Exhibit 10.2

RIDER No. 1 TO THE CONTRACT

FOR EXPLORATION AND PRODUCTION SHARING ETAME No. G4-160.

BETWEEN:

VAALCO GABON (ETAME), INC., a company constituted under the current law in the
State of Delaware, United States of America, headquartered in Houston, Texas,
77027, United States of America, 4600 Post Oak Place, Suite 309, represented by
Virgil WALSTON, with all powers for this instrument,

AND

THE STATE OF GABON, represented by Paul TOUNGUI, State Minister, Minister of
Mines, Energy, Oil and Hydraulic Resources.

Hereinafter the “Parties”

RECITALS:

·

VAALCO GABON (ETAME), INC. and the STATE OF GABON signed on July 7, 1995 a
Contract for Exploration and Production Sharing (“the MARIN CEEP ETAME No.
G4-160”) concerning the permit for research, so-called Marin ETAME permit No.
G4-160, valid for liquid and gaseous hydrocarbons bearing No. G4-160 (the
“permit”).

·

By decree No. 0001513/PR/MMEP/DGEEH of December 12, 1995, a permit for research
of liquid and gaseous hydrocarbons was issued, named “ETAME” No. G4-160, and the
related Contract for Exploration and Production Sharing was approved;

·

By Decision No. 00043/MMEPRH of July 17, 2001, an Exclusive Exploitation
Authorization valid for liquid and gaseous hydrocarbons named “EAME [sic] MARIN
No.G5-88” was issued and granted to VAALCO GABON (ETAME), INC., pursuant to the
provisions of Article 16.4 of the Contract for Exploration and Production
Sharing (“the MARIN CEPP ETAME No. G4-160”);

·

VAALCO GABON/(ETAME), INC. presented on May 20, 2001, a request for amendment of
the contractual provisions concerning the exploration periods, in order to
enable it to examine and evaluate boring results; to judge the interest of the
research permit named Marin ETAME No. G4-160, and to proceed with additional
seismic and drilling work;

·

The Parties have consequently agreed to make, by this rider, the necessary
amendments in the Contract for Exploration and Production Sharing (“the MARIN
CEPP ETAME No. G4-160”) in order to change the new exploration periods and the
related work, among the rights and obligations of the Contractor.

CONSEQUENTLY, IT HAS BEEN AGREED AS FOLLOWS:

Article 1:

Article 3.3 of the Contract for Exploration and Production Sharing (“the MARIN
CEPP ETAME No. G4-160”) is replaced by this Article and Articles 2 and 3 of the
Rider.

This Article now has the following language:

“If the Contractor, during the second period, extended if applicable pursuant to
Article 3.2, met its obligations arising from the Contract, in particular the
commitments for the work defined in Article 4, the Exclusive Exploration
Authorization is renewed at its request for a third period of three Contractual
Years.

The third period may also be extended by three months as a maximum for the same
reasons and under the same conditions as indicated in Article 3.2.

The Contractor must submit its renewal request for the third period at least
thirty days before the expiration of the second. The renewal is granted by
decisions of the Minister of Hydrocarbons.”

 

1

--------------------------------------------------------------------------------

 

Article 2:

If, during the third period, extended if applicable, pursuant to Article 1 of
the Rider, the Contractor met its obligations arising from the Contract,
especially the commitments for the work defined in Article 5 of this Rider, at
its request, the Exclusive Exploration Authorization is renewed for a fourth
period of two (2) Contractual Years on an area of the Delimited Zone, reduced by
fifty percent (50%) of the remaining area.

The area so released must be simple is shape and limited by terrestrial
parallels and meridians.

The fourth period may also be extended by three months as a maximum for the same
reasons and under the same conditions as indicated above.

Article 3:

If, at the end of any period, the Exclusive Exploration Authorization is not
renewed, the Contractor must release the entire Delimited Zone, except for the
Exploitation Zones or areas for which it submitted a request for Exclusive
Exploitation Authorization which is pending.

Article 4:

The Delimited Zone is now that defined in Addendum 1 of the Contract for
Exploration and Production Sharing (“the MARIN CEPP ETAME No. G4-160”), less the
area of the MARIN ETAME Exclusive Exploitation Authorization.

Article 5:

5.1

During the third exploration period defined in Article 1 above, the Contractor
must carry out at least the following work:

·

optional seismic 3D;

·

two (2) mandatory wells.

To carry out this Work Program under the best technical conditions generally
admitted in the Hydrocarbon industry, the Contractor shall invest an amount
estimated at two million US Dollars.

5.2

During the fourth exploration period defined in Article 2 above, the Contractor
must carry out at least: one (1) optional well.

To carry out this Work Program under the best technical conditions generally
admitted in the Hydrocarbon industry, the Contractor shall invest an amount
estimated at five million US Dollars.

5.3

The drilling referred to above shall take place up to the depth of at least two
thousand five hundred (2,500) meters, or until the Gamba geological formation is
surveyed on at least fifty meters if it extends beyond the contractual depth.
If, at 2,500 m, the formation referred to above has not been found, the Parties
shall consult each other to examine whether they have an interest in continuing
to drill.

Drilling is stopped at a lesser depth than initially planned if, after being
executed pursuant to the rules of the art generally admitted in the Hydrocarbon
industry, the stoppage is justified by one of the following reasons:

·

the Gamba formation is found at a lesser depth than the contractual depth; in
this case, the Parties shall consult each other to examine whether they have an
interest in continuing to drill;

·

the bedrock is found at a lesser depth than planned;

·

the continuation of drilling presents a manifest danger because of the existence
of an abnormal layer pressure;

 

2

--------------------------------------------------------------------------------

 

·

rock formations are found, with a hardness that does not allow continuing
drilling with the usual equipment;

·

oil formations are found, which, in order to be crossed, require, for their
protection, the installation of tubes which do not allow reaching the
contractual depth.

