TIDMEGY
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 w
hile 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%
% Change Q3 % Change Q3
2023 vs. Q3 2023 vs. Q2
Revenue and Sales Q3 2023 Q3 2022 2022 Q2 2023 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 $7.0 million or 6% as total
NRI sales volumes of 1,812,000 BOE was slightly higher than Q2 2023
but rose 148% compared to 731,000 BOE for Q3 2022. Q3 2023 sales
were at the higher end of VAALCO's guidance. The Company expects
fourth quarter 2023 NRI sales to be between 19,800 and 22,000
BOEPD.
Q3 2023 realized pricing (net of royalties) was up 7% compared
to Q2 2023 but decreased 39% compared to Q3 2022.
Costs and % Change Q3 2023 % Change Q3 2023
Expenses Q3 2023 Q3 2022 vs. Q3 2022 Q2 2023 vs. Q2 2023
--------- --------- ---------------- --------- ----------------
Production
expense,
excluding
offshore
workovers and
stock comp ($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:
Average
Settlement Type of Monthly Weighted Average Put Weighted Average
Period Contract Index Volumes Price 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 and $0.3
million,
respectively 1,635 15,830
Foreign income taxes receivable - 2,769
Other, net of allowance for credit losses of
$3.5 and $0.0 million, respectively 64,826 68,519
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 method, net 467,877 495,272
Other noncurrent assets:
Restricted cash 1,787 1,763
Value added tax and other receivables, net of
allowance of $9.9 million and $8.4 million,
respectively 9,462 7,150
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 119,482,680
shares issued, 105,714,499 and 107,852,857 shares
outstanding, respectively 12,134 11,948
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, September 30, June 30, September 30, September
2023 2022 2023 2023 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 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, September 30, September 30, September 30,
2023 2022 June 30, 2023 2023 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
realized commodity
derivatives) $ 63.38 $ 91.13 $ 59.34 $ 62.47 $ 90.76
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 September 30, September 30, June 30, September 30, September
Income 2023 2022 2023 2023 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 September 30, September 30, June 30, September 30, September
Adjusted EBITDAX 2023 2022 2023 2023 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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