VAALCO Energy, Inc. (NYSE:EGY) today reported operational and
financial results for the first quarter 2018.
Highlights and Recent Key
Items:
- Reported income from continuing operations of $8.7
million ($0.15 per diluted share) for the first quarter of 2018,
which was 146% higher compared with $3.5 million ($0.06 per diluted
share) in the fourth quarter of 2017;
- Generated operating income of $13.0 million in the
first quarter of 2018, which was $10.5 million higher compared with
$2.5 million in the fourth quarter of 2017;
- Grew Adjusted EBITDAX to $14.5 million, up $10.5
million from $3.9 million in the fourth quarter of
2017;
- As previously disclosed, income from continuing
operations, operating income and Adjusted EBITDAX were positively
impacted this quarter by higher realized Brent pricing, no
commodity hedges in place and the split lifting that took place
during the period from December 31, 2017 to January 1,
2018;
- Produced an average of 3,611 net barrels of oil per day
(BOPD) in the first quarter of 2018, above the guidance range for
the quarter, despite two wells that were shut-in during the period
as a result of prior year electrical submersible pump (“ESP”)
failures on the Avouma platform;
- Realized pricing of $68.69 per barrel of oil in the
first quarter of 2018, up 15% compared with $59.89 per barrel in
the fourth quarter of 2017;
- Increased working capital from continuing operations by
$7.9 million, which contributed to the increase in cash and cash
equivalents;
- Reduced debt by $2.1 million, resulting in total debt
(principal amount) at March 31, 2018 of $7.1 million.
For the first quarter of 2018, VAALCO reported
income from continuing operations of $8.7 million, or $0.15 per
diluted share. In the same period in 2017, the Company
reported income from continuing operations of $4.4 million, or
$0.07 per diluted share, and in the fourth quarter of 2017 reported
income from continuing operations of $3.5 million, or $0.06 per
diluted share. The average realized price for crude oil in
the first quarter of 2018 was $68.69 per barrel, an increase of 32%
from $51.99 per barrel in the first quarter of 2017. In the
fourth quarter of 2017, the average realized price for crude oil
was $59.89 per barrel. Adjusted EBITDAX totaled $14.5 million in
the first quarter of 2018 compared with $10.4 million in the same
period of 2017, and $3.9 million in the fourth quarter of 2017.
Adjusted EBITDAX and working capital from
continuing operations are Non-GAAP financial measures and are
described and reconciled to the closest GAAP measure in the
attached table under “Non-GAAP Financial Measures.”
Cary Bounds, VAALCO’s Chief Executive Officer
commented: “I am very pleased with our strong first quarter 2018
results. With our realized pricing correlated to Brent and no
hedges in place for 2018, we were able to generate significant net
income and adjusted EBITDAX. As our oil price realizations in the
first quarter grew to the highest level since the fourth quarter of
2014, so did our operational margin per barrel, and we were able to
increase our operational income from the fourth quarter of 2017 by
over $10 million. We also paid down our debt by $2.1 million and
grew cash to $32.2 million. We are delivering on guidance and
strengthening our balance sheet, while we continue to evaluate
development opportunities at Etame that we are considering drilling
early next year, subject to approvals from the Gabon government and
our partners. We are mobilizing a hydraulic workover unit to our
Avouma platform to replace the ESPs in our two wells that are
temporarily shut-in and expect to restore approximately 750 BOPD of
production from those wells before the end of the second quarter. I
am optimistic that we will create substantial value for our
shareholders in 2018 by continuing to enhance our operations and
improving our balance sheet.
Gabon
In the first quarter of 2018, net oil production
exceeded guidance at 3,611 BOPD compared with 3,957 BOPD in the
fourth quarter of 2017. The decrease in production was primarily
due to the loss of production from two Avouma wells that
experienced ESP failures in late 2017.
