Ladies and gentlemen, thank you for standing by and welcome to the Second Quarter 2014 Earnings Report. At this time, all participants are in a listen-only mode. Later, there will be an opportunity for questions. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Chief Financial Officer, Greg Hullinger. Please go ahead..

Thanks Michelle. Thank you for joining us on the call today to review the company’s second quarter 2014 operating and financial performance and thank you for your understanding and accommodating us as we rescheduled this call.

As we mentioned in the press release issued this morning VAALCO executives are in Washington DC attending meetings associated with the US Africa Leaders Summit. On short notice, a key meeting was scheduled at the original time of the conference call and felt it was important to take the meeting and reschedule our conference call to this afternoon.

After I cover the forward-looking statements narrative, Steve Guidry, VAALCO Energy’s Chief Executive Officer and Chairman of the Board will speak on the key issues followed by a financial review that I will present and then Russell Scheirman, the Company’s President and Chief Operating Officer will provide a review of our operations in the three west African countries where we have exploration and production activity.

Following the presentations, we will be pleased to answer any questions you may have. With that, let me proceed with our forward-looking statements guidance. During the course of this conference call, the company will be making forward-looking statements.

We caution you that any statement that is not a statement of historical fact is a forward-looking statement.

Forward-looking statements are those concerning VAALCO’s plans, expectations, future drilling, and completion activities, expected capital expenditures, prospect evaluations, negotiations with governments and third parties, reserve growth, and other operations.

Statements made during this conference call that address activity, events or developments that VAALCO expects, beliefs or anticipates, will, or may occur in the future are forward-looking statements.

These statements are based on assumptions made by VAALCO based on its experience perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances.

Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond VAALCO’s control. Investors are cautioned that forward-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.

VAALCO disclaims any 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 the yesterday’s press release titled Forward-looking statements and in the reports we filed with the Securities and Exchange Commission, notably the 2013 Form 10-K filed with the Commission on March 13, 2014.

Please note that this conference call is being recorded and without taking care of, let me turn the meeting over to Steve Guidry. Steve?’.

Thank you, Greg and hello everyone. Thank you for joining us this afternoon. As Greg mentioned, Russell, Greg and myself are in Washington DC today participating in events surrounding the US Africa Leaders Summit where we are having a number of meetings with high level government officials from various West African countries.

We saw this event as an excellent opportunity to deepen our relationships with key leaders from the region. With that said, let me touch on a few of our exciting highlights for the second quarter 2014.

Our second quarter performance rebounded as predicted with the benefit of an April 1 lifting and a June 30 lifting which left only a minimum volume of inventory in our FPSO at quarter end.

In addition to our increased sales volumes, strong pricing in the first part of quarter the coupled with lower lifting costs have served to significantly bolster our second quarter earnings. As production from the Etame Marine block continues to meet or exceed our expectations.

We remain confident in our ability to deliver our targeted operating cash flow and income for the 2014 calendar year. Equally exciting is the steady progress we have made in the second quarter on various projects in Gabon Angola and Equatorial Guinea.

Russell will be reporting on the projects in much more detail later but I do want to congratulate our Gabon expansion project team on reaching several important project milestones. First our two support jackets successfully made their voyage to Gabon and are in the process of being installed as we speak.

The two new processing platforms are decks sale for Gabon at the end of July and are scheduled to arrive in the first week in September. We were successful and fully commissioning the utility systems on both platforms prior to their sailing which will make the start-up of the platforms on location in Gabon much easier and much more certain.

The projects remain on schedule and on budget and will be operational in the fourth quarter of 2014. As a reminder, we have contracted with Transocean to supply the jack-up rig Constellation-2 to drill the six new development wells slated to begin in October of this year.

We are also very pleased to announce the successful resolution of the PSC negotiation at the Mutamba Iroru Block Onshore Gabon. You may recall, that this is the VAALCO operated block in which we had a discovery in 2012.

