Exhibit
99.1
VAALCO ENERGY, INC. ANNOUNCES
SECOND QUARTER 2024 RESULTS
HOUSTON - August 7, 2024 - VAALCO
Energy, Inc. (NYSE: EGY, LSE: EGY) ("VAALCO" or the
"Company") today reported operational and financial results
for the second quarter of 2024.
Second 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;
|
|
|
|
● Updated third-party
reserve engineer's calculation of proved reserves as of December
31, 2023 for Svenska that shows significant increase of SEC
proved reserves to 16.9 million barrels of oil equivalent
("MMBOE") (93% oil);
|
|
|
|
● Realized a $19.9 million bargain
purchase gain on the transaction;
|
|
|
●
|
Reported strong Q2 2024 net income of $28.2 million
($0.27 per diluted share) and, Adjusted Net
Income(1) of $22.6 million
($0.22 per diluted
share);
|
|
|
●
|
Increased Adjusted EBITDAX(1)
by 17% to $72.5
million compared to Q1 2024, driven by sales increase associated
with Côte d'Ivoire lifting in May following the closing of
the Svenska acquisition;
|
|
|
●
|
Achieved production of 20,588 net revenue
interest ("NRI")(2)
barrels of oil
equivalent per day ("BOEPD") and working interest ("WI")(3)
production
of 25,411 BOEPD; second quarter 2024
included new production of 3,329 NRI BOEPD (3,329 WI BOEPD) from
Côte d'Ivoire;
|
|
|
●
|
Delivered better than expected results from the Canadian
drilling program with three wells averaging 30 day initial
production ("IP")1
rates of 464
barrels of oil per day ("BOPD"), significantly increasing the liquid ratio
in Canada;
|
|
|
●
|
Reported NRI sales of 1,764,000 barrels of oil equivalent
("BOE"), or 19,386 BOEPD, above the midpoint of
guidance; and 18% above the first quarter of 2024 due to the
Côte d'Ivoire lifting;
|
|
|
●
|
Posted unrestricted cash of $62.9 million which is after
$40.2 million paid for the Svenska acquisition, $6.5 million paid
for quarterly dividend and $32.5 million in cash capital spending
for the quarter;
|
|
|
|
● Received $8 million payment post quarter-end
of back dated accounts receivables ("AR") in Egypt from EGPC. And, in July,
written confirmation that the invoice was recognized in their June
Accounts Payable as owed to us for our Merged Concession effective
date adjustment;
|
|
|
●
|
Settled $30.2 million in foreign income taxes for Gabon
through the government taking its oil in-kind during a Q2 2024
lifting; and
|
|
|
●
|
Announced quarterly cash dividend of $0.0625 per share of
common stock to be paid on September 20, 2024.
|
|
|
(1)
|
Adjusted EBITDAX, Adjusted Net Income, Adjusted Working
Capital and Free Cash Flow2 are Non-GAAP financial measures and are described and
reconciled to the closest GAAP measure in the attached table
under "Non-GAAP Financial
Measures."
|
|
|
(2)
|
All
NRI production rates are VAALCO's working interest volumes less
royalty volumes, where applicable.
|
|
|
(3)
|
All
WI production rates and volumes are VAALCO's working interest
volumes, where applicable.
|
1
George Maxwell, VAALCO's Chief
Executive Officer commented, "We had another strong quarter
operationally and financially, closed on a highly accretive
acquisition and continue to focus on profitably generating cash
flow to fund future projects, while maintaining our commitment to
meaningful shareholder returns through our quarterly dividend
policy. We are very pleased with the solid results from our
Canadian drilling program, which improved our liquid mix
considerably in the second quarter as we had three of the four
wells come in with higher-than-expected IP30 rates. We closed
the Côte d'Ivoire transaction on April 30, had a lifting there
in May and collected payment in June."
"Looking at our highly accretive
Côte d'Ivoire acquisition, we recognized a $19.9 million non-cash
bargain purchase gain, which benefited our second quarter earnings,
but it's the strategic opportunities that provide VAALCO another
strong asset to support future growth that we are most excited
about. We are very pleased with the results of our third-party
reserve engineer's calculation of proved reserves as of December
31, 2023 that shows even greater reserves than we initially
disclosed, up approximately 30% from our initial
disclosure. This strategic and highly cost-effective
acquisition strategically expands our West African focus area with
a sizeable producing asset that has significant upside potential
and considerable future development opportunities in Côte d'Ivoire,
a well-established and investment-friendly country."
"The focus for the second half of
2024 will be the preparation for major projects expected to deliver
a step-change in organic growth across the portfolio in 2025. We
expect to see an increase in capex investment through the second
half of the year associated with these numerous projects including
the drilling campaign in Gabon and the FPSO upgrade in Cote
d'Ivoire. We are excited about the future and plan to continue to
generate strong operational cash flow to fund our impressive
organic opportunities moving forward, while continuing to return
capital to our shareholders through the quarterly
dividend."
Operational Update
Egypt
VAALCO focused on enhancing
production in the first half 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 fracked and put online in
January 2024. Three additional workover recompletions were
completed in the second 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 the first half of 2024 is presented
below:
|
VAALCO Egypt 2024 Workover
Wells
|
|
|
Well
|
Workover
date
|
Type
|
Completion
Zone
|
|
Perforation Interval
(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
|
27-Mar-24
|
Recompletion
|
Asl-G
|
|
|
16.4
|
|
|
|
58*
|
|
|
K-74
|
3-Apr-24
|
Water
Shut-off Recompletion
|
Asl-A
|
|
|
8.2
|
|
|
|
108
|
|
|
K-77
|
7-Apr-24
|
Recompletion
|
Asl-A
|
|
|
26.2
|
|
|
|
100
|
|
|
K-84
|
13-Jun-24
|
Recompletion
|
Asl-D
|
|
|
19.7
|
|
|
|
430
|
|
|
K-80
|
19-Jun-24
|
Recompletion
|
Asl-D
|
|
|
13.1
|
|
|
|
188
|
|
*Production as of June 30, 2024
- Sand production - Possible Sand Screen Required
Canada
The 2024 drilling campaign commenced
in January 2024 with the drilling of 9-12-30-4W5, which was spud on
January 17, 2024. The first 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 9, 2024, and drilled to a total depth of 21,736
feet. The third well on the program, 11-12-30-4W5 was spud on
February 23, 2024, and drilled to a total depth of 21,624 feet. The
fourth well on the program 1-18-30-3W5 was spud on March 9, 2024,
and drilled to a total depth of 20,669 feet. The drilling rig was
released on March 24, 2024.
Completion of the wells began in
late March and was completed in April. By early May all wells were
on production with strong initial rates as noted below:
|
VAALCO Canada 2024 Wells
|
|
Well
|
Spud date
|
Net Pay
(ft)
|
Penetrated Pay
Zones
|
Completion
Zone
|
|
Perforation Interval
(ft)
|
|
IP-30 Rate
(BOEPD)
|
|
09-12-30-4W5
|
1/17/2024
|
2.75-Mile
Hz (4,400m, 14,430ft)
|
Upper
Bioturbated Cardium
|
Cardium
|
|
|
115 Stg x
15T Hydraulic Fracture Treatment
|
|
479
|
|
10-12-30-4W5
|
2/22/2024
|
2.75-Mile
Hz (4,400m, 14,430ft)
|
Upper
Bioturbated Cardium
|
Cardium
|
|
|
100 Stg x
15T Hydraulic Fracture Treatment
|
|
469
|
|
11-12-30-4W5
|
2/23/2024
|
2.75-Mile
Hz (4,400m, 14,430ft)
|
Upper
Bioturbated Cardium
|
Cardium
|
|
|
108 Stg x
15T Hydraulic Fracture Treatment
|
|
444
|
|
1-18-30-3W5
|
9/3/2024
|
2.75-Mile
Hz (4,400m, 14,430ft)
|
Upper
Bioturbated Cardium
|
Cardium
|
|
|
106 Stg x
15T Hydraulic Fracture Treatment
|
|
182
|
2
Gabon
VAALCO is currently
finalizing locations and planning for the next drilling
campaign at Etame that is expected to occur early in 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.
