Victoria Oil & Gas jumps 20% after bullish Cameroon well update
Shares in Victoria Oil & Gas plc surged 20% after the company gave a bullish update on its drilling programme in Cameroon.
Chief executive Amhet Dik expects La-107, on the Logbaba gas and gas condensate field, to be a “substantial producer”.
WATCH: Victoria Oil & Gas expecting La-107 to be a 'substantial' producer
The new well, which will be flow tested soon, should be in production by the end of next month, supplying the country’s second city and industrial hub, Douala.
Well reaches target depth
The CEO’s comment came as VOG said La-107 had reached its target depth of 3,180 metres.
In doing so it encountered an additional 23 metres of net gas sand since the last update. It brings the total in the lower and upper Logbaba formations to 58 metres.
Dik said: “New gas supply is expected to come online during the third quarter and this should allow [us] to finalise contracts with high usage customers we have been in discussion with over the past months.
“It is very satisfying to have over 50 metres of net gas sands in La-107 ‘behind pipe’ and I would like to congratulate the drilling team on the safe delivery of this well."
Operating locally as Gas du Cameroun, VOG has pioneered the use of gas in Douala from the Logbaba field, constructing its own, 50km pipe network while helping customers make the switch from ‘dirtier’ fuels that were bad for the environment.
Daily production of 14.5mln cubic feet
In the second-quarter daily production averaged 14.5mln cubic feet, which generated revenues of US$7.8mln for the three months. For the year to December 2016 sales were almost US$33mln.
VOG has ‘doubled up’ on Cameroon by acquiring an 80% stake in the Bomono licence that was owned by explorer Bowleven and taking a 75% stake in the Matanda block. Both border the Logbaba field.
“Very encouraging results from our initial Matanda evaluation enhance the possibility of early identification of drilling targets and updated gas inventory estimates,” CEO Dik said recently.
“The additional acreage at Matanda and Bomono will allow VOG to help realise its plan for major gas production to meet the large unsatisfied energy demand in Cameroon."
The shares, up 56% in the year to date, advanced a further 9.04p, or 19.51% on the back of Thursday’s bullish update.
Broker Shore Capital estimates VOG’s ‘risked’ net asset value to be 170p a share – which suggests the stock would have some way to go hit that target.