US company adds ‘sizeable producing asset’ to its African oil portfolio with acquisition of Swedish company

Houston-based Vaalco Energy has wrapped up the acquisition of Svenska Petroleum Exploration, an exploration and production company based in Sweden. This enabled the U.S. player to enrich its asset portfolio with an offshore block in Côte d’Ivoire, West Africa.

Following the announcement that the two companies were discussing the possibility of Vaalco Energy acquiring the Swedish firm in February, and the signing of a sales and purchase agreement in March, the U.S. firm has confirmed the closing of the acquisition.

As a result, Vaalco will take over Svenska’s 27.39% non-operated working interest in the deepwater producing Baobab field in Block CI-40, offshore Côte d’Ivoire. The U.S. player has fully funded the $40.2 million net purchase price with cash on hand, thus, no debt or equity was issued. 

George Maxwell, VAALCO’s Chief Executive Officer noted: “We are very pleased to have closed this highly accretive acquisition in less than two months. We continue to enhance our diversified portfolio by building size and scale that allows VAALCO to generate significant free cash flow and execute our strategic vision. We are excited to be partnering with Petroci and Canadian Natural Resources International, and believe the Baobab field in Cote d’Ivoire is an outstanding asset with significant upside potential.” 

The Baobab field is operated by Canadian Natural Resources International (CNRL), with a 57.61% working interest (WI), Vaalco now has a 27.39% stake, and the remaining 15% is held by the national oil company, Petroci Holding. Located 30 kilometers off the coast of Côte d’Ivoire, the field comprises five distinguishable reservoir units. 

Following the planned shutdown for maintenance in April, Baobab is now producing more than 5,000 (Vaalco working interest) barrels of oil equivalent per day (boepd) (99% oil). As of October 1, 2023, the field includes estimated 1P WI CPR reserves of 13.0 million barrels of oil equivalent (MMBOE) (99% oil), and total 2P WI CPR reserves of 21.7 million MMBOE (97% oil).

“We will be incorporating the production, revenue and related operating expenses from the acquisition into our Q2 2024 and full year 2024 guidance that we will discuss in our upcoming first quarter earnings release and conference call in early May. This is highly accretive on key metrics to our shareholder base and provides another strong asset to support future growth. We continue to have no bank debt and we will use our strong balance sheet to fund our growth activities, all while returning value to our shareholders,” added Maxwell.

Aside from strategically expanding Vaalco’s West African focus area with what the company describes as a sizable producing asset with significant upside potential, the transaction provides further development opportunities in Côte d’Ivoire. In addition to Cote d’Ivoire, the U.S. firm is also working on a development project off the coast of Equatorial Guinea, with the first oil targeted in 2026.