Q3 2025 VAALCO Energy Inc Earnings Call
Good morning, everyone, and welcome to the VAALCO Energy, Inc. Q3 2025 conference call.
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Please also note, today's event is being recorded.
At this time I'd like to turn the floor over to Al P3. Investor relations coordinator. Sir. Please go ahead.
Your questions.
During our question and answer session, we ask you to limit your questions to 1 and a follow-up. You can always re-enter the queue with additional questions. I'd like to point out that we posted a supplemental investor deck on our website that has additional financial analysis, comparison and guidance that should be helpful with that. Let me proceed with our forward-looking statement comments.
During the course of this conference call, the company will be making forward-looking statements.
investors are cautioned that hard-looking statements are not guarantees of future performance, and those actual results or developments May differ materially from those projected in the forward-looking statements,
Falco's intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Accordingly, you should not place undue reliance on forward-looking statements.
These and other risks are described in our earnings release, the presentation posted on our website and in the reports we file with the SEC, including our form 10K.
Please note that this call is being recorded. Let me turn the call over to George.
Thank you. Al good morning, everyone. And Welcome to our third quarter 2025 earnings conference call.
For over 2 years. Every quarterly earnings call. We have met or exceeded our production guidance. Consistently leading to strong operational and financial results.
The third quarter was no different with NRI production of 15,405, BOE per day, which was at the high end of guidance working interest production of 19,887.
Boe was above the midpoint of guidance, and NRI sales of 12,831 BOE per day were also at the high end of guidance.
Our production and sales performance through the first 9 months of 2025 have been so strong that we have raised the midpoint of our full year production and sales guidance by about 5%.
While also further reducing our capital guidance by almost 20% and maintaining our operating expenses virtually flat.
Rome will go into more detail about our guidance later in this call, but we believe that maintaining operational excellence and consistent production across our portfolio is essential to continued strong adjusted EBITDA generation, which will assist us in funding organic growth initiatives while positioning us as a larger player in the industry.
In the first 9 months of 2025, we have delivered net income of $17.2 million, or $0.16 per share, and adjusted EBITDA of $130.5 million.
It is important to remember that 2025 is a transitional year and everything remains on track with our forecast.
Production came offline in Q1 at Cordova due to the FPSO project, and we do not expect to start the drilling campaign until late Q4 as we await the drilling rigs' completion of their current commitments.
This means that the meaningful production uplift, we are projecting for these major projects won't begin until 2026 and into 2027.
I would now like to go through and provide a quick update on our diverse portfolio of high-quality assets, beginning, with Cordova.
In line with the project timeline the fpso C hydrocarbon operations are scheduled on January 31st 2025 with the final lifting of crude oil from The Vessel occurring in early February.
The vessel departed from the field in late March and arrived at the shipyard in Dubai ahead of schedule in mid-May 2025.
The fpso refurbishment is well underway in the shipyard.
Significant development: drilling is expected to begin in 2026 after the FPSO returns to service, with potential meaningful additions to production from the main Bail Bob field.
We now have a 10-year extension of the license on ci4 extending it to 2038.
In March 2025.
We announced a form an agreement for the CI 705 block offshore Court of War, where we will operate with a 70%, working interest, and a 100% paying interest.
In Q2, we received seismic data for the block and we are conducting a detailed, integrated geological analysis to assess and mature. Our understanding of the blocks overall prospectivity, as well as the basin's overall potential.
We Believe The Block is favored. Favorably located in a proven hydrocarbon system and is approximately 70 km to the west of our CI, 40 block,
We have demonstrated our ability to acquire develop and enhance value through a creative Acquisitions. And we are excited about the prospects in court of War.
Moving to Gabon given that we haven't drilled a well in. Gabon, in, over 2 years, we are very pleased with the Positive overall production results, including strong production, uptime and improved decline curves on the wells in 2025.
In July, we successfully completed a planned fulfilled maintenance, shutdown of the Gabon platforms, to perform safety inspections and necessary maintenance.
