VAALCO Energy, Inc. Update

HOUSTON, Jan. 22 /PRNewswire-FirstCall/ - VAALCO Energy, Inc. (NYSE: EGY)
(the "Company") today announced the results of a recent exploration well in
the North Sea and an update of future planned activities.
U.K. North Sea Exploration
The 9/28b-19A exploration well, operated by Bow Valley Petroleum (UK)
Limited (37.5%) on behalf of partners Marathon Oil (U.K.) Ltd. (37.5%) and
VAALCO UK (North Sea) Limited (25%) was drilled to a total measured depth of
12,726 feet. The well penetrated a thick sequence of Upper Jurassic Brae
Formation sandstone reservoirs, the top of which encountered 105 feet of gross
oil column. Formation pressures and fluid samples were acquired during TD
wireline logging program. The potential reserves associated with this
discovery are smaller than anticipated and the well has been suspended pending
further evaluation or possible development in conjunction with other
activities in the area.
VAALCO is currently in final negotiations with a third party to
participate in an exploration well in the Southern Gas Basin of the North Sea.
Should an agreement be concluded VAALCO would pay a portion of the well costs
to earn a 25% working interest. Estimated gross reserves are 45 billion cubic
feet. with an anticipated spud date in the third quarter of 2008.
Gabon West Africa

Etame Concession

VAALCO is evaluating seven exploration/development leads and/or prospects
to determine its drilling program to commence in the fourth quarter of 2008.
Gross unrisked recoverable reserves are estimated by the company to
approximate 100 million barrels (24 mmbo net). Current daily production is
approximately 22,000 bopd from the Etame concession.
The Ebouri platform is nearing completion in Ingleside, Texas and is
scheduled to depart for Gabon the beginning of May 2008. VAALCO has signed a
letter of intent with a drilling contractor to commence drilling the Ebouri
development well in October with first oil expected in December at a rate of
5,000 - 6,000 bopd gross. The drilling rig is contracted to drill an
exploration well immediately following Ebouri with the possibility of one
additional well to follow.
Mutamba Concession
VAALCO is planning to drill two exploration wells commencing in the fourth
quarter of 2008 and is currently in the market to contract for a land drilling
rig. The target will be the Gamba sandstone, the same formation producing in
the Etame Field. VAALCO owns all of the working interest and as a result of
its strong cash position currently anticipates drilling 100% of each prospect.
The objective sands are shallow, between 3,500 - 4,000 feet with reserves of
approximately 10-15 million barrels per prospect.
Angola
VAALCO continues to process seismic to determine the location of an
exploration well on Block 5. It continues to investigate the availability of
a drilling rig in order to commence operations in the fourth quarter of 2008.
The market, however, remains extremely tight and a rig may not become
available until early 2009.
Management Comments
Robert L. Gerry, III, Chairman and CEO stated, "The North Sea well was
tantalizingly close to being a success. Bow Valley found an oil column in the
correct geological sequence but unfortunately it did not contain enough
hydrocarbons to be a commercial success. While we will suspend the well we
will leave infrastructure in place on the sea floor to allow for easy entry in
the future when development is warranted.
We are in the final stages of completing negotiations with a third party
to drill a gas well in the Southern Gas Basin of the North Sea. Believed to
contain approximately 45 bcf. VAALCO will have a 25% working interest. Gas
currently is being sold in the U.K. for approximately $10.00 per mcf so if we
are right it will add significant reserves and cash flow to VAALCO.
Robert Gerry further stated that, "If you are in the exploration business
you will drill a few non commercial wells; however, we believe our portfolio
is exceptional. Our internal calculations estimate that we currently have
approximately 10 million barrels of proved net reserves and over the next 12
months we believe we could easily double that number.
Even after accounting for our investment in the North Sea well our balance
sheet remains extremely strong with more than $80 million in cash. When
coupled with our strong cash flow we believe VAALCO is ideally positioned to
expand its portfolio. The market place is creating opportunities for
companies with cash and cash flow. We believe VAALCO is well situated to be in
the forefront to take advantage of those opportunities.
About VAALCO
VAALCO Energy, Inc. is a Houston based independent energy company
principally engaged in the acquisition, exploration, development and
production of crude oil. VAALCO's strategy is to increase reserves and
production through the exploration of oil and natural gas properties with high
emphasis on international opportunities. The Company's properties and
exploration acreage are located primarily in Gabon and Angola, West Africa.
This press release includes "forward-looking statements" as defined by the
U.S. securities laws. Forward-looking statements are those concerning VAALCO's
plans, expectations, and objectives for future operations and activities. All
statements included in this press release that address activities, events or
developments that VAALCO expects, believes 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. These risks include, but are not limited to, inflation, lack
of availability, goods, services and capital, environmental risks, drilling
risks, foreign operational risks and regulatory changes. Investors are
cautioned that forward-looking statements are not guarantees of future
performance and that actual results or developments may differ materially from
those projected in the forward-looking statements. These risks are further
described in VAALCO's annual report on form 10K/A for the year ended December
31, 2006 and other reports filed with the SEC which can be reviewed at
http://www.sec.gov, or which can be received by contacting VAALCO at 4600 Post
Oak Place, Suite 309, Houston, Texas 77027, (713) 623-0801.
SOURCE VAALCO Energy, Inc.

VAALCO Energy, Inc., +1-713-623-0801, fax, +1-713-623-0982