HOUSTON, March 13, 2024 (GLOBE NEWSWIRE) --
VAALCO Energy, Inc. (NYSE: EGY, LSE: EGY) ("VAALCO" or the
"Company") today reported operational and financial results
for the fourth quarter and full year of 2023. The Company
also provided 2024 operational and financial guidance for the first
quarter and full year of 2024.
2023 Full Year
Highlights:
- Reported full year ("FY")
2023 net income of $60.4 million ($0.56 per diluted share) and
net cash from operating activities of $223.6 million;
- Generated record Adjusted
EBITDAX(1) of $280.4
million and $119.7 million of Free Cash Flow
(“FCF”)(1)
in FY 2023;
- Returned $50.3 million or
42% of FCF to shareholders in 2023 through dividends and
buybacks;
- Raised production in 2023
by 83% year-over-year to 18,710 net revenue interest
(“NRI”)(2)
barrels of oil equivalent per day
(“BOEPD”), at the higher end of
the Company's increased guidance;
- FY 2023 working interest
(“WI”)(3)
production of 23,946 BOEPD was at the top of the
increased guidance range;
- Increased year-end 2023 SEC
proved reserves by 3% to 28.6 million barrels of oil
equivalent
(“MMBOE”);
- Integrated a major
acquisition and invested over $70 million in a capital program
focused on Egypt and Canada; and
- Increased cash at December
31, 2023 to $121 million, all while remaining bank debt
free.
Fourth Quarter 2023 Highlights:
- Reported Q4 2023 net income of $44.0 million ($0.41 per
diluted share);
- Generated record Adjusted EBITDAX(1) of $95.9
million;
- Produced 18,065 NRI BOEPD (23,330 WI BOEPD);
and
- Sold 21,674 BOEPD in Q4 2023, at the high end of
guidance.
2024 Key Items and Outlook:
- Announced accretive all
cash acquisition with sales and purchase agreement ("SPA") to
acquire Svenska Petroleum Exploration AB ("Svenska");
- Currently producing approximately 4,500 BOEPD (99%
oil);
- Includes estimated 1P WI CPR reserves4 as of October 1,
2023, of 13.0 MMBOE (99% oil) and total 2P WI CPR4 reserves at
October 1, 2023, of 21.7 million MMBOE (97% oil);
- Planning a 2024 capital
budget of $70 to $90 million; and
- Target to return over $25
million of FCF to shareholders.
(1) |
Adjusted EBITDAX, Adjusted Net Income, Adjusted Working Capital
and Free Cash Flow are Non-GAAP financial measures and are
described and reconciled to the closest GAAP measure in the
attached table under “Non-GAAP Financial Measures.” |
(2) |
All NRI production rates are VAALCO's working interest volumes
less royalty volumes, where applicable |
(3) |
All WI production rates and volumes are VAALCO’s working
interest volumes, where applicable |
(4) |
A BOE conversion ratio of six thousand cubic feet of natural
gas to one barrel of oil equivalent (6 MCF: 1Bbl) is based on an
energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead. Reserves estimates were prepared in accordance with the
definitions and guidelines set forth in the 2018 Petroleum
Resources Management Systems approved by the Society of Petroleum
Engineers. |
George Maxwell, VAALCO’s Chief Executive Officer
commented, “In 2023, we delivered record financial results,
successfully integrated a major acquisition and continued to return
a meaningful amount of value to our shareholders through dividends
and share buybacks. Sales and production volumes nearly doubled, we
grew our cash position at year-end by nearly $84 million and
we generated record Adjusted EBITDAX of $280 million. This
allowed us to fully fund, with cash on hand, the return of over $50
million to shareholders through our dividend and buyback programs
and over $70 million in a capital program focused on Egypt and
Canada, all while remaining bank debt free which demonstrates the
strong financial position of the Company today. Our 2023 proved
reserves saw 3% growth year-over-year, despite a year of record
production across our asset portfolio and significant
decreases in SEC pricing. We were able to more than replace our
2023 production through strong positive revisions that more than
offset production and reserve reductions due to lower SEC
pricing.”
“In early 2024, we announced our intent to
utilize a portion of this strong cash position to add to our
diversified portfolio of high performing assets in line with our
strategic vision. With our all-cash deal to buy Svenska, which
provides us with a new country entry and strong production and
reserves from a proven producing asset as well as a significant
organic upside opportunity, we are enhancing VAALCO's ability to
generate sustainable cash flow and continue to return cash to our
shareholders for many years to come. The acquisition is
expected to close in Q2 2024 and is highly accretive on key metrics
to our shareholder base and provides another strong asset to
support future growth."
“Our ability to execute on our strategic vision
has led to unprecedented growth in production, reserves and cash
flow, all while extending our runway for future opportunities. We
are in the strongest position in VAALCO’s history and are entering
2024 with more reserves, production and future potential. We are
adding to that position through the Svenska acquisition, and we
remain focused on prioritizing our organic and inorganic growth
opportunities as we continue to build a balanced business of scale
that is capable of maximizing value for our shareholders. We are
excited about the future and believe that 2024 could be another
record-breaking year for VAALCO.”
Operational Update
Egypt
In Egypt, VAALCO continued to use the EDC-64 rig
in the Eastern Desert drilling campaign. The
Company continued drilling the EA-55 development
well in the fourth quarter which was the last well of the 2023
campaign. Through operational efficiencies, VAALCO drilled an
average of two wells per month with the EDC-64 rig, nearly twice as
fast as in 2022 and, VAALCO drilled 18 wells in 2023, while
also completing the Arta-77Hz well at the beginning of 2023. The
2023 firm and contingent work program was drilled faster and
cheaper compared to budget, adding to its economic returns.
A summary of the Egyptian drilling campaign's
impact during 2023 is presented below:
VAALCO Egypt 2023 Wells |
Well |
Spud date |
Net Pay (ft) |
Penetrated Pay Zones |
Completion Zone |
Perforation Interval (ft) |
IP-30 Rate (BOPD) |
EastArta-53 |
1/15/2023 |
14.8 |
Redbed |
Redbed |
Hydraulic Frac |
35 |
K-81 |
2/2/2023 |
68.9 |
Asl-D and E |
Asl-E |
13.1 |
255 |
K-79 |
2/21/2023 |
190 |
Asl-A, B, D, E and F |
Asl-B1 and B2 |
59 |
150 |
Arta-80 |
3/10/2023 |
33 |
Redbed |
Redbed |
32 |
440 |
Arta-81 |
3/21/2023 |
28.5 |
Redbed |
Redbed |
26 |
340 |
HE-4 |
4/2/2023 |
27.9 |
Asl-B1 and B2 |
Asl-B2 |
13.1 |
440 |
HE-5 Injector |
4/16/2023 |
4.9 |
Asl-B2 |
Asl-B2 |
9.8 |
NA |
HE-3 |
5/10/2023 |
9.2 |
Asl-B1 and B2 |
Asl-B2 |
16.4 |
235 |
Arta-82 |
5/25/2023 |
42 |
Redbed |
Redbed |
28 |
150 |
Arta-84 |
6/6/2023 |
34 |
Nukhul |
Nukhul |
Hydraulic Frac |
68 |
NWG-5C1 |
6/16/2023 |
none |
Nukhul |
Temporarily Abandoned |
none |
none |
K-80 |
6/30/2023 |
141.4 |
Asl-A, B, D and E |
Asl-E |
16.4 |
144 |
K-84 |
7/16/2023 |
98.8 |
Asl-D, E, F and G |
Asl-G2 |
19.7 |
125 |
K-85 |
7/31/2023 |
63.3 |
Asl-D, E, F and G |
Asl-E |
9.8 |
82 |
M-24 |
8/14/2023 |
70.2 |
Asl-A, B and D |
Asl-D |
9.8 |
134 |
Arta-91 |
9/1/2023 |
40 |
Nukhul and Redbed |
Redbed |
20 |
150 |
EA-54 |
9/12/2023 |
none |
Nukhul, Thebes and Redbed |
Plugged & Abandoned |
none |
none |
EA-55 |
10/4/2023 |
42 |
Redbed |
Redbed |
Hydraulic Frac |
Pending Frac |
Canada
VAALCO drilled and completed two wells in
the first quarter of 2023, consisting of a 1.5-mile
lateral and a 3-mile lateral, which were also required for
land retention purposes. Both wells were drilled and
completed safely and cost effectively without incident. The wells
were tied in and equipped in April and early May with overall cycle
times that were significantly less than historical cycle times. The
wells began flowing in May and naturally flowed through June. In
early July, the pump and rods were run on both wells. The
production rates from both wells exceeded expectations,
and the Company is monitoring their long-term performance while
evaluating future drilling campaigns, with the intent of moving
exclusively to 2.5 mile and 3-mile laterals to improve economics.
This resulted in record production levels reported for Canada in
2023.
A summary of the Canada drilling campaign's
impact during 2023 is presented below:
VAALCO Canada 2023 Wells |
Well |
Spud date |
Net Pay (ft) |
Penetrated Pay Zones |
Completion Zone |
Perforation Interval (ft) |
IP-30 Rate (BOPD) |
100/12-12 |
1/28/2023 |
14,430 |
Upper Bioturbated Cardium |
118 Stg x 15T Hydraulic Fracture Treatment |
n/a |
444 BOPD ; 500 BOEPD |
102/16-30 |
2/22/2023 |
7,870 |
Upper Bioturbated Cardium |
55 Stg x 15T Hydraulic Fracture Treatment |
n/a |
374 BOPD ; 426 BOEPD |
Gabon
VAALCO completed its 2021/2022 drilling
campaign in the fourth quarter of 2022. The Company is currently
evaluating locations and planning for its next drilling
campaign. Gabon production performance in the year ended
December 31, 2023 has been strong and ahead of plan driven by
improved operational uptime at Etame. The cost savings from
the new Floating, Storage and Offloading vessel ("FSO") have
been captured, as planned, but are being offset by increased marine
costs as a consequence of inflationary (marine vessel supply rates,
transportation, and contractors) and industry supply chain
pressures as well as higher diesel costs due to the feed gas line
being suspended due to a leak. The gas line was successfully fixed
in October 2023 and the FSO is now utilizing gas rather than
diesel.