VAALCO has been working with our partner Total and with the Ministry of Petroleum to agree to a new PSC terms and last week we signed a term sheet with the government and the partners that provides for the framework of a new PSC that will be – we will target signing here in the coming weeks.

As soon as that is done, VAALCO and our partner Total will be finalizing the engineering work to progress the development of that block. We are also putting the final touches on our well plan for the Candeli post well test in Angola. The well is scheduled to spud in this November and will likely reach TD in January of 2015.

The Transocean semi-submersible rig Celtic Sea is scheduled to arrive mid-November. We are also progressing the processing of the outboard seismic on Block 5 and should have that concluded by early 2015 as well, setting the stage for our very exciting pre-sell tests on Block 5.

We have also made progress in Equatorial Guinea where we continue to work on our plan to establish the joint operator ship with our partner G-Petrol. We have discussed with G-Petrol and the Ministry of Mines and Industry and Energy, the potential to reorder the activities on Block P and have received preliminary support for the concept.

The proposed new concept for Block P would have us developing the Venus discover ahead of drilling the exploration wells at southwest Grande and Marte. We believe this to be a lower risk alternative that allows us to establish cash flow from the block much sooner.

Lastly I can report that we continue to evaluate a number of discovered resource opportunities but we are being very selective looking for the right opportunity for VAALCO. As I mentioned before, our target area is the shallow waters of West Africa from South Africa.

And we have also added additional human resources to our team to help us with that effort. So it’s been an exciting second quarter. And with that, I will pass the call over to Greg to discuss our financial results in further detail..

Thank you, Steve. I will be providing an overview of the key financial information for the second quarter of 2014 that we reported yesterday in our 10-Q filing with the SEC and our earnings press release. The company reported strong net income of $24.7 million or $0.43 per diluted share for the second quarter of 2014.

This compares to a net income of $7.1 million or $0.12 per diluted share in the second quarter of 2013. Quarterly income in the second quarter of 2014 was over three times the income reported in the same period in 2013.

For the first six months of the year the company reported net income of $17.7 or $0.31 per diluted share and this compares to net income of $14.3 million or $0.25 per diluted share in the second quarter of 2013. The net income for the first half of 2014 was 24% higher than the net income reported for the first half of 2013.

The significant increase in net income for the second quarter should not be misery to those of you that follow our company. The largest factor is the timing and size of crude oil liftings from our operations at Offshore Gabon. We post our liftings on our website for your convenience so that you can access this information.

You may recall that we had a sizable crude inventory of the FPSO vessels at the end of the first quarter that we lifted on April 1 2014 the very first day of the second quarter. Then two additional liftings occurred during the second quarter including a lifting on the last day of the quarter as Steve mentioned earlier.

The resulting high volume of crude sold during the quarter which was a combination of inventory available at the beginning of the second quarter and solid production performance during the period is the driver of the increase in net income.

Now for some details that drove this significant increase in net income numbers by looking at revenues, lifting and production information. Revenues in the second quarter of 2014 of $52.1 million were 79% higher than the same period in 2013.

VAALCO’s share of the liftings during the quarter totaled approximately 480,000 net barrels, a 71% increase over the second quarter lifting volume of approximately 280,000 net barrels. The average price we received for the second quarter 2014 lifted volume was $108.24 which was $6.03 higher than the price received in the second quarter of 2013.

Keep in mind that quarterly revenues are highly impacted by not only the timing but also the size of our crude lifting. Since we can only sell what we’ve produced, our key measure is to understand our production profile.

Production for three months ended June 30, 2014 was approximately 446,000 net barrels as compared to 432,000 net barrels for the same period in 2013 a 3% increase. To summarize the revenue of lifting and production, here is a quick recap when comparing Q2 2014 versus Q2 2013.

Revenues were up 79%, lifted volumes were up 7% obviously a direct correlation. Average prices of the barrels we sold was up 6%, production was up 3%.

