TIDMVOG
RNS Number : 3674M
Victoria Oil & Gas PLC
20 January 2016
20 January 2016
Victoria Oil & Gas Plc
("VOG", "Group" or "the Company")
Q4 2015 Operations Update
Victoria Oil & Gas Plc provides this update on the Group's
operations for the three month period ended 31 December 2015 (the
"quarter" or "Q4"). The Company has changed its accounting
reference date from 31 May to 31 December and will be presenting
its next audited results for the seven month period ended 31
December 2015 by the end of May 2016. The change of accounting
reference date will align the financial reporting calendar with
future quarterly operational updates. Today's quarterly results
contain an enhanced level of financial detail and operations
analysis including unaudited revenue and net cash, and supply
statistics.
Highlights
-- 7.1mmscf/d Q4 average gas production (Q3 2015: 8.2mmscf/d)
-- 73% increase in production average compared to Q4 2014 (4.1mmscf/d)
-- Maintained customers and prices despite adverse market conditions
-- 625.6mmscf gas sold Q4 2015 (Q3 2015 717.7mmscf)
-- 2,867.7mmscf of gas sold for the 12 months to 31 December
2015 (1,271.7 mmscf for the 12 months to 31 December 2014)
-- The 14 days to 17 January 2016 produced an average production
of 15.3mmscf/d with a peak of 16.6mmscf/d
-- Group Q4 unaudited financial highlights
o $7.6m revenue (Q3 2015: $9.0m)
o $13.1m cash position (Q3 2015: $12.8m)
o $5.9m net cash position (Q3 2015: $4.9m) *
*net cash is defined as cash equivalents less borrowings
Overview
The period marked the third quarter of supply to ENEO and
overall production was in line with expectations based on known
seasonal fluctuations in gas demand. The continual erosion of the
global oil price however has had minimal effect on the Gaz du
Cameroun SA ("GDC") business in terms of gas price changes or
customers changing back to oil.
The quarter covered the second half of the wet season where gas
consumption in the grid power sector is lower due to higher
availability of hydroelectric power. Average daily production was
7.1mmscf/d during the quarter of which 3.4mmscf/d was attributable
to grid power.
Importantly, GDC has maintained customers at their contracted
prices and these prices, which are not tied to oil, distinguish us
from other junior oil and gas companies. Despite the large drop in
the oil price both internationally and locally, GDC maintained its
selling price for gas. This ranged between $9 to $16 per mmbtu or a
weighted average price of more than $60/BOE. Our customers have
stayed with gas because it is a reliable, clean and conveniently
available source of energy that leaves a much smaller carbon
footprint than alternatives.
January marks the return to the dry season and associated higher
gas utilization, with the grid power sector now recording
consistent consumption in excess of 9.0mmscf/d. The increase in
consumption is due to the take-or-pay terms with ENEO, the national
power joint venture entity with Actis, whereby minimum consumption
levels are split into six-month periods covering the dry (January-
June) and wet (July - December) seasons.
Operational update
The quarterly gas and condensate consumption is as follows:
Q4 2015 Q3 2015 Q2 2015 Q1 2015 Q4 2014
------------------- -------- -------- -------- -------- --------
Gas sales
- Thermal
and Retail
Power (mmscf) 315.3 350.0 302.5 340.7 374.4
------------------- -------- -------- -------- -------- --------
Gas sales
- Grid Power
(mmscf) 310.3 367.6 817.5 63.9 0.0
------------------- -------- -------- -------- -------- --------
Gas sales
- Total (mmscf)* 625.6 717.6 1120.1 404.5 374.4
------------------- -------- -------- -------- -------- --------
Average daily
gas production
(mmscf/d)* 7.14 8.19 12.6 4.5 4.1
------------------- -------- -------- -------- -------- --------
Condensate
sold (bbls) 8,608 10, 878 13,445 6,345 2,265
------------------- -------- -------- -------- -------- --------
* Production rates are calculated from metering at the process
plant. Sales figures are calculated from the individual PRMS units
at customer sites. There is always a slight variation between the
two figures due to gas in the pipeline, flaring and differing
levels of metering accuracy.
Thermal gas sales remained reasonably consistent with previous
quarters and management expects this to continue until the capital
expansion projects described below are completed. These projects
will allow for the addition of further thermal and retail power
customers.
