This fast-growing upstream company has emerged as a significant player in the Southeast Asian energy landscape. With a remarkable 42% surge in daily production, it remains significantly undervalued.
Thank you! Given the 2025 guidance, major Brent price change, and some extra color we have on Valeura, we plan or releasing the update on Valeura in a couple of days :)
The production and capex profile don't match the plans of the company or the nature of the assets, they are totally made up. There are 2 redevelopment projects for the next years that will see much higher capex in 2026-2027 compared to your projections. The production profile doesn't make any sense, besides, total production will not grow between 2027 and 2034 with the current Thai assets. There aren't any plans to develop the Turkish asset, tax assets only apply to 3 out of 4 fields, there is a royalty income that is ignored, and there is buying pressure from the largest shareholder that is also omitted. I can continue, but I think I made my point clear.
Our capex projection matches the asset profile and was based on historical spending per barrel of new production. Moreover, we don’t include any production from the Turkish asset… in terms of the Thai fields, we assume moderate production growth on fields that are now being redeveloped or are planned to be.
That being said, we published our write-up month before 2025 guidance so of course our production and capex are misaligned with the current outlook.
Besides that, buying pressure doesn’t have to materialize and DCF valuation simply shouldn’t account for it. DCF only looks at discounted cash flows and the current share count that has nothing to do with somebody buying or selling.
With all that said, from the time of writing our thesis, a lot has changed (guidance, 2024 numbers, crude oil price) and we will be publishing an update soon. You are welcome to read it.
Are you aware that this company has a 2x Reserves Replacement Rate (RRR) so it discovers two times more oil than it can extract? Given how much ocean floor is still waiting for exploration, we are more than happy to assume production of 11mm bbls in the terminal year vs 2024’s 8mm bbls.
As I mentioned, we base it on historical capex spending for a new barrel of oil. Even if our total is too low because of our assumed maintenance/growth capex split, it doesn't change much. With double the capex, guided production for the next year, and a share price now ~20% higher, the model spits out ~250% upside...
Your assumptions of a sustained reserves replacement of 200% through more exploration and less capex makes no sense. Projecting an annualized production of 30,000+ bbl/d from Nong Yao, Manora, Wassana and Jasmine is extremely naive. Your production doubles the 3P+3C reserves and resources in 10 years and that has never happened in the industry. Geology doesn't support your projections. It's clear you don't understand how this sector works and resist to acknowledge it.
Sure, there's one. We’ve never targeted 2x RRR. Our production stabilized at 1x RRR.
Capex was revised based on the guidance and we extrapolated the cost into the future.
To simplify our production projections, we maintained the production profile in the initial write-up. In the update, we made adjustments based on our internal discussion.
"Are you aware that this company has a 2x Reserves Replacement Rate (RRR) so it discovers two times more oil than it can extract? Given how much ocean floor is still waiting for exploration, we are more than happy to assume production of 11mm bbls in the terminal year vs 2024’s 8mm bbls."
Just don't lie and accuse people of making up facts. Your previous production forecast was based on "how much ocean floor is still waiting for exploration", as if oil was limitless in Valeura's acreage with both Mubadala and Valeura drilling dry wells in the past.
Great analysis! Some assumptions may be optimistic, but overall, this is a great buy! Do you plan on updating it after the guidance?
Thank you! Given the 2025 guidance, major Brent price change, and some extra color we have on Valeura, we plan or releasing the update on Valeura in a couple of days :)
Your capex and production forecasts are waaaaay off. Not to mention other aspects you got wrong.
Okay, then - tell us what is off and why.
The production and capex profile don't match the plans of the company or the nature of the assets, they are totally made up. There are 2 redevelopment projects for the next years that will see much higher capex in 2026-2027 compared to your projections. The production profile doesn't make any sense, besides, total production will not grow between 2027 and 2034 with the current Thai assets. There aren't any plans to develop the Turkish asset, tax assets only apply to 3 out of 4 fields, there is a royalty income that is ignored, and there is buying pressure from the largest shareholder that is also omitted. I can continue, but I think I made my point clear.
No, your point is completely missing the mark…
Our capex projection matches the asset profile and was based on historical spending per barrel of new production. Moreover, we don’t include any production from the Turkish asset… in terms of the Thai fields, we assume moderate production growth on fields that are now being redeveloped or are planned to be.
That being said, we published our write-up month before 2025 guidance so of course our production and capex are misaligned with the current outlook.
Besides that, buying pressure doesn’t have to materialize and DCF valuation simply shouldn’t account for it. DCF only looks at discounted cash flows and the current share count that has nothing to do with somebody buying or selling.
With all that said, from the time of writing our thesis, a lot has changed (guidance, 2024 numbers, crude oil price) and we will be publishing an update soon. You are welcome to read it.
Your production profile to 2034 is 4x times the 2P reserves, it's based either on magic or insane amounts of CAPEX, something you don't include.
Are you aware that this company has a 2x Reserves Replacement Rate (RRR) so it discovers two times more oil than it can extract? Given how much ocean floor is still waiting for exploration, we are more than happy to assume production of 11mm bbls in the terminal year vs 2024’s 8mm bbls.
As I mentioned, we base it on historical capex spending for a new barrel of oil. Even if our total is too low because of our assumed maintenance/growth capex split, it doesn't change much. With double the capex, guided production for the next year, and a share price now ~20% higher, the model spits out ~250% upside...
Your assumptions of a sustained reserves replacement of 200% through more exploration and less capex makes no sense. Projecting an annualized production of 30,000+ bbl/d from Nong Yao, Manora, Wassana and Jasmine is extremely naive. Your production doubles the 3P+3C reserves and resources in 10 years and that has never happened in the industry. Geology doesn't support your projections. It's clear you don't understand how this sector works and resist to acknowledge it.
Just mention a single made up point in my observations, if you want to discredit me at least be specific.
It's just a coincidence you were considering to revise the production and capex but didn't mention it before, isn't it?
Sure, there's one. We’ve never targeted 2x RRR. Our production stabilized at 1x RRR.
Capex was revised based on the guidance and we extrapolated the cost into the future.
To simplify our production projections, we maintained the production profile in the initial write-up. In the update, we made adjustments based on our internal discussion.
"Are you aware that this company has a 2x Reserves Replacement Rate (RRR) so it discovers two times more oil than it can extract? Given how much ocean floor is still waiting for exploration, we are more than happy to assume production of 11mm bbls in the terminal year vs 2024’s 8mm bbls."
Just don't lie and accuse people of making up facts. Your previous production forecast was based on "how much ocean floor is still waiting for exploration", as if oil was limitless in Valeura's acreage with both Mubadala and Valeura drilling dry wells in the past.
Yes you made stuff up: “Your assumptions of a sustained reserves replacement of 200% through more exploration and less capex makes no sense.”
Your comments offend people’s logic sir