REG - Vaalco Energy Inc - Q4 & FY 2024 RESULTS AND YEAR-END 2024 RESERVES
14/03/2025 07:00
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RNS Number : 7161A Vaalco Energy Inc 14 March 2025
Exhibit 99.1
VAALCO ENERGY, INC. ANNOUNCES FOURTH QUARTER AND RECORD FULL YEAR 2024
FINANCIAL AND OPERATING RESULTS AND YEAR-END 2024 RESERVES
HOUSTON - March 14, 2025 - 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 2024 and year-end 2024 reserves. The
Company also provided 2025 operational and financial guidance for the first
quarter and full year of 2025.
Fourth Quarter 2024 Highlights:
• Reported net income of $11.7 million ($0.11 per diluted share)
and Adjusted EBITDAX((1)) of $76.2 million;
• Produced 20,775 net revenue interest ("NRI")((2)) barrels of oil
equivalent per day ("BOEPD") or 25,300 Working interest ("WI")((3)) BOEPD,
both at the midpoint of guidance; and
• Sold 20,352 NRI BOEPD in Q4 2024, toward the high end of
guidance.
2024 Full Year Highlights:
• Reported full year ("FY") 2024 net income of $58.5 million
($0.56 per diluted share) and net cash from operating activities of $113.7
million;
• Generated record Adjusted EBITDAX((1)) of $303.0 million in FY
2024;
• Grew production in 2024 by 7% year-over-year to 19,936 NRI((2))
BOEPD, at the midpoint of the Company's increased guidance;
◦ WI((3)) production of 24,738 BOEPD, was also at the midpoint of
Vaalco's increased guidance;
• Sold 19,843 NRI BOEPD, above the midpoint of the Company's
increased guidance;
• Increased year-end 2024 SEC proved reserves by 57% to 45.0
million barrels of oil equivalent ("MMBOE");
• Closed the accretive all cash acquisition of Svenska Petroleum
Exploration AB ("Svenska") for a net purchase price of $40.2 million;
◦ Strategically expanded West African focus area with a sizeable producing
asset that has significant upside potential and future development
opportunities in Cote d'Ivoire, a well-established and investment-friendly
country;
◦ Paid back 1.8x((4)) Vaalco's initial net investment in Côte
d'Ivoire in the eight months since closing and the performance of the asset
has tracked well ahead of the Company's expectations at the time of the
acquisition;
• Completed Production Sharing Contracts ("PSCs") with the
Government of Gabon for the offshore Niosi Marin and Guduma Marin exploration
blocks; and
• Returned $33 million to shareholders in 2024, as well as $83.4
million over the past two years through dividends and buybacks.
2025 Key Items and Outlook:
• Entered into new revolving credit facility with an initial
commitment of $190 million with the ability to grow to $300 million, secured
by Vaalco's Gabon, Egypt and Côte d'Ivoire assets;
• Acquired 70% WI((3)) in and will operate the CI-705 block in
offshore Côte D'Ivoire;
• Planning a 2025 capital budget of $270 to $330 million, including
a drilling campaign at Etame, Côte d'Ivoire Floating Production Storage and
Offloading vessel ("FPSO") Dry Dock Refurbishment Project and continued
drilling in Egypt and Canada; and
• Target to return over $25 million to shareholders through Vaalco's
dividend program.
(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."
(2) All NRI sales and production rates are Vaalco's working interest
volumes less royalty volumes, where applicable.
(3) All WI production rates and volumes are Vaalco's working interest
volumes, where applicable.
(4) Payback of 1.8x is based on unaudited operational cash flow for the
Côte d'Ivoire assets compared to the acquisition price of $40.2 million as of
December 31, 2024.
George Maxwell, Vaalco's Chief Executive Officer commented, "We have delivered
another successful and record setting performance in 2024, where we continued
to execute our strategic vision of maintaining operational excellence and
profitably growing production and reserves. Since 2021, we have transformed
Vaalco through acquisitions and organic growth, expanding our asset base,
nearly tripling production and quadrupling proved reserves. We have
consistently delivered operationally and financially, meeting or exceeding our
guidance and generating record production, sales and Adjusted EBITDAX. We have
accomplished all of this without losing sight of our commitment to sustainably
return value to our shareholders and over the past two years have returned
over $83 million through dividends and buybacks."
"As we look forward to 2025, we are excited about the major projects that we
have planned which are expected to deliver a step-change in organic growth
across our portfolio in the coming years. We have another drilling campaign at
Etame that we believe will expand our production and reserves considerably. In
Côte D'Ivoire, we have commenced the FPSO refurbishment project and are
preparing for a drilling campaign in 2026 to augment the production and
economic life of the Baobab field. In Egypt and Canada, we continue to drill,
recomplete and workover wells adding to our production base and cash flows. We
also have exciting opportunities in offshore Gabon with the Niosi Marin and
Guduma Marin exploration blocks that are located in close proximity to the
prolific producing fields of Etame and Dussafu. We have farmed into and are
operator of the CI-705 block, in offshore Côte D'Ivoire, which is favorably
located in a proven petroleum system, near existing infrastructure with access
to a strong growing domestic market and attractive upside potential. We are
also excited to proceed with our plans to develop, operate, and begin
producing from the discovery in Block P offshore Equatorial Guinea over the
next few years. Financially, we are well-positioned to fund the meaningful
growth and opportunities that we plan to pursue. Last week we announced a new
credit facility that will supplement our internally generated cash flow and
cash balance to assist in funding our robust organic growth projects."
Mr. Maxwell concluded, "I am proud of all that we have accomplished and would
like to thank our hard-working employees for helping us to achieve these
milestones. We believe that we are well positioned to continue to execute
operationally and financially to achieve even greater growth and value for the
rest of the decade. Our focus remains fixed on maximizing value and generating
strong operational cash flow to fund our numerous organic opportunities moving
forward, all while continuing to return capital to our shareholders through
our quarterly dividend policy."
Operational Update
Egypt
Vaalco focused on enhancing production in 2024 through a series of planned
workovers, as well as through interventions using the OGS-10 rig. Two
additional workover recompletions were completed in the fourth quarter of
2024. With the low cost of workovers, the well economics are strongly
positive.
A summary of the Egyptian workover campaign's impact in fourth quarter of 2024
is presented below:
Vaalco Egypt 2024 Workover Wells
Well Workover date Type Completion Zone Perforation Interval (ft) IP-30 Rate (BOPD)(a)
H-28 3-Nov-24 Recompletion Lower Yusr 13.1 50
Hoshia-10 11-Dec-24 Recompletion Lower Rudeis 20.0 300
a) Initial Production; 30 day duration
The fourth quarter 2024 drilling campaign started with Arta-92 and Arta-93, in
December 2024. The Arta-92 well successfully increased production levels,
achieving an initial 30-day average rate of 428 barrels of oil per day
("BOPD") and the Arta-93 has recently come online with an initial 30-day
average rate of 95 BOPD.
