VAALCO Energy, Inc. (NYSE: EGY, LSE: EGY) ("VAALCO" or the
"Company") today reported operational and financial results
for the first quarter of 2024.
First Quarter 2024 Highlights and
Recent Key Items:
- Closed the accretive all
cash acquisition of Svenska Petroleum Exploration AB (“Svenska”)
for a net purchase price of $40.2 million;
- Following the planned shutdown for maintenance in
April, the Baobab field is back on production with a current rate
in excess of 5,000 VAALCO working interest (“WI”)(1) barrels of oil
equivalent per day (“BOEPD”) (99% oil);
- Strategically expands West African focus area with a
sizeable producing asset that has significant upside potential and
future development opportunities in Cote d’Ivoire, a
well-established and investment-friendly country;
- Reported Q1 2024 net
income of $7.7 million ($0.07 per diluted share) and Adjusted
Net Income(2) of $6.5 million ($0.06 per diluted
share);
- Delivered strong Adjusted
EBITDAX(2) of $61.7 million and funded $16.7 million in
cash capital expenditures from cash on hand and cash from
operations;
- Achieved production
of 16,848 net revenue interest (“NRI”)(3) BOEPD and WI(1)
production of 21,807 BOEPD;
- Reported NRI sales
of 1,490,000 barrels of oil equivalent (“BOE”),
or 16,373 BOEPD, near the high end of guidance;
- Posted unrestricted cash of
$113.3 million after paying out $6.5 million in dividends in the
quarter and completing $5.5 million in share
buybacks;
- Since inception of the share buyback program,
VAALCO has purchased approximately $30 million in shares;
and
- Announced quarterly cash
dividend of $0.0625 per share of common stock to be paid on June
21, 2024.
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(1) |
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All WI production rates and volumes are VAALCO’s working interest
volumes, where applicable |
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(2) |
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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.” |
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(3) |
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All NRI production rates are
VAALCO's working interest volumes less royalty volumes, where
applicable |
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George Maxwell, VAALCO’s Chief Executive Officer
commented, “We continue to deliver strong operational and
financial results in line with or ahead of our guidance. Sales for
the first quarter were near the high end of guidance and our costs
were below the low end of guidance. Coupled with a strong pricing
environment, VAALCO was able to generate solid earnings and
Adjusted EBITDAX. We continued to return meaningful cash to our
shareholders through our ongoing dividend program. Additionally, we
finalized the agreements in Equatorial Guinea and are proceeding
with our Front-End Engineering Design (“FEED”) study. We anticipate
the completion of the FEED study will lead to an economic Final
Investment Decision (“FID”) which will enable the development of
the Venus Plan of Development (“POD”). In April, we closed the all
cash Svenska acquisition, ahead of schedule, for a net purchase
price of $40.2 million. It has been a very productive start to
2024."
“We continue to enhance our diversified
portfolio by building size and scale that allows VAALCO to generate
significant free cash flow and execute our strategic vision. We are
excited to be partnering with Petroci and CNR International, and
believe the Baobab field in Cote d’Ivoire is an outstanding asset
with significant upside potential. We have updated our full year
2024 guidance and released our second quarter guidance, both of
which reflects the positive impact to production and production
expense per barrel, which should lead to improved margins and
greater Adjusted EBITDAX. As you can see, this acquisition is
highly accretive on key metrics to our shareholder base and
provides another strong asset to support future growth and
returning value to shareholders.”
Operational Update
Egypt
VAALCO focused on enhancing production in the
first quarter of 2024 through a series of planned workovers, as
well as through interventions using the OGS-10 rig. VAALCO
finalized the K-81 recompletion at the start of the first quarter
which was a carry-over from its 2023 drilling activity. The EA-55
well, drilled in October 2023, was fraced and put online in January
2024. Three additional workover recompletions were completed in the
first quarter with one more in progress. With the low cost of
workovers, the well economics are strongly positive.
A summary of the Egyptian workover campaign's impact in Q1 2024
is presented below:
|
VAALCO Egypt 2024 Workover Wells |
|
| Well |
Workover date |
Type |
Completion Zone |
|
PerforationInterval (ft) |
|
|
IP-30 Rate(BOPD) |
|
|
K-81 |
1-Jan-24 |
Recompletion |
Asl-D |
|
|
13.1 |
|
|
|
154 |
|
| EA-55 |
10-Jan-24 |
Frac & Complete |
Redbed |
|
Hydraulic Frac |
|
|
|
143 |
|
| H-22 |
7-Feb-24 |
Recompletion |
Yusr-A |
|
|
9.8 |
|
|
|
82 |
|
| K-65_ST1 |
14-Feb-24 |
Recompletion |
Asl-D |
|
|
13.1 |
|
|
|
43* |
|
| K-85 |
16-Mar-24 |
Recompletion |
Asl-D |
|
|
13.1 |
|
|
|
420 |
|
| K-84 |
21-Mar-24 Under WO |
Recompletion |
Asl-G |
|
|
16.4 |
|
|
In Progress |
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Canada
The 2024 drilling campaign commenced in January
with the drilling of 9-12-30-4W5, spud on January 17th. The well
was drilled to a total depth of 22,732 feet. The second well of the
program, 10-12-30-4W5, was spud on February 9th, and drilled to a
total depth of 21,736 feet. The third well of the program,
11-12-30-4W5 was spud on February 23rd, and drilled to a total
depth of 21,624 feet. The fourth well of the program was spud
on March 9th, and drilled to a total depth of 20,669 feet. Each of
these wells included a 2.75 mile lateral. The drilling rig was
released on March 24th. Completion of the wells was initiated
in late March, and was completed in April, followed by equipping
and tie-in, with first production forecasted to be in May 2024.
Gabon
VAALCO is currently finalizing locations
and planning for the next drilling campaign at Etame that is
expected to occur late in 2024 and into 2025. In October 2022,
VAALCO successfully completed its transition to a Floating Storage
and Offloading vessel (“FSO”) and related field reconfiguration
processes. This project provides a low cost FSO solution that
increases the storage capacity for the Etame block and improved
operational performance. The Company continues to
emphasize operational excellence, production uptime and
enhancement in 2024 to minimize decline until the next
drilling campaign.
The focus is on the continued production
optimization of the new flow line configurations through the Etame
Facility, for final processing before being pumped to the FSO. This
continued optimization and understanding of the
post-reconfiguration process dynamics of the Etame platform, have
resulted in a very high uptime of the Etame Facility and, in
turn, the complete Etame field during the first quarter of 2024.
