HOUSTON, Aug. 6, 2014 /PRNewswire/ -- VAALCO Energy,
Inc. (NYSE: EGY) today reported net income of $24.7 million or $0.43 per diluted share for the second quarter of
2014 compared to net income of $7.1
million or $0.12 per diluted
share for the comparable period in 2013. Second quarter 2014
revenues were $52.1 million compared
to $29.1 million in the second
quarter of 2013, primarily due to the higher volumes of crude
liftings in the second quarter of 2014 as compared to the second
quarter of 2013.
Second quarter 2014 highlights when compared to the same quarter
in 2013 include the following:
- Net income increased by 347%
- Revenues were up 79%
- Lifted volumes (crude sales) were up 71%
- Average price for the barrels sold was up 6%
- Production from Gabon
operations was up by 3%
- Jacket sections of two new platforms have arrived in
Gabon and are in the process of
being installed
- Deck sections of the two platforms are on their journey from
the fabrication yard in Louisiana
to the offshore waters of Gabon
- Agreement reached with the government and the venture partner
on terms of a new production sharing contract for Mutamba Iroru,
VAALCO's onshore Gabon
block
Steve Guidry, CEO, commented:
"VAALCO continues to deliver reliable production and strong
operating cash flow and income from our offshore Gabon operation. Our teams are
continuing to optimize our producing assets, while building out the
infrastructure required for our next phase of growth at the Etame
Marin Block. Just last week we reached a major project
milestone as our two new platforms set sail on their 45 day voyage
to Gabon. We will be
drilling our first exploration well offshore Angola later this year and we have made
progress in our collaborative efforts with our partners toward
optimally developing and exploring Block P Equatorial Guinea.
Our enthusiasm for VAALCO's initiatives to grow our
business and drive additional shareholder value creation remains
strong and we look forward to continued success in 2014."
Exploration and Development Update
The Company provided the following update on its exploration and
development programs:
Gabon
During the
second quarter of 2014, VAALCO continued to execute the near- and
long-term optimization of production offshore Gabon. In
April 2014, the Company commenced
drilling a development well in the South Tchibala field to replace
a well with damaged casing. The well was successfully brought on
production in May 2014. Today the well is producing
approximately 1400 BOPD. This well was the final development well
of the eight well drilling campaign offshore Gabon that began in late 2012.
The planned installation of the two production platforms for the
additional development of the Etame Marin block remains on schedule
for later in 2014, with one platform being installed in the Etame
field and the second platform being installed between the Southeast
Etame and North Tchibala fields. The first platform jacket
arrived in Gabon in July 2014 and has been successfully positioned on
the seabed in the Etame field. The second platform jacket has
arrived in Gabon and is scheduled
for installation in August 2014. The deck sections are
currently being towed to Gabon and
are expected to arrive in September
2014. The Transocean "Constellation II" jack-up rig has been
contracted to begin drilling development wells from the two new
platforms beginning in the fourth quarter of 2014.
The owner/operator of the Company's leased floating, production,
storage and offloading vessel ("FPSO") will implement a planned six
day shutdown in late-August 2014 to
upgrade the gas detection and fire systems. The upgrade
projects aboard the FPSO will require the Company to shut-in
production from the block during this period.
Onshore Gabon, VAALCO and its
concession partner, Total Gabon, continue to work with the
government of Gabon to obtain
approval of a revised production sharing contract. All three
parties reached agreement and signed a term sheet outlining the
variable components that will feature in the new contract.
Once the contract is approved, the plan of development will then be
submitted.
Angola
In the first
quarter of 2014, the Company and its working interest partner
purchased seismic data in the outboard segment of Block 5, which is
currently being processed with an expected completion early in
2015. The processing and interpretation will identify both
post-salt and pre-salt opportunities.
In April 2014, the Company
received a letter and contractual amendment proposal from Sonangol
E. P. which is expected to be signed in the near term by the
government of Angola. The amendment provides for a three year
extension until December 1, 2017
along with the spudding of one exploration well prior to the
expiration of the current November 30,
2014 time extension, and the second well by early 2016.
The Transocean "Celtic Sea" semi-submersible drilling rig has
been contracted and will drill the 2014 well in the Kindele
prospect, a post-salt objective.
Offshore Equatorial
Guinea
The Company continues to work with GEPetrol,
the block operator, on a joint operatorship model, and with the
Ministry of Mines, Industry and Energy regarding timing and
budgeting for development and exploration activities. VAALCO
has proposed to both GEPetrol and the Ministry that the sequence of
activities be reordered, with the development of the Venus
discovery occurring prior to the drilling of the exploration wells
at SWGrande and Marte.
Financial Results Discussion
During the second quarter of 2014, the Company sold, from its
offshore Gabon operation,
approximately 480,000 net barrels of oil from three liftings at an
average price of $108.24 per barrel,
compared to 280,000 net barrels of oil equivalent from two liftings
at an average price of $102.21 per
barrel in the second quarter of 2013. Quarterly oil sales are
a function of the number and size of oil liftings that occur in a
calendar quarter from the FPSO and thus do not always closely
correlate with production. Produced volumes for the three
months ended June 30, 2014 were
approximately 446,000 net barrels as compared to approximately
432,000 net barrels produced in the three months ended June 30, 2013.