Year-End 2023 Reserves
VAALCO’s SEC proved reserves at December 31,
2023 increased by 3% to 28.6 MMBOE from 27.9 MMBOE
at year-end 2022. Year-end 2023 reserves included
22.5 MMBOE in proved developed reserves and 6.2 MMBOE in
proved undeveloped reserves. The Company’s SEC reserves were
engineered by its third-party independent reserve consultant,
Netherland, Sewell & Associates, Inc., (“NSAI”) who has
provided annual independent estimates of VAALCO’s year-end SEC
reserves for over 15 years and evaluates VAALCO's Gabonese and
Egyptian reserves, and GLJ Ltd. ("GLJ"), who evaluates VAALCO's
Canadian reserves. In 2023, the Company added 5.6 MMBOE
due to positive revisions and 1.9 MMBOE of SEC proved reserves
through extensions and additions, primarily in Canada with
additional PUD locations. These additions were partially
offset by 6.8 MMBOE of full year
2023 production. VAALCO had a reserve replacement ratio
of 110% compared to the 6.8 MMBOE of production in 2023.
The standardized measure of VAALCO’s SEC
proved reserves, utilizing SEC pricing decreased to
$341.9 million at December 31, 2023 from
$624.5 million at December 31, 2022. This was
primarily driven by a decrease in year over year SEC
prices which was utilized for the calculation and
can be found in the Company’s Annual Report on Form 10-K
disclosure, which is expected to be filed with the SEC by March 15,
2024.
|
|
MMBoe |
|
Proved SEC Reserves at
December 31, 2022 |
|
27.9 |
|
2023 Production |
|
|
(6.8 |
) |
Revisions of Previous Estimates |
|
|
5.6 |
|
Extensions and Additions |
|
|
1.9 |
|
Proved SEC Reserves at
December 31, 2023 |
|
|
28.6 |
|
At year-end 2023, NSAI provided the 2P WI CPR estimates of proven
and probable reserves which were prepared in accordance with
the definitions and guidelines set forth in the 2018 Petroleum
Resources Management Systems approved by the Society of Petroleum
Engineers as of December 31, 2023 using VAALCO’s management
assumptions for future commodity pricing and costs shown below
under “Supplemental Non-GAAP Financial Measures - 2P WI CPR
Reserves”. The 2P WI CPR reserves attributable to VAALCO’s
ownership are reported on a WI basis prior to deductions for
government royalties. Management's year-end 2023 2P WI
CPR estimate of reserves is 77.3 MMBOE to VAALCO’s WI, an increase
of 1% from 76.4 MMBO at December 31, 2022. The
present value discounted at 10% ("PV-10") of VAALCO’s 2P WI
CPR reserves at year-end 2023, utilizing management timing
assumptions and escalated pricing and cost assumptions, is $630.9
million, down 34% from $814.8 million at December 31, 2022.
The PV-10 decrease is driven primarily by pricing and cost
inflation.
See “Supplemental Non-GAAP Financial
Measures” below concerning 2P WI CPR reserves and 2P
PV-10.
Financial Update –Fourth
Quarter of 2023
Reported net income of $44.0 million
($0.41 per diluted share) for the fourth quarter of 2023
which was up significantly compared with net income of $6.1 million
($0.06 per diluted share) in the third quarter of
2023 and $17.8 million ($0.17 per diluted share) in the
fourth quarter of 2022. The increase in earnings compared to the
third quarter of 2023 is mainly due to increased sales revenue
due to increased volumes and improved realized pricing due to
geographic sales mix, lower credit losses due to reversal of credit
loss allowances on the settlement of debts in Gabon and
decreased depreciation, depletion and
amortization (“DD&A”) expense partially offset
by higher income tax expense on the increased operating
profit. Similarly, the increase in earnings compared to the
fourth quarter of 2022 is primarily due to higher sales
revenue due to increased volumes, lower credit losses due to
reversal of credit loss allowances and decreased
DD&A expense partially offset by higher income tax
expense.
Adjusted EBITDAX totaled $95.9 million in
the fourth quarter of 2023, a 34% increase from $71.4
million in the third quarter of 2023, primarily due
to higher revenues driven by higher sales and improved
realized commodity pricing. The increase in fourth quarter
2023 Adjusted EBITDAX to $95.9 million compared with $49.8
million generated in the same period in 2022, is primarily due
to increased revenue as a result of the TransGlobe
transaction and lower credit losses due to reversal of a
credit loss allowance.
Quarterly Summary - Sales and Net Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in
thousands |
|
Three Months Ended December 31, 2023 |
|
|
Three Months Ended September 31, 2023 |
|
|
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
|
Total |
|
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
|
Total |
|
Oil Sales |
|
$ |
100,398 |
|
|
$ |
79,043 |
|
|
$ |
5,476 |
|
|
$ |
184,917 |
|
|
$ |
64,100 |
|
|
$ |
88,748 |
|
|
$ |
7,832 |
|
|
$ |
160,680 |
|
NGL Sales |
|
|
— |
|
|
|
— |
|
|
$ |
2,019 |
|
|
$ |
2,019 |
|
|
|
— |
|
|
|
— |
|
|
$ |
2,073 |
|
|
$ |
2,073 |
|
Gas Sales |
|
|
— |
|
|
|
— |
|
|
$ |
818 |
|
|
$ |
818 |
|
|
|
— |
|
|
|
— |
|
|
$ |
988 |
|
|
$ |
988 |
|
Gross Sales |
|
$ |
100,398 |
|
|
$ |
79,043 |
|
|
$ |
8,313 |
|
|
$ |
187,754 |
|
|
$ |
64,100 |
|
|
$ |
88,748 |
|
|
$ |
10,893 |
|
|
$ |
163,741 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Costs & carried
interest |
|
$ |
1,711 |
|
|
$ |
0 |
|
|
|
— |
|
|
$ |
1,711 |
|
|
$ |
1,378 |
|
|
$ |
(497 |
) |
|
|
— |
|
|
$ |
881 |
|
Royalties & taxes |
|
$ |
(13,699 |
) |
|
$ |
(24,393 |
) |
|
$ |
(1,517 |
) |
|
$ |
(39,609 |
) |
|
$ |
(8,203 |
) |
|
$ |
(37,944 |
) |
|
$ |
(2,206 |
) |
|
$ |
(48,353 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue |
|
$ |
88,410 |
|
|
$ |
54,650 |
|
|
$ |
6,796 |
|
|
$ |
149,856 |
|
|
$ |
57,275 |
|
|
$ |
50,307 |
|
|
$ |
8,687 |
|
|
$ |
116,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil Sales MMB (working
interest) |
|
|
1,165 |
|
|
|
1,023 |
|
|
|
77 |
|
|
|
2,265 |
|
|
|
764 |
|
|
|
1,282 |
|
|
|
101 |
|
|
|
2,146 |
|
Average Oil Price
Received |
|
$ |
86.18 |
|
|
$ |
77.24 |
|
|
$ |
71.57 |
|
|
$ |
81.65 |
|
|
$ |
83.92 |
|
|
$ |
69.24 |
|
|
$ |
77.89 |
|
|
$ |
74.87 |
|
% Change Q4 2023 vs. Q3
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Brent Price |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
84.01 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
86.65 |
|
% Change Q4 2023 vs. Q3
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas Sales MMCF (working
interest) |
|
|
— |
|
|
|
— |
|
|
|
471 |
|
|
|
471 |
|
|
|
— |
|
|
|
— |
|
|
|
470 |
|
|
|
470 |
|
Average Gas Price
Received |
|
|
— |
|
|
|
— |
|
|
|
1.74 |
|
|
$ |
1.74 |
|
|
|
— |
|
|
|
— |
|
|
$ |
2.10 |
|
|
$ |
2.10 |
|
% Change Q4 2023 vs. Q3
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-17 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Aeco Price ($USD) |
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
$ |
1.86 |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
$ |
1.89 |
|
% Change Q4 2023 vs. Q3
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NGL Sales MMB (working
interest) |
|
|
— |
|
|
|
— |
|
|
|
80 |
|
|
|
80 |
|
|
|
— |
|
|
|
— |
|
|
|
82 |
|
|
|
82 |
|
Average Liquids Price
Received |
|
|
— |
|
|
|
— |
|
|
$ |
25.09 |
|
|
$ |
25.09 |
|
|
|
— |
|
|
|
— |
|
|
$ |
25.27 |
|
|
$ |
25.27 |
|
% Change Q4 2023 vs. Q3
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue and
Sales |
|
Q4 2023 |
|
|
Q4 2022 |
|
|
% Change
Q4 2023 vs.
Q4 2022 |
|
|
Q3 2023 |
|
|
% Change
Q4 2023 vs.
Q3 2023 |
|
Production (NRI BOEPD) |
|
|
18,065 |
|
|
|
14,390 |
|
|
|
26 |
% |
|
|
18,844 |
|
|
|
(4 |
)% |
Sales (NRI BOE) |
|
|
1,994,000 |
|
|
|
1,371,000 |
|
|
|
45 |
% |
|
|
1,812,000 |
|
|
|
10 |
% |
Realized commodity price
($/BOE) |
|
$ |
73.96 |
|
|
$ |
70.43 |
|
|
|
5 |
% |
|
$ |
63.41 |
|
|
|
17 |
% |
Commodity (Per BOE including
realized commodity derivatives) |
|
$ |
73.89 |
|
|
$ |
70.24 |
|
|
|
5 |
% |
|
$ |
63.38 |
|
|
|
17 |
% |
Total commodity sales
($MM) |
|
$ |
149.2 |
|
|
$ |
96.6 |
|
|
|
54 |
% |
|
$ |
116.3 |
|
|
|
28 |
% |
VAALCO had a net revenue increase
of $32.9 million or 28% as the total NRI sales
volumes of 1,994,000 BOE was higher than Q3 2023
and rose 45% compared to 1,371,000 BOE for Q4 2022.
Q4 2023 sales were at the top end of VAALCO's
guidance.
Q4 2023 realized pricing (net of royalties)
was up 17% compared to Q3 2023 and up 5% compared to
Q4 2022.
Costs and Expenses |
|
Q4 2023 |
|
|
Q4 2022 |
|
|
% Change
Q4 2023 vs.
Q4 2022 |
|
|
Q3 2023 |
|
|
% Change
Q4 2023 vs.
