First Quarter 2024 Highlights and Recent Key Items:
- Closed the accretive all cash acquisition of
Svenska Petroleum Exploration AB (“Svenska”) for a net purchase price of$40.2 million ;- Following the planned shutdown for maintenance in April, the Baobab field is back on production with a current rate in excess of 5,000 VAALCO working interest (“WI”)(1) barrels of oil equivalent per day (“BOEPD”) (99% oil);
- Strategically expands West African focus area with a sizeable producing asset that has significant upside potential and future development opportunities in Cote d’Ivoire, a well-established and investment-friendly country;
- Reported Q1 2024 net income of
$7 .7 million ($0.07 per diluted share) and Adjusted Net Income(2) of$6.5 million ($0 .06 per diluted share); - Delivered strong Adjusted EBITDAX(2) of
$61.7 million and funded$16 .7 million in cash capital expenditures from cash on hand and cash from operations; - Achieved production of 16,848 net revenue interest (“NRI”)(3) BOEPD and WI(1) production of 21,807 BOEPD;
- Reported NRI sales of 1,490,000 barrels of oil equivalent (“BOE”), or 16,373 BOEPD, near the high end of guidance;
- Posted unrestricted cash of
$113.3 million after paying out$6.5 million in dividends in the quarter and completing$5 .5 million in share buybacks;- Since inception of the share buyback program, VAALCO has purchased approximately
$30 million in shares; and
- Since inception of the share buyback program, VAALCO has purchased approximately
- Announced quarterly cash dividend of
$0.0625 per share of common stock to be paid onJune 21, 2024 .
(1) | All WI production rates and volumes are VAALCO’s working interest volumes, where applicable | ||
(2) | Adjusted EBITDAX, Adjusted Net Income, | ||
(3) | All NRI production rates are VAALCO's working interest volumes less royalty volumes, where applicable | ||
“We continue to enhance our diversified portfolio by building size and scale that allows VAALCO to generate significant free cash flow and execute our strategic vision. We are excited to be partnering with
Operational Update
VAALCO focused on enhancing production in the first quarter 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
A summary of the Egyptian workover campaign's impact in Q1 2024 is presented below:
VAALCO Egypt 2024 Workover Wells | |||||||||||
Well | Workover date | Type | Perforation Interval (ft) | IP-30 Rate (BOPD) | |||||||
K-81 | Recompletion | Asl-D | 13.1 | 154 | |||||||
EA-55 | Frac & Complete | Redbed | Hydraulic Frac | 143 | |||||||
H-22 | Recompletion | Yusr-A | 9.8 | 82 | |||||||
K-65_ST1 | Recompletion | Asl-D | 13.1 | 43* | |||||||
K-85 | Recompletion | Asl-D | 13.1 | 420 | |||||||
K-84 | Recompletion | Asl-G | 16.4 | In Progress | |||||||
The 2024 drilling campaign commenced in January with the drilling of 9-12-30-4W5, spud on
VAALCO is currently finalizing locations and planning for the next drilling campaign at Etame that is expected to occur late in 2024 and into 2025. In
The focus is on the continued production optimization of the new flow line configurations through the Etame Facility, for final processing before being pumped to the FSO. This continued optimization and understanding of the post-reconfiguration process dynamics of the Etame platform, have resulted in a very high uptime of the Etame Facility and, in turn, the complete Etame field during the first quarter of 2024. Combining this with focus on individual well and facility chemical injection optimization and facility pipelines has provided more stable operations resulting in lower downtime. Through the end of 2023 and in the first quarter of 2024, this continued to be a focus with positive results in production rates and uptime.
