Production from Cameroon’s Logbaba field has increased by 11.4% year on year in the first half, Victoria Oil & Gas said last week. Production averaged 413,500 cubic metres per day in the first half of 2017, versus 371,000 cubic metres per day last year.
In a statement published on September 28, Victoria went on to note that results from a recently completed well, La-107, were “very positive”, with production beginning on September 22. The well was flow tested at an “absolute open flow” rate of 4.13 mcm per day, with a constrained rate of 1.53 mcm per day.
The rig has been skidded over to an adjacent site and is resuming work on the La-108 well.
"The year has been very productive for the company, with the delivery of very positive drilling results and the completion of well La-107, where we have encountered a combined 58 metres of net gas sands,” Victoria’s CEO, Ahmet Dik, said. “Production flow testing has confirmed the commercial viability of the gas-bearing reservoir sands detected in the Upper and Lower Logbaba formations, and initial flows through the processing facility yielded positive results.”
The company is aiming for production of 2.83 mcm per day by 2021, while the Douala region has gas demand potential of 4.25 mcm per day. “We believe [Victoria] is uniquely placed to take advantage of that market as the dominant onshore gas producer in country,” Dik said.
Revenues in the first six months were down, though, at US$15.4 million, versus US$23.6 million in the first half of 2016. In addition, the company had net debt of US$25.2 million, versus a net cash position at the end of December 2016 of US$1.8 million.
In a letter from Victoria’s chairman, Kevin Foo, he said the debt had been driven by its drilling programme. However, he noted, the completion of La-107 should “grow revenue significantly in the medium term”. However, delays in this programme slowed its efforts to increase production.
The company has US$4.9 million of headroom on its existing debt facilities but the subsidiary carrying out the work has a letter from a Cameroonian financial institution offering to extend this.
Revenues were reduced as the company recovered its share of costs from the Logbaba field, cutting its share of the revenues to 60%, from 100%. Furthermore, as of June 12, Cameroon’s Societe Nationale des Hydrocarbures (SNH) took a 5% stake in the field, with Victoria contributing 3%.
One worrying sign was an increase in trade receivables, as a result of payment delays from the company’s main customer, ENEO, which has provided US$10.1 million of promissory notes. Payments have resumed, it said, but remain behind contracted terms.
Victoria is also in the process of striking a farm-out agreement with Bowleven on the acquisition of an 80% stake in the 2,237 square km Bomono licence. This is adjacent to the Logbaba field. Completion of this deal requires government approval.
The deal was signed in March of this year. The companies are waiting for government approval on the deal, and in the meantime, Victoria has extended the end date of the agreement to the end of December.
Foo, in his comments, said the Bomono – and Matanda – blocks would be essential in helping meet Victoria’s 2021 goal.
Victoria went on to note that the government wanted Gaz du Cameroun to serve as the operator of the Bomono licence. The company said it was making these changes, which would require government approval.