VAALCO Energy, Inc. (NYSE: EGY, LSE: EGY) ("VAALCO" or the
"Company") today reported operational and financial results
for the first quarter of 2023.
First Quarter 2023 Highlights and
Key Items:
- Paid first quarter 2023 cash dividend of $0.0625 per
share of common stock and announced quarterly cash dividend of
$0.0625 per share of common stock ($0.25 annualized) to be paid on
June 23, 2023, an increase of 92% compared to 2022;
- Returned $10.5 million to shareholders by purchasing
2.2 million shares since inception of share buy back in November
2022 through May 9, 2023;
- Increased average daily production by 27% to 18,306 net
revenue interest (“NRI”)1 barrels of oil equivalent per day
(“BOEPD”), or 23,152 working interest (“WI”)2 BOEPD compared to the
fourth quarter of 2022;
- Reported Q1 2023 net income of $3.5 million ($0.03 per
diluted share) and Adjusted Net Income3 of $7.3 million ($0.07 per
diluted share);
- Sold 1,224,000 barrels of oil equivalent in Q1 2023,
which were impacted by timing of liftings;
- Expect Q2 2023 NRI sales to be between 1,420,000 and
1,570,000 barrels of oil equivalent;
- Generated Adjusted EBITDAX3 of $47.8 million and funded
$27.7 million in cash capital expenditures from cash on hand and
cash from operations during the first quarter 2023;
- Increased cash and cash equivalents to $52.1 million,
generated $42.0 million in cash flow from operating activities and
reported Adjusted Working Capital1 of $40.2 million at March 31,
2023; and
- Finalized multiple substantive documents with VAALCO's
partners and the Ministry of Mines & Hydrocarbons ("MMH") in
Equatorial Guinea for Block P which includes the Venus
development.
| |
(1 |
) |
All NRI production rates are
VAALCO's working interest volumes less royalty volumes, where
applicable |
| |
(2 |
) |
All WI production rates and
volumes are VAALCO’s working interest volumes |
| |
(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.” |
George Maxwell, VAALCO’s Chief Executive Officer
commented, “In October 2022, we completed the transformational
combination with TransGlobe Energy Corporation that has grown
VAALCO into a diversified, multi-country company focused on
sustainable growth and returning value to shareholders. The first
quarter of 2023 is the first full quarter of reporting as a
combined company. We delivered strong daily production growth
of 27% compared to Q4 2022, and generated significant cash flow and
Adjusted EBITDAX, despite lower sales due to timing of liftings and
lower commodity pricing. Remaining committed to returning value to
shareholders, we increased our quarterly dividend by 92% to $0.0625
per share and have paid the first quarter dividend and announced
the second quarter dividend. In addition, we have returned
$10.5 million in share buy backs through May 9th. We are well
positioned and financially stronger with more reserves, production
and future potential than at any other time in our history. We
are a diversified, multinational exploration and production company
with significant 2P WI CPR reserves across four countries and
heavily weighted to oil. We have no bank debt, a growing cash flow
position and meaningful upside opportunities that we are evaluating
for future organic growth. We have built a company of size and
scale that is capable of supporting sustainable shareholder
returns.”
“Following our meetings with the MMH and our
partners in March regarding our development plans for Equatorial
Guinea, we continue to work towards the finalization of
documents between the partners, having completed the production
sharing contract ("PSC") documentation with the MMH. We are now
moving forward with the project, subject to finalization of JOA
documentation, with a more detailed review of the drilling and
topsides development of the Venus project with the objective of
reducing the overall project costs in conjunction with our
partners. Following a detailed peer review, we are considering
options where the drilling of all three wells (two producers and
one water injector) are drilled as a single campaign which will
reduce the overall drilling costs through lower mobilization costs.
We are also building detailed options for the production and
evacuation facilities throughout the second and third quarters of
2023. Planned activity includes a detailed seabed survey to
identify the prime location for the development facilities. We are
excited about the future in Equatorial Guinea as we begin to
develop the vast resource potential at Block P.”
Operational Update
Egypt
In December 2022, VAALCO spudded the Arta77 HC
well targeting the Nukhul reservoir. The lateral was successfully
drilled through reservoir encountering laterally 1,363 meters of
good oil and gas shows. Historically, the wells drilled in Egypt
were vertical wells and VAALCO is planning to continue to drill
between 15 and 20 vertical wells in Egypt in 2023. The Arta77 HC
was the first horizontal well drilled under the new merged
concession agreement and the Company plans to study the results,
drilling technique and completions methods to enhance potential
productivity of the next horizontal well, which VAALCO plans to
drill in the second half of 2023. In addition to drilling capital,
VAALCO has also spent capital and expense dollars on upgrading
facilities, to improve well performance as well as to meet its
environmental social and governance (“ESG”) standards.
After completing the Arta77 HC well in January
2023, VAALCO drilled five vertical development wells in the first
quarter. One well required a frac stimulation and the other four
wells added over 700 BOPD at the end of the first
quarter. These wells continue to perform very well with May
production from them at nearly 1,100 BOPD. In the second
quarter of 2023, the Company plans to drill another six vertical
wells.
Canada
VAALCO drilled and completed two wells in
the first quarter of 2023, consisting of a 1.5-mile
lateral and a 3-mile lateral, which were also required for
land retention purposes. Both wells were drilled and
completed safely and cost effectively without incident. Facility
tie in work is underway with production expected in early
May. The Company is currently evaluating future drilling
campaigns, with the intent of moving exclusively to 3-mile laterals
in order to improve economics. Additionally, VAALCO is conducting a
review of completions intensity for potential future well
completions and facility and pad optimization which should improve
production cycle times in the future.
Gabon
VAALCO completed its 2021/2022 drilling
campaign in the fourth quarter of 2022. The Company is currently
evaluating locations and planning for its next drilling campaign.
More details will be made available in the second half of
2023. In October 2022, VAALCO successfully completed its
transition to a Floating Storage and Offloading vessel (“FSO”) and
related field reconfiguration processes. This project provides a
lower cost FSO solution that increases the storage capacity for
VAALCO to continue to economically produce from the Etame field and
led to an extension of the economic field life. In 2023, the
Company will continue to focus on operational excellence, including
production uptime and enhancement, to minimize decline until the
next drilling campaign. Gabon production performance in the
first quarter has been strong and slightly ahead of plan. The cost
savings from the new FSO have already begun to be realized but
were partly offset by inflationary and industry supply chain
pressures and temporarily higher diesel costs.
