Wednesday, October 19, 2022
VAALCO Energy has successfully completed the Floating Storage and Offloading vessel (FSO) installation and field reconfiguration at the Etame field offshore Gabon. The company additionally highlighted Q3 results and first oil lifting.
Highlights
o All diving, subsea connections, subsea infrastructure and reconfigurations;
o All pipeline tie-ins and pressure testing;
o All the new riser connections to the Teli FSO;
George Maxwell, VAALCO’s Chief Executive Officer, commented, “We are very pleased to have successfully delivered this highly complex, full field reconfiguration, maintenance turnaround and upgraded FSO installation, as planned and on time. This project was completed despite a difficult global supply chain environment and is a testament to the dedication of our workforce and partners who helped complete the project, underlining VAALCO’s status as a quality Operator. The new FSO provides us with additional flexibility and has an effective capacity for storage that is 50% larger than our relinquished FPSO. It also reduces our expected storage and offloading costs by 50% which should lead to an extension of the economic field life, resulting in a corresponding increase in recovery and reserves at Etame.
“Additionally, we reported very strong VAALCO standalone third quarter 2022 production and sales volumes both above the midpoint of our guidance ranges. Production for the third quarter was approximately 9,150 net BOPD and sales volumes were approximately 7,952 net BOPD. Our team worked tirelessly to ensure that we maximized our production and sales in the third quarter. We were able to complete three liftings during the quarter plus an additional smaller one on October 5, shortly before the FPSO was decommissioned. The team successfully overlapped the maintenance turnaround with the field reconfiguration to minimize downtime and deliver operating efficiencies. We continue to execute on our strategy and remain focused on generating meaningful free cash flow to enhance shareholder value.”
“Since the strategic combination with TransGlobe Energy did not close until October 14, 2022, production volumes and associated revenues and expenses will not be included in VAALCO’s financial results until post-closing in the fourth quarter of 2022. However, the Company said that the majority of the transaction costs associated with the strategic combination were incurred in the third quarter and will be recognized as special, one-time expenses in third quarter financial results. The company also expects to incur a realized derivative loss in the third quarter as a result of the settlement of the remaining derivative swaps. Both the transaction costs and realized derivative losses are not deductible for Gabonese taxes, so the effective tax rate will be higher than normal during the third quarter. Additionally, costs associated with the relinquishment of the FPSO and transition to the FSO will be included in the third quarter.