VAALCO Energy, Inc. (NYSE: EGY, LSE: EGY) ("VAALCO" or the
"Company") today reported operational and financial results
for the second quarter of 2024.
Second Quarter 2024 Highlights and
Recent Key Items:
- Closed the accretive all cash acquisition of Svenska
Petroleum Exploration AB (“Svenska”) for a net purchase price of
$40.2 million;
- Updated third-party reserve engineer's calculation of
proved reserves as of December 31, 2023 for Svenska that shows
significant increase of SEC proved reserves to 16.9
million barrels of oil equivalent (“MMBOE”) (93%
oil);
- Realized a $19.9 million bargain purchase gain on the
transaction;
- Reported strong Q2 2024 net income of $28.2
million ($0.27 per diluted share) and, Adjusted Net
Income(1) of $22.6 million ($0.22 per diluted
share);
- Increased Adjusted EBITDAX(1) by 17% to $72.5 million
compared to Q1 2024, driven by sales increase associated with Côte
d’Ivoire lifting in May following the closing of the Svenska
acquisition;
- Achieved production of 20,588 net revenue
interest (“NRI”)(2) barrels of oil equivalent per day
(“BOEPD”) and working interest (“WI”)(3) production
of 25,411 BOEPD; second quarter 2024 included new
production of 3,329 NRI BOEPD (3,329 WI BOEPD) from Côte
d’Ivoire;
- Delivered better than expected results from the
Canadian drilling program with three wells averaging 30 day initial
production (“IP”)1 rates of 464 barrels of oil per day
(“BOPD”), significantly increasing the liquid ratio in
Canada;
- Reported NRI sales of 1,764,000 barrels of
oil equivalent (“BOE”), or 19,386 BOEPD, above the midpoint of
guidance; and 18% above the first quarter of 2024 due to the
Côte d’Ivoire lifting;
- Posted unrestricted cash of $62.9 million which is
after $40.2 million paid for the Svenska acquisition, $6.5 million
paid for quarterly dividend and $32.5 million in cash capital
spending for the quarter;
- Received $8 million payment post quarter-end of back
dated accounts receivables (“AR”) in Egypt from EGPC.
And, in July, written confirmation that the invoice was recognized
in their June Accounts Payable as owed to us for our Merged
Concession effective date adjustment;
- Settled $30.2 million in foreign income taxes for Gabon
through the government taking its oil in-kind during a Q2 2024
lifting; and
- Announced quarterly cash dividend of $0.0625 per share
of common stock to be paid on September 20, 2024.
|
|
(1) |
|
Adjusted EBITDAX, Adjusted Net Income, Adjusted Working
Capital and Free Cash Flow2 are Non-GAAP financial measures and are
described and reconciled to the closest GAAP measure in the
attached table under “Non-GAAP Financial Measures.” |
| |
(2) |
|
All NRI production rates are
VAALCO's working interest volumes less royalty volumes, where
applicable. |
| |
(3) |
|
All WI production rates and
volumes are VAALCO's working interest volumes, where
applicable. |
| |
|
|
|
George Maxwell, VAALCO’s Chief Executive Officer
commented, “We had another strong quarter operationally and
financially, closed on a highly accretive acquisition and continue
to focus on profitably generating cash flow to fund future
projects, while maintaining our commitment to meaningful
shareholder returns through our quarterly dividend policy. We are
very pleased with the solid results from our Canadian drilling
program, which improved our liquid mix considerably in the second
quarter as we had three of the four wells come in with
higher-than-expected IP30 rates. We closed the Côte d‘Ivoire
transaction on April 30, had a lifting there in May and
collected payment in June.”
“Looking at our highly accretive Côte d’Ivoire
acquisition, we recognized a $19.9 million non-cash bargain
purchase gain, which benefited our second quarter earnings, but
it’s the strategic opportunities that provide VAALCO another strong
asset to support future growth that we are most excited about. We
are very pleased with the results of our third-party reserve
engineer’s calculation of proved reserves as of December 31, 2023
that shows even greater reserves than we initially disclosed, up
approximately 30% from our initial disclosure. This strategic
and highly cost-effective acquisition strategically expands our
West African focus area with a sizeable producing asset that has
significant upside potential and considerable future development
opportunities in Côte d’Ivoire, a well-established and
investment-friendly country.”
“The focus for the second half of 2024 will be
the preparation for major projects expected to deliver a
step-change in organic growth across the portfolio in 2025. We
expect to see an increase in capex investment through the second
half of the year associated with these numerous projects including
the drilling campaign in Gabon and the FPSO upgrade in Cote
d’Ivoire. We are excited about the future and plan to continue to
generate strong operational cash flow to fund our impressive
organic opportunities moving forward, while continuing to return
capital to our shareholders through the quarterly dividend.”
Operational Update
Egypt
VAALCO focused on enhancing production in the
first half of 2024 through a series of planned workovers, as well
as through interventions using the OGS-10 rig. VAALCO finalized the
K-81 recompletion at the start of the first quarter which was a
carry-over from its 2023 drilling activity. The EA-55 well, drilled
in October 2023, was fracked and put online in January 2024. Three
additional workover recompletions were completed in the second
quarter with one more in progress. With the low cost of workovers,
the well economics are strongly positive.
A summary of the Egyptian workover campaign's impact in the
first half of 2024 is presented below:
|
VAALCO Egypt 2024 Workover Wells |
|
|
Well |
Workover date |
Type |
Completion Zone |
|
Perforation Interval (ft) |
|
|
IP-30 Rate (BOPD) |
|
| K-81 |
1-Jan-24 |
Recompletion |
Asl-D |
|
|
13.1 |
|
|
|
154 |
|
| EA-55 |
10-Jan-24 |
Frac & Complete |
Redbed |
|
Hydraulic Frac |
|
|
|
143 |
|
| H-22 |
7-Feb-24 |
Recompletion |
Yusr-A |
|
|
9.8 |
|
|
|
82 |
|
| K-65_ST1 |
14-Feb-24 |
Recompletion |
Asl-D |
|
|
13.1 |
|
|
|
43* |
|
| K-85 |
16-Mar-24 |
Recompletion |
Asl-D |
|
|
13.1 |
|
|
|
420 |
|
| K-84 |
27-Mar-24 |
Recompletion |
Asl-G |
|
|
16.4 |
|
|
|
58* |
|
| K-74 |
3-Apr-24 |
Water Shut-off Recompletion |
Asl-A |
|
|
8.2 |
|
|
|
108 |
|
| K-77 |
7-Apr-24 |
Recompletion |
Asl-A |
|
|
26.2 |
|
|
|
100 |
|
| K-84 |
13-Jun-24 |
Recompletion |
Asl-D |
|
|
19.7 |
|
|
|
430 |
|
| K-80 |
19-Jun-24 |
Recompletion |
Asl-D |
|
|
13.1 |
|
|
|
188 |
|
*Production as of June 30, 2024 – Sand production –
Possible Sand Screen Required
Canada
The 2024 drilling campaign commenced in January
2024 with the drilling of 9-12-30-4W5, which was spud on January
17, 2024. The first well was drilled to a total depth of
22,732 feet. The second well of the program, 10-12-30-4W5, was spud
on February 9, 2024, and drilled to a total depth of 21,736 feet.
The third well on the program, 11-12-30-4W5 was spud on February
23, 2024, and drilled to a total depth of 21,624 feet. The fourth
well on the program 1-18-30-3W5 was spud on March 9, 2024, and
drilled to a total depth of 20,669 feet. The drilling rig was
released on March 24, 2024.
Completion of the wells began in late March and
was completed in April. By early May all wells were on production
with strong initial rates as noted below:
| VAALCO
Canada 2024 Wells |
|
Well |
Spud date |
Net Pay (ft) |
Penetrated Pay Zones |
Completion Zone |
|
Perforation Interval (ft) |
|
IP-30 Rate (BOEPD) |
| 09-12-30-4W5 |
1/17/2024 |
2.75-Mile Hz (4,400m, 14,430ft) |
Upper Bioturbated Cardium |
Cardium |
|
|
115 Stg x 15T Hydraulic Fracture Treatment |
|
479 |
| 10-12-30-4W5 |
2/22/2024 |
2.75-Mile Hz (4,400m, 14,430ft) |
Upper Bioturbated Cardium |
Cardium |
|
|
100 Stg x 15T Hydraulic Fracture Treatment |
|
469 |
| 11-12-30-4W5 |
2/23/2024 |
2.75-Mile Hz (4,400m, 14,430ft) |
Upper Bioturbated Cardium |
Cardium |
|
|
108 Stg x 15T Hydraulic Fracture Treatment |
|
444 |
| 1-18-30-3W5 |
9/3/2024 |
2.75-Mile Hz (4,400m, 14,430ft) |
Upper Bioturbated Cardium |
Cardium |
|
|
106 Stg x 15T Hydraulic Fracture Treatment |
|
182 |
| |
Gabon
VAALCO is currently finalizing locations
and planning for the next drilling campaign at Etame that is
expected to occur early in 2025. 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 low cost FSO solution that
increases the storage capacity for the Etame block and improved
operational performance. The Company continues to
emphasize operational excellence, production uptime and
enhancement in 2024 to minimize decline until the next
drilling campaign.
