Vaalco Completes Gabon Phase 3 as Baobab Drilling Starts
ETSEM-3H is producing about 2,000 gross barrels of oil a day, 1,140 barrels net to Vaalco, as the Borr Norve rig left SE Etame.
Vaalco Energy, Inc. (EGY) finished the offshore Gabon Phase 3 drilling program and started the Baobab Phase 5 campaign in Côte d’Ivoire, closing a multi-well campaign in Gabon and putting a first new Baobab producer on a path toward the end of 2026.
The Houston-based African-focused independent energy company drilled, completed and placed on production the ETSEM-3H development well in an attic position within the SE Etame field, with a 300-meter lateral in high-quality Gamba reservoir sands. Stabilized initial flow was about 2,000 gross barrels of oil per day, or 1,140 barrels net to Vaalco. The Borr Norve rig has been demobilized from the field.
That well was the last of the Phase 3 campaign. Earlier in the program, Vaalco had put Etame 14H on production in April at an initial 4,850 gross barrels a day with 325 meters of net pay, and Etame 15H in February at 2,000 gross barrels a day. Chief Executive Officer George Maxwell said ETSEM-3H “represents the final well in our successful Phase 3 drilling campaign.”
In Côte d’Ivoire, Baobab Phase 5 operations have begun with batch-setting of top-holes by the operator. After the top-hole sections of all wells are drilled, the wells will be completed and placed on production sequentially. The current plan consists of four producers, three water injectors and two workovers. Vaalco expects the first new producer online near the end of the year, with meaningful production increases expected in 2027.
The drilling start followed a June 2026 restart of the Baobab field after a major refurbishment of the floating production storage and offloading vessel. In the second quarter, Vaalco sold 17,812 net revenue interest barrels of oil equivalent per day, above the midpoint of guidance and up 47% from 12,157 barrels in the first quarter. Production was 21,796 working interest barrels of oil equivalent per day, or 16,688 net revenue interest barrels.
Net income was $42.4 million, or $0.39 a share, versus a first-quarter net loss of $93.8 million, or $0.90 a share. The company attributed the swing to higher sales, lower exploration expense and a non-cash gain on derivative instruments. Adjusted EBITDAX was $54.8 million, compared with $11.6 million in the first quarter, when there were no partner liftings in Gabon and no sales in Côte d’Ivoire. Second-quarter results included two Gabon liftings and increased sales in Egypt.
Capital expenditures were $103.6 million in the second quarter, covering the start of the Gabon Phase 3 program, completion of the Côte d’Ivoire FPSO dry-dock refurbishment and drilling materials for the 2026 Côte d’Ivoire campaign. Egypt trade receivables fell to $12.9 million at June 30 from $24.2 million at March 31.
Vaalco affirmed full-year 2026 net revenue interest production and sales volumes that had been raised in May by 8% and 12% at the midpoint, and kept the 2026 capital budget unchanged even with additional drilling in Egypt. For the third quarter, it forecast sales volumes of 17,200 to 18,900 net revenue interest barrels of oil per day and production of 19,600 to 21,600 net revenue interest barrels, a 23% increase versus the second quarter at the midpoint, including a full quarter of Côte d’Ivoire production and the first 2026 lifting there.
Maxwell said continued success and the organic project pipeline support Vaalco’s focus on growing production, reserves and value. The company combines cash-generative production assets with development and exploration opportunities in Gabon, Egypt, Côte d’Ivoire and Equatorial Guinea.