VAALCO Energy Inc. has signed a sale and purchase agreement to acquire Sasol Gabon SA 27.8% working interest in the Etame Marin block offshore Gabon, the company said on Nov. 17. In addition, VAALCO is acquiring Sasol’s 40% non-operated participating interest in Block DE-8 offshore Gabon.
The agreed to total consideration for the entire transaction was $44 million, subject to customary post-effective date adjustments, and future contingent payments of up to $6 million. Funding for the acquisition will be from cash on hand and cash from operations.
In the deal, VAALCO acquires an additional 27.8% working interest in the Etame Marin block offshore Gabon, increasing VAALCO’s total working interest to 58.8%.
Since VAALCO currently owns and operates a 31.1% working interest in Etame, the transaction will almost double VAALCO’s total production and reserves. The deal increases the company’s net revenue interest production from 4,850 to 9,150 barrels of oil per day based on current month production; increases year-end 2019 SEC reserves from 5 million to 9.4 million barrels (MMbbl) of oil; and increases year-end 2019 independent 2P CPR reserves from 9.2 MMbbl to 17.5 MMbbl of oil.
Additionally, the acquisition is immediately accretive to VAALCO, with estimated increase of 23% in free cash flow per barrel from approximately $10.90 to $13.30 at $45 realized oil price and adds optionality from acquisition of Sasol’s 40% non-operated participating interest in Block DE-8 offshore Gabon.
“We believe that the acquisition of Sasol’s interest at Etame is a very attractive and value accretive strategic acquisition for the company that confirms our position as one of the leading independent exploration and production companies in West Africa. In what was a competitive sales process, this is the ideal growth transaction that we have been seeking for VAALCO,” Cary Bounds, VAALCO CEO, said.
He added: “We are focused on maximizing the value of our Gabon resources as well as expanding into new development opportunities across Africa.”
Recommended Reading
‘Monster’ Gas: Aethon’s 16,000-foot Dive in Haynesville West
2024-04-09 - Aethon Energy’s COO described challenges in the far western Haynesville stepout, while other operators opened their books on the latest in the legacy Haynesville at Hart Energy’s DUG GAS+ Conference and Expo in Shreveport, Louisiana.
Mighty Midland Still Beckons Dealmakers
2024-04-05 - The Midland Basin is the center of U.S. oil drilling activity. But only those with the biggest balance sheets can afford to buy in the basin's core, following a historic consolidation trend.
Decoding the Delaware: How E&Ps Are Unlocking the Future
2024-05-01 - The basin is deeper, gassier, more geologically complex and more remote than the Midland Basin to the east. But the Delaware is too sweet of a prize to pass up for many of the nation’s top oil and gas producers.
EIA: Permian, Bakken Associated Gas Growth Pressures NatGas Producers
2024-04-18 - Near-record associated gas volumes from U.S. oil basins continue to put pressure on dry gas producers, which are curtailing output and cutting rigs.
Enverus: Permian Gains Will Sustain US Oil Production Through 2030
2024-05-09 - Crude output gains from the Permian Basin will keep U.S. oil production relatively flat entering the 2030s, offsetting declines from mature oily basins, according to Enverus Intelligence Research.