Hello, and welcome to Virtual Investor Conferences. On behalf of OTC Markets, we are very pleased you have joined us for the Oil and Gas Conference. The next presentation is from Valeura Energy. Please note you may submit questions for the presenter in the box to the left of the slides. You can also view a company's availability for one-on-one meetings by clicking "Book a Meeting." At this point, I am very pleased to welcome Robin Martin, Senior Vice President of Valeura Energy, which trades on the OTCQX Best Market under the symbol VLERF and on TSX under the symbol VLE. Welcome back, Robin.
Thanks, Lily. Good to be here. Thanks everyone for joining to listen to an update on Valeura Energy today. Before I get started, I will just draw your attention to our disclaimers and advisories slide, which is extremely fine print, so I don't expect you to be able to read it here, but I would ask you to take a look at this at our corporate presentation, which is on our website. Speaking of which, that's where I've drawn these slides from today. What you'll notice is the slide numbers on your screen are not contiguous, but they do tie to that corporate presentation, which includes a little bit more detail.
I thought what I would do today, as I've presented here before to the OTCQX Virtual Conference, is give you an update on the company, a little bit of an overview on what we're all about for those who might be new to the story, then I'll walk through some of the new developments and things that have happened since I last presented here. Valeura Energy, we are a Canadian company. As Lily mentioned, we're listed on the TSX, and we also are quoted on OTCQX. We are an oil producer. All of our assets are offshore in the Gulf of Thailand, where we produce about 22,000 barrels a day of oil. We have reserves of about 58 million barrels. Our market cap, $1.1 billion. That's increased significantly since last I presented here, and we've got a very strong balance sheet.
$262 million of cash at the end of the first quarter and no debt. We're also strongly cash flow positive. In 2025, we generated nearly $300 million, pardon me, $250 million in cash flow from operations. That's based on $300 million in EBITDAX. Just delving in a little bit more, what you're seeing here is a share price chart. This is showing the share price in Canadian dollars per share. I should mention everything else that I speak to today is in US dollars. That's how we report. Since most of our liquidity is on TSX, you're seeing the share price here in Canadian dollars. This goes back to the beginning of 2022, which is chosen as the date to show you the share price because that's when we started our strategic transition and established our portfolio in Thailand that we have today.
On that share price chart are some of the key transactions that we've done, acquisitions from KrisEnergy and from Mubadala, and more recently, a farm-in with PTTEP. You can see how these have helped us to build the portfolio. Moreover, I think most of the value appreciation that we've seen up to sort of the tail end of last year is tied directly to execution on this business, though, rather than just the acquisitions themselves. Obviously in the more recent past, we've seen the benefit of much higher oil prices, which I think has propelled the share price a little bit and given us some more recognition in the market. Speaking of recognition, you also see some of the awards that we've attained at the bottom of the screen there.
Various things that we've been recognized for over the last couple of years. This culminates in the one on the bottom right, which is Valeura being identified as Canada's top growing company. The number one top growing company as ranked by The Globe and Mail in their Report on Business Magazine. Just a few other capital markets details I'll mention here. Shareholders, we have two large shareholders. One is Baillie Gifford, very long-term investor, institutional investor based in the U.K. They hold about 17% of the company. The other one is Thoresen Thai, which is a listed entity on the Stock Exchange of Thailand. It is effectively the investment vehicle of a high net worth family in Thailand. Beyond that, board and management have a significant position in the company as well, between 6% and 7%. Just touching on our strategy for those who are new to the company.
Our strategy is to deliver value through growth, and importantly, we don't just use the word growth, we use deliver value through growth. It's not about bragging rights, it's about adding that value for shareholders. We do this by way of three critical pillars. One of them is organic growth, or as we've described it here, maximizing cash flow from organic portfolio. What that means is reinvesting into the portfolio in order to replace our reserves or grow them, and add future years of cash flow, which then affect the value of the company, and I'll get a little bit more detail on that in just a moment. Inorganic growth is obviously a way that we have grown the business, and I expect we'll continue to grow the business.
For this reason, we've kept a very strong balance sheet, which is why there's no debt, and you see that cash position of more than $200 million, $260 million. Equally important to how we grow is how we operate, and for that reason, operational excellence takes a place at the very top of our strategy. This is a catch-all bin that describes how we go about conducting ourselves responsibly and also how we go about conducting ourselves efficiently. That means reducing our OpEx, being more efficient with energy consumption, being more efficient with things like greenhouse gas emissions, and we take this as absolutely paramount to our strategy. Just delving in to take a quick look at our assets. The four that are identified here in the gold typeface are the four producing assets where we generate our 22,000 barrels a day or so of production.