In late 2016, VAALCO completed a successful
workover campaign and replaced ESPs in the South Tchibala 2-H and
Avouma 2-H wells on the Avouma platform. Following the
failure of the South Tchibala 2-H ESP in July 2017, VAALCO began
workover operations in October 2017 to replace failed ESPs in the
South Tchibala 1-HB and South Tchibala 2-H wells. While
production from the South Tchibala 1-HB well was not restored, the
workover operation on the South Tchibala 2-H well was successfully
completed in November 2017. Following demobilization of the
workover unit in late 2017, the Avouma 2-H well experienced ESP
failures, and the well remains temporarily shut-in. VAALCO
has worked closely with the original equipment manufacturer and
other technical experts to identify the root causes of the ESP
failures. Based on the results of the combined team’s
analysis, changes have been made to the design, installation and
operating systems of the ESPs which the Company believes will
reduce the likelihood of untimely failures in the future.
VAALCO is mobilizing a hydraulic workover unit to the Avouma
platform to replace the ESP systems in the Avouma 2-H and the South
Tchibala 1-HB wells and restore approximately 750 BOPD of net
production to both wells before the end of the second quarter of
2018. Excluding the Avouma platform wells, the wells with
ESPs on our three other platforms have operated without incident
for up to four years.
Equatorial Guinea
The Company continues to examine alternative,
lower cost development options for discoveries on Block P offshore
Equatorial Guinea. These discoveries present unique development
opportunities that will be re-evaluated as prices continue to
recover.
2018 First Quarter Financial
Results
Total oil sales for the first quarter of 2018
were $27.6 million, compared to $17.2 million in the fourth quarter
of 2017. During the first quarter of 2018, VAALCO sold
approximately 393,000 net barrels of oil at an average price of
$68.69 per barrel, compared to 280,000 net barrels at an average
price of $59.89 per barrel in the fourth quarter of 2017. In late
December, the normal monthly sales lifting from the floating
production facility that stores oil produced in the Etame block was
not able to be completed by December 31 due to adverse sea and
weather conditions. As a result, the December lifting took
place during the period from December 31, 2017 to January 1, 2018
with 53,300 net barrels of oil sold in December and the remaining
balance of 95,500 net barrels of oil sold in January 2018. In
addition to 95,500 net barrels of oil being sold in January 2018
instead of December 2017, the Company also benefited from the
split-lifting because VAALCO’s January 2018 pricing was $68.66 per
barrel of oil sales as compared to $63.67 per barrel in December
2017.
Costs and Expenses
Total production expense, excluding workovers,
was $10.7 million, or $27.17 per barrel of oil of sales, in the
first quarter of 2018, compared to $8.1 million, or $20.44 per
barrel of oil of sales, in the first quarter of 2017, and $8.2
million, or $29.12 per barrel of sales in the fourth quarter of
2017. Costs per barrel for the fourth quarter of 2017 were
impacted by higher FPSO costs and certain regulatory related
costs. Workover expense in the first quarter of 2018 was $0.3
million.
Depreciation, depletion and amortization
(DD&A) expense was $1.1 million, or $2.86 per barrel of oil of
sales in the three months ended March 31, 2018 compared to $1.9
million, or $4.74 per barrel of oil of sales in the comparable
period in 2017, and $0.9 million, or $3.28 per barrel of oil of
sales in the fourth quarter of 2017. DD&A per barrel
decreased due to the increase in proved reserves at December 31,
2017.
General and administrative (G&A) expense for
the first quarter 2018 was $2.6 million, or $6.62 per barrel of oil
of sales, as compared to $3.1 million, or $7.94 per barrel of oil
of sales in the first quarter 2017 and $1.7 million, or $6.15 per
barrel of oil of sales in the fourth quarter of 2017. General and
administrative expense includes $0.3 million, $0.2 million, and
$0.2 million of non-cash compensation expense for the quarters
ended March 31, 2018 and 2017 and December 31, 2017,
respectively. Fourth quarter 2017 G&A was lower due to a
benefit from increased charges to our joint venture partners during
the quarter offset by accruals related to a Gabon regulatory
audit.
