REG - Vaalco Energy Inc - THIRD QUARTER 2023 RESULTS
08/11/2023 07:00
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RNS Number : 7075S Vaalco Energy Inc 08 November 2023
VAALCO ENERGY, INC. ANNOUNCES
THIRD QUARTER 2023 RESULTS
HOUSTON - November 8, 2023 - VAALCO Energy, Inc. (NYSE: EGY, LSE: EGY)
("VAALCO" or the "Company") today reported operational and financial results
for the third quarter of 2023.
Third Quarter 2023 Highlights and Key Items:
● Achieved production of 18,844 net revenue interest ("NRI")((1)) barrels of oil
equivalent per day ("BOEPD"), at the higher end of guidance, driven by
operational uptime in Gabon and continued drilling success in Egypt;
● Working interest ("WI")((2)) production of 24,430 BOEPD also at
higher end of guidance range;
● Increased NRI sales to 1,812,000 barrels of oil equivalent ("BOE"), or 19,700
BOEPD above the midpoint of guidance;
● Reported lifting of 600,000 gross barrels of oil in Gabon
occurred in first week of October 2023;
● Grew unrestricted cash by 124% to $103.4 million after paying out $6.7 million
in dividends in the quarter and completing $6.0 million in share buybacks;
● Since inception of the $30 million share buyback program,
VAALCO has purchased over $20 million in shares;
● Continued to collect Egyptian receivables and have reduced accounts receivable
by $17.7 million in the third quarter, decreasing the outstanding current
Egyptian accounts receivable to $18.8 million;
● Reported Q3 2023 net income of $6.1 million ($0.06 per diluted share) and
Adjusted Net Income((3))( )of $7.5 million ($0.07 per diluted share); both
were reduced by a non-cash tax adjustment in Gabon of $5.3 million ($0.05 per
diluted share) due to increased oil price quarter over quarter related to
untaken, in-kind tax barrels;
● Grew Adjusted EBITDAX((3))( )by 9% to $71.4 million compared to Q2 2023 and
funded $22.5 million in capital expenditures from cash on hand and cash from
operations during the third quarter of 2023;
● Delivering meaningful cash returns to shareholders with $36 million returned
year to date, representing about 41% of Free Cash Flow((3)) available to
shareholders; and
● Announced quarterly cash dividend of $0.0625 per share of common stock to be
paid on December 21, 2023.
(1) All NRI production rates are VAALCO's working interest volumes less royalty
volumes, where applicable
(2) All WI production rates and volumes are VAALCO's working interest volumes
(3) 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."
George Maxwell, VAALCO's Chief Executive Officer commented, "Building a
diversified portfolio of high performing assets has been part of our strategic
vision for the past two years. Our continued outstanding results both
operationally and financially reinforce the success of this strategy and
point to a very bright future for VAALCO. Our 2023 capital program in Egypt
and Canada has exceeded expectations, and coupled with our solid operational
uptime in Gabon, has allowed us to deliver robust production rates. We raised
production and sales guidance after our first half 2023 results and our
continued strong performance has carried into the third quarter with both
production and sales at the high end of our guidance ranges. We have
maintained a lower cost structure and have reduced our capital run rate. All
of these factors have contributed to our Adjusted EBITDAX growth and cash flow
generation allowing us to return meaningful value to shareholders and grow our
cash position to over $100 million at September 30, 2023. In early October, we
also had another lifting in Gabon of about 600,000 gross barrels, which will
further add to our healthy cash position. We expect our ability to grow cash
flow in the current commodity price environment to continue through year-end.
This robust cash reserve will allow us to fund our 2024 capital program,
continue to return cash to shareholders through dividends and buybacks and
provides meaningful financial optionality for the future."
"Our strategic vision has proven highly successful, but it's our employees'
commitment to operational excellence and execution that has helped VAALCO
achieve record production and Adjusted EBITDAX while growing cash flow and
returning significant value to shareholders. VAALCO is financially stronger,
with more reserves and production, than at any other time in our history and
poised to continue to grow in 2024 and beyond. We continue to have no bank
debt and a growing cash position that will allow us to fund 2024 capex
projects across our portfolio. We remain committed to accretively growing
VAALCO both organically and through additional inorganic opportunities. The
diversity and strength of our assets provide a solid foundation for
sustainable growth and supports our commitment to returning and growing value
for our shareholders."
Operational Update
Egypt
In Egypt, VAALCO continued to use the EDC-64 rig in the Eastern Desert
drilling campaign. The Company completed six wells in the third quarter of
2023, five development wells K-80, K-84, K-85, M-24, Arta-91 and one deep
appraisal well EA-54. Drilling continues on the EA-55 development well in the
fourth quarter which will be the last well of the 2023 campaign. Through
operational efficiencies, VAALCO is drilling an average of two wells per month
with the EDC-64 rig, nearly twice as fast as in 2022, and VAALCO has drilled
18 wells this year, while also completing the Arta-77Hz at the beginning of
2023. The 2023 firm and contingent work program was drilled faster and cheaper
compared to budget, adding to its economic returns.
A summary of the Egyptian drilling campaign's impact during the third quarter
is presented below:
VAALCO Egypt Q3 Wells
Well Spud date Pay Zones Completion Interval IP-30 Rate BOPD
K-80 7/1/2023 141.4 feet Asl-A, B, D and E Asl-E 16.4 feet 144
K-84 7/16/2023 98.8 feet Asl- D, E, F and G Asl-G 19.7 feet 158
K-85 7/31/2023 63.3 feet Asl- D, E, F and G Asl-E 9.8 feet 164
M-24 8/14/2023 70.2 feet Asl-A, B and D Asl-D 9.8 feet 120
Arta-91 9/1/2023 40 feet Red-bed/Nukhl Red-bed 20.0 feet 94
EA-54 9/12/2023 none Red-bed/Nukhl Abandoned none none
The East Arta 54 appraisal well in Egypt was drilled and abandoned during the
period and subsequently, $1.2 million was charged to exploration expense.