Combining this with focus on individual well and facility chemical
injection optimization and facility pipelines has provided
more stable operations resulting in lower downtime. Through the end
of 2023 and in the first quarter of 2024, this continued to be
a focus with positive results in production rates and uptime.
Financial Update –
First Quarter of 2024
VAALCO reported net income of $7.7 million
($0.07 per diluted share) for the first quarter of
2024 which was down compared with net income of $44.0
million ($0.41 per diluted share) in the fourth quarter of
2023 and up compared to $3.4 million ($0.03 per diluted
share) in the first quarter of 2023. The decrease in earnings
compared to the fourth quarter of 2023 is mainly due to decreased
sales revenue, increased depreciation, depletion and
amortization (“DD&A”) expense, transaction costs, and
higher credit losses, partially offset by decreased production
expense and lower income taxes. The increase in earnings
compared to the first quarter of 2023 is primarily due to
higher sales revenue due to increased volumes partially offset
by higher production expense, transaction costs, higher DD&A
expense, losses on derivatives and higher income taxes.
Adjusted EBITDAX totaled $61.7 million in the
first quarter of 2024, a decrease from $95.9
million in the fourth quarter of 2023, primarily due to
lower sales and commodity pricing. The increase in first
quarter 2024 Adjusted EBITDAX to $61.7 million compared
with $47.8 million, generated in the same period in 2023, is
primarily due to increased revenue as a result of increased
sales.
|
Quarterly Summary - Sales and Net Revenue |
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Three Months Ended |
|
|
Three Months Ended |
|
| $ in
thousands |
|
March 31, 2024 |
|
|
December 31, 2023 |
|
| |
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
|
Total |
|
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
|
Total |
|
| Oil Sales |
|
|
64,788 |
|
|
|
63,192 |
|
|
|
4,153 |
|
|
|
132,133 |
|
|
|
100,398 |
|
|
|
79,043 |
|
|
|
5,476 |
|
|
|
184,917 |
|
| NGL Sales |
|
|
— |
|
|
|
— |
|
|
|
1,977 |
|
|
|
1,977 |
|
|
|
— |
|
|
|
— |
|
|
|
2,019 |
|
|
|
2,019 |
|
| Gas Sales |
|
|
— |
|
|
|
— |
|
|
|
820 |
|
|
|
820 |
|
|
|
— |
|
|
|
— |
|
|
|
818 |
|
|
|
818 |
|
| Gross Sales |
|
|
64,788 |
|
|
|
63,192 |
|
|
|
6,951 |
|
|
|
134,931 |
|
|
|
100,398 |
|
|
|
79,043 |
|
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|
8,313 |
|
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|
187,754 |
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| Selling Costs & carried
interest |
|
|
1,174 |
|
|
|
(111 |
) |
|
|
(143 |
) |
|
|
920 |
|
|
|
1,711 |
|
|
|
— |
|
|
|
(702 |
) |
|
|
1,009 |
|
| Royalties & taxes |
|
|
(8,458 |
) |
|
|
(26,120 |
) |
|
|
(1,118 |
) |
|
|
(35,696 |
) |
|
|
(13,699 |
) |
|
|
(24,393 |
) |
|
|
(1,517 |
) |
|
|
(39,609 |
) |
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| Net Revenue |
|
|
57,504 |
|
|
|
36,961 |
|
|
|
5,690 |
|
|
|
100,155 |
|
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|
88,410 |
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|
54,650 |
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|
6,094 |
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|
149,154 |
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| Oil Sales MMB (working
interest) |
|
|
770 |
|
|
|
950 |
|
|
|
61 |
|
|
|
1,781 |
|
|
|
1,165 |
|
|
|
1,023 |
|
|
|
77 |
|
|
|
2,265 |
|
| Average Oil Price
Received |
|
$ |
84.19 |
|
|
$ |
66.52 |
|
|
$ |
67.83 |
|
|
$ |
74.21 |
|
|
$ |
86.18 |
|
|
$ |
77.27 |
|
|
$ |
71.12 |
|
|
$ |
81.65 |
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| Change |
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-9 |
% |
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| Average Brent Price |
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$ |
83.00 |
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$ |
84.01 |
|
| Change |
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|
-1 |
% |
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| Gas Sales MMCF (working
interest) |
|
|
— |
|
|
|
— |
|
|
|
469 |
|
|
|
469 |
|
|
|
— |
|
|
|
— |
|
|
|
471 |
|
|
|
471 |
|
| Average Gas Price
Received |
|
|
— |
|
|
|
— |
|
|
$ |
1.75 |
|
|
$ |
1.75 |
|
|
|
— |
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|
— |
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|
$ |
1.74 |
|
|
$ |
1.74 |
|
| Change |
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|
1 |
% |
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| Average Aeco Price ($USD) |
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|
— |
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— |
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$ |
1.46 |
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$ |
1.46 |
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|
$ |
1.86 |
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|
$ |
1.86 |
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| Change |
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|
-22 |
% |
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| NGL Sales MMB (working
interest) |
|
|
— |
|
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|
— |
|
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|
76 |
|
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|
76 |
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|
— |
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— |
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|
80 |
|
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|
80 |
|
| Average Liquids Price
Received |
|
|
— |
|
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|
— |
|
|
$ |
25.98 |
|
|
$ |
25.98 |
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|
— |
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|
— |
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|
$ |
25.09 |
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|
$ |
25.09 |
|
| Change |
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|
4 |
% |
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| Revenue and Sales |
|
Q1 2024 |
|
|
Q1 2023 |
|
|
% Change Q1 2024 vs. Q1 2023 |
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|
Q4 2023 |
|
|
% Change Q1 2024 vs. Q4 2023 |
|
|
Production (NRI BOEPD) |
|
|
16,848 |
|
|
|
18,306 |
|
|
|
(8 |
)% |
|
|
18,065 |
|
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|
(7 |
)% |
| Sales (NRI BOE) |
|
|
1,490,000 |
|
|
|
1,224,000 |
|
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|
22 |
% |
|
|
1,994,000 |
|
|
|
(25 |
)% |
| Realized commodity price
($/BOE) |
|
$ |
66.43 |
|
|
$ |
65.68 |
|
|
|
1 |
% |
|
$ |
73.96 |
|
|
|
(10 |
)% |
| Commodity (Per BOE including
realized commodity derivatives) |
|
$ |
66.41 |
|
|
$ |
65.63 |
|
|
|
1 |
% |
|
$ |
73.89 |
|
|
|
(10 |
)% |
| Total commodity sales
($MM) |
|
$ |
100.2 |
|
|
$ |
80.4 |
|
|
|
25 |
% |
|
$ |
149.2 |
|
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|
(33 |
)% |
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VAALCO had net revenues decrease by
$49.0 million or 33% as total NRI sales volumes of
1,490,000 BOE was lower than Q4 2023 but rose 22%
compared to 1,224,000 BOE for Q1 2023. Q1 2024 NRI
sales were at the higher end of VAALCO's guidance. The Company
expects second quarter 2024 NRI sales to be between
18,100 and 20,000 BOEPD, reflecting the addition of the
Svenska acquisition volume in May and June.
