VAALCO Energy, Inc. (NYSE: EGY; LSE: EGY) (VAALCO or the Company)
today provided an update on its 2019/2020 drilling program offshore
Gabon and reported 2019 production volumes.
Highlights
- Successfully completed the Etame
11H development well including approximately 860 feet of horizontal
section in the Gamba reservoir;
- Brought the Etame 11H well onto
production in early January 2020 at a higher-than-expected
stabilized initial flow rate of approximately 5,200 gross barrels
of oil per day (BOPD), 1,400 net(1) BOPD to VAALCO, with no
H2S;
- Increased VAALCO’s current total
Company net production to approximately 5,900 BOPD which includes
production from the Etame 11H well;
- Commenced workover of the
previously shut-in Etame 10H well to restore production; and
- Continued planning for drilling the
SE Etame 4P appraisal wellbore following completion of the Etame
10H workover. (1) As has been disclosed in the past, all “net”
production rates and volumes are VAALCO’s 31% working interest less
13% royalty payment.
Cary Bounds, Chief Executive Officer, commented,
“We are very pleased with the successful results of the second
development well in our 2019/2020 drilling campaign that was
drilled and completed on schedule and within budget. The
high-quality reservoir we encountered in both the Etame 9H and
Etame 11H wells has yielded two significant new producing wells and
validated our strategy to undertake this program.
We have increased our total Company net
production to approximately 5,900 BOPD which is up 70% from our
2019 full year net average production of 3,476 BOPD as a result of
the Etame 9H and Etame 11H wells in addition to restoring
production from the previously shut-in Etame 4H well.
We have since commenced the workover on the
Etame 10H well, which if successful, could restore additional
production of approximately 200 BOPD net to VAALCO. We then plan to
move the rig to the SEENT platform to drill the SE Etame 4P
appraisal wellbore, which could confirm additional development well
locations in the Gamba reservoir.
Our 2019/2020 drilling program is certainly
delivering on its objectives through the enhancement of production
and we continue to be encouraged by the recent strengthening of oil
prices which bodes well for us given our predominantly fixed cost
base at Etame. As a result, we are optimistic about our outlook for
2020 and remain focused on executing on our strategic plan and
delivering continued positive operational results.”
Drilling Update
VAALCO reached a total measured depth of
approximately 9,022 feet in the Etame 11H development well and
completed approximately 860 feet of horizontal section within the
Gamba reservoir. Similar to Etame 9H well, the initial development
well in the 2019/2020 program, the horizontal section of the Etame
11H well is at the top of the Gamba structure but at a different
location.
After installing production equipment, the well
was brought online at a stabilized initial flow rate of
approximately 5,200 BOPD gross, (1,400 BOPD net to VAALCO), with no
H2S which is significantly more than the pre-drill expected initial
flow rate of 2,500 to 3,500 gross BOPD (675 to 960 BOPD net to
VAALCO). The Etame 11H development well was drilled and completed
as planned and within budget, with no safety or environmental
incidents. The Etame 9H well, which came on stream with a
stabilized initial flow rate of 5,500 BOPD in December, is
currently producing approximately 4,200 BOPD which is in-line with
expectations for wells after they are online for a similar period
of time. The Etame 11H well is expected to experience a similar
decline rate during its initial month of production, and they both
came online at significantly higher-than-expected rates. The
Company also recently restored production on the Etame 4H well on
the same platform, that had been previously shut-in.
Shortly after completion of the Etame 11H
development well, the Company began the workover of the Etame 10H
well, also on the same Etame platform, to replace the electric
submersible pump (ESP) which if successful, could restore
additional production of approximately 735 gross BOPD, or 200 BOPD
net to VAALCO. The ESP failed in September 2019 after 4.5 years of
service.
Following execution of the workover of the Etame
10H well, the Company plans to move the rig to the SEENT platform
to drill the SE Etame 4P appraisal wellbore to evaluate a Gamba
step out area in Southeast Etame. Upon drilling this second
appraisal wellbore, VAALCO will have satisfied the drilling
commitment as part of the PSC extension that VAALCO signed in late
2018.
As previously noted, if the SE Etame 4P
appraisal wellbore indicates the presence of hydrocarbons in the
Gamba reservoir, then VAALCO, subject to approvals from joint
interest owners and governmental authorities, plans to promptly
drill a third development well, the SE Etame 4H, which will target
4.0 to 10.0 million barrels of prospective resources, as part of
the ongoing 2019/2020 drilling campaign. VAALCO is also considering
using the contracted drilling rig to perform additional workovers
to preemptively replace ESPs that are still operating but near the
end of their design life.
Fourth Quarter and Full Year 2019
Production
The Company produced an average of 13,560 BOPD
gross, (3,664 BOPD net to VAALCO) in the fourth quarter of 2019. In
the full year 2019, the Company produced an average of 12,863 BOPD
gross, (3,476 BOPD net to VAALCO). The Company’s 2019 net exit
production rate was approximately 4,800 BOPD, which included the
benefit of the Etame 9H and Etame 4H wells coming online in
December, but not production from the Etame 11H well which came
online in early 2020.
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 31.1% working interest in the Etame Marin
Block, located offshore Gabon, which to date has produced over 110
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 / Kelsey
Traynor / James Husband |
VAALCO@buchanan.uk.com |
Forward Looking Statements
This press release 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 press release 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 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, 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. Actual future results, including project plans and
schedules and resource recoveries could differ materially due to
changes in market conditions affecting the oil and gas industry or
long-term oil and gas price levels, political or regulatory
developments, reservoir performance, the outcome of future
exploration and development efforts, technical or operating
factors, 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. There are no assurances the Company can
develop probable or possible reserves, or that if developed,
probable reserves will become producing reserves to the level of
estimates.
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, except as required by law.
References to thickness of oil pay or of a
formation where evidence of hydrocarbons have been encountered is
not necessarily an indicator that hydrocarbons will be recoverable
in commercial quantities or in any estimated volume. Well test
results should be considered as preliminary and not necessarily
indicative of long-term performance or of ultimate recovery. Well
log interpretations indicating oil accumulations are not
necessarily indicative of future production or ultimate
recovery.
Inside Information
This announcement contains inside information as
defined in Regulation (EU) No. 596/2014 on market abuse (“MAR”) and
is made in accordance with the Company’s obligations under article
17 of MAR.
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.
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