Income tax expense for the first quarter of 2018
was $4.0 million compared to $3.2 million for the same period in
2017, and $1.3 million in the fourth quarter of 2017. The
increase in income tax expense in the first quarter of 2018 as
compared to the same quarter in 2017 is primarily attributable to
higher revenue in VAALCO’s operations in Gabon. Due to the
Tax Cuts and Jobs Act enacted in December 2017, a $1.3 million
income tax benefit associated with the reversal of the valuation
allowance related to AMT credits was recorded during the fourth
quarter of 2017.
Capital Investments/Balance
Sheet
During the three months ended March 31, 2018,
VAALCO invested approximately $0.4 million in capital expenditures
on a cash basis, primarily for equipment and enhancements.
The Company does not currently have any material commitments for
capital investments in 2018 but is considering development drilling
offshore Gabon in early 2019.
At the end of the first quarter, VAALCO had an
unrestricted cash balance of $32.2 million. This does not
include an additional $0.9 million in restricted cash (related
primarily to deposits in Gabon) classified as current assets or the
additional $1.0 million of restricted cash classified as long
term. The unrestricted cash balance includes $4.8 million of
cash attributable to non-operating partner advances.
Beginning with the first quarter of 2018, the
government of Gabon elected to lift the state’s share of oil (which
is reported as income taxes) separately from the Etame joint
venture partners. As a result, Gabon income taxes will be
settled when the government of Gabon lifts its own share of
production. Such settlements are expected to occur once or
twice per year, depending on production levels. At March 31,
2018, VAALCO had $1.8 million of foreign taxes payable attributable
to such taxes.
During the first quarter of 2018, VAALCO reduced
its debt by $2.1 million. At March 31, 2018, debt, net of deferred
financing costs, totaled $7.0 million, of which $5.8 million is
expected to be repaid during 2018 and was classified as current,
reflecting the repayment terms of the loan agreement with the
IFC.
Conference Call
As previously announced, the Company will hold a
conference call to discuss its first quarter financial and
operating results May 8, 2018, at 9:00 a.m. Central Time (10:00
a.m. Eastern Time). Interested parties may participate by dialing
(844) 841-1668. International parties may dial (661)
378-9859. The confirmation code is 8093007. This call
will also be webcast on VAALCO’s website at
www.vaalco.com.
An audio replay will be available beginning
approximately two hours after the end of the call and be available
through May 22, 2018 by dialing (855) 859-2056. International
parties may dial (404) 537-3406. The confirmation code is
8093007.
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 amounts due in connection with the Company’s withdrawal
from Angola, expected sources of future capital funding and future
liquidity, future operating losses, future changes in oil and
natural gas prices, future strategic alternatives, capital
expenditures, future drilling plans, prospect evaluations,
negotiations with governments and third parties including with the
government of the Republic of Gabon in connection with a revised
production sharing contract, expectations regarding processing
facilities, production and sales projections, reserve growth, and
other issues related to our exit from Angola. 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, oil and gas price volatility, inflation, general
economic conditions, the Company's success in discovering,
developing and producing reserves, production and sales differences
due to timing of liftings, decisions by our current lender or
future lenders, the risks associated with liquidity, the risk that
our negotiations with the governments of the Republic of Gabon and
the Republic of Angola will be unsuccessful, lack of availability
of goods, services and capital, environmental risks, drilling
risks, foreign regulatory and 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,
2017 and quarterly report on Form 10-Q for the quarter ended March
31, 2018, which will be filed shortly, 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.
About VAALCO
VAALCO Energy, Inc. is a Houston, Texas 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
development and exploitation of international oil and natural gas
properties. The Company's properties and exploration acreage are
located primarily in Gabon and Equatorial Guinea in West
Africa.
