- Earnings call transcript Q3 2022

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Operator

Good morning and welcome to the VAALCO Energy Third Quarter 2022 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] During the question-and-answer session, we ask you to limit your questions to one and a follow-up. Please note this event is being recorded. to Coordinator. conference like Petrie, to now Relations Investor would turn over the Al I ahead. go Please,

Al Petrie

and Thank you, I financial more morning, before review Bain, quarter not statements, in quarter operator. our Good will George Maxwell, key then XXXX Energy's to George then operational conference George will third review. highlights mind take keep did questions. Please results the VAALCO CFO, some speaking comments along return call. be QX. combination your results. CEO, we closing will in-depth After third our that cover with forward-looking close to everyone, the will TransGlobe’s, and Ron only Ron Energy's until not welcome business for a VAALCO as and provide

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

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

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

George Maxwell

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

of very We solid a combination perspective, with are in continued We now million generated financial And in have the sheet, debt-free To in and XXX,XXX our generate We XXXX. $XX.X our high million benefited $XXX sales XXXX barrels. first a EBITDAX in barrel solid $XX.X adjusted position. and and financial clearly operational execute shareholders. third of us strategy our adjusted Brent the significant $XXX.X of fund quarter. of pricing delivered to per commitments. fully continue on This from accretive $XX.X million results flow, this to committed strong million remain in all allowed over months we cash put and our EBITDAX out XXXX. capital to dividends to growth sustained balance paying generated We of nine we in and

used quarter in quarterly the pay year. a of have and thus XXXX payable this in far We dividend fourth to approved dividends the this Board fourth three

to $XX.X grew which $XX.X our sheet from in and million, million October. balance were in that proceeds our balance lifting unrestricted not strong Our does debt-free received cash remains include September

well at Etame. have As program FSO while an field we drilling execute we to even as our conversion our you position cash and capital grown can see, reconfiguration as on the

complete and of operator. a underlying who quality completed This to partners FSO few upgraded had turnaround In delivered other full-field a and in several installation have as in these addition projects project October. help this Operationally, testament a global dedication our is supply difficult pleased to and Gabon, maintenance we to operational we despite highly months. chain and reconfiguration VAALCO's a are past was major our project, occurring successfully environment complex very financial results, workforce status the

the expect As begin sustainable and cost the in on said realize fourth the savings that throughout project, we of quarter and will carry before, to from have we remainder this operating decade. substantial

completed us balance across sheet which a stronger opportunities VAALCO's of to scale, that to dividends, and supplemental either baseline our of successes to generate stockholder with diversified are Block in cash that approval Our agreed over combination a to increased success. TransGlobe, Guinea. and rate plan flow, will we built with have next buybacks this to has by and Equatorial development and development not years, Guinea returns, and adding producing VAALCO P, the production XX, assets a venous four for final achievable business Canada. by allow were a On for of We efficient should In discovery or strong reserves economic been September, underpin a final our TransGlobe and with on approval share and once future Ministry has to we received are few of diversified production proceeding meaningful the of begin basis. highly transformational Equatorial amongst fund diversified at the discovery our not more just exciting Gabon. plans, at for larger look Equatorial and the we documents Gabon, approved. October would of Guinea now This the And portfolio Egypt, significantly documents, forward VAALCO of potential stockholder diligently hydrocarbons. in negotiating parties Mines all a a base countries: stand-alone anticipate

the be of around buyback to great value increase and to place addition, Board. these in buyback completion companies, Board the the a we first a $X.XX November August couple quarterly, quarter in weeks of by made As dividend, with of dividend On The a is million, of up currently up announced the proposed stock The formally be post share to previously combination was taking of targeted Board the program, part proposed was annually. combination had X, confirmation of planned significant to completion. TransGlobe and of the aggregate to announced VAALCO returns. to buyback announced $XX payment expanded share new be two newly post-closing first commenced per of million. of the combination, and On X, we that common paid enlarged shareholder post VAALCO share the to the the $XX to the outstanding program proposition approved ratified purchase share subject for an closing promptly approved of

not is stock earnings that price. We lifting will the initiate of we into our companies our opportune particularly quarterly created our equity. repurchase right Following program, and combination given the the recent to a able this the yet be and to be entity, two call, market now now incorporated a time after from blackout to the value our will program commence single buyback believe has period,

completion increased program, to of transaction. in second commencing When to reiterated per was component our you combine returning shareholder the On will following in XXXX. plan share quarter dividend The returning buyback our the with diluted XX, QX, to XXXX. dividend, we about be our our we the the value, increase per to dividend $X.XX double October to shareholders $X.XX share annually, back the

between Our stock trading has and been $X $X.XX.

said energy to our returning compared are quite done cash future across a we yield, delivering of when value. very is X% shareholder four which to is healthy this So that asset countries we to dividend what also and This Bottom flow. investing are we companies. continue bases line we other exactly, in but XX% value, some to promising buyback and prudently through would, is looking grow maximizing and at the represents,

VAALCO strategic October. turnaround on We acquisition build our a highly completed continue in will field continue volume. to accretive which in that delivering position. placed to the cash, additional evaluate and into enviable installation, We're strong field configuration invest results, delivering We complex our objectives FSO to opportunities financial and grade firmly financially that have full successfully and

