LONDON (Alliance News) - Victoria Oil & Gas PLC Thursday said it has expanded its operations in Cameroon after it purchased a 75% stake in the Matanda licence from a subsidiary of commodity giant Glencore PLC.
Glencore Exploration Cameroon Ltd has agreed to sell its 75% stake in the production sharing contract covering the 1,235 square kilometre Matanda block to Victoria Oil for an undisclosed amount.
Following the deal, Victoria's wholly-owned subsidiary, Gaz Du Cameroun Matanda SA, will hold a 75% stake in the contract over the licence, with the other 25% being retained by the current owner of that stake, Afex Global Ltd, a Bermuda-based exploration and production firm.
Victoria Oil's subsidiary will be the operator of the licence following the deal, and will now have to outline a work programme for the project that satisfies the government of Cameroon. The company said it is hoping to begin the first phase of seismic acquisition in the fourth quarter of this year.
Victoria Oil said it will initially work with Afex Global on prospects in the onshore licence area located within a few kilometres of the adjacent Logbaba area and its existing pipeline network that is currently operated by Victoria's subsidiary.
Victoria Oil holds a 60% stake in the adjacent Logbaba project through the same subsidiary that will operate Matanda.
"The assignment of the production sharing contract complements the Group's current development activity at Logbaba, including the previously announced new drilling programme of one twin and one-step out well scheduled for 2016, by securing a significant additional resource base," said Victoria.
"The existing Logbaba gas network infrastructure will also allow for fast-track development of any new discoveries made on Matanda to deliver additional natural gas to local industrial users in Cameroon," the company added.
Victoria Oil believes the geology could link up between Logbaba and the North Matanda field, which is likely to be the initial focus of the Matanda development as it is the most explored area. The North Matanda field is estimated to hold around 1.8 trillion cubic feet of gas-in-place and condensate-in-place of 136.0 million barrels.
Importantly, the entire Matanda block is 60 times greater in size than the entire Logbaba project area. Last month, Victoria Oil said gas production from Logbaba in 2015 more than doubled from 2014, which made the project cash generative, and Victoria Oil & Gas is expecting further rises in production this year.
Current average production from the Logbaba project is 15.0 million standard cubic feet per day, with the aim of producing over 3.7 billion cubic feet in total during 2016 - which would represent a 30% rise from 2015.
Glencore did not release a statement concerning the sale, but it will be of no surprise to the market that the multi-commodity giant has exited the exploration project as it continues to offload non-core assets and tighten up its portfolio to deal with the current rout in the commodity markets, as it scrambles to reduce its hefty debt pile.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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