Canada
VAALCO drilled and completed two wells in the first quarter of 2023,
consisting of a 1.5-mile lateral and a 3-mile lateral, which were also
required for land retention purposes. Both wells were drilled and completed
safely and cost effectively without incident. The wells were tied in and
equipped in April and early May with overall cycle times that were
significantly less than historical cycle times. The wells began flowing in
May and naturally flowed through June. In early July, the pump and rods were
run on both wells. Both wells' production rates exceeded expectations, and
the Company is monitoring their long-term performance while evaluating future
drilling campaigns, with the intent of moving exclusively to 2.5 mile and
3-mile laterals to improve economics. This resulted in record production
levels reported for Canada in 2023. Additionally, VAALCO is conducting a
review of completions intensity for potential future well completions and
facility and pad optimization which should improve production cycle times in
the future.
Gabon
VAALCO completed its 2021/2022 drilling campaign in the fourth quarter of
2022. The Company is currently evaluating locations and planning for its next
drilling campaign. Gabon production performance in the nine months ended
September 30, 2023 has been strong and ahead of plan driven by improved
operational uptime at Etame. The cost savings from the new Floating, Storage
and Offloading vessel ("FSO") have been captured, as planned, but are being
offset by increased marine cost as a consequence of inflationary (marine
vessel supply rates, transportation, and contractors) and industry supply
chain pressures as well as higher diesel costs due to the feed gas line being
suspended due to a leak. The gas line has been successfully fixed in October
and the FSO is now utilizing gas rather than diesel.
Environmental, Social and Governance
As part of the Company's commitment to environmental stewardship, social
awareness and good corporate governance, VAALCO published its annual ESG
report in April 2023. The report covers VAALCO's ESG initiatives and related
key performance indicators and is available on VAALCO's web site,
www.vaalco.com, under the "Sustainability" tab. During 2022, the Company
completed a materiality study, led by its ESG Engineer with input from key
personnel across the organization with responsibility for engaging with its
key stakeholder groups. Working with an external consultancy, VAALCO created
an ESG materiality framework against which it plotted material topics informed
by the Global Reporting Initiative and Sustainability Accounting Standards
Board. Each of these were assessed based upon the perceived level of risk to
the business and the level of management control in place.
Financial Update -Third Quarter of 2023
Reported net income of $6.1 million ($0.06 per diluted share) for the
third quarter of 2023 which was down modestly compared with net income of
$6.8 million ($0.06 per diluted share) in the second quarter of 2023 and
$6.9 million ($0.11 per diluted share) in the third quarter of 2022. The
decrease in earnings compared to the second quarter of 2023 is mainly due
to higher income tax expense, losses on derivatives and well exploration
costs, partially offset by increased sales revenue and decreased depreciation.
depletion and amortization ("DD&A") expense. The decrease in earnings
compared to the third quarter of 2022 is primarily due to higher sales
revenue due to increased volumes more than offset by higher production
expense, higher DD&A expense, higher losses on derivatives and higher
income taxes.
Adjusted EBITDAX totaled $71.4 million in the third quarter of 2023, a 9%
increase from $65.3 million in the second quarter of 2023, primarily due to
higher revenues driven by higher sales and commodity pricing. The increase in
third quarter 2023 Adjusted EBITDAX to $71.4 million compared with $42.4
million, generated in the same period in 2022, is primarily due to increased
revenue as a result of the TransGlobe transaction which was partially offset
by lower commodity prices.
Quarterly Summary - Sales and Net Revenue
$ in thousands Three Months Ended September 30, 2023 Three Months Ended June 30, 2023
Gabon Egypt Canada Total Gabon Egypt Canada Total
Oil Sales $ 64,100 $ 88,748 $ 7,832 $ 160,680 $ 87,478 $ 50,201 $ 8,325 $ 146,004
NGL Sales - - $ 2,073 $ 2,073 - - $ 1,885 $ 1,885
Gas Sales - - $ 988 $ 988 - - $ 703 $ 703
Gross Sales $ 64,100 $ 88,748 $ 10,893 $ 163,741 $ 87,478 $ 50,201 $ 10,913 $ 148,592
Selling Costs & carried interest $ 1,378 $ (497 ) - $ 881 $ 2,212 $ (1 ) - $ 2,211
Royalties & taxes $ (8,203 ) $ (37,944 ) $ (2,206 ) $ (48,353 ) $ (11,766 ) $ (28,892 ) $ (905 ) $ (41,563 )
Net Revenue $ 57,275 $ 50,307 $ 8,687 $ 116,269 $ 77,924 $ 21,308 $ 10,008 $ 109,240
Oil Sales MMB (working interest) 764 1,282 101 2,146 1,113 910 123 2,146
Average Oil Price Received $ 83.92 $ 69.24 $ 77.89 $ 74.87 $ 78.62 $ 55.15 $ 67.76 $ 68.04
% Change Q3 2023 vs. Q2 2023 10 %
Average Brent Price - - - $ 86.65 - - - $ 77.92
% Change Q3 2023 vs. Q2 2023 11 %
Gas Sales MMCF (working interest) - - 470 470 - - 442 442
Average Gas Price Received - - $ 2.10 $ 2.10 - - $ 1.59 $ 1.59
% Change Q3 2023 vs. Q2 2023 32 %
Average Aeco Price ($USD) - - - $ 1.89 - - - $ 1.68
% Change Q3 2023 vs. Q2 2023 13 %
NGL Sales MMB (working interest) - - 82 82 - - 78 78
Average Liquids Price Received - - $ 25.27 $ 25.27 - - $ 24.04 $ 24.04
% Change Q3 2023 vs. Q2 2023 5 %
Revenue and Sales Q3 2023 Q3 2022 % Change Q3 2023 vs. Q3 2022 Q2 2023 % Change Q3 2023 vs. Q2 2023
Production (NRI BOEPD) 18,844 9,157 106 % 19,676 (4 )%
Sales (NRI BOE) 1,812,000 731,000 148 % 1,803,000 0 %
Realized commodity price ($/BOE) $ 63.41 $ 103.61 (39 )% $ 59.37 7 %
Commodity (Per BOE including realized commodity derivatives) $ 63.38 $ 91.13 (30 )% $ 59.34 7 %
Total commodity sales ($MM) $ 116.3 $ 78.1 49 % $ 109.2 6 %
VAALCO had net revenue increase by $7.0 million or 6% as total NRI sales
volumes of 1,812,000 BOE was slightly higher than Q2 2023 but rose 148%
compared to 731,000 BOE for Q3 2022. Q3 2023 sales were at the higher end of
VAALCO's guidance. The Company expects fourth quarter 2023 NRI sales to be
between 19,800 and 22,000 BOEPD.