Equatorial Guinea
VAALCO owns a working interest in Block P
offshore Equatorial Guinea, where there are previously discovered
but undeveloped resources as well as additional exploration
potential. In March 2023, VAALCO held productive meetings with the
MMH and its partners in Houston. During these meetings, VAALCO
finalized multiple substantive documents, for Block P which
includes the Venus development, relating to the PSC. VAALCO
anticipates a strong, efficient and economic development of this
exciting discovery with first oil projected for 2026. The Company
believes that there are clear strategic benefits in further
diversifying the revenue generation and country focus of its
portfolio. VAALCO has a proven operating track record for a
development of this kind and it looks forward to demonstrating
these capabilities as the Company progresses the Venus discovery
into production and further demonstrates the meaningful value of
our asset base. With the PSC amendments approved, VAALCO
and its partners have retained not only the Venus development
area but have also retained the entire Block P acreage
for further exploitation.
Environmental, Social and Governance
As part of the Company’s commitment to
environmental stewardship, social awareness and good corporate
governance, VAALCO published its annual ESG report in April 2023.
The report covers VAALCO’s ESG initiatives and related key
performance indicators and is available on VAALCO’s web site,
www.vaalco.com, under the “Sustainability” tab. During 2022, the
Company completed a materiality study, led by its ESG Engineer with
input from key personnel across the organization with
responsibility for engaging with its key stakeholder groups.
Working with an external consultancy, VAALCO created an ESG
materiality framework against which it plotted material topics
informed by the Global Reporting Initiative and Sustainability
Accounting Standards Board. Each of these was assessed based upon
the perceived level of risk to the business and the level of
management control in place.
Financial Update
–First Quarter of 2023
Reported net income of $3.5 million
($0.03 per diluted share) for the first quarter of 2023 which
was down compared with net income of $17.8 million ($0.17 per
diluted share) in the fourth quarter of 2022 and down compared to
$12.2 million ($0.20 per diluted share) in the first quarter
of 2022. The decrease in earnings compared to the fourth quarter of
2022 is mainly due to higher other income (expense) costs and
higher income taxes. During the fourth quarter of 2022 VAALCO
recorded a bargain purchase gain of $10.8 million that was
partially offset by $7.0 million of transaction costs. During
the first quarter of 2023, the Company recorded a measurement
period adjustment related to the acquisition reducing the original
bargain purchase gain by $1.4 million. The decrease in earnings
compared to the first quarter of 2022 is due to higher production
expense, DD&A expense and higher taxes, partially offset by
higher revenue and lower losses on derivatives.
Adjusted EBITDAX totaled $47.8 million in the
first quarter of 2023, a small decrease from $49.8 million in the
fourth quarter of 2022 and a 43% increase from the $33.5 million
generated in the same period in 2022. The increase in first quarter
2023 Adjusted EBITDAX compared to the first quarter of 2022 is
primarily due to higher revenue resulting from the TransGlobe
transaction and lower realized losses on derivatives.
| Revenue and Sales |
|
Q1 2023 |
|
|
Q1 2022 |
|
|
% ChangeQ1 2023 vs.Q1 2022 |
|
|
Q4 2022 |
|
|
% ChangeQ1 2023 vs.Q4 2022 |
|
|
Production (NRI BOEPD) |
|
|
18,306 |
|
|
|
8,051 |
|
|
|
127 |
% |
|
|
14,390 |
|
|
|
27 |
% |
| Sales (NRI BOE) |
|
|
1,224,000 |
|
|
|
616,000 |
|
|
|
99 |
% |
|
|
1,371,000 |
|
|
|
(11 |
)% |
| Realized commodity price
($/BOE) |
|
$ |
65.68 |
|
|
$ |
109.65 |
|
|
|
(40 |
)% |
|
$ |
70.43 |
|
|
|
(7 |
)% |
| Commodity (Per BOE including
realized commodity derivatives) |
|
$ |
65.63 |
|
|
$ |
91.16 |
|
|
|
(28 |
)% |
|
$ |
70.24 |
|
|
|
(7 |
)% |
| Total commodity sales
($MM) |
|
$ |
80.4 |
|
|
$ |
68.7 |
|
|
|
17 |
% |
|
$ |
96.6 |
|
|
|
(17 |
)% |
VAALCO had total NRI sales volumes of 1,224,000
BOE compared to 1,371,000 BOE in the fourth quarter of 2022 and
616,000 BOE for the same period in 2022. A lifting in Gabon
originally planned for March 2023 was delayed until April which
resulted in lower NRI sales volumes of 13,600 BOEPD during the
first quarter of 2023, compared with 14,900 BOEPD in the fourth
quarter of 2022. The Company expects second quarter NRI sales to be
between 15,600 and 17,300 BOEPD which includes the impacts of the
delayed liftings.
First quarter of 2023 realized pricing
(including the effects of derivative contracts) was down 7%
compared to the fourth quarter of 2022 and decreased 28% compared
to the first quarter of 2022.
| Costs and Expenses |
|
Q1 2023 |
|
|
Q1 2022 |
|
|
% ChangeQ1 2023 vs.Q1 2022 |
|
|
Q4 2022 |
|
|
% ChangeQ1 2023 vs.Q4 2022 |
|
|
Production expense, excluding offshore workovers and stock comp
($MM) |
|
$ |
29.3 |
|
|
$ |
18.4 |
|
|
|
59 |
% |
|
$ |
40.8 |
|
|
|
(28 |
)% |
| Production expense, excluding
offshore workovers ($/BOE) |
|
$ |
23.9 |
|
|
$ |
29.83 |
|
|
|
(20 |
)% |
|
$ |
29.80 |
|
|
|
(20 |
)% |
| Offshore workover expense
($MM) |
|
$ |
(1.1 |
) |
|
$ |
— |
|
|
|
— |
% |
|
$ |
4.7 |
|
|
|
(123 |
)% |
| Depreciation, depletion and
amortization ($MM) |
|
$ |
24.4 |
|
|
$ |
4.7 |
|
|
|
420 |
% |
|
$ |
26.3 |
|
|
|
(7 |
)% |
| Depreciation, depletion and
amortization ($/BOE) |
|
$ |
19.9 |
|
|
$ |
7.59 |
|
|
|
163 |
% |
|
$ |
19.20 |
|
|
|
4 |
% |
| General and administrative
expense, excluding stock-based compensation ($MM) |
|
$ |
4.6 |
|
|
$ |
3.6 |
|
|
|
27 |
% |
|
$ |
(0.3 |
) |
|
|
(1,629 |
)% |
| General and administrative
expense, excluding stock-based compensation ($/BOE) |
|
$ |
3.7 |
|
|
$ |
5.80 |
|
|
|
(35 |
)% |
|
$ |
(0.2 |
) |
|
|
(1,973 |
)% |
| Stock-based compensation
expense ($MM) |
|
$ |
0.6 |
|
|
$ |
1.4 |
|
|
|
(57 |
)% |
|
$ |
(0.1 |
) |
|
|
(700 |
)% |
| Current income tax expense
(benefit) ($MM) |
|
$ |
12.3 |
|
|
$ |
5.7 |
|
|
|
116 |
% |
|
$ |
1.7 |
|
|
|
624 |
% |
| Deferred income tax expense
(benefit) ($MM) |
|
$ |
2.5 |
|
|
$ |
(10.3 |
) |
|
|
(124 |
)% |
|
$ |
5.3 |
|
|
|
(53 |
)% |
Total production expense (excluding offshore
workovers and stock compensation) of $29.3 million was at the
low end of the Company’s guidance range. These costs decreased in
the first quarter of 2023 compared to the fourth quarter of 2022
and increased compared to the same period in 2022. The decrease in
first quarter 2023 expense compared to the fourth quarter of 2022
was driven primarily by lower costs related to the completion of
the FSO conversion and field reconfiguration, and lower expense
associated with lower sales volumes. The increase in the first
quarter of 2023 compared to the first quarter of 2022 was primarily
driven by increased production and costs associated with the
TransGlobe combination as well as higher costs associated with
boats, diesel and operating costs. VAALCO has seen inflationary and
industry supply chain pressure on personnel and contractor
costs.
