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Vaalco shuts-in off Gabon

Written by  Wednesday, 06 July 2016 10:37

Houston-based independent Vaalco has shut-in its South Tchibala 2-H well, offshore Gabon, after the electrical submersible pumps (ESPs) failed late last month.

Image from Vaalco.

The well, which was producing some 1700 b/d prior to the ESP failure on 23 June, is expected to be back online by early Q4 2016.

“Vaalco is working to mobilize a hydraulic workover unit to move onto the Avouma platform and replace the ESPs in the well,” the company said in a statement.

Vaalco will use a hydraulic unit to replace the ESPs rather than mobilizing a jackup rig results in substantially lower cost for the workover. The company expects its net cost will be about US$1.5 million.

“The shut-in of the South Tchibala 2-H well is expected to be only a short-term temporary disruption; therefore we don’t see a need to change our current annual production guidance of 3700 to 4500 boe/d at this time,” Steve Guidry, Vaalco CEO said.

South Tchibala is located in Vaalco's most significant asset, the Etame Marin block, which covers an area of some 28,700 gross acres, and consists of subsalt reservoirs that lie 20mi offshore Gabon at about 250ft water depth. 

The Etame, Avouma/South Tchibala, Ebouri, Southeast Etame and North Tchibala fields are included in the block.

Vaalco is the operator of the Etame Marin block, on behalf of a consortium of five companies; the company owns 28.1% stake. The development is subject to a 7.5% back-in interest by the Government of Gabon which they assigned to a third party. Total production for Vaalco in Q2 averaged approximately 4700 boe/d, up 4% from 4516 boe/d in Q1 2016.

Vaalco mobilized a rig to the Avouma platform in December 2015 to perform workovers on three wells: South Tchibala 2-H, Avouma 3-H and Avouma 2-H. At the end of 2015, one workover had been completed successfully and the second was underway.

In January 2016, the workover campaign was complete. The South Tchibala 2-H was restored to production after being offline since August 2014.

In 2005, the government of Gabon awarded Vaalco and its partners a 13,000 gross acre exploitation area for the joint development of the Avouma/South Tchibala field. The exploitation area has a term of 20 years through March 2025 (a 10-year primary term followed by two subsequent five year renewals). In 2006, Vaalco installed a platform at the Avouma/South Tchibala field and subsequently drilled four development wells. On 31 December 2015, three wells were producing, and a workover was underway on the fourth well. As discussed above, the workover of the Avouma 3-H was unsuccessful, and it remains off production in 2016.

Transocean Constellation II deal

In addition, Vaalco entered into an agreement with Transocean for the remaining contract term associated with the Constellation II jackup for the company’s drilling program offshore Gabon. The deal will see Vaalco pay $5.1 million for unused rig days utilized in the company’s recent drilling program offshore Gabon which provides for payment of $5.1 million net to Vaalco’s interest for unused rig days under the contract.

Earlier this year, Vaalco released the Constellation II, with no intentions to drill any more wells in 2016 on its Etame Marin block offshore Gabon, in which the company incurred costs of up to $7 million related to the contract period from the rig release date through its expiration.

“We are very pleased to have reached a fair and amicable settlement with Transocean following the release of the rig utilized in our offshore Gabon drilling program,” Guidry said. “While low oil prices were the primary factor in our releasing the rig, the benefit of our drilling program through that point was further evidenced in Q2 when our production averaged approximately 4700 boe/d, at the top end of guidance for the quarter.”

“Thus far in 2016, we have experienced very high production uptime along with more shallow declines from new wells placed on production in the last 12 months,” Guidry concluded.

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Vaalco hits at North Tchibala 2-H

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