Vaalco Egypt Fourth Quarter 2024 New Wells
Well Spud date Initial Completion Date Completion Zone Perforation Interval (ft) IP-30 Rate (BOPD)(a)
Arta-92 12/2/2024 18-Dec-24 Redbed 13.1 428
Arta-93 12/14/2024 28-Dec-24 Redbed 20 95
a) Initial Production; 30 day duration
Canada
The 2024 drilling campaign commenced in January 2024 with all four wells
drilled, completed and brought onto production by Q2 2024. In the fourth
quarter of 2024, the Company drilled a step-out well in its southern acreage.
Vaalco has minimal horizontal subsurface information in this area and the
well, if successful, could prove up additional long lateral wells in the
future with the potential to add proved undeveloped locations. The Company is
continuing to monitor the well's flowback as it has only recently come online
in the first quarter of 2025.
Vaalco Canada Fourth Quarter 2024 Well
Well Spud date Net Pay (ft) Penetrated Pay Zones Completion Zone Perforation Interval (ft) IP-30 Rate (BOEPD)
1-32-28-3W5 10/31/2024 2.0-Mile Hz (4,400m, 14,430ft) Upper Bioturbated Cardium Cardium 104 Stg x 15T Hydraulic Fracture Treatment TBD
Gabon
In October 2022, Vaalco successfully completed its transition to a Floating
Storage and Offloading vessel ("FSO") and related field reconfiguration
processes. This project provides a low cost FSO solution that increases the
storage capacity for the Etame block and improved operational performance. The
Company continues to demonstrate operational excellence, production uptime and
enhancement in 2024 to optimize production until the next drilling campaign.
In December 2024, Vaalco secured a rig for the 2025/26 drilling campaign at
Etame. Vaalco is currently finalizing locations and planning for the next
drilling campaign, which is expected to commence in Q3 2025.
The Company recently completed the documentation with the Government of Gabon
for the offshore Niosi Marin and Guduma Marin exploration blocks. This follows
the technical provisional award announced in October 2021 granting Vaalco a
37.5% non-operating working interest in the Niosi Marin Block (previously
G12-13) and the Guduma Marin Block (previously H12-13) located in shallow
waters offshore Gabon, with BW Energy as operator (also holding a 37.5%
working interest) and Panoro Energy as a non-operating joint owner with a 25%
working interest. The Niosi and Guduma blocks cover areas of 2,974 square
kilometers ("km²) and 1,927 km², respectively. The Niosi Block is located
adjacent to the Etame Marin Permit, where Vaalco operates a successful ongoing
exploration and production campaign. To date, the Etame Marin partners have
produced and discovered over 150 million barrels of oil, with multiple fields
brought online. The area benefits from significant infrastructure investments,
including processing facilities and a new FSO vessel installed by Vaalco in
2022 which is located adjacent to the Niosi Marin blocks. The blocks are
also adjacent to BW Energy and Panoro Energy's Dussafu PSC offshore Southern
Gabon, which is another area of significant successful exploration and
development.
Côte d'Ivoire
During the fourth quarter, three liftings took place. In October 2024,
671,166 gross barrels were lifted or 142,674 net barrels to Vaalco. In
November 2024, 514,559 gross barrels were lifted or 154,249 net barrels to
Vaalco. In December 2024, 286,904 gross barrels were lifted or 81,569 net
barrels to Vaalco.
Work with Modec, the operator of the Baobab FPSO, on the dry docking project
for the FPSO, continued in the fourth quarter of 2024. In alignment with the
project timeline, the FPSO Baobab Ivoirien MV10, ceased hydrocarbon operations
as scheduled on January 31, 2025. The final lifting of crude oil from the
vessel took place in early February 2025. The project team has commenced
mobilization efforts, deploying the necessary workforce support vessels and
equipment to facilitate the safe disconnection of the FPSO. The vessel is
planned to be towed to the shipyard in Dubai for refurbishment upon departure
from the field in March 2025. Significant development drilling is expected to
begin in 2026 after the FPSO returns to service with meaningful additions to
production from the main Baobab field in CI-40.
In March 2025, Vaalco announced that it has farmed into the CI-705 block
offshore Côte d'Ivoire. Vaalco is the operator of the block with a 70%
working interest and a 100% paying interest though a commercial carry
arrangement and is partnering with Ivory Coast Exploration Oil & Gas SAS
and PETROCI. The CI-705 block is located in the prolific Tano basin and is
approximately 70 kilometers ("km") to the west of Vaalco's CI-40 Block, where
the Baobab and Kossipo oil fields are located, and 60 km west of ENI's recent
Calao discovery. Block CI-705 covers approximately 2,300 km(2) and is lightly
explored with three wells drilled to date on the block. The water depth across
the block ranges from zero to 2,500 meters. Vaalco has invested $3 million to
acquire its interest in the new block which it believes has significant
prospectivity.
Year-End 2024 Reserves
Vaalco's SEC proved reserves at December 31, 2024 increased by 57% to 45.0
MMBOE from 28.6 MMBOE at year-end 2023. Year-end 2024 reserves included 20.9
MMBOE in proved developed reserves and 24.1 MMBOE in proved undeveloped
reserves. The Company's SEC reserves were prepared by its third-party
independent reserve engineers, Netherland, Sewell & Associates, Inc.,
("NSAI") that has provided annual independent estimates of Vaalco's year-end
SEC reserves for over 15 years and evaluates Vaalco's Gabonese, Ivorian and
Egyptian reserves while GLJ Ltd. ("GLJ") evaluates Vaalco's Canadian reserves.
In 2024, the Company added 16.5 MMBOE of SEC proved reserves through the
Svenska Acquisition and 7.2 MMBOE due to positive revisions. These additions
were partially offset by 7.3 MMBOE of full year 2024 production. VAALCO had a
reserve replacement ratio of 324% compared to the 7.3 MMBOE of production in
2024.
The standardized measure of Vaalco's SEC proved reserves, utilizing SEC
pricing increased to $379.4 million at December 31, 2024 from $341.9 million
at December 31, 2023. This was primarily driven by the additions of reserves
from the Svenska acquisition, offset by a decrease in year over year SEC
prices which were 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 on March 17, 2025.
MMBoe
Proved SEC Reserves at December 31, 2023 28.6
2024 Production (7.3)
Revisions of Previous Estimates 7.2
Purchase of reserves 16.5
Proved SEC Reserves at December 31, 2024 45.0
At year-end 2024, NSAI and GLJ 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, 2024 using
VAALCO's management assumptions for future commodity pricing and costs shown
below under "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 2024 2P WI CPR estimate of reserves is 96.1
MMBOE to VAALCO's WI, an increase of 24% from 77.3 MMBOE at December 31,
2023. The present value discounted at 10% ("PV-10") of VAALCO's 2P WI CPR
reserves at year-end 2024, utilizing management timing assumptions and
escalated pricing and cost assumptions, is $686.6 million, up 9% from $630.9
million at December 31, 2023. The PV-10 increase is due to additional
reserves from the Svenska acquisition, offset by a decrease due to pricing,
natural decline in reserves and cost inflation.
