VAALCO Energy, Inc. (NYSE/LSE: EGY) (“VAALCO” or the “Company”)
today reported operational and financial results for the fourth
quarter and full year of 2020.
Highlights and Recent Key
Items:
- Closed the transformational acquisition of Sasol’s
working interest in the Etame field;
- Nearly doubles VAALCO’s total net production and
reserves;
- Estimated acquisition cost per NRI
barrel(6) of $14.41 for SEC
proved reserves and $4.91 for 2P CPR reserves;
- Produced 4,662 net revenue interest
(“NRI”)(1) barrels of crude oil
per day (“BOPD”), or 5,359 working interest
(“WI”)(2) BOPD in Q4
2020;
- Reported net loss of $3.6 million ($0.06 per
diluted share), Adjusted Net Loss(3)
of $5.6 million ($0.10 per diluted share) and
generated Adjusted EBITDAX(3) of
$3.5 million for Q4 2020;
- Q4 2020 revenues were reduced by approximately
$7.8 million due to a delay in the December lifting to
January 2021;
- Q4 2020 operating loss reflected $3.6 million of
seismic related exploration expense;
- Completed the 2019/2020 drilling campaign with a 100%
success rate, on time and within budget, with no safety or
environmental incidents on April 9, 2020;
- Completed the acquisition of new three dimensional
(“3-D”) seismic over the Etame field:
- Utilized to optimize and de-risk future drilling
locations;
- Added 1.6 MMBO NRI proved
SEC(4) reserves in 2020 from
positive well performance and the SE Etame 4P discovery which were
offset by 1.6 MMBO NRI due to negative pricing related
revisions;
- Reported year-end 2020 independent 2P
CPR(5) reserves of 10.4 MMBO
WI;
- Maintained a strong balance sheet with no debt, a cash
balance of $47.9 million, including $1.4 million in net
joint venture owner advances as of December 31, 2020;
and
-
Improving outlook for oil pricing coupled with enhanced
cash flow generation supports next Etame drilling campaign
currently anticipated to start in late 2021/early
2022.
|
(1) |
All NRI production rates and volumes are VAALCO’s 31.1% WI less 13%
royalty volumes. |
|
(2) |
All WI production rates and volumes are VAALCO’s 31.1% WI. |
|
(3) |
Adjusted EBITDAX, Adjusted Net Income and Adjusted Working Capital
are Non-GAAP financial measures and are described and reconciled to
the closest GAAP measure in the attached table under “Non-GAAP
Financial Measures.” |
|
(4) |
“SEC reserves” are Netherland, Sewell & Associates estimates
prepared in accordance with the definitions and regulations of the
U.S. Securities and Exchange Commission as of December 31,
2020. |
|
(5) |
“2P CPR Reserves” are Netherland, Sewell & Associates proved
plus probable estimates prepared in accordance with the definitions
and guidelines set forth in the 2018 Petroleum Resources Management
Systems approved by the Society of Petroleum Engineers as of
December 31, 2020 using VAALCO’s management assumptions for
escalated crude oil price and costs. |
|
(6) |
Estimated acquisition cost per barrel for SEC proved reserves and
2P CPR reserves are calculated based on VAALCO management’s
internal estimates of SEC proved reserves and 2P CPR reserves
acquired from Sasol.See “Supplemental Non-GAAP Financial Measures”
below for additional information. |
Cary Bounds, VAALCO’s Chief Executive Officer
commented: “Despite the difficult conditions in 2020, VAALCO
performed extremely well, generating $26.6 million in Adjusted
EBITDAX while investing only $10.5 million in capital expenditures
to complete a highly successful drilling program. The drilling
program brought three new development wells online, boosting Etame
field production by almost 7,000 gross BOPD in 2020. Cost
discipline and operational excellence remain core priorities for
VAALCO as we seek to maximize profitability and maintain a strong
balance sheet with a healthy cash position. In the fourth quarter
of 2020, we continued to perform well operationally with net
production of 4,662 BOPD, despite curtailing production to support
Gabon meeting OPEC+ production mandates. Although year-end SEC
proved reserve additions for extensions and performance were
equivalent to 90% of 2020 production, these positive additions were
offset by negative revisions due to lower average pricing in 2020.
Our 2P CPR reserves for year-end 2020 were 10.4 MMBO WI, which is
substantially the same volume as year-end 2019 2P CPR reserves. We
expect that our year-end 2021 reserves will be meaningfully higher
if recent oil price trends continue through year-end 2021, coupled
with the reserve additions attributable to the acquisition of
Sasol’s ownership in Etame.”
“As we announced in February 2021, we are very
excited to have closed the Sasol acquisition which nearly doubles
our net production and reserves with minimal increase in G&A
expense. Over the past several years, we have executed on our
strategy of accretive growth and free cash flow generation through
cost effectively maintaining core production, executing a
successful drilling program and acquiring Sasol’s ownership in the
Etame license. With the rising price environment thus far in 2021,
we are forecasting a significant increase in free cash flow which
will further strengthen our financial position as we begin our next
Etame drilling campaign late this year or early next year. In
anticipation of the next drilling campaign, we recently completed
the acquisition of 3-D seismic over the entire Etame field and we
expect to complete the processing by the fourth quarter of 2021.
Interpretation of the new seismic is underway in order to optimize
and de-risk our drilling locations and potentially identify new
drilling locations. We are planning to drill up to four wells in
the upcoming drilling campaign, which we expect could increase
gross field production by 7,000 to 8,000 BOPD when the drilling
program is completed in 2022. We have made substantial progress
toward achieving our growth objectives and we believe that VAALCO
is well positioned to continue to profitably grow production and
reserves well into the future.”
Transformational Acquisition
Closes
As previously announced, VAALCO completed its
acquisition of Sasol’s 27.8% working interest(7) in the Etame Marin
block offshore Gabon from Sasol Gabon S.A., increasing the
Company’s total working interest to 58.8%. The transaction almost
doubles VAALCO’s total net production and reserves. The effective
date of the transaction was July 1, 2020 and net cash flows
generated from the Sasol interest from the effective date through
the closing date reduced the final cash settlement amount of the
agreed $44 million purchase price. In addition, VAALCO made a cash
deposit to Sasol in November 2020 of $4.3 million. Taking into
account the deposit, the net cash flow from Sasol’s interest
through closing and other purchase price adjustments, VAALCO paid
$29.6 million to Sasol at closing from cash on hand. The terms of
the agreement also include a contingent payment of $5.0 million
which will be payable to Sasol if the average Dated Brent price
over a consecutive 90-day period from July 1, 2020 to June 30, 2022
exceeds $60.00 per barrel. The cash consideration, together with
the $5.0 million contingent payment totals $38.9 million. VAALCO’s
reserves, production and financial results for the Sasol interest
acquired will be included in the Company’s results for periods
starting on February 25, 2021, the closing date of the transaction.