The focus is on the continued production
optimization of the new flow line configurations through the Etame
Facility, for final processing before being pumped to the FSO. This
continued optimization and understanding of the
post-reconfiguration process dynamics of the Etame platform, have
resulted in a very high uptime of the Etame Facility.
Côte d'Ivoire
Prior to closing of the acquisition, at the beginning of Q2
2024, production was shut in due to the planned field maintenance
shutdown. The Baobab production shutdown took place successfully
and as per plan between March 21, 2024 and April 13, 2024. All nine
operational production wells were successfully restarted in
mid-April with flush production rates of just over 21,000 BOEPD,
which has since stabilized to around 18,000 BOEPD.
During the second quarter, one
lifting took place in May of 655,715 gross barrels or 211,294
net barrels to VAALCO, achieving a price of $81.70 per
barrel.
Work with Modec, the operator of the Baobab
Floating Production and Offloading Vessel (“FPSO”), on the
drydocking project for the FPSO, projected to be offline in 2025,
continued in the second quarter of 2024. The operator
is currently preparing detailed project timetable and costings
for the partners and regulator; however preliminary work
including the execution of a letter of intent with Modec
on April 4, 2024 which covers the key contracts to be
executed, including vessel purchase, EPC, and O&M amendments,
as well as selection of the disconnect and reconnect contractor,
and support for the revised yard bid from Dubai dry docks among
other activities. Additionally, in the second quarter of 2024,
the outstanding tank inspections continued in preparation for the
dry dock.
Financial Update –
Second Quarter of 2024
VAALCO reported net income of $28.2 million
($0.27 per diluted share) for the
second quarter of 2024 which was up significantly
compared with net income of $7.7 million ($0.07 per diluted
share) in the first quarter of 2024 and up compared to $6.8
million ($0.06 per diluted share) in the second quarter of
2023. The increase in earnings is driven by the non-cash
bargain purchase gain on the acquisition, increased sales
associated with Côte d’Ivoire and was partially offset by increased
production expense.
Adjusted EBITDAX totaled $72.5 million in the
second quarter of 2024, an increase from $61.7
million in the first quarter of 2024
and from $65.3 million generated in the same period
in 2023. The increase was primarily due to additional sales volumes
from Côte d'Ivoire.
|
Quarterly Summary - Sales and Net Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ in
thousands |
|
Three Months Ended June 30, 2024 |
|
|
Three Months Ended March 31, 2024 |
|
| |
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
|
Côte d'Ivoire |
|
|
Total |
|
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
|
Côte d'Ivoire |
|
|
Total |
|
| Oil Sales |
|
|
62,327 |
|
|
|
65,314 |
|
|
|
9,547 |
|
|
|
17,240 |
|
|
|
154,428 |
|
|
|
64,788 |
|
|
|
63,192 |
|
|
|
4,153 |
|
|
|
— |
|
|
|
132,133 |
|
| NGL Sales |
|
|
— |
|
|
|
— |
|
|
|
1,922 |
|
|
|
— |
|
|
|
1,922 |
|
|
|
— |
|
|
|
— |
|
|
|
1,977 |
|
|
|
— |
|
|
|
1,977 |
|
| Gas Sales |
|
|
— |
|
|
|
— |
|
|
|
384 |
|
|
|
- |
|
|
|
384 |
|
|
|
- |
|
|
|
- |
|
|
|
820 |
|
|
|
— |
|
|
|
820 |
|
| Gross Sales |
|
|
62,327 |
|
|
|
65,314 |
|
|
|
11,854 |
|
|
|
17,240 |
|
|
|
156,734 |
|
|
|
64,788 |
|
|
|
63,192 |
|
|
|
6,951 |
|
|
|
— |
|
|
|
134,931 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling Costs & carried
interest |
|
|
- |
|
|
|
(117 |
) |
|
|
(318 |
) |
|
|
- |
|
|
|
(435 |
) |
|
|
1,174 |
|
|
|
(111 |
) |
|
|
(143 |
) |
|
|
— |
|
|
|
920 |
|
| Royalties & taxes |
|
|
(8,653 |
) |
|
|
(29,716 |
) |
|
|
(1,152 |
) |
|
|
- |
|
|
|
(39,521 |
) |
|
|
(8,458 |
) |
|
|
(26,120 |
) |
|
|
(1,118 |
) |
|
|
— |
|
|
|
(35,696 |
) |
| |
|
|
|
|
|
|
|
|
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| |
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Revenue |
|
|
53,674 |
|
|
|
35,481 |
|
|
|
10,384 |
|
|
|
17,240 |
|
|
|
116,778 |
|
|
|
57,504 |
|
|
|
36,961 |
|
|
|
5,690 |
|
|
|
— |
|
|
|
100,155 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Oil Sales MMB (working
interest) |
|
|
759 |
|
|
|
953 |
|
|
|
130 |
|
|
|
211 |
|
|
|
2,053 |
|
|
|
770 |
|
|
|
950 |
|
|
|
61 |
|
|
|
— |
|
|
|
1,781 |
|
| Average Oil Price
Received |
|
$ |
82.13 |
|
|
$ |
68.52 |
|
|
$ |
73.52 |
|
|
$ |
81.70 |
|
|
$ |
75.22 |
|
|
$ |
84.19 |
|
|
$ |
66.52 |
|
|
$ |
67.83 |
|
|
|
— |
|
|
$ |
74.21 |
|
| Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average Brent Price |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
$ |
84.65 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
$ |
83.00 |
|
| Change |
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
2 |
% |
|
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| |
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|
|
|
|
|
|
| Gas Sales MMCF (working
interest) |
|
|
— |
|
|
|
— |
|
|
|
423 |
|
|
|
|
|
|
|
423 |
|
|
|
— |
|
|
|
— |
|
|
|
469 |
|
|
|
|
|
|
|
469 |
|
| Average Gas Price
Received |
|
|
— |
|
|
|
— |
|
|
$ |
0.91 |
|
|
|
|
|
|
$ |
0.91 |
|
|
|
— |
|
|
|
— |
|
|
$ |
1.75 |
|
|
|
|
|
|
$ |
1.75 |
|
| Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-48 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average Aeco Price ($USD) |
|
|
— |
|
|
|
— |
|
|
$ |
0.84 |
|
|
|
|
|
|
$ |
0.84 |
|
|
|
— |
|
|
|
— |
|
|
$ |
1.46 |
|
|
|
|
|
|
$ |
1.46 |
|
| Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-42 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NGL Sales MMB (working
interest) |
|
|
— |
|
|
|
— |
|
|
|
76 |
|
|
|
|
|
|
|
76 |
|
|
|
— |
|
|
|
— |
|
|
|
76 |
|
|
|
|
|
|
|
76 |
|
| Average Liquids Price
Received |
|
|
— |
|
|
|
— |
|
|
$ |
25.16 |
|
|
|
|
|
|
$ |
25.16 |
|
|
|
— |
|
|
|
— |
|
|
$ |
25.98 |
|
|
|
|
|
|
$ |
25.98 |
|
| Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue and Sales |
|
Q2 2024 |
|
|
Q2 2023 |
|
|
% Change Q2 2024 vs. Q2 2023 |
|
|
Q1 2024 |
|
|
% Change Q2 2024 vs. Q1 2024 |
|
|
Production (NRI BOEPD) |
|
|
20,588 |
|
|
|
19,676 |
|
|
|
5 |
% |
|
|
16,848 |
|
|
|
22 |
% |
| Sales (NRI BOE) |
|
|
1,764,000 |
|
|
|
1,803,000 |
|
|
|
(2 |
)% |
|
|
1,490,000 |
|
|
|
18 |
% |
| Realized commodity price
($/BOE) |
|
$ |
66.05 |
|
|
$ |
59.37 |
|
|
|
11 |
% |
|
$ |
66.43 |
|
|
|
(1 |
)% |
| Commodity (Per BOE including
realized commodity derivatives) |
|
$ |
66.03 |
|
|
$ |
59.34 |
|
|
|
11 |
% |
|
$ |
66.41 |
|
|
|
(1 |
)% |
| Total commodity sales
($MM) |
|
$ |
116.5 |
|
|
$ |
109.2 |
|
|
|
7 |
% |
|
$ |
100.2 |
|
|
|
16 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VAALCO had net revenues increase by
$16.0 million or 16% as total NRI sales volumes of
1,764,000 BOE was higher than Q1 2024 and decreased
2% compared to 1,803,000 BOE for Q2 2023. Q2 2024 NRI
sales were toward the upper end of VAALCO's guidance. The
Company expects third quarter 2024 NRI sales to be
between 21,700 and 24,000 BOEPD, reflecting the
addition of the Côte d'Ivoire volume for an entire quarter.
Q2 2024 realized pricing (net of
royalties) was virtually flat compared to Q1 2024 and 11%
higher compared to Q2 2023.