This is the first time we have had to perform a full fuel shutdown in Gabon. Since the fso was brought online in 2022.
This has helped to contribute to the strong. Uptime numbers in Gabon that we have had over the past several years, which can be seen in our supplemental presentation.
while we secure, the drilling rig in December 2024, for our 2025 2026 drilling campaign, the timing of, when we start the drilling program has always been dependent on the rigs completion of his existing commitments,
The rig is now being released and moving to Gabon.
As we discussed in the Capital Market State, we have some very strong, drilling opportunities, and the additional data gathered during the upcoming drilling program will help us high-grade and de-risk additional Well, locations that have already been identified.
We plan to begin the drilling program on the atami field platform and we are currently planning on moving to the aburi Wells later in the program because of the current robust production profile of these Wells.
In particular, we remain very pleased with the extended flow test on Aburi 4812, which is continuing to surprise our initial expectations.
We originally wanted to gather information on the H2S concentrations at this location to aid in equipment design and to evaluate our chemical crew sweetening process.
The 48, well, has now flowed for all of 2025 at a gross average of around 1,000 barrels of oil per day, with the 8 to concentration within our modeling, expectations demonstrating, our ability to chemically treat the oil.
The wealth production has helped Gabon exceed its production guidance in 2025, while adding some additional production costs for chemicals?
Regarding our exploration blocks, in Gabon. Then I owe you marine and the GDA Marine we are working in conjunction with our partners and the operator BW energy on plans for the 2x moving forward.
A seismic survey to fulfill a work commitment on AUZI is being planned for acquisition in late 2025 or early 2026.
Given the proximity of these blocks to the prolific producing fields of Itami, we are excited about the future possibilities for these blocks.
Turning to Egypt.
In the fourth quarter of 2024, we contracted our rig and drilled 2. Well, starting a drilling campaign that has carried into the first 9 months of 2025
We have drilled and completed multiple wells in the first nine months of 2025, and our continuing activity into the fourth quarter.
We are very pleased with the operational performance and efficiency of the drilling program, which contributes to minimizing costs.
We've been able to drill more wells, faster and cheaper.
And what we had in the budget, and for the same amount of capital, which has also positively impacted the production.
We also continue to work over and recomp complete wells in Egypt.
With the drilling program and the work over program in Egypt, add solid production and our economic even in lower commodity price environments.
We are continuing to evaluate the exploration results in South gazab, where the wells are encountering, both oil and gas, net. Pay zones with different levels of reservoir pressure.
We are incorporating well results and updating our understanding of the area with new mapping that will determine potential additional prospectivity for the area.
In March 2024, we announced the finalization of documents in Equatorial Guinea related to the Venus Block P Plan of Development.
This summer, we began our front-end engineering design or feed study.
The feed is complete and confirms the technical viability of a plan of development, but also highlights some of the risks and challenges from the Shelf location.
Side and this is currently underway.
We are very excited to proceed with our plans to develop, operate, and begin producing from the discovery and Block P offshore Equatorial Guinea in the next few years.
Turning to Canada.
We successfully built and completed four wells in 2024.
We also drilled a well, in the southern acreage in late 2024, but could help us better understand the acreage and upside in that area.
What will remain optimistic about the drillable inventory? In Canada, we decided to postpone our Canadian drilling program in 2025, due to the current commodity price environment.
We will continue to monitor the performance of our wells and plan for future drilling opportunities.
Before I turn the call over to Ron, I would like to thank our hardworking team, who continue to operate and execute, our strategic vision and help us deliver these outstanding results.
We are well, positioned to execute the projects in our enhanced portfolio and are proven track record of success in these past few years to do still confidence for our future.
With that, I'd like to turn the call over to Ron to share our financial results.
Thank you George. And once again, good morning.
I will provide some insight into the drivers for our financial results with a focus on the key points.
Let me Begin by echoing George's comments about our continued success, through the first 9 months of 2025.
Driven by a strong operational performance.