Based on these four positive metrics, we reported strong second quarter financial performance and when combined with our first quarter 2014 financial results, this equates to a solid first six months of performance in 2014. Now to the other key financial components for the quarter.

Operating income was $33.8 million in the second quarter of 2014 compared to an $11.7 million for the second quarter of 2013. The significant increase is again attributable to the volumes of crude lifted in each of the respective quarters.

Production expenses for the 2014 second quarter were $4.8 million compared to $7.0 million for the 2013 second quarter. The decrease is primarily attributable to less well work over costs and non-operational adjustments including an accrual true-up.

Exploration expense for the second quarter of 2014 was $3.3 million compared to $4.3 million reported in the second quarter of 2013. DD&A for the second quarter of 2014 was $7.0 million compared to $3.4 million in the second quarter of 2013.

The increase is primarily a function of the increased lifting volumes, but also reflects a higher composite DD&A rate for our Offshore Gabon assets.

Income tax expenses for the first quarter of 2014 was $9.0 million compared to $4.6 million in the same three month period in 2013 and the increase in income taxes reflects the impact of the higher volume of crude lifted during the quarter.

Cash and cash equivalents including restricted cash totaled $131.7 million at the end of the second quarter, this compares to $147.3 million at the end of 2013.

The decrease is largely attributable to significant capital expenditures of approximately $51 million that we expended in the first six months of 2014, primarily associated with the two new platforms that Steve mentioned just a few minutes ago.

The company has not drawn down any debt against our new $65 million IFC credit facility that we completed in the first quarter of 2014. VAALCO’s capital expenditure budget for 2014 is expected to be approximately $114 million. With that, that concludes my review of VAALCO Energy’s Inc.

second quarter financials, a very strong performance period for ourselves. Russell Scheirman our President and Chief Operating Officer will now provide you with an operational update..

Thanks, Greg. So I have progress to report on our platform installation projects at Etame and right through with the government on our Onshore Gabon Mutamba project and Equatorial Guinea and I’ll also update on our Angola activity.

In Gabon and Etame, production averaged 18,000 barrels per day during the second quarter which is 4400 barrels net per day to VAALCO. The production increase in the second quarter due to the successful side-track of the South Tchibala 1H well which had powdered casing.

Later this month, the FPSO owners have scheduled a six day full field maintenance shutdown to upgrade the fire and safety systems onboard the vessel which will impact our third quarter production. On the construction front, as Steve mentioned, we are installing the first jackets, for the two new platforms to be commissioned later this year.

A second jacket has arrived in the area and it’s awaiting completion of the first installation. These platforms are for Etame field expansion and for the development of the Southeast Etame discover and the North Tchibala discovery. The Emas heavy lift vessel, the Constellation is performing these platform installations.

Both of the decks for the platforms were shipped from Honolulu, Louisiana last month and will arrive in Gabon in early September. The decks are currently off the coast of South Africa one of them is near Venezuela, one is around near – and their air – weigh for (Inaudible) hurricane threat.

So we were happy to get them through the Caribbean without any issues. That will be lifted on to the jackets upon arrival and then commissioning will follow to make the platforms ready for development drilling. We will be drilling six new development wells in Etame in Southeast Etame during late 2014 and 2015.

Additionally, we will drill a dry gas well to provide a fuel source for the Etame complex in the future which will eliminate the need to use diesel for power generation and save large amounts of expense. Our total investment for this project will be about a $133 million net to VAALCO.

Most of it’s spent this year and in 2015 although we did spent some lifting and engineering dollars in 2013. Just under half of this $133 million has already been spent without any significant cost overruns to-date and our goal with these two projects is to maintain production near to or above 20,000 barrels per day well into 2016.

I mentioned last quarter that we located a drilling rig for the platform and signed an agreement to use the 450 jack ups that Transocean constellation 2 rig. Rigs currently operating in Gabon for another operator and it is anticipated to be released out in October of this year so that we can commence drilling.

