VAALCO Energy, Inc. (NYSE: EGY; LSE: EGY) (“VAALCO” or the
“Company”) today announced that, in connection with VAALCO’s
previously announced acquisition from Sasol Gabon S.A. (“Sasol”) of
Sasol’s 27.8% working interest(1) in the Etame Marin block offshore
Gabon, the other joint owners in the Etame Marin block have not
exercised their pre-emptive rights. As a result, VAALCO will now
move forward with acquiring Sasol’s entire working interest in the
field.
In regard to Block DE-8 offshore Gabon, the 60%
operated participating interest owner, Perenco, has exercised its
preferential rights. As a result, Perenco is acquiring Sasol’s 40%
non-operated participating interest(1), releasing VAALCO from the
potential obligation to drill an appraisal well. VAALCO will not be
subject to any contingency payments due regarding Block DE-8. The
terms of the sale and purchase agreement did not attribute a
material value to the undeveloped resource at Block DE-8, as such,
the purchase price for Sasol’s 27.8% working interest(1) of $44
million less customary post-effective date adjustments has not
changed. The maximum future contingency payments have been reduced
from $6 million to $5 million.
Additional details regarding the transaction
were included in a news release issued on November 17, 2020. Since
VAALCO currently owns and operates a 31.1% working interest(1) in
Etame, the transaction will almost double VAALCO’s total production
and reserves.
Cary Bounds, Chief Executive Officer, commented,
“We are excited to move forward with this very attractive and value
accretive acquisition. Based on production performance in November,
our production capacity, including volumes acquired from Sasol,
would be over 9,000 barrels of oil per day and with the recent
increase in oil pricing, this should significantly boost our free
cash flow profile in 2021. In addition, this transaction is
lowering our breakeven cost per barrel by increasing production
with minimal increases to G&A expense. While we are
disappointed that we will not be participating in Block DE-8, this
eliminates the cost to drill the appraisal well, thereby reducing
our overall capital commitment in 2021 by between $7 million and $9
million and removes the $1 million potential contingency
obligation. We are even more confident in the future for VAALCO and
this acquisition coupled with the new proprietary 3-D seismic data
we are processing over the entire Etame Marin block will allow us
to maximize the value of our Gabon resources. We are well
positioned to profitably grow and generate free cash flow in the
near and long-term which should enhance value for our
shareholders.”
(1) |
Prior to the closing of the acquisition, VAALCO’s working interest
in Etame is 31.1% and its participating interest is 33.6%; Sasol’s
working interest in Etame is 27.8% and its participating interest
is 30%. All NRI production rates and volumes are based on working
interest less 13% royalty volumes. Sasol’s participating interest
in DE-8 is 40% and its working interest is subject to government
rights for a 20% carried interest and 10% back-in
interest. |
An updated investor deck with additional
information is available at www.vaalco.com under the Investor
Relations section.
About VAALCO
VAALCO, founded in 1985, is a Houston, USA
based, independent energy company with production, development and
exploration assets in the West African region.
The Company is an established operator within
the region, holding a 33.6% participating interest in the Etame
Marin block, located offshore Gabon, which to date has produced
over 119 million barrels of crude oil and of which the Company is
the operator.
For Further Information
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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 |
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Buchanan (UK Financial
PR) |
+44 (0) 207 466 5000 |
Ben Romney / Kelsey
Traynor / James Husband |
VAALCO@buchanan.uk.com |
Forward Looking Statements
This document includes “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. All statements, other than statements of
historical facts, included in this document that address
activities, events, plans, expectations, objectives or developments
that VAALCO expects, believes or anticipates will or may occur in
the future are forward-looking statements. These statements may
include statements related to the impact of the COVID-19 pandemic,
including the recent sharp decline in the global demand for and
resulting global oversupply of crude oil and the resulting steep
decline in oil prices, production quotas imposed by Gabon,
disruptions in global supply chains, quarantines of our workforce
or workforce reductions and other matters related to the pandemic,
well results, wells anticipated to be drilled and placed on
production, future levels of drilling and operational activity and
associated expectations, the implementation of the Company’s
business plans and strategy, prospect evaluations, prospective
resources and reserve growth, its activities in Equatorial Guinea,
expected sources of and potential difficulties in obtaining future
capital funding and future liquidity, its ability to restore
production in non-producing wells, future operating losses, future
changes in crude oil and natural gas prices, future strategic
alternatives, future and pending acquisitions, capital
expenditures, future drilling plans, acquisition and interpretation
of seismic data and costs thereof, negotiations with governments
and third parties, timing of the settlement of Gabon income taxes,
and expectations regarding processing facilities, production, sales
and financial projections. These statements are based on
assumptions made by VAALCO based on its experience and perception
of historical trends, current conditions, expected future
developments and other factors it believes are appropriate in the
circumstances. Such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond
VAALCO’s control. These risks include, but are not limited to,
crude oil and natural gas price volatility, the failure of the
transaction to close, the impact of production quotas imposed by
Gabon in response to production cuts agreed to as a member of OPEC,
inflation, general economic conditions, the outbreak of COVID-19,
the Company’s success in discovering, developing and producing
reserves, production and sales differences due to timing of
liftings, decisions by future lenders, the risks associated with
liquidity, lack of availability of goods, services and capital,
environmental risks, drilling risks, foreign regulatory and
operational risks, and regulatory changes.
Investors are cautioned that forward-looking
statements are not guarantees of future performance and that actual
results or developments may differ materially from those projected
in the forward-looking statements. VAALCO disclaims any intention
or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events, or
otherwise.
Inside Information
This announcement contains inside information as
defined in Regulation (EU) No. 596/2014 on market abuse (“MAR”) and
is made in accordance with the Company’s obligations under article
17 of MAR.
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