EGY - Earnings call transcript Q1 2019

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Operator

Good morning. My name is Amy and I will be your conference operator today. At this time, I would like to welcome everyone to the VAALCO First Quarter 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions]. [Operator you. Thank turn now over Mr. to I the will call Al Petrie, Coordinator. Relations Investor

Al Petrie

forward-looking Financial and closing your financial first will review. with Chief Good call. VAALCO then Liz the comments provide of our the Amy. take key you, then will return welcome Executive Prochnow, results. After along Cary Officer, will Chief morning, cover conference Thank highlights XXXX everyone, a some to before review Bounds, quarter Cary questions. we Energy's I quarter, statements, our for operational Officer, more in-depth first

During your our and questions session, to follow-up. we ask that you a questions limit one

that reenter always additional guidance comparisons should posted can like updated forward-looking financial to be additional out that that, let comments. helpful. the our You morning questions. with an I our would me has queue with statements on proceed investor analysis, we that deck With point this website

in note press recorded. is including the or Investors projected the are intention any filed whether be of yesterday. or place Accordingly, statements. yesterday's our not to of are forward-looking the conference obligation will those that the was that presentation of actual those forward-looking differ new information, posted future making this conference call Form events reports developments reliance statements disclaims VAALCO release, and undue statements. with risks revise website in otherwise. the forward-looking file described the company or update on you Please the being that should results as may XX-Q These other on we statements. forward-looking call, and materially SEC, forward-looking a not performance, result or cautioned and from During this in statements, future course any guarantees are

the Let call to over me Cary. turn now

Cary Bounds

to Angola. first Sonangol the earnings our from to agreement a by had of results. obligations and payment cash first year, quarter P&P. payment of settlement settlement Mineral like VAALCO you, days discontinued an execution Petroleum. and In $X.X Good within call. VAALCO VAALCO our and interest the have liabilities Sonangol allows I will exit very and related of of in E.P was a receivable XXXX. receivable year-end X. Block Block $XX pleased potential decree from for million associated assets welcome reached liability operations for Resources and XX reflected our the to The finalize outstanding quarter after current Angola. termination And we elimination rights, million previously of start Ministry is reviewing a the executive for due as this morning, everyone signed which conference Sonangol E.P., includes agreement the VAALCO's accrued Billings quarter with I'm the the X The of XXXX first agreement become at Al. joint from all from would to from Thank The relinquishing payment and with to

VAALCO's extended $XX ability and in with strengthens million sheet in growth robust on Angola reserve clean a foundation, production which balance a hand reserves and continued from and Gabon. an Combining includes noncash the this exit operations a of million VAALCO in XXXX. at quarter our first of As with the adjusted the liability $X.X from from PSC a recognized result discontinued tax net of and of benefit Extension horizon resources, to cash grow for solid Etame agreement, time

work above of non we third have stoppage range. production XXXX FPSO Without would first the that of which on barrels employees our been by day. midpoint to the the net, quarter oil per results, unexpected to of party approximately a by in XXX reduced per of barrels interruption, this range our for day low guidance at the production quarter Turning VAALCO guidance due averaged oil operational the was end

the to in For of XXXX per the net. of second oil barrels XXXX range quarter, day production be we to expect

As in boost thus late production year development drilling XXXX will until and from will not a XXXX our reminder, greater the impact program production on have production. the impact a significantly

slightly the to $XX generate the oil first the the hand quarter. and per to we pricing million of EBITDAX million barrel $XX continued quarter expand But in our $X.XX quarter. Our meaningful $X.X over of declined to cash end and on first realized in adjusted at

update Now, XXXX I our program. would on like you development drilling to

appraisal the well As we committed September two XXXX. and wells to in Extension Gabon, part bores PSC of drilling development by two

cash from we and begin announced, drilling and up previously two on from XXXX, three plan appraisal wells, cash to operations. development in to funded As generated hand bores well

wells rig through to plan drilling the be a secured of first quarter third have that in available XXXX, will XXXX. of to quarter continue these We the we begin drilling and

well there appraisal reserves area and six on placed are current well net out work to locations to In Our in to the Gamba bring in to the well bores million potential X the quickly are rig with the Dentale have southeast evaluate development the add first the up future minimal our If prove under operating in Etame and of wells can a presentation bores of the Extension. website, with locations step to the in first off up and online and the most resources of increase jack-up fourth overhead drilling we XXXX. our which with online and of XXXX drilling are be costs. wells half of barrels drilling VAALCO drilled approximately in the posted campaign, assess additional description appraisal commitment to quarter easily in plans will the detailed we Etame. well is the potential remaining existing access XP platforms are campaigns. a production a included XXXX The These satisfy these recent drilling our areas, PSC

