In Angola VAALCO Energy entered into the Subsequent Exploration Phase (SEP) on Block 5 together with its working interest partner, Sonangol P&P. The SEP extends the exploration license for an additional three-year period such that the new expiry date for exploration activities is November 30, 2017.

Under the terms of the SEP, VAALCO and Sonangol are required to acquire a 3D seismic program covering 600 sq km and to drill two additional exploration wells. The seismic obligation has been satisfied with a seismic program already completed covering 1,058 sq km over the outboard portion of the block.

By entering the SEP, the partners are now required to drill a total of four exploration wells during the exploration extension period. The four-well obligation includes the two-well commitment under the primary exploration period that carries over to the SEP period. A $10 million assessment ($5 million net to VAALCO) applies to each of the four commitment exploration wells, if any, that remain undrilled at the end of the exploration period in 2017.

The Transocean Celtic Sea has been contracted to drill the first well, the post-salt Kindele-1.  The Kindele well is targeting the Mucanzo sand (Pinda group) with a planned total depth of 2,250 meters in a water depth of 101 meters.  Gross unrisked recoverable resources are estimated to be between 20-49 million barrels. The rig is currently estimated to be on location in mid-December 2014.

The decision to enter the SEP was made in part to remove uncertainty on whether the primary term of the exploration license would be extended by the Angolan government before the November 30, 2014 expiration date.

Steve Guidry, Chairman and CEO, commented, “We believe entering into the SEP is a sound strategy for the Company.  Although the SEP comes with additional commitments, we believe this is a coveted block with potential in the deep syn-rift and sag play.  The SEP allows VAALCO and its partner to properly assess the results of the current seismic reprocessing that is being merged with previously licensed seismic data through pre-stack depth migration.  This will help us determine the best opportunities in the pre-salt horizons.  The action we took to enter into the SEP removes the uncertainty of an exploration license extension and allows us to focus on our exploration activities on the block.”

 

Source : petroleum africa