The first quarter of 2023 had a
negative $1.1 million in offshore workover expenses with
reversal of accruals on completion and tie out of the workover
AFE's. While there were no offshore workover expenses in the
first quarter of 2022, the fourth quarter of 2022 incurred
$4.7 million in offshore workover expenses.
Production expense per barrel of oil equivalent,
excluding workover costs and stock compensation, was lower than the
first and fourth quarters of 2022 due to lower costs in Etame
associated with the FSO conversion and lower per BOE costs from the
Egyptian and Canadian assets.
Depreciation, depletion and amortization
(“DD&A”) expense for the three months ended March 31, 2023 was
$24.4 million which was lower than the fourth quarter of 2022
of $26.3 million and higher than the $4.7 million in the first
quarter of 2022. The increase in DD&A expense, compared to the
first quarter of 2022, is due to higher depletable costs
associated with the FSO, the field reconfiguration capital costs at
Etame and the step-up to fair value of the TransGlobe assets.
General and administrative (“G&A”) expense,
excluding stock-based compensation, increased for the
three months ended March 31, 2023 to
$4.6 million from $(0.3) million in the fourth quarter of 2022
and $3.6 million for the same period in the prior year. The
fourth quarter of 2022 benefitted from the large increase in
operational projects during that period involving a majority of
corporate resources, which realized a high percentage of costs
charged to projects. First quarter 2023 G&A was within the
Company’s guidance, the Company has made meaningful progress toward
reducing absolute G&A costs when compared against the combined
TransGlobe and VAALCO first quarter of 2022 costs.
Non-cash stock-based compensation expense was
$0.6 million for the first quarter of 2023 compared to $1.4 million
during the same period in 2022. Non-cash stock-based compensation
expense for the fourth quarter of 2022 was immaterial.
Other income (expense), net, was an
expense of $1.1 million for the three months ended March 31,
2023 compared to an expense of $0.7 million during the same period
in 2022 and was income of $2.5 million for the three months ended
December 31, 2022. Other income (expense), net, normally
consists of foreign currency losses reflecting the continued US$
currency strength against most currencies and in particular the
Euro and CFA. For the three months ended March 31, 2023, other
income (expense), net included a $1.4 million expense associated
with a measurement period adjustment associated with the TransGlobe
acquisition. Additionally, for the three months ended December 31,
2022, other income (expense), net included a $10.8 million bargain
purchase gain on the TransGlobe acquisition offset by
$7.0 million of TransGlobe transaction costs.
Foreign income taxes for Gabon and Egypt are
settled by the government taking their oil in-kind. Income tax
expense for the three months ended March 31, 2023 was an expense of
$14.8 million and is comprised of current tax expense of $12.3
million and deferred tax provision of $2.5 million. Income tax
expense for the three months ended December 31, 2022 was an expense
of $7.0 million. This was comprised of $1.7 million of
current tax expense and a deferred tax provision of $5.3
million. The income tax benefit for the quarter ended March 31,
2022 was a benefit of $4.6 million. This was comprised of $10.3
million of deferred tax benefit and a current tax provision of $5.7
million. For all periods, VAALCO’s overall effective tax rate
was impacted by non-deductible items associated with derivative
losses and corporate expenses.
Capital Investments/Balance Sheet
For the first quarter of 2023, net capital
expenditures totaled $27.7 million on a cash basis and
$25.4 million on an accrual basis. These expenditures were
primarily related to costs associated with the development drilling
programs in Egypt and Canada.
At the end of the first quarter of 2023, VAALCO
had an unrestricted cash balance of
$52.1 million. Working capital at March 31, 2023 was
$30.5 million compared with $38.0 million at December 31, 2022,
while Adjusted Working Capital at March 31, 2023 totaled
$40.2 million.
In mid-2022, VAALCO announced entry into a new
credit agreement, effective May 16, 2022, for a new five-year
Reserve Based Lending (“RBL”) facility with Glencore Energy UK Ltd.
(“Glencore”) that includes an initial commitment of $50 million and
is expandable up to $100 million. The facility is currently
secured by the Company’s assets in Gabon and matures in
2027. Key terms and covenants under the new facility include
Consolidated Total Net Debt to EBITDAX (each term as defined in the
RBL facility) for the trailing twelve months of less than three
times and requires VAALCO to maintain a minimum consolidated cash
and cash equivalents balance of $10 million. While VAALCO
intends to fund its capital and shareholder returns programs with
internally generated funds, the facility enhances future financial
flexibility.
In conjunction with the TransGlobe transaction,
VAALCO assumed an existing revolving loan facility with Alberta
Treasury Branches and on January 5, 2023 the facility was
exited.
Cash Dividend Policy and Share Buyback
Authorization
VAALCO paid a quarterly cash dividend of $0.0625
per share of common stock for the first quarter of 2023 on March
31, 2023. On May 9, 2023, the Company announced its next quarterly
cash dividend of $0.0625 per share of common stock for the second
quarter of 2023 ($0.25 annualized), to be paid on June 23, 2023 to
stockholders of record at the close of business on May 24, 2023.
VAALCO increased its dividend 92% beginning with the first quarter
of 2023 compared to the quarterly dividends paid in 2022. Future
declarations of quarterly dividends and the establishment of future
record and payment dates are subject to approval by the VAALCO
Board of Directors (the "Board").
On November 1, 2022, VAALCO announced that its
newly expanded Board formally ratified and approved the share
buyback program that was announced on August 8, 2022 in
conjunction with the pending business combination with
TransGlobe. The Board also directed management to implement a
Rule 10b5-1 trading plan to facilitate share purchases through open
market purchases, privately negotiated transactions, or otherwise
in compliance with Rule 10b-18 under the Securities Exchange Act of
1934. The plan provides for an aggregate purchase of currently
outstanding common stock up to $30 million. Payment for shares
repurchased under the program will be funded using the Company's
cash on hand and cash flow from operations.
