HOUSTON, Nov. 16, 2015 /PRNewswire/ -- VAALCO Energy,
Inc. (NYSE: EGY) today responded to the request of the stockholder
group consisting of Group 42, Inc. as well as Bradley L. Radoff, together with other
participants (collectively, the "Group 42−BLR Group") to solicit
consents to remove without cause four duly elected members of
VAALCO's Board of Directors and replace them with Group 42−BLR
Group's nominees.
The Company noted that under its certificate of incorporation
filed in accordance with the General Corporation Law of the
State of Delaware (the "Charter"),
duly elected members of VAALCO's Board can only be removed from
office for cause. As fiduciaries of the Company, the Board
cannot ignore, waive or amend the clear language in its current
Charter without stockholder approval. Accordingly, the Board
believes that the Group 42−BLR Group proposal to remove four VAALCO
Board members without cause is not an action that can properly be
taken under the Company's Charter, and therefore, any purported
action by written consent to remove a director without reference to
the cause requirement would be null and void.
VAALCO's Board firmly believes in stockholder democracy.
Therefore, the Board has offered to convene a Special Meeting in
December 2015 (the "Special Meeting")
to let the stockholders decide whether they should be allowed to
remove directors without cause. The Board would invite
stockholders to vote on a proposal to amend the Charter so that
stockholders would have the power to remove directors without
cause. The Board would commit to approve such Charter amendment if
the stockholders approve it at the Special Meeting. In
addition, the Board would put Group 42−BLR Group's proposals to
remove and replace a majority of VAALCO's Board on the agenda and
up to a vote for the stockholders at the December Special
Meeting.
Steve Guidry, Chairman and CEO,
commented: "The Company firmly believes that it is in the best
interests of all stockholders that the dispute with Group 42−BLR
Group be resolved swiftly and without consuming our limited
corporate resources. In the current challenging environment
for the E&P industry, a company of VAALCO's size cannot afford
to have its liquidity used up in a protracted confrontation. Given
that the consent solicitation is not actionable under VAALCO's
charter, we have offered an alternative that appropriately provides
stockholders with a forum to decide on Group 42−BLR Group's
proposals. We have also reiterated our offer to end this
unnecessary dispute by appointing one Group 42−BLR Group nominee to
the Board so that we can work together to capitalize on VAALCO's
significant opportunities to deliver increased stockholder
value."
As communicated in a November 16,
2015 letter from VAALCO's Board of Directors to the Group
42−BLR Group, the Company is prepared to expeditiously proceed with
setting a record date for the consent solicitation once the Group
42−BLR Group revises the Notice of Action by Written Consent to
comply with VAALCO's Charter. Alternatively, if the Group
42-BLR Group accepts VAALCO's offer to convene a Special Meeting in
December, 2015, the Board is also prepared to file preliminary
proxy materials for such meeting with the Securities and Exchange
Commission. The Company has requested that the Group 42−BLR
Group respond to the offer to convene a Special Meeting by
Friday, November 20, 2015, and will
consider its offer rejected if the Group 42−BLR Group fails to
respond by that date.
VAALCO urges all VAALCO stockholders to refrain from taking any
action (including returning any consent card sent by the Group
42−BLR Group) at this time.
Vinson & Elkins L.L.P. is serving as legal counsel to the
Company.
VAALCO stockholders with questions may contact the Company's
proxy solicitor, D.F. King &
Co., Inc., (212) 269-5550.
The full text of the November 16,
2015 letter from VAALCO's Board of Directors to the Group
42−BLR Group is included below:
November 16, 2015
By Email
Group 42, Inc.
312 Pearl Parkway, CIA Building II, Suite 2403
San Antonio, Texas 78215
Attention: Paul A. Bell,
President and Chief Executive Officer
Bradley L. Radoff
1177 West Loop South, Suite 1625
Houston, Texas 77027
Re: Proposal to Convene a
Special Meeting
Messrs. Bell and Radoff:
On behalf of our client, VAALCO Energy, Inc. (the "Company"), I
am writing in response to your letter dated November 6, 2015 (the "November 6 Letter") on behalf of Group 42, Inc.
