VAALCO Energy Drilling Ahead on Etame Development Well

VAALCO Energy reports that it has completed running 9-5/8 inch casing on the Etame 5H development well offshore Gabon in preparation for drilling the horizontal lateral in the Gamba formation. The Gamba sand was first penetrated via a pilot hole and successfully encountered the forty-five foot thick Gamba sand with oil as originally planned. The well was then plugged back and redrilled to nearly horizontal and the casing landed at the top of the Gamba sand. The rig has now temporarily moved off the location to allow for the installation of the flowlines and control umbilicals which will tie the well back to the floating production, storage and offloading facility moored at the field.

While the flowlines and umbilicals are being installed, the rig has moved to drill an exploration well named the Avouma No. 1, which is approximately ten miles south of the Etame field. This is the second of two commitment wells required under the current exploration phase of the production sharing contract with the Republic of Gabon. The target for the Avouma well is the Gamba sandstone, with Dentale sandstones as secondary targets. It is anticipated that the rig will move off the Avouma well, back to the Etame 5H development well after the flowline installation is completed. It will then require a fifteen day program to drill and gravel pack the horizontal lateral in the Etame 5H well, at which time the well can commence production to the FPSO. Commencement of production from the Etame 5H well in July is expected to increase total production from the Etame field to over 20,000 barrels oil per day.

After completing the Etame 5H well, the rig will finalize the drilling of the Avouma No. 1 well.

VAALCO's subsidiary VAALCO Gabon Etame, Inc. operates and owns a 28.07% interest in the Etame Field. The Etame field was placed on production in September 2002 and has produced between 14,500 and 15,000 barrels per day since startup. Other field partners are PanAfrican Energy Gabon Corp. (31.36%), Sasol Petroleum West Africa (Ltd.) (27.75%), Sojitz Etame Limited (2.98%), PetroEnergy Resources Corp. (2.34%) and Energy Africa Gabon (7.5%).