TIDMVOG
RNS Number : 5365M
Victoria Oil & Gas PLC
31 July 2017
31 July 2017
Victoria Oil & Gas Plc
("VOG" or "the Company")
Q2 2017 Operations Update
Victoria Oil & Gas Plc, a Cameroon based gas producer and
distributor, is pleased to provide an update on the Group's
operations for the three months ended 30 June 2017.
Highlights
Production
-- 11.9% increase in gross average gas production from Logbaba
to 14.59mmscf/d (Q2 2016: 13.04mmscf/d)
-- Gross Logbaba gas sales increased to 1,192mmscf for the quarter (Q2 2016: 1,151mmscf)
Drilling new wells
-- Completion, flow testing and network supply input at well La-107 is scheduled for Q3 2017
-- Well La-107, as of 30 July 2017, has been drilled to 2914m
Measured Depth ("MD"), and 2901m Total Vertical Depth ("TVD") and a
7" liner has been run to 2,440m (2,426m TVD) and cemented in
place
-- Well La-107 has, to date, encountered a net pay of 35m of
high permeability, high porosity gas bearing sands in the Upper
Logbaba Formation, slightly more than was expected, based on the
La-104 logs. Preliminary results indicate that a further 15m of net
gas sand has been encountered in La-107 in the Lower Logbaba
Formation
-- Engineering design work has been completed to allow La-108 to
be side-tracked, through the Logbaba Formation, to access the 100m
of gas sands found in the original La-108 wellbore. Drilling will
commence after the completion of La-107
Financial highlights
Q2 (unaudited) financial highlights:
-- $7.8 million net revenue (Q1 2017: $8.1million)
-- $7.6 million cash position at quarter end (Q1 2017: $10.5 million)
-- $20.7 million net debt position at quarter end (Q1 2017: $10.7 million)
-- 5% Cameroonian State participation in Logbaba; 3%
relinquished by Gaz du Cameroun S.A. ("GDC")
Ahmet Dik, Chief Executive Officer of VOG, commented:
"I am pleased that in this period we delivered further positive
drilling results, particularly from La-107. The detection of an
additional 15m of gas-bearing reservoir sands in the Lower Logbaba
and the planned production flow testing at La-107 are encouraging
signs as we take the first steps towards our longer-term objective
of producing 100mmscf/d.
Once we flow test La-107, VOG plans to enter into long term gas
supply agreements with large offtake customers.
The onshore field development programme at Matanda is
progressing well, presenting VOG with an exciting opportunity to
develop gas supply for sale from sources with low capex
exposure."
Operational update
The quarterly gross and net gas and condensate consumptions, for
Logbaba and GDC, are as follows; amounts in bold are gas and
condensate sales attributable to GDC*:
Q2 2017 Q1 2017 Q4 2016 Q3 2016 Q2 2016
--------------- -------------- -------------- ------------- -------------- ----------------
Gas sales
(mmscf)
--------------- -------------- -------------- ------------- -------------- ----------------
Thermal 322 191 340 204 292 175 290 174 214 181
--------------- ------ ------ ------ ------ ----- ------ ------ ------ ------- -------
Retail power 15 9 12 7 16 10 31 18 27 24
--------------- ------ ------ ------ ------ ----- ------ ------ ------ ------- -------
Grid power 855 508 801 481 346 208 309 186 910 791
--------------- ------ ------ ------ ------ ----- ------ ------ ------ ------- -------
Total (mmscf) 1,192 708 1,153 692 654 392 630 378 1,151 996
--------------- ------ ------ ------ ------ ----- ------ ------ ------ ------- -------
Average gas
production
(mmscf/d) 14.59 14.57 7.64 7.14 13.04
--------------- -------------- -------------- ------------- -------------- ----------------
Condensate
sold (bbl.) 9,147 5,437 8,816 5,290 7011 4,207 6,786 4,072 12,457 10,826
--------------- ------ ------ ------ ------ ----- ------ ------ ------ ------- -------
* After reaching a cost recovery milestone on Logbaba during Q2
2016, GDC received 60% of revenues from Logbaba in accordance with
its participating interest. Prior to this date GDC received 100% of
revenues as a recovery of exploration costs. In June 2017, Societe
Nationale des Hydrocarbures ("SNH") executed its right to a 5%
participation in Logbaba resulting in GDC's participating interest
decreasing to 57% and the figures from the effective date onwards
have been adjusted accordingly.