emphasize and next repeat programs our enough. production goals. the adding can't and drilling years achieve Our similar vision I and times this multiple to continue XXXX help reserves is over us to vision several Again,

companies will cash last in we on on budget increasingly volatile by been generate estimated million XX all $XX cash We hand become an net have expect experiencing. capital million flow like cash of funded community in and to investment our of free operations. E&P The investment extended ability prices XXXX to oil from period months flow be has of focused the the $XX

long management understood of to the team importance Our us ultimately free to generating has cash flow and company our allow sustain grow.

build with flow We a base balance. cash stable have cash helped production generating our strong, free minimizing costs that on team and a us and has focused

me a Let Guinea. update Equatorial on provide brief now

P, fourth we several in suspension our As been years. for quarter XXXX discussed our on Block in XX% has interest call,

hydrocarbons suspension. of September in lifted the However, XXXX, Ministry Equatorial and the Guinea Mines

to everyone, has venture Mines reminder P. the partners owner, new XX, the March group owned the approving is GEPetrol of to state contractor begin $XX Mines a Equatorial Guinea company VAALCO on the oil Block new drill GEPetrol to one year or joint Ministry write associated basis to the venture have write-off drilling value and would has of down our license. XXXX promoted a for the fulfilled to GEPetrol undeveloped cost seek the leasehold or by of required operations. loss to our intends books interest new I'm our investor P would joint all the owner well. Ministry to joint our with we a requirement. and license of As this exploratory was of introduce the million the sorry, one and Upon have all in owner we in in Block costs on to to substantially would result drill Value cover that an a of will

area the timing to with evaluate and a working owners under joint the in activities the exploration development and and and including venture production our approval production are development plan. block, We development for budgeting of a

the that Stock recently listing the a Europe our to to initiated like seek equity Finally, list discuss We the a pursue four in would do to listing London institutional and over to a time progress access next better group Exchange. process for to I months. international a of VAALCO VAALCO peer us this process provide is of which international to believe Stock range dual right investors We we our broader will Exchange, group. the six position standard The process a alongside on analysts. broader research will to think on London

results. would operations has strong the I as Chief would leader to an our Officer. about opening and Liz to VAALCO to financial our VAALCO into Financial Liz been my the conclude a I discuss past integral our four Prochnow, to She Officer. guide With like over financial is as Chief future. years I Before background call turn over welcome help like knowledgeable for that, the to Liz has Accounting remarks, our

Elizabeth Prochnow

Thank words you for those everyone. morning, introduction, in Cary. Good had kind

$X fourth the to or $X.XX including charged or or million in Adjusted tax share. after of income per $X.X diluted $X.XX million share, same of Rights of oil settlement a noncash diluted XXXX $X.X Angola. quarter will or swaps, once $X.XX as or million $X.XX outstanding or XXXX. again charge A employee diluted income crude Several as or for per quarter of million quarter impacted We diluted noncash the first noncash net $X.X items well and million expense Adjusted per for XXXX income the net of results $XX.X approximately $X.X in $X.X of first of financial of quarter with deferred income in first obligations reported million of diluted $XX.X for DAX total $X.XX share. the due per million million our share million income to the of $X.X SARS Our share. EBIT the noncash share $X.X Stock compared Appreciation per diluted the tax, related XXXX, and per net strong. in total mark-to-market period

XXXX, net from with ago, first fourth XXXX in XXX,XXX price in is and barrels XX.XX an the XXXX X% of barrel, crude oil of quarter quarter that fourth additional lifting a XXXX, first barrels. the there month XX.XX quarter oil XXXX. for a approximately first XXXX, June net totaled from oil for quarter realized split to increased and due quarter swap XXX,XXX barrels weighted the This VAALCO executed sales fourth the Dated of the price averaged included for of per of and June the compared quarter first per average liberally XXXX quantity December. carried over multiple from quarter the barrel XXX,XXX of In XX.XX the down fourth June In down had of I $XX net in XXXX same and oil lifting. period a in the from of was listings Brent at XXX,XXX in XXXX quarter sales barrels, is through year First XXXX the in period including XXXX.