4
| Costs and Expenses |
|
Q2 2024 |
|
|
Q2 2023 |
|
|
% Change Q2 2024 vs. Q2 2023 |
|
|
Q1 2024 |
|
|
% Change Q2 2024 vs. Q1 2024 |
|
|
Production expense, excluding offshore workovers and stock comp
($MM) |
|
$ |
52.4 |
|
|
$ |
38.8 |
|
|
|
35 |
% |
|
$ |
32.1 |
|
|
|
63 |
% |
| Production expense, excluding
offshore workovers ($/BOE) |
|
$ |
29.70 |
|
|
$ |
21.51 |
|
|
|
38 |
% |
|
$ |
21.58 |
|
|
|
38 |
% |
| Offshore workover expense
($MM) |
|
$ |
0.1 |
|
|
$ |
(0.2 |
) |
|
|
134 |
% |
|
$ |
(0.1 |
) |
|
|
— |
% |
| Depreciation, depletion and
amortization ($MM) |
|
$ |
33.1 |
|
|
$ |
38.0 |
|
|
|
(13 |
)% |
|
$ |
25.8 |
|
|
|
28 |
% |
| Depreciation, depletion and
amortization ($/BOE) |
|
$ |
18.78 |
|
|
$ |
21.10 |
|
|
|
(11 |
)% |
|
$ |
17.33 |
|
|
|
8 |
% |
| General and administrative
expense, excluding stock-based compensation ($MM) |
|
$ |
6.6 |
|
|
$ |
4.8 |
|
|
|
38 |
% |
|
$ |
5.9 |
|
|
|
14 |
% |
| General and administrative
expense, excluding stock-based compensation ($/BOE) |
|
$ |
3.8 |
|
|
$ |
2.70 |
|
|
|
40 |
% |
|
$ |
3.9 |
|
|
|
(4 |
)% |
| Stock-based compensation
expense ($MM) |
|
$ |
0.9 |
|
|
$ |
0.6 |
|
|
|
50 |
% |
|
$ |
0.9 |
|
|
|
- |
% |
| Current income tax expense
(benefit) ($MM) |
|
$ |
13.3 |
|
|
$ |
12.4 |
|
|
|
7 |
% |
|
$ |
25.7 |
|
|
|
(48 |
)% |
| Deferred income tax expense
(benefit) ($MM) |
|
$ |
(4.0 |
) |
|
$ |
(0.8 |
) |
|
|
405 |
% |
|
$ |
(3.4 |
) |
|
|
17 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total production expense (excluding offshore
workovers and stock compensation) of $52.4 million in
Q2 2024 was an increase compared to Q1 2024 and
an increase compared to the same period in 2023. The increase in
Q2 2024 was primarily driven by a non-cash purchase price
adjustment for the Svenska acquisition flowing through production
expense and increased operating expenditure
associated with the addition of Côte d'Ivoire in the
quarter. VAALCO has seen withholding tax, inflationary and
industry supply chain pressure on personnel and contractor
costs.
Q2 2024 had minimal offshore workover
expense and was equal to workover expense in
Q1 2024.
Q2 2024 production expense per BOE,
excluding offshore workover expense, increased
to $29.70 per BOE which was higher than Q2 2023
and Q1 2024 primarily due to the increased costs associated
with the non-cash purchase price adjustment for the Svenska
acquisition.
DD&A expense for Q2 2024 was
$33.1 million which was higher than $25.8 million in
Q1 2024 and lower than $38.0 million in
Q2 2023. The increase in Q2 2024 DD&A
expense compared to Q1 2024 is due primarily to increased
depletion associated with the addition of Côte d'Ivoire. The
decrease in Q2 2024 DD&A expense compared to
Q2 2023 is due to lower depletable costs in Gabon, Egypt,
and Canada partially offset by higher depletable costs in Côte
d'Ivoire.
General and administrative (“G&A”) expense,
excluding stock-based compensation, increased to
$6.6 million in Q2 2024 from $5.9 million in
Q1 2024 and $4.8 million in Q2 2023. The
increase in general and administrative expenses compared to
Q2 2023 and Q1 2024 is primarily due to
higher professional service fees, salaries and wages, and
accounting and legal fees due to growth due to the
acquisition. Q2 2024 cash G&A was within the
Company’s guidance and nearly flat compared to Q1 2024 on a per
barrel basis.
Non-cash stock-based compensation expense was
$0.9 million for Q2 2024 compared to
$0.6 million for Q2 2023. Non-cash stock-based
compensation expense for Q1 2024 was
$0.9 million.
Other income (expense), net, was an
expense of $2.0 million for Q2 2024, compared to an
expense of $0.5 million during Q2 2023 and an
expense of $1.8 million for Q1 2024. Other income
(expense), net, normally consists of foreign currency losses.
Also included in Q2 2024 amount are $1.8 million in transaction
costs related to the Svenska acquisition.
Foreign income taxes for Gabon are settled by
the government taking oil in-kind. Q2 2024 income tax
expense was an expense of $9.3 million and is comprised of current
tax expense of $13.3 million and deferred tax benefit of
$4.0 million. Current quarter tax was impacted by
non-deductible items (such as the Svenska transaction costs) and
the change in market value of tax barrels due to Gabon State
mark-to-market at quarter end. Q1 2024 income tax
expense was an expense of $22.2 million. This was comprised of
$25.7 million of current tax expense and a deferred tax
benefit of $3.4 million. Q2 2023 income tax expense was
an expense of $11.6 million. This was comprised of $12.4
million of current tax expense and a deferred tax benefit of $0.8
million. For all periods, VAALCO’s overall effective tax rate was
impacted by non-deductible items associated with tax rates in
foreign jurisdictions higher than the US statutory rate and by
non-deductible items associated with operations.
Financial Update –
First Six Months of 2024
WI Sales for the first six months of 2024
increased to 4,134 MBOE compared to 3,438 MBOE in
the first six months of 2023. The increase was driven
primarily by the Côte d'Ivoire acquisition. Crude oil sales
are a function of the number and size of crude oil liftings in each
quarter and do not always coincide with volumes produced in any
given period.
The average realized crude oil price for the
first six months of 2024 was $74.75 per barrel, representing
an increase of 8.0% from $69.28 realized in the first
six months of 2023. This increase in crude oil price reflects
the increase in commodity pricing over the past year.
The Company reported net income for the six
months ended June 30, 2024 of $35.8 million, which compares
to $10.2 million for the same period of 2023. The increase in
net income for the six months ended June 30,
2024 compared to the same period in 2023 was primarily
due to the bargain purchase gain related to the Svenska acquisition
in April, as well as higher sales and realized pricing.
|
Year to Date Summary - Sales and Net Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ in
thousands |
|
Six Months Ended June 30, 2024 |
|
|
Six Months Ended June 30, 2023 |
|
| |
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
|
Côte d'Ivoire |
|
|
Total |
|
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
|
Côte d'Ivoire |
|
|
Total |
|
| Oil Sales |
|
|
127,115 |
|
|
|
128,506 |
|
|
|
13,700 |
|
|
|
17,240 |
|
|
|
286,561 |
|
|
|
130,079 |
|
|
|
104,822 |
|
|
|
14,979 |
|
|
|
— |
|
|
|
249,880 |
|
| NGL Sales |
|
|
— |
|
|
|
— |
|
|
|
3,898 |
|
|
|
|
|
|
|
3,898 |
|
|
|
— |
|
|
|
— |
|
|
|
4,348 |
|
|
|
|
|
|
|
4,348 |
|
| Gas Sales |
|
|
— |
|
|
|
— |
|
|
|
1,205 |
|
|
|
|
|
|
|
1,205 |
|
|
|
— |
|
|
|
— |
|
|
|
1,661 |
|
|
|
|
|
|
|
1,661 |
|
| Gross Sales |
|
|
127,115 |
|
|
|
128,506 |
|
|
|
18,802 |
|
|
|
17,240 |
|
|
|
291,663 |
|
|
|
130,079 |
|
|
|
104,822 |
|
|
|
20,988 |
|
|
|
— |
|
|
|
255,889 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling Costs & carried
interest |
|
|
1,174 |
|
|
|
(228 |
) |
|
|
(461 |
) |
|
|
|
|
|
|
485 |
|
|
|
2,212 |
|
|
|
(498 |
) |
|
|
— |
|
|
|
|
|
|
|
1,714 |
|
| Royalties & taxes |
|
|
(17,111 |
) |
|
|
(55,836 |
) |
|
|
(2,269 |
) |
|
|
|
|
|
|
(75,216 |
) |
|
|
(17,630 |
) |
|
|
(48,232 |
) |
|
|
(2,098 |
) |
|
|
— |
|
|
|
(67,960 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Revenue |
|
|
111,178 |
|
|
|
72,442 |
|
|
|
16,073 |
|
|
|
17,240 |
|
|
|
216,933 |
|
|
|
114,661 |
|
|
|
56,092 |
|
|
|
18,890 |
|
|
|
— |
|
|
|
189,643 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Oil Sales MMB (working
interest) |
|
|
1,528 |
|
|
|
1,903 |
|
|
|
191 |
|
|
|
211 |
|
|
|
3,834 |
|
|
|
1,641 |
|
|
|
1,750 |
|
|
|
216 |
|
|
|
— |
|
|
|
3,607 |
|
| Average Oil Price
Received |
|
$ |
83.17 |
|
|
$ |
67.52 |
|
|
$ |
71.70 |
|
|
$ |
81.70 |
|
|
$ |
74.75 |
|
|
$ |
79.29 |
|
|
$ |
59.89 |
|
|
$ |
69.27 |
|
|
$ |
- |
|
|
$ |
69.28 |
|
| Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average Brent Price |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
83.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
79.47 |
|
| Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gas Sales MMCF (working
interest) |
|
|
— |
|
|
|
— |
|
|
|
892 |
|
|
|
|
|
|
|
892 |
|
|
|
— |
|
|
|
— |
|
|
|
857 |
|
|
|
|
|
|
|
857 |
|
| Average Gas Price
Received |
|
|
— |
|
|
|
— |
|
|
$ |
1.35 |
|
|
|
|
|
|
$ |
1.35 |
|
|
|
— |
|
|
|
— |
|
|
$ |
1.94 |
|
|
|
|
|
|
$ |
1.94 |
|
| Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average Aeco Price ($USD) |
|
|
|
|
|
|
|
|
|
$ |
1.15 |
|
|
|
|
|
|
$ |
1.15 |
|
|
|
|
|
|
|
|
|
|
$ |
1.96 |
|
|
|
|
|
|
$ |
1.96 |
|
| Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-41 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NGL Sales MMB (working
interest) |
|
|
— |
|
|
|
— |
|
|
|
152 |
|
|
|
|
|
|
|
152 |
|
|
|
— |
|
|
|
— |
|
|
|
155 |
|
|
|
|
|
|
|
155 |
|
| Average Liquids Price
Received |
|
|
— |
|
|
|
— |
|
|
$ |
25.63 |
|
|
|
|
|
|
$ |
25.63 |
|
|
|
— |
|
|
|
— |
|
|
$ |
28.08 |
|
|
|
|
|
|
$ |
28.08 |
|
| Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Capital Investments/Balance Sheet
For the second quarter of 2024, net capital
expenditures totaled $32.5 million on a cash basis and
$22.4 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 second quarter of 2024,
VAALCO had an unrestricted cash balance of $62.9
million. Working capital at June 30, 2024 was $31.2
million compared with $45.7 million at December 31, 2023, while
Adjusted Working Capital(2) at June 30, 2024 totaled $43.5
million.