Based on management’s internal estimates, the Company estimates
that approximately 2.7 MMBO of proved NRI reserves and 9.1 MMBO of
2P CPR WI reserves were acquired.
|
(7) |
Prior to the closing of the acquisition, VAALCO’s working interest
in Etame was 31.1% and its participating interest was 33.6%;
Sasol’s working interest in Etame was 27.8% and its participating
interest was 30%. All NRI production rates and volumes are based on
working interest less 13% royalty volumes. |
Operational Update
Gabon
Seismic Acquisition
In connection with planning for future drilling
programs, VAALCO completed the acquisition of nearly 1,000 square
kilometers of new dual-azimuth proprietary 3-D seismic data over
the entire Etame Marin block offshore Gabon during the fourth
quarter of 2020. The information provided from the acquisition,
processing and analyzing of this data will be used to optimize and
de-risk future drilling locations and potentially identify new
drilling locations. The Company expects the seismic data to enhance
sub-surface imaging by merging legacy data with the newly acquired
seismic allowing for the first continuous 3-D seismic over the
entire block. VAALCO estimates the total gross costs of both the
acquisition and processing of seismic data to be approximately
$16.1 million gross, $12.6 million of which was incurred in 2020.
Fourth quarter 2020 financial results included exploration expense
of $3.6 million and development costs of $0.6 million related to
VAALCO’s net share of these costs. Processing of the seismic data
began in January 2021 with all data expected to be fully processed
and analyzed by the fourth quarter of 2021.
2021/2022 Drilling Program
VAALCO is planning for the commencement of the
next drilling campaign at Etame in late 2021 or early 2022. The
locations of the wells will be determined in conjunction with the
new seismic processing and interpretation, and VAALCO is currently
planning for a four-well program with two development wells and two
appraisal wells. Preliminary production uplift estimates for the
drilling campaign are between 7,000 and 8,000 gross BOPD of peak
production from the four wells. The estimated cost of the program
is $115 million to $125 million gross, or $73 million to $79
million, net to VAALCO’s 63.6% participating interest.
Equatorial Guinea
VAALCO and its joint venture owners are
evaluating the timing and budgeting for development and exploration
activities on Block P. The Block P production sharing contract
provides for a term of 25 years from the date of approval of a
development and production plan. The non-binding memorandum of
understanding with a third party to cover all or substantially all
of the Company’s cost to drill an exploratory well on Block P has
expired; however, the Company continues to evaluate alternatives to
funding the cost to drill an exploratory well in Block P. There can
be no certainty any such transaction will be completed or that
VAALCO will be able to commence drilling operations on Block P. As
of December 31, 2020, the Company had $10.0 million recorded for
the book value of the undeveloped leasehold costs associated with
the Block P license.
Financial Update – 2020 Fourth
Quarter
Net loss of $3.6 million, or $0.06 per
diluted share, for the fourth quarter of 2020 included the impact
from $3.6 million in exploration expense related to the Etame
seismic program during the quarter and a charge of approximately
$2.2 million for stock-based compensation expense. The lifting
scheduled for December 2020 was delayed to January 2021 which
reduced sales volumes and revenues while increasing capitalized
crude oil inventory costs for the fourth quarter of 2020. This
delayed the lifting for approximately 155 MBO NRI barrels.
Net income of $1.0 million, or $0.02 per
diluted share, for the fourth quarter of 2019 included the impact
from a non-cash charge of approximately $3.1 million for a
mark-to-market loss related to the Company’s crude oil swaps,
stock-based compensation of approximately $0.7 million and a
$1.8 million tax benefit related to a decrease in the
valuation allowance on deferred tax assets. Net income of
$7.6 million, or $0.13 per diluted share, for the third
quarter of 2020 included an income tax benefit of $2.8 million
which reflected the impact from a decrease in the valuation
allowance on deferred tax assets of $5.3 million, or $0.09 per
diluted share.
Adjusted Net Loss for the fourth quarter of 2020
totaled $5.6 million, or $0.10 per diluted share, as compared
to Adjusted Net Income of $5.5 million, or $0.09 per diluted
share, for the fourth quarter of 2019. The decrease in earnings
between these periods was mainly due to lower revenues as a result
of lower oil prices and lower sales volumes due to a delay in the
lifting scheduled for December 2020 to January 2021, coupled with
$3.6 million of exploration expense related to the seismic
acquisition costs in the fourth quarter of 2020. In the third
quarter of 2020, VAALCO reported $2.3 million in Adjusted Net
Income, or $0.04 per diluted share. Adjusted EBITDAX totaled
$3.5 million in the fourth quarter of 2020 compared with
$10.4 million in the same period of 2019. In the third quarter
of 2020, Adjusted EBITDAX was $7.0 million. As with the net
loss and Adjusted Net Loss, Adjusted EBITDAX was impacted by the
lower sales volumes resulting from the delay in the lifting
scheduled for December discussed above.
Revenue and Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2020 |
|
Q4 2019 |
|
% Change Q4 2020 vs. Q4 2019 |
|
Q3 2020 |
|
% Change Q4 2020 vs. Q3 2020 |
Production (NRI BOPD) |
|
|
4,662 |
|
|
3,664 |
|
|
27 |
|
% |
|
|
4,405 |
|
|
6 |
|
% |
Sales (NRI BO) |
|
|
290,000 |
|
|
318,000 |
|
|
(9 |
) |
% |
|
|
412,000 |
|
|
(30 |
) |
% |
Realized crude oil price
($/BO) |
|
$ |
42.07 |
|
$ |
65.80 |
|
|
(36 |
) |
% |
|
$ |
43.63 |
|
|
(4 |
) |
% |
Total crude oil sales
($MM) |
|
$ |
12.6 |
|
$ |
21.9 |
|
|
(42 |
) |
% |
|
$ |
18.3 |
|
|
(31 |
) |
% |
The fourth quarter of 2020 saw an increase in
NRI production from 3,664 BOPD in the fourth quarter of 2019 to
4,662 BOPD primarily due to the new development wells coming online
from the 2019/2020 drilling program. Revenues for the fourth
quarter of 2020 were negatively impacted due to a delay in the
lifting scheduled for December 2020 until January 2021. While this
delay reduced revenues for 2020, pricing improved between
December 2020 and January 2021, increasing the amount realized
from the lifting, the impact of which was realized in the first
quarter of 2021.
