HOUSTON, March 13, 2014 /PRNewswire/ -- VAALCO Energy,
Inc. (NYSE: EGY) today reported results for the fourth quarter and
full-year 2013.
For the 2013 fourth quarter, VAALCO reported net income of
$26.4 million, or $0.46 per diluted share, compared to a net loss
attributable to VAALCO of $18.9
million, or a loss of $0.33
per diluted share, for the comparable period in
2012.
For the year ended December 31,
2013, VAALCO reported record net income of $43.1 million, or $0.74 per diluted share, compared to net income
attributable to VAALCO of $0.6
million, or $0.01 per diluted
share, for the year ended December
31, 2012. The increase in net income in 2013 versus
2012 is primarily attributable to lower income taxes paid in
Gabon as well as lower exploration
costs.
Steve Guidry, CEO, commented:
"I am very pleased with our progress in 2013 on several
fronts. Our efforts to grow our near term production and cash flow
by the setting of two new platforms and drilling six new
development wells is progressing on time and on budget. The
jackets and decks destined for the Etame Marin block, offshore
Gabon are set to sail from
Houma, Louisiana this summer for
installation in the second half of 2014. After the two new
platforms are set, the rig program will re-commence with the
drilling of the first of the six platform development wells.
The VAALCO team recognizes the importance of and is committed to
successfully executing the 2014 work program so as to add
additional reserves and cash flow in 2015."
Mr. Guidry continued, "Additionally, we have continued to make
progress on our growth projects in Equatorial Guinea and Angola. In concert with the national oil
companies in both countries, we are developing the plans for the
drilling of two exploration wells in both Equatorial Guinea and Angola. Our plan is to have all four
exploration wells drilled by the end of 2015. We have a wide
range of opportunities within our portfolio and with the credit
facility we recently put in place we have significantly enhanced
our financial flexibility, which will allow us to build out our
infrastructure and execute on our plans to create further
shareholder value by adding proven reserves and increasing
production. I am excited about the direction of the company
and the efforts underway to deliver on our plans for 2014 and
beyond."
Exploration and Development Update
The Company provided the following update on its exploration and
development programs:
Gabon
In 2013, VAALCO
continued its multi-well drilling and workover campaign offshore
Gabon, which included the drilling
of a successful development well in the Avouma field, three well
workovers to replace electrical submersible pumps and two
unsuccessful exploration wells. In 2014, VAALCO and its
partners finished drilling an unsuccessful exploration well in the
Dimba prospect, and have repositioned the rig to perform a workover
of one well in the Avouma field to replace electrical submersible
pumps and to drill a replacement development well in the South
Tchibala field.
Construction work on the two production platforms for the
additional development of the Etame Marin block remains on schedule
for installation in the second half of 2014, with one platform
being installed in the Etame field and the second platform being
installed between the Southeast Etame and North Tchibala fields. As
previously announced, multiple wells are expected to be drilled
from each of the new platforms. The total cost to build and install
the platforms is expected to be $325.0
million, $91.0 million net to
VAALCO.
The Company continues to work on the designs and cost
projections for facilities to be constructed to handle the
previously announced discovery of hydrogen sulfide
("H2S") in the oil produced from two wells in the Ebouri
field. The Company and its partners expect to make final
investment decisions in the second half of 2014 with a goal of
re-establishing production from the area impacted by H2S
in the first half of 2017.
Onshore Gabon, VAALCO and its
concession partner, Total Gabon, continue to work with the
government of Gabon to obtain
approvals for a revised production sharing contract. If the
contract is approved, the application for a development area is
expected to also be approved without further delay. A plan of
development, which will include the drilling of wells and the
installation of pipelines, will then be submitted for approval.
Development of the onshore block is expected to capitalize on
synergies benefiting from our operating base in Port Gentil,
Gabon.
Angola
VAALCO has
entered into an agreement to license and reprocess 3D Seismic data
to better define the Ombundi and other high potential pre-salt
leads in the deeper water portion of Block 5, offshore
Angola. The Company and its new partner, Sonangol P&P,
are incorporating new seismic data and working to develop the
exploration plan including the timing for drilling exploration
wells which are currently required to commence drilling by
November 30, 2014. The Company
has applied for a time extension for drilling the wells.
