VAALCO ENERGY, INC. ANNOUNCES FOURTH
QUARTER
AND FULL YEAR 2023 FINANCIAL AND OPERATING
RESULTS
VAALCO Reports Record Financial Results and
Shareholder Returns Following Year of Expansion
HOUSTON - March 14, 2024 - VAALCO
Energy, Inc. (NYSE: EGY, LSE: EGY) ("VAALCO" or the
"Company") today reported operational and financial results
for the fourth quarter and full year of 2023. The Company
also provided 2024 operational and financial guidance for the first
quarter and full year of 2024.
2023 Full Year Highlights:
|
|
●
|
Reported full year ("FY") 2023 net income of $60.4 million
($0.56 per diluted share) and net cash from operating
activities of $223.6 million;
|
|
|
|
Generated record Adjusted EBITDAX(1)
of $280.4 million
and $119.7 million of Free Cash Flow ("FCF")(1)
in FY
2023;
|
|
|
|
Returned $50.3 million or 42% of FCF to shareholders in
2023 through dividends and buybacks;
|
|
|
●
|
Raised production in 2023 by 83% year-over-year to
18,710 net revenue interest ("NRI")(2)
barrels of oil
equivalent per day ("BOEPD"), at the higher end of the Company's
increased guidance;
|
|
|
|
● FY 2023 working interest
("WI")(3)
production of
23,946 BOEPD was at the top of the increased guidance
range;
|
|
|
●
|
Increased year-end 2023 SEC proved reserves by 3% to
28.6 million barrels of oil equivalent
("MMBOE");
|
|
|
●
|
Integrated a major acquisition and invested over $70 million
in a capital program focused on Egypt and Canada;
and
|
|
|
|
Increased cash at December 31, 2023 to $121 million, all while
remaining bank debt free.
|
Fourth Quarter 2023 Highlights:
|
|
●
|
Reported Q4 2023 net income of $44.0 million
($0.41 per diluted share);
|
|
|
●
|
Generated record Adjusted EBITDAX(1)
of $95.9
million;
|
|
|
●
|
Produced 18,065 NRI BOEPD (23,330 WI BOEPD);
and
|
|
|
●
|
Sold
21,674 BOEPD in Q4 2023, at the high end of
guidance.
|
2024
Key Items and Outlook:
|
|
●
|
Announced accretive all cash acquisition with sales and
purchase agreement ("SPA") to acquire Svenska Petroleum Exploration
AB ("Svenska");
|
|
|
|
● Currently producing approximately
4,500 BOEPD (99% oil);
|
|
|
|
● Includes estimated 1P WI CPR
reserves4
as of October 1,
2023, of 13.0 MMBOE (99% oil) and total 2P WI
CPR4 reserves at October 1, 2023,
of 21.7 million MMBOE (97% oil);
|
|
|
●
|
Planning a 2024 capital budget of $70 to $90 million;
and
|
|
|
●
|
Target to return over $25 million of FCF to
shareholders.
|
|
|
(1)
|
Adjusted EBITDAX, Adjusted Net Income, Adjusted Working
Capital and Free Cash Flow are Non-GAAP financial measures and are
described and reconciled to the closest GAAP measure in the
attached table under "Non-GAAP Financial
Measures."
|
|
|
|
All
NRI production rates are VAALCO's working interest volumes less
royalty volumes, where applicable
|
|
|
|
All
WI production rates and volumes are
VAALCO's working interest volumes, where
applicable
|
|
|
(4)
|
A
BOE conversion ratio of six thousand cubic feet of natural gas to
one barrel of oil equivalent (6 MCF: 1Bbl) is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead.
Reserves estimates were prepared in accordance with the definitions
and guidelines set forth in the 2018 Petroleum Resources Management
Systems approved by the Society of Petroleum
Engineers.
|
George Maxwell, VAALCO's Chief
Executive Officer commented, "In 2023, we delivered record
financial results, successfully integrated a major acquisition and
continued to return a meaningful amount of value to our
shareholders through dividends and share buybacks. Sales and
production volumes nearly doubled, we grew our cash position at
year-end by nearly $84 million and we generated record
Adjusted EBITDAX of $280 million. This allowed us to fully
fund, with cash on hand, the return of over $50 million to
shareholders through our dividend and buyback programs and over $70
million in a capital program focused on Egypt and Canada, all while
remaining bank debt free which demonstrates the strong financial
position of the Company today. Our 2023 proved reserves saw
3% growth year-over-year, despite a year of record production
across our asset portfolio and significant decreases in SEC
pricing. We were able to more than replace our 2023 production
through strong positive revisions that more than offset production
and reserve reductions due to lower SEC pricing."
"In early 2024, we announced our
intent to utilize a portion of this strong cash position to add to
our diversified portfolio of high performing assets in line with
our strategic vision. With our all-cash deal to buy Svenska, which
provides us with a new country entry and strong production and
reserves from a proven producing asset as well as a significant
organic upside opportunity, we are enhancing VAALCO's ability to
generate sustainable cash flow and continue to return cash to our
shareholders for many years to come. The acquisition is
expected to close in Q2 2024 and is highly accretive on key metrics
to our shareholder base and provides another strong asset to
support future growth."
"Our ability to execute on our
strategic vision has led to unprecedented growth in production,
reserves and cash flow, all while extending our runway for future
opportunities. We are in the strongest position in VAALCO's history
and are entering 2024 with more reserves, production and future
potential. We are adding to that position through the Svenska
acquisition, and we remain focused on prioritizing our organic and
inorganic growth opportunities as we continue to build a balanced
business of scale that is capable of maximizing value for our
shareholders. We are excited about the future and believe that 2024
could be another record-breaking year for VAALCO."
Operational Update
Egypt
In Egypt, VAALCO continued to use
the EDC-64 rig in the Eastern Desert drilling campaign. The
Company continued drilling the EA-55 development
well in the fourth quarter which was the last well of the 2023
campaign. Through operational efficiencies, VAALCO drilled an
average of two wells per month with the EDC-64 rig, nearly twice as
fast as in 2022 and, VAALCO drilled 18 wells in 2023, while
also completing the Arta-77Hz well at the beginning of 2023. The
2023 firm and contingent work program was drilled faster and
cheaper compared to budget, adding to its economic
returns.
A summary of the Egyptian drilling
campaign's impact during 2023 is presented below:
|
VAALCO Egypt 2023
Wells
|
|
Well
|
Spud date
|
Net Pay
(ft)
|
Penetrated Pay
Zones
|
Completion
Zone
|
Perforation Interval
(ft)
|
IP-30 Rate
(BOPD)
|
|
EastArta-53
|
1/15/2023
|
14.8
|
Redbed
|
Redbed
|
Hydraulic
Frac
|
35
|
|
K-81
|
2/2/2023
|
68.9
|
Asl-D and
E
|
Asl-E
|
13.1
|
255
|
|
K-79
|
2/21/2023
|
190
|
Asl-A, B,
D, E and F
|
Asl-B1
and B2
|
59
|
150
|
|
Arta-80
|
3/10/2023
|
33
|
Redbed
|
Redbed
|
32
|
440
|
|
Arta-81
|
3/21/2023
|
28.5
|
Redbed
|
Redbed
|
26
|
340
|
|
HE-4
|
4/2/2023
|
27.9
|
Asl-B1
and B2
|
Asl-B2
|
13.1
|
440
|
|
HE-5
Injector
|
4/16/2023
|
4.9
|
Asl-B2
|
Asl-B2
|
9.8
|
NA
|
|
HE-3
|
5/10/2023
|
9.2
|
Asl-B1
and B2
|
Asl-B2
|
16.4
|
235
|
|
Arta-82
|
5/25/2023
|
42
|
Redbed
|
Redbed
|
28
|
150
|
|
Arta-84
|
6/6/2023
|
34
|
Nukhul
|
Nukhul
|
Hydraulic
Frac
|
68
|
|
NWG-5C1
|
6/16/2023
|
none
|
Nukhul
|
Temporarily Abandoned
|
none
|
none
|
|
K-80
|
6/30/2023
|
141.4
|
Asl-A, B,
D and E
|
Asl-E
|
16.4
|
144
|
|
K-84
|
7/16/2023
|
98.8
|
Asl-D, E,
F and G
|
Asl-G2
|
19.7
|
125
|
|
K-85
|
7/31/2023
|
63.3
|
Asl-D, E,
F and G
|
Asl-E
|
9.8
|
82
|
|
M-24
|
8/14/2023
|
70.2
|
Asl-A, B
and D
|
Asl-D
|
9.8
|
134
|
|
Arta-91
|
9/1/2023
|
40
|
Nukhul
and Redbed
|
Redbed
|
20
|
150
|
|
EA-54
|
9/12/2023
|
none
|
Nukhul,
Thebes and Redbed
|
Plugged
& Abandoned
|
none
|
none
|
|
EA-55
|
10/4/2023
|
42
|
Redbed
|
Redbed
|
Hydraulic
Frac
|
Pending
Frac
|
Canada
VAALCO drilled and completed
two wells in the first quarter of 2023, consisting of
a 1.5-mile lateral and a 3-mile lateral, which were also
required for land retention purposes. Both wells were
drilled and completed safely and cost effectively without
incident. The wells were tied in and equipped in April and early
May with overall cycle times that were significantly less than
historical cycle times. The wells began flowing in May and
naturally flowed through June. In early July, the pump and rods
were run on both wells. The production rates from
both wells exceeded expectations, and the Company is
monitoring their long-term performance while evaluating future
drilling campaigns, with the intent of moving exclusively to 2.5
mile and 3-mile laterals to improve economics. This resulted in
record production levels reported for Canada in 2023.