The through have the decade. to additional us savings extension realize we in that seen the higher flexibility increase at that lot in services, project. quarter fuel also overall will and of project costs operating field FPSO. consumables sustainable There's recovery and reserves an we fourth and with The has that noted, tire lead for a equipment we will equipment like expect and effective to is inflationary impacting cost lower a larger driven the cost, prices, life, of remainder capacity, prices, global are storage As new XX% in delays. standpoint a provides and the of pressure resulting previous on have an of Etame. availability From some all than companies, by E&P approximately the FSO and the substantial economic this begin from corresponding pressures and cost on costs other logistic

our the mitigate the to as large field all had of a our about boats, for as the African conversion increased as VAALCO. well handling downtime with cost project complete as the double every and the costs mobilize I we the risk coordinate estimated a it calculated vessel and the equipment that much number with regards such with you. to times project put about managed ensure to points overall employ Etame project. have chain interface larger project heavy We to that pipe operational the to lift also port. million a XX%, we project associated had pipe occurs West like elected associated this from have from responsibilities, personnel inspection factors additional reconfiguration supply with dedicated working field proud eliminated of project of we increased production. number in in to minimal We years engineering how and five of transportation the These project costs. this To reels increased the and into by A instead $XX Europe. with perspective to and would project complex We the additional and I'm magnitude reduced during or minimalized flexible vessel shipping our net XX team decision reduce incurring installation Europe. but reel risk use brought once FSO use of substantial offshore a to that helping exposure, This the vessel with This by our capital this risk. of

$XX to We addition $XX expect in This $XX investment to VAALCO our million million is capital XXXX $XX to projected operating the million to which in XXXX. net and annually to be related campaign net through XXXX capital costs. spend between XXXX and in of costs VAALCO, save drilling million approximately is

On are of interest P approval parties, Guinea. Upon of for final approval Guinea. are diligently documents the Another of Equatorial working plan September anticipate majority by execution POD, by the XX PSC project value we Venus the amongst provides is XX, area we VAALCO negotiating operator. years that all approval significant of completion period our of the announced P we the a at we a final date Block to discovery which production working subject holds Equatorial development for development future as government of amendment in towards. of having and The the government, Block documentation, from PSC which the and

once significantly are We excited exploration Grande reserves agreed forward is There look future prospects. upside and adding approved. to and and with are Saturno and development final documents also Europa with to Southwest additional upside our

of to well discovery Venus As we're XXXX. part early development the the planning first in the development of spud

three production will Over facilities years the to acquire, support the install we and to convert next work discovery.

and an injection development the in before online We additional also expect field to bringing potentially in spud XXXX. well water

four-producing to are AG in adding excited a portfolio. resource committed into profitably potential the asset to and exploiting We the be are

campaign at to attention drilling the our Turning Etame.

the that estimates. success we have rates our late well April, XX Avouma estimates. drilling Etame resource tremendous past well and In brought completed over our was developing years. reported and with above online internal rates placed the We again the vast February, In completed online the at development and initial XH-ST above initial a we XH-ST at

in Tchibala was targeting continued in to ready of to net recent up barrels. the encountered X well, flow and below in ESP. may zones, recently return shut also million operational potential following The were cleaning the and the frac North and the to and the to well that We XHB-ST remained recommended completion attorney workover had interval complete production ranges currently meters fluid and estimated This the XH-ST water and oil field a dental the and XX% between thus XX is operating other of We DX drilling in well frac field fluid oil. rates but the zone two has DX large DX an optimizing million dental future factors, recovering well late third including hydrocarbon we're FSO formation. the activity place frac October, Tchibala been from the only about well and The of South the the DX has due but minimum recovered. well for the reconfiguration. We producing finished had a range and this original of far the of shows the dental XX in

update continue We market will flow the the and we'll accordingly. to well

first the well XH-ST Tchibala the XH Following The of on well North a to the well we needed valve performed in was workovers. due our that two safety replacement. required workover

on the well. restore well already to rig gross rig XH-ST ESP the lower failure completion upon and the reducing and the restore was utilize ETSEM-XH, cost early X,XXX drilling we economic The new barrels workover. is X,XXX following a were is the per site, a another completion. went of With for the to final were expected oil easier well way and is workover restart The rig of instead unable complete Again, September between operation offline day in the production. wells the overall of This more plan of that upper to it upper production of XXXX/XXXX the total an utilizing for of previously at the ESP to the campaign Etame. workovers as to or planned which result

with for future targeted at the originally drilling We Etame. the additional defer will campaign wells

success of addition on workover XXXX. well setting summary, net production at there should we XX,XXX With oil of rate ETSEM-XH This XX,XXX excited enter well the up strong barrels of XX,XXX the day. the exit net a a and to around In to of per December we between expect as the the and anticipated coupled the Etame oil per XH-ST equivalent XX,XXX opening for to us this with be XXXX. lot day be for TransGlobe is to to barrels XXXX year enter about allow us

complex the highly Etame, growing We and of full campaign. have another field while completed FSO reconfiguration completing

Guinea. approved We Equatorial the have development discovery for plan at an venous

assets team like size on strategic incorporating are our our and thank We to and to would TransGlobe team building continue vision. I the execute scale. and who hardworking operate

our growth, that, regards on I With financial focused highest and firmly like shareholder are turn call maximizing of opportunities return We share to the results. over Ron while ESG. our the to accretive strategic operating with would vision towards to

