Victoria Oil & Gas has cut reserves at its Cameroon gas field as a result of a major customer defaulting but the country is opening up again, raising the prospect of demand returning.
Gross gas sales in the second quarter fell to 4.6 million cubic feet per day, from 5.1 mmcf per day in the first quarter. The volume of condensate sold rose to 3,548 barrels, from 1,343 barrels in the first quarter.
Net revenues for Victoria reached $6.8 million, up from $5.3mn in the first quarter.
Victoria reported 9.66 mmcf per day of gas sold in the second quarter of 2019.
The company served a notice of termination to major grid power offtaker ENEO Cameroon. As a result of this, and with no plans for additional drilling in the near term, proved reserves have been cut at the Logbaba field.
Victoria now calculates that 1P reserves stood at 19 billion cubic feet at the beginning of the year, a reduction of 46 bcf.
The company gave some reassurances of new demand. It has secured contracts for around 30% of volumes that had gone to ENEO with alternative customers. Two new customers should be tied in within the next three months, it said. All told, this will replace around 50% of the revenues lost as a result of the ENEO termination.
Victoria announced the termination of the ENEO contract at the beginning of July. ENEO owed $16mn at the end of June, of which $9mn was due to Victoria.
The power producer has a 30 MW plant at Logbaba. This is not the first time that ENEO has struggled, it was also unable to pay for gas for much of 2018.
ENEO’s recent problems began in September 2019 when the company was unable to pay for its generators. The supplier of this equipment suspended operations. ENEO was unable to take the gas from Logbaba but Victoria continued to send invoices under take-or-pay provisions.
While ENEO takes the largest amount of gas from Logbaba, it pays the lowest price. Victoria said it would replace this contract through connections with privately owned credit-worthy customers that were close to existing infrastructure.