Q3 2023 realized pricing (net of royalties) was up 7% compared to Q2 2023 but
decreased 39% compared to Q3 2022.
Costs and Expenses Q3 2023 Q3 2022 % Change Q3 2023 vs. Q3 2022 Q2 2023 % Change Q3 2023 vs. Q2 2023
Production expense, excluding offshore workovers and stock comp ($MM) $ 39.9 $ 23.2 72 % $ 38.8 3 %
Production expense, excluding offshore workovers ($/BOE) $ 22.07 $ 31.79 (31 )% $ 21.51 3 %
Offshore workover expense ($MM) $ (0.0 ) $ - - % $ (0.2 ) (88 )%
Depreciation, depletion and amortization ($MM) $ 32.5 $ 9.0 262 % $ 38.0 (14 )%
Depreciation, depletion and amortization ($/BOE) $ 18.0 $ 12.26 46 % $ 21.10 (15 )%
General and administrative expense, excluding stock-based compensation ($MM) $ 5.2 $ 2.0 159 % $ 4.8 8 %
General and administrative expense, excluding stock-based compensation ($/BOE) $ 2.9 $ 2.74 4 % $ 2.7 6 %
Stock-based compensation expense ($MM) $ 1.0 $ - - % $ 0.6 67 %
Current income tax expense (benefit) ($MM) $ 2.1 $ (1.2 ) (275 )% $ 12.4 (83 )%
Deferred income tax expense (benefit) ($MM) $ (2.6 ) $ 24.0 (111 )% $ (0.8 ) 225 %
Total production expense (excluding offshore workovers and stock compensation)
of $39.9 million in Q3 2023 was higher compared to Q2 2023 and the same
period in 2022. The increase in Q3 2023 expense compared to Q2 2023 was
driven primarily by higher costs related to higher sales volumes. The
increase in Q3 2023 compared to the Q3 2022 was primarily driven by increased
expense associated with higher sales and costs associated with the TransGlobe
combination as well as higher costs associated with boats, diesel and
operating costs. VAALCO has seen inflationary and industry supply chain
pressure on personnel and contractor costs.
Q3 2023 had no offshore workover expense. The negative $0.2 million in
workover expenses in Q2 2023 was the result of a reversal of accruals on
completion and tie out of the workover AFE's. There were no offshore workover
expenses in Q3 2022.
Q3 2023 production expense per BOE, excluding offshore workover costs remained
low at $22.07 per BOE which was in line with Q2 2023 and down 31% compared to
Q3 2022 due to higher sales, lower costs in Etame associated with the FSO
conversion and lower per BOE costs from the Egyptian and Canadian assets.
DD&A expense for the Q3 2023, was $32.5 million which was lower than
$38.0 million in Q2 2023 and higher than $9.0 million in Q3 2022. The
decrease in Q3 2023 DD&A expense, compared to Q2 2023, is due to lower
DD&A costs associated with Gabon due to a lifting that occurred in early
October 2023. The increase in Q3 2023 DD&A expense compared to Q3 2022 is
due to higher depletable costs associated with the FSO, the field
reconfiguration capital costs at Etame and the step-up in fair value of the
TransGlobe assets.
Q3 2023 included a $1.2 million expense related to the East Arta 54 appraisal
well in Egypt that was abandoned during Q3 2023 and subsequently expensed
to Exploration Expense.
General and administrative ("G&A") expense, excluding stock-based
compensation, increased to $5.2 million in Q3 2023 from $4.8 million in
Q2 2023 and $2.0 million in Q3 2022. The increase in general and
administrative expenses is primarily due to higher professional service fees,
salaries and wages, and accounting and legal fees. The Company has incurred
one-time reorganization costs in 2023 as it integrates the TransGlobe assets
and eliminates duplicate administrative costs. Q3 2023 G&A was within the
Company's guidance. The Company has made meaningful progress toward reducing
absolute G&A costs when compared against the combined TransGlobe and
VAALCO Q3 2022 costs.
Non-cash stock-based compensation expense was $1.0 million for Q3
2023 compared to no expense for Q3 2022. Non-cash stock-based compensation
expense for Q2 2023 was $0.6 million.
Other income (expense), net, was an income of $0.2 million for Q3 2023,
compared to an expense of $7.7 million during Q2 2022 and an expense of $0.5
million for Q2 2023. Other income (expense), net, normally consists of
foreign currency losses. For Q3 2022, included in other (expense) income,
net is $6.4 million of transaction costs associated with the TransGlobe
transaction.
Foreign income taxes for Gabon are settled by the government taking their oil
in-kind. Q3 2023 income tax expense was an expense of $25.8 million and is
comprised of current tax expense of $26.8 million and deferred tax benefit of
$0.9 million. Due to the sharp rise in oil prices subsequent to June 30,
2023, the repricing of the government oil taken in kind in Gabon to market
pricing from June 30, 2023 to September 30, 2023 has resulted in higher than
expected accrued taxes of approximately $5.3 million. Q2 2023 income tax
expense was an expense of $11.6 million. This was comprised of $12.4 million
of current tax expense and a deferred tax benefit of $0.8 million. Q3 2022
income tax expense was an expense of $22.8 million. This was comprised of
$24.0 million of deferred tax expense and a current tax benefit of
$1.2 million. For all periods, VAALCO's overall effective tax rate was
impacted by non-deductible items associated with derivative losses and
corporate expenses.
Financial Update - First Nine Months of 2023
Production for the first nine months of 2023 more than doubled
to 6,594 MBOE compared to 2,765 MBOE production in the first nine months
of 2022. The increase was driven by production from the TransGlobe assets,
as well as new wells from the 2021/2022 drilling campaign in Gabon. The first
nine months of 2023 saw sales volume more than double to 4,839 MBbls net
crude oil compared to 2,305 MBbls for the first nine months of 2022. Crude
oil sales are a function of the number and size of crude oil liftings in each
quarter and do not always coincide with volumes produced in any given period.
The average realized crude oil price for the first nine months of 2023 was
$62.48 per barrel, representing a decrease of 43% from $109.28 realized in
the first nine months of 2022. This decrease in crude oil price reflects the
softening in commodity pricing over the past year, as well as the
incorporation of the TransGlobe assets which include Canadian and Egyptian
crude, natural gas, and NGLs that have lower realized pricing than Gabon.