We have met or exceeded production guidance for the past two-plus years, driven by strong production in Gibbon and Egypt, despite Quota of War being offline since late January.
this performance has allowed us to positively adjust the midpoint of our full year production and sales guidance.
And the supplemental deck on our website, you can see that NRI production is up, 900 Boe per day, and sales are up 750 Boe per day.
You will also see that our full year Capital. Midpoint guidance is down almost 60 million dollars to around 240 million in total.
Finally, we have worked hard to keep our absolute production expense in line with our original guidance.
But with the increase, the sales and production expenses on a per BOE basis are down about $1 per BOE.
Our overall results and ability to manage multiple assets and high-profile capital projects across multiple countries are reflected in our updated 2025 guidance.
For Q4 2025, we are forecasting production to be between 20,300
And 202,200 working interests Boe per day.
And between 15,600 and 70,300 NRI, Boe per day.
This is up compared to the third quarter, due to the plan maintenance. Turnaround that occurred in Gabon, in July and continued strong production in Egypt,
For the fourth quarter, we're forecasting, our sales will sales will also be higher compared to Q3 due to more offshore listings in Gabon.
We also expect our absolute operating costs to be higher compared to Q3 due to the additional sales, but virtually flat on a per barrel of oil equivalent basis.
Finally looking at capex or Q4 spend is expected to be higher than the third quarter. As we begin, the drilling campaign in Gabon
we are focused in between 90 and 110 million and we can and we anticipate continued spending on in CDI and Egypt, in Q4 more or less in line with Q3
And for the third quarter, we generated $1.1 million in net income, or $0.01 per share.
And $23.7 million in adjusted EBITDAX.
Our NRI sales for the quarter were at the high end of guidance at 12,831 BOE per day.
Both sales and pricing moved against us. In the third quarter, with sales down 33%, due to the fewer listings, in Gibbon driven by the plant turnaround.
And pricing was lowered by about 7% quarter over quarter.
We've seen higher volatility in the commodity price environment thus far in 2025.
With the rbl know in place, we are moving towards a more programmatic hedging program. That will be more consistent over a rolling time Horizon.
With this in mind, we took advantage of periods of higher oil prices during the third quarter to add more hedges for the 2026 hedging program.
The company now has about 500,000, barrels of remaining, 2025 oil, production hedge with an average floor of approximately 61 dollars per barrel and about 800,000 volts of all production Hedge. For the first half of 2026, with an average floor of approximately, 62 bucks per barrel.
We are targeting around 40% of H1 2026 oil production to be hedged by year-end.
Our full hedge positions are disclosed in the earnings release.
Turning to costs our production costs for the third quarter of 2025 were at the low end of guidance on an absolute basis and on a per barrel basis.
Absolute expense was 29.87 million. A 26% reduction quarter over quarter. Another per barrel basis with $55.24
GD costs were in line with guidance and remained relatively flat quarter-over-quarter.
Our Focus remains on keeping our cost low to enable us to maximize margins and increase our cash flow.
Moving to taxes, we reported an income tax benefit of $3.6 million for Q3 2025.
Which was comprised of an 8.6 million current tax expense.
Offset by deferred tax, benefit of 12.2 million.
as I've previously stated in Gabon, or foreign income taxes are settled by the government, through any kind oil of things,
In Q3 we saw a 3.9 million favorable oil price adjustment as a result of the change in value of the government of Gibbons, allocation of profit oil between the time, it was produced and the time it was taken in kind.
Turning now, to the balance sheet and cash flow statement.
Unrestricted cash at the end of the third quarter was $24 million.
Collections from the Egyptian, General petroleum Corporation, egpc, since the first of January 2025 total over 103.6 million and the company expects to receive further material payments against the Terriers before year end.
We anticipate that our annual receivables balance will be half of what it was in 2024 by year-end.
Monthly invoices are now paid in full, and regular repayments are being made against the receivables balance.
As we discussed last quarter, we added a reserved Space Credit facility with an initial commitment of $190 million and the ability to grow to $300 million.
