Picture 5

Exhibit 99.1



VAALCO ENERGY, INC. ANNOUNCES

THIRD QUARTER 2020 RESULTS



REPORTS NET INCOME OF $7.6 MILLION, OR $0.13 PER DILUTED SHARE



HOUSTON – November 5, 2020 - VAALCO Energy, Inc. (NYSE: EGY, LSE: EGY) today reported operational and financial results for the third quarter of 2020.



Highlights and Recent Key Items:  

·

Achieved strong production performance of 4,405 net revenue interest (“NRI”)(1) barrels of crude oil per day (“BOPD”), or  5,064 working interest (“WI”)(2) BOPD in Q3 2020, despite planned full field maintenance shutdown in September and production curtailment due to an OPEC+ mandate for Gabon;

·

Successfully resumed production following completion of the planned full field annual maintenance shutdown at Etame in September on schedule and on budget;

·

Sold 412,000 barrels of oil in Q3 2020, compared to 279,000 barrels in Q3 2019, due to the continued strong production performance from the successful 2019/2020 drilling campaign;

·

Decreased per-unit production expense, excluding workovers, by 35% in Q3 2020 vs Q3 2019 as a result of higher sales volumes and lower operating costs due to proactive cost reductions;

·

Reported Q3 net income of $7.6 million ($0.13 per diluted share), Adjusted Net Income(3) of $2.3  million ($0.04 per diluted share) and generated Adjusted EBITDAX(3) of $7.0 million;

·

Maintained strong balance sheet with no debt, a cash balance of $42.0 million, including $6.0 million in joint venture owner advances, working capital of $16.6 million and Adjusted Working Capital(3) of $29.3 million as of September 30, 2020; and

·

Announced acquisition of new proprietary three-dimensional (“3-D”) seismic data over the entire Etame Marin block which will be used to optimize and de-risk future drilling locations as well as identify new potential locations.



(1)

All NRI production rates and volumes are VAALCO’s 31.1% WI less 13% royalty volumes.

(2)

All WI production rates and volumes are VAALCO’s 31.1% WI.

(3)

Adjusted EBITDAX, Adjusted Net Income and Adjusted Working Capital are Non-GAAP financial measures and are described and reconciled to the closest GAAP measure in the attached table under “Non-GAAP Financial Measures.”

Cary Bounds, VAALCO’s Chief Executive Officer commented: “We continued to perform well operationally in the third quarter with net production of 4,405 BOPD, despite our annual planned full field maintenance shutdown at Etame and production curtailment due to an OPEC+ mandate for Gabon.  From a financial perspective, we reported net income of $7.6 million in the quarter, even with the impact of those production curtailments and low oil prices, and generated $7.0 million of Adjusted EBITDAX, highlighting the economic robustness of the Etame field.  Our cash balance remained strong at $42.0 million, which includes $6.0 million in joint venture owner

1


 

advances.  Additionally, given that the vast majority of our operating expenses are fixed, our higher sales volumes and proactive measures to manage costs have helped to drive down our unit production costs and enhanced our profit margins year-over-year.”

“We have maintained our focus on operational excellence and execution, which continues to allow us to maintain a healthy cash position, and cost discipline remains a core priority for the Company as we seek to maximize our profitability.  We completed a highly successful drilling program earlier this year that demonstrated the quality of the Etame asset that we have been operating and growing since 1995.  Our recent announcement that we are acquiring new proprietary 3-D seismic data over the entire Etame Marin block underscores the confidence we have in the long-term potential at Etame.  We believe that we are well positioned to deliver both near-term and long-term profitable growth, as we continue to execute on our strategic objectives.”  

Operational Update

Gabon



In connection with planning for future drilling programs at the Etame Marin block offshore Gabon, VAALCO recently agreed to acquire new 3-D seismic data. VAALCO expects the seismic survey to begin and conclude in the fourth quarter of 2020, with processing to be fully completed by the fourth quarter of 2021. The Company expects that the full field 3-D survey will optimize future drilling locations, provide better imaging of existing satellite and infill locations, as well as identify additional upside opportunities. VAALCO projects the gross cost of both the acquisition and processing of the seismic survey to be between $12 million and $15 million, or $4 million to $5 million net to VAALCO. The Company plans to fund the costs with cash on hand and through cash from operations.



Equatorial Guinea

VAALCO has a 43% WI in Block P offshore Equatorial Guinea.  VAALCO is continuing commercial discussions with Levene HydroCarbon Limited (“Levene”) regarding VAALCO’s potential assignment of a portion of the Block P interest to Levene in exchange for Levene covering all or substantially all of VAALCO’s cost to drill an exploratory well on Block P. Levene and VAALCO have not executed any binding agreements, and there can be no certainty a transaction will be completed or that the EG MMH will approve the assignment. As of September 30, 2020, the Company had $10.0 million recorded for the book value of the undeveloped leasehold costs associated with the Block P license.

