RNS 17.01.19 - Q4 2018 Operations Update Victoria Oil & Gas Plc (“VOG” or “the Company” or “the Group”) Q4 2018 Operations Update Victoria Oil & Gas Plc, the Cameroon based gas and condensate producer and distributor, provides an update on the Group’s operations for the three months ended 31 December 2018 (“Q4 18” or “the Quarter”). Highlights: · Following signature of a binding term sheet with ENEO for a 3-year contract to supply the 30MW Logbaba Power Station, sales to ENEO recommenced on 22 December 2018 · 2018 peak rate of 7.67mmscfd reached on 28 December 2018, following resumption of sales to ENEO · Q4 Gross gas sales of 403.8mmscf +14% on Q3 (355.6mmscf) · Q4 Average gas production rate of 4.45mmscfd +20% on Q3 (3.72mmscfd) · Gross Gas sales for 2018 of 1,410.0mmscf (2017 3,683.6mmscfd; -62%) · Average production rate for 2018 of 3.75mmscfd (2017 10.98mmscfd; -66%) · Grid power sales decreased by 99% on 2017 due to ENEO non-renewal of contract, announced on 5 January 2018 · Thermal consumption increased 5% on 2017 with addition of 3 new customers and 2 reconnections. · Industrial power consumption increased 12% on 2017 with addition of 3 new customers Post Period End: · Average production rate MTD for January 2019 of 7.8mmscfd as at 14 January 2019 · Presidential Decree received on Matanda license assignment Logbaba - Quarterly Production Update The Q4 18 gross and net gas and condensate sales for Logbaba and Gaz du Cameroun S.A., (“GDC”), are as follows: Amounts in bold are gas and condensate sales attributable to GDC (57%): Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Gas sales (mmscf) Thermal 200 352 194 341 174 305 179 313 177 312 Industrial power 15 27 9 15 9 15 10 17 10 18 Grid power 15 25 0 0 0 0 0 0 226 396 Total (mmscf) 230 404 203 356 183 320 189 330 413 726 Average gas production (mmscfd) 4.45 3.72 3.30 3.50 7.94 Condensate sold (bbl.) 2,701 4,738 2,298 4,032 1,657 2,907 1,654 2,900 3,951 6,931 Consumption Increased Notwithstanding ENEO resuming gas consumption at the end of December, the thermal and industrial power customers showed encouraging consumption uplifts. · Q4 18 thermal customer usage increased by 3% on the previous quarter (Q4 2018 increased by 5% on Q4 2017);and · Q4 18 industrial power customer usage increased by 80% on the previous quarter (Q4 2018 increased by 12% on Q4 2017). These increases reflect GDC management’s focus on driving the industrial customer growth, during the year, to diversify and reduce the reliance on the grid power customers. In addition, an existing Thermal customer, Agrocam, which had been connected for power consumption in the previous quarter started consuming gas for power on 2 October 2018. The consumption levels post period end, as a result of ENEO coming back online, are: · 7.67mmscfd to 14 January 2019 · 9.19mmscfd peak reached to date in January 2019 Grid Power Update The Company announced on 24 December 2018 that Gaz du Cameroun (“GDC”) had entered into a binding term sheet on the 21 December 2018 with ENEO Cameroon SA (“ENEO”) to resume gas supply to the 30MW Logbaba Power Station. Gas supply and power distribution commenced 22 December 2018. The parties are committed to executing Fully Termed Agreements and providing appropriate payment guarantees during Q1 19. The term sheet with ENEO sets out 3-year contract term with peak delivery of 6.1mmscfd to be made available to the Logbaba station on an 80% minimum Take or Pay basis throughout the year, which equates to a minimum gas supply of 4.88mmscfd. This differs from the previous contract, which contained a seasonal minimum take or pay element of 90% during the January to June dry season and 30% during the wet season July to December. The initial gas sale price of $6.75 per MMBtu will increase over the three-year term of the agreement by $0.10/MMBtu on each anniversary of the effective date of the agreement. Presidential Decree on Matanda Received GDC received the Decree signed by H.E. President Paul Biya on December 17, 2018, authorising the transfer of interest in the Matanda Production Sharing Contract (“Matanda PSC”) license assigned from Glencore in early 2016. This secured GDC 75% ownership and operatorship of the Matanda PSC, adjacent to its Logbaba concession, which at 1,235 square kilometers, is over 60 times the area of the Logbaba concession. The North Matanda offshore field contains estimated gross 2C Contingent Resources of 150bcf of recoverable gas and 6 million barrels of condensate, with an upside of 1Tcf of gas. The initial focus, however, will be onshore exploration prospects close to Logbaba gas pipeline network, where gross resource potential is estimated at 1,303bcf of gas (Mean GIIP) contained in 23 prospects and leads. The existing GDC infrastructure, with proximity to Matanda, will allow new discoveries to be delivered to industrial users efficiently and promptly. A minimum work programme obligation of one exploration well, plus seismic reprocessing is to be completed in the first 2 years of the assignment