Shortly after the third quarter, we successfully completed our semi-annual redetermination with lenders and reaffirmed the initial commitments.
As of September 30, 2025, we have $16 million in outstanding borrowings, which is the same amount outstanding as we had at the end of the second quarter.
In Q3 we spent 48.3 million in cash, capex. Well below our third quarter guidance of 70 to 90 million
Additionally, we returned $6.7 million through dividends to our shareholders.
We believe that our current dividend yield of around 7% is very attractive, especially considering the meaningful upside potential in production and reserve growth that we outlined on the capital markets day over the next few years.
In closing, we're continuing to see strong results. We are well, positioned to execute and fund a robust organic Capital program that should help to increase production and reserves for 2026 and Beyond.
With that, I'll now turn the call back over to George.
Thanks Ron, we will continue to execute a strategy focused on operating efficiency. Investing prudently maximizing our asset base and looking for accredited opportunities.
As you have heard this morning we can continue to meet or exceed, both our core clearly guidance and analysts estimates in the first 9 months of 2025 as we have done for the past several years.
This is allowed us to increase or fully your production guidance by about 5% while lowering our full year, Capital guidance by about 20%.
Continue to deliver on the exciting slate of projects that we have over the next few years.
Our entire organization is actively working to deliver sustainable growth and strong results.
We have multiple major projects underway that are anticipated to meaningfully grow production and reserves.
So the first 9 months of 2025, we have generated 130.5 million dollars in adjusted debit tax.
And this is with court of War offline.
For the FPS start again.
Through the first 9 months of 2025, we have generated 130.5 million in adjusted debit tax.
And this is with the court of law, offline for the fpso project and no new wells building a bone.
In addition to funding our Capital program, we have remained focused on returning value to our shareholders.
in the first 9 months of 2025, we returned around 20 million dollars to shareholders through dividends
with the Q4 dividend announcement, we will deliver another 0.25 cents per share annual dividend for 2025.
Which are our current share prices as a dividend yield of about 7%?
We are confident in our ability to execute on the many projects ahead largely because we have been highly successful over the past several years developing and growing our assets.
Our disciplined approach to maximizing value for our shareholders by delivering growth in production reserves and cash flow has led to expanding results and has positioned us to continue to profitably grow in the future.
Thank you. And with that operator, we're ready to take questions.
Ladies and gentlemen, at this time, we'll begin the question and answer session. Once again to ask a question. Please press star and then 1 using a touchtone telephone to withdraw your questions. You may press star and 2
If you are using a speaker-phone we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality once again, that is star star and then 1 to join the question queue. We'll pause momentarily to assemble the roster.
In our first question today, we hear from Chris Delange.
Stefane facade from active advisors, please go ahead with your question.
Morning, guys. Thank you for taking my questions. Um, so I have two questions.
Prediction of capex in 2025. I was wondering, what would be broadly? The capex makes a second in 2025.
And what it means, the capex resection in 2025 for 2026, in other words how which 2026 capex compare report League because 2025? So that's my first question. The second question is about South gehlot.
In your view.
In a sexist case.
How big could be South Gazette, or what those results mean in term of compared to the existing Reserve in Egypt?
Thank you.
20 million dollars of that is gone. That was discretionary capex. So we took out in 2025.
Um, we've had about a $10 million increase in CDI capex, really? Just keeping that MV 10 on schedule. Uh, and that's very good news as far as we're concerned; everything's going well in relation to that project.
And the rest. Um, it's really a shift in gabour from the drilling campaign due to the the delay in getting the rig moving out from uh, 2025 into 2026.
What I would say though, is on Egypt, um, effectively. The Egyptian capex is the same number as we originally guided to, but we'll have completed 8 additional wells in that time period for the same capex. So, you know, again, that's a very positive efficiency that the guys have brought to the table in 2025.
