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VAALCO Energy, Inc. (EGY)

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Previous Close1.6300
Open1.6200
Bid1.6400 x 800
Ask1.6900 x 900
Day's Range1.5700 - 1.7000
52 Week Range0.7000 - 2.6000
Volume450,238
Avg. Volume631,552
Market Cap96.526M
Beta (5Y Monthly)1.96
PE Ratio (TTM)N/A
EPS (TTM)-0.7540
Earnings DateNov 06, 2020
Forward Dividend & YieldN/A (N/A)
Ex-Dividend DateJul 22, 2009
1y Target Est2.79
  • VAALCO Announces Transformational Acquisition of Additional Working Interest at Etame Marin Block Offshore Gabon Nearly Doubling Reserves and Production
    GlobeNewswire

    VAALCO Announces Transformational Acquisition of Additional Working Interest at Etame Marin Block Offshore Gabon Nearly Doubling Reserves and Production

    HOUSTON, Nov. 17, 2020 (GLOBE NEWSWIRE) -- VAALCO Energy, Inc. (NYSE: EGY; LSE: EGY) (“VAALCO” or the “Company”) today announced that it has signed a sale and purchase agreement (“SPA”) to acquire Sasol Gabon S.A.’s (“Sasol’s”) 27.8% working interest(1) in the Etame Marin block offshore Gabon. Since VAALCO currently owns and operates a 31.1% working interest(1) in Etame, the transaction will almost double VAALCO’s total production and reserves. In addition, VAALCO is acquiring Sasol’s 40% non-operated participating interest(1) in Block DE-8 offshore Gabon.Highlights      •Acquiring an additional 27.8% working interest in the Etame Marin block offshore Gabon, increasing VAALCO’s total working interest to 58.8%;  •Nearly doubles VAALCO’s total net production and reserves;    •Increases net revenue interest (“NRI”) production from 4,850 to 9,150 barrels of oil per day (“BOPD”) based on current month production    •Increases year-end 2019 SEC reserves(2) from 5.0 million to 9.4 million barrels of oil (“MMBO”)    •Increases year-end 2019 independent 2P CPR reserves(3) from 9.2 MMBO to 17.5 MMBO  •Immediately accretive to VAALCO, with estimated increase of 23% in free cash flow per barrel(4) from approximately $10.90 to $13.30 at $45 realized oil price;  •Adds optionality from acquisition of Sasol’s 40% non-operated participating interest in Block DE-8 offshore Gabon;  •Agreed to total consideration to Sasol for the entire transaction of $44 million, subject to customary post-effective date adjustments, and future contingent payments of up to $6 million; and  •Funding for the acquisition will be from cash on hand and cash from operations. (1)Prior to the closing of the acquisition, VAALCO’s working interest in Etame is 31.1% and its participating interest is 33.6%; Sasol’s working interest in Etame is 27.8% and its participating interest is 30%. All NRI production rates and volumes are based on working interest less 13% royalty volumes. Sasol’s participating interest in DE-8 is 40% and its working interest is subject to government rights for a 20% carried interest and 10% back-in interest. (2)“SEC reserves” are Netherland, Sewell & Associates estimates prepared in accordance with the definitions and regulations of the U.S. Securities and Exchange Commission as of December 31, 2019. (3)“2P CPR Reserves” are Netherland, Sewell & Associates proved plus probable estimates 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, 2019 using VAALCO’s management assumptions for escalated crude oil price and costs. 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, 2019. As a result, 2P CPR reserves may not be comparable to SEC reserves determined under 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. (4)Free cash flow per barrel is calculated as (i) revenues less production expenses, general and administrative expense, annual abandonment funding and current income tax expense divided by (ii) the number of NRI barrels of oil sold.    An investor deck with additional information regarding the transaction is available at www.vaalco.com under the Investor Relations section. Cary Bounds, Chief Executive Officer, commented, “We believe that the acquisition of Sasol’s interest at Etame is a very attractive and value accretive strategic acquisition for the Company that confirms our position as one of the leading independent exploration and production companies in West Africa. In what was a competitive sales process, this is the ideal growth transaction that we have been seeking for VAALCO. We believe the acquisition of an additional stake in this field that we know so well, having been the operator since 1995, is an important step in implementing our strategy. The acquisition is expected to deliver a step change in our production to over 9,000 barrels of oil per day net based on current production and significantly boosts our cash flow profile. With minimal additions to our overhead costs, we expect this transaction to lower our G&A cost per barrel by approximately 40%. The strong operational and economic performance of Etame in recent years has enabled us to grow our net cash position, which we are now using to fund this value accretive acquisition and profitably expand our reserve base.” Bounds continued, “We completed a highly successful drilling program earlier this year that demonstrated the quality of the asset and the upside that resides in the field, and this transaction, coupled with our recent announcement of acquiring new proprietary 3-D seismic data over the entire Etame Marin block, underscores the belief that we have in the long-term potential at Etame.   We are also enhancing upside potential with a 40% non-operated position in Block DE-8 offshore Gabon which includes an existing discovery and for which there are plans to potentially drill an appraisal well in 2021 representing an exciting near-term catalyst. In summary, as we have previously stated, we are focused on maximizing the value of our Gabon resources as well as expanding into new development opportunities across Africa.”Transaction TermsThe Company has agreed to total cash consideration for both properties of approximately $44 million. The effective date of the transaction is July 1, 2020, and the Company anticipates that the transaction will close within 90 days. Cash paid at closing is expected to be less than $44 million as the amount paid will be subject to certain customary financial adjustments, including adjustments to account for estimated positive net cash flows attributable to the period from the effective date until the closing date. VAALCO plans to fund the net cost of the transaction with cash on hand and cash from operations. The SPA contains customary closing conditions including receipt of all necessary written consents, approvals or waivers, and provides for certain contingent payments of up to $6 million, as discussed below. Reserves, production and financial results for the interests being acquired will be included in VAALCO’s results for periods after the closing date of the transaction.Impact of AcquisitionThe metrics provided in the table below reflect Company management’s estimate of the positive impact of the acquisition on VAALCO’s key metrics.           