Q1 2024 realized pricing (net of
royalties) was 10% lower compared to Q4 2023 but slightly
higher compared to Q1 2023.
| Costs and Expenses |
|
Q1 2024 |
|
|
Q1 2023 |
|
|
% Change Q1 2024 vs. Q1 2023 |
|
|
Q4 2023 |
|
|
% Change Q1 2024 vs. Q4 2023 |
|
|
Production expense, excluding offshore workovers and stock comp
($MM) |
|
$ |
32.1 |
|
|
$ |
29.3 |
|
|
|
10 |
% |
|
$ |
46.3 |
|
|
|
(31 |
)% |
| Production expense, excluding
offshore workovers ($/BOE) |
|
$ |
21.58 |
|
|
$ |
23.90 |
|
|
|
(10 |
)% |
|
$ |
23.27 |
|
|
|
(7 |
)% |
| Offshore workover expense
($MM) |
|
$ |
(0.1 |
) |
|
$ |
(1.1 |
) |
|
|
93.5 |
% |
|
$ |
— |
|
|
|
— |
% |
| Depreciation, depletion and
amortization ($MM) |
|
$ |
25.8 |
|
|
$ |
24.4 |
|
|
|
6 |
% |
|
$ |
20.3 |
|
|
|
27 |
% |
| Depreciation, depletion and
amortization ($/BOE) |
|
$ |
17.3 |
|
|
$ |
19.90 |
|
|
|
(13 |
)% |
|
$ |
10.20 |
|
|
|
70 |
% |
| General and administrative
expense, excluding stock-based compensation ($MM) |
|
$ |
5.9 |
|
|
$ |
4.6 |
|
|
|
27 |
% |
|
$ |
6.1 |
|
|
|
(4 |
)% |
| General and administrative
expense, excluding stock-based compensation ($/BOE) |
|
$ |
3.9 |
|
|
$ |
3.70 |
|
|
|
6 |
% |
|
$ |
3.0 |
|
|
|
31 |
% |
| Stock-based compensation
expense ($MM) |
|
$ |
0.9 |
|
|
$ |
0.6 |
|
|
|
50.0 |
% |
|
$ |
0.9 |
|
|
|
- |
% |
| Current income tax expense
(benefit) ($MM) |
|
$ |
25.7 |
|
|
$ |
12.3 |
|
|
|
109 |
% |
|
$ |
14.3 |
|
|
|
80 |
% |
| Deferred income tax expense
(benefit) ($MM) |
|
$ |
(3.4 |
) |
|
$ |
2.5 |
|
|
|
(238 |
)% |
|
$ |
(2.6 |
) |
|
|
32 |
% |
| |
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|
Total production expense (excluding offshore
workovers and stock compensation) of $32.1 million in
Q1 2024 was lower compared to Q4 2023 and
slightly higher than the same period in 2023. The decrease in
Q1 2024 expense compared to Q4 2023 was driven
primarily by lower costs related to lower sales
volumes. The increase in Q1 2024 compared to
Q1 2023 was primarily driven by increased expense
associated with higher sales as well as higher costs associated
with boats, diesel and operating costs. VAALCO has seen withholding
tax, inflationary and industry supply chain pressure on personnel
and contractor costs.
Q1 2024 had no offshore workovers, and
the slightly negative workover expense in
Q1 2024 was the result of a reversal of accruals.
Q1 2024 production expense per BOE,
excluding offshore workover expense, decreased
to $21.58 per BOE which was down compared
with Q4 2023 and Q1 2023 partially due to the devaluation
of the Egyptian pound on local costs and lower engineering and
maintenance spend mainly due to the timing of planned projects
partially offset by higher workover costs in Egypt.
DD&A expense for Q1 2024 was
$25.8 million which was higher than $20.3 million in
Q4 2023 and higher than $24.4 million in
Q1 2023. The increase in Q1 2024 DD&A
expense compared to Q4 2023 and Q1 2023 is due to
higher depletable costs in Gabon, Egypt, and Canada.
General and administrative (“G&A”) expense,
excluding stock-based compensation, decreased to $5.9 million
in Q1 2024 from $6.1 million in Q4 2023 and
increased from $4.6 million in Q1 2023. The increase
in general and administrative expenses compared to Q1 2023 is
primarily due to higher professional service fees, salaries
and wages, and accounting and legal fees. Q1 2024 cash
G&A was within the Company’s guidance. The Company has made
meaningful progress toward reducing absolute G&A costs when
compared against the combined TransGlobe and VAALCO
Q1 2023 costs.
Non-cash stock-based compensation expense was
$0.9 million for Q1 2024 compared to $0.6 million
for Q1 2023. Non-cash stock-based compensation expense for
Q4 2023 was $0.9 million.
Other income (expense), net, was an
expense of ($0.5) million for Q1 2024, compared to an
expense of ($1.2) million during Q1 2023 and an
expense of ($0.8) million for Q4 2023. Other income
(expense), net, normally consists of foreign currency
losses.
Foreign income taxes for Gabon are settled by
the government taking their oil in-kind. Q1 2024 income
tax expense was an expense of $22.2 million and is comprised of
current tax expense of $25.7 million and deferred tax
benefit of $3.4 million. Current quarter tax was impacted
by non-deductible items (such as the Svenska transaction costs) and
the change in market value of tax barrels due to Gabon State
mark-to-market at quarter end. Q4 2023 income tax expense
was an expense of $37.6 million. This was comprised of
$41.1 million of current tax expense and a deferred tax
benefit of $3.5 million. Q1 2023 income tax expense
was an expense of $14.8 million. This was comprised of
$12.3 million of deferred tax expense and a current tax
expense of $2.5 million. For all periods, VAALCO’s overall
effective tax rate was impacted by non-deductible items associated
with derivative losses and corporate expenses.