Aerial extinct could be and how large that could be for potential development, um, and then understanding the uh, the reduced pressures around the gas Zone and, and where that depletion may may be. So, having got the results of the, well, we're going back to do or after action review and establish, where else within the, the existing structure that we understand? We'd want to, uh, to drill additional Wells there.
There are a couple of things outstanding in South Gaza. While we, you know, we had some commitment wells that we've already completed to keep the acreage.
But in addition to that, we've also got some commercial issues around the PSC that we have to discuss before we get anywhere close to, uh, some kind of preliminary field development plan. So there's more technical work to do but there's also some more commercial work to do. Um, we've always been hopeful that because it's such a prolific area out there in the western desert that this block will yield uh some interesting opportunities for us. Um but that's still that's still to be uh to be developed and it's still to be evaluated at this time.
Okay, thank you very much.
Thanks. Stevie
Our next question comes from Jeff Robertson. From Water Tower Research, please go ahead with your question.
Thank you. Good morning, Ron. Just to clarify on the CAPEX, did I hear you right that about $20 million of the reduced guidance is a permanent reduction? In other words, getting...
uh, either doing things at lower cost and budgeted or getting more done with the same amount of dollars.
That's exactly right. Jeff uh as you know we took um Canadian drilling capex out uh very early in I think in Q2 guidance we we pulled that out that was about half of that. The other half is just discretionary capex. So we've pulled out uh over the last 3 or 4 months.
Are the efficiency gains that have helped in Egypt. Um, are those stickies or in other words, just does that you you would retain those types of efficiencies.
if you look at a capex program in Egypt, in 2026,
Yeah. I mean, what what we've got uh Jeff is is is you know, we produced that to Spud to to basically take an online cycle time, quite considerably over the last 3 years and we continue to drill and complete and bring online those Wells. Uh, it's a much lower level of days, uh, versus what we're initial. Expectations were so, um, those efficiencies are real, they're there. Uh, and uh, if they continued into 2026, we'll, we'll continue to see. Um, let's see if EOS for drilling in.
Egypt.
I can't on the rbl run. I believe the electric commitments is is going to go up to 240 million in January, is that a reflection of asset performance?
I think it's more a reflection of the current market. Uh, Jeff. I mean, liquidity is going to be key for for all Upstream companies. As as we move into 2026, we soften in commodity prices. Uh, and, uh, you know, from from our point of view, we have the availability there. I'd rather lock it in when we've going to position a strength than, you know, when in when, in a position of need
Thank you.
Our next question comes from Christopher Wheaton from stifel please. Go ahead with your question.
Uh, good morning, guys. Thanks very much indeed for the call today. Uh, I have maybe three questions. If I may, firstly on Gabon production. Um, you've not, as you've said, uh, George, you've not drilled any wells, uh, for two years now on Capone. And as you said, the Gabon drilling program shifted later in this year. Yet, you still delivered a pretty good production performance, and that's on that time. If anything, slightly lower than, uh, it was last year. I'm interested, is the geology better and are particular wells performing better than you expected? I'm interested in what's been driving that production uptime. And then the second question is really about 2026 C.
And your ability to flex that as you've got more of the cabone, drilling campaign falling into 26, you've got coded W capex obviously as a as a given for 26 as well, I'm interested. Just what your key priorities for setting that 2026, capital budget are going to be given. You've got a lot of things that you kind of on the must do or they have to do list and therefore, you know, realistically are we going to see is there much capex Flex below, say, 2025 levels, that we might see for 2026 capex guidance?
I'll stop there. Thank you.
Is, um, I think it's be maybe discussed before is a significant reduction in back back pressure into the reservoir, which is enhanced, not just well performance but but a lot of the field performance as well, we've also been working uh, on the brewery side to um, continue the production on 28. And then we also brought on 48, we did that deliberately to test the levels of H2S. That could be managed through the scavenger program. Um, and we've continued to see 48 produce throughout, uh, 2025 with uh, with H2S levels. Well, within our manageable range and that's been very encouraging and it's also will lead uh, when we get to the drilling program leads us to not just the 28s work over potential but then 5/8 to go back um, and redrill 5/8 for uh,
It goes across a 4-block area to enhance production and increase purchases. So, these results are...
