GABON – Vaalco Energy has announced its completion of the previously announced acquisition of Sasol Gabon’s 27.8% working interest in the Etame Marin block offshore Gabon, increasing the Company’s total working interest to 58.8%.

The transaction had an economic effective date of July 1, 2020. Taking into account the US$4.3 million deposit, net cash flow from the Sasol interest through closing and other purchase price adjustments, Vaalco paid US$29.6 million to Sasol at closing from cash on hand.

Vaalco’s reserves, production and financial results for the Sasol interest being acquired will be included in the Company’s results for periods after the closing date of the transaction.

“Sustained operational and robust financial performance at Etame serves as the foundation for growing the Company through future accretive acquisition opportunities in line with our strategy and operational expertise in West Africa.”

Cary Bounds – CEO, Vaalco Energy

Under the terms of the agreement, a contingent payment of US$5 million will be payable to Sasol by Vaalco if Brent oil pricing averages greater than US$60 per barrel for 90 consecutive days during the period from July 1, 2020 to June 30, 2022.

“We are extremely pleased to close this transformational and accretive transaction in a rising price environment. All cash payments were funded entirely by cash on hand. With the additional production from the acquisition, we are forecasting significant cash flow generation in 2021,” Cary Bounds, CEO, Vaalco Energy.

“In addition, we believe the recently acquired 3D seismic will improve our subsurface interpretation at Etame and lead to another successful drilling campaign, starting late this year or early next year, funded from cash on hand and cash from operations.

“Sustained operational and robust financial performance at Etame serves as the foundation for growing the Company through future accretive acquisition opportunities in line with our strategy and operational expertise in West Africa.”

Prior to the closing of the acquisition, Vaalco’s working interest in Etame was 31.1% and its participating interest was 33.6%; Sasol’s working interest in Etame was 27.8% and its participating interest was 30%.

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