TIDMVOG
RNS Number : 1353U
Victoria Oil & Gas PLC
27 July 2020
27 July 2020
Victoria Oil & Gas Plc
("VOG" or the "Company")
Q2 2020 Operational Update
Victoria Oil & Gas Plc, whose wholly owned subsidiary, Gaz
du Cameroun S.A. ("GDC"), the onshore gas producer and distributor
with operations located in the port city of Douala, Cameroon, is
pleased to provide shareholders with an operations update of the
Company for the second quarter of 2020.
SUMMARY
-- The Company remains vigilant in relation to the Covid-19
pandemic and adherent to the authorities' guidelines in the
jurisdictions in which it works: the lockdown in Cameroon was eased
in May 2020, but a restrictive lockdown persists in the YaNAO
region of the FSU where our West Medvezhye asset is located.
-- Daily average gross gas sales rate for the quarter of 4.6
mmscf/d (Q1 20: 5.1 mmscf/d) of natural gas plus gross 3,548 bbls
(Q1 20: 1,343 bbls) condensate was produced safely and sold to
industrial customers, resulting in net revenues of US$6.8 million
(unaudited) (Q1 20: US$5.3 million).
-- The grid power customer ENEO Cameroon S.A. ("ENEO") was
served notice of termination, having been given further
opportunities to clear its debts.
-- In the short-term, we have lined up sales to replace over 30%
of the grid power customer's Take-or-Pay volumes at a higher price
margin via increased demand from existing customers, and at least 2
new customers expected to be tied in within the next 3 months.
These increased sales already represent replacement of over 50% of
the revenue lost through the termination of the ENEO contract.
-- Following an analysis of the current well stock, and
recognizing there are no short-term plans for further drilling at
this time, management has reduced its estimated Proved Reserves
("1P") for the Logbaba Field.
-- The large, in-place resource estimate remains unchanged, and
the revised 1P Reserves, without additional drilling, still provide
for several years of supply with or without the grid power
demand.
-- Following an extensive prospect evaluation and derisking of
the Matanda Licence, management has materially increased its
estimate of Prospective Resources for the Onshore part of the
Licence, which is contiguous with Logbaba.
-- The Matanda partners, GDC and Afex Global Ltd, continue
discussions with the Government in Cameroon and remain optimistic
of obtaining an extension as previously guided.
Roy Kelly, Chief Executive of the Company, commented :
"We are pleased with the resilience the Cameroon business has
shown through recent times and the early strides made to replace
the gas sales volumes previously allotted to ENEO. The Logbaba
reserves reduction reflects adjustments based on the current well
stock but leaves the Company with years of supply with or without
the grid power demand even without further development drilling.
The work programme on Matanda has yielded encouraging and
significant prospectivity on the licence, in what is a rich
hydrocarbon province. We are also encouraged by the unsolicited
interest in the SGI asset."
LOGBABA UPDATE
Quarterly Production
GDC continues to safely produce and sell natural gas to a
variety of customers in the Douala area, most of whom would have
previously burnt diesel or fuel oil, with liquid fuels currently
selling at twice the price of our gas. Quarterly gross and net gas
and condensate sales at Logbaba are as follows (amounts in bold are
net gas and condensate sales attributable to GDC (57%)):
Q2 2020 Q1 2020
Gas sales (mmscf)
------ ------ ---- ------
Thermal 224 394 250 438
------ ------ ---- ------
Industrial power 13 22 15 26
------ ------ ---- ------
Grid power 0 0 0 0
------ ------ ---- ------
Total (mmscf) 237 416 265 464
------ ------ ---- ------
Daily average gross
gas sales rate (mmscf/d) 4.6 5.1
-------------- ------------
Condensate sold (bbls) 2,022 3,548 766 1,343
------ ------ ---- ------
Customer Base
Absent ENEO, we continue to supply gas continuously to 30 or
more customers. In addition, now that we do not have to reserve gas
for ENEO, we are able to grow demand in a step-wise fashion:
-- Stage I: increase supply to those existing customers who have
requested more gas; Company is currently in receipt of several such
requests;
-- Stage II: tie-in new customers near our infrastructure. We
expect to tie in 2 new customers between now & September;
and
-- Stage III: look to tie in customers some distance from our
infrastructure in clusters to justify the expenditure.
GDC has some 10 km of pipeline in stock, along with the
necessary valves & fittings, plus the operational skills to
carry out much of this work itself.
This short-term increase in supply should amount to an
incremental 1.5 mmscf/d or so, or 31% of the ENEO Take-or-Pay
levels, notwithstanding any natural swings in demand. This increase
represents over 50% of the revenue lost through the termination of
the ENEO contract.
Beyond this, we continue to pursue the "low hanging fruit" type
opportunities of high value, tie-back opportunities to satisfy a
growing energy demand for natural gas, which remains both cleaner
and cheaper than liquid fuel options such as imported,
carbon-emitting heavy fuel oil or diesel
Capital Projects
La-108 Remediation : We await the return of the workover crew,
noting that some scheduled flights to Cameroon have just
recommenced.
Facilities Enhancement Project : Design of the project
continues, and lower pressure tests of the plant have been
successful in terms of maintaining the sales gas specification at
lower process operating pressures.