As of December 31, 2019  VAALCO Sasol Interest Combined           SEC Crude Oil Proved Reserves (MBbls)4,996  4,437  9,433            2P CPR Crude Oil Proved + Probable Reserves (MBbls)9,224  8,242  17,466                       Nine Months Ended September 30, 2020  VAALCO Sasol Interest Combined           NRI SALES DATA         Crude oil (MBbls)1,337  1,195  2,532  NRI PRODUCTION DATA         Crude oil (MBbls)1,347  1,204  2,551  Average daily production volumes (BOPD)4,918  4,394  9,312            Block DE-8 Offshore GabonUnder the terms of the SPA, VAALCO is acquiring a 40% non-operated participating interest in Block DE-8 offshore Gabon, with Perenco, the operator, holding the remaining 60%. Block DE-8 is in shallow waters and encompasses multiple producing fields that are not part of the transaction and are carved out of the contract area that VAALCO is acquiring. The SPA includes an interest in the Akoum-B discovery on Block DE-8 that was drilled in 2003 and has a potential appraisal well planned for 2021. If the appraisal well is successful, it could be tied back through a subsea completion to a Perenco-operated existing platform on Block DE-8.Contingent PaymentsUnder the terms of the SPA, a contingent payment of $5 million will be payable to Sasol by VAALCO if Brent oil pricing averages greater than $60 per barrel for 90 consecutive days during the period from July 1, 2020 to June 30, 2022. There is an additional contingent payment of $1 million if the DE-8 appraisal well is successful.AdvisorsEvercore Group L.L.C. served as financial advisors to VAALCO while Ashurst LLP served as legal advisors.Conference CallThe Company will hold a conference call to discuss its acquisition of additional interest at Etame on November 18, 2020, 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 (877) 270-2148. Parties in the United Kingdom may participate toll-free by dialing 08082389064 and other international parties may dial (412) 902-6510. Participants should request to be joined to the “VAALCO Energy Conference Call.” This call will also be webcast on VAALCO’s website at www.vaalco.com. An archived audio replay will be available on VAALCO’s website.About VAALCOVAALCO, founded in 1985, is a Houston, USA based, independent energy company with production, development and exploration assets in the West African region.The Company is an established operator within the region, holding a 33.6% participating interest in the Etame Marin block, located offshore Gabon, which to date has produced over 118 million barrels of crude oil and of which the Company is the operator.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 / Kelsey Traynor / James HusbandVAALCO@buchanan.uk.com Forward Looking Statements This document includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this document that address activities, events, plans, expectations, objectives or developments that VAALCO expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements may include statements related to the pending transaction, the impact of the COVID-19 pandemic, including the recent sharp decline in the global demand for and resulting global oversupply of crude oil and the resulting steep decline in oil prices, production quotas imposed by Gabon, disruptions in global supply chains, quarantines of our workforce or workforce reductions and other matters related to the pandemic, well results, wells anticipated to be drilled and placed on production, future levels of drilling and operational activity and associated expectations, the implementation of the Company’s business plans and strategy, prospect evaluations, prospective resources and reserve growth, its activities in Equatorial Guinea, expected sources of and potential difficulties in obtaining future capital funding and future liquidity, its ability to restore production in non-producing wells, future operating losses, future changes in crude oil and natural gas prices, future strategic alternatives, future acquisitions, capital expenditures, future drilling plans, acquisition and interpretation of seismic data and costs thereof, negotiations with governments and third parties, timing of the settlement of Gabon income taxes, and expectations regarding processing facilities, production, sales and financial projections. These statements are based on assumptions made by VAALCO based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond VAALCO’s control. These risks include, but are not limited to, crude oil and natural gas price volatility, the failure of the transaction to close, the impact of production quotas imposed by Gabon in response to production cuts agreed to as a member of OPEC, inflation, general economic conditions, the outbreak of COVID-19, the Company’s success in discovering, developing and producing reserves, production and sales differences due to timing of liftings, decisions by future lenders, the risks associated with liquidity, lack of availability of goods, services and capital, environmental risks, drilling risks, foreign regulatory and operational risks, and regulatory changes.Investors are cautioned that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. VAALCO disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.Inside InformationThis announcement contains inside information as defined in Regulation (EU) No. 596/2014 on market abuse (“MAR”) and is made in accordance with the Company’s obligations under article 17 of MAR.