And these tests Wells that we've been back on, Steam are really important for our understanding of how we're going to deal with the potential leads to us as it comes comes towards us in the future. The
You are correct in the in, in when you look at the production profiles for the, uh, Tammy field, we can see that we're producing well above the 1 p, uh, decline curve. And in some cases into the 2p position. Um, we we look at that, and the questions are naturally come as the size of the tank larger. Uh, our recovery factors are going up to the to the 50 percentile and higher. So there's there is there's clearly, um, some geological remapping work that's currently underway, that's required to understand, this feel better. Um, I keep going back to some of the decisions way back in the early 2000s when this field had a life expectancy of 5 years, and here we are. 20 plus years later, having produced, close to 150 million barrels from the field and it continues to give. So, um, hopefully the studies we've got in place, over the next 6 months will start. Clearly, give a better definition around the geology.
And whether there is context connectivity into the Gamba from the Gentile, that supplementing those uh, those those production levels.
Um, with regard to the capex position of 2026. Now, obviously, as Ron mentioned the delay in, uh, in the rig coming to us for 2025, uh, has delayed our, our program for Gibbon. Um, we continue with the positioning of your born with, uh, a 5 firm and 5 options.
Um, so there is some flexibility in the in the drilling program in Gabon. But as I've mentioned before, you know, we've been studying these, uh, uh, drill locations now for a few years and and we've got some pretty strong targets that we we want to go after so, um, that that will give some meaningful production, uplifts in Gabon. So whilst there, there may be, um, not as much flexibility as we may want in the bond drilling campaign that comes with the added benefit of significant additional production.
Um, with regard to court to what? Um, as Ron mentioned we we have spent a little bit more capex in 25 to ensure that the sail away date of the end of March for the fpso, it can be met and we've discussed that in detail with the operator. Um, there there is a drilling program as you're aware to start the second half of, uh, of 2026 in in court of war. The exact timing of that drilling program is still a little bit subject to obviously, rigged availability equipment, Etc. So there may be some flexibility there. However, again these, uh, these Investments come with significant ads to production. So, um, and as we know in in, in Cordova, you know, every dollar we spend, you know, is recoverable with a door, 25 back in, in the, in the cost oil. So whilst uh, the capex may may look slightly less flexible in 26 than it was in 25th of benefits.
Cool. Thank you very much, indeed.
Our next question comes from Charlie, sharp from Canaccord. Please, go ahead with your question.
And Mr. Sharp is it possible that your phone is on mute?
Is it going? Hello, can you hear me?
Yeah, we can hear you start. Please, please go. Sorry about that. I was on. I was on a separate phone and
On the, uh, planned Sail Away of the, uh, bear bagger Bao FPS. So I'm I'm guessing from that that you still expect, um, to be back on stream there, uh, before the middle of the year, in order to facilitate drilling sometime in the second half. That's 1, small question. And then, secondly, on Gibbon, uh, should we assume that your your drilling Wells about 1 per quarter in which case you'll probably be drilling into 20 27? And will you be completing successful Wells, uh, as you go or will you batch drill and batch complete?
Okay, so I'll start with uh you're correcting your assumption. We're still um, the see what we did is still for the end of uh January after the second Dry Dock period. The hookup is, is scheduled to be late March early April and back on production by end of April early May so, uh, well ahead of of the drilling program. And when we come into 2026, you'll see that coming into your guidance position and we'll be able to give you much more detail uh at that time. But that's the current schedule and uh, everything on that project is currently on schedule.
