EGY - Earnings call transcript Q1 2022

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Operator

Good morning, and welcome to the VAALCO Energy First Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Al Petrie, Investor Relations Coordinator. Please go ahead.

Al Petrie

Thank you, Operator. welcome Energy’s and Earnings Quarter everyone, Call. Conference morning, to First VAALCO XXXX Good the George forward-looking will cover I After statements, highlights with review Maxwell, along operational results. key CEO, our more CFO, then our review. Bain, Ron provide a in-depth will financial comments George your we questions. some take before will for then return closing quarter this and [Operator Instructions] morning helpful. additional analysis, comparisons first that that point investor should deck we posted out has I'd supplemental that on guidance be like a to XXXX our website financial our forward-looking with comments. that, proceed With let statement me

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

now me over the turn George. Let to call

George Maxwell

and morning, everyone, earnings our first call. to Good welcome Al. you, Thank XXXX conference quarter

XX% QX built was over by strategic XXXX. our on vision, execute growth to adjusted shareholders. to continued We and of quarter EBITDA up value XXXX accretive and in while our around fourth creating X% Production increased returning

wells two at drilling campaign Etame. our placed We on have and current drilled, now production of the first successfully development completed

late internal highly Avouma the brought the Etame We internal our was in Etame to forecast. April, platform the development forecast. and a successful, then Avouma our exceeded development XH-ST was and online platform, Our first online the the also moved from in above well rig February came well which XH-ST, well, drilled

the drilling program. our third now in XXXX, XXXX well planned wells are of We the four currently

We at we and are quarterly dividend first budget. paid reconfiguration paying dividend the later that announced conversion our and time we In on our second an March, FSO progressing cash and on are field quarterly this also to quarter. cash Etame

can you are strategic position. see, objectives in a in firmly our VAALCO expectations, we cases, and which As exceeding on delivering placed enviable financially many is

resulted sales Turning had day. net to X,XXX XXXX per our of and quarter oil barrels in an financial first two barrels We average We results. XXX,XXX sold. oil operational in of total quarter, which listings produced the of

the our XH-ST as saw addition higher drove is of and level increased rate day, reduced we had production As higher per the first which of quarter, to now. quarter. last in well, Etame well revenue that the operational downtime the first recovery the and we which discussed in At weather of call, production resulted issues, operational March, in liftings lower in X,XXX we and from net In prices, well. due and significantly end barrels February to successful with oil sustained all the the some factors, above

impact share. per of or million deferred net strong very income unrealized the a Our $XX.X and adjusted was taxes $X.XX excluding income derivatives

million last EBITDAX with adjusted million X, was compared quarter XX.X Our XXXX, in XX.X quarter.

operational XXXX. XXXX dividend hand of We XXXX, from cash conversion drilling in and flow cash campaign, more on to our and are currently sufficient line than FSO fund sight capital,

focused high this be production on to prices. of levels oil continue We our through growing period

future. Turning our attention the to

drilling growth opportunities, accretive Our margins through accretive organic is built expanding on acquisitions. and our vision strategic

drilling our have the campaign. XXXX and the Etame We XD maximize used that seismic to acquired of over XXXX we impact

internal above the and completed with online locations our XH-ST we initial completed XD drilling reported at estimates. stayed In the that below with well Avouma brought but the to In February, processing. above derisking future identifying has is placed also we April, was rates XH-ST to the development rates targeting drilled again well the locations are site program, initial Dentale Gamba Avouma development new on well. XH-ST The drilling estimates. well we on formation. we and rig and Additionally, potentially our reservoir, third the in deeper have well platform late begun further online test the This being when the is

good in it Gamba reminder, bring Dentale and complete reserves can also produce potentially in area did to This additional can PDP Dentale as a productive move as Etame, is Dentale PDP, and Gamba. resources. Dentale potentially a XP to resources this the de-risk well the could exciting and another from the and shows the As has we and well contingent

the be XX% increase second compared day estimating oil At between XX,XXX are production XX,XXX of be quarter. XXXX, would of our to barrel net. midpoint For we and quarter the guidance the per this first to

At a XX,XXX day. And addition, per midpoint production particularly guidance, and compared sales be XX,XXX net would of In margin will increase prices hand to we the are oil at and expansion in the significantly between cost we XX% barrels this be quarter. per sales are with have is first time a increase significant This reductions. a opportune a increased barrel seeing now. of the forecasting increase in to

barrel cost. economic production barrel previously Every available will costs as increases production are low we online of bring costs As because our of advised fixed is the about have we new decrease. XX% and more

we our we margins cost are per also So our growing barrel. and barrel, per production, reducing as grow

reconfiguration For our to standpoint, the related capital the to The compared Etame, drilling XX% to the which quarter, expect to guidance XXXX, the quarter. at to second XXXX year program. we XXXX. production million be continue of midpoint first and From capital $XX, a at a see the the XXX cost, to barrel $XX we excluding decrease conversion field range and million workovers FSO XX our expenditures of the full for in be represents between

million XX to second of XX million about in this the spend in to expect CapEx We year. quarter

