TIDMVOG
RNS Number : 2734U
Victoria Oil & Gas PLC
01 April 2021
1 April 2021
Victoria Oil & Gas Plc
("VOG" or the "Company")
Corporate and Operational Update
Victoria Oil & Gas Plc, whose wholly owned subsidiary, Gaz
du Cameroun S.A. ("GDC"), the onshore gas producer and distributor
with operations located in the port city of Douala, Cameroon, is
pleased to provide shareholders with a general corporate and
operational update on key matters.
HIGHLIGHTS
-- The Company experienced a small number of positive Covid-19
cases in the Douala office over the last few weeks; the office was
immediately sanitised and remains open only to those employees with
a negative Covid-19 test. The staff affected were asymptomatic and
have thankfully started to recover quickly and operations have not
been affected. The Yamalo-Nenets Autonomous Okrug region of Siberia
in which our West Med asset is located remains locked down for now
due to COVID-19.
-- Cameroon Operations . Recent weekday production has been 5.5
to 6.0 MMscf/d gross gas, but with the usual daily and weekly
fluctuations, with one customer returning having paid off aged
debt, and one customer increasing its consumption for both power
and thermal.
-- Early La-108 Performance . Well La-108 was brought online on
15 February. The well was initially producing on its own and more
recently in combination with another well to ensure that operations
could be managed given contrasting wellhead pressures. The well
started producing significantly more water than the other wells,
and above what might be expected as water of condensation. Analysis
of this water suggests it is significantly fresher than formation
water and thus likely composed of drilling and completions fluid
lost from the drilling (which started in 2016), through to the
attempted remediation in 2019 and then successful remediation in
2020. The water-gas-ratio stabilised at around 50 bbls/MMscf, and
has fallen below this in the last week. This level of water
production (up to 200 bbl/d) is being managed well by the
operations team. We propose to produce a larger volume from the
well and then carry out a pressure build-up test.
-- West Med . We have signed a non-binding term sheet with a
potential buyer of VOG's wholly owned subsidiary, ZAO
SeverGas-Invest (SGI), which owns the West Medvezhye (West Med)
licence. This buyer has instructed recognised third-party
specialist advisors to conduct what we hope will be final,
confirmatory due diligence on the asset. This potential buyer has a
period of exclusivity which runs to 31 May 2021. The asset was
fully impaired in VOG's accounts in 2014.
-- Kemerkol . At the end of December 2020, VOG notified the
Republic of Kazakhstan of its intention, failing an amicable
settlement with the Government, to commence an investment
arbitration under the Energy Charter Treaty. VOG has retained
counsel and the arbitration is fully funded by specialist disputes
funder Therium. The dispute arises out of a series of actions and
omissions by the Government and its courts which ultimately
deprived VOG of the value of its investment in the Kemerkol oil
field located in Atyrau Oblast. After investing over US$35 million
into the Kemerkol Field, Kazakhstan invalidated VOG's rights to the
Kemerkol Field, seized assets on site, and VOG was forced to
suspend oil production in June 2008. In the event the Parties are
unable to make concrete progress towards resolving their dispute
amicably by the end of May 2021, VOG will commence proceedings.
Kemerkol was fully impaired in VOG's accounts in 2009.
-- Matanda. Well planning, procurement of long lead items and
rig selection are underway, and the farmout process has been
started with several parties registering interest. The
Environmental and Social Impact Assessment ("ESIA") has been
delivered for the Ministry's consideration. Follow up meetings have
been held with the Ministry of Environment[1] to plan the second
phase of public hearings which form part of the ESIA process.
-- New Age Letter of Intent ("LoI"). The LoI with New Age, which
was originally announced on 5 February 2020, expired on 31 March
2021. In consultation with SNH, GDC and New Age agreed to let the
LoI lapse and expedite discussions with SNH on the way forward on
the project in line with the Gas Code of Cameroon and the Country's
Gas Master Plan. As part of the process, GDC has offered to offtake
up to 25 MMscf/d from Etinde, subject to a number of conditions.
The whole project still remains conditional upon securing Final
Investment Decision ("FID") on the upstream project and award of an
Independent Power Producer licence among other things. Recent
public statements suggest that the Etinde partners are now likely
to secure FID in 2022, before which they will need to renew their
Exclusive Exploitation Agreement ("EEA") and seek approval for a
revised development plan.
-- RSM Litigation. An ICC Arbitration panel will hear the
substantive matters raised by RSM (GDC's joint venture partner in
the Logbaba field), and GDC's counterclaims, in the third week of
April (rescheduled from January). The UNCITRAL arbitration will be
heard in London under Cameroon Law and is scheduled for hearing at
the end of September 2021. Arbitrations under ICC and UNCITRAL
rules are confidential processes and the Company is not permitted
to provide detailed comments on them, beyond saying that the
amounts of claims and counterclaims are material to the Company and
that it continues to vigorously defend the claims raised by RSM.
Our expectation is that each panel would take several months to
deliberate and issue their rulings.
Roy Kelly, Chief Executive of the Company, commented:
" We are very pleased at the significant progress that we have
made as a company over the course of the past few months on a
number of corporate and operational fronts. The company now has a
well stock of four wells at Logbaba, albeit with very different
production characteristics. The operations team have done a great
job managing the different wellhead pressures during the multi-well
operations, and the higher water production.
In the Matanda license, we're pleased with progress on the
ranking of prospects and the start of the well planning phase. We
have initial interest in the farmout of Matanda but there is of
course a long way to go in that process.
The interest shown in West Med has been very encouraging and we
have for the first time entered into a short period of exclusivity
with a potential buyer as they conduct serious due diligence using
well-known specialists. Of course, we know this may not result in a
binding bid or a sale but is nonetheless encouraging."
The information contained within this announcement is deemed to
constitute inside information pursuant to the EU (Withdrawal) Act
and amended pursuant to Market Abuse (Amended) (EU Exit)
Regulations 2019. Upon the publication of this announcement, this
inside information is now considered to be in the public
domain.
For further information, please visit www.victoriaoilandgas.com or contact:
Victoria Oil & Gas Plc
Roy Kelly/Rob Collins Tel: +44 (0) 20 7921 8820
Strand Hanson Limited (NOMAD)
Rory Murphy/James Dance Tel: +44 (0) 20 7409 3494
Shore Capital Stockbrokers Limited (Joint Broker)
Mark Percy / Toby Gibbs (corporate advisory) Tel: +44 (0) 207 408 4090
Jerry Keen (corporate broking)
Camarco (Financial PR)
Billy Clegg / Nick Hennis Tel: +44 (0) 20 3772 2499
[1] Full name: Ministry of Environment, Nature Protection and
Sustainable Development
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END
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