Q3 2023 |
|
Production expense, excluding offshore workovers and stock comp
($MM) |
|
$ |
46.3 |
|
|
$ |
40.8 |
|
|
|
14 |
% |
|
$ |
39.9 |
|
|
|
16 |
% |
Production expense, excluding
offshore workovers ($/BOE) |
|
$ |
23.27 |
|
|
$ |
29.80 |
|
|
|
(22 |
)% |
|
$ |
22.07 |
|
|
|
5 |
% |
Offshore workover expense
($MM) |
|
$ |
0.0 |
|
|
$ |
4.7 |
|
|
|
(100.0 |
)% |
|
$ |
(0.0 |
) |
|
|
— |
% |
Depreciation, depletion and
amortization ($MM) |
|
$ |
20.3 |
|
|
$ |
26.3 |
|
|
|
(23 |
)% |
|
$ |
32.5 |
|
|
|
(38 |
)% |
Depreciation, depletion and
amortization ($/BOE) |
|
$ |
10.2 |
|
|
$ |
19.20 |
|
|
|
(47 |
)% |
|
$ |
17.96 |
|
|
|
(43 |
)% |
General and administrative
expense, excluding stock-based compensation ($MM) |
|
$ |
6.1 |
|
|
$ |
(0.3 |
) |
|
|
(2,119 |
)% |
|
$ |
5.2 |
|
|
|
17 |
% |
General and administrative
expense, excluding stock-based compensation ($/BOE) |
|
$ |
3.0 |
|
|
$ |
(0.20 |
) |
|
|
(1,619 |
)% |
|
$ |
2.86 |
|
|
|
6 |
% |
Stock-based compensation
expense ($MM) |
|
$ |
0.9 |
|
|
$ |
(0.1 |
) |
|
|
(1,000.0 |
)% |
|
$ |
1.0 |
|
|
|
(10 |
)% |
Current income tax expense
(benefit) ($MM) |
|
$ |
14.3 |
|
|
$ |
1.7 |
|
|
|
741 |
% |
|
$ |
2.1 |
|
|
|
581 |
% |
Deferred income tax expense
(benefit) ($MM) |
|
$ |
(2.6 |
) |
|
$ |
5.3 |
|
|
|
(149 |
)% |
|
$ |
(2.6 |
) |
|
|
- |
% |
Total production expense (excluding offshore workovers and stock
compensation) of $46.3million in Q4 2023 was higher compared
to Q3 2023 and the same period in 2022. The increase in
Q4 2023 expense compared to Q3 2023 was driven
primarily by higher costs related to higher sales
volumes. The increase in Q4 2023 compared to the
Q4 2022 was primarily driven by increased expense associated
with higher sales and costs associated with the TransGlobe
combination as well as higher costs associated with boats, diesel
and other direct operating costs. VAALCO has seen inflationary and
industry supply chain pressure on personnel and contractor
costs.
There was no offshore
workover expense in Q4 2023 or Q3 2023. There was a
100% decrease in offshore workover expense in Q4 2023 compared
to Q4 2022.
Q4 2023 production expense per BOE,
excluding offshore workover costs, remained low at $23.27 per
BOE which was 5% higher than Q3 2023 and down 22% compared to
Q4 2022 due to higher sales, lower costs in Etame
associated with the FSO conversion and lower per BOE costs from the
Egyptian and Canadian assets.
DD&A expense for the Q4 2023, was
$20.3 million which was lower than $32.5 million in
Q3 2023 and lower than $26.3 million in Q4 2022. The
decrease in Q4 2023 DD&A expense, compared to Q3 2023
and to Q4 2022 is due to year-end depletion adjustments,
primarily in Egypt, that were made in Q4 upon the completion of the
2023 competent persons report.
Q4 2023 included a $0.7 million
expense related to an appraisal well in Egypt that
was abandoned during Q4 2023 and subsequently
expensed to Exploration Expense.
General and administrative (“G&A”) expense,
excluding stock-based compensation, increased to
$6.1 million in Q4 2023 from $5.2 million in
Q3 2023 and a negative $0.3 million in Q4 2022. The
increase in general and administrative expenses is primarily due to
higher professional service fees, salaries and wages, and
accounting and legal fees. The Company incurred one-time
reorganization costs in 2023 as it integrated the
TransGlobe assets and eliminated duplicate administrative
costs. Q4 2023 G&A was within the Company’s guidance. The
Company has made meaningful reductions to absolute G&A costs
when compared with the combined TransGlobe and VAALCO combined
G&A costs for 2022.
Non-cash stock-based compensation expense was
$0.9 million for Q4 2023 compared to Q3 2023 of
$1.0 million and Q4 2022 of negative $0.1 million.
Other income (expense), net, was an
expense of $0.8 million for Q4 2023, compared to an
income of $2.5 million during Q4 2022 and an income
of $0.2 million for Q3 2023. Other income
(expense), net, normally consists of foreign currency gains
and losses. For Q4 2022, included in other (expense)
income was a $10.8 million bargain purchase gain on the
TransGlobe acquisition offset by $7.0 million of transaction
costs associated with the business combination with
TransGlobe. For the full year ended December 31, 2022,
acquisition transaction costs were $14.6 million.
Q4 2023 income tax expense was an expense
of $37.6 million and is comprised of current tax expense of
$41.1 million and deferred tax benefit of
$3.5 million. Q3 2023 income tax expense was an expense
of $25.8 million. This was comprised of $26.8 million of
current tax expense and a deferred tax benefit of
$0.9 million. Q4 2022 income tax expense was an expense
of $7.0 million. This was comprised of $5.3 million of
deferred tax expense and a current tax expense of
$1.7 million. For all periods, VAALCO’s overall effective tax
rate was impacted by non-deductible items associated with
derivative losses and corporate expenses. Foreign income taxes for
Gabon are settled by the government taking their oil in-kind.
Financial Update
– Full Year 2023
The Company reported net income for
the twelve months ended December 31, 2023 of $60.4 million,
which compares to $51.9 million for the same period of 2022. The
increase in net income for the twelve months ended December
31, 2023 compared to the same period in 2022 was primarily due
to increased sales volumes partially offset by higher production
costs, higher DD&A and lower oil prices.
Both production and sales volumes for full year
2023 were up 83% to 6.8 MMBOE compared to 3.7
MMBOE production for the prior year. The increase was
driven by production from the TransGlobe assets, as well as new
wells from the 2021/2022 drilling campaign in Gabon. Crude oil
sales are a function of the number and size of crude oil liftings
in each quarter and do not always coincide with volumes produced in
any given period.
The average realized crude oil price for the
twelve months of 2023 was $65.83 per barrel, representing
a decrease of 30% from $94.77 realized in the
twelve months of 2022. This decrease in crude oil price
reflects the softening in commodity pricing over the past year, as
well as the incorporation of the TransGlobe assets which include
Canadian and Egyptian crude, natural gas, and NGLs that
have lower realized pricing than Gabon.
Year to Date Summary - Sales and Net Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in
thousands |
|
Twelve Months Ended December 31, 2023 |
|
|
Twelve Months Ended December 31, 2022 |
|
|
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
|
Total |
|
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
|
Total |
|
Oil Sales |
|
|
294,577 |
|
|
|
272,613 |
|
|
|
28,287 |
|
|
|
595,477 |
|
|
|
346,780 |
|
|
|
56,452 |
|
|
|
7,362 |
|
|
|
410,594 |
|
NGL Sales |
|
|
— |
|
|
|
— |
|
|
|
8,440 |
|
|
|
8,440 |
|
|
|
— |
|
|
|
— |
|
|
|
2,276 |
|
|
|
2,276 |
|
Gas Sales |
|
|
— |
|
|
|
— |
|
|
|
3,467 |
|
|
|
3,467 |
|
|
|
— |
|
|
|
— |
|
|
|
1,340 |
|
|
|
1,340 |
|
Gross Sales |
|
|
294,577 |
|
|
|
272,613 |
|
|
|
40,194 |
|
|
|
607,384 |
|
|
|
346,780 |
|
|
|
56,452 |
|
|
|
10,978 |
|
|
|
414,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Costs & carried
interest |
|
|
5,301 |
|
|
|
(995 |
) |
|
|
— |
|
|
|
4,306 |
|
|
|
5,843 |
|
|
|
— |
|
|
|
— |
|
|
|
5,843 |
|
Royalties & taxes |
|
|
(39,532 |
) |
|
|
(110,569 |
) |
|
|
(5,821 |
) |
|
|
(155,922 |
) |
|
|
(45,848 |
) |
|
|
(18,742 |
) |
|
|
(1,137 |
) |
|
|
(65,727 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue |
|
|
260,346 |
|
|
|
161,049 |
|
|
|
34,373 |
|
|
|
455,768 |
|
|
|
306,775 |
|
|
|
37,710 |
|
|
|
9,841 |
|
|
|
354,326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil Sales MMB (working
interest) |
|
|
3,569 |
|
|
|
4,055 |
|
|
|
394 |
|
|
|
8,018 |
|
|
|
3,355 |
|
|
|
818 |
|
|
|
93 |
|
|
|
4,266 |
|
Average Oil Price
Received |
|
$ |
82.54 |
|
|
$ |
67.22 |
|
|
$ |
71.88 |
|
|
$ |
74.27 |
|
|
$ |
103.36 |
|
|
$ |
69.00 |
|
|
$ |
79.59 |
|
|
$ |
96.25 |
|
% Change 2023 vs.
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-23 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Brent Price |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
82.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
100.93 |
|
% Change 2023 vs.
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-18 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas Sales MMCF (working
interest) |
|
|
— |
|
|
|
— |
|
|
|
1,798 |
|
|
|
1,798 |
|
|
|
— |
|
|
|
— |
|
|
|
335 |
|
|
|
335 |
|
Average Gas Price
Received |
|
|
— |
|
|
|
— |
|
|
$ |
1.93 |
|
|
$ |
1.93 |
|
|
|
— |
|
|
|
— |
|
|
$ |
4.00 |
|
|
$ |
4.00 |
|
% Change 2023 vs. 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-52 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NGL Sales MMB (working
interest) |
|
|
— |
|
|
|
— |
|
|
|
317 |
|
|
|
317 |
|
|
|
— |
|
|
|
— |
|
|
|
63 |
|
|
|
63 |
|
Average Liquids Price
Received |
|
|
— |
|
|
|
— |
|
|
$ |
26.58 |
|
|
$ |
26.58 |
|
|
|
— |
|
|
|
— |
|
|
$ |
36.13 |
|
|
$ |
36.13 |
|
Capital Investments/Balance
Sheet
For the twelve months of 2023, net capital
expenditures totaled $97.2 million on a cash basis and $72.6
million on an accrual basis. These expenditures were primarily
related to costs associated with the development drilling programs
in Egypt and Canada.
