Cameroon takes stake in Victoria Oil and Gas's Logbaba project

Cameroon's state hydrocarbon company decided to tap directly into Victoria Oil&Gas's Logbaba project, exercising its right to take a stake via a participation agreement.

The deal formalised SNH's involvement on behalf of the government of Cameroon alongside Gaz du Cameroun, Victoria's wholly-owned subsidiary, and RSM production company in the Logbaba on shore gas project.

Under the terms of the agreement, Victoria would have a 57% interest in the sale of all hydrocarbons from Logbaba, compared to 60% previously, with RSM entitled to 38% and SNH to 5%.

Following an audit of the exploitation costs, SNH would also have to compensate its partners for a part of the funds invested thus far.

"The Cameroon Government has supported and set the conditions by which GDC has been able to operate and invest in excess of US$250m, and encouraged new investors into Douala to establish their businesses," said Ahmet Dik, Victoria's chief executive officer.

Analysts at Shore Capital concurred, telling clients they expected commercial state participation in Logbaba to be "very supportive" of further development of the flagship project.

GDC was supplying gas from Logbaba to businesses in Douala, Cameroon's main business hub, via an integrated gas supply network.

According to Victoria, those supplies were not only cost effective, reliable, safe and cleaner than liquid fuel alternatives, they also provided the entire economy of Cameroon with stable energy.

In the same announcement, VOG confirmed it had chosen to extend the termination date of its farm-in agreement with rival Bowleven for the Bomono project to late September 2017.

ShoreCap described Bomono as "highly accretive and provides an excellent strategic fit for VOG as the company consolidates its dominant position in the Douala region".

Dik, expressed excitement about the deal reached with SNH, saying "I am delighted that we can now formally share our energy success story on a commercial basis with the Cameroon Government".

"Our team looks forward to building on the excellent working relationship we have with the SNH team and I thank and extend my gratitude to Mr Adolphe Moudiki, Executive General Manager of SNH for the contribution SNH has made to the oil and gas sector in Cameroon".

As of 1151 BST shares in AIM-listed Victoria Oil&Gas were unchanged at 47.25p.