TIDMVOG
RNS Number : 1077P
Victoria Oil & Gas PLC
24 May 2018
24 May 2018
Victoria Oil & Gas Plc
("VOG" or "the Company")
Q1 2018 Operations and Outlook
Victoria Oil & Gas Plc, the Cameroon based gas and
condensate producer and distributor, is pleased to provide an
update on the Group's operations for the three months ended 31
March 2018 ("Q1 18" or "the Quarter").
Q1 18 saw a decrease in gas consumption levels from Gaz du
Cameroun SA's ("GDC") Logbaba Project in Douala, Cameroon, due to
the non-renewal of the ENEO Cameroon SA ("ENEO") grid power gas
sale agreement at the end of December 2017. ENEO has not
recommenced consumption to date but management is confident of a
resolution.
Q1 2018 Overview
-- Q1 18 Gross Gas Sold of 330mmscf (54% decrease on Q4 17, 71% decrease on Q1 17)
-- Average daily gas production for Q1 18 of 3.50mmscf/d (Q4 17:
7.94mmscf/d, Q1 17: 14.57mmscf/d)
-- One more thermal customer, Panzani, came on-line post quarter
end and three more, a Nestle subsidiary, Camlait and Agrocam, are
commissioning their gas fired gensets
-- Well La-107 flow line tie in complete and La-108 perforation gun recovery scoped
-- Cash and cash equivalents at end of Q1 18 was $6.0 million
(Q4 17: $11.4 million), trade receivables were $4.3 million (Q4 17:
$6.2m), trade payables $9.1 million (Q4 17: $8.8 million) and
borrowings were $23.4 million (Q4 17: $24.5 million). Net debt was
$17.4 million (Q4 17: $13.1 million).
Outlook
-- The revised year end production targets are 11.3mmscf/d if
ENEO is back online by 1 July 2018 and 7.8mmscf/d if they remain
offline.
-- Non-grid revenue generating business such as dedicated gas to
power solutions for customers and the Compressed Natural Gas (CNG)
project are two initiatives that should enable increased revenue to
the Company.
-- Discussions with three prospective large volume grid-power
customers continue for power stations to produce 150MW, 140MW and
150MW respectively with the potential to consume 78mmscf/d of gas
in aggregate when operational.
Ahmet Dik, CEO 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.
GDC is the only onshore gas producer in Cameroon; management
estimates that with Logbaba and Matanda, GDC has recoverable gas
resources of at least 1.5 TCF. Our 50km of gas pipeline and support
infrastructure is delivering gas to over 30 customer sites.
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 with potential
consumption of approximately 78mmscf/d of gas when operational in
2020."
Logbaba Update
Quarterly Production Update
The Q1 18 gross and net gas and condensate sales for Logbaba and
GDC, are as follows; amounts in bold are gas and condensate sales
attributable to GDC*:
Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017
--------------- -------------- -------------- ---------------------- -------- --------------
Gas sales
(mmscf)
--------------- -------------- -------------- ---------------------- -------- --------------
Thermal 179 313 177 312 157 276 191 322 204 340
--------------- ------ ------ ------ ------ ------ ------ ------ -------- ------ ------
Retail power 10 17 10 18 12 20 9 15 7 12
--------------- ------ ------ ------ ------ ------ ------ ------ -------- ------ ------
Grid power 0 0 226 396 180 317 508 855 481 801
--------------- ------ ------ ------ ------ ------ ------ ------ -------- ------ ------
Total (mmscf) 189 330 413 726 349 613 708 1,192 692 1,153
--------------- ------ ------ ------ ------ ------ ------ ------ -------- ------ ------
Average gas
production
(mmscf/d) 3.50 7.94 6.96 14.59 14.57
--------------- -------------- -------------- ---------------------- -------- --------------
Condensate
sold (bbl.) 1,654 2,900 3,951 6,931 2,538 4,452 5,437 9,147 5,290 8,816
--------------- ------ ------ ------ ------ ------ ------ ------ -------- ------ ------
* After reaching a cost recovery milestone on Logbaba during Q2
16, GDC received 60% of revenue from Logbaba in accordance with its
participating interest. Prior to this date GDC received 100% of
revenues as a recovery of exploration costs. In June 2017, Société
Nationale des Hydrocarbures ("SNH") executed its right to a 5%
participation in Logbaba resulting in GDC's participating interest
decreasing to 57% and the figures from the effective date onwards
have been adjusted accordingly.