Côte d'Ivoire
Prior to closing of the acquisition,
at the beginning of Q2 2024, production was shut in due to the
planned field maintenance shutdown. The Baobab production shutdown
took place successfully and as per plan between March 21, 2024 and
April 13, 2024. All nine operational production wells were
successfully restarted in mid-April with flush production rates of
just over 21,000 BOEPD, which has since stabilized to around 18,000
BOEPD.
During the second quarter, one
lifting took place in May of 655,715 gross barrels or 211,294
net barrels to VAALCO, achieving a price of $81.70 per
barrel.
Work with Modec, the operator of the
Baobab Floating Production and Offloading Vessel ("FPSO"), on the
drydocking project for the FPSO, projected to be offline in 2025,
continued in the second quarter of 2024. The operator
is currently preparing detailed project timetable and costings
for the partners and regulator; however preliminary work
including the execution of a letter of intent with Modec
on April 4, 2024 which covers the key contracts to be
executed, including vessel purchase, EPC, and O&M amendments,
as well as selection of the disconnect and reconnect contractor,
and support for the revised yard bid from Dubai dry docks among
other activities. Additionally, in the second quarter of 2024,
the outstanding tank inspections continued in preparation for the
dry dock.
3
Financial Update - Second Quarter of 2024
VAALCO reported net
income of $28.2 million ($0.27 per diluted share) for the
second quarter of 2024 which was up significantly
compared with net income of $7.7 million ($0.07 per diluted
share) in the first quarter of 2024 and up compared to $6.8
million ($0.06 per diluted share) in the second quarter of
2023. The increase in earnings is driven by the non-cash
bargain purchase gain on the acquisition, increased sales
associated with Côte d'Ivoire and was partially offset by increased
production expense.
Adjusted EBITDAX totaled $72.5
million in the second quarter of 2024, an increase from
$61.7 million in the first quarter of 2024
and from $65.3 million generated in the same period
in 2023. The increase was primarily due to additional sales
volumes from Côte d'Ivoire.
|
Quarterly Summary - Sales and Net Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in
thousands
|
|
Three Months Ended June 30,
2024
|
|
|
Three Months Ended March 31,
2024
|
|
|
|
|
Gabon
|
|
|
Egypt
|
|
|
Canada
|
|
|
Côte
d'Ivoire
|
|
|
Total
|
|
|
Gabon
|
|
|
Egypt
|
|
|
Canada
|
|
|
Côte
d'Ivoire
|
|
|
Total
|
|
|
Oil Sales
|
|
|
62,327
|
|
|
|
65,314
|
|
|
|
9,547
|
|
|
|
17,240
|
|
|
|
154,428
|
|
|
|
64,788
|
|
|
|
63,192
|
|
|
|
4,153
|
|
|
|
-
|
|
|
|
132,133
|
|
|
NGL Sales
|
|
|
-
|
|
|
|
-
|
|
|
|
1,922
|
|
|
|
-
|
|
|
|
1,922
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,977
|
|
|
|
-
|
|
|
|
1,977
|
|
|
Gas Sales
|
|
|
-
|
|
|
|
-
|
|
|
|
384
|
|
|
|
-
|
|
|
|
384
|
|
|
|
-
|
|
|
|
-
|
|
|
|
820
|
|
|
|
-
|
|
|
|
820
|
|
|
Gross Sales
|
|
|
62,327
|
|
|
|
65,314
|
|
|
|
11,854
|
|
|
|
17,240
|
|
|
|
156,734
|
|
|
|
64,788
|
|
|
|
63,192
|
|
|
|
6,951
|
|
|
|
-
|
|
|
|
134,931
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Costs & carried
interest
|
|
|
-
|
|
|
|
(117
|
)
|
|
|
(318
|
)
|
|
|
-
|
|
|
|
(435
|
)
|
|
|
1,174
|
|
|
|
(111
|
)
|
|
|
(143
|
)
|
|
|
-
|
|
|
|
920
|
|
|
Royalties & taxes
|
|
|
(8,653
|
)
|
|
|
(29,716
|
)
|
|
|
(1,152
|
)
|
|
|
-
|
|
|
|
(39,521
|
)
|
|
|
(8,458
|
)
|
|
|
(26,120
|
)
|
|
|
(1,118
|
)
|
|
|
-
|
|
|
|
(35,696
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue
|
|
|
53,674
|
|
|
|
35,481
|
|
|
|
10,384
|
|
|
|
17,240
|
|
|
|
116,778
|
|
|
|
57,504
|
|
|
|
36,961
|
|
|
|
5,690
|
|
|
|
-
|
|
|
|
100,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil Sales MMB (working
interest)
|
|
|
759
|
|
|
|
953
|
|
|
|
130
|
|
|
|
211
|
|
|
|
2,053
|
|
|
|
770
|
|
|
|
950
|
|
|
|
61
|
|
|
|
-
|
|
|
|
1,781
|
|
|
Average Oil Price Received
|
|
$
|
82.13
|
|
|
$
|
68.52
|
|
|
$
|
73.52
|
|
|
$
|
81.70
|
|
|
$
|
75.22
|
|
|
$
|
84.19
|
|
|
$
|
66.52
|
|
|
$
|
67.83
|
|
|
|
-
|
|
|
$
|
74.21
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Brent Price
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
$
|
84.65
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
$
|
83.00
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
%
|
|
|
|
|
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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)
|
|
|
-
|
|
|
|
-
|
|
|
|
423
|
|
|
|
|
|
|
|
423
|
|
|
|
-
|
|
|
|
-
|
|
|
|
469
|
|
|
|
|
|
|
|
469
|
|
|
Average Gas Price Received
|
|
|
-
|
|
|
|
-
|
|
|
$
|
0.91
|
|
|
|
|
|
|
$
|
0.91
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.75
|
|
|
|
|
|
|
$
|
1.75
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-48
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Aeco Price ($USD)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
0.84
|
|
|
|
|
|
|
$
|
0.84
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.46
|
|
|
|
|
|
|
$
|
1.46
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-42
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
NGL Sales MMB (working
interest)
|
|
|
-
|
|
|
|
-
|
|
|
|
76
|
|
|
|
|
|
|
|
76
|
|
|
|
-
|
|
|
|
-
|
|
|
|
76
|
|
|
|
|
|
|
|
76
|
|
|
Average Liquids Price
Received
|
|
|
-
|
|
|
|
-
|
|
|
$
|
25.16
|
|
|
|
|
|
|
$
|
25.16
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
25.98
|
|
|
|
|
|
|
$
|
25.98
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue and Sales
|
|
Q2 2024
|
|
|
Q2 2023
|
|
|
% Change Q2 2024 vs. Q2
2023
|
|
|
Q1 2024
|
|
|
% Change Q2 2024 vs. Q1
2024
|
|
|
Production (NRI BOEPD)
|
|
|
20,588
|
|
|
|
19,676
|
|
|
|
5
|
%
|
|
|
16,848
|
|
|
|
22
|
%
|
|
Sales (NRI BOE)
|
|
|
1,764,000
|
|
|
|
1,803,000
|
|
|
|
(2
|
)%
|
|
|
1,490,000
|
|
|
|
18
|
%
|
|
Realized commodity price
($/BOE)
|
|
$
|
66.05
|
|
|
$
|
59.37
|
|
|
|
11
|
%
|
|
$
|
66.43
|
|
|
|
(1
|
)%
|
|
Commodity (Per BOE including realized
commodity derivatives)
|
|
$
|
66.03
|
|
|
$
|
59.34
|
|
|
|
11
|
%
|
|
$
|
66.41
|
|
|
|
(1
|
)%
|
|
Total commodity sales
($MM)
|
|
$
|
116.5
|
|
|
$
|
109.2
|
|
|
|
7
|
%
|
|
$
|
100.2
|
|
|
|
16
|
%
|
VAALCO had net revenues
increase by $16.0 million or 16% as total NRI
sales volumes of 1,764,000 BOE was higher than
Q1 2024 and decreased 2% compared to 1,803,000 BOE for
Q2 2023. Q2 2024 NRI sales were toward the upper end of
VAALCO's guidance. The Company expects third quarter
2024 NRI sales to be between 21,700 and 24,000 BOEPD, reflecting the addition of the Côte
d'Ivoire volume for an entire quarter.
