"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," said VAALCO CEO Cary Bounds.
"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," he said.
VAALCO shares in New York rose 7.34% to $2.78 on Wednesday after gaining 11.2% in the premarket to $2.88. The stock closed on Tuesday 5.28% higher at $2.59.
The deal on the Etame areas will run through 2028. Under the terms of the deal, a program to drill two development wells and two appraisal wells will be undertaken within two years. VAALCO has also agreed to individually to provide an increased commitment to social responsibility projects in the African nation.
VAALCO is the operator with a 33.575% participating Interest under the terms of the Joint Operating Agreement. The remaining owners are Addax Petroleum Etame, Inc with 33.9%, Sasol Gabon S.A. with 30%, and PetroEnergy Resources Corp with 2.525%.
VAALCO Energy is an independent energy company engaged in the acquisition, exploration, development and production of crude oil. The company is based in Houston, Texas.
The company's strategy is to increase reserves and production through the development and exploitation of international oil and natural gas properties. The company's properties and exploration acreage are located primarily in Gabon and Equatorial Guinea in West Africa.