for were Brent an from March swaps commodity XXXX, crude has for are in VAALCO barrels. of executed XXXX, May XXXX XXXX, July In the period the currently oil weighted These including price of company that XXXX. XX.XX a there through As derivative average XX,XXX for price for XX of per place. XXX,XXX barrel Dated a only a at contracts barrels remaining quantity June the swap

We will our through allow hedging ways In mitigate continue evaluate noncash ensure rising a to our we to for to cash future our prices flows quarter, market-to-market cruel for drilling recorded related first upsides swaps programs commodity of and project. million. the risk, charged to $X

cash on million quarter. settled $X.X during swaps realized gain we the first was the However,

asset As sheet. estimated consolidated swaps XX at condensed was and barrels recorded price an balance at the $X.X remaining the XXXX, and is million, of other on line March which prepayments in of commodity value market-to-market the XXXX XX,XXX

$X.X first of or the quarter of was same fourth Turning compared barrel barrel per XX.XX excluding for expenses, XX.XX with XXXX, $X.X overs production to million per quarter or XXXX. of sale, or $XX.X barrel and per quarter the in XXXX total the in expense of oil million million work XX.X

quarter XXXX, our first to costs below the as we the of midpoint expenses. per For of our continue were controllable guidance barrel manage

barrel compares be $XX we was and quarter X.XX work XXXX and million, XX production million This of X.XX favorable $XX.X to the of barrel. quarter, December XX revisions in DD&A PSC remains quarter or same per of the for million quarter DD&A in barrel in XXXX. oil. at per $X.X the with to annual the For by an year-over-year associated of upward The increase the X.XX million XXXX costs barrel partly the excluding barrel or first to second expect $XX in as expense depletable per or offset the XX, or to guidance of oil per XXXX. Extension, impact of $X to barrel, reserves increase $X.X and fourth overs $X.X per XXXX, between reflects per first

$X.X and quarter of of as We DD&A of first expense quarter General XXXX, noncash at XXXX expect our the million or the million barrel $X.X first to X.XX barrel XXXX. in X.XX unchanged oil of was compared oil barrel full-year X.XX X.X compensation excluding range or of quarter $X.X barrel of oil in fourth remain and the to per for per administrative to or per X.XX of sales.

the of We versus expense variability expense of with the and XXXX same continuing ended an $X.X Income SARs quarter related noncash quarter or share tax remain the to included to of government the $X.X million and the tax the expect which million or excluding every $X.X March taxes. full-year share operations are XXXX, per we fourth closing $X to tax an of compared quarter, the to SARs. of $XX.X credit million XXXX at compensation Appreciation the end expense. of to the mark-to-market December $X.X $X.XX the Gabon XXXX SARs fourth be stock XXXX. the G&A million on and fair compared XXXX report unchanged for of noncash second in for tax Stock XXXX. oil impacts noncash million an XXXX price that the expense first which based XXXX. comparable in of of first value price quarter credit expense, the the the end Rights quarterly the deferred in $XX million XX, first SARs There $X.XX on in no quarter expense quarter lifted at elected million quarter will within million. expensive was expense months of the whereas Beginning the Income XX, attributable compensation million XXXX was income $X.X in greatly expensive fourth and to our as is quarter first stock based three of associated period quarter the in between $X.X was value $X.X of tax of XXXX. Noncash million there profit included period, revalued XXXX, quarter deferred deferred expense the during the Stock

taxes or levels. in taxes settled took Gabon production to oil year, lifting. settlements The Gabon on share result, Gabon not oil election These income occur in its of its when lifts are twice a are Gabon government first the its government per expected As being depending of the lifting production. of once March VAALCO when which further was in April took XX, XXXX. XXXX, any since September million payable At XXXX. Gabon do foreign anticipate XXXX, had by an settled $X.X lifting of We

end with prices. higher our position general XX XX by XX price VAALCO's Slides both Slide adjusted leverage oil our lease on to capital assets At cash, terms, presentation this the amounts we per oil first quarter, liabilities EBITDAX the strengthening restricted on including approximately realized the financial expense. additional annual continuing oil increase detailed not our to in of operations, in restricted to work include cash included million As deposits is In At each we $XX.X VAALCO million. venture fund sales, and of illustrate at assets. is advances. deck of oil classified free attributable presented $XX.X the approximately the which strong had of flow we our an primarily owner as This point as per in build And that our over unrestricted related working barrel $X.X breakeven long-term end in is further sales. estimate morning is cash cash, to This breakeven drilling from excluding cash current classified does shows estimate quarter, the XX development clearly continued barrel XX the increases million of operational of $X $X our non-operating cash currently website, which additional had balance first million, which of XXXX the $X.X $X or in of in million. price XXXX Gabon, joint million and the program. an