Investor ContactPhil
Patman 713-623-0801
VAALCO ENERGY, INC AND SUBSIDIARIESConsolidated Balance Sheets
(Unaudited)(in thousands, except share and per share amounts)
|
|
March 31, 2018 |
|
December 31, 2017 |
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
32,205 |
|
|
$ |
19,669 |
|
Restricted cash |
|
|
866 |
|
|
|
842 |
|
Receivables: |
|
|
|
|
|
|
Trade |
|
|
8,260 |
|
|
|
3,556 |
|
Accounts
with partners, net of allowance of $0.5 million at March 31, 2018
and December 31, 2017 |
|
|
88 |
|
|
|
3,395 |
|
Other |
|
|
12 |
|
|
|
100 |
|
Crude oil
inventory |
|
|
1,279 |
|
|
|
3,263 |
|
Prepayments and other |
|
|
3,767 |
|
|
|
2,791 |
|
Current
assets - discontinued operations |
|
|
3,030 |
|
|
|
2,836 |
|
Total
current assets |
|
|
49,507 |
|
|
|
36,452 |
|
Property and equipment
- successful efforts method: |
|
|
|
|
|
|
Wells,
platforms and other production facilities |
|
|
390,279 |
|
|
|
389,935 |
|
Undeveloped acreage |
|
|
10,000 |
|
|
|
10,000 |
|
Equipment
and other |
|
|
9,366 |
|
|
|
9,432 |
|
|
|
|
409,645 |
|
|
|
409,367 |
|
Accumulated
depreciation, depletion, amortization and impairment |
|
|
(387,046 |
) |
|
|
(386,146 |
) |
Net
property and equipment |
|
|
22,599 |
|
|
|
23,221 |
|
Other noncurrent
assets: |
|
|
|
|
|
|
Restricted cash |
|
|
968 |
|
|
|
967 |
|
Value
added tax and other receivables, net of allowance of $6.6 million
and $6.5 million at March 31, 2018 and December 31, 2017,
respectively |
|
|
7,043 |
|
|
|
6,925 |
|
Deferred
tax asset |
|
|
1,260 |
|
|
|
1,260 |
|
Abandonment funding |
|
|
10,808 |
|
|
|
10,808 |
|
Total
assets |
|
$ |
92,185 |
|
|
$ |
79,633 |
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts
payable |
|
$ |
10,269 |
|
|
$ |
11,584 |
|
Accounts
with partners |
|
|
4,822 |
|
|
|
— |
|
Accrued
liabilities and other |
|
|
13,477 |
|
|
|
12,991 |
|
Foreign
taxes payable |
|
|
1,849 |
|
|
|
— |
|
Current
portion of long term debt |
|
|
5,833 |
|
|
|
6,666 |
|
Current
liabilities - discontinued operations |
|
|
15,002 |
|
|
|
15,347 |
|
Total
current liabilities |
|
|
51,252 |
|
|
|
46,588 |
|
Asset retirement
obligations |
|
|
20,434 |
|
|
|
20,163 |
|
Other long term
liabilities |
|
|
283 |
|
|
|
284 |
|
Long term debt,
excluding current portion, net |
|
|
1,119 |
|
|
|
2,309 |
|
Total
liabilities |
|
|
73,088 |
|
|
|
69,344 |
|
Commitments and
contingencies |
|
|
|
|
|
|
Shareholders’
equity: |
|
|
|
|
|
|
Preferred
stock, none issued, 500,000 shares authorized, $25 par value |
|
|
— |
|
|
|
— |
|
Common
stock, $0.10 par value; 100,000,000 shares authorized, 66,443,971
shares issued, 58,862,876 shares outstanding as of March 31, 2018
and December 31, 2017 |
|
|
6,644 |
|
|
|
6,644 |
|
Additional paid-in capital |
|
|
71,400 |
|
|
|
71,251 |
|
Less
treasury stock 7,581,095 shares at cost as of March 31, 2018 and
December 31, 2017 |
|
|
(37,953 |
) |
|
|
(37,953 |
) |
Accumulated deficit |
|
|
(20,994 |
) |
|
|
(29,653 |
) |
Total
shareholders' equity |
|
|
19,097 |
|
|
|
10,289 |
|
Total
liabilities and shareholders' equity |
|
$ |
92,185 |
|
|
$ |
79,633 |
|
|
|
|
|
|
|
|
|
|
VAALCO ENERGY, INC AND SUBSIDIARIESConsolidated Statements of
Operations (Unaudited)(in thousands, except per share amounts)
|
|
Three Months Ended |
|
|
March 31, 2018 |
|
March 31, 2017 |
|
December 31, 2017 |
