VAALCO Energy Inc (EGY) Reports Record Financial Results for 2023
Net Income: $60.4 million for FY 2023, with Q4 net income of $44.0 million.
Production: Increased by 83% year-over-year to 18,710 NRI BOEPD.
Adjusted EBITDAX: Record $280.4 million for FY 2023, with Q4 at $95.9 million.
Free Cash Flow: Generated $119.7 million in FY 2023.
Shareholder Returns: $50.3 million returned through dividends and buybacks in 2023.
Reserves: Year-end 2023 SEC proved reserves increased by 3% to 28.6 MMBOE.
Acquisition: Announced all-cash acquisition of Svenska Petroleum Exploration AB.
On March 13, 2024, VAALCO Energy Inc (NYSE:EGY) released its 8-K filing, announcing its financial and operating results for the fourth quarter and full year of 2023. The company, an independent energy company operating in the United States, is engaged in the acquisition, exploration, development, and production of crude oil and natural gas. VAALCO operates through geographical segments, with the majority of its revenue generated from the Gabon segment.
Financial and Operational Highlights
VAALCO reported a net income of $60.4 million for the full year 2023, translating to $0.56 per diluted share, and net cash from operating activities of $223.6 million. The company generated a record Adjusted EBITDAX of $280.4 million and $119.7 million of Free Cash Flow (FCF) in FY 2023. Notably, VAALCO returned $50.3 million, or 42% of FCF, to shareholders in 2023 through dividends and buybacks.
Production in 2023 increased by 83% year-over-year to 18,710 net revenue interest (NRI) barrels of oil equivalent per day (BOEPD), at the higher end of the company's increased guidance. The year-end 2023 SEC proved reserves increased by 3% to 28.6 million barrels of oil equivalent (MMBOE).
VAALCO also announced an accretive all-cash acquisition of Svenska Petroleum Exploration AB, which is currently producing approximately 4,500 BOEPD (99% oil). The acquisition includes estimated 1P WI CPR reserves as of October 1, 2023, of 13.0 MMBOE (99% oil) and total 2P WI CPR reserves at October 1, 2023, of 21.7 million MMBOE (97% oil).
Operational and Strategic Developments
George Maxwell, VAALCOs CEO, highlighted the company's record financial results, successful integration of a major acquisition, and the return of significant value to shareholders through dividends and share buybacks. He emphasized the growth in cash position, reserves, and production, and expressed optimism for the future, particularly with the Svenska acquisition expected to close in Q2 2024.
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.
In Egypt, VAALCO continued its drilling campaign, achieving operational efficiencies and drilling 18 wells in 2023. In Canada, the company drilled and completed two wells, resulting in record production levels for the region. Gabon production remained strong, with improved operational uptime and cost savings from the new Floating, Storage and Offloading vessel (FSO).
Financial Performance Analysis
VAALCO's Q4 2023 net income of $44.0 million ($0.41 per diluted share) represented a significant increase from the previous quarter and the same quarter in the previous year. Adjusted EBITDAX for Q4 2023 was $95.9 million, a 34% increase from Q3 2023. The company's net revenue increased by $32.9 million or 28% as total NRI sales volumes rose 45% compared to Q4 2022.
Production expenses, excluding offshore workovers and stock compensation, were higher in Q4 2023 due to increased sales volumes and costs associated with the TransGlobe combination. The company also experienced inflationary and industry supply chain pressures on personnel and contractor costs.
VAALCO's balance sheet remained strong with an unrestricted cash balance of $121.0 million at the end of Q4 2023. The company's working capital at December 31, 2023, was $100.7 million, with adjusted working capital totaling $113.8 million.
VAALCO paid a quarterly cash dividend of $0.0625 per share of common stock for Q4 2023 and repurchased $23.6 million in shares under its share buyback program.
The company will hold a conference call to discuss its Q4 2023 financial and operating results on March 14, 2024, at 10:00 a.m. Central Time.
For further information on VAALCO's financial performance and operational updates, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from VAALCO Energy Inc for further details.
This article first appeared on GuruFocus.