The ones to the north of this map, Manora and Jasmine, are, I would say, on the more mature end of the oil and gas spectrum. That said, these are both assets that do as so many do in the Gulf of Thailand, which is surprise to the upside and exceed their expectations many times over. The Jasmine field is a great case in point for that. Jasmine was developed in 2005 with an expectation of recovering a sum total of seven million barrels of oil. Now, fast-forward to 2026. As of August this year, I expect we will be celebrating our 100 millionth barrel produced from the Jasmine field. Original expectation of seven, and here we are staring down the 100 millionth barrel, and we've still got more reserves to go for several years.
The two assets to the southern part of the map, Nong Yao and Wassana, I describe as being very much on the other end of the oil and gas development spectrum. These are assets that, while in production, are still in what can be considered an initial growth phase. The Nong Yao field, for example, we expanded this in 2024 with a new production platform. We are also expanding it further by adding additional well slots to the main Nong Yao A production platform, with the idea of increasing the amount of wells that we can have from that platform without having to wait for existing wells to reach the end of their life to be reused. The Wassana field as well, this was our first acquisition in Thailand. We've discovered significantly more oil here than was ever going to be able to be produced with the existing infrastructure.
We are in the midst of a full-scale redevelopment of this asset, building a new central processing platform facility that I expect will be loaded out toward the end of this year. I'll get into that in a little bit more detail in a moment as well. The assets that you see in the middle, G1/65 and G3/65, are not producing yet. These are the subject of a farm-in that we're doing with the national oil company, PTT EP, to earn a 40% non-operated working interest. Final step on getting that deal completed is the government approval, which I expect is going to happen in the relatively near term following Thailand's election and putting a new government in place just as of last week. I mentioned Wassana, and I thought I would delve into this asset just in a little bit of detail.
What you can see here in the bottom right is a photograph of the new central processing platform facility that we're building for the Wassana field. You can get a sense of the scale with the individuals you see at the bottom of the screen, just sort of poking in there. Large-scale facility, much bigger than the facility that we have in place right now in the Wassana field. The idea being higher capacity and also designed in order to allow for expansion of the field by way of tying in additional satellite platforms down the road. Very importantly, we test the economics of projects like this at low-stress oil prices. This one, tested at $60 per barrel, will still generate an IRR of 40%, and that would give us a payback of just 18 months. Very, very robust economics.
The other reason that I want to show this slide, though, and show that photograph, is to underscore a very important point. When most people hear, "Valeura, you're an oil producer and you're in Thailand?" They're a little bit surprised to learn that Thailand has an oil and gas industry. They do. Multiple decades of oil and gas, in fact. It's not just reserves, it's also production. It's also all of the services that go into supporting our industry, including things like facility construction. This yard that we're looking at is Thai -Nippon Steel. Very professional, very sophisticated yard. This is literally a one-hour drive from our office in Bangkok. Everything that we need to support this industry is right there and world-class in Thailand. I also mentioned the strategic farm-in that we're doing with PTTEP.
I wanted to show this slide just to give you a sense for how very big these blocks are. You can see Block G1/65 and Block G3/65 identified there right alongside very large gas and oil fields in Gulf of Thailand. This will increase Valeura's gross acreage to over 22,000 sq km. To put this into perspective, north to south, each of these blocks is about 200 mi. Very significant size. We are entering these blocks at ground floor basis, and usually in our industry, when you hear of a company doing a farm-in at ground floor basis, what it means is you've got absolutely nothing discovered, that is, and you're starting from a blank slate of exploration. That's not the case in this instance. In fact, we've got several discoveries across these blocks, 15 oil and gas discoveries across these blocks.
We believe PTT EP has welcomed us into this venture in order to rely on the expertise and the reputation that we've built with producing our four oil fields within the Gulf of Thailand. Just to zoom in on a little bit of the opportunity, this is looking at the G3 block, and there's three focus areas identified here. The first one that I'll point out is the one that is covered with the green box, sort of in the middle of the map, the Busabong gas development area. This is a case in point for the stage of development here. Wells were drilled in this Busabong gas development area in early 2025 that resulted in gas discoveries. Thereafter, the operator, PTT EP, has gone to the regulator and has reserved that green area as a production area within the G3 block.
