VAALCO Acquires Bakken Interest in Montana

- VAALCO Acquires Bakken Interest in Montana

Friday, September 09, 2011
VAALCO Energy

VAALCO Energy, Inc. today announced that the Company has entered into a definitive agreement with Magellan Petroleum Corporation to acquire and develop an operating working interest in approximately 23,000 net mineral acres of oil, gas and mineral leases covering the Bakken and deeper formations in the East Poplar Unit and the Northwest Poplar Field in Roosevelt County, Montana. Under the terms of the agreement, VAALCO has paid Magellan $5 million and committed to spend approximately $15 million to drill three wells.

VAALCO has agreed to drill three wells to the Bakken formation and to formations below the Bakken in the Poplar Field. All three wells will be drilled by the end of 2012 and one well will be drilled on or before June 1, 2012. Of these, one well will be drilled horizontally to test the Bakken Formation, one well will be drilled vertically to test the Red River Formation, and the third will be targeted at VAALCO's discretion. Under the terms of the definitive agreement, VAALCO will have a 65% working interest in the Bakken and Deep Intervals within the Poplar Field.

Robert Gerry, Chairman and CEO said, "We are excited to complete this acquisition of additional Bakken Acreage, which we believe will be a powerful source of oil revenues to VAALCO over the next several years. In addition to the potential we see in the Bakken formation, we will also be evaluating deeper objectives in the Three Forks, Nisku and Red River formations. Our seismic studies indicate that there are structures in these deeper objectives that could be the source of prolific production and we are optimistic that we can prove up reserves and create shareholder value."

Magellan will retain its current ownership for all formations above the Bakken, including the currently producing Charles and Tyler formations and will retain the remaining 35% of the Bakken and deeper rights in partnership with VAALCO.

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VAALCO Brings Granite Wash Well Online

- VAALCO Brings Granite Wash Well Online

Tuesday, August 16, 2011
VAALCO Energy Inc.

VAALCO announced first production from its successful exploration well drilled in Hemphill County, Texas in the Granite Wash formation. The Hefley 90-01H well was drilled during June and July 2011 with fracturing operations completed earlier this month. Initial production rates during the flowback period were 11 MMcfpd and 175 barrels of condensate per day.

Robert Gerry, Chairman and CEO, commented, "We are excited to report the success of our first well drilled in our recently acquired shale play portfolio. Initial production rates are in-line with our expectations and we have staked out a site for the second well to be drilled on the lease. In addition, VAALCO is developing plans for drilling additional wells on the Granite Wash formation properties in Texas as well as the Bakken formation properties in Montana."

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Magellan, Vaalco Sign LOI for Bakken Development in Montana

- Magellan, Vaalco Sign LOI for Bakken Development in Montana

Monday, July 18, 2011
Magellan Petroleum Corporation

Magellan Petroleum Corporation signed a letter of intent (LOI) with Vaalco Energy Inc. to begin work on developing the Bakken formation and deeper horizons within the East Poplar Unit and Northwest Poplar Field in Roosevelt County, Montana (Poplar).

The LOI terms remain subject to closing on a definitive Purchase and Sale Agreement ("PSA"). The LOI contemplates a farm-out to VAALCO of an operating working interest in all of the approximately 23,000 net acres of oil, gas and mineral leases covering the Bakken and deeper formations at Poplar.

VAALCO has agreed to acquire 65% in return for cash consideration and for bearing 100% of the cost to drill three wells by the end of 2012. Parties would then move forward together as 65% / 35% owners respectively to further develop the prospects.

Magellan will retain its current ownership for all formations above the Bakken, including the currently producing Charles and Tyler formations where all Poplar proved and probable reserves are located.

William Hastings, President and CEO commented, "After conducting evaluation drilling, coring, and petrography work, we remain very encouraged about a number of prospective horizons at Poplar. Our new partnership with VAALCO is another step, with a strong and experienced partner, toward monetizing this asset and accelerating near-term development and production, not only from the Bakken but also from the Three Forks, Red River and associated deeper formations there in Montana. Given existing oil and gas infrastructure, our summer recompletion/infill program, our shallow gas plans, and, now, our Bakken partnership, we will continue efforts to add value, and perhaps extend, our position in Montana.

Magellan is a US-based energy company principally engaged in the acquisition, exploration, development and production of crude oil and "stranded" natural gas. Magellan's strategy involves the exploitation of already discovered oil and natural gas properties worldwide into non-traditional, growing markets. The company's properties and exploration acreage are located primarily in Australia, the United Kingdom, and the United States.

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VAALCO Shuts-In Portion of Production Offshore Gabon

VAALCO Shuts-In Portion of Production Offshore Gabon

Friday, April 01, 2011
VAALCO Energy Inc.

VAALCO provided an update on its operations following the commencement of industrial action in Gabon by the National Organization of Oil Employees (ONEP), which began at midnight, March 31, 2011. ONEP launched the action against the Gabonese government as part of a dispute over the government's labor regulations. ONEP is requesting the publication of a decree from the government of Gabon regulating the employment of foreign labor.

Reportedly, ONEP represents approximately 4,000 of the 5,000 workers in the industry, including approximately 45 VAALCO employees in Gabon.

VAALCO is in the process of shutting in a portion of the daily gross production in the Etame Marin block offshore Gabon, which has been recently averaging approximately 23,500 barrels of oil per day. Shutting-in is a staged process due to the configuration of the block containing two platforms, subsea wells, several miles of pipelines and the FPSO facility where the oil from the block is transported for processing and storage.

The impact to the daily gross production amount could be substantial in the upcoming days if the strike were to continue. The remaining production is required for power to provide for safe conditions aboard the FPSO facility. The Company is continuing to monitor the ONEP action.

VAALCO believes it is in compliance with all Gabon labor laws and the agreements to which the Company is a party.

Oil is the main export of Gabon, which VAALCO believes is approximately 220,000 to 240,000 barrels per day according to recent reports. Oil revenues constitute approximately 60% of the Gabon budget.

VAALCO believes the government of Gabon and ONEP will reach an amicable position in this matter quickly such that the Company can restore production to normal output levels.

The Company's subsidiary VAALCO Gabon Etame, Inc. operates the Etame Marin Permit in which it holds a 28.07% net interest in the Etame Field. Other participants in the permit are Sinopec Group (31.36%) through its subsidiary, Addax Petroleum Etame Inc., Sasol Petroleum Etame Limited (27.75%), Sojitz Etame Limited (2.98%), PetroEnergy Resources Corp. (2.34%) and Tullow Oil Gabon SA (7.5%).