Victoria Oil and Gas Plc (LON:VOG) has hit a large gas pocket at one of two development wells drilled recently at its Logbaba field in Cameroon.
The well, La-108, hit 125m net pay of high permeability, high porosity gas bearing sands that should result in a significant increase in proven reserves, said the Aim-listed group.
Flow testing of both that well and its sister, La-107, will be carried out this quarter with a gas line set up to link both to the existing gas processing plant at Logbaba.
One hiccough was a ‘well control incident’ that will add around five weeks and US$8m to the overall cost of the well but will be recouped from revenue.
WATCH: VOG boss says its been "a terrific year and a great quarter" ...
Elsewhere, production rose to 14.7 million cubic feet (mmscf) per day, a 10.7% increase in the months to March.
Sales volumes for the quarter were 1,153mmscf (gross) or up 2% on this time a year ago with net revenues of US$8.1mln (US$4.6mln). VOG receives 60% of gross revenues at Logbaba.
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Net debt at the end of the quarter was US$10.7mln.
Ahmet Dik, chief executive, said VOG had plenty of momentum behind it at present.
“Gas sales increased and record sales were achieved in March,” he said, while the gas sands discovery at La-108 was “very encouraging”.
He believes the well will be as productive as well La-105, its best to date.
Asset base transformed
Dik added that VOG’s asset base had been transformed In the quarter through the deal to acquire an 80% interest in Bowleven’s Bomono licence, also in Cameroon.
“Very encouraging results from our initial Matanda evaluation enhance the possibility of early identification of drilling targets and updated gas inventory estimates,” he added.
“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."
This has been reflected in VOG ‘s stock market performance as the shares have more than doubled this year to 72.8p.
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Graham-Wood enthusiastic
Respected Oil commentator Malcolm Graham –Wood is a big fan and said the key features were production up, again, two Logbaba wells currently drilling, the Bowleven farm-in under way and initial positive news from Matanda where early seismic shows ‘considerable gas in place potential’.
“With record gas sales in March one can remain genuinely optimistic about the future, especially as the company has completed phases 2 and 3 of the pipeline making 50km in total and added six new customers with two more waiting to tap in.“
“This confirms that there is large, unsatisfied energy demand in Cameroon and VOG is very well placed to profit from it.”
Graham-Wood added that at Bomono, the existing pipeline is only 9.5km away and most of the route could be constructed through a rubber plantation that has been untapped for several years.
“The VOG format in Cameroon is rapidly becoming a significant money making operation, supplying gas to power projects and substantial commercial customers."
"Cameroon is seeing considerable inward investment, particularly from Chinese companies in the area, he added.
His target price is 200p compared to 72.45p, down 6% today.
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