US independent Vaalco Energy will begin a formal hunt for a farm-in partner for Block P off Equatorial Guinea after the government has offloaded state-owned GePetrol’s interest in the asset.

Vaalco chief executive Cary Bounds said: “We are still waiting on the Minister of Mines & Hydrocarbons to approve transferring the state’s participating interest in Block P to a new joint venture owner.

“Once the transfer of the state’s interest is approved, we will seek a partner on a promoted basis (to) fund all, or substantially all, of the cost to drill an exploration well,” he told analysts during the company’s second-quarter conference call.

“There are a group of companies that we think are interested in the block, and we will pursue them further.”

Once the government has approved the sale of GePetrol’s 58.4% interest in the shallow water asset, Vaalco will have one year to begin drilling an exploration well.

The proposed target is the 60 million-barrel South West Grande prospect, which was originally due to be drilled in 2013 shortly after Vaalco entered the block by acquiring the interest held by Malaysia's Petronas.

If SW Grande is successful, it could be jointly developed with the 14-year-old Venus discovery, where resources are estimated at about 20 million barrels of oil equivalent.

Failure to drill would result in the US player losing its 31% stake and writing off $10 million “for the undeveloped leasehold cost associated with the Block P licence”, said Vaalco, which expects to see its shares trading on the London Stock Exchange within three months’ time.

Bounds said the sale of GePetrol’s stake “should be a formality” because it is “one branch of government making a recommendation to another branch”.

However, he remarked that it is taking longer than expected, adding that “there are other issues internally in Equatorial Guinea that I can't speak to”.

Bounds told analysts that “we are aware of who the company is that is proposed to take over the state’s participating interest”, but pointed out: “We are not allowed to disclose that information until the new partner is approved.”

The other Block P partners are Nigeria’s Atlas-Petroleum on 5.6% and Sweden-based Crown Energy on 5%.

Off Gabon, Vaalco will spud up to four wells on its Etame Marine licence in the coming months.

The Houston-based company said two development wells would be drilled by the end of this year, with the appraisal probes drilling in the first half of 2020. Pending approval from the licence partners and government, a third well may be drilled this year.

Any successful wells would be tied back to infrastructure in the block which currently centres on wellhead platforms tied back to the Etame floating production, storage and offloading unit.

Vaalco Energy posted a net loss in the second quarter of about $1 million against a profit a year earlier of $544,000, on revenues of $25.23 million, up from $24.43 million.

Etame’s production averaged about 13,550 barrels per day in the second quarter of 2019, from the five fields Etame, South East Etame Ebouri, North Tchibala, South Tchibala and Avouma.

Nearby prospects include West Etame, South West Etame, South Etame, North East Avouma and South East Avouma.

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Vaalco farm-out awaits GePetrol's Block P exit