TIDMVOG
RNS Number : 4551Y
Victoria Oil & Gas PLC
09 May 2019
9 May 2019
Victoria Oil & Gas Plc
("VOG" or "the Company" or "the Group")
Q1 2019 Operations Update
Victoria Oil & Gas Plc, owner of Gaz du Cameroun S.A.
("GDC"), the Cameroon based gas and condensate producer and
distributor, provides an update on the Group's operations for the
three months ended 31 March 2019 ("Q1 19" or "the Quarter").
Highlights:
-- Overall Q1 19 average gas production rate increased by 127%
during the period to 10.10mmscfd (Q4 18: 4.45mmscfd), driven by the
resumption of the contract with ENEO
-- ENEO gas consumption consistently over 5.5mmscfd during the
Quarter having recommenced on 22 December 2018
-- Peak rate of 12.85mmscfd reached in Q1 19
-- Q1 19 gross gas sales of 903.2mmscf (Q4 18: 403.8mmscf)
-- 2 new customer gas sales agreements signed
-- International Organization for Standardization compliance
("ISO") 9001, 14001 & 45001 audits successfully completed,
emphasising the Company's commitment to international standards in
its management systems
Post Period End:
-- Completion of GBP13.57 million (gross) fundraise to
strengthen the Company's financial position and provide a stable
growth platform for the business
-- Completion of Board Changes:
-- Kevin Foo stepped down as Director and Executive Chairman
-- Roger Kennedy assumed the role of Executive Chairman.
-- Appointment of John Daniel and John Knight as Independent Non-Executive Directors
Roger Kennedy, Executive Chairman of VOG commented:
"The past month has marked a positive new beginning for VOG, as
the business restored a stable platform for future growth through
the delivery of a strong set of Q1 19 production figures, in
addition to the post period end completion of the fundraising and
the reshaping of the Board.
VOG is in a much improved financial and operational position. As
the only onshore gas supplier and operator of a gas pipeline
network, we are well placed to take advantage of the increasing gas
demand in Douala, Cameroon.
As a management team, we are confident about the future of this
business, and are firmly focused on the development,
diversification and expansion of our operations and customer base
in Cameroon."
Corporate Update
On 7 March 2019, the Company announced that it had conditionally
raised GBP13.57 million (gross), with new and existing
shareholders, comprising a Placing of 59,357,488 New Ordinary
Shares and a Subscription of 45,000,000 New Ordinary Shares, with
270,000 Fee Shares issued in connection with the Fundraising. The
issue of the New Ordinary Shares was conditional upon, inter alia,
the passing of the Resolution at the General Meeting held on 3
April 2019, which was duly passed.
The net proceeds of the Fundraising will enable the Company
to:
-- maintain and expand its existing operations in Cameroon, with
a focus on securing new customers and increasing revenue;
-- complete Well LA 108 at Logbaba and fund the ongoing planning
of the Matanda project, a key focus for the Company;
-- continue to implement its cost reduction programme in both
the London and Cameroon operations; and
-- fund its working capital requirements.
Board Changes
Kevin Foo stepped down as Director and Executive Chairman at the
conclusion of the General Meeting. Roger Kennedy, formerly Senior
Independent Director, has assumed the role of Executive Chairman.
The Company was pleased to announce the appointment of two
Independent Non-Executive Directors to the Board: John Knight,
appointed Senior Independent Director, and John Daniel, both of
whom bring a wealth of experience and expertise to strengthen the
Board.
Logbaba - Quarterly Production Update
The Q1 19 gross and net gas and condensate sales at Logbaba for
Gaz du Cameroun S.A., ("GDC"), are as follows:
Amounts in bold are gas and condensate sales attributable to GDC
(57%):
Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018
Gas sales (mmscf)
-------------- -------------- -------------- -------------- --------------
Thermal 211 370 200 352 194 341 174 305 179 313
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Industrial power 14 25 15 27 9 15 9 15 10 17
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Grid power 290 508 15 25 0 0 0 0 0 0
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total (mmscf) 515 903 230 404 203 356 183 320 189 330
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Average gas production
(mmscfd) 10.10 4.45 3.72 3.30 3.50
-------------- -------------- -------------- -------------- --------------
Condensate sold
(bbl.) 3,825 6,710 2,701 4,738 2,298 4,032 1,657 2,907 1,654 2,900
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
The material increase in consumption (173% increase on Q1 18) is
as a result of ENEO resuming gas consumption at the end of December
2018. Thermal customer consumption increased 5% quarter on quarter
(18% on Q1 18).