The Company reported net income for the nine months ended September 30,
2023 of $16.4 million, which compares to $34.1 million for the same period of
2022. The decrease in net income for the nine months ended September 30,
2023 compared to the same period in 2022 was primarily due to higher
production costs, higher DD&A and lower oil prices partially offset by
increased sales volumes.
Year to Date Summary - Sales and Net Revenue
$ in thousands Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022
Gabon Egypt Canada Total Gabon Egypt Canada Total
Oil Sales 194,179 193,570 22,811 410,560 289,290 - - 289,290
NGL Sales - - 6,421 6,421 - - - -
Gas Sales - - 2,649 2,649 - - - -
Gross Sales 194,179 193,570 31,881 419,630 289,290 - - 289,290
Selling Costs & carried interest 3,590 (995 ) - 2,595 5,843 - - 5,843
Royalties & taxes (25,833 ) (86,176 ) (4,304 ) (116,313 ) (37,395 ) - - (37,395 )
Net Revenue 171,936 106,399 27,577 305,912 257,738 - - 257,738
Oil Sales MMB (working interest) 2,404 3,032 317 5,753 2,650 - - 2,650
Average Oil Price Received $ 80.76 $ 63.85 $ 72.01 $ 71.36 $ 109.17 - - $ 109.17
% Change 2023 vs. 2022 -35 %
Average Brent Price $ 81.99 $ 105.00
% Change 2023 vs. 2022 -22 %
Gas Sales MMCF (working interest) - - 1,327 1,327 - - - -
Average Gas Price Received - - $ 2.00 $ 2.00 - - - -
% Change Q2 2023 vs. Q1 2023
NGL Sales MMB (working interest) - - 237 237 - - - -
Average Liquids Price Received - - $ 27.10 $ 27.10 - - - -
Capital Investments/Balance Sheet
For the first nine months of 2023, net capital expenditures totaled $77.4
million on a cash basis and $63.3 million on an accrual basis. These
expenditures were primarily related to costs associated with the development
drilling programs in Egypt and Canada. In the second quarter 2023 earnings
release, VAALCO reduced its planned capital budget for full year 2023 from a
range of $70 to $90 million to $71 to $75 million, or nearly $10 million at
the mid-point of guidance. The increased efficiencies achieved in drilling
wells in Egypt and Canada contributed to VAALCO's reducing its planned
spending for 2023.
At the end of the third quarter of 2023, VAALCO had an unrestricted cash
balance of $103.4 million. Working capital at September 30, 2023 was $51.3
million compared with $45.7 million at June 30, 2023, while Adjusted Working
Capital((3)) at September 30, 2023 totaled $63.3 million. VAALCO continues to
work with the Egyptian General Petroleum Corporation on both collections and
offsets. In addition, with the completion of drilling in Canada and Egypt,
VAALCO expects to see a reduction in its outstanding Accounts Payable and
Accruals.
In mid-2022, VAALCO announced entry into a new credit agreement, effective May
16, 2022, for a new five-year Reserve Based Lending ("RBL") facility with
Glencore Energy UK Ltd. ("Glencore") that includes an initial commitment of
$50 million and is expandable up to $100 million. The facility is currently
secured by the Company's assets in Gabon and matures in 2027. Key terms and
covenants under the new facility include Consolidated Total Net Debt to
EBITDAX (each term as defined in the RBL facility) for the trailing twelve
months of less than three times and requires VAALCO to maintain a minimum
consolidated cash and cash equivalents balance of $10 million. While VAALCO
intends to fund its capital and shareholder returns programs with internally
generated funds, the facility enhances future financial flexibility.
Cash Dividend Policy and Share Buyback Authorization
VAALCO paid a quarterly cash dividend of $0.0625 per share of common stock for
the third quarter of 2023 on September 22, 2023. On November 7, 2023, the
Company announced its next quarterly cash dividend of $0.0625 per share of
common stock for the fourth quarter of 2023 ($0.25 annualized), to be paid
on December 21, 2023 to stockholders of record at the close of business on
November 24, 2023. VAALCO increased its per share dividend amount 92%
beginning with the second quarter of 2023 compared to the quarterly dividends
paid in 2022. Future declarations of quarterly dividends and the establishment
of future record and payment dates are subject to approval by the VAALCO Board
of Directors (the "Board").
On November 1, 2022, VAALCO announced that its newly expanded Board formally
ratified and approved the share buyback program that was announced on August
8, 2022 in conjunction with the pending business combination with
TransGlobe. The Board also directed management to implement a Rule 10b5-1
trading plan to facilitate share purchases through open market purchases,
privately negotiated transactions, or otherwise in compliance with Rule 10b-18
under the Securities Exchange Act of 1934. The plan provides for an aggregate
purchase of currently outstanding common stock up to $30 million. Payment for
shares repurchased under the program will be funded using the Company's cash
on hand and cash flow from operations.
The actual timing, number and value of shares repurchased under the share
buyback program will depend on a number of factors, including constraints
specified in any Rule 10b5-1 trading plans, price, general business and market
conditions, and alternative investment opportunities. Under such a trading
plan, the Company's third-party broker, subject to Securities and Exchange
Commission regulations regarding certain price, market, volume and timing
constraints, has authority to purchase the Company's common stock in
accordance with the terms of the plan. The share buyback program does not
obligate the Company to acquire any specific number of shares in any period,
and may be expanded, extended, modified or discontinued at any time.
Since inception of the buyback program in November 2022 through November 3,
2023, VAALCO has repurchased $20.8 million in shares.
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 for the fourth quarter of
2023 and new hedges that were entered into for 2024:
Settlement Period Type of Contract Index Average Monthly Volumes Weighted Average Put Price Weighted Average Call Price
(Bbls) (per Bbl) (per Bbl)
October 2023 - December 2023 Collars Dated Brent 85,000 $ 65.00 $ 90.00
January 2024 - March 2024 Collars Dated Brent 85,000 $ 65.00 $ 97.00
April 2024 - June 2024 Collars Dated Brent 65,000 $ 65.00 $ 100.00
2023 Guidance:
The Company has provided fourth quarter 2023 guidance and updated its full
year 2023 guidance. Driven by continued strong performance from the 2023
drilling program, production guidance for both Egypt and Canada have been
raised. Additionally, due to operational excellence and continued focus on
maintaining strong uptime in the field, VAALCO has raised its Gabon full year
production guidance. The drilling, completions and facility improvements seen
in Egypt and Canada have also driven capital costs lower and VAALCO has
updated and lowered its full year capital expenditure budget. All of the
quarterly and annual guidance is detailed in the tables below.
