Victoria Oil & Gas provides operations update & Societe Generale commitment
Wednesday, January 30, 2013
- 15 customers now taking gas from Logbaba at a combined average daily production of 2.8 million standard cubic feet per day ("mmscf/d").
- Commitment from Societe Generale for a US$15 million reserve based lending facility.
VOG, the AIM quoted oil and gas exploration and production company with assets in Cameroon and the FSU, is pleased to announce continued progress on the execution of its gas strategy in Cameroon. Since the Company's last update on 21 December 2012, a further four customers have been commissioned and have commenced gas consumption. In total, the Company now has 15 contracted customers taking gas and there remain a further 10 contracted customers that await conversion of their facilities to take gas. This is an increase from six customers taking gas in November 2012.
All 25 contracts have been executed at an energy price of US$16 per million British thermal units fixed for five years for thermal use. This contract price represents a significant discount compared to alternative liquid fuels used to raise heat in industrial boilers or furnaces for the companies' process requirements.
Weighted average production is currently 2.8mmscf/d for a standard operating week. This equates to gross annualised gas and condensate earnings of ca. US$18 million per annum. The Company through its 100% owned subsidiary Rodeo Development Limited (RDL) holds a 95 per cent. interest and is operator of the Logbaba Field and owns and controls its own pipeline and distribution infrastructure from the well-head to the customer.
The Company has identified over 60 prospects for gas and/or on-site gas fired power demand along the existing and planned pipeline route of way. The gas to power market represents two thirds of the Company's total thermal and power market estimated at approximately 20 mmscf/d in July 2014 by Challenge Energy Limited assuming unconstrained capital availability. To date, the Company has signed seven letters of intent for on-site gas fired power and anticipates executing these when funds are available. The Company estimates total gas thermal and on site-gas power demand in excess of 40 mmscf/d over the medium term.
The Company is also pleased to announce that Societe Generale has made a commitment for an initial US$15m under a reserve based lending facility for a term of three years, which is expected to satisfy a substantial part of the Company's future funding requirements. This facility will become effective upon finalisation of legal documentation and further details will be announced following the completion of the documentation.
Kevin Foo, Chairman of VOG commented, "The commitment by Societe Generale is a very important endorsement of our company and the initial funding will help considerably in meeting our future capital needs. In the field we have made steady progress since November 2012 and with 2.8mmscf/day we are close to cash break even for the Company's operations. Looking back, in a little over three years since we spudded our first well, we have made a significant gas discovery, built a pipeline distribution network and put our first thermal customers on line. We look forward in 2013 to extending our customer base for thermal gas sales, establishing our customers with the supply of gas for power generation and expanding our pipeline network in Douala. Looking forward, in the next 18-24 months, the Company will be in utility mode of its development, meeting the known demand of contracted customers and connecting them to our infrastructure, to generate increased sales and revenues."
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