VAALCO Energy, Inc. has reached an agreement with the Government of Gabon for a five-year extension of the Etame Marine Permit. The extension, which will go into effect July 2006, is divided into a three-year first term and an optional twoyear second term. An exploration well is required during each term.
Separately, the Company also announced that it will now sell its Etame crude oil to Trafigura Beheer B.V. Trafigura was the high bidder for the contract which is based on Rabi Light. At current market prices, the Company would expect to receive a price of approximately Dated Brent less $1.25. This represents a significant improvement over the beginning of 2004, when due to weakness in the Rabi price, the Company was receiving Dated Brent less approximately $5.00. The first lifting under the new contract of approximately 720,000 barrels is ongoing.