Wednesday 26 September 2018

VAALCO Energy, Inc. through its wholly owned subsidiary, VAALCO Gabon S.A. and the other Etame Participating Interest owners announced the receipt of the Presidential Decree approving the successful execution of an Amendment to the Etame Marin Production Sharing Contract (“PSC”) in Gabon between the Government of Gabon and the Etame Participating Interest owners. The Amendment provides for a 10-year extension of the three Exclusive Exploitation Areas under the PSC. VAALCO is the Operator with a 33.575% Participating Interest under the terms of the applicable Joint Operating Agreement. The remaining owners of Participating Interests under the Joint Operating Agreement are Addax Petroleum Etame, Inc. (33.900%), Sasol Gabon S.A. (30.000%), and PetroEnergy Resources Corp. (2.525%). VAALCO and the other Participating Interest Owners are referred to as the “Contractor Parties”.

Key Highlights of the Extension:

- Extends each of the existing three Exclusive Exploitation Authorizations under the Etame PSC for 10 years from the date of the signing of the Amendment, with two additional five-year option periods;

- Provides the opportunity to make future investments that will yield benefit to both the Contractor Parties and the government of Gabon through further development of the resource potential within the Exploitation Areas;

- Commits the Contractor Parties to complete, within two years of the Amendment coming into force, a drilling program to drill two development wells and two appraisal wells, as well as undertake technical studies;

- In addition, VAALCO has agreed individually to provide an increased commitment to corporate social responsibility projects in Gabon.

Representatives of Sasol Gabon, Addax and PetroEnergy have also executed the Amendment. The Contractor Parties have also agreed to their respective Participating Interest share of the work commitment and other obligations, including the drilling commitments, under the terms of the Extension. The Contractor Parties are optimistic that these wells will be part of a broader, long-term program to develop the economically recoverable portion of the hydrocarbon resources remaining in the field which will jointly benefit VAALCO, the other Contractor Parties and the Republic of Gabon.