Earnings call transcript Q4 2022

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Operator

Good morning and welcome to the VAALCO Energy Fourth Quarter and Full Year 2022 Earnings Conference Call. [Operator Instructions] Please also note that this event is being recorded today.

I would now like to turn the conference over to Al Petrie, Investor Relations Coordinator. Please go ahead, sir.

Al Petrie

Thank you, operator. fourth full Energy's call. XXXX VAALCO to quarter year and conference Welcome full I George of key and statements, the the XXXX. our quarter After forward-looking review Maxwell, cover CEO, will fourth year highlights will Ron then Bain, our provide more review. in-depth a financial CFO, some return your comments before George questions. for we will closing then take

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

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

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

place the should with SEC, statements. presentation in that note including is recorded. on Accordingly, Form call the being These and earnings not risks file are you on described reliance and our website our Please XX-K. posted reports release undue we in other forward-looking our the this conference

over the George. call turn to Let me

George Maxwell

SEC acquisition by earnings doubled conference successfully that projects, was reserves diversify Al. you, that an XXXX saw quarter results, record Welcome and and Thank asset call. generate base production, high-impact complete financial to XXXX our a nearly operational increase our year for us proved transformational full close XXX%. truly multiple year VAALCO fourth

shareholders. dividend meaningful our to in our dividends in XX% commitment returning out XXXX ever value program late to our by first million our and further XXXX, In XXXX, Additionally, enhance demonstrate in paying we a approved buyback to program increased implemented stock we to shareholders. $X.X dividend and

Our capital Etame. multiple sheet while funded company extended at lower field remains the largest our included balance we and FSO a adding drilling Etame that infrastructure, after solution wells reconfiguring our fully economic in the that program and cost life completely debt-free long-lasting even history, field

strong to fund have dividend, programs significant and buybacks, the future. cash forward We additional we cash base us moving help production flow build for generate our potentially a acquisitions where to additional capital

Before these on record-breaking results generated of maintained helped which in I us $XX.X many grew cash operational debt-free let of To meaningful $XX.X million significant year-over-year We $XXX.X we EBITDAX strong more $XXX some put fully and XX% go in in program detail a hand operations. year. on in first capital We in a funded production to adjusted with all high-level deliver financial led free me XXXX with cash positioned million cash accomplishments, a and from million over summarize record-breaking cash XXXX. We and generate into and sheet balance to that perspective, by XXXX. this hand on million ourselves XXXX. flow

financially, and and are scale substantially VAALCO. positive to we grow in operationally momentum size have both building We XXXX and

basis. at TransGlobe diversified with for acquisition. have a will of now a supplemental scale either or the a generate of flow beyond would base rate Gabon, Egypt, This meaningful on and a VAALCO has by stronger and stockholder with VAALCO's countries, standalone a sheet us assets buybacks diversified been On portfolio a diversified built the larger dividend, VAALCO our transformational share opportunities that the business we and and TransGlobe, to which XXXX derisks XX, portfolio overall Canada. underpin positions more combination to including four fund base has not in and On cash TransGlobe increased success. Guinea potential balance across Equatorial October returns that production completed achievable production stockholder future

the canceled advisors first total result of also more Board will a to listings, a synergies additional combination and as and requirements. efficient up executive corporate $X streamlined been per actioned the the structure, positions, external captured. We the consolidated We trends only number beginning. meaningful reduced outlined public and that this but capturing annually, million the year are our of us save reporting This have is we already initially

to service, We XX back-office savings that over supply annualized optimization, amount them well potentially could months. double to next savings increasing chain are operational and as efficiencies implement the and of as initiating digitalization XX as the continue we

give our combination when is believe the with single from return entity, efficiency, a the into appreciation in to the of returned combination our and we over which doubled aim We of X%, shareholders. the time to our around the value the key In right buyback, $XX When to in our trading, This returns. shareholder part to share two share proposition. in a value significantly with not a the buyback XXXX, market stock of proposition shareholders yield nearly operational $X.XX a per dividend, cash on or February share XXXX. our $X.XX recognized cash from dividend market. in a companies share XXXX. has we of that for the million share we would the is yet opportune quarterly particularly coupled buybacks, is opportunity A currently $X.XXXX over is increase capital program. this was per dividend dividends per was annually where of today's meaningful result compelling XXXX, to this our making created deliver provides investment combined the In strong through Based a through now

continue much position, environments, to cash Bottom to acquisition propels across future overall this flow. shareholders reducing cash in promising operationally a return additional base providing investing and pricing also diversification is VAALCO and to through to a us but to very risk distributions, grow to the financially, value and our done asset This stronger is the our countries flow line X both maximize prudently allowing shareholders. in cash by different our to

in to will VAALCO reconfigured completed value. a of XXXX. only additional invest for drilling a was We one we TransGlobe Etame acquisition into an campaign, entered field efficiency many. upgraded continue in for build long-term accretive it was that also accomplishment Gabon, At And acquisition a major the but and to opportunities further evaluate for The FSO. contract

Now to review Gabon.

