VAALCO Pivots Drilling Plan After Encountering Water-Bearing Reservoir

VAALCO Energy EGY, an independent exploration and production company, has recently finished drilling the ET-14P exploration well at the Etame field, which was part of its Phase Three drilling program. The exploration well, located offshore Gabon, encountered approximately 10 meters of high-quality Gamba sands. The results from the exploration program aligned with the pre-drill geological expectations.

The company has reported that the target zone of the reservoir turned out to be water-bearing. Since no hydrocarbons were found in the exploration well, VAALCO has decided that the lower part of the well will be plugged and abandoned. The company has stated that it will drill the ET-14H development well from the existing wellbore. The development well will be drilled in the Main Fault Block of Etame, but this plan is still pending approval from the partners.

VAALCO has mentioned that management was aware that the Etame West exploration well might not be commercially successful or encounter commercially viable quantities of hydrocarbons. The size of the reservoir made it a risk worth taking. Additionally, the company had planned for the negative outcome and designed the well so that a development well could be drilled using the same wellbore. This should enable the company to drill toward a different target. In this case, the company intends to drill the development well toward the proven productive area of the field. The drilling operations associated with the development well are anticipated to be completed in April.

EGY’s Zacks Rank and Key Picks

EGY currently has a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks from the energy sector are Archrock Inc. AROC, Subsea7 SUBCY and Galp Energia GLPEY. While Archrock sports a Zacks Rank #1 (Strong Buy), Subsea7 and Galp Energia carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock is an energy infrastructure company based in the United States with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues. With natural gas playing an increasingly important role in the energy transition journey, AROC is expected to witness sustained demand for its services.

Subsea7 helps build underwater oil and gas fields. It is a leading player in the global offshore energy industry, providing engineering, construction and related services at offshore oil and gas fields. The long-term outlook for energy demand remains positive, and Subsea7’s focus on cost-efficient deepwater projects strengthens the position of its subsea business.

Galp Energia is a Portuguese energy company engaged in exploration and production activities. The company’s oil exploration efforts have yielded positive results, particularly with the Mopane discovery in the Orange Basin, offshore Namibia. This discovery allows Galp to diversify its global presence with the potential to become a significant oil producer in the region.

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This article originally published on Zacks Investment Research (zacks.com).

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