VAALCO Energy has inked a Sale and Purchase Agreement (SPA) to acquire the 27.8% working interest of Sasol in the Etame Marin block offshore Gabon. The acquisition will add to the company’s already-existing 31.1% working interest in the block. VAALCO is also acquiring the Integrated Chemicals’ company’s 40% non-operated participating interest in Block DE-8 offshore Gabon.
The terms of the transaction states that:
- The transaction is effective from July 1st 2020 and it is anticipated to close within 90 days. Cash paid at closing is expected to be less than $44 million as the amount paid will be subject to certain customary financial adjustments, including adjustments to account for estimated positive net cash flows attributable to the period from the effective date until the closing date.
- VAALCO is acquiring a 40% non-operated participating interest in Block DE-8 offshore Gabon, with Perenco, the operator, holding the remaining 60%.
- A contingent payment of $5 million will be payable to Sasol by VAALCO if Brent oil pricing averages greater than $60 per barrel for 90 consecutive days during the period from July 1, 2020 to June 30, 2022.
- It includes an interest in the Akoum-B discovery on Block DE-8 that was drilled in 2003 and has a potential appraisal well planned for 2021. If the appraisal well is successful, it could be tied back through a subsea completion to a Perenco-operated existing platform on Block DE-8.
- Evercore Group L.L.C. serves as the financial advisors to VAALCO while Ashurst LLP serves as legal advisors.
The Chief Executive Officer of VAALCO, Cary Bounds said, “We believe that the acquisition of Sasol’s interest at Etame is a very attractive and value accretive strategic acquisition for the Company that confirms our position as one of the leading independent exploration and production companies in West Africa. In what was a competitive sales process, this is the ideal growth transaction that we have been seeking for VAALCO. We believe the acquisition of an additional stake in this field that we know so well, having been the operator since 1995, is an important step in implementing our strategy. The acquisition is expected to deliver a step change in our production to over 9,000 barrels of oil per day net based on current production and significantly boosts our cash flow profile. With minimal additions to our overhead costs, we expect this transaction to lower our G&A cost per barrel by approximately 40%. The strong operational and economic performance of Etame in recent years has enabled us to grow our net cash position, which we are now using to fund this value accretive acquisition and profitably expand our reserve base.”