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2020 |
|
Q4 2019 |
|
% Change Q4 2020 vs. Q4 2019 |
|
Q3 2020 |
|
% Change Q4 2020 vs. Q3 2020 |
Production expense, excluding workovers ($MM) |
$ |
6.6 |
|
|
$ |
9.8 |
|
|
(33 |
) |
% |
|
$ |
9.1 |
|
|
(28 |
) |
% |
Production expense, excluding
workovers ($/BO) |
$ |
22.66 |
|
|
$ |
30.70 |
|
|
(26 |
) |
% |
|
$ |
22.21 |
|
|
2 |
|
% |
Workover expense ($MM) |
$ |
(0.1 |
) |
|
$ |
0.1 |
|
|
(200 |
) |
% |
|
$ |
(0.2 |
) |
|
(50 |
) |
% |
Depreciation, depletion and
amortization ($MM) |
$ |
1.3 |
|
|
$ |
2.1 |
|
|
(38 |
) |
% |
|
$ |
2.2 |
|
|
(41 |
) |
% |
Depreciation, depletion and
amortization ($/BO) |
$ |
4.37 |
|
|
$ |
6.64 |
|
|
(34 |
) |
% |
|
$ |
5.37 |
|
|
(19 |
) |
% |
General and administrative
expense, excluding stock-based compensation ($MM) |
$ |
2.5 |
|
|
$ |
2.2 |
|
|
13 |
|
% |
|
$ |
2.4 |
|
|
4 |
|
% |
General and administrative
expense, excluding stock-based compensation ($/BO) |
$ |
8.73 |
|
|
$ |
6.96 |
|
|
25 |
|
% |
|
$ |
5.89 |
|
|
48 |
|
% |
Stock-based compensation
expense (benefit) ($MM) |
$ |
2.2 |
|
|
$ |
0.7 |
|
|
214 |
|
% |
|
$ |
(0.2 |
) |
|
(1,200 |
) |
% |
Current income tax expense
(benefit) ($MM) |
$ |
2.0 |
|
|
$ |
2.4 |
|
|
(17 |
) |
% |
|
$ |
2.5 |
|
|
(20 |
) |
% |
Deferred income tax expense
(benefit) ($MM) |
$ |
(2.8 |
) |
|
$ |
1.8 |
|
|
(256 |
) |
% |
|
$ |
(5.3 |
) |
|
(47 |
) |
% |
Total production expense, excluding workovers,
decreased compared to both prior periods primarily due to lower
sales volumes in the fourth quarter of 2020 resulting from the
delayed lifting. The per-unit production expense, excluding
workovers, decreased significantly in the fourth quarter of 2020 as
compared to the fourth quarter of 2019 due to higher overall
production rates and was in-line with the per-unit production
expense in the third quarter of 2020. Included in total production
expense are COVID-19 related costs incurred to protect the health
and safety of the Company’s employees. In the fourth quarter of
2020 and the third quarter of 2020, total production expense is
approximately $0.4 million and $0.4 million higher,
respectively, due to additional costs incurred as a result of the
pandemic. For the full year, these costs were
$1.6 million.
Depreciation, depletion and amortization
(“DD&A”) expense was lower than both the fourth quarter of 2019
and the third quarter of 2020 prior periods due to lower sales
volumes in the fourth quarter of 2020 resulting from the delayed
lifting. The per-unit DD&A rate in the fourth quarter of 2020
was lower than the rate in the fourth quarter of 2019 due to the
impairment charge taken in the first quarter of 2020. The per-unit
DD&A rate in the fourth quarter of 2020 was lower than the rate
in the third quarter of 2020 due to higher production volumes from
fields with a smaller depletion base.
General and administrative (“G&A”) expense,
excluding stock-based compensation, in the fourth quarter of 2020
was slightly higher than in the same period in 2019 due to higher
legal and professional fees and was similar to G&A expense,
excluding stock-based compensation, in the third quarter of 2020.
The per-unit G&A rate in the fourth quarter of 2020 was higher
than both the fourth quarter of 2019 and the third quarter of 2020
due to lower sales as a result of the delayed lifting. Stock-based
compensation expense (benefit) was impacted by the change in the
SARs liability as a result of changes in the Company’s stock price
during the quarters. For the fourth quarter of 2020 the stock-based
compensation expense related to SARs was an expense of
$1.9 million compared to expense of $0.6 million for the
fourth quarter of 2019. For the third quarter of 2020 there was a
benefit of $0.6 million rather than an expense related to
SARs.
Income tax was a benefit for both the fourth and
third quarters of 2020. For the three months ended
December 31, 2020 income tax was a benefit of
$0.8 million, and included a $2.8 million deferred tax
benefit. For the three months ended September 30, 2020 income
tax was a benefit of $2.8 million, and included a
$5.3 million deferred tax benefit to decrease the valuation
allowances on U.S. and Gabonese deferred tax assets. Income tax
expense for the fourth quarter of 2019 was $4.2 million, which
included $1.8 million of deferred tax expense.
Hedging
VAALCO did not have any commodity hedges in
place during the fourth quarter of 2020. In January 2021, VAALCO
entered into new crude oil commodity swap agreements for a total of
709,262 barrels at a Dated Brent weighted average price of $53.10
per barrel for the period from and including February 2021 through
January 2022. These swaps will settle on a monthly basis. The
Company hedged a portion of its production volumes to protect cash
flows which will be used to fund the 2021/2022 drilling
program.
Response to COVID-19
Pandemic
VAALCO remains fully committed to the health and
safety of all its employees and contractors. In response to the
COVID-19 pandemic, VAALCO has taken the following measures:
- Put into place social distancing measures at our work
sites;
- Actively screening and monitoring employees and contractors
that come onto the Company’s Gabon facilities including testing and
quarantine periods with onsite medical supervision; and
- Engaging in regular Company-wide COVID-19 updates to keep
employees informed of key developments.
VAALCO expects to continue to take proactive
steps to manage any disruption in its business caused by COVID-19
and to protect the health and safety of its employees. As of
March 9, 2021, VAALCO has experienced no material impact on
its Gabon operations directly associated with COVID-19; however,
the Company has incurred higher costs related to proactive measures
taken in response to the pandemic. These costs were approximately
$0.4 million during the fourth quarter of 2020 and
$1.6 million for the full year 2020 and were primarily related
to additional personnel-related costs to support enhanced health
and safety measures.
Financial Update - Full Year
2020
Net loss for the full year 2020 was
$48.2 million, or $0.83 per diluted share while Adjusted Net
Income was $9.0 million, or $0.16 per diluted share. This
compares to the full year 2019 net income of $2.6 million, or
$0.04 per diluted share, and Adjusted Net Income of
$18.6 million, or $0.31 per diluted share. The year-over-year
decrease in net income is primarily the result of lower revenues of
$17.3 million and a $30.6 million impairment charge to
crude oil and natural gas properties. The lower revenues and
impairment charge were a result of lower oil prices in 2020. These
items were partially offset by a benefit from higher sales volumes.
The Company generated $26.6 million in Adjusted EBITDAX for
the full year 2020 compared to $37.5 million in 2019. The
reduction was primarily the result of lower revenues as a result of
lower crude oil prices which was partially mitigated by the higher
sales volumes.
Production for the full year 2020 was 4,853 NRI
BOPD or 1.8 MMBO. For the full year 2019, production averaged 3,476
NRI BOPD or 1.3 MMBO. For the full year 2020, VAALCO’s realized
crude oil sales price was $40.29 per NRI barrel, or 38% lower than
$65.20 per NRI barrel that was realized for full year 2019. Even
though there were fewer liftings in 2020, sales volumes increased
30% to 1.6 MMBO in 2020 from 1.3 MMBO in 2019 as a result of higher
production in 2020.
For the full year 2020, total production
expense, excluding workovers, decreased to $34.8 million
compared to $37.2 million in 2019 with the decrease primarily
due to higher crude inventory levels from the delays associated
with the last scheduled lifting of 2020 as discussed above in
“Revenue and Sales”. The production expense rate per barrel of
crude oil sales, excluding workover costs, was $21.38 in 2020 and
$29.70 in 2019. Workover expense for 2020 totaled $2.5 million
and for 2019 totaled $0.5 million.