Financial Update –  Third Quarter of 2020

Net income of $7.6 million ($0.13 per diluted share) for the third quarter of 2020 compared favorably with a net loss of $3.9 million ($0.07 per diluted share) in the same period in 2019. The third quarter of 2020 reflected an income tax benefit of $2.8 million while the net loss in the third quarter of 2019 was impacted by income tax expense of $7.7 million.  Lower realized crude oil prices of $43.63 per barrel for the third quarter of 2020 compared to $61.26 per barrel in the third quarter of 2019 were more than offset by higher sales volumes year-over-year as a result of additional production associated with the three successful wells from the 2019/2020 drilling program.  Net income of the third quarter of 2020 additionally benefitted from lower operating costs and expenses compared with the third quarter of 2019. 



With respect to the second quarter of 2020, net income was $0.6 million ($0.01 per diluted share) which reflected the impact of lower realized crude oil prices of $28.31 per barrel.  The impact of lower prices was partially offset by higher sales volumes for the second quarter of 2020 as a result of four liftings.  The second quarter also included a loss on derivatives of $0.8 million ($0.01 per diluted share) and an income tax benefit of $2.2 million.



2


 

Adjusted Net Income for the third quarter of 2020 increased to $2.3 million ($0.04 per diluted share) from an Adjusted Net Loss of $0.6 million ($0.01 per diluted share) for the third quarter of 2019, primarily as a result of lower general and administrative expenses. The lower Adjusted Net Income for the third quarter of 2020 as compared to $5.3 million ($0.09 per diluted share) of Adjusted Net Income in the second quarter of 2020 was primarily the result of realized gains on derivatives of $6.5 million ($0.11 per diluted share) in the second quarter of 2020.



Adjusted EBITDAX totaled $7.0 million in the third quarter of 2020 compared with $4.5 million in the same period of 2019.  In the second quarter of 2020, Adjusted EBITDAX was $10.1 million.   Adjusted EBITDAX for the third quarter of 2020 was higher than the same period in the prior year primarily due to increased sales volumes associated with new production from the three wells completed as part of the 2019/2020 drilling campaign and lower operating costs and expenses, partially offset by lower realized prices.  Adjusted EBITDAX for the third quarter of 2020 was lower than the second quarter of 2020 primarily due to realized gains on derivatives of $6.5 million in the second quarter of 2020. 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue and Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Q3 2020

 

Q3 2019

 

% Change Q3 2020 vs. Q3 2019

 

Q2 2020

 

% Change Q3 2020 vs. Q2 2020

Production (NRI BOPD)

 

 

4,405 

 

 

3,081 

 

 

43 

%

 

 

5,410 

 

 

(19)

%

Sales (NRI BO)

 

 

412,000 

 

 

279,000 

 

 

48 

%

 

 

631,000 

 

 

(35)

%

Realized crude oil price ($/BO)

 

$

43.63 

 

$

61.26 

 

 

(29)

%

 

$

28.31 

 

 

54 

%

Total crude oil sales ($MM)

 

$

18.3 

 

$

17.6 

 

 

%

 

$

18.0 

 

 

%



VAALCO had three liftings in the third quarter of 2020, which resulted in total sales volumes of 412,000 barrels compared with 279,000 barrels in the same period of 2019.  The increase in volumes in the third quarter of 2020 is due to the higher production rate resulting from the new wells.  Third quarter of 2020 realized pricing fell 29% from the third quarter of 2019 due to sharply lower prices received due to the COVID-19 pandemic and OPEC-related pricing issues.







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Q3 2020

 

Q3 2019

 

% Change Q3 2020 vs. Q3 2019

 

Q2 2020

 

% Change Q3 2020 vs. Q2 2020

Production expense, excluding workovers ($MM)

 

$

9.1 

 

$

9.5 

 

 

(4)

%

 

$

12.2 

 

 

(25)

%

Production expense, excluding workovers ($/BO)

 

$

22.21 

 

$

34.01 

 

 

(35)

%

 

$

19.31 

 

 

15 

%

Workover expense ($MM)

 

$

(0.2)

 

$

0.3 

 

 

(167)

%

 

$

(0.1)

 

 

100 

%

Depreciation, depletion and amortization ($MM)

 

$

2.2 

 

$

1.5 

 

 

47 

%

 

$

2.8 

 

 

(21)

%

Depreciation, depletion and amortization ($/BO)

 

$

5.37 

 

$

5.41 

 

 

(1)

%

 

$

4.44 

 

 

21 

%

General and administrative expense, excluding non-cash compensation ($MM)

 

$

2.4 

 

$

3.6 

 

 

(33)

%

 

$

2.3 

 

 