XXXX, of our all will in that hand funded as dividend commitments and operations. forecast as cash from to capital from cash fully well in our continue We

will managing are FSO margins. the simultaneously The reduce and August, storage had progressing also FSO solution. new reserves we Etame. FSO drilling signed for Etame, nicely, XX%, received field resulting the corresponding costs Last an over improve significantly and recovery project a XX% to in extension forward lead that will in our With and offloading approval partner for new and by we which at costs increase reduce announced program we capacity life storage solution by Etame effective of at economic about and increase

reconfiguration a conversion significant portion for This major the work secured signed During overall and upgrade. begun we [works on the with schedule quarter, second field The a DOF on for and project. and of the capital are budget. construction reconfiguration group] the has field contract the FSO

expecting are vessel will mobilized Gabon. that begin to before being We sea the in trials late June

attractive guidance. reminder, of years. field giving in associated and conversion to to net FSO and a with save XX CapEx our operational million the approximately XX is in projected period about between to This XXXX, million estimated capital investment million very be our a cost are net are the two project XXXX XX capital reconfiguration to expected through included in to payback costs VAALCO As only million VAALCO to XX

announced been Dussafu Southern the blocks and highly conversion the our successful in detailed The extended Energy in be has members periods awarded both XXth by of years, has progress undertaken Gabon. blocks the adjacent over development may the and the Licensing BW In a VAALCO’s appraised XXX to provisionally to blocks through October, eight offshore which these the further Gabon, are approximately press projects, VAALCO discovered and The exploration working sharing we new with of are consortium two continue date. Gabonese entered well is by Gabon. releases. Panoro exploration consortium Energy. exciting to as years. reconfiguration BW shareholders years production will discussions keep our Round through with depth PSC PSC contract two both and XX million water with with the consortium of We opportunities HXX-XX FSO production in into to totaling The in government. Etame two barrels as two field Dussafu Etame and The been past in consulting and similar majority Etame, Offshore GXX-XX two Energy have Panoro’s

future for Another VAALCO layer Equatorial holds is significant that Guinea. potential

step We development exploration have evaluating a substantial on working acreage. our are out interest in several and Block and P we opportunities

Last excited summer, feasibility now are discovery a we our development about block development. development moving our sense believe timeline forward of project we're and it makes We opportunities Venus and this completed on the to concepts. with Block potential the few and in P forward more standalone the for study definable the with move

allow to anticipate our partners with quarter We significant are an second in and within advanced progress making towards agreement and government XXXX. the discussions approval

and potential operational to the assets committed exploiting profitably asset significant are EG a could resource We our moving become forward. of

recruited ESG recently based be ESG efforts. in manager Turning We a who to our full-time Houston. will

are Meeting. quarter and General and summary, focused in completing of as to should social be We We In showing annual remain enter is the our published there Annual lot report ESG and be excited environmental, improvement XXXX. a process second of it our second about in ahead in quarter the government of on the progress a our we metrics.

Vaalco thank Equatorial who at We like to drilling strategic Guinea. exciting our projects are our continuing our Etame production progress forward growing team to continue campaign would and operate here execute while Gabon hardworking through to at vision. successful accretively in and I

the and share towards I to As the turn firmly financial highest you are shareholder to with our Ron call on results. return maximizing to can that, ESG. opportunities would over see, focused operating like With we regards

Ron Bain

everyone. Thank morning, you, George, and good

and remain positioned in Let also with returning accretive adding me and well while to pleased begin performance growth operational value of strategy we by to our execute financial saying our shareholders. I'm our very

the and This our same FSO from EBITDAX ‘XX strategic Turning hand, CapEx, allowed flow of prior clearly $XX.X with the pricing. field $XX.X has financials. initiatives benefited in Adjusted our XXXX. of costs. We've higher to in with drilling in and cash including million double realized rose in $XX million XXXX, reconfiguration and quarter period our million us the quarter campaign sustained first XXXX, to conversion, the XX% cash fund compared to nearly