  • VAALCO Energy, Inc. Announces Third Quarter 2020 Results
    GlobeNewswire

    VAALCO Energy, Inc. Announces Third Quarter 2020 Results

    REPORTS NET INCOME OF $7.6 MILLION, OR $0.13 PER DILUTED SHAREHOUSTON, Nov. 05, 2020 (GLOBE NEWSWIRE) -- VAALCO Energy, Inc. (NYSE: EGY, LSE: EGY) today reported operational and financial results for the third quarter of 2020.Highlights and Recent Key Items: * Achieved strong production performance of 4,405 net revenue interest (“NRI”)(1) barrels of crude oil per day (“BOPD”), or 5,064 working interest (“WI”)(2) BOPD in Q3 2020, despite planned full field maintenance shutdown in September and production curtailment due to an OPEC+ mandate for Gabon; * Successfully resumed production following completion of the planned full field annual maintenance shutdown at Etame in September on schedule and on budget; * Sold 412,000 barrels of oil in Q3 2020, compared to 279,000 barrels in Q3 2019, due to the continued strong production performance from the successful 2019/2020 drilling campaign; * Decreased per-unit production expense, excluding workovers, by 35% in Q3 2020 vs Q3 2019 as a result of higher sales volumes and lower operating costs due to proactive cost reductions; * Reported Q3 net income of $7.6 million ($0.13 per diluted share), Adjusted Net Income(3) of $2.3 million ($0.04 per diluted share) and generated Adjusted EBITDAX(3) of $7.0 million; * Maintained strong balance sheet with no debt, a cash balance of $42.0 million, including $6.0 million in joint venture owner advances, working capital of $16.6 million and Adjusted Working Capital(3) of $29.3 million as of September 30, 2020; and * Announced acquisition of new proprietary three-dimensional (“3-D”) seismic data over the entire Etame Marin block which will be used to optimize and de-risk future drilling locations as well as identify new potential locations. (1) All NRI production rates and volumes are VAALCO’s 31.1% WI less 13% royalty volumes. (2) All WI production rates and volumes are VAALCO’s 31.1% WI. (3) Adjusted EBITDAX, Adjusted Net Income and Adjusted Working Capital are Non-GAAP financial measures and are described and reconciled to the closest GAAP measure in the attached table under “Non-GAAP Financial Measures.”Cary Bounds, VAALCO’s Chief Executive Officer commented: “We continued to perform well operationally in the third quarter with net production of 4,405 BOPD, despite our annual planned full field maintenance shutdown at Etame and production curtailment due to an OPEC+ mandate for Gabon. From a financial perspective, we reported net income of $7.6 million in the quarter, even with the impact of those production curtailments and low oil prices, and generated $7.0 million of Adjusted EBITDAX, highlighting the economic robustness of the Etame field. Our cash balance remained strong at $42.0 million, which includes $6.0 million in joint venture owner advances. Additionally, given that the vast majority of our operating expenses are fixed, our higher sales volumes and proactive measures to manage costs have helped to drive down our unit production costs and enhanced our profit margins year-over-year.”“We have maintained our focus on operational excellence and execution, which continues to allow us to maintain a healthy cash position, and cost discipline remains a core priority for the Company as we seek to maximize our profitability. We completed a highly successful drilling program earlier this year that demonstrated the quality of the Etame asset that we have been operating and growing since 1995. Our recent announcement that we are acquiring new proprietary 3-D seismic data over the entire Etame Marin block underscores the confidence we have in the long-term potential at Etame. We believe that we are well positioned to deliver both near-term and long-term profitable growth, as we continue to execute on our strategic objectives.”Operational Update        GabonIn connection with planning for future drilling programs at the Etame Marin block offshore Gabon, VAALCO recently agreed to acquire new 3-D seismic data. VAALCO expects the seismic survey to begin and conclude in the fourth quarter of 2020, with processing to be fully completed by the fourth quarter of 2021. The Company expects that the full field 3-D survey will optimize future drilling locations, provide better imaging of existing satellite and infill locations, as well as identify additional upside opportunities. VAALCO projects the gross cost of both the acquisition and processing of the seismic survey to be between $12 million and $15 million, or $4 million to $5 million net to VAALCO. The Company plans to fund the costs with cash on hand and through cash from operations.Equatorial GuineaVAALCO has a 43% WI in Block P offshore Equatorial Guinea. VAALCO is continuing commercial discussions with Levene HydroCarbon Limited (“Levene”) regarding VAALCO’s potential assignment of a portion of the Block P interest to Levene in exchange for Levene covering all or substantially all of VAALCO’s cost to drill an exploratory well on Block P. Levene and VAALCO have not executed any binding agreements, and there can be no certainty a transaction will be completed or that the EG MMH will approve the assignment. As of September 30, 2020, the Company had $10.0 million recorded for the book value of the undeveloped leasehold costs associated with the Block P license.Financial Update – Third Quarter of 2020Net income of $7.6 million ($0.13 per diluted share) for the third quarter of 2020 compared favorably with a net loss of $3.9 million ($0.07 per diluted share) in the same period in 2019. The third quarter of 2020 reflected an income tax benefit of $2.8 million while the net loss in the third quarter of 2019 was impacted by income