{"id":9432,"date":"2020-11-19T08:38:50","date_gmt":"2020-11-19T08:38:50","guid":{"rendered":"http:\/\/oilnewskenya.com\/?p=9432"},"modified":"2020-11-19T08:38:50","modified_gmt":"2020-11-19T08:38:50","slug":"gabon-vaalco-acquires-additional-working-interest-at-etame-marin-block","status":"publish","type":"post","link":"https:\/\/www.oilnewskenya.com\/index.php\/gabon-vaalco-acquires-additional-working-interest-at-etame-marin-block\/","title":{"rendered":"GABON: VAALCO Acquires Additional Working Interest at Etame Marin Block"},"content":{"rendered":"\n\n\n\n\n\n\n\n\n\n\n\n\n
Highlights<\/strong><\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n\u2022<\/td>\nAcquiring an additional 27.8% working interest in the Etame Marin block offshore Gabon, increasing VAALCO\u2019s total working interest to 58.8%;<\/td>\n<\/tr>\n
<\/td>\n\u2022<\/td>\nNearly doubles VAALCO\u2019s total net production and reserves;<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n\u2022<\/td>\nIncreases net revenue interest (\u201cNRI\u201d) production from 4,850 to 9,150 barrels of oil per day (\u201cBOPD\u201d) based on current month production<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n\u2022<\/td>\nIncreases year-end 2019 SEC reserves(2)<\/sup>\u00a0from 5.0 million to 9.4 million barrels of oil (\u201cMMBO\u201d)<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n\u2022<\/td>\nIncreases year-end 2019 independent 2P CPR reserves(3)<\/sup>\u00a0from 9.2 MMBO to 17.5 MMBO<\/td>\n<\/tr>\n
<\/td>\n\u2022<\/td>\nImmediately accretive to VAALCO, with estimated increase of 23% in free cash flow per barrel(<\/sup>4<\/sup>)\u00a0<\/sup>from approximately $10.90 to $13.30 at $45 realized oil price;<\/td>\n<\/tr>\n
<\/td>\n\u2022<\/td>\nAdds optionality from acquisition of Sasol\u2019s 40% non-operated participating interest in Block DE-8 offshore Gabon;<\/td>\n<\/tr>\n
<\/td>\n\u2022<\/td>\nAgreed to total consideration to Sasol for the entire transaction of $44 million, subject to customary post-effective date adjustments, and future contingent payments of up to $6 million; and<\/td>\n<\/tr>\n
<\/td>\n\u2022<\/td>\nFunding for the acquisition will be from cash on hand and cash from operations.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Cary Bounds, Chief Executive Officer, commented, \u201cWe believe that the acquisition of Sasol\u2019s interest at Etame is a very attractive and value accretive strategic acquisition for the Company that confirms our position as one of the leading independent exploration and production companies in West Africa. In what was a competitive sales process, this is the ideal growth transaction that we have been seeking for VAALCO. We believe the acquisition of an additional stake in this field that we know so well, having been the operator since 1995, is an important step in implementing our strategy. The acquisition is expected to deliver a step change in our production to over 9,000 barrels of oil per day net based on current production and significantly boosts our cash flow profile. With minimal additions to our overhead costs, we expect this transaction to lower our G&A cost per barrel by approximately 40%. The strong operational and economic performance of Etame in recent years has enabled us to grow our net cash position, which we are now using to fund this value accretive acquisition and profitably expand our reserve base.\u201d<\/p>\n

Bounds continued, \u201cWe completed a highly successful drilling program earlier this year that demonstrated the quality of the asset and the upside that resides in the field, and this transaction, coupled with our recent announcement of acquiring new proprietary 3-D seismic data over the entire Etame Marin block, underscores the belief that we have in the long-term potential at Etame.\u00a0\u00a0 We are also enhancing upside potential with a 40% non-operated position in Block DE-8 offshore Gabon which includes an existing discovery and for which there are plans to potentially drill an appraisal well in 2021 representing an exciting near-term catalyst. In summary, as we have previously stated, we are focused on maximizing the value of our Gabon resources as well as expanding into new development opportunities across Africa.\u201d<\/p>\n

Transaction Terms<\/strong><\/p>\n

The Company has agreed to total cash consideration for both properties of approximately $44 million. The effective date of the transaction is July 1, 2020, and the Company anticipates that the transaction will close within 90 days. Cash paid at closing is expected to be less than $44 million as the amount paid will be subject to certain customary financial adjustments, including adjustments to account for estimated positive net cash flows attributable to the period from the effective date until the closing date. VAALCO plans to fund the net cost of the transaction with cash on hand and cash from operations. The SPA contains customary closing conditions including receipt of all necessary written consents, approvals or waivers, and provides for certain contingent payments of up to $6 million, as discussed below. Reserves, production and financial results for the interests being acquired will be included in VAALCO\u2019s results for periods after the closing date of the transaction<\/p>\n

Block DE-8 Offshore Gabon<\/strong><\/p>\n

Under the terms of the SPA, VAALCO is acquiring a 40% non-operated participating interest in\u00a0Block DE-8 offshore Gabon, with Perenco, the operator, holding the remaining 60%. Block DE-8 is in shallow waters and encompasses multiple producing fields that are not part of the transaction and are carved out of the contract area that VAALCO is acquiring. The SPA includes an interest in the Akoum-B discovery on Block DE-8 that was drilled in 2003 and has a potential appraisal well planned for 2021. If the appraisal well is successful, it could be tied back through a subsea completion to a Perenco-operated existing platform on Block DE-8.<\/p>\n

