EGY - Earnings call transcript Q1 2021

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Operator

Good morning everyone and welcome to the VAALCO Energy First Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note, today’s event is being recorded. At this time, I’d like to turn the conference call over to Al Petrie, Investor Relations Coordinator. ahead. go please Sir,

Al Petrie

Doornik, April, Good XXXX And cover conference results. questions. Maxwell, in-depth CEO Controller, comments statements, more Chief Accounting review. Jamie. highlights before Energy’s more closing George the to first George in named was quarter will call. who we along will Jason review Officer morning, provide you, key welcome everyone. VAALCO your then forward-looking with our operational will for take Thank a After financial and then I return

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

comparisons re-enter statement with website guidance out our XXXX comments. helpful. be You forward-looking the can let that to a investor like supplemental questions. this point morning always proceed should we QX and posted with that, queue our analysis, With additional that on I’d me has deck that financial additional

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

George Maxwell

my morning for speak XXXX for first you introduction. this Executive. It's you Good new the to conference thank much call very earnings with pleasure as me first and Chief everyone quarter to as welcome Al, morning, call. the our a

that Despite energy drilling global well to in appraisal exceeded successful XXXX, difficulties, economy wellbores, production this to severely integral thank valued drilling to successful executive success strong saw part like and increase. highly discuss our COVID-XX. an VAALCO impacted part in fall as I'd world supply XXXX’s well we flow and for result We our a sharply campaign Before these leadership him achieve point, he due Bounds production oil expectations results, accretive He In campaign’s long and of included Cary development wells a wish large demand pandemic, as generate past have moments of prices cash the on due of placed year-over-year, continue at was his VAALCO. year endeavors. of our his number and few in we growth. significant the position meaningful and throughout At dedication to XX% three the two take years free accomplishments was me XXXX, the helped that industry was let to review early higher heels success. positive of this imbalances. a to future us on an our enviable as VAALCO achieve term that by

dramatically. CPR sheet through protection year while us This and for prices overcome price sub reserves. that asset, $X.XX had increasing oil maintaining our was for improving challenges when barrel able $X is around production and to last or XXXX place is we paid hedges accretive very also a provided financial oil our deal VAALCO net XP in significantly the it fell of to balance This flexibility. We in as good were XXXX is margins, benefit the Etame fully in the expect We opportunity the will to closed operate accretive is hand. February a immediately capture arose excellent G&A to We we I’m acquisition we Sasol acquisition. on the we XX.X% no in – working cash that and interest very ability We the increase Since XXXX. in acquisition us will and and utilizing we in from believe of gave integration sorry, the late minimal already there strong needed expense, pricing.

of cash operational had production the along about I’ll the XX% increased first the quarter transaction going Sasol acquisition. oil are produced quarter. additional barrels little With one a day, bit due NRI average an talk the driven From continued an X,XXX that We the strong strong of over in meaningful forward. of the of we XXXX by us, production projecting to inclusion results. of net very oil was now increase XXXX, results, brings recovery fourth with we a pricing, our per generation free of QX flow which month the

Our second XXXX include volumes. an entire additional of Sasol with quarter production will quarter the

With of In said, that production quarter and OPEC production second a before barrels Gabonese of knew XXXX than production continue quarter. of of with XXXX, to the guidance procurements mid-point X,XXX to due XXXX The X,XXX to of net such, procurements. declines. the quarters, second is we not average the reduction quarter As first oil between which the increase of production lower a production continuing second and our to we're for are Sasol purely guidance forecasting expected over per any impact Closing This the full is quarter XX% procurement acquisition. into the the estimated this day. QX OPEC production. now earlier comply average we a unexpected production includes the for year the bit is extent remainder is

XXXX, of to of our forecasting half we natural per the average income barrels of From which oil on Taking a prior day, X.X just which second day. account, currently oil higher production share half material diluted second upcoming $X.XX to down million, earnings barrels of drilling campaign. maintenance well, that not half as of is second expect the per share. of and perspective, a into net any are X,XXX day we we per uplift bit between pleased XXXX we basis turnaround, is our very seven and than from annual net X,XXX an guidance decline, the our X,XXX are X,XXX planning were During