The actual timing, number and value of shares
repurchased under the share buyback program will depend on a number
of factors, including constraints specified in any Rule 10b5-1
trading plans, price, general business and market conditions, and
alternative investment opportunities. Under such a trading plan,
the Company’s third-party broker, subject to Securities and
Exchange Commission regulations regarding certain price, market,
volume and timing constraints, has authority to purchase the
Company’s common stock in accordance with the terms of the
plan. The share buyback program does not obligate the Company
to acquire any specific number of shares in any period, and may be
expanded, extended, modified or discontinued at any time.
Since inception of the buyback program in November 2022 through
May 9, 2023, VAALCO has repurchased $10.5 million in
shares.
Hedging
The Company continued to opportunistically hedge
a portion of its expected production in 2023 to lock in strong cash
flow generation to assist in funding its capital program and
dividend.
The following additional hedges
were entered into in 2023 for periods after the first
quarter:
| Settlement
Period |
Type of Contract |
Index |
|
AverageMonthlyVolumes |
|
|
WeightedAveragePut Price |
|
|
WeightedAverageCall Price |
|
| |
|
|
|
(Bbls) |
|
|
(per Bbl) |
|
|
(per Bbl) |
|
|
April 2023 - June 2023 |
Collars |
Dated Brent |
|
|
95,500 |
|
|
$ |
65.00 |
|
|
$ |
100.00 |
|
| Settlement
Period |
Type of Contract |
Index |
|
AverageMonthlyVolumes |
|
|
WeightedAveragePut Price |
|
|
WeightedAverageCall Price |
|
| |
|
|
|
(Bbls) |
|
|
(per Bbl) |
|
|
(per Bbl) |
|
|
July 2023 - September 2023 |
Collars |
Dated Brent |
|
|
95,000 |
|
|
$ |
65.00 |
|
|
$ |
96.00 |
|
2023 Guidance:
|
|
|
|
FY 2023 |
|
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
| Production
(BOEPD) |
WI |
|
20,400 – 24,400 |
|
|
|
8,500 – 10,300 |
|
|
|
9,700 – 11,500 |
|
|
|
2,200 – 2,600 |
|
| Production
(BOEPD) |
NRI |
|
15,300 – 18,600 |
|
|
|
7,400 – 9,000 |
|
|
|
6,000 – 7,300 |
|
|
|
1,900 – 2,300 |
|
| Sales Volume
(BOEPD) |
WI |
|
20,400 – 24,400 |
|
|
|
8,500 - 10,300 |
|
|
|
9,700 – 11,500 |
|
|
|
2,200 – 2,600 |
|
| Sales Volume
(BOEPD) |
NRI |
|
15,300 – 18,600 |
|
|
|
7,400 - 9,000 |
|
|
|
6,000 – 7,300 |
|
|
|
1,900 – 2,300 |
|
| Production Expense
(millions) |
WI & NRI |
|
$135.5 – $157.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Production Expense per
BOE |
WI |
|
$16.00 – $20.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Production Expense per
BOE |
NRI |
|
$21.00 – $27.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Offshore Workovers
(millions) |
WI & NRI |
|
$1 – $10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash G&A
(millions) |
WI & NRI |
|
$15.0 – $20.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| CAPEX
(millions) |
WI & NRI |
|
$70 – $90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Q2 2023 |
|
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
| Production
(BOEPD) |
WI |
|
22,600 – 24,600 |
|
|
|
9,500 – 10,300 |
|
|
|
10,600 – 11,600 |
|
|
|
2,500 – 2,700 |
|
| Production
(BOEPD) |
NRI |
|
17,300 – 19,000 |
|
|
|
8,300 – 9,000 |
|
|
|
6,900 – 7,700 |
|
|
|
2,100 – 2,300 |
|
| Sales Volume
(BOEPD) |
WI |
|
21,200 – 23,300 |
|
|
|
11,900 – 13,200 |
|
|
|
6.800 – 7.400 |
|
|
|
2,500 – 2,700 |
|
| Sales Volume
(BOEPD) |
NRI |
|
15,600 – 17,300 |
|
|
|
10,400 – 11,500 |
|
|
|
3,100 – 3,500 |
|
|
|
2,100 – 2,300 |
|
| Production Expense
(millions) |
WI & NRI |
|
$32.5 – $39.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Production Expense per
BOE |
WI |
|
$15.50 – $20.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Production Expense per
BOE |
NRI |
|
$22.00 – $29.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Offshore Workovers
(millions) |
WI & NRI |
|
$0 – $1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash G&A
(millions) |
WI & NRI |
|
$3.5 – $5.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| CAPEX
(millions) |
WI & NRI |
|
$18 – $28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Conference Call
As previously announced, the Company will hold a
conference call to discuss its first quarter 2023 financial and
operating results tomorrow, Wednesday May 10, 2023, at 10:00 a.m.
Central Time (11:00 a.m. Eastern Time and 4:00 p.m. London Time).
Interested parties may participate by dialing (833) 685-0907.
Parties in the United Kingdom may participate toll-free by dialing
08082389064 and other international parties may dial (412)
317-5741. Participants should request to be joined to the “VAALCO
Energy First Quarter 2023 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 and incorporated under
the laws of Delaware, is a Houston, USA based, independent energy
company with production, development and exploration assets in
Africa and Canada.
Following its business combination with
TransGlobe in October 2022, VAALCO owns a diverse portfolio of
operated production, development and exploration assets across
Gabon, Egypt, Equatorial Guinea and Canada.
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 / Jon Krinks |
VAALCO@buchanan.uk.com |
Forward Looking Statements
This press release includes “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended (the “Securities Act”) and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to
be covered by the safe harbors created by those laws and other
applicable laws and “forward-looking information” within the
meaning of applicable Canadian securities laws. Where a
forward-looking statement expresses or implies an expectation or
belief as to future events or results, such expectation or belief
is expressed in good faith and believed to have a reasonable basis.