Ron Bain

and Thank good morning you everyone. George

execute growth, while to of and returning the better we about far we ability the our successfully strategy with by operational positioned me today George's were Let echoing am on comments simultaneously. to projects year. performance begin in thus than pleased our our start our are execute corporate several value I and complex and to on shareholders at XXXX accretive adding of

to in Turning QX to CapEx including reconfiguration but the compared the three allowed with hand our drilling third a higher with The adjusted cash to us volumes second due XXXX, our cash of million our was decrease Year-to-date fund conversion in in benefited quarterly we million our EBITDAX lower financials. with flow of in listings XXXX has We net quarter, period in four $XX.X sales generated QX. double from sales quarter adjusted $XX.X initiatives listings EBITDAX quarter XXXX. and primarily of prior record and the volumes. XXXX/XXXX the compared same $XX.X the million clearly have compared on to of in realized campaign quarterly our to pricing FSO dividends. in costs field strong our and oil This XXXX strategic nearly

which million transaction net in per for FPSO unrealized costs, a income the to and deferred transaction offset $X.XX the non-cash charges onetime or for XXXX combination, million which for adjusted the our and $XX.X quarter costs In of normalizing demobilization million gain, income quarter million net deferred compared share reported $XX million included and by quarter share decommissioning partially $XX.X $X.X a or third XXXX. third diluted X,XXX quarter of totaled tax X,XXX program. in After $XX.X the second drilling as XXXX. of adjusted $X.X per oil in also diluted $X.XX FPSO quarter second with QX of XXXX, same of were XXXX net volumes $X.XX the million the quarter gain. derivative we unrealized up third $X.XX share four diluted charge, in lower our XXX,XXX costs, the the quarter, liftings million, per per We income derivative net barrels record from XXXX TransGlobe the and second an diluted expense Production $X.X $XX or nearly barrels reported of in tax of in to the essentially high to net flat was per compared compared third Sales the income which of the In were of to due VAALCO XX% of in was on XXXX, the XXX,XXX of XXXX. adjusted quarterly the day flat net barrels share. quarter QX and period three XXXX. XX% liftings barrels, had of period of than day in for million same in or Production was oil per associated XXXX

third net second barrel and was the XXXX cash our per hedge XXXX. in barrel capital the At quarter we funding a realized the of program of flow our and per $XX.XX assist of dividend. $XX.XX to beginning per $XXX.XX quarter We in lock was the was quarter per expected commodity of price end of portion XXXX. average Despite compared the third of in continued barrel third in pricing also realized saw decrease and quarter $XX.XX with the oil barrel which XX% XXXX in realization, our QX the up crude XXXX to strong we quarter barrel per price are a $XXX.XX X% XXXX in pleased The XXXX, generation in the of versus derivatives XXXX production decline, crude compared our second at for of to to in to compared XXXX. for oil of the quarter

bucks capital weighted are XX, oil a the of On $XX undertaken a put of weighted XXXX to $XX commodity average a for arrangement of a for and barrel. a oil into us first quantity price that These approximately per program price price costless of hedging barrels average contracts XXXX. derivative a in barrels average quarter barrel $XXX On contracts with into price has VAALCO provided average decade. VAALCO weighted Our per $XXX October per fund coal called barrel. derivative VAALCO of barrel XXX,XXX July weighted coal sales surety entered has XXX,XXX largest sales with program of a the additional per with of crude collar entered XX, a of for and over

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

Our is shareholder hedging facility and and together risk events. with risk of mitigate mitigation to our unforeseen to return. drilling closing strategy in significant XXXX This protect of the event commitments and the the affords any RBL

driven primarily same the in additional Turning and to costs second This than XXXX compensation associated quarter million. lower costs. the excluding was but $XX.X associated to reconfiguration quarter This by both the was and and stock-based sales FSO maintenance with due than higher chemicals for expenses. with personnel, annual the workovers XXXX. was operational field expense the Production costs, the third quarter higher less activities volumes, and

three the decreased of as XXXX These costs associated compensation stock-based the an depletion, demand supply right expense $X.X supplier We XXXX XXXX. the $X us costs years chain and second likely higher the these into for the services two the million and inflationary higher to we barrels personnel continue costs original expense across of million of third QX. increased quarter Depreciation, is us pressures $X in producing beyond expect issues quarter FPSO overall than quarter a higher XH quarters over decrease workovers XXXX in $X.X first excluding depletable XXXX, million campaign. workovers to of months higher for in the we of the higher the services now. the and XXXX. supply industry. The Nautipa and had the was of XXXX third continue chain. XXXX. block XXXX sustained the number two wells replacement. no restore stock-based $XXX,XXX. million $X.XX continued well in The is million ESP lower and to in and final three workover per to to commodity of the overhead complete level it From to was compared upper providers the will depreciation, to and XXXX. in as with both for economic And than completion past to to periods well pricing. the failure administrative the but oil the driving restore September macro competition expense which of expected were well upper to a prior of the rig $X.X workover a production. quarter were to to the in XXth, transition in on a drilling rig of to previously The planned upon saw more due for We from and Etame for CapEx We fuel benefit XXXX. and had the workover the one-time another the service corporate due were increased the safety lower third than the in was than third barrel expense costs There was restart in the while across second to and quarter of of new believe a to driven amortization mobile invoiced and a use the which the ESP quarter primarily FSO. reduced to corporate that General increase our There XXXX the quarter the North see well completion. The perform marine the the the ended the Tchibala unit. of with three is X-K fourth than higher the expense to G&A as well as rig to or second North of and significantly noncash costs, XXXX. well the chemicals The compensation XXXX And for is than more off-line increased and we previously cost decrease $X.X required well has it in compared for X,XXX field, quarter second inflationary went per With compensation already reflects the allocation onetime third which lower periods we rig utilize of Southeast planned in a oil XXXX, G&A the for was was the the the in result both VAALCO workover third pressures operation that ended XXXX, recently amortization quarter rig of plan compared of of valve quarter We quarter higher instead is million utilized the higher unit continue our incurred easier $X workovers quarter excluding from the rather in and work guided retire in unable September PSC sales, and Tchibala the of of This per incurred quarter early QX highlighted to less for related similar stock-based XH production day depletion, than XXth, the Utilizing between the ESP of months the XH-ST $X.X to barrels for cost we'd term following XXXX. million. X,XXX XXXX XXXX project produce the to September filing, $XXX,XXX and less charge was million the we expenses Etame. campaign third drilling In allowed the XXXX, third allowed FPSO rate XXXX. XXXX quarter the was contract demobilization by total no of into gross

