VAALCO Energy, Inc. announced that the workover operations on the Avouma 2H well are complete and replacement of the Electrical Submersible Pump (ESP) system was conducted safely and efficiently with no injuries or environmental incidents. The well is online producing at rates in excess of pre-shutdown levels and is expected to stabilize around 2,000 barrels of oil per day (BOPD) gross, or 540 BOPD net to the Company.
In addition, a third workover has commenced to proactively upgrade the ESP system in the South Tchibala 2H well while the Company has the hydraulic workover unit on the platform. With the proactive replacement of the system, the Company is mitigating the potential for a premature ESP failure by installing a system with design enhancements that are expected to extend the run life of the ESP. The Company will also realize cost savings by conducting the South Tchibala 2H workover while the hydraulic workover unit is already on the platform.
VAALCO also announced that it has executed a hedge swap at a Dated Brent weighted average of $74 per barrel for the period from and including June 2018 through June 2019 for a quantity of approximately 400,000 barrels.
Cary Bounds, Chief Executive Officer, commented, “We are pleased to have restored significant production from the Avouma 2H well. We are realizing significant cash flow generation at current Brent pricing, and have decided to lock in cash generation at $74 per barrel on approximately 400,000 barrels over the next 13 months in anticipation of a possible development drilling campaign on our offshore Gabon asset in 2019. With the recent elimination of all of our outstanding debt, we will continue to strengthen our balance sheet through cash flow generation and look to future economic development drilling opportunities.”
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