All statements other than statements of historical fact may be
forward-looking statements. The words “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “forecast,” “outlook,” “aim,”
“target,” “will,” “could,” “should,” “may,” “likely,” “plan” and
“probably” or similar words may identify forward-looking
statements, but the absence of these words does not mean that a
statement is not forward-looking. Forward-looking statements in
this press release include, but are not limited to, statements
relating to (i) VAALCO’s ability to realize the anticipated
benefits and synergies expected from the acquisition of TransGlobe;
(ii) estimates of future drilling, production, sales and costs of
acquiring crude oil, natural gas and natural gas liquids; (iii)
estimates of future cost reductions, synergies, including pre-tax
synergies, savings and efficiencies; (iv) expectations regarding
VAALCO’s ability to effectively integrate assets and properties it
acquired as a result of the acquisition of TransGlobe into its
operations; (v) the amount and timing of stock buybacks, if any,
under VAALCO’s stock buyback program and VAALCO’s ability to
enhance stockholder value through such plan; (vi) expectations
regarding future exploration and the development, growth and
potential of VAALCO’s operations, project pipeline and investments,
and schedule and anticipated benefits to be derived therefrom;
(vii) expectations regarding future acquisitions, investments or
divestitures; (viii) expectations of future dividends, buybacks and
other potential returns to stockholders; (ix) expectations of
future balance sheet strength; (x) expectations of future equity
and enterprise value; (xi) expectations of the continued listing of
VAALCO’s common stock on the NYSE and LSE and (xii) VAALCO’s
ability to finalize documents and effectively execute the POD for
the Venus development in Block P.
Such forward-looking statements are subject to
risks, uncertainties and other factors, which could cause actual
results to differ materially from future results expressed,
projected or implied by the forward-looking statements. These risks
and uncertainties include, but are not limited to: risks relating
to any unforeseen liabilities of VAALCO or TransGlobe; the tax
treatment of the business combination with TransGlobe in the United
States and Canada; declines in oil or natural gas prices; the level
of success in exploration, development and production activities;
adverse weather conditions that may negatively impact development
or production activities; the right of host governments in
countries where we operate to expropriate property and terminate
contracts (including the Etame production sharing contract and the
Block P PSC) for reasons of public interest, subject to reasonable
compensation, determinable by the respective government in its
discretion; the final terms of the agreements pertaining to Block P
in Equatorial Guinea, which remain under negotiation; the timing
and costs of exploration and development expenditures; inaccuracies
of reserve estimates or assumptions underlying them; revisions to
reserve estimates as a result of changes in commodity prices;
impacts to financial statements as a result of impairment
write-downs; the ability to generate cash flows that, along with
cash on hand, will be sufficient to support operations and cash
requirements; the ability to attract capital or obtain debt
financing arrangements; currency exchange rates and regulations;
actions by joint venture co-owners; hedging decisions, including
whether or not to enter into derivative financial instruments;
international, federal and state initiatives relating to the
regulation of hydraulic fracturing; failure of assets to yield oil
or gas in commercially viable quantities; uninsured or underinsured
losses resulting from oil and gas operations; inability to access
oil and gas markets due to market conditions or operational
impediments; the impact and costs of compliance with laws and
regulations governing oil and gas operations; the ability to
replace oil and natural gas reserves; any loss of senior management
or technical personnel; competition in the oil and gas industry;
the risk that the business combination with TransGlobe may not
increase VAALCO’s relevance to investors in the international
E&P industry, increase capital market access through scale and
diversification or provide liquidity benefits for stockholders; and
other risks described under the caption “Risk Factors” in VAALCO’s
2022 Annual Report on Form 10-K filed with the SEC on April 6,
2023, VAALCO’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2023, expected to be filed on May 10, 2023 and in
VAALCO’s Definitive Proxy Statement on Schedule 14A filed with the
SEC on April 23, 2023.
Dividends beyond the second quarter of 2023 have
not yet been approved or declared by the Board of Directors for
VAALCO. The declaration and payment of future dividends and the
terms of share buybacks remains at the discretion of the Board and
will be determined based on VAALCO’s financial results, balance
sheet strength, cash and liquidity requirements, future prospects,
crude oil and natural gas prices, and other factors deemed relevant
by the Board. The Board reserves all powers related to the
declaration and payment of dividends and the terms of share
buybacks. Consequently, in determining the dividend to be declared
and paid on VAALCO common stock or the terms of share buybacks, the
Board may revise or terminate the payment level or buyback terms at
any time without prior notice. “Yields” with respect to
dividends and the buyback program in this release are forecasts of
total cash to be paid for shares in the buyback program, plus total
cash to be paid in the form of dividends, and are extrapolations
based on the number of shares of Common Stock issued and
outstanding as of April 28, 2023, which was 107,014,245, and the
share price as of such date.
Inside Information
This announcement contains inside information as
defined in Regulation (EU) No. 596/2014 on market abuse which is
part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 (“MAR”) and is made in accordance with the
Company’s obligations under article 17 of MAR. The person
responsible for arranging the release of this announcement on
