VAALCO Energy, Inc. Announces Third Quarter 2024 Results

HOUSTON, Nov. 11, 2024 (GLOBE NEWSWIRE) -- VAALCO Energy, Inc. (NYSE: EGY, LSE: EGY) ("Vaalco" or the "Company") today reported operational and financial results for the third quarter of 2024.

Third Quarter 2024 Highlights and Recent Key Items:

• Grew net revenue interest ("NRI")⁽²⁾ sales to 2,134,000 barrels of oil equivalent ("BOE”), or 23,198 barrels of oil equivalent per day ("BOEPD"), toward the upper end of guidance; and 20% above the second quarter of 2024 due to additional Côte d'Ivoire liftings;
• Reported Q3 2024 net income of $11.0 million ($0.10 per diluted share) and Adjusted Net Income⁽¹⁾ of $7.9 million ( $0.08 per diluted share);
• Increased Adjusted EBITDAX⁽¹⁾ by 28% to $92.8 million compared to Q2 2024, driven by sales increase associated with Côte d'Ivoire liftings;
• Achieved production of 21,770 NRI⁽²⁾ BOEPD and working interest ("WI”)⁽³⁾ production of 26,709 BOEPD; both were higher than Q2 2024 by 5%;
• Posted unrestricted cash of $89.1 million which is after $6.6 million paid for quarterly dividend and $12.4 million in cash capital spending for the quarter;
• Decreased production expense per BOE by 33% quarter-over-quarter to $19.80 per BOE, at the low end of the Q3 2024 guidance range ;
• Completed Production Sharing Contracts ("PSCs”) with the Government of Gabon for the offshore Niosi Marin and Guduma Marin exploration blocks; and
• Announced quarterly cash dividend of $0.0625 per share of common stock to be paid on December 20, 2024.

George Maxwell, Vaalco's Chief Executive Officer commented, "We continue to deliver strong quarterly results, both operationally and financially, that are generating significant Adjusted EBITDAX and building cash on hand to fund organic growth. In addition, we remain committed to shareholder returns through our quarterly dividend policy. Our production, sales and Adjusted EBITDAX all improved compared to Q2 2024 as we realize the positive impacts from the highly accretive Côte d'Ivoire acquisition, the solid results from our Canadian drilling program, and the focus on optimizing production in Gabon and Egypt.”

"In the third quarter, we announced that the results of our independent, third-party reserve engineer's calculation of proved reserves associated with the Côte d'Ivoire acquisition as of December 31, 2023 was approximately 30% greater than our initial disclosure. This strategically complementary and highly cost-effective acquisition expands our West African focus area through the addition of a sizeable producing asset that has significant upside potential and considerable future development opportunities in Côte d'Ivoire, a well-established and investment-friendly country. Additionally, the documentation has been completed on the production sharing contracts for two offshore Gabon exploration blocks where Vaalco holds a 37.5% working interest.”

"We are excited about the major projects planned for 2025 that are expected to deliver a step-change in organic growth across the portfolio in the coming years. As we work to finalize the timing of our projects, we will provide more details in early 2025. We have delivered on our focused strategy over the past three years and believe we will continue to do so with the organic growth programs across our diversified portfolio over the next few years. We remain focused on maximizing value and generating strong operational cash flow to fund our numerous organic opportunities moving forward, all while continuing to return capital to our shareholders through the quarterly dividend policy.”

Operational Update

Egypt

Vaalco focused on enhancing production in the first nine months of 2024 through a series of planned workovers, as well as through interventions using the OGS-10 rig. Vaalco finalized the K-81 recompletion at the start of the first quarter which was a carry-over from its 2023 drilling activity. The EA-55 well, drilled in October 2023, was fracked and put online in January 2024. Three additional workover recompletions were completed in the third quarter of 2024 with one more in progress. With the low cost of workovers, the well economics are strongly positive.

