Company Announcements

THIRD QUARTER 2024 RESULTS

Source: RNS
RNS Number : 8652L
Vaalco Energy Inc
12 November 2024
 

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

VAALCO ENERGY, INC. ANNOUNCES

THIRD QUARTER 2024 RESULTS

Third Quarter 2024 Highlights and Recent Key Items:

•          Grew net revenue interest ("NRI")(2) sales to 2,134,000 barrels of oil equivalent ("BOE"), or  23,198 barrels of oil equivalent per day ("BOEPD"), toward the upper end of guidance; and 20% above the second quarter of 2024 due to additional Côte d'Ivoire liftings;

•          Reported Q3 2024 net income of $11.0 million ($0.10 per diluted share) and Adjusted Net Income(1) of  $7.9 million ( $0.08 per diluted share);

•          Increased Adjusted EBITDAX(1) by 28% to $92.8 million compared to Q2 2024, driven by sales increase associated with Côte d'Ivoire liftings;

•          Achieved production of 21,770 NRI(2) BOEPD and working interest ("WI")(3) production of 26,709 BOEPD; both were higher than Q2 2024 by 5%;

•          Posted unrestricted cash of $89.1 million which is after $6.6 million paid for quarterly dividend and $12.4 million in cash capital spending for the quarter;

•          Decreased production expense per BOE by 33% quarter-over-quarter to $19.80 per BOE, at the low end of the Q3 2024 guidance range ;

•        Completed Production Sharing Contracts ("PSCs") with the Government of Gabon for the offshore Niosi Marin and Guduma Marin exploration blocks; and

•          Announced quarterly cash dividend of $0.0625 per share of common stock to be paid on December 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 sales and 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 continue to deliver strong quarterly results, both operationally and financially, that are generating significant Adjusted EBITDAX and building cash on hand to fund organic growth. In addition, we remain committed to shareholder returns through our quarterly dividend policy. Our production, sales and Adjusted EBITDAX all improved compared to Q2 2024 as we realize the positive impacts from the highly accretive Côte d'Ivoire acquisition, the solid results from our Canadian drilling program, and the focus on optimizing production in Gabon and Egypt."

"In the third quarter, we announced that the results of our independent, third-party reserve engineer's calculation of proved reserves associated with the Côte d'Ivoire acquisition as of December 31, 2023 was approximately 30% greater than our initial disclosure. This strategically complementary and highly cost-effective acquisition expands our West African focus area through the addition of 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. Additionally, the documentation has been completed on the production sharing contracts for two offshore Gabon exploration blocks where Vaalco holds a 37.5% working interest."

"We are excited about the major projects planned for 2025 that are expected to deliver a step-change in organic growth across the portfolio in the coming years. As we work to finalize the timing of our projects, we will provide more details in early 2025. We have delivered on our focused strategy over the past three years and believe we will continue to do so with the organic growth programs across our diversified portfolio over the next few years. We remain focused on maximizing value and generating strong operational cash flow to fund our numerous organic opportunities moving forward, all while continuing to return capital to our shareholders through the quarterly dividend policy."

Operational Update

Egypt

Vaalco focused on enhancing production in the first nine months 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 third quarter of 2024 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 nine months of 2024 is presented below:

Vaalco Egypt 2024 Workover Wells

Well

Workover date

Type

Completion Zone

 

Perforation Interval (ft)

 

IP-30 Rate (BOPD)(a)

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

K-72A

24-Jul-24

Recompletion

Asl-A

 

9.8

 

150

HE-04

27-Jul-24

ALS Change to SRP

Asl-B2

 

0.0

 

170

K-65ST1

31-Aug-24

Recompletion

Asl-B

 

6.6

 

100

a)            Initial Production; 30 day duration

*  Production - impacted by sand production - Possible workover with 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 in 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

2/9/2024

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

3/9/2024

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 in mid-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 demonstrate operational excellence, production uptime and enhancement in 2024 to optimize production until the next drilling campaign.

The Company recently completed the documentation with the Government of Gabon for the offshore Niosi Marin and Guduma Marin exploration blocks. This follows the technical provisional award announced in October 2021 granting Vaalco a 37.5% non-operating working interest in the Niosi Marin Block (previously G12-13) and the Guduma Marin Block (previously H12-13) located in shallow waters offshore Gabon, with BW Energy as operator (also holding a 37.5% working interest) and Panoro Energy as a non-operating joint owner with a 25% working interest. The Niosi and Guduma blocks cover areas of 2,974 square kilometers ("km²) and 1,927 km², respectively. The Niosi Block is located adjacent to the Etame Marin Permit, where Vaalco operates a successful ongoing exploration and production campaign. To date, the Etame Marin partners have produced and discovered over 150 million barrels of oil, with multiple fields brought online. The area benefits from significant infrastructure investments, including processing facilities and a new FSO vessel installed by Vaalco in 2022 which is located adjacent to the Niosi Marin blocks.  The blocks are also adjacent to BW Energy and Panoro Energy's Dussafu PSC offshore Southern Gabon, which is another area of significant successful exploration and development.

Côte d'Ivoire

During the third quarter, three liftings took place.  In July, 612,773 gross barrels were lifted or 197,457 net barrels to Vaalco.  In August, 681,584 gross barrels were lifted or 219,630 net barrels to Vaalco. And in September, 667,871 gross barrels were lifted or 215,211 net barrels to Vaalco.

Work with Modec, the operator of the Baobab Floating Production and Offloading Vessel ("FPSO"), on the dry docking project for the FPSO, projected to be offline in 2025, continued in the third 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.

