Valeura Energy provided an update on the first deep exploration well. The company has 4 planned production tests for this well and they announced the first test results. The positive results were superb and build a case for a very large find.
Over the final 24 hours of the test the well was produced at an average restricted rate of approximately 0.8 million cubic feet per day (“MMcf/d”) of natural gas and 60 to 70 barrels per day of 56o API gravity condensate (70 to 80 barrels per MMcf). At the end of the test, the well was still cleaning up.
Although the Corporation had previously advised that aggregate test results would be disclosed at the end of the test program after all four planned production tests were completed, these interim production test results have exceeded expectations and are viewed as material to the Corporation. The results are also encouraging given that this first production test was in the deepest and lowest porosity test interval. Additionally, the test only accessed approximately 10% of the planned total net pay to be production tested in the well. The condensate content of the gas was also much higher than expected and is a significant value addition to any future on-stream sales.
The huge news is the company wasn’t planning on releasing any of the test well results until mid-Jan, when the testing would be completed. But the initial results were superb.
The key thing now is to wait until mid-to-late Jan when the company will release the resource update. At that point we will really see institutions wake up to the upside on this play and the valuation will reflect the potential sale price of the company.
You can read more about the test results and some valuation comparisons here.
I tripled my position in VLE once the initial test results came out.