See "PV-10 Value and Probable Reserves" and "WI CPR Reserves" for additional
information related to 2P WI CPR reserves and 2P PV-10.
Financial Update - Fourth Quarter of 2024
Vaalco reported net income of $11.7 million ($0.11 per diluted share) for the
fourth quarter of 2024, which was up 6% compared with net income of $11.0
million ($0.10 per diluted share) in the third quarter of 2024 and down
compared to $44.0 million ($0.41 per diluted share) in the fourth quarter of
2023. The increase in earnings compared with the third quarter of 2024 was
driven by lower production expenses, lower depreciation, depletion and
amortization and significantly lower income tax expense, partly offset by
lower sales volume in Q4 2024 of 1,872,000 BOE compared to a sales volume of
2,134,000 BOE in Q3 2024.
Adjusted EBITDAX totaled $76.2 million in the fourth quarter of 2024, an 18%
decrease from $92.8 million in the third quarter of 2024 and down 20% from
$95.9 million generated in the same period in 2023. The decrease was primarily
due to lower sales and realized pricing.
Quarterly Summary - Sales and Net Revenue
$ in thousands Three Months Ended December 31, 2024 Three Months Ended September 30, 2024
Gabon Egypt Canada Côte d'Ivoire Total Gabon Egypt Canada Côte d'Ivoire Total
Oil Sales 54,172 59,010 6,685 28,045 $ 147,912 54,934 63,431 8,038 49,795 $ 176,198
NGL Sales - - 1,965 - 1,965 - - 2,007 - 2,007
Gas Sales - - 421 - 421 - - 225 - 225
Gross Sales 54,172 59,010 9,071 28,045 150,298 54,934 63,431 10,270 49,795 178,430
Selling Costs & carried interest 450 (130) (319) - - 1 651 (173) (351) - 127
Royalties & taxes (7,455) (19,899) (1,224) - (28,578) (7,977) (28,714) (1,532) - (38,223)
Net Revenue 47,167 38,981 7,528 28,045 121,721 47,608 34,544 8,387 49,795 140,334
Oil Sales MMB (working interest) 733 923 99 379 2,134 709 964 112 632 2,417
Average Oil Price Received $ 73.92 $ 63.92 $ 67.68 $ 73.90 $ 69.30 $ 77.45 $ 65.79 $ 71.55 $ 78.75 $ 72.87
Change (5) %
Average Brent Price $ 74.66 $ 79.84
Change (6) %
Gas Sales MMCF (working interest) - - 431 - 431 - - 449 449
Average Gas Price Received - - $ 0.98 - $ 0.98 - - $ 0.50 $ 0.50
Change 95 %
Average Aeco Price ($USD) - - $ 1.36 - $ 1.36 - - $ 0.57 $ 0.57
Change 139 %
NGL Sales MMB (working interest) - - 75 - 75 - - 82 82
Average Liquids Price Received - - $ 26.22 - $ 26.22 - - $ 24.58 $ 24.58
Change 7 %
Revenue and Sales Q4 2024 Q4 2023 % Change Q4 2024 vs. Q4 2023 Q3 2024 % Change Q4 2024 vs. Q3 2024
Production (NRI BOEPD) 20,775 18,065 15% 21,770 (5%)
Sales (NRI BOE) 1,872,000 1,994,000 (6) % 2,134,000 (12%)
Realized commodity price ($/BOE) $ 64.77 $ 73.96 (12%) $ 65.41 (1) %
Commodity (Per BOE including realized $ 64.48 $ 73.89 (13%) $ 65.42 (1) %
commodity derivatives)
Total commodity sales ($MM) $ 121.7 $ 149.2 (18%) $ 140.3 (13%)
In Q4 2024, Vaalco had a net revenue decrease of $18.6 million or 13% compared
to Q3 2024 as total NRI sales volumes of 1,872,000 BOE was 12% lower than the
Q3 2024 volumes of 2,134,000 BOE and 6% lower compared to 1,994,000 BOE for Q4
2023, primarily due to timing of offshore cargoes. Q4 2024 NRI sales were
toward the higher end of Vaalco's guidance.
Q4 2024 realized pricing (net of royalties) was slightly lower compared to Q3
2024 and also 12% lower compared to Q4 2023.
Costs and Expenses Q4 2024 Q4 2023 % Change Q4 2024 vs. Q4 2023 Q3 2024 % Change Q4 2024 vs. Q3 2024
Production expense, excluding offshore workovers and stock comp ($MM) $ 36.5 $ 46.3 (21%) $ 42.2 (14%)
Production expense, excluding offshore workovers ($/BOE) $ 19.52 $ 23.27 (16%) $ 19.80 (1%)
Offshore workover expense ($MM) $ 0.1 $ - -% $ 0.1 -%
Depreciation, depletion and amortization ($MM) $ 37.0 $ 20.3 82 % $ 47.0 (21%)
Depreciation, depletion and amortization ($/BOE) $ 19.79 $ 10.20 94 % $ 22.04 (10%)
General and administrative expense, excluding stock-based compensation ($MM) $ 7.1 $ 6.1 16% $ 6.0 18%
General and administrative expense, excluding stock-based compensation ($/BOE) $ 3.80 $ 3.00 27% $ 2.80 36%
Stock-based compensation expense ($MM) $ 1.4 $ 0.9 56% $ 0.9 56%
Current income tax expense (benefit) ($MM) $ 26.2 $ 41.1 (36%) $ 33.7 (22) %
Deferred income tax expense (benefit) ($MM) $ (9.0) $ (3.5) 157% $ (1.1) 718%
Total production expense (excluding offshore workovers and stock compensation)
of $36.5 million in Q4 2024 was a 14% decrease compared to Q3 2024 and a 21%
decrease compared to the same period in 2023. The decrease in Q4 2024 was
primarily driven by lower production expense in Egypt and Côte d'Ivoire in
the quarter.
Q4 2024 and Q3 2024 had minimal offshore workover expense, while Q4 2023 had
no workover expense.
Q4 2024 production expense per BOE, excluding offshore workover expense, was
$19.52 per BOE which was lower than Q4 2023, primarily due to
the increased sales associated with the purchase of the Côte d'Ivoire asset,
and slightly lower than Q3 2024.
Depreciation, depletion and amortization ("DD&A") expense for Q4 2024 was
$37.0 million which was lower than $47.0 million in Q3 2024 and higher than
$20.3 million in Q4 2023. The decrease in Q4 2024 DD&A expense compared to
Q3 2024 is due primarily to the impact of the year end depletion adjustments
based on the year end reserve reports. The increase in Q4 2024 DD&A
expense compared to Q4 2023 is due to higher depletable costs in Côte
d'Ivoire partially offset by lower depletable costs in Gabon, Egypt, and
Canada.