Financial Update - Third Quarter of 2024

Vaalco reported net income of $11.0 million ($0.10 per diluted share) for the third quarter of 2024 which was down compared with net income of $28.2 million ($0.27 per diluted share) in the second quarter of 2024 and up compared to $6.1 million ($0.06 per diluted share) in the third quarter of 2023. The decrease in earnings compared with the second quarter of 2024 is driven primarily by the non-cash bargain purchase gain on the Svenska acquisition in the second quarter.

Adjusted EBITDAX totaled $92.8 million in the third quarter of 2024, a 28% increase from $72.5 million in the second quarter of 2024 and up 30% from $71.4 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 September 30, 2024

 

Three Months Ended June 30, 2024


Gabon

 

Egypt

 

Canada

 

Côte d'Ivoire

 

Total

 

Gabon

 

Egypt

 

Canada

 

Côte d'Ivoire

 

Total

Oil Sales

$   54,934    

 

$   63,431    

 

$     8,038      

 

$   49,795    

 

$ 176,198

 

$   62,327    

 

$   65,314    

 

$     9,547      

 

$   17,240    

 

$     154,428      

NGL Sales

           -

 

           -

 

       2,007      

 

           -

 

       2,007

 

           -

 

           -

 

       1,922      

 

           -

 

          1,922         

Gas Sales

           -

 

           -

 

          225         

 

           -

 

  225

 

           -

 

           -

 

          384         

 

           -

 

             384            

Gross Sales

     54,934    

 

     63,431    

 

     10,270    

 

     49,795    

 

178,429

 

     62,327    

 

     65,314    

 

     11,853    

 

     17,240    

 

       156,734      


 

 

 

 

 

 

 

 

 

 


 


 


 


 

 

Selling Costs & carried interest

          651         

 

        (173)

 

        (351)

 

           -

 

          127

 

           -

 

       (117)

 

        (318)

 

           -

 

           (435)

Royalties & taxes

     (7,977)

 

    (28,714)

 

     (1,532)

 

           -

 

  (38,223)

 

     (8,653)

 

   (29,716)

 

     (1,152)

 

           -

 

       (39,521)


 

 

 

 

 

 

 

 

 

 


 


 


 


 

 

Net Revenue

     47,608    

 

     34,544    

 

       8,387      

 

     49,795    

 

   140,334

 

     53,674    

 

     35,481    

 

     10,383    

 

     17,240    

 

       116,778      


 

 

 

 

 

 

 

 

 

 


 


 


 


 

 

Oil Sales MMB (working interest)

          709         

 

          964         

 

          112

 

          632         

 

       2,418

 

          759         

 

         953

 

          130         

 

          211         

 

          2,053         

Average Oil Price Received

$     77.45      

 

$     65.79      

 

$     71.55      

 

$     78.75      

 

$     72.87

 

$     82.13      

 

$    68.52

 

$     73.52      

 

$     81.70      

 

$        75.22         

Change

 

 

 

 

 

 

 

 

                -3%

 

 

 

 

 

 

 

 

 

 

Average Brent Price

 

 

 

 

 

 

 

 

$     79.84

 

 

 

 

 

 

 

 

 

$        84.65         

Change

 

 

 

 

 

 

 

 

                -6%

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gas Sales MMCF (working interest)

           -

 

           -

 

          449         

 

           -

 

          449

 

           -

 

           -

 

          423         

 

           -

 

             423            

Average Gas Price Received

           -

 

           -

 

$       0.50        

 

           -

 

$       0.50

 

           -

 

           -

 

$       0.91        

 

           -

 

$          0.91           

Change

 

 

 

 

 

 

 

 

                -45%

 

 

 

 

 

 

 

 

 

 

Average Aeco Price ($USD)

           -

 

           -

 

$       0.57        

 

           -

 

$       0.57

 

           -

 

           -

 

$       0.84        

 

           -

 

$          0.84           

Change

 

 

 

 

 

 

 

 

                -32%

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NGL Sales MMB (working interest)

           -

 

           -

 

           82

 

           -

 

           82

 

           -

 

           -

 

           76

 

           -

 

               76

Average Liquids Price Received

           -

 

           -

 

$     24.58      

 

           -

 

$     24.58

 

           -

 

           -

 

$     25.16      

 

           -

 

$        25.16         

Change

 

 

 

 

 

 

 

 

                -2%

 

 

 

 

 

 

 

 

 

 

 

Revenue and Sales

Q3 2024

 

Q3 2023

 

% Change Q3 2024 vs. Q3 2023

 

Q2 2024

 

% Change Q3 2024 vs. Q2 2024

Production (NRI BOEPD)

                21,770

 

              18,845

 

         16%        

 

              20,588

 

       6%   

Sales (NRI BOE)

           2,134,000

 

         1,812,000

 

     18       %

 

         1,764,000

 

         21%        

Realized commodity price ($/BOE)

$                65.41

 

$              63.41

 

       3%   

 

$              66.05

 

     (1)       %

Commodity (Per BOE including realized commodity derivatives)

$                65.42

 

$              63.38

 

       3%   

 

$              66.03

 

     (1)       %

Total commodity sales ($MM)

$                140.3

 

$              116.3

 

         21%        

 

$              116.5

 

         20%        

Vaalco had net revenues increase by $24.1 million or 21% as total NRI sales volumes of 2,134,000 BOE was 21% higher than Q2 2024 and increased 18% compared to 1,812,000 BOE for Q3 2023. Q3 2024 NRI sales were toward the upper end of Vaalco's guidance. The Company expects fourth quarter 2024 NRI sales to be between 18,600 and 20,800 BOEPD.

Q3 2024 realized pricing (net of royalties) was slightly lower compared to Q2 2024 and 3% higher compared to Q3 2023.