In Egypt, the Company received written
confirmation from EGPC that $51.7 million was recognized in their
June Accounts Payable as owed to Company for our Merged Concession
effective date adjustment, from which they will offset $11.2
million to satisfy any obligation of VAALCO or its subsidiaries in
connection with the TransGlobe combination. This allowance of $11.2
million is fully covered in the 30th June 2024 Balance Sheet.
Having this confirmation from EGPC is an important step in the
process of getting this paid.
Quarterly Cash Dividend
VAALCO paid a quarterly cash dividend of $0.0625
per share of common stock for the second quarter of
2024 on June 21, 2024. The Company also announced its next
quarterly cash dividend of $0.0625 per share of common stock for
the third quarter of 2024 ($0.25 annualized), to be paid
on September 20, 2024 to stockholders of record at the
close of business on August 23, 2024. 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").
Svenska Acquisition
VAALCO closed its acquisition of Svenska
for the net purchase price of $40.2 million, on April 30, 2024
after certain regulatory and government approvals were
received.
Svenska’s primary license interest is a 27.39%
non-operated working interest (30.43% paying interest) in the CI-40
license, which includes the producing Baobab field, located in
deepwater offshore Côte d’Ivoire. The field is operated by CNR
International, which holds a 57.61% working interest in the
project, with the national oil company, Petroci Holding, owning the
remaining 15% working interest (10% of which is carried by the
other license partners). The CI-40 license has an initial term
through mid-2028 with the contractual option to extend the license
term by 10 years to 2038, subject to certain conditions. Production
in the Baobab field was approximately 5,000 WI BOEPD, with
cumulative gross production from the field has been approximately
150 MMBOE, a portion of the estimated over one billion barrels of
oil equivalent volumes initially in place.
At the time of the initial announcement of the
acquisition, VAALCO disclosed that the transaction included
estimated 1P WI CPR reserves, as of October 1, 2023, of 13.0 MMBOE
(99% oil) and total 2P WI CPR reserves at October 1, 2023, of 21.7
million MMBOE (97% oil). VAALCO at that time did not have a
calculation of SEC proved reserves as of December 31, 2023 but has
since worked with its third-party reserves auditors to calculate
its SEC proved reserves. VAALCO reported on July 16, 2024 that SEC
net proved reserves as of December 31, 2023 totaled 16.9 MMBOE and
that 2P WI CPR reserves for Svenska as of December 31, 2023 are
estimated at 22.5 MMBOE. On a pro-forma basis, this results in
VAALCO’s year-end 2023 pro-forma SEC net proved reserves totaling
45.6 MMBOE, a 59% increase from its reported yearend 2023 SEC net
proved reserves of 28.6 MMBOE. Utilizing the net cash purchase
price of $40.2 million, VAALCO paid approximately $2.37 per net
proved barrel of reserves.
CI-40 has a long history of production and
significantly de-risked reservoirs. With almost 20 years of
production to date, the FPSO is planned to come off station at
the start of 2025 for planned maintenance and upgrade work to allow
the FPSO to continue to produce through the end of the expected
extended field license in 2038. The scope of work for the FPSO
upgrade is currently being finalized. Production on Baobab is
expected to re-start in 2026 following the FPSO work program. In
addition, a fully appraised development drilling program is
expected to start in 2026, targeting the significant incremental
probable reserve base on the field. VAALCO sees reduced geological
risk relating to this drilling program and the joint venture
partners have already commenced the ordering of certain long-lead
drilling items. Further future drilling phases have not yet been
sanctioned, but there is significant incremental potential in both
the Baobab field itself, as well as the nearby Kossipo development,
which has also been appraised by two wells drilled in 2002 and
2019.
In addition to the CI-40 license in Côte
d’Ivoire, VAALCO currently owns a 21.05% working interest in the
early stage Uge discovery in the OML 145 concession in Nigeria
alongside partners ExxonMobil (21.05%), Chevron (21.05%), Oando
(21.05%) and NPDC (15.80%). There are minimal commitments on this
license interest and no drilling or development is currently
planned.
Hedging
The Company continued to opportunistically hedge
a portion of its expected future production to lock in strong cash
flow generation to assist in funding its capital and shareholder
returns programs.
The following includes hedges remaining in
place as of the end of the second quarter of 2024:
|
Settlement Period |
Type of Contract |
Index |
|
Average Monthly Volumes |
|
|
Weighted Average Put Price |
|
|
Weighted Average Call Price |
|
| |
|
|
|
(Bbls) a |
|
|
(per Bbl) |
|
|
(per Bbl) |
|
|
July 2024 - September 2024 |
Collars |
Dated Brent |
|
|
80,000 |
|
|
$ |
65.00 |
|
|
$ |
92.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a) The premium for these options was $4.01 per barrel and
was paid in October 2023.
| Settlement
Period |
Type of Contract |
Index |
|
Average Monthly Volumes |
|
|
Weighted Average Put Price |
|
| |
|
|
|
(Bbls) |
|
|
(per Bbl) |
|
|
July 2024 - December 2024 |
Put Options |
Dated Brent |
|
|
125,000 |
|
|
$ |
65.00 |
|
| Settlement
Period |
Type of Contract |
Index |
|
Average Monthly Volumes |
|
|
Weighted Average SWAP Price in CAD |
|
| |
|
|
|
(GJ)b |
|
|
(per GJ) |
|
|
November 2024 - March 2025 |
Swap |
AECO (7A) |
|
|
67,000 |
|
|
$ |
2.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
b) One gigajoule (GJ) equals one billion joules (J).
A gigajoule of natural gas is about 25.5 cubic metres at standard
conditions.
2024 Guidance:
The Company has provided third quarter
2024 guidance and updated its full year 2024 guidance.
