2010-08-31-2010-08-17

To buy 50% stake in Gabon's Mutamba Iroru permit.

VAALCO Gabon (Production) Inc., a subsidiary of VAALCO Energy Inc., Houston, (NYSE: EGY) plans to farm out a 50% stake in its operated Mutamba Iroru permit in Gabon to Total Gabon, a subsidiary of French oil major Total SA (NYSE: TOT), for an undisclosed price.

VAALCO and Total have committed to reprocess 400 kilometers of 2-D seismic data and drill one exploration well, superseding VAALCO's prior obligation to acquire 200 kilometers of 2-D data on the permit. In return for Total funding an agreed portion of the new work program, Total will receive a 50% interest. VAALCO will continue to operate the permit.

The agreement is subject to obtaining the approval of the Republic of Gabon for the amended work program, including a one-year extension to allow sufficient time to conclude the seismic study and drilling operations. Government approval is expected by late September.

VAALCO chairman and chief executive Robert Gerry says, "We are pleased to welcome Total as a partner and, given their expertise in Gabon, we look forward to working with them to high-grade potential prospects on the permit."

In the event that exploration results lead to a development plan, Total has the option to assume operatorship of the Mutamba Iroru permit. Total currently has production infrastructure in place as operator of Atora Field to the north of the Mutamba Iroru permit.

VAALCO also operates the Etame permit offshore Gabon, from which current net production is approximately 5,000 barrels oil per day.