Revenues: |
|
|
|
|
|
|
|
|
|
Oil and
natural gas sales |
|
$ |
27,645 |
|
|
$ |
21,266 |
|
|
$ |
17,156 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
|
|
Production expense |
|
|
10,960 |
|
|
|
7,946 |
|
|
|
11,549 |
|
Exploration expense |
|
|
— |
|
|
|
— |
|
|
|
3 |
|
Depreciation, depletion and amortization |
|
|
1,124 |
|
|
|
1,869 |
|
|
|
918 |
|
General
and administrative expense |
|
|
2,603 |
|
|
|
3,127 |
|
|
|
1,723 |
|
General
and administrative related to shareholder matters |
|
|
— |
|
|
|
15 |
|
|
|
— |
|
Bad debt
expense (recovery) and other |
|
|
(56 |
) |
|
|
98 |
|
|
|
220 |
|
Total
operating costs and expenses |
|
|
14,631 |
|
|
|
13,055 |
|
|
|
14,413 |
|
Other
operating income (expense), net |
|
|
24 |
|
|
|
(63 |
) |
|
|
(248 |
) |
Operating
income |
|
|
13,038 |
|
|
|
8,148 |
|
|
|
2,495 |
|
Other
income (expense): |
|
|
|
|
|
|
|
|
|
Interest
expense, net |
|
|
(354 |
) |
|
|
(403 |
) |
|
|
(306 |
) |
Other,
net |
|
|
69 |
|
|
|
(116 |
) |
|
|
2,684 |
|
Total
other income (expense), net |
|
|
(285 |
) |
|
|
(519 |
) |
|
|
2,378 |
|
Income from continuing
operations before income taxes |
|
|
12,753 |
|
|
|
7,629 |
|
|
|
4,873 |
|
Income tax expense |
|
|
4,042 |
|
|
|
3,194 |
|
|
|
1,339 |
|
Income from continuing
operations |
|
|
8,711 |
|
|
|
4,435 |
|
|
|
3,534 |
|
Loss from discontinued
operations |
|
|
(52 |
) |
|
|
(176 |
) |
|
|
(103 |
) |
Net income |
|
$ |
8,659 |
|
|
$ |
4,259 |
|
|
$ |
3,431 |
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss)
per share: |
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations |
|
$ |
0.15 |
|
|
$ |
0.07 |
|
|
$ |
0.06 |
|
Loss from
discontinued operations |
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
Net
income per share |
|
$ |
0.15 |
|
|
$ |
0.07 |
|
|
$ |
0.06 |
|
Basic
weighted average shares outstanding |
|
|
58,863 |
|
|
|
58,567 |
|
|
|
58,819 |
|
Diluted net income
(loss) per share: |
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations |
|
$ |
0.15 |
|
|
$ |
0.07 |
|
|
$ |
0.06 |
|
Loss from
discontinued operations |
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
Net
income per share |
|
$ |
0.15 |
|
|
$ |
0.07 |
|
|
$ |
0.06 |
|
Diluted
weighted average shares outstanding |
|
|
58,863 |
|
|
|
58,580 |
|
|
|
58,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VAALCO ENERGY, INC AND SUBSIDIARIESConsolidated Statements of
Cash Flows (Unaudited)(in thousands)
|
|
Three Months Ended March 31, |
|
|
2018 |
|
2017 |
Cash Flows From
Operating Activities: |
|
|
|
|
|
|
Net income |
|
$ |
8,659 |
|
|
$ |
4,259 |
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
Loss from
discontinued operations |
|
|
52 |
|
|
|
176 |
|
Depreciation, depletion and amortization |
|
|
1,124 |
|
|
|
1,869 |
|
Other
amortization |
|
|
60 |
|
|
|
97 |
|
Unrealized foreign exchange gain |
|
|
(75 |
) |
|
|
(128 |
) |
Stock-based compensation |
|
|
314 |
|
|
|
154 |
|
Commodity
derivatives loss |
|
|
— |
|
|
|
180 |
|
Bad debt
expense (recovery) and other |
|
|
(56 |
) |
|
|
98 |
|
Other
operating (gain) loss, net |
|
|
(24 |
) |
|
|
63 |
|
Operational expenses associated with equipment and other |
|
|
172 |
|
|
|
— |
|
Change in
operating assets and liabilities: |
|
|
|
|
|
|
Trade
receivables |
|
|
(4,704 |
) |
|
|
255 |
|
Accounts
with partners |
