VAALCO Successfully Sidetracks Ebouri Prospect

VAALCO Energy reports the wildcat well Ebouri No. 1 ("EBO-1"), offshore Gabon, was successfully sidetracked a distance of about 0.5 kilometers (1,600 feet) and logged approximately 15 meters (49 feet) of net oil pay in 17 meters (55 feet) of gross Gamba sandstone section. This was a comparable pay section to that found in the original wellbore, and in the first successful sidetrack. The log from the sidetrack confirms a continuous oil-water contact between the original well and the two sidetracks. The Ebouri discovery lies 11 kilometers (7 miles) away from the Etame field, which has been onstream for 18 months, producing at approximately 15,000 barrels oil per day. The Gamba sandstone section in the EBO-1 well is the same reservoir as in the Etame field. Both accumulations are within the 3,073 square kilometer Etame Block, which VAALCO has operated since 1995.

Mr. Robert Gerry, Chairman and CEO of VAALCO stated, "We now have three penetrations of the Gamba reservoir within the Ebouri prospect, all confirming oil pay. While a further step out will be necessary before we can determine the reserves, we believe we have a commercial new field discovery. We were able to get samples of the oil from the pay interval and confirm that it has an API of approximately 36 degrees, similar to the Etame oil. Engineering studies to tie the Ebouri discovery back to our existing FPSO facilities will begin immediately. These facilities have designed capacity to receive 25,000 to 30,000 barrels of oil per day."

VAALCO expects to drill one new development well in the Etame field during the second quarter of this year to increase Etame production to over 20,000 barrels of oil per day. The consortium also has one additional exploration well commitment on the Etame Block, which will also be drilled during the second quarter of this year.

VAALCO's subsidiary VAALCO Gabon Etame, Inc. operates and owns a 28.07% interest in the Etame Field. Other field partners are PanAfrican Energy Gabon Corp. (31.36%), Sasol Petroleum West Africa (Ltd.) (27.75%), Energy Resources Japan Etame (Gabon) Limited (2.98%) and PetroEnergy Resources Corp. (2.34%) Energy Africa Gabon (7.5%).