets, the company is undertaking a production-oriented drilling campaign, targeting reservoir intervals that have been only partially developed. The current drilling campaign of three horizontal development wells is intended to increase production to a target rate of around 4,500 bbls/d. However, the firm may drill additional development wells later in the year.

Following the 2023 Wassana appraisal drilling program, where results indicated a possible additional 20 production well locations, the Canadian company is evaluating options to expand the field’s production infrastructure. To this end, the firm is eyeing a final investment decision (FID) in 2024. Valeura’s objective is to pursue redevelopment of the field to commercialize further accumulations, increase production, and extend the field’s economic life beyond 2030.

At the Jasmine field, Valeura is planning a 2024 capex of approximately $50 million, the bulk of which will be directed toward an infill drilling campaign planned for the second half of 2024. Further Jasmine infill wells directly follow opportunities identified in the firm’s 2023 and earlier drilling campaigns. The company’s efforts at this field are oriented toward reducing the effect of natural declines and continuing the field’s long history of year-on-year reserves additions.

In addition, the Canadian player has sanctioned a project to improve both the cost base and greenhouse gas (GHG) emissions intensity of its operations at Jasmine. As part of the $50 million capex planned for the field, Valeura will invest about $8 million to install a gas turbine generator tailor-made to utilize the field’s unique waste gas stream as feedstock for power generation. The project is forecast to reduce the Jasmine field’s GHG emissions and diesel consumption, and thus Opex, contributing to a further extension of the economic life of the field.

Even though Valeura is focused primarily on investment opportunities that generate immediate or near-term cash flow, the firm also intends to invest around $8 million in pursuing exploration opportunities within its licenses, which have been identified at Wassana North, Nong Yao D, and the Ratree prospect, located near the Jasmine field.

According to the company, the final drilling sequencing and timing will be determined through ongoing work to optimize the drilling program around the firm’s development drilling plans. Valeura is also evaluating additional exploration prospects within its asset portfolio as part of its normal course of business.

The Canadian firm continues to seek a partner to participate in its tight gas exploration/appraisal play in Türkiye and does not intend to commit material spending to the play until a suitable commercial arrangement is in place.

Sean Guest, President and CEO of Valeura, commented: “Our key organic projects for the year are the development of the Nong Yao C accumulation, which will start with an aggressive drilling campaign later this quarter and further development of the Wassana field – initially through infill drilling, and thereafter through finalizing plans for a large-scale re-development of the field.”

A few months ago, Valeura disclosed that Borr Drilling’s Mist rig was on location at the Manora oil field, where it was set to drill three wells aimed at increasing production from the field and by extension, adding to the economic life of the asset.

The Canadian firm disclosed at the end of December 2023 that the rig would return to Nong Yao in 1Q 2024 to begin the Nong Yao C development.