Financial Update – First Quarter of 2024
VAALCO reported net income of
Adjusted EBITDAX totaled
Quarterly Summary - Sales and Net Revenue | ||||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||
$ in thousands | ||||||||||||||||||||||||||||||||
Total | Total | |||||||||||||||||||||||||||||||
Oil Sales | 64,788 | 63,192 | 4,153 | 132,133 | 100,398 | 79,043 | 5,476 | 184,917 | ||||||||||||||||||||||||
NGL Sales | — | — | 1,977 | 1,977 | — | — | 2,019 | 2,019 | ||||||||||||||||||||||||
Gas Sales | — | — | 820 | 820 | — | — | 818 | 818 | ||||||||||||||||||||||||
Gross Sales | 64,788 | 63,192 | 6,951 | 134,931 | 100,398 | 79,043 | 8,313 | 187,754 | ||||||||||||||||||||||||
Selling Costs & carried interest | 1,174 | (111 | ) | (143 | ) | 920 | 1,711 | — | (702 | ) | 1,009 | |||||||||||||||||||||
Royalties & taxes | (8,458 | ) | (26,120 | ) | (1,118 | ) | (35,696 | ) | (13,699 | ) | (24,393 | ) | (1,517 | ) | (39,609 | ) | ||||||||||||||||
Net Revenue | 57,504 | 36,961 | 5,690 | 100,155 | 88,410 | 54,650 | 6,094 | 149,154 | ||||||||||||||||||||||||
Oil Sales MMB (working interest) | 770 | 950 | 61 | 1,781 | 1,165 | 1,023 | 77 | 2,265 | ||||||||||||||||||||||||
Average Oil Price Received | $ | 84.19 | $ | 66.52 | $ | 67.83 | $ | 74.21 | $ | 86.18 | $ | 77.27 | $ | 71.12 | $ | 81.65 | ||||||||||||||||
Change | -9 | % | ||||||||||||||||||||||||||||||
Average | $ | 83.00 | $ | 84.01 | ||||||||||||||||||||||||||||
Change | -1 | % | ||||||||||||||||||||||||||||||
Gas Sales MMCF (working interest) | — | — | 469 | 469 | — | — | 471 | 471 | ||||||||||||||||||||||||
Average Gas Price Received | — | — | $ | 1.75 | $ | 1.75 | — | — | $ | 1.74 | $ | 1.74 | ||||||||||||||||||||
Change | 1 | % | ||||||||||||||||||||||||||||||
Average Aeco Price ($USD) | — | — | $ | 1.46 | $ | 1.46 | $ | 1.86 | $ | 1.86 | ||||||||||||||||||||||
Change | -22 | % | ||||||||||||||||||||||||||||||
NGL Sales MMB (working interest) | — | — | 76 | 76 | — | — | 80 | 80 | ||||||||||||||||||||||||
Average Liquids Price Received | — | — | $ | 25.98 | $ | 25.98 | — | — | $ | 25.09 | $ | 25.09 | ||||||||||||||||||||
Change | 4 | % |
Revenue and Sales | Q1 2024 | Q1 2023 | % Change Q1 2024 vs. Q1 2023 | Q4 2023 | % Change Q1 2024 vs. Q4 2023 | |||||||||||||||
Production (NRI BOEPD) | 16,848 | 18,306 | (8 | )% | 18,065 | (7 | )% | |||||||||||||
Sales ( | 1,490,000 | 1,224,000 | 22 | % | 1,994,000 | (25 | )% | |||||||||||||
Realized commodity price ($/BOE) | $ | 66.43 | $ | 65.68 | 1 | % | $ | 73.96 | (10 | )% | ||||||||||
Commodity (Per BOE including realized commodity derivatives) | $ | 66.41 | $ | 65.63 | 1 | % | $ | 73.89 | (10 | )% | ||||||||||
Total commodity sales ($MM) | $ | 100.2 | $ | 80.4 | 25 | % | $ | 149.2 | (33 | )% | ||||||||||
VAALCO had net revenues decrease by
Q1 2024 realized pricing (net of royalties) was 10% lower compared to Q4 2023 but slightly higher compared to Q1 2023.
Costs and Expenses | Q1 2024 | Q1 2023 | % Change Q1 2024 vs. Q1 2023 | Q4 2023 | % Change Q1 2024 vs. Q4 2023 | |||||||||||||||
Production expense, excluding offshore workovers and stock comp ($MM) | $ | 32.1 | $ | 29.3 | 10 | % | $ | 46.3 | (31 | )% | ||||||||||
Production expense, excluding offshore workovers ($/BOE) | $ | 21.58 | $ | 23.90 | (10 | )% | $ | 23.27 | (7 | )% | ||||||||||
Offshore workover expense ($MM) | $ | (0.1 | ) | $ | (1.1 | ) | 93.5 | % | $ | — | — | % | ||||||||
Depreciation, depletion and amortization ($MM) | $ | 25.8 | $ | 24.4 | 6 | % | $ | 20.3 | 27 | % | ||||||||||
Depreciation, depletion and amortization ($/BOE) | $ | 17.3 | $ | 19.90 | (13 | )% | $ | 10.20 | 70 | % | ||||||||||
General and administrative expense, excluding stock-based compensation ($MM) | $ | 5.9 | $ | 4.6 | 27 | % | $ | 6.1 | (4 | )% | ||||||||||
General and administrative expense, excluding stock-based compensation ($/BOE) | $ | 3.9 | $ | 3.70 | 6 | % | $ | 3.0 | 31 | % | ||||||||||
Stock-based compensation expense ($MM) | $ | 0.9 | $ | 0.6 | 50.0 | % | $ | 0.9 | - | % | ||||||||||
Current income tax expense (benefit) ($MM) | $ | 25.7 | $ | 12.3 | 109 | % | $ | 14.3 | 80 | % | ||||||||||
Deferred income tax expense (benefit) ($MM) | $ | (3.4 | ) | $ | 2.5 | (238 | )% | $ | (2.6 | ) | 32 | % | ||||||||
Total production expense (excluding offshore workovers and stock compensation) of
Q1 2024 had no offshore workovers, and the slightly negative workover expense in Q1 2024 was the result of a reversal of accruals.