tax expense of $7.7 million. Lower realized crude oil prices of $43.63 per barrel for the third quarter of 2020 compared to $61.26 per barrel in the third quarter of 2019 were more than offset by higher sales volumes year-over-year as a result of additional production associated with the three successful wells from the 2019/2020 drilling program. Net income of the third quarter of 2020 additionally benefitted from lower operating costs and expenses compared with the third quarter of 2019.With respect to the second quarter of 2020, net income was $0.6 million ($0.01 per diluted share) which reflected the impact of lower realized crude oil prices of $28.31 per barrel. The impact of lower prices was partially offset by higher sales volumes for the second quarter of 2020 as a result of four liftings. The second quarter also included a loss on derivatives of $0.8 million ($0.01 per diluted share) and an income tax benefit of $2.2 million.Adjusted Net Income for the third quarter of 2020 increased to $2.3 million ($0.04 per diluted share) from an Adjusted Net Loss of $0.6 million ($0.01 per diluted share) for the third quarter of 2019, primarily as a result of lower general and administrative expenses. The lower Adjusted Net Income for the third quarter of 2020 as compared to $5.3 million ($0.09 per diluted share) of Adjusted Net Income in the second quarter of 2020 was primarily the result of realized gains on derivatives of $6.5 million ($0.11 per diluted share) in the second quarter of 2020.Adjusted EBITDAX totaled $7.0 million in the third quarter of 2020 compared with $4.5 million in the same period of 2019. In the second quarter of 2020, Adjusted EBITDAX was $10.1 million. Adjusted EBITDAX for the third quarter of 2020 was higher than the same period in the prior year primarily due to increased sales volumes associated with new production from the three wells completed as part of the 2019/2020 drilling campaign and lower operating costs and expenses, partially offset by lower realized prices. Adjusted EBITDAX for the third quarter of 2020 was lower than the second quarter of 2020 primarily due to realized gains on derivatives of $6.5 million in the second quarter of 2020.                   Revenue and Sales                    Q3 2020 Q3 2019 % Change Q3 2020 vs. Q3 2019 Q2 2020 % Change Q3 2020 vs. Q2 2020 Production (NRI BOPD)  4,405  3,081  43 %  5,410  (19)% Sales (NRI BO)  412,000  279,000  48 %  631,000  (35)% Realized crude oil price ($/BO) $43.63 $61.26  (29)% $28.31  54 % Total crude oil sales ($MM) $18.3 $17.6  4 % $18.0  2 % VAALCO had three liftings in the third quarter of 2020, which resulted in total sales volumes of 412,000 barrels compared with 279,000 barrels in the same period of 2019. The increase in volumes in the third quarter of 2020 is due to the higher production rate resulting from the new wells. Third quarter of 2020 realized pricing fell 29% from the third quarter of 2019 due to sharply lower prices received due to the COVID-19 pandemic and OPEC-related pricing issues.                   Costs and Expenses                    Q3 2020 Q3 2019 % Change Q3 2020 vs. Q3 2019 Q2 2020 % Change Q3 2020 vs. Q2 2020 Production expense, excluding workovers ($MM) $9.1  $9.5  (4)% $12.2   (25)% Production expense, excluding workovers ($/BO) $22.21  $34.01  (35)% $19.31   15 % Workover expense ($MM) $(0.2) $0.3  (167)% $(0.1)  100 % Depreciation, depletion and amortization ($MM) $2.2  $1.5  47 % $2.8   (21)% Depreciation, depletion and amortization ($/BO) $5.37  $5.41  (1)% $4.44   21 % General and administrative expense, excluding non-cash compensation ($MM) $2.4  $3.6  (33)% $2.3   4 % General and administrative expense, excluding non-cash compensation ($/BO) $5.89  $12.86  (54)% $3.64   62 % Stock-based compensation expense (benefit) ($MM) $(0.2) $1.2  (122)% $0.7   (134)% Current income tax expense (benefit) ($MM) $2.5  $2.6  (4)% $1.1   127 % Deferred income tax expense (benefit) ($MM) $(5.3) $5.1  (204)% $(3.4)  56 % Total production expense, excluding workovers, decreased compared to the same period in 2019 primarily due to proactive operating cost reductions and was lower compared to the second quarter 2020 due to lower sales volumes. The per-unit production expense, excluding workovers, decreased significantly in the third quarter of 2020 as compared to the third quarter of 2019 as a result of higher sales volumes and lower operating costs due to proactive cost reductions. Production expense for the third quarter of 2020 included approximately $0.4 million in additional costs related to proactive employee-related measures taken in response to the pandemic.    Depreciation, depletion and amortization (“DD&A”) expense in the third quarter of 2020 on a per NRI barrel of crude oil sales basis was substantially unchanged from the comparable prior year quarter. The per-unit DD&A rate in the third quarter of 2020 was higher than the rate in the second quarter of 2020 due to higher volumes attributable to fields with higher depletable costs.General and administrative (“G&A”) expense, excluding non-cash stock-based compensation, in the third quarter of 2020 was lower than in the third quarter of 2019 as a result of lower professional fees, legal expenses, and accounting and audit fees, but was similar to G&A expense, excluding non-cash stock-based compensation in the second quarter of 2020. The third quarter of 2019 included one-time expenses associated with VAALCO’s dual listing on the London Stock Exchange. Non-cash stock-based compensation expense (benefit) was impacted by the change in the SARs liability as a result of changes in the Company’s stock price during the quarter.Income tax was a benefit for the three months ended September 30, 2020 of $2.8 million, and included a $5.3 million deferred tax benefit to decrease the valuation allowances on U.S. and Gabonese deferred tax assets.Income tax expense for the three months ended September 30, 2019 was $7.7 million, and included a $4.8 million charge to increase the valuation allowances on U.S. deferred tax assets due to a decrease in future estimated taxable earnings primarily as result of lower crude oil prices.   