%

General and administrative expense, excluding non-cash compensation ($/BO)

 

$

5.89 

 

$

12.86 

 

 

(54)

%

 

$

3.64 

 

 

62 

%

Stock-based compensation expense (benefit) ($MM)

 

$

(0.2)

 

$

1.2 

 

 

(122)

%

 

$

0.7 

 

 

(134)

%

Current income tax expense (benefit) ($MM)

 

$

2.5 

 

$

2.6 

 

 

(4)

%

 

$

1.1 

 

 

127 

%

Deferred income tax expense (benefit) ($MM)

 

$

(5.3)

 

$

5.1 

 

 

(204)

%

 

$

(3.4)

 

 

56 

%



Total production expense, excluding workovers, decreased compared to the same period in 2019 primarily due to proactive operating cost reductions and was lower compared to the second quarter 2020 due to lower sales volumes.  The per-unit production expense, excluding workovers, decreased significantly in the third quarter of 2020 as compared to the third quarter of 2019 as a result of higher sales volumes and lower operating costs due to proactive cost reductions.  Production expense for the third quarter of 2020 included approximately $0.4 million in additional costs related to proactive employee-related measures taken in response to the pandemic.

   

Depreciation, depletion and amortization (“DD&A”) expense in the third quarter of 2020 on a per NRI barrel of crude oil sales basis was substantially unchanged from the comparable prior year quarter.  The per-unit DD&A

3


 

rate in the third quarter of 2020 was higher than the rate in the second quarter of 2020 due to higher volumes attributable to fields with higher depletable costs.



General and administrative (“G&A”) expense, excluding non-cash stock-based compensation, in the third quarter of 2020 was lower than in the third quarter of 2019 as a result of lower professional fees, legal expenses, and accounting and audit fees, but was similar to G&A expense, excluding non-cash stock-based compensation in the second quarter of 2020.  The third quarter of 2019 included one-time expenses associated with VAALCO’s dual listing on the London Stock Exchange.  Non-cash stock-based compensation expense (benefit) was impacted by the change in the SARs liability as a result of changes in the Company’s stock price during the quarter. 



Income tax was a benefit for the three months ended September 30, 2020 of $2.8 million, and included a $5.3 million deferred tax benefit to decrease the valuation allowances on U.S. and Gabonese deferred tax assets. 

Income tax expense for the three months ended September 30, 2019 was $7.7 million, and included a $4.8 million charge to increase the valuation allowances on U.S. deferred tax assets due to a decrease in future estimated taxable earnings primarily as result of lower crude oil prices.     

Income tax was a benefit for the three months ended June 30, 2020 of $2.2 million, and included a $0.9 million favorable crude oil price adjustment as a result of the change in value of the government’s allocation between the time it was produced and the time it was taken in-kind as well as a $4.1 million benefit to decrease the valuation allowances on U.S. and Gabonese deferred tax assets. 



Response to COVID-19 Pandemic and Current Pricing Environment



VAALCO remains fully committed to the health and safety of all its employees and contractors.  In response to the COVID-19 pandemic and the current pricing environment, VAALCO has taken the following measures:

Put into place social distancing measures at our work sites;

Actively screened and monitored employees and contractors that come onto the Company’s Gabon facilities including testing and quarantine periods with onsite medical supervision; 

Engaged in regular Company-wide COVID-19 updates to keep employees informed of key developments;

Implemented cost cutting measures with vendors;

Implemented sharing certain costs, such as support vessels, helicopters, and personnel with other operators in the region;

Temporarily reduced director, executive and certain non-executive employee compensation; and

Ceased or deferred certain discretionary capital spending.



VAALCO expects to continue to take proactive steps to manage any disruption in its business caused by COVID-19 and to protect the health and safety of its employees.  As of November 5, 2020, VAALCO has experienced no material impact on its Gabon operations directly associated with COVID-19; however, the Company has incurred higher costs related to proactive measures taken in response to the pandemic.  These costs were approximately $0.4 million during the third quarter of 2020 and were primarily related to additional personnel-related costs to support enhanced health and safety measures. The situation surrounding COVID-19 remains fluid and unpredictable, and VAALCO is actively managing its response and assessing potential impacts to its financial position and operating results, as well as any adverse developments that could impact the Company’s business.



Capital Investments/Balance Sheet



As discussed above, in connection with planning for future drilling programs at the Etame Marin block offshore Gabon, VAALCO recently agreed to acquire new 3-D seismic data in the fourth quarter of 2020. VAALCO projects the gross cost of both the acquisition and processing of the seismic survey to be between $12 million and

4


 

$15 million, or $4 million to $5 million net to VAALCO.  The Company expects to incur  $3.0 million to $3.5 million net to VAALCO in the fourth quarter of 2020 and the balance in 2021. The Company plans to fund the costs with cash on hand and through cash from operations.