Um, for Gibbon, obviously what we're trying to do here in Gibbon, like I said, we we spent a lot of time looking at these dual locations. Um, some of the, uh, as you may be aware, you know, the Imaging. Um, on the, on the seismic here is not as clear as we would like it to be due to, uh, the interference of salt. Um, but that being said, we're planning to drill a pilot holes and some of these locations to establish, uh, exact, um, levels of, uh, hydrocarbons. So then allow us to pull back and redraw, um, or, uh,
Complete in a in a different zone. So when we look at the, the schedule right now where we starting on the uh Itami filled with 2 Pilots, um we would if both of those uh come in and and our mind to possess are 80% plus um we would we would drill in complete uh as as we go. So um there we will not do bad drilling so we potentially have uh 3 Wells on the Tam. Um if we if we choose to to elect 1 of the options uh 1 well on Cent and then a work over um 1 well on the booty.
That's brilliant. Thank you very much.
Our next question comes from.
bill desalin from
Please go ahead with your question. Thank you. Uh, um, relative to the coat devoir drilling program. You'd mentioned that that will uh begin in the second half of next year. Uh given that the uh fpso will be back in the field and and reconnected in May
What's the swing factor or swing factors? That would, uh, Drive the drilling?
Earlier in the second half versus later in the second half.
Okay, so um the biggest swing factor is exactly what we face in Gabon is the the drilling unit arriving on time. And when we look at where we are today, Bill, we all the long lead items. You know, the the, the trees and the equipment Etc are all all ready to go. So it's all around the, the drilling unit and the timing of that. So when it comes off its existing contract, as you know, um, we may, we may have a, a scheduled date. But if it's halfway through drilling a well, for the, for a previous client then it has to complete that well before it comes to us. So it's really just the rig, the rig move would be the swing Factor.
That's helpful, thank you very much. And then relative to uh, equatorial Ginette you'd mentioned that, uh, you're looking at a subk, uh, completion uh application
Was that part of the feed study or are you now needing to do? Essentially a uh uh a sidebar for each study?
It's not quite a sidebar. What, what came out of the feed study was, what, what we were trying to achieve in the feed? Study was how do we reduce the capex position that's in the Pod. Um, and what we were looking at was, you know, how can we go to, um, drill off the shelf, uh, with a, what we call, a mu a self-leveling platform for production, um, and and, uh, Excel and, and basically put that to, at least unit rather than a, a, a capital unit.
um, what came from that is that there are given the
complexities of
For the wells are possible. But complicated when you're looking for the 2, you're looking at getting a water injector in there on a with a long lateral to give you an efficient. Um,
full of, of
The production from from the, uh, the structure. So
Uh, We've sub since in during the feed, completed a new, uh, static and dynamic model, uh, which confirms the volumes that we um uh, announced back in the capital markets day. But again that dependency on the sweep efficiency from the water injector is critical to uh up to achieving these production levels.
So when we looked at that risk factor, we said, okay, it's it's possible but it contains risk and we then looked at a vertical solution, that said, do we eliminate that risk factor significantly by coming from a drill ship position, uh, vertically versus coming from the shelf and the answer to that is is very clearly. Yes.
Uh, what does that do to to the cost structure? Well, it reduces the drilling times significantly and would evaluating that, but it comes at a higher Drilling day cost. But overall, the economics are far better. Uh, for the on the drill side, the production side. We're now looking at, um, and we've spent some time now, looking with what we've done in Gabon, and what we're doing in quote de
Do we get an fpso at a reasonable price that can evacuate this oil? Uh, and at efficient level and that's really where the study is, right now. Um, there's a lot of units available in the market right now. Um, and they're, and because of the decline in other areas, there are a reasonable, a reasonable cost. So that's really what we're looking at. Have we've de-risked the drilling position, can we then match it up with an efficient production position? And that's really it's it's like a sidebar to use your terms but it's it's it's also um, you know, looking how we minimize the risk position on on the on the drilling side.
Great. Thank you, George. Appreciate it.
Our next question comes from Jeff Robertson. From water tower research please go ahead with your question.
Thank you, George. Just a quick question in uh kavir when the fpso gets back to bbab how long would it take? Do you anticipate for
Production in the field to, to go back to whatever the full rate will be.