cash and lease term financial These to assets expenditure on our use million, the would first and rules. lease in recognize quarter and leasing expect, quarter second and our they for capital, the million on share half be at in we new $XX.X liabilities VAALCO that operator with lead of standard, maintenance effects XXXX. of completed is long capital majority include invested second in the some in the million. those rules, $X.X $XX.X items VAALCO's have underlying estimated A net will it share is the two wells development quarter million. With our hand capital $XX.X expect decrease capital portion least right program impact first long-term lease accounting flow quarter capital be cost standard well XXXX a is of liabilities range of our to impact current the have by and the million. $XX.X our XXXX, of assets In cash contracts. drilling and our XXXX, primarily of and amounts anticipate as remains recurred higher are with new up from associated the joint capital of XXXX, Under capital VAALCO on bores, in million expenditures cost. XXXX statement. XXXX. to the will that use program which term these to of at a been with we Recording term to appraisal owners short $XX the expenditures party lease long in minimal expenditures operations. gross million is working required approximately is and funded of attributable leasing of three portion the FPSO. short the one results, first the $XX position lease at than in The and at will had along continue amount The the at for the cash adopted to include right significant we related in no The very our reporting resulted the term income expenditures strong we liabilities The drilling because VAALCO

and over best Angola no turn are recent the We hand, into XXXX have to $XX focused cash operational of our and strong cash execution our continuing I company's development the million build Cary. positions With will this, XXXX remain call carried the our history. in on one fund now on in we balance debt opportunities. on agreement back sheet to settlement financial With the to

Cary Bounds

Liz. Thanks,

financially positioned succeed VAALCO long see and and near operationally have to We the term. to in term

have With and the debt we capital. agreement, Angola balance a no ample with working clean sheet

the class PSC world With build Extension future place, robust have in producing the a we to asset. a from runway

Our see operating through track value solid optimistic responsibly. create growth our where at our we of program strong we capacity XX. investment that high in performing which highlighted have a foundation we substantial on slides significant for Etame, with by upside, for presentation will drilling record shareholders on is team, a and I'm our executing XX

We striving more with and portfolio with premier diversified a to XXXX. are our operator vision become African a

five create to We reserves value for then shareholders. our are times targeting production in growth

maximize have with pursuing team a M&A with to strong are can our we where a asset We operational expertise, expertise and clearly producing value we creation. differentiated utilize African upside significant opportunities a

to will about lie And with take profitable the and very excited Our The Thank for are creative questions. that, focus growth value on outlook ahead. for opportunities VAALCO add that we is operator, ready shareholders. are we is you. and promising to our that

Operator

Instructions] from [Operator Stephane question is First Foucaud.at Securities. GMP you. Thank

Stephane Foucaud

Good effectively flush values of to to need U.K.? the of morning, the done stop words, what term that out milestones do in what see lead trading long to we Thank other you. London please you listing the to would be guys. needs the Could

Cary Bounds

the you drilling? sorry needs to start to What thank in trading be I'm to the effectively for U.K. start question. and done

six that We steps applications expect four finish through process are We've months. working like through the the required start approval the to really the now. mentioned - that to process I and now we're forms in it's And we that by started Stock out to going and Exchange filling trading and within have we're London regulator.

Stephane Foucaud

Thank Right. you.

Operator

next is question Jamie Wieland from Wieland Your Management. of

Jamie Wieland

processes? got XX you've are? say Where in to the a are find Could tell in partner. you what process? you we Guinea, you the you months Equatorial On us, And are where

Cary Bounds

carry of an we for partner. to a interest have expect Yes. the portion transferred where Good are a already occurs to to are that occur Guinea Once we we Jamie. our part them that partner started find said Absolutely, have their with drill over processes, morning the are well, an looking process partner. to marketing participating we interest working working new we Equatorial will imminently, and and promote GEPetrol like to cost or in a take will of to we I our they exploratory and substantial a

assign interest Now who until are we their will know not finalize will we that process to. who GEPetrol ultimately

the approval that So a our their assign partner our then we'll step will process GEPetrol and first ministry interest finalize in continue for of and to interest. and is for bring take part

Jamie Wieland

So that you determined? yet has not from correct? a have date Is been months that XX

Cary Bounds

XX That correct. deadline the in is begin drilling. be months deadline, clear, just the And to to is

Jamie Wieland

in And drilling when expect far to a I said bit back be you year, the that be but begin? specific? as do the the you little could know of half Okay. you as more in to Gabon,

Cary Bounds

I late think like third early quarter. quarters, but Late fourth quarter third quarter, third -

Jamie Wieland

this next could year drilling wells was year, three And over you'll be quite it into carrying asking?

