VAALCO Energy Announces Commencement of 2019/2020 Drilling Campaign at Etame and Provides Operational Update
September 13 2019 - 6:45AM
VAALCO Energy, Inc. (NYSE: EGY) (“VAALCO” or the “Company”) today
announced that the Company has commenced its 2019/2020 drilling
campaign and spud the Etame 9P appraisal wellbore at the Etame
field offshore Gabon. Drilling of the Etame 9P appraisal
wellbore is expected to take approximately four weeks, after which
the Company will commence drilling the Etame 9H development well
targeting the Gamba reservoir. The objective of the Etame 9P
appraisal wellbore is to test the Dentale reservoirs beneath the
Etame field. The Company estimates that there could be up to
4.6 million gross barrels of recoverable oil present in the Dentale
reservoirs beneath the Etame field. If these resources are
present in the Dentale, the Company will need to drill additional
wells to exploit these reservoirs. As previously announced, VAALCO
contracted the Vantage Drilling International Topaz jackup drilling
rig to execute the 2019/2020 drilling campaign, which will include
two appraisal wellbores and up to three development wells.
Cary Bounds, the Company’s Chief Executive
Officer, commented, “We have entered into the first phase of our
growth strategy starting with the Etame 9P appraisal wellbore where
we are seeking to de-risk significant resources in the Dentale
formation with a view to future exploitation opportunities.
The resources we are targeting were identified in oil-bearing
Dentale reservoirs encountered in wells drilled beneath the Gamba
reservoir at the Etame field. The Etame 9P appraisal wellbore
represents the first of many opportunities where we are attempting
to create substantial value for our shareholders by converting
resources to reserves in a cost-effective manner.”
Gabon Production and Operational Update
and Other Matters
Based on actual production volumes thus far in
the third quarter of 2019, the Company reaffirms its prior
production guidance and expects third quarter 2019 production to be
in the range of 3,000 to 3,300 barrels of oil per day (“BOPD”),
net, and full year 2019 production to be in the range of 3,300 to
3,900 BOPD, net. In early September 2019, the Electric
Submersible Pump (“ESP”) failed in the Etame 10H well after
operating for 4.5 years. Prior to the ESP failure, the well was
producing approximately 200 BOPD, net to VAALCO. VAALCO is
investigating various cost-effective options available to replace
the ESP, including utilizing the Vantage drilling rig to perform a
workover. The Company does not anticipate the loss of
production from the Etame 10H well to change third quarter 2019 or
full year 2019 production guidance. In setting its range for
production guidance, the Company considers unforeseen events such
as mechanical issues as well as the timing and results from the
2019/2020 drilling campaign.
The Company also signed definitive agreements to
finalize the previously announced agreement in principle with the
Etame joint venture owners to resolve past audit findings for the
periods from 2007 through 2016 for $4.4 million net to
VAALCO. The agreement provides for procedures to minimize the
chances of future audit claims. As the Company accrued the $4.4
million settlement amount in the 2019 second quarter financial
statement, no further adjustments are expected.
About VAALCO
VAALCO Energy, Inc. is a Houston-based
independent energy company principally engaged in the development
and production of crude oil. The Company's properties and acreage
are located primarily in Gabon and Equatorial Guinea in West
Africa.
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. Forward-looking
statements include all statements regarding wells anticipated
to be drilled and placed on production, future levels of drilling
activity and associated production and cash flow expectations, the
Company's 2019 guidance and capital expenditure forecast, estimated
reserve quantities and the present value thereof, the
implementation of the Company's business plans and strategy,
expected sources of future capital funding and future
liquidity, future operating losses, future changes in oil and
natural gas prices, future strategic alternatives, prospect
evaluations, negotiations with governments and third parties,
expectations regarding processing facilities, production and sales
projections, and reserve growth, as well as statements including
the words "believe," "expect," "plans" and words of similar
meaning. 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. No
assurances can be given, however, that these events will occur or
that these projections will be achieved, and actual results could
differ materially from those projected as a result of certain
factors. Some of the factors which could affect our future results
and could cause results to differ materially from those expressed
in our forward-looking statements include oil and 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.
These and other risks are further described in
VAALCO's annual reports on Form 10-K and quarterly reports on Form
10-Q and other reports filed with the U.S. Securities and Exchange
Commission (“SEC”) which can be reviewed at http://www.sec.gov, or
which can be received by contacting VAALCO at 9800 Richmond Avenue,
Suite 700, Houston, Texas 77042, (713) 623-0801. 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.
Supplemental Reserves
Disclosure This press release contains oil and gas
metrics, which do not have standardized meanings or standard
methods of calculation as classified by the SEC and therefore such
measures may not be comparable to similar measures used by other
companies. Such metrics have been included herein to provide
readers with additional measures to evaluate the Company’s
performance; however, such measures are not reliable indicators of
the future performance of the Company and future performance may
not compare to the performance in previous periods.
Investor Contact Al Petrie
713-543-3422
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