unrealized million for an income derivative adjusted $XX.X as of of also $X.XX compared XXXX. a strong net net XX.X reported non-cash normalizing of an per $XX.X derivative the $X.XX XX.X the tax of XXXX, net or first and of the our loss, benefit. share, first We tax quarter per loss, included After share which quarter XXXX in million income the million for or diluted benefit, or totaled million diluted per $X.XX fourth to adjusted deferred quarter $XX.X income unrealized deferred for million share diluted

compared deferred same of period oil the was is fourth volumes or $X.X of reported in in Production was X,XXX but to were net the by adjusted with issues to from share. partially in brought quarter, February. February, day in per X,XXX VAALCO two in guidance of decrease production expected XX% X, in million having the but flat of well XXXX. to and up net barrels same the program in of within higher per the in quarter barrels the first On XXXX. fourth only offset we're in primarily down the quarter temporary XXXX, Production period which first for day from diluted quarter quarter due the XXXX, volumes listings quarter due XXXX. The XX% operational Sales first per income to oil XXXX, was being was net of the due drilling $X.XX online

in sales As second volumes sales we and be which result issues the with per challenges volumes resulted which discussed production our you was of in XX,XXX the oil volumes. in lower in from call, February, barrels timing listing timing QX and day. XXXX, of of due QX temporary on will in can the stripping a higher between will difference operational quarter see earnings sales this XX,XXX in This to guidance

dividend XX% XXXX, crude of to XXXX XXXX of quarter Our in was in in barrel XXXX, XX% increased price $XX.XX portion the commitments. end to first quarter realization XXX.XX expected XXXX in oil we up to production beginning in the our capital compared the and of versus in of our funding assist the per quarter the XXXX. from and cash fourth At barrel hedged per and first of a $XX.XX of program to barrel generation strong per lock

have the XXst for the we year, In XXX,XXX third remainder average of of $XX.XX. XXXX of production currently As year full the an of we guided hedge of March, price barrels one have hedged. total, about our

our Our website. information full yesterday's be derivative in on well position our as earnings can as found release pack QX presentation in supplemental

month volumes. interest XXXX production that quarter full quarter in first per XX% XXXX workovers February primarily of Turning were quarter expense, period XXXX within increased in quarter expenses. for X primarily on XXXX, per from XXXX. to are expense, quarter was an fourth in $XX.XX excluding first the to basis a guidance of in the closed and by production workovers slightly to acquisition same barrel million. of fourth unit higher the absolute over the quarter to XXXX, compared In QX XXXX of $XX.XX Etame XXXX. excluding of XX.X than with was The just per due compared as Production lower This XXXX, sales X, Costs quarter Sasol's the in $XX.XX at the driven compared one in in barrel. lower

sales. workover million depletion is $XX.XX of prior the for full net of of was production We $XX.X anticipate $X.XX of depletable first was quarter barrel. range X.XX had and periods quarter with we be XXXX and XXXX first a second rate compensation all the in expected sales in per excluding quarter to ‘XX DD&A both $X to excluding legal Given year X.XX was the $XX partially a or $X.X of or second the million, quarter offset barrel the oil due expense. of first costs excluding potential a first million the on in ‘XX with XXXX to the $X.X fourth of compared the sales result million be or $XX sales of and the XXXX. or crude prior XXXX. presented barrel of And to ‘XX related for but basis quarter higher the per and quarter the first G&A for workovers based The unit per slightly lower per in barrel higher of barrel General associated of to per of barrel was changing fourth million to to due costs higher amortization of to for the sales million of in higher guidance ‘XX not quarter X.XX $X.XX $XX our quarter second no drilling campaign. between ’XX-XX of per expense $X.XX for the the quarter XXXX. Depreciation, the to range XXXX. of for than salary barrel of XXXX. million stock-based expected per above expense guidance on are of quarter expense and audit $XX increase the We sales end production timing, compared or The towards net second on compensation compared We're expense was quarter workovers costs $X.X periods in barrel to compared XXXX our fourth forecasting XXXX, million oil lower per XXXX, quarter $X.X $X.X to million of quarter in of of administrative $XX.XX the increase stock-based $XX quarter, first our fees. wages DD&A guidance realizable by oil to per the first quarter and higher million and in

XXXX full-year expect changing million. $X.X expense For the XXXX, and expense of Non-cash million. million in comprised for $X.X XXXX the of $X.X and million. of $X.X first We're not of of we cash $XX.X XXX,XXX guidance compensation to cash SARs-related our second of of to be non-SARs-related million was was the X million G&A range quarter quarter stock-based expense to G&A

was compensation stock-based quarter of fourth XXX,XXX. expense compensation for quarter was And first million. of the ’XX, stock-based XXXX $X.X For the