The Company reported operating income of $33.8 million in the second quarter of 2014
compared to operating income of $11.7
million in the second quarter of 2013.
Total production expenses were $4.8
million in the second quarter of 2014 compared to
$7.0 million in the prior year
quarter. The lower production expenses incurred were
primarily due to non-operational adjustments recorded in the second
quarter of 2014 including an accrual true-up.
Exploration expense was $3.3
million in the second quarter of 2014 compared to
$4.2 million of expense in the prior
year quarter. Exploration expense in the second quarter of
2014 consisted primarily of $2.0
million related to an unsuccessful offshore Gabon exploration well, $0.8 million for impairment of remaining
unevaluated leasehold offshore Gabon, and an additional $0.3 million related to seismic processing in
Angola.
Income tax expenses were $9.0
million for the three months ended June 30, 2014 compared to $4.6 million in the second quarter of 2013, all
of which was paid to the Republic of Gabon. The higher income tax is
primarily attributable to higher sales volumes.
Balance Sheet
At June 30, 2014, the Company had
unrestricted cash of $118.6 million.
This cash, combined with partner receivables, cash flow from
operations and the IFC facility is sufficient to fund the Company's
remaining 2014 capital expenditure budget.
As of June 30, 2014, the Company
had no outstanding borrowings under the IFC loan facility.
Conference Call
As previously announced, the Company will hold a conference call
to discuss its second quarter results on Thursday, August 7, 2014 at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). Interested
parties may participate by dialing 1 (877) 209-9921.
International parties may dial 1 (612) 288-0340. The
confirmation code is 331766. 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 September 7, 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 331766.
Summary of financial results for the quarter are tabulated
below.
|
Three Months
Ended June 30,
|
|
Six Months
Ended June 30,
|
(Unaudited - in
thousands of dollars)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Revenues
|
$52,098
|
|
$29,118
|
|
$80,172
|
|
$73,255
|
Operating costs
and expenses
|
18,269
|
|
17,452
|
|
46,990
|
|
40,085
|
Operating
(loss) income
|
33,828
|
|
11,666
|
|
33,181
|
|
33,170
|
|
|
|
|
|
|
|
|
Other expense,
net
|
(108)
|
|
14
|
|
(370)
|
|
(55)
|
Income tax
expense
|
(9,009)
|
|
(4,559)
|
|
(15,135)
|
|
(18,805)
|
Net (loss)
income - VAALCO Energy, Inc.
|
24,712
|
|
7,121
|
|
17,676
|
|
14,310
|
Basic net
(loss) income per share attributable
|
|
|
|
|
|
|
|
to VAALCO
Energy, Inc.
|
$
0.43
|
|
$
0.12
|
|
$
0.31
|
|
$
0.25
|
Diluted net
(loss) income per share attributable
|
|
|
|
|
|
|
|
to VAALCO
Energy, Inc.
|
$
0.43
|
|
$
0.12
|
|
$
0.31
|
|
$
0.24
|
Other financial results:
|
Three months
ended,
|
|
Six months
ended
|
(Unaudited)
|
June 30,
2014
|
|
June 30,
2013
|
|
June 30,
2014
|
|
June 30,
2013
|
Net oil sales
(MBbls)
|
478
|
|
281
|
|
736
|
|
679
|
Net gas sales
(MMCF)
|
56
|
|
88
|
|
126
|
|
183
|
Net oil and gas sales
(MBOE)
|
488
|
|
296
|
|
757
|
|
709
|
Average oil price
($/bbl)
|
$108.24
|
|
$102.12
|
|
$108.15
|
|
$106.72
|
Average gas price
($/MCF)
|
$5.61
|
|
$4.60
|
|
$4.70
|
|
$4.47
|
Average price
($/BOE)
|
$106.81
|
|
$98.41
|
|
$105.94
|
|
$103.28
|
Production costs,
excluding workover costs ($/BOE)
|
$9.94
|
|
$8.50
|
|
$16.28
|
|
$13.67
|
Depletion costs
($/BOE)
|
$14.34
|
|
$11.60
|
|
$14.74
|
|
$9.95
|
General and
administrative costs ($/BOE)
|
$6.42
|
|
$8.33
|
|
$8.88
|
|
$8.60
|
Capital Expenditures
($thousands)
|
$24,237
|
|
$18,954
|
|
$39,551
|
|
$34,301
|
Basic and diluted share information:
|
Three Months
Ended June 30,
|
|
Six Months
Ended June 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Basic weighted
average common stock
|
|
|
|
|
|
|
|
issued and
outstanding
|
56,950,678
|
|
57,906,967
|
|
56,905,675
|
|
57,906,967
|
Dilutive
options
|
586,040
|
|
659,475
|
|
487,442
|
|
881,937
|
Total dilutive
shares
|
57,536,718
|
|
58,566,442
|
|
57,393,117
|
|
58,788,904
|
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, acquisition opportunities and reserve growth. These
statements are based on assumptions made by VAALCO based on its
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, 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.