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Victoria Oil & Gas notches up record gas sales in January

Last updated: 13:01 03 Feb 2017 GMT, First published: 07:49 03 Feb 2017 GMT

picture of pipelines
15km of pipeline was laid in the last quarter

Cameroon-based gas producer Victoria Oil & Gas plc (LON:VOG) had a record month for gas sales from its Logbaba field in January as a new pipeline to Bonaberi came on-stream.

Three new customers began taking gas during December after the Bonaberi extension.

This new supply and increased consumption from state energy company ENEO as the dry season starts had a beneficial impact in January, said Victoria.

“GDC [its local subsidiary] has set a record in monthly supply figures averaging 14.5mmscf/d and peaking at 17.1mmscf/d up to 31 January.”

Bonaberi is an industrial part of Douala, Cameroon’s second city.

Victoria commissioned 15km of new pipeline in the final quarter of 2016 to make 49.6km in total now laid.

In the three months to December, gas sales were a gross 654mln cubic feet (mmscf), up 5% on the previous year, with average production of 7.64mmscf per day.

Within that, thermal gas sales rose by 24% compared to a year ago. Revenues eased slightly to US$4.6mln (US$4.7mln).

For 2016 in total, sales rose 24% to 3,566mmscf at a daily average rate of 10.23mmscf, up 26%.

Ahmet Dik, chief executive, said: "The Bonaberi pipeline extension provides gas to the western industrial area of Douala, which is fast becoming a new hub for future developments looking to access Douala's port, power and road networks.

“We have established ourselves as a vital part of the energy infrastructure for the city and the region. I am particularly pleased that year on year gas sales for 2016 has increased by 24% and a monthly production record has been set this January. 

“Our drilling programme has progressed well and we are reaching an exciting phase as the wells descend into the Logbaba Formation.”

House broker Shore Capital added that with Phases Two and Three of the Bonaberi pipeline extension completed and new customers coming on stream, Victoria Oil & Gas has made a highly encouraging start to the current,

The ENEO contract is a two year gas supply agreement that expires in the second quarter of 2017.

Negotiations are underway to renew the contract.

Exploration at Logbaba drilling programme is progressing well, though costs have risen, while net cash at the end of 2016 was US$1.3mln against Shore’s expectation of debt.

The broker has retained a very punchy 170p share price target set last year and sees lots of potential as it adds reserves, expands customer supply and delivers higher earnings.

Shares were 6% lower at 38p.

 

-- adds share price, broker comment --

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