Now, part of that process is to identify your vision for how you would ultimately develop the field. In doing so, they have identified what you see here as the gray black circles, which are each ultimately a potential gas platform. 24 potential platforms identified here. We've moved into development planning mode immediately on this part of the block, and I expect about middle of this year, we'll be taking our final investment decision on the first two of the gas development platforms. This is an area that had a bit of a head start because it's got existing 3D seismic, so we could fairly easily figure out what we need to do to develop this. The other two areas that are identified in blue outline here we felt could benefit from new 3D seismic.
That was acquired in 2025, and I expect we'll receive that data starting about middle of this year. Importantly, in the very north of the map, you'll see an area called Nong Yao North-East Exploration. You'll recognize that name, Nong Yao, as one of our producing oil fields. What we see here is, we believe, an extension of the Nong Yao field as part of an oil fairway that goes beyond our block, G11/48, onto this farm-in block, G3/65, meaning there's good opportunity to develop more oil. Again, this underscores probably why PTTEP wanted Valeura involved in these blocks to benefit from our expertise when it comes to developing oil fields, as well as access to our infrastructure. I should mention as well, you'll notice the pink fields just to the east.
Those are very large gas fields that are operated by PTTEP, meaning there's ample infrastructure for us to be tying into for production purposes. One of the other things that's new since last time I presented to the OTCQX is we came out with our reserves update earlier this year. I think the key highlight from Valeura's reserves over the last three years has been for three years running now, we have replaced more than double our production each year in a 2P sense. Summing that all together to put it into a three-year chart is what you're seeing on the bottom left, 218% reserve replacement over three years, meaning we've produced 24 million barrels, we've added 53 million barrels.
Even though we've had the cash flow from three solid years of production meeting our guidance every year, we've in fact doubled our reserves, very nearly doubled our reserves in that period. The graph on the bottom right is important in that sense as well. It shows you that not only is it about adding barrels, it's about adding years of life to these fields. This is showing you our initial view of the economic field life for Manora, Nong Yao, Jasmine and Wassana, and our current view of that field life. Again, these are not numbers that are just derived from Valeura. These are numbers that come from our external third-party reserves evaluator, our reserves being evaluated every year, which is mandatory as a Canadian company. It's not just about adding those years of life, it's about adding the cash flow from those years.
This is how I believe we've managed to increase the value of Valeura over the time that we've operated this portfolio. Underscoring that, I wanted to show what a year of cash flow actually looks like. I've mentioned in 2025, we generated nearly $250 million in adjusted cash flow from operations. This slide sort of brings you through how we managed to do that. In 2025, with average oil prices of $70 per barrel, we generated revenues of nearly $600 million. I'm not going to walk through every number on here except to say you can see the large chunks there being royalties, which are defined in our fiscal contracts. Those fiscal contracts have never changed by the way, in Thailand. They've honored those fiscal terms since they were initially granted. Adjusted OpEx, I'll just mention this.
This comes out to about $26 per barrel adjusted OpEx, and that's basically what our guidance is for this year as well. I believe that's quite a respectable number for any offshore operations. The rest of the numbers there you can see don't necessarily stand out, relatively modest G&A and relatively modest tax payments, and that comes from an advantaged tax position that we have, based on the fact that we've got significant tax losses that came from one of our acquisitions, which we continue to use to our benefit. With that sort of cash flow generation and having built the balance sheet, it makes sense to look at the current situation and reflect on the fact that this oil revenue was derived from oil prices averaging $70 per barrel. Obviously, that's not the world that we're in now.
With geopolitics affecting the price of oil, I'll just point out a couple of important factors when it comes to selling oil within Thailand. First of all, Thailand imports about 92% of the oil that it consumes. Most of that comes from the Middle East. Oil sales in Thailand are therefore tied to Middle Eastern crude oil benchmarks. Specifically, our oil sales are tied to the Dubai benchmark. Historically, we've averaged between $1-$2 as a premium to Dubai. We've seen Dubai have some very high numbers in the last month or so, as high as $140-$150 at times. More recently, it's come back to about equivalent to Brent. Nonetheless, I think the point is, oil is much higher than the $70 price environment that we saw in 2025, and we're currently seeing prices of $100+. Most of that will flow through directly to Valeura.
There's no capping on the price of oil sales within Thailand. Under the royalty tax regime, royalties are applied just as they always were. OpEx will change a little bit with increased price in fuel, but ultimately, we stand to be the beneficiary of much higher prices. Having built the balance sheet with that sort of success and an expectation of that continuing, one of the questions that I typically get is: What are you going to do with all the cash? As I mentioned at the beginning, there's $267 million of cash on our balance sheet right now and no debt. While we are taking measures to capitalize on the fact that current oil prices are higher than they were when we put our plan together for the year, we'll do things like expanding this Nong Yao facility.