General and administrative ("G&A") expense, excluding stock-based
compensation, increased to $7.1 million in Q4 2024 from $6.0 million in Q3
2024 and from $6.1 million in Q4 2023. The increase in G&A expenses
compared to both Q3 2024 and Q4 2023 was primarily due to higher professional
service fees, salaries and wages, and accounting and legal fees. Q4 2024 cash
G&A was within the Company's guidance.
Non-cash stock-based compensation expense was $1.4 million for Q4 2024
compared to $0.9 million for Q4 2023. Non-cash stock-based compensation
expense for Q3 2024 was $0.9 million.
Other income (expense), net, was an expense of $9.7 million for Q4 2024,
compared to other income of $0.6 million during Q4 2023 and an expense of $0.5
million for Q3 2024. Other income (expense), net, normally consists of foreign
currency losses. Also in Q4 2024, Vaalco recorded a reduction in the bargain
purchase gain of $6.4 million as a result of the change in fair value
estimates of the net assets acquired in the Svenska acquisition.
Foreign income taxes for Gabon are settled by the government taking oil
in-kind. Q4 2024 income tax expense was an expense of $17.2 million and is
comprised of current tax expense of $26.2 million and deferred tax benefit of
$9.0 million. Current quarter tax was impacted by non-deductible items (such
as the Svenska transaction costs) and the change in market value of tax
barrels due to Gabon State mark-to-market at quarter end. Q3 2024 income tax
expense was an expense of $32.6 million and is comprised of current tax
expense of $33.7 million and deferred tax benefit of $1.1 million. Q4 2023
income tax expense was an expense of $37.6 million, comprised of $41.1 million
of current tax expense and a deferred tax benefit of $3.5 million. For all
periods, Vaalco's overall effective tax rate was impacted by non-deductible
items associated with tax rates in foreign jurisdictions higher than the US
statutory rate and by non-deductible items associated with operations.
Taxes paid by jurisdiction are as follows:
(in thousands) Gabon Egypt Canada Equatorial Guinea Cote d'Ivoire Corporate and Other Total
Cash/In Kind Taxes Paid:
Three months ended December 31, 2024 $ 852 $ 9,819 - - $ 4,624 - $ 15,295
Financial Update - Full Year 2024
The Company reported net income for the year ended December 31, 2024 of $58.5
million, which is a decrease from the $60.4 million reported for the same
period in 2023. The decrease in net income was primarily due to increased
DD&A expense, production expenses and credit losses partially offset by
higher revenues and a bargain purchase gain related to the Svenska
acquisition.
NRI production volumes for full year 2024 were up 6.8% to 7.3 MMBOE compared
to 6.8 MMBOE production for the prior year. The increase was driven
primarily by production from the assets acquired in the Svenska Acquisition.
NRI sales volumes for full year 2024 were up 6.3% to 7.3 MMBOE compared to 6.8
MMBOE sales for the prior year. 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 year ended December 31, 2024 was
$65.64 per barrel, representing a decrease of 0.3% from $65.83 realized in the
twelve months of 2023. This slight decrease in crude oil price reflects the
softening in commodity pricing over the past year.
Year to Date Summary - Sales and Net Revenue
$ in thousands Year Ended December 31, 2024 Year Ended December 31, 2023
Gabon Egypt Canada Côte d'Ivoire Total Gabon Egypt Canada Côte d'Ivoire Total
Oil Sales 236,221 250,946 28,418 95,082 $ 610,667 294,577 272,613 28,287 - $ 595,477
NGL Sales - - 7,859 - 7,859 - - 8,440 - 8,440
Gas Sales - - 1,849 - 1,849 - - 3,467 - 3,467
Gross Sales 236,221 250,946 38,126 95,082 620,375 294,577 272,613 40,194 - 607,384
Selling Costs & carried interest 2,276 (531) (1,131) - 614 5,301 (995) (702) - 3,604
Royalties & taxes (32,543) (104,449) (5,009) - (142,001) (39,532) (110,569) (5,821) - (155,922)
Net Revenue 205,954 145,966 31,986 95,082 478,988 260,346 161,049 33,671 - 455,066
Oil Sales MMB (working interest) 2,971 3,791 402 1,223 8,387 3,569 4,055 394 - 8,018
Average Oil Price Received $ 79.52 $ 66.20 $ 70.66 $ 77.74 $ 72.81 $ 82.54 $ 67.22 $ 71.88 - $ 74.27
Change (2) %
Average Brent Price $ 80.52 $ 82.49
Change (2) %
Gas Sales MMCF (working interest) - - 1,772 - 1,772 - - 1,798 - 1,798
Average Gas Price Received - - $ 1.04 - $ 1.04 - - $ 1.93 - $ 1.93
Change (46) %
Average Aeco Price ($USD) - - $ 1.05 - $ 1.05 - - $ 1.92 - $ 1.92
Change (45) %
NGL Sales MMB (working interest) - - 309 - 309 - - 317 - 317
Average Liquids Price Received - - $ 25.46 - $ 25.46 - - $ 26.58 - $ 26.58
Change (4) %
Capital Investments/Balance Sheet
For the fourth quarter of 2024, net capital expenditures totaled $41.5 million
on a cash basis and $36.4 million on an accrual basis. For the full year 2024,
net capital expenditures totaled $103.0 million on a cash basis and $109.4
million on an accrual basis. These expenditures were primarily related to
costs associated with the development drilling programs in Egypt and Canada,
as well as maintenance, project costs and long lead items for Gabon and Côte
d'Ivoire.
At the end of the fourth quarter of 2024, Vaalco had an unrestricted cash
balance of $82.6 million. Working capital at December 31, 2024 was $56.2
million compared with $100.7 million at December 31, 2023, while Adjusted
Working Capital at December 31, 2024 totaled $73.1 million.
In March 2025, Vaalco entered into a new revolving credit facility the ("new
facility") with an initial commitment of $190 million and the ability to grow
to $300 million, led by The Standard Bank of South Africa Limited, Isle of Man
Branch with other participating banks and financial partners. This new
facility, which is subject to customary administrative conditional precedents,
replaces the Company's existing undrawn revolving credit facility that was
provided by Glencore Energy UK Ltd. The Company arranged the new facility
primarily to provide short-term funding that may be needed from time-to-time
to supplement its internally generated cash flow and cash balance as it
executes its planned investment programs across its diversified asset base
over the next few years.