ENEO Update
The Government of Cameroon, ENEO, Altaaqa Global ("Altaaqa"),
the genset providers to ENEO which consume GDC's gas and GDC
continue to seek a resolution to the suspension of the ENEO owned
Logbaba and Bassa power stations in Douala.
GDC remains confident that a solution will be found as all
parties are actively engaged in the various steps involved that
will result in gas consumption being resumed. The shortfalls in
power supply in Cameroon continue, with hydroelectric schemes not
meeting the current demand.
In our update on 5 January 2018, we reported gross ENEO
receivables of $8.7 million, which had been reduced to $5 million
at 17 February 2018. We are pleased to report that at the time of
this announcement this gross receivable has reduced to $2.9
million. The Company expects the balance to be paid off by the end
of Q2 18/early Q3 18.
Other Developments
Post the quarter end, Panzani Cameroon S.A. ("Panzani")
commissioned its plant to become a thermal customer switching from
LFO (Light Fuel Oil). Panzani is a leading household brand and
pasta manufacturer, located in the Bassa Industrial Zone of Douala
with anticipated consumption of 0.07mmscf/d.
A Nestle subsidiary, Camlait Cameroon, and Agrocam are in the
process of commissioning their new gas-fired gensets, which are
expected to be on-line during Q2 18.
Because of the current power shortages in Douala, several
existing and new customers have expressed interest in the retail
power solutions which GDC is offering and we expect to have several
of these customers online by year end.
Q1 18 Unaudited Financial Update
Unaudited net revenue for Q1 18 was $2.5 million (Q4 17: $4.4
million; Q1 17: $8.1 million). As previously guided, the loss of
revenue from ENEO, which accounted for approximately 53% of revenue
in 2017, will be significant for the Group in 2018 and will affect
profits and results.
Cash and cash equivalents at the end of Q1 18 was $6.0 million
(Q4 17: 11.4 million), trade receivables were $4.3 million (Q4 17:
$6.2 million). Trade payables $9.1 million (Q4 17: $8.8 million)
and borrowings was $23.4 million (Q4 17: $24.5 million). Net debt
was $17.4 million (Q4 17: $13.1 million).
The Company has suspended all non-essential capital programmes,
is actively reducing costs in the business and is preserving
available cash resources. An application has been made to
restructure the Group's outstanding bank debt including more
favourable terms.
Subsurface and Wells
During the quarter, a subsurface re-evaluation of the Logbaba
field commenced. This involves reprocessing historic seismic data
and assessing the results of the La-107 and La-108 wells. This will
enable an update of the Logbaba geological maps and provide an
improved basis for decisions on future development of the license
area.
An internal reserves review following this re-evaluation will be
performed for the Logbaba field by the end of June 2018 and
management believes that a substantial increase in reserves will be
demonstrated.
Following the drilling and completion activities, work to tie in
the wells for permanent production has been ongoing. Construction
of the La-107 flowline tie-in is now complete. La-107 and La-105
are now both available for production, as required, to meet market
demand.
A programme for recovery of the spent perforating gun and
completing the clean-up and testing of the Logbaba sands in La-108
has been developed. This will be carried out when appropriate to
meet gas demands.
An insurance claim for $24.5 million gross has been lodged with
the Company's insurers to cover the substantial and material costs
associated with the well control event during the drilling of
La-108 and the consequential schedule and cost overrun. During the
quarter the Company has worked to enhance the technical merits of
the claim. As is common in these situations, the outcome of the
claim is not certain.
After apportionment of finance costs the total accounting cost
of the two wells is expected to be $90.7 million.
Other Licenses Update
During the quarter the Group continued the subsurface evaluation
for the Matanda Block, which indicates the potential for more than
1TCF of recoverable gas across onshore sections of the block. The
Company continues to work with the Government of Cameroon to
finalise the work programme and obtain the Presidential Decree
conferring title to its participating share in this block.
