VAALCO Energy Completes South Tchibala 1HB-ST Well Off Gabon

VAALCO Energy Completes South Tchibala 1HB-ST Well Off Gabon
VAALCO Energy has completed the South Tchibala 1HB-ST well from the Avouma platform in the Etame field, offshore Gabon.

VAALCO Energy has advanced its drilling campaign at the Etame asset with the completion of the South Tchibala 1HB-ST well from the Avouma platform.

The South Tchibala 1HB-ST was successfully completed after performing a frac pack on the Dentale D1 sand, the first operation of this kind in the Etame field. The second sand identified during the drilling, the Dentale D9, was not appraised during this completion, although it also showed hydrocarbon potential. 

The South Tchibala 1HB-ST well adds new reserves that were previously not captured in VAALCO’s 2P reserves and, upon successful completion and first production, these reserves will be additive to VAALCO’s 1P as well as 2P reserves. VAALCO’s internal reserve range estimate of original oil in place (OOIP) for the Dentale D1 sand is 5.5 to 16 million barrels of oil. The company’s internal estimate of ultimate recoverable reserves (EUR) is 1.8 mmbo, with a range of 0.5 to 3.0 mmbo.

The additional Dentale D9 (15 meters net hydrocarbons) interval can be tested and completed in the future and has an estimate OOIP range of 4 to 15 mmbo, which can be completed after the D1 sand is depleted or accessed with another well.

“The Etame asset is a premier, high-quality field that has produced over 126 million barrels of oil and we believe still has significant upside over the next decade. We are pleased with the results of the South Tchibala 1HB-ST well which will add to production once the long-term stabilized rate is established, and more importantly, adds new reserves to VAALCO’s 1P and 2P positions. The continued success of our 2021/22 drilling campaign, coupled with a strong pricing environment and financial efficiencies of keeping the rig on location has enabled us to extend the current four-well program by an additional two wells,” said George Maxwell, VAALCO's Chief Executive Officer.

"The FPSO replacement and full field reconfiguration plans are progressing in-line with our expectations and we look forward to benefitting from the associated cost savings in Q4 2022 and beyond, once those activities have been completed. These activities are expected to save approximately $20-25 million gross per year in operational costs through 2030 resulting in rapid payback and a material impact on production margins and free cash flow going forward.

"We achieved record high quarterly liftings during the second quarter of 2022, which equates to sales volumes of approximately 10,500 BOPD net to VAALCO. Our preliminary estimate of production for the period of 9,200 to 9,300 BOPD was modestly below our expectations primarily due to delays associated with initiating production on our last two development wells on the Avouma platform, which required more complex and time-consuming completions. Nonetheless, we continue to expect to meet our full year 2022 production guidance.”

The well will be brought on slowly to allow the formation to be cleaned up adequately over the next several weeks after which a long-term stabilized flow rate will be established. During the initial period, the well will be flowed at varying rates of fluid per day to ensure that long-term formation and completion damage risk is minimized. VAALCO expects to see a stabilized flow rate in the next five to seven days.

Following the completion of the South Tchibala 1HB-ST well, the rig is currently being mobilized to the SEENT Platform to drill the final planned well in the 2021/2022 program, the ETBNM 2H-ST well, which is targeting the Dentale formations.

VAALCO plans to exercise its options to extend its contract for the existing rig with Borr West Africa Assets, an affiliate of Borr Drilling Limited, and as a result the company plans to add two additional wells to the program to take advantage of both higher oil prices and reduced overall spread costs in the current contracts. The two additional wells are the Ebouri 6H development well targeting the Gamba formation and a Northeast Avouma well that is a near-field exploration well also targeting the Gamba formation and if successful is expected to be tied into the Avouma platform at a later date.

The company further noted that FPSO replacement, Etame platform modifications while preparations for subsea reconfigurations are also underway.  

During the second quarter of 2022, liftings totaled 1,871,446 gross barrels of oil, a record quarterly high for VAALCO, which equates to sales volumes of approximately 10,500 BOPD net to VAALCO. The company expects a lifting of approximately 500,000 barrels to occur in late-July, with two additional liftings anticipated to occur in August.

As of the end of the second quarter of 2022, VAALCO’s full year 2022 production guidance remains within the range of 9,500 to 10,500 net NRI BOPD. Preliminary production during the second quarter of 2022 is estimated at 9,200 to 9,300 net BOPD and was modestly lower than expected primarily due to delays associated with the last two wells on the Avouma platform being completed and placed on-line, as well as some temporary downtime associated with the Etame platform reconfiguration. The company continues to expect to meet its 2022 annual guidance.

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