All of the quarterly and annual guidance is detailed in the tables
below.
| |
|
|
FY 2024 |
|
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
|
Côte d'Ivoire |
|
|
Production (BOEPD) |
WI |
|
|
23600 - 26500 |
|
|
|
8300 - 9600 |
|
|
|
9800 - 10600 |
|
|
|
2700 - 3200 |
|
|
|
2800 - 3100 |
|
| Production (BOEPD) |
NRI |
|
|
18900 - 21400 |
|
|
|
7200 - 8300 |
|
|
|
6700 - 7400 |
|
|
|
2200 - 2600 |
|
|
|
2800 - 3100 |
|
| Sales Volume (BOEPD) |
WI |
|
|
24300 - 27200 |
|
|
|
8300 - 9500 |
|
|
|
9800 - 10600 |
|
|
|
2700 - 3200 |
|
|
|
3500 - 3900 |
|
| Sales Volume (BOEPD) |
NRI |
|
|
19600 - 22200 |
|
|
|
7200 - 8300 |
|
|
|
6700 - 7400 |
|
|
|
2200 - 2600 |
|
|
|
3500 - 3900 |
|
| Production Expense
(millions) |
WI & NRI |
|
$174.0 - $189.0 MM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Production Expense per
BOE |
WI |
|
$18.00 - $20.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Production Expense per
BOE |
NRI |
|
$22.00 - $26.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Offshore Workovers
(millions) |
WI & NRI |
|
$1 - $10 MM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash G&A (millions) |
WI & NRI |
|
$20.0 - $28.0 MM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CAPEX excluding acquisitions
(millions) |
WI & NRI |
|
$115 - $140 MM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| DD&A ($/BOE) |
NRI |
|
$16.00 - $20.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Q3 2024 |
|
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
|
Côte d'Ivoire |
|
|
Production (BOEPD) |
WI |
|
|
24900 - 27600 |
|
|
|
8300 - 9300 |
|
|
|
9700 - 10700 |
|
|
|
2700 - 3000 |
|
|
|
4200 - 4600 |
|
| Production (BOEPD) |
NRI |
|
|
20300 - 22800 |
|
|
|
7200 - 8200 |
|
|
|
6600 - 7500 |
|
|
|
2300 - 2500 |
|
|
|
4200 - 4600 |
|
| Sales Volume (BOEPD) |
WI |
|
|
26100 - 28700 |
|
|
|
7300 - 8000 |
|
|
|
9700 - 10700 |
|
|
|
2700 - 3000 |
|
|
|
6400 - 7000 |
|
| Sales Volume (BOEPD) |
NRI |
|
|
21700 - 24000 |
|
|
|
6400 - 7000 |
|
|
|
6600 - 7500 |
|
|
|
2300 - 2500 |
|
|
|
6400 - 7000 |
|
| Production Expense
(millions) |
WI & NRI |
|
$38.5 - $49.0 MM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Production Expense per
BOE |
WI |
|
$14.50 - $21.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Production Expense per
BOE |
NRI |
|
$17.50 - $25.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Offshore Workovers
(millions) |
WI & NRI |
|
$0 - $0 MM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash G&A (millions) |
WI & NRI |
|
$4.5 - $6.5 MM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CAPEX excluding acquisitions
(millions) |
WI & NRI |
|
$32 - $54 MM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| DD&A ($/BOE) |
NRI |
|
$16.00 - $20.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conference Call
As previously announced, the Company will hold a
conference call to discuss its second quarter
2024 financial and operating results tomorrow, Wednesday,
August 7, 2024, 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 Second Quarter
2024 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.
A “Q2 2024 Supplemental Information”
investor deck will be posted to VAALCO’s web site prior to its
conference call on August 7, 2024 that includes
additional financial and operational information.
About VAALCO
VAALCO, founded in 1985 and incorporated under
the laws of Delaware, is a Houston, Texas, USA based, independent
energy company with a diverse portfolio of production,
development and exploration assets across Gabon, Egypt, Côte
d'Ivoire, 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 / Barry Archer |
VAALCO@buchanan.uk.com |
| |
|
Forward Looking StatementsThis 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) estimates of future
drilling, production, sales and costs of acquiring crude oil,
natural gas and natural gas liquids; (ii) expectations regarding
VAALCO's ability to effectively integrate assets and properties it
has acquired as a result of the Svenska acquisition into its
operations; (iii) 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; (iv) expectations regarding
future acquisitions, investments or divestitures; (v) expectations
of future dividends; (vi) expectations of future balance sheet
strength; and (vii) expectations of future equity and
enterprise value.
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; the ability to generate
cash flows that, along with cash on hand, will be sufficient to
support operations and cash requirements; risks relating to the
timing and costs of completion for scheduled maintenance of the
FPSO servicing the Baobab field; and the risks described
under the caption “Risk Factors” in VAALCO’s 2023 Annual
Report on Form 10-K filed with the SEC on March 15, 2024 and
subsequent Quarterly Reports on Form 10-Q filed with the
SEC.
Dividends beyond the third quarter of
2024 have not yet been approved or declared by the Board of
Directors for VAALCO. The declaration and payment of future
dividends 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. Consequently, in determining the dividend
to be declared and paid on VAALCO common stock, the Board may
revise or terminate the payment level at any time without prior
notice.
WI CPR Reserves
WI CPR reserves represent proved (1P) and proved
plus probable (2P) estimates as reported by Petroleum Development
Consultants Limited and prepared in accordance with the definitions
and guidelines set forth in the 2018 Petroleum Resources Management
Systems approved by the Society of Petroleum Engineers. The SEC
definitions of proved and probable reserves are different from the
definitions contained in the 2018 Petroleum Resources Management
Systems approved by the Society of Petroleum Engineers. As a
result, 1P and 2P WI CPR reserves may not be comparable to United
States standards. The SEC requires United States oil and gas
reporting companies, in their filings with the SEC, to disclose
only proved reserves after the deduction of royalties and
production due to others but permits the optional disclosure of
probable and possible reserves in accordance with SEC
definitions.
1P and 2P WI CPR reserves, as disclosed herein, may differ from
the SEC definitions of proved and probable reserves because:
- Pricing for SEC is the average closing price on the first
trading day of each month for the prior year which is then held
flat in the future, while the 1P and 2P WI CPR pricing assumption
was $79.79 per barrel of oil beginning in 2024, $69.79 in 2025, and
inflating 2% thereafter;
- Lease operating expenses are typically not escalated under the
SEC’s rules, while for the WI CPR reserves estimates, they are
escalated at 2% annually beginning in 2024.
Management uses 1P and 2P WI CPR reserves as a
measurement of operating performance because it assists management
in strategic planning, budgeting and economic evaluations and in
comparing the operating performance of Svenska to other companies.
Management believes that the presentation of 1P and 2P WI CPR
reserves is useful to its international investors, particularly
those that invest in companies trading on the London Stock
Exchange, in order to better compare reserve information to other
London Stock Exchange-traded companies that report similar
measures. However, 1P and 2P WI CPR reserves should not be used as
a substitute for proved reserves calculated in accordance with the
definitions prescribed by the SEC. In evaluating VAALCO’s business,
investors should rely on VAALCO’s SEC proved reserves and consider
1P and 2P WI CPR reserves only supplementally.
Other Oil and Gas
Advisories
Investors are cautioned when viewing BOEs in
isolation. The Svenska reserves estimates as of October 1, 2023
were calculated using a BOE conversion ratio of six thousand cubic
feet of natural gas to one barrel of oil equivalent (6 MCF: 1 Bbl).
The Svenska reserves estimates as of December 31, 2023 were
calculated using a BOE conversion ratio of five thousand eight
hundred cubic feet of natural gas to one barrel of oil equivalent
(5.8 MCF: 1 Bbl). BOE conversion ratio is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead.
Given that the value ratio based on the current price of crude oil
as compared to natural gas is significantly different from the
energy equivalencies described above, utilizing such equivalencies
may be incomplete as an indication of value.