Industrial Customer Updates
Gas Sales Agreements have been signed with two new customers
during the quarter, each with thermal and industrial power
requirements. Commissioning of these customers is anticipated in Q4
19, and mid 2020 respectively.
Grid Power Update
ENEO have consistently consumed gas from GDC in excess of
5.5mmscf/d, which is above the contracted consumption volume. The
parties are currently operating on a signed binding Term Sheet and
are working together to finalise a Fully Termed Agreement, which
includes the provision of an appropriate bank guarantee. The
invoices for gas consumed in 2019, totaling approximately $3.6
million (net), remain outstanding. Management expect payment
shortly and is actively engaging with both ENEO and the Government
to resolve this.
Trade Indebtedness
The Company has settled with a large creditor from its last
drilling program and now trades with its creditors within trading
terms. GDC has received a statutory demand in the BVI from
Weatherford Services and Rental Ltd ("Weatherford") for payment of
invoices relating to various services provided by Weatherford for
the La-107 and La-108 drill program for an amount of approx.
US$2.9m. The Company contends that this matter was in dispute prior
to service of the statutory demand and has made an application to
have the statutory demand set aside. The Company has also formally
disputed that the full funds demanded are due and is working to
resolve the matter.
Cameroon Holdings Limited ("CHL") Royalty Agreement
Since January 2019 the Company has ceased to make any payments
under the Royalty Agreement. The Board is in the process of
reviewing the governing documents regarding the payment of
royalties to CHL and the Company is not currently making any
payments under the Royalty Agreement.
ISO Certification
GDC has been working on International Organization for
Standardization compliance ("ISO") 9001, 14001 & 45001 ISO
since 2017. It has developed and implemented its Integrated
Management System (IMS) based upon the requirements of these
International Standards.
We are pleased to announce that following an audit by an
external certifying authority, GDC has completed the audit process
for ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018 with
certifications being expected by end of Q2 19. This achievement is
evidence that Gaz du Cameroun has established management systems;
Quality, Environmental and Occupational Safety and Health, which
conform to international ISO standards. This accomplishment
demonstrates our continued commitment to providing a high-quality
product and delivering a consistent service to all our clients,
alongside the investment of time and money into new technology,
staff, processes and procedures by the Company.
Logbaba La-108 Insurance Claim
The insurance claim to recover the costs associated with the
La-108 well control event has been declined by the insurer based on
their opinion that there was insufficient evidence of an
underground blow-out as defined in the insurance policy. Expert
technical advisors to the Company have produced information
contrary to what the insurer has put forward and the Board believes
it has reasonable prospects of success in pursuing the claim
through litigation in Cameroon. The parties relating to the Logbaba
Project are evaluating their options.
La-108 remediation
As a result of increased production demand, planning has
commenced for works to recover the perforating gun lost down-hole
and to conduct further perforating and flow testing to complete
well La-108.
Matanda
Following the receipt of a Presidential Decree conferring title
over the Matanda PSC in December 2018, in Q1 19 planning commenced
for the next phase of subsurface work on the block involving
completion of the evaluation of the prospectivity and de-risking of
existing prospects.
This announcement contains inside information.
For further information, please visit www.victoriaoilandgas.com
or contact:
Victoria Oil & Gas Plc
Ahmet Dik Tel: +44 (0) 20 7921 8820
Kate Baldwin
Strand Hanson Limited (Nominated and Financial Adviser)
Rory Murphy / James Dance / Jack Botros Tel: +44 (0) 20 7409 3494
Shore Capital Stockbrokers Limited (Joint Broker)
Mark Percy / Toby Gibbs (corporate finance) Tel: +44 (0) 207 408 4090
Jerry Keen (corporate broking)
FirstEnergy Capital LLP (Joint Broker)
Jonathan Wright / Hugh Sanderson Tel: +44 (0) 207 448 0200
Camarco (Financial PR)
Billy Clegg Tel: +44 (0) 203 757 4983
Nick Hennis Tel: +44 (0) 203 781 8330
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END
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