Victoria Oil & Gas PLC (LON:VOG) confirmed it has now formally secured its 75% ownership stake in the Matanda PSC, which lies adjacent to the company’s flagship Logbaba concession.
It said, in a statement, that its Gaz du Cameroun subsidiary received a decree signed by Cameroon President Paul Biya on 17 December which authorised the transfer of interest which was assigned via the company’s agreement with Glencore.
Matanda spans some 1,235 square kilometres, more than 60 times larger than Logbaba. It covers both onshore and offshore areas (with the North Matanda offshore believed to host some 150bn cubic feet of gas resources, with upside potential seen at around 1 trillion cubic feet).
Onshore, the project area hosts prospects close to the Logbaba gas pipeline network and these areas will be the priority. Here, the company sees a total of 23 prospects and leads, with a total resource potential of around 1.3 trillion cubic feet.
It is anticipated that any new discoveries can be developed “efficiently and promptly”.
The Matanda contract has a minimum work obligation of one exploration well, plus seismic reprocessing, which need to be completed within the first two years following the presidential decree.
"It is very rewarding to receive Presidential approval for this acquisition,” the company said in the statement.
“Matanda provides material upside to underpin our growth plans and with block size 60 times larger than Logbaba and significant onshore potential, development of Matanda in parallel with Logbaba should provide both size and flexibility.
It added: “Matanda, which is primarily onshore and on the western side of Douala, provides an opportunity to develop an independent gas field to feed the growing industrial and domestic markets in the Bonaberi areas and beyond.
“Additionally, the offshore North Matanda Field has considerable potential in the longer term.”
Broker sees big upside potential
“Given the very significant unrisked potential and excellent strategic fit offered by Matanda, we congratulate VOG on its successful receipt of presidential approval for the acquisition, with news of this coming hot on the heels of renewal of the Eneo supply contract in December,” said Shore Capital analyst Craig Howie.
“VOG highlights the fact that Matanda, which is primarily onshore and on the western side of Douala, provides an opportunity to develop an independent gas field to feed growing markets in the Bonaberi areas and beyond, with offshore areas providing additional long-term potential.”
The analyst added that he looks forward to “fully reflecting recent positive developments” into Shore Capital’s models, and, in the meantime noted that the broker’s most recent valuation was pitched at 70p (net asset value) which compares to a current share price of 23.48p.
Meanwhile, in a note to clients, analysts at SPAngel said: “The PSC will allow the Company to legitimately state that it has longevity as a midstream participant, which in turn could have additional benefits for all operators in the area.
“Currently, there have been a number of high profile projects that have stalled due to concerns over the longevity of access to gas resources, which any appraisal or exploration success at Matanda will help to alleviate, to the significant benefit of all regional participants.”
In early afternoon trading, Victoria O&G shares were 0.1% lower at 22.85p.
-- Adds further analyst comment, updates share price --