A summary of the
Canada drilling campaign's impact during 2023 is
presented below:
|
VAALCO Canada 2023
Wells
|
|
Well
|
Spud date
|
Net Pay
(ft)
|
Penetrated Pay
Zones
|
Completion
Zone
|
Perforation Interval
(ft)
|
IP-30 Rate
(BOPD)
|
|
100/12-12
|
1/28/2023
|
14,430
|
Upper
Bioturbated Cardium
|
118 Stg x
15T Hydraulic Fracture Treatment
|
n/a
|
444 BOPD
; 500 BOEPD
|
|
102/16-30
|
2/22/2023
|
7,870
|
Upper
Bioturbated Cardium
|
55 Stg x
15T Hydraulic Fracture Treatment
|
n/a
|
374 BOPD
; 426 BOEPD
|
Gabon
VAALCO completed its 2021/2022
drilling campaign in the fourth quarter of 2022. The Company is
currently evaluating locations and planning for its next drilling
campaign. Gabon production performance in the year ended
December 31, 2023 has been strong and ahead of plan driven by
improved operational uptime at Etame. The cost savings from
the new Floating, Storage and Offloading vessel ("FSO") have
been captured, as planned, but are being offset by increased marine
costs as a consequence of inflationary (marine vessel supply rates,
transportation, and contractors) and industry supply chain
pressures as well as higher diesel costs due to the feed gas line
being suspended due to a leak. The gas line was successfully fixed
in October 2023 and the FSO is now utilizing gas rather than
diesel.
Year-End 2023 Reserves
VAALCO's SEC proved reserves at
December 31, 2023 increased by 3% to
28.6 MMBOE from 27.9 MMBOE at year-end 2022.
Year-end 2023 reserves included 22.5 MMBOE in proved
developed reserves and 6.2 MMBOE in proved undeveloped
reserves. The Company's SEC reserves were engineered by its
third-party independent reserve consultant, Netherland, Sewell
& Associates, Inc., ("NSAI") who has provided annual
independent estimates of VAALCO's year-end SEC reserves for over 15
years and evaluates VAALCO's Gabonese and Egyptian reserves, and
GLJ Ltd. ("GLJ"), who evaluates VAALCO's Canadian reserves. In
2023, the Company added 5.6 MMBOE due to positive revisions
and 1.9 MMBOE of SEC proved reserves through extensions and
additions, primarily in Canada with additional PUD
locations. These additions were partially offset by
6.8 MMBOE of full year 2023 production. VAALCO had a
reserve replacement ratio of 110% compared to the 6.8 MMBOE of
production in 2023.
The standardized measure of
VAALCO's SEC proved reserves, utilizing SEC pricing
decreased to $341.9 million at December 31,
2023 from $624.5 million at December 31, 2022. This
was primarily driven by a decrease in year over year SEC
prices which was utilized for the calculation and
can be found in the Company's Annual Report on Form 10-K
disclosure, which is expected to be filed with the SEC by March 15,
2024.
|
|
|
MMBoe
|
|
|
Proved SEC Reserves at December 31,
2022
|
|
27.9
|
|
|
2023 Production
|
|
|
(6.8
|
)
|
|
Revisions of Previous
Estimates
|
|
|
5.6
|
|
|
Extensions and Additions
|
|
|
1.9
|
|
|
Proved SEC Reserves at December 31,
2023
|
|
|
28.6
|
|
At year-end 2023, NSAI provided the
2P WI CPR estimates of proven and probable reserves which
were prepared in accordance with the definitions and
guidelines set forth in the 2018 Petroleum Resources Management
Systems approved by the Society of Petroleum Engineers as of
December 31, 2023 using VAALCO's management assumptions for
future commodity pricing and costs shown below under "Supplemental
Non-GAAP Financial Measures - 2P WI CPR Reserves". The 2P WI CPR
reserves attributable to VAALCO's ownership are reported on a WI
basis prior to deductions for government
royalties. Management's year-end 2023 2P WI CPR estimate
of reserves is 77.3 MMBOE to VAALCO's WI, an increase of 1% from
76.4 MMBO at December 31, 2022. The present value
discounted at 10% ("PV-10") of VAALCO's 2P WI CPR reserves at
year-end 2023, utilizing management timing assumptions and
escalated pricing and cost assumptions, is $630.9 million, down 34%
from $814.8 million at December 31, 2022. The PV-10
decrease is driven primarily by pricing and cost
inflation.
See "Supplemental Non-GAAP Financial
Measures" below concerning
2P WI CPR reserves and 2P PV-10.
Financial Update -Fourth Quarter of 2023
Reported net income
of $44.0 million ($0.41 per diluted share) for
the fourth quarter of 2023 which was up significantly compared
with net income of $6.1 million ($0.06 per diluted share) in
the third quarter of 2023 and $17.8 million
($0.17 per diluted share) in the fourth quarter of 2022. The
increase in earnings compared to the third quarter of 2023 is
mainly due to increased sales revenue due to increased volumes and
improved realized pricing due to geographic sales mix, lower credit
losses due to reversal of credit loss allowances on the settlement
of debts in Gabon and decreased depreciation, depletion and
amortization ("DD&A") expense partially offset
by higher income tax expense on the increased operating
profit. Similarly, the increase in earnings compared to the
fourth quarter of 2022 is primarily due to higher sales
revenue due to increased volumes, lower credit losses due to
reversal of credit loss allowances and decreased
DD&A expense partially offset by higher income tax
expense.
Adjusted EBITDAX totaled $95.9
million in the fourth quarter of 2023, a 34% increase from
$71.4 million in the third quarter of
2023, primarily due to higher revenues driven by higher
sales and improved realized commodity pricing. The increase
in fourth quarter 2023 Adjusted EBITDAX to $95.9 million
compared with $49.8 million generated in the same period
in 2022, is primarily due to increased revenue as a result
of the TransGlobe transaction and lower credit losses due
to reversal of a credit loss allowance.
|
Quarterly Summary - Sales and Net Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in
thousands
|
|
Three Months Ended December
31, 2023
|
|
|
Three Months Ended September
31, 2023
|
|
|
|
|
Gabon
|
|
|
Egypt
|
|
|
Canada
|
|
|
Total
|
|
|
Gabon
|
|
|
Egypt
|
|
|
Canada
|
|
|
Total
|
|
|
Oil Sales
|
|
$
|
100,398
|
|
|
$
|
79,043
|
|
|
$
|
5,476
|
|
|
$
|
184,917
|
|
|
$
|
64,100
|
|
|
$
|
88,748
|
|
|
$
|
7,832
|
|
|
$
|
160,680
|
|
|
NGL Sales
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2,019
|
|
|
$
|
2,019
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2,073
|
|
|
$
|
2,073
|
|
|
Gas Sales
|
|
|
-
|
|
|
|
-
|
|
|
$
|
818
|
|
|
$
|
818
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
988
|
|
|
$
|
988
|
|
|
Gross Sales
|
|
$
|
100,398
|
|
|
$
|
79,043
|
|
|
$
|
8,313
|
|
|
$
|
187,754
|
|
|
$
|
64,100
|
|
|
$
|
88,748
|
|
|
$
|
10,893
|
|
|
$
|
163,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Costs & carried
interest
|
|
$
|
1,711
|
|
|
$
|
0
|
|
|
|
-
|
|
|
$
|
1,711
|
|
|
$
|
1,378
|
|
|
$
|
(497
|
)
|
|
|
-
|
|
|
$
|
881
|
|
|
Royalties & taxes
|
|
$
|
(13,699
|
)
|
|
$
|
(24,393
|
)
|
|
$
|
(1,517
|
)
|
|
$
|
(39,609
|
)
|
|
$
|
(8,203
|
)
|
|
$
|
(37,944
|
)
|
|
$
|
(2,206
|
)
|
|
$
|
(48,353
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue
|
|
$
|
88,410
|
|
|
$
|
54,650
|
|
|
$
|
6,796
|
|
|
$
|
149,856
|
|
|
$
|
57,275
|
|
|
$
|
50,307
|
|
|
$
|
8,687
|
|
|
$
|
116,269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil Sales MMB (working
interest)
|
|
|
1,165
|
|
|
|
1,023
|
|
|
|
77
|
|
|
|
2,265
|
|
|
|
764
|
|
|
|
1,282
|
|
|
|
101
|
|
|
|
2,146
|
|
|
Average Oil Price Received
|
|
$
|
86.18
|
|
|
$
|
77.24
|
|
|
$
|
71.57
|
|
|
$
|
81.65
|
|
|
$
|
83.92
|
|
|
$
|
69.24
|
|
|
$
|
77.89
|
|
|
$
|
74.87
|
|
|
%
Change Q4 2023 vs. Q3 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Brent Price
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
84.01
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
86.65
|
|
|
%
Change Q4 2023 vs. Q3 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas Sales MMCF (working
interest)
|
|
|
-
|
|
|
|
-
|
|
|
|
471
|
|
|
|
471
|
|
|
|
-
|
|
|
|
-
|
|
|
|
470
|
|
|
|
470
|
|
|
Average Gas Price Received
|
|
|
-
|
|
|
|
-
|
|
|
|
1.74
|
|
|
$
|
1.74
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.10
|
|
|
$
|
2.10
|
|
|
%
Change Q4 2023 vs. Q3 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Aeco Price ($USD)
|
|
|
-
|
|
|
|
-
|
|
|
|
2
|
|
|
$
|
1.86
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2
|
|
|
$
|
1.89
|
|
|
%
Change Q4 2023 vs. Q3 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NGL Sales MMB (working
interest)
|
|
|
-
|
|
|
|
-
|
|
|
|
80
|
|
|
|
80
|
|
|
|
-
|
|
|
|
-
|
|
|
|
82
|
|
|
|
82
|
|
|
Average Liquids Price
Received
|
|
|
-
|
|
|
|
-
|
|
|
$
|
25.09
|
|
|
$
|
25.09
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
25.27
|
|
|
$
|
25.27
|
|
|
%
Change Q4 2023 vs. Q3 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue and Sales
|
|
Q4 2023
|
|
|
Q4 2022
|
|
|
% Change Q4 2023 vs. Q4
2022
|
|
|
Q3 2023
|
|
|
% Change Q4 2023 vs. Q3
2023
|
|
|
Production (NRI BOEPD)
|
|
|
18,065
|
|
|
|
14,390
|
|
|
|
26
|
%
|
|
|
18,844
|
|
|
|
(4
|
)%
|
|
Sales (NRI BOE)
|
|
|
1,994,000
|
|
|
|
1,371,000
|
|
|
|
45
|
%
|
|
|
1,812,000
|
|
|
|
10
|
%
|
|
Realized commodity price
($/BOE)
|
|
$
|
73.96
|
|
|
$
|
70.43
|
|
|
|
5
|
%
|
|
$
|
63.41
|
|
|
|
17
|
%
|
|
Commodity (Per BOE including realized
commodity derivatives)
|
|
$
|
73.89
|
|
|
$
|
70.24
|
|
|
|
5
|
%
|
|
$
|
63.38
|
|
|
|
17
|
%
|
|
Total commodity sales
($MM)
|
|
$
|
149.2
|
|
|
$
|
96.6
|
|
|
|
54
|
%
|
|
$
|
116.3
|
|
|
|
28
|
%
|
VAALCO had a net revenue increase
of $32.9 million or 28% as
the total NRI sales volumes of 1,994,000 BOE was higher than
Q3 2023 and rose 45% compared to
1,371,000 BOE for Q4 2022. Q4 2023 sales were at the
top end of VAALCO's guidance.