Turning taxes. to now

benefit and taxes expense expense by a Foreign million. of $X.X Income ended benefit expense are deferred months was XX.X Gabon taking to March government of months oil three their Income comprised benefits for included $X.X three XX, are X.X million. a the X.X of deferred current in a and XXXX tax and deferred attributable kind. ended This tax current tax XX, million settled the benefit a tax income of tax million. This expense current tax comprised million. Income a of tax of expense $XX.X for of XXXX million was million and for XXXX XX, benefit tax three December X.X months was of the million. of was March expense and ended $XX.X tax XXX,XXX

current tax our rather track For BOPD time, with all at tax our and shows like we effective purposes. price. on States I'd we midpoint on seen We've XX than cost drilling XXXX supplemental for net by slide generating United strong to cashflow three non-deductible in periods, guidance results overall which absolute was a and deck updated posted oil the on foreign of prices. deducting BOPD campaign them remain result rate We've taxes to to deliver impacted barrel despite incorporated our pressures. associated are and FSO our to per early information basis that operations our savings refer you that website. in our items realized substantial a the an exceptional inflationary using We've lower will solution crediting

On campaign conversion BOPD, in the solution. indicative shown net a four assuming same success slide, of XXXX we've our the quarter full drilling FSO and an continued

of XX, Xx being share the a range March of At the at per a million, at $X.XX from owner joint XX, and receivables. were recent This annualized. low we paying $X.XX of our trading proceeds not which April non-operating realized of first $XXX is March capital higher unrestricted QX X.X sales volume quarter, March meaningfully than compared the XXXX we lower listing quarter decrease the sales million Working program first year guidance an negative the to for about XX.X a in include crude what XXXX, XXXX XXXX. received dividend we're EBITDAX had XX.X in Even XX, the this in price EBITDA free. at in Our capital XX, million. plus adrenaline to is for derivatives. about in $XX.X does cash rest related multiple part large was in X working despite million debt and With of annualized our million million, the due bucks, with stock XXXX. The with of is capital associated balance December costs

These net a the expenditures on For the $XX.X and conversion, FSO to total reconfiguration. related million quarter million primarily drilling capital basis. an XXXX, expenditures, on ’XX-XX Etame first and field excluding were the the program, accrual associated cash cost basis with acquisitions, XX.X

As quarter range CapEx to George we to mentioned, $XXX estimate continue $XX to million to approximately for the XXXX, CapEx our the and of million $XX million second to in be net million. $XX of full expect year our be

XX, the of stockholders that, cash dividend record As to business equates second the on the cutting over of to has now Last week, Board I'll XXXX This that annualized George. With at quarter a $X.XXXX on been of XXXX turn dividend are we common approved case payable June is the XXXX, the of since of Directors XXXX. on XX, a the per debt. May no per $X.XX to call full-year year. close the back cash share

George Maxwell

future The Ron. and Vaalco, Thanks, this for dynamic is the very industry. time bright energy in for very remains a

continue both cash Avouma XH-ST exceeding drilling combined focus with results with to production flow We accretively seen on internal our well, our through successful the production in Etame additional drilling shareholders. initial growing XH-ST sustainable campaign already to expectations. We've and evaluate and our opportunities of the a return are providing and organic

Additionally, and for Etame we reconfiguration on field the schedule conversion. FSO and are budget on

organic enhance our Vaalco a strategic we program, the accretive believe scale, flow. will for and our in Africa. and year investment our incorporate can we our higher confident we internally and Etame cash cash Gabon and more vision. size build provide acquisitions fully scale business blocks With with and position conversion can increasing field this strong by commodity potential stringent West a dividend growth, that meet pricing, in size funded drilling that on criteria for be FSO sustained that to and P now easily in the strong platform new evaluate and allowing the hand Block our cash and We and generated XXXX-XXXX reconfiguration are instituted

and strategy prudently will Finally, as first complement quarterly our part growth of is next moving strategy. that be shareholders quarter. our accretive dividend way creation in our value returning cash We forward. We paid believe this to paid a dividend to later announced March great our

focused we while to can return, As see, total towards on you increase are highest operating regards ways shareholder with ESG. firmly the

the you. our We are Thank questions. opportunities strategic operator, long-term executing take about for we're objectives near-term with excited ready and are And to Vaalco. that, and

Operator

ROTH And our from will question of Instructions] Capital. White come first John [Operator

John White

and in blocks awarding on -- go everything and very And us terms the blocks block results. your to Can that and Congratulations the you new so I'll update going at Gabon GXX,XX seismic of at these Etame, on nice smoothly the the PSC XX. of skip program? that HXX, official