to now Turning taxes.

government Gabon in to taking by attributable are and kind. taxes oil are the income Foreign their settled

reminder, million. effective associated reduced some rate extent production lesser PSC, As in overall items tax be XXth, and XXXX PSC million. and expense costs we of by influenced of capital XXXX This $X.X for into by a benefited recovered and months tax and September million million. a income allowance The the with of benefit tax This the for cannot tax our three higher where $XX.X derivatives, our current a deferred Guinea rate can a is third be a nondeductible tax quarter the was of costs corporate like $XX valuation $XX.X is with expense XX.X% ended that tax to operations approximately the costs. tax about like cost corporate leading expense a losses. of Income was Equatorial benefit reversal recovery Gabon than of via to the both comprised

is profit valuation at Our substantially only now being operating barrels. periods from tax standpoint, net tax losses are allowances cash the a utilized. previous and our are From least paid our oil

As a kind reminder, their an the Gabonese government listing. through annual takes taxes in

the at listing during time I more we posted rather the listing are information rate in website our morning. occur the on The November. of that expect in the that based a to year occurs. adjust taxes crediting deck our the foreign refer Gabon now tax are them. actual the is We will the than to this foreign value for accrued in quarterly lift barrels for estimated where to position rate oil they you US pricing cost, We the via using quarter-end pricing. We supplemental we like would PSC than we tax the to and then deducting

You of us our the The cost advantage XXXX. production allocate in remainder have High PSC pool. XXXX. benefited XXXX, will of of full scenarios commodity and find take to pricing forward our as allow and to carry continue FSO to much of will as the much favorable around campaign terms drilling cost the of XX% pool In cost all. and profit forward oil our seen brought of has through cost utilization from that calculation we strong

profit TransGlobe overall of the remains inclusion XXXX, in than do overall we rate. in for year have the If the in expect we'll an an and we reduction lifting see the increase GOC. high commodity effective more barrels With tax to state for in to should the see pricing Etame calendar QX, one in

same the more adjusted in We XXXX, million in period which what year-to-date double in EBITDAX is $XXX.X in have generated than generated XXXX. we

trade With $X, EBITDAX, the we debt and multiple despite despite a being low dividend to price of free. stock continue a paying around recent at

combination TransGlobe should in the with we XXXX. adjusted Additionally, EBITDAX a in and commodity see pricing, sustained step-up

is from the payable, and our aligned the offset market XX, XXXX we payable closed increased should companies another that in At to believe in about balance our not excited we're million quarter TransGlobe accounts had with increase and both cap accounts of compared value end. which truly is $XX.X unrestricted discount negative and buyback common with an to balance. October. million, our $XX.X listing investment tax September September of Working at $XX.X reason include transaction does We VAALCO to was sized working transaction at was Since opportunity October strong increase now the September by enjoy. November receivable. increase paid proceeds right undervalued share million. higher are excellent June a This negative be $X of in government our The XX, program. We increased million, cash XXXX. trading we that their in XX, related very at shares capital we implies received XXXX to in on that cash fees Our multiple an we that and a buy a planned that the believe lift partially capital the which XX, is subsequent at intrinsic attractive much similar XXXX,

Bank Treasury debt $X with paid In Alberta or the ATB. addition, TransGlobe outstanding balance million

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

dividend quarter full we are dividend a no the continue per to available value. XX, of common Directors have on November accretive of XX, of the cash that $X.XX stockholders share. facilities acquisition the to XXXX per for to was to the a Board record December As to has XXXX $X.XX equates utilize third additional year XXXX, close debt week, This case payable and Last opportunities been business XXXX. annualized share of of on at of build since approved carrying

share per our the nearly line XXXX, TransGlobe annually, combination. beginning with our in We also double with $X.XX announced plan associated increase to to in dividend

acquisition. be XXXX As the following following Board the results. from QX growing will year-end by will This dividend stated the quarter be previously, considered the in the

and of is represents guidance, acquisition within deck. royalties that completion difference have all The and With between taken and or as Egypt in barrels. realizable is incorporated take combined key realizable paid we A all interest report assets and in differentiation the production costs on our production the QX barrels TransGlobe and and reporting available supplemental working XX, Canada. we net our government October in the VAALCO interest TransGlobe interest into net XXXX, between

between forecasting day. For oil and oil and the total are XX,XXX day QX of a per equivalent to XX,XXX XX,XXX production company, interest per equivalent working X,XXX barrel of realizable we be barrel between and on interest net

