VAALCO sold 512,000 net barrels of oil equivalent at an average price of $60.93 per barrel during the first quarter of 2006, compared with 519,000 net barrels of oil equivalent at an average price of $44.58 per barrel in the first quarter of 2005.
The principal source of those sales was the Etame Field offshore of the Republic of Gabon in West Africa, where VAALCO operates and holds a 28% interest in a consortium currently producing approximately 18,000 barrels of oil equivalent per day. Sales from Etame during the first quarter of 2006 amounted to 2.1 million barrels of oil equivalent, of which VAALCO's share was 511 thousand barrels. That compares with sales of 2.2 million barrels in the first quarter of 2005, of which VAALCO's net interest was 518 thousand barrels.
Discretionary cash flow, a non-GAAP financial measure of the amount of cash generated that can be used for working capital, debt service or future investments, was $14.8 million for the three months ended March 31, 2006, compared to $9.8 million for the three months ended March 31, 2005.
Robert L. Gerry, III, Chairman and CEO stated, "First quarter 2006 earnings benefited from a more robust global crude oil market as compared to first quarter 2005. The Etame field continues to perform to our expectations. During the quarter, we announced agreement with the Republic of Gabon for a five-year extension of the Etame Marine Permit, effective in July, as well as a new oil sales agreement with Trafigura Beheer B.V., at a significantly higher price.
"We are aware of reports being circulated today indicating VAALCO has been awarded an interest in Block 5 offshore Angola. VAALCO will discuss the status of the award at its scheduled conference call on Thursday, May 11, 2006.
"With respect to our development activities in Gabon, our Avouma project adjacent to the Etame field remains on track for installation of the platform this summer, and first oil production from Avouma to begin late in the fourth quarter. In February, the government of Gabon approved commercial development of the Ebouri field, northwest of the Etame field. This paves the way for carving out a twenty-year exploitation area and the filing of a development plan for the project. We also continue to make progress on our development opportunities onshore in Gabon, in Angola, and in the North Sea region."
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