PetroEnergy Joint Venture Completes Successful Exploration and Appraisal Drilling of SE-Etame Prospect; New Drilling Slated

The Etame Joint Venture through its Operator, Vaalco, Energy, has officially announced on June 17, 2010 an oil discovery in the Southeast Etame prospect in the Etame Marin Concession, Offshore Gabon. The exploration well “ETSEM-1” was drilled to a total depth of 2,757 meters and encountered 5 meters of Gamba sandstone which logged oil full to base.

The Gamba sandstone section encountered in this exploration well is the same reservoir that produces in the Avouma/South Tchibala, Ebouri, and Etame oil fields.

The Consortium proceeded to sidetrack ETSEM-1 and preliminary information indicates an oil column of up to 27 meters (90 feet) based upon the estimated oil-water contact. Further analyses are on-going to estimate the size of the discovery and to assess potential development strategies.

Following the completion of ETSEM-1 appraisal, the drilling rig “Sapphire Driller” will move to the Etame field to drill a new horizontal development well, Etame 7H (ET-7H). The well is designed to replace the original vertical discovery well ET-IV and is expected to be completed in the fourth quarter of this year.

Furthermore, on June 15, 2010 the Etame Marin JV partners met in Houston and elected to drill two additional wells immediately following the four well program. The first well, ETBSM-2H, will be a development well in the South Tchibala field. The second well, ETOMG-1, will be a new exploration well to test the Gamba and Dentale reservoirs in the Omangou prospect. The prospect is located approximately three km southeast (two miles) of the Ebouri platform and approximately six km (four miles) northwest of the center of the Etame field.