VAALCO Energy Inc. (NYSE: EGY; LSE: EGY) ("
VAALCO"
or the "
Company")
today
provided an update on the South Tchibala 1HB-ST well that was
successfully drilled and completed from the Avouma platform in the
Etame field, offshore Gabon, as well as additional operational
information regarding its activities in Gabon.
Highlights
- South Tchibala 1HB-ST well successfully completed after
performing a frac pack on the Dentale D1 sand:
- Will add new reserves
previously not captured in VAALCO’s 2P reserves;
- Well will be flowed slowly
and at varying rates of fluid per day during its initial flow back
period;
- Expecting a stabilized oil
flow rate in the next five to seven days;
- Upside potential identified
in a second sand encountered in the well, the Dentale D9, which
showed hydrocarbon potential;
- Plans to exercise extension option on currently
contracted rig and add two additional wells to current 2021/22
drilling program for a total of six wells:
- Currently mobilizing rig to
the Southeast Etame North Tchibala (“SEENT”) platform to commence
drilling the ETBNM 2H-ST, the fourth development well in the
2021/2022 program;
- Replacement of existing Floating Production, Storage
and Offloading unit (“FPSO”) proceeds on schedule and new Floating
Storage and Offloading (“FSO”) vessel is scheduled to arrive in
Gabon in early August; and
- Reported that liftings during the second quarter of
2022 totaled 1,871,446 gross barrels of oil, a record quarterly
high, and reaffirmed that VAALCO’s full year 2022 net production
guidance remains within the range of 9,500 - 10,500
BOPD.
George Maxwell, VAALCO's Chief Executive Officer
commented, “The Etame asset is a premier, high-quality field that
has produced over 126 million barrels of oil and we believe still
has significant upside over the next decade. We are pleased with
the results of the South Tchibala 1HB-ST well which will add to
production once the long-term stabilized rate is established, and
more importantly, adds new reserves to VAALCO’s 1P and 2P
positions. The continued success of our 2021/22 drilling campaign,
coupled with a strong pricing environment and financial
efficiencies of keeping the rig on location has enabled us to
extend the current four-well program by an additional two
wells.
"The FPSO replacement and full field
reconfiguration plans are progressing in-line with our expectations
and we look forward to benefitting from the associated cost savings
in Q4 2022 and beyond, once those activities have been completed.
These activities are expected to save approximately $20-25 million
gross per year in operational costs through 2030 resulting in rapid
payback and a material impact on production margins and free cash
flow going forward.
"We achieved record high quarterly liftings
during the second quarter of 2022, which equates to sales volumes
of approximately 10,500 BOPD net to VAALCO. Our preliminary
estimate of production for the period of 9,200 to 9,300 BOPD was
modestly below our expectations primarily due to delays associated
with initiating production on our last two development wells on the
Avouma platform, which required more complex and time-consuming
completions. Nonetheless, we continue to expect to meet our full
year 2022 production guidance.”
Etame: The South Tchibala
1HB-ST
The South Tchibala 1HB-ST was successfully
completed after performing a frac pack on the Dentale D1 sand, the
first operation of this kind in the Etame field. The second sand
identified during the drilling, the Dentale D9, was not appraised
during this completion, although it also showed hydrocarbon
potential.
The well will be brought on slowly to allow the
formation to be cleaned up adequately over the next several weeks
after which a long-term stabilized flow rate will be established.
During the initial period, the well will be flowed at varying rates
of fluid per day to ensure that long-term formation and completion
damage risk is minimized. VAALCO expects to see a stabilized flow
rate in the next five to seven days.
The South Tchibala 1HB-ST well adds new reserves
that were previously not captured in VAALCO’s 2P reserves and, upon
successful completion and first production, these reserves will be
additive to VAALCO’s 1P as well as 2P reserves. VAALCO’s internal
reserve range estimate of original oil in place (“OOIP”) for the
Dentale D1 sand is 5.5 to 16 million barrels of oil (“MMBO”). The
Company’s internal estimate of ultimate recoverable reserves
(“EUR”) is 1.8 MMBO, with a range of 0.5 to 3.0 MMBO.
The additional Dentale D9 (15 meters net
hydrocarbons) interval can be tested and completed in the future
and has an estimate OOIP range of 4 to 15 MMBO, which can be
completed after the D1 sand is depleted or accessed with another
well.
Etame: 2021/2022 Drilling Campaign
Following the completion of the South Tchibala
1HB-ST well, the rig is currently being mobilized to the SEENT
Platform to drill the final planned well in the 2021/2022 program,
the ETBNM 2H-ST well, which is targeting the Dentale
formations.