following the Presidential Decree. Outlook for 2019 Grid Power ENEO has expressed interest in increasing power generation levels to include an additional 20MW from its Bassa Power Station in due course. This would add an additional 4mmscfd to current demand, if concluded. Discussions continue with other IPP’s who are evaluating additional power supply options to meet the electricity shortfalls that the city of Douala continues to experience. GdC is targeting agreement with at least one of these IPP’s, during 2019, to kick off a new power project in Douala. Non-Grid Business Development Whilst gas supply for grid power to ENEO and to others will always be a key strategy of the Group, the Board, as previously announced, has identified that it is important to diversify the customer base to reduce dependence on any single customer. Rebalancing of Group customer consumption with an emphasis on non-grid remains a major driver for 2019. The considerable reserves upgrade announced in June 2018 provides the basis to seek long term sales contracts for growth of both grid and non-grid sales. The key focuses for management will be to: · Increase Thermal consumption by actively marketing the benefits of natural gas over liquid fuels; · Accelerate the Groups gas to power programme for Industrial Power customers; · Leverage VOG’s relationship with Naturelgaz, aimed at bringing first CNG customers online in 2019; and · Examine potential rural energy needs using CNG as a key fuel that allows integrated and distributed power solutions for communities with no grid power access. The Group’s “Energy Well” solution. Industrial Power With ongoing power shortages in Douala, the Board expects Industrial Power to yield substantial revenues over the next 10 years for GDC. Over 30 existing and new customers have expressed interest in an industrial power solution; the GDC Industrial Power Unit. As most of these proposed power customers are already connected to GDC’s gas pipeline, adding gas fired power generation at these sites would increase gas consumption with minimal downstream costs for GDC. GDC has completed negotiations with and issued GSA’s to 11 customers and signed GSA’s with 4 customers. The Board expects a further 7 customers to sign in the near term. GDC is working with Altaaqa and other equipment suppliers to fast track generators for customers. The target is to have a number of Industrial Power customers online by end of 2019, consuming over 4.5mmscfd of gas with no seasonality at prices of around US$13/MMBtu. CNG Development On 26 June 2018 the Company announced an agreement to partner with Naturelgaz Sanayi ve Ticaret A.S.(“Naturelgaz”) on CNG projects. Naturelgaz is Europe’s largest CNG supplier and distributor and brings valuable expertise within this field to support GDC. The partnership will provide CNG infrastructure for customers in and around Douala. Marketing studies by GDC and Naturelgaz have concluded that five types of customers would use CNG in Cameroon; thermal, off-grid power generation, commercial trucking, public transportation, and domestic transportation. The studies indicate the near-term potential of the CNG market, within a 60 km radius of the Logbaba facilities, is 2mmscfd thermal and 2mmscfd industrial power. To date, 20 customers have expressed interest in CNG within a 60 km radius of Douala. Design, engineering and cost estimation has now been completed which demonstrates feasibility for an initial project to build a 2mmscfd CNG plant in Douala for CNG distribution. Negotiations with customers on offtake agreements are in progress which, on signature will enable the project to kick off. The Board believes that CNG will compete strongly against diesel and heavy fuel oil which are currently priced in Cameroon at $25/MMBtu and $15/MMBtu respectively. The Energy Well Concept Seventy four percent of the Cameroon population has access to the National Grid and 86% of the population lives within 15km of the power network. However, household electrification stands at only 23% and there are approximately 8 million rural Cameroonians who have no access to grid electricity. This situation is replicated in many African nations, where less than 10% of the rural population has access to reliable grid electricity. The average rural household in Cameroon requires about 1kWh of energy per day. VOG is pursuing its ‘Energy Well’ system, utilising CNG, as the bridge between traditional hydrocarbons and renewable energy to provide a seamless, clean and reliable energy solution to regions that are currently poorly served by conventional energy sources. GDC has teamed up with US company Blocksyte Inc on development of the Blockchain elements of Energy Wells. The Company is working with Blocksyte, Altaaqa and others to start field tests this year on the key components of the business. Logbaba La-108 Insurance Claim The Company has now received a full independent technical analysis, by an internationally respected group, of the drilling operations on the