For the full year 2020, G&A, excluding
stock-based compensation, was $10.6 million, a decrease of 7%
compared with full year 2019 G&A, excluding stock-based
compensation, of $11.3 million. The decrease year-over-year
was primarily due to accounting and audit fees associated with
VAALCO’s London Stock Exchange listing in 2019 and lower travel
related expenses in 2020. G&A includes $0.1 million and
$3.5 million of stock-based compensation expense for the years
ended December 31, 2020 and December 31, 2019,
respectively, that was primarily expense related to SARs.
Year-End 2020 Reserves
The following discussion regarding VAALCO’s
reserves and the Present Value of Estimated Future Cash Inflows
(“PV-10”) do not include the impact of the acquisition of Sasol’s
interest in Etame which closed in February 2021. The impact of this
acquisition will be reflected in year-end 2021 reserves and
PV-10.
VAALCO’s proved SEC reserves at
December 31, 2020 were 3.2 NRI MMBO, all of which are proved
developed reserves. The proved developed reserves are 3.7 MMBO on a
WI basis. The Company’s SEC reserves were fully engineered by its
third-party independent reserve consultant, Netherland, Sewell
& Associates, Inc., (“NSAI”) who has provided annual
independent estimates of VAALCO’s year-end SEC reserves for over 15
years. In 2020, the Company added 1.6 MMBO of SEC proved reserves
through a combination of positive well performance revisions and
the SE Etame 4H extension. These additions were offset by a
downward revision of 1.6 MMBO due to lower SEC crude oil
prices.
The PV-10 value of VAALCO’s proved SEC reserves
at year-end 2020, utilizing SEC pricing of $42.46 per barrel of
crude oil (average of monthly Brent prices on the first of each
month for calendar year 2020 adjusted for price differentials),
decreased to $14.7 million from $70.4 million at
December 31, 2019. In addition to cash flows from production
during the year, the decline was due primarily to lower SEC pricing
which declined 33% in 2020 compared with $63.60 per barrel of crude
oil in 2019.
|
MMBO |
Proved SEC Reserves at December 31, 2019 |
5.0 |
|
2020 Production |
(1.8 |
) |
Extensions and discoveries |
0.5 |
|
Revisions of previous estimates - performance |
1.1 |
|
Revisions of previous estimates - pricing |
(1.6 |
) |
Proved SEC Reserves at December 31, 2020 |
3.2 |
|
See “Supplemental Non-GAAP Financial Measures” below regarding
proved reserves and PV-10.
At year-end 2020, NSAI provided the 2P CPR
estimate of proven and probable reserves which was prepared in
accordance with the definitions and guidelines set forth in the
2018 Petroleum Resources Management Systems approved by the Society
of Petroleum Engineers as of December 31, 2020 using VAALCO’s
management assumptions for future Brent escalated crude oil pricing
and costs shown below under “Supplemental Non-GAAP Financial
Measures - 2P CPR Reserves”. The 2P CPR reserves attributable to
VAALCO’s ownership are reported on a WI basis prior to deductions
for government royalties. The year-end 2020 2P CPR estimate of
reserves is 10.4 MMBO to VAALCO’s WI. The PV-10 value of VAALCO’s
2P CPR reserves at year-end 2020, utilizing management escalated
pricing and cost assumptions, is $84.4 million.
In connection with the acquisition of Sasol’s
interest in Etame, VAALCO’s management estimates that it acquired
approximately 2.7 MMBO NRI of proved SEC reserves and 9.1 MMBO WI
of 2P CPR proven and probable reserves as of the closing date.
See “Supplemental Non-GAAP Financial Measures” below concerning
2P CPR reserves.
Capital Investments/Balance
Sheet
For the full year 2020, net capital expenditures
totaled $20.0 million on a cash basis and $10.5 million on an
accrual basis. Capital expenditures primarily related to the
2019/2020 drilling program at Etame.
At the end of the fourth quarter of 2020, VAALCO
had an unrestricted cash balance of $47.9 million, which included
$1.4 million in net joint venture owner advances. Working capital
at December 31, 2020 was $11.4 million compared with $16.6 million
at September 30, 2020, while Adjusted Working Capital at December
31, 2020 totaled $24.3 million, compared with $29.3 million at
September 30, 2020.
2021 Guidance
Including the positive impact of the purchase of
Sasol’s interest in Etame beginning with the day of closing of the
transaction on February 25, 2021, VAALCO currently estimates full
year 2021 NRI production to be between 6,800 and 7,400 BOPD. All of
VAALCO’s production estimates for 2021 include an estimated 15%
annual natural decline in production. For the first quarter of
2021, which will include slightly more than one month of production
from the interest purchased from Sasol, NRI production is
forecasted between 5,100 and 5,400 BOPD.
For the second quarter of 2021, which will
include the impact of a full quarter of production from the
interest purchased from Sasol, NRI production is forecasted between
8,000 and 8,600 BOPD.
For the second half of 2021, which includes the
impact of a planned annual seven-day full-field shutdown for
maintenance in the third quarter, NRI production is forecasted
between 7,100 and 7,800 BOPD.
Sales NRI volumes for 2021 are currently
estimated to average 7,100 to 7,800 BOPD. This higher sales volumes
per day as compared to production volumes reflects the impact of
the delay in the December 2020 lifting to January 2021.
VAALCO’s production expense guidance (excluding
workovers) for full year 2021 is expected to be between $69 million
and $77 million or $24.50 to $29.25 per NRI barrel of crude oil
sales, with production expense for the first quarter of 2021
projected to be between $16.5 million and $18.5 million or $26.00
to $31.00 per NRI barrel. Production expense, excluding workovers,
on a gross basis, is comparable between 2020 and 2021 with $121
million of gross expense in 2020 as compared to $118 million to
$132 million gross estimated for 2021. The Company forecasts
between $10.0 million and $12.0 million in G&A expense,
excluding stock-based compensation, for full year 2021.
For the first quarter of 2021, VAALCO expects
net capital expenditures, excluding any costs associated with the
planned 2021 drilling campaign and seismic, to be in the range of
$2.0 million to $3.0 million. For the full year 2021, VAALCO
estimates its net capital expenditures, excluding the 2021 drilling
campaign and seismic, to total $3.0 million to $6.0 million. VAALCO
is currently considering several alternatives regarding the leased
FPSO for which the contract will expire in September 2022.
Estimated 2021 capital expenditures do not include costs related to
any of these alternatives.
Conference Call
As previously announced, the Company will hold a
conference call to discuss its fourth quarter financial and
operating results Wednesday, March 10, 2021, at 9:00 a.m. Central
Time (10:00 a.m. Eastern Time and 3:00 pm London Time). Interested
parties may participate by dialing (877) 270-2148. Parties in the
United Kingdom may participate toll-free by dialing 08082389064 and
other international parties may dial (412) 902-6510. Participants
should request to be joined to the “VAALCO Energy Fourth Quarter
2020 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.
About VAALCO
VAALCO, founded in 1985, is a Houston, USA
based, independent energy company with production, development and
exploration assets in the West African region.
The Company is an established operator within
the region, holding a 58.8% working interest in the Etame Marin
Block, located offshore Gabon, which to date has produced over 120
million barrels of crude oil and of which the Company is the
operator.