At the end of the fourth quarter of 2023,
VAALCO had an unrestricted cash balance of $121.0
million. VAALCO also has an undrawn reserve based lending
("RBL") facility with $43.75 million of availability to
further enhance the Company’s liquidity position. The RBL facility
is in its amortization phase.
Working capital at December 31, 2023 was
$100.7 million compared with $38.0 million at December 31, 2022,
while Adjusted Working Capital(3) at December 31,
2023 totaled $113.8 million. VAALCO continues to work with the
Egyptian General Petroleum Corporation on both collections and
offsets. In addition, with the completion of drilling in Canada and
Egypt, VAALCO expects to see a reduction in its outstanding
Accounts Payable and Accruals.
Cash Dividend Policy and Share Buyback
Authorization
VAALCO paid a quarterly cash dividend of $0.0625
per share of common stock for the fourth quarter of 2023 on
December 21, 2023. VAALCO increased its quarterly per share
dividend amount in 2023 and paid out a total $0.25 per
share or approximately $27 million in dividends to its
shareholders in 2023. On February 26, 2024, the Company
announced its next quarterly cash dividend of $0.0625 per share of
common stock for the first quarter of 2024 ($0.25 annualized),
to be paid on March 28, 2024 to stockholders of record at
the close of business on March 8, 2024. Future declarations of
quarterly dividends and the establishment of future record and
payment dates are subject to approval by the VAALCO Board of
Directors.
The Company's share buyback program provides for
an aggregate purchase of currently outstanding common stock up to
$30 million. Payment for shares repurchased under the program
will be funded using the Company's cash on hand and cash flow from
operations.
The actual timing, number and value of shares
repurchased under the share buyback program will depend on a number
of factors, including constraints specified in any Rule 10b5-1
trading plans, price, general business and market conditions, and
alternative investment opportunities. Under such a trading plan,
the Company’s third-party broker, subject to SEC regulations
regarding certain price, market, volume and timing constraints, has
authority to purchase the Company’s common stock in accordance with
the terms of the plan. The share buyback program does not
obligate the Company to acquire any specific number of shares in
any period, and may be expanded, extended, modified or discontinued
at any time.
In 2023, VAALCO repurchased $23.6 million
in shares.
Svenska Acquisition
VAALCO expects to acquire 100% of the share
capital of Svenska from Petroswede AB (“Petroswede” or the
“Seller”) in the acquisition with an effective date of October 1,
2023. Gross consideration for the Acquisition is $66.5 million,
subject to customary closing adjustments, with the net cash payment
to be made by VAALCO on closing expected to be approximately $30 to
$40 million depending on a number of factors including the timing
of closing. The Acquisition is subject to a number of customary
closing conditions, including regulatory and government
approvals.
Svenska’s primary license interest is a 27.39%
non-operated working interest (30.43% paying interest) in the CI-40
license, which includes the producing Baobab field, located in
deepwater offshore Cote d’Ivoire. The field is operated by Canadian
Natural Resources Limited, which holds a 57.61% working interest in
the project, with the national oil company, Petroci Holding, owning
the remaining 15% working interest (10% of which is carried by the
other license partners). The CI-40 license has an initial term
through mid-2028 with the contractual option to extend the license
term by 10 years to 2038, subject to certain conditions. Current
production from the Baobab field is approximately 4,500 WI BOEPD,
with 1P WI CPR reserves at the Effective Date of 13.0 MMBOE (99%
oil), and 2P WI CPR reserves of 21.7 MMBOE (97% oil). These reserve
figures reflect currently sanctioned development activities;
however, CI-40 has a significant growth runway with incremental
development potential on the Baobab field, as well as the nearby
Kossipo field, expected to provide a material uplift to the reserve
and production volumes, supporting long-term production of the
asset into the late 2030s. Cumulative gross production from the
field has been approximately 150 MMBOE, a portion of the estimated
over one billion barrels of oil equivalent volumes initially in
place.
CI-40 has a long history of production and
significantly de-risked reservoirs. With almost 20 years of
production to date, the FPSO is planned to come off station at the
start of 2025 for planned maintenance and upgrade work to allow the
FPSO to continue to produce through the end of the expected
extended field license in 2038. The scope of work for the FPSO
upgrade is currently being finalized. Production on Baobab is
expected to re-start in 2026 following the FPSO work program. In
addition, a fully appraised development drilling program is
expected to start in 2026, targeting the significant incremental
probable reserve base on the field. VAALCO sees reduced geological
risk relating to this drilling program and the joint venture
partners have already commenced the ordering of certain long-lead
drilling items. Further future drilling phases have not yet been
sanctioned, but there is significant incremental potential in both
the Baobab field itself, as well as the nearby Kossipo development,
which has also been appraised by two wells drilled in 2002 and
2019.
In addition to the CI-40 license in Cote
d’Ivoire, Svenska currently owns a 21.05% working interest in the
early stage Uge discovery in the OML 145 concession in Nigeria
alongside partners ExxonMobil (21.05%), Chevron (21.05%), Oando
(21.05%) and NPDC (15.80%). There are minimal commitments on this
license interest and no drilling or development is currently
planned.
Hedging
The Company continued to proactively hedge a
portion of its expected future production to lock in strong cash
flow generation to assist in funding its capital and shareholder
returns programs.
The following includes hedges remaining in
place at March 13,2024:
Settlement
Period |
Type of Contract |
Index |
|
Average
Monthly
Volumes |
|
|
Weighted
Average Put
Price |
|
|
Weighted
Average Call
Price |
|
|
|
|
|
(Bbls) |
|
|
(per Bbl) |
|
|
(per Bbl) |
|
January 2024 - March 2024 |
Collars |
Dated Brent |
|
|
85,000 |
|
|
$ |
65.00 |
|
|
$ |
97.00 |
|
April 2024 - June 2024 |
Collars |
Dated Brent |
|
|
65,000 |
|
|
$ |
65.00 |
|
|
$ |
100.00 |
|
July 2024 - September
2024 |
Collars |
Dated Brent |
|
|
80,000 |
|
|
$ |
65.00 |
|
|
$ |
92.00 |
|
2024 Guidance:
The Company has provided first quarter and full
year 2024 guidance. As a reminder, this guidance does not include
the recently announced Svenska acquisition and will be updated once
the acquisition is finalized. All of the quarterly and annual
guidance is detailed in the tables below.
|
|
FY 2024 |
|
Gabon |
|
Egypt |
|
Canada |
Production (BOEPD) |
WI |
20800 - 23400 |
|
8300 - 9600 |
|
9800 - 10600 |
|
2700 - 3200 |
Production (BOEPD) |
NRI |
16100 - 18300 |
|
7200 - 8300 |
|
6700 - 7400 |
|
2200 - 2600 |
Sales Volume (BOEPD) |
WI |
20800 - 23300 |
|
8300 - 9500 |
|
9800 - 10600 |
|
2700 - 3200 |
Sales Volume (BOEPD) |
NRI |
16100 - 18300 |
|
7200 - 8300 |
|
6700 - 7400 |
|
2200 - 2600 |
Production Expense
(millions) |
WI & NRI |
$155.0 - $165.5 MM |
|
|
|
|
|
|
Production Expense per
BOE |
WI |
$18.00 - $22.00 |
|
|
|
|
|
|
Production Expense per
BOE |
NRI |
$25.50 - $31.00 |
|
|
|
|
|
|
Offshore Workovers
(millions) |
WI & NRI |
$1 - $10 MM |
|
|
|
|
|
|
Cash G&A (millions) |
WI & NRI |
$20.0 - $28.0 MM |
|
|
|
|
|
|
CAPEX (millions) |
WI & NRI |
$70 - $90 MM |
|
|
|
|
|
|
DD&A ($/BO) |
NRI |
$20.00 - $22.00 |
|
|
|
|
|
|
|
|
Q1 2024 |
|
Gabon |
|
Egypt |
|
Canada |
Production (BOEPD) |
WI |
21700 - 22400 |
|
9100 - 9300 |
|
10200 - 10600 |
|
2400 - 2500 |
Production (BOEPD) |
NRI |
16800 - 17300 |
|
7900 - 8100 |
|
7000 - 7200 |
|
1900 - 2000 |
Sales Volume (BOEPD) |
WI |
16800 - 21800 |
|
4200 - 8700 |
|
10200 - 10600 |
|
2400 - 2500 |
Sales Volume (BOEPD) |
NRI |
12600 - 16800 |
|
3700 - 7600 |
|
7000 - 7200 |
|
1900 - 2000 |
Production Expense
(millions) |
WI & NRI |
$35.5 - $42.5 MM |
|
|
|
|
|
|
Production Expense per
BOE |
WI |
$17.00 - $22.50 |
|
|
|
|
|
|
Production Expense per
BOE |
NRI |
$22.00 - $29.50 |
|
|
|
|
|
|
Offshore Workovers
(millions) |
WI & NRI |
$0 - $0 MM |
|
|
|
|
|
|
Cash G&A (millions) |
WI & NRI |
$4.0 - $6.5 MM |
|
|
|
|
|
|
CAPEX (millions) |
WI & NRI |
$22 - $28 MM |
|
|
|
|
|
|
DD&A ($/BO) |
NRI |
$20.00 - $22.00 |
|
|
|
|
|
|
Conference Call
As previously announced, the Company will hold a
conference call to discuss its fourth quarter 2023 financial and
operating results tomorrow, Thursday, March 14, 2024, at 10:00
a.m. Central Time (11:00 a.m. Eastern Time and 3:00 p.m. London
Time). Interested parties may participate by dialing (833)
685-0907. Parties in the United Kingdom may participate toll-free
by dialing 08082389064 and other international parties may dial
(412) 317-5741. Participants should request to be joined to the
“VAALCO Energy Fourth Quarter 2023 Conference Call.” This call will
also be webcast on VAALCO’s website at www.vaalco.com. An archived
audio replay will be available on VAALCO’s website.
A “Q4 2023 Supplemental Information”
investor deck will be posted to VAALCO’s web site prior to its
conference call on March 14, 2024 that includes additional
financial and operational information.
About VAALCO
VAALCO, founded in 1985 and incorporated under
the laws of Delaware, is a Houston, USA based, independent energy
company with production, development and exploration assets in
Africa and Canada.
VAALCO owns a diverse portfolio of operated
production, development and exploration assets across Gabon, Egypt,
Equatorial Guinea and Canada.