Logbaba La-108 well in the aftermath of a drill string washout on 7th March 2017. On the basis of this work, the Company will continue to pursue the insurance claim to recover the costs associated with the event. As is normal in these situations, the outcome of the claim is not certain. The gross amount of the claim submitted is $24.5 million. Matanda Having received the Presidential Decree conferring title to the Matanda PSC, GDC will continue subsurface planning work for the initial drilling programme at Matanda. The Company is continuing to explore financing options for the drilling programme, including a potential farm-down of the asset, to fund further development. West Medvezhye (“West Med”) The Company has identified a number of potential buyers for the West Med Asset in Russia. Negotiations are ongoing targeting a sale in 2019. OECD Instance Following a complaint to the Organisation for Economic Co-operation and Development (“OECD”) in 2018 and various communications with the UK National Contact Point (“NCP”) for promotion of the OECD Guidelines for Multinational Enterprises (the “Guidelines”), the NCP has decided, on an “Initial Assessment” that issues raised merit further examination (based on initial information from both parties). The instance was made by the association of residents of Ndogpassi I, II and II and the Good Neighbours circle of Logmayangui in relation to the establishment and operation of the Logbaba Project in Cameroon. The Guidelines are principles for responsible business conduct in areas including employment, human rights and the environment. While the Board and GDC both strongly believes that the Company has and has had the necessary policies and processes in place, we welcome the opportunity to engage further with the complainants to understand their concerns and to agree how we can advance together. The Initial Assessment, once published, will be accessible on the OECD’s website [link] . The NCP stresses in its report that its decision to examine further the claim against VOG is not a finding against the Company. We look forward to engaging in NCP-facilitated mediation, which the Company anticipates will take place over the coming months. Further announcements will be made as and when appropriate. END - - - Sorry about the tables; they don’t copy and paste well. A_D
Good post Francis. In the past the price range was $7.50 to $16. Now the range is $6.65 (ENEO) to $16. Most thermal will be paying $16 apart from Dangote/SABC who i would image would pay a bit less as large users. Industrial power is set at $13.
New revenue? The price was given by VOG earlier in the year “price range US$7.50 to $16.00 per mmbtu” this is from [link] (Slide 3). I guess they are selling the rest of the gas to other customers even cheaper No - you would expect ENEO to pay less than anyone else, because of the volume they are taking. If one customer is taking as much gas as all the others put together, of course they will get a good deal. So this will not double revenue, but it is a useful boost when you think that the marginal cost of additional gas is close to zero: the main costs are the up-front drilling and infrascructure, plus network maintenance, all of which is either paid for or is being incurred anyway.
The_Marin in response to your post yesterday i have some info for you. The new ENEO deal is at $6.75 mmbtu rising to $6.95 mmbtu. Before ENEO came back online the company was doing about 5 mmscf/d for thermal and industrial power. VOG have said many many times that thermal commands up to $16 mmbtu and Ind power is $13 fixed. Way more than ENEO. I haven't a clue as to why you say "So how much is 4.9mmscf/d in cash terms? I guess they are selling the rest of the gas to other customers even cheaper otherwise they would have given us an expected daily revenue rather than expect us to calculate it ourselves." It is very easy to work out revenue figures. Nothing suspicious at all. VOG will only give actual rev figures in interim and annual reports. Nothing corrupt at all about his company. They sell gas to customers. It couldn't be clearer. I have reported your post mentioning corruption as this is defamation. You are talking nonsense.
New revenue? You should be able to calculate it. see below result from internet search: “One thousand cubic feet (Mcf) of natural gas equals 1.037 million Btu (MMBtu), 10.37 therms. The heat content of natural gas may vary by location and by type of natural gas consumer, and it may vary over time.” Revenue up by 100%, share price up by 50%. Didn’t think cost of production was that high. Go figure. A_D
Good news- Logbaba is up and running Excellent news… should enable the SP to improve rapidly now; opening price will be much higher than the last closing price; so fine for long-suffering holders of VOG shares like myself.
Good news- Logbaba is up and running At long last! Buying may be muted due to need for financing at some point soon, but at least they should be able to get it now. A nice Christmas present.