Q2 2024 realized pricing
(net of royalties) was virtually flat compared to Q1 2024 and
11% higher compared to Q2 2023.
4
|
Costs and Expenses
|
|
Q2 2024
|
|
|
Q2 2023
|
|
|
% Change Q2 2024 vs. Q2
2023
|
|
|
Q1 2024
|
|
|
% Change Q2 2024 vs. Q1
2024
|
|
|
Production expense, excluding
offshore workovers and stock comp ($MM)
|
|
$
|
52.4
|
|
|
$
|
38.8
|
|
|
|
35
|
%
|
|
$
|
32.1
|
|
|
|
63
|
%
|
|
Production expense, excluding
offshore workovers ($/BOE)
|
|
$
|
29.70
|
|
|
$
|
21.51
|
|
|
|
38
|
%
|
|
$
|
21.58
|
|
|
|
38
|
%
|
|
Offshore workover expense
($MM)
|
|
$
|
0.1
|
|
|
$
|
(0.2
|
)
|
|
|
134
|
%
|
|
$
|
(0.1
|
)
|
|
|
-
|
%
|
|
Depreciation, depletion and
amortization ($MM)
|
|
$
|
33.1
|
|
|
$
|
38.0
|
|
|
|
(13
|
)%
|
|
$
|
25.8
|
|
|
|
28
|
%
|
|
Depreciation, depletion and
amortization ($/BOE)
|
|
$
|
18.78
|
|
|
$
|
21.10
|
|
|
|
(11
|
)%
|
|
$
|
17.33
|
|
|
|
8
|
%
|
|
General and administrative expense,
excluding stock-based compensation ($MM)
|
|
$
|
6.6
|
|
|
$
|
4.8
|
|
|
|
38
|
%
|
|
$
|
5.9
|
|
|
|
14
|
%
|
|
General and administrative expense,
excluding stock-based compensation ($/BOE)
|
|
$
|
3.8
|
|
|
$
|
2.70
|
|
|
|
40
|
%
|
|
$
|
3.9
|
|
|
|
(4
|
)%
|
|
Stock-based compensation expense
($MM)
|
|
$
|
0.9
|
|
|
$
|
0.6
|
|
|
|
50
|
%
|
|
$
|
0.9
|
|
|
|
-
|
%
|
|
Current income tax expense (benefit)
($MM)
|
|
$
|
13.3
|
|
|
$
|
12.4
|
|
|
|
7
|
%
|
|
$
|
25.7
|
|
|
|
(48
|
)%
|
|
Deferred income tax expense (benefit)
($MM)
|
|
$
|
(4.0
|
)
|
|
$
|
(0.8
|
)
|
|
|
405
|
%
|
|
$
|
(3.4
|
)
|
|
|
17
|
%
|
Total production expense (excluding
offshore workovers and stock compensation) of $52.4 million in
Q2 2024 was an increase compared to Q1 2024 and
an increase compared to the same period in 2023. The increase in
Q2 2024 was primarily driven by a non-cash purchase price
adjustment for the Svenska acquisition flowing through production
expense and increased operating expenditure
associated with the addition of Côte d'Ivoire in the
quarter. VAALCO has seen withholding tax, inflationary and
industry supply chain pressure on personnel and contractor
costs.
Q2 2024 had minimal
offshore workover expense and was equal to workover
expense in Q1 2024.
Q2 2024 production expense
per BOE, excluding offshore workover expense, increased
to $29.70 per BOE which was higher than Q2 2023
and Q1 2024 primarily due to the increased costs associated
with the non-cash purchase price adjustment for the Svenska
acquisition.
DD&A expense
for Q2 2024 was $33.1 million which
was higher than $25.8 million in
Q1 2024 and lower than $38.0 million in
Q2 2023. The increase in Q2 2024 DD&A
expense compared to Q1 2024 is due primarily to increased
depletion associated with the addition of Côte d'Ivoire. The
decrease in Q2 2024 DD&A expense compared to
Q2 2023 is due to lower depletable costs in Gabon, Egypt,
and Canada partially offset by higher depletable costs in Côte
d'Ivoire.
General and administrative
("G&A") expense, excluding stock-based compensation,
increased to $6.6 million in Q2 2024 from
$5.9 million in Q1 2024 and $4.8 million in
Q2 2023. The increase in general and administrative
expenses compared to Q2 2023 and Q1 2024 is primarily due to
higher professional service fees, salaries and wages, and
accounting and legal fees due to growth due to the
acquisition. Q2 2024 cash G&A was within the
Company's guidance and nearly flat compared to Q1 2024 on a per
barrel basis.
Non-cash stock-based compensation
expense was $0.9 million for Q2 2024 compared to
$0.6 million for Q2 2023. Non-cash stock-based
compensation expense for Q1 2024 was
$0.9 million.
Other
income (expense), net, was an expense of
$2.0 million for Q2 2024, compared to an
expense of $0.5 million during Q2 2023 and an
expense of $1.8 million for Q1 2024. Other income
(expense), net, normally consists of foreign currency losses.
Also included in Q2 2024 amount are $1.8 million in transaction
costs related to the Svenska acquisition.
Foreign income taxes for Gabon are
settled by the government taking oil in-kind.
Q2 2024 income tax expense was an expense of $9.3
million and is comprised of current tax expense of
$13.3 million and deferred tax benefit of
$4.0 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. Q1 2024 income tax
expense was an expense of $22.2 million.
This was comprised of $25.7 million of current tax
expense and a deferred tax benefit of $3.4 million. Q2 2023 income tax expense was an expense
of $11.6 million. This was comprised
of $12.4 million of current tax expense and a deferred tax benefit
of $0.8 million. For all periods, VAALCO's overall
effective tax rate was impacted by non-deductible items associated
with tax rates in foreign jurisdictions higher than the US
statutory rate and by non-deductible items associated with
operations.
5
Financial Update - First Six Months of 2024
WI Sales for the first six months of
2024 increased to 4,134 MBOE compared to 3,438
MBOE in the first six months of 2023. The increase
was driven primarily by the Côte d'Ivoire acquisition. Crude
oil sales are a function of the number and size of crude oil
liftings in each quarter and do not always coincide with volumes
produced in any given period.
The average realized crude oil price
for the first six months of 2024 was $74.75 per barrel,
representing an increase of 8.0% from $69.28 realized in
the first six months of 2023. This increase in crude oil
price reflects the increase in commodity pricing over the past
year.
The Company reported net income for
the six months ended June 30, 2024 of $35.8 million, which
compares to $10.2 million for the same period of 2023.
The increase in net income for the six months ended June 30,
2024 compared to the same period in 2023 was primarily
due to the bargain purchase gain related to the Svenska acquisition
in April, as well as higher sales and realized pricing.
