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DJ Victoria Oil & Gas PLC Pre-AGM Trading Update

TIDMVOG

RNS Number : 6871D

Victoria Oil & Gas PLC

27 June 2019

27 June 2019

Victoria Oil & Gas Plc

("VOG" or "the Company" or "the Group")

Pre-AGM Trading Update

Victoria Oil & Gas Plc, whose wholly-owned subsidiary, Gaz du Cameroun S.A. ("GDC"), the fully integrated onshore gas producer and distributor with operations located in the port city of Douala, Cameroon, is pleased to provide an update on the Group's operations prior to today's Annual General Meeting. This update covers the period from 1 April to 25 June 2019 inclusive ("Q2 19" or "the Quarter").

Highlights:

   --    Q2 19 average gas production rate during the period of 9.72 mmscfd (Q1 19: 10.10 mmscfd) 
   --    Q2 19 ENEO Cameroun S.A ("ENEO") gas consumption consistently over 5.1 mmscfd 
   --    Q2 19 gross gas sales of 838 mmscf (Q1 19: 903mmscf) 
   --    ENEO payment of January 2019 invoice received by GDC 

-- GDC and ENEO finalising a fully termed agreement and payment guarantee to supplement the existing binding term sheet

Ahmet Dik, Chief Executive Officer of VOG commented:

"The Company has continued to perform well over the past Quarter, delivering consistent production figures following the resumption of the ENEO contract whilst reducing operating costs. We have been pleased to receive the January payment from ENEO.

"We continue to diversify our client base as we pursue material opportunities with other Independent Power Producers in the region that are recognizing the increasing demand for power in Douala. We remain confident about the long-term future of this business and are focused firmly on the development and expansion of our operations."

Logbaba - Quarterly Production Update

Q2 19 (up to 25 June 2019) gross and net gas and condensate sales at Logbaba are as follows:

Amounts in bold are gas and condensate sales attributable to GDC (57%):

 
                             *Q2 2019         Q1 2019         Q4 2018         Q3 2018         Q2 2018 
 Gas sales (mmscf) 
                          --------------  --------------  --------------  --------------  -------------- 
 Thermal                     195     343     211     370     200     352     194     341     174     305 
                          ------  ------  ------  ------  ------  ------  ------  ------  ------  ------ 
 Industrial power             13      23      14      25      15      27       9      15       9      15 
                          ------  ------  ------  ------  ------  ------  ------  ------  ------  ------ 
 Grid power                  269     472     290     508      15      25       0       0       0       0 
                          ------  ------  ------  ------  ------  ------  ------  ------  ------  ------ 
 Total (mmscf)               477     838     515     903     230     404     203     356     183     320 
                          ------  ------  ------  ------  ------  ------  ------  ------  ------  ------ 
 Average gas production 
         (mmscfd)              9.72            10.10           4.45            3.72            3.30 
                          --------------  --------------  --------------  --------------  -------------- 
 Condensate sold 
  (bbl.)                   3,193   5,602   3,825   6,710   2,701   4,738   2,298   4,032   1,657   2,907 
                          ------  ------  ------  ------  ------  ------  ------  ------  ------  ------ 
 

* This period is from 1 April to 25 June 2019 inclusive. The Company will release the full quarter results in due course.

Grid Power Update

GDC has been supplying natural gas to ENEO for the 30MW power plant, located in Logbaba, over and above contracted minimum levels since it recommenced gas consumption in December 2018. Daily average gas consumption by ENEO by month has ranged between 5.1 and 6.2 mmscfd from 1 January 2019 to 25 June 2019 inclusive, with peak rates during those months ranging between 6.8 and 7.0 mmscfd.

The Company is pleased to announce that payments have been received from ENEO to settle the January 2019 invoice totaling $0.8 million (net). An amount of $3.5 million (net) remains outstanding, not including amounts to be invoiced for June.

GDC and ENEO are working to finalise a fully termed agreement and payment guarantee to supplement the existing binding term sheet pursuant to which the parties are currently operating.

GDC continues to work closely with ENEO and interested Independent Power Producers, with a view to further establishing itself as an integral part of the growth in demand and supply of electricity to the grid power network in Douala.

Trade Indebtedness

During the Quarter, the Company announced that it had signed a settlement agreement with Weatherfords Services and Rental Ltd and a full and final payment of $1.4 million has been made to extinguish the outstanding debt. In accordance with the settlement, the parties have signed and filed with the relevant court consent orders for the statutory demand to be set aside, which has been approved by the judge, and the court process completed on 5 June 2019.

La-108 remediation & facilities enhancement programme

Planning activities are progressing for the removal of the stuck perforation gun in La-108. The work will be performed using a hydraulic work-over unit. A clean out of the wellbore (tubing and lining) will then be carried out followed by perforation of the Upper Logbaba Sands. The La-108 well will then be tied-back to the existing flowline and the flowline made permanent. Planning and engineering for enhancements to the process plant are also progressing to tie in with the La-108 well remediation. These projects are expected to be carried out in H2 19.

ISO Certification

GDC reported in the Q1 19 update that it had completed the International Organization for Standardization compliance ("ISO") audit process for ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018. The Company is pleased to announce that the certifications have now been received confirming that GDC's Quality, Environmental and Occupational Safety and Health management systems conform to international ISO standards.

Cameroon Holdings Limited ("CHL") Royalty Agreement

GDC is in dispute with CHL and its legal advisers have received documentation from CHL purporting to commence litigation against GDC and the Company. Our legal advisers are assessing the validity of the claim and the Company will make further announcements in due course.

Long term incentive plan - Management options

Further to the Company's circular to shareholders dated 11 March 2019, the Board is currently finalising documentation to implement a long-term incentive programme for directors and senior management, with the issue of options over a number of Ordinary Shares, priced at 14p, with an exercise period of 5 years. It is expected that such long-term incentive programme will be finalised during Q3 2019 and a further announcement will be made accordingly.

For further information, please visit www.victoriaoilandgas.com or contact:

Victoria Oil & Gas Plc

Ahmet Dik Tel: +44 (0) 20 7921 8820

Kate Baldwin

Strand Hanson Limited (Nominated and Financial Adviser)

   Rory Murphy / James Dance / Jack Botros                                   Tel: +44 (0) 20 7409 3494 

Shore Capital Stockbrokers Limited (Joint Broker)

   Mark Percy / Toby Gibbs (corporate finance)                               Tel: +44 (0) 207 408 4090 

Jerry Keen (corporate broking)

FirstEnergy Capital LLP (Joint Broker)

Jonathan Wright / Hugh Sanderson Tel: +44 (0) 207 448 0200

Camarco (Financial PR)

Billy Clegg Tel: +44 (0) 203 757 4983

Nick Hennis Tel: +44 (0) 203 781 8330

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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June 27, 2019 08:10 ET (12:10 GMT)