("Group 42") and Bradley L. Radoff,
each together with certain affiliates (collectively, the
"Group" or "you"). The November 6
Letter includes as Annex B your letter as of the same date, in
which Group 42 provided notice (all such notice materials sent on
November 6, together with the
November 6 Letter, constituting
together the "Notice") of its intention to conduct stockholder
business and nominate candidates (the "Group 42 Nominees") for
election as directors in connection with a consent solicitation. I
am also writing in consideration of the consent solicitation you
have attempted to commence by means of a public filing on Schedule
14A filed November 6, 2015 (the
"Consent Solicitation").
This letter is being delivered to you concurrently with another
letter (the "Notice Reply"), also sent on behalf of the Company,
discussing certain deficiencies that the Board of Directors of the
Company (the "Board") identified in your Notice.
As discussed in the Notice Reply, Proposal #2 as set forth in
the Notice and the Consent Solicitation seeks to remove without
cause four members of the Board (the "Removal Proposal"). However,
Article V, Section 3 of the Charter provides that directors may be
removed from office only for cause. The Board cannot ignore the
clear language in its current Charter by, in this instance,
permitting an action by written consent that plainly contradicts
explicit language in the Charter. As fiduciaries of the Company,
the Board is bound to follow the Charter. Pursuant to Article II,
Section 11 of the Bylaws, the Board believes that the Removal
Proposal is not an action that can properly be taken under the
Company's organizational documents, and therefore, the Board
considers any purported action by written consent in respect of the
Removal Proposal to be null and void. To become a valid matter for
stockholder action by written consent, the Removal Proposal would
need to be revised to include the cause requirement.
It is clear that the Company and the Group could arrive at an
impasse with respect to the validity of the Removal Proposal. The
Group presumably believes there is a reason that the Company should
ignore Article V, Section III of the Charter. The Company, for its
part, finds no legal basis that would cause or permit the Board in
this instance to ignore or waive Article V, Section III of the
Charter within the context of your Removal Proposal. Faced with an
impasse, the Group may attempt to proceed with its Consent
Solicitation as is, but the Board will continue to be obligated to
maintain that any purported stockholder action in respect of the
Removal Proposal would be null and void. In any given scenario
under these circumstances, the Group and the Company may be heading
toward a dispute.
The Company firmly believes that it is in the best interests of
all stockholders that the current situation be resolved swiftly and
without consuming limited corporate resources on litigation
concerning the Charter. In the current challenging environment for
the E&P industry, a company of VAALCO's size cannot afford to
have its liquidity used up in a protracted confrontation.
To avoid a dispute, the Company would like to offer an
alternative that serves the best interests of our stockholders and
the Company. The Board is a firm believer in stockholder democracy.
Therefore, it offers to convene a Special Meeting in December (the
"Special Meeting") to let the stockholders decide whether they
should be allowed to remove directors without cause. The
Board would invite stockholders to vote on a proposal to amend the
Charter so that stockholders would have the power to remove
directors without cause. The Board would commit to approve such
Charter amendment if the stockholders approve it at the Special
Meeting. In addition, the Board would put your other proposals on
the meeting agenda and up to a vote for the stockholders. The
Company agrees to convene the Special Meeting for the foregoing
purposes on the conditions that the Group (1) withdraw the Consent
Solicitation, (2) covenant not to launch another consent
solicitation until after the conclusion of the 2016 annual meeting
and (3) covenant not to initiate any litigation over the "cause"
requirement. We have already prepared a preliminary proxy statement
and meeting notice, which we will file promptly upon your
acceptance of our offer to call a special meeting. An agreement to
effect the foregoing offer is attached to this letter as Annex
A.
Given the delicate nature of the situation and the short time
windows involved in the SEC's review of the consent solicitation
and consent revocation statements, please respond to this offer by
Friday, November 20, 2015. If I have
not heard from you by that time, the Company will conclude that you
have rejected its offer.
Simultaneously with the sending of this letter, the Company has
filed a preliminary consent revocation statement with the SEC. If
the Group accepts our offer, the Company will withdraw its
preliminary consent revocation statement. If the Group declines our
special meeting offer and another compromise cannot be worked out,
the Company will proceed to take all necessary steps to protect the
Company and all of its stockholders from any action that is not in
the best interest of the Company and all of its stockholders. The
Company will continue to consider any purported stockholder action
with respect to the Removal Proposal that is not in compliance with
the Charter null and void.
The Company also reiterates its standing offer, which was
extended previously, to add one of your nominees to the Board. The
Company regrets that the Group has not taken the Company up on its
numerous efforts to meet and discuss its offer as well as to
consider other means of compromise, but it remains open to
resolving this unnecessary confrontation in an amicable way.
