VAALCO Announces the Closing of the Acquisition of Additional Interest in the Etame Field From Sasol
February 25 2021 - 4:45PM
VAALCO Energy, Inc. (NYSE: EGY; LSE: EGY) (“VAALCO” or the
“Company”) today announced that it has now completed the previously
announced acquisition of Sasol Gabon S.A.’s (“Sasol”) 27.8% working
interest(1) in the Etame Marin block offshore Gabon, increasing the
Company’s total working interest to 58.8%.
Key Highlights
- Nearly doubles VAALCO’s total net production and reserves;
- Expected to be immediately accretive to VAALCO, with minimal
additional variable costs;
- Anticipated to materially increase free cash flow(2) in 2021
and beyond, particularly in the current increasing price
environment;
- Paid $29.6 million in cash to Sasol, taking into account the
agreed upon transaction price of $44 million, the deposit already
paid and post-effective date adjustments, with a future contingent
payment of up to $5 million; and
- Funded the closing of the acquisition entirely from cash on
hand and cash from operations.
Cary Bounds, Chief Executive Officer, commented,
“We are extremely pleased to close this transformational and
accretive transaction in a rising price environment. All cash
payments were funded entirely by cash on hand. With the additional
production from the acquisition, we are forecasting significant
cash flow generation in 2021. In addition, we believe the recently
acquired 3D seismic will improve our subsurface interpretation at
Etame and lead to another successful drilling campaign, starting
late this year or early next year, funded from cash on hand and
cash from operations. Sustained operational and robust financial
performance at Etame serves as the foundation for growing the
Company through future accretive acquisition opportunities in line
with our strategy and operational expertise in West Africa.”
The transaction had an economic effective date
of July 1, 2020. Taking into account the $4.3 million deposit, net
cash flow from the Sasol interest through closing and other
purchase price adjustments, VAALCO paid $29.6 million to Sasol at
closing from cash on hand. VAALCO’s reserves, production and
financial results for the Sasol interest being acquired will be
included in the Company’s results for periods after the closing
date of the transaction.
Contingent Payments
Under the terms of the agreement, a contingent
payment of $5 million will be payable to Sasol by VAALCO if Brent
oil pricing averages greater than $60 per barrel for 90 consecutive
days during the period from July 1, 2020 to June 30, 2022.
(1) 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. (2) Free cash flow is calculated as (i)
revenues less production expenses, general and administrative
expense, annual abandonment funding and current income tax expense
divided by (ii) the number of NRI barrels of oil sold.
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 63.6% participating 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 |
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Al Petrie Advisors (US
Investor Relations) |
+00 1 713 543 3422 |
Al Petrie / Chris Delange |
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Buchanan (UK Financial
PR) |
+44 (0) 207 466 5000 |
Ben Romney / Kelsey
Traynor / James Husband |
VAALCO@buchanan.uk.com |
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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 recent 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, 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 and pending acquisitions, capital
expenditures, future drilling plans, acquisition and 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.
Inside Information
This announcement contains inside information as
defined in Regulation (EU) No. 596/2014 on market abuse (“MAR”) and
is made in accordance with the Company’s obligations under article
17 of MAR.
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