For compare this the of quarter in the a XXXX a quarter XXXX of loss million very first XX.X first $X.X fourth with net favorably of quarter in and net of the of million XXXX. loss

first further but revenue pretty of how to a first The price evidence stronger earnings gain due want reflected of be non-cash the It's XXXX called that quarter sales. included bargain quarter XXXX I was VAALCO. to for purchase pricing lower oil and point realized was is to strong rare due This to on our also out gain. a this attractive outlook. asset purchase, ours acquisition an higher

price the -- of compared New reserves was the sale associated price XXXX fair to were closing last the with November signed purchase XX, determined. outlook oil and of February date the value February and acquisition on with with higher XXXX, agreement sorry,

was and We quarter EBITDAX XXXX first five the improved also our fourth EBITDA the of realized of in fourth increased reported Adjusted likewise adjusted quarter, $XX XXXX. EBITDAX quarter adjusted more than higher million sales due volume of quarter to than significantly first prices. the the was times which in for

past EBITDAX. production, wanted over a allow have through added strength drilling ongoing barrels and increase portion production October This and free average capital weighted oil per of any with has week, that happy with our FSO hedge total, and will its XXXX the campaign XXX,XXX a XX% we to meaningful we fund significant additional of lock-in XXXX are under VAALCO enough average the price With price to all with barrel. of of the including oil through our in from decent of associated for cash of current commitments – generate environment, we swaps In added mind, October We have $XX.XX to adjusted a May and price us XXXX. flow $XX.XX at at barrel build weighted capital cash conversion. XXXX XXXX our fully per potential of

addition, potential contracts the our this next retain of since production all just six prices In months. higher will we oil not upside year has from for run new still

acquisitions. turning campaign, future, on growth to your is strategic vision attention through Looking the organic XXXX-XXXX through at and our our accretive opportunities drilling drilling built

planning cash has to four future the With and successful flow, to over acquisition the drill for to pricing fourth production time a We're believe success allowing As Etame drilling seismic strong you to campaign XD successful years quarter is campaign improved the block we complete, solid us new right know, execute XXXX drilling lock to up and a continue in reserves the in the Etame. of of of campaigns Etame. foundation at built finishing close, at XXXX. several oil acquisition building the XXXX-XXXX starting in wells next our and another adding over

that for and access wells and development there We to costs That reduce will are continued and growing opportunities production. appraisal expecting two re-entries -- reserves risk are are do currently two wells. sidetrack low

XX% or be and believe appraisal costs barrel the campaign production VAALCO in data is the field net barrels have is X,XXX per the with we our If as currently that locations offer day completed online expansion in to barrels is production not a About processing well XXXX. production upside cost also with costs. in programs be day barrel conjunction Every we fixed to reflected will of seismic our of Hand XD bring estimated costs of economic barrel new our X,XXX per are increase locations oil acquire. final and well because per reports. low the when successful, reserve We is will drilling hand the The within will more four variable we oil is reduction. per of dramatically. in that X,XXX gross increase X,XXX to margin our increases, production new meaningful decrease of determined could

grow has gross bring of per a to higher combined cost cost margin prices or From program to VAALCO. the reducing low we $XXX cost barrel. campaign additional is million $XX capital as The standpoint, you per million $XX net when and especially upcoming we barrel So and the our between with we the free $XXX million estimate production, drilling to potential generate structure. a also flow our sustained significant oil operating cash million

intent FSO, see be the we increase total will ago, new fund expiration September compared Offshore announced current term flow which in non that years improve Currently up at FPSO a the is of current upon The production cost In be our cash future additional announcement FPSO this to will ways talk I'll reduce expired flow and to fund expense. when operating margin the minimize during we're the to about free contract organic the we more to costs FSO. by and a to the now to our on recent of fund our opportunities. strategy barrel to VAALCO’s production margins. Marin decrease offshore operate inorganic opportunities in in terminals total binding campaign letter operator, XX% dramatically a drilling the unit Our to Etame cost of the we deliver equates Omni to field our growth in costs strategy This of our XX costs XX% XXXX. on to utilize significant move improve number total with proposal at constantly find BW future. and our looking the we XX% to FSO could The of completion bring to around we with FSO A with an cash the able with line only agreement. offshore will to fall XXXX weeks low VAALCO’s free the on in per proposed contract potentially the and Gabon for transformative growth when to and substantially. provide

to would the decided to existing the beyond FPSO development As a require different we substantial investment maintain reminder, costs. transition a approach contract capital current either for whether option,

existing make investment on of XXXX high As production less savings, government XXXX. $XX of the in capital payback the platforms. field half and approach Omni, between three store to balance million be of second expect VAALCO years and cost invested to reconfiguration, with But in the will offload part of field this $XX FSO given new of need than configuration, the required investment. of we In will includes which be completed the the the million and with processing we the approximately amount would net FSO would estimated an a on XX% the

quick update to We’re agreements I give like in further attempt Equatorial would too. engaging and with the to definitive a activity discussions now in you finalize on Guinea.