Q1 2024 production expense per BOE, excluding offshore workover expense, decreased to $21.58 per BOE which was down compared with Q4 2023 and Q1 2023 partially due to the devaluation of the Egyptian pound on local costs and lower engineering and maintenance spend mainly due to the timing of planned projects partially offset by higher workover costs in
DD&A expense for Q1 2024 was
General and administrative (“G&A”) expense, excluding stock-based compensation, decreased to
Non-cash stock-based compensation expense was
Other income (expense), net, was an expense of (
Foreign income taxes for
Capital Investments/Balance Sheet
For the first quarter of 2024, net capital expenditures totaled
At the end of the first quarter of 2024, VAALCO had an unrestricted cash balance of
Cash Dividend Policy and Share Buyback Authorization
VAALCO paid a quarterly cash dividend of
On
Svenska Acquisition
VAALCO closed its acquisition of Svenska for the net purchase price of
Svenska’s primary license interest is a 27.39% non-operated working interest (30.43% paying interest) in the CI-40 license, which includes the producing Baobab field, located in deepwater offshore Cote d’Ivoire. The field is operated by
CI-40 has a long history of production and significantly de-risked reservoirs. With almost 20 years of production to date, the floating, production, storage and offloading vessel ("FPSO") is planned to come off station at the start of 2025 for planned maintenance and upgrade work to allow the FPSO to continue to produce through the end of the expected extended field license in 2038. The scope of work for the FPSO upgrade is currently being finalized. Production on Baobab is expected to re-start in 2026 following the FPSO work program. In addition, a fully appraised development drilling program is expected to start in 2026, targeting the significant incremental probable reserve base on the field. VAALCO sees reduced geological risk relating to this drilling program and the joint venture partners have already commenced the ordering of certain long-lead drilling items. Further future drilling phases have not yet been sanctioned, but there is significant incremental potential in both the Baobab field itself, as well as the nearby Kossipo development, which has also been appraised by two wells drilled in 2002 and 2019.
In addition to the CI-40 license in Cote d’Ivoire, Svenska currently owns a 21.05% working interest in the early stage Uge discovery in the OML 145 concession in
Hedging
The Company continued to opportunistically hedge a portion of its expected future production to lock in strong cash flow generation to assist in funding its capital and shareholder returns programs.
The following includes hedges remaining in place as of the end of the first quarter of 2024:
Settlement Period | Type of Contract | Index | Average Monthly Volumes | Weighted Average Put Price | Weighted Average Call Price | |||||||||
(Bbls) | (per Bbl) | (per Bbl) | ||||||||||||
Collars | Dated Brent | 65,000 | $ | 65.00 | $ | 100.00 | ||||||||
Collars | Dated Brent | 80,000 | $ | 65.00 | $ | 92.00 | ||||||||
2024 Guidance:
The Company has provided second quarter 2024 guidance and updated its full year 2024 guidance to reflect the closing of the Svenska acquisition in April. All of the quarterly and annual guidance is detailed in the tables below.
