VAALCO settles offshore Gabon rig costs

VAALCO Energy has reached an accord with Transocean on the remaining contract term for the Constellation II rig.

Jul 19th, 2016

Offshore staff

HOUSTONVAALCO Energy has reached an accord with Transocean on the remaining contract term for the Constellation II rig, employed for a recent drilling program offshore Gabon.

The agreement provides for payment of $5.1 million net to VAALCO’s interest for unused rig days under the contract. This amount, plus demobilization charges, will be paid in seven monthly instalments.

Last month, the electrical submersible pumps (ESPs) in theSouth Tchibala 2-H well failed - the well, which had been producing 1,700 b/d of oil, has since been shut-in.

VAALCO aims to deploy a hydraulic workover unit (at lower cost than a jackup) to move onto the Avouma platform and replace the ESPs in the well, which should be back on production by early 4Q.

CEO Steve Guidry said: “Thus far in 2016, we have experienced very high production uptime along with more shallow declines from new wells placed on production in the last 12 months.

“The shut-in of the South Tchibala 2-H well is expected to be only a short-term temporary disruption, therefore we don’t see a need to change our current annual production guidance of 3,700-4,500 boe/d at this time.”

07/19/2016

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