|
Year to Date Summary - Sales and Net Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in
thousands
|
|
Six Months Ended June 30,
2024
|
|
|
Six Months Ended June 30,
2023
|
|
|
|
|
Gabon
|
|
|
Egypt
|
|
|
Canada
|
|
|
Côte
d'Ivoire
|
|
|
Total
|
|
|
Gabon
|
|
|
Egypt
|
|
|
Canada
|
|
|
Côte
d'Ivoire
|
|
|
Total
|
|
|
Oil Sales
|
|
|
127,115
|
|
|
|
128,506
|
|
|
|
13,700
|
|
|
|
17,240
|
|
|
|
286,561
|
|
|
|
130,079
|
|
|
|
104,822
|
|
|
|
14,979
|
|
|
|
-
|
|
|
|
249,880
|
|
|
NGL Sales
|
|
|
-
|
|
|
|
-
|
|
|
|
3,898
|
|
|
|
|
|
|
|
3,898
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,348
|
|
|
|
|
|
|
|
4,348
|
|
|
Gas Sales
|
|
|
-
|
|
|
|
-
|
|
|
|
1,205
|
|
|
|
|
|
|
|
1,205
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,661
|
|
|
|
|
|
|
|
1,661
|
|
|
Gross Sales
|
|
|
127,115
|
|
|
|
128,506
|
|
|
|
18,802
|
|
|
|
17,240
|
|
|
|
291,663
|
|
|
|
130,079
|
|
|
|
104,822
|
|
|
|
20,988
|
|
|
|
-
|
|
|
|
255,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Costs & carried
interest
|
|
|
1,174
|
|
|
|
(228
|
)
|
|
|
(461
|
)
|
|
|
|
|
|
|
485
|
|
|
|
2,212
|
|
|
|
(498
|
)
|
|
|
-
|
|
|
|
|
|
|
|
1,714
|
|
|
Royalties & taxes
|
|
|
(17,111
|
)
|
|
|
(55,836
|
)
|
|
|
(2,269
|
)
|
|
|
|
|
|
|
(75,216
|
)
|
|
|
(17,630
|
)
|
|
|
(48,232
|
)
|
|
|
(2,098
|
)
|
|
|
-
|
|
|
|
(67,960
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue
|
|
|
111,178
|
|
|
|
72,442
|
|
|
|
16,073
|
|
|
|
17,240
|
|
|
|
216,933
|
|
|
|
114,661
|
|
|
|
56,092
|
|
|
|
18,890
|
|
|
|
-
|
|
|
|
189,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil Sales MMB (working
interest)
|
|
|
1,528
|
|
|
|
1,903
|
|
|
|
191
|
|
|
|
211
|
|
|
|
3,834
|
|
|
|
1,641
|
|
|
|
1,750
|
|
|
|
216
|
|
|
|
-
|
|
|
|
3,607
|
|
|
Average Oil Price Received
|
|
$
|
83.17
|
|
|
$
|
67.52
|
|
|
$
|
71.70
|
|
|
$
|
81.70
|
|
|
$
|
74.75
|
|
|
$
|
79.29
|
|
|
$
|
59.89
|
|
|
$
|
69.27
|
|
|
$
|
-
|
|
|
$
|
69.28
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Brent Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
83.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
79.47
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas Sales MMCF (working
interest)
|
|
|
-
|
|
|
|
-
|
|
|
|
892
|
|
|
|
|
|
|
|
892
|
|
|
|
-
|
|
|
|
-
|
|
|
|
857
|
|
|
|
|
|
|
|
857
|
|
|
Average Gas Price Received
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.35
|
|
|
|
|
|
|
$
|
1.35
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.94
|
|
|
|
|
|
|
$
|
1.94
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-30
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Aeco Price ($USD)
|
|
|
|
|
|
|
|
|
|
$
|
1.15
|
|
|
|
|
|
|
$
|
1.15
|
|
|
|
|
|
|
|
|
|
|
$
|
1.96
|
|
|
|
|
|
|
$
|
1.96
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-41
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NGL Sales MMB (working
interest)
|
|
|
-
|
|
|
|
-
|
|
|
|
152
|
|
|
|
|
|
|
|
152
|
|
|
|
-
|
|
|
|
-
|
|
|
|
155
|
|
|
|
|
|
|
|
155
|
|
|
Average Liquids Price
Received
|
|
|
-
|
|
|
|
-
|
|
|
$
|
25.63
|
|
|
|
|
|
|
$
|
25.63
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
28.08
|
|
|
|
|
|
|
$
|
28.08
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Investments/Balance Sheet
For the second quarter of 2024, net
capital expenditures totaled $32.5 million on a cash basis and
$22.4 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
second quarter of 2024, VAALCO had an unrestricted cash
balance of $62.9 million. Working capital at June 30,
2024 was $31.2 million compared with $45.7
million at December 31, 2023, while Adjusted Working
Capital(2) at June 30, 2024 totaled $43.5 million.
In Egypt, the Company received
written confirmation from EGPC that $51.7 million was recognized in
their June Accounts Payable as owed to Company for our Merged
Concession effective date adjustment, from which they will offset
$11.2 million to satisfy any obligation of VAALCO or its
subsidiaries in connection with the TransGlobe combination. This
allowance of $11.2 million is fully covered in the
30th June 2024 Balance Sheet. Having this confirmation from EGPC is
an important step in the process of getting this paid.
Quarterly Cash Dividend
VAALCO paid a quarterly cash
dividend of $0.0625 per share of common stock for the
second quarter of 2024 on June 21, 2024. The Company also
announced its next quarterly cash dividend of $0.0625 per share of
common stock for the third quarter of 2024 ($0.25 annualized),
to be paid on September 20,
2024 to stockholders of record at the close of business
on August 23, 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").
Svenska Acquisition
VAALCO closed its acquisition
of Svenska for the net purchase price of $40.2 million, on
April 30, 2024 after certain 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 Côte 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. Production
in the Baobab field was approximately 5,000 WI BOEPD, with
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.
At the time of the initial
announcement of the acquisition, VAALCO disclosed that the
transaction included estimated 1P WI CPR reserves, as of October 1,
2023, of 13.0 MMBOE (99% oil) and total 2P WI CPR reserves at
October 1, 2023, of 21.7 million MMBOE (97% oil). VAALCO at
that time did not have a calculation of SEC proved reserves as of
December 31, 2023 but has since worked with its third-party
reserves auditors to calculate its SEC proved reserves.
VAALCO reported on July 16, 2024 that SEC net proved reserves
as of December 31, 2023 totaled 16.9 MMBOE and that 2P WI CPR
reserves for Svenska as of December 31, 2023 are estimated at 22.5
MMBOE. On a pro-forma basis, this results in VAALCO's year-end 2023
pro-forma SEC net proved reserves totaling 45.6 MMBOE, a 59%
increase from its reported yearend 2023 SEC net proved reserves of
28.6 MMBOE. Utilizing the net cash purchase price of $40.2 million,
VAALCO paid approximately $2.37 per net proved barrel of
reserves.
CI-40 has a long history of
production and significantly de-risked reservoirs. With almost 20
years of production to date, the FPSO is planned to come off
station at the start of 2025 for planned maintenance and upgrade
work to allow the FPSO to continue to produce through the end of
the expected extended field license in 2038. The scope of work for
the FPSO upgrade is currently being finalized. Production on Baobab
is expected to re-start in 2026 following the FPSO work program. In
addition, a fully appraised development drilling program is
expected to start in 2026, targeting the significant incremental
probable reserve base on the field. VAALCO sees reduced geological
risk relating to this drilling program and the joint venture
partners have already commenced the ordering of certain long-lead
drilling items. Further future drilling phases have not yet been
sanctioned, but there is significant incremental potential in both
the Baobab field itself, as well as the nearby Kossipo development,
which has also been appraised by two wells drilled in 2002 and
2019.
In addition to the CI-40 license in
Côte d'Ivoire, VAALCO 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.
6
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
second quarter of 2024:
|
Settlement Period
|
Type of
Contract
|
Index
|
|
Average Monthly
Volumes
|
|
|
Weighted Average Put
Price
|
|
|
Weighted Average Call
Price
|
|
|
|
|
|
|
(Bbls)
a
|
|
|
(per Bbl)
|
|
|
(per Bbl)
|
|
|
July 2024 - September 2024
|
Collars
|
Dated
Brent
|
|
|
80,000
|
|
|
$
|
65.00
|
|
|
$
|
92.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
a) The premium for these options was
$4.01 per barrel and was paid in October 2023.
|
Settlement Period
|
Type of
Contract
|
Index
|
|
Average Monthly
Volumes
|
|
|
Weighted Average Put
Price
|
|
|
|
|
|
|
(Bbls)
|
|
|
(per Bbl)
|
|
|
July 2024 - December 2024
|
Put
Options
|
Dated
Brent
|
|
|
125,000
|
|
|
$
|
65.00
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Settlement Period
|
Type of
Contract
|
Index
|
|
Average Monthly
Volumes
|
|
|
Weighted Average SWAP Price
in CAD
|
|
|
|
|
|
|
(GJ)b
|
|
|
(per GJ)
|
|
|
November 2024 - March 2025
|
Swap
|
AECO
(7A)
|
|
|
67,000
|
|
|
$
|
2.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
b) One gigajoule (GJ)
equals one billion joules (J). A gigajoule of natural gas is
about 25.5 cubic metres at standard conditions.
