Vaalco pays US$8.4 million for oil exploration rights of bloc 5 of Angola’s offshore

23 May 2006

Houston, United States, 23 May – US oil company Vaalco Energy has said it will pay US$8.4 million for the exploration rights of oil bloc 5 in Angola’s offshore area, which will operate a partnership with Interoil and Sonangol.

Under the terms of the agreement with Angolan state oil company Sonangol, Vaalco undertakes to survey an area of 1,000 square meters of the bloc and drill two exploration wells in the four years of the initial period of the concession.

A second period of three years is also included in the agreement for carrying out an additional seismic survey and drilling a further two wells.

In a statement, Vaalco said that, of the 12 wells drilled in bloc 5 so far by different operators, vestiges of oil were found in four, and another three produced between 700 and 1,100 barrels of crude oil per day.

Total reserves found were of 50 million barrels, although most of this has been classified as unfeasible for commercial use.

Located in the Cuanza River basin, bloc 5 covers a total of 1.4 million acres, and in 95 percent of its area depth is of less than 200 meters.

The winning consortium has Vaalco as its operator, with a 40 percent stake, and also includes Interoil, also with 40 percent, and Sonangol Pesquisa e Produção, with 20 percent.

Vaalco will now have to sign a participation agreement with Sonangol, as well as a sharing agreement with the two members of the consortium.

According to Robert Gerry, the chairman of Vaalco, bloc 5 is attractive because it has “a proven hydrocarbon system, based on discoveries made by previous operators.”

Gerry added that some of the “targets” for the concession area “could so far not have been reached without new seismic processing techniques developed over the last few years.” (macauhub)