TIDMVOG
RNS Number : 8319T
Victoria Oil & Gas PLC
23 July 2015
RNS Number:
Victoria Oil & Gas PLC (AIM: VOG)
23 July 2015
Victoria Oil & Gas Plc
("VOG" or "the Company")
Q2 2015 Operations Update
Victoria Oil & Gas Plc provides an update on the Company's
operations for the 3 month period ended 30 June 2015 (the
"period"). The Company intends to provide the market with quarterly
operational updates, based on the calendar year and covering all
significant activities. The quarterly updates will not affect VOG's
responsibility to release any price sensitive news to the market in
a timely manner.
Highlights
-- Average gas production of 12.6mmscf/d during the period
-- Bassa and Logbaba power stations online and new thermal gas customers connected
-- Group cash of $14.2m at quarter end, compared to $15.6m at
the end of last quarter - capex spend included $2.6m on gas
processing plant acquisition from Expro
-- Cash received from gas and condensate sales Q2 $9.8 (Cash received Q1 $5.1m)
-- 1,524.60mmscf H1 2015 gas sold (1,273.25mmscf 2014 full year gas sold)
-- Two well programme under design for planned commencement of
drilling H2 2016 aimed at bringing on additional production Q4
2016
Operational Update
Q2 2015 Q1 2015 Q4 2014 Q3 2014 Q2 2014
----------------------- --------- -------- -------- -------- --------
Average gas
production(mmscf/d)* 12.6 4.5 4.1 4.0 2.6
----------------------- --------- -------- -------- -------- --------
Total gas sold
(mmscf) 1,120.09 404.51 374.38 368.19 281.09
----------------------- --------- -------- -------- -------- --------
Condensate sold
(bbls) 13,445.1 6,345.2 2,265.3 5,667.3 4,990.4
----------------------- --------- -------- -------- -------- --------
*average production numbers are based on a 7 day week and given
on a YoY basis for corresponding quarters to account for seasonal
impact between dry and wet seasons. Dry season runs from January to
June and wet season runs from July to December. The demand for gas
to generate electricity changes based on the availabilty of of
Cameroon's hydroelectric power stations to produce electricity.
Gas production increased 178% for the period compared to Q1
2015, with an average daily production of 12.6mmscf/d. Production
reached a peak of 16.9mmscf/d, with an average 5 day working week
output of 13.1mmscf/d. The significant expansion follows the first
grid power connections coming on line under the deal with ENEO
Cameroon S.A ("ENEO") and new thermal customers being connected,
including the Dangote cement plant commissioned in June 2015.
Gas sold for Q2 2015 was almost four times that sold in Q2
2014.
Group cash was $14.2m at quarter end, compared to $15.6m at the
end of the first quarter with notable capex spend of $2.6m on the
gas plant acquisition from Expro.
In GDC, cash received from gas and condensate sales in Q2 was
$9.8m compared to cash received in Q1 of $5.1m.
Operations remain in line with expectations for the next
quarter.
Customer Updates
At the beginning of Q2 2015, gas supply to both the Bassa and
Logbaba power stations commenced following the agreement signed
with ENEO in December 2014. Gaz du Cameroun S.A. ("GDC") is
responsible for supplying gas to both the Bassa and Logbaba power
stations, where electricity is generated from gas fired electricity
generation sets supplied and operated by project partners Altaaqa
Global.
The successful running of maximum supply to both power plants
met the requirement, set by ENEO, for both stations to be online
and delivering 50 MW to trigger the minimum take or pay conditions
as set out under the terms of the agreement between GDC and ENEO.
The minimum take or pay levels require GDC to provide 10.1mmscf/d
of gas to generate 50 MW of power, with ENEO consequently agreeing
to a take or pay component of 90% of total usage during the dry
season and 30% in the wet season.
The Dangote cement plant, located on the southern shore of the
Wouri River, Douala, was the largest of a number of new gas supply
connections completed during the period. Dangote is an important
indicator of how the city of Douala is developing economically as
an important, stable, industrial and commercial hub for the wider
Central-West Africa region.
Operations
The Logbaba gas production plant was purchased from Expro using
cash generated from GDC's operations and partner RSM's
contributions. GDC is evaluating proposals for a long-term contract
for the operation and maintenance of the plant with specialist
service companies, including Expro. The purchase is part of VOG's
strategy to increase production capacity. GDC is currently studying
options for the expansion of the gas production plant from its
existing 20mmscf/d level to up to 40mmscf/d.
Sub -Surface Development Work
Driven by the large current and projected demand for gas in
Douala, initial planning, well design and engineering for drilling
the next two wells, LA 107 and LA 108 has been accelerated. The
current schedule estimates spudding of the next two wells in H2
2016 and completion in late 2016. At least one of these wells will
be a twin of four wells drilled by the French in the 1950's, all of
which produced gas.
The Company is also analysing techniques for conducting 2D and
3D seismic programmes in urban environments and for re-processing
and extrapolating key historic seismic data to assist in sub
surface interpretations. The Company is positioned to significantly
advance gas supply into a series of existing and new markets and
consequently is focusing on increasing reserves and production
capacity. Further updates will be made to the market when
appropriate.
CNG Update
At present, GDC is in discussion with several groups for the
provision of a CNG solution, whereby a technical partner will
undertake all gas compression capital expenditure and logistical
operations. This model will preserve GDC's strategy of
concentrating on gas sales rather than downstream development. In
the coming months, it is anticipated that a preferred partner will
be selected to assist GDC in this project. The potential benefits
of CNG are:
- Minimal GDC capital requirement
- Enables customers up to 250km from Douala to be provided with our gas
- High margin business for 'gas only' supply model
- No capacity pressure on pipeline
- CNG production can also occur during off-peak periods to help
maintain balanced gas production
VOG Chairman Kevin Foo said: "VOG continues to make excellent
operational and financial progress. Q2 was outstanding with a 178%
increase in production to a seven day week monthly average of
12.6mmscf/d. We almost doubled cash received from sales in Q2 to
$9.8m. We now have the financial strength to pursue the next phase
of our growth which is to bring more gas online to meet the massive
customer demands. We plan to fund this development programme from
existing and projected cash flows and local lines of credit. The
quarterly reporting format we are committing to demonstrates the
progress we have made operationally and in generating significant
cash flow from gas and condensate sales. This report provides
shareholders with a reliable format to demonstrate our performance
in a consistent and clear manner."
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 / Joanna Boon 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 primarily supplied with gas through a 31.3km pipeline network
built by GDC in Douala.
Through thermal gas supply and provision of energy to the Douala
grid, under the ENEO terms of agreement, GDC is helping to ensure
that the Cameroon economy is underpinned with stable power. 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.
Cameroon Energy Market
Cameroon is a stable African country that is host to 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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