Vaalco Energy Inc
VAALCO Energy, Inc. is a Delaware corporation, incorporated in 1985 and headquartered
at 9800 Richmond Avenue, Suite 700, Houston, Texas 77042. Our telephone number
is (713) 623-0801 and our website address is www.vaalco.com.
We are an independent energy company principally engaged in the acquisition,
exploration, development and production of crude oil and natural gas. Our primary
source of revenue has been from our Etame Production Sharing Contract (“Etame
PSC”) related to the Etame Marin block located offshore the Republic of
Gabon (“Gabon”) in West Africa. We also currently own interests
in an undeveloped block offshore Equatorial Guinea, West Africa and undeveloped
leasehold acreage in Montana.
Our strategy is to utilize our technical expertise and operational infrastructure,
with a focus on extending our existing license in Gabon, further developing
our Gabon resources and expanding into new development opportunities in West
Africa. Crude oil prices began their rapid and significant decline in 2014 as
the global oil supply began to outpace demand.
For operating segment and geographic financial information, see Note 15 to
the Financial Statements. Our only reportable operating segments are Gabon,
Equatorial Guinea and the United States.
Our most significant asset, which accounts for nearly 100% of our current revenues,
is the Etame PSC, which we signed in 1995, relating to the Etame Marin block
located offshore Gabon. The Etame Marin block covers an area of approximately
28,700 gross acres and consists of subsalt reservoirs that lie 20 miles offshore
in water depths of approximately 250 feet. The Etame, Avouma/South Tchibala,
Ebouri, Southeast Etame and North Tchibala fields are included in the block.
Our working interest in the Etame Marin block is now 31.1%, and we operate it
on behalf of a consortium of four companies (which we refer to as the “consortium”).
The development is subject to a 7.5% back-in interest by the government of Gabon,
which they have assigned to a third party.
Four of our wells are currently shut-in for safety and marketability reasons
because of high levels of H2S found in their initial production. To re-establish
and maximize production from the impacted areas, additional capital investment
will be required, including the construction of one or more processing facilities
capable of removing H2S, the recompletion of the temporarily abandoned wells
and the potential drilling of additional wells. There are no alternatives deemed
economic at current forecasted oil prices, but we believe economic alternatives
are available should oil prices recover sufficiently. As of December 31, 2016,
we had no proved reserves booked for the wells impacted by high levels of H2S.