We have access to the rig for about 23 months. So, if we find follow-on work as a result of the successes on the drilling at Etame a Southeast Etame we will have access to the rig. If we don’t need it that long, we have an arrangement to return it to the operator who we are getting it from. Moving on to the H2S issue that we’ve discussed in the past.

You may recall that two wells are at Northern most Ebouri fields again that produced H2S in late 2012 and had to be suspended. We also saw H2S production from the Etame 5H well which was our lowest productivity well making about 300 barrels per day in early 2014.

During the last quarter, we completed a detailed testing program of the Etame 5H well and confirmed the low levels of H2S. We collected, oil gas and water samples for further analysis and laboratory testing will help us to determine the source and type of H2S concentrations so that we can figure how best to mitigate it.

As a result of the appearance to the H2S we are performing engineering design work for tower sweetening facility which will enable us to redevelop Ebouri. The facility will be located near the Etame field adjacent to the Etame expansion platform where we have a good gas supply that sweetens the crude.

We are targeting the project to reach a final investment decision by year end 2014 or early 2015 with the sweetening facility in place by early 2017. Our models do not show significant increases in H2S at Etame until after that timeframe.

This will allow us to reopen the Ebouri wells to drill at least one maybe two additional Ebouri wells and redevelop Ebouri as well as to reopen the Etame 5H well and it will also allow us to mitigate the impact of any further spread of H2S in the other parts of the Etame complex.

So moving to Onshore Gabon where we have the N’Gongui discovery that we made at the end of 2012 after over year of discussions N’Gongui faced tedious discussions with the Gabonese government over approval of a development area for this N’Gongui discovery, VAALCO and total signed a term sheet with the government for a new production sharing contract over the block.

So, rather than extending the existing one with the development area, we are signing a new production sharing contract. The contract contains both an exploration phase and a development area terms and covers royalty, cost recovery and profit on sharing.

The exploration phase is for two three year terms with the first term we are required to drill one appraisal well on the N’Gongui discovery which we plan to do anyway. If we decide to enter into the option of second term, we will be committed to drill one exploration well.

The production license, once we file ordinance awarded is for 20 years to develop and deplete any production area that we may request. So this agreement finally paves the way for issuance of a productionary license and a developments of the N’Gongui discovery.

We will be working with Total to tie this discovery back to facilities in the pipeline that they operated in a field called Atora which is about five miles away and we are targeting to have first production from the area in 18 to 24 months.

In Equatorial Guinea, we own a 31% interest in the provisional development area of Block C offshore which is operated by G-Petrol the national company, the national oil company with a 58.4% interest. The block contains a former discovery known as Venus located at a water depth of 800 feet.

In the past G-Petrol was focused on two exploration prospect on the block but after a recent management change within G-Petrol, we raised the prospect with developing Venus first. The idea is being favorably looked upon by G-Petrol and our partners and the petroleum ministry.

We are working on a joint operatorship model for the project with G-Petrol, this will be a project very similar to how we got started in Etame, three wells, Subsea development into an FPSO, project planning is commenced to device a detailed development plan such that we can order long lead time items for the project.

We envision initial production in the 10,000 to 12,000 barrels per day range from the field and it can be worked out and we should have first oil in 2017. Once we’ve established production and have an cost recovery account we can proceed with the exploration projects which are cost recoverable from production.

This will greatly reduce the risk of exposure of these prospects to the consortium and if we are successful on any of these exploration projects that could be tied back to the Venus installation similar to the way we tie back Avouma and Ebouri 2 at Etame and Gabon.

Finally, on Angola, moving to Angola, we continue to operate under a two year extent and that ends November 30 of 2014 this year but as we’ve mentioned in the past, we have negotiated a further extension, a three year extension with the government which we are in the process of documenting.

VAALCO and our partner Sonangol PMP have signed that extension documents and we are just waiting for Sonangol EP the government contracting entity to sign their confirming of the extension.

