Page 9 - AfrOil Week 19 2021

AfrOil INVESTMENT AfrOil

VAALCO Energy hedges another

portion of its 2021 production

GABON HOUSTON-BASED VAALCO Energy hedges, we have materially de-risked our work
reported earlier this week that it was hedging programme from a funding standpoint and
most of the oil it expected to produce this year expect our capital commitments over the next
in order to ensure its ability to cover the cost of 12 months to be fully funded through our cash
work at the Etame Marin block offshore Gabon. flow and cash on hand. In addition, we have
In a statement dated May 11, the company maintained the opportunity for us to bene-
said it had signed commodity swap agreements fit from further increases in oil prices, since
covering 672,533 barrels of crude oil. These we have not hedged all of our production and
swaps, which will be settled on a monthly basis, the term of these new contracts is for just six
lock the price of the oil in at $66.51 per barrel for months.”
Dated Brent, it noted. VAALCO serves as the operator of Etame
VAALCO explained that it had entered into Marin and has a 58.8% stake in the project. It
the hedging agreements with the intent of pro- has been using a floating production, storage
tecting the cash flows that will be needed to fund and off-loading (FPSO) vessel known as the
its 2021-2022 drilling programme and upgrade Petróleo Nautipa to develop the block, but its
work on a floating storage and off-loading (FSO) 20-year contract with the unit’s owner, BW Off-
unit. The company has already drawn up plans shore (Norway), is due to expire in September
for drilling up to four new wells at Etame Marin 2022. The company hopes to fill the gap by hir-
by the end of next year and may need to pay for ing an FSO from Omni Offshore Terminals and
upgrade work on an FSO, in the event that it fol- using existing platforms to extract oil. ™
lows through with the letter of intent (LoI) that
it signed with Omni Offshore Terminals (Singa-
pore) last month.
The signing of the new agreements marks
VAALCO’s second attempt to hedge its produc-
tion to date this year, the statement said. “The
company entered into similar commodity swap
agreements in January 2021,” it explained. “In
total, VAALCO now has 70% of its production
hedged through October 2021 at a Dated Brent
weighted average price of $62.27 per barrel.”
George Maxwell, the CEO of VAALCO,
expressed satisfaction with the new hedging
deal. “We have locked in strong free cash flow
over the next six months by capitalising on the
continued strength in crude oil prices,” he com-
mented. “This is particularly important, as we
are benefitting from the additional volumes
associated with the acquisition of Sasol’s interest
at Etame that closed in late February.”
He continued: “With these additional Etame Marin lies offshore Gabon (Image: VAALCO Energy)

POLICY
Nigeria considers domestic LPG subsidy

NIGERIA NIGERIA’S government is reportedly consid- means of promoting the use of LPG as cooking
ering a plan to subsidise domestic LPG prices. gas. Taking this step would complement ongo-
According to Ahmed Bobboi, the executive ing efforts to encourage Nigerians to phase out
secretary of the country’s Petroleum Equali- wood, charcoal and other solid fuels, he said at
sation Fund (PEF), Abuja sees subsidies as a an interactive meeting with reporters last week..

Week 19 12•May•2021 www. NEWSBASE .com P9