At the end of the third quarter of 2020, VAALCO had an unrestricted cash balance of $42.0 million. The unrestricted cash balance includes $6.0 million of cash attributable to non-operating joint venture owner advances. Working capital at September 30, 2020 was $16.6 million compared with $11.7 million at June  30, 2020, while Adjusted Working Capital at September 30, 2020 totaled $29.3 million, compared with $24.1 million at June  30, 2020.



The Company does not have any derivatives currently and continues to evaluate adding derivatives in the future, in line with its strategic objectives.



2020 Guidance



For the fourth quarter 2020 forecasted NRI production and sales are expected to be between 4,600 and 5,000 BOPD. Production and sales NRI volumes for full year 2020 are expected to be at an average of 4,800 to 4,900 BOPD.  The Company’s production expense guidance (excluding workovers) for full year 2020 is $37 to $38 million or $20.50 to $21.50 per NRI barrel of crude oil sales, with production expense for the fourth quarter of 2020 projected to be between $9 and $10 million or $19.00 to $23.00 per NRI barrel of crude oil sales. The Company forecasts between $10 and $11 million in cash G&A expense for full year 2020.



Conference Call



As previously announced, the Company will hold a conference call to discuss its third quarter financial and operating results November 6, 2020, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time and 3:00 p.m. London Time). Interested parties may participate by dialing (877) 270-2148.  Parties in the United Kingdom may participate toll-free by dialing 08082389064 and other international parties may dial (412) 902-6510.  Participants should request to be joined to the “VAALCO Energy Third Quarter 2020 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.  



About VAALCO



VAALCO, founded in 1985, is a Houston, USA based, independent energy company with production, development and exploration assets in the West African region.

The Company is an established operator within the region, holding a 31.1% working interest in the Etame Marin Block, located offshore Gabon, which to date has produced over 118 million barrels of crude oil and of which the Company is the operator.

5


 

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 / Kelsey Traynor James Husband

VAALCO@buchanan.uk.com



Forward Looking Statements



This document includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  All statements, other than statements of historical facts, included in this document that address activities, events, plans, expectations, objectives or developments that VAALCO expects, believes or anticipates will or may occur in the future are forward-looking statements.  These statements may include statements related to the impact of the COVID-19 pandemic, including the recent sharp decline in the global demand for and resulting global oversupply of crude oil and the resulting steep decline in oil prices, production quotas imposed by Gabon, disruptions in global supply chains, quarantines of our workforce or workforce reductions and other matters related to the pandemic, well results, wells anticipated to be drilled and placed on production, future levels of drilling and operational activity and associated expectations, the implementation of the Company’s business plans and strategy, prospect evaluations, prospective resources and reserve growth, its activities in Equatorial Guinea, expected sources of and potential difficulties in obtaining future capital funding and future liquidity, its ability to restore production in non-producing wells, future operating losses, future changes in crude oil and natural gas prices, future strategic alternatives, future acquisitions, capital expenditures, future drilling plans, acquisition and interpretation of seismic data and costs thereof, negotiations with governments and third parties, timing of the settlement of Gabon income taxes, and expectations regarding processing facilities, production, sales and financial projections.  These statements are based on assumptions made by VAALCO based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances.  Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond VAALCO’s control.  These risks include, but are not limited to, crude oil and natural gas price volatility, the impact of production quotas imposed by Gabon in response to production cuts agreed to as a member of OPEC, inflation, general economic conditions, the outbreak of COVID-19, the Company’s success in discovering, developing and producing reserves, production and sales differences due to timing of liftings, decisions by future lenders, the risks associated with liquidity, lack of availability of goods, services and capital, environmental risks, drilling risks, foreign regulatory and operational risks, and regulatory changes. 



Investors are cautioned that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements.  VAALCO disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.



Inside Information



This announcement contains inside information as defined in Regulation (EU) No. 596/2014 on market abuse (“MAR”) and is made in accordance with the Company’s obligations under article 17 of MAR.

6


 

VAALCO ENERGY, INC AND SUBSIDIARIES

Consolidated Balance Sheets (Unaudited)





 

 

 

 

 

 



 

 



 

September 30, 2020

 

December 31, 2019

ASSETS

 

(in thousands)

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

41,986 

 

$

45,917 

Restricted cash

 

 

82 

 

 

911 

Receivables:

 

 

 

 

 

 

Trade

 

 

6,080 

 

 

14,335 

Accounts with joint venture owners, net of allowance of $0.0 million and $0.5 million, respectively

 

 

 —

 

 

2,714 

Foreign income taxes receivable

 

 

1,124 

 

 

 —

Other

 

 

81 

 

 

1,517 

Crude oil inventory

 

 

781 

 

 

1,072 

Prepayments and other

 

 