It calls for drilling of one exploration well this year which we are going to drill with the Constellation rig Transocean – excuse me – Celtic Sea rig, also a Transocean rig which is coming to us late in the fourth quarter.

By virtue of the extension, we are able to defer our second obligation well until the first quarter of 2016 we can drill it sooner if we are ready. But we will go into the full details of the extension once all the documentation is finalized.

We’ve held technical workshops with our new partner Sonangol and have agreed on the first prospect for 2014 which is a post-salt test name Candeli. If that offset to a discovery made by Conoco 20 years ago and we will seek to prove up sufficient new reserves such that when the two are combined, commercial production can be established.

We have the rig under contract and we expect that rig as I mentioned to come to us in November.

In anticipation for the second well, we licensed a little of 1000 square kilometers of seismic data in the de-proportion of the block, the seismic is being used to evaluate some carbonate structures similar to the ones drilled by Cobalt which led their conservation discovery that we see are deeper portion of the block.

We’ve merged this seismic with our existing 1175 square kilometer seismic survey that’s in the center of the concession and all of this is being re-processed by a western geophysical into a pre-stack migrated volume. The prospect should be completed later this year and that’s really what’s driving the timing of the second well.

We mean to get that process finished interpreted and then high grade for the best prospect within the block and we can drill for our second commitment well. With that Steve, I am going to turn it back to you. Steven Guidry Okay. Thanks, Russ. I may just take a shot at summarizing much more details heard.

Aside from the outstanding operational and financial performance that you just heard us highlight, one way to think about our second quarter is, if you put that aside for what it is, which is outstanding performance and greater earnings. And then think about the progress we’ve made on our forward projects.

The progress at Etame with the expansion as we mentioned in the platform setting sale, the new PSC in terms at Mutamba that really represents a breakthrough with the government of Gabon.

Our partners in EG and the ministry preliminarily agreeing to the development of Venus as Russ pointed out and also getting our partners onboard with the concept of our centralized crude sweetening that gives us the potential to redevelop the Ebouri field.

Those four things are all very positive developments and they are all pointing to future development opportunities for VAALCO. We could very well find ourselves managing four developments simultaneously over the next 24 to 36 months. So we find that to be very exciting.

If you couple that with the post-sat and pre-salt tests, in Angola and we believe that we’ve set the stage for some very significant value creation for the shareholders. So with that, we will open it up to questions..

And your first question comes from the line of Leo Mariani of RBC. Please go ahead..

Hey guys.

Trying to get a sense of what your current production is in the Etame complex right now?.

It’s a little below what we did in the second quarter but we are going to have that six day shut down. We will lose 100,000 barrels or so as a result of that shut down , but we are frankly been very pleased with – we haven’t had any drilling now for almost a year and we – the wells have held up quite nicely..

Okay, in terms of your drilling, that’s going to start, I guess, later this year on the Etame complex, when would you expect production contribution from that?.

Leo, this is Steve. We are anticipating the rig arriving in October. We anticipate that the Etame platform, the new Etame platform will be ready to receive the rig. It’s 45 days, so we should see our first contribution at or around used in probably sometime in December on the first well..

Okay, and just in terms of your CapEx budget for the year here, if I recall correctly, some of the CapEx assumes drilling in both Angola and EG, do you guys think you are going to spend that whole budget here in 2014?.

We had initially budgeted $117 million for the year. That assumes as you point out – that assumes a pre-salt well in Angola and it assumed the exploration well in EG. Instead of drilling the pre-salt well in Angola.

You are right, we will drill a post-salt well which will be lower cost and with our recent development in EG, substituting the Venus development putting it ahead of the exploration well, we will not be drilling Southwest Grande. So if you do the math and all that, our $117 now is right at a $102 million..

Okay, that’s helpful and I guess, in terms of Venus, I guess, I had always thought that that was somewhat of a marginal discovery, but clearly you guys are making plans here to move forward and develop it.