behalf of VAALCO is Matthew Powers, Corporate Secretary of
VAALCO.
VAALCO ENERGY, INC AND SUBSIDIARIESConsolidated Balance Sheets
(Unaudited)
| |
|
As of March 31, 2023 |
|
|
As of December 31, 2022 |
|
| ASSETS |
|
(in thousands) |
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
52,119 |
|
|
$ |
37,205 |
|
|
Restricted cash |
|
|
76 |
|
|
|
222 |
|
|
Receivables: |
|
|
|
|
|
|
|
|
|
Trade, net |
|
|
30,795 |
|
|
|
52,147 |
|
|
Accounts with joint venture owners, net of allowance for credit
losses of $0.3 million in both periods presented |
|
|
25 |
|
|
|
15,830 |
|
|
Foreign income taxes receivable |
|
|
- |
|
|
|
2,769 |
|
|
Other, net of allowance for credit losses of $3.5 and $0.0 million,
respectively |
|
|
67,157 |
|
|
|
68,519 |
|
|
Crude oil inventory |
|
|
11,778 |
|
|
|
3,335 |
|
|
Prepayments and other |
|
|
17,424 |
|
|
|
20,070 |
|
|
Total current assets |
|
|
179,374 |
|
|
|
200,097 |
|
| |
|
|
|
|
|
|
|
|
| Crude oil and natural gas
properties, equipment and other - successful efforts method,
net |
|
|
499,953 |
|
|
|
495,272 |
|
| Other noncurrent assets: |
|
|
|
|
|
|
|
|
|
Restricted cash |
|
|
1,771 |
|
|
|
1,763 |
|
|
Value added tax and other receivables, net of allowance of $9.0
million and $8.4 million, respectively |
|
|
8,026 |
|
|
|
7,150 |
|
|
Right of use operating lease assets |
|
|
2,211 |
|
|
|
2,777 |
|
|
Right of use finance lease assets |
|
|
91,198 |
|
|
|
90,698 |
|
|
Deferred tax assets |
|
|
33,430 |
|
|
|
35,432 |
|
|
Abandonment funding |
|
|
6,268 |
|
|
|
20,586 |
|
|
Other long-term assets |
|
|
1,752 |
|
|
|
1,866 |
|
|
Total assets |
|
$ |
823,983 |
|
|
$ |
855,641 |
|
| LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
49,982 |
|
|
$ |
59,886 |
|
|
Accounts with joint venture owners |
|
|
3,098 |
|
|
|
— |
|
|
Accrued liabilities and other |
|
|
80,707 |
|
|
|
91,392 |
|
|
Operating lease liabilities - current portion |
|
|
2,040 |
|
|
|
2,314 |
|
|
Finance lease liabilities - current portion |
|
|
6,907 |
|
|
|
7,811 |
|
|
Foreign income taxes payable |
|
|
5,424 |
|
|
|
— |
|
|
Current liabilities - discontinued operations |
|
|
673 |
|
|
|
687 |
|
|
Total current liabilities |
|
|
148,831 |
|
|
|
162,090 |
|
| Asset retirement
obligations |
|
|
42,327 |
|
|
|
41,695 |
|
| Operating lease liabilities -
net of current portion |
|
|
367 |
|
|
|
686 |
|
| Finance lease liabilities -
net of current portion |
|
|
80,470 |
|
|
|
78,248 |
|
| Deferred tax liabilities |
|
|
79,854 |
|
|
|
81,223 |
|
| Other long-term
liabilities |
|
|
16,959 |
|
|
|
25,594 |
|
|
Total liabilities |
|
|
368,808 |
|
|
|
389,536 |
|
| Commitments and
contingencies |
|
|
|
|
|
|
|
|
| Shareholders’ equity: |
|
|
|
|
|
|
|
|
|
Preferred stock, $25 par value; 500,000 shares authorized, none
issued |
|
|
— |
|
|
|
— |
|
|
Common stock, $0.10 par value; 160,000,000 shares authorized,
120,116,106 and 119,482,680 shares issued, 107,318,214 and
107,852,857 shares outstanding, respectively |
|
|
12,012 |
|
|
|
11,948 |
|
|
Additional paid-in capital |
|
|
354,499 |
|
|
|
353,606 |
|
|
Accumulated other comprehensive income |
|
|
1,054 |
|
|
|
1,179 |
|
|
Less treasury stock, 12,797,892 and 11,629,823 shares,
respectively, at cost |
|
|
(53,029 |
) |
|
|
(47,652 |
) |
|
Retained earnings |
|
|
140,639 |
|
|
|
147,024 |
|
|
Total shareholders' equity |
|
|
455,175 |
|
|
|
466,105 |
|
|
Total liabilities and shareholders' equity |
|
$ |
823,983 |
|
|
$ |
855,641 |
|
VAALCO ENERGY, INC AND SUBSIDIARIESConsolidated Statements of
Operations (Unaudited)
| |
|
Three Months Ended |
|
| |
|
March 31, 2023 |
|
|
March 31, 2022 |
|
|
December 31, 2022 |
|
| |
|
(in thousands except per share amounts) |
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and natural gas liquids sales |
|
$ |
80,403 |
|
|
$ |
68,656 |
|
|
$ |
96,588 |
|
| Operating costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Production expense |
|
|
28,200 |
|
|
|
18,360 |
|
|
|
45,514 |
|
|
Exploration expense |
|
|
8 |
|
|
|
127 |
|
|
|
8 |
|
|
Depreciation, depletion and amortization |
|
|
24,417 |
|
|
|
4,673 |
|
|
|
26,316 |
|
|
General and administrative expense |
|
|
5,224 |
|
|
|
4,994 |
|
|
|
(430 |
) |
|
Credit losses and other |
|
|
935 |
|
|
|
492 |
|
|
|
999 |
|
|
Total operating costs and expenses |
|
|
58,784 |
|
|
|
28,646 |
|
|
|
72,407 |
|
|
Other operating expense, net |
|
|
— |
|
|
|
(5 |
) |
|
|
43 |
|
| Operating income |
|
|
21,619 |
|
|
|
40,005 |
|
|
|
24,224 |
|
| Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments gain (loss), net |
|
|
21 |
|
|
|
(31,758 |
) |
|
|
(290 |
) |
|
Interest expense, net |
|
|
(2,246 |
) |
|
|
(3 |
) |
|
|
(1,679 |
) |
|
Other income (expense), net |
|
|
(1,140 |
) |
|
|
(696 |
) |
|
|
2,466 |
|
|
Total other income (expense), net |
|
|
(3,365 |
) |
|
|
(32,457 |
) |
|
|
497 |
|
| Income from continuing
operations before income taxes |
|
|
18,254 |
|
|
|
7,548 |
|
|
|
24,721 |
|
| Income tax expense
(benefit) |
|
|
14,771 |
|
|
|
(4,628 |
) |
|
|
6,953 |
|
| Income from continuing
operations |
|
|
3,483 |
|
|
|
12,176 |
|
|
|
17,768 |
|
| Loss from discontinued
operations, net of tax |
|
|
(13 |
) |
|
|
(12 |
) |
|
|
(14 |
) |
| Net income |
|
$ |
3,470 |
|
|
$ |
12,164 |
|
|
$ |
17,754 |
|
| Other comprehensive income
(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
| Currency translation
adjustments |
|
|
(125 |
) |
|
|
— |
|
|
|
1,179 |
|
| Comprehensive income |
|
$ |
3,345 |
|
|
$ |
12,164 |
|
|
$ |
18,933 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic net income (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
$ |
0.03 |
|
|
$ |
0.21 |
|
|
$ |
0.17 |
|
|
Loss from discontinued operations, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Net income (loss) per share |
|
$ |
0.03 |
|
|
$ |
0.21 |
|
|
$ |
0.17 |
|
| Basic weighted average shares
outstanding |
|
|
107,387 |
|
|
|
58,702 |
|
|
|
101,227 |
|
| Diluted net income (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
$ |
0.03 |
|
|
$ |
0.20 |
|
|
$ |
0.17 |
|
|
Loss from discontinued operations, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Net income (loss) per share |
|
$ |
0.03 |
|
|
$ |
0.20 |
|
|
$ |
0.17 |
|
| Diluted weighted average
shares outstanding |
|
|
108,752 |
|
|
|
59,179 |
|
|
|
101,578 |
|
VAALCO ENERGY, INC AND SUBSIDIARIES Consolidated Statements
of Cash Flows (Unaudited)
