News listings

energy-pedia farmouts/divestments

Gabon flagGabon

Middle East / Africa >>> Gabon

Gabon: VAALCO acquires additional working interest in the Etame Marin Block offshore Gabon


18 Nov 2020

Photo - see caption

VAALCO Energy has signed a sale and purchase agreement ('SPA') to acquire Sasol Gabon’s 27.8% working interest in the Etame Marin block offshore Gabon. Since VAALCO currently owns and operates a 31.1% working interest in Etame, the transaction will almost double VAALCO’s total production and reserves. In addition, VAALCO is acquiring Sasol’s 40% non-operated participating interest in Block DE-8 offshore Gabon.

Photo - see caption

Highlights

  •  Acquiring an additional 27.8% working interest in the Etame Marin block offshore Gabon, increasing VAALCO’s total working interest to 58.8%;
  •  Nearly doubles VAALCO’s total net production and reserves;
    • Increases net revenue interest ('NRI') production from 4,850 to 9,150 barrels of oil per day ('BOPD') based on current month production
    • Increases year-end 2019 SEC reserves from 5.0 million to 9.4 million barrels of oil ('MMBO')
    • Increases year-end 2019 independent 2P CPR reserves from 9.2 MMBO to 17.5 MMBO
  • Immediately accretive to VAALCO, with estimated increase of 23% in free cash flow per barrel from approx. $10.90 to $13.30 at $45 realized oil price;
  • Adds optionality from acquisition of Sasol’s 40% non-operated participating interest in Block DE-8 offshore Gabon;
  • Agreed to total consideration to Sasol for the entire transaction of $44 million, subject to customary post-effective date adjustments, and future contingent payments of up to $6 million; and
  • Funding for the acquisition will be from cash on hand and cash from operations.

Cary Bounds, Chief Executive Officer, commented:

'We believe that the acquisition of Sasol’s interest at Etame is a very attractive and value accretive strategic acquisition for the Company that confirms our position as one of the leading independent exploration and production companies in West Africa. In what was a competitive sales process, this is the ideal growth transaction that we have been seeking for VAALCO. We believe the acquisition of an additional stake in this field that we know so well, having been the operator since 1995, is an important step in implementing our strategy. The acquisition is expected to deliver a step change in our production to over 9,000 barrels of oil per day net based on current production and significantly boosts our cash flow profile. With minimal additions to our overhead costs, we expect this transaction to lower our G&A cost per barrel by approximately 40%. The strong operational and economic performance of Etame in recent years has enabled us to grow our net cash position, which we are now using to fund this value accretive acquisition and profitably expand our reserve base.'

Bounds continued: 'We completed a highly successful drilling program earlier this year that demonstrated the quality of the asset and the upside that resides in the field, and this transaction, coupled with our recent announcement of acquiring new proprietary 3-D seismic data over the entire Etame Marin block, underscores the belief that we have in the long-term potential at Etame.   We are also enhancing upside potential with a 40% non-operated position in Block DE-8 offshore Gabon which includes an existing discovery and for which there are plans to potentially drill an appraisal well in 2021 representing an exciting near-term catalyst. In summary, as we have previously stated, we are focused on maximizing the value of our Gabon resources as well as expanding into new development opportunities across Africa.'

Transaction Terms

The Company has agreed to total cash consideration for both properties of approx. $44 million. The effective date of the transaction is July 1, 2020, and the Company anticipates that the transaction will close within 90 days. Cash paid at closing is expected to be less than $44 million as the amount paid will be subject to certain customary financial adjustments, including adjustments to account for estimated positive net cash flows attributable to the period from the effective date until the closing date. VAALCO plans to fund the net cost of the transaction with cash on hand and cash from operations. The SPA contains customary closing conditions including receipt of all necessary written consents, approvals or waivers, and provides for certain contingent payments of up to $6 million, as discussed below. Reserves, production and financial results for the interests being acquired will be included in VAALCO’s results for periods after the closing date of the transaction.

Impact of Acquisition

The metrics provided in the table below reflect Company management’s estimate of the positive impact of the acquisition on VAALCO’s key metrics.

Photo - see caption

Block DE-8 Offshore Gabon

Under the terms of the SPA, VAALCO is acquiring a 40% non-operated participating interest in Block DE-8 offshore Gabon, with Perenco, the operator, holding the remaining 60%. Block DE-8 is in shallow waters and encompasses multiple producing fields that are not part of the transaction and are carved out of the contract area that VAALCO is acquiring. The SPA includes an interest in the Akoum-B discovery on Block DE-8 that was drilled in 2003 and has a potential appraisal well planned for 2021. If the appraisal well is successful, it could be tied back through a subsea completion to a Perenco-operated existing platform on Block DE-8.

Contingent Payments

Under the terms of the SPA, a contingent payment of $5 million will be payable to Sasol by VAALCO if Brent oil pricing averages greater than $60 per barrel for 90 consecutive days during the period from July 1, 2020 to June 30, 2022. There is an additional contingent payment of $1 million if the DE-8 appraisal well is successful.

Advisors

Evercore Group L.L.C. served as financial advisors to VAALCO while Ashurst LLP served as legal advisors.

Click here for full announcement

Source: VAALCO Energy





Bookmark and Share


A global information service for upstream oil and gas opportunities - divestitures, farmins and farmouts and licensing rounds.


Subscriber Only Deals

Current Deals

Current Upstream Deals: 373

Completed Deals

Completed Upstream Deals: 5961

Company Profiles

Current Company Profiles: 2745

Corporate Activity

Current Corporate Activity articles: 3564

Companies Looking

Current number of articles: 444

Company Sales

Current Company Sales articles:1443

Geostudies

Current Geostudies articles: 766

How to subscribe

energy-pedia Jobs

RSS Feed Widget
See all jobs...


energy-pedia Databank

The energy-pedia databank contains links to information on the world financial and energy markets, including share prices, oil and gas prices and the global stock exchanges. Read more...



energy-pedia Glossary

A list of commonly used terms in the oil and gas industry. Read more...

Subscribe

Subscribe to the FREE
energy-pedia Daily Newsletter
Subscribe

SLR Consulting logo
OPC
KL Publishing
energy365
Bayphase
Union Jack Oil 149
Rose & Assocs 149
Government of South Australia
About energy-pedia

energy-pedia news is a FREE news service written and edited by E and P professionals for E and P professionals.

We don't just report the news, we give you the technical background as well, with additional information derived from our unique energy-pedia opportunities service.
Contact us

energy365 Ltd

238 High Street
London Colney
St Albans
UNITED KINGDOM

Tel: +44(0)1727 822675

Email: info@energy-pedia.com