17 Apr 2015 17:36
Victoria Oil & Gas PLC
17 April 2015
Victoria Oil & Gas Plc
("VOG" or "the Company")
Production Update - 9.4 mmscf/dLogbaba Power Station Installation Nears Completion
Highlights
· Achieved 9.4 mmscf/d average gas production average (7 day) following Phase 1 ENEO connections
o 114% increase in gas supply to customers since beginning of 2015
o 10.5 mmscf/d peak production rate
o 9.6 mmscf/d 5 day working week average (high demand period)
· Take-or-pay gas supply agreement triggered at 20MW Bassa Power Station
· Balance of Gensets cleared customs, under installation at 30MW Logbaba Power Station
Victoria Oil & Gas PLC (AIM: VOG) today announces that gas supply to industrial customers in Cameroon, from its wholly owned subsidiary Gaz du Cameroun S.A. ("GDC"), has risen to 9.4 mmscf/d on a seven-day average basis following increased production to feed the Bassa power station. This production rate marks a 114% increase from the beginning of the year on a seven-day weekly average basis. The five-day 'working week' average, the high use period for GDC, is now at 9.6 mmscf/d with a peak production rate of 10.5 mmscf/d.
The Bassa Power station is supplied with gas under an agreement signed with ENEO Cameroon S.A ("ENEO"), a company partly owned and operated by UK based Actis and the state power company in Cameroon. GDC is responsible for supplying gas to both the Bassa and Logbaba power stations, where electricity is generated from gas fired electricity generation sets ("Gensets") supplied and operated by project partners Altaaqa Global ("Altaaqa").
Under the terms signed with ENEO, minimum take or pay elements come on-line guaranteeing fixed levels of revenue for the Company, once 20MW of power is made available at Bassa and 50MW of power is made available at both Bassa and Logbaba power stations. A maximum combined power generation of approximately 50MW equates to 10.1 mmscf/d of gas with the minimum take-or-pay terms requiring payment for90% of this during the dry season (January-June), and 30% in the wet season (July-December), at a fixed price of US$9/mmbtu. Take-or-pay obligations have been satisfied at the Bassa Power Station, following consistent generation of 20MW of power.
The completion of the Logbaba power station has now entered its final phase, with all remaining Gensets released from customs and being installed by Altaaqa. The installation is expected to be completed soon and Logbaba will thereafter meet its 30MW supply target (6.06 mmscf/d).
Kevin Foo, Executive Chairman, said: "Our gas production has doubled since the beginning of the year, and for the first time our peak production has broken the 10 mmscf/d threshold. This is a big achievement for VOG and the continuation of what I expect to be a successful 2015 for the Company."
For further information, please visit www.victoriaoilandgas.com or contact:
Victoria Oil & Gas Plc
Kevin Foo / Laurence Read Tel: +44 (0) 20 7921 8820
Numis Securities
John Prior / Ben Stoop Tel: +44 (0) 207 260 1000
Strand Hanson Limited
Angela Hallett / Stuart Faulkner Tel: +44 (0) 20 7409 3494
Tavistock Communications
Jos Simson / Edward Portman/ Nuala Gallagher Tel: +44 (0) 20 7920 3150
Notes to Editors
About Victoria Oil & Gas Plc
Victoria Oil & Gas (VOG.L) is a gas utility company with operations in the industrial port city of Douala in Cameroon, which is the business hub to Central Africa.
The Company's subsidiary, Gaz du Cameroun S.A. ("GDC"), supplies cost effective, clean and reliable gas to industries in the Douala region from its onshore Logbaba Gas Project. Industrial customers are primarily supplied with gas through a 31.3km pipeline network built by GDC in Douala. GDC products currently include thermal gas, gas condensate and gas for electricity generation. GDC gas is attractive to customers due to its reliability, price competitiveness, low hydrocarbon emissions (compared to Heavy Fuel Oil) and adaptability to meet varied power requirement needs.
The Company generates cash flow from the Logbaba Project which is 60% owned and managed by GDC, with RSM Production Corporation, an affiliate of Grynberg Petroleum Company of Denver, Colorado holding a 40% participating interest.
VOG also holds 100% of the West Medvezhye oil and gas exploration project near Nadym, Russia. The field has C1 plus C2 reserves of 14.4mmboe (under the Russian resource classification system, analogous to proven and probable reserves under Western conventions) in addition to best estimate prospective resources of 1.4bboe.
Cameroon Energy Market
Cameroon is a stable African country that is host to a developing economy serving most of Central Africa with goods and services. A power deficit remains a major hindrance to Cameroon's economic expansion. The power grid is reliant on hydroelectric dams to supply 75% of power and the shortfall is made up from heavy fuel oil and gas. Hydroelectric dams are highly seasonal, with stream rates significantly varying from 6,000m3 per second in the wet season to 50m3 per second in the dry season. As with many hydro electrical systems transmission loss is also a constant issue when balancing power loads across distances to different consuming regions. The port-city of Douala is the major industrial zone within Cameroon and it requires high levels of consistently delivered grid power all year round. Currently Cameroon's energy demand is growing at 7% annually and gas is seen as a key element to Cameroons national energy strategy.