VAALCO Energy, Inc. (NYSE: EGY; LSE: EGY) (“VAALCO” or the
“Company”) today provided an operational update including the
successful completion of the South East Etame 2H workover and the
release of the drilling rig used in its highly successful 2019/2020
drilling program.
Highlights
- Successfully completed a planned
workover on the South East Etame 2H well and restored 2,400 gross
barrels of oil per day (“BOPD”), 650 BOPD net revenue interest
(“NRI”)(1) to VAALCO;
- Increased total Company production
to approximately 5,400 BOPD NRI or 6,200 working interest (“WI”)(2)
BOPD following the successful workover;
- Released the Vantage Drilling
International Topaz jackup drilling rig on April 9, 2020;
- Produced 4,944 BOPD NRI, or 5,683
BOPD WI in the first quarter of 2020, near the high end of first
quarter guidance (4,700 - 5,000 NRI);
- Reported sales volumes of 294,000
barrels of oil, net to VAALCO for the first quarter of 2020 as
compared to 318,000 barrels for the fourth quarter of 2019;
- Reaffirmed full year 2020
production guidance at 4,400 to 5,000 BOPD NRI (being 5,100 to
5,750 BOPD WI), and
- Experienced no material disruptions
in operations to date due to current worldwide COVID-19
crisis.
- All NRI production rates and volumes are VAALCO’s 31.1% WI less
13% royalty volumes.
- All WI production rates and volumes are VAALCO’s 31.1% WI.
Cary Bounds, Chief Executive Officer, commented,
“We continue to execute operationally and have restored 2,400 gross
BOPD of production with the successful workover of the South East
Etame 2H well. We have now released the Vantage drilling rig after
completing the successful 2019/2020 drilling campaign and executing
two workovers that restored production from wells that were shut in
due to electronic submersible pump (“ESP”) failures. We have
elected not to pursue any additional preemptive workovers at this
time. We are proud of the highly successful and transformational
drilling program that has added meaningful production and
significantly reduced our operating costs per barrel. For the first
quarter 2020, production was 4,944 BOPD NRI, which is 35% greater
than our Q4 2019 average production and is our highest production
since Q4 2015. This gives us confidence to reaffirm our full year
2020 production guidance of 4,400 to 5,000 BOPD NRI. In addition,
our strong production has helped to lower our operational breakeven
cost of approximately $31.00 per barrel and, coupled with our
current hedge portfolio, positions us well to navigate through the
uncertain macro environment we face today. Thus far, VAALCO’s
operations have not been disrupted by the global COVID-19 pandemic,
and we have managed through the logistical challenges that we have
faced since the outbreak. VAALCO continues to put the safety of our
workers and local stakeholders first and has contingency plans in
place in the event that we are directly impacted. We remain
committed to capital efficiency, controlling costs and optimizing
production to ensure VAALCO generates long-term value for our
shareholders.”
Operational Update
The workover on the South East Etame 2H well
successfully restored 2,400 gross BOPD, or 650 BOPD NRI to VAALCO,
in line with the production level prior to when the ESP failed in
early March 2020. VAALCO released the Vantage rig on April 9, 2020
and does not currently expect to perform any additional workovers
in order to better preserve cash flow in the current uncertain
environment.
With the completion of the 2019/2020 drilling
campaign and the successful South East Etame 2H workover, total
Company production is approximately 20,000 gross BOPD or 5,400 BOPD
NRI to VAALCO. During the first quarter of 2020, the Company
brought two new wells online, experienced normal operational
downtime associated with simultaneous production and
drilling/completion operations and brought production back online
as a result of performing two workovers. Production for the first
quarter of 2020 was 18,298 gross BOPD or 4,944 BOPD NRI to
VAALCO.
During the first quarter of 2020, VAALCO had two
liftings, one in January and one in February, but the next lifting
for 85,000 barrels of oil that was scheduled for March was delayed
to April 1st due to poor weather conditions. As a result, the sales
volumes for the quarter were 294,000 barrels of oil, net to VAALCO
as compared to 318,000 barrels for the fourth quarter of 2019,
despite the higher production in the first quarter of
2020.
Thus far, VAALCO’s operations have not been
materially affected by the COVID-19 pandemic. The health and
wellbeing of employees remains paramount, and as such, VAALCO
continues to work with its regional partners to ensure the Company
operates as safely as possible, applying best practice protocols as
instructed by the respective governments.
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 114
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 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. These statements may
include statements related to well results, future levels of
drilling and operational activity and associated expectations,
expectations concerning the impact of the recent decline in oil
prices and the outbreak of COVID-19 on our business and results of
operations, the implementation of the Company’s business plans and
strategy, prospect evaluations, prospective resources and reserve
growth, its activities in Equatorial Guinea, expected sources of
future capital funding and future liquidity, the share repurchase
program, its ability to restore production in non-producing wells,
future operating losses, future changes in crude oil and natural
gas prices, future strategic alternatives, future acquisitions,
capital expenditures, future drilling plans, prospect evaluations,
negotiations with governments and third parties, timing of the
settlement of Gabon income taxes, expectations regarding processing
facilities, production, sales and financial projections and reserve
growth. 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. Such statements
are subject to a number of assumptions, risks and uncertainties,
many of which are beyond VAALCO’s control. These risks include, but
are not limited to, crude oil and natural 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, as well as risks related to the impact of COVID-19 on the
global economy and our business.
Investors are cautioned that forward-looking
statements are not guarantees of future performance and that actual
results or developments may differ materially from those projected
in the forward-looking statements. 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.
References to thickness of crude 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 crude 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.
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