The Company remains engaged with several potential buyers or
partners for the West Medvezhye Project in Russia.
Outlook
The revised year end daily production targets are 11.3mmscf/d if
ENEO is back online by 1 July 2018 and 7.8mmscf/d if they remain
offline.
The Company is in discussions with current and potential
independent power providers (IPP's).
-- Dibamba Power Development Company ("DPDC"), who are planning
a 140MW gas to power plant upgrade at their Dibamba station;
-- Altaaqa Global ("Altaaqa"), our partners who supply the 50MW
generating power to the ENEO project and who recently applied for
an IPP license for 150MW;
-- Grenor S.A ("Grenor") who are planning a 150MW power station in eastern Douala; and
-- All projects have plans to be fully online by mid-late 2020.
These projects would require up to 26mmscf/d of gas each and the
three have the potential to consume approximately 78mmscf/d of gas
in aggregate.
GDC is expediting its support to manufacturers and producers in
Douala who are facing regular power disruptions by providing
bespoke gas fired power generation for individual customers or
groups of customers. As most of these proposed power customers are
already connected to the gas pipeline network, adding a gas to
power generation solution would increase gas consumption with
minimal capital costs for GDC.
The Company commissioned a pre-feasibility study on CNG for
plant capacity up to 2mmscf/d. The sales team in Douala is in
discussions with potential customers that would make this venture
commercially viable and aims to sign General Sales Agreements in
the near term. The project will afford GDC the opportunity to reach
some larger customers beyond the pipeline infrastructure and aims
to replace diesel and heavy fuel in a variety of applications.
VOG has set an ambitious business strategy with gas sales build
up to 100mmsc/d by 2021. We still believe that this target is
achievable and that the demand for gas within Cameroon remains
high.
Sam Metcalfe, the Company's Subsurface Manager, has reviewed and
approved the technical information contained in this announcement.
Mr. Metcalfe is a graduate in BA Geology, BSc Civil Engineering,
and MSc Petroleum Engineering.
This announcement contains inside information.
For further information, please visit www.victoriaoilandgas.com
or contact:
Victoria Oil & Gas Plc
Kevin Foo / Ahmet Dik Tel: +44 (0) 20 7921 8820
Strand Hanson Limited (Nominated and Financial Adviser)
Rory Murphy / Angela Hallett / Ritchie Balmer Tel: +44 (0) 20 7409 3494
Shore Capital Stockbrokers Limited (Joint Broker)
Mark Percy / Toby Gibbs (corporate finance) Tel: +44 (0) 207 408 4090
Jerry Keen (corporate broking)
FirstEnergy Capital LLP (Joint Broker)
Jonathan Wright / David van Erp Tel: +44 (0) 207 448 0200
Camarco (Financial PR)
Billy Clegg Tel: +44 (0) 203 757 4983
Nick Hennis Tel: +44 (0) 203 781 8330
NOTES TO EDITORS:
Victoria Oil & Gas Plc ("VOG" or "the Company") is a
fully-integrated onshore gas producer and distributor with
operations located in the port city of Douala, Cameroon. Through
the Company's wholly-owned subsidiary, Gaz du Cameroun S.A.
("GDC"), VOG delivers gas via a 50km gas distribution pipeline
network to a range of major industrial customers.
Since spudding its first wells in 2010, the Company has grown to
become the dominant player in the Cameroon onshore gas market,
primarily through the 57% owned Logbaba gas project. GDC is
partnered on this project with RSM Production Company ("RSM"), and
Société Nationale des Hydrocarbures ("SNH"), who have holdings of
38% and 5% respectively.
Subject to government approval VOG will extend it acreage over
the highly prospective Douala Basin with the addition of the
Matanda license area.
Victoria Oil & Gas is listed on the AIM market of the London
Stock Exchange under the ticker VOG.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
TSTPGUWWAUPRPPW
(END) Dow Jones Newswires
May 24, 2018 02:01 ET (06:01 GMT)
Victoria Oil & Gas (LSE:VOG)
Historical Stock Chart
From Apr 2024 to May 2024
Victoria Oil & Gas (LSE:VOG)
Historical Stock Chart
From May 2023 to May 2024