4,264 

 

 

3,292 

Total current assets

 

 

54,398 

 

 

69,758 



 

 

 

 

 

 

Crude oil and natural gas properties, equipment and other - successful efforts method, net

 

 

38,845 

 

 

68,258 

Other noncurrent assets:

 

 

 

 

 

 

Restricted cash

 

 

925 

 

 

925 

Value added tax and other receivables, net of allowance of $2.1 million and $1.0 million, respectively

 

 

3,684 

 

 

3,683 

Right of use operating lease assets

 

 

25,700 

 

 

33,383 

Deferred tax assets

 

 

 —

 

 

24,159 

Abandonment funding

 

 

11,885 

 

 

11,371 

Total assets

 

$

135,437 

 

$

211,537 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

4,702 

 

$

15,897 

Accounts with joint venture owners

 

 

5,984 

 

 

 —

Accrued liabilities and other

 

 

14,426 

 

 

29,773 

Operating lease liabilities - current portion

 

 

12,696 

 

 

11,990 

Foreign income taxes payable

 

 

 —

 

 

5,740 

Current liabilities - discontinued operations

 

 

15 

 

 

350 

Total current liabilities

 

 

37,823 

 

 

63,750 

Asset retirement obligations

 

 

17,105 

 

 

15,844 

Operating lease liabilities - net of current portion

 

 

12,993 

 

 

21,371 

Deferred tax liabilities

 

 

2,802 

 

 

 —

Other long-term liabilities

 

 

43 

 

 

852 

Total liabilities

 

 

70,766 

 

 

101,817 

Commitments and contingencies

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

Preferred stock, $25 par value; 500,000 shares authorized, none issued

 

 

 —

 

 

 —

Common stock, $0.10 par value; 100,000,000 shares authorized, 67,819,242 and 67,673,787 shares issued, 57,456,139 and 58,024,571 shares outstanding, respectively

 

 

6,782 

 

 

6,767 

Additional paid-in capital

 

 

74,061 

 

 

73,549 

Less treasury stock, 10,363,103 and 9,649,216 shares, respectively, at cost

 

 

(42,419)

 

 

(41,429)

Retained earnings

 

 

26,247 

 

 

70,833 

Total shareholders' equity

 

 

64,671 

 

 

109,720 

Total liabilities and shareholders' equity

 

$

135,437 

 

$

211,537 



7


 

VAALCO ENERGY, INC AND SUBSIDIARIES

Consolidated Statements of Operations (Unaudited)





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Nine Months Ended September 30,



 

September 30, 2020

 

September 30, 2019

 

June 30, 2020

 

2020

 

2019



 

(in thousands except per share amounts)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil and natural gas sales

 

$

18,256 

 

$

17,603 

 

$

17,974 

 

$

54,619 

 

$

62,598 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production expense

 

 

8,984 

 

 

9,836 

 

 

12,126 

 

 

30,859 

 

 

27,874 

Exploration expense

 

 

16 

 

 

 —

 

 

 —

 

 

16 

 

 

 —

Depreciation, depletion and amortization

 

 

2,212 

 

 

1,509 

 

 

2,801 

 

 

8,116 

 

 

4,971 

Impairment of proved crude oil and natural gas properties

 

 

 —

 

 

 —

 

 

 —

 

 

30,625 

 

 

 —

General and administrative expense

 

 

2,178 

 

 

4,738 

 

 

3,019 

 

 

5,951 

 

 

11,905 

Bad debt expense and other

 

 

151 

 

 

54 

 

 

179 

 

 

1,140 

 

 

30 

Total operating costs and expenses

 

 

13,541 

 

 

16,137 

 

 

18,125 

 

 

76,707 

 

 

44,780 

Other operating income (expense), net

 

 

(37)

 

 

35 

 

 

(815)

 

 

(883)

 

 

(4,401)

Operating income (loss)

 

 

4,678 

 

 

1,501 

 

 

(966)

 

 

(22,971)

 

 

13,417 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative instruments gain (loss), net

 

 

 —

 

 

2,267 

 

 

(756)

 

 

6,583 

 

 

2,266 

Interest income, net

 

 

23 

 

 

193 

 

 

11 

 

 

150 

 

 

581 

Other, net

 

 

147 

 

 

(138)

 

 

47 

 

 

163 

 

 

(521)

Total other income, net

 

 

170 

 

 

2,322 

 

 

(698)

 

 

6,896 

 

 

2,326 

Income (loss) from continuing operations before income taxes

 

 

4,848 

 

 

3,823 

 

 

(1,664)

 

 

(16,075)

 

 

15,743 

Income tax expense (benefit)

 

 

(2,759)

 

 

7,681 

 

 

(2,249)

 

 

28,470 

 

 

19,642 

Income (loss) from continuing operations

 

 