George Maxwell

continue with in can. with negotiations I blocks around both be John, the to of at I the Yes, of we these mean, moment, Gabonese terms our commercial partners. government the

into QX. So those are QX have continuing discussions and place been taking were through --

happen We even resolution it's see completion probably reprocessing the will are it XXXX. of see discussions. the we but may a to QX, so into acquisition hoping in QX, And to And QX, in can it's done does in come get QX. in -- award commercial getting then stretch formal of the if I'm towards definitely the into seismic hopeful to a that of not XXXX. it some a block,

So most of that will XXXX. slip into

John White

that. much, EG good luck And of Okay. any updates Well, very thanks with P? all Block and on

George Maxwell

require as think that resolution approval EG partners, On QX. Block confident a Yes. position Block move get an I can I'm we to minister I'm we'll to that forward. that we soon with the the P partners certainly, that's come to the discussion P arrangement we think, with with planning. And been resolution, are, confident as in on that in the Block we're I what P, during we we've And get and the

execute the going as we're how first the at probably looked For standpoint, planning at well. we've that completed studies. the XXXX, draft POD -- previously, first to this XXXX, feasibility from moment, approval. to looking a subject that the the in POD we're we're February mentioned well at have And We've early we we January,

Operator

The next comes Canaccord. Charlie question of from Sharp

Charlie Sharp

Just actually do determine the well this and the you potential How on formation Dentale the is test think the in plans is you a that. test to the think what the question trying from to Dentale. license and well important current results why of

George Maxwell

good don't A it's well. a position Dentale or for Charlie. on I not make question, think this break the

us overall this don't the So a it doing I and do of it does give performance think benchmark option, us for this is gives does contingent original the the reserves. to this -- for why looked And that go with though opportunity in test we What we particular to deeper when resource that is like sand. the we to Gamba. Dentale. down us the what convert position the see in the was only But it as at going as XP direct well far into the we're

take opportunity. increase it With well to prices, these that time sense and made cost commodity that this at

we at from So some took find position to And producer. Gamba. to a what to in make we a then we we can good then that deliberately and Dentale immediately back so case it a point if oil-bearing come the the is sand find produce down future the that and hope test

Charlie Sharp

Dentale? is think this if a you the pursue do you the well, are for in near that see. term there successful I to opportunities And

George Maxwell

the to target. is going mean, a next look I -- at also Dentale program are There

Operator

comes from of Foucaud The Auctus. Stephane question next

Stephane Foucaud

from the Charlie. on up question what Bidding

this XP? do we in from the a well, we what converted you contingent for be year, of look deliver just resources -- Dentale that how So rate well again, -- well expectations? we then be or year else on are you reservoir to Gamba, this -- look the at similar if the will ongoing would well, And case much a second something ongoing if success to first Gamba this wondering at this would the might think the this, expect the of

George Maxwell

have I X regard from at producing in mean, Dentale, Dentale the the well With of moment is the Okay. platform. we the prospectivity what Defense the to

how contingent to of into that think from the area, more. well opportunity even knowledge resource move I increase -- and that going on be start the is this But we and next an -- the to will and we're opportunity Dentale we above can results. we'll well mean expand Obviously, we're by go encouraged XP? into our the we're to hopeful Gamba. I over purely additional based the sand much

past, for it drilling So have to more would we the I XX we've and the results seen we an from because expect don't in the and we're in from what we Do expect exact the it first Stephane, or based well location we're kind XX towards would the we saw results the we position. first second drilling expect we on this logs well? North regard With I -- in the number align we kind from the XX? well what of do that you, be results at in now this of saw from the and the see get on next Again, what looking the Tchibala.

in Dentale XX. Gamba. the to that's was would we rates it But will sometime the in future from -- be what we until the Dentale expect know is similar shallow, won't successful seeing actually the unsuccessful before the we shallow were producing on what Dentale, because come we're we be we in to when However, going if come we the

Operator

Bill from Capital. of comes question Dezellem Tieton Next

Bill Dezellem

a quality the of because being -- me just were better you rock than Let in Or expectations. your start modest? Is wells expectations both is just this higher simply with X that than the recognized? came program that have you your

George Maxwell

and us than We better we always than anticipated. in factors permeability want Obviously, to be that the wells, modest. both better gave But think no, results we X porosities there's were I announced anticipated. the

excellent better Avouma. both in because So also and placing we well initially tanker addition reservoir got we've than to characteristics Etame also we've see to seen that, forecast. did we But drillers on

position is placing well as performance, well you also the know. critical So to

Bill Dezellem

Right.