|
|
8,129 |
|
|
|
8,099 |
|
Other
receivables |
|
|
37 |
|
|
|
40 |
|
Crude oil
inventory |
|
|
1,984 |
|
|
|
(124 |
) |
Value
added tax and other receivables |
|
|
83 |
|
|
|
(317 |
) |
Prepayments and other |
|
|
(804 |
) |
|
|
536 |
|
Accounts
payable |
|
|
(1,291 |
) |
|
|
(9,066 |
) |
Foreign
taxes payable |
|
|
1,849 |
|
|
|
— |
|
Accrued
liabilities and other |
|
|
149 |
|
|
|
(1,509 |
) |
Net cash
provided by continuing operating activities |
|
|
15,658 |
|
|
|
4,682 |
|
Net cash
used in discontinued operating activities |
|
|
(591 |
) |
|
|
(584 |
) |
Net cash
provided by operating activities |
|
|
15,067 |
|
|
|
4,098 |
|
CASH FLOWS
FROM INVESTING ACTIVITIES: |
|
|
|
|
Property
and equipment expenditures |
|
|
(423 |
) |
|
|
(768 |
) |
Net cash
used in continuing investing activities |
|
|
(423 |
) |
|
|
(768 |
) |
Net cash
used in discontinued investing activities |
|
|
— |
|
|
|
— |
|
Net cash
used in investing activities |
|
|
(423 |
) |
|
|
(768 |
) |
CASH FLOWS
FROM FINANCING ACTIVITIES: |
|
|
|
|
Proceeds
from the issuances of common stock |
|
|
— |
|
|
|
38 |
|
Debt
repayment |
|
|
(2,083 |
) |
|
|
(3,750 |
) |
Borrowings |
|
|
— |
|
|
|
4,167 |
|
Net cash
provided by (used in) continuing financing activities |
|
|
(2,083 |
) |
|
|
455 |
|
Net cash
provided by discontinued financing activities |
|
|
— |
|
|
|
— |
|
Net cash
provided by (used in) financing activities |
|
|
(2,083 |
) |
|
|
455 |
|
NET CHANGE IN CASH,
CASH EQUIVALENTS AND RESTRICTED CASH |
|
|
12,561 |
|
|
|
3,785 |
|
CASH, CASH EQUIVALENTS
AND RESTRICTED CASH AT BEGINNING OF PERIOD |
|
|
32,286 |
|
|
|
30,643 |
|
CASH, CASH EQUIVALENTS
AND RESTRICTED CASH AT END OF PERIOD |
|
$ |
44,847 |
|
|
$ |
34,428 |
|
|
|
|
|
|
|
|
|
|
VAALCO ENERGY, INC AND SUBSIDIARIESSelected Financial and
Operating Statistics(Unaudited)
|
|
Three Months Ended |
|
|
March 31, 2018 |
|
March 31, 2017 |
|
December 31, 2017 |
NET SALES DATA: |
|
|
|
|
|
|
|
|
|
Oil
(MBbls) |
|
|
393 |
|
|
394 |
|
|
280 |
|
|
|
|
|
|
|
|
|
|
Average
daily sales volumes (bbls/day) |
|
|
4,367 |
|
|
4,378 |
|
|
3,043 |
NET PRODUCTION
DATA |
|
|
|
|
|
|
|
|
|
Oil
(MBbls) |
|
|
325 |
|
|
416 |
|
|
364 |
Average daily production volumes (MBbls/day) |
3,611 |
|
|
4,622 |
|
|
3,957 |
AVERAGE SALES
PRICES: |
|
|
|
|
|
|
|
|
|
Oil
($/Bbl) |
|
$ |
68.69 |
|
$ |
51.99 |
|
$ |
59.89 |
COSTS AND EXPENSES (PER
Bbl OF SALES): |
|
|
|
|
|
|
|
|
|
Production expense |
|
$ |
27.89 |
|
$ |
20.17 |
|
$ |
41.25 |
Production expense, excluding workovers* |
|
|
27.17 |
|
|
20.44 |
|
|
29.12 |
Depreciation, depletion and amortization |
|
|
2.86 |
|
|
4.74 |
|
|
3.28 |
General
and administrative expense** |
|
|
6.62 |
|
|
7.94 |
|
|
6.15 |
Property and equipment
expenditures, cash basis (in thousands) |
|
$ |
423 |
|
$ |
768 |
|
$ |
513 |
|
|
|
|
|
|
|
|
|
|
*Workover costs excluded from the three months ended March 31,
2018 and 2017 and December 31, 2017 are $0.3 million, $ (0.1)
million and $3.4 million, respectively.**General and administrative
expenses include $0.80, $0.39 and $0.59 barrel of oil of sales of
non-cash stock-based compensation expense in the three months ended
March 31, 2018, and 2017 and December 31, 2017, 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 compensation expense and commodity derivative loss.