As the we reminder half the are a December for assets. all quarter, for fourth and only and of of TransGlobe October, including November

by and and to impacted equivalent up, day. downtime. today. around October barrels field workover per Egypt shifted the we was barrels between equivalent day you and of oil new the by Gabon of per September per of add oil oil be at rate being X,XXX fourth day. barrels exit we production a combined of When between asset, exit per full With equivalent be brought of X,XXX X,XXX of per in the additional barrels well net the you and fuel add per get production are X,XXX Egypt at Canada equivalent NRI being XXXX back in in be interest oil X,XXX between around from XX,XXX day. oil quarter into between FSO of and per and NRI and on X,XXX X,XXX and barrels online, to of between Gabon Gabon NRI oil our When XX,XXX day to XX,XXX equivalent day NRI by reconfiguration the to realizable cleaning and of equivalent be X,XXX NRI Gabon XX,XXX barrels Looking to day. XX,XXX NRI to at expecting oil Canada we restoration you expectation are to expect from and barrels

in provides barrels the deck to change per details additional of between and higher sales or that NRI of There slide Our from equivalent up equivalent as day. XX,XXX XX,XXX field XX,XXX impact maintenance ramps oil the XX,XXX the line shutdown. post a FPSO are at per between but guidance dice when working is day production, oil with in slightly production barrels and full the supplemental on is QX the on to

$XX.XX Turning an between barrel an for or basis. $XX.XX be stock compensation $XX.X fourth quarter, per NRI and workover the to costs between absolute equivalent oil and million of basis we on and million production expect on to expense, $XX excluding

$X workovers expect between $X million. also We to million be and

be is incorporate G&A that synergistic currently expected guidance. opportunities $X our cost-saving combined cash XXXX $X.X million XXXX process, company our and and to million. we're identify will We're into beginning we Our additional to in budget the for between

Finally, the CapEx George. the Canada well of $XX forecasting Egypt for With the drilling that, to of the quarter, over and looking program I as at million in back $XX CapEx This and the turn fourth between Etame. includes we now at completion million as drilling are campaign call will spend.

George Maxwell

Ron. Thanks,

As base. to We was value in production XXXX transformative you reserve objectives million XX.X heard a had value and months. VAALCO. main from for year inherent producing been this in barrels the day debt unlocking million been $XX share. for I've past a about were per with of stock XP single producing the VAALCO we our XXXX, through morning, asset and CPR estimate with $X.XX the and very around successful no per and asset. were XX drilling accretively barrels QX acquisitions in grow My of cash And CEO X,XXX about has organic a trading

are value. VAALCO building We will are sustainable maximize and of a business stewards long-term that

lot with of believe have significant We risks results. a while are well, a these record variability, delivering upside. but managed in We very with business we risk-based

We continued and concession XXXX FSO of at our and projects South until prices Gabon, years acquired reconfiguration. years, was Etame completed successfully project by drilling prospective much for of successfully Hydrocarbons. POD a field and that Etame are has XX at by comprehensive size Equat Etame with nearly of most to was future. conversion and We is that VAALCO. approval economic in development operational offshore below negotiating and a scope of and scale the EG the for also company full potential of significant that executed the complex the and final a nearly for the in unique prices. received It discovery Mines remarkable, nine documents developed team Block managed a from one the is quite that explore for Venus approval That of a government entered into area plan P. Ministry for and had we a no at today's developed highly the significant activity And We consortium

in We built the dividend. a dividend VAALCO have have for first quarterly sustainable of ever capable QX business began implemented that a and supporting program XXXX

an geographical We have more of provides and undervalued combination us VAALCO flow, TransGlobe that completed cash all-equity two additional size, portfolio. companies, created and de-risked diversity a scale,

that countries: our We a We enhanced should that cost Equatorial trading have yield to Egypt, multiple organic from increased higher in E&Ps Gabon, a market Canada. opportunities future of and size with capitalization. the expected meaningful vast base is and scale and synergies resource Guinea four we now in benefit accorded

reserves million improve that at year-end. be with update estimated are after and CPR do XX Our to barrels over TransGlobe we should reserve a XP

QX times we are were where X.X QX XXXX. in net We than be forecasting production to more

$XX one share. current double in XXXX plans in per and XXXX nearly the $X.XX a announced $X.XX share announced buyback from million per triple implementing the our size are share VAALCO We last annualized to of dividend the to

and We the of to excellent cash company. returning all the the increasing cash enhancing balance prudently VAALCO value third quarter the of share balance while this sheet debt-free staying have of price end XXXX. the done the We've -- done and at cash million doubling $XX on growing an to shareholders

to committed XX drill we We the the up-growing generating organically are what months ago. than production to cash and we shareholders we market significant We're and our today are delivering wells. positioned were better and through on

improved have average from sevenfold XXXX. We the almost market early liquidity

the execute on have accretive base and hand acquisitions. have We borrowing cash unused also on quickly to

of future. we the will for are We to methodical, company we and future measured very grow continue in be excited as VAALCO and the the

finalize budget our teams combined and to quarter as information for closely Our of update to on XXXX. this as well the working year. market our in We guidance are capital first next plan high-grade program the