interest substantial out in We have we opportunities a Block Block are developments P. P. evaluating in And working step exploration in several

we believe And operators. discoveries current from price oil prior We economically can have on these we several the attractive discoveries. given Block undeveloped outlook, the develop

you Guinea with and plan to update more really exploit in second Equatorial We’re potential working resource information. to about excited and the we're quarter profitably

this So and operate and core flow our summary, first through in VAALCO’s of to maintaining strategy continue accretive growth effectively in execute closing, outstanding in statement, employees cost production. cash on generation free

We we to flow have with new balance maintaining sheet, locked our fund our and have entire increased a hedges, sufficient obligations and strong upcoming capital base cash production upside. in plus

coming on supplemental where price, realized we excluding before that in and oil Looking When our pricing, are CapEx. website, XXXX, will production free assuming is at cost million more current at online $XX you we at this the multiple [ph] look the the generate X.X QX strong should FSO $XX at times, around cash potential flow about our cash see for flow. drilling stock presentation for with in and XXXX campaign believe flow from our taking pricing into year our changes, even account cash we're hedges updated current currently additional which VAALCO and will the we continued you generate following significant reductions free stock free price, trading

So our to you. to results. detail over notes, Jason? Jason more call financial on with I Thank turn the like to those would share

Jason Doornik

loss you, of by first loss. was the and which an net was good purchase bargain George, a reported of income in which offset on instruments. quarter included of unrealized everyone. morning, derivative non-cash XXXX, gain, We loss instruments diluted million derivative per million million $X.XX $X.X or Thank strong $X million $X.X share on the $X.X

mentioned, quarter first As pricing. increase reflected significant and in realized sales the George

related million compensation. XXXX, For of million based comparison or reported exploration expense related million a the $X.X we purposes, stock $X.X in share, of $X.X per diluted the the fourth net included which expense quarter in impact quarter seismic and loss to program $X.XX of the Etame during to of

charge net reported crude For of million. lower and non-cash the non-cash first $XX.X prices, oil tax a or million XXXX, due $X.XX included we charge million loss $XX.X diluted impairment which quarter per of $XX.X share, income deferred to of

income in of of share diluted net adjusted or compared for in the per diluted The of the was or of net day barrels as included net the per company's mainly the from barrels for XXXX. increase XXXX. $X.X $X.XX prior to $X.X quarter closing of $X.X of quarter and adjusted due X,XXX quarter the Our $X day earnings date realized million an Production same prior being million per first both after sales $X.XX per in XXXX million XXXX. totaled share, loss primarily XXth, of periods, fourth income VAALCO quarter the of million in EBITDAX to due XX% quarter in oil and fourth increased reported the X,XXX share. adjusted the for increased revenues higher results first first in the first the net prices. result higher EBITDAX of sales. or higher for a quarter driven XXXX, February diluted by of of with acquisition Adjusted oil million XXXX as the million than to Adjusted totaled XXXX, volumes Sasol quarter of higher $X.X In oil volumes in prices, quarter higher period XXXX, net first $XX $X.XX the per compared was

