VAALCO Announces Agreement Regarding Remaining Contract Term on Offshore Gabon Drilling Rig and Provides Operational Update
July 05 2016 - 4:45PM
VAALCO Energy, Inc. (NYSE:EGY) today announced that it has executed
an agreement with Transocean Ltd. regarding the remaining contract
term associated with the Constellation II rig utilized in the
Company’s recent drilling program offshore Gabon which provides for
payment of $5.1 million net to VAALCO’s interest for unused rig
days under the contract. This amount, plus the Company’s share of
demobilization charges, will be paid in seven equal monthly
installments beginning in July.
Operational Update
Total Company production for the second quarter
of 2016 averaged approximately 4,700 net barrels of oil equivalent
per day (BOEPD), up 4% from 4,516 net BOEPD in the first quarter of
2016. On June 23, the electrical submersible pumps (ESPs) in
the South Tchibala 2-H well failed, resulting in the well being
temporarily shut-in. The well was producing approximately
1,700 barrels of oil per day gross, or 415 net to the Company,
prior to being temporarily shut-in. VAALCO is working to
mobilize a hydraulic workover unit to move onto the Avouma platform
and replace the ESPs in the well which is expected to be back on
production by early fourth quarter 2016. The Company said that
using a hydraulic unit to replace the ESPs rather than mobilizing a
jackup rig results in substantially lower cost for the workover.
VAALCO’s net share of the cost is expected to be approximately $1.5
million. The Company further commented that it does not plan
to change its annual production guidance at this time as a result
of this temporary well shut-in.
Steve Guidry, the Company’s Chief Executive
Officer, commented: “We are very pleased to have reached a fair and
amicable settlement with Transocean following the release of the
rig utilized in our offshore Gabon drilling program. We
appreciate the relationship with Transocean and their support of
our operations. While low oil prices were the primary factor in our
releasing the rig, the benefit of our drilling program through that
point was further evidenced in the second quarter when our
production averaged approximately 4,700 BOE per day, at the top end
of guidance for the quarter. Thus far in 2016, we have
experienced very high production uptime along with more shallow
declines from new wells placed on production in the last twelve
months. The shut-in of the South Tchibala 2-H well is
expected to be only a short-term temporary disruption, therefore we
don’t see a need to change our current annual production guidance
of 3,700 to 4,500 BOE per day at this time.”
About VAALCO
VAALCO Energy, Inc. is a Houston-based
independent energy company principally engaged in the acquisition,
exploration, development and production of crude oil. The Company's
properties and exploration acreage are located primarily in Gabon,
Equatorial Guinea and Angola in West Africa.
This news release includes "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements are those concerning VAALCO's plans,
expectations, and objectives for future drilling, completion,
workover and other operations and activities. All statements, other
than statements of historical facts, included in this 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 may 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, 2015, subsequent quarterly reports on
Form 10-Q, and other reports filed with the SEC. 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.
Investor Contact
Al Petrie
Investor Relations Coordinator
713-543-3422
Vaalco Energy (NYSE:EGY)
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