Income tax was a benefit for the three months ended June 30, 2020 of $2.2 million, and included a $0.9 million favorable crude oil price adjustment as a result of the change in value of the government’s allocation between the time it was produced and the time it was taken in-kind as well as a $4.1 million benefit to decrease the valuation allowances on U.S. and Gabonese deferred tax assets.Response to COVID-19 Pandemic and Current Pricing EnvironmentVAALCO remains fully committed to the health and safety of all its employees and contractors. In response to the COVID-19 pandemic and the current pricing environment, VAALCO has taken the following measures: * Put into place social distancing measures at our work sites; * Actively screened and monitored employees and contractors that come onto the Company’s Gabon facilities including testing and quarantine periods with onsite medical supervision;  * Engaged in regular Company-wide COVID-19 updates to keep employees informed of key developments; * Implemented cost cutting measures with vendors; * Implemented sharing certain costs, such as support vessels, helicopters, and personnel with other operators in the region; * Temporarily reduced director, executive and certain non-executive employee compensation; and * Ceased or deferred certain discretionary capital spending. VAALCO expects to continue to take proactive steps to manage any disruption in its business caused by COVID-19 and to protect the health and safety of its employees. As of November 5, 2020, VAALCO has experienced no material impact on its Gabon operations directly associated with COVID-19; however, the Company has incurred higher costs related to proactive measures taken in response to the pandemic. These costs were approximately $0.4 million during the third quarter of 2020 and were primarily related to additional personnel-related costs to support enhanced health and safety measures. The situation surrounding COVID-19 remains fluid and unpredictable, and VAALCO is actively managing its response and assessing potential impacts to its financial position and operating results, as well as any adverse developments that could impact the Company’s business.Capital Investments/Balance SheetAs discussed above, in connection with planning for future drilling programs at the Etame Marin block offshore Gabon, VAALCO recently agreed to acquire new 3-D seismic data in the fourth quarter of 2020. VAALCO projects the gross cost of both the acquisition and processing of the seismic survey to be between $12 million and $15 million, or $4 million to $5 million net to VAALCO. The Company expects to incur $3.0 million to $3.5 million net to VAALCO in the fourth quarter of 2020 and the balance in 2021. The Company plans to fund the costs with cash on hand and through cash from operations.At the end of the third quarter of 2020, VAALCO had an unrestricted cash balance of $42.0 million. The unrestricted cash balance includes $6.0 million of cash attributable to non-operating joint venture owner advances. Working capital at September 30, 2020 was $16.6 million compared with $11.7 million at June 30, 2020, while Adjusted Working Capital at September 30, 2020 totaled $29.3 million, compared with $24.1 million at June 30, 2020.The Company does not have any derivatives currently and continues to evaluate adding derivatives in the future, in line with its strategic objectives.2020 Guidance For the fourth quarter 2020 forecasted NRI production and sales are expected to be between 4,600 and 5,000 BOPD. Production and sales NRI volumes for full year 2020 are expected to be at an average of 4,800 to 4,900 BOPD. The Company’s production expense guidance (excluding workovers) for full year 2020 is $37 to $38 million or $20.50 to $21.50 per NRI barrel of crude oil sales, with production expense for the fourth quarter of 2020 projected to be between $9 and $10 million or $19.00 to $23.00 per NRI barrel of crude oil sales. The Company forecasts between $10 and $11 million in cash G&A expense for full year 2020.Conference CallAs previously announced, the Company will hold a conference call to discuss its third quarter financial and operating results November 6, 2020, 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 (877) 270-2148. Parties in the United Kingdom may participate toll-free by dialing 08082389064 and other international parties may dial (412) 902-6510. Participants should request to be joined to the “VAALCO Energy Third Quarter 2020 Conference Call.” This call will also be webcast on VAALCO’s website at www.vaalco.com. An archived audio replay will be available on VAALCO’s website.About VAALCOVAALCO, founded in 1985, is a Houston, USA based, independent energy company with production, development and exploration assets in the West African region.The Company is an established operator within the region, holding a 31.1% working interest in the Etame Marin Block, located offshore Gabon, which to date has produced over 118 million barrels of crude oil and of which the Company is the operator.