Victoria Oil & Gas PLC Q1 2021 Operational Update (1507X)

TIDMVOG

RNS Number : 1507X

Victoria Oil & Gas PLC

30 April 2021

30 April 2021

Victoria Oil & Gas Plc

("VOG" or the "Company")

Q1 2021 Operational Update

Victoria Oil & Gas Plc, whose wholly owned subsidiary, Gaz du Cameroun S.A. ("GDC"), is the onshore gas producer and distributor with operations located in the port city of Douala, Cameroon, is pleased to provide shareholders with an operations update for the first quarter of 2021.

SUMMARY

-- Sales . Average daily gross gas sales rate for the quarter of 5.2 MMscf/d (Q4 20: 5.1 MMscf/d) of natural gas plus gross 5,473 bbls (Q4 20: 3,109 bbls) condensate was produced safely and sold to industrial customers in the Douala area.

-- La-108 Performance . The well continues to supply the base demand, topped up by well La-105. The water production from the well continues to fall, albeit slowly.

-- Matanda . Well planning continues and the next batch of the public hearings have taken place in villages near potential wellsites.

   Roy Kelly, Chief Executive   of the Company, commented : 

"We are very pleased with the recent progress made on a number of fronts, both from an operational and corporate perspective, with some of these having been reported on separately in the last few weeks. We are happy to report that the sales gas demand has remained very robust, and the next customer to increase organic demand has already started commissioning his new equipment.

Operationally, the falling water production from well La-108 is welcome, and we continue to use the well for our base load whilst we monitor the well closely.

The public hearings for the Matanda drilling programme are being well attended and good engagement is taking place with local communities."

LOGBABA UPDATE

Quarterly Production

GDC continues to safely produce and sell natural gas to a variety of customers in the Douala area, most of whom would have previously burned liquid fuels. Quarterly gross and net gas and condensate sales at Logbaba are as follows (amounts in bold are net gas and condensate sales attributable to GDC (57%)):

 
                                 Q1 2021         Q4 2020 
 Gas sales (MMscf) 
                             ------  ------  ------  ------ 
 Thermal                        252     442     250     438 
                             ------  ------  ------  ------ 
 Industrial power                13      23      15      27 
                             ------  ------  ------  ------ 
 Total (MMscf)                  265     465     265     465 
                             ------  ------  ------  ------ 
 Daily average gross 
  gas sales rate (MMscf/d)         5.2             5.1 
                             --------------  -------------- 
 Condensate shipped 
  (bbls)                      3,120   5,473   1,772   3,109 
                             ------  ------  ------  ------ 
 

Gas Demand

Recent mid-week demand has been 5.5 - 6.0, with peaks over 6.0 MMscf/d, but the quarterly average is dragged down by the typical slow build-up in early January after the holiday season. Towards the middle of the year, we look forward to two other existing customers increasing demand by up to 1.0 MMscf/d.

La-108 Performance

GDC continues to use well La-108 at a constant rate to the extent possible so that we can observe its performance. The well's water-gas-ratio which was over 55 bbls/MMscf in the middle of March has continued to fall and has been less than 40 bbls/MMscf in the last few days. The level of water production has fallen to less than 160 bbls/d and this is easily manageable. The well has produced 0.3 Bcf to date, and will be shut in for a pressure build-up at some stage.

MATANDA UPDATE

Work continues on well design, site and rig selection. Under the guidance of the Ministry for Environment, the Company held public hearings in villages in the vicinity of potential surface well locations which were very well attended. During these meetings, the Environmental and Social Impact Assessment was available to be read and any further queries raised.

Management has been conducting sub-surface analysis of the various prospects, onshore Matanda and a ranking exercise has lifted, two prospects, Marula (P(mean) Unrisked Prospective Resource of 69 Bcf) and Theobroma (P(mean) Unrisked Prospective Resource of 25 Bcf), to the top of the list, though the Company is carefully considering all the surface issues including impact on nearby residents (if any), footprint of the site, access from major roads, and so on. The quoted prospective resources for these prospects are Company estimates, which form part of the previously disclosed estimate for Matanda Onshore of 1,196 bcf.

LITIGATION UPDATE

As has been previously disclosed, RSM instituted an arbitration in Texas, USA under ICC rules in which it is asserting material claims primarily related to invoices for the drilling of wells La-107 and La-108, and certain audit exceptions. The substantive matter has just been heard by an Arbitration Panel under ICC rules in the U.S.A., though it will take several months before the Panel publishes its findings.

Arbitrations under ICC rules are confidential processes, and VOG is thus not permitted to provide detailed comments on them, beyond saying that it continues to vigorously defend the claims raised by RSM. The amounts under dispute in this arbitration, including GDC's counterclaims, are significant and an adverse finding could have a material impact upon the results and position of the Group.

   For further information, please visit  www.victoriaoilandgas.com    or contact: 

Victoria Oil & Gas Plc

Roy Kelly/Rob Collins Tel: [phone]

Strand Hanson Limited (NOMAD)

Rory Murphy/James Dance Tel: [phone]

Shore Capital Stockbrokers Limited (Broker)

   Mark Percy/Toby Gibbs (corporate advisory)                      Tel: [phone] 

Jerry Keen (corporate broking)

Camarco (Financial PR)

Billy Clegg/Nick Hennis Tel: [phone]

Notes

Sam Metcalfe, the Company's Subsurface Manager has reviewed and approved the technical information contained in this announcement in his capacity as a qualified person under the AIM Rules. Sam has over 30 years of industry experience, and has an MSc in Petroleum Engineering from The University of Texas at Austin.

The P(mean) resources given above are estimates of the average prospective resources (unrisked for chance of success), based on an assessment of volumetric uncertainty of the prospects.

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April 30, 2021 02:00 ET (06:00 GMT)