Offshore Equatorial
Guinea
The Company and GEPetrol, the operator of
Block P, are in the process of developing a joint operatorship
model to steward the exploration activities on the block. The
Company expects to participate in the drilling of two exploration
wells on Block P in the 2014/2015 time period.
2013 Fourth Quarter Financial Results Discussion
Oil Revenues
Gabon
Crude oil revenues for the three months ended December 31, 2013, were $58.0 million, as compared to revenues of
$52.9 million for the same period in
2012. During the fourth quarter of 2013, VAALCO sold
approximately 531,000 net barrels of oil at an average price of
$109.12/Bbl in Gabon compared to 482,000 net barrels of oil
at an average price of $109.80/Bbl in
2012.
United States
Condensate sales were $0.1
million, resulting from the sale of approximately 1,000 net
barrels of oil condensate at an average price of $97.90/Bbl. For the same period in 2012,
condensate sales were $0.2 million
resulting from the sale of approximately 2,000 net barrels of oil
condensate at an average price of $77.96/Bbl.
Natural Gas Revenues
United States
Natural gas revenues including revenues from natural gas liquids
for the three months ended December 31,
2013, were $0.3 million
compared to $0.4 million for the
comparable period in 2012. Natural gas sales were
approximately 100 MMcf at an average price of $4.51/Mcf for the three months ended December 31, 2013. For the same period of
2012, natural gas sales were approximately 100 MMcf at an average
price of $3.73/Mcf.
Operating Costs and Expenses
Total production expenses for the fourth quarter of 2013 were
$8.6 million, comparable to
$8.7 million of production expenses
in the fourth quarter of 2013.
Exploration expenses were $2.5
million in the fourth quarter of 2013 compared to
$36.0 million of costs in the
comparable period in 2012. Exploration expense in the fourth
quarter of 2013 is primarily related to the unsuccessful efforts of
an exploration well offshore Gabon, whereas the fourth quarter of 2012
included four unsuccessful exploration wells drilled in
the United States.
Income tax expenses for the fourth quarter of 2013 were
$9.6 million, compared to
$2.1 million for the same period in
2012 with the increase primarily due to increased sales volumes and
the impact of a lower cost account.
2013 Full-Year Financial Results Discussions
Total oil and gas sales for 2013 were $169.3 million as compared to $195.3 million for 2012.
Oil Revenues
Gabon
Crude oil revenues for 2013 were $167.4
million, as compared to revenues of $192.5 million for the same period in 2012.
VAALCO sold approximately 1,544,000 net barrels of oil at an
average price of $108.42/Bbl in
Gabon in 2013, as compared to
1,740,000 net barrels of oil at an average price of $111.24/Bbl in 2012.
United States
Condensate sales were $0.4
million, resulting from the sale of approximately 5,000 net
barrels of oil condensate at an average price of $85.67/Bbl. For the same period in 2012,
condensate sales were $0.8 million
resulting from the sale of approximately 10,000 net barrels of oil
condensate at an average price of $81.68/Bbl.
Natural Gas Revenues
United States
Natural gas revenues including revenues from natural gas liquids
for the year 2013 were $1.5 million
compared to $1.9 million for the
comparable period in 2012. Natural gas sales were
approximately 300 MMcf at an average price of $4.50/Mcf for 2013. For the same period of
2012, natural gas sales were approximately 500 MMcf at an average
price of $3.66/Mcf.
Operating Costs and Expenses
Production expense for 2013 was $36.6
million as compared to $26.7
million for 2012. Production expense in 2013 was
higher than 2012 due to well workover costs to replace electrical
submersible pumps in three offshore Gabon wells totaling $7.6 million, deck boiler repairs onboard the
FPSO vessel totaling $1.0 million and
generator repairs on the Avouma platform totaling $2.1 million.