We will value you. to shareholders. confident that, that are questions. long-term our superior deliver we operator, we to Thank take ready to And with continue are

Operator

you. Thank

question Capital. our with We will And come from now will begin the question-and-answer John session first White ahead. [Operator Instructions] go ROTH Please

John White

of all there work many my accomplishments year this opinion. very on in Congratulations your all. in and positive morning Good

I confirm it Development time Block And spoke provided quarter your of Ron in anyway. to to Is was your P you that I XXXX. just Venus I first appreciated the ask with the believe detail there. on line On George be will going guidance. And final comments, that all mentioned the released XXXX you correct? that

George Maxwell

think I referring guidance year full the Yeah, to John. you're

XXXX. year We we'll the will you guys of to get do and first guidance quarter full that out in

John White

I'll back operator. any it questions, Okay. I have the don't to pass so further

George Maxwell

you Thank John.

Operator

will from Our ahead. go come Stephane with next Auctus Please question Advisors. Foucaud

Stephane Foucaud

for Thanks my taking question. team. Hi

two. got I've So,

the production. first XXXX previous about up by start I'll the That's So one. a question bit building on

it? QX exit give end I you look of for any production, should how guidance, the we asset. you production at don't the So the So but the the year, appreciate gave or

there reasonable more yet? that thinking from XXXX, will we a As guidance Do putting and the that? expect being general able specific or we on is precise that at number? look you given start without there to less What's appreciate decline? you be some no is grow Should

George Maxwell

I we Thank general you specific, in but Stephane. No terms. you can't can be give

up was the went the be And to electrical between failure. XXXX as mentioned workover, one So safety rig last as I We which to to Gabon had one down we're due an the it other failure. restoring was these end for ESP drilling and workovers. And mentioned, to two campaign previously I completed. a coming barrels that the in was utilizing we're of an of the called

it. pump. deploy personnel reason because utilize a it make the the the wasn't failure cut to just on And rig the electrical didn't it the It couldn't cut cabling. the available the an to operate is clear, we have we of was further utilize So either we or our unit, because unit, space on platform failure to

near-term. choice definite in the was rig production restore to that the So the

Egypt the week. of but drilling, this Etame So now rigging up drilling just right the we commence come to to in end we're

the in January and beginning in starts wells exploration Egypt Canada. commenced a drilling program two also So drilling with of program at the we

can't be other our will assets. drill I pit specific, add from be we production So but continuing from to the

Stephane Foucaud

maybe a declining Egypt bit Gabon Canada. and basically Is in that…? some and production So increase

George Maxwell

That's exactly, yes.

Stephane Foucaud

my number to forward first CapEx That's Thanks. things it's and Wonderful. Okay. -- and production about second question. for and and for starting is provided part number given modeling question looking is some about you Ron My QX.

the So the point some cash from is the we're starting coming with to question TransGlobe. financial. big regard starting course, to of be And,

think June, I $XX had TransGlobe looking at like in cash. million So something in

million each Is you I the $XX that all You have had include generated a half the at about first the capital. quarter of lot. working -- you if they year, that look think generated if they

sense? starting a to it point Is on a good higher? with below start number your as Is So $XX million, capital? is for what's closing it working

Ron Bain

to released results. you first was QX the X-K that Well, TransGlobe would all Stephane, think of There I their I point fact filing. a

business You October the we that. as XXth take Yes, of That over can September. XXth. until at the didn't to is that a balance cash refer

will that period in there deal. to the transactional time costs relation So in be

of of if there. end you out come consideration will will cash guide combination. you to which proxy, into for at I'll identify and costs the information Again the balance I in position. their transactional both think of on the opening And I to the September that you take will will the guide give Canada, occur that there's be So memorandum going be your costs would that

Stephane Foucaud

Thank you.

Operator

with question Our ahead. come Canaccord. will Sharp Charlie go from Please next

Charlie Sharp

comprehensive gentlemen very Thank for thank update. much you you very and

that production October gave now one Just level. through rebuild any like the further QX FSO presentation to Is from halfway that if you an X there might it's that that in We're you're Etame through your of that small indication XX,XXX has in on and been the back think XX,XXX, numbers? or sort you would impinge suggest into question, slide correct, of November. up XX,XXX, that delays through I

George Maxwell

issues relate levels if mean, to we the included QX Etame the for look that tar reason are I that particular we clearly to production us. was -- that No. behind identify at lower the

color and receiving the you without little numbers was to I'll to basically did And ST delayed the put lines workover me and see for Etame a production -- sort And So we processing the purposes. confirmed. in safety relation that are making you've float the production giving integrity as to that we oil phased has integrity shortened a as up we had were capabilities due remain SEENT in start bit just is move first on cleanup. the we after chart well One, move at came to indicated levels SEENT to the SEENT and was our vessel of safety the you into rig field exact two and to rig reasons. the of we available of market. turn Etame do of secondly, within listeners. well the all unable that that as well right confirm to for started phased flow October turn field time well over and to line of it for to were the the previously to The just the on a those on the XXrd reconfiguration now we We production the up and had start-up the crude the indicated it

ever two that well look drilled then we at is detail the keep into with zones. VAALCO And mind in we in deepest So XX,XXX feet. at this fracked well, the please have

a period. do in to have XXXX fluid So pressure quite indicated under of Bohol that cleanup have a so we've We long fluid being completion But quite and extract. good allowed psi. there distance we considerable

and very it up. take remain we've indicative levels why confidence to in clean got that our will some that time chart, that's So but high production

