VAALCO Energy, Inc. (NYSE: EGY; LSE: EGY) (“VAALCO” or the
“Company”) today provided an update on the successful completion of
its 2019/2020 drilling program as well as an operational update.
Highlights
- Successfully completed the South East Etame 4H development well
including approximately 750 feet of horizontal section in the Gamba
reservoir;
- Brought the South East Etame 4H well onto production on March
21, 2020 at an initial flow rate of approximately 2,200 gross
barrels of oil per day (“BOPD”), 600 BOPD net revenue interest
(“NRI”) to VAALCO;
- Commenced workover of the South East Etame 2H well to replace
the electric submersible pumps (“ESPs”) and expects to restore
production around the end of March; and
- To date, operations have not been materially disrupted by
current worldwide COVID-19 crisis.
Cary Bounds, Chief Executive Officer, commented,
“We are proud of the highly successful 2019/2020 drilling campaign
in which we have drilled and brought online three development wells
and drilled two successful appraisal wellbores that confirmed
additional resources to exploit from this quality asset. The
drilling campaign has been transformational for VAALCO and has
added meaningful production and cash flow with minimal increase in
operating costs. This has helped to improve our margins and
drive our operational breakeven down to $31 per barrel of realized
pricing. Following the completion of the South East Etame 4H
well, we began the planned workover on the South East Etame 2H well
to replace ESPs. We expect to bring the South East Etame 2H
well back online around the end of March, which should restore
production of approximately 2,400 gross BOPD.”
“Our lowered operational breakeven, strong hedge
position and increased production has enabled us to establish a
solid financial footing which puts us in a stronger position to
navigate the current low price oil environment. With that
said, the global pandemic and energy industry events that began in
late February of 2020 have been unprecedented and caused
significant uncertainty across the oil sector with regards to
outlook and budgets. The world is battling COVID-19 which has
disrupted our everyday lives and negatively impacted the worldwide
economy. As of right now, VAALCO’s operations have not been
disrupted, and we have managed through the logistical challenges
that we have faced since the outbreak. VAALCO has contingency
plans in place in the event that we are directly impacted, and we
continue to put the safety of our workers and local stakeholders
first. We remain committed to generating long-term value for
our shareholders by focusing on capital efficiency, controlling
costs and optimizing production.”
With the drilling of the South East Etame 4H
well, VAALCO has completed its 2019/2020 drilling campaign.
As previously announced, with the drilling of the South East Etame
4P appraisal wellbore, VAALCO has also satisfied the drilling
commitment as part of the PSC extension that VAALCO signed in late
2018.
After installing production equipment, the South
East Etame 4H well was brought online at an initial rate of
approximately 2,200 gross BOPD, (600 BOPD NRI to VAALCO), with no
H2S which is at the high end of the February 2020 pre-drill initial
production rate of 1,200 to 2,500 gross BOPD (325 to 675 BOPD NRI
to VAALCO). The well was drilled and completed as planned,
with no safety or environmental incidents.
As previously announced, on March 7, 2020, the
South East Etame 2H well stopped producing due to an ESP
failure. The drilling rig on the South East Etame North
Tchibala (“SEENT”) platform was already scheduled to replace the
ESP on that well in a preemptive workover upon completion of the
South East Etame 4H well. The workover on the South East
Etame 2H well is currently underway and the well is expected to be
returned to production around the end of March. The well was
producing 2,400 gross BOPD, or 650 BOPD NRI to VAALCO, when the ESP
failed. VAALCO will not perform any additional workovers with
the contracted drilling rig and the rig will be released after
completion of operations on the South East Etame 2H well.
About VAALCO
VAALCO, founded in 1985, is a Houston, USA
based, independent energy company with production, development and
exploration assets in the West African region.
The Company is an established operator within
the region, holding a 31.1% working interest in the Etame Marin
Block, located offshore Gabon, which to date has produced over 114
million barrels of crude oil and of which the Company is the
operator.
For Further Information
VAALCO Energy, Inc. (General and Investor
Enquiries) |
+00 1 713 623 0801 |
Website: |
www.vaalco.com |
|
|
Al Petrie Advisors (US
Investor Relations) |
+00 1 713 543 3422 |
Al Petrie / Chris Delange |
|
|
|
Buchanan (UK Financial
PR) |
+44 (0) 207 466 5000 |
Ben Romney / Kelsey
Traynor / James Husband |
VAALCO@buchanan.uk.com |
Forward Looking Statements
This document 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. All statements, other than statements of
historical facts, included in this document that address
activities, events, plans, expectations, objectives or developments
that VAALCO expects, believes or anticipates will or may occur in
the future are forward-looking statements. These statements
may include statements related to well results, future levels of
drilling and operational activity and associated expectations,
expectations concerning the impact of the recent decline in oil
prices and the outbreak of COVID-19 on our business and results of
operations, the implementation of the Company’s business plans and
strategy, prospect evaluations, prospective resources and reserve
growth, its activities in Equatorial Guinea, expected sources
of future capital funding and future liquidity, the share
repurchase program, its ability to restore production in
non-producing wells, future operating losses, future changes in
crude oil and natural gas prices, future strategic alternatives,
future acquisitions, capital expenditures, future drilling plans,
prospect evaluations, negotiations with governments and third
parties, timing of the settlement of Gabon income taxes,
expectations regarding processing facilities, production, sales and
financial projections and reserve growth. These statements
are based on assumptions made by VAALCO based on its experience and
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, crude oil and natural gas price volatility, inflation, general
economic conditions, the Company’s success in discovering,
developing and producing reserves, production and sales differences
due to timing of liftings, decisions by future lenders, the risks
associated with liquidity, lack of availability of goods, services
and capital, environmental risks, drilling risks, foreign
regulatory and operational risks, and regulatory changes, as well
as risks related to the impact of COVID-19 on the global economy
and our business.
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.
References to thickness of crude oil pay or of a
formation where evidence of hydrocarbons have been encountered is
not necessarily an indicator that hydrocarbons will be recoverable
in commercial quantities or in any estimated volume. Well test
results should be considered as preliminary and not necessarily
indicative of long-term performance or of ultimate recovery. Well
log interpretations indicating crude oil accumulations are not
necessarily indicative of future production or ultimate
recovery.
Inside Information
This announcement contains inside information as
defined in Regulation (EU) No. 596/2014 on market abuse (“MAR”) and
is made in accordance with the Company’s obligations under article
17 of MAR.
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