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Victoria Oil & Gas plc: THE INVESTMENT CASE

VOG on hunt for long-term contracts after reserves upgrade

“I believe that the ENEO issue will be solved as VOG management has prioritised this matter and is focused on achieving a result in the shortest possible timeframe,” chief executive Ahmet Dik
oil and gas operations
INVESTMENT OVERVIEW: VOG The Big Picture
Logbaba has reserves for ten years - now its needs customers

Victoria Oil & Gas PLC (LON:VOG) expects to sell larger volumes of gas on longer-term contracts following an upgrade to reserves at Logbaba in Cameroon.

Proved and probable or 2P reserves rose 52% to 309bcf, with the production profile at Logbaba based on that number extended to ten years at 90mln cubic feet per day.

WATCH: Victoria Oil & Gas confident of positive outcome to ENEO issue

Proved reserves (1P), defined by connected volumes to all the wells drilled into Logbaba, were revised up to 69bcf, an increase of 29bcf.

Kevin Foo, VOG’s chairman said the upgrade confirmed field reserves would meet the growing demand in the Douala market for the foreseeable future.

Douala is Cameroon’s second city

“Importantly, this will now enable us to market larger volumes of natural gas on a longer-term contractual basis to buyers, providing them with the security of supply they require.”

The company is looking for new customers following the non-renewal of a supply deal for a gas-fired power plant in Douala. The agreement with ENEO Cameroon expired at the end of December.

ENEO an issue to be resolved

First quarter gross sales reduced by 54% from the preceding quarter to 330mln cubic feet, though on a year-on-year basis it was down 71%.

Average daily gas production amounted to 3.5mln cubic feet, from 7.94mln in the fourth quarter of 2017 and 14.57mln in the comparative quarter of last year.

VOG noted its revised year-end production target of 11.3mln cubic feet per day, though that assumes ENEO supply will be back online by the start of July.

The company told investors that it has added a new customer (in the thermal market) in the second quarter and it is expecting three power generation customers will soon commission their gas-fired generators.

CEO confident business will develop

Ahmet Dik, VOG chief executive, said: "Despite the suspension of the ENEO supply, I believe that the company will actually grow stronger and create a more diverse product base in 2018 and continue to build the outstanding business we have created in Cameroon.

“We have developed gas reserves to meet industrial and grid power demand for large quantities of gas and power that is required by groups other than ENEO.”

Dik added: “We are actively working on non-grid solutions such as customer gas to power units and CNG supply for customers who are away from our pipeline but want gas.

“In parallel with this we are in discussions with large gas volume consumers and independent power producers who are developing large power stations.”

Victoria Oil has a 57% stake in Logbaba through its GDC subsidiary with RSM and Société Nationale des Hydrocarbures (SNH) owning 38% and 5% respectively.

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