Dr. Sean Guest reports

VALEURA ENERGY INC. ANNOUNCES TURKIYE JOINT VENTURE AGREEMENT

Through a wholly owned subsidiary and together with its partner, Pinnacle Turkey Inc., Valeura Energy Inc. has entered into an agreement with a subsidiary of Transatlantic Petroleum LLC to explore for and develop hydrocarbons in the deep rights formations of the Thrace basin of northwestern Turkey.

Dr. Sean Guest, president and chief executive officer, commented: "Despite our strategic pivot toward the Asia-Pacific region, we have maintained our conviction that the deep gas play we discovered in northwest Turkiye offers significant potential to add value to the company. Our drilling program from 2017 to 2019 demonstrated that there are multiple [trillion cubic feet] of gas in place across Valeura's lands in a deep tight gas play. We drilled three wells into this play and tested 12 separate zones -- every one of which flowed gas. It is my hope that, with a reinvigorated push to test the play, we will see this evolve into a commercial success, especially when coupled with the higher European gas prices that exist today.

"Valeura has a proven history of creating cost-efficient structures to pursue exploration ventures, and this joint venture is no different. Moreover, this agreement will result in near-term action in the field with re-entry and testing of new zones in our key Devepinar-1 well expected this quarter. With success in that testing operation, Transatlantic can fully earn a 50-per-cent working interest across the play by drilling and testing a new deep appraisal well.

"We are pleased to be working again with Transatlantic, who, given their strong presence in Turkiye and proven unconventional operating credentials both in Turkiye and the United States, are well placed to operate this next phase of the play to drive value generation for all stakeholders."

Thrace deep gas play

Valeura has held various blocks and operated in Turkey for almost 15 years. The company continues to hold the deep rights (being below 2,500 metres or a pressure gradient of 0.6 pound per square inch per foot, whichever is shallower) in various exploration licences and production leases covering a total of 955 square kilometres (gross) in the Thrace basin, located just west of Istanbul. For the majority of the acreage (those lands held under exploration licences), the current exploration phase expires on June 27, 2026, but discussions are under way with the government in relation to a two-year appraisal period extension.

Between 2017 and 2020, Valeura explored and discovered a ubiquitous, gas-charged, overpressured sandstone reservoir, believed to represent a basin-centred gas play at depths of approximately 2,900 to 4,775 metres. In conjunction with its partner at the time, Equinor, it drilled the Yamalik-1, Inanli-1 and Devepinar-1 exploration wells, all which demonstrated the presence of hydrocarbons. The company undertook hydraulic stimulation of 12 separate intervals, all of which flowed gas to surface. The testing program included one long-term test that was flowed and sold into the gas grid for approximately three months. While the drilling program confirmed multiple trillion cubic feet of gas in place, none of the wells were declared a commercial success at that time given the flow rates and local gas price. Since the exit of Equinor from the play in Q2 2020, the assets have remained an operationally dormant part of Valeura's portfolio.

Joint venture

Transatlantic has been operating in Turkey since 2007 and continues to be very active in-country, including the announcement earlier this year of a joint venture with Continental Resources and Turkiye Petrolleri AO (Turkey's state-owned petroleum corporation) to develop unconventional oil and gas resources in Turkey's Diyarbakir and Thrace basins. Additionally, Transatlantic has partnered with both Valeura and Pinnacle in the Thrace basin between 2011 and 2017 as operator of the conventional gas production. Given its active operations in Turkey, Transatlantic will serve as contract operator for the venture, with Valeura remaining the operator of record designated with the government of Turkey.

The joint venture provides an opportunity for Transatlantic to earn a 50-per-cent undivided working interest in the deep rights held by Valeura and Pinnacle through two separate operations.

Devepinar re-entry

Valeura drilled and hydraulically stimulated the Devepinar-1 exploration well in 2019 and conducted short-term tests of three separate intervals in the deep part of the Kesan formation at a depth of 4,660 to 4,765 metres. While gas was produced at good initial rates from all intervals, relatively high decline rates were observed that suggested the zones would not support long-term commercial flow rates. Thereafter, the company preserved the well in a suspended state and performed extensive technical modelling work alongside its search for a new joint venture partner.

Under the terms of the joint venture, Transatlantic has agreed to undertake a re-entry of the Devepinar-1 well, including hydraulic stimulation and testing of shallower zones in the Kesan formation. If the results constitute a commercial discovery, Transatlantic shall earn a 50-per-cent proportion of the working interest held by each of Valeura (currently 63 per cent) and Pinnacle (currently 37 per cent) in the western portion of the lands (comprising the West Thrace production leases and West Thrace exploration licence, as defined in Valeura's annual information form for the year ended Dec. 31, 2024).

Under the terms of the joint venture, Transatlantic will pay 100 per cent of the costs to re-enter the Devepinar-1 well, up to $2-million (U.S.). Any costs there above shall be shared amongst the parties: 50 per cent Transatlantic, 31.5 per cent Valeura and 18.5 per cent Pinnacle. Testing operations are expected to commence in Q4 2025.

Deep appraisal well

Transatlantic has an option to earn an interest in the eastern portion of the lands (the Banarli exploration licences, as defined in Valeura's annual information form for the year ended Dec. 31, 2024) by drilling a well down to at least 4,000 metres on either the western or eastern portion of the lands. If such well results in a commercial discovery, Transatlantic shall earn a 50-per-cent proportion of the interest held by Valeura (currently 100 per cent). Transatlantic will pay 100 per cent of the costs up to $8-million (U.S.), and any costs there above shall be shared 50 per cent Transatlantic and 50 per cent Valeura.

Valeura gathered significant learnings in the earlier drilling and testing phase and its technical studies thereafter have identified a well location that could intersect the best-quality-known reservoir within the dry gas window of the play. Valeura postulates that this combination should improve the flow rates and minimize decline and hence offers the best chance of yielding a commercial discovery. That well location, which is on the Banarli exploration licence and is known as Hanoglu-1, has already been permitted for drilling and may therefore serve as a fast-track opportunity for the deep appraisal well. However, the final decision on the well will be made in collaboration between Valeura, Transatlantic and Pinnacle and only after the testing of the Devepinar-1 well.

About Valeura Energy Inc.

Valeura Energy is a Canadian public company engaged in the exploration, development and production of petroleum and natural gas in Thailand and in Turkey. The company is pursuing a growth-oriented strategy and intends to reinvest into its producing asset portfolio and to deploy resources toward further organic and inorganic growth in Southeast Asia. Valeura aspires toward value-accretive growth for stakeholders while adhering to high standards of environmental, social and governance responsibility.

We seek Safe Harbor.