For Further Information
|
|
|
|
VAALCO Energy, Inc.
(General and Investor Enquiries) |
+00 1 713 623 0801 |
Website: |
www.vaalco.com |
|
|
|
|
Al Petrie Advisors (US
Investor Relations) |
+00 1 713 543 3422 |
Al Petrie / Chris Delange |
|
|
|
Buchanan (UK Financial
PR) |
+44 (0) 207 466 5000 |
Ben Romney / Barry Archer |
VAALCO@buchanan.uk.com |
Forward Looking
Statements
This press release includes “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended (the “Securities Act”) and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to
be covered by the safe harbors created by those laws and other
applicable laws and “forward-looking information” within the
meaning of applicable Canadian securities laws. Where a
forward-looking statement expresses or implies an expectation or
belief as to future events or results, such expectation or belief
is expressed in good faith and believed to have a reasonable basis.
All statements other than statements of historical fact may be
forward-looking statements. The words “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “forecast,” “outlook,” “aim,”
“target,” “will,” “could,” “should,” “may,” “likely,” “plan” and
“probably” or similar words may identify forward-looking
statements, but the absence of these words does not mean that a
statement is not forward-looking. Forward-looking statements in
this press release include, but are not limited to, statements
relating to (i) estimates of future drilling, production, sales and
costs of acquiring crude oil, natural gas and natural gas
liquids; (ii) the proposed acquisition of Svenska and its
terms, timing and closing, including receipt of required regulatory
approvals and satisfaction of other closing conditions; (iii)
the amount and timing of stock buybacks, if any, under VAALCO’s
stock buyback program and VAALCO’s ability to enhance stockholder
value through such plan; (iv) expectations regarding future
exploration and the development, growth and potential of VAALCO’s
operations, project pipeline and investments, and schedule and
anticipated benefits to be derived therefrom; (v) expectations
regarding future acquisitions, investments or divestitures; (vi)
expectations of future dividends, buybacks and other potential
returns to stockholders; (vii) expectations of future balance sheet
strength; (viii) expectations regarding VAALCO’s ability to
effectively integrate assets and properties it may acquire as a
result of the acquisition of Svenska into its operations and the
benefits of acquiring Svenska.
Such forward-looking statements are subject to
risks, uncertainties and other factors, which could cause actual
results to differ materially from future results expressed,
projected or implied by the forward-looking statements. These risks
and uncertainties include, but are not limited to: the ability to
obtain regulatory approvals in connection with the proposed
acquisition of Svenska; the amount of any pre-closing dividends
permitted by the law applicable to Svenska; the ability to complete
the proposed acquisition on the anticipated terms and timetable;
the possibility that various closing conditions for the acquisition
of Svenska may not be satisfied or waived; risks relating to any
unforeseen liabilities of the Svenska; the outcome of any cost
audits undertaken by the Cote d’Ivoire government; timing and
amounts of any decommissioning or other wind up costs relating to
any acquired Nigerian assets; declines in oil or natural gas
prices; the level of success in exploration, development and
production activities; actions of joint-venture partners risks
relating to any unforeseen liabilities of VAALCO; the ability to
generate cash flows that, along with cash on hand, will be
sufficient to support operations and cash requirements;
the impact and costs of compliance with laws and regulations
governing oil and gas operations; the risks described under the
caption “Risk Factors” in VAALCO’s filings with the Securities and
Exchange Commission, including its most recent Annual Report on
Form 10-K and subsequent Quarterly Reports on Form 10-Q.
2022 Annual Report on Form 10-K filed with the SEC on April 6,
2023.
Dividends beyond the first quarter of
2024 have not yet been approved or declared by the Board. The
declaration and payment of future dividends and the terms of share
buybacks remains at the discretion of the Board and will be
determined based on VAALCO’s financial results, balance sheet
strength, cash and liquidity requirements, future prospects, crude
oil and natural gas prices, and other factors deemed relevant by
the Board. The Board reserves all powers related to the declaration
and payment of dividends and the terms of share buybacks.
Consequently, in determining the dividend to be declared and paid
on VAALCO common stock or the terms of share buybacks, the Board
may revise or terminate the payment level or buyback terms at any
time without prior notice.
Inside Information
This announcement contains inside information as
defined in Regulation (EU) No. 596/2014 on market abuse which is
part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 (“MAR”) and is made in accordance with the
Company’s obligations under article 17 of MAR. The person
responsible for arranging the release of this announcement on
behalf of VAALCO is Matthew Powers, Corporate Secretary of
VAALCO.
VAALCO ENERGY, INC AND SUBSIDIARIES
Consolidated Balance Sheets
|
|
As of December
31, 2023 |
|
|
As of December
31, 2022 |
|
ASSETS |
|
(in thousands) |
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
121,001 |
|
|
$ |
37,205 |
|
Restricted cash |
|
|
114 |
|
|
|
222 |
|
Receivables: |
|
|
|
|
|
|
|
|
Trade, net of allowance for credit losses of $0.5 and $0.0 million,
respectively |
|
|
42,150 |
|
|
|
52,147 |
|
Accounts with joint venture owners, net of allowance for credit
losses of $0.8 and $0.3 million, respectively |
|
|
1,814 |
|
|
|
15,830 |
|
Foreign income taxes receivable |
|
|
— |
|
|
|
2,769 |
|
Egypt receivables and other, net of allowance for credit losses of
$4.6 and $0.0 million, respectively |
|
|
48,680 |
|
|
|
68,519 |
|
Crude oil inventory |
|
|
1,948 |
|
|
|
3,335 |
|
Prepayments and other |
|
|
12,434 |
|
|
|
20,070 |
|
Total current assets |
|
|
228,141 |
|
|
|
200,097 |
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and
NGLs properties and equipment, net |
|
|
459,786 |
|
|
|
495,272 |
|
Other noncurrent assets: |
|
|
|
|
|
|
|
|
Restricted cash |
|
|
1,795 |
|
|
|
1,763 |
|
Value added tax and other receivables, net of allowance of $0.0
million and $8.4 million, respectively |
|
|
4,214 |
|
|
|
7,150 |
|
Right of use operating lease assets |
|
|
2,378 |
|
|
|
2,777 |
|
Right of use finance lease assets |
|
|
89,962 |
|
|
|
90,698 |
|
Deferred tax assets |
|
|
29,242 |
|
|
|
35,432 |
|
Abandonment funding |
|
|
6,268 |
|
|
|
20,586 |
|
Other long-term assets |
|
|
1,430 |
|
|
|
1,866 |
|
Total assets |
|
$ |
823,216 |
|
|
$ |
855,641 |
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
22,152 |
|
|
$ |
59,886 |
|
Accounts with joint venture owners |
|
|
5,990 |
|
|
|
— |
|
Accrued liabilities and other |
|
|
66,924 |
|
|
|
91,392 |
|
Operating lease liabilities - current portion |
|
|
2,396 |
|
|
|
2,314 |
|
Finance lease liabilities - current portion |
|
|
10,079 |
|
|
|
7,811 |
|
Foreign income taxes payable |
|
|
19,261 |
|
|
|
— |
|
Current liabilities - discontinued operations |
|
|
673 |
|
|
|
687 |
|
Total current liabilities |
|
|
127,475 |
|
|
|
162,090 |
|
Asset retirement
obligations |
|
|
47,343 |
|
|
|
41,695 |
|
Operating lease liabilities -
net of current portion |
|
|
33 |
|
|
|
686 |
|
Finance lease liabilities -
net of current portion |
|
|
78,293 |
|
|
|
78,248 |
|
Deferred tax liabilities |
|
|
73,581 |
|
|
|
81,223 |
|
Other long-term
liabilities |
|
|
17,709 |
|
|
|
25,594 |
|
Total liabilities |
|
|
344,434 |
|
|
|
389,536 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock, $25 par value; 500,000 shares authorized, none
issued |
|
|
— |
|
|
|
— |
|
Common stock, $0.10 par value; 160,000,000 shares authorized,
121,397,553 and 119,482,680 shares issued, 104,346,233 and
107,852,857 shares outstanding, respectively |
|
|
12,140 |
|
|
|
11,948 |
|
Additional paid-in capital |
|
|
357,498 |
|
|
|
353,606 |
|
Accumulated other comprehensive income |
|
|
2,880 |
|
|
|
1,179 |
|
Less treasury stock, 17,051,320 and 11,629,823 shares,
respectively, at cost |
|
|
(71,222 |
) |
|
|
(47,652 |
) |
Retained earnings |
|
|
177,486 |
|
|
|
147,024 |
|
Total shareholders' equity |
|
|
478,782 |
|
|
|
466,105 |
|
Total liabilities and shareholders' equity |
|
$ |
823,216 |
|
|
$ |
855,641 |
|
VAALCO ENERGY, INC AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
|
December
31, 2023 |
|
|
December
31, 2022 |
|
|
September
30, 2023 |
|
|
December
31, 2023 |
|
|
December
31, 2022 |
|
|
|
(in thousands except per share amounts) |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and natural gas liquids sales |
|
$ |
149,154 |
|
|
$ |
96,588 |
|
|
$ |
116,269 |
|
|
$ |
455,066 |
|
|
$ |
354,326 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production expense |
|
|
46,397 |
|
|
|
45,514 |
|
|
|
39,956 |
|
|
|
153,157 |
|
|
|
112,661 |
|
FPSO demobilization and other costs |
|
|
1,837 |
|
|
|
- |
|
|
|
— |
|
|
|
7,484 |
|
|
|
8,867 |
|
Exploration expense |
|
|
706 |
|
|
|
8 |
|
|
|
1,194 |
|
|
|
1,965 |
|
|
|
258 |
|
Depreciation, depletion and amortization |
|
|
20,344 |
|
|
|
26,316 |
|
|
|
32,538 |