Q4 2023 realized pricing (net
of royalties) was up 17% compared to Q3 2023 and up
5% compared to Q4 2022.
|
Costs and
Expenses
|
|
Q4 2023
|
|
|
Q4 2022
|
|
|
% Change Q4 2023 vs. Q4
2022
|
|
|
Q3 2023
|
|
|
% Change Q4 2023 vs. Q3
2023
|
|
|
Production expense, excluding
offshore workovers and stock comp ($MM)
|
|
$
|
46.3
|
|
|
$
|
40.8
|
|
|
|
14
|
%
|
|
$
|
39.9
|
|
|
|
16
|
%
|
|
Production expense, excluding
offshore workovers ($/BOE)
|
|
$
|
23.27
|
|
|
$
|
29.80
|
|
|
|
(22
|
)%
|
|
$
|
22.07
|
|
|
|
5
|
%
|
|
Offshore workover expense
($MM)
|
|
$
|
0.0
|
|
|
$
|
4.7
|
|
|
|
(100.0
|
)%
|
|
$
|
(0.0
|
)
|
|
|
-
|
%
|
|
Depreciation, depletion and
amortization ($MM)
|
|
$
|
20.3
|
|
|
$
|
26.3
|
|
|
|
(23
|
)%
|
|
$
|
32.5
|
|
|
|
(38
|
)%
|
|
Depreciation, depletion and
amortization ($/BOE)
|
|
$
|
10.2
|
|
|
$
|
19.20
|
|
|
|
(47
|
)%
|
|
$
|
17.96
|
|
|
|
(43
|
)%
|
|
General and administrative expense,
excluding stock-based compensation ($MM)
|
|
$
|
6.1
|
|
|
$
|
(0.3
|
)
|
|
|
(2,119
|
)%
|
|
$
|
5.2
|
|
|
|
17
|
%
|
|
General and administrative expense,
excluding stock-based compensation ($/BOE)
|
|
$
|
3.0
|
|
|
$
|
(0.20
|
)
|
|
|
(1,619
|
)%
|
|
$
|
2.86
|
|
|
|
6
|
%
|
|
Stock-based compensation expense
($MM)
|
|
$
|
0.9
|
|
|
$
|
(0.1
|
)
|
|
|
(1,000.0
|
)%
|
|
$
|
1.0
|
|
|
|
(10
|
)%
|
|
Current income tax expense (benefit)
($MM)
|
|
$
|
14.3
|
|
|
$
|
1.7
|
|
|
|
741
|
%
|
|
$
|
2.1
|
|
|
|
581
|
%
|
|
Deferred income tax expense (benefit)
($MM)
|
|
$
|
(2.6
|
)
|
|
$
|
5.3
|
|
|
|
(149
|
)%
|
|
$
|
(2.6
|
)
|
|
|
-
|
%
|
Total production expense (excluding offshore workovers and stock
compensation) of $46.3 million in Q4 2023 was higher compared
to Q3 2023 and the same period in 2022. The increase in
Q4 2023 expense compared to Q3 2023 was driven
primarily by higher costs related to higher sales
volumes. The increase in Q4 2023 compared to the
Q4 2022 was primarily driven by increased expense associated
with higher sales and costs associated with the TransGlobe
combination as well as higher costs associated with boats, diesel
and other direct operating costs. VAALCO has seen inflationary and
industry supply chain pressure on personnel and contractor
costs.
There was no offshore
workover expense in Q4 2023 or Q3 2023. There was a
100% decrease in offshore workover expense in Q4 2023 compared
to Q4 2022.
Q4 2023 production expense per
BOE, excluding offshore workover costs, remained low at
$23.27 per BOE which was 5% higher than Q3 2023 and down
22% compared to Q4 2022 due to higher sales, lower costs
in Etame associated with the FSO conversion and
lower per BOE costs from the Egyptian and Canadian
assets.
DD&A expense for the
Q4 2023, was $20.3 million which was lower than
$32.5 million in Q3 2023 and lower than
$26.3 million in Q4 2022. The decrease in Q4 2023
DD&A expense, compared to Q3 2023 and to Q4 2022 is
due to year-end depletion adjustments, primarily in Egypt, that
were made in Q4 upon the completion of the 2023 competent persons
report.
Q4 2023 included a
$0.7 million expense related to an appraisal well in
Egypt that was abandoned during Q4 2023 and
subsequently expensed to Exploration Expense.
General and administrative
("G&A") expense, excluding stock-based compensation,
increased to $6.1 million in Q4 2023 from
$5.2 million in Q3 2023 and a negative $0.3 million in
Q4 2022. The increase in general and administrative
expenses is primarily due to higher professional service fees,
salaries and wages, and accounting and legal fees. The Company
incurred one-time reorganization costs in 2023 as
it integrated the TransGlobe assets and
eliminated duplicate administrative costs. Q4 2023
G&A was within the Company's guidance. The Company has made
meaningful reductions to absolute G&A costs when compared
with the combined TransGlobe and VAALCO combined G&A costs
for 2022.
Non-cash stock-based compensation
expense was $0.9 million for Q4 2023 compared to
Q3 2023 of $1.0 million and Q4 2022 of negative $0.1
million.
Other
income (expense), net, was an expense of
$0.8 million for Q4 2023, compared to an
income of $2.5 million during Q4 2022 and an income
of $0.2 million for Q3 2023. Other income
(expense), net, normally consists of foreign currency gains
and losses. For Q4 2022, included in other (expense)
income was a $10.8 million bargain purchase gain on the
TransGlobe acquisition offset by $7.0 million of transaction
costs associated with the business combination with
TransGlobe. For the full year ended December 31, 2022,
acquisition transaction costs were $14.6
million.
Q4 2023 income tax expense was
an expense of $37.6 million and is comprised of current tax expense
of $41.1 million and deferred tax benefit of
$3.5 million. Q3 2023 income tax expense was an expense
of $25.8 million.
This was comprised of $26.8 million of
current tax expense and a deferred tax benefit of
$0.9 million. Q4 2022 income tax expense
was an expense of $7.0 million. This
was comprised of $5.3 million of deferred tax expense and a
current tax expense of $1.7 million. For all periods,
VAALCO's overall effective tax rate was impacted by
non-deductible items associated with derivative losses and
corporate expenses. Foreign income taxes for Gabon are settled by
the government taking their oil in-kind.
Financial Update - Full Year 2023
The Company reported net income for
the twelve months ended December 31, 2023 of $60.4 million,
which compares to $51.9 million for the same period of 2022.
The increase in net income for the twelve months ended
December 31, 2023 compared to the same period in 2022 was
primarily due to increased sales volumes partially offset by higher
production costs, higher DD&A and lower oil
prices.
