VAALCO Energy today provided an update on the South Tchibala 1HB-ST well, as well as updated full year production guidance.

Highlights

• South Tchibala 1HB-ST well:
• Penetrated a thin section of the Gamba sand that is not economically viable to complete in this wellbore;
• Discovered two potential Dentale producing zones, the Dentale D1 sand and the Dentale D9 sand;

Completed the Deep Dentale D1 sand interval with a small frac pack

• This sand interval has good quality oil with low gas oil ratio ("GOR”) that has produced an average of 150 to 200 net revenue interest (“NRI”) barrels of oil per day (“BOPD”);
• Production rates have been well below the minimum recommended operating range of the electrical submersible pump (“ESP”) which has required more frequent well cycling to prevent ESP damage;

Plan to evaluate and recomplete the D9 interval during the next drilling campaign

• Expected higher oil production rates from the D9 interval which is analogous to the North Tchibala sands currently on production;
• Dentale D9 interval has an estimated original oil in place (“OOIP”) range of 4 to 15 million barrels of oil (“MMBO”); and

Due to low flow volumes below the minimum recommended operating range of the ESP, the South Tchibala 1HB-ST well will be intermittently flowed, using well cycling, to determine if production improvements will occur and to project future reserve recovery expectations; and

Primarily due to the South Tchibala 1HB-ST well performance, VAALCO’s full year 2022 net production guidance is being reduced by 750 NRI BOPD at the midpoint to a range of 9,000 to 9,500 NRI BOPD.

George Maxwell, VAALCO's Chief Executive Officer commented, 
“The production from the D1 formation of the South Tchibala 1HB-ST has been below expectations and as a result, we are lowering full year 2022 production guidance by 750 NRI BOPD at the midpoint. Despite this, we remain optimistic about the D9 formation and plan to recomplete that interval in the South Tchibala 1HB-ST wellbore during our next drilling campaign. We plan to drill additional wells in the 2021/2022 drilling campaign that could positively impact our production toward the end of the year and into 2023. By exercising our additional options on the current drilling rig in a time of continued strong pricing, we are maximizing our potential to add meaningful reserves and production to VAALCO’s portfolio. The Etame asset is a premier, high-quality field that has produced over 126 million barrels of oil since we began producing it over 20 years ago and we believe there is still significant upside to be captured over the next decade.”

Etame: The South Tchibala 1HB-ST

The South Tchibala 1HB-ST discovered two potential Dentale producing zones, the Dentale D1 sand and the Dentale D9. The first completion was in the shallower D1 which included a hydraulic fracture treatment to increase both the production flow rate and recovery from the D1 interval.

To date, production rates have been well below the minimum recommended operating range of the ESP which has required more frequent well cycling to prevent ESP damage. Pressure transient analysis has been used during well shut-in periods to determine D1 reservoir characteristics in this area. According to several analyzed pressure build-ups, multiple boundaries near the well and low permeability have combined to restrict the capability of the well to continuously provide oil at stable rates. Production and shut-in cycling of the well will be continued to determine if production improvements will occur and to project future reserve recovery expectations.

The additional Dentale D9 (15 meters net hydrocarbons) interval can be tested and completed in the future and has an estimated OOIP range of 4 to 15 MMBO.

Production Guidance

In conjunction with the South Tchibala 1HB-ST well performance, VAALCO’s full year 2022 net production guidance is being reduced by 750 NRI BOPD at the midpoint to a range of 9,000 to 9,500 NRI BOPD. Previously VAALCO’s full year 2022 production guidance was 9,500 to 10,500 NRI BOPD.

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