HOUSTON, Jan. 26, 2016 /PRNewswire/ -- VAALCO Energy,
Inc. (NYSE: EGY) ("VAALCO" or "the Company") today announced that
its Board of Directors has formed a strategic committee to explore
a range of strategic alternatives to further enhance shareholder
value. The strategic alternatives process will explore options for
the future of the Company including, but not limited to securing
additional investment to support existing projects and growth
opportunities, joint ventures, asset sales or farm-outs, the
potential sale or merger of the Company, or continuing to pursue
the Company's existing operating plan.
Steve Guidry, Chief Executive
Officer and Director, commented: "Our Board and management team
remain committed to unlocking the value of the Company's assets and
maximizing value for our shareholders. In the current period of
highly volatile oil prices, we believe it is appropriate to conduct
a thorough evaluation of strategic alternatives."
There is no assurance that the strategic alternatives process
will result in VAALCO completing any such transaction and the
Company does not intend to make any further announcements regarding
strategic alternatives unless and until a final decision has been
made by its Board. VAALCO has engaged Scotia Capital
(USA) Inc. as financial advisor
who will advise the Company of potential strategic
alternatives.
Operational Update
Additionally, VAALCO today provided a detailed operational
update.
The Company's previously announced workover campaign at the
Avouma Platform in the Etame Marin block offshore Gabon is complete. Three wells were
included in the project consisting of the South Tchibala 2-H,
Avouma 3-H and the Avouma 2-H. Production from the Avouma
Platform, one of four currently installed in the Etame Marin block,
is tied back to the Petroleo Nautipa FPSO.
The South Tchibala 2-H workover operation was completed
successfully and restored approximately 1,700 gross barrels of oil
per day (BOPD) (415 BOPD net to VAALCO) of production that had been
offline since August of 2014 due to downhole equipment
failure. The Avouma 2-H workover operation was also completed
successfully and the well is flowing approximately 3,000 gross BOPD
(730 BOPD net to VAALCO) following the workover. The Avouma 2-H
post-workover rate represents an increase of approximately 500
gross BOPD (122 BOPD net to VAALCO) from the well which was on
production prior to the workover. Finally, the Avouma 3-H
workover operation was suspended and the well was secured for
future use due to downhole equipment becoming lodged in the
wellbore with efforts to remove it being unsuccessful. The
Company will fully review the circumstances that caused this issue
to determine if additional operations can be conducted on the
Avouma 3-H at a future date. This well was not on production
prior to the workover operation.
VAALCO said its net production for the fourth quarter of 2015
averaged approximately 4,859 net barrels of oil equivalent per day
(BOE), up 31% compared with 3,696 net BOE in the fourth quarter of
2014. For the full year 2015, its net production averaged
approximately 4,627 net BOE per day, up 16% compared with 3,995 net
BOE per day in full year 2014. The 2015 fourth quarter and
full year production rates were both within the guidance provided
in the Company's most recent earnings conference call.
Additionally, VAALCO announced that the offshore Gabon Etame
Marin Crude Sweetening Project (CSP) is being deferred until oil
prices recover to levels that support positive economic
returns. Although over 15 potential solutions were identified
and evaluated to remove hydrogen sulfide (H2S) from
produced fluids, none are economic in the current depressed oil
price environment. The suspension of the CSP resulted in a
1.9 million barrels of oil net to VAALCO reduction of VAALCO's
proved reserves as of December 31,
2015. The sour reserves will be reclassified to contingent
resources at January 1, 2016.
Guidry continued, "Two of the three workovers at the Avouma
Platform were completed on time and slightly under budget and
either restored or sustained over 4,700 BOPD of gross production,
or 1,145 BOPD net to VAALCO. Unfortunately, the third workover at
Avouma 3-H was not successful due to a mechanical issue.
Regarding the process to identify a means by which to treat the
H2S present in some of the wells in the Ebouri and Etame
fields, I commend the VAALCO staff and members of the joint venture
team in their efforts to identify a viable solution. Although
currently suspended, the groundwork has been laid to quickly and
efficiently restart the project when prices improve to an
acceptable level. The associated reserves would then most likely be
reclassified as proven."
Guidry added, "On January 25,
2016, we began demobilizing the Constellation II rig
operated by Transocean and no longer intend to drill any wells in
2016 on our Etame Marin block offshore Gabon. We are pleased with the overall results
we achieved with our 2015 drilling program as we reversed the
decline in our production and meaningfully increased our
volumes. Due to the continued sharp decline in oil prices we
have determined additional drilling to be uneconomic. As a
result, we estimate our 2016 capital expenditures to now range from
$4 to $6 million. We are in
discussions with Transocean regarding the remaining rig contract
term which we believe carries a maximum exposure of approximately
$7 million (net)."
About VAALCO
VAALCO Energy, Inc. is a Houston based independent energy company
principally engaged in the acquisition, exploration, development
and production of crude oil. VAALCO's strategy is to increase
reserves and production through the exploration and exploitation of
oil and natural gas properties with the emphasis on international
opportunities. The Company's properties and exploration
acreage are located primarily in Gabon, Angola
and Equatorial Guinea in
West Africa.
This news release includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, and are intended to qualify for the safe harbor from
liability established by the Private Securities Litigation Reform
Act of 1995. Forward-looking statements are those concerning
VAALCO's plans, expectations, and objectives for future drilling,
completion and other operations and activities, including
statements relating to a potential strategic alternative
transaction, or the terms, timing or structure of any such
transactions (or whether any such transaction will take place at
all) and VAALCO's future performance if any such transaction is
completed. All statements, other than statements of historical
facts, included in this news release that address activities,
events or developments that VAALCO expects, believes or anticipates
will or may occur in the future are forward-looking statements.
These statements include expected capital expenditures, future
drilling plans, prospect evaluations, liquidity, negotiations with
governments and third parties, expectations regarding processing
facilities, and reserve growth. These statements are based on
assumptions made by VAALCO based on its experience, perception of
historical trends, current conditions, expected future developments
and other factors it believes are appropriate in the circumstances.
Such statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond VAALCO's control. These
risks include, but are not limited to, oil and gas price
volatility, inflation, general economic conditions, the Company's
success in discovering, developing and producing reserves, lack of
availability of goods, services and capital, environmental risks,
drilling risks, foreign operational risks, and regulatory changes.
These and other risks are further described in VAALCO's annual
report on Form 10-K for the year ended December 31, 2014, subsequent quarterly reports
on Form 10-Q, and other reports filed with the SEC, which can be
reviewed at http://www.sec.gov, or which can be received by
contacting VAALCO at 9800 Richmond Avenue, Suite 700, Houston, Texas 77042, (713) 623-0801.
Investors are cautioned that forward-looking statements are not
guarantees of future performance and that actual results or
developments may differ materially from those projected in the
forward-looking statements. VAALCO disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events, or
otherwise. VAALCO assumes no obligation to update any
forward-looking statement as of any future date.
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SOURCE VAALCO Energy, Inc.