FY 2023 Gabon Egypt Canada
Production (BOEPD) WI 23,450 - 24,400 9,950 - 10,200 10,900 - 11,400 2,600 - 2,800
Production (BOEPD) NRI 18,300 - 18,900 8,600 - 8,800 7,500 - 7,700 2,200 - 2,400
Sales Volume (BOEPD) WI 23,050 - 24,000 9,550 - 9,800 10,900 - 11,400 2,600 - 2,800
Sales Volume (BOEPD) NRI 17,900 - 18,500 8,200 - 8,400 7,500 - 7,700 2,200 - 2,400
Production Expense (millions) WI & NRI $154.0 - $160.0
Production Expense per BOE WI $17.00 - $19.50
Production Expense per BOE NRI $22.00 - $25.00
Offshore Workovers (millions) WI & NRI $0 - $0
Cash G&A (millions) WI & NRI $18.0 - $21.0
CAPEX (millions) WI & NRI $71 - $75
DD&A ($/BO) NRI $20.0 - $22.00
Q4 2023 Gabon Egypt Canada
Production (BOEPD) WI 22,900 - 24,600 9,400 - 10,100 11,100 - 11,800 2,400 - 2,700
Production (BOEPD) NRI 17,600 - 19,400 8,100 - 8,800 7,600 - 8,300 1,900 - 2,300
Sales Volume (BOEPD) WI 25,300 - 27,600 11,800 - 13,100 11,100 - 11,800 2,400 - 2,700
Sales Volume (BOEPD) NRI 19,800 - 22,000 10,300 - 11,400 7,600 - 8,300 1,900 - 2,300
Production Expense (millions) WI & NRI $42.2 - $47.6
Production Expense per BOE WI $16.00 - $21.00
Production Expense per BOE NRI $21.00 - $26.50
Offshore Workovers (millions) WI & NRI $0 - $0
Cash G&A (millions) WI & NRI $4.0 - $6.0
CAPEX (millions) WI & NRI $9.5 - $12
DD&A ($/BO) NRI $20.0 - $22.0
Conference Call
As previously announced, the Company will hold a conference call to discuss
its third quarter 2023 financial and operating results tomorrow, Wednesday,
November 8, 2023, at 10:00 a.m. Central Time (11:00 a.m. Eastern Time and 4:00
p.m. London Time). Interested parties may participate by dialing (833)
685-0907. Parties in the United Kingdom may participate toll-free by dialing
08082389064 and other international parties may dial (412) 317-5741.
Participants should request to be joined to the "VAALCO Energy Third Quarter
2023 Conference Call." This call will also be webcast on VAALCO's website at
www.vaalco.com. An archived audio replay will be available on VAALCO's
website.
A "Q3 2023 Supplemental Information" investor deck will be posted to VAALCO's
web site prior to its conference call on November 8, 2023 that includes
additional financial and operational information.
About VAALCO
VAALCO, founded in 1985 and incorporated under the laws of Delaware, is a
Houston, USA based, independent energy company with production, development
and exploration assets in Africa and Canada.
Following its business combination with TransGlobe in October 2022, VAALCO
owns a diverse portfolio of operated production, development and exploration
assets across Gabon, Egypt, Equatorial Guinea and Canada.
For Further Information
VAALCO Energy, Inc. (General and Investor Enquiries) +00 1 713 623 0801
Website: www.vaalco.com
Al Petrie Advisors (US Investor Relations) +00 1 713 543 3422
Al Petrie / Chris Delange
Buchanan (UK Financial PR) +44 (0) 207 466 5000
Ben Romney / Barry Archer VAALCO@buchanan.uk.com
Forward Looking Statements
This press release includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended, which are
intended to be covered by the safe harbors created by those laws and other
applicable laws and "forward-looking information" within the meaning of
applicable Canadian securities laws. Where a forward-looking statement
expresses or implies an expectation or belief as to future events or results,
such expectation or belief is expressed in good faith and believed to have a
reasonable basis. All statements other than statements of historical fact may
be forward-looking statements. The words "anticipate," "believe," "estimate,"
"expect," "intend," "forecast," "outlook," "aim," "target," "will," "could,"
"should," "may," "likely," "plan" and "probably" or similar words may identify
forward-looking statements, but the absence of these words does not mean that
a statement is not forward-looking. Forward-looking statements in this press
release include, but are not limited to, statements relating to (i) estimates
of future drilling, production, sales and costs of acquiring crude oil,
natural gas and natural gas liquids; (ii) the amount and timing of stock
buybacks, if any, under VAALCO's stock buyback program and VAALCO's ability to
enhance stockholder value through such plan; (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, buybacks and other potential returns to stockholders; (vi)
expectations of future balance sheet strength; (vii) expectations of future
equity and enterprise value; and (viii) VAALCO's ability to finalize documents
and effectively execute the POD for the Venus development in Block P.
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 or TransGlobe; the ability to generate
cash flows that, along with cash on hand, will be sufficient to support
operations and cash requirements; the impact and costs of compliance with
laws and regulations governing oil and gas operations; the risks described
under the caption "Risk Factors" in VAALCO's 2022 Annual Report on Form 10-K
filed with the SEC on April 6, 2023.
Dividends beyond the fourth quarter of 2023 have not yet been approved or
declared by the Board of Directors for VAALCO. The declaration and payment of
future dividends and the terms of share buybacks remains at the discretion of
the Board and will be determined based on VAALCO's financial results, balance
sheet strength, cash and liquidity requirements, future prospects, crude oil
and natural gas prices, and other factors deemed relevant by the Board. The
Board reserves all powers related to the declaration and payment of dividends
and the terms of share buybacks. Consequently, in determining the dividend to
be declared and paid on VAALCO common stock or the terms of share buybacks,
the Board may revise or terminate the payment level or buyback terms at any
time without prior notice.
Inside Information
This announcement contains inside information as defined in Regulation (EU)
No. 596/2014 on market abuse which is part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ("MAR") and is made in accordance with
the Company's obligations under article 17 of MAR. The person responsible for
arranging the release of this announcement on behalf of VAALCO is Matthew
Powers, Corporate Secretary of VAALCO.
