VAALCO Energy, Inc. (NYSE:EGY) today reported operational and
financial results for the second quarter 2018.
Highlights and Recent Key
Items:
- Produced an average of 3,549 net barrels of oil per day
(“BOPD”) in the second quarter of 2018, within the guidance range
for the quarter;
- Successfully completed a three-well workover program
within cost guidance, adding 1,100 BOPD of net
production;
- Reported revenues from continuing operations of $24.4
million, slightly below the $27.6 million amount for the first
quarter of 2018, despite the additional partial lifting that
benefited the first quarter;
- Reported income from continuing operations of $0.9
million ($0.02 per diluted share) for the second quarter of 2018,
which was adversely impacted primarily by workover expenses, and to
a lesser extent by mark-to-market charges related to Stock
Appreciation Rights (“SARs”) and crude oil swaps, which
collectively totaled $7.5 million ($0.13 per diluted
share);
- Excluding these three items totaling $7.5 million,
second quarter income from continuing operations would have been
very strong at $8.4 million and nearly unchanged from the $8.7
million ($0.15 per diluted share) amount reported in the first
quarter of 2018;
- Generated Adjusted EBITDAX of $23.3 million for the
first half of 2018 and forecasted Adjusted EBITDAX for the second
half of 2018 to be in the range of $27.0 million to $30.0 million
using Brent strip pricing as of August 3, 2018 and the mid-point of
the Company’s guidance ranges;
- Increased working capital from continuing operations by
$10.9 million during the six months ended June 30, 2018, which
contributed to the increase in cash and cash equivalents to $40.5
million; and
- Paid off outstanding debt balance, leaving VAALCO with
no debt on the balance sheet for the first time since June 30,
2014.
For the second quarter of 2018, VAALCO reported
income from continuing operations of $0.9 million, or $0.02 per
diluted share. This included the impact from approximately
$4.5 million, or $0.08 per diluted share for successful workovers
performed in the quarter, primarily non-cash adjustments for
employee SARs of approximately $2.0 million, or $0.03 per diluted
share, and a non-cash mark-to-market charge related to the
Company’s crude oil swaps of approximately $1.0 million, or $0.02
per diluted share. In the same period in 2017, the Company reported
income from continuing operations of $2.5 million, or $0.04 per
diluted share, and in the first quarter of 2018 reported income
from continuing operations of $8.7 million, or $0.15 per diluted
share. The average realized price for crude oil in the second
quarter of 2018 was $74.36 per barrel, an increase of 59% from
$46.83 per barrel in the second quarter of 2017. In the first
quarter of 2018, the average realized price for crude oil was
$68.69 per barrel. Adjusted EBITDAX totaled $8.8 million in the
second quarter of 2018 compared with $8.6 million in the same
period of 2017, and $14.5 million in the first quarter of 2018.
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: “We are pleased to have restored approximately 1,100
BOPD net production on our Avouma platform through the safe and
successful completion of our workover program. Following completion
of the Avouma workover program, total net production for VAALCO is
currently averaging approximately 4,300 BOPD. While earnings were
down from the first quarter of this year, the decline was related
to definable charges during the quarter for workovers, SARs and the
required mark-to-market adjustment for our crude oil swaps. We
remained focused on operational excellence, mitigating production
downtime and maximizing margins. We are encouraged with how
discussions are progressing with the Gabonese on securing a license
extension that will ensure the long-term viability of our premier
Etame asset. With the recent elimination of all of our outstanding
debt, we will continue to strengthen our balance sheet through
strong cash flow generation at current Brent pricing and look to
add value through future economic development drilling
opportunities.”
Gabon
In October 2017, VAALCO began workover
operations 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 an ESP failure. In May
2018 VAALCO mobilized 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 restored production from both wells in June
2018. In addition the Company took advantage of the hydraulic
workover unit being on the platform to proactively upgrade the ESP
system in the South Tchibala 2-H well. Excluding the Avouma
platform wells, the wells with ESPs on the Company’s three other
platforms have operated without incident for up to four
years. As a result of these workover operations approximately
1,100 BOPD of net production has been restored. Average net
oil production in the second quarter of 2018 was within the
guidance at 3,549 BOPD compared with 3,611 BOPD in the first
quarter of 2018.
Equatorial Guinea and
Angola
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 are being re-evaluated as prices continue to
recover.
