VAALCO Spuds Etame-5H Development Well

VAALCO has spud the Etame-5H development well in the Etame field offshore Gabon. The well is being drilled by Diamond Offshore's Ocean Nomad. The well will be completed horizontally in the Gamba sandstone reservoir at Etame, and should increase total field production to over 20,000 barrels per day. Upon completion of the Etame-5H well, the Company will commence the drilling of the Avouma No. 1 well, an exploration well on a structure approximately 7 miles south of Etame. An additional development well is planned to commence mid-year 2005.

Robert L. Gerry, III, Chairman and CEO stated, "We are extremely pleased with our financial results for the first quarter and look forward to an active year adding a new development well in Etame and continuing our exploration efforts for additional reserves on the Etame block. The Etame field has produced 9 million barrels in the eighteen months that it has been on production and continues to produce at approximately 15,000 barrels per day."