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Independent CPR on the Logbaba Gas and Condensate Field

1 Oct 2012

Independent CPR on the Logbaba Gas and Condensate Field

 

Victoria Oil & Gas Plc (AIM: VOG), the oil and gas exploration and production company with assets in Cameroon and the FSU, is pleased to announce the publication of an independent Competent Person’s Report (“CPR”) compiled by petroleum and gas industry specialists ERC Equipoise Limited (“ERCE”) on its producing Logbaba gas and condensate field in Cameroon.

Highlights:

  • Independent reserve auditors confirm a 50% increase in total 1P Reserves and 1C Contingent Resource gas volumes.
  • 1P (Proven) Reserves of 39.1 bcf, plus 32.7 bcf of 1C Contingent Resources, giving potential 71.8 bcf of producible gas (gross), plus 1.14 mmbbls condensate.
  • Expect to reclassify Contingent Resource volumes as Reserves, once producibility of Lower Logbaba sands has been established by stimulation and testing.
  • Results provide independent endorsement of Logbaba gas security of supply.

Reserve Update

The technical review of gas and condensate 1P reserves and 1C resources contained in the Logbaba gas field, onshore Cameroon, was commissioned to deliver independent reserve and resource information in relation to a senior secured credit facility VOG is negotiating with a top tier financial institution. The technical reserve and resource information is as of 30 June 2012 based on data and information available up to 31 August 2012.

ERCE used standard petroleum evaluation techniques, following the guidelines outlined in the 2007 Petroleum Resources Management System, and its report shows gross 1P reserve volumes of 39.2 billion cubic feet (“bcf”) of gas and 0.62 million barrels (mmbbls) of condensate and 1C resources of 32.7 bcf of gas and 0.52 mmbbls of condensate.

Table 1: Summary of ERCE gas and condensate technical 1P and 1C reserves at 30 June 2012

Reserves

Gas (bcf)

Condensate (MMbbl)

Gross Ultimate Technical 1P Reserves

39.2

0.62

Cumulative Production at 30 June 2012

0.1

0.0

Remaining Technical 1P Reserves at 30 June 2012

39.1

0.62

Gross Ultimate Technical 1C Resources

32.7

0.52

Total of ERCE Gross Remaining 1P Reserves plus 1C Resources

71.8

1.14

Total of VOG internal Gross Remaining 1P Reserves plus 1C Resources

46.7

0.70

The gas in the Logbaba field is contained in Upper Cretaceous aged sands of the Logbaba Formation. The Logbaba Formation is divided into Upper and Lower sections. ERCE has assigned Proved Reserves to the Upper Logbaba formation. Pending the outcome of a satisfactory stimulation and testing programme which demonstrates that improved flow rates can be achieved from the Lower Logbaba, ERCE has assigned the additional recoverable volumes it has calculated for the Lower Logbaba as 1C Contingent Resources. VOG’s existing internal Gross Ultimate Remaining Technical 1P Reserves estimate is 46.7 bcf and it is carrying no 1C Contingent Resources.

Commenting on the Reserve Update, Kevin Foo, Chairman of Victoria Oil & Gas, said, “This independent report underlines our belief that there are no gas supply constraints from Logbaba for the foreseeable future. We are delighted to have third party endorsement of our proven reserves and contingent resources, which will benefit us as we seek to build production and take advantage of the growing energy demand in Cameroon.”

Review by qualified person

Mr Radwan Hadi, Chief Operating Officer of the Company, has reviewed and approved the technical information contained within this announcement in his capacity as a qualified person, as required under the AIM rules.  Mr Hadi is a petroleum/reservoir engineer with over 30 years experience in oil and gas exploration and production.

About Victoria Oil & Gas

Victoria Oil & Gas Plc is an independent oil and gas exploration and production company with projects in Africa and the FSU. The Company's principal assets are the Logbaba gas and condensate project in Cameroon and the West Medvezhye project in Siberia, Russia. Logbaba is located in Douala, the economic capital of Cameroon. The field was discovered in the 1950s when all four exploration wells drilled at the time encountered gas. The Company drilled two successful development wells in 2009/10 and was awarded an Exploitation Licence in April 2011.

The Company’s estimate of the total Logbaba proved and probable reserves of 212 bcf is sufficient to supply an average of 30mmscf/d for the next 20 years to industrial customers. Under current management projections, the Company forecasts industrial gas demand to rise to 44mmscf/d by the end of 2014. In the longer term, as further reserves may be proven, gas may also be supplied to large gas fired power stations connected to the grid, with either VOG investing in an independent power producer joint venture or selling the gas to third parties. The Company has signed a multitude of gas sales agreements with industrial customers to serve their energy requirements and anticipates in excess of 40 customers over the medium term.

West Medvezhye is situated in the prolific Yamal-Nenetsk hydrocarbon region in Siberia. An independent audit, carried out by Mineral LLC in 2011, estimated prospective resources for the area of over 1.4 billion barrels of oil equivalent (‘boe’). The Company also has a discovery well, 103, with C1 and C2 reserves, independently assessed under the Russian classification convention of 14.4 million boe as approved by the Russian Ministry of Natural Resources.

Development studies are in progress to commercialise the Well-103 discovery and prospective resources and a detailed well design study for the upcoming drilling campaign has commenced.