FY 2024 | ||||||||||||||||||||
Production (BOEPD) | WI | 23600 - 26500 | 8300 - 9600 | 9800 - 10600 | 2700 - 3200 | 2800 - 3100 | ||||||||||||||
Production (BOEPD) | NRI | 18900 - 21400 | 7200 - 8300 | 6700 - 7400 | 2200 - 2600 | 2800 - 3100 | ||||||||||||||
Sales Volume (BOEPD) | WI | 24300 - 27200 | 8300 - 9500 | 9800 - 10600 | 2700 - 3200 | 3500 - 3900 | ||||||||||||||
Sales Volume (BOEPD) | NRI | 19200 - 21800 | 7200 - 8300 | 6700 - 7400 | 2200 - 2600 | 3100 - 3500 | ||||||||||||||
Production Expense (millions) | WI & NRI | |||||||||||||||||||
Production Expense per BOE | WI | |||||||||||||||||||
Production Expense per BOE | NRI | |||||||||||||||||||
Offshore Workovers (millions) | WI & NRI | |||||||||||||||||||
Cash G&A (millions) | WI & NRI | |||||||||||||||||||
CAPEX (millions) | WI & NRI | |||||||||||||||||||
DD&A ($/BOE) | NRI |
Q2 2024 | ||||||||||||||||||||
Production (BOEPD) | WI | 23800 - 27000 | 8000 - 9200 | 10000 - 11300 | 3000 - 3300 | 2800 - 3200 | ||||||||||||||
Production (BOEPD) | NRI | 19000 - 21800 | 7000 - 8000 | 6900 - 7800 | 2500 - 2800 | 2800 - 3200 | ||||||||||||||
Sales Volume (BOEPD) | WI | 22800 - 25400 | 7400 - 8100 | 10000 - 11300 | 3000 - 3300 | 2400 - 2700 | ||||||||||||||
Sales Volume (BOEPD) | NRI | 18100 - 20000 | 6500 - 7000 | 6900 - 7800 | 2500 - 2800 | 2200 - 2400 | ||||||||||||||
Production Expense (millions) | WI & NRI | |||||||||||||||||||
Production Expense per BOE | WI | |||||||||||||||||||
Production Expense per BOE | NRI | |||||||||||||||||||
Offshore Workovers (millions) | WI & NRI | |||||||||||||||||||
Cash G&A (millions) | WI & NRI | |||||||||||||||||||
CAPEX (millions) | WI & NRI | |||||||||||||||||||
DD&A ($/BOE) | NRI | |||||||||||||||||||
Conference Call
As previously announced, the Company will hold a conference call to discuss its first quarter 2024 financial and operating results tomorrow,
A “Q1 2024 Supplemental Information” investor deck will be posted to VAALCO’s web site prior to its conference call on May 8, 2024 that includes additional financial and operational information.
About VAALCO
VAALCO, founded in 1985 and incorporated under the laws of
For Further Information
+00 1 713 623 0801 | |
Website: | www.vaalco.com |
Al | +00 1 713 543 3422 |
Buchanan ( | +44 (0) 207 466 5000 |
VAALCO@buchanan.uk.com | |
Endnote
1. Reserves estimates in this announcement were prepared in accordance with the definitions and guidelines set forth in the 2018 Petroleum Resources Management Systems approved by the
Forward Looking Statements
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created by those laws and other applicable laws and “forward-looking information” within the meaning of applicable Canadian securities laws. Where a forward-looking statement expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. All statements other than statements of historical fact may be forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “forecast,” “outlook,” “aim,” “target,” “will,” “could,” “should,” “may,” “likely,” “plan” and “probably” or similar words may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this press release include, but are not limited to, statements relating to (i) estimates of future drilling, production, sales and costs of acquiring crude oil, natural gas and natural gas liquids; (ii) expectations regarding VAALCO's ability to effectively integrate assets and properties it has acquired as a result of the Svenska acquisition into its operations; (iii) expectations regarding future exploration and the development, growth and potential of VAALCO’s operations, project pipeline and investments, and schedule and anticipated benefits to be derived therefrom; (iv) expectations regarding future acquisitions, investments or divestitures; (v) expectations of future dividends, 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; the ability to generate cash flows that, along with cash on hand, will be sufficient to support operations and cash requirements; risks relating to the timing and costs of completion for scheduled maintenance of the FPSO servicing the Baobab field; and the risks described under the caption “Risk Factors” in VAALCO’s 2023 Annual Report on Form 10-K filed with the
Dividends beyond the second quarter of 2024 have not yet been approved or declared by the Board of Directors for VAALCO. The declaration and payment of future dividends remains at the discretion of the Board and will be determined based on VAALCO’s financial results, balance sheet strength, cash and liquidity requirements, future prospects, crude oil and natural gas prices, and other factors deemed relevant by the Board. The Board reserves all powers related to the declaration and payment of dividends. Consequently, in determining the dividend to be declared and paid on VAALCO common stock, the Board may revise or terminate the payment level at any time without prior notice.