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 / Kelsey Traynor / James HusbandVAALCO@buchanan.uk.com Forward Looking Statements This document includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this document that address activities, events, plans, expectations, objectives or developments that VAALCO expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements may include statements related to the impact of the COVID-19 pandemic, including the recent sharp decline in the global demand for and resulting global oversupply of crude oil and the resulting steep decline in oil prices, production quotas imposed by Gabon, disruptions in global supply chains, quarantines of our workforce or workforce reductions and other matters related to the pandemic, well results, wells anticipated to be drilled and placed on production, future levels of drilling and operational activity and associated expectations, the implementation of the Company’s business plans and strategy, prospect evaluations, prospective resources and reserve growth, its activities in Equatorial Guinea, expected sources of and potential difficulties in obtaining future capital funding and future liquidity, its ability to restore production in non-producing wells, future operating losses, future changes in crude oil and natural gas prices, future strategic alternatives, future acquisitions, capital expenditures, future drilling plans, acquisition and interpretation of seismic data and costs thereof, negotiations with governments and third parties, timing of the settlement of Gabon income taxes, and expectations regarding processing facilities, production, sales and financial projections. These statements are based on assumptions made by VAALCO based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond VAALCO’s control. These risks include, but are not limited to, crude oil and natural gas price volatility, the impact of production quotas imposed by Gabon in response to production cuts agreed to as a member of OPEC, inflation, general economic conditions, the outbreak of COVID-19, the Company’s success in discovering, developing and producing reserves, production and sales differences due to timing of liftings, decisions by future lenders, the risks associated with liquidity, lack of availability of goods, services and capital, environmental risks, drilling risks, foreign regulatory and operational risks, and regulatory changes.Investors are cautioned that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. VAALCO disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.Inside InformationThis announcement contains inside information as defined in Regulation (EU) No. 596/2014 on market abuse (“MAR”) and is made in accordance with the Company’s obligations under article 17 of MAR. VAALCO ENERGY, INC AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited)              September 30, 2020 December 31, 2019 ASSETS (in thousands) Current assets:       Cash and cash equivalents $41,986  $45,917  Restricted cash  82   911  Receivables:       Trade  6,080   14,335  Accounts with joint venture owners, net of allowance of $0.0 million and $0.5 million, respectively  —   2,714  Foreign income taxes receivable  1,124   —  Other  81   1,517  Crude oil inventory  781   1,072  Prepayments and other  4,264   3,292  Total current assets  54,398   69,758          Crude oil and natural gas properties, equipment and other - successful efforts method, net  38,845   68,258  Other noncurrent assets:       Restricted cash  925   925  Value added tax and other receivables, net of allowance of $2.1 million and $1.0 million, respectively  3,684   3,683  Right of use operating lease assets  25,700   33,383  Deferred tax assets  —   24,159  Abandonment funding  11,885   11,371  Total assets $135,437  $211,537  LIABILITIES AND SHAREHOLDERS' EQUITY       Current liabilities:       Accounts payable $4,702  $15,897  Accounts with joint venture owners  5,984   —  Accrued liabilities and other  14,426   29,773  Operating lease liabilities - current portion  12,696   11,990  Foreign income taxes payable  —   5,740  Current liabilities - discontinued operations  15   350  Total current liabilities  37,823   63,750  Asset retirement obligations  17,105   15,844  Operating lease liabilities - net of current portion  12,993   21,371  Deferred tax liabilities  2,802   —  Other long-term liabilities  43   852  Total liabilities  70,766   101,817  Commitments and contingencies       Shareholders’ equity:       Preferred stock, $25 par value; 500,000 shares authorized, none issued  —   —  Common stock, $0.10 par value; 100,000,000 shares authorized, 67,819,242 and 67,673,787 shares issued, 57,456,139 and 58,024,571 shares outstanding, respectively  6,782   6,767  Additional paid-in capital  74,061   73,549  Less treasury stock, 10,363,103 and 9,649,216 shares, respectively, at cost  (42,419)  (41,429) Retained earnings  26,247   70,833  Total shareholders' equity  64,671   109,720  Total liabilities and shareholders' equity $135,437  $211,537  VAALCO ENERGY, INC AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)                   Three Months Ended Nine Months Ended September 30,   September 30, 2020 September 30, 2019 June 30, 2020 2020  2019   (in thousands except per share amounts) Revenues:                Crude oil and natural gas sales $18,256  $17,603  $17,974  $54,619  $62,598  Operating costs and expenses:                Production expense  8,984   9,836   12,126   30,859   27,874  Exploration expense  16   —   —   16   —  Depreciation, depletion and amortization  2,212   1,509   2,801   8,116   4,971  Impairment of proved crude oil and natural gas properties  —   —   —   30,625   —  General and administrative expense  2,178   4,738   3,019   5,951   11,905  Bad debt expense and other  151   54   179   1,140   30  Total operating costs and expenses  13,541   16,137   18,125   76,707   44,780  Other operating income (expense), net  (37)  35   (815)  (883)  (4,401) Operating income (loss)  4,678   1,501   (966)  (22,971)  13,417  Other income (expense):                