The drilling stopped for the above reasons shall be reputed to have been done at
the contractual depth, provided the reasons invoked are communicated in a timely
manner to the Administration and are considered justified by latter.

5.4

The Contractor must carry out all the work planned for a considered exploration
period, even if it causes it to overrun the amount estimated for this period.

However, if, for a given exploration period, the Contractor met its work
commitment for an amount lower than the amount estimated for this period, it
shall be deemed that it met its obligations.

The Contractor may decide not to drill the wells in the third period; in this
case, it must pay an opt-out fee equal to 5 million US Dollars.

5.5

When the Administration finds that the Contractor has not met its work
commitment for a given exploration period, it shall notify the latter in
writing. The procedure set forth in Article 48.10 of the Contract for
Exploration and Production Sharing (“the MARIN CEPP ETAME No. G4-160”) is then
implemented as needed.

Article 6:

Article 21.7 of the Contract for Exploration and Production Sharing (“the MARIN
CEPP ETAME No. G4-160”) is replaced by this Article and shall now have the
following language:

“The Contractor contributes annually to a Hydrocarbon Support Fund created in
order to assure the progress of Oil Research and Promotion. This contribution is
distributed as follows:

a)

Payment of 150,000 US Dollars when signing this Rider;

b)

Payment during the exploration periods in the amount of 60,000 US Dollars per
Calendar Year. This amount shall be paid to an account opened for this purpose,
managed by a Parity Commission presided over by the Minister of Hydrocarbons and
consisting of representatives of the General Department of Hydrocarbons and of
the Contractor. This Parity Commission must decide on various oil projects
prepared by the Technical Committee for Oil Operation Follow-up, and presented
by the General Department of Hydrocarbons, which assures its Technical
Secretariat and forwards the files for final decision. This contribution shall
be included in Petroleum Costs.

c)

Payment, in exploitation phase, of the amount of 75,000 US Dollars per Calendar
Year and 0.05 US Dollars per Barrel of Total Available Production. This
contribution shall be managed by the Minister of Hydrocarbons and shall not be
included in Petroleum Costs.

Article 7:

In addition to the obligations referred to in Article 28 of the Contract for
Exploration and Production Sharing (“the MARIN CEPP ETAME No. G4-160”), the
Contractor pays to the State a signing bonus of six hundred thousand (600,000)
US Dollars when signing this Rider.

 

3

--------------------------------------------------------------------------------

 

Article 8:

Article 39 of the Contract for Exploration and Production Sharing (“the MARIN
CEPP ETAME No. G4-160”) is replaced by this Article and shall now have the
following language:

“39.1

In addition to the obligation set forth in Article 38, the Contractor is now
obligated to contribute to the training of other Gabon citizens designated by
the Administration, dedicating for this training throughout the term of the
Contract:

a)

one hundred thousand (100,000) US Dollars per Calendar Year during the period
preceding the start of Production;

b)

one hundred fifty thousand (150,000) US Dollars per Calendar Year during the
development and exploitation periods.

The contributions defined in paragraphs (a) and (b) above are used:

·

in part, for the training of Gabon citizens in higher schools or universities of
international reputation. The training program is established by the Department
of Hydrocarbons;

·

in part, for the entry-level training of Gabon citizens on the sites and in the
main activity centers of the Contractor; the conditions for such training being
established on a case-by-case basis by mutual consent;

·

in part, for the training of Gabon citizens chosen by the Administration,
outside the Contractor’s structures, in the form of participation in seminars or
transfers to other companies.

The amounts established in this Article are managed by the Contractor and must
be used exclusively for the training of Gabon citizens designated by the General
Department of Hydrocarbons. At the expiration of the Exclusive Exploitation
Authorization or at the end of the exploitation period of the deposit, the
Contractor shall pay the amounts mentioned above to the Administration “prorata
temporis.”

39.2

The contributions referred to in this Article are included in the Petroleum
Costs.

Article 8 [sic]:

All other provisions of the Contract for Exploration and Production Sharing
(“MARIN CEPP ETAME No. G4-160”) not amended under the Articles of this Rider
remain unchanged.

 

4

--------------------------------------------------------------------------------

 

Article 9:

This Rider to the Contract for Exploration and Production Sharing (“MARIN CEPP
ETAME No. G4-160”) shall enter in effect as of the date of its signing by the
Parties, with retroactive effect as of July 7, 2001.

 

 

 

 

Libreville, on

 

 

 

 

 

 

For the Republic of Gabon,

 

 

 

For VAALCO

 

 

 

 

GABON (ETAME), INC.

 

 

 

 

[signature]

The Minister of State, Minister of

 

 

 

(Title of Signatary)

Mining, Energy, Oil and Hydraulic Resources,

 

 

 

 

 

 

 

 

 

 

 

[signature]

 

 

 

 

 

Paul TOUNGUI

 

 

 

 

 

 

 

 

 

Virgil WALSTON

 

 

 

 

Vice Chairman and

 

 

 

 

Chief Operating Officer

 

 

 

 

 

 

 

 

 

 

(Name of Signatary)

 

 

 

 

 

 

 

 

 

 

[stamp]

 

 

 

 

VAALCO Gabon (Etame), Inc.

The Minister of Economy, Finance,

 

 

 

1995

Budget and Participation,

 

 

 

 

 

[signature]

 

 

 

 

 

Emile DOUMBA

 

 

 

 

 

[stamp]

The Minister of Economy, Finance, Budget and Participation – The Minister

 

Republic of Gabon[illegible]

 

 

5