Houston-based Vaalco Energy in its Q3, 2016 result announced that it has withdrawn from Angola terminating all operations, as it acquire stake in the Etame permit offshore Gabon.

The company said it informed its joint venture partner, Sonangol P&P of its exit on September 30, 2016 to be effected on October 31.

According to Vaalco, due to the decision it recorded a loss in Q3 totaling $15.8 million. The loss comprised of a non-cash obligation of $15 million concerning the maximum penalty for not drilling the three outstanding exploratory wells under the Angola production sharing agreement.

“We have recently taken several strategic steps to narrow our operational focus, reduce costs and enhance shareholder value. We intend to concentrate on our production activities in Gabon and continue to seek low risk, discovered resource opportunities in West Africa or other similar areas internationally. Our plan to acquire an additional interest in the Etame permit is a good example of the first step in that process. We also decided to exit Angola and discontinue all operations in that country,” Cary Bounds, Vaalco’s COO and interim CEO said told OEDigital.

Meanwhile, in Gabon, the company’s production dropped by 20% from 4,725 bpd in Q2 2016 to 3,772 bpd in Q3, due to electrical submersible pump (ESP) failures at the Avouma field.

The company said it is planning to replace the ESPs in the affected wells and expects to restore at most a portion of the shut-in production by late Q4 of 2016 that will cost about $3.1 million.

On August 1, 2016, Vaalco signed a purchase and sale agreement to acquire a further 2.98% stake in the Etame Marin Permit offshore Gabon from Sojitz Etame. The company said the acquisition will increase its net production by 11%. The deal is expected to be finalized by the end of December and is subject to customary closing conditions.

Anita Fatunji