VAALCO Energy has closed on the purchase of an additional 3.23% participating interest (2.98% working interest) in the Etame Marin Permitlocated offshore of the Republic of Gabon from Sojitz Etame, which represented the full interest owned by Sojitz Etame in the concession. The transaction had an effective date of August 1, 2016.
VAALCO is operator of the fields in the Etame Marin block which encompass approx. 28,700 gross acres in shallow water and, prior to the acquisition, owned a 30.35% participating interest (28.1% working interest) in the block. There are four production platforms and nine wells currently producing in the concession, including three subsea well tiebacks. Production from the fields currently averages about 13,500 barrels of oil per day and over 94 million barrels of oil have been produced since production commenced in 2002.
The acquisition will boost VAALCO's net production by approx. 11% post-closing and will not require any additional staffing. The transaction was funded with cash on hand. VAALCO may issue a request to the International Finance Corporation (IFC) to borrow the $5.0 million potentially available under its term loan agreement in the near future.
VAALCO has also mobilized a hydraulic workover unit onto the Avouma platform offshore Gabon and work is underway to replace failed electric submersible pumps (ESPs). The failed ESPs will be inspected by the original equipment manufacturer, who also installed the ESPs, to determine what caused the failures.
Cary Bounds, VAALCO's Chief Operating Officer and Interim CEO commented:
'We are very pleased to have closed our transaction with Sojitz and increased our participating interest in our flagship producing asset in offshore Gabon to 33.58%. One of our key strategic goals is to seek opportunities to grow the Company in a cost-effective manner that enhances shareholder value. We believe this acquisition is an excellent example of the execution of that strategy. It immediately increases our production in a field we know extremely well and enhances our option value due to the significant upside potential remaining. At Etame, we have identified 21 low risk development and step-out drilling opportunities with about 65 million barrels of gross unrisked recoverable contingent resources. We are working with our partners on a schedule to develop these opportunities as soon as practical. We are also very pleased to have initiated the workover program at Avouma and hope to restore production at Avouma before year end.'
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