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 / Kelsey
Traynor / James Husband |
VAALCO@buchanan.uk.com |
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. All statements, other than statements of
historical facts, included in this document that address
activities, events, plans, expectations, objectives or developments
that VAALCO expects, believes or anticipates will or may occur in
the future are forward-looking statements. These statements may
include statements related to the impact of the COVID-19 pandemic,
including the sharp decline in the global demand for and resulting
global oversupply of crude oil and the resulting steep decline in
oil prices, production quotas imposed by Gabon, disruptions in
global supply chains, quarantines of our workforce or workforce
reductions and other matters related to the pandemic, well results,
wells anticipated to be drilled and placed on production, future
levels of drilling and operational activity and associated
expectations, the implementation of the Company’s business plans
and strategy, prospect evaluations, prospective resources and
reserve growth, VAALCO’s 2021-2022 drilling program, its activities
in Equatorial Guinea, expected sources of and potential
difficulties in obtaining future capital funding and future
liquidity, its ability to restore production in non-producing
wells, future operating losses, future changes in crude oil and
natural gas prices, future strategic alternatives, future
acquisitions, capital expenditures, future drilling plans, prospect
evaluations, interpretation of seismic data and costs thereof,
negotiations with governments and third parties, timing of the
settlement of Gabon income taxes, and expectations regarding
processing facilities, production, sales and financial projections.
These statements are based on assumptions made by VAALCO based on
its experience and 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, crude oil and natural gas price volatility, the
impact of production quotas imposed by Gabon in response to
production cuts agreed to as a member of OPEC, inflation, general
economic conditions, the outbreak of COVID-19, the Company’s
success in discovering, developing and producing reserves,
production and sales differences due to timing of liftings,
decisions by future lenders, the risks associated with liquidity,
lack of availability of goods, services and capital, environmental
risks, drilling risks, foreign regulatory and operational risks,
and regulatory changes.
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.
References to thickness of crude oil pay or of a
formation where evidence of hydrocarbons have been encountered is
not necessarily an indicator that hydrocarbons will be recoverable
in commercial quantities or in any estimated volume. Well test
results should be considered as preliminary and not necessarily
indicative of long-term performance or of ultimate recovery. Well
log interpretations indicating crude oil accumulations are not
necessarily indicative of future production or ultimate
recovery.
Inside Information
This announcement contains inside information
for the purposes of article 7 of the Market Abuse Regulation (EU)
596/2014 which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. Upon publication of this announcement, this
inside information is now considered to be in the public
domain.
Supplemental Non-GAAP Financial
Measures
This press release contains crude oil and
natural gas metrics which do not have standardized meanings or
standard methods of calculation as classified by the SEC and
therefore such measures may not be comparable to similar measures
used by other companies. Such metrics have been included herein to
provide readers with additional measures to evaluate the Company’s
performance; however, such measures are not reliable indicators of
the future performance of the Company and future performance may
not compare to the performance in previous periods.
PV-10 Value and Probable Reserves
PV-10 is a non-GAAP financial measure and
represents the period-end present value of estimated future cash
inflows from VAALCO’s reserves, less future development and
production costs, discounted at 10% per annum to reflect timing of
future cash flows. PV-10 values for both SEC reserves and 2P CPR
reserves have been calculated using SEC pricing assumptions in the
case of SEC reserves and using VAALCO’s management assumptions for
escalated crude oil price and cost in the case of 2P CPR reserves.
PV-10 generally differs from standardized measure, the most
directly comparable GAAP financial measure, because it generally
does not include the effects of income taxes; however, VAALCO’s
PV-10 does include the effect of income taxes. PV-10 is a widely
used measure within the industry and is commonly used by securities
analysts, banks and credit rating agencies to evaluate the
estimated future net cash flows from proved reserves on a
comparative basis across companies or specific properties. VAALCO’s
PV-10 on an SEC basis and 2P CPR basis includes the effect of
income taxes, and the PV-10 on an SEC basis is the same as its
standardized measure for the periods presented herein. Neither
PV-10 nor the standardized measure purports to represent the fair
value of the Company’s crude oil and natural gas reserves.
VAALCO has provided summations of its PV-10 for
its proved and probable reserves on a 2P CPR basis in this press
release. The SEC strictly prohibits companies from aggregating
proved, probable and possible reserves in filings with the SEC due
to the different levels of certainty associated with each reserve
category. GAAP does not provide a measure of estimated future net
cash flows for reserves other than proved reserves and accordingly
it is not practicable to reconcile the PV-10 value of 2P CPR
reserves to a GAAP measure, such as the standardized measure.
Investors should be cautioned that estimates of PV-10 of probable
reserves, as well as the underlying volumetric estimates, are
inherently more uncertain of being recovered and realized than
comparable measures for proved reserves. Further, because estimates
of probable reserve volumes have not been adjusted for risk due to
this uncertainty of recovery, their summation may be of limited
use. Nonetheless, VAALCO believes that PV-10 estimates for probable
reserves present useful information for investors about the future
net cash flows of its reserves in the absence of a comparable GAAP
measure such as standardized measure.
2P CPR Reserves
2P CPR reserves represent proved plus probable
estimates as reported by NSAI 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 as of December 31, 2020 using escalated crude oil price
and cost assumptions made by VAALCO’s management. 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 of
December 31, 2020. As a result, 2P 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.
2P CPR reserves and the PV-10 value for 2P CPR
reserves, as calculated 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 2P CPR
pricing is based on management pricing assumptions for future Brent
oil pricing for 2021 -2029: $51.75, $55.90, $57.52, $59.41, $62.72,
$67.85, $73.28, $77.29, $80.08 and thereafter escalated 2% per
year;
- Lease operating expenses are not
escalated in the SEC case, while for the 2P CPR reserves case they
are escalated at 2% annually beginning on January 1, 2023.
Management uses 2P 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 the Company to other companies. Management
believes that the presentation of 2P 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 the Company’s reserve information to other London Stock
Exchange-traded companies that report similar measures. VAALCO also
believes that this information enhances its investors’ and
securities analysts’ understanding of its business. However, 2P 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 the
Company’s SEC proved reserves and consider 2P CPR reserves only
supplementally.
