- VOG delivers first commercial gas production on schedule
- VOG becomes the first onshore gas and condensate producer in Cameroon, supplying the industrial market
- Second stage of pipeline network under construction, expected to be completed in Q2 2012
- Production expected to grow from 8 million standard cubic feet per day (‘mmscf/d’) by the end of 2012 to 44mmscf/d by the end of 2014
Victoria Oil & Gas Plc, the AIM quoted oil and gas exploration and production company with assets in Cameroon and the FSU, is pleased to announce the successful installation and commissioning of production facilities and a gas pipeline network in Douala. Rodeo Development Limited, the Company’s wholly owned Cameroon subsidiary, made its first delivery of gas to customers on the Magzi Industrial Estate on the 17 December 2011.
VOG’s Executive Chairman Kevin Foo commented, “This is a very significant milestone for the Company. We have now moved from an exploration and development company into a producer. The development of Logbaba is also important news for the city of Douala. The commissioning of two wells, production facilities and the first stage of the pipeline was successful and without incident.
This achievement is the culmination of three years of tireless effort by the team and strong support from shareholders and the Government of the Republic of Cameroon. I am very pleased that we have met our promised target of first production in Q4 2011.”
Logbaba has gross proved and probable reserves of 212 billion cubic feet of gas and 4.2 million barrels of condensate. VOG has a 95 per cent. working interest and is the operator. The Company has two wells completed as producers. The first well, La-105, tested at rates of up to 55mmscf/d and 1,000 barrels per day of condensate and the second well, La-106, tested at rates of up to 22mmscf/d and unmeasured amounts of condensate. The Company estimates that there are additional prospective resources in excess of 1 trillion cubic feet of gas with associated condensate within the exploitation area.
The Logbaba field has been developed as a fast track project with gas production start-up to the first customer hub while the remainder of the pipeline network continues under construction. The Company anticipates installation of its entire 34km pipeline network, east of the Wouri River, by mid 2012, serving four main industrial hubs.
The Company anticipates gross gas production volumes to rise to a plateau rate of 44mmscf/d by the end of 2014 from 8mmscf/d anticipated by the end of the first year of operations as all initial thermal customers are brought on stream. The pipeline has an operating capacity of 60mmscf/d, which the Directors anticipate to be of sufficient size to satisfy the Douala industrial market over the medium term. Condensate separated from the gas at the production facilities will be stabilised and trucked to the Sonara refinery at Limbe, located 60km away.
Gas and Condensate Sales
In parallel with the development activity this year, gas sales agreements have been signed with 13 industrial customers, including a number of multinational firms. Contract prices have been fixed at $16 per million British thermal units for the first five years (approximately $16 per thousand cubic feet) with price re-sets thereafter. A further 10 gas sales agreements are anticipated to be agreed in early 2012 as the pipeline network expands from the first customer hub in the Magzi region onto the second customer hub in central Douala.
Condensate sales are anticipated to be 160 barrels of condensate per day by the end of 2012, rising to 880 barrels per day by the end of 2014.
For further information, please contact:
Victoria Oil & Gas Plc - Tel: +44 (0) 20 7921 8820
Kevin Foo / Martin Devine
Macquarie Capital (Europe) Limited Tel: +44 (0) 20 3037 2000
Jeffrey Auld / Steve Baldwin / Nicholas Harland
Fox-Davies Capital - Tel: +44 (0) 20 3463 5010
Daniel Fox-Davies/ Richard Hail
Strand Hanson Limited - Tel: +44 (0) 20 7409 3494
Simon Raggett / Angela Peace
Tavistock Communications - Tel: +44 (0) 20 7920 3150
Ed Portman/ Paul Youens
Background Information on Victoria Oil & Gas Plc:
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 Logbaba proved and probable reserves are 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. 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.
Reprocessing of 845km of 2D seismic has recently been completed and geophysical/geological modelling is currently underway. In addition, development studies are in progress to commercialise the Well-103 discovery and prospective resources.
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