Capital Investments/Balance Sheet
For the first quarter of 2024, net capital
expenditures totaled $16.6 million on a cash basis and
$24.0 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 first quarter of 2024,
VAALCO had an unrestricted cash balance of $113.3
million. Working capital at March 31, 2024 was $86.5
million compared with $100.7 million at December 31, 2023, while
Adjusted Working Capital(3) at March 31, 2024 totaled $99.0
million.
Cash Dividend Policy and Share Buyback
Authorization
VAALCO paid a quarterly cash dividend of $0.0625
per share of common stock for the first quarter of
2024 on March 28, 2024. The Company also announced its next
quarterly cash dividend of $0.0625 per share of common stock for
the second quarter of 2024 ($0.25 annualized), to be paid
on June 21, 2024 to stockholders of record at the close
of business on May 17, 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
"Board").
On November 1, 2022, VAALCO announced that its
newly expanded Board formally ratified and approved the share
buyback program that was announced on August 8, 2022 in
conjunction with the pending business combination with
TransGlobe. The Board also directed management to implement a
Rule 10b5-1 trading plan to facilitate share purchases through open
market purchases, privately negotiated transactions, or otherwise
in compliance with Rule 10b-18 under the Securities Exchange Act of
1934. The plan provided for an aggregate purchase of currently
outstanding common stock up to $30 million. Payment for shares
repurchased under the program were funded using the Company's cash
on hand and cash flow from operations. The share buyback program
was completed on March 12, 2024. Under the share buyback
program, VAALCO purchased a total of 6,797,711 shares at an
average price of $4.41 per share.
Svenska Acquisition
VAALCO closed its acquisition of Svenska
for the net purchase price of $40.2 million, on April 30, 2024
after regulatory and government approvals were received.
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 CNR
International, 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 5,000 WI BOEPD,
with 1P WI CPR reserves of 13.0 MMBOE (99% oil), and 2P WI CPR
reserves of 21.7 MMBOE (97% oil) as of October 1, 2023. 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 floating, production, storage and
offloading vessel ("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 opportunistically 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 as of the end of the first quarter of 2024:
| Settlement
Period |
Type of Contract |
Index |
|
Average Monthly Volumes |
|
|
Weighted Average Put Price |
|
|
Weighted Average Call Price |
|
| |
|
|
|
(Bbls) |
|
|
(per Bbl) |
|
|
(per Bbl) |
|
|
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 second quarter
2024 guidance and updated its full year 2024 guidance to
reflect the closing of the Svenska acquisition in April. All of the
quarterly and annual guidance is detailed in the tables below.
| |
|
|
FY 2024 |
|
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
|
Cote d'Ivoire |
|
|
Production (BOEPD) |
WI |
|
23600 - 26500 |
|
|
|
8300 - 9600 |
|
|
|
9800 - 10600 |
|
|
|
2700 - 3200 |
|
|
|
2800 - 3100 |
|
| Production (BOEPD) |
NRI |
|
18900 - 21400 |
|
|
|
7200 - 8300 |
|
|
|
6700 - 7400 |
|
|
|
2200 - 2600 |
|
|
|
2800 - 3100 |
|
| Sales Volume (BOEPD) |
WI |
|
24300 - 27200 |
|
|
|
8300 - 9500 |
|
|
|
9800 - 10600 |
|
|
|
2700 - 3200 |
|
|
|
3500 - 3900 |
|
| Sales Volume (BOEPD) |
NRI |
|
19200 - 21800 |
|
|
|
7200 - 8300 |
|
|
|
6700 - 7400 |
|
|
|
2200 - 2600 |
|
|
|
3100 - 3500 |
|
| Production Expense
(millions) |
WI & NRI |
|
$162.0 - $174.5 MM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Production Expense per
BOE |
WI |
|
$16.00 - $19.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Production Expense per
BOE |
NRI |
|
$21.00 - $24.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Offshore Workovers
(millions) |
WI & NRI |
|
$1 - $10 MM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash G&A (millions) |
WI & NRI |
|
$20.0 - $28.0 MM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CAPEX (millions) |
WI & NRI |
|
$115 - $140 MM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| DD&A ($/BOE) |
NRI |
|
$20.00 - $22.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Q2 2024 |
|
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
|
Cote d'Ivoire |
|
|
Production (BOEPD) |
WI |
|
23800 - 27000 |
|
|
|
8000 - 9200 |
|
|
|
10000 - 11300 |
|
|
|
3000 - 3300 |
|
|
|
2800 - 3200 |
|
| Production (BOEPD) |
NRI |
|
19000 - 21800 |
|
|
|
7000 - 8000 |
|
|
|
6900 - 7800 |
|
|
|
2500 - 2800 |
|
|
|
2800 - 3200 |
|
| Sales Volume (BOEPD) |
WI |
|
22800 - 25400 |
|
|
|
7400 - 8100 |
|
|
|
10000 - 11300 |
|
|
|
3000 - 3300 |
|
|
|
2400 - 2700 |
|
| Sales Volume (BOEPD) |
NRI |
|
18100 - 20000 |
|
|
|
6500 - 7000 |
|
|
|
6900 - 7800 |
|
|
|
2500 - 2800 |
|
|
|
2200 - 2400 |
|
| Production Expense
(millions) |
WI & NRI |
|
$35.5 - $45.5 MM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Production Expense per
BOE |
WI |
|
$11.50 - $16.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Production Expense per
BOE |
NRI |
|
$15.00 - $20.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Offshore Workovers
(millions) |
WI & NRI |
|
$0 - $0 MM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash G&A (millions) |
WI & NRI |
|
$5.0 - $7.0 MM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CAPEX (millions) |
WI & NRI |
|
$30 - $50 MM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| DD&A ($/BOE) |
NRI |
|
$20.00 - $22.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conference Call
As previously announced, the Company will hold a
conference call to discuss its first quarter 2024 financial
and operating results tomorrow, Wednesday, May 8, 2024, at 10:00
a.m. Central Time (11:00 a.m. Eastern Time and 4:00 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 First Quarter 2024 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 “Q1 2024 Supplemental Information”
investor deck will be posted to VAALCO’s web site prior to its
conference call on May 8, 2024 that includes additional
financial and operational information.