VAALCO continues to negotiate with the Angolan
government to exit on reasonable terms from the Block 5 exploration
area.
2018 - Second Quarter Financial
Results
Total oil sales for the second quarter of 2018
were $24.4 million, compared to $27.6 million in the first quarter
of 2018. During the second quarter of 2018, VAALCO sold
approximately 319,000 net barrels of oil at an average price of
$74.36 compared to approximately 414,000 net barrels at an average
price of $46.83 per barrel during the second quarter of 2017.
During the first quarter of 2018, the Company sold approximately
393,000 net barrels of oil at an average price of $68.69 per
barrel.
In June 2018, VAALCO executed commodity swaps at
a Dated Brent weighted average price of $74 per barrel for the
period from and including June 2018 through June 2019 for a
quantity of approximately 400,000 barrels. As of June 30, 2018, the
estimated mark-to-market value of the commodity price swaps in 2018
and beyond was a liability of $1.0 million, which is recorded on
the “Accrued liabilities and other” line item on the condensed
consolidated balance sheet.
Costs and Expenses
Total production expense, excluding workovers,
was $8.3 million, or $26.08 per barrel of oil sales, in the second
quarter of 2018, compared to $9.7 million, or $23.41 per barrel of
oil sales, in the second quarter of 2017, and $10.7 million, or
$27.17 per barrel of oil sales in the first quarter of 2018.
Second quarter 2018 absolute production costs excluding workovers
declined 22% from the first quarter of 2018 due to lower sales
volumes. Workover expense in the second quarter of 2018 was $4.5
million and was spread over three workovers as noted earlier.
Depreciation, depletion and amortization
(DD&A) expense was $1.0 million, or $3.24 per barrel of oil
sales in the three months ended June 30, 2018 compared to $2.0
million, or $4.76 per barrel of oil sales in the comparable period
in 2017, and $1.1 million, or $2.86 per barrel of oil sales in the
first quarter of 2018. DD&A per barrel decreased from
2017 due to the increase in proved reserves at December 31,
2017.
General and administrative (G&A) expense for
the second quarter 2018 was $5.0 million, or $15.70 per barrel of
oil sales, as compared to $3.0 million, or $7.36 per barrel of oil
sales in the second quarter 2017 and $2.6 million, or $6.62 per
barrel of oil sales in the first quarter of 2018. General and
administrative expense includes $2.4 million, $0.6 million, and
$0.3 million of stock-based compensation expense for the quarters
ended June 30, 2018 and 2017 and March 31, 2018,
respectively. Stock-based compensation expense related to
SARs was $2.0 million during the three months ended June 30, 2018
as compared to $0.1 million in the comparable 2017 period; and
therefore accounted for the bulk of the increase. Because
SARs are cash settled when exercised after vesting, these awards
are adjusted to fair value each period, and as a result of the
increase in VAALCO’s stock price from $0.86 at March 31, 2018 to
$2.73 at June 30, 2018, the amount of expense increased by $1.8
million in the second quarter.
Income tax expense for the second quarter of
2018 was $3.6 million compared to $3.1 million for the same period
in 2017, and $4.0 million in the first quarter of 2018. The
increase in income tax expense in the second quarter of 2018 as
compared to the same quarter in 2017 is primarily attributable to
higher revenue in VAALCO’s operations in Gabon.
Capital Investments/Balance
Sheet
During the three months ended June 30, 2018,
VAALCO invested approximately $0.6 million in capital expenditures
on a cash basis, primarily for equipment and enhancements.
The Company does not currently have any material obligations for
capital investments in 2018 but is actively considering development
drilling opportunities in offshore Gabon in 2019.
At the end of the second quarter, VAALCO had an
unrestricted cash balance of $40.5 million. The unrestricted
cash balance included $9.8 million of cash attributable to
non-operating joint venture owner advances. This does not
include an additional $1.0 million in restricted cash (related
primarily to deposits in Gabon) classified as current assets or the
additional $0.9 million of restricted cash classified as long
term.
Beginning with the first quarter of 2018, the
government of Gabon elected to lift its share of oil (which is
reported as income taxes) separately from the Etame joint interest
owners. As a result, Gabon income taxes will be settled when
the government of Gabon lifts its share of production. Such
settlements are expected to occur once or twice per year, depending
on production levels. At June 30, 2018, VAALCO had $5.4
million of foreign taxes payable attributable to such taxes.