We'll do things like exploring how we might be able to drill more than we'd initially envisioned this year, all with the purpose of enhancing our production in 2026. Truth be told, our priorities when it comes to how we allocate cash and cash flow have not changed. There's really three bins for how we look at that. Number one shouldn't come as a surprise. Reinvesting into our portfolio is a worthwhile endeavor, and therefore organic investment is a priority for us. We see this as what we need to do in order to maintain our production in a long-term band of 20,000-25,000 barrels per day, and that's what you should expect from these four producing assets, is 20,000-25,000 barrels a day lasting into the 2030s. The other important bin for us is looking at M&A, and the important words are there, value accretive M&A.
It's not growth for growth's sake. It's not growth for bragging rights. It's growth for the purpose of adding value. Fortunately, what we see within the Asia-Pacific region is a very attractive market. We see a reduced number of operators from who were there years ago, and we don't see a lot of buyers. We don't face the same sort of competition that you get in other regions of the world. The third consideration when it comes to how we allocate capital is returns to shareholders. This is a discussion that we have every time that our board sits to meet, and it is a serious discussion. It's not a tick-the-box exercise. It's a real debate as to whether it is the right time to be returning cash directly to shareholders. The conversation usually happens alongside a discussion on what the investment opportunities are within the Asia-Pacific region.
To this point, the decision that's come out from that is shareholders are best served by Valeura maintaining a very robust balance sheet in order to maximize our ability to transact, because that's how we've added value in the past, and that's how we envisage adding value going forward. Now, that said, we do have a share buyback program in place. We've been relatively modest about using it. Essentially, we've taken the approach of preventing dilution, so I take it as an anti-dilution sort of mechanism. That said, we've also discussed that if we find ourselves in a world where with high prices, we're building cash and we have more than we could envisage using for organic investment or inorganic growth, we will take the decision to return some cash to shareholders. Mechanism for that is not decided at this stage.
I'm always curious to hear investors' thoughts on that, if you'd like to weigh in on it as to whether buybacks or dividends of some kind are more appropriate. In any event, it's not something that we've committed to doing just yet, but it is very much on our minds and something we discuss regularly. Also wanted to highlight some of the successes that we've delivered over the last few years when it comes to the way that we operate, and in particular, the sustainability of our operations. Managing a portfolio of relatively mature assets, I think this is an important consideration for any company. We're very proud with our success at reducing greenhouse gas emissions intensity. In fact, we've reduced our greenhouse gas emissions intensity by 30% over three years. I think that's a fantastic outcome for a mature portfolio.
It speaks to being efficient in how we use fuel, how we modernize our facilities, and how we operate. Also, on the social side of things, I'll just point out, 95% of our employee workforce is local workforce. We're very fortunate to be operating in a jurisdiction like Thailand that has a sophisticated and well-educated workforce. The number that's not on the screen that I'd like to be on the screen, that I'd like to mention as well is 50% of our workforce is female, and that's not something that a lot of oil companies could say. Governance, we also take very seriously certifying our integrity management systems, our safety systems and whatnot, and also all the work that goes into maintaining that certification behind the scenes so that we continue to operate in a world-class fashion.
Just by way of summary, what I'd like you to take away from any introductory presentation on Valeura is our business works. We are strongly cash flow generative, and we've built an incredible balance sheet with nothing but cash. What that does is set us up for investing further into the business in order to continue generating value for shareholders. To that point, in the middle of the screen, we've put, I think, again, keywords. Our investments are always strategic. We insist on robust economics, and you see that with things like our Wassana development, for example. Even at $60 oil, we expect to generate a 40% internal rate of return. Partnerships are critical operating anywhere in the world, and especially in Asia. Now, everyone will tell you they have fantastic relationships with their partners, their regulators, their government.
Not everyone can show you things like the transaction that we're doing with PTTEP, where the very large national oil company has welcomed us in to work with them in exploring and developing these two very large blocks. Opportunity. We do have opportunities to leverage the strong current oil prices. I've described them there as back-pocket plans. A couple of those are things like our expansion of the Nong Yao field, looking at opportunities to expand the amount of drilling that we'll do in 2025, and there's more that we'll do as well to capitalize on this opportunity. With that, high prices equals new opportunity. To that point, I'll just point out that we are uniquely levered to benefit from high oil prices. We maintain discipline in everything we do, though, and you've heard me say it a couple of times in this presentation.