7,607 

 

 

(3,858)

 

 

585 

 

 

(44,545)

 

 

(3,899)

Income (loss) from discontinued operations, net of tax

 

 

11 

 

 

(61)

 

 

11 

 

 

(41)

 

 

5,448 

Net income (loss)

 

$

7,618 

 

$

(3,919)

 

$

596 

 

$

(44,586)

 

$

1,549 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.13 

 

$

(0.07)

 

$

0.01 

 

$

(0.77)

 

$

(0.07)

Income (loss) from discontinued operations, net of tax

 

 

0.00 

 

 

0.00 

 

 

0.00 

 

 

0.00 

 

 

0.09 

Net income (loss) per share

 

$

0.13 

 

$

(0.07)

 

$

0.01 

 

$

(0.77)

 

$

0.02 

Basic weighted average shares outstanding

 

 

57,456 

 

 

58,953 

 

 

57,456 

 

 

57,628 

 

 

59,457 

Diluted net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.13 

 

$

(0.07)

 

$

0.01 

 

$

(0.77)

 

$

(0.07)

Income (loss) from discontinued operations, net of tax

 

 

0.00 

 

 

0.00 

 

 

0.00 

 

 

0.00 

 

 

0.09 

Net income (loss) per share

 

$

0.13 

 

$

(0.07)

 

$

0.01 

 

$

(0.77)

 

$

0.02 

Diluted weighted average shares outstanding

 

 

57,741 

 

 

58,953 

 

 

57,594 

 

 

57,628 

 

 

59,457 



8


 

VAALCO ENERGY, INC AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)





 

 

 

 

 

 



 

Nine Months Ended September 30,



 

2020

 

2019



 

(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income (loss)

 

$

(44,586)

 

$

1,549 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

 

(Income) loss from discontinued operations

 

 

41 

 

 

(5,448)

Depreciation, depletion and amortization

 

 

8,116 

 

 

4,971 

Impairment of proved crude oil and natural gas properties

 

 

30,625 

 

 

 —

Other amortization

 

 

181 

 

 

181 

Deferred taxes

 

 

26,972 

 

 

12,725 

Unrealized foreign exchange gain

 

 

(60)

 

 

(46)

Stock-based compensation

 

 

(2,097)

 

 

2,770 

Cash settlements paid on exercised stock appreciation rights

 

 

 —

 

 

(261)

Derivatives instruments gain

 

 

(6,583)

 

 

(2,266)

Cash settlements received on matured derivative contracts, net

 

 

7,216 

 

 

2,056 

Bad debt expense and other

 

 

1,140 

 

 

30 

Other operating loss, net

 

 

83 

 

 

37 

Operational expenses associated with equipment and other

 

 

1,418 

 

 

(62)

Change in operating assets and liabilities:

 

 

 

 

 

 

Trade receivables

 

 

8,255 

 

 

4,404 

Accounts with joint venture owners

 

 

8,642 

 

 

12,354 

Other receivables

 

 

1,333 

 

 

219 

Crude oil inventory

 

 

291 

 

 

10 

Prepayments and other

 

 

(1,153)

 

 

(1,979)

Value added tax and other receivables

 

 

(919)

 

 

664 

Accounts payable

 

 

(9,318)

 

 

(2,154)

Foreign income taxes receivable/payable

 

 

(6,875)

 

 

(122)

Accrued liabilities and other

 

 

(3,285)

 

 

4,092 

Net cash provided by continuing operating activities

 

 

19,437 

 

 

33,724 

Net cash used in discontinued operating activities

 

 

(376)

 

 

(4,673)

Net cash provided by operating activities

 

 

19,061 

 

 

29,051 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

Property and equipment expenditures

 

 

(22,317)

 

 

(3,382)

Net cash used in continuing investing activities

 

 

(22,317)

 

 

(3,382)

Net cash used in discontinued investing activities

 

 

 —

 

 

 —

Net cash used in investing activities

 

 

(22,317)

 

 

(3,382)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

Proceeds from the issuances of common stock

 

 

 —

 

 

133 

Treasury shares

 

 

(990)

 

 

(2,425)

Net cash used in continuing financing activities

 

 

(990)

 

 

(2,292)

Net cash used in discontinued financing activities

 

 

 —

 

 

 —

Net cash used in financing activities

 

 

(990)

 

 

(2,292)

NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

 

(4,246)

 

 

23,377 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

 

 

59,124 

 

 

46,655 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

 

$

54,878 

 

$

70,032 



9


 

VAALCO ENERGY, INC AND SUBSIDIARIES

Selected Financial and Operating Statistics

(Unaudited)





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Nine Months Ended September 30,



 

September 30, 2020

 

September 30, 2019

 

June 30, 2020

 

2020

 

2019

NRI SALES DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil (MBbls)

 