reading Okay. too that the And into Or than difference that much early? enough can there locations? your it better into porosity of we with too being anticipated read locations be we a remaining anything between shouldn't permeability is and

George Maxwell

the the because the producing initially wouldn't both completely I wells first wells. Dentale, wells the are separate and next too much X X from early, primarily read which signs we're targeting is too into from

a we there. well across between this not But XX is direct degree there's So some of Gamba. were the read correlation obviously certainly, if there and in a

Bill Dezellem

flow suspicion or cetera, sands relative less And you Gamba or cetera? field, the in what the unknown their potential et and your than Similar, it Dentale just production out? terms than truly the et for more to versus sands figure is of need rates to

George Maxwell

the say know think we're not going we hydrocarbons we this similar whether is with we right too. there go wet well, where prolific first whether from But I a sufficient into going to area there's a work, into make especially and in areas we're the it opportunity. producing or now into what hypercarbonarea key Well, would water

the be we've Dentale, we obviously, or to the I -- are Dentale overall we producers in between from test doing that excited opportunity the got So and think wouldn't it. it's Gamba I produce them the other we the by area experienced that the fairly think

hydrocarbon So Dentale walker wet. is our on the -- but being position to position the subject are not

to expect it's we see think characteristics. I similar would

Bill Dezellem

around my this normal between it or higher X me and Allow it X? loadings. a to the are production means. that considering to and quarter? ultimately X I'm Is your back what tanker offloads and a Or trying be? quarter? increases, does -- go helpful. may, you What wrapped production your shift, head Is it X forth get to of considering offloading what That's as philosophically if very I cadence to

RonBain

it's in I'll here. one. this Bill, Ron on step

all that at progresses. the that the But lifting of, a year volumes year QX of we X has the Outside GOC, production the government's would quantities schedule scheduling, list oil, depend and per X. in year obviously, Generally, or take generally. On generally, will that they on month. end as on once the the happened last

So we're similar XXXX. looking at something in

much The a of QX loading look to the as that variable us capacity, let on other and me FSO new through the has allows from get comes vessel. this it say, that larger and play, other optimization into better at, is part which we

due FSO. the view production being considerably the soon. to no stoppage existing to a The allows from So goes quite it up that also to ensure FPSO tanks of from there's us filled point capacity

So looking X per had what of kind because from the lifting is would last over we're say slipped we April QX. I at little into a bit month in X

guidance. our sales definitely see you'll So from

sales up for Our is way QX. guidance

about QX, really it's I say, I XX% think lifting would an that reflects, and extra on up in there.

Bill Dezellem

the is starting into point adjust month, or operational that on. basically, down you it will So bring offloading realities have up on and to then per depending it,

George Maxwell

Exactly.

Bill Dezellem

take Earlier would was X then BW additional please. about With step the Energy today, benefiting the you know like block And to helpful. question coming X anticipate I'd Gabon you That's And block. question, what when from that further. VAALCO? asked on, question production that

George Maxwell

my it's back Okay. I'll know seismic of reprocessing earlier that 'XX. get go to answer, parts existing of we'll a done Well, in today, we what and unlikely even

either Dussafu further that 'XX. proximity I date down that commercial substantive in So each we're how in existing to looking well be to the our at that infrastructures. may in well opportunity 'XX. found be on tieback push then looking more 'XX. exploration capture Etame, would a tieback find mind and the my of and structures to But justifies was the blocks, we'd for world out. 'XX or or 'XX. interpretation say the probably it's will a 'XX If something Depending a And Dussafu each And even nothing infrastructure, separate of on then the or Etame. be an at inside either of XX%, before its a certainly, production But exploration really single of production location location locates of well to and the there commitment or an

Operator

Next from Wilen Management. of Wilen question comes Jamie

Jamie Wilen

Gamba the to? will the about you test be longer from to do about for how it Gamba then the to will you go And us tell all drilling. new much you timing long the Or Could question the will time? more and Dentale? in results that One the to issue prior how X

George Maxwell

of end June, I looking it's sorry. towards Okay. through, to drill We're believe, the mid-June

issuing results all be same at the will the time. We

and So location obviously, Gamba in find complete then we that the then back to basically the particular is got oil-bearing current should through Gamba would we announced sands We there where Dentale, in we we immediately volumes perforate looking will Dentale. Dentale proven are would And the that and for hydrocarbons. perforate or of of that drilling deeper hydrocarbons into commercial there. of know volumes be no the be commercial to will well the us we've pulling announce the we designs

Jamie Wilen

Got you.

