HOUSTON, Feb. 11, 2019 (GLOBE NEWSWIRE) — VAALCO Energy, Inc. (NYSE: EGY) today announced 2018 year-end reserves and plans for drilling in 2019.
- Produced an average of 3,750 barrels of oil per day (“BOPD”) net in 2018 and sold 1.44 million barrels of oil (“MMBO”) net to the Company in 2018
- Increased year-end proved reserves to 5.4 MMBO, up 76% compared to year-end 2017 proved reserves
– Added 2.2 MMBO as a result of extending the Production Sharing Contract (“PSC”) in Gabon, 1.1 MMBO from improved performance and 0.4 MMBO through higher oil pricing
– Replaced over 270% of 2018 production
- Increased year-end 2018 proved and probable (“2P”) reserves to 9.7 MMBO, an increase of 144% versus year-end 2017
- Grew present value discounted at 10% per annum (“PV-10”) of proved reserves at SEC pricing to $80.1 million and PV-10 of 2P reserves at SEC pricing to $132.0 million (1)
- Finalizing plans to drill up to three development wells in 2019 at net cost to VAALCO of $25 to $30 million, all of which will be funded from cash on hand and cash generated from operations
Cary Bounds, Chief Executive Officer, commented, “Last year was a transformational year for VAALCO as we were able to secure the future of the Company by extending our license to operate the Etame permit in Gabon for up to twenty more years. Delivering consistent and predictable production from Etame is the foundation of our Company. Achieving our 2018 production goals at Etame enabled us to generate sufficient cash in 2018 to pay off all of our debt and fund a substantial portion of our 2019 development drilling program. In addition, we were able to substantially increase our reserve base as a result of the solid production performance, license extension and improved pricing.
In 2019 we plan to drill up to three development wells and two appraisal wellbores funded from cash on hand and cash generated from operations. The three development wells are expected to immediately increase production and the appraisal wellbores will help further define opportunities to potentially add reserves and production in future drilling campaigns beyond 2019. Our vision is to repeat this process multiple times and continue adding reserves and production for many years to come. We have a strong, stable reserve base with substantial upside opportunities to create additional value and we are working diligently to deliver that value to our shareholders.”
(1) A non-GAAP measure. See “Supplemental Non-GAAP Financial Measure” below.
2018 Year-End Proved Reserves
VAALCO’s proved reserves at December 31, 2018 have increased by 76% to 5.4 MMBO consisting of 3.4 MMBO of proved developed reserves and 2.0 MMBO of proved undeveloped reserves. The Company’s reserves were fully engineered by its third-party independent reserve consultant, Netherland, Sewell & Associates, Inc., who has provided annual independent estimates of VAALCO’s year-end reserves for over 15 years. In 2018, the Company replaced 270% of production by adding a total of 3.7 MMBO of proved reserves including 2.2 MMBO of proved reserves additions as a result of extending the Etame Marin PSC in Gabon. VAALCO also added 1.1 MMBO of proved reserves as a result of improved reservoir performance and another 0.4 MMBO of proved reserves as a result of higher oil pricing. Year-end probable reserves have also increased by 3.4 MMBO resulting in year-end 2018 proved and probable (“2P”) reserves of 9.7 MMBO, an increase of 144% versus year-end 2017. This reserve growth occurred despite no capital being spent on drilling new wells in 2018. VAALCO’s proved and probable reserves are 100% oil attributable to the Etame Marin Permit area offshore Gabon.
The PV-10 value of VAALCO’s proved reserves at year-end 2018, utilizing SEC pricing of $70.83 per barrel of oil (average of monthly Brent prices on the first of each month for calendar year 2018), nearly quadrupled to $80.1 million from $22.5 million at December 31, 2017. The PV-10 value of VAALCO’s 2P reserves at year-end 2018 utilizing SEC pricing increased by nearly $100 million to $131.9 million from $33.9 million at year-end 2017.
2019 Development Drilling Program
VAALCO and its joint owners are moving forward with executing a development drilling program in 2019. The Company is already in discussions to secure a rig to drill up to three development wells and two appraisal wellbores in 2019. The Company believes that there is significant reserve upside associated with the two appraisal wellbores as they may confirm 2.8 to 5.6 MMBO of resources that could be converted into 2P reserves at year end 2019. The Company is forecasting that the 2019 drilling program will be funded by cash on hand and cash generated from operations. The current estimated net capital expenditure in 2019 associated with this drilling program is $25 million to $30 million.
VAALCO Energy, Inc. is a Houston-based independent energy company principally engaged in the acquisition, development and production of crude oil. The Company’s properties and acreage are located primarily in Gabon and Equatorial Guinea in West Africa.