Vaalco Energy, Inc. has executed an agreement with Transocean regarding the remaining contract term for the Constellation II jack-up rig used at Vaalco’s recent drilling program offshore Gabon.
To remind, in January 2016, Vaalco said it had no plans to drill any more wells during the year on its Etame Marin block offshore Gabon. Consequently, the driller and the oil company then started the discussions over the rig’s contract status.
The agreement revealed on Tuesday provides for payment of $5.1 million net to VAALCO’s interest for unused rig days under the contract. This amount, plus the company’s share of demobilization charges, will be paid in seven equal monthly installments beginning in July.
Steve Guidry, the Company’s Chief Executive Officer, said: “We are very pleased to have reached a fair and amicable settlement with Transocean following the release of the rig utilized in our offshore Gabon drilling program. We appreciate the relationship with Transocean and their support of our operations.”
He said that while low oil prices were the primary factor in Vaalco’s releasing the rig, the benefit of the drilling program through that point was further evidenced in the second quarter when the company’s production averaged approximately 4,700 BOE per day, at the top end of guidance for the quarter.
“Thus far in 2016, we have experienced very high production uptime along with more shallow declines from new wells placed on production in the last twelve months. The shut-in of the South Tchibala 2-H well is expected to be only a short-term temporary disruption, therefore we don’t see a need to change our current annual production guidance of 3,700 to 4,500 BOE per day at this time,” Guidry said.
Offshore Energy Today Staff