Sasol as primarily quarter both listings of quarter in acquired of acquisition the and first versus First the three as up quarter thus the sales compared at up quarter XXXX due XXXX. and QX the of volumes same closing listings to quarter additional increase was in quarter XXXX XXX% the XXXX. and XXXX of to interest X% fourth in first in was fourth volumes of well two XXXX, first higher XXXX. the following in of from the in first is Sales XXX% the in period production The

including XXXX. per crude oil in $XX.XX quarter fourth the barrels crude of Our weighted through new for was we XXXX January Dated X% In total average February of first swaps oil increased first the at XXX,XXX the per per of in a barrel in from XXXX price quarter realization agreements at $XX.XX a Brent settled and a XXXX. XX% into compared $XX.XX of swap January, per monthly barrel basis. $XX.XX versus quarter on period the barrel for entered XXXX price of barrel to These commodity

crude barrels we May, more XXXX of from a average in at XXXX. of weighted Dated swaps price added $XX.XX for oil May per Additionally, the period XXX,XXX including Brent through October barrel and

actions in to will As our strong George cash enable stock program, for mentioned, to portion we lock XXXX, protect trends FSO continue derivative to volumes still which assess potential buyback significant began hedge additional of VAALCO allow cash to price upside. our and we any our risk fund program XXXX XXXX, program, capital We mitigate took consider future similar contracts. any drilling future future program, additional and will XXXX we production the flows, in a flow in some as before XXXX needs and

workovers company’s production fourth million than quarter The due to is first result in of oil from per $XX.XX the the Sasol the protect the day acquired health an $XX.XX sales that first $X.X XXXX the $XX.XX quarter barrel acquisition unit the the guidance to projected for related XXXX XXXX Keep a Turning million fourth for $XX of this we expense XXXX expense in XXXX. cost higher primarily all which Sasol and the fourth February acquisition. incurred of with is in and and $XX was between the of associated positive quarter excluding expense quarter to of inventory in of of Included of be to safety due to total the FPSO workovers Production million mind costs. the to excluding which per $XX.XX additional crude oil in $XX $X.X the charter was quarter today quarter we workovers million of XXXX, expenses, per barrel million, second production expense to the per increase compared the on production the COVID-XX unit providing in primarily quarter volumes first in the barrel for approximately $XX increase the $X.X and and or includes to QX totaled XXth, million effective in higher working production of XXXX. XXXX the higher and and sales. as expense impact increase XXXX, employees, costs per $X.X from Sasol we're first million are closed quarter The interest excluding XXXX.

second of So three for will all quarter the included. of results with XXXX, Sasol months we include financial interest

costs of per Our audit of compensation volumes. XXXX lower to first increased the stock compared increased future oil excluding impacts XXXX XXXX barrel in of salaries, lower in rate fourth $X.X per DD&A from for both X.X million of included higher of the quarter the $X.X stock XXXX their per XXXX. of first DD&A quarter depletable the QX of DD&A and The the comparable million contributions for added $X fees. the experienced. million unit or was compared employee XXX quarter X.X with being base increase fourth due million the production excludes oil the higher increased increased expense XXXX rate QX fourth taxes and than in sales, and being XXXk, XXXX, sales. the to currently fees, due expense the and significantly General expense of for quarter of the to quarter $X.XX in Sasol related XXXX in the expense or quarter The with the was XXXX. barrel excluding or XXXX to due guidance to the fourth The per the for costs sales $XX.XX of campaign contributions legal as in pandemic, acquisition increased any net XXXX and first G&A based compensation first sales quarter XXXX barrel compared COVID-XX QX with with was first XXXX. potential was barrel increase and based $X.XX associated and in in higher and not million results the quarter depletable drilling X.X in XXXX associated accounting in first quarter with XXXX the $X.XX quarter first administrative quarter was larger quarter million

result million per second we based the stock For impacted expense the Noncash quarter, was in to liability during million change excluding by G&A, compensation stock stock $X.XX company's quarter. X.X or the and the in based changes a forecasting of be are to $X.XX price barrel. product X.X compensation between as

the of of benefit a based X.X For expense XXXX, an SARS to XXXX. X.X of compensation stock quarter million the related of expense first quarter million compared for was first to

of For XXXX, related expense X.X was there million the an of SARS. quarter fourth to

XX, XX, XX, a purposes. XX.X in of million XXXX. at March unrestricted them and included was US now million of XX, taxes fourth X XXXX, Sasol X.X for million. XX, included owner tax March net negative a XX.X overall the tax was for a expense XX tax Since taxes. compared million. deferred a At expense the tax Income benefits XXXX with of cash non-deductible XXXX a and tax tax a March The for current VAALCO’s current expense benefit X.X million. comprised for X million, tax current joint first This income was had the deferred a of XX.X million at X.X associated rate included Working operations of Turning XXXX, rather million which to the for months X.X March benefit provision with associated tax advances. million a effective XXXX, X.X an months including XX.X than items March tax of a expense we acquisition. deferred impacted tax quarter XXXX, of crediting of positive million. ended is Income deducting tax December X.X by of of quarter balance Income benefit with million million X.X expense three provision and tax the foreign capital tax ended income deferred and

capital positive X.X million XX, XX.X at XXXX. March million with working compared negative XX, at a December the total adjusted XXXX While