Exploration expense in 2013 was $23.9
million, as compared to $41.0
million in 2012. The exploration expense in 2013 was
primarily attributable to costs related to dry holes drilled in
Gabon and the United States totaling $19.4 million compared to dry hole costs
associated with five exploration wells drilled in the United States in 2012 totaling
$37.3 million.
In 2013, the Company incurred $34.1
million in income taxes as compared to $81.8 million for 2012. All income tax expenses
were associated with the Etame Marin block production and were
incurred in Gabon. The lower
income tax expense for 2013 versus 2012 was primarily the result of
lower sales volumes which results in lower profit oil barrels
subject to income taxes, and the impact of higher capital
expenditures and operating expenses which results in the allocation
of a higher percentage of oil barrels lifted as cost oil barrels
which do not bear income taxes. The increase in capital
expenditures and operating costs in 2013 was primarily attributable
to the construction of two new platforms and the 2013 drilling and
workover program.
Balance Sheet
On December 31, 2013, VAALCO had
cash balances of $130.5 million and
restricted cash of $13.2
million. The Company believes that these cash balances
combined with cash flow from operations will be sufficient to fund
the Company's 2014 capital expenditure budget, which is expected to
total approximately $116.8
million.
On February 4, 2014, VAALCO
announced that it had executed a loan agreement with the
International Finance Corporation (IFC) for a $65.0 million reserve based loan facility secured
by the assets of the Company's Gabon subsidiary which owns the Company's
interest in the Etame Marin block, offshore Gabon. The loan facility will be used to
support the Company's development program in Gabon.
Repurchase of Common Stock
On June 6, 2013, the Company
announced that its Board of Directors has authorized the repurchase
of up to $25.0 million of the
Company's common stock over the next 12 months. During 2013, the
Company repurchased 1,765,170 shares at an average price of
$6.49 per share totaling $11.5 million.
Conference Call
As previously announced, the Company will hold a conference call
to discuss its fourth quarter and full-year results on Friday, March 14, 2014, at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). Interested
parties may participate by dialing 1 (800) 230-1074.
International parties may dial 1 (612) 288-0337. The
confirmation code is 319712. This call will also be webcast
on VAALCO's website at www.vaalco.com.
An audio replay will be available beginning approximately one
hour after the end of the conference call through April 14, 2014, on the Company's website and by
dialing 1 (800) 475-6701. International parties may dial 1
(320) 365-3844. The confirmation code is 319712.
Summary of financial results for the quarter are tabulated
below.
Abbreviated
Financial Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended December 31,
|
|
Twelve Months
Ended December 31,
|
(Unaudited - in
thousands of dollars)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Revenues
|
$58,282
|
|
$53,553
|
|
$169,277
|
|
$195,287
|
Operating costs
and expenses
|
22,332
|
|
51,292
|
|
92,052
|
|
108,694
|
Operating
Income
|
35,950
|
|
2,261
|
|
77,225
|
|
86,593
|
|
|
|
|
|
|
|
|
Other expense,
net
|
73
|
|
(105)
|
|
(38)
|
|
559
|
Income tax
expense
|
(9,648)
|
|
(21,073)
|
|
(34,115)
|
|
(81,813)
|
Net
Income
|
26,375
|
|
(18,917)
|
|
43,072
|
|
5,339
|
|
|
|
|
|
|
|
|
Less net income
- noncontrolling interest
|
-
|
|
-
|
|
-
|
|
(4,708)
|
Net income
(Loss) - VAALCO Energy, Inc.
|
26,375
|
|
(18,917)
|
|
43,072
|
|
631
|
|
|
|
|
|
|
|
|
Basic net
income per share attributable
|
|
|
|
|
|
|
|
to VAALCO
Energy, Inc.
|
$
0.46
|
|
$
(0.33)
|
|
$
0.75
|
|
$
0.01
|
Diluted net
income per share attributable
|
|
|
|
|
|
|
|
to VAALCO
Energy, Inc.
