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Acquired 70% WI in 5,214 acres in Sheridan County, MT.

Vaalco Energy Inc., Houston, (NYSE: EGY) has acquired a 70% working interest in 5,214 acres in Sheridan County, Montana, from an undisclosed privately-held company for and undisclosed price.

The acreage directly adjoins Flat Lake Field, which produces from the Middle Bakken formation.

"We are highly optimistic that this acreage will be productive from the Bakken and possibly the Three Forks formation, thereby having the potential to add significant reserves and cash flow to Vaalco," says Robert Gerry, chairman and chief executive.

"We believe there could be 100 million barrels of original oil in place associated with this acreage and with a recovery factor of between 5% to 10% it is an exciting undertaking for us," adds Gerry. "Our partner has participated in over 200 Bakken wells and will retain a 30% working interest in the prospect."

Operatorship is being discussed by the partners with a well anticipated to be drilled in the fourth quarter of 2011 at a net cost to Vaalco of approximately $3.5 million.