Derivative instruments gain (loss), net  —   2,267   (756)  6,583   2,266  Interest income, net  23   193   11   150   581  Other, net  147   (138)  47   163   (521) Total other income, net  170   2,322   (698)  6,896   2,326  Income (loss) from continuing operations before income taxes  4,848   3,823   (1,664)  (16,075)  15,743  Income tax expense (benefit)  (2,759)  7,681   (2,249)  28,470   19,642  Income (loss) from continuing operations  7,607   (3,858)  585   (44,545)  (3,899) Income (loss) from discontinued operations, net of tax  11   (61)  11   (41)  5,448  Net income (loss) $7,618  $(3,919) $596  $(44,586) $1,549                   Basic net income (loss) per share:                Income (loss) from continuing operations $0.13  $(0.07) $0.01  $(0.77) $(0.07) Income (loss) from discontinued operations, net of tax  0.00   0.00   0.00   0.00   0.09  Net income (loss) per share $0.13  $(0.07) $0.01  $(0.77) $0.02  Basic weighted average shares outstanding  57,456   58,953   57,456   57,628   59,457  Diluted net income (loss) per share:                Income (loss) from continuing operations $0.13  $(0.07) $0.01  $(0.77) $(0.07) Income (loss) from discontinued operations, net of tax  0.00   0.00   0.00   0.00   0.09  Net income (loss) per share $0.13  $(0.07) $0.01  $(0.77) $0.02  Diluted weighted average shares outstanding  57,741   58,953   57,594   57,628   59,457  VAALCO ENERGY, INC AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited)          Nine Months Ended September 30,   2020  2019   (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES:       Net income (loss) $(44,586) $1,549  Adjustments to reconcile net income to net cash provided by (used in) operating activities:       (Income) loss from discontinued operations  41   (5,448) Depreciation, depletion and amortization  8,116   4,971  Impairment of proved crude oil and natural gas properties  30,625   —  Other amortization  181   181  Deferred taxes  26,972   12,725  Unrealized foreign exchange gain  (60)  (46) Stock-based compensation  (2,097)  2,770  Cash settlements paid on exercised stock appreciation rights  —   (261) Derivatives instruments gain  (6,583)  (2,266) Cash settlements received on matured derivative contracts, net  7,216   2,056  Bad debt expense and other  1,140   30  Other operating loss, net  83   37  Operational expenses associated with equipment and other  1,418   (62) Change in operating assets and liabilities:       Trade receivables  8,255   4,404  Accounts with joint venture owners  8,642   12,354  Other receivables  1,333   219  Crude oil inventory  291   10  Prepayments and other  (1,153)  (1,979) Value added tax and other receivables  (919)  664  Accounts payable  (9,318)  (2,154) Foreign income taxes receivable/payable  (6,875)  (122) Accrued liabilities and other  (3,285)  4,092  Net cash provided by continuing operating activities  19,437   33,724  Net cash used in discontinued operating activities  (376)  (4,673) Net cash provided by operating activities  19,061   29,051  CASH FLOWS FROM INVESTING ACTIVITIES:     Property and equipment expenditures  (22,317)  (3,382) Net cash used in continuing investing activities  (22,317)  (3,382) Net cash used in discontinued investing activities  —   —  Net cash used in investing activities  (22,317)  (3,382) CASH FLOWS FROM FINANCING ACTIVITIES:     Proceeds from the issuances of common stock  —   133  Treasury shares  (990)  (2,425) Net cash used in continuing financing activities  (990)  (2,292) Net cash used in discontinued financing activities  —   —  Net cash used in financing activities  (990)  (2,292) NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH  (4,246)  23,377  CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD  59,124   46,655  CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $54,878  $70,032  VAALCO ENERGY, INC AND SUBSIDIARIES Selected Financial and Operating Statistics (Unaudited)                   Three Months Ended Nine Months Ended September 30,   September 30, 2020 September 30, 2019 June 30, 2020 2020 2019 NRI SALES DATA                Crude oil (MBbls)  412  279  631  1,337  933 NRI PRODUCTION DATA                Crude oil (MBbls)  405  283  492  1,347  932 Average daily production volumes (BOPD)  4,405  3,081  5,410  4,918  3,412 REALIZED DERIVATIVE INSTRUMENTS GAIN (LOSS)                Realized derivative instruments gain (loss), net, in thousands $0.00 $493 $6,498 $7,216 $2,056 Realized derivative instruments gain (loss), net (Per Bbls)  0.00  1.77  10.30  5.40  2.20                  AVERAGE SALES PRICES:                Crude oil (Per Bbls) $43.63 $61.26 $28.31 $39.90 $65.00 COSTS AND EXPENSES (Per Bbl of sales):                Production expense $21.81 $35.25 $19.22 $23.08 $29.88 Production expense, excluding workovers*  22.21  34.01  19.31  21.10  29.36 Depreciation, depletion and amortization  5.37  5.41  4.44  6.07  5.33 General and administrative expense**  5.29  16.98  4.78  4.45  12.76 Property and equipment expenditures, cash basis (in thousands) $2,220 $2,219 $8,117 $22,317 $3,382 *Workover costs excluded from the three months ended September 30, 2020 and 2019 and June 30, 2020 are $(0.2) million, $0.3 million and $(0.1) million, respectively. **General and administrative expenses include $(0.60), $4.12 and $1.14 per barrel of oil of sales of stock-based compensation expense in the three months ended September 30, 2020, and 2019 and June 30, 2020, respectively.NON-GAAP FINANCIAL MEASURESAdjusted 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, non-cash and other items including stock compensation expense and unrealized commodity derivative loss.