Thor Pruckl: So the upgrade is really based around the class on the vessel itself. So if you recollect in Gabon, we actually changed the vessel out from an FPSO to an FSO. In this case, what’s happening is that the vessel is reach class limits, and needs to go into dry dock to get class resumed. So that’s the first part of it. While it’s there, they’ll obviously pick up some metal replacement. They’ll do some additional work probably on the process equipment, I would expect cleaning it up, reinvigorating it for the next phase of its life, and then the other part that needs to be done is there needs to be some bearing replacements on the current. On the subsea side, there’s really not a lot of work that’s happening there. So it’s the same, but somewhat different, more of the topside scope than the subsea scope.
Jeff Robertson: From a perspective on the rig program in Gabon and ultimately, if you get the JOA finalized for EG. George, can you talk about the effect, if any, of just cost fluctuations that are having an impact on how you evaluate the work going into the FID and the FEED work?
George Maxwell: Yes, I can, Jeff. I mean, obviously, from where VAALCO were two years ago, capital allocation was relatively simple, as a single asset company, capital allocation and a multi-asset company becomes, I wouldn’t say more problematic. It becomes challenging as to where we get the best return for the investment. Now, when we look at where we were 18 months ago and preparing the plan of development for Venus in Equatorial Guinea, obviously, pricing both on drilling units on production units has moved considerably. Now, we believe we’ve maybe seen the top of that cycle now. We’re starting to maybe see it plateau often from where it was in its historic highs in 2023. And that’s really the purpose of the FEED study. And it’s not really to go and reconfirm or challenge the technical position inside the plan of development.
However, if we do see a better way of doing it, and we do see a more economic way of doing it, that will come into that FEED study. But the project itself had fairly robust economics despite its CapEx intensity. We’ve been looking at that CapEx position and seeing how we can challenge that between CapEx and leasehold. We’ve been looking at that also from a tax perspective. But bear in mind that albeit a relatively small project at about 17 million to 20 million barrels recoverable, it has a very short life, which gives it an attractive cash flow. So throughout 2024, we’ll be working on that feed to firm up both the timing of the development, how it fits into our overall corporate CapEx program and ensuring that the FEED study can deliver us towards an FID position.
Operator: The next question is from Chris Wheaton with Stifel.
Chris Wheaton: Two questions, if I may. Firstly, I wonder if you’d go back to Equatorial Guinea and just understand what the timing might be of the stages you need to get through to be able to get to FID here? Because obviously, you’re in the FEED stage. It sounds like you’re in the FEED stage at the moment, you need to get through to FID at some point. I’m presuming now that, that is going to be next year sometime i.e. 2025, because you need to get the operating agreement sorted out as well. My second question is kind of related to Equatorial Guinea, after you folded in the Svenska acquisition of the Baobab stake. I’m presuming you’d quite like to do both Equatorial Guinea and the Cote d’Ivoire redevelopment simultaneously.
Financially, I’m interested in whether you see there’s a risk of — you see any risk of you not being able to do that. I would have thought your — given your cash flows and your balance sheet strength, you’re quite able to do both of those projects simultaneously. If you want to, I guess the question is, how good are they returns when you stack them up against each other? That’s my second question.
George Maxwell: The first question, we are at a position now with Equatorial Guinea where through efforts from everyone in particular efforts from the MMH, the government in Equatorial Guinea, we’ve got, I would say, 99% alignment on where we want to be within the JOA. And as I’ve indicated, I can’t say for sure today, but I do expect to see if we’re sure in the very near future that the JOA issues are extensively behind us. Like I said in my opening remarks, we’re looking at confirmatory documentation as opposed to negotiating documentation, which is a big step forward from where we’ve been previously. That does allow us to move into FEED. I’m kind of guessing that when we move into FEED given the complexity for a Bluewater development that we are estimating nine months on FEED.
It could go quicker, it could go slower. But given we have the seabed survey, environmental impact assessments and like it is starting from a Bluewater location, I do anticipate nine months is a reasonable time frame to get to FEED and FEED will deliver, and we do anticipate FEED delivering FID. During that same period, obviously, we’ll be able to give much more surety and clarity around what’s happening in the Svenska acquisition, which we do expect to close in Q2 and become a full partner with the operator CNRL throughout the rest of this year. As we get into that position, we can give more clarity as to what the costing and timings are for the rehabilitation of the MV10. The challenges, as you pointed out, Chris, about a number of CapEx opportunities coming together at the same time, we’ll all be looked at the merits.