Both production and sales volumes
for full year 2023 were up 83% to 6.8 MMBOE compared
to 3.7 MMBOE production for the prior year. The
increase was driven by production from the TransGlobe assets,
as well as new wells from the 2021/2022 drilling campaign in
Gabon. 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 twelve months of 2023 was $65.83 per barrel,
representing a decrease of 30% from $94.77 realized in the
twelve months of 2022. This decrease in crude oil price
reflects the softening in commodity pricing over the past year, as
well as the incorporation of the TransGlobe assets which include
Canadian and Egyptian crude, natural gas, and NGLs that
have lower realized pricing than Gabon.
|
Year to Date Summary - Sales and Net Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in
thousands
|
|
Twelve Months Ended December
31, 2023
|
|
|
Twelve Months Ended December
31, 2022
|
|
|
|
|
Gabon
|
|
|
Egypt
|
|
|
Canada
|
|
|
Total
|
|
|
Gabon
|
|
|
Egypt
|
|
|
Canada
|
|
|
Total
|
|
|
Oil Sales
|
|
|
294,577
|
|
|
|
272,613
|
|
|
|
28,287
|
|
|
|
595,477
|
|
|
|
346,780
|
|
|
|
56,452
|
|
|
|
7,362
|
|
|
|
410,594
|
|
|
NGL Sales
|
|
|
-
|
|
|
|
-
|
|
|
|
8,440
|
|
|
|
8,440
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,276
|
|
|
|
2,276
|
|
|
Gas Sales
|
|
|
-
|
|
|
|
-
|
|
|
|
3,467
|
|
|
|
3,467
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,340
|
|
|
|
1,340
|
|
|
Gross Sales
|
|
|
294,577
|
|
|
|
272,613
|
|
|
|
40,194
|
|
|
|
607,384
|
|
|
|
346,780
|
|
|
|
56,452
|
|
|
|
10,978
|
|
|
|
414,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Costs & carried
interest
|
|
|
5,301
|
|
|
|
(995
|
)
|
|
|
-
|
|
|
|
4,306
|
|
|
|
5,843
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,843
|
|
|
Royalties & taxes
|
|
|
(39,532
|
)
|
|
|
(110,569
|
)
|
|
|
(5,821
|
)
|
|
|
(155,922
|
)
|
|
|
(45,848
|
)
|
|
|
(18,742
|
)
|
|
|
(1,137
|
)
|
|
|
(65,727
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue
|
|
|
260,346
|
|
|
|
161,049
|
|
|
|
34,373
|
|
|
|
455,768
|
|
|
|
306,775
|
|
|
|
37,710
|
|
|
|
9,841
|
|
|
|
354,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil Sales MMB (working
interest)
|
|
|
3,569
|
|
|
|
4,055
|
|
|
|
394
|
|
|
|
8,018
|
|
|
|
3,355
|
|
|
|
818
|
|
|
|
93
|
|
|
|
4,266
|
|
|
Average Oil Price Received
|
|
$
|
82.54
|
|
|
$
|
67.22
|
|
|
$
|
71.88
|
|
|
$
|
74.27
|
|
|
$
|
103.36
|
|
|
$
|
69.00
|
|
|
$
|
79.59
|
|
|
$
|
96.25
|
|
|
%
Change 2023 vs. 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-23
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Brent Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
82.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
100.93
|
|
|
%
Change 2023 vs. 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas Sales MMCF (working
interest)
|
|
|
-
|
|
|
|
-
|
|
|
|
1,798
|
|
|
|
1,798
|
|
|
|
-
|
|
|
|
-
|
|
|
|
335
|
|
|
|
335
|
|
|
Average Gas Price Received
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.93
|
|
|
$
|
1.93
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
4.00
|
|
|
$
|
4.00
|
|
|
% Change 2023 vs. 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-52
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NGL Sales MMB (working
interest)
|
|
|
-
|
|
|
|
-
|
|
|
|
317
|
|
|
|
317
|
|
|
|
-
|
|
|
|
-
|
|
|
|
63
|
|
|
|
63
|
|
|
Average Liquids Price
Received
|
|
|
-
|
|
|
|
-
|
|
|
$
|
26.58
|
|
|
$
|
26.58
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
36.13
|
|
|
$
|
36.13
|
|
Capital Investments/Balance Sheet
For the twelve months of 2023, net
capital expenditures totaled $97.2 million on a cash basis and $72.6 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 fourth
quarter of 2023, VAALCO had an unrestricted cash balance
of $121.0 million. VAALCO also has an
undrawn reserve based lending ("RBL") facility with
$43.75 million of availability to further enhance the
Company's liquidity position. The RBL facility is in its
amortization phase.
Working capital
at December 31, 2023 was $100.7 million compared with $38.0 million at December 31,
2022, while Adjusted Working Capital(3) at December 31, 2023 totaled $113.8 million.
VAALCO continues to work with the Egyptian General Petroleum
Corporation on both collections and offsets. In addition, with the
completion of drilling in Canada and Egypt, VAALCO expects to see a
reduction in its outstanding Accounts Payable and
Accruals.
Cash Dividend Policy and Share Buyback
Authorization
VAALCO paid a quarterly cash
dividend of $0.0625 per share of common stock for the fourth
quarter of 2023 on December 21, 2023. VAALCO increased its
quarterly per share dividend amount in 2023 and paid out a total
$0.25 per share or approximately $27 million in dividends
to its shareholders in 2023. On February 26, 2024, the Company
announced its next quarterly cash dividend of $0.0625 per share of
common stock for the first quarter of 2024 ($0.25 annualized),
to be paid on March 28, 2024 to
stockholders of record at the close of business on March 8, 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 Company's share buyback program
provides for an aggregate purchase of currently outstanding common
stock up to $30 million. Payment for shares repurchased under
the program will be funded using the Company's cash on hand and
cash flow from operations.
The actual timing, number and value
of shares repurchased under the share buyback program will depend
on a number of factors, including constraints specified in any Rule
10b5-1 trading plans, price, general business and market
conditions, and alternative investment opportunities. Under such a
trading plan, the Company's third-party broker, subject to
SEC regulations regarding certain price, market, volume and
timing constraints, has authority to purchase the Company's common
stock in accordance with the terms of the plan. The share
buyback program does not obligate the Company to acquire any
specific number of shares in any period, and may be expanded,
extended, modified or discontinued at any time.
In 2023, VAALCO repurchased
$23.6 million in shares.
Svenska Acquisition
VAALCO expects to acquire 100% of
the share capital of Svenska from Petroswede AB ("Petroswede" or
the "Seller") in the acquisition with an effective date of October
1, 2023. Gross consideration for the Acquisition is $66.5 million,
subject to customary closing adjustments, with the net cash payment
to be made by VAALCO on closing expected to be approximately $30 to
$40 million depending on a number of factors including the timing
of closing. The Acquisition is subject to a number of customary
closing conditions, including regulatory and government
approvals.
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 Cote d'Ivoire. The field is operated
by Canadian Natural Resources Limited, 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. Current production from the Baobab field is
approximately 4,500 WI BOEPD, with 1P WI CPR reserves at the
Effective Date of 13.0 MMBOE (99% oil), and 2P WI CPR reserves of
21.7 MMBOE (97% oil). These reserve figures reflect currently
sanctioned development activities; however, CI-40 has a significant
growth runway with incremental development potential on the Baobab
field, as well as the nearby Kossipo field, expected to provide a
material uplift to the reserve and production volumes, supporting
long-term production of the asset into the late 2030s. 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.
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
Cote d'Ivoire, Svenska 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 proactively
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 at March 13,2024:
|
Settlement Period
|
Type of
Contract
|
Index
|
|
Average Monthly
Volumes
|
|
|
Weighted Average Put
Price
|
|
|
Weighted Average Call
Price
|
|
|
|
|
|
|
(Bbls)
|
|
|
(per Bbl)
|
|
|
(per Bbl)
|
|
|
January 2024 - March 2024
|
Collars
|
Dated
Brent
|
|
|
85,000
|
|
|
$
|
65.00
|
|
|
$
|
97.00
|
|
|
April 2024 - June 2024
|
Collars
|
Dated
Brent
|
|
|
65,000
|
|
|
$
|
65.00
|
|
|
$
|
100.00
|
|
|
July 2024 - September 2024
|
Collars
|
Dated
Brent
|
|
|
80,000
|
|
|
$
|
65.00
|
|
|
$
|
92.00
|
|
2024 Guidance:
The Company has provided first
quarter and full year 2024 guidance. As a reminder, this guidance
does not include the recently announced Svenska acquisition and
will be updated once the acquisition is finalized. All of the
quarterly and annual guidance is detailed in the tables
below.
|
|
|
FY 2024
|
|
Gabon
|
|
Egypt
|
|
Canada
|
|
Production (BOEPD)
|
WI
|
20800 -
23400
|
|
8300 -
9600
|
|
9800 -
10600
|
|
2700 -
3200
|
|
Production (BOEPD)
|
NRI
|
16100 -
18300
|
|
7200 -
8300
|
|
6700 -
7400
|
|
2200 -
2600
|
|
Sales Volume (BOEPD)
|
WI
|
20800 -
23300
|
|
8300 -
9500
|
|
9800 -
10600
|
|
2700 -
3200
|
|
Sales Volume (BOEPD)
|
NRI
|
16100 -
18300
|
|
7200 -
8300
|
|
6700 -
7400
|
|
2200 -
2600
|
|
Production Expense
(millions)
|
WI &
NRI
|
$155.0 -
$165.5 MM
|
|
|
|
|
|
|
|
Production Expense per BOE
|
WI
|
$18.00 -
$22.00
|
|
|
|
|
|
|
|
Production Expense per BOE
|
NRI
|
$25.50 -
$31.00
|
|
|
|
|
|
|
|
Offshore Workovers
(millions)
|
WI &
NRI
|
$1 - $10
MM
|
|
|
|
|
|
|
|
Cash G&A (millions)
|
WI &
NRI
|
$20.0 -
$28.0 MM
|
|
|
|
|
|
|
|
CAPEX (millions)
|
WI &
NRI
|
$70 - $90
MM
|
|
|
|
|
|
|
|
DD&A ($/BO)
|
NRI
|
$20.00 -
$22.00
|
|
|
|
|
|
|
|
|
|
Q1 2024
|
|
Gabon
|
|
Egypt
|
|
Canada
|
|
Production (BOEPD)
|
WI
|
21700 -
22400
|
|
9100 -
9300
|
|
10200 -
10600
|
|
2400 -
2500
|
|
Production (BOEPD)
|
NRI
|
16800 -
17300
|
|
7900 -
8100
|
|
7000 -
7200
|
|
1900 -
2000
|
|
Sales Volume (BOEPD)
|
WI
|
16800 -
21800
|
|
4200 -
8700
|
|
10200 -
10600
|
|
2400 -
2500
|
|
Sales Volume (BOEPD)
|
NRI
|
12600 -
16800
|
|
3700 -
7600
|
|
7000 -
7200
|
|
1900 -
2000
|
|
Production Expense
(millions)
|
WI &
NRI
|
$35.5 -
$42.5 MM
|
|
|
|
|
|
|
|
Production Expense per BOE
|
WI
|
$17.00 -
$22.50
|
|
|
|
|
|
|
|
Production Expense per BOE
|
NRI
|
$22.00 -
$29.50
|
|
|
|
|
|
|
|
Offshore Workovers
(millions)
|
WI &
NRI
|
$0 - $0
MM
|
|
|
|
|
|
|
|
Cash G&A (millions)
|
WI &
NRI
|
$4.0 -
$6.5 MM
|
|
|
|
|
|
|
|
CAPEX (millions)
|
WI &
NRI
|
$22 - $28
MM
|
|
|
|
|
|
|
|
DD&A ($/BO)
|
NRI
|
$20.00 -
$22.00
|
|
|
|
|
|
|
Conference Call
As previously announced, the Company
will hold a conference call to discuss its fourth quarter 2023
financial and operating results tomorrow, Thursday, March 14,
2024, at 10:00 a.m. Central Time (11:00 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 Fourth Quarter 2023
Conference Call." This call will also be webcast on VAALCO's
website at www.vaalco.com. An archived
audio replay will be available on VAALCO's website.