XXXX. on basis. basis on related next net million expenditures quarter the For as associated with enhancements, primarily cash of capital the were $X.X program. drilling excluding acquisitions as totaled X.X early well expenditures equipment a and These first million to an costs accrual

the now call this, quarter I of As since back the will to carrying has case turn been over George. XXXX, With we second the debt. are no

George Maxwell

Thank you, Jason. Thank just some for you give I'll that. comments. closing

we to This returns. successful energized grow XXXX on is this investor the I exciting are I a and is in for my the previous provide principles, look guiding order believe and and to lead all applied sustainable level. As at roles, build a benefits teams in the beyond, time very businesses successfully VAALCO VAALCO. it is and next stakeholders one of my focus growth executive to I'm to with existing foundation a to

assures has environment. to to good management environment to where the create we source trusted a a a empowered and a the our success operate operator, board that the Our team as working generous partner communities

will VAALCO’s and presence We markets, returns. UK our growth are maximize strategy support we the shareholder believe in a enhancing accretive international that move and

have accretive strong operational foundation financial base performance cash our organic and a line at generating QX is strategy. excellence through Etame and XXXX serves current that flow VAALCO drilling which was pricing in free the in meaningful results. asset as opportunities for future Sustained with in growing Etame acquisition We a robust evident our as environment,

provide hydraulic deployed for and Gabon is will than unit an will XX% total for we an XX% This used additional In a LOI flexibility unit Gabon. costs reduce by and for time, us that operating million to signed quickly, any workover significant purchased in operational an us sustained As excellence, moving notice. production past commitment have That unit moment's flow of new example world to the FSO forward. a unit issue also we $X allow to a be a ESP ready and April save should cash respond to considering. year, this that in our have less at downtime which our we of will to operational

our in and are increased us ESPs to improve can cash our will workovers meaningful allow development enhance Gabon both production that changing in be a which and But to it Etame. performing opportunities uptime not looking will Additionally, strong platform for proactive are our and organic and EG, maintain countries simply on we there at business operational flow. blocks in growth provide further

As repurchase will of free cash to share to will we complement ways programs also return potential evaluate that continue past, strategy. as [indiscernible] flow consider we in we as growth in future the develop programs dividends flows, to similar well increase to and cash our some the

successful can drilling that, drilling at at we to VAALCO through accretive the will and you you pass We sustainably locked questions. hedges, VAALCO. we growing regardless program, in champions this vision we're a oil price committed remain With year, to of to cash generated take begin this strategic fully back this ready from Etame. As to environment. are executing believe that operations and has VAALCO sufficient and I'd to thank acquisitions our we profitability operator, Later have bright and future like another fund we campaign and the see, growing our Etame with recent additional flow

Operator

this And at first our John [Operator Please go from Instructions] we'll from comes question-and-answer today ROTH begin question gentlemen, with ahead point, Capital. the session. and Ladies your White question.

John White

my offer me congratulations CEO let George, your on appointment of as VAALCO.

George Maxwell

Thank John. you,

John White

question the -- switch My the regarding switch to FSO. the potential first FPSO from is the

operating reduction future to costs, talk the of a about FSO new in believe but capacity You've ability little production you've detail talked higher touched in and could the I years? handle about you capacity, in bit more on

George Maxwell

storage course, a an which barrels. The can -- is of SUEZMAX excess that do we're Yes, signed that. capacity, of we of proposed a on is I FSO X million letter intent of

the to crude risk occasionally of issues us have younger current the discharge as the FPSO us And operators It's the currently coming tank, years. the we is vessel has that. with storage which the least operations also at that's for capabilities that such benefits field and one come have it that that capability oil and So, fields, the younger parcel moment. one for with of at the the in avoid much ever of the obviously to larger impacts smaller the by sizes XX we technology a vessel than

efficiency So, there there weeks the the Hopefully, RNS and to end lease cargo the economics, we announced look added start at will larger question. is an the when we drive both price we an it look at in cost the charter position. a looking which side vast the oil that give ago. is that's when reduction at giving clearly answered potential But us sales the us values. in the your of -- few initial That's