About VAALCO
VAALCO, founded in 1985 and incorporated under
the laws of Delaware, is a Houston, Texas, USA based, independent
energy company with a diverse portfolio of production,
development and exploration assets across Gabon, Egypt, Cote
d'Ivoire, 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 |
| |
|
Endnote
1. Reserves estimates in this announcement 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. See “Oil and Natural Gas
Reserves” for further information.
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) expectations regarding VAALCO's ability to effectively
integrate assets and properties it has acquired as a result of the
Svenska acquisition into its operations; (iii) 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; (iv)
expectations regarding future acquisitions, investments or
divestitures; (v) expectations of future dividends, buybacks and
other potential returns to stockholders; (vi) expectations of
future balance sheet strength; (vii) expectations of future equity
and enterprise value; and (viii) VAALCO’s ability to finalize
documents and effectively execute the POD for the Venus development
in Block P.
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: 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; risks relating to the
timing and costs of completion for scheduled maintenance of the
FPSO servicing the Baobab field; and the risks described
under the caption “Risk Factors” in VAALCO’s 2023 Annual
Report on Form 10-K filed with the SEC on March 15, 2024.
Dividends beyond the second quarter of
2024 have not yet been approved or declared by the Board of
Directors for VAALCO. The declaration and payment of future
dividends 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. Consequently, in determining the dividend
to be declared and paid on VAALCO common stock, the Board may
revise or terminate the payment level at any time without prior
notice.
Oil and Natural Gas
Reserves
This press release contains crude oil and
natural gas metrics which do not have standardized meanings or
standard methods of calculation as classified by the Securities and
Exchange Commission (the “SEC”) and therefore such measures may not
be comparable to similar measures used by other companies. Such
metrics have been included herein to provide readers with
additional measures to evaluate the acquisition of Svenska;
however, such measures may not be reliable indicators of future
performance.
WI CPR Reserves
WI CPR reserves represent proved (1P) and proved
plus probable (2P) estimates as reported 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. 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 a
result, 1P and 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.
1P and 2P WI CPR reserves, as disclosed 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 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.
Management uses 1P and 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 Svenska to other companies.
Management believes that the presentation of 1P and 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 reserve information to other
London Stock Exchange-traded companies that report similar
measures. However, 1P and 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 VAALCO’s SEC proved reserves and consider
1P and 2P WI CPR reserves only supplementally. As a result of the
consummation of the Acquisition, VAALCO will report Svenska’s
reserves in accordance with the definitions and regulations
promulgated by the SEC.
Other Oil and Gas Advisories
Investors are cautioned when viewing BOEs in
isolation. A BOE conversation ratio of six thousand cubic feet of
natural gas to one barrel of oil equivalent (6 MCF: 1 Bbl) is based
on an energy equivalency conversion method primarily applicable at
the burner tip and does not represent a value equivalency at the
wellhead. Given that the value ratio based on the current price of
crude oil as compared to natural gas is significantly different
from the energy equivalency of 6:1, utilizing a conversion on a 6:1
basis may be an incomplete as an indication of value.
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 SUBSIDIARIESConsolidated Balance Sheets
(Unaudited)
| |
|
As of March 31, 2024 |
|
|
As of December 31, 2023 |
|
| ASSETS |
|
(in thousands) |
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
113,321 |
|
|
$ |
121,001 |
|
|
Restricted cash |
|
|
140 |
|
|
|
114 |
|
|
Receivables: |
|
|
|
|
|
|
|
|
|
Trade, net of allowances for credit loss and other of $0.8 and $0.5
million, respectively |
|
|
44,897 |
|
|
|
44,888 |
|
|
Accounts with joint venture owners, net of allowance for credit
losses of $0.8 and $0.8 million, respectively |
|
|
35 |
|
|
|
1,814 |
|
|
Egypt receivables and other, net of allowances for credit loss and
other of $6.0 and $4.6 million, respectively |
|
|
44,591 |
|
|
|
45,942 |
|
|
Crude oil inventory |
|
|
2,386 |
|
|
|
1,948 |
|
|
Prepayments and other |
|
|
12,374 |
|
|
|
12,434 |
|
|
Total current assets |
|
|
217,744 |
|
|
|
228,141 |
|
| |
|
|
|
|
|
|
|
|
| Crude oil, natural gas and
NGLs properties and equipment, net |
|
|
457,419 |
|
|
|
459,786 |
|
| Other noncurrent assets: |
|
|
|
|
|
|
|
|
|
Restricted cash |
|
|
- |
|
|
|
1,795 |
|
|
Value added tax and other receivables, net of allowances for credit
loss and other of $0.0 and $0.0 million, respectively |
|
|
5,033 |
|
|
|
4,214 |
|
|
Right of use operating lease assets |
|
|
1,444 |
|
|
|
2,378 |
|
|
Right of use finance lease assets |
|
|
89,587 |
|
|
|
89,962 |
|
|
Deferred tax assets |
|
|
30,329 |
|
|
|
29,242 |
|
|
Abandonment funding |