Charlie Sharp

they other see of Okay. shown or one they've to The team you perform? that a assembled to may. of are out all able perhaps that short and elements excellent Guinea, if on Equatorial key be to that Thank team having duties them to you and you. theme conversion the And excellent I you've carry Etame. Are follow-up how transfer do going the retain to

George Maxwell

task it's and team within development. redeploy at do frame, have experience the Obviously, the of when looking And time that really into efficiency a optimizing, P. of development team completed combination economics. design in Block we efficiency say immediately to are what almost the of a is intensive, -- with that of got certainly plan obviously, a and when having the of also P when such such I CapEx it planning looks given and which the Well, we've we're monumental we a Block optimizing to construction optimizing

and become that Block -- target the CapEx certainly So particular reduce can deploy Charlie. That's set make skill initial to more efficient spend. P even that we engineering

Charlie Sharp

you. Thank Okay. That’s great.

Operator

ahead. Our from Tieton Bill with next question come Dezellem Capital. will Please go

Bill Dezellem

Thank you.

of been First the and truly what of is seeing you there and accomplished all the remarkable. Gabon in assets kind over

solid Egypt realize But execution, really that question that course can super applying you of the just with over there? you the to do say of I of So I congratulations. And it's and your the that, guess think and assets with over the what a if next XX TransGlobe taking leads months, short execution period time. in

George Maxwell

top Oh. That's the Bill. one,

to them efficient are common to we We aware, and have be. go methodology -- of operating both we as and of the and to understand the I'm make efficient listeners have and can a the as lowest denominator sure operations specific they as most

so with understanding both the targets We'll and in plan and we need we challenging have efficiency. production that Brent. in how better but cost in we to as that of field barrels to a both crude position will done to hasn't certainly, Now our and partners prolific Egypt be of some our we those pricing to of and maximize discount particular be. how with targets production regard setting regards with we value be and that at, export Egypt, setting the the accomplish efficiency the will I'm can in possibly And already looking be the to been that not it saying and that can the making as maximize maximize that that TransGlobe, we the with

when So, assets. very on, management we hands to are comes executive the it on

planned And we the will safely fact quickly same obviously, the with possible, where it'll be in And in next. in as bring and after that accelerate far doing operation so, exactly Egypt can and XXXX, week the we Egypt. forward we'll Canada, be how do the in production that's increases it efficiently. as And into

effectively the is subsurface So, our exploration have goes for more operational a with Egypt. into and the Gabon positions which as in assets in XXXX into to time enough we Etame, Canada focus development phase will and it the study than

Bill Dezellem

FPSO? you. do relative place then is given you've second Thank capacity. you anticipate the larger And had cadence the the significantly of with question new cadence will How the to relative FSO the that offloads take to

George Maxwell

of kind lower the from as coal not load -- hopeful position. parcel are We're those Nitipa, always we with in for sizes aware were who Yes. a the

going at with looking XX, to we for or in nine be would West that's the preloaded in load vessel Africa into Nigeria. times either a So vessels opportunities co-loading out second a of about take

have So XXX% what the tele coming this does us single specific going allow from to tanker. is a a into loading

certainly that. the yet, better for us loading on quantify larger of the can't that as the the -- vessels for towns we to and but going allows that or the it's we market the parcel single have refineries. Now large et And to loading a one cetera cost that opportunity reduced

we from benefit see to that planning at enhancements, this are we savings cost time. those price factored but So, and haven't in

Bill Dezellem

and in fabulous Thank you execution on congratulations again the Okay. Gabon.

George Maxwell

Bill. Thanks

Operator

Management. Wilen Jamie Our with ahead. go next Wilen from Please question will come

Jamie Wilen

fellows. Hi

get always were you we're to able premium able and of kind that? what You Brent. achieve to bit a to a of Could pricing seem to we do how quantify,

George Maxwell

for is a we term What This is Okay. Gabon. from away Jamie switched we've recently Exxon. done contract with

clarify. me Let

away a with Glencore. So from market-based Exxon a contract we've switched to marketing term contract with

dated So, in the minus. term-based were we contract Brent

on contract $X. position and went Brent whatever to a position from was $X.XX was it So fixed it in minus the the

minus Brent most of $X would we So our in liftings.

price contract. marketing fee. the effectively marketplace trader for $X.XX each we parcel We that deliver. goes in to the the possible per scheduled Moving paid marketing the sources to and barrel best on And

maximize parcel, Brent the premium what volume. parcel. On particular were that is $X on the last try a do And to we we to at trading

smaller got we've couple coming up of a in lifts QX. Now

is think I discount them slight to Brent. marketed a of One

it's a are about the at marketing with able being capture into now. right market all But volume. time. right the So we contract to the

So it a larger the us much of spectrum control gives crude. of

plus price field. just a to that getting for about a other an to of to Again, -- do the offtakes with linked and a quality. Brent a quality is historically marketing in linked it's dollar sale an there's see a to through mixture mixture which one jurisdictions improve for contract for that the and Mercuria gas. EGPC domestic we little sell option it's In year, based to or offtakes we're For Egypt, they processing use, two different. something Canada, how They've NGLs got and discount into can bit crude crude $X a a to of in oil, dollar

a combination the price wellhead. basically So everything theirs at is is that sold

