28th Jan 2016 09:32
LONDON (Alliance News) - Victoria Oil & Gas PLC shares rose on Thursday after the company said gas production more than doubled year-on-year in 2015 and predicted further significant increases this year.
Victoria Oil & Gas shares were trading up 14% to 30.79 pence per share on Thursday morning.
Victoria Oil & Gas owns a 60% stake and operates the Logbaba gas project in Cameroon through its wholly-owned subsidiary, Gaz Du Cameroun SA, which supplies industrial gas to a number of domestic customers.
Gas production from the project in 2015 more than doubled from 2014, which made the project cash generative, and Victoria Oil & Gas is expecting further rises in production this year.
Current average production from the project is 15.0 million standard cubic feet per day, with the aim of producing over 3.7 billion cubic feet in total during 2016 - which would represent a 30% rise from 2015.
"In 2015, Victoria Oil & Gas came of age in terms of operational and financial performance. In 2016 we are focused on exceeding the record production we achieved last year," said Chairman Kevin Foo.
Enhancing the growing production is the company's insulation from volatile oil prices, which have fallen dramatically since the middle of 2014 to multi-year lows in 2016. Victoria said it has maintained "most customers" at contract prices varying between USD9 to USD16 per million British thermal units.
Moving forward, Victoria plans to drill two wells at Logbaba this year, which will hopefully expand its gas reserves, and the company also will increase the gas treatment plant's capacity to 40.0 million standard cubic feet per day - which is substantially above current production levels.
On the sales front, Victoria will add over 13.0 kilometres to its gas pipeline network by building in new industrial areas such as Bonaberi and the Douala port area, expanding its customer reach, whilst also progressing new market products such as compressed natural gas, it said.
Despite not being as affected by the fall in oil prices as its peers, Victoria said it will continue to focus on cost reduction and will try to fund its capital projects using revenue, partner contributions and debt.
Victoria also wants to pounce on the current environment by looking for additional gas acquisitions within Cameroon to bolster its existing project, which also could come in the form of joint ventures or corporate deals, it said.
Beyond that, the company has also not ruled out expanding further into Africa, leveraging its successful Cameroon model.
By Joshua Warner; [email protected]; @JoshAlliance
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