Houston-based VAALCO Energy Inc. looked for promising prospects in West Africa and found them in Gabon as it combined analysis with good timing and a large helping of opportunity.
Gabon holds the third largest reserves in sub-Saharan Africa, but it’s a long way behind Nigeria and Angola. It has the fourth highest production behind those two nations and Equatorial Guinea.

VAALCO’s Avouma platform offshore Gabon prepares to begin production from the Avouma-Tchibala complex late this year or in early 2007. (Photo courtesy of VAALCO Energy Inc.)


In the mid-1990s, when VAALCO wanted to expand away from diminishing Asian reserves, it looked at African potential from Morocco to South Africa, said Russell Scheirman, president and chief financial officer. Angola, the Congo and Gabon topped the list. In 1995, Angola wouldn’t even talk with an independent, and Angola and Congo both were involved in revolutions.

“We high-graded West Africa, and Gabon was willing to talk,” he said.

A lot of majors had just left Gabon along with a host of appealing properties, and the country was anxious to sign new production-sharing contracts. In addition, competitors didn’t seem to realize that the offshore block relinquished by Total (then Elf) had a couple of promising discoveries at North and South Tchibala on the Etame contract area that the major hadn’t developed. No one had shot 3-D in the area to look below the sub-salt at that time.
Some 20 wells had been drilled on the Etame contract area and, without 3-D help, Elf just missed finding the 50-million-bbl Etame field. VAALCO found it, and it currently produces about 16,000 b/d of 36°-gravity sweet oil at a sale price about US $1.25 below the Brent benchmark. That field has produced 25 million bbl of oil since it came on stream in 2002.
VAALCO has installed a platform over the Avouma-Tchibala field complex and can produce those fields to the Etame floating production, storage and offloading vessel.

The company also received permission to develop the one-well Ebouri field at the northwestern end of the northwest-southeast trending group of fields. Avouma and Tchibala should come on stream for another 10,000 b/d around the end of this year, and Ebouri should add another 5,000 b/d next year or early in 2008. Those fields offer another 15 million to 20 million bbl of oil reserves.

VAALCO’s initial terms on its property involved a 3-year initial exploration period and a 2-year extension with a work program and expenditures spelled out for the period.

Under Gabon’s profit oil-cost oil system up to 70% of the oil produced can be used by the operator to recover costs. Once recovery is complete, the operator and the state oil agency split 50:50 after operating costs are deducted.

Also, Gabon doesn’t use ring fencing. That means the company can recover the cost of the Avouma development from oil produced now at Etame.

VAALCO likes Gabon well enough that it recently picked up the onshore Mutamba Iroru contract area, which surrounds Shell’s Gamba Ivinga field, Gabon’s second largest at 300 million bbl of reserves. The VAALCO exploration team sees several prospects on the property that might have been below Shell’s production threshold. The largest field is Shell’s Rabi Kounga, a 900-million-bbl-plus field on the same trend but about 38 miles (60 km) to the north.

VAALCO’s 270,000-acre onshore property has similar geology to offshore Etame field.
With reasonable terms and large reserves, it’s curious that more companies haven’t tried their skill in Gabon. Scheirman said Shell and Elf dominated the country until the mid-1990s, and most of the majors left about that time because reserves weren’t large enough. Independents haven’t had good luck in finding new reserves. Marathon made a discovery prior to VAALCO’s, but the success ratio for others has been low.

VAALCO, as operator, with partner Interoil, also received an award for 40% each in Block 5 offshore Angola in the Kwanza Basin. About 95% of that tract is in water shallower than 656 ft (200 m). That’s the kind of play VAALCO likes, “We look for relatively shallow jackup opportunities that the majors wouldn’t quite touch,” Scheirman said.