A "Q4 2023 Supplemental
Information" investor deck will be posted to VAALCO's web site
prior to its conference call on March 14, 2024 that includes
additional financial and operational information.
About VAALCO
VAALCO, founded in 1985 and
incorporated under the laws of Delaware, is a Houston, USA based,
independent energy company with production, development and
exploration assets in Africa and Canada.
VAALCO owns a diverse portfolio of
operated production, development and exploration assets across
Gabon, Egypt, Equatorial Guinea and Canada.
For
Further Information
|
|
|
|
|
|
|
VAALCO Energy, Inc. (General and Investor
Enquiries)
|
+00 1 713 623 0801
|
|
Website:
|
www.vaalco.com
|
|
|
|
|
|
|
|
Al
Petrie Advisors (US Investor Relations)
|
+00 1 713 543 3422
|
|
Al Petrie / Chris Delange
|
|
|
|
|
|
Buchanan (UK Financial PR)
|
+44 (0) 207 466 5000
|
|
Ben Romney / 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) the proposed
acquisition of Svenska and its terms, timing and closing, including
receipt of required regulatory approvals and satisfaction of other
closing conditions; (iii) the amount and timing of stock
buybacks, if any, under VAALCO's stock buyback program and VAALCO's
ability to enhance stockholder value through such plan;
(iv) 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; (v) expectations regarding future
acquisitions, investments or divestitures; (vi) expectations of
future dividends, buybacks and other potential returns to
stockholders; (vii) expectations of future balance sheet strength;
(viii) expectations regarding VAALCO's ability to effectively
integrate assets and properties it may acquire as a result of the
acquisition of Svenska into its operations and the benefits of
acquiring Svenska.
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: the
ability to obtain regulatory approvals in connection with the
proposed acquisition of Svenska; the amount of any pre-closing
dividends permitted by the law applicable to Svenska; the ability
to complete the proposed acquisition on the anticipated terms and
timetable; the possibility that various closing conditions for the
acquisition of Svenska may not be satisfied or waived; risks
relating to any unforeseen liabilities of the Svenska; the outcome
of any cost audits undertaken by the Cote d'Ivoire government;
timing and amounts of any decommissioning or other wind up costs
relating to any acquired Nigerian assets; declines in oil or
natural gas prices; the level of success in exploration,
development and production activities; actions of joint-venture
partners 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;
the impact and costs of compliance with laws and regulations
governing oil and gas operations; the risks described under the
caption "Risk Factors" in VAALCO's filings with the Securities and
Exchange Commission, including its most recent Annual Report on
Form 10-K and subsequent Quarterly Reports on Form 10-Q.
2022 Annual Report on Form 10-K
filed with the SEC on April 6, 2023.
Dividends beyond the first quarter
of 2024 have not yet been approved or declared by the Board.
The declaration and payment of future dividends and the terms of
share buybacks remains at the discretion of the Board and will be
determined based on VAALCO's financial results, balance sheet
strength, cash and liquidity requirements, future prospects, crude
oil and natural gas prices, and other factors deemed relevant by
the Board. The Board reserves all powers related to the declaration
and payment of dividends and the terms of share buybacks.
Consequently, in determining the dividend to be declared and paid
on VAALCO common stock or the terms of share buybacks, the Board
may revise or terminate the payment level or buyback terms at any
time without prior notice.
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
|
|
|
As of December 31,
2023
|
|
|
As of December 31,
2022
|
|
|
ASSETS
|
|
(in
thousands)
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
121,001
|
|
|
$
|
37,205
|
|
|
Restricted cash
|
|
|
114
|
|
|
|
222
|
|
|
Receivables:
|
|
|
|
|
|
|
|
|
|
Trade, net of allowance for credit
losses of $0.5 and $0.0 million, respectively
|
|
|
42,150
|
|
|
|
52,147
|
|
|
Accounts with joint venture owners,
net of allowance for credit losses of $0.8 and $0.3 million,
respectively
|
|
|
1,814
|
|
|
|
15,830
|
|
|
Foreign income taxes
receivable
|
|
|
-
|
|
|
|
2,769
|
|
|
Egypt receivables and other, net of
allowance for credit losses of $4.6 and $0.0 million,
respectively
|
|
|
48,680
|
|
|
|
68,519
|
|
|
Crude oil inventory
|
|
|
1,948
|
|
|
|
3,335
|
|
|
Prepayments and other
|
|
|
12,434
|
|
|
|
20,070
|
|
|
Total current assets
|
|
|
228,141
|
|
|
|
200,097
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and NGLs
properties and equipment, net
|
|
|
459,786
|
|
|
|
495,272
|
|
|
Other noncurrent assets:
|
|
|
|
|
|
|
|
|
|
Restricted cash
|
|
|
1,795
|
|
|
|
1,763
|
|
|
Value added tax and other
receivables, net of allowance of $0.0 million and $8.4 million,
respectively
|
|
|
4,214
|
|
|
|
7,150
|
|
|
Right of use operating lease
assets
|
|
|
2,378
|
|
|
|
2,777
|
|
|
Right of use finance lease
assets
|
|
|
89,962
|
|
|
|
90,698
|
|
|
Deferred tax assets
|
|
|
29,242
|
|
|
|
35,432
|
|
|
Abandonment funding
|
|
|
6,268
|
|
|
|
20,586
|
|
|
Other long-term assets
|
|
|
1,430
|
|
|
|
1,866
|
|
|
Total assets
|
|
$
|
823,216
|
|
|
$
|
855,641
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
22,152
|
|
|
$
|
59,886
|
|
|
Accounts with joint venture
owners
|
|
|
5,990
|
|
|
|
-
|
|
|
Accrued liabilities and
other
|
|
|
66,924
|
|
|
|
91,392
|
|
|
Operating lease liabilities -
current portion
|
|
|
2,396
|
|
|
|
2,314
|
|
|
Finance lease liabilities - current
portion
|
|
|
10,079
|
|
|
|
7,811
|
|
|
Foreign income taxes
payable
|
|
|
19,261
|
|
|
|
-
|
|
|
Current liabilities - discontinued
operations
|
|
|
673
|
|
|
|
687
|
|
|
Total current liabilities
|
|
|
127,475
|
|
|
|
162,090
|
|
|
Asset retirement
obligations
|
|
|
47,343
|
|
|
|
41,695
|
|
|
Operating lease liabilities - net of
current portion
|
|
|
33
|
|
|
|
686
|
|
|
Finance lease liabilities - net of
current portion
|
|
|
78,293
|
|
|
|
78,248
|
|
|
Deferred tax liabilities
|
|
|
73,581
|
|
|
|
81,223
|
|
|
Other long-term
liabilities
|
|
|
17,709
|
|
|
|
25,594
|
|
|
Total liabilities
|
|
|
344,434
|
|
|
|
389,536
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
|
|
Preferred stock, $25 par value;
500,000 shares authorized, none issued
|
|
|
-
|
|
|
|
-
|
|
|
Common stock, $0.10 par value;
160,000,000 shares authorized, 121,397,553 and 119,482,680 shares
issued, 104,346,233 and 107,852,857 shares outstanding,
respectively
|
|
|
12,140
|
|
|
|
11,948
|
|
|
Additional paid-in
capital
|
|
|
357,498
|
|
|
|
353,606
|
|
|
Accumulated other comprehensive
income
|
|
|
2,880
|
|
|
|
1,179
|
|
|
Less treasury stock, 17,051,320 and
11,629,823 shares, respectively, at cost
|
|
|
(71,222
|
)
|
|
|
(47,652
|
)
|
|
Retained earnings
|
|
|
177,486
|
|
|
|