Cary Bounds

carrying - into next yeah over into it's carrying year. It over

Jamie Wieland

Okay.

Cary Bounds

So two point. early and this year at next year this one

Jamie Wieland

- And

Cary Bounds

- Jamie. do let me What clarify

the year middle expect by next of of We to year, next two the wells online online bring half this year. well first and one

Jamie Wieland

of sheet million. And then Okay. wise balance that $XX

to is already goes and paid joint our the Joint that venture, in we have Angola money Venture Partners of as that some well? of Some

Cary Bounds

will invoices. our pay holding cash our our the Angola cash is decree Angola and yes, payments we in $X.X ministry payment Once we degree a a to have not in be have The Angola the million for cash we are portion payment to the make that our so of cash have filed, is to is portion to yet. days the not we We partner's filed. use made of made ministry yet, process - XX

Elizabeth Prochnow

bills. Yeah, the monthly just normal it's

of the the on the million depending So ended at quarter. they $X.X fund with up and their timing cash when calls, we end of

Jamie Wieland

your as to a or cash hedging limit Okay. secure to of the ahead third oil and XX% and going flow the for you program, we assume would out your And each the far as well be your risk as just hedging year, look as year? advanced you're

Cary Bounds

That is exactly Jamie. right, Yes.

Jamie Wieland

Okay. I'm good. Thank you much. very

Cary Bounds

Thank Okay. you.

Operator

Dezellem Your is Bill Tieton question next Capital. from of

William Dezellem

thank said to Well, Would times remarks of the Cary, something you very I you you. what please repeat towards five times your about relative five increase? end thought it was

Cary Bounds

Right. to we define value. reserves of that this got but discuss five Bill going will cap, five larger VAALCO a it shareholder be we sake market mean five the vision What to larger, we're regardless, five is management times or targeting our said is, management or be at XXXX, or we XXXX. production do and five and could five times times we'd And of times but times not is larger, times we're to like commitment by and team together for by team what our

And have or - of in we areas. the so, grow be way, five shareholder we we we will one in we will total all those top constrained quartile times return. ourselves by said But and along have have

of growth growing the a target combination is growth shareholders company. shareholder meaningful for the or of value so, with And in size our return total combined a

William Dezellem

and thank that or market you could value? were said And reverse Great, the looking production qualify you at be three you. areas would that

Cary Bounds

Correct, correct.

William Dezellem

all your hope target accounts. and Well, beat you're your on hope successful three - I

Cary Bounds

Thank you, Bill.

William Dezellem

your is and Equatorial Guinea not the you found up interest. with are lined GEPetrol your once questions, continue may way. reading have like assuming It additional you I some already that have their does assigned - sounds already If in in since you their every surprise has you GEPetrol partner correctly, partner

have who position? someone of part your You ready take to is

Cary Bounds

not up do the we No, have with someone lined moment.

began our We process. are interest, marketing that we

sorry, And mean not we finalized. to not is are on that's engaging still But to information didn't so finish you, would have parallel to will is VAALCO's the I we marketing we partner I'm us a engage our who candidates which once GEPetrol we several decided that need take and - with yet. their and we mislead marketing give in interest process. though there over marketing and are with but marketing out know final will we're GEPetrol we takes interest go partner interest

William Dezellem

really line, guess trying that get really And tight that is I'm is once that so doable, is I Is what pushing ticking? or how the a very to one clock arms time my bit? around year starts

Cary Bounds

my doable. In opinion, it's

William Dezellem

And I'm That's to I would two prefer with know I helpful. pass Great. going continue? by questions. that? you May Or

Cary Bounds

that's no, No, right. fine. That's all

William Dezellem

that And listings the of is first are the in to that you. the then given for the second maybe fewer increased quarter, in Thank April? that particularly you government implications other said or QX? quarter listings What way had number the lifting QX in they're lead the in less the