Well, I mean obviously we've got the the the vessel gets back to the field, we've got the contract for the hookup and taking the flow lines back in place and then we've got commissioning. I mean, I, I'm
At the moment and the and the schedule will easily looking at 6 to 8 weeks for that.
Um, what we don't, what we haven't yet, looked at Jeff, is the startup sequence. So we've got the commissioning to do, and then we need to look at the startup sequence for the wells and see exactly, which sequence of Wells are coming on between the injectors, obviously. And then the producers. Um, so that's something we'll certainly guide to, uh, when we come to the, the next call and and uh, early 26th, we'll have much more detail on the, on the startup sequence at that time.
We've just 1 more in Gabon, with, with the maintenance work that you did in July, what will that do to prepare the facilities? If anything, for the upcoming drilling campaign,
Well, I mean, effectively, I think they're, um, Jeff, we we, we did, uh, quite some upgrades to Tommy on both power and, uh, water handling. So, everything's now done and, and ready for that drilling campaign coming in. But yeah, that's, that's essentially what was done along with, you know, this plan, the normal plan inspections
Thank you.
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Hey Phyllis, I wonder if you could refresh me on the H2S Wells that were shut in a few years ago. Uh, how many there were and what were their uh what was the volume per day and what is your expectation moving forward?
Or correct them. Um and as I said we've got we've had 28 flowing now. Uh, consistently for a number of years. Um, 48, we took on earlier this year and has continued to perform well and it's got to be said that we our expectation of this. Well was it was going to last for 3 months, mainly not because of reservoir issues, but because of the ESP issues and it's a, it's an old ESP that has been uh in that in that well for probably close to 13 years.
Um, and uh, the 58 position. We shut that down when we shut down the Holy Booty platform. So the 58 redrill that's coming up in the program this time, uh, that's for me one of the most exciting wells that are in the program because it's a redrill back into, uh, what should be a crystal position in the field. And, uh, you know, we're anticipating some really, um, good results from that well.
So, um, with the work on a bully, uh, you know, and the test work that we've done, it just further enhances our confidence levels to be able to deal with these to us as and when it comes towards us.
What was the volume of that? Well, when it was producing.
I talked to Jake Jamie, but I think it was probably around about somewhere between 1500 and 2,000 barrels a day. But my position this is going to be. It's, it's, that's the old will the new wells are are, are sidetracked redrill and it's going to a much higher position in the, in the rest of our structure. So, I'm, I'm
A little bit confident. I may see numbers higher than that for that well. And I think what what I'd add to that is George is talking gross, email all the time. Yeah, those are those are gross numbers.
Gotcha, very good. Thank you, fellas.
Thank you. Thanks so much.
And ladies and gentlemen, at this time, we've reached the end of today's question-and-answer session. I'd like to turn the conference call back over to George Maxwell for any closing remarks.
Thank you very much, operator, I'd just like to close, you know, we've had a, a, a, a strong third quarter and, and some good results in the third quarter, despite, you know, the the reduced volumes in, in net sales because of, uh, the uh, government lift things that took place, this quarter. Um, the position that we're in, coming, into 2026, uh, um, with the execution of a project leaves us in a, in a strong position. There are no concerns around uh, where we are in the the main uh Capital project around the fpso. Uh, for a quart of war that project remains on
Contract, and we monitor it very closely with our partners. I am very encouraged that we're finally getting going on the drilling campaign. Be it, there’s a 4-month delay in the rig arriving, but that's encouraging and it shows our commitment both to Gabon and our commitment to CDI for our investment.
We've seen strong ebit dats performance over and above guidance this quarter which maybe was a bit masked by by the revenue but again but the lower revenue and highly but Dax indicates the countries focus on its cost control uh during this uh period of softening commodity prices.
So I'm encouraged now uh that when we come to talk again early q1 and that we will complete 2025 and a successful basis as you've seen. We've narrowed the guidance to give uh further confidence to the market as we see our position in um narrowing to improve uh the profile through uh, through Q4. Um, and with that I look forward to talking to you again in q1 2026. Thank you.
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