Kendrick has previously served in several senior management and executive level positions with both public and private oil and gas companies.

His most recent position was a project manager for The Expro Group where he was responsible for the on time supply, installation and commissioning of the Logbaba Plant last year.

“(Kendrick) has a proven track record of bringing projects to fruition and delivering results in demanding environments,” said chairman of Victoria Kevin Foo.

“We know Neil exceptionally well from his previous role and we are confident that his experience and leadership qualities will ensure we are successful in the implementation of our objectives.”

The appointment becomes effective on June 1 this year.

Vixtoria’s flagship asset is the Logbaba gas project in Cameroon, where it is currently working to complete a 34 kilometre pipeline to connect all industrial customers across the city of Douala after achieving first production last December with two customers connected.

Edison Investment Research said in April that shares in VOG would be due for a re-rating if the group could hit its production targets this year.

The research house noted that the installation of Victoria’s remaining distribution network on track to complete this year and it expects to hit its year end exit rate target of eight million cubic feet of gas per day (mmcfpd) from up to 20 customers.

VOG is also preparing to install a demonstration generation unit in the second half of the year to stimulate industrial customer on-site generation demand, hoping this will help it achieve rates of 20 mmcfpd next year and 40 mmcfpd in 2014.

Edison Investment Research reckons shares in Victoria Oil & Gas (LON:VOG) are due for a re-rating if the Cameroon operating gas group hits its production targets this year.

Vixtoria’s flagship asset is the Logbaba gas project in Cameroon, where it is currently working to complete a 34 kilometre pipeline to connect all industrial customers across the city of Douala after achieving first production last December with two customers connected.

The research house noted that the installation of Victoria’s remaining distribution network on track to complete this year and the company expects to hit its year end exit rate target of eight million cubic feet of gas per day (mmcfpd) from up to 20 customers.

VOG is also preparing to install a demonstration generation unit in the second half of the year to stimulate industrial customer on-site generation demand, hoping this will help it achieve rates of 20 mmcfpd next year and 40 mmcfpd in 2014.

“Although industrial thermal demand forms the basis for early production, medium-term growth will require these customers to also switch to on-site power generation,” said Edison analyst Ian McLelland.

“An H212 demonstration generator should help with driving up this demand, which is critical to our core NAV estimate.”

The analyst’s core net asset value (NAV) estimate of 10.2 pence per share is based on the proved and probable (2P) reserves at Logbaba, which currently stand at 212 billion cubic feet.

The current NAV is more than twice yesterday’s closing price of 4.09 pence per share.

This could increase further if prospective resources at Logbaba are also proved up and developed, giving Victoria a risked asset value estimate of 13.6 pence.

According to McLelland, the shares could re-rate within a year if target production rates are achieved.

“For now, however, we focus investors on VOG’s immediate Logbaba activities to reach its planned 2012 and 2013 production targets from industrial thermal and on-site power generation demand,” said McLelland.

Victoria Oil & Gas (LON:VOG) set the scene for what chairman Kevin Foo called a year of “major developments” by re-confirming the time-table for its roll out of Cameroon’s first commercial pipeline.

It began supplying businesses in the country’s second city, Doula, in December. The next phase of the project is underway and is due to be finished in the second quarter, with completion of the 34 kilometre network planned for third quarter.

VOG says it expects to be producing around 1 million standard cubic a day of gas from May and 8 million by the end of the year. The plan is then to ramp this up to 40 million cubic feet a day by late 2014.

All of this of course means the group is on the cusp of being cash generative. It hopes to be cashflow positive in June. It is well placed financially until then with a debt facility of US$8 million.

Chairman Foo said: “I believe that 2012 will be a year of major developments for the company as we make the transition from explorer to producer and generate positive cash flows. 

“To equip us for the future, we are strengthening our management with experienced oil and gas professionals and senior executives.

The update was provided alongside the company’s interim report covering the six months to end of November.

During the period the company increased its interest in the Logbaba gas project in Cameroon to 95 per cent, while the resource estimate fpr the West Med project in Russia increased to 1.4 barrels of oil equivalent from 300 million. VOG also completed equity placings totaling US$16.1 million (£10.1 million). 

The financials, which are largely irrelevant for a company at this stage in its development show the company posted a US$2.34 million loss, up from US$833,000 previously.

In a note to clients today analyst Kate Fisher highlights the fact the VOG shares are yet to see a re-rating despite the start of commercial gas production at the Logbaba gas project last year.

This key milestone means that VOG is being transformed from an explorer to a producer, she says.

“Victoria has made the step from explorer to producer and is on the brink of the all important jump from cash burner to cash generator,” the analyst said.

Daniel Stewart has a ‘buy’ recommendation on the stock with an 8.7p price target. This punchy assessment implies the stock could rise some 130 per cent from the current price of 8.7p.

