EQUATORIAL GUINEA: VAALCO Energy Announces Approval of Plan of Development for Discovery on Block P

VAALCO Energy has announced that the Government of Equatorial Guinea has approved the Venus – Block P Plan of Development. VAALCO has an 80% participation interest in the project and is the operator. Upon the execution of final documents, VAALCO will proceed directly to project execution which targets first oil in 2026 and adds 23.1 million barrels of oil of 2P CPR gross reserves, and 18.5 MMBO of 2P CPR Working Interest reserves (16.2 MMBO net 2P reserves).¹

Highlights

• Substantially adds to VAALCO’s 2P CPR WI reserves;
  • Adds 18.5 MMBO of 2P CPR WI reserves as of September 2022, which includes 9.1 MMBO of WI proved undeveloped reserves (“PUDs”);
  • Additional future upside with Europa development and exploration upside with Saturno and Southwest Grande prospects;
• Allows VAALCO to proceed with the development of the Venus discovery;
  • Plans to spud first development well in early 2024;
  • Acquire, convert and install production facilities over the next three years;
  • Expects to spud an additional development and a water injection well in 2025/2026;
• Estimates the preliminary project cost of drilling two development wells, an injection well and related production facility to be approximately $310 million gross, or approximately $13.40 per barrel of 2P gross reserves;
• Anticipates first oil production from Block P in mid to late 2026; and
• Based on results from the initial discovery well and reservoir modeling, VAALCO expects production from the field to reach approximately 15,000 gross barrels of oil per day upon completion of the two development wells and injector well.

George Maxwell, VAALCO’s Chief Executive Officer, commented, “With approval of the POD, and upon execution of final documents, we are very excited to proceed with our plans to operate, develop and begin producing from our discovery at Block P in Equatorial Guinea over the next few years. We have a strong and highly economic plan of development in place and are looking forward to working with our carried partner GEPetrol and the Equatorial Guinea government in efficiently developing this exciting discovery. We believe that adding another asset to our portfolio with significant 2P WI CPR is a very positive step for VAALCO and further demonstrates the meaningful value of our asset base. We believe that Block P in Equatorial Guinea has the upside potential to become a world class asset in line with our Etame asset and see clear strategic benefits in diversifying the revenue generation and country focus of our portfolio. VAALCO has a proven operating track record for a development of this kind and we look forward to demonstrating these capabilities as we progress Block P into production. As you can see, we are very excited for the future of VAALCO and believe that we can significantly enhance shareholder value through the drill bit on our outstanding assets.”

On July 15, 2022, VAALCO, on behalf of itself and Guinea Ecuatorial de Petroleós (GEPetrol), submitted to the EG MMH a plan of development for the Venus development in Block P. The other Block P joint venture owner, Atlas Petroleum International Limited, opted not to participate in the POD. On September 16, 2022, the Equatorial Guinea Minister approved VAALCO’s POD. As a result, VAALCO will hold an 80% working interest in the Venus development in Block P and GEPetrol will hold a 20% carried interest. The Block P PSC provides for a development and production period of 25 years from the date of approval of the POD.