Costs and Expenses

Q3 2024

 

Q3 2023

 

% Change Q3 2024 vs. Q3 2023

 

Q2 2024

 

% Change Q3 2024 vs. Q2 2024

Production expense, excluding offshore workovers and stock comp ($MM)

$             42.2

 

$             39.9

 

       6%   

 

$             52.4

 

                (19%)

Production expense, excluding offshore workovers ($/BOE)

$           19.80

 

$           22.07

 

                (10%)

 

$           29.70

 

                (33%)

Offshore workover expense ($MM)

$               0.1

 

$                -

 

         -%        

 

$               0.1

 

         -%        

Depreciation, depletion and amortization ($MM)

$             47.0

 

$             32.5

 

     44       %

 

$             33.1

 

         42%        

Depreciation, depletion and amortization ($/BOE)

$           22.04

 

$           18.00

 

     22       %

 

$           18.78

 

         17%        

General and administrative expense, excluding stock-based compensation ($MM)

$               6.0

 

$               5.2

 

         15%        

 

$               6.6

 

                (9%)

General and administrative expense, excluding stock-based compensation ($/BOE)

$               2.8

 

$             2.90

 

                (3%)

 

$               3.8

 

                (26%)

Stock-based compensation expense ($MM)

$               0.9

 

$               1.0

 

                (10%)

 

$               0.9

 

         -%        

Current income tax expense (benefit) ($MM)

$             33.7

 

$               2.1

 

             1505%            

 

$             13.3

 

       153   %

Deferred income tax expense (benefit) ($MM)

$             (1.1)

 

$             (2.6)

 

                (58%)

 

$             (4.0)

 

                (73%)

Total production expense (excluding offshore workovers and stock compensation) of $42.2 million in Q3 2024 was a 19% decrease  compared to Q2 2024 and a 6% increase compared to the same period in 2023. The decrease in Q3 2024 was primarily driven by a non-cash purchase price adjustment for the Svenska acquisition flowing through production expense and decreased 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.

Q3 2024  and Q2 2024 had minimal offshore workover expense, while Q3 2023 had no workover expense.

Q3 2024 production expense per BOE, excluding offshore workover expense, decreased to $19.80 per BOE which was lower than Q3 2023 and Q2 2024 primarily due to the increased sales associated with the purchase of the Côte d'Ivoire asset.

DD&A expense for Q3 2024 was $47.0 million which was higher than $33.1 million in Q2 2024 and higher than $32.5 million in Q3 2023. The increase in Q3 2024 DD&A expense compared to Q2 2024 is due primarily to increased depletion associated with the addition of Côte d'Ivoire. The increase in Q3 2024 DD&A expense compared to Q3 2023 is due to higher depletable costs in Côte d'Ivoire partially offset by lower depletable costs in Gabon, Egypt, and Canada.

General and administrative ("G&A") expense, excluding stock-based compensation, decreased to $6.0 million in Q3 2024 from $6.6 million in Q2 2024 and increased from $5.2 million in Q3 2023. The decrease in G&A expenses compared to Q2 2024 was primarily due to lower professional, accounting and legal fees.  The increase in G&A expenses compared to Q3 2023 was primarily due to higher professional service fees, salaries and wages, and accounting and legal fees due to growth associated with the acquisition. Q3 2024 cash G&A was within the Company's guidance.

Non-cash stock-based compensation expense was $0.9 million for Q3 2024 compared to $1.0 million for Q3 2023. Non-cash stock-based compensation expense for Q2 2024 was $0.9 million.

Other income (expense), net, was an expense of $0.1 million for Q3 2024, compared to other income of $0.2 million during Q3 2023 and an expense of $2.0 million for Q2 2024. Other income (expense), net, normally consists of foreign currency losses. Also included in Q3 2024 amount are $0.3 million in transaction costs related to the Svenska acquisition.

 

Foreign income taxes for Gabon are settled by the government taking oil in-kind. Q3 2024 income tax expense was an expense of $32.6 million and is comprised of current tax expense of $33.7 million and deferred tax benefit of $1.1 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. 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. Q3 2023 income tax expense was an expense of $25.8 million, comprised of $26.8 million of current tax expense and a deferred tax benefit of $1.0 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.

 

 

Taxes extinguished by jurisdiction are as follows:

(in thousands)

 

Gabon

 

Egypt

 

Canada

 

Equatorial Guinea

 

Cote d'Ivoire

 

Corporate and Other

 

Total

Cash/In Kind Taxes Paid:

 


 


 


 


 

 

 


 


Three months ended September 30, 2004

 

-

 

$        7,235

 

-

 

-

 

$        4,531

 

-

 

$      11,766

 

Financial Update - First Nine Months of 2024

 

WI Sales for the first nine months of 2024 increased to 6,709 MBOE compared to 6,594 MBOE in the first nine 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 nine months of 2024 was $65.99 per barrel, representing an increase of 6.0% from $62.48 realized in the first nine 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 nine months ended September 30, 2024 of $46.8 million, which compares to $16.4 million for the same period of 2023. The increase in net income for the nine months ended September 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

Nine Months Ended September 30, 2024

 

Nine Months Ended September 30, 2023

 

Gabon

 

Egypt

 

Canada

 

Côte d'Ivoire

 

Total

 

Gabon

 

Egypt

 

Canada

 

Côte d'Ivoire

 

Total

Oil Sales

$  182,048   

 

$  191,938   

 

$    21,739     

 

$    67,035     

 

$   462,760

 

$  194,179   

 

$  193,570   

 

$    22,811     

 

$          -

 

$    410,560     

NGL Sales

            -

 

            -

 

       5,905      

 

            -

 

        5,905

 

            -

 

            -

 

       6,421      

 

            -

 

          6,421         

Gas Sales

            -

 

            -

 

       1,429      

 

            -

 

        1,429

 

            -

 

            -

 

       2,649      

 

            -

 

          2,649         

Gross Sales

    182,048   

 

    191,938   

 

      29,073     

 

      67,035     

 

     470,094

 

    194,179   

 

    193,570   

 