|
|
|
115,302 |
|
|
|
48,143 |
|
General and administrative expense |
|
|
7,005 |
|
|
|
(430 |
) |
|
|
6,216 |
|
|
|
23,840 |
|
|
|
10,077 |
|
Credit (recovery) losses and other |
|
|
(7,343 |
) |
|
|
999 |
|
|
|
822 |
|
|
|
(4,906 |
) |
|
|
3,082 |
|
Total operating costs and expenses |
|
|
68,946 |
|
|
|
72,407 |
|
|
|
80,726 |
|
|
|
296,842 |
|
|
|
183,088 |
|
Other operating income (expense), net |
|
|
731 |
|
|
|
43 |
|
|
|
5 |
|
|
|
433 |
|
|
|
38 |
|
Operating income |
|
|
80,939 |
|
|
|
24,224 |
|
|
|
35,548 |
|
|
|
158,657 |
|
|
|
171,276 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments gain (loss), net |
|
|
2,500 |
|
|
|
(290 |
) |
|
|
(2,320 |
) |
|
|
232 |
|
|
|
(37,812 |
) |
Interest income (expense), net |
|
|
(1,077 |
) |
|
|
(1,679 |
) |
|
|
(1,426 |
) |
|
|
(6,452 |
) |
|
|
(2,034 |
) |
Other income (expense), net |
|
|
(797 |
) |
|
|
2,466 |
|
|
|
183 |
|
|
|
(2,291 |
) |
|
|
(8,048 |
) |
Total other income (expense), net |
|
|
626 |
|
|
|
497 |
|
|
|
(3,563 |
) |
|
|
(8,511 |
) |
|
|
(47,894 |
) |
Income from continuing
operations before income taxes |
|
|
81,565 |
|
|
|
24,721 |
|
|
|
31,985 |
|
|
|
150,146 |
|
|
|
123,382 |
|
Income tax expense
(benefit) |
|
|
37,574 |
|
|
|
6,953 |
|
|
|
25,844 |
|
|
|
89,777 |
|
|
|
71,420 |
|
Income from continuing
operations |
|
|
43,991 |
|
|
|
17,768 |
|
|
|
6,141 |
|
|
|
60,369 |
|
|
|
51,962 |
|
Loss from discontinued
operations, net of tax |
|
|
— |
|
|
|
(14 |
) |
|
|
- |
|
|
|
(15 |
) |
|
|
(72 |
) |
Net income |
|
$ |
43,991 |
|
|
$ |
17,754 |
|
|
$ |
6,141 |
|
|
$ |
60,354 |
|
|
$ |
51,890 |
|
Other comprehensive income
(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation adjustments |
|
|
2,036 |
|
|
|
— |
|
|
|
(2,216 |
) |
|
|
1,701 |
|
|
|
1,179 |
|
Comprehensive income |
|
$ |
46,027 |
|
|
$ |
17,754 |
|
|
$ |
3,925 |
|
|
$ |
62,055 |
|
|
$ |
53,069 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
$ |
0.41 |
|
|
$ |
0.17 |
|
|
$ |
0.06 |
|
|
$ |
0.56 |
|
|
$ |
0.74 |
|
Loss from discontinued operations, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net income (loss) per share |
|
$ |
0.41 |
|
|
$ |
0.17 |
|
|
$ |
0.06 |
|
|
$ |
0.56 |
|
|
$ |
0.74 |
|
Basic weighted average shares
outstanding |
|
|
104,893 |
|
|
|
101,227 |
|
|
|
106,289 |
|
|
|
106,376 |
|
|
|
69,568 |
|
Diluted net income (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
$ |
0.41 |
|
|
$ |
0.17 |
|
|
$ |
0.06 |
|
|
$ |
0.56 |
|
|
$ |
0.73 |
|
Loss from discontinued operations, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net income (loss) per share |
|
$ |
0.41 |
|
|
$ |
0.17 |
|
|
$ |
0.06 |
|
|
$ |
0.56 |
|
|
$ |
0.73 |
|
Diluted weighted average
shares outstanding |
|
|
105,020 |
|
|
|
101,578 |
|
|
|
106,433 |
|
|
|
106,555 |
|
|
|
69,982 |
|
VAALCO ENERGY, INC AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
|
|
Twelve Months Ended December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
(in thousands) |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
60,354 |
|
|
$ |
51,890 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of tax |
|
|
15 |
|
|
|
72 |
|
Depreciation, depletion and amortization |
|
|
115,302 |
|
|
|
48,143 |
|
Bargain purchase gain |
|
|
1,412 |
|
|
|
(10,819 |
) |
Exploration Expense |
|
|
1,841 |
|
|
|
— |
|
Deferred taxes |
|
|
(2,864 |
) |
|
|
44,805 |
|
Unrealized foreign exchange loss |
|
|
52 |
|
|
|
(1,043 |
) |
Stock-based compensation |
|
|
3,323 |
|
|
|
2,200 |
|
Cash settlements paid on exercised stock appreciation rights |
|
|
(378 |
) |
|
|
(827 |
) |
Derivative instruments (gain) loss, net |
|
|
(232 |
) |
|
|
37,812 |
|
Cash settlements paid on matured derivative contracts, net |
|
|
(127 |
) |
|
|
(42,935 |
) |
Cash settlements paid on asset retirement obligations |
|
|
(6,747 |
) |
|
|
(6,577 |
) |
Credit loss recovery, net of expense |
|
|
7,543 |
|
|
|
3,082 |
|
Other operating loss, net |
|
|
55 |
|
|
|
(38 |
) |
Operational expenses associated with equipment and other |
|
|
3,196 |
|
|
|
2,052 |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Trade receivables |
|
|
9,461 |
|
|
|
18,385 |
|
Accounts with joint venture owners |
|
|
19,571 |
|
|
|
(18,929 |
) |
Other receivables |
|
|
12,064 |
|
|
|
(9,290 |
) |
Crude oil inventory |
|
|
1,387 |
|
|
|
(1,742 |
) |
Prepayments and other |
|
|
4,743 |
|
|
|
(4,387 |
) |
Value added tax and other receivables |
|
|
2,427 |
|
|
|
(5,193 |
) |
Other long-term assets |
|
|
3,830 |
|
|
|
(2,730 |
) |
Accounts payable |
|
|
(28,102 |
) |
|
|
23,920 |
|
Foreign income taxes receivable/(payable) |
|
|
22,030 |
|
|
|
(5,897 |
) |
Accrued liabilities and other |
|
|
(6,544 |
) |
|
|
6,964 |
|
Net cash provided by (used in) continuing operating activities |
|
|
223,612 |
|
|
|
128,918 |
|
Net cash used in discontinued operating activities |
|
|
(15 |
) |
|
|
(72 |
) |
Net cash provided by (used in) operating activities |
|
|
223,597 |
|
|
|
128,846 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
Property and equipment expenditures |
|
|
(97,223 |
) |
|
|
(159,897 |
) |
Cash acquired from TransGlobe acquisition |
|
|
— |
|
|
|
36,686 |
|
Net cash provided by (used in) continuing investing activities |
|
|
(97,223 |
) |
|
|
(123,211 |
) |
Net cash used in discontinued investing activities |
|
|
— |
|
|
|
— |
|
Net cash provided by (used in) investing activities |
|
|
(97,223 |
) |
|
|
(123,211 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
Proceeds from the issuances of common stock |
|
|
673 |
|
|
|
312 |
|
Dividend distribution |
|
|
(26,772 |
) |
|
|
(9,354 |
) |
Treasury shares |
|
|
(23,570 |
) |
|
|
(3,805 |
) |
Deferred financing costs |
|
|
— |
|
|
|
(2,069 |
) |
Payments of finance lease |
|
|
(7,150 |
) |
|
|
(3,039 |
) |
Net cash provided by (used in) in continuing financing
activities |
|
|
(56,819 |
) |
|
|
(17,955 |
) |
Net cash used in discontinued financing activities |
|
|
— |
|
|
|
— |
|
Net cash provided by (used in) in financing activities |
|
|
(56,819 |
) |
|
|
(17,955 |
) |
Effects of exchange rate changes on cash |
|
|
(153 |
) |
|
|
(218 |
) |
NET CHANGE IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH |
|
|
69,402 |
|
|
|
(12,538 |
) |
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH AT BEGINNING OF PERIOD |
|
|
59,776 |
|
|
|
72,314 |
|
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH AT END OF PERIOD |
|
$ |
129,178 |
|
|
$ |
59,776 |
|
VAALCO ENERGY, INC AND SUBSIDIARIES
Selected Financial and Operating Statistics
(Unaudited)
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
|
December 31,
2023 |
|
|
December 31,
2022 |
|
|
September 30,
2023 |
|
|
December 31,
2023 |
|
|
December 31,
2022 |
|
NRI SALES DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and
natural gas liquids sales (MBOE) |
|
|
1,994 |
|
|
|
1,371 |
|
|
|
1,812 |
|
|
|
6,832 |
|
|
|
3,677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WI PRODUCTION DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Etame Crude oil (MBbl) |
|
|
887 |
|
|
|
650 |
|
|
|
911 |
|
|
|
3,674 |
|
|
|
3,415 |
|
Egypt Crude oil (MBbl) |
|
|
1,024 |
|
|
|
818 |
|
|
|
1,076 |
|
|
|
4,055 |
|
|
|
818 |
|
Canada Crude Oil (MBbl) |
|
|
77 |
|
|
|
93 |
|
|
|
101 |
|
|
|
394 |
|
|
|
93 |
|
Canada Natural Gas (Mcf) |
|
|
471 |
|
|
|
335 |
|
|
|
470 |
|
|
|
1,798 |
|
|
|
335 |
|
Canada Natural Gas Liquid (Mbbl) |
|
|
81 |
|
|
|
63 |
|
|
|
82 |
|
|
|
317 |
|
|
|
63 |
|
Canada Crude oil, natural gas and natural gas liquids (MBOE) |
|
|
236 |
|
|
|
211 |
|
|
|
261 |
|
|
|
1,011 |
|
|
|
211 |
|
Total Crude oil, natural gas and natural gas liquids production
(MBOE) |
|
|
2,146 |
|
|
|
1,680 |
|
|
|
2,248 |
|
|
|
8,740 |
|
|
|
4,445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gabon Average daily production volumes (BOEPD) |
|
|
9,641 |
|
|
|
7,065 |
|
|
|
9,901 |
|
|
|
10,066 |
|
|
|
9,356 |
|
Egypt Average daily production volumes (BOEPD) |
|
|
11,126 |
|
|
|
8,893 |
|
|
|
11,691 |
|
|
|
11,111 |
|
|
|
2,241 |
|
Canada Average daily production volumes (BOEPD) |
|
|
2,563 |
|
|
|
2,293 |
|
|
|
2,835 |
|
|
|
2,769 |
|
|
|
578 |
|
Average daily production volumes (BOEPD) |
|
|
23,330 |
|
|
|
18,262 |
|
|
|
24,430 |
|
|
|
23,946 |
|
|
|
12,177 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NRI PRODUCTION DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Etame Crude oil (MBbl) |
|
|
772 |
|
|
|
566 |
|
|
|
792 |
|
|
|
3,196 |
|
|
|
2,971 |
|
Egypt Crude oil (MBbl) |
|
|
697 |
|
|
|
547 |
|
|
|
732 |
|
|
|
2,771 |
|
|
|
547 |
|
Canada Crude Oil (MBbl) |
|
|
63 |
|
|
|
93 |
|
|
|
81 |
|
|
|
335.51 |
|
|
|
93 |
|
Canada Natural Gas (Mcf) |
|
|
384 |
|
|
|
335 |
|
|
|
376 |
|
|
|
1,532.74 |
|
|
|
335 |
|
Canada Natural Gas Liquid
(Mbbl) |
|
|
66 |
|
|
|
63 |
|
|
|
66 |
|
|
|
270.69 |
|
|
|
63 |
|
Canada Crude oil, natural gas
and natural gas liquids (MBOE) |
|
|
193 |
|
|
|
211 |
|
|
|
210 |
|
|
|
862 |
|
|
|
211 |
|
Total Crude oil, natural gas
and natural gas liquids production (MBOE) |
|
|
1,662 |
|
|
|
1,324 |
|
|
|
1,734 |
|
|
|
6,829 |
|
|
|
3,729 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gabon Average daily production volumes (BOEPD) |
|
|
8,391 |
|
|
|
6,152 |
|
|
|
8,609 |
|
|
|
8,756 |
|
|
|
8,140 |
|
Egypt Average daily production volumes (BOEPD) |
|
|
7,576 |
|
|
|
5,946 |
|
|
|
7,957 |
|
|
|
7,593 |
|
|
|
1,499 |
|
Canada Average daily
production volumes (BOEPD) |
|
|
2,098 |
|
|
|
2,293 |
|
|
|
2,279 |
|
|
|
2,361 |
|
|
|
578 |
|
Average daily production
volumes (BOEPD) |
|
|
18,065 |
|
|