As quarter? entire I XXXX fourth that the when the Or of is look per for barrel realized for at talk cash the netbacks $XX.XX is the you provided for at free $XX oil. Is your year chart the you layer that flow? for the that XXXX, about margins first

RonBain

full Again, it's Jamie, Ron. year. that's a

QX. not So it's

to So at up versus 'XX similar do of demonstrate pricing, was wanted kind how is the level. $XX lining what pricing we there now XXXX

Jamie Wilen

Okay.

through numbers run am. tell I So far me let me how and off some

let's to somewhere alone? $XX the going $X free of in barrels flow, cash the just flow quarter looking X in neighborhood fourth you're be barrel If of do, say, fourth that to to per realizing of just -- fourth and free going you're quarter of cash at we're per million the share in $XX in

RonBain

really million the I've quarters But And guidance Again, where seen going to QX, Jamie. probably of off given be going to about strongest if we've million million there, to the ever got I our one we've it's you're forecast the sales. about X be the you on at -- to point you is say basis share a local. would not to XX look on -- for guidance talking on That's at million of to of what our that X which that's based for per midpoint QX, XX going barrels, shares the million shares. be basis XX for

Jamie Wilen

then production? more do hedging as kind playing your about you to do your lastly, Are a or that's portion we now to could of Obviously, our secure program well you more your opposed not any defense? talk need very since looking that strategy? you to have of Okay. drilling of hedge secured, are we but And hedged to offense needed you --

George Maxwell

Jamie, got about the great we've our X/X of analogy. At With moment, a production year. hedged this for

basically to our that covered for well forecast say Our commitments. we're

we as us obviously overall, QX. Yes. taken point a impacts We've which of first but taken this this year. approach to aware, QX been no have there's it of and the you're the we a look a marketplace QX still obviously got the that through look capital But take But year. there's QX XXXX. time. in of some, We've QX. not a X So at commitments in expenditures level position spending of hedge the degree at large quarters at at our lot into into forward from a go volatility fall look through of will positions. any Obviously, off

prices. oil. the $XX well doing need. that but one at not felt not core. done well going the necessity the in we've high that we've a had possible. commitment there That at as is position need always flow we that at. -- to things something, don't to dividend a be hedges about want our meet in when necessarily into position. that as always a into talking and we our from allows And look you're number and have don't got would we're commitments not we our simple bottom to there's point say mean the certainly it's of look And to as the $XX our But to speculate, is And requirements rush I a as as to want QX lock hedge these something XXXX. cash So us you're our and the overall certainly, look past, keep if will I we're covers capital this get in if or go we've I time may at upside and a in at we And swaps at look much to in Jamie, operational aware, of

Jamie Wilen

another policy first your to cash much, you much oil had looking at that of your the price was was What what the initially policy? with flow than with what program, prior achieved, dividend dividend achieving bit. you also you're successful then were formation is lastly. obviously runs this And raising that higher When is announced to moving of dividend the drill the given you you And announced the lower. when Okay. forward

George Maxwell

that can that to policy QX where commodity just to higher a sustainable I dividend additional what -- budget. from if Yes. we position other and inaugural regard that think partly accretion opportunities to with that sorry, dividend commit XXXX through a through trying with through cash and fully the our additional at consider seen recall, this derived mean level. that And a we we is we've put through opportunities activities Obviously, with Board, that through in XXXX program amend a dividend was be committed I windfall said with on particular this position we, we as QX we partly to continue place increase production you XXXX monitor may balanced through deployed partly cash that's that further. that prices, dividends, we

So reviewed address there's is, a question a Board, have balance to that. directly and The we be had. as

was be not. what but a amended, be in that point, have quarters. most said through we position got have CapEx in to think no, place that once we was As it's was in we of likely we significant the dividend algal But put to first the from I obviously X the the that this scope there always for expenditures

Operator

from comes Janney. question next Robert of The Carlson

Robert Carlson

in on hedging the call. my question You covered last

and So the work. up good congratulations keep

great. doing you're guys You

Operator

The comes Advisory. from next Pounds of Castlebury question Kenneth

Kenneth Pounds

Are And you drilling yet? Block be going putting in P? also Gabon together that for is addition to a plan next year to

George Maxwell

where increase continuous opportunities the at selecting time, to will decline we're utilize that we're well in program drilling we haven't production means a we have that our look production to a that we that with But existing that of level yet. Well, and Gabon at cyclical to drilling with arrest more program time inventory. but on the rather the same to plan Yes. utilizes the a -- is the landed overall plateau of our get than get fully drilling see as what trying to

to time conscious opportunities in So contractual closely frame in these. existing secure XXXX. targets very looking the And terms equipment We're long-lead are substantially, have units the and is pricing of we and cost terms that of both of looking XXXX. drilling at positions also currently the increasing within that for at we're in very we the

