VAALCO Energy to unlock over 20 MMbbl of oil offshore Equatorial Guinea in “landmark” PSC deal

(WO) – In a landmark deal, Houston-based oil and gas exploration company VAALCO Energy has reported that all involved parties have finalized a production sharing contract (PSC) for Block P offshore Equatorial Guinea.

According to the joint operating agreement, which was approved by the government of Equatorial Guinea in March 2024, the PSC provides for a development and production period of 25 years from the date of approval.

With a resource base of over 20 MMbbl of oil, Block P is home to the Venus discovery and an exploration area, operated by VAALCO Energy (60%), alongside Equatorial Guinea’s national oil company GEPetrol (20%) and Nigerian oil and gas company Atlas Petroleum International (20%).

VAALCO Energy is nearing a final investment decision on the offshore development, after which the company will move straight into a drilling campaign. The Venus conventional oil field is expected to start commercial production in 2026 and is forecast to peak in 2028.

Committed to maximizing Africa’s hydrocarbon potential, VAALCO Energy plans to double its crude production to over 50,000 bopd by 2027. The production increase falls under the company’s strategy to grow its output from maturing fields.

In another move set to bolster VAALCO Energy’s exploitation of crude resources, the company entered a deal in March 2024 to acquire Swedish offshore exploration company Svenska Petroleum Exploration. The $66.5-million, all-cash transaction includes the acquisition of Svenska’s 27.39% interest in the deepwater producing Baobab field in Block CI-40 offshore Ivory Coast.

Having been significantly de-risked through the drilling of 24 production wells and five injection wells and boasting a 20-year production history, the high-performing Baobab field is poised to serve as an important upside opportunity for VAALCO Energy.

As part of efforts to diversify its portfolio and boost production from its African assets, VAALCO Energy is planning a dry-docking and upgrade of Baobab’s FPSO unit in 2025, which will lead to significant production growth from the field’s planned 2026 drilling program.

In addition to Equatorial Guinea and Ivory Coast, VAALCO Energy is eyeing locations for its next drilling campaign at the Etame block offshore Gabon, with operations set to start in late-2024. So far, the company has extracted 127 MMbbl from its Etame permit and is focused on ensuring the block continues to produce over the next decade.

VAALCO Energy is maintaining its focus on high production uptime and enhancements at the permit to minimize decline until the new drilling campaign begins and is working to optimize production from new flowline configurations for final processing before being pumped to the field’s FPSO.

“With their boots-on-the-ground working philosophy and appetite for African assets, VAALCO Energy has shown a spirited dedication to bringing energy to where it is needed the most. The company continues to work with its partners on the continent – uniting financial resources with technical expertise – to drive high-impact exploration and production programs. The Chamber supports these efforts to exploit Africa’s energy resources for the benefit of the population, while transforming upstream markets into investor-friendly destinations. We see the company as a major contributor to improving Africa’s upstream landscape” says NJ Ayuk, Executive Chairman of the AEC.