Victoria Oil and Gas Chairman, Kevin Foo reported a letter on the progress of the Company over the last three months. Foo said that the market has shown a great deal of resilience and an improved level of optimism on equity stocks has returned, with resources stocks once again gaining attention. The company hopes that this trend will continue and remains to achieve revenue generation as soon as possible and develop VOG from an exploration to a development and production company.
In August the company seized the opportunity to raise a further £6 million for the early commencement of the design and engineering of the gas processing unit and pipeline for its Logbaba gas project in Douala, Cameroon. The downstream element of the project, key to monetisation of a gas discovery, would typically be financed through debt after a successful well. This financing has allowed the Company to start preparations in advance of the first well being completed and should save it considerable time between its first successful drilling results and receiving first cash flows.
The company is currently focused on its Logbaba gas project in Cameroon after the first new appraisal well, 105, was spudded on schedule at the end of August. The well, which is being drilled from its prepared site on the location of the old Well 104, will have a total depth of 10,000 feet (around 3,000 metres) and be deviated to twin Well 103, drilled by Elf in the 1950s. Well 103, which was drilled to a total depth of just over 9,000 feet, tested gas from the Campanian sands at almost 40 million cubic feet per day with no gas-water contact encountered.
The Company has successfully set 13 3/8 inch casing to a depth of around 4,250 feet and, in anticipation of an increase in pressure, has installed and tested a 10,000 psi blow-out preventer. Each of the wells drilled in the 1950s intersected high-pressured gas-bearing sands from depths of 5,500 feet and below and so as we drill the 12 ¼ inch hole section we are entering into the truly prospective zones. As is usual for a new and untested drilling rig, there have been teething problems, but these have been remedied and we expect smooth progress through the rest of the well.
In event that the Company has a successful well, it will proceed immediately with testing while the rig is moved a short distance of 10 metres for spudding of the next well. The results of the well test will also be circulated to RPS Energy for a revision of their reserve estimate, which currently assigns 2P reserves of more than 100 billion cubic feet of gas to Logbaba.
Due to its recent financing it has been able to commence work on the FEED (Front-End Engineering and Design) study for the gas processing facility and the 15 kilometre pipeline to carry the gas to its industrial clients, some of whom have already purchased the equipment necessary to convert their burners from liquid fuels to natural gas. Engineering consultants have been engaged to begin the work with our aim to produce a complete design package before the end of this year.
