Victoria Oil & Gas PLC Gas Supply Contract with ENEO Not Extended (1474B)
06 January 2018 - 3:31AM
UK Regulatory
TIDMVOG
RNS Number : 1474B
Victoria Oil & Gas PLC
05 January 2018
5 January 2018
Victoria Oil & Gas Plc
("VOG" or "the Company")
Gas Supply Contract with ENEO Not Extended
Victoria Oil & Gas Plc ("the Company") announced on 26 June
2017 that it had extended a gas supply agreement with ENEO Cameroon
S.A. ("ENEO"), the Cameroon energy joint venture between UK Group
Actis and the Cameroon Government, until 31 December 2017, whilst
negotiations to agree a new long-term contract continued.
ENEO has informed Gaz du Cameroun S.A. ("GDC") that it is not
currently in a position to extend the gas supply agreement and has
ceased taking gas from GDC. ENEO is actively discussing potential
solutions to this situation with the Government of Cameroon and the
Power Regulator in Cameroon. VOG believes this is a temporary issue
and expects a resolution in the short to medium term.
ENEO has advised the Company that it faces considerable
uncertainties in terms of generation costs that can be passed on as
tariffs to end users, large payment arrears from the Cameroon
Government and doubts over long term power payment security. Until
such issues are resolved, the Company does not believe that ENEO
will be able to underwrite the financial aspects of the extension
of the contracts with GDC and Altaaqa Global Solutions ("Altaaqa");
the providers of the gas fired generators, or enter into long term
financial commitments at this time. ENEO has advised that it is
very pleased with the service provided by GDC and Altaaqa and that
the suspension is as a result of factors beyond GDC's and Altaaqa's
control.
Whilst the suspension of the ENEO supply will clearly directly
affect GDC in the short term (it represents an estimated 53% of
Logbaba project gas sales revenues for the year ended 31 December
2017), the Company supplies gas to a diverse customer base and will
continue working with these customers and other investors in the
region to place the newly available gas.
ENEO currently owes GDC approximately $8.7 million gross, which
the Company expects will be paid in due course.
As a result of ENEO ceasing to take the gas from VOG, the
Company will immediately undertake an assessment of the Company's
capital projects and its wider budget and cash flow forecasts, in
order to best position the Company to deal with this outturn. The
Company intends to provide a comprehensive update of 2017
performance and outline the strategy for 2018, later this
quarter.
Ahmet Dik, CEO of VOG commented, "Cameroon has a very important
industrial hub in Douala that has seen significant growth and cross
border investment over the last five years, both into manufacturing
and the power sector.
We remain confident that ENEO and the Government will rapidly
find a solution that will allow GDC to continue to supply gas to
ENEO and to build on the relationships we have developed with all
stakeholders over the past three years.
Cameroon is an area that is in critical need of more power, with
an estimated demand in excess of 150mmscf/d of gas in the Douala
basin. We remain focused on increasing thermal customer demand in
Douala whilst also continuing to supply gas to our 30 other
customers, building non-grid solutions for its industrial customers
and advancing the compressed natural gas business whilst
maintaining our strong position as the sole provider to the
region."
For further information, please visit www.victoriaoilandgas.com
or contact:
Victoria Oil & Gas Plc
Kevin Foo / Ahmet Dik / Laurence Read Tel: +44 (0) 20 7921 8820
Strand Hanson Limited (Nominated and Financial Adviser)
Rory Murphy / Angela Hallett / Stuart Faulkner 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 / David van Erp 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
NOTES TO EDITORS:
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
3,500km(2) of the highly prospective Douala Basin with the addition
of the Matanda and Bomono license areas. A recent drilling
programme on the Logbaba asset has added further gas reserves to
meet the growing demand for gas in Cameroon.
Victoria Oil & Gas is listed on the AIM market of the London
Stock Exchange under the ticker VOG.
This information is provided by RNS
The company news service from the London Stock Exchange
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