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 June 30, 2024 |
|
|
As of December 31, 2023 |
|
| ASSETS |
|
(in thousands) |
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
62,890 |
|
|
$ |
121,001 |
|
|
Restricted cash |
|
|
139 |
|
|
|
114 |
|
|
Receivables: |
|
|
|
|
|
|
|
|
|
Trade, net of allowances for credit loss and other of $0.2 and $0.5
million, respectively |
|
|
64,934 |
|
|
|
44,888 |
|
|
Accounts with joint venture owners, net of allowance for credit
losses of $0.8 and $0.8 million, respectively |
|
|
721 |
|
|
|
1,814 |
|
|
Egypt receivables and other, net of allowances for credit loss and
other of $11.2 and $4.6 million, respectively |
|
|
40,628 |
|
|
|
45,942 |
|
|
Crude oil inventory |
|
|
8,586 |
|
|
|
1,948 |
|
|
Prepayments and other |
|
|
17,509 |
|
|
|
12,434 |
|
|
Total current assets |
|
|
195,407 |
|
|
|
228,141 |
|
| |
|
|
|
|
|
|
|
|
| Crude oil, natural gas and
NGLs properties and equipment, net |
|
|
548,415 |
|
|
|
459,786 |
|
| Other noncurrent assets: |
|
|
|
|
|
|
|
|
|
Restricted cash |
|
|
8,788 |
|
|
|
1,795 |
|
|
Value added tax and other receivables, net of allowances for credit
loss and other of $0.0 and $0.0 million, respectively |
|
|
6,109 |
|
|
|
4,214 |
|
|
Right of use operating lease assets |
|
|
580 |
|
|
|
2,378 |
|
|
Right of use finance lease assets |
|
|
86,342 |
|
|
|
89,962 |
|
|
Deferred tax assets |
|
|
64,859 |
|
|
|
29,242 |
|
|
Abandonment funding |
|
|
6,268 |
|
|
|
6,268 |
|
|
Other long-term assets |
|
|
1,216 |
|
|
|
1,430 |
|
|
Total assets |
|
$ |
917,984 |
|
|
$ |
823,216 |
|
| LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
22,605 |
|
|
$ |
22,152 |
|
|
Accounts with joint venture owners |
|
|
896 |
|
|
|
5,990 |
|
|
Accrued liabilities and other |
|
|
116,006 |
|
|
|
67,597 |
|
|
Operating lease liabilities - current portion |
|
|
574 |
|
|
|
2,396 |
|
|
Finance lease liabilities - current portion |
|
|
11,751 |
|
|
|
10,079 |
|
|
Foreign income taxes payable |
|
|
12,361 |
|
|
|
19,261 |
|
|
Total current liabilities |
|
|
164,193 |
|
|
|
127,475 |
|
| Asset retirement
obligations |
|
|
65,373 |
|
|
|
47,343 |
|
| Operating lease liabilities -
net of current portion |
|
|
- |
|
|
|
33 |
|
| Finance lease liabilities -
net of current portion |
|
|
74,388 |
|
|
|
78,293 |
|
| Deferred tax liabilities |
|
|
111,535 |
|
|
|
73,581 |
|
| Other long-term
liabilities |
|
|
8,847 |
|
|
|
17,709 |
|
|
Total liabilities |
|
|
424,336 |
|
|
|
344,434 |
|
| 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,
122,304,124 and 121,397,553 shares issued, 103,743,163 and
104,346,233 shares outstanding, respectively |
|
|
12,230 |
|
|
|
12,140 |
|
|
Additional paid-in capital |
|
|
359,803 |
|
|
|
357,498 |
|
|
Accumulated other comprehensive income |
|
|
(642 |
) |
|
|
2,880 |
|
|
Less treasury stock, 18,560,961 and 17,051,320 shares,
respectively, at cost |
|
|
(78,024 |
) |
|
|
(71,222 |
) |
|
Retained earnings |
|
|
200,281 |
|
|
|
177,486 |
|
|
Total shareholders' equity |
|
|
493,648 |
|
|
|
478,782 |
|
|
Total liabilities and shareholders' equity |
|
$ |
917,984 |
|
|
$ |
823,216 |
|
|
|
VAALCO ENERGY, INC AND SUBSIDIARIESConsolidated Statements of
Operations (Unaudited)
| |
|
Three Months Ended |
|
|
Six Months Ended |
|
| |
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
March 31, 2024 |
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
| |
|
(in thousands except per share amounts) |
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and natural gas liquids sales |
|
$ |
116,778 |
|
|
$ |
109,240 |
|
|
$ |
100,155 |
|
|
$ |
216,933 |
|
|
$ |
189,643 |
|
| Operating costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production expense |
|
|
52,446 |
|
|
|
38,604 |
|
|
|
32,089 |
|
|
|
84,535 |
|
|
|
66,804 |
|
|
FPSO demobilization and other costs |
|
|
— |
|
|
|
5,647 |
|
|
|
— |
|
|
|
- |
|
|
|
5,647 |
|
|
Exploration expense |
|
|
— |
|
|
|
57 |
|
|
|
48 |
|
|
|
48 |
|
|
|
65 |
|
|
Depreciation, depletion and amortization |
|
|
33,132 |
|
|
|
38,003 |
|
|
|
25,824 |
|
|
|
58,956 |
|
|
|
62,420 |
|
|
General and administrative expense |
|
|
7,591 |
|
|
|
5,395 |
|
|
|
6,710 |
|
|
|
14,301 |
|
|
|
10,619 |
|
|
Credit losses and other |
|
|
3,341 |
|
|
|
680 |
|
|
|
1,812 |
|
|
|
5,153 |
|
|
|
1,615 |
|
|
Total operating costs and expenses |
|
|
96,510 |
|
|
|
88,386 |
|
|
|
66,483 |
|
|
|
162,993 |
|
|
|
147,170 |
|
|
Other operating income (expense), net |
|
|
132 |
|
|
|
(303 |
) |
|
|
(166 |
) |
|
|
(34 |
) |
|
|
(303 |
) |
| Operating income |
|
|
20,400 |
|
|
|
20,551 |
|
|
|
33,506 |
|
|
|
53,906 |
|
|
|
42,170 |
|
| Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments gain (loss), net |
|
|
257 |
|
|
|
31 |
|
|
|
(847 |
) |
|
|
(590 |
) |
|
|
52 |
|
|
Interest expense, net |
|
|
(1,117 |
) |
|
|
(1,703 |
) |
|
|
(935 |
) |
|
|
(2,052 |
) |
|
|
(3,949 |
) |
|
Bargain purchase gain |
|
|
19,898 |
|
|
|
— |
|
|
|
— |
|
|
|
19,898 |
|
|
|
— |
|
|
Other income (expense), net |
|
|
(1,984 |
) |
|
|
(539 |
) |
|
|
(1,800 |
) |
|
|
(3,784 |
) |
|
|
(1,692 |
) |
|
Total other income (expense), net |
|
|
17,054 |
|
|
|
(2,211 |
) |
|
|
(3,582 |
) |
|
|
13,472 |
|
|
|
(5,589 |
) |
| Income before income
taxes |
|
|
37,454 |
|
|
|
18,340 |
|
|
|
29,924 |
|
|
|
67,378 |
|
|
|
36,581 |
|
|
Income tax expense |
|
|
9,303 |
|
|
|
11,588 |
|
|
|
22,238 |
|
|
|
31,541 |
|
|
|
26,359 |
|
| Net income |
|
$ |
28,151 |
|
|
$ |
6,752 |
|
|
$ |
7,686 |
|
|
$ |
35,837 |
|
|
$ |
10,222 |
|
| Other comprehensive income
(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation adjustments |
|
|
(1,068 |
) |
|
|
2,006 |
|
|
|
(2,454 |
) |
|
|
(3,522 |
) |
|
|
1,881 |
|
| Comprehensive income |
|
$ |
27,083 |
|
|
$ |
8,758 |
|
|
$ |
5,232 |
|
|
$ |
32,315 |
|
|
$ |
12,103 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic net income (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) per
share |
|
$ |
0.27 |
|
|
$ |
0.06 |
|
|
$ |
0.07 |
|
|
$ |
0.34 |
|
|
$ |
0.10 |
|
| Basic weighted average shares
outstanding |
|
|
103,528 |
|
|
|
106,965 |
|
|
|
103,659 |
|
|
|
103,594 |
|
|
|
107,175 |
|
| Diluted net income (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) per
share |
|
$ |
0.27 |
|
|
$ |
0.06 |
|
|
$ |
0.07 |
|
|
$ |
0.34 |
|
|
$ |
0.09 |
|
| Diluted weighted average
shares outstanding |
|
|
103,676 |
|
|
|
107,613 |
|
|
|
104,541 |
|
|
|
103,677 |
|
|
|
108,050 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VAALCO ENERGY, INC AND SUBSIDIARIESConsolidated Statements of
Cash Flows (Unaudited)
| |
|
Six Months Ended June 30, |
|
| |
|
2024 |
|
|
2023 |
|
| |
|
(in thousands) |
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
| Net income |
|
$ |
35,837 |
|
|
$ |
10,222 |
|
| Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
58,956 |
|
|
|
62,420 |
|
|
Bargain purchase gain |
|
|
(19,898 |
) |
|
|
1,412 |
|
|
Deferred taxes |
|
|
(7,407 |
) |
|
|
1,618 |
|
|
Unrealized foreign exchange loss |
|
|
(196 |
) |
|
|
313 |
|
|
Stock-based compensation |
|
|
1,883 |
|
|
|
1,254 |
|
|
Cash settlements paid on exercised stock appreciation rights |
|
|
(154 |
) |
|
|
(233 |
) |
|
Derivative instruments (gain) loss, net |
|
|
590 |
|
|
|
(52 |
) |
|
Cash settlements paid on matured derivative contracts, net |
|
|
(33 |
) |
|
|
(63 |
) |
|
Cash settlements paid on asset retirement obligations |
|
|
(82 |
) |
|
|
(374 |
) |
|
Credit losses and other |
|
|
5,474 |
|
|
|
1,615 |
|
|
Other operating loss, net |
|
|
34 |
|
|
|
62 |
|
|
Operational expenses associated with equipment and other |
|
|
1,029 |
|
|
|
(1,196 |
) |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Trade, net |