|
14,390 |
|
|
|
18,844 |
|
|
|
18,710 |
|
|
|
10,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE SALES PRICES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and
natural gas liquids sales (per BOE) - WI basis |
|
$ |
73.98 |
|
|
$ |
72.01 |
|
|
$ |
70.78 |
|
|
$ |
69.30 |
|
|
$ |
94.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and
natural gas liquids sales (per BOE) - NRI basis |
|
$ |
73.96 |
|
|
$ |
70.43 |
|
|
$ |
63.41 |
|
|
$ |
65.83 |
|
|
$ |
94.77 |
|
Crude oil, natural gas and
natural gas liquids sales (Per BOE including realized commodity
derivatives) |
|
$ |
73.89 |
|
|
$ |
70.24 |
|
|
$ |
63.38 |
|
|
$ |
65.81 |
|
|
$ |
83.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND EXPENSES (Per BOE of
sales): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production expense |
|
$ |
23.27 |
|
|
$ |
33.19 |
|
|
$ |
22.05 |
|
|
$ |
22.42 |
|
|
$ |
30.64 |
|
Production expense, excluding
offshore workovers and stock compensation* |
|
|
23.25 |
|
|
|
29.73 |
|
|
|
22.04 |
|
|
|
22.59 |
|
|
|
29.33 |
|
Depreciation, depletion and
amortization |
|
|
10.20 |
|
|
|
19.19 |
|
|
|
17.96 |
|
|
|
16.88 |
|
|
|
13.09 |
|
General and administrative
expense** |
|
|
3.51 |
|
|
|
(0.31 |
) |
|
|
3.43 |
|
|
|
3.49 |
|
|
|
2.74 |
|
Property and equipment expenditures, cash basis (in thousands) |
|
$ |
42,391 |
|
|
$ |
56,044 |
|
|
$ |
22,533 |
|
|
$ |
97,223 |
|
|
$ |
159,897 |
|
*Offshore workover costs excluded from the three
months ended December 31, 2023 and 2022 and
September 30, 2023 are $0.0 million, $4.7 million and
$0.0 million, respectively.
*Stock compensation associated with production expense excluded
from the three months ended December 31, 2023 and
2022 and September 30, 2023 are $0.9 million,
$(0.1) million and $1.0 million, respectively.
**General and administrative expenses include $0.50, $0.57 and
$0.57 per barrel of oil related to stock-based
compensation expense in the three months ended December 31,
2023 and 2022 and September 30,
2023, respectively.
NON-GAAP FINANCIAL MEASURES
Management uses Adjusted Net Income to evaluate
operating and financial performance and believes the measure is
useful to investors because it eliminates the impact of certain
non-cash and/or other items that management does not consider to be
indicative of the Company’s performance from period to period.
Management also believes this non-GAAP measure is useful to
investors to evaluate and compare the Company’s operating and
financial performance across periods, as well as facilitating
comparisons to others in the Company’s industry. Adjusted Net
Income is a non-GAAP financial measure and as used herein
represents net income before discontinued operations, impairment of
proved crude oil and natural gas properties, deferred income tax
expense, unrealized commodity derivative loss, gain on the Sasol
Acquisition and non-cash and other items.
Adjusted EBITDAX is a supplemental non-GAAP
financial measure used by VAALCO’s management and by external users
of the Company’s financial statements, such as industry analysts,
lenders, rating agencies, investors and others who follow the
industry, as an indicator of the Company’s ability to internally
fund exploration and development activities and to service or incur
additional debt. Adjusted EBITDAX is a non-GAAP financial measure
and as used herein represents net income before discontinued
operations, interest income net, income tax expense, depletion,
depreciation and amortization, exploration expense, impairment of
proved crude oil and natural gas properties, non-cash and other
items including stock compensation expense, gain on the Sasol
Acquisition and unrealized commodity derivative loss.
Management uses Adjusted Working Capital as a
transition tool to assess the working capital position of the
Company’s continuing operations excluding leasing obligations
because it eliminates the impact of discontinued operations as well
as the impact of lease liabilities. Under the lease accounting
standards, lease liabilities related to assets used in joint
operations include both the Company’s share of expenditures as well
as the share of lease expenditures which its non-operator joint
venture owners’ will be obligated to pay under joint operating
agreements. Adjusted Working Capital is a non-GAAP financial
measure and as used herein represents working capital excluding
working capital attributable to discontinued operations and current
liabilities associated with lease obligations.
Management uses Free Cash Flow to evaluate
financial performance and to determine the total amount of cash
over a specified period available to be used in connection with
returning cash to shareholders, and believes the measure is useful
to investors because it provides the total amount of net cash
available for returning cash to shareholders by adding cash
generated from operating activities, subtracting amounts used in
financing and investing activities, and adding back amounts used
for dividend payments and stock repurchases. Free Cash Flow is a
non-GAAP financial measure and as used herein represents net change
in cash, cash equivalents and restricted cash and adds the amounts
paid under dividend distributions and share repurchases over a
specified period.
Free Cash Flow has significant limitations,
including that it does not represent residual cash flows available
for discretionary purposes and should not be used as a substitute
for cash flow measures prepared in accordance with GAAP. Free Cash
Flow should not be considered as a substitute for cashflows from
operating activities before discontinued operations or any other
liquidity measure presented in accordance with GAAP. Free Cash Flow
may vary among other companies. Therefore, the Company’s Free Cash
Flow may not be comparable to similarly titled measures used by
other companies.
Adjusted EBITDAX and Adjusted Net Income have
significant limitations, including that they do not reflect the
Company’s cash requirements for capital expenditures, contractual
commitments, working capital or debt service. Adjusted EBITDAX,
Adjusted Net Income, Adjusted Working Capital and Free Cash
Flow should not be considered as substitutes for net income (loss),
operating income (loss), cash flows from operating activities or
any other measure of financial performance or liquidity presented
in accordance with GAAP. Adjusted EBITDAX and Adjusted Net Income
exclude some, but not all, items that affect net income (loss) and
operating income (loss) and these measures may vary among other
companies. Therefore, the Company’s Adjusted EBITDAX, Adjusted Net
Income, Adjusted Working Capital and Free Cash Flow may not be
comparable to similarly titled measures used by other
companies.
PV-10 Value and Probable Reserves
PV-10 is a non-GAAP financial measure and
represents the period-end present value of estimated future cash
inflows from VAALCO’s reserves, less future development and
production costs, discounted at 10% per annum to reflect timing of
future cash flows. PV-10 values for 2P WI CPR reserves have been
calculated using VAALCO’s management assumptions for timing,
escalated crude oil price and cost in the case of 2P WI CPR
reserves. PV-10 generally differs from standardized measure, the
most directly comparable GAAP financial measure, because it
generally does not include the effects of income taxes; however,
VAALCO’s PV-10 does include the effect of income taxes. PV-10 is a
widely used measure within the industry and is commonly used by
securities analysts, banks and credit rating agencies to evaluate
the estimated future net cash flows from proved reserves on a
comparative basis across companies or specific properties. VAALCO’s
PV-10 includes the effect of income taxes. Neither PV-10 nor the
standardized measure purports to represent the fair value of the
Company’s crude oil and natural gas reserves.
VAALCO has provided summations of its PV-10 for
its proved and probable reserves on a 2P WI CPR basis in this press
release. The SEC strictly prohibits companies from aggregating
proved, probable and possible reserves in filings with the SEC due
to the different levels of certainty associated with each reserve
category. GAAP does not provide a measure of estimated future net
cash flows for reserves other than proved reserves and accordingly
it is not practicable to reconcile the PV-10 value of 2P WI CPR
reserves to a GAAP measure, such as the standardized measure.
Investors should be cautioned that estimates of PV-10 of probable
reserves, as well as the underlying volumetric estimates, are
inherently more uncertain of being recovered and realized than
comparable measures for proved reserves. Further, because estimates
of probable reserve volumes have not been adjusted for risk due to
this uncertainty of recovery, their summation may be of limited
use. Nonetheless, VAALCO believes that PV-10 estimates for probable
reserves present useful information for investors about the future
net cash flows of its reserves in the absence of a comparable GAAP
measure such as standardized measure.
2P WI CPR Reserves
2P WI CPR reserves represent proved plus
probable estimates as reported by NSAI and GLJ and prepared in
accordance with the definitions and guidelines set forth in the
2018 Petroleum Resources Management Systems approved by the Society
of Petroleum Engineers as of December 31, 2021 using escalated
crude oil price and cost assumptions made by VAALCO’s management.