VAALCO plans to exercise its options to extend
its contract for the existing rig with Borr West Africa Assets
Inc., an affiliate of Borr Drilling Limited, and as a result the
Company plans to add two additional wells to the program to take
advantage of both higher oil prices and reduced overall spread
costs in the current contracts. As a result, the Company plans to
add two additional wells to the program, the Ebouri 6H development
well targeting the Gamba formation and a Northeast Avouma well that
is a near-field exploration well also targeting the Gamba formation
and if successful is expected to be tied into the Avouma platform
at a later date.
Etame: Full Field Reconfiguration
FSO (FPSO Replacement)
The replacement of the existing FPSO is on
schedule and, despite challenges with worldwide supply chain
issues, the “Teli” (renamed from “Cap Diamant”), is expected to
leave Bahrain on July 7 following completion of sea trials and
arrive in Gabon at the beginning of August. All major equipment is
on board and the mooring equipment is in transit with arrival in
early August.
Etame Platform Modifications
Modifications to the Etame platform, to support
the full field reconfiguration, are also on schedule. VAALCO has
recently completed the first of several short facility outages to
allow for flare system upgrades and the installation of tie-in
points for the process equipment. All major deck components have
arrived in Gabon and additional major components are in transit.
Installation of all equipment will continue over the next eight
weeks, with final hookup and commissioning expected to occur in the
third quarter once the Teli is moored on location.
Subsea Reconfiguration
Preparation for the subsea reconfiguration is
also underway with the first portion of the Bourbon/RANA dive
program starting in mid-July. The DOF Skandi Constructor has
completed integration of the lay equipment in Peterhead UK and has
transferred to Newcastle UK where it has completed loading the
flexible pipe and ancillary equipment. The Skandi Constructor is
scheduled to arrive in Gabon in late July and will commence
reconfiguration of the existing lines and installation of the new
lines.
Production and Q2 Liftings
During the second quarter of 2022, liftings
totaled 1,871,446 gross barrels of oil, a record quarterly high for
VAALCO, which equates to sales volumes of approximately 10,500 BOPD
net to VAALCO. The total volume lifted through the period was
impacted slightly due to the Etame outage as well as several short
duration outages relating to operational, facilities and drilling
simultaneous operations.
The Company expects a lifting of approximately
500,000 barrels to occur in late-July, with two additional liftings
anticipated to occur in August. The August liftings will be similar
in size, or approximately 400,000 – 500,000 barrels each, to
facilitate the removal of the FPSO and the switch out to the FSO in
September.
As of the end of the second quarter of 2022,
VAALCO’s full year 2022 production guidance remains within the
range of 9,500 to 10,500 net NRI BOPD. Preliminary
production during the second quarter of 2022 is estimated at 9,200
to 9,300 net BOPD and was modestly lower than expected primarily
due to delays associated with the last two wells on the Avouma
platform being completed and placed on-line, as well as some
temporary downtime associated with the Etame platform
reconfiguration. The Company continues to expect to meet its 2022
annual guidance.
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 63.6% participating interest in the Etame
Marin block, located offshore Gabon, which to date has produced
over 126 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 / Jon Krinks |
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 the impact of the COVID-19 pandemic,
including the recent sharp decline in the global demand for and
resulting global oversupply of crude oil and the resulting steep
decline in oil prices, production quotas imposed by Gabon,
disruptions in global supply chains, quarantines of our workforce
or workforce reductions and other matters related to the pandemic,
well results, wells anticipated to be drilled and placed on
production, future levels of drilling and operational activity and
associated expectations, 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 and potential difficulties in obtaining future
capital funding and future liquidity, its ability to restore
production in non-producing wells, our ability to find a
replacement for the FPSO or to renew the FPSO charter, future
operating losses, future changes in crude oil and natural gas
prices, future strategic alternatives, future and pending
acquisitions, capital expenditures, future drilling plans,
acquisition and interpretation of seismic data and costs thereof,
negotiations with governments and third parties, timing of the
settlement of Gabon income taxes, and expectations regarding
processing facilities, production, sales and financial projections.
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, the
impact of production quotas imposed by Gabon in response to
production cuts agreed to as a member of OPEC, inflation, general
economic conditions, the outbreak of COVID-19, 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.
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.
Inside Information
This announcement contains inside information as defined in
Regulation (EU) No. 596/2014 on market abuse which is part of UK
domestic law by virtue of the European Union (Withdrawal) Act 2018
(“MAR”) and is made in accordance with the Company’s obligations
under article 17 of MAR.
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