VAALCO ENERGY, INC AND SUBSIDIARIESConsolidated Balance
Sheets(unaudited)(in thousands, except share and per share
amounts)
|
December 31, |
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
ASSETS |
(in thousands) |
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
47,853 |
|
|
$ |
45,917 |
|
Restricted cash |
|
86 |
|
|
|
911 |
|
Receivables: |
|
|
|
|
|
Trade |
|
— |
|
|
|
14,335 |
|
Accounts with joint venture owners, net of allowance of $0.0
million and $0.5 million, respectively |
|
3,587 |
|
|
|
2,714 |
|
Other |
|
4,331 |
|
|
|
1,517 |
|
Crude oil inventory |
|
3,906 |
|
|
|
1,072 |
|
Prepayments and other |
|
4,215 |
|
|
|
3,292 |
|
Total current assets |
|
63,978 |
|
|
|
69,758 |
|
|
|
|
|
|
|
Crude oil and natural gas
properties, equipment and other - successful efforts method,
net |
|
37,036 |
|
|
|
68,258 |
|
Other noncurrent assets: |
|
|
|
|
|
Restricted cash |
|
925 |
|
|
|
925 |
|
Value added tax and other receivables, net of allowance of $2.3
million and $1.0 million, respectively |
|
4,271 |
|
|
|
3,683 |
|
Right of use operating lease assets |
|
22,569 |
|
|
|
33,383 |
|
Deferred tax assets |
|
— |
|
|
|
24,159 |
|
Abandonment funding |
|
12,453 |
|
|
|
11,371 |
|
Total assets |
$ |
141,232 |
|
|
$ |
211,537 |
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
$ |
16,690 |
|
|
$ |
15,897 |
|
Accounts with joint venture owners |
|
4,945 |
|
|
|
— |
|
Accrued liabilities and other |
|
17,184 |
|
|
|
29,773 |
|
Operating lease liabilities - current portion |
|
12,890 |
|
|
|
11,990 |
|
Foreign income taxes payable |
|
860 |
|
|
|
5,740 |
|
Current liabilities - discontinued operations |
|
7 |
|
|
|
350 |
|
Total current liabilities |
|
52,576 |
|
|
|
63,750 |
|
Asset retirement
obligations |
|
17,334 |
|
|
|
15,844 |
|
Operating lease liabilities -
net of current portion |
|
9,671 |
|
|
|
21,371 |
|
Deferred tax liabilities |
|
- |
|
|
|
— |
|
Other long-term
liabilities |
|
193 |
|
|
|
852 |
|
Total liabilities |
|
79,774 |
|
|
|
101,817 |
|
Commitments and
contingencies |
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
Preferred stock, $25 par value; 500,000 shares authorized, none
issued |
|
— |
|
|
|
— |
|
Common stock, $0.10 par value; 100,000,000 shares authorized,
67,897,530 and 67,673,787 shares issued, 57,531,154 and 58,024,571
shares outstanding, respectively |
|
6,790 |
|
|
|
6,767 |
|
Additional paid-in capital |
|
74,437 |
|
|
|
73,549 |
|
Less treasury stock, 10,366,376 and 9,649,216 shares, respectively,
at cost |
|
(42,421 |
) |
|
|
(41,429 |
) |
Retained earnings |
|
22,652 |
|
|
|
70,833 |
|
Total shareholders' equity |
|
61,458 |
|
|
|
109,720 |
|
Total liabilities and shareholders' equity |
$ |
141,232 |
|
|
$ |
211,537 |
|
VAALCO ENERGY, INC AND SUBSIDIARIES
Consolidated Statements of Operations(unaudited)(in thousands,
except per share amounts)
|
Three Months Ended |
|
Year Ended December 31, |
|
December 31, 2020 |
|
December 31, 2019 |
|
September 30, 2020 |
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands except per share amounts) |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil and natural gas sales |
$ |
12,557 |
|
|
$ |
21,923 |
|
|
$ |
18,256 |
|
|
$ |
67,176 |
|
|
$ |
84,521 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production expense |
|
6,456 |
|
|
|
9,815 |
|
|
|
8,984 |
|
|
|
37,315 |
|
|
|
37,689 |
|
Exploration expense |
|
3,572 |
|
|
|
— |
|
|
|
16 |
|
|
|
3,588 |
|
|
|
— |
|
Depreciation, depletion and amortization |
|
1,266 |
|
|
|
2,112 |
|
|
|
2,212 |
|
|
|
9,382 |
|
|
|
7,083 |
|
Impairment of proved crude oil and natural gas properties |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,625 |
|
|
|
— |
|
Gain on revision of asset retirement obligations |
|
— |
|
|
|
(379 |
) |
|
|
— |
|
|
|
— |
|
|
|
(379 |
) |
General and administrative expense |
|
4,744 |
|
|
|
2,950 |
|
|
|
2,178 |
|
|
|
10,695 |
|
|
|
14,855 |
|
Bad debt expense and other |
|
25 |
|
|
|
(371 |
) |
|
|
151 |
|
|
|
1,165 |
|
|
|
(341 |
) |
Total operating costs and expenses |
|
16,063 |
|
|
|
14,127 |
|
|
|
13,541 |
|
|
|
92,770 |
|
|
|
58,907 |
|
Other operating income (expense), net |
|
(786 |
) |
|
|
(20 |
) |
|
|
(37 |
) |
|
|
(1,669 |
) |
|
|
(4,421 |
) |
Operating income (loss) |
|
(4,292 |
) |
|
|
7,776 |
|
|
|
4,678 |
|
|
|
(27,263 |
) |
|
|
21,193 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments gain (loss), net |
|
(6 |
) |
|
|
(2,712 |
) |
|
|
— |
|
|
|
6,577 |
|
|
|
(446 |
) |
Interest income (expense), net |
|
5 |
|
|
|
152 |
|
|
|
23 |
|
|
|
155 |
|
|
|
733 |
|
Other, net |
|
(34 |
) |
|
|
83 |
|
|
|
147 |
|
|
|
129 |
|
|
|
(438 |
) |
Total other income (expense), net |
|
(35 |
) |
|
|
(2,477 |
) |
|
|
170 |
|
|
|
6,861 |
|
|
|
(151 |
) |
Income (loss) from continuing
operations before income taxes |
|
(4,327 |
) |
|
|
5,299 |
|
|
|
4,848 |
|
|
|
(20,402 |
) |
|
|
21,042 |
|
Income tax expense
(benefit) |
|
(789 |
) |
|
|
4,248 |
|
|
|
(2,759 |
) |
|
|
27,681 |
|
|
|
23,890 |
|
Income (loss) from continuing
operations |
|
(3,538 |
) |
|
|
1,051 |
|
|
|
7,607 |
|
|
|
(48,083 |
) |
|
|
(2,848 |
) |
Income (loss) from
discontinued operations, net of tax |
|
(57 |
) |
|
|
(37 |
) |
|
|
11 |
|
|
|
(98 |
) |
|
|
5,411 |
|
Net income (loss) |
$ |
(3,595 |
) |
|
$ |
1,014 |
|
|
$ |
7,618 |
|
|
$ |
(48,181 |
) |
|
$ |
2,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
$ |
(0.06 |
) |
|
$ |
0.02 |
|
|
$ |
0.13 |
|
|
$ |
(0.83 |
) |
|
$ |
(0.05 |
) |
Income (loss) from discontinued operations, net of tax |
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.09 |
|
Net income (loss) per share |
$ |
(0.06 |
) |
|
$ |
0.02 |
|
|
$ |
0.13 |
|
|
$ |
(0.83 |
) |
|
$ |
0.04 |
|
Basic weighted average shares outstanding |
|
57,493 |
|
|
|
58,212 |
|
|
|
57,456 |
|
|
|
57,594 |
|
|
|
59,143 |
|
Diluted net income (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
$ |
(0.06 |
) |
|
$ |
0.02 |
|
|
$ |
0.13 |
|
|
$ |
(0.83 |
) |
|
$ |
(0.05 |
) |
Income (loss) from discontinued operations, net of tax |
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.09 |
