CAMEROON: Victoria Oil & Gas Provides Q4 2021 Operational Update
SUMMARY
· Sales: Average daily gross gas sales rate for the quarter of 5.3 MMscf/d (up 6.0% on Q3 21: 5.0 MMscf/d) of natural gas, plus gross 5,584 bbls (Q3 21: 3,800 bbls) condensate was shipped to customers.
· Logbaba Performance: The field has been meeting the demand using two of the three wells at any one time, with Well La-108 alternating with Well La-107.
· Matanda: Following the selection of a suitable wellsite to drill a vertical well into the Marula prospect on Government-owned, late-life plantation lands, stakeholder engagement continued, and the preparation of site access roads commenced.
· Litigation: Certain of the non-monetary claims in the ICC arbitration with RSM Production Corporation have been settled consistent with the UNCITRAL arbitration settlement agreement, previously announced on 29 September 2021. The settled non-monetary claims resolve several prospective accounting issues.
Roy Kelly, Chief Executive of Victoria Oil & Gas, commented:
“We are very pleased with the robust quarter that GDC achieved, despite a greater than expected number of maintenance shutdowns for its customers. Following the end of the quarter, 2022 has started very well with strong demand shown in the market.
“I am pleased we could settle those non-monetary claims with a prospective impact in the ICC arbitration, and I am again grateful to RSM for their continued and constructive engagement on this.”
LOGBABA UPDATE
Quarterly Production
GDC continues to safely produce and sell natural gas to a variety of customers in the Douala area, who would otherwise be burning liquid fuels. Quarterly gross and net gas sales and condensate shipments at Logbaba are as follows (amounts shown in bold represent net gas and condensate sales attributable to GDC (57%)):
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Q4 2021 |
Q3 2021 |
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Gas sales (MMscf) |
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Thermal |
265 |
465 |
247 |
434 |
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Industrial power |
14 |
25 |
16 |
28 |
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Total (MMscf) |
279 |
490 |
263 |
462 |
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Daily average gross gas sales rate (MMscf/d) |
5.3 |
5.0 |
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Condensate shipped (bbls) |
3,183 |
5,584 |
2,166 |
3,800 |
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Logbaba Field Performance
The Logbaba field has now produced a cumulative 21 Bcf of natural gas, having passed the 20 Bcf milestone in July 2021. Well La-108 was shut in on 25 December 2021 to allow Well La-107 to commence production. Well La-108 was closed as both wells cannot be used simultaneously whilst their wellhead flowing pressures are so far apart. As before, the Company will use the shut-in to monitor the Well La-108 pressure build-up to gain more understanding of the reservoir and well performance. At the time of writing, the Well La-108 shut-in pressure continues to build up.
Customers
GDC’s online customer count remained around 30 for the period, though several customers used the period for maintenance shutdowns.
During January 2022, demand was high, reaching a mid-week peak of 6.8 MMscf/d gas sales (unaudited) on one occasion, the highest for three years.
Look-ahead: GDC is forecasting a growth in demand of 10-20% in 2022 (compared to demand in 2021), from both organic and inorganic growth. Cameroon is hosting a major sporting event in Q1 and the Company expects this to have a positive effect on sales in January and February. GDC will continue to exercise capital discipline and look to reduce costs where possible.
MATANDA UPDATE
Civil engineering work on site access continued during the period, occasionally hampered by the weather. The Company continues to market the Matanda Farm-Out opportunity.
Towards the end of the period, an invitation to tender was issued and (post-period) seven rigs have been offered, six of which are in neighbouring countries, one of which is in Europe.
La-108 UNSURANCE CLAIM
The Company continues to pursue its insurance claim relating to the 2017 well control incident, now with the assistance of a leading international law firm that specialises in this area.
WEST MED UPDATE
Whilst VOG have not received a binding offer at this stage, we continue to receive an encouraging number of enquiries about the West Med asset from credible and credit-worthy oil and gas companies, no doubt helped by elevated oil prices (the West Med discovery being light oil/condensate).
LITIGATION UPDATE
ICC Case NO. 23991/MK
Whilst the ICC has yet to make its award, the parties have now settled the prospective non-monetary elements of the arbitration and discussions with RSM continue to resolve the monetary claims and remaining retrospective non-monetary claims.