While these taxes have been charged against earnings during
the first six months of 2018, the cash payment has not occurred and
instead it is anticipated that the government will elect to take
its lifting of oil in September 2018 for the amount due; this will
reduce VAALCO and the other Etame owners’ share of cash flows from
oil sales in the period in which it occurs.
At March 31, 2018, debt, net of deferred
financing costs, totaled $7.0 million. On May 22, 2018,
VAALCO paid off the outstanding balance on its Amended Term Loan
Agreement with the IFC. The total payoff amount for the
principal and accrued interest since March 31, 2018 was
approximately $7.2 million. VAALCO now has no debt on the balance
sheet for the first time since June 30, 2014.
Outlook Projections
The Company is providing forecasted Adjusted
EBITDAX for the second half of 2018 to be in the range of $27.0
million to $30.0 million using average Brent strip pricing as of
August 3, 2018 of about $74 for the remainder of 2018, and the
mid-point of the Company’s guidance ranges. This would be an
approximately 23% increase over the first half of 2018 actual
Adjusted EBITDAX of $23.3 million. VAALCO estimates that for every
$5.00 increase in realized oil price, the Company generates
approximately $6 million in additional annualized Adjusted
EBITDAX.
Conference Call
As previously announced, the Company will hold a
conference call to discuss its second quarter financial and
operating results August 7, 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 6397074. 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 August 14, 2018 by dialing (855) 859-2056.
International parties may dial (404) 537-3406. The
confirmation code is 6397074.
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, timing of the settlement of Gabon
income taxes, expectations regarding processing facilities,
production, sales and financial 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 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, 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.
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
Patman713-623-0801
|
VAALCO ENERGY, INC AND SUBSIDIARIESConsolidated Balance Sheets
(Unaudited)(in thousands, except share and per share amounts) |
|
|
|
|
|
June 30, 2018 |
|
December 31, 2017 |
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
40,490 |
|
|
$ |
19,669 |
|
Restricted cash |
|
|
1,029 |
|
|
|
842 |
|
Receivables: |
|
|
|
|
|
|
Trade |
|
|
9,607 |
|
|
|
3,556 |
|
Accounts
with joint venture owners, net of allowance of $0.5 million at June
30, 2018 and December 31, 2017 |
|
|
— |
|
|
|
3,395 |
|
Other |
|
|
122 |
|
|
|
100 |
|
Crude oil
inventory |
|
|
1,298 |
|
|
|
3,263 |
|
Prepayments and other |
|
|
3,721 |
|
|
|
2,791 |
|
Current
assets - discontinued operations |
|
|
3,172 |
|
|
|
2,836 |
|
Total
current assets |
|
|
59,439 |
|
|
|
36,452 |
|
Property and equipment
- successful efforts method: |
|
|
|
|
|
|
Wells,
platforms and other production facilities |
|
|
390,404 |
|
|
|
389,935 |
|
Undeveloped acreage |
|
|
10,000 |
|
|
|
10,000 |
|
Equipment
and other |
|
|
8,531 |
|
|
|
9,432 |
|
|
|
|
408,935 |
|
|
|
409,367 |
|
Accumulated
depreciation, depletion, amortization and impairment |
|
|
(387,808 |
) |
|
|