|
Net income (loss) per share |
$ |
(0.06 |
) |
|
$ |
0.02 |
|
|
$ |
0.13 |
|
|
$ |
(0.83 |
) |
|
$ |
0.04 |
|
Diluted weighted average shares outstanding |
|
57,493 |
|
|
|
59,136 |
|
|
|
57,741 |
|
|
|
57,594 |
|
|
|
59,143 |
|
VAALCO ENERGY, INC AND SUBSIDIARIESConsolidated Statements of
Cash Flows(unaudited)(in thousands)
|
|
|
|
|
|
|
Year Ended December 31, |
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
(in thousands) |
CASH FLOWS FROM OPERATING
ACTIVITIES: |
|
|
|
|
|
Net income (loss) |
$ |
(48,181 |
) |
|
$ |
2,563 |
|
Adjustments to reconcile net
income to net cash provided by (used in) operating activities: |
|
|
|
|
|
(Income) loss from discontinued operations |
|
98 |
|
|
|
(5,411 |
) |
Depreciation, depletion and amortization |
|
9,382 |
|
|
|
7,083 |
|
Impairment of proved crude oil and natural gas properties |
|
30,625 |
|
|
|
— |
|
Gain on revision of asset retirement obligations |
|
— |
|
|
|
(379 |
) |
Other amortization |
|
181 |
|
|
|
241 |
|
Deferred taxes |
|
24,159 |
|
|
|
14,480 |
|
Unrealized foreign exchange gain |
|
91 |
|
|
|
(50 |
) |
Stock-based compensation |
|
114 |
|
|
|
3,506 |
|
Cash settlements paid on exercised stock appreciation rights |
|
(275 |
) |
|
|
(491 |
) |
Derivative instruments (gain) loss, net |
|
(6,577 |
) |
|
|
446 |
|
Cash settlements received on matured derivative contracts, net |
|
7,216 |
|
|
|
2,439 |
|
Bad debt expense and other |
|
1,165 |
|
|
|
(341 |
) |
Other operating loss, net |
|
869 |
|
|
|
58 |
|
Operational expenses associated with equipment and other |
|
1,601 |
|
|
|
69 |
|
Change in operating assets and liabilities: |
|
|
|
|
|
Trade receivables |
|
14,335 |
|
|
|
(2,428 |
) |
Accounts with joint venture owners |
|
4,016 |
|
|
|
(2,075 |
) |
Other receivables |
|
1,405 |
|
|
|
(94 |
) |
Crude oil inventory |
|
(2,834 |
) |
|
|
(287 |
) |
Prepayments and other |
|
(1,126 |
) |
|
|
(1,014 |
) |
Value added tax and other receivables |
|
(1,268 |
) |
|
|
275 |
|
Accounts payable |
|
(842 |
) |
|
|
6,011 |
|
Foreign income taxes receivable/payable |
|
(4,880 |
) |
|
|
2,396 |
|
Accrued liabilities and other |
|
(1,383 |
) |
|
|
4,161 |
|
Net cash provided by continuing operating activities |
|
27,891 |
|
|
|
31,158 |
|
Net cash used in discontinued operating activities |
|
(441 |
) |
|
|
(4,686 |
) |
Net cash provided by operating activities |
|
27,450 |
|
|
|
26,472 |
|
CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
|
|
|
Property and equipment expenditures |
|
(20,008 |
) |
|
|
(10,348 |
) |
Acquisition of crude oil and natural gas properties |
|
(4,320 |
) |
|
|
— |
|
Net cash used in continuing investing activities |
|
(24,328 |
) |
|
|
(10,348 |
) |
Net cash used in discontinued investing activities |
|
— |
|
|
|
— |
|
Net cash used in investing activities |
|
(24,328 |
) |
|
|
(10,348 |
) |
CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
|
|
|
Proceeds from the issuances of common stock |
|
63 |
|
|
|
256 |
|
Treasury shares |
|
(992 |
) |
|
|
(3,911 |
) |
Net cash used in continuing
financing activities |
|
(929 |
) |
|
|
(3,655 |
) |
Net cash used in discontinued
financing activities |
|
— |
|
|
|
— |
|
Net cash used in financing
activities |
|
(929 |
) |
|
|
(3,655 |
) |
NET CHANGE IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH |
|
2,193 |
|
|
|
12,469 |
|
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH AT BEGINNING OF YEAR |
|
59,124 |
|
|
|
46,655 |
|
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH AT END OF YEAR |
$ |
61,317 |
|
|
$ |
59,124 |
|
VAALCO ENERGY, INC AND SUBSIDIARIES
Selected Financial and Operating Statistics(Unaudited)
|
Three Months Ended |
|
Year Ended December 31, |
|
December 31, 2020 |
|
December 31, 2019 |
|
September 30, 2020 |
|
2020 |
|
2019 |
NRI SALES DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil (MBbls) |
|
290 |
|
|
|
318 |
|
|
412 |
|
|
1,627 |
|
|
1,251 |
NRI PRODUCTION DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil (MBbls) |
|
429 |
|
|
|
337 |
|
|
405 |
|
|
1,776 |
|
|
1,269 |
Average daily production volumes (BOPD) |
|
4,662 |
|
|
|
3,664 |
|
|
4,405 |
|
|
4,853 |
|
|
3,476 |
REALIZED DERIVATIVE
INSTRUMENTS GAIN (LOSS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized derivative instruments gain (loss), net, in thousands |
$ |
— |
|
|
$ |
383 |
|
$ |
— |
|
$ |
7,216 |
|
$ |
2,439 |
Realized derivative instruments gain (loss), net (Per Bbls) |
|
0.00 |
|
|
|
1.20 |
|
|
0.00 |
|
|
4.44 |
|
|
1.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE SALES PRICES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil (Per Bbls) |
$ |
42.07 |
|
|
$ |
65.80 |
|
$ |
43.63 |
|
$ |
40.29 |
|
$ |
65.20 |
COSTS AND EXPENSES (Per Bbl of
sales): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production expense |
$ |
22.26 |
|
|
$ |
30.86 |
|
$ |
21.81 |
|
$ |
22.93 |
|
$ |
30.13 |
Production expense, excluding workovers* |
|
22.66 |
|
|
|
30.70 |
|
|
22.21 |
|
|
21.38 |
|
|
29.70 |
Depreciation, depletion and amortization |
|
4.37 |
|
|
|
6.64 |
|
|
5.37 |
|
|
5.77 |
|
|
5.66 |
General and administrative expense** |
|
16.36 |
|
|
|
9.28 |
|
|
5.29 |
|
|
6.57 |
|
|
11.87 |
Property and equipment expenditures, cash basis (in thousands) |
$ |
(2,309 |
) |
|
$ |
6,966 |
|
$ |
2,220 |
|
$ |
20,008 |
|
$ |
10,348 |
*Workover costs excluded from the three months ended
December 31, 2020, December 31, 2019 and
September 30, 2020 are $(0.1) million, $0.1 million
and $(0.2) million, respectively. Workover costs excluded from
the years ended December 31, 2020 and December 31, 2019
are $2.5 million and $0.5 million, respectively.**General
and administrative expenses include $7.62, $2.31 and $(0.60) per
barrel of oil of stock-based compensation expense in the three
months ended December 31, 2020, December 31, 2019 and
September 30, 2020, respectively. General and administrative
expenses include $0.06 and $2.80 per barrel of oil of stock-based
compensation expense in the years ended December 31, 2020 and
December 31, 2019, respectively.