Can you just give me a little bit more color around that and I guess, you think this is going to be nicely economic or you largely pursuing this in order to offset some of the exploration costs?.

No, it’s really just a recognition that it provides us an opportunity to bring in some cash flow a lot sooner. One of the things that makes Venus very competitive is the contract. It’s a very good contract. We have a 70 cost recovery.

One of the real benefits is that the contractor receives 90% of the profit oil and the first 25 million barrels produced. Although the country does have a 35% income tax, it’s still is a very favorable contract.

And so, we just saw it as an opportunity and what contributed to this and our frankness is also a change in the management in G-Petrol who is our 58% working interest owner on the block. We were able to convince them to go this route and largely due to a change in management there..

All right, and I guess, can you just talk about on the operating agreement with G-Petrol that’s some of that’s likely to get finalized in the near future.

How should we think about that?.

We are having some of those conversations coincidentally what we are hearing in Washington with G-Petrol and with the government. We are planning to meet with the ministry in the month of September to present the final plan. So, we are very hopeful that that will all be settled sometime in September..

Okay, and I guess, in terms of your oil price realization, I guess, you guys clearly have an need plan for pursuing the oil here which I think was implemented in the second quarter. I know you said pricing was a little bit below Brent this quarter and Brent was kind of above in the past.

Can you talk to how that new mechanism works on the pricing? Are you guys receiving the price on the actual day when you received the cargos? I think in the past, you guys were received sort of an average monthly price when had a lifting.

Can you talk more about that?.

Yes, this is Russ. The proposed pricing mechanism is the average of dated Brent for the five days after the lifting. The way it’s actually turned out on the first two liftings under this gain which hope went into the UK. They asked that it’d be priced the five days around the days that it was being offloaded.

We agreed to that because, they were by far the best bidder. Under this arrangement we have a broker that goes out, looks for bids, and brings them to us and we are able to choose. The other benefit is we also control the timing of the liftings a little better.

I think you saw in the second quarter how we were able nail that lifting at the end of the quarter. We got a little bit lucky on the first lifting.

If price June 16 to 20 which was one of the highest and graded Iraq, from Syria and all the oil price jump then we got a $113 plus for that lifting and the lifting at the end of the June was in the low hundreds. We are currently getting ready to lift.

In the middle of August we did not have a lifting in July, but we have a big lifting coming up in the middle of August and we are still discussing with a potential buyer what the pricing dates will be around there.

But it’s no longer that where we get the average price, the set price against Robby Light were actually pricing against competitive bids from potential buyers..

Okay, and that was helpful.

And I guess, just a follow-up on the CapEx question, what would you expect CapEx to be on just the Etame concession in the second half of 2014 here?.

Second half, total for the year, our net at Etame was right at $70 million. So, I’d have to venture and guess to tell exactly what portion of that $70 million dispersed in the second half. But let us look that – we will see we can get back to you on that, Leo..

Okay, and that sounds good. And I guess, just on expenses, can you give us a little bit more color around those clearly your LOE was down substantially here in the second quarter, I think part of that was like a reimbursement.

Can you kind of quantify what the reinvestment what we should expect LOE to be in the second half or we have to think about it on a per barrel basis?.

This is Greg. LOE, in a quarter typically runs about $8 million. So, the combination of first quarter, second quarter is pretty close to that. Although it didn’t have very much in a way of work over costs, but normal, it’s about $8 million.

So we had a couple of items in there that we were correcting for including an accrual, true-up that caused our entire first quarter OpEx to be overstated a little bit. That’s kind of the run gate, it’s about $8 million a quarter..

Okay, that’s helpful and I guess, in the N’Gongui development, do you guys have an estimate of sort of rough CapEx that you may have to spend to get the first oil there?.

We do. It’s somewhere between $70 million and $90 million growth and we are responsible for half of that. That would be for a three well initial development tie-back to the Atora facility. And we are guessing those wells are going to be in the 1500 to 2500 barrels a day range.