VAALCO ENERGY, INC AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
As of September 30, 2023 As of December 31, 2022
ASSETS (in thousands)
Current assets:
Cash and cash equivalents $ 103,353 $ 37,205
Restricted cash 111 222
Receivables:
Trade, net 22,788 52,147
Accounts with joint venture owners, net of allowance for credit losses of $0.6 1,635 15,830
and $0.3 million, respectively
Foreign income taxes receivable - 2,769
Other, net of allowance for credit losses of $3.5 and $0.0 million, 64,826 68,519
respectively
Crude oil inventory 9,287 3,335
Prepayments and other 16,115 20,070
Total current assets 218,115 200,097
Crude oil and natural gas properties, equipment and other - successful efforts 467,877 495,272
method, net
Other noncurrent assets:
Restricted cash 1,787 1,763
Value added tax and other receivables, net of allowance of $9.9 million and 9,462 7,150
$8.4 million, respectively
Right of use operating lease assets 3,510 2,777
Right of use finance lease assets 87,971 90,698
Deferred tax assets 31,222 35,432
Abandonment funding 6,268 20,586
Other long-term assets 1,616 1,866
Total assets $ 827,828 $ 855,641
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 43,924 $ 59,886
Accounts with joint venture owners 1,151 -
Accrued liabilities and other 76,470 91,392
Operating lease liabilities - current portion 3,539 2,314
Finance lease liabilities - current portion 7,810 7,811
Foreign income taxes payable 33,256 -
Current liabilities - discontinued operations 673 687
Total current liabilities 166,823 162,090
Asset retirement obligations 45,201 41,695
Operating lease liabilities - net of current portion 82 686
Finance lease liabilities - net of current portion 77,862 78,248
Deferred tax liabilities 76,120 81,223
Other long-term liabilities 17,369 25,594
Total liabilities 383,457 389,536
Commitments and contingencies
Shareholders' equity:
Preferred stock, $25 par value; 500,000 shares authorized, none issued - -
Common stock, $0.10 par value; 160,000,000 shares authorized, 121,341,251 and 12,134 11,948
119,482,680 shares issued, 105,714,499 and 107,852,857 shares outstanding,
respectively
Additional paid-in capital 356,424 353,606
Accumulated other comprehensive income 844 1,179
Less treasury stock, 15,626,752 and 11,629,823 shares, respectively, at cost (65,145 ) (47,652 )
Retained earnings 140,114 147,024
Total shareholders' equity 444,371 466,105
Total liabilities and shareholders' equity $ 827,828 $ 855,641
VAALCO ENERGY, INC AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
Three Months Ended Nine Months Ended
September 30, 2023 September 30, 2022 June 30, 2023 September 30, 2023 September 30, 2022
(in thousands except per share amounts)
Revenues:
Crude oil, natural gas and natural gas liquids sales $ 116,269 $ 78,097 $ 109,240 $ 305,912 $ 257,738
Operating costs and expenses:
Production expense 39,956 23,312 38,604 106,760 67,147
FPSO Demobilization - 8,867 5,647 5,647 8,867
Exploration expense 1,194 56 57 1,259 250
Depreciation, depletion and amortization 32,538 8,963 38,003 94,958 21,827
General and administrative expense 6,216 1,979 5,395 16,835 10,507
Credit losses and other 822 1,020 680 2,437 2,083
Total operating costs and expenses 80,726 44,197 88,386 227,896 110,681
Other operating income (expense), net 5 - (303 ) (298 ) (5 )
Operating income 35,548 33,900 20,551 77,718 147,052
Other income (expense):
Derivative instruments gain (loss), net (2,320 ) 3,778 31 (2,268 ) (37,522 )
Interest expense, net (1,426 ) (234 ) (1,703 ) (5,375 ) (355 )
Other income (expense), net 183 (7,707 ) (537 ) (1,494 ) (10,514 )
Total other income (expense), net (3,563 ) (4,163 ) (2,209 ) (9,137 ) (48,391 )
Income from continuing operations before income taxes 31,985 29,737 18,342 68,581 98,661
Income tax expense (benefit) 25,844 22,843 11,588 52,203 64,467
Income from continuing operations 6,141 6,894 6,754 16,378 34,194
Loss from discontinued operations, net of tax - (26 ) (2 ) (15 ) (58 )
Net income $ 6,141 $ 6,868 $ 6,752 $ 16,363 $ 34,136
Other comprehensive income (loss)
Currency translation adjustments (2,216 ) - 2,006 (335 ) -
Comprehensive income $ 3,925 $ 6,868 $ 8,758 $ 16,028 $ 34,136
Basic net income (loss) per share:
Income (loss) from continuing operations $ 0.06 $ 0.12 $ 0.06 $ 0.15 $ 0.57
Loss from discontinued operations, net of tax - - - - -
Net income (loss) per share $ 0.06 $ 0.12 $ 0.06 $ 0.15 $ 0.57
Basic weighted average shares outstanding 106,289 59,068 106,965 106,876 58,900
Diluted net income (loss) per share:
Income (loss) from continuing operations $ 0.06 $ 0.11 $ 0.06 $ 0.15 $ 0.57
Loss from discontinued operations, net of tax - - - - -
Net income (loss) per share $ 0.06 $ 0.11 $ 0.06 $ 0.15 $ 0.57
Diluted weighted average shares outstanding 106,433 59,450 107,613 107,072 59,335
VAALCO ENERGY, INC AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30,
2023 2022
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 16,363 $ 34,136
Adjustments to reconcile net income to net cash provided by operating
activities:
Loss from discontinued operations, net of tax 15 58
Depreciation, depletion and amortization 94,958 21,827
Bargain purchase gain 1,412 -
Exploration Expense 1,194 -
Deferred taxes (2,305 ) 39,540
Unrealized foreign exchange loss 932 914
Stock-based compensation 2,332 2,300
Cash settlements paid on exercised stock appreciation rights (282 ) (805 )
Derivative instruments (gain) loss, net 2,268 37,522
Cash settlements paid on matured derivative contracts, net (62 ) (42,683 )
Cash settlements paid on asset retirement obligations (4,796 ) -
Credit losses and other 2,437 2,083
Other operating loss, net 317 5
Operational expenses associated with equipment and other 2,560 953
