VAALCO Energy Signs North Sea Agreements

VAALCO Energy has formed two joint ventures to access exploration and development projects in the UK sector of the North Sea.

VAALCO Energy, Inc. (Houston) executed an agreement with MPX (Oil and Gas) Limited, a privately held UK based oil and gas company, which will focus on the oil prone Central North Sea. MPX has assembled a group of geoscientists with extensive North Sea exploration experience gained while working for major oil companies. The group will begin analyzing open acreage to be offered by the UK government in the upcoming licensing round. Following the evaluation of the acreage offered, bids would be prepared and submitted later in 2006 on acreage considered to offer attractive upside potential.

A second agreement, executed with a US Independent, will jointly study and develop opportunities in the Southern Gas Basin of the North Sea. The UK based initiative will seek farm-in opportunities and acquisitions from operators with existing acreage and undeveloped discoveries.

Known as an experienced operating company with production offshore Gabon, West Africa, VAALCO continues to look for new opportunities. Both of these agreements underscore VAALCO's commitment to seek out new prospects for growth in West Africa and beyond.

Robert Gerry, Chairman and CEO, stated, "We feel that our expertise, combined with that of our partners, will enable us to high-grade exploration and development opportunities in the North Sea. We have successfully developed prospects in the past from exploration through to production, using the latest technologies, to create value for our shareholders. We believe similar opportunities exist for VAALCO in the North Sea."