So program in we to and for block at at I focused we was if program continue the , we'll drilling blocked XXXX. January XXXX those you But that's right blocking secure I for would looking now, can very a heard targets we're think mature of programs. something of mention on, I are that end as be be

Kenneth Pounds

That sure for now Right. are might be day you if idea. and my opportunity rates year next some an rigs that, was our I there's I'm up in go next elect better. suppose starting to that

George Maxwell

as cash well. commodity lot as of generation question existing see hold, certainly perhaps answered that possibly rig on QX rates drilling utilize the prices as our rates. regarding to agenda That's there's that opposed look will at a to to opportunity we some And excess we last Yes. in the in the having at higher

Kenneth Pounds

factor that Maybe the there that sounds you like road? limiting a the production us again great FPSO could to some remind down Is Great. advantage.

George Maxwell

the the directed to in the back existing sure with change of the not. they're based of instead the FSO field currently FPSO. processing of fact platforms. and no limiting have is located Absolutely We're FPSO of term the make the continue. FSO. to And production barrels towards to putting We a FSO central coming location in. flow oil moving XX,XXX with in existing lines different FPSO allow the There's reversing We're that that platforms from the on to XX,XXX a additional will between itself to the to between the not and more equipment couple the from

be constraint FSO. the will always there So no an in point forward position with

Operator

comes Dearnley of The from next question Partners. Richard Wan

Unidentified Analyst

the of you're Panoro. your a BW the And guide is well? for what IP and What for the for for is that looking Dentale in

George Maxwell

and geo I a have that correlation too have is to to but right the we distance far, and sands think that's got too Dentale in guys, mean, Dentale with think I the right. between Hopefully, my I'd far I distance Etame. defer Dussafu being is don't that for I Yes. the now, produced the

that question. don't part think then of to So And your the sorry, correlate I IPs on I an there's second forgive me, opportunity one. missed I'm

Unidentified Analyst

it. answers that No,

Operator

Stephane follow-up from Foucaud of Our next question is Acutus. a

Stephane Foucaud

resolved? what on P partner. for Picking you're cost the to some resolved? you are else. about the and comments you Could block the at And exploration perhaps instance, the it's likewise, in are put -- negotiation both discussing, needs of ongoing Is on made P points Gabon what need the about sense block recovery really that me a cost situations of something you for of the Block, the any that for the of basically be be Gabon with question it, there for give up sticking to all with sticking a partner with salient

George Maxwell

Thanks, different the the Stephane. terms mean, I'll a the operate discussions commercial of and to a Gabonese price slightly was the bid jurisdictions but start what particular detail wish with you need licence are they you I'm you We're in through Gabon our and licensing the in I partners, legislation the around going the terms. other of to have It the some round cover same to signature where you into go blocks. which the the terms fiscal with not and opportunity bonus. suite the or block. in government to from get and both this round

the it are So of being PSC conditions negotiated. that is suite

partners as ranking the in Block with project of point sticking opposed our economic see really all. real is Block or at and P P. view of in with of P, our obtaining issue no Some With The about I partners regards issues to on. negotiating specific to but real into we're can viability may others, there's go we on more Block can't portfolios be specifics points which

partners as in assets blocks, have that and and rankings demands our any portfolio ways have coming just you operations multiple to oil have ramped being an portfolio. our multiple and it's be and all have we different on equilibrium, we those where in projects between combining So our we'll cash company partners'

Operator

session. closing question-and-answer I turn back our over concludes Maxwell This any to conference George to for remarks. would the like

George Maxwell

operator. you, Thank

QX think quarter a strong VAALCO. for very been I that has

me we're we've us activities operational base QX and we're investor across calls an getting that and QX, indications with I'm getting that's come away, the QX gate will. and and that the us. in of with quality that questions we've in think on an analyst we which This encourages with into blow come are receiving. allows to really the our attendance pleased a the increasingly that which couple really out I of the highlighted of along base all already issues following company but

you you for to call us your thank for thank the for So today. listening questions, and

Operator

Good After you, now The you conference Thank the Earnings operator. presentation, morning, Call. cover operational today's CEO for we financial you and First for disconnect. attending Quarter I Bain, may to everyone, will Ron statements, a closing CFO your review George Conference take VAALCO provide welcome XXXX return highlights has then will now forward-looking Energy's our and in-depth along concluded. comments more more key our Maxwell, review. results. before will with George, then Thank

VAALCO Energy (EGY) 4 May 222022 Q1 Earnings call transcript