Quarterly Cash Dividend
Vaalco paid a quarterly cash dividend of $0.0625 per share of common stock for
the fourth quarter of 2024 on December 20, 2024. The Company also recently
announced its next quarterly cash dividend of $0.0625 per share of common
stock for the first quarter of 2025 ($0.25 annualized), to be paid on March
28, 2025 to stockholders of record at the close of business on February 28,
2025. Future declarations of quarterly dividends and the establishment of
future record and payment dates are subject to approval by the Vaalco Board of
Directors.
Hedging
The Company continued to opportunistically hedge a portion of its expected
future production to lock in strong cash flow generation to assist in funding
its capital and shareholder returns programs.
The following includes hedges remaining in place as of the end of the fourth
quarter of 2024:
Weighted Average Hedge Price ($/Bbl)
Settlement Period Type of Contract Index Average Volumes Hedged (Bbl) Floor Ceiling
January 2025 - March 2025 Collars Dated Brent 70,000 $ 65.00 $ 85.00
April 2025 - June 2025 Collars Dated Brent 70,000 $ 65.00 $ 81.00
Settlement Period Type of Contract Index Average Monthly Volumes Weighted Average SWAP Price in CAD
(GJ)(b) (per GJ)
January 2025 - March 2025 Swap AECO (7A) 67,000 $
2.80
a) One gigajoule (GJ) equals one billion joules (J). A gigajoule
of natural gas is about 25.5 cubic metres at standard conditions.
Subsequent to December 31, 2024, the Company entered into the following
additional derivative contracts to cover its future anticipated production:
Settlement Period Type of Contract Index Average Monthly Volumes Weighted Average Put Price Weighted Average Call Price
(Bbls) (per Bbl) (per Bbl)
July 2025 - September 2025 Collars Dated Brent 60,000 $ 65.00 $ 80.00
2025 Guidance:
The Company has provided first quarter 2025 guidance and its full year 2025
guidance. All of the quarterly and annual guidance is detailed in the tables
below.
FY 2025 Gabon Egypt Canada Côte d'Ivoire
Production (BOEPD) WI 19250 - 22310 7000 - 8300 9750 - 11100 2200 - 2600 300 - 310
Production (BOEPD) NRI 14500 - 16710 6200 - 7100 6200 - 7200 1800 - 2100 300 - 310
Sales Volume (BOEPD) WI 19850 - 22700 7300 - 8300 9750 - 11100 2200 - 2600 600 - 700
Sales Volume (BOEPD) NRI 14900 - 17200 6300 - 7200 6200 - 7200 1800 - 2100 600 - 700
Production Expense (millions) WI & NRI $148.5 - $161.5 MM
Production Expense per BOE WI $18.00 - $21.50
Production Expense per BOE NRI $24.00 - $28.00
Offshore Workovers (millions) WI & NRI $0 - $10 MM
Cash G&A (millions) WI & NRI $25.0 - $31.0 MM
CAPEX excluding acquisitions (millions) WI & NRI $270 - $330 MM
DD&A ($/BOE) NRI $18.00 - $22.00
Q1 2025 Gabon Egypt Canada Côte d'Ivoire
Production (BOEPD) WI 21550 - 22750 8000 - 8600 10000 - 10500 2300 - 2500 1250 - 1250
Production (BOEPD) NRI 16550 - 17650 6900 - 7500 6500 - 6900 1900 - 2100 1250 - 1250
Sales Volume (BOEPD) WI 22900 - 24300 8000 - 8700 10000 - 10500 2300 - 2500 2600 - 2700
Sales Volume (BOEPD) NRI 18000 - 19200 7000 - 7600 6500 - 6900 1900 - 2100 2600 - 2700
Production Expense (millions) WI & NRI $38.2 - $43.8 MM
Production Expense per BOE WI $17.00 - $21.00
Production Expense per BOE NRI $21.00 - $27.00
Offshore Workovers (millions) WI & NRI $0 - $0 MM
Cash G&A (millions) WI & NRI $6.0 - $8.0 MM
CAPEX excluding acquisitions (millions) WI & NRI $70 - $90 MM
DD&A ($/BOE) NRI $18.00 - $22.00
Conference Call
As previously announced, the Company will hold a conference call to discuss
its fourth quarter 2024 financial and operating results, Friday, March 14,
2025, 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 2024 Conference
Call." This call will also be webcast on Vaalco's website at www.vaalco.com.
An archived audio replay will be available on Vaalco's website.
A "Q4 2024 Supplemental Information" investor deck will be posted to Vaalco's
website prior to its conference call on March 14, 2025 that includes
additional financial and operational information.
About Vaalco
Vaalco, founded in 1985 and incorporated under the laws of Delaware, is a
Houston, Texas, USA based, independent energy company with a diverse portfolio
of production, development and exploration assets across Gabon, Egypt, Côte
d'Ivoire, Equatorial Guinea, Nigeria and Canada.
For Further Information
Vaalco Energy, Inc. (General and Investor Enquiries) +00 1 713 543 3422
Website: www.vaalco.com
Al Petrie Advisors (US Investor Relations) +00 1 713 543 3422
Al Petrie / Chris Delange
Buchanan (UK Financial PR) +44 (0) 207 466 5000
Ben Romney / Barry Archer VAALCO@buchanan.uk.com
Forward Looking Statements
This press release includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended, which are
intended to be covered by the safe harbors created by those laws and other
applicable laws and "forward-looking information" within the meaning of
applicable Canadian securities laws. Where a forward-looking statement
expresses or implies an expectation or belief as to future events or results,
such expectation or belief is expressed in good faith and believed to have a
reasonable basis. All statements other than statements of historical fact may
be forward-looking statements. The words "anticipate," "believe," "estimate,"
"expect," "intend," "forecast," "outlook," "aim," "target," "will," "could,"
"should," "may," "likely," "plan" and "probably" or similar words may identify
forward-looking statements, but the absence of these words does not mean that
a statement is not forward-looking. Forward-looking statements in this press
release include, but are not limited to, statements relating to (i) estimates
of future drilling, production, sales and costs of acquiring crude oil,
natural gas and natural gas liquids; (ii) expectations regarding Vaalco's
ability to effectively integrate assets and properties it has acquired as a
result of the Svenska acquisition into its operations; (iii) expectations
regarding future exploration and the development, growth and potential of
Vaalco's operations, project pipeline and investments, and schedule and
anticipated benefits to be derived therefrom; (iv) expectations regarding
future acquisitions, investments or divestitures; (v) expectations of future
dividends; (vi) expectations of future balance sheet strength; and (vii)
expectations of future equity and enterprise value.
Such forward-looking statements are subject to risks, uncertainties and other
factors, which could cause actual results to differ materially from future
results expressed, projected or implied by the forward-looking statements.
These risks and uncertainties include, but are not limited to: risks relating
to any unforeseen liabilities of Vaalco; the ability to generate cash flows
that, along with cash on hand, will be sufficient to support operations and
cash requirements; risks relating to the timing and costs of completion for
scheduled maintenance of the FPSO servicing the Baobab field; and the risks
described under the caption "Risk Factors" in Vaalco's most recent Annual
Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q filed with
the SEC.