      31,881     

 

            -

 

      419,630     



 


 


 


 

 

 


 


 


 


 

 

Selling Costs & carried interest

        1,825       

 

         (401)

 

        (812)

 

            -

 

           612

 

       3,590      

 

        (995)

 

            -

 

            -

 

          2,595         

Royalties & taxes

     (25,088)

 

     (84,550)

 

      (3,801)

 

            -

 

  (113,439)

 

    (25,833)

 

    (86,176)

 

      (4,304)

 

            -

 

    (116,313)

 


 


 


 


 

 

 


 


 


 


 

 

Net Revenue

    158,786   

 

    106,986   

 

      24,460     

 

      67,035     

 

     357,267

 

    171,936   

 

    106,399   

 

      27,577     

 

            -

 

      305,912     

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Oil Sales MMB (working interest)

        2,238       

 

        2,867       

 

          303         

 

          844         

 

        6,252

 

       2,404      

 

       3,032      

 

          317         

 

            -

 

          5,753         

Average Oil Price Received

$      81.35       

 

$      66.94       

 

$     71.75      

 

$     79.46      

 

$      74.02

 

$     80.76      

 

$     63.85      

 

$     72.01      

 

$          -

 

$        71.36         

Change

 

 

 

 

 

 

 

 

                4%

 

 

 

 

 

 

 

 

 

 

Average Brent Price

 

 

 

 

 

 

 

 

$      82.50

 

 

 

 

 

 

 

 

 

$        81.99         

Change

 

 

 

 

 

 

 

 

                1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gas Sales MMCF (working interest)

            -

 

            -

 

       1,341      

 

            -

 

       1,341 

 

            -

 

            -

 

       1,327      

 

            -

 

          1,327         

Average Gas Price Received

            -

 

            -

 

$       1.07        

 

            -

 

$       1.07  

 

            -

 

            -

 

$       2.00        

 

            -

 

$         2.00          

Change

 

 

 

 

 

 

 

 

                -47%

 

 

 

 

 


 


 


Average Aeco Price ($USD)

 

 

 

 

$       0.95        

 

 

 

$       0.95  

 

 

 

 

 

$       1.94        

 


 

$            -

Change

 

 

 

 

 

 

 

 

                -51%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NGL Sales MMB (working interest)

            -

 

            -

 

          234         

 

            -

 

          234  

 

            -

 

            -

 

          237         

 

            -

 

            237           

Average Liquids Price Received

            -

 

            -

 

$     25.26      

 

            -

 

$     25.26 

 

            -

 

            -

 

$     27.10      

 

            -

 

$        27.10         

Change

 

 

 

 

 

 

 

 

                -7%

 

 

 

 

 

 

 

 

 

 

Capital Investments/Balance Sheet

For the third quarter of 2024, net capital expenditures totaled $12.4 million on a cash basis and $26.6 million on an accrual basis. These expenditures were primarily related to costs associated with the development drilling programs in Egypt and Canada, as well as maintenance, project costs and long lead items for Gabon and Côte d'Ivoire.

At the end of the third quarter of 2024, Vaalco had an unrestricted cash balance of $89.1 million. Working capital at September 30, 2024 was $60.6 million compared with $100.7 million at December 31, 2023, while Adjusted Working Capital at September 30, 2024 totaled $73.4 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 its 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.  The Company invoiced EGPC for the final receivable amount in June 2024. 

Quarterly Cash Dividend

Vaalco paid a quarterly cash dividend of $0.0625 per share of common stock for the third quarter of 2024 on September 20, 2024. The Company also announced its next quarterly cash dividend of $0.0625 per share of common stock for the fourth quarter of 2024 ($0.25 annualized), to paid on December 20, 2024 to stockholders of record at the close of business on November 22, 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").

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 third quarter of 2024:

Settlement Period

Type of Contract

Index

 

Average Monthly Volumes

 

Weighted Average Put Price

 




 

(Bbls)a

 

(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

 

a)        One gigajoule (GJ) equals one billion joules (J). A gigajoule of natural gas is about 25.5 cubic metres at standard conditions.

Subsequent to September 30, 2024, the Company entered into the following additional derivative contracts to cover its future anticipated production:

 

 

 

 

 

 

 

 

Weighted Average Hedge Price ($/Bbl)

Settlement Period

 

Type of Contract

 

Index

 

Average Volumes Hedged (Bbl)

 

Floor

 

Ceiling

January 2025 - March 2025

 

Collars

 

Dated Brent

 

70,000

 

$                        65.00

 

$                          85.00

April 2025 - June 2025

 

Collars

 

Dated Brent

 

70,000

 

$                        65.00

 

$                          81.00

 

 

 


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

 

 24100 - 25400

 

 8500 - 8900

 

 10100 - 10600

 

 2600 - 2800

 

 2900 - 3100

 

Production (BOEPD)

NRI

 

 19300 - 20600

 

 7400 - 7800

 

 6800 - 7300

 

 2200 - 2400

 

 2900 - 3100

 

Sales Volume (BOEPD)

WI

 

 23500 - 25100

 

 7700 - 8300

 

 10100 - 10600

 

 2600 - 2800

 

 3100 - 3400

 

Sales Volume (BOEPD)

NRI

 

 18800 - 20300

 

 6700 - 7200

 

 6800 - 7300

 

 2200 - 2400

 

 3100 - 3400

 

Production Expense (millions)

WI & NRI

 

 $162.5 - $176.5 MM

 


 


 


 


 

Production Expense per BOE

WI

 

 $18.00 - $20.00

 


 


 


 


 

Production Expense per BOE

NRI

 

$22.50 - $25.50

 


 


 


 


 

Offshore Workovers (millions)

WI & NRI

 

 $0 - $0 MM

 


 


 


 


 

Cash G&A (millions)