(386,146 |
) |
Net
property and equipment |
|
|
21,127 |
|
|
|
23,221 |
|
Other noncurrent
assets: |
|
|
|
|
|
|
Restricted cash |
|
|
918 |
|
|
|
967 |
|
Value
added tax and other receivables, net of allowance of $6.4 million
and $6.5 million at June 30, 2018 and December 31, 2017,
respectively |
|
|
6,724 |
|
|
|
6,925 |
|
Deferred
tax asset |
|
|
1,260 |
|
|
|
1,260 |
|
Abandonment funding |
|
|
10,808 |
|
|
|
10,808 |
|
Total
assets |
|
$ |
100,276 |
|
|
$ |
79,633 |
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts
payable |
|
$ |
10,876 |
|
|
$ |
11,584 |
|
Accounts
with joint venture owners |
|
|
9,807 |
|
|
|
— |
|
Accrued
liabilities and other |
|
|
16,893 |
|
|
|
12,991 |
|
Foreign
taxes payable |
|
|
5,431 |
|
|
|
— |
|
Current
portion of long term debt |
|
|
— |
|
|
|
6,666 |
|
Current
liabilities - discontinued operations |
|
|
15,186 |
|
|
|
15,347 |
|
Total
current liabilities |
|
|
58,193 |
|
|
|
46,588 |
|
Asset retirement
obligations |
|
|
20,708 |
|
|
|
20,163 |
|
Other long-term
liabilities |
|
|
892 |
|
|
|
284 |
|
Long term debt,
excluding current portion, net |
|
|
— |
|
|
|
2,309 |
|
Total
liabilities |
|
|
79,793 |
|
|
|
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, 66,966,301
and 66,443,971 shares issued, 59,420,471 and 58,862,876 shares
outstanding |
|
|
6,696 |
|
|
|
6,644 |
|
Additional paid-in capital |
|
|
72,013 |
|
|
|
71,251 |
|
Less
treasury stock, 7,545,830 and 7,581,095 shares at cost |
|
|
(37,776 |
) |
|
|
(37,953 |
) |
Accumulated deficit |
|
|
(20,450 |
) |
|
|
(29,653 |
) |
Total
shareholders' equity |
|
|
20,483 |
|
|
|
10,289 |
|
Total
liabilities and shareholders' equity |
|
$ |
100,276 |
|
|
$ |
79,633 |
|
VAALCO ENERGY, INC AND SUBSIDIARIESConsolidated Statements of
Operations (Unaudited)(in thousands, except per share amounts) |
|
|
|
Three Months Ended |
|
|
June 30, 2018 |
|
June 30, 2017 |
|
March 31, 2018 |
Revenues: |
|
|
|
|
|
|
|
|
|
Oil and
natural gas sales |
|
$ |
24,426 |
|
|
$ |
20,425 |
|
|
$ |
27,645 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
|
|
Production expense |
|
|
12,817 |
|
|
|
9,866 |
|
|
|
10,960 |
|
Exploration expense |
|
|
12 |
|
|
|
— |
|
|
|
— |
|
Depreciation, depletion and amortization |
|
|
1,035 |
|
|
|
1,970 |
|
|
|
1,124 |
|
General
and administrative expense |
|
|
5,008 |
|
|
|
3,049 |
|
|
|
2,603 |
|
Bad debt
expense and other |
|
|
145 |
|
|
|
183 |
|
|
|
(56 |
) |
Total
operating costs and expenses |
|
|
19,017 |
|
|
|
15,068 |
|
|
|
14,631 |
|
Other
operating income, net |
|
|
314 |
|
|
|
230 |
|
|
|
24 |
|
Operating
income |
|
|
5,723 |
|
|
|
5,587 |
|
|
|
13,038 |
|
Other
income (expense): |
|
|
|
|
|
|
|
|
|
Interest
expense, net |
|
|
(30 |
) |
|
|
(378 |
) |
|
|
(354 |
) |
Other,
net |
|
|
(1,224 |
) |
|
|
338 |
|
|
|
69 |
|
Total
other expense, net |
|
|
(1,254 |
) |
|
|
(40 |
) |
|
|
(285 |
) |
Income from continuing
operations before income taxes |
|
|
4,469 |
|
|
|
5,547 |
|
|
|
12,753 |
|
Income tax expense |
|
|
3,582 |
|
|
|
3,096 |
|
|
|
4,042 |
|
Income from continuing
operations |
|
|
887 |
|
|
|
2,451 |
|
|
|
8,711 |
|
Loss from discontinued
operations |
|
|
(343 |
) |
|
|
(168 |
) |
|
|
(52 |
) |
Net income |
|
$ |
544 |
|
|
$ |
2,283 |
|
|
$ |
8,659 |
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss)