This letter is being sent on behalf of the Company while
expressly reserving, and without waiving, any and all rights and
defenses that the Company may have with respect to this matter. In
particular, this letter should not be construed as confirmation
that the Notice or terms of the Consent Solicitation are in
compliance with the Charter, Bylaws and applicable law.
Should you have questions, please contact Kai Haakon E. Liekefett at (713) 758-3839.
Very truly yours,
/s/ Kai Haakon E. Liekefett
Kai Haakon E. Liekefett
cc: Eric J. Christ, Vice President, General Counsel
and Secretary, VAALCO Energy, Inc.
Steve Wolosky, Esq.
Aneliya Crawford, Esq.
Annex A
VAALCO Energy, Inc.
9800 Richmond
Ave., Suite 700
Houston,
Texas 77042
Tel: (713) 623-0801
Fax:
(713) 623-0982
November 16, 2015
By Email
Group 42, Inc.
312 Pearl Parkway, CIA Building II, Suite 2403
San Antonio, Texas 78215
Attention: Paul A. Bell,
President and Chief Executive Officer
Bradley L. Radoff
1177 West Loop South, Suite 1625
Houston, Texas 77027
Re: Letter Agreement to
Convene Special Meeting
Gentlemen:
This letter agreement dated November 16,
2015 (the "Agreement"), is with reference to (i) the notice
to VAALCO Energy, Inc. (the "Company") of a proposed action by
written consent of stockholders dated November 6, 2015 (the "Notice") of Group 42, Inc.
("Group 42") of its intention to solicit consents of
stockholders (the "Consent Solicitation") for certain stockholder
business, including the removal of four members of the Board of
Directors of the Company, and the nomination of candidates for
election as directors of the Company; and (ii) the consent
solicitation statement filed on Schedule 14A on November 6, 2015 (the "Consent Statement")
on behalf of Group 42, Bradley L.
Radoff and certain other participants (collectively,
the "Group").
With respect to the foregoing and the mutual covenants and
agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged and accepted, each of the undersigned hereby agree as
follows:
- The Board of Directors of the Company (the "Board") use its
reasonable best efforts to (a) convene a special meeting of
stockholders (the "December Special Meeting") to be held as soon as
reasonably practicable, and in any event no later than December 31, 2015; (b) at such December Special
Meeting, submit to a vote of the stockholders of the Company (i) an
amendment to the Restated Certificate of Incorporation of the
Company, as amended through May 7,
2014 (the "Charter"), in the form attached hereto as Annex A
(the "Charter Amendment Proposal"), pursuant to which the
stockholders of the Company would be granted the power to remove
directors without cause, and (ii) each of the proposals set forth
in the Notice (collectively, the "Proposals"); and (c) file a
definitive proxy statement of the Company in respect of the
December Special Meeting that includes each of the Proposals.
If the Charter Amendment Proposal is approved by a stockholder vote
sufficient to approve such matter under the Charter, the Board
shall approve and adopt such Charter Amendment Proposal. The
Board shall not adjourn the December Special Meeting unless such
adjournment is approved by holders of a majority of the Company's
stock present in person or by proxy and entitled to vote at the
December Special Meeting.
- Group 42 hereby irrevocably withdraws the Notice. Each
member of the Group shall, and shall cause any of its affiliates
and its and its affiliates' associates, directors, officers,
employees, partners, members, managers, consultants, advisors,
agents and other representatives, as applicable,
("Representatives"), to, cease any and all efforts with respect to
the Consent Solicitation, including, any further efforts to
finalize the Consent Statement, whether by responding to comments
of the Staff of the Securities and Exchange Commission (the "SEC")
pertaining to the Consent Statement, filing any amendments or
supplements to the Consent Statement with the SEC, mailing the
Consent Statement to any stockholder of the Company or otherwise,
and shall notify the SEC of its desire to withdraw the Consent
Statement and take all other actions necessary to withdraw the
Consent Statement.