WI & NRI

 

 $21.0 - $25.0 MM

 


 


 


 


 

CAPEX excluding acquisitions (millions)

WI & NRI

 

 $110 - $130 MM

 


 


 


 


 

DD&A ($/BOE)

NRI

 

 $19.00 - $23.00

 


 


 


 


 

 



 

Q4 2024

 

Gabon

 

Egypt

 

Canada

 

Côte d'Ivoire

 

Production (BOEPD)

WI

 

 23800 - 26700

 

 7900 - 9100

 

 9500 - 10500

 

 2400 - 2700

 

 4000 - 4400

 

Production (BOEPD)

NRI

 

 19400 - 22000

 

 6900 - 7900

 

 6500 - 7500

 

 2000 - 2200

 

 4000 - 4400

 

Sales Volume (BOEPD)

WI

 

 22900 - 25300

 

 7300 - 8000

 

 9500 - 10500

 

 2400 - 2700

 

 3700 - 4100

 

Sales Volume (BOEPD)

NRI

 

 18600 - 20800

 

 6400 - 7000

 

 6500 - 7500

 

 2000 - 2200

 

 3700 - 4100

 

Production Expense (millions)

WI & NRI

 

 $40.8 - $47.3 MM

 

 

 

 

 

 

 

 

 

Production Expense per BOE

WI

 

 $17.50 - $22.50

 

 

 

 

 

 

 

 

 

Production Expense per BOE

NRI

 

$21.00 - $27.50

 

 

 

 

 

 

 

 

 

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

 

 $40 - $60 MM

 

 

 

 

 

 

 

 

 

DD&A ($/BOE)

NRI

 

 $21.00 - $24.00

 

 

 

 

 

 

 

 

 

 

Conference Call

As previously announced, the Company will hold a conference call to discuss its third quarter 2024 financial and operating results tomorrow, Tuesday, November 12, 2024, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time and 3:00 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 Third 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 "Q3 2024 Supplemental Information" investor deck will be posted to Vaalco's website prior to its conference call on November 12, 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, Nigeria and Canada.

For Further Information

Vaalco Energy, Inc. (General and Investor Enquiries)

+00 1 713 543 3422

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 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) 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 fourth 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.

Any forward-looking statement made by Vaalco in this press release is based only on information currently available to Vaalco and speaks only as of the date on which it is made. Except as may be required by applicable securities laws, Vaalco undertakes no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

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 SUBSIDIARIES

Consolidated Balance Sheets (Unaudited)

 

As of September 30, 2024

 

As of December 31, 2023

 

(in thousands)

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$                   89,101                    

 

$                 121,001                  

Restricted cash

                         146

 

                         114

Receivables:

 

 

 

 Trade, net of allowances for credit loss and other of $0.7 million and $0.5 million, respectively

                     84,344                    

 

                     44,888                    

 Accounts with joint venture owners, net of allowance for credit losses of $1.2 million and

   $0.8 million, respectively

                       1,131                      

 

                       1,814                      

Egypt receivables and other, net of allowances for credit loss and other of $0.0 million and $4.6 million as

   of December 31, 2023

                     42,163                    

 

                     45,942                    

Crude oil inventory

                       4,776                      

 

                       1,948                      

Prepayments and other

                     15,138                    

 

                     12,434                    

Total current assets

                   236,799                  

 

                   228,141                  

Crude oil, natural gas and NGLs properties and equipment, net

                   531,589                  

 

                   459,786                  

Other noncurrent assets:

 

 

 

Restricted cash

                       9,462                      

 

                       1,795                      

Value added tax and other receivables, net of allowances for credit loss and other of $0.0 million

                     10,228                    

 

                       4,214                      

Right of use operating lease assets

                       2,320                      

 

                       2,378                      

Right of use finance lease assets

                     83,093                    

 

                     89,962                    

Deferred tax assets

                     57,035                    

 

                     29,242                    

Abandonment funding

                       6,268                      

 

                       6,268                      

Other long-term assets

                       1,109                      

 

                       1,430                      

Total assets

$                 937,903                  

 

$                 823,216                  

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$                   15,047                    

 

$                   22,152                    

Accounts with joint venture owners

                         984

 

                       5,990                      

Accrued liabilities and other

                   103,848                  

 

                     67,597                    

Operating lease liabilities - current portion

                         335

 

                       2,396                      

Finance lease liabilities - current portion

                     12,560                    

 

                     10,079                    

Foreign income taxes payable

                     43,473                    

 

                     19,261                    

Total current liabilities

                   176,247                  

 

                   127,475                  

Asset retirement obligations

                     65,868                    

 

                     47,343                    

Operating lease liabilities - net of current portion

                       2,006                      

 

                           33

Finance lease liabilities - net of current portion

                     70,912                    

 

                     78,293                    

Deferred tax liabilities

                   103,356                  

 

                     73,581                    

Other long-term liabilities

                     18,482                    

 

                     17,709                    

Total liabilities

                   436,871                  

 

                   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

                   361,147                  

 

                   357,498                  

Accumulated other comprehensive income

                       1,013                      

 

                       2,880                      

     Less treasury stock, 18,560,961 and 17,051,320 shares, respectively, at cost

                   (78,024)

 

                   (71,222)

Retained earnings

                   204,666                  

 

                   177,486                  

Total shareholders' equity

                   501,032                  

 

                   478,782                  

Total liabilities and shareholders' equity

$                 937,903                  

 

$                 823,216                  

 


VAALCO ENERGY, INC AND SUBSIDIARIES

Consolidated Statements of Operations (Unaudited)

 

Three Months Ended

 

Nine Months Ended

 

September 30, 2024

 

September 30, 2023

 

June 30, 2024

 

September 30, 2024

 

September 30, 2023

 

(in thousands except per share amounts)

Revenues:

 

 

 

 

 

 

 

 

 

Crude oil, natural gas and natural gas liquids sales

$       140,334

 

$       116,269

 

        116,778 

 

$       357,267

 

$       305,912

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

Production expense

           42,324

 

           39,956

 

           52,446

 

         126,859

 

         106,760

FPSO demobilization and other costs

                  -

 

                  -

 

                  -

 

                  -

 

             5,647

Exploration expense

                  -

 

             1,194

 

                  -

 

                  48

 

             1,259

Depreciation, depletion and amortization

           47,031

 

           32,538

 

           33,132

 

         105,987

 

           94,958

General and administrative expense

             6,929

 

             6,216

 

             7,591

 

           21,230

 

           16,835

Credit losses and other

                  69

 

                822

 

             3,341

 

             5,222

 

             2,437

Total operating costs and expenses

           96,353

 

           80,726

 

           96,510

 

         259,346

 

         227,896

Other operating income (expense), net

                102

 

                    5

 

                132

 

                  68

 

              (298)

Operating income

           44,083

 

           35,548

 

           20,400

 

           97,989

 

           77,718

Other income (expense):

 

 

 

 

 

 

 

 

 

Derivative instruments gain (loss), net

                210

 

           (2,320)

 

                257

 

              (380)

 

           (2,268)

Interest expense, net

              (588)

 

           (1,426)

 

           (1,117)

 

           (2,640)

 

           (5,375)

Bargain purchase gain

                  -

 

                  -

 

           19,898

 

           19,898

 

           (1,412)

Other income (expense), net

              (141)

 

                183

 

           (1,984)

 

           (3,925)

 

                (97)

Total other income (expense), net

              (519)

 

           (3,563)

 

           17,054

 

           12,953

 

           (9,152)

Income before income taxes

           43,564

 

           31,985

 

           37,454

 

         110,942

 

           68,566

Income tax expense

           32,574

 

           25,844

 

             9,303

 

           64,115

 

           52,203

Net income

$         10,990

 

$           6,141

 

$         28,151

 

$         46,827

 

$         16,363

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

Currency translation adjustments

             1,655

 

           (2,216)

 

           (1,068)

 

           (1,867)

 

              (335)

Comprehensive income

$         12,645

 

$           3,925

 

$         27,083

 

$         44,960

 

$         16,028



 


 


 


 


Basic net income (loss) per share:


 


 


 


 


Net income (loss) per share

$             0.10

 

$             0.06

 

$             0.27

 

$             0.45

 

$             0.15

Basic weighted average shares outstanding

103,743

 

106,289

 

         103,528

 

103,644

 

106,876

Diluted net income (loss) per share:

 

 

 

 

 

 

 

 

 

Net income (loss) per share

$             0.10

 

$             0.06

 

$             0.27

 

$             0.45

 

$             0.15

Diluted weighted average shares outstanding

103,842

 

106,433

 

         103,676

 

103,728

 

107,072

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


VAALCO ENERGY, INC AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)


Nine Months Ended September 30,


2024

 

2023

 

 

 

 


(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:


 


Net income

$               46,827

 

$               16,363

Adjustments to reconcile net income to net cash provided by operating activities:


 


Depreciation, depletion and amortization

               105,987

 

                 94,958

Bargain purchase gain

               (19,898)

 

                   1,412

Exploration expense

                        48

 

                   1,194

Deferred taxes

                 (7,762)

 

                 (2,305)

Unrealized foreign exchange loss

                    (613)

 

                      932

Stock-based compensation

                   3,362

 

                   2,332

Cash settlements paid on exercised stock appreciation rights

                    (154)

 

                    (282)

Derivative instruments (gain) loss, net

                      209

 

                   2,268

Cash settlements paid on matured derivative contracts, net

                      (15)

 

                      (62)

Cash settlements paid on asset retirement obligations

                    (315)

 

                 (4,796)

Credit losses and other

                   5,222

 

                   2,437

Other operating loss, net

                        34

 

                      317

Equipment and other expensed in operations

                   1,589

 

                   2,560

Change in operating assets and liabilities:

 

 

 

Trade, net

               (39,456)

 

                 29,364

Accounts with joint venture owners, net

                 (4,739)

 

                 15,090

Egypt receivables and other, net

                    (394)

 

                      694

Crude oil inventory

                 12,153

 

                 (5,952)

Prepayments and other

                 (1,847)

 

                   1,198

Value added tax and other receivables

                 (5,713)

 

                 (3,719)

Other long-term assets

                   1,808

 

                   2,942

Accounts payable

                 (9,034)

 

               (10,083)

Foreign income taxes receivable/(payable)

                 24,327

 

                 36,025

Accrued liabilities and other

               (42,441)

 

               (11,076)

Net cash provided by (used in) operating activities

                 69,185

 

               171,811

CASH FLOWS FROM INVESTING ACTIVITIES:

 


Property and equipment expenditures

               (61,530)

 

               (77,365)

Cash paid in business combination

               (40,166)

 

                        -

Cash received in business combination

                 40,578

 

                        -

Net cash provided by (used in) investing activities

               (61,118)

 

               (77,365)

CASH FLOWS FROM FINANCING ACTIVITIES:

 


Proceeds from the issuances of common stock

                      447

 

                      593

Dividend distribution

               (19,647)

 

               (20,153)

Treasury shares

                 (6,803)

 

               (17,493)

Deferred financing costs

                        -

 

                      (83)

Payments of finance lease

                 (6,261)

 

                 (5,246)

Net cash provided by (used in) in financing activities

               (32,264)

 

               (42,382)

Effects of exchange rate changes on cash

                        (4)

 

                    (321)

NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

               (24,201)

 

                 51,743

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

               129,178

 

                 59,776

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

$             104,977

 

$             111,519

 