147,024
|
|
|
Total shareholders'
equity
|
|
|
478,782
|
|
|
|
466,105
|
|
|
Total liabilities and shareholders'
equity
|
|
$
|
823,216
|
|
|
$
|
855,641
|
|
VAALCO ENERGY, INC AND
SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
|
|
|
Three Months
Ended
|
|
|
Twelve Months
Ended
|
|
|
|
|
December 31,
2023
|
|
|
December 31,
2022
|
|
|
September 30,
2023
|
|
|
December 31,
2023
|
|
|
December 31,
2022
|
|
|
|
|
(in thousands except per
share amounts)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and natural
gas liquids sales
|
|
$
|
149,154
|
|
|
$
|
96,588
|
|
|
$
|
116,269
|
|
|
$
|
455,066
|
|
|
$
|
354,326
|
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production expense
|
|
|
46,397
|
|
|
|
45,514
|
|
|
|
39,956
|
|
|
|
153,157
|
|
|
|
112,661
|
|
|
FPSO demobilization and other
costs
|
|
|
1,837
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,484
|
|
|
|
8,867
|
|
|
Exploration expense
|
|
|
706
|
|
|
|
8
|
|
|
|
1,194
|
|
|
|
1,965
|
|
|
|
258
|
|
|
Depreciation, depletion and
amortization
|
|
|
20,344
|
|
|
|
26,316
|
|
|
|
32,538
|
|
|
|
115,302
|
|
|
|
48,143
|
|
|
General and administrative
expense
|
|
|
7,005
|
|
|
|
(430
|
)
|
|
|
6,216
|
|
|
|
23,840
|
|
|
|
10,077
|
|
|
Credit (recovery) losses and
other
|
|
|
(7,343
|
)
|
|
|
999
|
|
|
|
822
|
|
|
|
(4,906
|
)
|
|
|
3,082
|
|
|
Total operating costs and
expenses
|
|
|
68,946
|
|
|
|
72,407
|
|
|
|
80,726
|
|
|
|
296,842
|
|
|
|
183,088
|
|
|
Other operating income (expense),
net
|
|
|
731
|
|
|
|
43
|
|
|
|
5
|
|
|
|
433
|
|
|
|
38
|
|
|
Operating income
|
|
|
80,939
|
|
|
|
24,224
|
|
|
|
35,548
|
|
|
|
158,657
|
|
|
|
171,276
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments gain (loss),
net
|
|
|
2,500
|
|
|
|
(290
|
)
|
|
|
(2,320
|
)
|
|
|
232
|
|
|
|
(37,812
|
)
|
|
Interest income (expense),
net
|
|
|
(1,077
|
)
|
|
|
(1,679
|
)
|
|
|
(1,426
|
)
|
|
|
(6,452
|
)
|
|
|
(2,034
|
)
|
|
Other income (expense),
net
|
|
|
(797
|
)
|
|
|
2,466
|
|
|
|
183
|
|
|
|
(2,291
|
)
|
|
|
(8,048
|
)
|
|
Total other income (expense),
net
|
|
|
626
|
|
|
|
497
|
|
|
|
(3,563
|
)
|
|
|
(8,511
|
)
|
|
|
(47,894
|
)
|
|
Income from continuing operations
before income taxes
|
|
|
81,565
|
|
|
|
24,721
|
|
|
|
31,985
|
|
|
|
150,146
|
|
|
|
123,382
|
|
|
Income tax expense
(benefit)
|
|
|
37,574
|
|
|
|
6,953
|
|
|
|
25,844
|
|
|
|
89,777
|
|
|
|
71,420
|
|
|
Income from continuing
operations
|
|
|
43,991
|
|
|
|
17,768
|
|
|
|
6,141
|
|
|
|
60,369
|
|
|
|
51,962
|
|
|
Loss from discontinued operations,
net of tax
|
|
|
-
|
|
|
|
(14
|
)
|
|
|
-
|
|
|
|
(15
|
)
|
|
|
(72
|
)
|
|
Net income
|
|
$
|
43,991
|
|
|
$
|
17,754
|
|
|
$
|
6,141
|
|
|
$
|
60,354
|
|
|
$
|
51,890
|
|
|
Other comprehensive income
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation
adjustments
|
|
|
2,036
|
|
|
|
-
|
|
|
|
(2,216
|
)
|
|
|
1,701
|
|
|
|
1,179
|
|
|
Comprehensive income
|
|
$
|
46,027
|
|
|
$
|
17,754
|
|
|
$
|
3,925
|
|
|
$
|
62,055
|
|
|
$
|
53,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations
|
|
$
|
0.41
|
|
|
$
|
0.17
|
|
|
$
|
0.06
|
|
|
$
|
0.56
|
|
|
$
|
0.74
|
|
|
Loss from discontinued operations,
net of tax
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Net income (loss) per
share
|
|
$
|
0.41
|
|
|
$
|
0.17
|
|
|
$
|
0.06
|
|
|
$
|
0.56
|
|
|
$
|
0.74
|
|
|
Basic weighted average shares
outstanding
|
|
|
104,893
|
|
|
|
101,227
|
|
|
|
106,289
|
|
|
|
106,376
|
|
|
|
69,568
|
|
|
Diluted net income (loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations
|
|
$
|
0.41
|
|
|
$
|
0.17
|
|
|
$
|
0.06
|
|
|
$
|
0.56
|
|
|
$
|
0.73
|
|
|
Loss from discontinued operations,
net of tax
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Net income (loss) per
share
|
|
$
|
0.41
|
|
|
$
|
0.17
|
|
|
$
|
0.06
|
|
|
$
|
0.56
|
|
|
$
|
0.73
|
|
|
Diluted weighted average shares
outstanding
|
|
|
105,020
|
|
|
|
101,578
|
|
|
|
106,433
|
|
|
|
106,555
|
|
|
|
69,982
|
|
VAALCO ENERGY, INC AND
SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
Twelve
Months Ended December 31,
|
|
|
|
|
2023
|
|
|
2022
|
|
|
|
|
(in
thousands)
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
60,354
|
|
|
$
|
51,890
|
|
|
Adjustments to reconcile net income
to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations,
net of tax
|
|
|
15
|
|
|
|
72
|
|
|
Depreciation, depletion and
amortization
|
|
|
115,302
|
|
|
|
48,143
|
|
|
Bargain purchase gain
|
|
|
1,412
|
|
|
|
(10,819
|
)
|
|
Exploration Expense
|
|
|
1,841
|
|
|
|
-
|
|
|
Deferred taxes
|
|
|
(2,864
|
)
|
|
|
44,805
|
|
|
Unrealized foreign exchange
loss
|
|
|
52
|
|
|
|
(1,043
|
)
|
|
Stock-based compensation
|
|
|
3,323
|
|
|
|
2,200
|
|
|
Cash settlements paid on exercised
stock appreciation rights
|
|
|
(378
|
)
|
|
|
(827
|
)
|
|
Derivative instruments (gain) loss,
net
|
|
|
(232
|
)
|
|
|
37,812
|
|
|
Cash settlements paid on matured
derivative contracts, net
|
|
|
(127
|
)
|
|
|
(42,935
|
)
|
|
Cash settlements paid on asset
retirement obligations
|
|
|
(6,747
|
)
|
|
|
(6,577
|
)
|
|
Credit loss recovery, net of
expense
|
|
|
7,543
|
|
|
|
3,082
|
|
|
Other operating loss, net
|
|
|
55
|
|
|
|
(38
|
)
|
|
Operational expenses associated with
equipment and other
|
|
|
3,196
|
|
|
|
2,052
|
|
|
Change in operating assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
9,461
|
|
|
|
18,385
|
|
|
Accounts with joint venture
owners
|
|
|
19,571
|
|
|
|
(18,929
|
)
|
|
Other receivables
|
|
|
12,064
|
|
|
|
(9,290
|
)
|
|
Crude oil inventory
|
|
|
1,387
|
|
|
|
(1,742
|
)
|
|
Prepayments and other
|
|
|
4,743
|
|
|
|
(4,387
|
)
|
|
Value added tax and other
receivables
|
|
|
2,427
|
|
|
|
(5,193
|
)
|
|
Other long-term assets
|
|
|
3,830
|
|
|
|
(2,730
|
)
|
|
Accounts payable
|
|
|
(28,102
|
)
|
|
|
23,920
|
|
|
Foreign income taxes
receivable/(payable)
|
|
|
22,030
|
|
|
|
(5,897
|
)
|
|
Accrued liabilities and
other
|
|
|
(6,544
|
)
|
|
|
6,964
|
|
|
Net cash provided by (used in)
continuing operating activities
|
|
|
223,612
|
|
|
|
128,918
|
|
|
Net cash used in discontinued
operating activities
|
|
|
(15
|
)
|
|
|
(72
|
)
|
|
Net cash provided by (used in)
operating activities
|
|
|
223,597
|
|
|
|
128,846
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES:
|
|
|
|
|
|
|
Property and equipment
expenditures
|
|
|
(97,223
|
)
|
|
|
(159,897
|
)
|
|
Cash acquired from TransGlobe
acquisition
|
|
|
-
|
|
|
|
36,686
|
|
|
Net cash provided by (used in)
continuing investing activities
|
|
|
(97,223
|
)
|
|
|
(123,211
|
)
|
|
Net cash used in discontinued
investing activities
|
|
|
-
|
|
|
|
-
|
|
|
Net cash provided by (used in)
investing activities
|
|
|
(97,223
|
)
|
|
|
(123,211
|
)
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES:
|
|
|
|
|
|
|
Proceeds from the issuances of
common stock
|
|
|
673
|
|
|
|
312
|
|
|
Dividend distribution
|
|
|
(26,772
|
)
|
|
|
(9,354
|
)
|
|
Treasury shares
|
|
|
(23,570
|
)
|
|
|
(3,805
|
)
|
|
Deferred financing costs
|
|
|
-
|
|
|
|
(2,069
|
)
|
|
Payments of finance lease
|
|
|
(7,150