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, deferred income tax expense, unrealized commodity derivative loss and non-cash and other items.Management uses Adjusted Working Capital as a measurement tool to assess the working capital position of the Company’s continuing operations excluding leasing obligations because it eliminates the impact of discontinued operations as well as the impact of lease liabilities. Under the lease accounting standards, lease liabilities related to assets used in joint operations include both the Company’s share of expenditures as well as the share of lease expenditures which its non-operator joint venture owners’ will be obligated to pay under joint operating agreements. Adjusted Working Capital is a non-GAAP financial measure and as used herein represents working capital excluding working capital attributable to discontinued operations and current liabilities associated with lease obligations.Adjusted EBITDAX and Adjusted Net Income have significant limitations, including that they do not reflect the Company’s cash requirements for capital expenditures, contractual commitments, working capital or debt service. Adjusted EBITDAX and Adjusted Net Income 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 and Adjusted Net Income may not be comparable to similarly titled measures used by other companies.The tables below reconcile the most directly comparable GAAP financial measures to Adjusted Net Income, Adjusted EBITDAX and Adjusted Working Capital.VAALCO ENERGY, INC AND SUBSIDIARIES Reconciliations of Non-GAAP Financial Measures (Unaudited) (in thousands)                   Three Months Ended Nine Months Ended September 30, Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) September 30, 2020 September 30, 2019 June 30, 2020 2020  2019 Net income (loss) $7,618  $(3,919) $596  $(44,586) $1,549  Adjustment for discrete items:                Discontinued operations, net of tax  (11)  61   (11)  41   (5,448) Impairment of proved crude oil and natural gas properties  —   —   —   30,625   —  Unrealized derivative instruments (gain) loss  —   (1,774)  7,254   633   (210) Deferred income tax expense (benefit)  (5,299)  5,058   (3,367)  26,972   12,725  Other operating expense, net  37   (35)  815   883   4,401  Adjusted Net Income (Loss) $2,345  $(609) $5,287  $14,568  $13,017                   Diluted adjusted net income (loss) per share $0.04  $(0.01) $0.09  $0.25  $0.22  Diluted weighted average shares outstanding (1)  57,741   58,953   57,594   57,628   59,457  (1) No adjustments to weighted average shares outstanding                                   Three Months Ended Nine Months Ended September 30, Reconciliation of Net Income (Loss) to Adjusted EBITDAX September 30, 2020 September 30, 2019 June 30, 2020 2020  2019 Net income (loss) $7,618  $(3,919) $596  $(44,586) $1,549  Add back:                Impact of discontinued operations  (11)  61   (11)  41   (5,448) Interest income, net  (23)  (193)  (11)  (150)  (581) Income tax expense (benefit)  (2,759)  7,681   (2,249)  28,470   19,642  Depreciation, depletion and amortization  2,212   1,509   2,801   8,116   4,971  Exploration expense  16   —   —   16   —  Impairment of proved crude oil and natural gas properties  —   —   —   30,625   —  Non-cash or unusual items:                Stock-based compensation  (248)  1,150   720   (2,097)  2,770  Unrealized derivative instruments (gain) loss  —   (1,774)  7,254   633   (210) Other operating expense, net  37   (35)  815   883   4,401  Bad debt expense and other  151   54   179   1,140   30  Adjusted EBITDAX $6,993  $4,534  $10,094  $23,091  $27,124  VAALCO ENERGY, INC AND SUBSIDIARIES Reconciliations of Non-GAAP Financial Measures (Unaudited) (in thousands)           Reconciliation of Working Capital to Adjusted Working Capital September 30, 2020 June 30, 2020 December 31, 2019 Current assets $ 54,398  $62,234  $69,758  Current liabilities   (37,823)  (50,498)  (63,750) Working capital   16,575   11,736   6,008  Add: operating lease liabilities - current portion   12,696   12,274   11,990  Add: current liabilities - discontinued operations   15   48   350  Adjusted Working Capital $ 29,286  $24,058  $18,348

  • VAALCO Schedules Third Quarter 2020 Earnings Release and Conference Call
    GlobeNewswire

    VAALCO Schedules Third Quarter 2020 Earnings Release and Conference Call

    HOUSTON, Oct. 30, 2020 (GLOBE NEWSWIRE) -- VAALCO Energy, Inc. (NYSE: EGY; LSE: EGY) today announced the timing of its third quarter 2020 earnings release and conference call. The Company will issue its third quarter 2020 earnings release on Thursday, November 5 after the close of trading on the New York Stock Exchange and host a conference call to discuss its financial and operational results on Friday morning, November 6 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time and 3:00 p.m. London Time).Interested parties in the United States may participate toll-free by dialing (877) 270-2148. Interested parties in the United Kingdom may participate toll-free by dialing 08082389064. Other international parties may dial (412) 902-6510. Participants should ask to be joined to the “VAALCO Energy Third Quarter 2020 Conference Call.” This call will also be webcast on VAALCO’s website at www.vaalco.com. An audio replay will be available on the Company’s website following the call.About VAALCOVAALCO, founded in 1985, is a Houston, USA based, independent energy company with production, development and exploration assets in the West African region.The Company is an established operator within the region, holding a 31.1% working interest in the Etame Marin Block, located offshore Gabon, which to date has produced over 117 million barrels of crude oil and of which the Company is the operator.For Further InformationVAALCO 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 / Kelsey Traynor / James HusbandVAALCO@buchanan.uk.com