John White

you for for new about drilling program still to -- XX% to need most of time to early part was that is seismic XXXX? new you do Thank detail. year, latter of work there Yes. or or XXXX that on sooner, production in some any consideration XXXX the shot start hedge the With

George Maxwell

on types elements key Yes, consider a embarking question. no, timing. good Whenever on a that make commitment that's three you have campaigns, before to you're are you these of there

The is consideration first and most obvious key financial.

sort campaign the stress So, position and you any company we've putting commit financial have that. yourself the to in can a of you put where in done without

you looking execute available important to and forward. the stretch considering. that a thing when on to ready by are when those than with the form a to that you're most wells, that's making when of the with into program that. probability processing third and the right with you're subsurface And have at the that second to currently really that commit that relation is, subsurface and the able as we But the all will wells ours little And more such on And touched in a is -- And we're at execute would but now. place that you fit horizon the nothing comfortable assets assets and timing both time point not assets time. target that and currently, to The position the for change for in are location of or on meter based very reprocessing, wells the these two, out comfortable move And sure the the that program it. underway. success step appraisals surface bit targets any we the to be it right substantive of we're to looking to ready a you we're move consider

So is timing the of availability. the the with us for that's pacing right now program, to item asset really regard

John White

your you meet rigs when talking talk drilling about And you're about that asset requirements? availability,

George Maxwell

Absolutely.

there I -- the Looking available, beam of but tried rig modern drilling to that our we geographical and are globally, reduce mean, of rigs can optimize location at, course, drilling lots with cost. both capability

So pacing really us. for that's item the

John White

jump for and along, queue. pass in you Thank back and I Okay. it that may the I'll

George Maxwell

you. Okay. Thank

Operator

question. Our Please ahead Foucaud Auctus Stephane comes next your from question Advisors. from with go

Stephane Foucaud

payment rather Thanks -- attractive? just than for something potentially What It's non-binding the why million. guys. around first my is you question. one hit more $XX the payment you would taking I it that quick acquisition rather something for press would that the expect But FSO committed? the an in think, earlier the Stephane account million. read I was sum-up for one the is LOI. And on accounting. LOI around I the was, shows you cash it second think a the only Is my the $XX.X than final release Two, flow Hi, to -- I binding? -- And Foucaud. the expect LOI would is that question

So the I comment that is coming could misunderstood wondering payment whether Thank on you. that I was within just or whether you something?

George Maxwell

When of market operational requirements, us. particularly infield FSO Well, that capabilities expect very changes? many from when positions assets detailed the that that very met And similar could by that to an when for. non-binding to drilling move and do look a this availability, we LOI, John's relation we to first I'll on looking to FSO, the -- we to a our what on FPSO Jason scanning And fits pass to why the rigs. available came I'll it's other talk were where down and Stephane. started to the question both one with we the skill criteria position new the we storage we deal your opportunity did you, there question. and to narrow weren't on to set any could accounting we in the a capacity very acquisition. the quickly to asset for question that particular first provide why Thank With see enhancements where and it look

LOI position little that to detailed level continuing in and actually initially asset. our There's in jumped point engineering is that So position was this can't the place have that field. the to the reason doing we contractual of Non-Binding secure sure that we the very to on done we this today we'll finalize be asset

structure that result are LOI acquisition want would the declared and step that firming there's we've cost today to But the achieved, give you that to the up that with the for if we've positions any indication that centre? seen the Jason, be we're us cost right nothing going that Non-Binding and with with not on So in -- was question indicative main now. to regard driver the

Jason Doornik

Thank Stephane. you, good George morning, and

million. got there's XX.X combinations, you're to Sasol and the the million million in flow in door part on is XX.X for of this pay the also cash that that XX.X that definitely you if cash cash that the the I So flow million, you paid statement. roughly And total and Sasol. we Sasol of of million XX.X get this, XX.X statement see, as acquisition, the indeed which correct, out XX.X subtract what's year, business we from in received restricted believe included a take the million we cash funds you to so you But