Contingent Payments<\/strong><\/p>\n

Under the terms of the SPA, a contingent payment of $5 million will be payable to Sasol by VAALCO if Brent oil pricing averages greater than $60 per barrel for 90 consecutive days during the period from July 1, 2020 to June 30, 2022. There is an additional contingent payment of $1 million if the DE-8 appraisal well is successful.<\/p>\n","protected":false},"excerpt":{"rendered":"

Highlights \u2022 Acquiring an additional 27.8% working interest in the Etame Marin block offshore Gabon, increasing VAALCO\u2019s total working interest to 58.8%; \u2022 Nearly doubles VAALCO\u2019s total net production and … Read More<\/a><\/p>\n","protected":false},"author":24,"featured_media":9241,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[7447,7442,11],"tags":[8668,8667,8531,944,1990,2249,8532],"class_list":["post-9432","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-central-africa","category-countries","category-top-news","tag-akoum-b","tag-block-de-8","tag-etame-marin-block","tag-gabon","tag-perenco","tag-sasol","tag-vaalco","entry"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/10\/GABON-ETAME.jpg?fit=376%2C485&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p5JWkQ-2s8","jetpack-related-posts":[{"id":9613,"url":"https:\/\/www.oilnewskenya.com\/index.php\/gabon-etame-marine-block-jv-partners-their-pre-emptive-rights\/","url_meta":{"origin":9432,"position":0},"title":"GABON: Etame Marine Block JV Partners Waive Their Pre-Emptive Rights","author":"","date":"January 3, 2021","format":false,"excerpt":"VAALCO Energy has announced that, in connection with VAALCO\u2019s previously announced acquisition from Sasol Gabon S.A.\u00a0 of Sasol\u2019s 27.8% working interest in the Etame Marin block offshore Gabon, the other joint owners in the Etame Marin block have not exercised their pre-emptive rights. As a result, VAALCO will now move\u2026","rel":"","context":"In "Central Africa"","block_context":{"text":"Central Africa","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/central-africa\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/10\/GABON-ETAME.jpg?fit=376%2C485&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":12535,"url":"https:\/\/www.oilnewskenya.com\/index.php\/gabon-vaalco-energy-provides-operational-update\/","url_meta":{"origin":9432,"position":1},"title":"GABON: VAALCO Energy Provides Operational Update","author":"","date":"August 3, 2022","format":false,"excerpt":"Highlights South Tchibala 1HB-ST well: Penetrated a thin section of the Gamba sand that is not economically viable to complete in this wellbore; Discovered two potential Dentale producing zones, the Dentale D1 sand and the Dentale D9 sand; Completed the Deep Dentale D1 sand interval with a small frac pack;\u2026","rel":"","context":"In "Central Africa"","block_context":{"text":"Central Africa","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/central-africa\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2022\/04\/GABON-ETAME.jpg?fit=376%2C485&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":12692,"url":"https:\/\/www.oilnewskenya.com\/index.php\/equatorial-guinea-vaalco-energy-announces-approval-of-plan-of-development-for-discovery-on-block-p\/","url_meta":{"origin":9432,"position":2},"title":"EQUATORIAL GUINEA: VAALCO Energy Announces Approval of Plan of Development for Discovery on Block P","author":"","date":"September 26, 2022","format":false,"excerpt":"VAALCO Energy has announced that the Government of Equatorial Guinea has approved the Venus - Block P Plan of Development. VAALCO has an 80% participation interest in the project and is the operator. Upon the execution of final documents, VAALCO will proceed directly to project execution which targets first oil\u2026","rel":"","context":"In "Central Africa"","block_context":{"text":"Central Africa","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/central-africa\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2022\/04\/GABON-ETAME.jpg?fit=376%2C485&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":10012,"url":"https:\/\/www.oilnewskenya.com\/index.php\/vaalco-closes-the-acquisition-of-additional-interest-in-the-etame-field-from-sasol\/","url_meta":{"origin":9432,"position":3},"title":"GABON: VAALCO Closes the Acquisition of Additional Interest in the Etame Field From Sasol","author":"","date":"March 1, 2021","format":false,"excerpt":"Key Highlights Nearly doubles VAALCO\u2019s total net production and reserves; Expected to be immediately accretive to VAALCO, with minimal additional variable costs; Anticipated to materially increase free cash flow\u00a0in 2021 and beyond, particularly in the current increasing price environment; Paid $29.6 million in cash to Sasol, taking into account the\u2026","rel":"","context":"In "Countries"","block_context":{"text":"Countries","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/10\/GABON-ETAME.jpg?fit=376%2C485&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":10812,"url":"https:\/\/www.oilnewskenya.com\/index.php\/gabon-vaalco-announces-binding-loi-for-fso-at-etame\/","url_meta":{"origin":9432,"position":4},"title":"GABON: VAALCO Announces Binding LoI for FSO at Etame","author":"","date":"August 26, 2021","format":false,"excerpt":"VAALCO Energy has signed a binding letter of intent with World Carrier Offshore Services Corp.\u00a0 to provide and operate a Floating Storage and Offloading (FSO) unit at VAALCO\u2019s Etame Marin field offshore Gabon for up to eight years with additional option periods available upon the expiration of the current Floating\u2026","rel":"","context":"In "Countries"","block_context":{"text":"Countries","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/10\/GABON-ETAME.jpg?fit=376%2C485&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":11376,"url":"https:\/\/www.oilnewskenya.com\/index.php\/gabon-vaalco-spuds-first-well-in-2021-2022-drilling-campaign\/","url_meta":{"origin":9432,"position":5},"title":"GABON: Vaalco Spuds First Well in 2021\/2022 Drilling Campaign","author":"","date":"December 14, 2021","format":false,"excerpt":"VAALCO Energy has announced that it has commenced its 2021\/2022 drilling campaign offshore Gabon with the Etame 8H-ST well. 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