Change in operating assets and liabilities:
Trade receivables 29,364 5,683
Accounts with joint venture owners 15,090 (11,118 )
Other receivables 694 (2,904 )
Crude oil inventory (5,952 ) (2,661 )
Prepayments and other 1,198 (1,120 )
Value added tax and other receivables (3,719 ) (5,371 )
Other long-term assets 2,942 (2,842 )
Accounts payable (10,083 ) 4,129
Foreign income taxes receivable/payable 36,025 24,928
Accrued liabilities and other (11,076 ) 25,182
Net cash provided by (used in) continuing operating activities 171,826 129,756
Net cash used in discontinued operating activities (15 ) (57 )
Net cash provided by (used in) operating activities 171,811 129,699
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment expenditures (77,365 ) (103,853 )
Net cash provided by (used in) continuing investing activities (77,365 ) (103,853 )
Net cash used in discontinued investing activities - -
Net cash provided by (used in) investing activities (77,365 ) (103,853 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuances of common stock 593 257
Dividend distribution (20,153 ) (5,816 )
Treasury shares (17,493 ) (788 )
Deferred financing costs (83 ) (1,535 )
Payments of finance lease (5,246 ) (193 )
Net cash provided by (used in) in continuing financing activities (42,382 ) (8,075 )
Net cash used in discontinued financing activities - -
Net cash provided by (used in) in financing activities (42,382 ) (8,075 )
Effects of exchange rate changes on cash (321 ) -
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 51,743 17,771
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD 59,776 72,314
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $ 111,519 $ 90,085
VAALCO ENERGY, INC AND SUBSIDIARIES
Selected Financial and Operating Statistics
(Unaudited)
Three Months Ended Nine Months Ended
September 30, 2023 September 30, 2022 June 30, 2023 September 30, 2023 September 30, 2022
NRI SALES DATA
Crude oil, natural gas and natural gas liquids sales (MBOE) 1,812 731 1,803 4,839 2,305
WI PRODUCTION DATA
Etame Crude oil (MBbl) 911 968 934 2,787 2,765
Egypt Crude oil (MBbl) 1,076 - 1,054 3,032 -
Canada Crude Oil (MBbl) 101 - 123 317 -
Canada Natural Gas (Mcf) 470 - 442 1,327 -
Canada Natural Gas Liquid (Mbbl) 82 - 78 237 -
Canada Crude oil, natural gas and natural gas liquids (MBOE) 261 - 275 775 -
Total Crude oil, natural gas and natural gas liquids production (MBOE) 2,248 968 2,263 6,594 2,765
Gabon Average daily production volumes (BOEPD) 9,901 10,525 10,262 10,209 10,127
Egypt Average daily production volumes (BOEPD) 11,691 - 11,579 11,106 -
Canada Average daily production volumes (BOEPD) 2,835 - 3,021 2,838 -
Average daily production volumes (BOEPD) 24,430 10,525 24,863 24,153 10,127
NRI PRODUCTION DATA
Etame Crude oil (MBbl) 792 842 812 2,425 2,405
Egypt Crude oil (MBbl) 732 - 726 2,074 -
Canada Crude Oil (MBbl) 81 - 113 274.82 -
Canada Natural Gas (Mcf) 376 - 406 1,150.85 -
Canada Natural Gas Liquid (Mbbl) 66 - 72 205.52 -
Canada Crude oil, natural gas and natural gas liquids (MBOE) 210 - 253 672 -
Total Crude oil, natural gas and natural gas liquids production (MBOE) 1,734 842 1,791 5,172 2,405
Gabon Average daily production volumes (BOEPD) 8,609 9,157 8,923 8,883 8,810
Egypt Average daily production volumes (BOEPD) 7,957 - 7,978 7,598 -
Canada Average daily production volumes (BOEPD) 2,279 - 2,776 2,462 -
Average daily production volumes (BOEPD) 18,844 9,157 19,676 18,943 8,810
AVERAGE SALES PRICES:
Crude oil, natural gas and natural gas liquids sales (per BOE) - WI basis $ 70.78 $ 104.25 $ 64.67 $ 67.40 $ 109.17
Crude oil, natural gas and natural gas liquids sales (per BOE) - NRI basis $ 63.41 $ 103.61 $ 59.37 $ 62.48 $ 109.28
Crude oil, natural gas and natural gas liquids sales (Per BOE including $ 63.38 $ 91.13 $ 59.34 $ 62.47 $ 90.76
realized commodity derivatives)
COSTS AND EXPENSES (Per BOE of sales):
Production expense $ 22.05 $ 31.89 $ 21.41 $ 22.06 $ 29.13
Production expense, excluding offshore workovers and stock compensation* 22.04 31.79 21.51 22.32 29.10
Depreciation, depletion and amortization 17.96 12.26 21.08 19.62 9.47
General and administrative expense** 3.43 2.71 2.99 3.48 4.56
Property and equipment expenditures, cash basis (in thousands) $ 22,533 $ 43,575 $ 27,132 $ 77,365 $ 103,853
*Offshore workover costs excluded from the three months ended September 30,
2023 and 2022 and June 30, 2023 are $0.0 million, $0.0 million and
$(0.2) million, respectively.
*Stock compensation associated with production expense excluded from the three
months ended September 30, 2023 and 2022 and June 30, 2023 are not
material.
**General and administrative expenses include $0.57, $(0.03) and $0.33 per
barrel of oil related to stock-based compensation expense in the three
months ended September 30, 2023 and 2022 and June 30, 2023, respectively.
NON-GAAP FINANCIAL MEASURES
Management uses Adjusted Net Income to evaluate operating and financial
performance and believes the measure is useful to investors because it
eliminates the impact of certain non-cash and/or other items that management
does not consider to be indicative of the Company's performance from period to
period. Management also believes this non-GAAP measure is useful to investors
to evaluate and compare the Company's operating and financial performance
across periods, as well as facilitating comparisons to others in the Company's
industry. Adjusted Net Income is a non-GAAP financial measure and as used
herein represents net income before discontinued operations, impairment of
proved crude oil and natural gas properties, deferred income tax expense,
unrealized commodity derivative loss, gain on the Sasol Acquisition and
non-cash and other items.