Stephane Foucaud

great That's you. Thank very clear. and

Operator

ahead question. with Dezellem question your next Tieton from Our Please go Bill from Capital. comes

Bill Dezellem

FSO. Capitol to up like Hi. the daily gave Thank very earlier? of you. FSO start to have also That's opposed the capacity current basis, the a I'd which as basis, Tieton questions. And relative specifically, to is group production I on total you believe what with And a the storage I

Jason Doornik

first completely to. capacity Okay. you've capacity, different question. from That's your is Processing storage alluded as

is Our but XX,XXX processing circa not on the moved the platform. of current processing FPSO capacity change the been to capacity barrels That processing day liquids. per will

of will maintain within capacity day the we XX,XXX barrels liquids field. So processing per

Bill Dezellem

And… you. Thank Okay.

Jason Doornik

have at capacities, And barrels by XXX,XXX I when think, storage increased namely the the sales. look about storage capacity, we with that the FPSO

Bill Dezellem

you. thank Great,

Second production question your guidance. is relative to

What You as noted raise guidance, led in production increase? opening you the half to your that second remarks.

Jason Doornik

forward main QX moving the from behind or QX. work main main that into is the over the increase Bill The position cause

Bill Dezellem

you missed your of I you production just opening that it. impact Great, remarks. would think were And the drilling I repeat lastly, thank you. mentioning from in please program? And that then,

Jason Doornik

Yeah. to from The X,XXX X,XXX impact X,XXX would I and the between barrels be the drilling day. NRI X,XXX would barrels of per VAALCO per and day think growth be

Bill Dezellem

guidance X,XXX for And day of given day per literally X,XXX X,XXX you've day, half just of that's barrels a the increase? another a on top to are per the roughly for adding barrels of XX% top on perspective, second that barrels that

Jason Doornik

December wells curve the Yes. over That forward them on those point would be from through you have four all decline correct to left to screen.

Bill Dezellem

that for Thank you Great. clarification.

Operator

Kenny Wiland Management. comes question. with Please Our ahead question your next go Wiland from from

Kenny Wiland

I areas. chose three different

First quicker? decided that sooner vessel new clauses contract some move to will we'd on the of are fee there that existing terminate if not in have, sooner? the could to we Is we advantage FSO, have that take to given storage the only economics favorable the termination there the pay

George Maxwell

we be look would earlier. termination answer FPSO, there To to fees question, the your down contract within shut the if

you period. in option, to really sometimes levels OpEx given attractive the that the However, see though a that's an of same even expect is termination would not fee

not got we into dry the us. We've However, she we this automatically with station, class years. timeline of into for next that's contractual project when to to the months available for from just of take which -- not but get for has five commitment, period on a at a further certification evolved and years goes dock a Omni really five get point basically look from the vessel, class,

this for the function sure station, XXXX. from So we're on through is least at fit making in field in vessel XXXX to

dry advantage into accelerate really process vessel the not get That's significant of first that. refurbishment So that a in and take issue. field to and there's dock opportunity time that window

The the some was modifications of episodes dry that be some infield will this time have issue perform on second to also and that the done also dock. lines the in the platforms we floor during

an we at we So from that window engineering standpoint, could by you're OPEC accelerate X. don't where really have looking

Kenny Wiland

shutdown we in have XXXX And that Okay. accommodate transition will this time is endure there when to a occurs, the vessel? new to

George Maxwell

Yes.

as It may to have shutdown program. period. maintenance -- do two. we’ll that or a our as long a is be we week annual look with what We will But coordinate

not So at period shutdown additional during we're winter. an looking

Kenny Wiland

program. the pay? you in rig are on the the kind been rates, to Obviously, And XX have Okay. daily current would expect George all over the oil drilling last or map prices months. rate What what of rig

George Maxwell

I Indicatively mean, sell. discussions the in rig, we’re to

indicatively the going not market discussions I where mention in not rate from what the right seeing would I'm But campaign the some what pay, to happily performed was out it's having. prejudice that to probably might we're of XXXX, XXXX. we're now So of

Kenny Wiland

to $XXX XXXX. flow number $XX I free future million Okay. program. that the this you the differences Excellent. would $XX Yet any were cash And you lastly, those during at the million. projecting cover campaign months to of -- the mentioned commentary, in to you flow would and that million mentioned buyback $XX the flow FSL, you that cash be numbers? over reconcile Can any cash XX free drilling versus you year before million the have free program be XX sufficient buyback what over in -- calculate the also months next next