Dividends beyond the first quarter of 2025 have not yet been approved or
declared by the Board of Directors for Vaalco. The declaration and payment of
future dividends remains at the discretion of the Board and will be determined
based on Vaalco's financial results, balance sheet strength, cash and
liquidity requirements, future prospects, crude oil and natural gas prices,
and other factors deemed relevant by the Board. The Board reserves all powers
related to the declaration and payment of dividends. Consequently, in
determining the dividend to be declared and paid on Vaalco common stock, the
Board may revise or terminate the payment level at any time without prior
notice.
Any forward-looking statement made by Vaalco in this press release is based
only on information currently available to Vaalco and speaks only as of the
date on which it is made. Except as may be required by applicable securities
laws, Vaalco undertakes no obligation to publicly update any forward-looking
statement, whether written or oral, that may be made from time to time,
whether as a result of new information, future developments or otherwise.
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.
WI CPR Reserves
WI CPR reserves represent proved ("1P") and proved plus probable ("2P")
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. The SEC
definitions of proved and probable reserves are different from the definitions
contained in the 2018 Petroleum Resources Management Systems approved by the
Society of Petroleum Engineers. As a result, 1P and 2P WI CPR reserves may not
be comparable to United States standards. The SEC requires United States oil
and gas reporting companies, in their filings with the SEC, to disclose only
proved reserves after the deduction of royalties and production due to others
but permits the optional disclosure of probable and possible reserves in
accordance with SEC definitions.
1P and 2P WI CPR reserves, as disclosed herein, may differ from the SEC
definitions of proved and probable reserves because:
• Pricing for SEC is the average closing price on the first
trading day of each month for the prior year which is then held flat in the
future, while the 1P and 2P WI CPR pricing assumption was $79.79 per barrel of
oil beginning in 2025, $69.79 in 2026, and inflating 2% thereafter; and
• 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 2025.
Management uses 1P and 2P WI CPR reserves as a measurement of operating
performance because it assists management in strategic planning, budgeting and
economic evaluations and in comparing the operating performance of Svenska to
other companies. Management believes that the presentation of 1P and 2P WI CPR
reserves is useful to its international investors, particularly those that
invest in companies trading on the London Stock Exchange, in order to better
compare reserve information to other London Stock Exchange-traded companies
that report similar measures. However, 1P and 2P WI CPR reserves should not be
used as a substitute for proved reserves calculated in accordance with the
definitions prescribed by the SEC. In evaluating Vaalco's business, investors
should rely on Vaalco's SEC proved reserves and consider 1P and 2P WI CPR
reserves only supplementally.
Other Oil and Gas Advisories
Investors are cautioned when viewing BOEs in isolation. BOE conversion ratio
is based on an energy equivalency conversion method primarily applicable at
the burner tip and does not represent a value equivalency at the wellhead.
Given that the value ratio based on the current price of crude oil as compared
to natural gas is significantly different from the energy equivalencies
described above, utilizing such equivalencies may be incomplete as an
indication of value.
Inside Information
This announcement contains inside information as defined in Regulation (EU)
No. 596/2014 on market abuse which is part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ("MAR") and is made in accordance with
the Company's obligations under article 17 of MAR. The person responsible for
arranging the release of this announcement on behalf of Vaalco is Matthew
Powers, Corporate Secretary of Vaalco.
VAALCO ENERGY, INC AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
December 31,
2024 2023
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 82,650 $ 121,001
Receivables:
Trade, net of allowances for credit loss and other of $0.2 million and $0.5 94,778 44,888
million, respectively
Accounts with joint venture owners, net of allowance for credit losses of $1.5 179 1,814
million and $0.8 million, respectively
Foreign income taxes receivable - -
Egypt receivables and other, net of allowances for credit loss and other of 35,763 45,942
$0.0 million and $4.6 million, respectively
Other current assets 24,557 14,496
Total current assets 237,927 228,141
Crude oil, natural gas and NGLs properties and equipment, net 538,103 459,786
Other noncurrent assets:
Right of use operating lease assets 17,254 2,378
Right of use finance lease assets 79,849 89,962
Deferred tax assets 55,581 29,242
Other long-term assets 26,236 13,707
Total assets $ 954,950 $ 823,216
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 181,728 $ 127,475
Asset retirement obligations 78,592 47,343
Operating lease liabilities - net of current portion 13,903 33
Finance lease liabilities - net of current portion 67,377 78,293
Deferred tax liabilities 93,904 73,581
Other long-term liabilities 17,863 17,709
Total liabilities 453,367 344,434
Total shareholders' equity 501,583 478,782
Total liabilities and shareholders' equity $ 954,950 $ 823,216
VAALCO ENERGY, INC AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months Ended Year Ended
December 31, 2024 December 31, 2023 September 30, 2024 December 31, 2024 December 31, 2023
(in thousands except per share amounts)
Revenues:
Crude oil, natural gas and natural gas liquids sales $ 121,721 $ 149,154 $ 140,334 $ 478,988 $ 455,066
Operating costs and expenses:
Production expense 36,641 46,397 42,324 163,500 153,157
FPSO demobilization and other costs - 1,837 - - 7,484
Exploration expense - 706 - 48 1,965
Depreciation, depletion and amortization 37,047 20,344 47,031 143,034 115,302
General and administrative expense 8,454 7,005 6,929 29,684 23,840
Credit losses and other 1,082 (7,343) 69 6,304 (4,906)
Total operating costs and expenses 83,224 68,946 96,353 342,570 296,842
Other operating income, net 10 731 102 78 433
Operating income 38,507 80,939 44,083 136,496 158,657
Other income (expense):
Derivative instruments gain (loss), net (365) 2,500 210 (745) 232
Interest expense, net (1,092) (1,077) (588) (3,732) (6,452)
Bargain purchase gain (6,366) - - 13,532 (1,412)
Other income (expense), net (1,828) (797) (141) (5,754) (894)
Total other income (expense), net (9,651) 626 (519) 3,301 (8,526)
Income before income taxes 28,856 81,565 43,564 139,797 150,131
Income tax expense 17,192 37,574 32,574 81,307 89,777