There is a gap cap on this discovery and we are we will have to play around with the wells to make sure we don’t pull gas. So we will be studying that. We will be modeling that. But we are pretty excited that we finally got this thing moving down the pike..

All right, that’s it for me. Thanks guys..

Thanks, Leo..

Okay, thank you. And the next question is from the line of Jamie Wilen of Wilen Management. Please go ahead..

Hey, it’s (Inaudible). A couple questions on Angola, we have not gotten paid the reimbursement yet.

Have we billed that?.

We have billed it, we have not been paid it. We have not really forced the issue pending receipt and the final signature on this three year extension and then we’ll get heavy about it..

Okay, and getting the signature on the expansion is from one Sonangol arm to another Sonangol arm and – but it still take us a long period of time to have that done?.

It’s from the contractor which is Sonangol EP. It’s equivalent of the DG aids that we deal with in Gabon. So, the Sonangol PP which is the national oil company, the private national oil company and VAALCO have signed a document that Sonangol EP generated by the way. They are the ones that presented the extension products signed.

We’ve signed it and sent it back to them. And they keep telling us it’s in eminent but you saw how long it took to you to sign the partner and things just take a while there..

Okay, and when you sign the – or the new term sheet for the PSC from Mutamba, is that, are the terms similar they are than they were beforehand?.

They are - the rub was, we got caught right up against this new petroleum law that the Gabonese government has recently passed and we have some terms that were not in sync with the new law.

There is a couple new items that they want you to contribute to such as the social, redevelopment funds and environmental fund, the big arm wrestle was over the royalty rates.

They’ve set minimum royalty rates that were higher than our higher royalty rates that we had to concede some there but then we got things back in terms we got a higher cost of oil recovery factor. There is a new – in the new law the contractor is responsible for paying the income tax.

In the old law the government was responsible, we were able to keep if where the government will pay the income tax. So we lost some, we got some back. All in all, maybe they want a few points, but it’s reasonably comfortable with what had before..

I think it’s fair to say, Jamie, that there was a slight deterioration in the NPV but economics for the development is still very robust..

Very good.

And lastly given the, your exploration activities in the back, what would you expect your tax rate to be on y our oil in the second half?.

In Gabon we should keep the COGS handful for the balance of the year..

Okay, very good. Thanks, that was well done..

Thank you, Jamie..

Okay, thank you, and the next question is from the line of Joe Pratt [ph], private investor. Please go ahead..

Yes, just a quick question as to and I think you’ve already said this when do you expect to spud the well in Equatorial Guinea, the Venus well?.

We, IT would be – as Russell pointed out, this would be a development. So we are talking about two producers and an injector and our first step will be to get all the approvals necessary to move forward on the development out of the exploration.

But we probably would not see – we’d not see a drilling the producing wells after we’ve completed all the facility work which will be sometime in 2016..

We’ve got to order Subsea threes which are about in 18 months advance order and we’ve got order flexible flow lines in umbilical which are also about a one year plus. So this is pushing the actual drilling phase back considerably..

Okay, and I saw from prior slides, prior company’s government crown they estimated that Venus well had reserves of 18 million barrels and then around it in the block like was potentially 185 million barrels, Do you want to comment on recent seismic analysis of those estimates ?.

That 18 million number is kind of the middle of our range for what we know there is upside within Venus to the northwest within the turbidite that prospect comprises. We obviously don’t carry the two major prospects. That you said 180 million, we are not that high. We are probably more like 100 to 140 depending on how what we call Marte pans out.

The southwest Grande has a large channel sands but it’s hard to know whether they are going to be full or half full whether it has been broached, that probably got the highest potential impact at the Southwest Grande.

The market prospect is, it could be big, but it’s a stratigraphic play they can be full forever or they can just have a little bit of the top or they can be breached, so..

Okay, and then moving over to the subject of Block 5 in Angola, you’ve announced in January processing more seismic with Sonangol.