Grid power consumption is expected to increase significantly
during the first half of 2016. The 14 days to 17 January 2016
produced an average total production of 15.3mmscf/d with a peak of
16.6mmscf/d.
Condensate sales are a by-product of the gas production process
and volumes sold are expected to reflect the volumes of gas
produced.
Our drive in 2016 is to ensure there is sufficient capacity to
bring on major new customers by increasing reserves, plant capacity
and pipeline reach. At present the production plant capacity is
constrained at 20mmscf/d. In addition, finding flexible new
applications such as CNG that can add capacity for our existing
markets remains a priority.
GDC, as holder of the Group's 60% participating interest in the
Logbaba concession, is currently entitled to 100% of the revenue
generated by the Logbaba project. The concession agreement provides
for this allocation of revenue to continue until gross revenues
equal the initial exploration costs incurred in the drilling of the
two operational wells. Management expects that this point will be
reached during the first half of 2016. Thereafter revenues will be
split in accordance with the participating interests, which will
impact the revenues and profitability attributable to GDC.
GDC Chief Executive Officer and VOG Director Ahmet Dik said:
"Our business continues to prove its resilience despite a
challenging macro environment, delivering another strong production
performance when set against the comparative period last year.
Looking ahead to 2016, our focus is on increasing capacity to
service a larger, more diversified customer base. We believe that
through the continued delivery of safe, clean, reliable and
accessible sources of energy from our gas, VOG can continue to
strengthen its position as a provider of choice."
For further information, please visit www.victoriaoilandgas.com
or contact:
Victoria Oil & Gas Plc
Kevin Foo / Laurence Read Tel: +44 (0) 20 7921 8820
Numis Securities
John Prior / Ben Stoop Tel: +44 (0) 207 260 1000
Strand Hanson Limited
Angela Hallett / Stuart Faulkner Tel: +44 (0) 20 7409 3494
Bell Pottinger
Daniel Thöle / Charles Stewart / Zara de Belder Tel: +44 (0) 20
3 772 2499
Notes to Editors
About Victoria Oil & Gas Plc
Victoria Oil & Gas (VOG.L) is a gas utility company with
operations in the industrial port city of Douala in Cameroon, which
is the business hub to Central Africa.
The Company's subsidiary, Gaz du Cameroun S.A. ("GDC"), supplies
cost effective, clean and reliable gas to industries in the Douala
region from its onshore Logbaba Gas Project. Industrial customers
are supplied with gas through a 33km pipeline network built by GDC
in Douala.
GDC's gas supply to the thermal, grid power and retail power
markets in Douala, is helping to ensure that the Cameroon economy
is underpinned with stable energy. By developing a full integrated
gas supply network, connected to wells located within the city
itself, GDC has established a new range of energy product types
within Douala that are cost effective, reliable, safe and cleaner
than liquid fuel alternatives.
The Company generates cash flow from the Logbaba Project which
is 60% owned and managed by GDC, with RSM Production Corporation,
an affiliate of Grynberg Petroleum Company of Denver, Colorado
holding a 40% participating interest.
VOG also holds 100% of the West Medvezhye oil and gas
exploration project near Nadym, Russia. The field has C1 plus C2
reserves of 14.4mmboe (under the Russian resource classification
system, analogous to proven and probable reserves under Western
conventions) in addition to best estimate prospective resources of
1.4bboe. Given the challenging economic environment in Russia, The
Group has fully impaired the West Medvezhye assets.
Cameroon Energy Market
Cameroon is a developing economy serving most of Central Africa
with goods and services. A power deficit remains a major hindrance
to Cameroon's economic expansion. The power grid is reliant on
hydroelectric dams to supply 75% of power and the shortfall is made
up from heavy fuel oil and gas. Hydroelectric dams are highly
seasonal, with stream rates significantly varying from 6,000m(3)
per second in the wet season to 50m(3) per second in the dry
season. As with many hydro electrical systems transmission loss is
also a constant issue when balancing power loads across distances
to different consuming regions. The port-city of Douala is the
major industrial zone within Cameroon and it requires high levels
of consistently delivered grid power all year round. Currently
Cameroon's energy demand is growing at 7% annually and gas is seen
as a key element to Cameroons national energy strategy.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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