A summary of the Egyptian workover campaign's impact in the first nine months of 2024 is presented below:

* Production - impacted by sand production - Possible workover with sand screen required

Canada

The 2024 drilling campaign commenced in January 2024 with the drilling of 9-12-30-4W5, which was spud on January 17, 2024. The first well was drilled to a total depth of 22,732 feet. The second well of the program, 10-12-30-4W5, was spud on February 9, 2024, and drilled to a total depth of 21,736 feet. The third well in the program, 11-12-30-4W5 was spud on February 23, 2024, and drilled to a total depth of 21,624 feet. The fourth well on the program 1-18-30-3W5 was spud on March 9, 2024, and drilled to a total depth of 20,669 feet. The drilling rig was released on March 24, 2024.

Completion of the wells began in late March and was completed in April. By early May all wells were on production with strong initial rates as noted below:

Gabon

Vaalco is currently finalizing locations and planning for the next drilling campaign at Etame that is expected to occur in mid-2025. In October 2022, Vaalco successfully completed its transition to a Floating Storage and Offloading vessel ("FSO”) and related field reconfiguration processes. This project provides a low cost FSO solution that increases the storage capacity for the Etame block and improved operational performance. The Company continues to demonstrate operational excellence, production uptime and enhancement in 2024 to optimize production until the next drilling campaign.

The Company recently completed the documentation with the Government of Gabon for the offshore Niosi Marin and Guduma Marin exploration blocks. This follows the technical provisional award announced in October 2021 granting Vaalco a 37.5% non-operating working interest in the Niosi Marin Block (previously G12-13) and the Guduma Marin Block (previously H12-13) located in shallow waters offshore Gabon, with BW Energy as operator (also holding a 37.5% working interest) and Panoro Energy as a non-operating joint owner with a 25% working interest. The Niosi and Guduma blocks cover areas of 2,974 square kilometers ("km²) and 1,927 km², respectively. The Niosi Block is located adjacent to the Etame Marin Permit, where Vaalco operates a successful ongoing exploration and production campaign. To date, the Etame Marin partners have produced and discovered over 150 million barrels of oil, with multiple fields brought online. The area benefits from significant infrastructure investments, including processing facilities and a new FSO vessel installed by Vaalco in 2022 which is located adjacent to the Niosi Marin blocks. The blocks are also adjacent to BW Energy and Panoro Energy's Dussafu PSC offshore Southern Gabon, which is another area of significant successful exploration and development.

Côte d'Ivoire

During the third quarter, three liftings took place. In July, 612,773 gross barrels were lifted or 197,457 net barrels to Vaalco. In August, 681,584 gross barrels were lifted or 219,630 net barrels to Vaalco. And in September, 667,871 gross barrels were lifted or 215,211 net barrels to Vaalco.

Work with Modec, the operator of the Baobab Floating Production and Offloading Vessel ("FPSO”), on the dry docking project for the FPSO, projected to be offline in 2025, continued in the third quarter of 2024. The operator is currently preparing detailed project timetable and costings for the partners and regulator; however preliminary work including the execution of a letter of intent with Modec on April 4, 2024 which covers the key contracts to be executed, including vessel purchase, EPC, and O&M amendments, as well as selection of the disconnect and reconnect contractor, and support for the revised yard bid from Dubai dry docks among other activities.

Financial Update - Third Quarter of 2024

Vaalco reported net income of $11.0 million ($0.10 per diluted share) for the third quarter of 2024 which was down compared with net income of $28.2 million ($0.27 per diluted share) in the second quarter of 2024 and up compared to $6.1 million ($0.06 per diluted share) in the third quarter of 2023. The decrease in earnings compared with the second quarter of 2024 is driven primarily by the non-cash bargain purchase gain on the Svenska acquisition in the second quarter.

Adjusted EBITDAX totaled $92.8 million in the third quarter of 2024, a 28% increase from $72.5 million in the second quarter of 2024 and up 30% from $71.4 million generated in the same period in 2023. The increase was primarily due to additional sales volumes from Côte d'Ivoire.