Oil and Natural Gas Reserves
This press release contains crude oil and natural gas metrics which do not have standardized meanings or standard methods of calculation as classified by the
WI CPR Reserves
WI CPR reserves represent proved (1P) and proved plus probable (2P) estimates as reported by
1P and 2P WI CPR reserves, as disclosed herein, may differ from the
- Pricing for
SEC is the average closing price on the first trading day of each month for the prior year which is then held flat in the future, while the 1P and 2P WI CPR pricing is based on pricing assumptions for future Brent oil pricing for 2023 of$84.5 and up to 2030 the Brent Oil price follows the average of four available forecasts and assumes flat real thereafter. Oil price is escalated 2% per year;
- Lease operating expenses are typically not escalated under the SEC’s rules, while for the WI CPR reserves estimates, they are escalated at 2% annually beginning in 2024.
Management uses 1P and 2P WI CPR reserves as a measurement of operating performance because it assists management in strategic planning, budgeting and economic evaluations and in comparing the operating performance of Svenska to other companies. Management believes that the presentation of 1P and 2P WI CPR reserves is useful to its international investors, particularly those that invest in companies trading on the
Other Oil and Gas Advisories
Investors are cautioned when viewing BOEs in isolation. A BOE conversation ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 MCF: 1 Bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be an incomplete as an indication of value.
Inside Information
This announcement contains inside information as defined in Regulation (EU) No. 596/2014 on market abuse which is part of
Consolidated Balance Sheets (Unaudited)
As of | As of | |||||||
ASSETS | (in thousands) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 113,321 | $ | 121,001 | ||||
Restricted cash | 140 | 114 | ||||||
Receivables: | ||||||||
Trade, net of allowances for credit loss and other of | 44,897 | 44,888 | ||||||
Accounts with joint venture owners, net of allowance for credit losses of | 35 | 1,814 | ||||||
44,591 | 45,942 | |||||||
Crude oil inventory | 2,386 | 1,948 | ||||||
Prepayments and other | 12,374 | 12,434 | ||||||
Total current assets | 217,744 | 228,141 | ||||||
Crude oil, natural gas and NGLs properties and equipment, net | 457,419 | 459,786 | ||||||
Other noncurrent assets: | ||||||||
Restricted cash | - | 1,795 | ||||||
Value added tax and other receivables, net of allowances for credit loss and other of | 5,033 | 4,214 | ||||||
Right of use operating lease assets | 1,444 | 2,378 | ||||||
Right of use finance lease assets | 89,587 | 89,962 | ||||||
Deferred tax assets | 30,329 | 29,242 | ||||||
Abandonment funding | 6,268 | 6,268 | ||||||
Other long-term assets | 1,323 | 1,430 | ||||||
Total assets | $ | 809,147 | $ | 823,216 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 16,747 | $ | 22,152 | ||||
Accounts with joint venture owners | 3,836 | 5,990 | ||||||
Accrued liabilities and other | 60,345 | 67,597 | ||||||
Operating lease liabilities - current portion | 1,466 | 2,396 | ||||||
Finance lease liabilities - current portion | 10,974 | 10,079 | ||||||
Foreign income taxes payable | 37,836 | 19,261 | ||||||
Total current liabilities | 131,204 | 127,475 | ||||||
Asset retirement obligations | 47,644 | 47,343 | ||||||
Operating lease liabilities - net of current portion | - | 33 | ||||||
Finance lease liabilities - net of current portion | 77,802 | 78,293 | ||||||
Deferred tax liabilities | 71,228 | 73,581 | ||||||
Other long-term liabilities | 8,679 | 17,709 | ||||||
Total liabilities | 336,557 | 344,434 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ equity: | ||||||||
Preferred stock, | — | — | ||||||
Common stock, | 12,194 | 12,140 | ||||||
Additional paid-in capital | 358,827 | 357,498 | ||||||
Accumulated other comprehensive income | 426 | 2,880 | ||||||