Adjusted EBITDAX has significant limitations,
including that it does not reflect the Company’s cash requirements
for capital expenditures, contractual commitments, working capital
or debt service. Adjusted EBITDAX should not be considered as a
substitute for net income (loss), operating income (loss), cash
flows from operating activities or any other measure of financial
performance or liquidity presented in accordance with GAAP.
Adjusted EBITDAX excludes some, but not all, items that affect net
income (loss) and operating income (loss) and these measures may
vary among other companies. Therefore, the Company’s Adjusted
EBITDAX may not be comparable to similarly titled measures used by
other companies.
The table below reconciles the most directly
comparable GAAP financial measures to Adjusted EBITDAX.
VAALCO ENERGY, INC AND SUBSIDIARIESReconciliations of Non-GAAP
Measures(Unaudited)(in thousands)
|
|
Three Months Ended |
Reconciliation
of Net income to Adjusted EBITDAX |
|
March 31, 2018 |
|
March 31, 2017 |
|
December 31, 2017 |
Net income |
|
$ |
8,659 |
|
|
$ |
4,259 |
|
|
3,431 |
|
Add back: |
|
|
|
|
|
|
|
|
|
Impact of
discontinued operations |
|
|
52 |
|
|
|
176 |
|
|
103 |
|
Interest
expense, net |
|
|
354 |
|
|
|
403 |
|
|
306 |
|
Income
tax expense |
|
|
4,042 |
|
|
|
3,194 |
|
|
1,339 |
|
Depreciation, depletion and amortization |
|
|
1,124 |
|
|
|
1,869 |
|
|
918 |
|
Exploration expense |
|
|
— |
|
|
|
— |
|
|
3 |
|
Non-cash or unusual
items: |
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
314 |
|
|
|
154 |
|
|
165 |
|
Accrued
liabilities reversal |
|
|
— |
|
|
|
— |
|
|
(2,614 |
) |
Shareholder matters |
|
|
— |
|
|
|
15 |
|
|
— |
|
Commodity
derivative loss |
|
|
— |
|
|
|
180 |
|
|
61 |
|
Equipment
(recovery) write-offs |
|
|
(24 |
) |
|
|
63 |
|
|
— |
|
Bad debt
expense (recovery) and other |
|
|
(56 |
) |
|
|
98 |
|
|
220 |
|
Adjusted EBITDAX |
|
$ |
14,465 |
|
|
$ |
10,411 |
|
$ |
3,932 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Changes in Working Capital From Continuing
Operations |
March 31, 2018 |
|
December 31, 2017 |
|
Change |
Current assets |
$ |
46,477 |
|
$ |
33,616 |
|
$ |
12,861 |
|
Current
liabilities |
|
36,250 |
|
|
31,241 |
|
|
5,009 |
|
Working capital(1) |
$ |
10,227 |
|
$ |
2,375 |
|
$ |
7,852 |
|
|
|
|
|
|
|
|
|
|
|
- Excludes current assets and current liabilities attributable to
discontinued operations.
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