The SEC definitions of proved and probable reserves are different
from the definitions contained in the 2018 Petroleum Resources
Management Systems approved by the Society of Petroleum Engineers
as of December 31, 2021. As a result, 2P WI CPR reserves may not be
comparable to United States standards. The SEC requires United
States oil and gas reporting companies, in their filings with the
SEC, to disclose only proved reserves after the deduction of
royalties and production due to others but permits the optional
disclosure of probable and possible reserves in accordance with SEC
definitions.
2P WI CPR reserves and the PV-10 value for 2P WI
CPR reserves, as calculated herein, may differ from the SEC
definitions of proved and probable reserves because:
●
Pricing for SEC is
the average closing price on the first trading day of each month
for the prior year which is then held flat in the future, while the
2P WI CPR pricing is based on management pricing assumptions for
future Brent oil pricing for 2023 of $80.00 and $70.00 in 2024,
escalated 2% per year thereafter and for Equatorial Guinea, given
the expectation of first oil beginning in 2026, Brent oil pricing
of $74.27 was assumed for 2026, escalated 2% per year
thereafter;
● Lease operating
expenses are not escalated in the SEC case, while for the 2P WI CPR
reserves case they are escalated at 2% annually beginning on
January 1, 2023.
For the 2P WI CPR reserves for Svenska, such
reserves may differ from the SEC definitions of proved and
probable reserves because:
- Pricing for SEC is the average
closing price on the first trading day of each month for the prior
year which is then held flat in the future, while the 1P and 2P WI
CPR pricing is based on pricing assumptions for future Brent oil
pricing for 2023 of $84.5 and up to 2030 the Brent Oil price
follows the average of four available forecasts and assumes flat
real thereafter. Oil price is escalated 2% per year;
- Lease operating expenses are
typically not escalated under the SEC’s rules, while for the WI CPR
reserves estimates, they are escalated at 2% annually beginning in
2024.
Additionally, (i) the reserves estimates for
Svenska were prepared by Petroleum Development Consultants Limited
and prepared in accordance with the definitions and guidelines set
forth in the 2018 Petroleum Resources Management Systems approved
by the Society of Petroleum Engineers and (ii) are as of October 1,
2023.
Management uses 2P WI CPR reserves as a
measurement of operating performance because it assists management
in strategic planning, budgeting and economic evaluations and in
comparing the operating performance of the Company to other
companies. Management believes that the presentation of 2P WI CPR
reserves is useful to its international investors, particularly
those that invest in companies trading on the London Stock
Exchange, in order to better compare the Company’s reserve
information to other London Stock Exchange-traded companies that
report similar measures. VAALCO also believes that this information
enhances its investors’ and securities analysts’ understanding of
its business. However, 2P WI CPR reserves should not be used as a
substitute for proved reserves calculated in accordance with the
definitions prescribed by the SEC. In evaluating VAALCO’s business,
investors should rely on the Company’s SEC proved reserves and
consider 2P WI CPR reserves only supplementally.
The tables below reconcile the most directly
comparable GAAP financial measures to Adjusted Net Income, Adjusted
EBITDAX, Adjusted Working Capital and Free Cash Flow.
VAALCO ENERGY, INC AND SUBSIDIARIES
Reconciliations of Non-GAAP Financial Measures
(Unaudited)
(in thousands)
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
Reconciliation of Net
Income to Adjusted Net Income |
|
December
31, 2023 |
|
|
December
31, 2022 |
|
|
September
30, 2023 |
|
|
December
31, 2023 |
|
|
December
31, 2022 |
|
Net income |
|
$ |
43,991 |
|
|
$ |
17,754 |
|
|
$ |
6,141 |
|
|
$ |
60,354 |
|
|
$ |
51,890 |
|
Adjustment for discrete
items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations, net of tax |
|
|
— |
|
|
|
14 |
|
|
|
— |
|
|
|
15 |
|
|
|
72 |
|
Dry Hole Costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Unrealized derivative instruments loss (gain) |
|
|
(2,565 |
) |
|
|
38 |
|
|
|
2,321 |
|
|
|
(359 |
) |
|
|
(5,123 |
) |
(Gain) /adjustment of acquisition price, net |
|
|
— |
|
|
|
(10,817 |
) |
|
|
— |
|
|
|
1,412 |
|
|
|
(10,817 |
) |
Arrangement Costs |
|
|
— |
|
|
|
7,006 |
|
|
|
— |
|
|
|
— |
|
|
|
14,630 |
|
FPSO demobilization |
|
|
1,837 |
|
|
|
— |
|
|
|
— |
|
|
|
7,484 |
|
|
|
8,867 |
|
Deferred income tax expense (benefit) |
|
|
(3,538 |
) |
|
|
5,266 |
|
|
|
(985 |
) |
|
|
(2,865 |
) |
|
|
44,805 |
|
Other operating (income) expense, net |
|
|
(731 |
) |
|
|
(43 |
) |
|
|
(5 |
) |
|
|
(433 |
) |
|
|
(38 |
) |
Adjusted Net Income |
|
$ |
38,994 |
|
|
$ |
19,218 |
|
|
$ |
7,472 |
|
|
$ |
65,608 |
|
|
$ |
104,286 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Adjusted Net Income
per Share |
|
$ |
0.37 |
|
|
$ |
0.19 |
|
|
$ |
0.07 |
|
|
$ |
0.62 |
|
|
$ |
1.49 |
|
Diluted weighted average
shares outstanding (1) |
|
|
105,020 |
|
|
|
101,578 |
|
|
|
106,433 |
|
|
|
106,555 |
|
|
|
69,982 |
|
(1) No adjustments to weighted average shares outstanding
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
Reconciliation of Net
Income to Adjusted EBITDAX |
|
December
31, 2023 |
|
|
December
31, 2022 |
|
|
September
30, 2023 |
|
|
December
31, 2023 |
|
|
December
31, 2022 |
|
Net income |
|
$ |
43,991 |
|
|
$ |
17,754 |
|
|
$ |
6,141 |
|
|
$ |
60,354 |
|
|
$ |
51,890 |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of discontinued operations |
|
|
- |
|
|
|
14 |
|
|
|
- |
|
|
|
15 |
|
|
|
72 |
|
Interest expense (income), net |
|
|
1,077 |
|
|
|
1,679 |
|
|
|
1,426 |
|
|
|
6,452 |
|
|
|
2,034 |
|
Income tax expense (benefit) |
|
|
37,574 |
|
|
|
6,953 |
|
|
|
25,844 |
|
|
|
89,777 |
|
|
|
71,420 |
|
Depreciation, depletion and amortization |
|
|
20,344 |
|
|
|
26,316 |
|
|
|
32,538 |
|
|
|
115,302 |
|
|
|
48,143 |
|
Exploration expense |
|
|
706 |
|
|
|
8 |
|
|
|
1,194 |
|
|
|
1,965 |
|
|
|
258 |
|
FPSO demobilization |
|
|
1,837 |
|
|
|
— |
|
|
|
— |
|
|
|
7,484 |
|
|
|
8,867 |
|
Non-cash or unusual
items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
991 |
|
|
|
(100 |
) |
|
|
1,078 |
|
|
|
3,323 |
|
|
|
2,200 |
|
Unrealized derivative instruments loss (gain) |
|
|
(2,565 |
) |
|
|
38 |
|
|
|
2,321 |
|
|
|
(359 |
) |
|
|
(5,123 |
) |
(Gain) /adjustment of acquisition price, net |
|
|
— |
|
|
|
(10,817 |
) |
|
|
— |
|
|
|
1,412 |
|
|
|
(10,817 |
) |
Arrangement Costs |
|
|
— |
|
|
|
7,006 |
|
|
|
— |
|
|
|
— |
|
|
|
14,630 |
|
Other operating (income) expense, net |
|
|
(731 |
) |
|
|
(43 |
) |
|
|
(5 |
) |
|
|
(433 |
) |
|
|
(38 |
) |
Credit losses and other |
|
|
(7,343 |
) |
|
|
999 |
|
|
|
822 |
|
|
|
(4,906 |
) |
|
|
3,082 |
|
Adjusted EBITDAX |
|
$ |
95,881 |
|
|
$ |
49,807 |
|
|
$ |
71,359 |
|
|
$ |
280,386 |
|
|
$ |
186,618 |
|
VAALCO ENERGY, INC AND SUBSIDIARIES
Reconciliations of Non-GAAP Financial Measures
(Unaudited)
(in thousands)
Reconciliation of
Working Capital to Adjusted Working Capital |
|
As of December
31, 2023 |
|
|
As of December
31, 2022 |
|
|
Change |
|
Current assets |
|
$ |
228,141 |
|
|
$ |
200,097 |
|
|
$ |
28,044 |
|
Current liabilities |
|
|
(127,475 |
) |
|
|
(162,090 |
) |
|
|
34,615 |
|
Working
capital |
|
|
100,666 |
|
|
|
38,007 |
|
|
|
62,659 |
|
Add: lease liabilities - current portion |
|
|
12,475 |
|
|
|
10,125 |
|
|
|
2,350 |
|
Add: current liabilities - discontinued operations |
|
|
673 |
|
|
|
687 |
|
|
|
(14 |
) |
Adjusted Working
Capital |
|
$ |
113,814 |
|
|
$ |
48,819 |
|
|
$ |
64,995 |
|
|
|
Twelve
Months
Ended December
31, 2023 |
Reconciliation of Free Cash Flow |
|
|
|
|
Net cash provided by Operating activities |
|
$ |
223,597 |
|
Net cash used in Investing activities |
|
|
(97,223 |
) |
Net cash used in Financing activities |
|
|
(56,819 |
) |
Effects of exchange rate changes on cash |
|
|
(153 |
) |
Total net cash
change |
|
|
69,402 |
|
|
|
|
|
|
Add back shareholder cash
out: |
|
|
|
|
Dividends paid |
|
|
26,772 |
|
Stock buyback |
|
|
23,570 |
|
Total cash returned to
shareholders |
|
|
50,342 |
|
|
|
|
|
|
Free Cash
Flow |
|
$ |
119,744 |
|
|
|
|
|
|
Percent of Free Cash
Flow returned to shareholders |
|
|
42 |
% |
Vaalco Energy (LSE:EGY)
Graphique Historique de l'Action
De Déc 2024 à Jan 2025
Vaalco Energy (LSE:EGY)
Graphique Historique de l'Action
De Jan 2024 à Jan 2025