 

412 

 

 

279 

 

 

631 

 

 

1,337 

 

 

933 

NRI PRODUCTION DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil (MBbls)

 

 

405 

 

 

283 

 

 

492 

 

 

1,347 

 

 

932 

Average daily production volumes (BOPD)

 

 

4,405 

 

 

3,081 

 

 

5,410 

 

 

4,918 

 

 

3,412 

REALIZED DERIVATIVE INSTRUMENTS GAIN (LOSS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Realized derivative instruments gain (loss), net, in thousands

 

$

0.00 

 

$

493 

 

$

6,498 

 

$

7,216 

 

$

2,056 

Realized derivative instruments gain (loss), net (Per Bbls)

 

 

0.00 

 

 

1.77 

 

 

10.30 

 

 

5.40 

 

 

2.20 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE SALES PRICES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil (Per Bbls)

 

$

43.63 

 

$

61.26 

 

$

28.31 

 

$

39.90 

 

$

65.00 

COSTS AND EXPENSES (Per Bbl of sales):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production expense

 

$

21.81 

 

$

35.25 

 

$

19.22 

 

$

23.08 

 

$

29.88 

Production expense, excluding workovers*

 

 

22.21 

 

 

34.01 

 

 

19.31 

 

 

21.10 

 

 

29.36 

Depreciation, depletion and amortization

 

 

5.37 

 

 

5.41 

 

 

4.44 

 

 

6.07 

 

 

5.33 

General and administrative expense**

 

 

5.29 

 

 

16.98 

 

 

4.78 

 

 

4.45 

 

 

12.76 

Property and equipment expenditures, cash basis (in thousands)

 

$

2,220 

 

$

2,219 

 

$

8,117 

 

$

22,317 

 

$

3,382 



*Workover costs excluded from the three months ended September 30, 2020 and 2019 and June  30, 2020 are $(0.2) million, $0.3 million and $(0.1) million, respectively.

**General and administrative expenses include $(0.60), $4.12 and $1.14 per barrel of oil of sales of stock-based compensation expense in the three months ended September 30, 2020, and 2019 and June  30, 2020, respectively.



NON-GAAP FINANCIAL MEASURES



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, non-cash and other items including stock compensation expense and unrealized commodity derivative loss.



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, deferred income tax expense, unrealized commodity derivative loss and non-cash and other items.



Management uses Adjusted Working Capital as a measurement 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.

10


 

 

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 and Adjusted Net Income 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 and Adjusted Net Income 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 and Adjusted Working Capital.



VAALCO ENERGY, INC AND SUBSIDIARIES

Reconciliations of Non-GAAP Financial Measures

(Unaudited)

(in thousands)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Nine Months Ended September 30,

Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)

 

September 30, 2020

 

September 30, 2019

 

June 30, 2020

 

2020

 

2019

Net income (loss)

 

$

7,618 

 

$

(3,919)

 

$

596 

 

$

(44,586)

 

$

1,549 

Adjustment for discrete items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations, net of tax

 

 

(11)

 

 

61 

 

 

(11)

 

 

41 

 

 

(5,448)

Impairment of proved crude oil and natural gas properties

 

 

 —

 

 

 —

 

 

 —

 

 

30,625 

 

 

 —

Unrealized derivative instruments (gain) loss

 

 

 —

 

 

(1,774)

 

 

7,254 

 

 

633 

 

 

(210)

Deferred income tax expense (benefit)

 

 

(5,299)

 

 

5,058 

 

 

(3,367)

 

 

26,972 

 

 

12,725 

Other operating expense, net

 

 

37 

 

 

(35)

 

 

815 

 

 

883 

 

 

4,401 

Adjusted Net Income (Loss)

 

$

2,345 

 

$

(609)

 

$

5,287 

 

$

14,568 

 

$

13,017 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted adjusted net income (loss) per share

 

$

0.04 

 

$

(0.01)

 

$

0.09 

 

$

0.25 

 

$

0.22 

Diluted weighted average shares outstanding (1)

 

 

57,741 

 

 

58,953 

 

 

57,594 

 

 

57,628 

 

 

59,457 

(1)  No adjustments to weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended September 30,

Reconciliation of Net Income (Loss) to Adjusted EBITDAX

 

September 30, 2020

 

September 30, 2019

 

June 30, 2020

 

2020

 

2019

Net income (loss)

 

$

7,618 

 

$

(3,919)

 

$

596 

 

$

(44,586)

 

$

1,549 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of discontinued operations

 

 

(11)

 

 

61 

 

 

(11)

 

 

41 

 

 

(5,448)

Interest income, net

 

 

(23)

 

 

(193)

 

 

(11)

 

 

(150)

 

 

(581)

Income tax expense (benefit)

 

 

(2,759)

 

 

7,681 

 