Fisher says the key drivers behind her recommendation are the favourable economics of the Logbaba gas project.

She points out that VOG has secured long term sales contracts, it has high margin production and it expects to sign-up many new sales contracts over the next two years.

“Production from Logbaba confers substantial near-term revenue,” Fisher said.

“Our cash flow projections indicate that it will achieve positive cash flows by year end 31 May 2012 and the Logbaba project will be self funding thereafter.”

The confirmation of solid cashflow figures should prove to be a catalyst for the share price, she adds.

Victoria Oil & Gas (LON:VOG) has delivered the first commercial gas on time and on budget from its Logbaba field on the outskirts of Douala, Cameroon’s largest city.

It marks a major landmark for the group, which becomes the country’s first onshore gas condensate producer.

To make the leap from development into production the group has constructed a plant and pipeline which will take gas to the businesses of Douala.

The first stop in the network was the Magzi Industrial Estate. The second phase of the 34 kilometre pipeline is expected to be completed in the second quarter of next year.

Victoria said it expects production to grow from 8 million standard cubic feet per day in 2012 to around 44 million by the end of 2014.

Chairman Kevin Foo said: “This is a very significant milestone for the company. 

“We have now moved from an exploration and development company into a producer. 

“The development of Logbaba is also important news for the city of Douala. 

“The commissioning of two wells, production facilities and the first stage of the pipeline was successful and without incident.

“This achievement is the culmination of three years of tireless effort by the team and strong support from shareholders and the Government of the Republic of Cameroon. 

“I am very pleased that we have met our promised target of first production in fourth quarter of 2011.”

Victoria Oil & Gas (LON:VOG) remains on schedule for first gas sales from the Logbaba field in Cameroon after it completed the production facilities at the site.

The production facilities will treat the gas from the wellheads and separate the condensate. 

The company confirmed that pre-commissioning of the production facilities has started and about 80 per cent of all instrumentation loops have been tested. Additionally all power circuits are in place and have been tested. 

It also revealed that the pipeline has now been installed to the first customer hub, which is located on the Magzi industrial estate. 

VOG said that the total length of the pipeline installed and backfilled to and around Magzi is 5 kilometres.

It added that specialist hydraulic and pneumatic testing equipment has been used for pipeline pre-commissioning, which includes stress testing of the entire existing network. 

It is expected that this work will be completed within the next two weeks. After that the pipeline will be purged with gas for several days as part of the network commissioning process ahead of first gas production.

Customer conversion work has commenced on a number of sites on Magzi, said VOG.

The first customers are scheduled to accept gas before the end of December and more customers will come on stream thereafter. 

VOG expects sales to build steadily to around 20 customers by the end of the first year of operations, as the entire 34 kilometre pipeline network is completed.

Victoria Oil & Gas (LON:VOG) has raised £9.5 million through a placing to achieve first gas production from its Logbaba project in Cameroon.

This target remains on schedule for the fourth quarter of this year, said the firm.

The company said it has placed 292.3 million shares at 3.25 pence per share - a discount to the current price of 3.61 pence.

The funds will be used to complete the Logbaba gas and condensate project following the increase to its working interest to 95 percent.

The money will also fund the final payment to buy a one third interest in Cameroon Holdings Limited, which was announced in August this year, it said.

These transactions have considerably enhanced the project's economics, said Victoria, increasing net proved and probable gas reserves by around 80 billion cubic feet and the post tax NPV by $270 million to $676 million.

"This placing demonstrates continued investor confidence in VOG in very challenging markets," said Kevin Foo, chairman of the firm.

Victoria also revealed that it had issued a further 28.4 million shares to key suppliers and advisors at a price of 3.25 pence per share in settlement of outstanding costs and fees -  an additional vote of confidence in the company.

Analyst Shahin Amini, at broker FoxDavies, which retains its 'buy' rating on the stock said the firm's shares were trading at a "substantial discount" to the broker's new core NAV (net asset value) of 8.7 pence.

"With the funding issue out of the way, investors can now look forward to the completion of Logbaba gas project and subsequent sale revenues towards the end of this year," said the analyst.

FoxDavies targets a price of 13 pence for the shares.

Meanwhile, broker Westhouse said the fundraising meant the firm was "further de-risked".

"We maintain that VOG represents excellent value at current levels, and reiterate our 'buy' recommendation and target price of 10.8p," it said.

Logbaba has proven and probable reserves of 212 billion cubic feet of gas (35.3 million barrels of oil equivalent) and the company expects gas sales of 8 million standard cubic feet per day (mmscf/d) in the first year of operations rising to 44 mmscf/d (7,300 barrels of oil a day equivalent) by the end of 2014.

The pipeline has a capacity of 60 mmscf/d, which is anticipated to be of sufficient size for the Douala (the largest city in Cameroon) industrial market over the medium term.

