VAALCO Successfully Extends Ebouri Field with Development Drilling

VAALCO has provided an update on the new development well being drilled in the Ebouri field and the new appraisal well (North Ebouri) being drilled in the Etame block. VAALCO commenced drilling these wells in November with the jackup rigs Adriatic 6 and Pride Cabinda, respectively, as previously announced.

For the development well in the Ebouri field, VAALCO announced that it has drilled one pilot hole to the south of the original Ebouri discovery and a second pilot hole to the northeast of the original discovery. Both of these pilot holes were successful in delineating additional Gamba sandstone reservoir above the oil water contact, thereby increasing the acreage and reserves of the Ebouri field. VAALCO is currently completing the development well horizontally on the same orientation as the second pilot hole. First oil production from this well is expected in January 2009.

The Company also announced that it drilled the North Ebouri appraisal well in the Etame block approximately 1.5 miles to the northeast of the Ebouri platform and found 21 feet of oil column, further expanding the Ebouri field. VAALCO is now planning a sidetrack to optimize the location for a potential second horizontal development well. In addition, the Company is planning two exploration wells (North Etame and South East Etame) on newly mapped structures. The wells will be drilled back to back using Pride Cabinda.

VAALCO continues to expect production at a rate sufficient to bring total production from the Etame license area to approximately 25,000 barrels of oil per day (bopd). The Etame license production areas currently produce approximately 20,000 bopd, of which VAALCO has a 28.1% working interest.

"Results from the Ebouri development drilling have exceeded expectations, and we are pleased with the initial results from our drilling program in the Etame block, with more wells to come," said Robert L. Gerry, III, Chairman and CEO of VAALCO. "We have substantially enlarged the productive acreage of the Ebouri field, thereby greatly enhancing the recoverable reserves. We look forward to continued success with our exploration program."

Additional wells planned over the coming months include:

  • Two exploratory wells onshore Gabon in the Mutamba concession: VAALCO is currently mobilizing the Nabors 864 rig to the first of the two planned drilling locations and expects to commence drilling the first exploratory well in early February 2009. Combined potential reserves for these two wells are expected to be in excess of 30 million barrels. VAALCO has a 100% working interest in the onshore Mutamba block.
  • One exploratory well in Angola: The Company expects to move forward on the planning for a well on Angola Block 5 during the third quarter of 2009 depending upon rig availability. The Company has recommended to the consortium a prospect with three objective zones, both above and below the salt layer on the block. Total potential from all three objectives is 150 million gross barrels. VAALCO has a 40% working interest in Block 5.
  • Interest in North Sea: VAALCO has a 25% interest in a gas prospect on Block 48/25c in the British North Sea. The Company is participating with Century Exploration on the well, which is an offset to a former Shell gas discovery made in 1987. 3-D seismic data indicates the ability to get higher on the structure than the earlier well, increasing the potential reserves to 60 Bcf. Due to a delay in the receipt of the rig from the current operator, VAALCO expects that drilling will begin in January 2009.

VAALCO's development and exploration wells planned over the coming months expose VAALCO to over 50 million net barrels, or an 8-fold potential increase to the Company's current 6.2 million barrels of proved reserves.

VAALCO has an interest in a 1,186 square mile offshore block in Gabon, the Etame Marin block where it signed a production sharing contract in 1995. The block contains five discoveries including the Etame, Avouma and South Tchibala fields which are on production, the Ebouri field, which is under development, and the North Tchibala discovery for which there are no development plans at this time. These fields and discoveries consist of sub-salt reservoirs that lie 20 miles offshore in approximately 250 feet of water depth. The Company owns a 30.4% (28.1% development and production) interest in the Etame Marin block.