|
$
0.46
|
|
$
(0.33)
|
|
$
0.74
|
|
$
0.01
|
|
|
|
|
|
|
|
|
Other financial
results:
|
|
|
Three months
ended,
|
|
Twelve months
ended
|
(Unaudited)
|
December 31,
2013
|
|
December 31,
2012
|
|
December 31,
2013
|
|
December 31,
2012
|
Net oil sales
(MBbls)
|
531
|
|
485
|
|
1,549
|
|
1,741
|
Net gas sales
(MMCF)
|
68
|
|
111
|
|
325
|
|
532
|
Net oil and gas sales
(MBOE)
|
543
|
|
503
|
|
1,603
|
|
1,829
|
Average oil price
($/bbl)
|
$109.10
|
|
$109.63
|
|
$108.35
|
|
$111.06
|
Average gas price
($/MCF)
|
$4.51
|
|
$3.73
|
|
$4.50
|
|
$3.66
|
Average price
($/BOE)
|
$107.39
|
|
$106.43
|
|
$105.60
|
|
$106.75
|
Production costs,
excluding workover costs ($/BOE)
|
$15.76
|
|
$17.33
|
|
$18.10
|
|
$14.61
|
Depletion costs
($/BOE)
|
$10.90
|
|
$6.35
|
|
$10.56
|
|
$10.88
|
General and
administrative costs ($/BOE)
|
$6.00
|
|
$5.39
|
|
$7.02
|
|
$6.44
|
Capital Expenditures
($thousands)
|
$3,821
|
|
$2,604
|
|
$48,390
|
|
$46,676
|
Basic and diluted
share information:
|
|
|
|
|
Twelve Months
Ended December 31,
|
|
|
2013
|
|
2012
|
Basic weighted
average common stock
|
|
|
|
|
issued
and outstanding
|
|
57,298,910
|
|
57,673,342
|
Dilutive
options
|
|
626,091
|
|
1,158,717
|
Total
dilutive shares
|
|
57,925,001
|
|
58,832,059
|
|
|
|
|
|
Proved Reserve
Information:
|
|
|
|
|
|
|
Oil
(MBbls)
|
|
Gas (MMcf)
|
Balance at
December 31, 2012
|
|
7,488
|
|
1,544
|
Production
|
|
(1,549)
|
|
(325)
|
Revision
of previous estimates
|
|
1,241
|
|
114
|
Extension and discoveries
|
|
52
|
|
-
|
Balance at
December 31, 2013
|
|
7,232
|
|
1,333
|
Forward Looking Statements
This document includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements are those concerning
VAALCO's plans, expectations, and objectives for future drilling,
completion and other operations and activities. All
statements included in this document that address activities,
events or developments that VAALCO expects, believes or anticipates
will or may occur in the future are forward-looking
statements. These statements include expected capital
expenditures, future drilling plans, prospect evaluations,
negotiations with governments and third parties, and reserve
growth. These statements are based on assumptions made by
VAALCO based on its experience perception of historical trends,
current conditions, expected future developments and other factors
it believes are appropriate in the circumstances. Such
statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond VAALCO's control.
These risks include, but are not limited to, inflation, general
economic conditions, oil and gas price volatility, the Company's
success in discovering, developing and producing reserves,
lack of availability of goods, services and capital, environmental
risks, drilling risks, foreign operational risks, and regulatory
changes. These and other risks are further described in
VAALCO's annual report on Form 10-K for the year ended December 31, 2012, its Form 10-Q for the third
quarter filed on November 7, 2013,
and other reports filed with the SEC which can be reviewed at
http://www.sec.gov, or which can be received by contacting VAALCO
at 4600 Post Oak Place, Suite 300, Houston, Texas 77027, (713) 623-0801.
Investors are cautioned that forward-looking statements are not
guarantees of future performance and that actual results or
developments may differ materially from those projected in the
forward-looking statements. VAALCO disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events, or
otherwise.
About VAALCO
VAALCO Energy, Inc. is a Houston based independent energy company
principally engaged in the acquisition, exploration, development
and production of crude oil. VAALCO's strategy is to increase
reserves and production through the exploration and exploitation of
oil and natural gas properties with high emphasis on international
opportunities. The company's properties and exploration
acreage are located primarily in Gabon, Angola
and Equatorial Guinea in
West Africa.
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SOURCE VAALCO Energy, Inc.