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Vaalco sets out opportunities and appetites

Platforms on the horizon, with water in the foreground
Vaalco Energy

Vaalco Energy has a new CEO and a strategy that aims to place the company among its West Africa-focused peers on the London market.

“We need to be seen to be there,” CEO George Maxwell told Energy Voice. The company’s two listings, in the US and UK, is a “significant strength,” he said. “There is an exciting opportunity to grow to a considerable size. Opportunities abound for us – and we have the appetite.”

Maxwell was previously CEO at Eland Oil and Gas, sold to Nigeria’s Seplat Petroleum Development in 2019.

In the near term, the strategy is to shore up production and sustainable returns. Vaalco has a single producing asset, the Etame field in Gabon. It carried out drilling there in 2019-20 but those wells are now declining, opening up processing capacity.

Vaalco will drill two production development wells and two appraisal wells later this year. It has also acquired seismic, which will help near-term drilling plans and future work. The four wells will cost Vaalco $73-79 million.

As part of the company’s push to control costs, it intends to shift from a floating production, storage and offloading (FPSO) vessel at Etame to floating storage and offloading (FSO) vessel.

“We’ve done the infield engineering and feasibility studies. We know we have the capability to fund it,” Maxwell said. Some additional decks are needed on the Etame platform, some subsea lines to be reversed and flow lines to be hooked up to the platform rather than the FPSO, he explained.

The new vessel would not moor in the same location, though, Maxwell said. “As a result, there’s not a risk of significant downtime. It will not be spread moored but turret, which is more efficient. That should reduce costs further.”

Next steps

In addition to its Gabon interest, Vaalco also has a stake in Block P, offshore Equatorial Guinea. “We’re a custodian of assets, we have a responsibility to do something with them. Technology is moving forward and we’re sitting on discovered oil,” at the block, Maxwell said.

As such, there is a need to “evaluate what system, what opportunity we can put together to make sure oil is evacuated”. A first step would be a feasibility concept.

Beyond Vaalco’s assets, the company is open to inorganic growth, Maxwell said. “But it has to fit. There’s a lot up for sale, IOCs are divesting everywhere. We have to be realistic”.

A deal would have to align with Vaalco’s existing capacity: West Africa, offshore, shallow water would be of interest.

“There are two key considerations. You need to discount the fable that the grass is always greener. Second, you should always consider spending on organic vs inorganic. Where is the best value for the dollars we spend?”

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