Less treasury stock, 18,485,306 and 17,051,320 shares, respectively, at cost | (77,566 | ) | (71,222 | ) | ||||
Retained earnings | 178,709 | 177,486 | ||||||
Total shareholders' equity | 472,590 | 478,782 | ||||||
Total liabilities and shareholders' equity | $ | 809,147 | $ | 823,216 | ||||
Consolidated Statements of Operations (Unaudited)
Three Months Ended | ||||||||||||
(in thousands except per share amounts) | ||||||||||||
Revenues: | ||||||||||||
Crude oil, natural gas and natural gas liquids sales | $ | 100,155 | $ | 80,403 | $ | 149,154 | ||||||
Operating costs and expenses: | ||||||||||||
Production expense | 32,089 | 28,200 | 46,397 | |||||||||
FPSO demobilization and other costs | — | — | 1,837 | |||||||||
Exploration expense | 48 | 8 | 706 | |||||||||
Depreciation, depletion and amortization | 25,824 | 24,417 | 20,344 | |||||||||
Transaction costs related to acquisition | 1,313 | — | — | |||||||||
General and administrative expense | 6,710 | 5,224 | 7,005 | |||||||||
Credit losses and other | 1,812 | 935 | (7,343 | ) | ||||||||
Total operating costs and expenses | 67,796 | 58,784 | 68,946 | |||||||||
Other operating income (expense), net | (166 | ) | — | 731 | ||||||||
Operating income | 32,193 | 21,619 | 80,939 | |||||||||
Other income (expense): | ||||||||||||
Derivative instruments gain (loss), net | (847 | ) | 21 | 2,500 | ||||||||
Interest expense, net | (935 | ) | (2,246 | ) | (1,077 | ) | ||||||
Other income (expense), net | (487 | ) | (1,153 | ) | (797 | ) | ||||||
Total other income (expense), net | (2,269 | ) | (3,378 | ) | 626 | |||||||
Income before income taxes | 29,924 | 18,241 | 81,565 | |||||||||
Income tax expense | 22,238 | 14,771 | 37,574 | |||||||||
Net income | $ | 7,686 | $ | 3,470 | $ | 43,991 | ||||||
Other comprehensive income (loss) | ||||||||||||
Currency translation adjustments | (2,454 | ) | (125 | ) | 2,036 | |||||||
Comprehensive income | $ | 5,232 | $ | 3,345 | $ | 46,027 | ||||||
Basic net income (loss) per share: | ||||||||||||
Net income (loss) per share | $ | 0.07 | $ | 0.03 | $ | 0.41 | ||||||
Basic weighted average shares outstanding | 103,659 | 107,387 | 104,893 | |||||||||
Diluted net income (loss) per share: | ||||||||||||
Net income (loss) per share | $ | 0.07 | $ | 0.03 | $ | 0.41 | ||||||
Diluted weighted average shares outstanding | 104,541 | 108,752 | 105,020 | |||||||||
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended | ||||||||
2024 | 2023 | |||||||
(in thousands) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 7,686 | $ | 3,470 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation, depletion and amortization | 25,824 | 24,417 | ||||||
Bargain purchase loss | — | 1,412 | ||||||
Deferred taxes | (3,441 | ) | 2,471 | |||||
Unrealized foreign exchange loss | (102 | ) | 512 | |||||
Stock-based compensation | 898 | 649 | ||||||
Cash settlements paid on exercised stock appreciation rights | (154 | ) | (233 | ) | ||||
Derivative instruments (gain) loss, net | 847 | (21 | ) | |||||
Cash settlements paid on matured derivative contracts, net | (24 | ) | (59 | ) | ||||
Cash settlements paid on asset retirement obligations | (29 | ) | (123 | ) | ||||
Credit losses and other | 1,812 | 935 | ||||||
Other operating loss, net | 166 | 13 | ||||||
Operational expenses associated with equipment and other | 302 | (640 | ) | |||||
Change in operating assets and liabilities: | ||||||||
Trade, net | (9 | ) | 21,357 | |||||
Accounts with joint venture owners, net | (683 | ) | 18,911 | |||||
1,346 | (2,309 | ) | ||||||
Crude oil inventory | (438 | ) | (8,443 | ) | ||||
Prepayments and other | (2,278 | ) | 983 | |||||
Value added tax and other receivables | (2,734 | ) | (1,361 | ) | ||||
Other long-term assets | (1,017 | ) | 1,051 | |||||
Accounts payable | (5,984 | ) | (6,739 | ) | ||||
Foreign income taxes receivable/(payable) | 18,912 | 8,193 | ||||||
Deferred tax liability | — | (3,250 | ) | |||||
Accrued liabilities and other | (19,068 | ) | (19,190 | ) | ||||
