The upgrade is intended to improve the water processing capacity at the floating production, storage and offloading (FPSO) facility, which will enable Vaalco to increase production by 10% to 25,000 barrels of oil per day by 2008 year-end. In addition, modifications to the gas flare system will be undertaken, improving safety and reducing the likelihood of unplanned downtime.

Vaalco noted that the upgrade to the floating production, storage and offloading facility is expected to commence on June 12, 2008, and be completed within seven to 10 days, during which production will be temporarily shut-in.

Vaalco expects to make up for the lost production as a result of the capacity expansion and does not expect the shut-in to have a material effect on the company’s revenues or earnings for the quarter or for the year.

Robert Gerry III, chairman and CEO of Vaalco Energy, said: This upgrade is part of our efforts to ensure that we are fully capitalizing on Vaalco’s exploration and production portfolio and driving value for our shareholders. With seven planned exploration wells in Gabon, Angola and the North Sea, we are entering a period that will see the highest levels of exploration and development in Vaalco’s history.