|
|
(20,046 |
) |
|
|
(5,208 |
) |
|
Accounts with joint venture owners, net |
|
|
(4,603 |
) |
|
|
21,746 |
|
|
Egypt receivables and other, net |
|
|
1,306 |
|
|
|
(1,868 |
) |
|
Crude oil inventory |
|
|
8,343 |
|
|
|
(7,465 |
) |
|
Prepayments and other |
|
|
(3,829 |
) |
|
|
(69 |
) |
|
Value added tax and other receivables |
|
|
(2,007 |
) |
|
|
(2,302 |
) |
|
Other long-term assets |
|
|
699 |
|
|
|
1,508 |
|
|
Accounts payable |
|
|
(727 |
) |
|
|
(10,897 |
) |
|
Foreign income taxes receivable/(payable) |
|
|
(6,563 |
) |
|
|
15,344 |
|
|
Deferred tax liability |
|
|
— |
|
|
|
(3,081 |
) |
|
Accrued liabilities and other |
|
|
(27,211 |
) |
|
|
(7,137 |
) |
|
Net cash provided by (used in) operating activities |
|
|
21,395 |
|
|
|
77,569 |
|
| CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
Property and equipment expenditures |
|
|
(49,099 |
) |
|
|
(54,832 |
) |
|
Cash paid in business combination |
|
|
(40,166 |
) |
|
|
- |
|
|
Cash received in business combination |
|
|
40,578 |
|
|
|
- |
|
|
Net cash provided by (used in) investing activities |
|
|
(48,687 |
) |
|
|
(54,832 |
) |
| CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
Proceeds from the issuances of common stock |
|
|
447 |
|
|
|
382 |
|
|
Dividend distribution |
|
|
(13,042 |
) |
|
|
(13,452 |
) |
|
Treasury shares |
|
|
(6,802 |
) |
|
|
(11,403 |
) |
|
Deferred financing costs |
|
|
(1 |
) |
|
|
(30 |
) |
|
Payments of finance lease |
|
|
(4,169 |
) |
|
|
(3,379 |
) |
|
Net cash provided by (used in) in financing activities |
|
|
(23,567 |
) |
|
|
(27,882 |
) |
|
Effects of exchange rate changes on cash |
|
|
(234 |
) |
|
|
(285 |
) |
| NET CHANGE IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH |
|
|
(51,093 |
) |
|
|
(5,430 |
) |
| CASH, CASH EQUIVALENTS AND
RESTRICTED CASH AT BEGINNING OF PERIOD |
|
|
129,178 |
|
|
|
59,776 |
|
| CASH, CASH EQUIVALENTS AND
RESTRICTED CASH AT END OF PERIOD |
|
$ |
78,085 |
|
|
$ |
54,346 |
|
| |
VAALCO ENERGY, INC AND SUBSIDIARIESSelected Financial and
Operating Statistics(Unaudited)
| |
|
Three Months Ended |
|
|
Six Months Ended |
|
| |
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
March 31, 2024 |
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
NRI SALES DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and natural gas liquids sales (MBOE) |
|
|
1,764 |
|
|
|
1,803 |
|
|
|
1,490 |
|
|
|
3,254 |
|
|
|
3,027 |
|
|
Average daily sales volumes (BOE) |
|
|
19,386 |
|
|
|
19,813 |
|
|
|
16,374 |
|
|
|
17,881 |
|
|
|
16,724 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| WI PRODUCTION DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Etame Crude oil (MBbl) |
|
|
780 |
|
|
|
934 |
|
|
|
819 |
|
|
|
1,599 |
|
|
|
1,876 |
|
|
Egypt Crude oil (MBbl) |
|
|
953 |
|
|
|
1,054 |
|
|
|
950 |
|
|
|
1,903 |
|
|
|
1,957 |
|
|
Canada Crude Oil (MBbl) |
|
|
130 |
|
|
|
123 |
|
|
|
61 |
|
|
|
191 |
|
|
|
216 |
|
|
Canada Natural Gas (Mcf) |
|
|
423 |
|
|
|
442 |
|
|
|
469 |
|
|
|
892 |
|
|
|
857 |
|
|
Canada Natural Gas Liquid (MBOE) |
|
|
76 |
|
|
|
78 |
|
|
|
76 |
|
|
|
152 |
|
|
|
155 |
|
|
Canada Crude oil, natural gas and natural gas liquids (MBOE) |
|
|
277 |
|
|
|
275 |
|
|
|
215 |
|
|
|
492 |
|
|
|
514 |
|
|
Côte d'Ivoire Crude oil (MBbl) |
|
|
303 |
|
|
|
— |
|
|
|
— |
|
|
|
303 |
|
|
|
— |
|
|
Total Crude oil, natural gas and natural gas liquids production
(MBOE) |
|
|
2,313 |
|
|
|
2,263 |
|
|
|
1,984 |
|
|
|
4,297 |
|
|
|
4,347 |
|
|
Gabon Average daily production volumes (BOEPD) |
|
|
8,566 |
|
|
|
10,262 |
|
|
|
9,001 |
|
|
|
8,784 |
|
|
|
10,364 |
|
|
Egypt Average daily production volumes (BOEPD) |
|
|
10,474 |
|
|
|
11,579 |
|
|
|
10,440 |
|
|
|
10,457 |
|
|
|
10,810 |
|
|
Canada Average daily production volumes (BOEPD) |
|
|
3,041 |
|
|
|
3,021 |
|
|
|
2,363 |
|
|
|
2,702 |
|
|
|
2,839 |
|
|
Côte d'Ivoire Average daily production volumes (BOEPD) |
|
|
3,329 |
|
|
|
— |
|
|
|
— |
|
|
|
1,664 |
|
|
|
— |
|
|
Average daily production volumes (BOEPD) |
|
|
25,411 |
|
|
|
24,863 |
|
|
|
21,807 |
|
|
|
23,607 |
|
|
|
24,013 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NRI PRODUCTION DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Etame Crude oil (MBbl) |
|
|
678 |
|
|
|
812 |
|
|
|
713 |
|
|
|
1,391 |
|
|
|
1,632 |
|
|
Egypt Crude oil (MBbl) |
|
|
643 |
|
|
|
726 |
|
|
|
641 |
|
|
|
1,284 |
|
|
|
1,342 |
|
|
Canada Crude Oil (MBbl) |
|
|
117 |
|
|
|
113 |
|
|
|
51 |
|
|
|
169 |
|
|
|
195 |
|
|
Canada Natural Gas (Mcf) |
|
|
381 |
|
|
|
406 |
|
|
|
392 |
|
|
|
787 |
|
|
|
773 |
|
|
Canada Natural Gas Liquid (MBOE) |
|
|
69 |
|
|
|
72 |
|
|
|
63 |
|
|
|
134 |
|
|
|
140 |
|
|
Canada Crude oil, natural gas and natural gas liquids (MBOE) |
|
|
250 |
|
|
|
253 |
|
|
|
179 |
|
|
|
429 |
|
|
|
464 |
|
|
Côte d'Ivoire Crude oil (MBbl) |
|
|
303 |
|
|
|
— |
|
|
|
— |
|
|
|
303 |
|
|
|
— |
|
|
Total Crude oil, natural gas and natural gas liquids production
(MBOE) |
|
|
1,873 |
|
|
|
1,791 |
|
|
|
1,533 |
|
|
|
3,406 |
|
|
|
3,438 |
|
|
Gabon Average daily production volumes (BOEPD) |
|
|
7,451 |
|
|
|
8,923 |
|
|
|
7,835 |
|
|
|
7,642 |
|
|
|
9,017 |
|
|
Egypt Average daily production volumes (BOEPD) |
|
|
7,066 |
|
|
|
7,978 |
|
|
|
7,044 |
|
|
|
7,053 |
|
|
|
7,414 |
|
|
Canada Average daily production volumes (BOEPD) |
|
|
2,742 |
|
|
|
2,776 |
|
|
|
1,971 |
|
|
|
2,356 |
|
|
|
2,563 |
|
|
Côte d'Ivoire Average daily production volumes (BOEPD) |
|
|
3,329 |
|
|
|
— |
|
|
|
— |
|
|
|
1,664 |
|
|
|
— |
|
|
Average daily production volumes (BOEPD) |
|
|
20,588 |
|
|
|
19,676 |
|
|
|
16,848 |
|
|
|
18,716 |
|
|
|
18,994 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| AVERAGE SALES PRICES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and natural gas liquids sales (per BOE) - WI
basis |
|
$ |
70.92 |
|
|
$ |
64.67 |
|
|
$ |
69.62 |
|
|
$ |
70.31 |
|
|
$ |
65.41 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Crude oil, natural gas and
natural gas liquids sales (per BOE) - NRI basis |
|
$ |
66.05 |
|
|
$ |
59.37 |
|
|
$ |
66.43 |
|
|
$ |
66.22 |
|
|
$ |
61.92 |
|
| Crude oil, natural gas and
natural gas liquids sales (Per BOE including realized commodity
derivatives) |
|
$ |
66.03 |
|
|
$ |
59.34 |
|
|
$ |
66.41 |
|
|
$ |
66.21 |
|
|
$ |
61.90 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| COSTS AND EXPENSES (Per BOE of
sales): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Production expense |
|
$ |
29.74 |
|
|
$ |
21.41 |
|
|
$ |
21.54 |
|
|
$ |
25.98 |
|
|
$ |
22.07 |
|
| Production expense, excluding
offshore workovers and stock compensation* |
|
|
29.68 |
|
|
|
21.51 |
|
|
|
21.56 |
|
|
|
25.96 |
|
|
|
22.48 |
|
| Depreciation, depletion and
amortization |
|
|
18.78 |
|
|
|
21.08 |
|
|
|
17.33 |
|
|
|
18.12 |
|
|
|
20.62 |
|
| General and administrative
expense** |
|
|
4.30 |
|
|
|
2.99 |
|
|
|
4.50 |
|
|
|
4.39 |
|
|
|
3.51 |
|
| Property and equipment
expenditures, cash basis (in thousands) |
|
$ |
32,481 |
|
|
$ |
27,132 |
|
|
$ |
16,618 |
|
|
$ |
49,099 |
|
|
$ |
54,832 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Offshore workover costs excluded from the three
months ended June 30, 2024 and 2023 and March 31,
2024 are $(0.1) million, $(0.2) million and
$(0.1) million, respectively.*Stock compensation associated
with production expense excluded from the three months ended June
30, 2024 and 2023 and March 31, 2024 are
immaterial.**General and administrative expenses include $0.51,
$0.33 and $0.60 per barrel of oil related
to stock-based compensation expense in the three months ended
June 30, 2024 and 2023 and March 31,
2024, 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.
