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VAALCO Announces 10Y Extension of Etame Exclusive Exploitation Areas through 2028

Source: www.gulfoilandgas.com 9/25/2018, Location: Africa

VAALCO Energy, Inc. through its wholly owned subsidiary, VAALCO Gabon S.A. and the other Etame Participating Interest owners announced the receipt of the Presidential Decree approving the successful execution of an Amendment to the Etame Marin Production Sharing Contract (“PSC”) in Gabon between the Government of Gabon and the Etame Participating Interest owners. The Amendment provides for a 10-year extension of the three Exclusive Exploitation Areas under the PSC (“the Extension”).

VAALCO is the Operator with a 33.575% Participating Interest under the terms of the applicable Joint Operating Agreement. The remaining owners of Participating Interests under the Joint Operating Agreement are Addax Petroleum Etame, Inc. (33.900%), Sasol Gabon S.A. (30.000%), and PetroEnergy Resources Corp. (2.525%). VAALCO and the other Participating Interest Owners are referred to as the “Contractor Parties”.

Key Highlights of the Extension:
- Extends each of the existing three Exclusive Exploitation Authorizations under the Etame PSC for 10 years from the date of the signing of the Amendment, with two additional five-year option periods;
- Provides the opportunity to make future investments that will yield benefit to both the Contractor Parties and the government of Gabon through further development of the resource potential within the Exploitation Areas;
- Commits the Contractor Parties to complete, within two years of the Amendment coming into force, a drilling program to drill two development wells and two appraisal wells, as well as undertake technical studies;
- In addition, VAALCO has agreed individually to provide an increased commitment to corporate social responsibility projects in Gabon.

Cary Bounds, Chief Executive Officer, commented, “VAALCO, together with the other Contractor Parties, are very excited to announce this extension of our Exclusive Exploitation Authorizations in the Etame Marin Permit. The Extension will further strengthen our strategic partnership with the Government of Gabon and ensures the long-term viability of our premier Etame asset, which has produced more than 100 million barrels of oil since inception. This extension stabilizes VAALCO’s outlook for the future, removes uncertainty, and allows us to focus on generating further value and extracting additional reserves from the Etame block. We are now ready to move forward with our 2019 development and appraisal drilling program. We will provide additional details once the locations and timing are finalized. As we look to the future, we remain focused on creating substantial value for our shareholders by operating safely and efficiently, and continuing to execute on our growth strategy. The remaining opportunities in Etame are significant and we are well positioned to strengthen our financial and operational positions. We are also very pleased to continue our long-term relationship with the Government of Gabon and look forward to many more years of successful operations in the country.”

Representatives of Sasol Gabon, Addax and PetroEnergy have also executed the Amendment. The Contractor Parties have also agreed to their respective Participating Interest share of the work commitment and other obligations, including the drilling commitments, under the terms of the Extension. The Contractor Parties are optimistic that these wells will be part of a broader, long-term program to develop the economically recoverable portion of the hydrocarbon resources remaining in the field which will jointly benefit VAALCO, the other Contractor Parties and the Republic of Gabon.

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