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VAALCO Energy, Inc. provided an update on the successful completion of its 2019/2020 drilling program as well as an operational update.
Highlights
Cary Bounds, Chief Executive Officer, commented, “We are proud of the highly successful 2019/2020 drilling campaign in which we have drilled and brought online three development wells and drilled two successful appraisal wellbores that confirmed additional resources to exploit from this quality asset. The drilling campaign has been transformational for VAALCO and has added meaningful production and cash flow with minimal increase in operating costs.  This has helped to improve our margins and drive our operational breakeven down to $31 per barrel of realized pricing. Following the completion of the South East Etame 4H well, we began the planned workover on the South East Etame 2H well to replace ESPs. We expect to bring the South East Etame 2H well back online around the end of March, which should restore production of approximately 2,400 gross BOPD.â€
“Our lowered operational breakeven, strong hedge position and increased production has enabled us to establish a solid financial footing which puts us in a stronger position to navigate the current low price oil environment. With that said, the global pandemic and energy industry events that began in late February of 2020 have been unprecedented and caused significant uncertainty across the oil sector with regards to outlook and budgets. The world is battling COVID-19 which has disrupted our everyday lives and negatively impacted the worldwide economy. As of right now, VAALCO’s operations have not been disrupted, and we have managed through the logistical challenges that we have faced since the outbreak. VAALCO has contingency plans in place in the event that we are directly impacted, and we continue to put the safety of our workers and local stakeholders first. We remain committed to generating long-term value for our shareholders by focusing on capital efficiency, controlling costs and optimizing production.â€
With the drilling of the South East Etame 4H well, VAALCO has completed its 2019/2020 drilling campaign. As previously announced, with the drilling of the South East Etame 4P appraisal wellbore, VAALCO has also satisfied the drilling commitment as part of the PSC extension that VAALCO signed in late 2018. Â
After installing production equipment, the South East Etame 4H well was brought online at an initial rate of approximately 2,200 gross BOPD, (600 BOPD NRI to VAALCO), with no H2S which is at the high end of the February 2020 pre-drill initial production rate of 1,200 to 2,500 gross BOPD (325 to 675 BOPD NRI to VAALCO). The well was drilled and completed as planned, with no safety or environmental incidents.
As previously announced, on March 7, 2020, the South East Etame 2H well stopped producing due to an ESP failure. The drilling rig on the South East Etame North Tchibala (“SEENTâ€) platform was already scheduled to replace the ESP on that well in a preemptive workover upon completion of the South East Etame 4H well. The workover on the South East Etame 2H well is currently underway and the well is expected to be returned to production around the end of March. The well was producing 2,400 gross BOPD, or 650 BOPD NRI to VAALCO, when the ESP failed. VAALCO will not perform any additional workovers with the contracted drilling rig and the rig will be released after completion of operations on the South East Etame 2H well.
Source: VAALCO
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Valaris Limited announced new contracts awarded subsequent to issuing the Company’s most recent fleet status report on February 21, 2023. Three-year contract with Petrobras for drillship VALARIS DS-8. The rig will be reactivated for this contract. The total contract value is approximately $500 million, including a $30 million mobilization fee. 100-day contract with a TotalEnergies affiliate for drillship VALARIS DS-12. The contract is expected to commence in second quarter 2023. 70-day contract with Beach Energy offshore New Zealand for heavy duty modern jackup VALARIS 107. The contract is expected to commence in third quarter 2023. The total contract value is approximately $26 million. President and Chief Executive Officer Anton Dibowitz said, “We are particularly pleased to have secured the award for preservation stacked drillship VALARIS DS-8, for a contract that is expected to generate a meaningful return over the firm contract term, and we remain focused on exercising our operational leverage in a disciplined manner. This most recent award represents the sixth contract awarded to one of our high-quality stacked floaters since mid-2021, and speaks volumes about our demonstrated track record of project execution when reactivating rigs.” Dibowitz added, “Following the reactivation of VALARIS DS-17 and DS-8, we will have ten floaters working across the golden triangle, including four drillships in Brazil, a market where we expect to see continued growth over the next several years.” Updated Guidance As a result of the contract awarded to VALARIS DS-8, which will require the rig to be reactivated from preservation stack, we are updating our first quarter 2023 and full-year 2023 guidance provided on our fourth quarter 2022 conference call on February 21, 2023. First Quarter 2023 Contract drilling expense is expected to increase by approximately $5 million to $385 million to $395 million. Adjusted EBITDA is expected to decrease by approximately $5 million to negative $5 million to breakeven. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $25 million to $30 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Full-Year 2023 Revenues are anticipated to be $1.8 billion to $1.9 billion, unchanged from the guidance provided on our fourth quarter 2022 conference call. Contract drilling expense is expected to increase by approximately $60 million to $1.49 billion to $1.59 billion. Adjusted EBITDA is expected to decrease by approximately $60 million to $180 million to $220 million. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $280 million to $320 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Capital expenditures are expected to increase by $60 million to $320 million to $360 million. Source: Valaris Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Seadrill Limited announced that the West Neptune has executed approximately six months of term extensions with LLOG Exploration Offshore, L.L.C in the US Gulf of Mexico. The extensions will commence in direct continuation of the existing term, and will keep the rig busy until Q3 2024, furthering Seadrill and LLOG’s long-term association. Total contract value for the extension is approximately $79 million. Source: Seadrill Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Semisub rig owner Dolphin Drilling has inked a new contract with Peak Petroleum in Nigeria for its 1974-built Blackford Dolphin. The firm contract, which follows the letter of award in January, gives the Euronext Growth-listed owner of three rigs the potential to extend the unit’s backlog by a minimum of 120 days and up to 485 days. The deal adds to and will be a direct continuation of the previously announced 12-month contract with General Hydrocarbon Limited (GHL). Øystein Stray Spetalen-backed company said the effective dayrate associated with the minimum firm period of the contract is $325,000, including the mobilisation fee. “The final award of the contract for Blackford Dolphin shows the opportunities in Nigeria at a strong dayrate, in addition to building on the backlog for the rig. It also underlines the attractiveness of our assets, and we look forward to returning to revenue-generating operations in 2023,” noted Bjørnar Iversen, CEO of Dolphin Drilling. Source: Dolphin Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
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