George Maxwell

production. we that the position mean, that and our what a the that's based in And cash position production. get on-stream XX from an I CapEx to we're confident particular main increase success the we're next that campaign recording but on-stream our upcoming -- wells right -- differences, taking all scenario, taking bounces expenditures. the Yes. order of main delta. this not wells flow are a cover in the for year That's drilling now, get year We're existing to the free where on

we a campaign drilling -- April roll end of potentially, $XX look the XXXX, million So in that forward where you the into you or if position of April-May and end right with at are, now, the XXXX. if

You that's from but $XX by enhanced million these position, production the be that better a additional on-stream coming can going to wells. to extrapolate

Kenny Wiland

wish I and success. Thank you George continued Thanks, you. Excellent.

George Maxwell

Thank you very much.

Operator

question. [Operator comes Instructions] question Please, White ROTH ahead Our go John Capital. from with from next your

John White

or shortly, be a posted April website, lifting is a is the to that? your that there reason Yes. not I on for month noticed for of there's

George Maxwell

for reason doing producing. size no of that. that the mean, and is of all they're the we're listings, we're a issue things, mixture listing what there's I these No, John, and whenever --

periodic monthly there to And have are month, than a accommodate we we So buyers we position. size the satisfy where be size ongoing every look a may could to parcel times listings but accommodate requested obviously a that. almost larger

So that's periodization. in positions us monthly quite of sometimes gives not

John White

Okay.

be an you'll So posting lifting. April

George Maxwell

yes. That's We'll definite, be in a May. posting listing

John White

Okay. you. Thank

Operator

And Charlie Canaccord. Please, question your Sharp from question. our with next ahead comes go from

Charlie Sharp

question. taking Is for advantages savings another down much very my terms you some you've subsea FSO. wondered, FSO, Tieback there facilities some outlined assets detail just in that wonder, FSO, then And there of to currently transferred themselves, current in part particular producing cost just line of engineering any there have, of It's the the given transfer the I concern introduce risks, wells chance the the that using the that FSO? in onto are Thank operating the I if once if secondly, that you the are might costs And producing one may may. the I some about be the of including cause diverse you configuration FPSO.

George Maxwell

tied no, Charlie. the is existing Thank production capability to activities. Most redirection is production of And windows the fair of production costs. no platform question, existing subsea couple I on on on we significant to the redirection what And [ph], your a there relates or towards include But as side, material enhancing lines, are boomer with couple the the on decks cost And line moving for a not moving We capabilities, obviously, wind the the to savings two of floor the CapEx or have redirection the wells the first platform. a that to to now, subsea you're rumor with OpEx transferring right on we're mentioned, Etame you, additional of into some the processing. engineering in do new platform regard the Yes, correct those its on a of platform. and wells FPSO. position doing field that back line. work, infrastructure the

current from not within the There we -- significant And engineering, top the engineering moving is technology as the the are, that have current, weather gives or moving as tankers side you is we're So planning because will savings vessel both, the there's mood that and subsea, which against potential will there's operation existing our our offload savings with standard. position, wind. try get to the for or not sometimes to been current. that opposed us as well activities, FSO, alongside a asked basically no on configuration which or having vessel, potential capabilities

less So the there’s no major engineering issue think some environmental us operation that environment. risk make and certainly for I are there options

Charlie Sharp

That's you. great. Thank

Operator

to And the question-and-answer any for floor ladies and gentlemen, like over management I'd with concluding that, session. back turn today's to we'll closing remarks. be

Al Petrie

my as to call like Executive. everyone I'd questions. Yes. first Chief for as like I'd the to thank

have exciting some And potential. XXXX And think turbulence very excellent upside are us. VAALCO have we beyond the given asset. in we have EG development that company in an XXXX for growth in of a opportunities excited XXXX, the think that the into look saw front And producing an key I has we certainly. we period as by and we assets, I

Operator

for you. you and thank will today's conference Ladies attending We conclude that do with gentlemen, call.

lines. may your You disconnect now

VAALCO Energy (EGY) 13 May 212021 Q1 Earnings call transcript