Cary Bounds

from the Right. the are The implications for second over first quarter carried quarter. to the second quarter there was that inventory

I'm in can that at say we on or on the right right times, the time and listings our the I schedule if higher not have time, And second could volumes, liftings but lift we shouldn't so quarter. and

by when that the quite our first liftings promise end we'll that weren't it little to we of try quarter, the that maximize the of leave of the that to I of yes, yet the do because But again, was to inventory the what second increase first able the the over to opportunity lifting. listings quarter. again, along hope end Now, do. at do to on possible end equipment goal But saying We do support second I and of our And at availability comes there tankers as we'll that's goes quarter. it's - there to quarter. it we without And in a the always try always as inventory availability we'll quarter. carried second is from can't depends the

William Dezellem

would that you you do that you're a that And zero for lifting cash flow did quarter. impact then go have negative along? April your as as government in so for correctly earnings actually their the But second from because has taxes, implication accruing the on understand the for we it

Elizabeth Prochnow

Yes. That is correct.

William Dezellem

process like to increase would just you you're have shift if that Okay. for the are your Can update evaluation - - ties one. the and there? acquisitions, the you go could really you answer what looking folds ahead back And And which about pipeline the then and question, of the two acquisition I'll next I are general and that Thank you. what five maybe business overtime. talk to seeing well I out

Cary Bounds

Right. Africa be area, ideally, geographic restraint acquisition acquisitions, or past, an because a Africa, the I that's is offshore as of oil. in the would - ourselves in said, Africa, Well, know, in confined what terms we've to we

I Africa, higher are there risk. say in where there's Now, places political

risk And where we're can expertise then manage operational the Africa, political also at expertise. and technical have where we and looking we so

their And other acquisition. very ultimately I the have areas, pipeline announce of about and on a there's tend nothing in process lot a fact, yes, listed is to London, executing and and it London those active and identifying to opportunities spend an companies so within to to that today, don't we a but are assets. so come are in opportunities talking team from seeing we companies time dedicated of we in a

William Dezellem

acquisitions some been And evaluating time. Cary for you there have

up than What been yet? not to been intended inhibitor so so working And announced have really but time. the you for an is you this given understand, in through, you question against you've not acquisitions acquisition that more or the so eye that poke been next have some evaluating has what

Cary Bounds

then single up It until inhibitor. our now been, I we've has extending been on not had internally really year last finalizing Angola. It's late guess, Gabon and first focus - a - a there's

And we've objectives. goals challenges and are those accomplished so those

resources step And to acquisition. back so, more and to we now have time apply

portfolio we So our we drilling the so opportunity were and working while I'll another outside it program opportunities parallel on say, of looking have internal was coming in is and and part again, of we're, up.

been we resources of future. are it's building executing a to So that of balance where been put strong and that a make we it. on our foundation sure part we're That's

and we transaction my and then that of transaction. that be of will what in And find when And a a to want fair we're opportunities that part something. take due a background, is go executing of XXX picky, is to very even bit work. it time a means - we've the diligence do don't one to sake honest, of very, at Another got execute fair finalize look amount to for might to

So be something I don't quickly do if these that a it want do and right the acquisition careful had, the do If to we we takes we do quickly, deal. time. long wrong

So that hope question, anyway, I Bill. answers your

William Dezellem

questions. It does. extra the time the Thank and you. Appreciate

Cary Bounds

Sure.

Operator

follow-up You from Stephane GMP a question securities. Foucaud on have

Stephane Foucaud

program. question, whereas about Thanks six in my on first talks case first, of the for success current follow-up question. being taking to in Gabon your design in and My

upside What upside office around are to portion that the you you store historically transaction, as are What ground the are talking program. that associated look farm looking was is be about that question first for investment? That'd to EG, you. looking that And my would talked be regards the wells? - to about? what floor the XP But would some of my and to out. detail is during you is would question. for the second to we we sanction of sort new You Thank at we looking sort be you carry? with six What for, be

Cary Bounds

There's appraisal test first appraisal great to appraisal the the at from a And we'll deeper Etame. the other Stephane XP upside start Right, that's sand Gamba well producing Gamba will Atam two Southeast which And the mentioned the with earlier, I structure a structure field. test Dentale adjacent beneath one questions. wells wells. is like off I'll

