Page 16 - AfrOil Week 35 2021

AfrOil NEWS IN BRIEF AfrOil

expect to have the FSO in place and operating working interests of 75% in the Exploration Per-
in September 2022, prior to when our current mits and in the Concession.
FPSO contract expires. We will continue to Commenting, Graham Lyon (Executive
maximise the value opportunities for our share- Chairman) said: “This accretive transaction has
holders and look forward to beginning our next now completed and underlines Sound Ener-
drilling campaign at Etame later this year.” gy’s position as the leading gas developer in
Further Details: VAALCO has studied sev- Morocco. Following the recently announced
eral alternatives regarding the expiration of the Gas Sales Agreement with Afriquia Gaz, Sound
contract on its current FPSO in September 2022. Energy is now moving inexorably forward to the
The proposed development approach utilising Final Investment Decision for its Micro-LNG
an FSO with all processing on existing platforms project.”
aligns with VAALCO’s ongoing strategy to Sound Energy, August 31 2021
reduce operating costs and extend field life. This
is particularly attractive due to the potential for Impact Oil & Gas completes
meaningful ongoing operating cost reductions
over its term compared with the current FPSO farm-out of Transkei and
arrangement and other options analyzed, as well
Key Highlights: Signed a binding LoI with World as removing both the risk of life extension costs Algoa blocks to Shell
Carrier to enter into a Bareboat Contract and on the existing vessel.
Operating Agreement to provide and operate Once the field is reconfigured, the agreement Impact Oil & Gas, a privately-owned, Africa-fo-
the Cap Diamant, a double-hull crude tanker with World Carrier to convert and operate the cused, exploration company, has announced the
built in 2001, as an FSO. The Bareboat Contract Cap Diamant is expected to lead to annual oper- completion of the previously announced farm-
and Operating Agreement will become effective ating expense savings of around $20-25mn gross out transaction between its wholly-owned sub-
upon approval from the Etame joint owners ($13-16mn net to VAALCO) over the life of the sidiary, Impact Africa, and BG International, a
which is expected by early September 2021. new agreement, resulting in a fast payback of its wholly owned subsidiary of Royal Dutch Shell,
Compared to the current FPSO solution: invested capital and enhanced margins going of a 50% working interest and operatorship in
Reduces storage and off-loading costs almost forward. These savings are achieved due to a the Transkei & Algoa exploration right, off-
50%; Lowers total operating costs at Etame more simplified processing system that avoids shore South Africa (Exploration Right reference
by approximately 17% to 20% through 2030; duplication of processing on the platforms 12/3/252).
Increases effective capacity for storage by over and again on the FSO. This change is expected Following completion of the transaction, the
50%, allowing for greater operational and lifting to reduce or eliminate the need for ongoing participating interests in the Transkei & Algoa
flexibility and a material reduction in per barrel life extension costs, in addition to a significant blocks are as follows: Shell (Operator) with 50%
lifting costs; Expected to lead to an extension reduction in planned/unplanned downtime. and Impact Africa with 50%. Impact has also
of the economic field life, resulting in a corre- Additionally, VAALCO continues to believe that announced that the South African Government
sponding increase in recovery and reserves at the capital costs for the field reconfiguration and has granted the Second Renewal Period of the
Etame; Requires a prepayment of $2mn gross the upcoming planned 2021/2022 drilling cam- licence. This is a two-year exploration period
($1.3mn net) in 2021 and $5mn gross ($3.2mn paign can be funded with cash from operations that commenced in August 2021. Impact and
net) in 2022 of which $6mn will be recovered and cash on hand. Shell intend to proceed with the acquisition of
against future rentals; and Forecasting capital VAALCO, August 26 2021 approximately 6,000 km2 of 3D seismic during
costs including field reconfiguration and the 2022.
2021/2022 drilling programme to be funded Siraj Ahmed, CEO of Impact Oil & Gas, com-
with cash from operations and cash on hand. INVESTMENT mented: “We are very pleased to have concluded
George Maxwell, VAALCO’s CEO, com- this transaction with Shell; a world-class opera-
mented: “We are very pleased to finalise an Sound Energy completes tor with deepwater expertise. We look forward to
agreement with World Carrier that will allow us working with Shell to build on the considerable
to sustain our operational excellence and robust acquisition of Schlumberger work done to date and further explore this excit-
financial performance at Etame through 2030. ing exploration province.
Additionally, this new solution costs almost 50% Silk Route Services “This transaction, and the proposed 3D seis-
less than the current FPSO solution and will mic acquisition programme, enables Impact to
reduce our overall costs by approximately 17% to Sound Energy, the Moroccan-focused upstream deliver on its objective of accelerating the explo-
20%. Current total field level capital conversion gas company, has announced the completion of ration of the transform margin of the South
estimates are $40-50mn gross ($26 to $32mn net the Company’s acquisition, as announced on African Natal Trough, which Impact believes
to VAALCO) spread across 2021 and 2022. This June 14, 2021, from Schlumberger Holdings II has significant potential.”
capital investment is projected to save approx- Ltd of the entire issued share capital of Schlum- Exploration Right 12/3/252, Transkei &
imately $20-25mn gross per year ($13-16mn berger Silk Route Services (SSRS). Algoa is located offshore eastern South Africa
net to VAALCO) in operational costs through SSRS holds a 27.5% participating interest in and covers approximately 45,838 square km in
2030, giving the project a very attractive payback the Anoual and Greater Tendrara exploration water depths up to 3,000 metres. The licence
period of only two to two and a half years. permits in Eastern Morocco, together with a was initially awarded to Impact Africa Limited
“It is clear this is a very economical solution 27.5% indirect interest in the Tendrara Conces- as a Technical Cooperation Permit in 2012, fol-
for VAALCO and should help us to enhance the sion through its contractual relationship with the lowed by an application for an Exploration Right,
profitability of our flagship asset at Etame and Group. which was granted in 2014.
materially increase stakeholder returns. We Sound Energy now controls operated Impact Oil & Gas, August 31 2021

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