Net cash provided by (used in) operating activities | 21,832 | 42,006 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Property and equipment expenditures | (16,618 | ) | (27,700 | ) | ||||
Net cash provided by (used in) investing activities | (16,618 | ) | (27,700 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from the issuances of common stock | 447 | 274 | ||||||
Dividend distribution | (6,463 | ) | (6,735 | ) | ||||
(6,344 | ) | (5,377 | ) | |||||
Payments of finance lease | (2,095 | ) | (1,701 | ) | ||||
Net cash provided by (used in) in financing activities | (14,455 | ) | (13,539 | ) | ||||
Effects of exchange rate changes on cash | (208 | ) | (309 | ) | ||||
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (9,449 | ) | 458 | |||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD | 129,178 | 59,776 | ||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ | 119,729 | $ | 60,234 | ||||
Selected Financial and Operating Statistics
(Unaudited)
Three Months Ended | ||||||||||||
NRI SALES DATA | ||||||||||||
Crude oil, natural gas and natural gas liquids sales (MBOE) | 1,490 | 1,224 | 1,994 | |||||||||
WI PRODUCTION DATA | ||||||||||||
Etame Crude oil (MBbl) | 819 | 942 | 887 | |||||||||
Egypt Crude oil (MBbl) | 950 | 903 | 1,024 | |||||||||
Canada Crude Oil (MBbl) | 61 | 93 | 77 | |||||||||
469 | 415 | 471 | ||||||||||
Canada Natural Gas Liquid (MBbl) | 76 | 77 | 81 | |||||||||
Canada Crude oil, natural gas and natural gas liquids (MBOE) | 215 | 239 | 236 | |||||||||
Total Crude oil, natural gas and natural gas liquids production (MBOE) | 1,984 | 2,084 | 2,146 | |||||||||
Gabon Average daily production volumes (BOEPD) | 9,001 | 10,463 | 9,641 | |||||||||
Egypt Average daily production volumes (BOEPD) | 10,440 | 10,033 | 11,126 | |||||||||
Canada Average daily production volumes (BOEPD) | 2,363 | 2,656 | 2,563 | |||||||||
Average daily production volumes (BOEPD) | 21,807 | 23,152 | 23,330 | |||||||||
NRI PRODUCTION DATA | ||||||||||||
Etame Crude oil (MBbl) | 713 | 820 | 772 | |||||||||
Egypt Crude oil (MBbl) | 641 | 616 | 697 | |||||||||
Canada Crude Oil (MBbl) | 51 | 82 | 63 | |||||||||
392 | 367 | 384 | ||||||||||
Canada Natural Gas Liquid (MBbl) | 63 | 68 | 66 | |||||||||
Canada Crude oil, natural gas and natural gas liquids (MBOE) | 179 | 211 | 193 | |||||||||
Total Crude oil, natural gas and natural gas liquids production (MBOE) | 1,533 | 1,647 | 1,662 | |||||||||
Gabon Average daily production volumes (BOEPD) | 7,835 | 9,115 | 8,391 | |||||||||
Egypt Average daily production volumes (BOEPD) | 7,044 | 6,844 | 7,576 | |||||||||
Canada Average daily production volumes (BOEPD) | 1,971 | 2,347 | 2,098 | |||||||||
Average daily production volumes (BOEPD) | 16,848 | 18,306 | 18,065 | |||||||||
AVERAGE SALES PRICES: | ||||||||||||
Crude oil, natural gas and natural gas liquids sales (per BOE) - WI basis | $ | 69.62 | $ | 66.42 | $ | 73.98 | ||||||
Crude oil, natural gas and natural gas liquids sales (per BOE) - NRI basis | $ | 66.43 | $ | 65.68 | $ | 73.96 | ||||||
Crude oil, natural gas and natural gas liquids sales (Per BOE including realized commodity derivatives) | $ | 66.41 | $ | 65.63 | $ | 73.89 | ||||||
COSTS AND EXPENSES (Per BOE of sales): | ||||||||||||
Production expense | $ | 21.54 | $ | 23.04 | $ | 23.27 | ||||||
Production expense, excluding offshore workovers and stock compensation* | 21.56 | 23.91 | 23.25 | |||||||||
Depreciation, depletion and amortization | 17.33 | 19.95 | 10.20 | |||||||||
General and administrative expense** | 4.50 | 4.27 | 3.51 | |||||||||
Property and equipment expenditures, cash basis (in thousands) | $ | 16,618 | $ | 27,700 | $ | 42,391 |
*Offshore workover costs excluded from the three months ended March 31, 2024 and 2023 and December 31, 2023 are $(0.1) million, $(1.1) million and
*Stock compensation associated with production expense excluded from the three months ended March 31, 2024 and 2023 and
**General and administrative expenses include
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
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.
