VAALCO ENERGY, INC. ANNOUNCES
FIRST QUARTER 2024 RESULTS
HOUSTON - May 8, 2024 - 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:
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●
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Closed the accretive all cash acquisition of Svenska Petroleum
Exploration AB ("Svenska") for a net purchase price of $40.2
million;
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● 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);
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|
|
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● 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;
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|
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●
|
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);
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●
|
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;
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●
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Achieved production of 16,848 net revenue
interest ("NRI")(3)
BOEPD and
WI(1) production
of 21,807 BOEPD;
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●
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Reported NRI sales of 1,490,000 barrels of oil equivalent
("BOE"), or 16,373 BOEPD, near the high end of
guidance;
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●
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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;
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● Since inception of
the share buyback
program, VAALCO has purchased approximately $30 million in shares;
and
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●
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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)
|
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
|
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:
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VAALCO Egypt 2024 Workover
Wells
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Well
|
Workover
date
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Type
|
Completion
Zone
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Perforation Interval
(ft)
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IP-30 Rate
(BOPD)
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K-81
|
1-Jan-24
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Recompletion
|
Asl-D
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13.1
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154
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EA-55
|
10-Jan-24
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Frac
& Complete
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Redbed
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Hydraulic
Frac
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143
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H-22
|
7-Feb-24
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Recompletion
|
Yusr-A
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9.8
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|
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82
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K-65_ST1
|
14-Feb-24
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Recompletion
|
Asl-D
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13.1
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43*
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K-85
|
16-Mar-24
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Recompletion
|
Asl-D
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13.1
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420
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K-84
|
21-Mar-24
Under WO
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Recompletion
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Asl-G
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16.4
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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 $47.8 million,
generated in the same period in 2023, is primarily due to increased
revenue as a result of increased sales.
|
Quarterly Summary - Sales and Net Revenue
|
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|
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Three Months
Ended
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|
Three Months
Ended
|
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$ in
thousands
|
|
March 31,
2024
|
|
|
December 31,
2023
|
|
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|
Gabon
|
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Egypt
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Canada
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Total
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Gabon
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Egypt
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Canada
|
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Total
|
|
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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
|
|
|
|
8,313
|
|
|
|
187,754
|
|
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|
|
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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
|
)
|
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|
(1,517
|
)
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|
(39,609
|
)
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Net Revenue
|
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|
57,504
|
|
|
|
36,961
|
|
|
|
5,690
|
|
|
|
100,155
|
|
|
|
88,410
|
|
|
|
54,650
|
|
|
|
6,094
|
|
|
|
149,154
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
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|
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|
|
|
|
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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
|
|
|
Change
|
|
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|
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|
-9
|
%
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Average Brent Price
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$
|
83.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
84.01
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Gas Sales MMCF (working
interest)
|
|
|
-
|
|
|
|
-
|
|
|
|
469
|
|
|
|
469
|
|
|
|
-
|
|
|
|
-
|
|
|
|
471
|
|
|
|
471
|
|
|
Average Gas Price Received
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.75
|
|
|
$
|
1.75
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.74
|
|
|
$
|
1.74
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
Average Aeco Price ($USD)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.46
|
|
|
$
|
1.46
|
|
|
|
|
|
|
|
|
|
|
$
|
1.86
|
|
|
$
|
1.86
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-22
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
NGL Sales MMB (working
interest)
|
|
|
-
|
|
|
|
-
|
|
|
|
76
|
|
|
|
76
|
|
|
|
-
|
|
|
|
-
|
|
|
|
80
|
|
|
|
80
|
|
|
Average Liquids Price
Received
|
|
|
-
|
|
|
|
-
|
|
|
$
|
25.98
|
|
|
$
|
25.98
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
25.09
|
|
|
$
|
25.09
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue and Sales
|
|
Q1 2024
|
|
|
Q1 2023
|
|
|
% Change Q1 2024 vs. Q1
2023
|
|
|
Q4 2023
|
|
|
% Change Q1 2024 vs. Q4
2023
|
|
|
Production (NRI BOEPD)
|
|
|
16,848
|
|
|
|
18,306
|
|
|
|
(8
|
)%
|
|
|
18,065
|
|
|
|
(7
|
)%
|
|
Sales (NRI BOE)
|
|
|
1,490,000
|
|
|
|
1,224,000
|
|
|
|
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
|
|
|
|
(33
|
)%
|
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
|
%
|
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
SUBSIDIARIES
Consolidated 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
SUBSIDIARIES
Consolidated 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
SUBSIDIARIES
Selected 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
SUBSIDIARIES
Reconciliations 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
SUBSIDIARIES
Reconciliations 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
|
|
|
|
|
|
|
|