Mr. Jim McFarland reports

VALEURA ACHIEVES FIRST GAS FROM BANARLI

Valeura Energy Inc. has achieved first natural gas sales from its first exploration well Bati Gurgen-1 on the 100-per-cent-owned-and-operated Banarli licences in the Thrace basin of Turkey. The well has been on stream for nine days and over this period has produced conventional natural gas from the Osmancik formation at an average restricted rate of approximately three million cubic feet per day on a 20/64th-inch choke at a current flowing tubing pressure of 1,570 pounds per square inch. At this time, only 12 metres of net pay has been perforated in the well compared with the total aggregate net pay of 32 metres measured in the Osmancik and Danismen formations.

"We are delighted to reach the important milestone of first gas from Banarli, which has boosted our current sales in Turkey by more than 60 per cent," said Jim McFarland, president and chief executive officer. "We plan to produce the well at restricted rates in the near term and perforate additional pay as pressure and deliverability decline naturally.

"Natural gas prices continue to be strong in Turkey, and we expect Banarli to attract sales price realizations of approximately $8.85 per thousand cubic feet and an operating netback of more than $40 per barrel of oil equivalent at current reference prices and exchange rates."

As previously announced on March 8, 2016, the Bati Gurgen-1 well was tied in through a new eight-inch, 3.2-kilometre pipeline to an existing dehydration facility at the Gurgen-1 well (Valeura 40-per-cent working interest) on the adjacent joint venture lands acquired from Thrace Basin Natural Gas (Turkiye) Corp. (TBNG) and Pinnacle Turkey Inc. (PTI) (the TBNG-PTI JV). The pipeline has been sized to provide capacity for follow-up wells that could be drilled in the area.

Gas sales commenced from the Bati Gurgen-1 well on March 12, 2016. The gas is being sold to the TBNG-PTI JV, net of a transportation and marketing fee, and is being distributed to existing TBNG-PTI JV customers located north of Banarli. Valeura receives some benefit from this fee arrangement and the associated proceeds by virtue of its 40-per-cent working interest in the TBNG-PTI JV facilities.

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