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    Valeura Encouraged by Latest Inanli Test in Turkey


Testing of next well seen as critical for the company as share price takes a hammering.

by: Dale Lunan

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Valeura Encouraged by Latest Inanli Test in Turkey

Calgary-based Valeura Energy said October 21 it was encouraged by the results of the fourth flow test at its Inanli-1 well in Turkey’s Thrace basin, where the company and its partner, Norway’s Equinor, are probing the commerciality of a basin-centred gas accumulation (BCGA). However the same day its share price fell 40%.

The fourth test at Inanli-1 targeted an interval between 3,681 metres and 3,723 metres in the Kesan formation, and over a 10-day period using artificial lift flowed at an average gas rate of 306,000 ft3/day. The rate for the final 24 hours was 171,000 ft3/day.

The interval also produced associated condensate, at an average rate over the 10-day test of 23 b/mn ft3, rising to 97 b/mn ft3 over the final 24 hours of the test. Water recovery was 98 b/d over the final 24 hours, consisting primarily of returned frac water.

The latest interval was the shallowest to be tested at Inanli-1, which was drilled to a total depth of 4,885 metres. A shallower zone was initially targeted for testing by Valeura and Equinor, but given the results of the third and fourth tests, and the high condensate yields, Valeura “believes it is prudent” to leave the shallower zone uncompleted should it wish to re-enter the well in the future.

“With the completion of the fourth test interval at Inanli-1, we now feel we have a much better understanding of the vertical variability of our tight gas play,” Valeura CEO Sean Guest said. “We are particularly encouraged by the stable rates of dry gas flowed from the deeper intervals, as these results exceeded our expectations.”

Valeura and Equinor have decided to prioritise testing of deeper zones in the BCGA, and will now move on to test the Devepinar-1 well, 20 km west of Inanli-1 and the first deep well to be stimulated and tested in the western end of the Thrace basin. Devepinar-1 was drilled earlier this year to a total depth of 4,796 metres.

Despite the encouraging comments from Guest, Valeura shares were down sharply on both the London and Toronto stock exchanges following release of the test results. On the London Stock Exchange, where Valeura was listed earlier this year, shares opened the day at £1.075 but by the end of the day were trading as low as £0.68. On the Toronto Stock Exchange, they were trading at C$0.99 at mid-day after closing October 18 at C$1.67 per share.

In a research note, Stephane Foucaud, a London analyst for Calgary-based GMP FirstEnergy, characterised market reaction to the test results as “slightly positive” even though they were “below our expectations.”

In an email to NGW, however, he said that while the actual flow volumes were disappointing, especially for retail traders, the fact that Equinor decided to keep spending to test Devepinar-1 was encouraging.

“They were not obliged to do it and if they did not like Inanli, they could have decided to pull out,” Foucaud said in his email. “The fact that they keep going is good as this was my big fear. Devepinar is now absolutely critical with a potentially quite binary outcome.”