2024 Guidance:
The Company has provided third
quarter 2024 guidance and updated its full year
2024 guidance. All of the quarterly and annual guidance
is detailed in the tables below.
|
|
|
|
FY 2024
|
|
|
Gabon
|
|
|
Egypt
|
|
|
Canada
|
|
|
Côte
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
|
|
|
19600 -
22200
|
|
|
|
7200 -
8300
|
|
|
|
6700 -
7400
|
|
|
|
2200 -
2600
|
|
|
|
3500 -
3900
|
|
|
Production Expense
(millions)
|
WI &
NRI
|
|
$174.0 -
$189.0 MM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production Expense per BOE
|
WI
|
|
$18.00 -
$20.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production Expense per BOE
|
NRI
|
|
$22.00 -
$26.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offshore Workovers
(millions)
|
WI &
NRI
|
|
$1 - $10
MM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash G&A (millions)
|
WI &
NRI
|
|
$20.0 -
$28.0 MM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPEX excluding acquisitions
(millions)
|
WI &
NRI
|
|
$115 -
$140 MM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DD&A ($/BOE)
|
NRI
|
|
$16.00 -
$20.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2024
|
|
|
Gabon
|
|
|
Egypt
|
|
|
Canada
|
|
|
Côte
d'Ivoire
|
|
|
Production (BOEPD)
|
WI
|
|
|
24900 -
27600
|
|
|
|
8300 -
9300
|
|
|
|
9700 -
10700
|
|
|
|
2700 -
3000
|
|
|
|
4200 -
4600
|
|
|
Production (BOEPD)
|
NRI
|
|
|
20300 -
22800
|
|
|
|
7200 -
8200
|
|
|
|
6600 -
7500
|
|
|
|
2300 -
2500
|
|
|
|
4200 -
4600
|
|
|
Sales Volume (BOEPD)
|
WI
|
|
|
26100 -
28700
|
|
|
|
7300 -
8000
|
|
|
|
9700 -
10700
|
|
|
|
2700 -
3000
|
|
|
|
6400 -
7000
|
|
|
Sales Volume (BOEPD)
|
NRI
|
|
|
21700 -
24000
|
|
|
|
6400 -
7000
|
|
|
|
6600 -
7500
|
|
|
|
2300 -
2500
|
|
|
|
6400 -
7000
|
|
|
Production Expense
(millions)
|
WI &
NRI
|
|
$38.5 -
$49.0 MM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production Expense per BOE
|
WI
|
|
$14.50 -
$21.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production Expense per BOE
|
NRI
|
|
$17.50 -
$25.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offshore Workovers
(millions)
|
WI &
NRI
|
|
$0 - $0
MM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash G&A (millions)
|
WI &
NRI
|
|
$4.5 -
$6.5 MM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPEX excluding acquisitions
(millions)
|
WI &
NRI
|
|
$32 - $54
MM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DD&A ($/BOE)
|
NRI
|
|
$16.00 -
$20.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
Conference Call
As previously announced, the Company
will hold a conference call to discuss its second quarter
2024 financial and operating results tomorrow, Wednesday,
August 7, 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 Second 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 "Q2 2024 Supplemental
Information" investor deck will be posted to VAALCO's web site
prior to its conference call on August 7, 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, Côte 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
|
8
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; (vi) expectations of future balance sheet
strength; and (vii) expectations of future equity and
enterprise value.
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 and subsequent Quarterly Reports on
Form 10-Q filed with the SEC.
Dividends beyond the third 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.
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 assumption was $79.79 per barrel of oil beginning in
2024, $69.79 in 2025, and inflating 2% thereafter;
|
|
|
●
|
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.
9
Other Oil and Gas Advisories
Investors are cautioned when viewing
BOEs in isolation. The Svenska reserves estimates as of October 1,
2023 were calculated using a BOE conversion ratio of six thousand
cubic feet of natural gas to one barrel of oil equivalent (6 MCF: 1
Bbl). The Svenska reserves estimates as of December 31, 2023 were
calculated using a BOE conversion ratio of five thousand eight
hundred cubic feet of natural gas to one barrel of oil equivalent
(5.8 MCF: 1 Bbl). BOE conversion ratio 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 equivalencies described above, utilizing such equivalencies
may be 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.
10
VAALCO ENERGY, INC AND
SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
|
|
|
As of June 30,
2024
|
|
|
As of December 31,
2023
|
|
|
ASSETS
|
|
(in
thousands)
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
62,890
|
|
|
$
|
121,001
|
|
|
Restricted cash
|
|
|
139
|
|
|
|
114
|
|
|
Receivables:
|
|
|
|
|
|
|
|
|
|
Trade, net of allowances for credit
loss and other of $0.2 and $0.5 million, respectively
|
|
|
64,934
|
|
|
|
44,888
|
|
|
Accounts with joint venture owners,
net of allowance for credit losses of $0.8 and $0.8 million,
respectively
|
|
|
721
|
|
|
|
1,814
|
|
|
Egypt receivables and other, net of
allowances for credit loss and other of $11.2 and $4.6 million,
respectively
|
|
|
40,628
|
|
|
|
45,942
|
|
|
Crude oil inventory
|
|
|
8,586
|
|
|
|
1,948
|
|
|
Prepayments and other
|
|
|
17,509
|
|
|
|
12,434
|
|
|
Total current assets
|
|
|
195,407
|
|
|
|
228,141
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and NGLs
properties and equipment, net
|
|
|
548,415
|
|
|
|
459,786
|
|
|
Other noncurrent assets:
|
|
|
|
|
|
|
|
|
|
Restricted cash
|
|
|
8,788
|
|
|
|
1,795
|
|
|
Value added tax and other
receivables, net of allowances for credit loss and other of $0.0
and $0.0 million, respectively
|
|
|
6,109
|
|
|
|
4,214
|
|
|
Right of use operating lease
assets
|
|
|
580
|
|
|
|
2,378
|
|
|
Right of use finance lease
assets
|
|
|
86,342
|
|
|
|
89,962
|
|
|
Deferred tax assets
|
|
|
64,859
|
|
|
|
29,242
|
|
|
Abandonment funding
|
|
|
6,268
|
|
|
|
6,268
|
|
|
Other long-term assets
|
|
|
1,216
|
|
|
|
1,430
|
|
|
Total assets
|
|
$
|
917,984
|
|
|
$
|
823,216
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
22,605
|
|
|
$
|
22,152
|
|
|
Accounts with joint venture
owners
|
|
|
896
|
|
|
|
5,990
|
|
|
Accrued liabilities and
other
|
|
|
116,006
|
|
|
|
67,597
|
|
|
Operating lease liabilities -
current portion
|
|
|
574
|
|
|
|
2,396
|
|
|
Finance lease liabilities - current
portion
|
|
|
11,751
|
|
|
|
10,079
|
|
|
Foreign income taxes
payable
|
|
|
12,361
|
|
|
|