VAALCO ENERGY, INC AND SUBSIDIARIES

Selected Financial and Operating Statistics

(Unaudited)


Three Months Ended

 

Nine Months Ended


September 30, 2024

 

September 30, 2023

 

June 30, 2024

 

September 30, 2024

 

September 30, 2023

NRI SALES DATA


 


 


 


 


Crude oil, natural gas and natural gas liquids sales (MBOE)

              2,134

 

              1,812

 

              1,764

 

              5,388

 

              4,839

Average daily sales volumes (BOE)

            23,198

 

            19,696

 

            19,386

 

            19,664

 

            17,725


 

 

 

 

 

 

 

 

 

WI PRODUCTION DATA

 

 

 

 

 

 

 

 

 

Etame Crude oil (MBbl)

                 810

 

                 911

 

                 780

 

              2,408

 

              2,787

Egypt Crude oil (MBbl)

                 964

 

              1,076

 

                 953

 

              2,867

 

              3,032

Canada Crude Oil (MBbl)

                 112

 

                 101

 

                 130

 

                 303

 

                 317

Canada Natural Gas (Mcf)

                 449

 

                 470

 

                 423

 

              1,341

 

              1,327

Canada Natural Gas Liquid (MBOE)

                   82

 

                   82

 

                   76

 

                 234

 

                 237

Canada Crude oil, natural gas and natural gas liquids (MBOE)

                 269

 

                 261

 

                 277

 

                 761

 

                 775

Côte d'Ivoire Crude oil (MBbl)

                 415

 

                   -

 

                 303

 

                 717

 

                   -

Total Crude oil, natural gas and natural gas liquids production (MBOE)

              2,458

 

              2,248

 

              2,313

 

              6,753

 

              6,594

Gabon Average daily production volumes (BOEPD)

              8,800

 

              9,901

 

              8,566

 

              8,789

 

            10,209

Egypt Average daily production volumes (BOEPD)

            10,480

 

            11,691

 

            10,474

 

            10,465

 

            11,106

Canada Average daily production volumes (BOEPD)

              2,923

 

              2,835

 

              3,041

 

              2,776

 

              2,838

Côte d'Ivoire Average daily production volumes (BOEPD)

              4,506

 

                   -

 

              3,329

 

              2,619

 

                   -

Average daily production volumes (BOEPD)

            26,709

 

            24,427

 

            25,411

 

            24,649

 

            24,153



 


 


 


 


NRI PRODUCTION DATA


 


 


 


 


Etame Crude oil (MBbl)

                 704

 

                 792

 

                 678

 

              2,095

 

              2,425

Egypt Crude oil (MBbl)

                 657

 

                 732

 

                 643

 

              1,941

 

              2,074

Canada Crude Oil (MBbl)

                   95

 

                   81

 

                 117

 

                 263

 

                 275

Canada Natural Gas (Mcf)

                 380

 

                 376

 

                 381

 

              1,161

 

              1,151

Canada Natural Gas Liquid (MBOE)

                   69

 

                   66

 

                   69

 

                 202

 

                 206

Canada Crude oil, natural gas and natural gas liquids (MBOE)

                 227

 

                 210

 

                 250

 

                 656

 

                 673

Côte d'Ivoire Crude oil (MBbl)

                 415

 

                   -

 

                 303

 

                 717

 

                   -

Total Crude oil, natural gas and natural gas liquids production (MBOE)

              2,003

 

              1,734

 

              1,874

 

              5,410

 

              5,172

Gabon Average daily production volumes (BOEPD)

              7,652

 

              8,609

 

              7,451

 

              7,647

 

              8,883

Egypt Average daily production volumes (BOEPD)

              7,141

 

              7,957

 

              7,066

 

              7,084

 

              7,598

Canada Average daily production volumes (BOEPD)

              2,471

 

              2,279

 

              2,742

 

              2,395

 

              2,462

Côte d'Ivoire Average daily production volumes (BOEPD)

              4,506

 

                   -

 

              3,329

 

              2,619

 

                   -

Average daily production volumes (BOEPD)

            21,770

 

            18,845

 

            20,588

 

            19,745

 

            18,943



 


 


 


 


AVERAGE SALES PRICES:


 


 


 


 


Crude oil, natural gas and natural gas liquids sales (per BOE) - WI basis

$           69.07

 

$           70.78

 

$           70.92

 

$           69.90

 

$           67.40


 

 

 

 

 

 

 

 

 

Crude oil, natural gas and natural gas liquids sales (per BOE) - NRI basis

$           65.41

 

$           63.41

 

$           66.05

 

$           65.99

 

$           62.48

Crude oil, natural gas and natural gas liquids sales (Per BOE including realized commodity derivatives)

$           65.39

 

$           63.38

 

$           66.03

 

$           65.98

 

$           62.47



 


 


 


 




 


 


 


 


COSTS AND EXPENSES (Per BOE of sales):


 


 


 


 


Production expense

$           19.83

 

$           22.05

 

$           29.74

 

$           23.54

 

$           22.06

Production expense, excluding offshore workovers and stock compensation*

$           19.80

 

$           22.04

 

$           29.68

 

$           23.52

 

$           22.32

Depreciation, depletion and amortization

$           22.04

 

$           17.96

 

$           18.78

 

$           19.67

 

$           19.62

General and administrative expense**

$             3.25

 

$             3.43

 

$             4.34

 

$             3.94

 

$             3.48

Property and equipment expenditures, cash basis (in thousands)

$        12,431

 

$        22,533

 

$        32,481

 

$        61,530

 

$        77,365

*              Offshore workover costs excluded from the three months ended September 30, 2024 and 2023 and June 30, 2024 are $0.1 million, $0 million and $0.1 million, respectively.

*              Stock compensation associated with production expense excluded from the three months ended September 30, 2024 and 2023 and June 30, 2024 are immaterial.