Good news- Logbaba is up and running 24 December 2018 Victoria Oil & Gas Plc Renewal of Long-Term Gas Supply Contract with ENEO Victoria Oil & Gas Plc, the Cameroon based gas and condensate producer and distributor, is pleased to announce that its wholly owned subsidiary Gaz du Cameroun S.A (“GDC”) has signed a binding term sheet with grid power provider, Eneo Cameroon S.A. (“ENEO”), to resume gas supply to the Logbaba 30MW Power Station. Highlights: · Gas supply and power distribution commenced 22 December 2018 · 3-year contract term · Peak quantity delivery of 6.1mmscf/d to be made available to the ENEO site · Minimum base load 80% (4.9mmscf/d) of peak quantity “Take or Pay” throughout the year · This contract will increase current daily average consumption by more than 100% to approximately 8.8mmscf/d · Gas price range from $6.75 to $6.95 per MMBtu over contract term The Board is pleased to confirm that a binding term sheet was signed on 21 December 2018 between GDC and ENEO for the resumption of gas sales. Simultaneously, ENEO has entered into an agreement with Altaaqa Alternative Solutions Projects DWC-LLC (“Altaaqa”) for the provision of their gas-powered generation units (“Gensets”). Gas export and power generation began on 22 December and build-up to the full 30MW supply is progressing well. Terms of the Agreement Under the revised terms, gas will be supplied to ENEO’s 30MW Logbaba Power Station. The peak quantity requirement equates to 6.1mmscf/d gas consumption from GDC. The initial gas sale price of $6.75 per MMBtu will increase over the three-year term of the agreement by $0.10/MMBtu on each anniversary of the effective date of the agreement. The original contract with ENEO contained a seasonal minimum take or pay element of 90% during the January to June dry season and 30% during the wet season July to December. The take or pay element of the contract has been amended to a minimum base load level of 80% throughout the entire year, which equates to a minimum gas supply of 4.88mmscf/d. The average daily consumption of gas for GDC during 2018, prior to recommencing supply to ENEO was approximately 4mmscf/d, so the Logbaba production more than doubles current daily average production to more than 8.8mmscf/d. The parties are committed to executing Fully Termed Agreements and providing appropriate payment guarantees by 31 January 2019. ENEO has expressed their intention to increase power generation levels to include an additional 20MW from its Bassa Power Station in due course and they, and other IPP’s, are evaluating additional power supply options to meet the electricity shortfalls that the city of Douala continues to experience. The Company commented: "We are delighted that GDC has renewed its contract with ENEO and has quickly resumed gas supply to the Logbaba Power Station in Douala. Whilst the situation in 2018 has been a challenging one for all involved, the management team remained confident that a resolution would be reached. We wish to thank the Government of Cameroon, Ministry of Water & Energy, Eneo Cameroon S.A, Société National de Hydrocarbons (SNH) and His Excellency the President for entrusting GDC and Altaaqa with such an important project for the Republic of Cameroon and its people. The new contract provides GDC with a stable three-year deal that immediately doubles daily average gas sales, whilst also offering a platform for further opportunities with ENEO, notably at their 20 MW Bassa Power Station in Douala. With the resumption of the ENEO contract, the Company is in a strong position for growth during 2019. GDC 's significant reserve base and position as the only onshore gas producer in Cameroon provides a unique opportunity to produce more power in the region for the benefit of both the Company, and the people of Cameroon. The management team has worked hard over the last 12 months to successfully diversify the product base and increase the number of clients and will continue to focus on this initiative."
Good news- Logbaba is up and running Just heard from my same source that the Bassa power station is not happening. The gensets have gone but Logbaba is 30mw so doubling production overnight. This source of mine has stated it’s a real step in the right direction so we should be greatly enthused by this. Yes Bassa hasn’t come in but with the CNG/Naturelgaz project coming on stream next year there is plenty to be confident about. We can enjoy Xmas with a spring in our step!
Good news- Logbaba is up and running I’ve found out from another VOG investor that last night the Logbaba power station was now taking gas. Hopefully ENEO will get the Bassa power station up and running soon. No info on the contracts signed. Hopefully the share price will shoot up significantly!
General Interest Its starting to not look good now. We’re looking at another placing. Who in their right minds will buy. A penny, or should I say a share in VOG, for anyone’s thoughts.
General Interest I just re-watched the two proactive investor videos from August and October. We are now coming to the end of the year. Do VOG have enough cash? Foo said that they have enough till the end of the year but what about next? And ENEO is becoming distant.