NON-GAAP FINANCIAL MEASURES
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 (expense) net, income tax expense,
depletion, depreciation and amortization, impairment of proved
properties, exploration expense, non-cash and other items including
stock-based compensation expense and commodity derivative loss.
Management uses Adjusted Net Income (Loss) to
evaluate operating and financial performance and believes the
measure is useful to investors because it eliminates the impact of
certain noncash 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 (Loss) represents net income before discontinued operations,
net of tax, Unrealized derivative instruments (gain) loss, other
operating income, net, deferred income tax expense (benefit), and
gain on revision of asset retirement obligations.
Management uses Adjusted Working Capital as a
measurement 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 lease liabilities. Under the current leasing
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.
The non-GAAP measure utilized herein have
significant limitations, including that they may not reflect the
Company’s cash requirements for capital expenditures, contractual
commitments, working capital or debt service. Non-GAAP financial
measures should not be considered as a substitute for their
corresponding nearest applicable GAAP measure or 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. Non-GAAP measures may
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 non-GAAP measures may not be
comparable to similarly titled measures used by other
companies.
The tables below reconcile the most directly comparable GAAP
financial measures to Adjusted EBITDAX, Adjusted Net Income (Loss)
and Adjusted Working Capital.
VAALCO ENERGY, INC AND SUBSIDIARIESReconciliations of Non-GAAP
Measures(Unaudited)(in thousands)
|
Three Months Ended |
|
Year Ended December 31, |
Reconciliation of Net
Income (Loss) to Adjusted EBITDAX |
December 31, 2020 |
|
December 31, 2019 |
|
September 30, 2020 |
|
2020 |
|
|
2019 |
|
Net income (loss) |
$ |
(3,595 |
) |
|
$ |
1,014 |
|
|
$ |
7,618 |
|
|
$ |
(48,181 |
) |
|
$ |
2,563 |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of discontinued operations |
|
57 |
|
|
|
37 |
|
|
|
(11 |
) |
|
|
98 |
|
|
|
(5,411 |
) |
Interest income, net |
|
(5 |
) |
|
|
(152 |
) |
|
|
(23 |
) |
|
|
(155 |
) |
|
|
(733 |
) |
Income tax expense (benefit) |
|
(789 |
) |
|
|
4,248 |
|
|
|
(2,759 |
) |
|
|
27,681 |
|
|
|
23,890 |
|
Depreciation, depletion and amortization |
|
1,266 |
|
|
|
2,112 |
|
|
|
2,212 |
|
|
|
9,382 |
|
|
|
7,083 |
|
Exploration expense |
|
3,572 |
|
|
|
— |
|
|
|
16 |
|
|
|
3,588 |
|
|
|
— |
|
Impairment of proved crude oil and natural gas properties |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,625 |
|
|
|
— |
|
Non-cash or unusual
items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
2,211 |
|
|
|
736 |
|
|
|
(248 |
) |
|
|
114 |
|
|
|
3,506 |
|
Unrealized derivative instruments (gain) loss |
|
6 |
|
|
|
3,095 |
|
|
|
— |
|
|
|
639 |
|
|
|
2,885 |
|
Other operating expense, net |
|
786 |
|
|
|
20 |
|
|
|
37 |
|
|
|
1,669 |
|
|
|
4,421 |
|
Gain on revision of asset retirement obligations |
|
— |
|
|
|
(379 |
) |
|
|
— |
|
|
|
— |
|
|
|
(379 |
) |
Bad debt expense and other |
|
25 |
|
|
|
(371 |
) |
|
|
151 |
|
|
|
1,165 |
|
|
|
(341 |
) |
Adjusted EBITDAX |
$ |
3,534 |
|
|
$ |
10,360 |
|
|
$ |
6,993 |
|
|
$ |
26,625 |
|
|
$ |
37,484 |
|
|
Three Months Ended |
|
Year Ended December 31, |
Reconciliation of Net
Income (Loss) to Adjusted Net Income (Loss) |
December 31, 2020 |
|
December 31, 2019 |
|
September 30, 2020 |
|
|
2020 |
|
|
|
2019 |
|
Net income (loss) |
$ |
(3,595 |
) |
|
$ |
1,014 |
|
|
$ |
7,618 |
|
|
$ |
(48,181 |
) |
|
$ |
2,563 |
|
Adjustment for discrete
items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations, net of tax |
|
57 |
|
|
|
37 |
|
|
|
(11 |
) |
|
|
98 |
|
|
|
(5,411 |
) |
Impairment of proved crude oil and natural gas properties |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,625 |
|
|
|
— |
|
Unrealized derivative instruments (gain) loss |
|
6 |
|
|
|
3,095 |
|
|
|
— |
|
|
|
639 |
|
|
|
2,885 |
|
Deferred income tax expense (benefit) |
|
(2,813 |
) |
|
|
1,755 |
|
|
|
(5,299 |
) |
|
|
24,159 |
|
|
|
14,480 |
|
Other operating expense, net |
|
786 |
|
|
|
20 |
|
|
|
37 |
|
|
|
1,669 |
|
|
|
4,421 |
|
Gain on revision of asset retirement obligations |
|
— |
|
|
|
(379 |
) |
|
|
— |
|
|
|
— |
|
|
|
(379 |
) |
Adjusted Net Income
(Loss) |
$ |
(5,559 |
) |
|
$ |
5,542 |
|
|
$ |
2,345 |
|
|
$ |
9,009 |
|
|
$ |
18,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Adjusted Net Income
(Loss) per Share |
$ |
(0.10 |
) |
|
$ |
0.09 |
|
|
$ |
0.04 |
|
|
$ |
0.16 |
|
|
$ |
0.31 |
|
Diluted weighted average
shares outstanding (1) |
|
57,493 |
|
|
|
59,136 |
|
|
|
57,741 |
|
|
|
57,594 |
|
|
|
59,143 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) No adjustments to weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Working Capital to Adjusted Working Capital |
2020 |
|
|
2019 |
|
|
Change |
Current assets |
$ |
63,978 |
|
|
$ |
69,758 |
|
|
$ |
(5,780 |
) |
Current liabilities |
|
(52,576 |
) |
|
|
(63,750 |
) |
|
|
11,174 |
|
Working
capital |
|
11,402 |
|
|
|
6,008 |
|
|
|
5,394 |
|
Add: operating lease
liabilities - current portion |
|
12,890 |
|
|
|
11,990 |
|
|
|
900 |
|
Add: current liabilities -
discontinued operations |
|
7 |
|
|
|
350 |
|
|
|
(343 |
) |
Adjusted Working
Capital |
$ |
24,299 |
|
|
$ |
18,348 |
|
|
$ |
5,951 |
|
Vaalco Energy (NYSE:EGY)
Historical Stock Chart
From Feb 2024 to Mar 2024
Vaalco Energy (NYSE:EGY)
Historical Stock Chart
From Mar 2023 to Mar 2024