per share: |
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations |
|
$ |
0.02 |
|
|
$ |
0.04 |
|
|
$ |
0.15 |
|
Loss from
discontinued operations |
|
|
(0.01 |
) |
|
|
0.00 |
|
|
|
0.00 |
|
Net
income per share |
|
$ |
0.01 |
|
|
$ |
0.04 |
|
|
$ |
0.15 |
|
Basic
weighted average shares outstanding |
|
|
59,090 |
|
|
|
58,658 |
|
|
|
58,863 |
|
Diluted net income
(loss) per share: |
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations |
|
$ |
0.02 |
|
|
$ |
0.04 |
|
|
$ |
0.15 |
|
Loss from
discontinued operations |
|
|
(0.01 |
) |
|
|
0.00 |
|
|
|
0.00 |
|
Net
income per share |
|
$ |
0.01 |
|
|
$ |
0.04 |
|
|
$ |
0.15 |
|
Diluted
weighted average shares outstanding |
|
|
59,851 |
|
|
|
58,658 |
|
|
|
58,863 |
|
|
|
|
|
|
|
|
|
|
|
VAALCO ENERGY, INC AND SUBSIDIARIESConsolidated Statements of
Cash Flows (Unaudited)(in thousands) |
|
|
|
Six Months Ended June 30, |
|
|
2018 |
|
|
2017 |
|
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net income |
|
$ |
9,203 |
|
|
$ |
6,542 |
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
Loss from
discontinued operations |
|
|
395 |
|
|
|
344 |
|
Depreciation, depletion and amortization |
|
|
2,159 |
|
|
|
3,839 |
|
Other
amortization |
|
|
191 |
|
|
|
201 |
|
Unrealized foreign exchange (gain)/loss |
|
|
79 |
|
|
|
(580 |
) |
Stock-based compensation |
|
|
2,674 |
|
|
|
783 |
|
Commodity
derivatives loss |
|
|
999 |
|
|
|
50 |
|
Bad debt
expense and other |
|
|
89 |
|
|
|
281 |
|
Other
operating gain, net |
|
|
(338 |
) |
|
|
(167 |
) |
Operational expenses associated with equipment and other |
|
|
1,739 |
|
|
|
— |
|
Change in
operating assets and liabilities: |
|
|
|
|
|
|
Trade
receivables |
|
|
(6,051 |
) |
|
|
(1,314 |
) |
Accounts
with joint venture owners |
|
|
13,203 |
|
|
|
2,610 |
|
Other
receivables |
|
|
(23 |
) |
|
|
58 |
|
Crude oil
inventory |
|
|
1,965 |
|
|
|
(39 |
) |
Prepayments and other |
|
|
(764 |
) |
|
|
395 |
|
Value
added tax and other receivables |
|
|
(249 |
) |
|
|
(1,130 |
) |
Accounts
payable |
|
|
(535 |
) |
|
|
(4,274 |
) |
Foreign
taxes payable |
|
|
5,431 |
|
|
|
— |
|
Accrued
liabilities and other |
|
|
1,381 |
|
|
|
(977 |
) |
Net cash
provided by continuing operating activities |
|
|
31,548 |
|
|
|
6,622 |
|
Net cash
used in discontinued operating activities |
|
|
(892 |
) |
|
|
(4,049 |
) |
Net cash
provided by operating activities |
|
|
30,656 |
|
|
|
2,573 |
|
CASH FLOWS
FROM INVESTING ACTIVITIES: |
|
|
|
|
Property
and equipment expenditures |
|
|
(976 |
) |
|
|
(1,032 |
) |
Acquisitions |
|
|
— |
|
|
|
64 |
|
Proceeds
from sale of oil and gas properties |
|
|
— |
|
|
|
250 |
|
Net cash
used in continuing investing activities |
|
|
(976 |
) |
|
|
(718 |
) |
Net cash
used in discontinued investing activities |
|
|
— |
|
|
|
— |
|
Net cash
used in investing activities |
|
|
(976 |
) |
|
|
(718 |
) |
CASH FLOWS
FROM FINANCING ACTIVITIES: |
|
|
|
|
Proceeds
from the issuances of common stock |
|
|
445 |
|
|
|
38 |
|
Debt
repayment |
|
|
(9,166 |
) |
|
|
(5,833 |
) |
Borrowings |
|
|
— |
|
|
|
4,167 |
|
Net cash
used in continuing financing activities |
|
|
(8,721 |
) |
|
|
(1,628 |
) |
Net cash
provided by discontinued financing activities |
|
|
— |
|
|
|
— |
|
Net cash
used in financing activities |
|
|
(8,721 |