|
|
6,268 |
|
|
|
6,268 |
|
|
Other long-term assets |
|
|
1,323 |
|
|
|
1,430 |
|
|
Total assets |
|
$ |
809,147 |
|
|
$ |
823,216 |
|
| LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
16,747 |
|
|
$ |
22,152 |
|
|
Accounts with joint venture owners |
|
|
3,836 |
|
|
|
5,990 |
|
|
Accrued liabilities and other |
|
|
60,345 |
|
|
|
67,597 |
|
|
Operating lease liabilities - current portion |
|
|
1,466 |
|
|
|
2,396 |
|
|
Finance lease liabilities - current portion |
|
|
10,974 |
|
|
|
10,079 |
|
|
Foreign income taxes payable |
|
|
37,836 |
|
|
|
19,261 |
|
|
Total current liabilities |
|
|
131,204 |
|
|
|
127,475 |
|
| Asset retirement
obligations |
|
|
47,644 |
|
|
|
47,343 |
|
| Operating lease liabilities -
net of current portion |
|
|
- |
|
|
|
33 |
|
| Finance lease liabilities -
net of current portion |
|
|
77,802 |
|
|
|
78,293 |
|
| Deferred tax liabilities |
|
|
71,228 |
|
|
|
73,581 |
|
| Other long-term
liabilities |
|
|
8,679 |
|
|
|
17,709 |
|
|
Total liabilities |
|
|
336,557 |
|
|
|
344,434 |
|
| 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,
121,940,831 and 121,397,553 shares issued, 103,455,525 and
104,346,233 shares outstanding, respectively |
|
|
12,194 |
|
|
|
12,140 |
|
|
Additional paid-in capital |
|
|
358,827 |
|
|
|
357,498 |
|
|
Accumulated other comprehensive income |
|
|
426 |
|
|
|
2,880 |
|
|
Less treasury stock, 18,485,306 and 17,051,320 shares,
respectively, at cost |
|
|
(77,566 |
) |
|
|
(71,222 |
) |
|
Retained earnings |
|
|
178,709 |
|
|
|
177,486 |
|
|
Total shareholders' equity |
|
|
472,590 |
|
|
|
478,782 |
|
|
Total liabilities and shareholders' equity |
|
$ |
809,147 |
|
|
$ |
823,216 |
|
|
|
VAALCO ENERGY, INC AND SUBSIDIARIESConsolidated Statements of
Operations (Unaudited)
| |
|
Three Months Ended |
|
| |
|
March 31, 2024 |
|
|
March 31, 2023 |
|
|
December 31, 2023 |
|
| |
|
(in thousands except per share amounts) |
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and natural gas liquids sales |
|
$ |
100,155 |
|
|
$ |
80,403 |
|
|
$ |
149,154 |
|
| Operating costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Production expense |
|
|
32,089 |
|
|
|
28,200 |
|
|
|
46,397 |
|
|
FPSO demobilization and other costs |
|
|
— |
|
|
|
— |
|
|
|
1,837 |
|
|
Exploration expense |
|
|
48 |
|
|
|
8 |
|
|
|
706 |
|
|
Depreciation, depletion and amortization |
|
|
25,824 |
|
|
|
24,417 |
|
|
|
20,344 |
|
|
Transaction costs related to acquisition |
|
|
1,313 |
|
|
|
— |
|
|
|
— |
|
|
General and administrative expense |
|
|
6,710 |
|
|
|
5,224 |
|
|
|
7,005 |
|
|
Credit losses and other |
|
|
1,812 |
|
|
|
935 |
|
|
|
(7,343 |
) |
|
Total operating costs and expenses |
|
|
67,796 |
|
|
|
58,784 |
|
|
|
68,946 |
|
|
Other operating income (expense), net |
|
|
(166 |
) |
|
|
— |
|
|
|
731 |
|
| Operating income |
|
|
32,193 |
|
|
|
21,619 |
|
|
|
80,939 |
|
| Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
| Derivative instruments gain
(loss), net |
|
|
(847 |
) |
|
|
21 |
|
|
|
2,500 |
|
|
Interest expense, net |
|
|
(935 |
) |
|
|
(2,246 |
) |
|
|
(1,077 |
) |
|
Other income (expense), net |
|
|
(487 |
) |
|
|
(1,153 |
) |
|
|
(797 |
) |
|
Total other income (expense), net |
|
|
(2,269 |
) |
|
|
(3,378 |
) |
|
|
626 |
|
| Income before income
taxes |
|
|
29,924 |
|
|
|
18,241 |
|
|
|
81,565 |
|
| Income tax expense |
|
|
22,238 |
|
|
|
14,771 |
|
|
|
37,574 |
|
| Net income |
|
$ |
7,686 |
|
|
$ |
3,470 |
|
|
$ |
43,991 |
|
| Other comprehensive income
(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation adjustments |
|
|
(2,454 |
) |
|
|
(125 |
) |
|
|
2,036 |
|
| Comprehensive income |
|
$ |
5,232 |
|
|
$ |
3,345 |
|
|
$ |
46,027 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic net income (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) per
share |
|
$ |
0.07 |
|
|
$ |
0.03 |
|
|
$ |
0.41 |
|
| Basic weighted average shares
outstanding |
|
|
103,659 |
|
|
|
107,387 |
|
|
|
104,893 |
|
| Diluted net income (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) per
share |
|
$ |
0.07 |
|
|
$ |
0.03 |
|
|
$ |
0.41 |
|
| Diluted weighted average
shares outstanding |
|
|
104,541 |
|
|
|
108,752 |
|
|
|
105,020 |
|
| |
VAALCO ENERGY, INC AND SUBSIDIARIES Consolidated Statements
of Cash Flows (Unaudited)
| |
|
Three Months Ended March 31, |
|
| |
|
2024 |
|
|
2023 |
|
| |
|
(in thousands) |
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
| Net income |
|
$ |
7,686 |
|
|
$ |
3,470 |
|
| Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
25,824 |
|
|
|
24,417 |
|
|
Bargain purchase loss |
|
|
— |
|
|
|
1,412 |
|
|
Deferred taxes |
|
|
(3,441 |
) |
|
|
2,471 |
|
|
Unrealized foreign exchange loss |
|
|
(102 |
) |
|
|
512 |
|
|
Stock-based compensation |
|
|
898 |
|
|
|
649 |
|
|
Cash settlements paid on exercised stock appreciation rights |
|
|
(154 |
) |
|
|
(233 |
) |
|
Derivative instruments (gain) loss, net |
|
|
847 |
|
|
|
(21 |
) |
|
Cash settlements paid on matured derivative contracts, net |
|
|
(24 |
) |
|
|
(59 |
) |
|
Cash settlements paid on asset retirement obligations |
|
|
(29 |
) |
|
|
(123 |
) |
|
Credit losses and other |
|
|
1,812 |
|
|
|
935 |
|
|
Other operating loss, net |
|
|
166 |
|
|
|
13 |
|
|
Operational expenses associated with equipment and other |
|
|
302 |
|
|
|
(640 |
) |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Trade, net |
|
|
(9 |
) |
|
|
21,357 |
|
|
Accounts with joint venture owners, net |
|
|
(683 |
) |
|
|
18,911 |
|
|
Egypt receivables and other, net |
|
|
1,346 |
|
|
|
(2,309 |
) |
|
Crude oil inventory |
|
|
(438 |
) |
|
|
(8,443 |
) |
|
Prepayments and other |
|
|
(2,278 |