19,261
|
|
|
Total current liabilities
|
|
|
164,193
|
|
|
|
127,475
|
|
|
Asset retirement
obligations
|
|
|
65,373
|
|
|
|
47,343
|
|
|
Operating lease liabilities - net of
current portion
|
|
|
-
|
|
|
|
33
|
|
|
Finance lease liabilities - net of
current portion
|
|
|
74,388
|
|
|
|
78,293
|
|
|
Deferred tax liabilities
|
|
|
111,535
|
|
|
|
73,581
|
|
|
Other long-term
liabilities
|
|
|
8,847
|
|
|
|
17,709
|
|
|
Total liabilities
|
|
|
424,336
|
|
|
|
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, 122,304,124 and 121,397,553 shares
issued, 103,743,163 and 104,346,233 shares outstanding,
respectively
|
|
|
12,230
|
|
|
|
12,140
|
|
|
Additional paid-in
capital
|
|
|
359,803
|
|
|
|
357,498
|
|
|
Accumulated other comprehensive
income
|
|
|
(642
|
)
|
|
|
2,880
|
|
|
Less treasury stock, 18,560,961 and
17,051,320 shares, respectively, at cost
|
|
|
(78,024
|
)
|
|
|
(71,222
|
)
|
|
Retained earnings
|
|
|
200,281
|
|
|
|
177,486
|
|
|
Total shareholders'
equity
|
|
|
493,648
|
|
|
|
478,782
|
|
|
Total liabilities and shareholders'
equity
|
|
$
|
917,984
|
|
|
$
|
823,216
|
|
11
VAALCO ENERGY, INC AND
SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
|
June 30,
2024
|
|
|
June 30,
2023
|
|
|
March 31,
2024
|
|
|
June 30,
2024
|
|
|
June 30,
2023
|
|
|
|
|
(in thousands except per
share amounts)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and natural
gas liquids sales
|
|
$
|
116,778
|
|
|
$
|
109,240
|
|
|
$
|
100,155
|
|
|
$
|
216,933
|
|
|
$
|
189,643
|
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production expense
|
|
|
52,446
|
|
|
|
38,604
|
|
|
|
32,089
|
|
|
|
84,535
|
|
|
|
66,804
|
|
|
FPSO demobilization and other
costs
|
|
|
-
|
|
|
|
5,647
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,647
|
|
|
Exploration expense
|
|
|
-
|
|
|
|
57
|
|
|
|
48
|
|
|
|
48
|
|
|
|
65
|
|
|
Depreciation, depletion and
amortization
|
|
|
33,132
|
|
|
|
38,003
|
|
|
|
25,824
|
|
|
|
58,956
|
|
|
|
62,420
|
|
|
General and administrative
expense
|
|
|
7,591
|
|
|
|
5,395
|
|
|
|
6,710
|
|
|
|
14,301
|
|
|
|
10,619
|
|
|
Credit losses and other
|
|
|
3,341
|
|
|
|
680
|
|
|
|
1,812
|
|
|
|
5,153
|
|
|
|
1,615
|
|
|
Total operating costs and
expenses
|
|
|
96,510
|
|
|
|
88,386
|
|
|
|
66,483
|
|
|
|
162,993
|
|
|
|
147,170
|
|
|
Other operating income (expense),
net
|
|
|
132
|
|
|
|
(303
|
)
|
|
|
(166
|
)
|
|
|
(34
|
)
|
|
|
(303
|
)
|
|
Operating income
|
|
|
20,400
|
|
|
|
20,551
|
|
|
|
33,506
|
|
|
|
53,906
|
|
|
|
42,170
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments gain (loss),
net
|
|
|
257
|
|
|
|
31
|
|
|
|
(847
|
)
|
|
|
(590
|
)
|
|
|
52
|
|
|
Interest expense, net
|
|
|
(1,117
|
)
|
|
|
(1,703
|
)
|
|
|
(935
|
)
|
|
|
(2,052
|
)
|
|
|
(3,949
|
)
|
|
Bargain purchase gain
|
|
|
19,898
|
|
|
|
-
|
|
|
|
-
|
|
|
|
19,898
|
|
|
|
-
|
|
|
Other income (expense),
net
|
|
|
(1,984
|
)
|
|
|
(539
|
)
|
|
|
(1,800
|
)
|
|
|
(3,784
|
)
|
|
|
(1,692
|
)
|
|
Total other income (expense),
net
|
|
|
17,054
|
|
|
|
(2,211
|
)
|
|
|
(3,582
|
)
|
|
|
13,472
|
|
|
|
(5,589
|
)
|
|
Income before income taxes
|
|
|
37,454
|
|
|
|
18,340
|
|
|
|
29,924
|
|
|
|
67,378
|
|
|
|
36,581
|
|
|
Income tax expense
|
|
|
9,303
|
|
|
|
11,588
|
|
|
|
22,238
|
|
|
|
31,541
|
|
|
|
26,359
|
|
|
Net income
|
|
$
|
28,151
|
|
|
$
|
6,752
|
|
|
$
|
7,686
|
|
|
$
|
35,837
|
|
|
$
|
10,222
|
|
|
Other comprehensive income
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation
adjustments
|
|
|
(1,068
|
)
|
|
|
2,006
|
|
|
|
(2,454
|
)
|
|
|
(3,522
|
)
|
|
|
1,881
|
|
|
Comprehensive income
|
|
$
|
27,083
|
|
|
$
|
8,758
|
|
|
$
|
5,232
|
|
|
$
|
32,315
|
|
|
$
|
12,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share
|
|
$
|
0.27
|
|
|
$
|
0.06
|
|
|
$
|
0.07
|
|
|
$
|
0.34
|
|
|
$
|
0.10
|
|
|
Basic weighted average shares
outstanding
|
|
|
103,528
|
|
|
|
106,965
|
|
|
|
103,659
|
|
|
|
103,594
|
|
|
|
107,175
|
|
|
Diluted net income (loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share
|
|
$
|
0.27
|
|
|
$
|
0.06
|
|
|
$
|
0.07
|
|
|
$
|
0.34
|
|
|
$
|
0.09
|
|
|
Diluted weighted average shares
outstanding
|
|
|
103,676
|
|
|
|
107,613
|
|
|
|
104,541
|
|
|
|
103,677
|
|
|
|
108,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
VAALCO ENERGY, INC AND
SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
Six Months Ended June
30,
|
|
|
|
|
2024
|
|
|
2023
|
|
|
|
|
(in
thousands)
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
35,837
|
|
|
$
|
10,222
|
|
|
Adjustments to reconcile net income
to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and
amortization
|
|
|
58,956
|
|
|
|
62,420
|
|
|
Bargain purchase gain
|
|
|
(19,898
|
)
|
|
|
1,412
|
|
|
Deferred taxes
|
|
|
(7,407
|
)
|
|
|
1,618
|
|
|
Unrealized foreign exchange
loss
|
|
|
(196
|
)
|
|
|
313
|
|
|
Stock-based compensation
|
|
|
1,883
|
|
|
|
1,254
|
|
|
Cash settlements paid on exercised
stock appreciation rights
|
|
|
(154
|
)
|
|
|
(233
|
)
|
|
Derivative instruments (gain) loss,
net
|
|
|
590
|
|
|
|
(52
|
)
|
|
Cash settlements paid on matured
derivative contracts, net
|
|
|
(33
|
)
|
|
|
(63
|
)
|
|
Cash settlements paid on asset
retirement obligations
|
|
|
(82
|
)
|
|
|
(374
|
)
|
|
Credit losses and other
|
|
|
5,474
|
|
|
|
1,615
|
|
|
Other operating loss, net
|
|
|
34
|
|
|
|
62
|
|
|
Operational expenses associated with
equipment and other
|
|
|
1,029
|
|
|
|
(1,196
|
)
|
|
Change in operating assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
Trade, net
|
|
|
(20,046
|
)
|
|
|
(5,208
|
)
|
|
Accounts with joint venture owners,
net
|
|
|
(4,603
|
)
|
|
|
21,746
|
|
|
Egypt receivables and other,
net
|
|
|
1,306
|
|
|
|
(1,868
|
)
|
|
Crude oil inventory
|
|
|
8,343
|
|
|
|
(7,465
|
)
|
|
Prepayments and other
|
|
|
(3,829
|
)
|
|
|
(69
|
)
|
|
Value added tax and other
receivables
|
|
|
(2,007
|
)
|
|
|
(2,302
|
)
|
|
Other long-term assets
|
|
|
699
|
|
|
|
1,508
|
|
|
Accounts payable
|
|
|
(727
|
)
|
|
|
(10,897
|
)
|
|
Foreign income taxes
receivable/(payable)
|
|
|
(6,563
|
)
|
|
|
15,344
|
|
|
Deferred tax liability
|
|
|
-
|
|
|
|
(3,081
|
)
|
|
Accrued liabilities and
other
|
|
|
(27,211
|
)
|
|
|
(7,137
|
)
|
|
Net cash provided by (used in)
operating activities
|
|
|
21,395
|
|
|
|
77,569
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES:
|
|
|
|
|
|
|