Net income $ 11,664 $ 43,991 $ 10,990 $ 58,490 $ 60,354
Other comprehensive income (loss):
Currency translation adjustments (5,975) 2,036 1,655 (7,842) 1,701
Comprehensive income $ 5,689 $ 46,027 $ 12,645 $ 50,648 $ 62,055
Basic net income per share:
Net income per share $ 0.11 $ 0.41 $ 0.10 $ 0.56 $ 0.56
Basic weighted average shares outstanding 103,743 104,893 103,743 103,669 106,376
Diluted net income per share:
Net income per share $ 0.11 $ 0.41 $ 0.10 $ 0.56 $ 0.56
Diluted weighted average shares outstanding 103,812 105,020 103,842 103,747 106,555
VAALCO ENERGY, INC AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Year Ended December 31,
2024 2023 2022
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 58,490 $ 60,354 $ 51,890
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation, depletion and amortization 143,034 115,302 48,143
Bargain purchase gain (13,532) 1,412 (10,819)
Exploration expense 48 1,841 -
Deferred taxes (16,785) (2,864) 44,805
Unrealized foreign exchange loss 8 52 (1,043)
Stock-based compensation 4,435 3,323 2,200
Cash settlements paid on exercised stock appreciation rights (154) (378) (827)
Derivative instruments (gain) loss, net 745 (232) 37,812
Cash settlements paid on matured derivative contracts, net (453) (127) (42,935)
Cash settlements paid on asset retirement obligations (368) (6,747) (6,577)
Credit losses and other 6,304 7,543 3,082
Other operating loss, net 34 55 (38)
Equipment and other expensed in operations 2,505 3,196 2,052
Change in operating assets and liabilities (70,594) 40,867 1,101
Net cash provided by operating activities 113,718 223,597 128,846
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment expenditures (102,996) (97,223) (159,897)
Acquisition of crude oil and natural gas properties 877 - 36,686
Net cash used in investing activities (102,119) (97,223) (123,211)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuances of common stock 447 673 312
Dividend distribution (26,216) (26,772) (9,354)
Treasury shares (6,803) (23,570) (3,805)
Deferred financing costs - - (2,069)
Payments of finance lease (10,477) (7,150) (3,039)
Net cash used in in financing activities (43,048) (56,819) (17,955)
Effects of exchange rate changes on cash (3) (153) (218)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (31,452) 69,402 (12,538)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD 129,178 59,776 72,314
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $ 97,726 $ 129,178 $ 59,776
VAALCO ENERGY, INC AND SUBSIDIARIES
Selected Financial and Operating Statistics
(Unaudited)
Three Months Ended Year ended
December 31, 2024 December 31, 2023 September 30, 2024 December 31, 2024 December 31, 2023
NRI SALES DATA
Crude oil, natural gas and natural gas liquids sales (MBOE) 1,872 1,994 2,134 7,262 6,832
Average daily sales volumes (BOE) 20,352 21,912 23,198 19,843 18,718
WI PRODUCTION DATA
Etame Crude oil (MBbl) 791 887 810 3,199 3,674
Gabon Average daily production volumes (BOEPD) 8,598 9,641 8,800 8,741 10,066
Egypt Crude oil (MBbl) 923 1,024 964 3,791 4,055
Egypt Average daily production volumes (BOEPD) 10,035 11,126 10,480 10,357 11,111
Canada Crude Oil (MBbl) 99 77 112 402 394
Canada Natural Gas (Mcf) 431 471 449 1,772 1,798
Canada Natural Gas Liquid (MBOE) 75 81 82 309 317
Canada Crude oil, natural gas and natural gas liquids (MBOE) 246 236 269 1,006 1,011
Canada Average daily production volumes (BOEPD) 2,669 2,563 2,923 2,749 2,769
Côte d'Ivoire Crude oil (MBbl) 368 - 415 1,058 -
Côte d'Ivoire Average daily production volumes (BOEPD) 3,997 - 4,506 2,891 -
Total Crude oil, natural gas and natural gas liquids production (MBOE) 2,328 2,147 2,458 9,054 8,740
Average daily production volumes (BOEPD) 25,300 23,330 26,709 24,738 23,946
NRI PRODUCTION DATA
Etame Crude oil (MBbl) 688 772 704 2,783 3,196
Gabon Average daily production volumes (BOEPD) 7,481 8,391 7,652 7,605 8,756
Egypt Crude oil (MBbl) 644 697 657 2,585 2,771
Egypt Average daily production volumes (BOEPD) 7,001 7,576 7,141 7,063 7,593
Canada Crude Oil (MBbl) 85 63 95 350 336
Canada Natural Gas (Mcf) 371 384 380 1,542 1,533
Canada Natural Gas Liquid (MBOE) 64 66 69 269 271
Canada Crude oil, natural gas and natural gas liquids (MBOE) 211 193 227 870 862
Canada Average daily production volumes (BOEPD) 2,296 2,098 2,471 2,377 2,361
Côte d'Ivoire Crude oil (MBbl) 368 - 415 1,058 -
Côte d'Ivoire Average daily production volumes (BOEPD) 3,997 - 4,506 2,891 -
Total Crude oil, natural gas and natural gas liquids production (MBOE) 1,911 1,662 2,003 7,296 6,829
Average daily production volumes (BOEPD) 20,775 18,065 21,770 19,936 18,710
AVERAGE SALES PRICES:
Crude oil, natural gas and natural gas liquids sales (per BOE) - WI basis $ 65.69 $ 73.98 $ 69.07 $ 68.63 $ 69.30
Crude oil, natural gas and natural gas liquids sales (per BOE) - NRI basis $ 64.77 $ 73.96 $ 65.41 $ 65.64 $ 65.83
Crude oil, natural gas and natural gas liquids sales (Per BOE including $ 64.48 $ 73.89 $ 65.39 $ 65.58 $ 65.81
realized commodity derivatives)
COSTS AND EXPENSES (Per BOE of sales):
Production expense 19.57 $ 23.27 $ 19.83 $ 22.51 $ 22.42
Production expense, excluding offshore workovers and stock compensation* 19.49 $ 23.25 $ 19.80 $ 22.48 $ 22.59
Depreciation, depletion and amortization 19.79 $ 10.20 $ 22.04 $ 19.69 $ 16.88
General and administrative expense** 4.52 $ 3.51 $ 3.25 $ 4.09 $ 3.49
Property and equipment expenditures, cash basis (in thousands) $ 41,466 $ 19,858 $ 12,431 $ 102,996 $ 97,223
* Offshore workover costs excluded for the three
months ended December 31, 2024 and 2023 and September 30, 2024 are $0.1
million, $0 million and $0.1 million, respectively.
* Stock compensation associated with production
expense excluded from the three months ended December 31, 2024 and 2023 and
September 30, 2024 are immaterial.
** General and administrative expenses include $0.72,
$0.50 and $0.52 per barrel of oil related to stock-based compensation expense
in the three months ended December 31, 2024 and 2023 and September 30, 2024,
respectively.
NON-GAAP FINANCIAL MEASURES
Management uses Adjusted Net Income to evaluate operating and financial
performance and believes the measure is useful to investors because it
eliminates the impact of certain non-cash and/or other items that management
does not consider to be indicative of the Company's performance from period to
period. Management also believes this non-GAAP measure is useful to investors
to evaluate and compare the Company's operating and financial performance
across periods, as well as facilitating comparisons to others in the Company's
industry. Adjusted Net Income is a non-GAAP financial measure and as used
herein represents net income, plus deferred income tax expense (benefit),
unrealized derivative instrument loss (gain), bargain purchase gain on the
Svenska Acquisition, FPSO demobilization, transaction costs related to the
Svenska acquisition and non-cash and other items.