General Interest Interesting article pertaining to VOG/GDC in many ways: How emerging markets in Africa can transform utilities through disruptive technology. By Yvonne Andiva - Last Updated: Nov 21, 2018 The entire installed generation capacity of Africa’s 48 Sub-Saharan countries is just 68 gigawatts, no more than Spain; this is according to the Africa’s Infrastructure report conducted by the World Bank. Up to one-quarter of that capacity is unavailable because of aging plants and poor maintenance. In Sub-Saharan Africa, just one person in five has access to electricity. If current trends continue, fewer than 40% of Sub-Saharan African countries will reach universal access to electricity by 2050. Per capita consumption of electricity in Sub-Saharan Africa (excluding South Africa) averages only 124 kilowatt-hours a year and is falling. The rate of consumption is barely 1% of that in high-income countries. If entirely allocated to household lighting, it would hardly be enough to power one light bulb per person for three hours a day. Marleze van Loggerenberg who is the Head of Business Development Africa at Wipro Limited, had an exclusive interview with Construction Review on how emerging markets in Africa can transform utilities through disruptive technology. She recently attended the Sub Saharan Africa Power Summit in South Africa which according to her was a very eye opening summit. What stood out for her was that in attendance were various African countries including South Africa, the senior decision makers from the IPP, PPP and National Power communities across the region. Also, how people came together to discuss the challenges that Africa is facing and trying to find solutions around it and the real time interactions among the people was very successful. [link]
Exclusive Compressed Natural Gas ("CNG") partnership Global Investment Holdings (Naturelgaz) have updated their website regarding the VOG agreement: Partnership with Victoria Oil & Gas Plc Naturelgaz has entered into an exclusive agreement to partner with Gaz du Cameroun S.A. (GDC). Gaz du Cameroun is a wholly-owned subsidiary of Victoria Oil & Gas Plc, the Cameroon based gas and condensate producer and distributor and listed on the AIM market of the London Stock Exchange under the ticker VOG. The purpose of this long-term partnership will be to: Design, build and operate compressed natural gas (“CNG”) infrastructure and solutions for customers who need mobile energy, initially in GDC’s home market of Cameroon with the intention of rolling this out into other African countries. Market CNG products, including bulk CNG and gas-to-power to industry and businesses which require reliable off-grid / off-pipeline energy solutions, as well as Auto CNG for alternative mobility solutions. Phase 1 agreed between the parties is a 2mmscf/d (21mscm/y) CNG plant and customer distribution project currently in design stage. About Victoria Oil & Gas: Victoria Oil & Gas Plc (“VOG” or “the Company”) is a fully-integrated onshore gas producer and distributor with operations located in the port city of Douala, Cameroon. Through the Company’s wholly-owned subsidiary, Gaz du Cameroun S.A. (“GDC”), VOG delivers gas via a 50km gas distribution pipeline network to a range of major industrial customers. Since spudding its first wells in 2010, the Company has grown to become the dominant player in the Cameroon onshore gas market, primarily through the 57% owned Logbaba gas project. GDC is partnered on this project with RSM Production Company (“RSM”), and Société Nationale des Hydrocarbures (“SNH”), who have holdings of 38% and 5% respectively. Subject to government approval VOG will extend it acreage over the highly prospective Douala Basin with the addition of the Matanda license area. Victoria Oil & Gas is listed on the AIM market of the London Stock Exchange under the ticker VOG. From the Global Investment Holdings site: [link] From the Naturelgaz site: [link]
General Interest Gas to overtake coal as world’s second largest energy source by 2030 - IEA LONDON (Reuters) - Natural gas is expected to overtake coal as the world’s second largest energy source after oil by 2030 due to a drive to cut air pollution and the rise in liquefied natural gas (LNG) use, the International Energy Agency (IEA) said on Tuesday. The Paris-based IEA said in its World Energy Outlook 2018 that energy demand would grow by more than a quarter between 2017 and 2040 assuming more efficient use of energy - but would rise by twice that much without such improvements. Global gas demand would increase by 1.6 percent a year to 2040 and would be 45 percent higher by then than today, it said. The estimates are based on the IEA’s “New Policies Scenario” that takes into account legislation and policies to reduce emissions and fight climate change. They also assume more energy efficiencies in fuel use, buildings and other factors. “Natural gas is the fastest growing fossil fuel in the New Policies Scenario, overtaking coal by 2030 to become the second-largest source of energy after oil,” the report said. China, already the world’s biggest oil and coal importer, would soon become the largest importer of gas and net imports would approach the level of the European Union by 2040, the IEA said. According to Reuters calculations, based on China’s General Administration of Customs data, China has already overtaken Japan as the world’s top natural gas importer. More via link [link]