VAALCO Energy, Inc. reported the results of a recent exploration well in the North Sea and an update of future planned activities.
The 9/28b-19A exploration well, operated by Bow Valley Petroleum (UK) Limited (37.5%) on behalf of partners Marathon Oil (U.K.) Ltd. (37.5%) and VAALCO UK (North Sea) Limited (25%) was drilled to a total measured depth of 12,726 feet. The well penetrated a thick sequence of Upper Jurassic Brae Formation sandstone reservoirs, the top of which encountered 105 feet of gross oil column. Formation pressures and fluid samples were acquired during TD wireline logging program. The potential reserves associated with this discovery are smaller than anticipated and the well has been suspended pending further evaluation or possible development in conjunction with other activities in the area.
VAALCO is currently in final negotiations with a third party to participate in an exploration well in the Southern Gas Basin of the North Sea. Should an agreement be concluded VAALCO would pay a portion of the well costs to earn a 25% working interest. Estimated gross reserves are 45 billion cubic feet. with an anticipated spud date in the third quarter of 2008.
VAALCO is evaluating seven exploration/development leads and/or prospects to determine its drilling program to commence in the fourth quarter of 2008. Gross unrisked recoverable reserves are estimated by the company to approximate 100 million barrels (24 mmbo net). Current daily production is approximately 22,000 bopd from the Etame concession.
The Ebouri platform is nearing completion in Ingleside, Texas and is scheduled to depart for Gabon the beginning of May 2008. VAALCO has signed a letter of intent with a drilling contractor to commence drilling the Ebouri development well in October with first oil expected in December at a rate of 5,000 - 6,000 bopd gross. The drilling rig is contracted to drill an exploration well immediately following Ebouri with the possibility of one additional well to follow.
Robert L. Gerry, III, Chairman and CEO stated, "The North Sea well was tantalizingly close to being a success. Bow Valley found an oil column in the correct geological sequence but unfortunately it did not contain enough hydrocarbons to be a commercial success. While we will suspend the well we will leave infrastructure in place on the sea floor to allow for easy entry in the future when development is warranted.
We are in the final stages of completing negotiations with a third party to drill a gas well in the Southern Gas Basin of the North Sea. Believed to contain approximately 45 bcf. VAALCO will have a 25% working interest. Gas currently is being sold in the U.K. for approximately $10.00 per mcf so if we are right it will add significant reserves and cash flow to VAALCO."
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