) |
|
|
983 |
|
|
Value added tax and other receivables |
|
|
(2,734 |
) |
|
|
(1,361 |
) |
|
Other long-term assets |
|
|
(1,017 |
) |
|
|
1,051 |
|
|
Accounts payable |
|
|
(5,984 |
) |
|
|
(6,739 |
) |
|
Foreign income taxes receivable/(payable) |
|
|
18,912 |
|
|
|
8,193 |
|
|
Deferred tax liability |
|
|
— |
|
|
|
(3,250 |
) |
|
Accrued liabilities and other |
|
|
(19,068 |
) |
|
|
(19,190 |
) |
|
Net cash provided by (used in) operating activities |
|
|
21,832 |
|
|
|
42,006 |
|
| CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
Property and equipment expenditures |
|
|
(16,618 |
) |
|
|
(27,700 |
) |
|
Net cash provided by (used in) investing activities |
|
|
(16,618 |
) |
|
|
(27,700 |
) |
| CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
Proceeds from the issuances of common stock |
|
|
447 |
|
|
|
274 |
|
|
Dividend distribution |
|
|
(6,463 |
) |
|
|
(6,735 |
) |
|
Treasury shares |
|
|
(6,344 |
) |
|
|
(5,377 |
) |
|
Payments of finance lease |
|
|
(2,095 |
) |
|
|
(1,701 |
) |
|
Net cash provided by (used in) in financing activities |
|
|
(14,455 |
) |
|
|
(13,539 |
) |
|
Effects of exchange rate changes on cash |
|
|
(208 |
) |
|
|
(309 |
) |
| NET CHANGE IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH |
|
|
(9,449 |
) |
|
|
458 |
|
| CASH, CASH EQUIVALENTS AND
RESTRICTED CASH AT BEGINNING OF PERIOD |
|
|
129,178 |
|
|
|
59,776 |
|
| CASH, CASH EQUIVALENTS AND
RESTRICTED CASH AT END OF PERIOD |
|
$ |
119,729 |
|
|
$ |
60,234 |
|
| |
VAALCO ENERGY, INC AND SUBSIDIARIESSelected Financial and
Operating Statistics(Unaudited)
| |
|
Three Months Ended |
|
| |
|
March 31, 2024 |
|
|
March 31, 2023 |
|
|
December 31, 2023 |
|
|
NRI SALES DATA |
|
|
|
|
|
|
|
|
|
|
|
|
| Crude oil, natural gas and
natural gas liquids sales (MBOE) |
|
|
1,490 |
|
|
|
1,224 |
|
|
|
1,994 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| WI PRODUCTION DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
Etame Crude oil (MBbl) |
|
|
819 |
|
|
|
942 |
|
|
|
887 |
|
|
Egypt Crude oil (MBbl) |
|
|
950 |
|
|
|
903 |
|
|
|
1,024 |
|
|
Canada Crude Oil (MBbl) |
|
|
61 |
|
|
|
93 |
|
|
|
77 |
|
|
Canada Natural Gas (Mcf) |
|
|
469 |
|
|
|
415 |
|
|
|
471 |
|
|
Canada Natural Gas Liquid (MBbl) |
|
|
76 |
|
|
|
77 |
|
|
|
81 |
|
|
Canada Crude oil, natural gas and natural gas liquids (MBOE) |
|
|
215 |
|
|
|
239 |
|
|
|
236 |
|
|
Total Crude oil, natural gas and natural gas liquids production
(MBOE) |
|
|
1,984 |
|
|
|
2,084 |
|
|
|
2,146 |
|
|
Gabon Average daily production volumes (BOEPD) |
|
|
9,001 |
|
|
|
10,463 |
|
|
|
9,641 |
|
|
Egypt Average daily production volumes (BOEPD) |
|
|
10,440 |
|
|
|
10,033 |
|
|
|
11,126 |
|
|
Canada Average daily production volumes (BOEPD) |
|
|
2,363 |
|
|
|
2,656 |
|
|
|
2,563 |
|
|
Average daily production volumes (BOEPD) |
|
|
21,807 |
|
|
|
23,152 |
|
|
|
23,330 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| NRI PRODUCTION DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
Etame Crude oil (MBbl) |
|
|
713 |
|
|
|
820 |
|
|
|
772 |
|
|
Egypt Crude oil (MBbl) |
|
|
641 |
|
|
|
616 |
|
|
|
697 |
|
|
Canada Crude Oil (MBbl) |
|
|
51 |
|
|
|
82 |
|
|
|
63 |
|
|
Canada Natural Gas (Mcf) |
|
|
392 |
|
|
|
367 |
|
|
|
384 |
|
|
Canada Natural Gas Liquid (MBbl) |
|
|
63 |
|
|
|
68 |
|
|
|
66 |
|
|
Canada Crude oil, natural gas and natural gas liquids (MBOE) |
|
|
179 |
|
|
|
211 |
|
|
|
193 |
|
|
Total Crude oil, natural gas and natural gas liquids production
(MBOE) |
|
|
1,533 |
|
|
|
1,647 |
|
|
|
1,662 |
|
|
Gabon Average daily production volumes (BOEPD) |
|
|
7,835 |
|
|
|
9,115 |
|
|
|
8,391 |
|
|
Egypt Average daily production volumes (BOEPD) |
|
|
7,044 |
|
|
|
6,844 |
|
|
|
7,576 |
|
|
Canada Average daily production volumes (BOEPD) |
|
|
1,971 |
|
|
|
2,347 |
|
|
|
2,098 |
|
|
Average daily production volumes (BOEPD) |
|
|
16,848 |
|
|
|
18,306 |
|
|
|
18,065 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| AVERAGE SALES PRICES: |
|
|
|
|
|
|
|
|
|
|
|
|
| Crude oil, natural gas and
natural gas liquids sales (per BOE) - WI basis |
|
$ |
69.62 |
|
|
$ |
66.42 |
|
|
$ |
73.98 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Crude oil, natural gas and
natural gas liquids sales (per BOE) - NRI basis |
|
$ |
66.43 |
|
|
$ |
65.68 |
|
|
$ |
73.96 |
|
| Crude oil, natural gas and
natural gas liquids sales (Per BOE including realized commodity
derivatives) |
|
$ |
66.41 |
|
|
$ |
65.63 |
|
|
$ |
73.89 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| COSTS AND EXPENSES (Per BOE of
sales): |
|
|
|
|
|
|
|
|
|
|
|
|
| Production expense |
|
$ |
21.54 |
|
|
$ |
23.04 |
|
|
$ |
23.27 |
|
| Production expense, excluding
offshore workovers and stock compensation* |
|
|
21.56 |
|
|
|
23.91 |
|
|
|
23.25 |
|
| Depreciation, depletion and
amortization |
|
|
17.33 |
|
|
|
19.95 |
|
|
|
10.20 |
|
| General and administrative
expense** |
|
|
4.50 |
|
|
|
4.27 |
|
|
|
3.51 |
|
| Property and equipment
expenditures, cash basis (in thousands) |
|
$ |
16,618 |
|
|
$ |
27,700 |
|
|
$ |
42,391 |
|
*Offshore workover costs excluded from the three
months ended March 31, 2024 and 2023 and December
31, 2023 are $(0.1) million, $(1.1) million and
$0.0 million, respectively.*Stock compensation associated with
production expense excluded from the three months ended March 31,
2024 and 2023 and December 31, 2023 are
immaterial.**General and administrative expenses include $0.58,
$0.52 and $0.50 per barrel of oil related
to stock-based compensation expense in the three months ended
March 31, 2024 and 2023 and December 31,
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.
