Mr. Jim McFarland reports

VALEURA CONFIRMS NO IMPACT TO DATE ON PERSONNEL OR OPERATIONS FROM ATTEMPTED COUP IN TURKEY AND PROVIDES OPERATIONAL UPDATE

Valeura Energy Inc. has provided the following update.

"We would like to confirm that our operations in the Thrace basin have not been directly affected to date by the attempted coup in Turkey on July 15, 2016, which appears to have been put down by the government," said Jim McFarland, president and chief executive officer. "All of our Turkish employees and expatriate contractors in Turkey are safe. We will continue to monitor conditions in the aftermath of this event, including the safety of our personnel and operations, the security situation generally, impact on the Turkish lira and banking facilities, the functioning of the General Directorate of Petroleum Affairs (GDPA), impact on our joint venture partners, and any changes in offtakes by our natural gas customers.

"We are pleased to advise that good progress is being made to complete the definitive transaction documents under the binding letter agreement with Statoil for the farm-out on the Banarli licences.

"We would also like to report that preliminary second quarter 2016 net petroleum and natural gas sales in Turkey averaged 945 barrels of oil equivalent per day (boe/d), up 19 per cent from the first quarter of 2016, at an estimated average price realization of $9.43 per 1,000 cubic feet. Final quarterly results are expected to be released after markets close on Aug. 11, 2016."

Statoil binding letter agreement for farm-out at Banarli

Good progress is being made to complete definitive transaction documents by the July 29, 2016, target date under the binding letter agreement with Statoil Holding Netherlands BV, a wholly owned affiliate of Statoil ASA, for a farm-out agreement for the exploration of the deeper formations below approximately 2,500 metres on Valeura's 100-per-cent-owned-and-operated Banarli exploration licences.

Preliminary second quarter 2016 operational results

Preliminary petroleum and natural gas sales in Turkey in the second quarter of 2016 of 945 boe/d (net) included 5.6 million cubic feet per day of natural gas and 18 barrels per day (bbl/d) of oil and condensate. Sales in the second quarter of 2016 were up 19 per cent from the first quarter of 2016 reflecting a full quarter of sales from Banarli, where sales commenced on March 12, 2016. Banarli sales in the second quarter of 2016 accounted for approximately 43 per cent of total sales. Compared with the same period in 2015, second quarter 2016 sales were down 10 per cent due to natural declines and reduced drilling and other capital expenditures on the joint venture lands acquired from Thrace Basin Natural Gas (Turkiye) Corp. (TBNG) and Pinnacle Turkey Inc. (PTI), partially offset by new sales from Banarli.

The preliminary average natural gas price realization in the second quarter of 2016 was approximately $9.43 per 1,000 cubic feet, down 6 per cent from the first quarter of 2016 and down 5 per cent from the second quarter of 2015 due to the impact of new sales from Banarli, which are priced at a small net discount to TBNG JV sales, and some fluctuations in the Turkish lira exchange rate. The BOTAS reference price for domestic gas sales in Turkey (priced in Turkish lira) has remained unchanged since Oct. 1, 2014.

Banarli drilling and completion interim results

Bati Gurgen-2

The Bati Gurgen-2 well, the third well drilled by Valeura at Banarli, was spudded on June 19 and is currently drilling in a sidetrack operation in the Osmancik formation at a depth of approximately 1,800 metres. The original targeted depth of the well was 2,200 metres to appraise both Danismen and Osmancik sandstone reservoirs discovered in the Bati Gurgen-1 well located 530 metres to the northwest. The initial well bore at Bati Gurgen-2 was drilled to a true vertical depth of 2,226 metres and penetrated well-developed sands in both the Danismen and Osmancik formations but these formations were 25 to 29 metres deeper than expected and the sands appeared to be wet on logs.

As a result, a sidetrack drilling operation is under way targeting sands in the Osmancik formation in a higher structural position and at a bottom-hole location that is approximately 420 metres west of the initial bottom-hole location. The target Osmancik sands are also expected to be at a higher elevation than in the Bati Gurgen-1 well with good potential for additional natural gas trapping. The Danismen formation is not expected to be prospective at this new bottom-hole location. The planned true vertical depth of the sidetrack is 2,000 metres.

Yayli-1

As previously announced, the Yayli-1 well was drilled to depth of 2,914 metres, penetrating overpressured tight sands in the Teslimkoy formation below approximately 2,500 metres. Two fracture stimulations were carried out in the Teslimkoy which produced natural gas. Confirmation of overpressure below 2,500 metres and evidence of producible gas from the overpressured Teslimkoy sands were important data points in assessing the potential of a basin-centred gas play on Banarli and progressing farm-out negotiations.

Following the signing of the letter agreement with Statoil, the corporation plugged off the Teslimkoy and moved uphole to complete and test 13 metres of indicated net pay in shallower conventional sands in the Osmancik formation at a depth of 1,800 metres. Five intervals in the Osmancik formation were perforated and simultaneously tested yielding initial short-term production rates of more than one million cubic feet per day but with high associated water production. Production logging indicated that the water production appeared to be sourced from one of the lower perforated intervals and attempts to isolate this zone and achieve a viable gas flow rate at low water production levels were not successful. Preparations are therefore under way to plug off the bottom four perforated intervals and to reperforate and test the top interval which showed good gas shows during drilling.

We seek Safe Harbor.