Reserves
The Company has carried out a review of the 1P reserves on the
Logbaba Field and given the analysis of the well stock and
recognising that there are no plans to drill further wells at
present, the Company has reduced estimates of its 1P Reserves per
the table below. The overall Resource estimates remain unchanged as
the Company has not amended the volumetrics from the previous third
party report.
Bcf, 100% Basis
As At 1/12019 68
----------------
2019 Production -3
----------------
Adjustment -46
----------------
As At 1/1/2020 19
----------------
All nine penetrations of the primary reservoir in the Logbaba
field have encountered mobile gas in reservoir quality sands in
what is undoubtedly a significant in-place resource. Our reduction
in Proved reserves at this time reflects our finite well stock, an
assessment of the La-107 performance which did not meet our
pre-drill expectations, and recognition that the project was
designed to be a staged development involving more wells drilled
through time in line with improved understanding of the reservoir
and growth in demand. The Proved reserves level would support
sustained production at current demand levels (which excludes grid
power). Additional wells in previously undrilled areas of the field
would immediately add to the Proved Reserves.
MATANDA UPDATE
We are pleased to report a material increase of management's
estimate of Prospective Resources onshore Matanda, with gross
unrisked, mean Prospective Resources increased to 1,196 Bcf in the
Matanda Licence (onshore) from the previously reported 903 Bcf (
ERCL Consultants Evaluation: 'Prospectivity and Volumetrics Report,
Matanda Block, Cameroon', 2017). T his increase is the result of a
detailed internal prospect evaluation which has identified 19 gas
prospects in shallower Tertiary-aged reservoirs, plus 7 prospects
in deeper, Cretaceous-aged prospects. The Company believes the
larger of these prospects has mean unrisked, Prospective Resources
of over 65 Bcf, with geological Chance of Success estimated at
better than 40%. This acreage is contiguous with the greater
Logbaba license, offering an easy monetisation route for gas
discoveries.
GSAs with Aksa Enerji Uretim A.S. ("AKSA") and New Age (African
Global Energy) Ltd ("New Age")
Aksa is progressing its in-country applications and agreements
for the power plant to be located at Bekoko, a brownfield site
which is already equipped with a high voltage substation on the
outskirts of Doula.
New Age and the other Etinde licence owners continue to progress
their development towards Final Investment Decision and have stated
publicly that they are targeting FID in the next 9 months.
SVERGAZINVEST ("SGI") UPDATE
The Company is pleased to announce that a third party Technical
Report has been completed by Well Energy Group (Russia) on the
Company's 100% owned Western Medvezhye Licence in YaNAO, Russia.
Based on this Technical Report, the Company has commenced a formal
process to divest the Western Medvezhye Field and is in discussions
with buyers of the field. Whilst a prospective buyer is conducting
due diligence, the Company expects an extended sales process due to
the COVID-19 crisis and the volatility of crude prices.
BOARD CHANGES
Andrew Diamond, Finance Director of VOG, tendered his
resignation as a Director and employee of the Company in May 2020.
He stepped down from the Board of Directors and is working out his
six months' notice period assisting the Company in the finalisation
of its Annual Report and Accounts to 31 December 2019 ("2019
Results"), among other things. The Company will make an
announcement on his replacement in due course.
GM AND ANNUAL REPORT
The Company received approval from AIM Regulation and Companies
House to extend its filing requirements for the 2019 Results to the
end of September 2020. The Company held its AGM at the end of June
2020 under the restrictions imposed as a result of the Covid-19
pandemic and is in the process of finalising its Annual Report for
2019 (which has been delayed due to the pandemic as previously
announced). The General Meeting to approve the Annual Report may
have similar restrictions to those at the AGM. The Company will
advise shareholders as events unfold.
For further information, please visit www.victoriaoilandgas.com
or contact:
Victoria Oil & Gas Plc
Roy Kelly Tel: +44 (0) 20 7921 8820
Kate Baldwin
Strand Hanson Limited (Nominated and Financial Adviser)
Rory Murphy / James Dance / Jack Botros Tel: +44 (0) 20 7409 3494
Shore Capital Stockbrokers Limited (Broker)
Mark Percy / Toby Gibbs (corporate advisory) Tel: +44 (0) 20 7408 4090
Jerry Keen (corporate broking)
Camarco (Financial PR)
Billy Clegg Tel: +44 (0) 20 3757 4983
Nick Hennis Tel: +44 (0) 20 3781 8330
Sam Metcalfe, the Company's Subsurface Manager has reviewed and
approved the technical information contained in this announcement
in his capacity as a qualified person under the AIM Rules. Sam has
over 30 years of industry experience, has prepared CPRs for the LSE
in the past, and has an MSc in Petroleum Engineering from The
University of Texas at Austin.
1P Reserves and Prospective Resources set out above are stated
in accordance with the PRMS.
The PRMS is available on the SPE website at:
https://www.spe.org/en/ .
Definitions
1P Reserves
Proven - Reserves, which on the available evidence, are
virtually certain to be technically and economically producible.
For the purpose of this definition it has a better than 90% chance
of being produced
Bcf
Billion cubic feet 1bcf = 0.83 million tonnes of oil
equivalent
mmscf
Million standard cubic feet
Prospective Resource (Mean)
Prospective Resources are those quantities of petroleum which
are estimated, on a given date, to be potentially recoverable from
undiscovered accumulations. The mean represents the average using
probabilistic methods.
Reference:
https://www.spe.org/en/industry/reserves/
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END
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