|
)
|
|
|
(3,039
|
)
|
|
Net cash provided by (used in) in
continuing financing activities
|
|
|
(56,819
|
)
|
|
|
(17,955
|
)
|
|
Net cash used in discontinued
financing activities
|
|
|
-
|
|
|
|
-
|
|
|
Net cash provided by (used in) in
financing activities
|
|
|
(56,819
|
)
|
|
|
(17,955
|
)
|
|
Effects of exchange rate changes on
cash
|
|
|
(153
|
)
|
|
|
(218
|
)
|
|
NET CHANGE IN CASH, CASH EQUIVALENTS
AND RESTRICTED CASH
|
|
|
69,402
|
|
|
|
(12,538
|
)
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH AT BEGINNING OF PERIOD
|
|
|
59,776
|
|
|
|
72,314
|
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH AT END OF PERIOD
|
|
$
|
129,178
|
|
|
$
|
59,776
|
|
VAALCO ENERGY, INC AND
SUBSIDIARIES
Selected Financial and Operating
Statistics
(Unaudited)
|
|
|
Three Months
Ended
|
|
|
Twelve Months
Ended
|
|
|
|
|
December 31,
2023
|
|
|
December 31,
2022
|
|
|
September 30,
2023
|
|
|
December 31,
2023
|
|
|
December 31,
2022
|
|
|
NRI SALES DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and natural gas
liquids sales (MBOE)
|
|
|
1,994
|
|
|
|
1,371
|
|
|
|
1,812
|
|
|
|
6,832
|
|
|
|
3,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WI PRODUCTION DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Etame Crude oil (MBbl)
|
|
|
887
|
|
|
|
650
|
|
|
|
911
|
|
|
|
3,674
|
|
|
|
3,415
|
|
|
Egypt Crude oil (MBbl)
|
|
|
1,024
|
|
|
|
818
|
|
|
|
1,076
|
|
|
|
4,055
|
|
|
|
818
|
|
|
Canada Crude Oil (MBbl)
|
|
|
77
|
|
|
|
93
|
|
|
|
101
|
|
|
|
394
|
|
|
|
93
|
|
|
Canada Natural Gas (Mcf)
|
|
|
471
|
|
|
|
335
|
|
|
|
470
|
|
|
|
1,798
|
|
|
|
335
|
|
|
Canada Natural Gas Liquid
(Mbbl)
|
|
|
81
|
|
|
|
63
|
|
|
|
82
|
|
|
|
317
|
|
|
|
63
|
|
|
Canada Crude oil, natural gas and
natural gas liquids (MBOE)
|
|
|
236
|
|
|
|
211
|
|
|
|
261
|
|
|
|
1,011
|
|
|
|
211
|
|
|
Total Crude oil, natural gas and
natural gas liquids production (MBOE)
|
|
|
2,146
|
|
|
|
1,680
|
|
|
|
2,248
|
|
|
|
8,740
|
|
|
|
4,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gabon Average daily production
volumes (BOEPD)
|
|
|
9,641
|
|
|
|
7,065
|
|
|
|
9,901
|
|
|
|
10,066
|
|
|
|
9,356
|
|
|
Egypt Average daily production
volumes (BOEPD)
|
|
|
11,126
|
|
|
|
8,893
|
|
|
|
11,691
|
|
|
|
11,111
|
|
|
|
2,241
|
|
|
Canada Average daily production
volumes (BOEPD)
|
|
|
2,563
|
|
|
|
2,293
|
|
|
|
2,835
|
|
|
|
2,769
|
|
|
|
578
|
|
|
Average daily production volumes
(BOEPD)
|
|
|
23,330
|
|
|
|
18,262
|
|
|
|
24,430
|
|
|
|
23,946
|
|
|
|
12,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NRI PRODUCTION DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Etame Crude oil (MBbl)
|
|
|
772
|
|
|
|
566
|
|
|
|
792
|
|
|
|
3,196
|
|
|
|
2,971
|
|
|
Egypt Crude oil (MBbl)
|
|
|
697
|
|
|
|
547
|
|
|
|
732
|
|
|
|
2,771
|
|
|
|
547
|
|
|
Canada Crude Oil (MBbl)
|
|
|
63
|
|
|
|
93
|
|
|
|
81
|
|
|
|
335.51
|
|
|
|
93
|
|
|
Canada Natural Gas (Mcf)
|
|
|
384
|
|
|
|
335
|
|
|
|
376
|
|
|
|
1,532.74
|
|
|
|
335
|
|
|
Canada Natural Gas Liquid
(Mbbl)
|
|
|
66
|
|
|
|
63
|
|
|
|
66
|
|
|
|
270.69
|
|
|
|
63
|
|
|
Canada Crude oil, natural gas and
natural gas liquids (MBOE)
|
|
|
193
|
|
|
|
211
|
|
|
|
210
|
|
|
|
862
|
|
|
|
211
|
|
|
Total Crude oil, natural gas and
natural gas liquids production (MBOE)
|
|
|
1,662
|
|
|
|
1,324
|
|
|
|
1,734
|
|
|
|
6,829
|
|
|
|
3,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gabon Average daily production
volumes (BOEPD)
|
|
|
8,391
|
|
|
|
6,152
|
|
|
|
8,609
|
|
|
|
8,756
|
|
|
|
8,140
|
|
|
Egypt Average daily production
volumes (BOEPD)
|
|
|
7,576
|
|
|
|
5,946
|
|
|
|
7,957
|
|
|
|
7,593
|
|
|
|
1,499
|
|
|
Canada Average daily production
volumes (BOEPD)
|
|
|
2,098
|
|
|
|
2,293
|
|
|
|
2,279
|
|
|
|
2,361
|
|
|
|
578
|
|
|
Average daily production volumes
(BOEPD)
|
|
|
18,065
|
|
|
|
14,390
|
|
|
|
18,844
|
|
|
|
18,710
|
|
|
|
10,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE SALES PRICES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and natural gas
liquids sales (per BOE) - WI basis
|
|
$
|
73.98
|
|
|
$
|
72.01
|
|
|
$
|
70.78
|
|
|
$
|
69.30
|
|
|
$
|
94.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and natural gas
liquids sales (per BOE) - NRI basis
|
|
$
|
73.96
|
|
|
$
|
70.43
|
|
|
$
|
63.41
|
|
|
$
|
65.83
|
|
|
$
|
94.77
|
|
|
Crude oil, natural gas and natural gas
liquids sales (Per BOE including realized commodity
derivatives)
|
|
$
|
73.89
|
|
|
$
|
70.24
|
|
|
$
|
63.38
|
|
|
$
|
65.81
|
|
|
$
|
83.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND EXPENSES (Per BOE of
sales):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production expense
|
|
$
|
23.27
|
|
|
$
|
33.19
|
|
|
$
|
22.05
|
|
|
$
|
22.42
|
|
|
$
|
30.64
|
|
|
Production expense, excluding offshore
workovers and stock compensation*
|
|
|
23.25
|
|
|
|
29.73
|
|
|
|
22.04
|
|
|
|
22.59
|
|
|
|
29.33
|
|
|
Depreciation, depletion and
amortization
|
|
|
10.20
|
|
|
|
19.19
|
|
|
|
17.96
|
|
|
|
16.88
|
|
|
|
13.09
|
|
|
General and administrative
expense**
|
|
|
3.51
|
|
|
|
(0.31
|
)
|
|
|
3.43
|
|
|
|
3.49
|
|
|
|
2.74
|
|
|
Property and equipment expenditures,
cash basis (in thousands)
|
|
$
|
42,391
|
|
|
$
|
56,044
|
|
|
$
|
22,533
|
|
|
$
|
97,223
|
|
|
$
|
159,897
|
|
*Offshore workover costs excluded
from the three months ended December 31,
2023 and 2022 and September 30, 2023 are $0.0
million, $4.7 million and $0.0 million,
respectively.
*Stock compensation associated with
production expense excluded from the three months ended
December 31, 2023 and 2022 and
September 30, 2023 are $0.9 million,
$(0.1) million and $1.0 million, respectively.
**General and administrative expenses
include $0.50, $0.57 and $0.57 per barrel of
oil related to stock-based compensation expense in the
three months ended December 31,
2023 and 2022 and September 30,
2023, 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.
PV-10 Value and Probable Reserves
PV-10 is a non-GAAP financial measure
and represents the period-end present value of estimated future
cash inflows from VAALCO's reserves, less future development and
production costs, discounted at 10% per annum to reflect timing of
future cash flows. PV-10 values for 2P WI CPR reserves have been
calculated using VAALCO's management assumptions for timing,
escalated crude oil price and cost in the case of 2P WI CPR
reserves. PV-10 generally differs from standardized measure, the
most directly comparable GAAP financial measure, because it
generally does not include the effects of income taxes; however,
VAALCO's PV-10 does include the effect of income taxes. PV-10 is a
widely used measure within the industry and is commonly used by
securities analysts, banks and credit rating agencies to evaluate
the estimated future net cash flows from proved reserves on a
comparative basis across companies or specific properties. VAALCO's
PV-10 includes the effect of income taxes. Neither PV-10 nor the
standardized measure purports to represent the fair value of the
Company's crude oil and natural gas reserves.
