VAALCO Pumps First Oil at South Tchibala

VAALCO announced that oil production has commenced from the Company's South Tchibala development well (ETBSM-2H) following successful operations to retrieve the completion assembly which, as previously announced, had slipped through the elevator as it was being lowered into the newly drilled well shaft. VAALCO has re-run the upper completion assembly, installing two new electric submersible pumps, and production estimated at 3,800 barrels per day commenced on November 26, 2010.

VAALCO has now moved the contracted drilling rig, the Sapphire Driller, onto location to drill a new exploration well on the Omangou prospect (ETOMG-10), approximately two miles southeast of the Ebouri platform and approximately four miles to the northwest of the center of the Etame field. Drilling commenced on November 25, 2010.

Subsea work is underway on the ET-7H well, a horizontal development well in a known separate fault block in the Etame field that is expected to add additional production. VAALCO is laying and connecting the production, service and gas lift lines between the sub-sea tree and the Company's floating production, storage and offloading ("FPSO") facilities. Operations are proceeding and it is expected that VAALCO will commence production in the second half of December 2010.

The Company's subsidiary VAALCO Gabon Etame, Inc. operates the Etame Marin Permit in which it holds a 28.07% net interest in the Etame Field. Other participants in the permit are Addax Petroleum Etame Inc. (31.36%), Sasol Petroleum Etame Limited (27.75%), Sojitz Etame Limited (2.98%), PetroEnergy Resources Corp. (2.34%) and Tullow Oil Gabon SA (7.5%).

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