Reconciliations of Non-GAAP Financial Measures
(Unaudited)
(in thousands)
Three Months Ended | ||||||||||||
Reconciliation of Net Income to Adjusted Net Income | ||||||||||||
Net income | $ | 7,686 | $ | 3,470 | $ | 43,991 | ||||||
Adjustment for discrete items: | ||||||||||||
Discontinued operations, net of tax | — | 13 | — | |||||||||
Unrealized derivative instruments loss (gain) | 823 | (80 | ) | (2,565 | ) | |||||||
(Gain) /adjustment of acquisition price, net | — | 1,412 | — | |||||||||
FPSO demobilization | — | — | 1,837 | |||||||||
Deferred income tax expense (benefit) | (3,441 | ) | 2,471 | (3,538 | ) | |||||||
Transaction costs related to acquisition | 1,313 | — | — | |||||||||
Other operating (income) expense, net | 166 | — | (731 | ) | ||||||||
Adjusted Net Income | $ | 6,547 | $ | 7,286 | $ | 38,994 | ||||||
Diluted Adjusted Net Income per Share | $ | 0.06 | $ | 0.07 | $ | 0.37 |
(1) No adjustments to weighted average shares outstanding
Three Months Ended | ||||||||||||
Reconciliation of Net Income to Adjusted EBITDAX | ||||||||||||
Net income | $ | 7,686 | $ | 3,470 | $ | 43,991 | ||||||
Add back: | ||||||||||||
Impact of discontinued operations | — | 13 | — | |||||||||
Interest expense (income), net | 935 | 2,246 | 1,077 | |||||||||
Income tax expense (benefit) | 22,238 | 14,771 | 37,574 | |||||||||
Depreciation, depletion and amortization | 25,824 | 24,417 | 20,344 | |||||||||
Exploration expense | 48 | 8 | 706 | |||||||||
FPSO demobilization | — | — | 1,837 | |||||||||
Non-cash or unusual items: | ||||||||||||
Stock-based compensation | 899 | 649 | 991 | |||||||||
Unrealized derivative instruments loss (gain) | 823 | (80 | ) | (2,565 | ) | |||||||
(Gain) /adjustment of acquisition price, net | — | 1,412 | — | |||||||||
Other operating (income) expense, net | 166 | — | (731 | ) | ||||||||
Transaction costs related to acquisition | 1,313 | — | — | |||||||||
Credit losses and other | 1,812 | 935 | (7,343 | ) | ||||||||
Adjusted EBITDAX | $ | 61,744 | $ | 47,841 | $ | 95,881 | ||||||
Reconciliations of Non-GAAP Financial Measures
(Unaudited)
(in thousands)
Reconciliation of Working Capital to | As of | As of | Change | |||||||||
Current assets | $ | 217,744 | $ | 228,141 | $ | (10,397 | ) | |||||
Current liabilities | (131,204 | ) | (127,475 | ) | (3,729 | ) | ||||||
Working capital | 86,540 | 100,666 | (14,126 | ) | ||||||||
Add: lease liabilities - current portion | 12,440 | 12,475 | (35 | ) | ||||||||
Add: current liabilities - discontinued operations | — | 673 | (673 | ) | ||||||||
$ | 98,980 | $ | 113,814 | $ | (14,161 | ) |
Three Months Ended | ||||
Reconciliation of Free Cash Flow | ||||
Net cash provided by Operating activities | $ | 21,832 | ||
Net cash used in Investing activities | (16,618 | ) | ||
Net cash used in Financing activities | (14,455 | ) | ||
Effects of exchange rate changes on cash | (208 | ) | ||
Total net cash change | (9,449 | ) | ||
Add back shareholder cash out: | ||||
Dividends paid | 6,463 | |||
Stock buyback | 5,502 | |||
Total cash returned to shareholders | 11,965 | |||
Free Cash Flow | $ | 2,516 | ||
Source:
2024 GlobeNewswire, Inc., source