Gas sales from Logbaba of 1,192mmscf was the project's highest
quarter to date. GDC's attributable gas sales volumes, whilst
slightly higher than Q1 2017, are lower than Q2 2016 owing to the
change in attributable revenues and the SNH participation mentioned
above.
Logbaba Drilling Programme
At the end of Q2 2017, a 7" liner was run and cemented in well
La-107 at 2,440m MD (2,426m TVD). Post period end, La-107 has
continued drilling in a 6" hole from the 7" liner shoe to a current
depth as of 30 July 2017 of 2914m MD.
As previously announced Well La-107 has, so far, encountered a
net pay of 35m of high permeability, high porosity gas bearing
sands in the Upper Logbaba Formation, slightly more than was
expected based on the La-104 logs.
In the La-107 6" hole section that is currently being drilled
through the Lower Logbaba Formation, preliminary LWD (Logging While
Drilling) data indicates that approximately 15m of net gas sand has
been encountered.
The drilling programme has taken longer than expected due to the
problems encountered in well La-108. First well completion, at well
La-107, is targeted for Q3 2017 with flow testing and tie in to the
process plant scheduled at the same time.
Following commercial completion of La-107, sidetrack drilling
will recommence at La-108 where approximately 100m of net
gas-bearing sands have been encountered between the top of the
Logbaba Formation at 1,670m TVD and at 2,702m TVD. This programme
will allow the Company to bring gas online imminently for sale from
La-107 and then develop further capacity from La-108.
ENEO and Power Consumer Update
During the quarter, the Company announced that it had extended
the current gas supply agreement with ENEO Cameroon S.A. ("ENEO"),
the Cameroon energy joint venture between UK Group Actis and the
Cameroon Government, until 31 December 2017.
The parties are currently developing the technical and financial
elements of a long-term gas supply arrangement aimed at increasing
the current contractual power supply of 50MW to beyond 100MW.
The take-or-pay components will remain in place and until year
end, an interim gas price of US$7.50/mmbtu has been agreed. GDC
estimates demand for gas in Douala at around 150mmscf/d, and supply
is limited to what GDC can produce. Once the La-107 flow test is
complete, the Company is confident it will execute a number of long
term- high volume gas supply agreements with local companies.
Participation Agreement
As announced on 4 July 2017, the Company entered into a
Participation Agreement, enabling SNH to take up a 5% participating
interest in the Logbaba Project.
As a result, with effect from 12 June 2017 the Group's
participating interest has reduced from 60% to 57% to accommodate
SNH's interest.
Matanda Exploration Update (75% participating interest and
operator)
Work continues on definition and evaluation of the on-block
prospect inventory. The work will form the basis of a drilling
campaign, with an objective to commence drilling operations during
Q4 2018 / Q1 2019.
Analyses conducted during the quarter have led the Subsurface
Team, in conjunction with Management, to prioritise the drilling of
shallower, lower pressure targets than those in Logbaba. The
ability to unlock long term gas supply from this substantial block
with reduced capital and operational expenditure is significant and
an exciting prospect for the Company.
Sam Metcalfe, the Company's Subsurface Manager has reviewed and
approved the technical information contained in this
announcement.
This announcement contains inside information.
For further information, please visit www.victoriaoilandgas.com
or contact:
Victoria Oil & Gas Plc
Kevin Foo / Ahmet Dik / Laurence Read Tel: +44 (0) 20 7921 8820
Strand Hanson Limited (Nominated and Financial Adviser)
Rory Murphy / Angela Hallett / Stuart Faulkner Tel: +44 (0) 20 7409 3494
Shore Capital Stockbrokers Limited (Joint Broker)
Mark Percy / Toby Gibbs (corporate finance) Tel: +44 (0) 207 408 4090
Jerry Keen (corporate broking)
FirstEnergy Capital LLP (Joint Broker)
Jonathan Wright / David van Erp Tel: +44 (0) 207 448 0200
Camarco (Financial PR)
Billy Clegg Tel: +44 (0) 203 757 4983
Nick Hennis Tel: +44 (0) 203 781 8330
This information is provided by RNS
The company news service from the London Stock Exchange
END
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