| |
|
Three Months Ended March 31, |
|
| |
|
2023 |
|
|
2022 |
|
| |
|
(in thousands) |
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
| Net income |
|
$ |
3,470 |
|
|
$ |
12,164 |
|
| Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of tax |
|
|
13 |
|
|
|
12 |
|
|
Depreciation, depletion and amortization |
|
|
24,417 |
|
|
|
4,673 |
|
|
Bargain purchase gain |
|
|
1,412 |
|
|
|
— |
|
|
Deferred taxes |
|
|
2,471 |
|
|
|
(10,318 |
) |
|
Unrealized foreign exchange loss |
|
|
512 |
|
|
|
116 |
|
|
Stock-based compensation |
|
|
649 |
|
|
|
1,422 |
|
|
Cash settlements paid on exercised stock appreciation rights |
|
|
(233 |
) |
|
|
(205 |
) |
|
Derivative instruments (gain) loss, net |
|
|
(21 |
) |
|
|
31,758 |
|
|
Cash settlements paid on matured derivative contracts, net |
|
|
(59 |
) |
|
|
(12,500 |
) |
|
Cash settlements paid on asset retirement obligations |
|
|
(123 |
) |
|
|
— |
|
|
Credit losses and other |
|
|
935 |
|
|
|
492 |
|
|
Other operating loss, net |
|
|
— |
|
|
|
5 |
|
|
Operational expenses associated with equipment and other |
|
|
(640 |
) |
|
|
240 |
|
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Trade receivables |
|
|
21,357 |
|
|
|
(22,152 |
) |
|
Accounts with joint venture owners |
|
|
18,911 |
|
|
|
(6,652 |
) |
|
Other receivables |
|
|
(2,309 |
) |
|
|
(1,723 |
) |
|
Crude oil inventory |
|
|
(8,443 |
) |
|
|
(3,041 |
) |
|
Prepayments and other |
|
|
983 |
|
|
|
(876 |
) |
|
Value added tax and other receivables |
|
|
(1,361 |
) |
|
|
(1,076 |
) |
|
Other long-term assets |
|
|
1,051 |
|
|
|
(1,452 |
) |
|
Accounts payable |
|
|
(6,739 |
) |
|
|
(10,132 |
) |
|
Foreign income taxes receivable/payable |
|
|
8,193 |
|
|
|
5,691 |
|
|
Deferred tax liability |
|
|
(3,250 |
) |
|
|
— |
|
|
Accrued liabilities and other |
|
|
(19,177 |
) |
|
|
12,814 |
|
|
Net cash provided by (used in) continuing operating activities |
|
|
42,019 |
|
|
|
(740 |
) |
|
Net cash used in discontinued operating activities |
|
|
(13 |
) |
|
|
(18 |
) |
|
Net cash provided by (used in) operating activities |
|
|
42,006 |
|
|
|
(758 |
) |
| CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
Property and equipment expenditures |
|
|
(27,700 |
) |
|
|
(23,148 |
) |
|
Net cash used in continuing investing activities |
|
|
(27,700 |
) |
|
|
(23,148 |
) |
|
Net cash used in discontinued investing activities |
|
|
— |
|
|
|
— |
|
|
Net cash used in investing activities |
|
|
(27,700 |
) |
|
|
(23,148 |
) |
| CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
Proceeds from the issuances of common stock |
|
|
274 |
|
|
|
198 |
|
|
Dividend distribution |
|
|
(6,735 |
) |
|
|
(1,929 |
) |
|
Treasury shares |
|
|
(5,377 |
) |
|
|
(387 |
) |
|
Payments of finance lease |
|
|
(1,701 |
) |
|
|
— |
|
|
Net cash used in continuing financing activities |
|
|
(13,539 |
) |
|
|
(2,118 |
) |
|
Net cash used in discontinued financing activities |
|
|
— |
|
|
|
— |
|
|
Net cash used in financing activities |
|
|
(13,539 |
) |
|
|
(2,118 |
) |
| Effects of exchange rate
changes on cash |
|
|
(309 |
) |
|
|
— |
|
| NET CHANGE IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH |
|
|
458 |
|
|
|
(26,024 |
) |
| CASH, CASH EQUIVALENTS AND
RESTRICTED CASH AT BEGINNING OF PERIOD |
|
|
59,776 |
|
|
|
72,314 |
|
| CASH, CASH EQUIVALENTS AND
RESTRICTED CASH AT END OF PERIOD |
|
$ |
60,234 |
|
|
$ |
46,290 |
|
VAALCO ENERGY, INC AND SUBSIDIARIESSelected Financial and
Operating Statistics(Unaudited)
| |
|
Three Months Ended |
|
| |
|
March 31, 2023 |
|
|
March 31, 2022 |
|
|
December 31, 2022 |
|
|
NRI SALES DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and natural gas liquids sales (MBOE) |
|
|
1,224 |
|
|
|
616 |
|
|
|
1,371 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| WI PRODUCTION DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
Etame Crude oil (MBbl) |
|
|
942 |
|
|
|
833 |
|
|
|
650 |
|
|
Egypt Crude oil (MBbl) |
|
|
903 |
|
|
|
— |
|
|
|
818 |
|
|
Canada Crude oil, natural gas and natural gas liquids sales
(MBOE) |
|
|
239 |
|
|
|
— |
|
|
|
211 |
|
|
Total Crude oil, natural gas and natural gas liquids sales
(MBOE) |
|
|
2,084 |
|
|
|
833 |
|
|
|
1,680 |
|
|
Average daily production volumes (BOEPD) |
|
|
23,152 |
|
|
|
9,256 |
|
|
|
18,262 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| NRI PRODUCTION DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
Etame Crude oil (MBbl) |
|
|
820 |
|
|
|
725 |
|
|
|
566 |
|
|
Egypt Crude oil (MBbl) |
|
|
616 |
|
|
|
— |
|
|
|
547 |
|
|
Canada Crude oil, natural gas and natural gas liquids sales
(MBOE) |
|
|
211 |
|
|
|
— |
|
|
|
211 |
|
|
Total Crude oil, natural gas and natural gas liquids sales
(MBOE) |
|
|
1,647 |
|
|
|
725 |
|
|
|
1,324 |
|
|
Average daily production volumes (BOEPD) |
|
|
18,306 |
|
|
|
8,051 |
|
|
|
14,390 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| AVERAGE SALES PRICES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and natural gas liquids sales (per BOE) |
|
$ |
65.68 |
|
|
$ |
109.65 |
|
|
$ |
70.43 |
|
|
Crude oil, natural gas and natural gas liquids sales (Per BOE
including realized commodity derivatives) |
|
$ |
65.63 |
|
|
$ |
91.16 |
|
|
$ |
70.24 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| COSTS AND EXPENSES (Per BOE of
sales): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Production expense |
|
$ |
23.04 |
|
|
$ |
29.81 |
|
|
$ |
33.19 |
|
|
Production expense, excluding offshore workovers and stock
compensation* |
|
|
23.91 |
|
|
|
29.83 |
|
|
|
29.73 |
|
|
Depreciation, depletion and amortization |
|
|
19.95 |
|
|
|
7.59 |
|
|
|
19.19 |
|
|
General and administrative expense** |
|
|
4.27 |
|
|
|
8.11 |
|
|
|
-0.31 |
|
|
Property and equipment expenditures, cash basis (in thousands) |
|
$ |
27,700 |
|
|
$ |
14,689 |
|
|
$ |
56,044 |
|
*Offshore workover costs excluded from the three
months ended March 31, 2023 and 2022 and December 31, 2022 are
$(1.1) million, $0.0 million and $4.7 million,
respectively.*Stock compensation associated with production expense
excluded from the three months ended March 31, 2023 and
2022 and December 31, 2022 are not material.**General and
administrative expenses include $0.52, $0.59 and
$(0.09) per barrel of oil related to stock-based
compensation expense in the three months ended March 31, 2023 and
2022 and December 31, 2022, respectively.