 

(2,249)

 

 

28,470 

 

 

19,642 

Depreciation, depletion and amortization

 

 

2,212 

 

 

1,509 

 

 

2,801 

 

 

8,116 

 

 

4,971 

Exploration expense

 

 

16 

 

 

 —

 

 

 —

 

 

16 

 

 

 —

Impairment of proved crude oil and natural gas properties

 

 

 —

 

 

 —

 

 

 —

 

 

30,625 

 

 

 —

Non-cash or unusual items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

(248)

 

 

1,150 

 

 

720 

 

 

(2,097)

 

 

2,770 

Unrealized derivative instruments (gain) loss

 

 

 —

 

 

(1,774)

 

 

7,254 

 

 

633 

 

 

(210)

Other operating expense, net

 

 

37 

 

 

(35)

 

 

815 

 

 

883 

 

 

4,401 

Bad debt expense and other

 

 

151 

 

 

54 

 

 

179 

 

 

1,140 

 

 

30 

Adjusted EBITDAX

 

$

6,993 

 

$

4,534 

 

$

10,094 

 

$

23,091 

 

$

27,124 



11


 

VAALCO ENERGY, INC AND SUBSIDIARIES

Reconciliations of Non-GAAP Financial Measures

(Unaudited)

(in thousands)



 

 

 

 

 

 

 

 

 

Reconciliation of Working Capital to Adjusted Working Capital

 

September 30, 2020

 

June 30, 2020

 

December 31, 2019

Current assets

 

$

54,398 

 

$

62,234 

 

$

69,758 

Current liabilities

 

 

(37,823)

 

 

(50,498)

 

 

(63,750)

Working capital

 

 

16,575 

 

 

11,736 

 

 

6,008 

Add: operating lease liabilities - current portion

 

 

12,696 

 

 

12,274 

 

 

11,990 

Add: current liabilities - discontinued operations

 

 

15 

 

 

48 

 

 

350 

Adjusted Working Capital

 

$

29,286 

 

$

24,058 

 

$

18,348 



 

 

 

 

 

 

 

 

 



12


View differences made from one to another to evaluate Vaalco Energy Inc's financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 8-K Corporate News to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Vaalco Energy Inc.

Continue

Never Miss A New SEC Filing Again


Real-Time SEC Filing Notifications
Screenshot taken from Gmail for a new 10-K Annual Report
Last10K.com Member Feature

Receive an e-mail as soon as a company files an Annual Report, Quarterly Report or has new 8-K corporate news.

Continue

We Highlighted This SEC Filing For You


SEC Filing Sentiment Analysis - Bullish, Bearish, Neutral
Screenshot taken from Wynn's 2018 10-K Annual Report
Last10K.com Member Feature

Read positive and negative remarks made by management in their entirety without having to find them in a 10-K/Q.

Continue

Widen Your SEC Filing Reading Experience


Increased Reading Area for SEC Filings
Screenshot taken from Adobe Inc.'s 10-Q Quarterly Report
Last10K.com Member Feature

Remove data columns and navigations in order to see much more filing content and tables in one view

Continue

Uncover Actionable Information Inside SEC Filings


SEC Filing Disclosures
Screenshot taken from Lumber Liquidators 10-K Annual Report
Last10K.com Member Feature

Read both hidden opportunities and early signs of potential problems without having to find them in a 10-K/Q

Continue

Adobe PDF, Microsoft Word and Excel Downloads


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshots of actual 10-K and 10-Q SEC Filings in PDF, Word and Excel formats
Last10K.com Member Feature

Export Annual and Quarterly Reports to Adobe PDF, Microsoft Word and Excel for offline viewing, annotations and analysis

Continue

FREE Financial Statements


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshot of actual balance sheet from company 10-K Annual Report
Last10K.com Member Feature

Get one-click access to balance sheets, income, operations and cash flow statements without having to find them in Annual and Quarterly Reports

Continue for FREE

Intrinsic Value Calculator


Intrinsic Value Calculator
Screenshot of intrinsic value for AT&T (2019)
Last10K.com Member Feature

Our Intrinsic Value calculator estimates what an entire company is worth using up to 10 years of financial ratios to determine if a stock is overvalued or not

Continue

Financial Stability Report


Financial Stability Report
Screenshot of financial stability report for Coco-Cola (2019)
Last10K.com Member Feature

Our Financial Stability reports uses up to 10 years of financial ratios to determine the health of a company's EPS, Dividends, Book Value, Return on Equity, Current Ratio and Debt-to-Equity

Continue

Get a Better Picture of a Company's Performance


Financial Ratios
Available Financial Ratios
Last10K.com Member Feature

See how over 70 Growth, Profitability and Financial Ratios perform over 10 Years

Continue

Log in with your credentials

or    

Forgot your details?

Create Account