Have you been able to talk about any conclusions and the implications of that for the Bundee prospect?.

Yes, I think what we can say is that the – Joe that, we were hesitant to purchase that data until we saw that the government was prepared to extend the license. And once we saw that then we went up and bought the data, which is why we are sitting here today without the data having been fully processed and analyzed.

And so, that will be done in the first quarter of 2015 and the government understands that and it’s part of why they have an expectation as we do of ourselves that we will be drilling that pre-salt well sometimes in the late 2015 early 2016 timeframe. But all we have to-date in the deeper portion of the block are 2D seismic lines.

And yes, the 3D dataset will have a significant impact on Bundee. It will allow us to shore up that structure or perhaps identify other structures on the block that they’d be more promising..

I read an – unrelated to you folks, a white paper that was talking about that area about the potential size of the structures after the 3D analyzed and they were talking about much bigger volume than you’ve talked about, some are between 1 billion barrels and 2 billion barrels.

Is that specious or is that worth considering?.

No, there are prospects that size out of the ultra deep water but the ones we are looking t are not that big but they are big, they are several 100 million barrels..

Right. Okay thank you..

Thank you..

And as a follow-on we were able to get the number for the second half CapEx spend in Etame and it’s between $20 million and $32 million..

Okay. Thank you and the next question is from the line of Neil Nelson of NNI. Please go ahead..

Good afternoon, I was just curious about the shift in priorities in Equatorial Guinea and how do you size an FPSO without knowing the potential for Southwest Grande if you proceed with a developments of the Venus prospects?.

It’s certainly an issue. We will be in the market for a vessel with ample storage capacity i.e. 1 million barrels to allow that if we needed to we could expand the FPSO capacity.

We will looking for a 30,000 to 50,000 barrel a day FPSO and we’ll just have to see what’s out there in the marketplace and the FPSO marketplace where these types of projects is very much a opportunity driven exercise. You don’t go out to have a special purpose FPSO built for 20 million barrel project you find one that’s finished on another project.

It can be put it as dry-dock modified as little bit and then re-used at a good price. We just think though that to have that cash flow as a back stop those exploration wells will tax deductible and we’ll be getting 90% of the profit oil and the cost oil. We’ll just greatly diminish the overall risk to the consortium to the project./.

And my next question is, what are the hydraulic pumping limits? For example, first, let’s take Etame.

What are the distance limits that you could pump a well to the FPSO?.

In Etame? Well, we have completions that are three or four miles away from the FPSO. They have dual flow lines that can be paid to help with flow assurance. We flow the Avouma pipeline 15 kilometers or 10 miles. Again, we have the ability to peak that line.

I think we have 450 pounds pressure at the platform to push that oil to 10 miles over to the FPSO. So you can pretty good distances if you want to. Subsea gets expensive just because of the dual flow lines and all that come up you need for the flow assurance though.

So, - but we don’t have that same problem to the extent we do at Etame where we are producing Subsea with this very waxy crude. We don’t have that problem in Equatorial Guinea. It’s post-salt crude it’s got a lot more gas in it. It’s even a little bit higher gravity.

So, we could probably go a fairly good way in Equatorial Guinea with the Subsea systems gas lifting back to an FPSO..

And, you mentioned the pumping pressure from the pipeline, does that imply for Etame that you could actually, beside using the ESP on the well, especially increase the pressure by using a pump from the platform to get more distance?.

We could but those ESPs can go to pretty high pressures..

Okay.

So would you say it’s a 10 mile limit or?.

As we need to go 20..

20, okay. All right that concludes my questions..

Thanks Neil..

Okay. Thank you. And the next question is from the line of Gavin (Inaudible) of RBC. Please go ahead. Okay and they released from the queue. And at this time, there are no further questions in queue. Back to you gentlemen..

Okay, well, we appreciate everyone’s time. We really appreciate everyone’s flexibility in allowing us to move our call for this afternoon and again we look forward to meeting with you with a positive third quarter report..

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