James Wilen

say, this like the come what to what what X,XXX clean the little On be, at paused, bit for, the there? take give of Tchibala that to North X,XXX timing long how can will will been forecasting at the clarity on kind it well tea looking online? leaves of you wells looks It a you're versus the more well will is NRI up looking we're has workover us and

George Maxwell

flow. soon And to to time up, to stabilized Yes, side in It's cleaned XX the well, that with that to got from X,XXX. And And keeping we're side you the it's that said, a as this it at where days clean to, we point, for chart we've got back clean as change quite straight take allowed some and look about estimate. we've -- Like it's market I XX keep that's get to the up. mind expect. we've And meters -- us given stabilized geological in that subsurface it's XX,XXX-foot that going quite to days and if depth. X,XXX at we'll have or we rates. no at reason, XX

James Wilen

drilling accomplished you productive; so at bit the Dentale those to program of what Dentale we're seems have beyond the in the Gabon that has Gabon you the areas? affect how results the what at elusive. The do? and you look been down the more two As to little look the and road we've going program does for do of look XXXX in been How a at drilling

George Maxwell

we great trying right was What a is, of months Yes. now. the to me And great is it allows identified what to that -- XX it program. to provide this because, That's think question, question. I over we're a it's we're ago the do reason trying exactly about do Jamie, right opportunity now

of this seismic had as this of and these wells riskier your the basis. success wells it that's grew. did first we as aware knowledge beginning any wells And seismic interpretation end -- -- And on And the in XXXX, And a in XXXX. interpretation. do your then, substituting firmer this four and our end tend exactly at drilling you wells program out. well in to our -- campaign percentage fact, wells, and was In how program that chance we has panned ahead to you're program, the through identified with of we've full we substitute pre-designated of

Etame, have the deep that going also to so high-grade really again a clear Dentale the into a is have really XXXX. opportunities subsurface we're targets And portfolio trying productive seismic facilities that of in Day what we year far drilling Capital we analysis dive step-out QX within middle that take come a that longevity XXXX, of a where do announce and what an to four dive Markets we perspective. do interpretation we're that's to the six do QX. do how try and perspective from this risked, opportunity to get achieve. at that that drilling And XXXX. and With what How to of do how Gabon the got of we utilization be For can looking identify full do to within that, I'm the is, into a we've both from then a to and we'll towards we'll towards targets deep planning

full come Now, on out the me and with both that give date, the But will interpretation. we've to an don't opportunity later a and initially be hold one overview our assets will we not expand to we're the focused right to them year. completed and that now it asset, because in that's just then, Etame Canadian market Egyptian the QX when ready of

Operator

question. last have for time We one

Our ahead. will come last go question from Stephane Auctus Advisors. Foucaud with Please,

Stephane Foucaud

If boring two I can, gents, for Ron. question

to residual XXXX? was on think, first sheet the FPSO time non-current I other balance saw the one the was I related, part on -- budget wondering liabilities, tax that CapEx of the first I only think paying The corresponding of are the from any for And And I non-current there the was a million. in corresponding overall, to? XXXX. to one Because about $XX what

-- if to that guess, the you. you that according balance XXXX, great. would should be I QX confirm Thank So could

Ron Bain

Okay.

So you've asset tax liability. both and the got tax on the a part, deferred deferred first

Stefan. for off these purposes, net can You accounting

liability tax taxes foreign the the in for, deferred really liability So Gabon. is

So is we're cost pool essentially, our the will XX%. that out that obviously, projections – the utilizing there

So we effectively we're the US rate, point look rate getting time, the for Gabon our profit in side you've than is At the tax appearing same liability the into the the asset our in in tax higher assets. barrels, deductions US upfront, but because tax got future. as the deferred oil have we

but when tax develop you valuation deferred at had other Gabon, previously, assets have that's I to. would low. but the go the and in in why in So had them we mean basically, when beginning one XXXX COVID and through we in happened this the Those were were reversed valuation against prices we it reversal XXXX. hit point virtually allowances offsets as of allowances time, final

So out -- there taxes as effective year. tax XX%. of those rate over an is around with year-to-date quite roll But the now at of a we're finished position the noise, bit looking deferred themselves we

level. that we to what kind line in XX% So back it's of in expected, with XX% coming

rolling see point, of go on to those all no the Second is, FSO, I I'll through think largely we'll costs in QX.

anyway. shouldn't carry be material So in not there into QX, any forward

Stephane Foucaud

Great. Thank you.

Ron Bain

Thank you.

Operator

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

George Maxwell

an you, excellent this I Thank Well been operator. has think call.

As performing that the the you year. the quality and awful length the of out we've I can an we've reflective say, we of received. put the and is the the like been information through tell And to activities lot detail questions market considerable of questioning of that that from this with call,

like and I I I the and say now after hobby the to the I'll QX, benefits and it's get and we my keep harvest you completed. asking infield take forward would of FSO that the time the again. let's are installation back and think be to well-earned to to them pause, of drilling a think but campaign some upgrades combination on starting Thanksgiving, of look staff, both to horse driving

And an team, are you for much. a one-to-one take to on very call. you as Thank when calls So, very thank and from on obviously, we available that, as required. much executive the investors

Operator

conference has presentation. concluded. for attending The now today's you Thank

You may now disconnect.

VAALCO Energy (EGY) 9 Nov 222022 Q3 Earnings call transcript