VAALCO has provided summations of
its PV-10 for its proved and probable reserves on a 2P WI CPR basis
in this press release. The SEC strictly prohibits companies from
aggregating proved, probable and possible reserves in filings with
the SEC due to the different levels of certainty associated with
each reserve category. GAAP does not provide a measure of estimated
future net cash flows for reserves other than proved reserves and
accordingly it is not practicable to reconcile the PV-10 value of
2P WI CPR reserves to a GAAP measure, such as the standardized
measure. Investors should be cautioned that estimates of PV-10 of
probable reserves, as well as the underlying volumetric estimates,
are inherently more uncertain of being recovered and realized than
comparable measures for proved reserves. Further, because estimates
of probable reserve volumes have not been adjusted for risk due to
this uncertainty of recovery, their summation may be of limited
use. Nonetheless, VAALCO believes that PV-10 estimates for probable
reserves present useful information for investors about the future
net cash flows of its reserves in the absence of a comparable GAAP
measure such as standardized measure.
2P
WI CPR Reserves
2P WI CPR reserves represent proved
plus probable estimates as reported by NSAI and GLJ 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 as of December 31, 2021 using escalated
crude oil price and cost assumptions made by VAALCO's management.
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 of December 31, 2021. As a result, 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.
2P WI CPR reserves and the PV-10
value for 2P WI CPR reserves, as calculated 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
2P WI CPR pricing is based on management pricing assumptions for
future Brent oil pricing for 2023 of $80.00 and $70.00 in 2024,
escalated 2% per year thereafter and for Equatorial Guinea, given
the expectation of first oil beginning in 2026, Brent oil pricing
of $74.27 was assumed for 2026, escalated 2% per year
thereafter;
●
Lease operating expenses
are not escalated in the SEC case, while for the 2P WI CPR reserves
case they are escalated at 2% annually beginning on January 1,
2023.
For the 2P WI CPR reserves for
Svenska, such reserves 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 is based on pricing assumptions for future Brent oil
pricing for 2023 of $84.5 and up to 2030 the Brent Oil price
follows the average of four available forecasts and assumes flat
real thereafter. Oil price is escalated 2% per
year;
|
|
|
●
|
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.
|
Additionally, (i) the reserves
estimates for Svenska were prepared 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 and (ii) are
as of October 1, 2023.
Management uses 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 the
Company to other companies. Management believes that the
presentation of 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 the Company's
reserve information to other London Stock Exchange-traded companies
that report similar measures. VAALCO also believes that this
information enhances its investors' and securities analysts'
understanding of its business. However, 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 the
Company's SEC proved reserves and consider 2P WI CPR reserves only
supplementally.
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
SUBSIDIARIES
Reconciliations of Non-GAAP Financial
Measures
(Unaudited)
(in
thousands)
|
|
|
Three Months
Ended
|
|
|
Twelve Months
Ended
|
|
|
Reconciliation of Net Income to Adjusted Net
Income
|
|
December 31,
2023
|
|
|
December 31,
2022
|
|
|
September 30,
2023
|
|
|
December 31,
2023
|
|
|
December 31,
2022
|
|
|
Net income
|
|
$
|
43,991
|
|
|
$
|
17,754
|
|
|
$
|
6,141
|
|
|
$
|
60,354
|
|
|
$
|
51,890
|
|
|
Adjustment for discrete
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations, net of
tax
|
|
|
-
|
|
|
|
14
|
|
|
|
-
|
|
|
|
15
|
|
|
|
72
|
|
|
Dry Hole Costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Unrealized derivative instruments
loss (gain)
|
|
|
(2,565
|
)
|
|
|
38
|
|
|
|
2,321
|
|
|
|
(359
|
)
|
|
|
(5,123
|
)
|
|
(Gain) /adjustment of acquisition
price, net
|
|
|
-
|
|
|
|
(10,817
|
)
|
|
|
-
|
|
|
|
1,412
|
|
|
|
(10,817
|
)
|
|
Arrangement Costs
|
|
|
-
|
|
|
|
7,006
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,630
|
|
|
FPSO demobilization
|
|
|
1,837
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,484
|
|
|
|
8,867
|
|
|
Deferred income tax expense
(benefit)
|
|
|
(3,538
|
)
|
|
|
5,266
|
|
|
|
(985
|
)
|
|
|
(2,865
|
)
|
|
|
44,805
|
|
|
Other operating (income) expense,
net
|
|
|
(731
|
)
|
|
|
(43
|
)
|
|
|
(5
|
)
|
|
|
(433
|
)
|
|
|
(38
|
)
|
|
Adjusted Net Income
|
|
$
|
38,994
|
|
|
$
|
19,218
|
|
|
$
|
7,472
|
|
|
$
|
65,608
|
|
|
$
|
104,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Adjusted Net Income per
Share
|
|
$
|
0.37
|
|
|
$
|
0.19
|
|
|
$
|
0.07
|
|
|
$
|
0.62
|
|
|
$
|
1.49
|
|
|
Diluted weighted average shares
outstanding (1)
|
|
|
105,020
|
|
|
|
101,578
|
|
|
|
106,433
|
|
|
|
106,555
|
|
|
|
69,982
|
|
(1) No adjustments to weighted
average shares outstanding
|
|
|
Three Months
Ended
|
|
|
Twelve Months
Ended
|
|
|
Reconciliation of Net Income to Adjusted
EBITDAX
|
|
December 31,
2023
|
|
|
December 31,
2022
|
|
|
September 30,
2023
|
|
|
December 31,
2023
|
|
|
December 31,
2022
|
|
|
Net income
|
|
$
|
43,991
|
|
|
$
|
17,754
|
|
|
$
|
6,141
|
|
|
$
|
60,354
|
|
|
$
|
51,890
|
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of discontinued
operations
|
|
|
-
|
|
|
|
14
|
|
|
|
-
|
|
|
|
15
|
|
|
|
72
|
|
|
Interest expense (income),
net
|
|
|
1,077
|
|
|
|
1,679
|
|
|
|
1,426
|
|
|
|
6,452
|
|
|
|
2,034
|
|
|
Income tax expense
(benefit)
|
|
|
37,574
|
|
|
|
6,953
|
|
|
|
25,844
|
|
|
|
89,777
|
|
|
|
71,420
|
|
|
Depreciation, depletion and
amortization
|
|
|
20,344
|
|
|
|
26,316
|
|
|
|
32,538
|
|
|
|
115,302
|
|
|
|
48,143
|
|
|
Exploration expense
|
|
|
706
|
|
|
|
8
|
|
|
|
1,194
|
|
|
|
1,965
|
|
|
|
258
|
|
|
FPSO demobilization
|
|
|
1,837
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,484
|
|
|
|
8,867
|
|
|
Non-cash or unusual items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
991
|
|
|
|
(100
|
)
|
|
|
1,078
|
|
|
|
3,323
|
|
|
|
2,200
|
|
|
Unrealized derivative instruments
loss (gain)
|
|
|
(2,565
|
)
|
|
|
38
|
|
|
|
2,321
|
|
|
|
(359
|
)
|
|
|
(5,123
|
)
|
|
(Gain) /adjustment of acquisition
price, net
|
|
|
-
|
|
|
|
(10,817
|
)
|
|
|
-
|
|
|
|
1,412
|
|
|
|
(10,817
|
)
|
|
Arrangement Costs
|
|
|
-
|
|
|
|
7,006
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,630
|
|
|
Other operating (income) expense,
net
|
|
|
(731
|
)
|
|
|
(43
|
)
|
|
|
(5
|
)
|
|
|
(433
|
)
|
|
|
(38
|
)
|
|
Credit losses and other
|
|
|
(7,343
|
)
|
|
|
999
|
|
|
|
822
|
|
|
|
(4,906
|
)
|
|
|
3,082
|
|
|
Adjusted EBITDAX
|
|
$
|
95,881
|
|
|
$
|
49,807
|
|
|
$
|
71,359
|
|
|
$
|
280,386
|
|
|
$
|
186,618
|
|
VAALCO ENERGY, INC AND
SUBSIDIARIES
Reconciliations of Non-GAAP
Financial Measures
(Unaudited)
(in thousands)
|
Reconciliation of Working Capital to Adjusted Working
Capital
|
|
As of December 31,
2023
|
|
|
As of December 31,
2022
|
|
|
Change
|
|
|
Current assets
|
|
$
|
228,141
|
|
|
$
|
200,097
|
|
|
$
|
28,044
|
|
|
Current liabilities
|
|
|
(127,475
|
)
|
|
|
(162,090
|
)
|
|
|
34,615
|
|
|
Working capital
|
|
|
100,666
|
|
|
|
38,007
|
|
|
|
62,659
|
|
|
Add: lease liabilities - current
portion
|
|
|
12,475
|
|
|
|
10,125
|
|
|
|
2,350
|
|
|
Add: current liabilities -
discontinued operations
|
|
|
673
|
|
|
|
687
|
|
|
|
(14
|
)
|
|
Adjusted Working Capital
|
|
$
|
113,814
|
|
|
$
|
48,819
|
|
|
$
|
64,995
|
|
|
|
|
Twelve Months Ended December 31, 2023
|
|
Reconciliation of Free Cash Flow
|
|
|
|
|
|
Net cash provided by Operating
activities
|
|
$
|
223,597
|
|
|
Net cash used in Investing
activities
|
|
|
(97,223
|
)
|
|
Net cash used in Financing
activities
|
|
|
(56,819
|
)
|
|
Effects of exchange rate changes on
cash
|
|
|
(153
|
)
|
|
Total net cash change
|
|
|
69,402
|
|
|
|
|
|
|
|
|
Add back shareholder cash
out:
|
|
|
|
|
|
Dividends paid
|
|
|
26,772
|
|
|
Stock buyback
|
|
|
23,570
|
|
|
Total cash returned to shareholders
|
|
|
50,342
|
|
|
|
|
|
|
|
|
Free
Cash Flow
|
|
$
|
119,744
|
|
|
|
|
|
|
|
|
Percent of Free Cash Flow returned to
shareholders
|
|
|
42
|
%
|