It's not growth for growth's sake. It's growth for the purpose of adding value, and I think we've been very successful at that over the last few years, and we intend to maintain that discipline and keep adding value for shareholders. With that, I'll just invite you to reach out anytime you like. I'm based in Calgary, with the idea of being in a time zone that's convenient for the investor market. The rest of our executives are all based in Singapore. We pride ourselves on being about the most accessible management team that you can find under the sun. Feel free to reach out at any time if there's any questions you might have. Speaking of questions, we do have some questions that were typed in. Just give me a moment to take a look at these. First question is, Q1 drilling at Manora was 100% successful.
How much confidence does that give you in finding more oil around your existing fields? We are very confident in finding more oil around our existing fields. In fact, in the Manora field in particular, you're right. We were successful with both development and appraisal drilling in Q1. Just about every time we're drilling a development well, we're very thoughtful as to how we plan the trajectory of that so that we take the opportunity to appraise additional targets. With success, that appraisal creates the next development drilling program, and with that next development drilling program, we consider how we can use those wells to appraise targets as we're drilling into the main one. Yes, the results of that program are to create a bigger development program going forward.
I'll also mention that there is at least one or two exploration prospects on the Manora block, one of which we are considering for drilling this year. Yeah. The question here is: With record cash balance and no debt and strong 2025, how aggressively are you prepared to lean into buybacks if the share price lags NAV? It is a good question, and I mentioned some of our thought process around this. To us, it's more about weighing the benefit of providing direct shareholder returns versus the benefit of maximizing our ability to transact on the opportunities before us. That's kind of the lever that we look at is if we were to see the investments opportunity set before us were to dry up.
For example, we don't see viable investments into our portfolio, and we don't see viable M&A opportunities, then that would tip the scales much more toward providing shareholder returns. It's less about considering NAV. If I'm being honest, it's obviously a consideration that we have, but we really look at what is the most efficient way to generate value for shareholders. VLE employs about 95% local staff. So I'm reading the question here. VLE employs about 95% local staff in Thailand and have a strong safety and ESG record. Do you think that local track record gives you an edge when new opportunities come up? Absolutely, it does. I have seen companies that have tried to make large investments, particularly new basin entries, new partnerships, new country entries, and while financially, they've got the wherewithal to do it, there tends to be hesitation if the operational reputation doesn't precede them.
In our instance, I would say that operational reputation does precede us. We have been looking at expanding into other countries within the Asia-Pacific region, and in some instances, we've introduced ourselves to new regulators with the expectation that while we'll need to tell them all about what we are and what we do and our success story. In fact, the meeting was entirely different, and the regulator on the other side of the table had done their research and understood our safety record and understood our operational track record and was essentially grilling us and questioning us as to how can you bring that sort of expertise to our basins. Yes, I do believe that that success gives us an edge.
We think it is right that operational excellence occupies that position at the very top level of our strategy, and we intend not to deviate from that because we do see this as a competitive advantage. Question here. Thailand's new fuel security rules don't affect crude exports. Does that make your domestic oil production even more strategically important and valuable in the eyes of the government and local partners? I think that's a great way to put it. In light of the current oil price environment, Thailand has put measures in place where effectively they've said they don't want to see the export of refined products from Thailand. Gasoline, diesel, and various other refined products that are created in Thailand, they want to stay in Thailand, and that's perfectly understandable.
They have not explicitly prohibited the export of crude oil, but there is a general request that we would sell crude oil domestically within Thailand. That makes perfect sense to us. We have buyers in Thailand that are competitive refiners and blenders that are accustomed to dealing with our product. The simple answer is yes, I do think it underscores the strategic importance to Thailand of having a domestic supply of oil. We've got just 30 seconds left. I'm just going to see if I can take one more question. Yeah. We'll tackle this one, and my apologies if I didn't get your question here. VLE cut emissions by approximately 30% in Thailand in just a few years. Does running cleaner and more efficiently also help protect your margins? Yes, absolutely.
Part of the way that we've managed to reduce our greenhouse gas emissions intensity is by looking at the fuel that we use for generating electricity. Insofar as older facilities might use diesel exclusively for generating electricity, if it's possible to change that out for biofuel generations, as we've done at our Nong Yao field, by using associated gas, or if it's possible to use other technologies, that obviously benefits our OpEx as well. With that, I believe I'm at time, so I will just thank you for listening in today and, again, invite you to reach out directly if you have any further questions. Thanks very much.