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Thursday, November 12, 2020
Victoria Oil and Gas has announced an update on activities in its La-108 license along with the settlement of litigation with of Cameroon Holdings Limited (CHL).
VOG’s activities on La-108 included remediation and initial testing. The company confirmed that its fishing operation in well La-108 has been successful and the well was cleaned out to below the target perforation intervals
Following the perforation of 2 of the sand intervals in the Upper Logbaba formation, an initial clean-up flow test was commenced on 11 November 2020
These operations were conducted safely, with sensitivity to environmental impact, and with frequent consultation with local communities
The well was opened up on a 16/64″ choke and was beaned up to 32/64″, and as of 5 p.m. GMT yesterday was flowing approximately 19 MMscf/d with a Flowing Well Head Pressure (FWHP) of 3,580 psig. The full potential of the well is highly likely to exceed the capacity of the plant, which is 20 MMscf/d.
Regarding the litigation, a settlement agreement has been entered into with CHL to cease all legal action and cancel the CHL royalty agreement. The settlement results in a valuable net revenue increase to GDC on a monthly basis from December 2020. Significant legal costs are also avoided and management can focus on value-adding activities. The settlement amount of, in aggregate, US$12.5 million, can be paid out over many years, or sooner without penalty.
Commenting today Roy Kelly, CEO of VOG, said: “The two items addressed in this RNS hopefully demonstrate that the Company is proactively and decisively dealing with intractable legacy issues. Firstly, the settlement of this long-standing legal dispute removes financial uncertainty and ongoing costs which could have run to a final hearing in 2022, with potentially negative consequences. The termination of the CHL Royalty Agreement as part of the Settlement is a considerable benefit to shareholders in terms of future cashflow. Without the distraction of expensive legal proceedings and the considerable drain on management resources, we can now focus on value accretive activities.
“Lastly, we are extremely pleased to have safely remediated La-108 and to have tested it at excellent flowrates. The complexity of this project in a deep, high pressure well was exacerbated by the remoteness of our operation meaning lead times for spares or new equipment can be several weeks or months as there are no other upstream onshore operations in the country. This took meticulous planning and execution by the team and its subcontractors. As to the additional gas sales potential this well provides, we maintain a ‘hopper’ of additional gas sales opportunities, including new and existing customers, power and thermal use, and we will now pursue these earnestly.”
The full release is available on the Victoria Oil & Gas website.
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