Property and equipment
expenditures
|
|
|
(49,099
|
)
|
|
|
(54,832
|
)
|
|
Cash paid in business
combination
|
|
|
(40,166
|
)
|
|
|
-
|
|
|
Cash received in business
combination
|
|
|
40,578
|
|
|
|
-
|
|
|
Net cash provided by (used in)
investing activities
|
|
|
(48,687
|
)
|
|
|
(54,832
|
)
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES:
|
|
|
|
|
|
|
Proceeds from the issuances of
common stock
|
|
|
447
|
|
|
|
382
|
|
|
Dividend distribution
|
|
|
(13,042
|
)
|
|
|
(13,452
|
)
|
|
Treasury shares
|
|
|
(6,802
|
)
|
|
|
(11,403
|
)
|
|
Deferred financing costs
|
|
|
(1
|
)
|
|
|
(30
|
)
|
|
Payments of finance lease
|
|
|
(4,169
|
)
|
|
|
(3,379
|
)
|
|
Net cash provided by (used in) in
financing activities
|
|
|
(23,567
|
)
|
|
|
(27,882
|
)
|
|
Effects of exchange rate changes on
cash
|
|
|
(234
|
)
|
|
|
(285
|
)
|
|
NET CHANGE IN CASH, CASH EQUIVALENTS
AND RESTRICTED CASH
|
|
|
(51,093
|
)
|
|
|
(5,430
|
)
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH AT BEGINNING OF PERIOD
|
|
|
129,178
|
|
|
|
59,776
|
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH AT END OF PERIOD
|
|
$
|
78,085
|
|
|
$
|
54,346
|
|
13
VAALCO ENERGY, INC AND
SUBSIDIARIES
Selected Financial and Operating
Statistics
(Unaudited)
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
|
June 30,
2024
|
|
|
June 30,
2023
|
|
|
March 31,
2024
|
|
|
June 30,
2024
|
|
|
June 30,
2023
|
|
|
NRI SALES DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and natural
gas liquids sales (MBOE)
|
|
|
1,764
|
|
|
|
1,803
|
|
|
|
1,490
|
|
|
|
3,254
|
|
|
|
3,027
|
|
|
Average daily sales volumes
(BOE)
|
|
|
19,386
|
|
|
|
19,813
|
|
|
|
16,374
|
|
|
|
17,881
|
|
|
|
16,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WI PRODUCTION DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Etame Crude oil (MBbl)
|
|
|
780
|
|
|
|
934
|
|
|
|
819
|
|
|
|
1,599
|
|
|
|
1,876
|
|
|
Egypt Crude oil (MBbl)
|
|
|
953
|
|
|
|
1,054
|
|
|
|
950
|
|
|
|
1,903
|
|
|
|
1,957
|
|
|
Canada Crude Oil (MBbl)
|
|
|
130
|
|
|
|
123
|
|
|
|
61
|
|
|
|
191
|
|
|
|
216
|
|
|
Canada Natural Gas (Mcf)
|
|
|
423
|
|
|
|
442
|
|
|
|
469
|
|
|
|
892
|
|
|
|
857
|
|
|
Canada Natural Gas Liquid
(MBOE)
|
|
|
76
|
|
|
|
78
|
|
|
|
76
|
|
|
|
152
|
|
|
|
155
|
|
|
Canada Crude oil, natural gas and
natural gas liquids (MBOE)
|
|
|
277
|
|
|
|
275
|
|
|
|
215
|
|
|
|
492
|
|
|
|
514
|
|
|
Côte d'Ivoire Crude oil
(MBbl)
|
|
|
303
|
|
|
|
-
|
|
|
|
-
|
|
|
|
303
|
|
|
|
-
|
|
|
Total Crude oil, natural gas and
natural gas liquids production (MBOE)
|
|
|
2,313
|
|
|
|
2,263
|
|
|
|
1,984
|
|
|
|
4,297
|
|
|
|
4,347
|
|
|
Gabon Average daily production
volumes (BOEPD)
|
|
|
8,566
|
|
|
|
10,262
|
|
|
|
9,001
|
|
|
|
8,784
|
|
|
|
10,364
|
|
|
Egypt Average daily production
volumes (BOEPD)
|
|
|
10,474
|
|
|
|
11,579
|
|
|
|
10,440
|
|
|
|
10,457
|
|
|
|
10,810
|
|
|
Canada Average daily production
volumes (BOEPD)
|
|
|
3,041
|
|
|
|
3,021
|
|
|
|
2,363
|
|
|
|
2,702
|
|
|
|
2,839
|
|
|
Côte d'Ivoire Average daily
production volumes (BOEPD)
|
|
|
3,329
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,664
|
|
|
|
-
|
|
|
Average daily production volumes
(BOEPD)
|
|
|
25,411
|
|
|
|
24,863
|
|
|
|
21,807
|
|
|
|
23,607
|
|
|
|
24,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NRI PRODUCTION DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Etame Crude oil (MBbl)
|
|
|
678
|
|
|
|
812
|
|
|
|
713
|
|
|
|
1,391
|
|
|
|
1,632
|
|
|
Egypt Crude oil (MBbl)
|
|
|
643
|
|
|
|
726
|
|
|
|
641
|
|
|
|
1,284
|
|
|
|
1,342
|
|
|
Canada Crude Oil (MBbl)
|
|
|
117
|
|
|
|
113
|
|
|
|
51
|
|
|
|
169
|
|
|
|
195
|
|
|
Canada Natural Gas (Mcf)
|
|
|
381
|
|
|
|
406
|
|
|
|
392
|
|
|
|
787
|
|
|
|
773
|
|
|
Canada Natural Gas Liquid
(MBOE)
|
|
|
69
|
|
|
|
72
|
|
|
|
63
|
|
|
|
134
|
|
|
|
140
|
|
|
Canada Crude oil, natural gas and
natural gas liquids (MBOE)
|
|
|
250
|
|
|
|
253
|
|
|
|
179
|
|
|
|
429
|
|
|
|
464
|
|
|
Côte d'Ivoire Crude oil
(MBbl)
|
|
|
303
|
|
|
|
-
|
|
|
|
-
|
|
|
|
303
|
|
|
|
-
|
|
|
Total Crude oil, natural gas and
natural gas liquids production (MBOE)
|
|
|
1,873
|
|
|
|
1,791
|
|
|
|
1,533
|
|
|
|
3,406
|
|
|
|
3,438
|
|
|
Gabon Average daily production
volumes (BOEPD)
|
|
|
7,451
|
|
|
|
8,923
|
|
|
|
7,835
|
|
|
|
7,642
|
|
|
|
9,017
|
|
|
Egypt Average daily production
volumes (BOEPD)
|
|
|
7,066
|
|
|
|
7,978
|
|
|
|
7,044
|
|
|
|
7,053
|
|
|
|
7,414
|
|
|
Canada Average daily production
volumes (BOEPD)
|
|
|
2,742
|
|
|
|
2,776
|
|
|
|
1,971
|
|
|
|
2,356
|
|
|
|
2,563
|
|
|
Côte d'Ivoire Average daily
production volumes (BOEPD)
|
|
|
3,329
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,664
|
|
|
|
-
|
|
|
Average daily production volumes
(BOEPD)
|
|
|
20,588
|
|
|
|
19,676
|
|
|
|
16,848
|
|
|
|
18,716
|
|
|
|
18,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE SALES PRICES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and natural
gas liquids sales (per BOE) - WI basis
|
|
$
|
70.92
|
|
|
$
|
64.67
|
|
|
$
|
69.62
|
|
|
$
|
70.31
|
|
|
$
|
65.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and natural
gas liquids sales (per BOE) - NRI basis
|
|
$
|
66.05
|
|
|
$
|
59.37
|
|
|
$
|
66.43
|
|
|
$
|
66.22
|
|
|
$
|
61.92
|
|
|
Crude oil, natural gas and natural
gas liquids sales (Per BOE including realized commodity
derivatives)
|
|
$
|
66.03
|
|
|
$
|
59.34
|
|
|
$
|
66.41
|
|
|
$
|
66.21
|
|
|
$
|
61.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND EXPENSES (Per BOE of
sales):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production expense
|
|
$
|
29.74
|
|
|
$
|
21.41
|
|
|
$
|
21.54
|
|
|
$
|
25.98
|
|
|
$
|
22.07
|
|
|
Production expense, excluding
offshore workovers and stock compensation*
|
|
|
29.68
|
|
|
|
21.51
|
|
|
|
21.56
|
|
|
|
25.96
|
|
|
|
22.48
|
|
|
Depreciation, depletion and
amortization
|
|
|
18.78
|
|
|
|
21.08
|
|
|
|
17.33
|
|
|
|
18.12
|
|
|
|
20.62
|
|
|
General and administrative
expense**
|
|
|
4.30
|
|
|
|
2.99
|
|
|
|
4.50
|
|
|
|
4.39
|
|
|
|
3.51
|
|
|
Property and equipment expenditures,
cash basis (in thousands)
|
|
$
|
32,481
|
|
|
$
|
27,132
|
|
|
$
|
16,618
|
|
|
$
|
49,099
|
|
|
$
|
54,832
|
|
*Offshore workover costs excluded
from the three months ended June 30, 2024 and
2023 and March 31, 2024 are
$(0.1) million, $(0.2) million and
$(0.1) million, respectively.