NON-GAAP FINANCIAL MEASURES
Management uses Adjusted Net Income to evaluate
operating and financial performance and believes the measure is
useful to investors because it eliminates the impact of certain
non-cash 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 is a non-GAAP financial measure and as used herein
represents net income before discontinued operations, impairment of
proved crude oil and natural gas properties, deferred income tax
expense, unrealized commodity derivative loss, gain on the Sasol
Acquisition and non-cash and other items.
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 net, income tax expense, depletion,
depreciation and amortization, exploration expense, impairment of
proved crude oil and natural gas properties, non-cash and other
items including stock compensation expense, gain on the Sasol
Acquisition and unrealized commodity derivative loss.
Management uses Adjusted Working Capital as a
transition 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 of lease liabilities. Under the lease accounting
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. Adjusted Working Capital is a non-GAAP financial
measure and as used herein represents working capital excluding
working capital attributable to discontinued operations and current
liabilities associated with lease obligations.
Adjusted EBITDAX and Adjusted Net Income have
significant limitations, including that they do not reflect the
Company’s cash requirements for capital expenditures, contractual
commitments, working capital or debt service. Adjusted EBITDAX,
Adjusted Net Income and Adjusted Working Capital should not be
considered as substitutes 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 and Adjusted Net Income 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 Adjusted EBITDAX, Adjusted Net Income and
Adjusted Working Capital 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 Net Income, Adjusted
EBITDAX and Adjusted Working Capital.
VAALCO ENERGY, INC AND SUBSIDIARIESReconciliations of Non-GAAP
Financial Measures(Unaudited)(in thousands)
| |
|
Three Months Ended |
|
| Reconciliation of Net
Income to Adjusted Net Income |
|
March 31, 2023 |
|
|
March 31, 2022 |
|
|
December 31, 2022 |
|
|
Net income |
|
$ |
3,470 |
|
|
$ |
12,164 |
|
|
$ |
17,754 |
|
| Adjustment for discrete
items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations, net of tax |
|
|
13 |
|
|
|
12 |
|
|
|
14 |
|
|
Unrealized derivative instruments loss (gain) |
|
|
(80 |
) |
|
|
19,258 |
|
|
|
38 |
|
|
(Gain) /adjustment of acquisition price, net |
|
|
1,412 |
|
|
|
— |
|
|
|
(10,817 |
) |
|
Arrangement Costs |
|
|
— |
|
|
|
— |
|
|
|
7,006 |
|
|
Deferred income tax expense (benefit) |
|
|
2,471 |
|
|
|
(10,319 |
) |
|
|
5,266 |
|
|
Other operating (income) expense, net |
|
|
— |
|
|
|
5 |
|
|
|
(43 |
) |
| Adjusted Net Income |
|
$ |
7,286 |
|
|
$ |
21,120 |
|
|
$ |
19,218 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted Adjusted Net Income
per Share |
|
$ |
0.07 |
|
|
$ |
0.36 |
|
|
$ |
0.19 |
|
| Diluted weighted average
shares outstanding (1) |
|
|
108,752 |
|
|
|
59,179 |
|
|
|
101,578 |
|
(1) No adjustments to weighted average shares outstanding
| |
|
Three Months Ended |
|
| Reconciliation of Net
Income to Adjusted EBITDAX |
|
March 31, 2023 |
|
|
March 31, 2022 |
|
|
December 31, 2022 |
|
|
Net income |
|
$ |
3,470 |
|
|
$ |
12,164 |
|
|
$ |
17,754 |
|
| Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of discontinued operations |
|
|
13 |
|
|
|
12 |
|
|
|
14 |
|
|
Interest expense (income), net |
|
|
2,246 |
|
|
|
3 |
|
|
|
1,679 |
|
|
Income tax expense (benefit) |
|
|
14,771 |
|
|
|
(4,628 |
) |
|
|
6,953 |
|
|
Depreciation, depletion and amortization |
|
|
24,417 |
|
|
|
4,673 |
|
|
|
26,316 |
|
|
Exploration expense |
|
|
8 |
|
|
|
127 |
|
|
|
8 |
|
| Non-cash or unusual
items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
649 |
|
|
|
1,422 |
|
|
|
(100 |
) |
|
Unrealized derivative instruments loss (gain) |
|
|
(80 |
) |
|
|
19,258 |
|
|
|
38 |
|
|
(Gain) /adjustment of acquisition price, net |
|
|
1,412 |
|
|
|
— |
|
|
|
(10,817 |
) |
|
Arrangement Costs |
|
|
— |
|
|
|
— |
|
|
|
7,006 |
|
|
Other operating (income) expense, net |
|
|
— |
|
|
|
5 |
|
|
|
(43 |
) |
|
Credit losses and other |
|
|
935 |
|
|
|
492 |
|
|
|
999 |
|
| Adjusted EBITDAX |
|
$ |
47,841 |
|
|
$ |
33,528 |
|
|
$ |
49,807 |
|
VAALCO ENERGY, INC AND SUBSIDIARIESReconciliations of Non-GAAP
Financial Measures(Unaudited)(in thousands)
| Reconciliation of
Working Capital to Adjusted Working Capital |
|
As of March 31, 2023 |
|
|
As of December 31, 2022 |
|
|
Change |
|
|
Current assets |
|
$ |
179,374 |
|
|
$ |
200,097 |
|
|
$ |
(20,723 |
) |
|
Current liabilities |
|
|
(148,831 |
) |
|
|
(162,090 |
) |
|
|
13,259 |
|
| Working
capital |
|
|
30,543 |
|
|
|
38,007 |
|
|
|
(7,464 |
) |
|
Add: lease liabilities - current portion |
|
|
8,947 |
|
|
|
10,125 |
|
|
|
(1,178 |
) |
|
Add: current liabilities - discontinued operations |
|
|
673 |
|
|
|
687 |
|
|
|
(14 |
) |
| Adjusted Working
Capital |
|
$ |
40,163 |
|
|
$ |
48,819 |
|
|
$ |
(8,656 |
) |
Vaalco Energy (NYSE:EGY)
Historical Stock Chart
From Sep 2023 to Oct 2023
Vaalco Energy (NYSE:EGY)
Historical Stock Chart
From Oct 2022 to Oct 2023