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 SUBSIDIARIESReconciliations of Non-GAAP
Financial Measures(Unaudited)(in thousands)
| |
|
Three Months Ended |
|
| Reconciliation of Net
Income to Adjusted Net Income |
|
March 31, 2024 |
|
|
March 31, 2023 |
|
|
December 31, 2023 |
|
|
Net income |
|
$ |
7,686 |
|
|
$ |
3,470 |
|
|
$ |
43,991 |
|
| Adjustment for discrete
items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations, net of tax |
|
|
— |
|
|
|
13 |
|
|
|
— |
|
|
Unrealized derivative instruments loss (gain) |
|
|
823 |
|
|
|
(80 |
) |
|
|
(2,565 |
) |
|
(Gain) /adjustment of acquisition price, net |
|
|
— |
|
|
|
1,412 |
|
|
|
— |
|
|
FPSO demobilization |
|
|
— |
|
|
|
— |
|
|
|
1,837 |
|
|
Deferred income tax expense (benefit) |
|
|
(3,441 |
) |
|
|
2,471 |
|
|
|
(3,538 |
) |
|
Transaction costs related to acquisition |
|
|
1,313 |
|
|
|
— |
|
|
|
— |
|
|
Other operating (income) expense, net |
|
|
166 |
|
|
|
— |
|
|
|
(731 |
) |
| Adjusted Net Income |
|
$ |
6,547 |
|
|
$ |
7,286 |
|
|
$ |
38,994 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted Adjusted Net Income
per Share |
|
$ |
0.06 |
|
|
$ |
0.07 |
|
|
$ |
0.37 |
|
(1) No adjustments to weighted average shares outstanding
| |
|
Three Months Ended |
|
| Reconciliation of Net
Income to Adjusted EBITDAX |
|
March 31, 2024 |
|
|
March 31, 2023 |
|
|
December 31, 2023 |
|
|
Net income |
|
$ |
7,686 |
|
|
$ |
3,470 |
|
|
$ |
43,991 |
|
| Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of discontinued operations |
|
|
— |
|
|
|
13 |
|
|
|
— |
|
|
Interest expense (income), net |
|
|
935 |
|
|
|
2,246 |
|
|
|
1,077 |
|
|
Income tax expense (benefit) |
|
|
22,238 |
|
|
|
14,771 |
|
|
|
37,574 |
|
|
Depreciation, depletion and amortization |
|
|
25,824 |
|
|
|
24,417 |
|
|
|
20,344 |
|
|
Exploration expense |
|
|
48 |
|
|
|
8 |
|
|
|
706 |
|
|
FPSO demobilization |
|
|
— |
|
|
|
— |
|
|
|
1,837 |
|
| Non-cash or unusual
items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
899 |
|
|
|
649 |
|
|
|
991 |
|
|
Unrealized derivative instruments loss (gain) |
|
|
823 |
|
|
|
(80 |
) |
|
|
(2,565 |
) |
|
(Gain) /adjustment of acquisition price, net |
|
|
— |
|
|
|
1,412 |
|
|
|
— |
|
|
Other operating (income) expense, net |
|
|
166 |
|
|
|
— |
|
|
|
(731 |
) |
|
Transaction costs related to acquisition |
|
|
1,313 |
|
|
|
— |
|
|
|
— |
|
|
Credit losses and other |
|
|
1,812 |
|
|
|
935 |
|
|
|
(7,343 |
) |
| Adjusted EBITDAX |
|
$ |
61,744 |
|
|
$ |
47,841 |
|
|
$ |
95,881 |
|
| |
VAALCO ENERGY, INC AND SUBSIDIARIESReconciliations of Non-GAAP
Financial Measures(Unaudited)(in thousands)
| Reconciliation of
Working Capital to Adjusted Working Capital |
|
As of March 31, 2024 |
|
|
As of December 31, 2023 |
|
|
Change |
|
|
Current assets |
|
$ |
217,744 |
|
|
$ |
228,141 |
|
|
$ |
(10,397 |
) |
|
Current liabilities |
|
|
(131,204 |
) |
|
|
(127,475 |
) |
|
|
(3,729 |
) |
| Working
capital |
|
|
86,540 |
|
|
|
100,666 |
|
|
|
(14,126 |
) |
| Add: lease liabilities -
current portion |
|
|
12,440 |
|
|
|
12,475 |
|
|
|
(35 |
) |
| Add: current liabilities -
discontinued operations |
|
|
— |
|
|
|
673 |
|
|
|
(673 |
) |
| Adjusted Working
Capital |
|
$ |
98,980 |
|
|
$ |
113,814 |
|
|
$ |
(14,161 |
) |
| |
|
Three Months Ended March 31, 2024 |
|
|
Reconciliation of Free Cash Flow |
|
|
|
|
|
Net cash provided by Operating activities |
|
$ |
21,832 |
|
|
Net cash used in Investing activities |
|
|
(16,618 |
) |
|
Net cash used in Financing activities |
|
|
(14,455 |
) |
|
Effects of exchange rate changes on cash |
|
|
(208 |
) |
| Total net cash
change |
|
|
(9,449 |
) |
| |
|
|
|
|
| Add back shareholder cash
out: |
|
|
|
|
|
Dividends paid |
|
|
6,463 |
|
|
Stock buyback |
|
|
5,502 |
|
| Total cash returned to
shareholders |
|
|
11,965 |
|
| |
|
|
|
|
| Free Cash
Flow |
|
$ |
2,516 |
|
| |
|
|
|
|
Vaalco Energy (LSE:EGY)
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