) |
|
|
(1,628 |
) |
NET CHANGE IN CASH,
CASH EQUIVALENTS AND RESTRICTED CASH |
|
|
20,959 |
|
|
|
227 |
|
CASH, CASH EQUIVALENTS
AND RESTRICTED CASH AT BEGINNING OF PERIOD |
|
|
32,286 |
|
|
|
30,643 |
|
CASH, CASH EQUIVALENTS
AND RESTRICTED CASH AT END OF PERIOD |
|
$ |
53,245 |
|
|
$ |
30,870 |
|
VAALCO ENERGY, INC AND SUBSIDIARIESSelected Financial and
Operating Statistics(Unaudited) |
|
|
|
Three Months Ended |
|
|
June 30, 2018 |
|
June 30, 2017 |
|
March 31, 2018 |
NET SALES DATA: |
|
|
|
|
|
|
|
|
|
Oil
(MBbls) |
|
|
319 |
|
|
|
414 |
|
|
|
393 |
|
|
|
|
|
|
|
|
|
|
|
Average
daily sales volumes (bbls/day) |
|
|
3,505 |
|
|
|
4,549 |
|
|
|
4,367 |
|
NET PRODUCTION
DATA |
|
|
|
|
|
|
|
|
|
Oil
(MBbls) |
|
|
323 |
|
|
|
397 |
|
|
|
325 |
|
Average daily production volumes (MBbls/day) |
3,549 |
|
|
|
4,363 |
|
|
|
3,611 |
|
AVERAGE SALES
PRICES: |
|
|
|
|
|
|
|
|
|
Oil
($/Bbl) |
|
$ |
74.36 |
|
|
$ |
46.83 |
|
|
$ |
68.69 |
|
COSTS AND EXPENSES (PER
Bbl OF SALES): |
|
|
|
|
|
|
|
|
|
Production expense |
|
$ |
40.18 |
|
|
$ |
23.83 |
|
|
$ |
27.89 |
|
Production expense, excluding workovers* |
|
|
26.08 |
|
|
|
23.41 |
|
|
|
27.17 |
|
Depreciation, depletion and amortization |
|
|
3.24 |
|
|
|
4.76 |
|
|
|
2.86 |
|
General
and administrative expense** |
|
|
15.70 |
|
|
|
7.36 |
|
|
|
6.62 |
|
Property and equipment
expenditures, cash basis (in thousands) |
|
$ |
(553 |
) |
|
$ |
(264 |
) |
|
$ |
(423 |
) |
*Workover costs excluded from the three months ended June 30,
2018 and 2017 and March 31, 2018 are $4.5 million, $0.2 million and
$0.3 million, respectively.**General and administrative expenses
include $7.66, $1.52 and $0.80 barrel of oil of sales of
stock-based compensation expense in the three months ended June 30,
2018, and 2017 and March 31, 2018, 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 unrealized 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 |
|
June 30, 2018 |
|
June 30, 2017 |
|
March 31, 2018 |
Net income |
|
$ |
544 |
|
|
$ |
2,283 |
|
|
|
8,659 |
|
Add back: |
|
|
|
|
|
|
|
|
|
Impact of
discontinued operations |
|
|
343 |
|
|
|
168 |
|
|
|
52 |
|
Interest
expense, net |
|
|
30 |
|
|
|
378 |
|
|
|
354 |
|
Income
tax expense |
|
|
3,582 |
|
|
|
3,096 |
|
|
|
4,042 |
|
Depreciation, depletion and amortization |
|
|
1,035 |
|
|
|
1,970 |
|
|
|
1,124 |
|
Non-cash or unusual
items: |
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
2,442 |
|
|
|
629 |
|
|
|
314 |
|
Commodity
derivative loss (income), unrealized |
|
|
999 |
|
|
|
(130 |
) |
|
|
— |
|
Equipment
recovery |
|
|
(314 |
) |
|
|
— |
|
|
|
(24 |
) |
Bad debt
expense (recovery) and other |
|
|
145 |
|
|
|
183 |
|
|
|
(56 |
) |
Adjusted EBITDAX |
|
$ |
8,806 |
|
|
$ |
8,577 |
|
|
$ |
14,465 |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Changes in Working Capital from continuing
operations |
|
June 30, 2018 |
|
December 31, 2017 |
|
Change |
Current assets |
|
$ |
56,267 |
|
$ |
33,616 |
|
$ |
22,651 |
Current
liabilities |
|
|
43,007 |
|
|
31,241 |
|
|
11,766 |
Working capital from
continuing operations(1) |
|
$ |
13,260 |
|
$ |
2,375 |
|
$ |
10,885 |
|
|
|
|
|
|
|
|
|
|
(1) Excludes current assets and current liabilities attributable
to discontinued operations.
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