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Canada's Valeura to offload Turkish producing business, to focus on deep gas play

Highlights

Agrees sale of conventional gas play to TBNG

To continue apprasial of 20 Tcf unconventional play

Hopes to bring in new partner through farm-out

London — Canada's Valeura Energy has agreed to sell its conventional gas producing business in Turkey to focus on developing its potential 20 Tcf (566 Bcm) unconventional gas play in the northwest of the country, the company said Oct. 20.

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Valeura has agreed to sell the business -- which currently produces around 672 b/d of oil equivalent -- to private UK company TBNG for $15.5 million, it said.

Once completed, the proceeds of the transaction are expected to help fund the company's further appraisal of its deep gas play, Valeura said in a statement.

"We are continuing in our commitment to Turkey as we appraise our 20 Tcfe unrisked mean prospective resource deep tight gas play," CEO Sean Guest said.

Valeura suffered a setback for its plans to develop the deep gas play at the Banarli block in the Thrace Basin earlier this year when its partner, Norway's Equinor, exited the project.

Valeura had been working in partnership with Equinor to develop the unconventional gas accumulation following a successful exploration well — Yamalik-1 — in 2017.

An appraisal well, Inanli-1, was drilled at the site in 2019, and despite Valeura saying that subsequent flow tests from the well and a second well, Devepinar-1, had been encouraging, Equinor opted to leave.

New partner

Valeura is continuing to look for a new partner to join it at Banarli, with Guest telling S&P Global Platts in May that it expected offers from potential partners by the end of 2020.

According to an October corporate presentation, Valeura hopes to conclude the farm-out process in early Q1 2021 and to resume appraisal drilling in Q2 2021.

Guest said in May that while having a partner of the scale of an oil major such as Equinor was a benefit, Valeura would also welcome a medium-sized partner with experience of unconventional developments.

Turkey is almost entirely dependent on imports from Russia, Iran and Azerbaijan — as well as imports of LNG — to meet gas demand of around 45 Bcm/year.

However, state upstream player TPAO in August made a giant gas discovery in the Black Sea, with reserves estimated at 405 Bcm.

First gas is expected in 2023, which will go some way to reducing Turkey's import dependence and also give it increased leverage in its contract renewal talks with its suppliers.

Guest said the Banarli block could produce up to 1.5 Bcf/d at peak — the equivalent of 42 million cu m/d or 15 Bcm/year — based on its potential resources.

It would take five to 10 years to ramp up to a full project of that scale, Guest said.

Valeura -- created in 2010 when it changed its name from PanWestern Energy -- has made Turkey its primary geographic focus.