Adjusted EBITDAX is a supplemental non-GAAP financial measure used by VAALCO's
management and by external users of the Company's financial statements, such
as industry analysts, lenders, rating agencies, investors and others who
follow the industry, as an indicator of the Company's ability to internally
fund exploration and development activities and to service or incur additional
debt. Adjusted EBITDAX is a non-GAAP financial measure and as used herein
represents net income before discontinued operations, interest income net,
income tax expense, depletion, depreciation and amortization, exploration
expense, impairment of proved crude oil and natural gas properties, non-cash
and other items including stock compensation expense, gain on the Sasol
Acquisition and unrealized commodity derivative loss.
Management uses Adjusted Working Capital as a transition tool to assess the
working capital position of the Company's continuing operations excluding
leasing obligations because it eliminates the impact of discontinued
operations as well as the impact of lease liabilities. Under the lease
accounting standards, lease liabilities related to assets used in joint
operations include both the Company's share of expenditures as well as the
share of lease expenditures which its non-operator joint venture owners' will
be obligated to pay under joint operating agreements. Adjusted Working Capital
is a non-GAAP financial measure and as used herein represents working capital
excluding working capital attributable to discontinued operations and current
liabilities associated with lease obligations.
Management uses Free Cash Flow to evaluate financial performance and to
determine the total amount of cash over a specified period available to be
used in connection with returning cash to shareholders, and believes the
measure is useful to investors because it provides the total amount of net
cash available for returning cash to shareholders by adding cash generated
from operating activities, subtracting amounts used in financing and investing
activities, and adding back amounts used for dividend payments and stock
repurchases. Free Cash Flow is a non-GAAP financial measure and as used herein
represents net change in cash, cash equivalents and restricted cash and adds
the amounts paid under dividend distributions and share repurchases over a
specified period.
Free Cash Flow has significant limitations, including that it does not
represent residual cash flows available for discretionary purposes and should
not be used as a substitute for cash flow measures prepared in accordance with
GAAP. Free Cash Flow should not be considered as a substitute for cashflows
from operating activities before discontinued operations or any other
liquidity measure presented in accordance with GAAP. Free Cash Flow may vary
among other companies. Therefore, the Company's Free Cash Flow may not be
comparable to similarly titled measures used by other companies.
Adjusted EBITDAX and Adjusted Net Income have significant limitations,
including that they do not reflect the Company's cash requirements for capital
expenditures, contractual commitments, working capital or debt service.
Adjusted EBITDAX, Adjusted Net Income, Adjusted Working Capital and Free Cash
Flow should not be considered as substitutes for net income (loss), operating
income (loss), cash flows from operating activities or any other measure of
financial performance or liquidity presented in accordance with GAAP. Adjusted
EBITDAX and Adjusted Net Income exclude some, but not all, items that affect
net income (loss) and operating income (loss) and these measures may vary
among other companies. Therefore, the Company's Adjusted EBITDAX, Adjusted Net
Income, Adjusted Working Capital and Free Cash Flow may not be comparable to
similarly titled measures used by other companies.
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 Nine Months Ended
Reconciliation of Net Income to Adjusted Net Income September 30, 2023 September 30, 2022 June 30, 2023 September 30, 2023 September 30, 2022
Net income $ 6,141 $ 6,868 $ 6,752 $ 16,363 $ 34,136
Adjustment for discrete items:
Discontinued operations, net of tax - 26 2 15 58
Unrealized derivative instruments loss (gain) 2,321 (12,902 ) (35 ) 2,206 (5,161 )
Arrangement Costs - 6,424 - - 7,624
FPSO demobilization - 8,867 5,647 5,647 8,867
Deferred income tax expense (benefit) (985 ) 24,008 (813 ) 673 39,539
Other operating (income) expense, net (5 ) - 303 298 5
Adjusted Net Income $ 7,472 $ 33,291 $ 11,856 $ 25,202 $ 85,068
Diluted Adjusted Net Income per Share $ 0.07 $ 0.56 $ 0.11 $ 0.24 $ 1.43
Diluted weighted average shares outstanding (1) 106,433 59,450 107,613 107,072 59,335
(1) No adjustments to weighted average shares outstanding
Three Months Ended Nine Months Ended
Reconciliation of Net Income to Adjusted EBITDAX September 30, 2023 September 30, 2022 June 30, 2023 September 30, 2023 September 30, 2022
Net income $ 6,141 $ 6,868 $ 6,752 $ 16,363 $ 34,136
Add back:
Impact of discontinued operations - 26 2 15 58
Interest expense (income), net 1,426 234 1,703 5,375 355
Income tax expense (benefit) 25,844 22,843 11,588 52,203 64,467
Depreciation, depletion and amortization 32,538 8,963 38,003 94,958 21,827
Exploration expense 1,194 56 57 1,259 250
FPSO demobilization - 8,867 5,647 5,647 8,867
Non-cash or unusual items:
Stock-based compensation 1,078 36 605 2,332 2,300
Unrealized derivative instruments loss (gain) 2,321 (12,902 ) (35 ) 2,206 (5,161 )
Arrangement Costs - 6,424 - - 7,624
Other operating (income) expense, net (5 ) - 303 298 5
Credit losses and other 822 1,020 680 2,437 2,083
Adjusted EBITDAX $ 71,359 $ 42,435 $ 65,305 $ 183,093 $ 136,811
VAALCO ENERGY, INC AND SUBSIDIARIES
Reconciliations of Non-GAAP Financial Measures
(Unaudited)
(in thousands)
Reconciliation of Working Capital to Adjusted Working Capital As of September 30, 2023 As of December 31, 2022 Change
Current assets $ 218,115 $ 200,097 $ 18,018
Current liabilities (166,823 ) (162,090 ) (4,733 )
Working capital 51,292 38,007 13,285
Add: lease liabilities - current portion 11,349 10,125 1,224
Add: current liabilities - discontinued operations 673 687 (14 )
Adjusted Working Capital $ 63,314 $ 48,819 $ 14,495
Nine Months Ended September 30, 2023
Reconciliation of Free Cash Flow
Net cash provided by Operating activities $ 171,811
Net cash used in Investing activities (77,365 )
Net cash used in Financing activities (42,382 )
Effects of exchange rate changes on cash (321 )
Total net cash change 51,743
Add back shareholder cash out:
Dividends paid 20,153
Stock buyback 15,566
Total cash returned to shareholders 35,719
Free Cash Flow $ 87,462
Percent of Free Cash Flow returned to shareholders 41 %
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