Adjusted EBITDAX is a supplemental non-GAAP financial measure used by Vaalco's
management and by external users of the Company's financial statements, such
as industry analysts, lenders, rating agencies, investors and others who
follow the industry. Management believes the measure is useful to investors
because it is 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, plus interest expense (income) net, income tax expense
(benefit), depreciation, depletion and amortization, exploration expense, FPSO
demobilization, non-cash and other items including stock compensation expense,
bargain purchase gain on the Svenska Acquisition, other operating (income)
expense, net, non-cash purchase price adjustment, transaction costs related to
acquisition, credit losses and other and unrealized derivative instrument loss
(gain).
Management uses Adjusted Working Capital as a transition tool to assess the
working capital position of the Company's continuing operations excluding
leasing obligations because it eliminates the impact of discontinued
operations as well as the impact of lease liabilities. Under the lease
accounting standards, lease liabilities related to assets used in joint
operations include both the Company's share of expenditures as well as the
share of lease expenditures which its non-operator joint venture owners' will
be obligated to pay under joint operating agreements. Adjusted Working Capital
is a non-GAAP financial measure and as used herein represents working capital
excluding working capital attributable to discontinued operations and current
liabilities associated with lease obligations.
Management uses Free Cash Flow to evaluate financial performance and to
determine the total amount of cash over a specified period available to be
used in connection with returning cash to shareholders, and believes the
measure is useful to investors because it provides the total amount of net
cash available for returning cash to shareholders by adding cash generated
from operating activities, subtracting amounts used in financing and investing
activities, effects of exchange rate changes on cash and adding back amounts
used for dividend payments and stock repurchases. Free Cash Flow is a non-GAAP
financial measure and as used herein represents net change in cash, cash
equivalents and restricted cash and adds the amounts paid under dividend
distributions and share repurchases over a specified period.
Free Cash Flow has significant limitations, including that it does not
represent residual cash flows available for discretionary purposes and should
not be used as a substitute for cash flow measures prepared in accordance with
GAAP. Free Cash Flow should not be considered as a substitute for cashflows
from operating activities before discontinued operations or any other
liquidity measure presented in accordance with GAAP. Free Cash Flow may vary
among other companies. Therefore, the Company's Free Cash Flow may not be
comparable to similarly titled measures used by other companies.
Adjusted EBITDAX and Adjusted Net Income have significant limitations,
including that they do not reflect the Company's cash requirements for capital
expenditures, contractual commitments, working capital or debt service.
Adjusted EBITDAX, Adjusted Net Income, Adjusted Working Capital and Free Cash
Flow should not be considered as substitutes for net income (loss), operating
income (loss), cash flows from operating activities or any other measure of
financial performance or liquidity presented in accordance with GAAP. Adjusted
EBITDAX and Adjusted Net Income exclude some, but not all, items that affect
net income (loss) and operating income (loss), and the calculation of these
measures may vary among other companies. Therefore, the Company's Adjusted
EBITDAX, Adjusted Net Income, Adjusted Working Capital and Free Cash Flow may
not be comparable to similarly titled measures used by other companies.
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 Year Ended
Reconciliation of Net Income to Adjusted Net Income December 31, 2024 December 31, 2023 September 30, 2024 December 31, 2024 December 31, 2023
Net income $ 11,664 $ 43,991 $ 10,990 $ 58,490 $ 60,354
Adjustment for discrete items:
Unrealized derivative instruments loss (gain) 96 (2,565) (192) 292 (359)
Bargain purchase gain 6,366 - - (13,532) 1,412
FPSO demobilization - 1,837 - - 7,484
Deferred income tax expense (benefit) (11,781) (3,538) (3,089) (20,332) (2,865)
Non-cash purchase price adjustment - - - 14,981 -
Transaction costs related to acquisition 508 - 327 3,910 -
Other operating (income) expense, net (10) (731) (102) (78) (418)
Adjusted Net Income $ 6,843 $ 38,994 $ 7,934 $ 43,731 $ 65,608
Diluted Adjusted Net Income per Share $ 0.07 $ 0.37 $ 0.08 $ 0.42 $ 0.62
Diluted weighted average shares outstanding ((1)) 103,812 105,020 103,842 103,747 106,555
((1) ) No adjustments to weighted average shares outstanding
Three Months Ended Year Ended
Reconciliation of Net Income to Adjusted EBITDAX December 31, 2024 December 31, 2023 September 30, 2024 December 31, 2024 December 31, 2023
Net income $ 11,664 $ 43,991 $ 10,990 $ 58,490 $ 60,354
Add back:
Interest expense (income), net 1,092 1,077 588 3,732 6,452
Income tax expense (benefit) 17,192 37,574 32,574 81,307 89,777
Depreciation, depletion and amortization 37,047 20,344 47,031 143,034 115,302
Exploration expense - 706 - 48 1,965
FPSO demobilization - 1,837 - - 7,484
Non-cash or unusual items:
Stock-based compensation 1,196 991 1,479 4,558 3,323
Unrealized derivative instruments loss (gain) 96 (2,565) (192) 292 (359)
Bargain purchase gain 6,366 - - (13,532) 1,412
Other operating (income) expense, net (10) (731) (102) (78) (418)
Non-cash purchase price adjustment - - - 14,981 -
Transaction costs related to acquisition 508 - 327 3,910 -
Credit losses and other 1,082 (7,343) 69 6,304 (4,906)
Adjusted EBITDAX $ 76,233 $ 95,881 $ 92,764 $ 303,046 $ 280,386
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)
VAALCO ENERGY, INC AND SUBSIDIARIES
Reconciliations of Non-GAAP Financial Measures
(Unaudited)
(in thousands)
Reconciliation of Working Capital to Adjusted Working Capital December 31, 2024 December 31, 2023 Change
Current assets $ 237,927 $ 228,141 $ 9,786
Current liabilities (181,728) (127,475) (54,253)
Working capital 56,199 100,666 (44,467)
Add: lease liabilities - current portion 16,895 12,475 4,420
Add: current liabilities - discontinued operations - 673 (673)
Adjusted Working Capital $ 73,094 $ 113,814 $ (40,720)
Year Ended December 31, 2024
Reconciliation of Free Cash Flow (in thousands)
Net cash provided by Operating activities $ 113,718
Net cash used in Investing activities (102,119)
Net cash used in Financing activities (43,048)
Effects of exchange rate changes on cash (3)
Total net cash change (31,452)
Add back shareholder cash out:
Dividends paid 26,215
Stock buyback 6,802
Total cash returned to shareholders 33,017
Free Cash Flow $ 1,565
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