The company's current proved and probable reserves are sufficient to supply an average of 30 mmscf/d for the next 20 years. In the longer term, as further reserves may be proven, gas may be supplied to large gas fired power stations connected to the grid, with Victoria either investing in an independent power producer joint venture or selling the gas to third parties.

The shares have fallen around 20 percent today after it announced a £10.8 million fundraising, which was priced at a discount.

“From a valuation perspective the placing does not make a difference to our 12p price target ... the stock price is responding to the placing but should recover when the project is allowed to move on,” Therond said.

Therond said the placing gives VOG breathing space, after administrative delays in Cameroon have caused permitting to take longer than expected.

The analyst added: “We are not concerned by the delay as we view it as a result of the slower than anticipated pace of the administrative process rather than blockages that would jeopardize the award.”

“The state oil company, and the government of Cameroon have so far been very supportive of Victoria Oil & Gas and, given the need for gas in the country, that support is not likely to vanish so close to first production.” 

In a statement this morning VOG revealed its latest funding, which comprised an equity placing and a draw down on its Standby Equity Distribution Agreement (SEDA).

Most of the capital came from the placing, with the issue of 183 million new shares at 4.9 pence to raise around £9 million. It has drawn down £1.8 million under the SEDA facility, it subsequently issued 40.3 million shares at 4.8 pence.

With the new capital in hand, VOG plans to bring the development phase of the Logbaba project forward. 

VOG also plans to use the new funds to extend the existing gas pipeline, to reach the South Eastern and South Western areas of Douala.

Logbaba is located within the eastern suburbs of Douala - Cameroon’s economic capital and main port - and the company will use the gas field to satisfy the city’s industrial demand.

VOG chairman Kevin Foo emphasised that the company continues to sign up gas customers in the city, and the licensing process is nearing completion.

He added: “We remain optimistic that the appropriate licenses will be awarded in the near future to enable the company to satisfy the ever-increasing demand for liquids and natural gas in Cameroon.”

The money will also support ongoing working capital requirements until Logbaba’s first gas sales, which are scheduled for Q1 2011.

In this latest funding the company has completed a placing and it has also drawn down on its Standby Equity Distribution Agreement (SEDA).

“We are pleased with the level of support shown by investors in this equity financing,” chairman Kevin Foo said. 

“The company is now well capitalised as we move to commence production from the Logbaba project early in the new year.” 

Most of the capital came from the placing, with the issue of 183 million new shares at 4.9 pence to raise around £9 million. It has drawn down £1.8 million under the SEDA facility, it subsequently issued 40.3 million shares at 4.8 pence.

The SEDA was arranged with Yorkville’s YA Global Master fund in June 2009.

With the new capital in hand, VOG plans to bring the development phase of the Logbaba project forward. 

VOG also plans to use the new funds to extend the existing gas pipeline, to reach the South Eastern and South Western areas of Douala.

Logbaba is located within the eastern suburbs of Douala - Cameroon’s economic capital and main port - and the company will use the gas field to satisfy the city’s industrial demand.

Foo emphasised that VOG continues to sign up gas customers in the city, and the licensing process is nearing completion.

He added: “We remain optimistic that the appropriate licenses will be awarded in the near future to enable the company to satisfy the ever-increasing demand for liquids and natural gas in Cameroon.”

The money will also support ongoing working capital requirements until Logbaba’s first gas sales, which are scheduled for Q1 2011.

Fox-Davies Capital featured VOG in its latest 'Daily Monitor' and issued a separate note on the story, saying the placing provides some breathing space to the company as authorities in Cameroon take longer than expected to award the necessary permits. "We are not concerned by the delay and reiterate our 'Buy' recommendation and (12 pence) price target," the broker added.

"SNH, the state oil company, and the government of Cameroon have so far been very supportive of Victoria Oil & Gas and, given the need for gas in the country, that support is not likely to vanish so close to first production."

The company said it is waiting to be issued with its exploitation authorisation and domestic transport authorisation licences, though it is confident of receiving them.

“A project delay is anticipated whilst the State Hydrocarbons Corporation (SNH), the Ministry of Mines and Technology and the Presidential Office undertake various levels of due diligence before these permits can be issued,” chairman Kevin Foo said. 

“It must be remembered that this will be the first such licence issued in Cameroon. 

“However, we remain confident that these permits are imminent and that Victoria has fully complied with and satisfied all requests to date.”

Whilst acknowledging that the delay is an unwelcome development, Fox-Davies oil analyst Lionel Therond retained his ‘Buy’ rating and his 12 pence target.

“SNH has always been supportive of Victo]]> Mon, 08 Nov 2010 09:21:00 +0000 http://www.proactiveinvestors.co.uk/companies/news/22798/victoria-oil-gas-on-target-to-deliver-first-gas-in-the-first-quarter-of-next-year-22798.html