- During the period (the "Standstill Period") commencing upon the
date of this Agreement and continuing through the day following the
date of the conclusion of the 2016 annual meeting of stockholders
of the Company (the "2016 Annual Meeting"), each member of the
Group shall not, and shall cause its Representatives not to,
without the written consent of the Board, directly or indirectly:
- (i) engage, or in any way participate, directly or indirectly,
in any solicitation of proxies or consents in any removal or
election contest with respect to the Company's directors or any
other stockholder proposals; (ii) seek to advise, encourage or
influence any person or entity with respect to the voting of any
voting securities of the Company in any removal or election contest
with respect to the Company's directors or any other stockholder
proposals; (iii) initiate, propose or otherwise solicit
stockholders of the Company for the approval of stockholder
proposals in connection with the removal or election of directors
of the Company or any other stockholder proposals; or (iv) induce
or attempt to induce any other person or entity to initiate any
proposal for stockholder action by written consent as described in
clauses (i) through (iv) above;
- form, join or in any way participate in any group with respect
to any voting securities of the Company in connection with any
election or removal contest with respect to the Company's
directors, other than with other members of the Group;
- seek, alone or in concert with others, to call a special
meeting of stockholders or solicit consents from stockholders or
conduct a referendum of stockholders;
- enter into any discussions, negotiations, agreements or
understandings with any third party with respect to the foregoing
matters described in clauses (a) through (d) above, or advise,
assist, encourage or seek to persuade any third party to take any
action with respect to any of the foregoing matters described in
clauses (a) through (d) above, or otherwise take or cause any
action inconsistent with any of the foregoing matters described in
clauses (a) through (d) above;
provided, however, that the restrictions of this Section 3 shall
not apply to any actions of the Group in respect of the December
Special Meeting and the 2016 Annual Meeting.
- Each member of the Group covenants and agrees that it shall
not, and shall cause its Representatives not to, directly or
indirectly, alone or in concert with others, initiate or pursue, or
encourage or assist any other person to initiate or pursue, any
claim, action, lawsuit or proceeding against the Company or any of
its Representatives, relating to, arising from or in connection
with the Charter Amendment Proposal or the director removal for
"cause" requirement set forth in Article V, Section 3 of the
Charter.
- This Agreement shall terminate, and be of no further force and
effect, from and after the expiration of the Standstill Period,
provided, however, that (a) the obligations of the
Company hereunder shall terminate immediately in the event that any
of the members of the Group materially breaches its obligations
hereunder and such breach has not been cured within 10 days
following written notice of such breach by the Company to the
Group; and (b) the obligations of the Group hereunder shall
terminate immediately in the event the Company materially breaches
it obligations hereunder if such breach has not been cured within
10 days following written notice of such breach by the Group to the
Company.
- Each party further agrees that, during the Standstill Period,
any information concerning the business and affairs of the Company,
including, for the avoidance of doubt, any settlement discussions
between the parties, shared in connection with the execution of
this Agreement or other discussions between the parties shall be
maintained in strict confidence. The parties acknowledge and agree
that such information shall not be disclosed to the public or to
any third party, other than as required by law or judicial or
regulatory process.
- This Agreement, and any disputes arising out of or related to
this Agreement (whether for breach of contract, tortious conduct or
otherwise), shall be governed by, and construed in accordance with,
the laws of the State of Delaware,
without giving effect to its conflict of laws principles.
Each of the members of the Group, on the one hand, and the Company,
on the other hand, acknowledges and agrees that irreparable injury
to the Other Party (as defined below) would occur in the event any
provision of this Agreement were not performed in accordance with
such provision's specific terms or were otherwise breached and that
such injury would not be adequately compensable by the remedies
available at law (including the payment of money damages). It
is accordingly agreed that each member of the Group, on the one
hand, and the Company, on the other hand (the "Moving Party"),
shall each be entitled to specific enforcement of, and injunctive
relief to prevent any violation of the terms hereof, and the Other
Party shall not take action, directly or indirectly, in opposition
to the Moving Party seeking such relief on the grounds that any
other remedy or relief is available at law or in equity. The
term "Other Party" means (a) from the perspective of the Company,
the Group; and (b) from the perspective of each of the members of
the Group, the Company. This Section 7 shall not be the
exclusive remedy for any violation of this Agreement.
- This Agreement contains the entire agreement and supersedes all
prior agreements and understandings, both written and oral, between
the Parties with respect to the subject matter hereof. This
Agreement shall not be assignable by operation of law or otherwise
by a party without the consent of the other party. Subject to
the foregoing sentence, this Agreement shall be binding upon, inure
to the benefit of, and be enforceable by and against the permitted
successors and assigns of each party. Any amendment or modification
of the terms and conditions set forth herein or any waiver of such
terms and conditions must be agreed to in a writing signed by each
party. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same agreement. Signatures to this Agreement
transmitted by facsimile transmission, by electronic mail in
"portable document format" (".pdf") form, or by any other
electronic means intended to preserve the original graphic and
pictorial appearance of a document, shall have the same effect as
physical delivery of the paper document bearing the original
signature. The word "including" (in its various forms) means
"including, without limitation."