*Stock compensation associated with
production expense excluded from the three months ended June 30,
2024 and 2023 and March 31, 2024 are
immaterial.
**General and administrative expenses
include $0.51, $0.33 and
$0.60 per barrel of oil related
to stock-based compensation expense in the three months ended
June 30, 2024 and 2023 and March 31,
2024, respectively.
14
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.
15
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
|
|
|
Six Months
Ended
|
|
|
Reconciliation of Net Income to Adjusted Net
Income
|
|
June 30,
2024
|
|
|
June 30,
2023
|
|
|
March 31,
2024
|
|
|
June 30,
2024
|
|
|
June 30,
2023
|
|
|
Net income
|
|
$
|
28,151
|
|
|
$
|
6,752
|
|
|
$
|
7,686
|
|
|
$
|
35,837
|
|
|
$
|
10,222
|
|
|
Adjustment for discrete
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized derivative instruments
loss (gain)
|
|
|
(266
|
)
|
|
|
(35
|
)
|
|
|
823
|
|
|
|
557
|
|
|
|
(115
|
)
|
|
(Gain) /adjustment of acquisition
price, net
|
|
|
(19,898
|
)
|
|
|
1,412
|
|
|
|
-
|
|
|
|
(19,898
|
)
|
|
|
1,412
|
|
|
FPSO demobilization
|
|
|
-
|
|
|
|
5,647
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,647
|
|
|
Deferred income tax expense
(benefit)
|
|
|
(2,021
|
)
|
|
|
(813
|
)
|
|
|
(3,441
|
)
|
|
|
(5,462
|
)
|
|
|
1,658
|
|
|
Non-cash purchase price
adjustment
|
|
|
14,981
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,981
|
|
|
|
-
|
|
|
Transaction costs related to
acquisition
|
|
|
1,762
|
|
|
|
-
|
|
|
|
1,313
|
|
|
|
3,075
|
|
|
|
303
|
|
|
Other operating (income) expense,
net
|
|
|
(132
|
)
|
|
|
303
|
|
|
|
166
|
|
|
|
-
|
|
|
|
-
|
|
|
Adjusted Net Income
|
|
$
|
22,577
|
|
|
$
|
13,266
|
|
|
$
|
6,547
|
|
|
$
|
29,090
|
|
|
$
|
19,127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Adjusted Net Income per
Share
|
|
$
|
0.22
|
|
|
$
|
0.12
|
|
|
$
|
0.06
|
|
|
$
|
0.28
|
|
|
$
|
0.18
|
|
|
Diluted weighted average shares
outstanding (1)
|
|
|
103,676
|
|
|
|
107,613
|
|
|
|
104,541
|
|
|
|
103,677
|
|
|
|
108,050
|
|
(1) No adjustments to weighted
average shares outstanding
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
Reconciliation of Net Income to Adjusted
EBITDAX
|
|
June 30,
2024
|
|
|
June 30,
2023
|
|
|
March 31,
2024
|
|
|
June 30,
2024
|
|
|
June 30,
2023
|
|
|
Net income
|
|
$
|
28,151
|
|
|
$
|
6,752
|
|
|
$
|
7,686
|
|
|
$
|
35,837
|
|
|
$
|
10,222
|
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (income),
net
|
|
|
1,117
|
|
|
|
1,703
|
|
|
|
935
|
|
|
|
2,052
|
|
|
|
3,949
|
|
|
Income tax expense
(benefit)
|
|
|
9,303
|
|
|
|
11,588
|
|
|
|
22,238
|
|
|
|
31,541
|
|
|
|
26,359
|
|
|
Depreciation, depletion and
amortization
|
|
|
33,132
|
|
|
|
38,003
|
|
|
|
25,824
|
|
|
|
58,956
|
|
|
|
62,420
|
|
|
Exploration expense
|
|
|
-
|
|
|
|
57
|
|
|
|
48
|
|
|
|
48
|
|
|
|
65
|
|
|
FPSO demobilization
|
|
|
-
|
|
|
|
5,647
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,647
|
|
|
Non-cash or unusual items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
984
|
|
|
|
605
|
|
|
|
899
|
|
|
|
1,883
|
|
|
|
1,254
|
|
|
Unrealized derivative instruments
loss (gain)
|
|
|
(266
|
)
|
|
|
(35
|
)
|
|
|
823
|
|
|
|
557
|
|
|
|
(115
|
)
|
|
Bargain purchase gain
|
|
|
(19,898
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(19,898
|
)
|
|
|
1,412
|
|
|
Other operating (income) expense,
net
|
|
|
(132
|
)
|
|
|
303
|
|
|
|
166
|
|
|
|
34
|
|
|
|
303
|
|
|
Non-cash purchase price
adjustment
|
|
|
14,981
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,981
|
|
|
|
-
|
|
|
Transaction costs related to
acquisition
|
|
|
1,762
|
|
|
|
-
|
|
|
|
1,313
|
|
|
|
3,075
|
|
|
|
-
|
|
|
Credit losses and other
|
|
|
3,341
|
|
|
|
680
|
|
|
|
1,812
|
|
|
|
5,153
|
|
|
|
1,615
|
|
|
Adjusted EBITDAX
|
|
$
|
72,475
|
|
|
$
|
65,303
|
|
|
$
|
61,744
|
|
|
$
|
134,219
|
|
|
$
|
113,131
|
|
16
VAALCO ENERGY, INC AND
SUBSIDIARIES
Reconciliations of Non-GAAP
Financial Measures
(Unaudited)
(in thousands)
|
Reconciliation of Working Capital to Adjusted Working
Capital
|
|
As of June 30,
2024
|
|
|
As of December 31,
2023
|
|
|
Change
|
|
|
Current assets
|
|
$
|
195,407
|
|
|
$
|
199,367
|
|
|
$
|
(3,960
|
)
|
|
Current liabilities
|
|
|
(164,193
|
)
|
|
|
(153,703
|
)
|
|
|
(10,490
|
)
|
|
Working capital
|
|
|
31,214
|
|
|
|
45,664
|
|
|
|
(14,450
|
)
|
|
Add: lease liabilities - current
portion
|
|
|
12,325
|
|
|
|
9,351
|
|
|
|
2,974
|
|
|
Add: current liabilities -
discontinued operations
|
|
|
-
|
|
|
|
673
|
|
|
|
(673
|
)
|
|
Adjusted Working Capital
|
|
$
|
43,539
|
|
|
$
|
55,688
|
|
|
$
|
(11,476
|
)
|
|
|
|
Six Months Ended June 30,
2024
|
|
|
Reconciliation of Free Cash Flow
|
|
|
|
|
|
Net cash provided by Operating
activities
|
|
$
|
21,395
|
|
|
Net cash used in Investing
activities
|
|
|
(49,099
|
)
|
|
Net cash used in Financing
activities
|
|
|
(23,567
|
)
|
|
Effects of exchange rate changes on
cash
|
|
|
(234
|
)
|
|
Total net cash change
|
|
|
(51,505
|
)
|
|
|
|
|
|
|
|
Add back shareholder cash
out:
|
|
|
|
|
|
Dividends paid
|
|
|
13,042
|
|
|
Stock buyback
|
|
|
5,502
|
|
|
Total cash returned to shareholders
|
|
|
18,544
|
|
|
|
|
|
|
|
|
Free
Cash Flow
|
|
$
|
(32,961
|
)
|
|
|
|
|
|
|
17