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Vaalco Energy has signed an agreement to purchase a working interest in a concession for $10.0 million in a West African country new to the company.
The acquisition, which has been approved by the company’s board of directors, is expected to close before the end of the 3Q 2012 and is subject to customary closing conditions, including approval of the agreement from the government of the West African country.
The company also announced that a potential partner has been identified to acquire the available 40% working interest in Block 5, offshore Angola, and the party has been submitted to the Angolan government for approval. Vaalco believes it has drilling opportunities in both the pre-salt and post-salt reservoirs and that it is likely the company can obtain a drilling rig and drill the first pre-salt exploration well within a reasonable time period upon transfer of the 40% working interest in Block 5 from the Angolan national oil company, Sonangol, to the new partner.
In other news, the company reported it has decided to shut in two producing wells in the Ebouri field offshore Gabon in West Africa as a precaution after detecting the presence of hydrogen sulfide (H2S) on the Ebouri platform. The contamination is isolated to two wells in the Ebouri field, and the company continues to maintain production from the entire Etame complex, including one well at Ebouri, at approximately 19,000 barrels per day. Investigations are under way to determine the cause of the H2S and develop a plan to produce the remaining reserves in a timely manner.
Vaalco also remains on track to start its four-well program in the 4Q of the year, beginning with a development well in Avouma, two workovers on the Avouma platform to replace electrical submersible pumps, and an exploration well in the Ebouri field that has the potential to generate 7 million gross barrels in reserves. A decision to drill an optional well on an exploration site will be made following the processing of recently acquired 3-D seismic data. The company plans to build two new platforms in the Etame Marin block, one in the Etame field and the second in the southeast Etame/North Tchibala area. Platform fabrication work is expected to commence in the 1Q of 2013.
The company and Total Gabon also have successfully completed reprocessing 400 km (249 miles) of 2-D seismic data and recently began reprocessing an additional 417 km (249 miles) of 2-D seismic data as part of an agreement on the Mutamba Iroru block located onshore near the coast in central Gabon. An exploration well is now expected to begin drilling in September 2012.
A third exploration period extension was signed in April 2012 extending the contract until the end of February 2013.