If the foregoing is acceptable and agreed to by you, please sign
on the line provided below to signify such acceptance and
agreement.
Very truly yours,
/s/ Eric J.
Christ
Eric J. Christ
Accepted and Agreed to by:
Group 42,
Inc.
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By:
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Name:
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Paul A.
Bell
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Title:
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President and Chief
Executive Officer
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Paul A.
Bell
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By:
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Name:
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Paul A.
Bell
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BLR Partners
LP
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By:
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BLRPart,
LP
General
Partner
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By:
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BLRGP Inc.
General
Partner
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By:
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Name:
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Bradley L.
Radoff
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Title:
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Sole
Director
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BLRPart,
LP
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By:
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BLRGP Inc.
General
Partner
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By:
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Name:
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Bradley L.
Radoff
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Title:
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Sole
Director
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BLRGP
Inc.
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By:
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Name:
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Bradley L.
Radoff
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Title:
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Sole
Director
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Fondren
Management, LP
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By:
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FMLP Inc.
General
Partner
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By:
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Name:
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Bradley L.
Radoff
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Title:
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Sole
Director
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FMLP
Inc.
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By:
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Name:
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Bradley L.
Radoff
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Title:
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Sole
Director
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The Radoff Family
Foundation
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By:
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Name:
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Bradley L.
Radoff
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Title:
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Director
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Enclosure
cc: Eric J. Christ, Vice President, General Counsel
and Secretary, VAALCO Energy, Inc.
Steve Wolosky, Esq.
Aneliya Crawford, Esq.
Annex A
Charter Amendment Proposal
Article Five, Section 3 of the Restated Certificate of
Incorporation of VAALCO Energy, Inc., as amended through
May 7, 2014, is hereby amended and
restated in its entirety to read as follows:
Section 3. Removal of Directors. Subject to the
rights of any class or series of stock having preference over the
Common Stock as to dividends or upon liquidation to elect
additional directors under specified circumstances, any director or
the entire board of directors may be removed, with or without
cause, by the holders of a majority of the voting power of all the
shares of the corporation entitled to vote generally in the
election of directors.
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.
Additional Information
The Company has filed a preliminary consent revocation statement
and a form of GOLD consent revocation card with the SEC in
connection with Group 42−BLR Group's consent solicitation. Promptly
after filing any definitive consent revocation statement with the
SEC, the Company intends to mail the definitive consent revocation
statement and form of GOLD consent revocation card to each
stockholder of VAALCO. STOCKHOLDERS OF VAALCO ARE URGED TO READ THE
CONSENT REVOCATION STATEMENT (INCLUDING ANY SUPPLEMENTS THERETO)
AND ANY OTHER DOCUMENTS THAT THE COMPANY MAY FILE WITH THE SEC
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION. The Company, its directors
and executive officers may be deemed to be participants in the
solicitation of consent revocations in connection with the Group
42-BLR Group's consent solicitation. Information regarding
the names of the Company's participants and their respective
interests in the Company, by security holdings or otherwise, is set
forth in the Company's preliminary consent revocation statement and
other materials filed by the Company with the SEC. These
documents are or will be available for no charge at the SEC's
website at www.sec.gov and at the Company's investor relations
website at vaalco.investorroom.com. Copies may also be
obtained by contacting the Company by mail at 9800 Richmond, Suite
700, Houston, Texas 77042,
Attention: Corporate Secretary or by telephone at (713)
623-0801.
Forward Looking Statements
This news release 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, and are intended to quality for the safe harbor from
liability established by the Private Securities Litigation Reform
Act of 1995. Forward-looking statements are those concerning
VAALCO's plans, expectations, and objectives for future drilling,
completion and other operations and activities. All statements,
other than statements of historical facts, included in this news
release 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,
liquidity, negotiations with governments and third parties,
expectations regarding processing facilities, 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, oil and gas price volatility, inflation, general
economic conditions, 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, 2014,
subsequent quarterly reports on Form 10-Q, 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 9800 Richmond Avenue, Suite
700, Houston, Texas 77042, (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. VAALCO assumes no obligation to update any
forward-looking statement as of any future date.
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SOURCE VAALCO Energy, Inc.