International Experience And Canadian Expertise Drive Valeura Energy Success In Turkey
How do you build a successful international oil and gas company?
“It all starts with the team,” says Sean Guest, Valeura Energy’s president and chief executive officer. “That’s the key thing that decides whether to pursue international opportunities. The Valeura team had success internationally in the past and were looking for a new opportunity in the area where they had experience.”
Other key factors include finding an opportunity that matches the team’s technical skills and the company’s financial capacity, Guest says in a new report commissioned by the Canadian Global Exploration Forum (CGEF).
The CGEF report, entitled Global Opportunities: Taking Canadian Exploration and Production Expertise to International Markets, outlines the Canadian industry’s competitive advantages in finding and developing oil and gas resources in petroleum producing basins around the world, and then highlights potential opportunities for investment.
For Valeura this meant acquiring low-cost onshore assets where it could increase production from existing operations while in parallel developing the potential exploration upside.
Valeura found what it was looking for in Turkey’s Thrace Basin in western Turkey, where the company has accumulated 373,588 acres of shallow rights with existing production, along with 255,662 acres of deep rights in an emerging unconventional gas play.
“Turkey has good fiscal terms and prices,” Guest explains. “A lot of the fields were not optimally developed. There was opportunity to apply production technology from Western Canada along with proximal exploration opportunities. There were no major oil and gas companies active in Turkey so Valeura could pick up producing assets at a low cost and grow from that end.”
Valeura’s production assets came with gas gathering and distribution infrastructure, allowing it to sell directly to customers.
“We also buy and process gas from other producers,” says Guest, adding value to its Turkish assets.
While Valeura started with a strategy of capturing the upside potential on its mature, conventional producing assets, over time its geologists started seeing opportunity for an unconventional basin centred gas play.
“Valeura geologists who had experience in the Western Canadian Sedimentary Basin (WCSB) brought new ideas and a new way of looking at the data. They recognized characteristics in the well logs and how the wells behaved that was similar to what they had seen in deep basin gas in Canada” Guest explains, adding that while the play is still being evaluated,
The deep unconventional gas play has been evaluated by D&M to have around 10.1 trillion cubic feet of natural gas equivalent prospective resource, including around 236 million barrels of condensate, with a commercial chance of success of 51 per cent . So far, Valeura, along with partner Equinor, have drilled three successful wells in the play and every test in these wells has flowed gas after stimulation.
“As we’ve been working through appraisal we’ve been able to draw on technical support from people in Canada with drilling, completions, and other technical experience in this kind of play,” says Guest.
Beyond technology, Guest says the “Canadian attitude” is another advantage in building a successful international company.
“Canadians are well received internationally,” he explains. “They have an approach to business and an attitude that is generally welcomed, and supports developing the relationships that are required to set up a sustainable business internationally. This is true in mining as well.”
Meeting environmental, social, and governance (ESG) expectations is important to international success, says Guest.
“As an oil and gas company, health, safety, environment, security and engaging with the community have always been a priority,” he notes. “Internationally, governance and regulatory compliance has to be to higher standard. There’s more nervousness internationally from investors. We’re very focused on governance and meeting our code of conduct. We work within the laws and standards of the country in which we operate, but also strive to meet international or Canadian standards. We try to introduce higher standards by working with our employees, contractors and the community to raise the bar.”
Having Norway-based energy giant Equinor as a partner in its unconventional development helps raise Valeura’s profile, says Guest.
“Equinor provides external validation for us,” he explains. “It brings us a level of credibility in the market as Equinor completed significant diligence on us to ensure Valeura operates to their high standards.”
Many Canadian companies don’t look for international opportunities due to concerns about political, regulatory or pricing risks. Guest says this is a mistake.
“People really talk a lot about country risk but you need to break it down. There is risk everywhere that energy companies operate,” he explains. “Look at the advantages in Turkey. You have around a $10/Mcf gas price with a 12.5 per cent royalty and 22 per cent corporate tax with fiscal terms that have been stable for a long time. You have easy access to transportation infrastructure with more pipelines being built every year. You have the support of the host government backing domestic energy and infrastructure. You need to ask where is the real country risk.”
CGEF, in collaboration with JWN, will be holding a report launch event on January 16th where attendees can gain insights and network with successful international Canadian operators.
To download the free report and register for a free breakfast event with Canadian companies telling their international stories, click here