**            General and administrative expenses include $0.52, $0.57 and $0.51 per barrel of oil related to stock-based compensation expense in the three months ended September 30, 2024 and 2023 and June 30, 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, deferred income tax expense (benefit), unrealized commodity derivative loss (gain), bargain purchase gain on the Svenska Acquisition, FPSO demobilization, transaction costs related to the Svenska 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, interest expense (income) net, income tax expense (benefit), depletion, depreciation and amortization, exploration expense, FPSO demobilization, non-cash and other items including stock compensation expense, Bargain purchase gain on the Svenska Acquisition, other operating (income) expense, net, non-cash purchase price adjustment, transaction costs related to acquisition, credit losses and other and unrealized commodity derivative loss (gain).

 

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, effects of exchange rate changes on cash 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 the calculation of 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.

 


VAALCO ENERGY, INC AND SUBSIDIARIES

Reconciliations of Non-GAAP Financial Measures

(Unaudited)

(in thousands)


Three Months Ended

 

Nine Months Ended

Reconciliation of Net Income to Adjusted Net Income

September 30, 2024

 

September 30, 2023

 

June 30, 2024

 

September 30, 2024

 

September 30, 2023

Net income

$       10,990

 

$          6,141

 

$       28,151

 

$       46,827

 

$       16,363

Adjustment for discrete items:

 

 

 

 

 

 

 

 

 

Unrealized derivative instruments loss (gain)

             (192)

 

            2,321

 

             (266)

 

               365

 

            2,206

Bargain purchase gain

                  -

 

                  -

 

        (19,898)

 

        (19,898)

 

                  -

FPSO demobilization

                  -

 

                  -

 

                  -

 

                  -

 

            5,647

Deferred income tax expense (benefit)

          (3,089)

 

             (985)

 

          (2,021)

 

          (8,551)

 

               673

Non-cash purchase price adjustment

                  -

 

                  -

 

          14,981

 

          14,981

 

                  -

Transaction costs related to acquisition

               327

 

                  -

 

            1,762

 

            3,402

 

                  -

Other operating (income) expense, net

             (102)

 

                  (5)

 

             (132)

 

                (68)

 

               313

Adjusted Net Income

$          7,934

 

$          7,472

 

$       22,577

 

$       37,058

 

$       25,202



 


 


 


 


Diluted Adjusted Net Income per Share

$            0.08

 

$            0.07

 

$            0.22

 

$            0.36

 

$            0.24

Diluted weighted average shares outstanding (1)

103,842

 

106,433

 

103,676

 

103,728

 

107,072

(1) No adjustments to weighted average shares outstanding

 

Three Months Ended

 

Nine Months Ended

Reconciliation of Net Income to Adjusted EBITDAX

September 30, 2024

 

September 30, 2023

 

June 30, 2024

 

September 30, 2024

 

September 30, 2023

Net income

$        10,990

 

$          6,141

 

$      28,151

 

$        46,827

 

$       16,363

Add back:

 

 

 

 

 

 

 

 

 

Interest expense (income), net

                588

 

            1,426

 

           1,117

 

            2,640

 

            5,375

Income tax expense (benefit)

          32,574

 

          25,844

 

           9,303

 

          64,115

 

         52,203

Depreciation, depletion and amortization

          47,031

 

          32,538

 

        33,132

 

        105,987

 

         94,958

Exploration expense

                  -

 

            1,194

 

                -

 

                  48

 

            1,259

FPSO demobilization

                  -

 

                  -

 

                -

 

                  -

 

            5,647

Non-cash or unusual items:

 

 

 

 

 

 

 

 

 

Stock-based compensation

            1,479

 

            1,078

 

              984

 

            3,362

 

            2,332

Unrealized derivative instruments loss (gain)

              (192)

 

            2,321

 

            (266)

 

                365

 

            2,206

Bargain purchase gain

                  -

 

                  -

 

       (19,898)

 

        (19,898)

 

                 -

Other operating (income) expense, net

              (102)

 

                  (5)

 

            (132)

 

                (68)

 

               313

Non-cash purchase price adjustment

                  -

 

                  -

 

        14,981

 

          14,981

 

                 -

Transaction costs related to acquisition

                327

 

                  -

 

           1,762

 

            3,402

 

                 -

Credit losses and other

                  69

 

                822

 

           3,341

 

            5,222

 

            2,437

Adjusted EBITDAX

$        92,764

 

$        71,359

 

$      72,475

 

$      226,983

 

$     183,093

 


VAALCO ENERGY, INC AND SUBSIDIARIES

Reconciliations of Non-GAAP Financial Measures

(Unaudited)

(in thousands)

Reconciliation of Working Capital to Adjusted Working Capital

As of September 30, 2024

 

As of December 31, 2023

 

Change

Current assets

              236,799

 

              228,141

 

$                8,658

Current liabilities

            (176,247)

 

            (127,475)

 

              (48,772)

Working capital

                60,552

 

              100,666

 

              (40,114)

Add: lease liabilities - current portion

                12,895

 

                12,475

 

                     420

Add: current liabilities - discontinued operations

                        -

 

                     673

 

                   (673)

Adjusted Working Capital

$             73,447

 

$           113,814

 

$            (40,367)

 


Nine Months Ended September 30, 2024

Reconciliation of Free Cash Flow

 

Net cash provided by Operating activities

$                         69,185

Net cash used in Investing activities

                         (61,118)

Net cash used in Financing activities

                         (32,264)

Effects of exchange rate changes on cash

                                   (4)

Total net cash change

                         (24,201)


 

Add back shareholder cash out:

 

Dividends paid

                           19,647

Stock buyback

                             5,502

Total cash returned to shareholders

                           25,149


 

Free Cash Flow

$                              947

 

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