XP terms But now. out perspective in combined what that or be $X.X There's from to different $X.X the to a giving couldn't converted Equatorial plus we resources. anyway, or want right either to pools the And there's deal Guinea. million that contingent are exposure range. do be XP million the so converted contingent in simple a upside for your pursuing is Guinea. may out we're resources barrels to second interest, $X.X a reserves it's - perspective structure we're not barrels we're sell Equatorial $X.X plan that carry, what upside million Its to we a - barrels. Then carry, It's on to question maintain cash our of

ideally that so…. be So would it carry, a

Stephane Foucaud

will be about $XX invested. And million - some took it you

we Cary pool investment. the of milky sort look that the of So at

be what XXXXXX, you seen acceptable? sense do of we've a sometimes have but So would

Cary Bounds

costs that to right, answer And trying but question, we're prior negotiate hesitant costs. right we consideration since some costs. million have Well, are we you're final the I'm and now of to it terms $XX into prior taking

consideration is the is that there prospects. a the Grindea exploration upside, is so sense. there makes particular right, a you're and in So Southwest companies significant We it's with the when talking multiple to we're multiple, you're, XXXXXX some believe that

on I - the higher So multiple be. final that But comment we're at since end right the at really obviously of the we're I higher we're negotiations in the what we're think might now seeking. multiple can't

Stephane Foucaud

XP, my location And targeted Okay. more back about be first current of by successful. a question program. lot. it what would around about is six additional But if talk to Thanks was talk on my you on the range you the follow that's question

rather the what current So plan associated the than program? the forward associated upside to to would locations be your

Cary Bounds

again, try that on to based when the be six drilling. were proved Okay. up bores the the two about Right. explain me I'm that sorry, let wells we appraisal may talk well

So of XP we looking from six to with reserves. defined X.X we're they reserves complete locations Once XP the appraisal the there's locations well million bores. across associated may anywhere at, six X.X barrels no and those,

Stephane Foucaud

Okay.

Cary Bounds

Okay.

Operator

next Instructions] question [Operator comes Canaccord. from Sharp Charlie Your of

Cary Bounds

Charlie. Hello,

Charlie Sharp

the tie how's to as going? explore try let's Hope targets five growth good your six possible And like a Hi, Stefan's morning. in that just everyone. morning, Good bit over times I little having say further it next question. and to you're years. a

on that time. said you think a I

some that contribute organically much wondering, that deliver able to investment I'm achieve to of how vision just for therefore times XXXX, in do that sort us you resource You you the that several beyond gives to your expected organically, XXXX XXXX production. reserve of targets? to idea asset to would target? cycle you those And the the program, program can And your think be growth need perhaps at five repeat times wider of what perhaps

Cary Bounds

time million. Right. is in resources of $XXX a at remaining terms What we see

million $XXX it call Let's barrels growth.

So that's those booked what right net XX we're of that is resources. what remains and now, what We've we're barrels million targeting.

that's XXX XX. of barrels So let's, XX to million there's let's it, we've booked already there's VAALCO, another net say of XX million

so were we an for make up driving to we've got to and five, to difference the growth Is make to the need up times at acquisition. it three with other that's you that what Charlie? So

Charlie Sharp

was exactly driving what out. is I That

your So really, big a of it can growth. provide chunk

need So in be you to one perhaps two deliver assets, of assets that enable or that it's don't West to investing Africa in lots let's say, you growth? would other other

Cary Bounds

could, so to right. right. exactly if And is like come are add that That is on and assets can that, a that we I And - exactly in or to that we I'd G&A over one is with in those without two take can or growth increase accomplish exactly Etame that And cost. acquisitions two rest significantly. five mainly those and the increasing our strategy times then minimal operate with from achieved G&A to one is

Charlie Sharp

a built I or could inclined development as just some production follow-up, And would with production and ask short on be production, some towards you appraisal more into development, whether potential? some

Cary Bounds

we open think that exploration no - production some new ideally, foregone that to need would but but production conclusion think lead support a production, bolt-on I be it's would acquisition. it more type with I appraisal are a think we to I potential, to

Charlie Sharp

helpful. That's Thank very you. Yeah.

Operator

further no questions There time. at this are

Cary Bounds

and participating to look like right. we to everyone call our for next thank forward I All would call. in our

Operator

participating today's disconnect. Thank in time, At this may teleconference. you all for you

VAALCO Energy (EGY) 9 May 192019 Q1 Earnings call transcript