VAALCO Energy, Inc. announced Monday that it has signed an agreement to acquire an additional 3.23 percent participating interest in the Etame Marin Permit located offshore Gabon from Sojitz Etame Ltd.
Sojitz's sale, which represents its full interest in the concession, will be effective Aug. 1 and the transaction is expected to close within 90 days, subject to customary closing conditions.
Prior to the acquisition, field operator VAALCO owned a 30.35 percent participating stake in the fields in the Etame Marin block that is spread over 28,700 gross acres in shallow water. There are 4 production platforms and 9 wells currently producing in the Etame Marin block, including three subsea well tiebacks. Production from the fields averaged about 19,000 barrels of oil per day in the second quarter of 2016 and over 93 million barrels of oil have been produced since production commenced in 2002. The latest acquisition is expected to boost VAALCO’s net production by nearly 11 percent.
VAALCO plans to fund the acquisition with the additional $5 million loan capacity available under the new term loan agreement announced in early July with the International Finance Corp. (IFC), subject to their approval, and with cash on hand.
"We are very pleased to increase our participating interest in our flagship producing asset in offshore Gabon to 33.58 percent ... We believe it has significant upside potential remaining. We have identified at least 17 future drilling opportunities we can pursue when prices recover that we estimate could include about 65 million barrels of gross unrisked recoverable contingent resources," Steve Guidry, VAALCO’s CEO commented in the press release.
"This is an ideal acquisition for us as it is anticipated to increase our production by nearly 11 percent and not require any additional staffing or cash overhead costs to assimilate into the Company. One of the goals of our strategic review process we announced earlier this year was to seek opportunities to grow the Company in a cost effective manner to enhance shareholder value and we believe this acquisition fits perfectly within that strategy."
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