Management uses Free Cash Flow to evaluate
financial performance and to determine the total amount of cash
over a specified period available to be used in connection with
returning cash to shareholders, and believes the measure is useful
to investors because it provides the total amount of net cash
available for returning cash to shareholders by adding cash
generated from operating activities, subtracting amounts used in
financing and investing activities, and adding back amounts used
for dividend payments and stock repurchases. Free Cash Flow is a
non-GAAP financial measure and as used herein represents net change
in cash, cash equivalents and restricted cash and adds the amounts
paid under dividend distributions and share repurchases over a
specified period.
Free Cash Flow has significant limitations,
including that it does not represent residual cash flows available
for discretionary purposes and should not be used as a substitute
for cash flow measures prepared in accordance with GAAP. Free Cash
Flow should not be considered as a substitute for cashflows from
operating activities before discontinued operations or any other
liquidity measure presented in accordance with GAAP. Free Cash Flow
may vary among other companies. Therefore, the Company’s Free Cash
Flow may not be comparable to similarly titled measures used by
other companies.
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, Adjusted Working Capital and Free Cash
Flow 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, Adjusted Working Capital and Free Cash Flow 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, Adjusted Working Capital and Free Cash Flow.
VAALCO ENERGY, INC AND SUBSIDIARIESReconciliations of Non-GAAP
Financial Measures(Unaudited)(in thousands)
| |
|
Three Months Ended |
|
|
Six Months Ended |
|
| Reconciliation of Net
Income to Adjusted Net Income |
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
March 31, 2024 |
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
Net income |
|
$ |
28,151 |
|
|
$ |
6,752 |
|
|
$ |
7,686 |
|
|
$ |
35,837 |
|
|
$ |
10,222 |
|
| Adjustment for discrete
items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized derivative instruments loss (gain) |
|
|
(266 |
) |
|
|
(35 |
) |
|
|
823 |
|
|
|
557 |
|
|
|
(115 |
) |
|
(Gain) /adjustment of acquisition price, net |
|
|
(19,898 |
) |
|
|
1,412 |
|
|
|
— |
|
|
|
(19,898 |
) |
|
|
1,412 |
|
|
FPSO demobilization |
|
|
— |
|
|
|
5,647 |
|
|
|
— |
|
|
|
— |
|
|
|
5,647 |
|
|
Deferred income tax expense (benefit) |
|
|
(2,021 |
) |
|
|
(813 |
) |
|
|
(3,441 |
) |
|
|
(5,462 |
) |
|
|
1,658 |
|
| Non-cash purchase price
adjustment |
|
|
14,981 |
|
|
|
— |
|
|
|
— |
|
|
|
14,981 |
|
|
|
— |
|
| Transaction costs related to
acquisition |
|
|
1,762 |
|
|
|
— |
|
|
|
1,313 |
|
|
|
3,075 |
|
|
|
303 |
|
| Other operating (income)
expense, net |
|
|
(132 |
) |
|
|
303 |
|
|
|
166 |
|
|
|
— |
|
|
|
— |
|
| Adjusted Net Income |
|
$ |
22,577 |
|
|
$ |
13,266 |
|
|
$ |
6,547 |
|
|
$ |
29,090 |
|
|
$ |
19,127 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted Adjusted Net Income
per Share |
|
$ |
0.22 |
|
|
$ |
0.12 |
|
|
$ |
0.06 |
|
|
$ |
0.28 |
|
|
$ |
0.18 |
|
| Diluted weighted average
shares outstanding (1) |
|
|
103,676 |
|
|
|
107,613 |
|
|
|
104,541 |
|
|
|
103,677 |
|
|
|
108,050 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) No adjustments to weighted average shares outstanding
| |
|
Three Months Ended |
|
|
Six Months Ended |
|
| Reconciliation of Net
Income to Adjusted EBITDAX |
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
March 31, 2024 |
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
Net income |
|
$ |
28,151 |
|
|
$ |
6,752 |
|
|
$ |
7,686 |
|
|
$ |
35,837 |
|
|
$ |
10,222 |
|
| Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (income), net |
|
|
1,117 |
|
|
|
1,703 |
|
|
|
935 |
|
|
|
2,052 |
|
|
|
3,949 |
|
|
Income tax expense (benefit) |
|
|
9,303 |
|
|
|
11,588 |
|
|
|
22,238 |
|
|
|
31,541 |
|
|
|
26,359 |
|
|
Depreciation, depletion and amortization |
|
|
33,132 |
|
|
|
38,003 |
|
|
|
25,824 |
|
|
|
58,956 |
|
|
|
62,420 |
|
|
Exploration expense |
|
|
— |
|
|
|
57 |
|
|
|
48 |
|
|
|
48 |
|
|
|
65 |
|
|
FPSO demobilization |
|
|
— |
|
|
|
5,647 |
|
|
|
— |
|
|
|
— |
|
|
|
5,647 |
|
| Non-cash or unusual
items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
984 |
|
|
|
605 |
|
|
|
899 |
|
|
|
1,883 |
|
|
|
1,254 |
|
|
Unrealized derivative instruments loss (gain) |
|
|
(266 |
) |
|
|
(35 |
) |
|
|
823 |
|
|
|
557 |
|
|
|
(115 |
) |
|
Bargain purchase gain |
|
|
(19,898 |
) |
|
|
— |
|
|
|
— |
|
|
|
(19,898 |
) |
|
|
1,412 |
|
|
Other operating (income) expense, net |
|
|
(132 |
) |
|
|
303 |
|
|
|
166 |
|
|
|
34 |
|
|
|
303 |
|
|
Non-cash purchase price adjustment |
|
|
14,981 |
|
|
|
— |
|
|
|
— |
|
|
|
14,981 |
|
|
|
— |
|
|
Transaction costs related to acquisition |
|
|
1,762 |
|
|
|
— |
|
|
|
1,313 |
|
|
|
3,075 |
|
|
|
— |
|
|
Credit losses and other |
|
|
3,341 |
|
|
|
680 |
|
|
|
1,812 |
|
|
|
5,153 |
|
|
|
1,615 |
|
| Adjusted EBITDAX |
|
$ |
72,475 |
|
|
$ |
65,303 |
|
|
$ |
61,744 |
|
|
$ |
134,219 |
|
|
$ |
113,131 |
|
| |
VAALCO ENERGY, INC AND SUBSIDIARIES Reconciliations of
Non-GAAP Financial Measures(Unaudited)(in thousands)
| Reconciliation of
Working Capital to Adjusted Working Capital |
|
As of June 30, 2024 |
|
|
As of December 31, 2023 |
|
|
Change |
|
|
Current assets |
|
$ |
195,407 |
|
|
$ |
199,367 |
|
|
$ |
(3,960 |
) |
|
Current liabilities |
|
|
(164,193 |
) |
|
|
(153,703 |
) |
|
|
(10,490 |
) |
| Working
capital |
|
|
31,214 |
|
|
|
45,664 |
|
|
|
(14,450 |
) |
|
Add: lease liabilities - current portion |
|
|
12,325 |
|
|
|
9,351 |
|
|
|
2,974 |
|
|
Add: current liabilities - discontinued operations |
|
|
— |
|
|
|
673 |
|
|
|
(673 |
) |
| Adjusted Working
Capital |
|
$ |
43,539 |
|
|
$ |
55,688 |
|
|
$ |
(11,476 |
) |
| |
|
Six Months Ended June 30, 2024 |
|
|
Reconciliation of Free Cash Flow |
|
|
|
|
|
Net cash provided by Operating activities |
|
$ |
21,395 |
|
|
Net cash used in Investing activities |
|
|
(49,099 |
) |
|
Net cash used in Financing activities |
|
|
(23,567 |
) |
|
Effects of exchange rate changes on cash |
|
|
(234 |
) |
| Total net cash
change |
|
|
(51,505 |
) |
| |
|
|
|
|
| Add back shareholder cash
out: |
|
|
|
|
|
Dividends paid |
|
|
13,042 |
|
|
Stock buyback |
|
|
5,502 |
|
| Total cash returned to
shareholders |
|
|
18,544 |
|
| |
|
|
|
|
| Free Cash
Flow |
|
$ |
(32,961 |
) |
| |
|
|
|
|
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