October highly we installation, the completed full the reconfiguration field FSO With FSO, in XXXX. turnaround field successfully and of complex

have flexibility of effective and the capacity with the for the FPSO. realize previous an cost operating The and savings we decade. us and XXXX larger noted, that positions has project approximately storage As XX% through remainder new substantial this us additional to continuing provides is sustainable in than FSO

field cost an and overall on standpoint. life, an in I increase feat lower engineering, extension put in recovery perspective operational would the for resulting was of this to lead at The economic a logistical like in reserves incredible Etame. to from This corresponding will also an project you.

with complete of minimal field we all with operational to had the personnel equipment Xx the project production. the downtime in boats, additional about responsibilities, and substantial coordinate We number our that during and project to the working ensure

difficult reduce risk cost and production excellence, This equipment our increased eliminated mitigated Remaining during operational all worldwide committed over and to have We being installation. which led from took been project manufactured, particularly world we installed over and the a global opportunity to consumables ensured during the past also upward equipment, delays. Availability cost delivered interruptions every safety two strained exposure. logistics some costly and effort employee by overall minimum pressure of project and the delays supply specialized chain environment. risk safety, years, to project had ensure

I this risk the a occurs XX posted we Hart and A interesting associated our about website and of with this and such have of with once large project, of through complex to project I'm to think savings project. are the forward, million regards our of $XX proud magnitude wrote which seeing Etame page extremely detail, VAALCO years. and cost net minimized managed team home reading. Energy on Ron you our an every story savings million And will in costs XXXX. XXXX; and project in our more about Etame but financials with the operational the in of materialize review $XX we cost to and moving enjoy the operations annual would

drilling campaign. XXXX-XXXX the to Turning

to Etame, and vast attention success had at the Etame, over have drilling the developing drilling tremendous we XX years. campaign Our past at resource the

pricing, We flow in this and XXXX primary strong forecast current profile achieve will overall at the thereby success quality has strong the was XXXX-XXXX from program payback demonstrating fulfilling the campaign. asset. objectives extended Etame of initial life economic were successful a highly drilling the and increased materially exceeded as field, program campaign overall the two the Etame and the at The Our wells drilling economics pre-drill of estimates. have cash the generated production strip our total

Avouma brought Our above initial two and online with Etame highly estimates. the were XH-ST successful the wells rates wells, our XH-ST internal

wells, XHB-ST and permeabilities Tchibala The and production the XH-ST North zones third for South rates fourth the entirely both wells expectations. the the these wells, below encountered reservoir but producing our were and Tchibala

four drilling performing more workovers rig wells site, the with easier and the two In on addition made economic. to already and it

ETSEM-XH barrels This of first was upper the that failure on offline The QX. in and X,XXX required result day. needed workover of well an late gross the second workover a was of replacement; oil valve restored went safety due a in to as production well the about ESP per restored

evaluating further for this the learnings next prospects Etame. evaluating at drilling drilling and our campaign most are We campaign from recent

campaign, our into XXXX, process next rig reviewed applied subject drilling integrated mid- have have and these to for proposal to approach. evaluation planning internal late a is We likely being and more augmented processes begin This the will which target to availability.

will Gabon planning to drilling learnings are two we in the into that from incorporate effectively. all changes making this, we necessary last process, our our With do and our of campaigns

supply implementation drilling availability, and lead long campaign depend rig pricing, commodity on Our procurement items. issues chain will next the of of

is yet be determined. So to timing the exact

potential we Gamba on and the next focused continue map across program, are to We understand drilling drilling Dentale better Etame. while targets deeper additional the in

economic asset. Our our drilling primary extending life future successfully Etame objectives and are production of the adding any with

additional on planning complete. campaign have share the with will market we We next drilling details our our once

campaign that with for campaign realized with cash strip entire return strong reiterate expected rate our XXXX-XXXX are over low drilling accomplished internal cost very especially capital. flow and XXX% of a of pricing. company of current and is the given a and overall rate pricing me debt, to no of a drilling the This attractive Let we economics return, that be

potential a on Guinea, a Equatorial Equatorial another that turn -- now Guinea me Equatorial Block On future discussion interest offshore area holds let in to significant owns previously P for meetings our VAALCO and Hydrocarbons with VAALCO. partners as Guinea, an In March where undeveloped but held potential. they we Houston. Mines the in discovered XXXX, as and exploration of additional have resources productive well working Ministry

includes the the which development During these meetings, Contract. P, relating Sharing substantive documents to Venus finalized we multiple Block for Production

are in working and concluding to of on documents the expect XXXX. update remaining We market quarter second the

efficient We excited Guinea, about anticipate strong, of first the with are we discovery Equatorial future and this development economic oil and projected of for XXXX. a

are diversifying further focus there the portfolio. benefits of and our clear Additionally, country strategic revenue in generation

have of development and demonstrating a a this these as forward track we record look progress into to Venus for kind, production. capabilities We discovery proven we the

drilling are In focused Nukhul on in include shows. XXXX, and well December in and on ever the first well Egypt, encountering horizontal opportunities good gas was lateral we drilling the acreage. successfully was This drilled spudded Egypt, our of oil which

assets. in a anchor and we part of program of completion and to develop one drilling capital our program will be continue XXXX our large Our Egypt

wells in into the Canada, Canada, delayed fourth but drilled several In we completions quarter, XXXX. in were

of a Canadian XXXX. We more drill all program and part complete in wells them our as will couple

that was to already this by morning. which base, our reserves. have pleased substantial of Turning of discussed the accomplishments We're driven the several with growth reserve very

believe We final our will barrels include reserves. equivalent. added in SEC proceed of significantly have oil acquisition SEC adding impact from Equatorial million proved barrels increase reserves by once compelling Equatorial We our oil million documents of positive The proved of reserves with of production oil This by equivalent reserve XXX% we positive XX.X does increase we Guinea, equivalent. X.X partially XX.X to not X that boosted from revisions, proved offset for was any are increased million reserves barrels proved the development the proved executed as begin the barrels oil year-end TransGlobe from SEC equivalent of Guinea. and which million plan. at

million. value $XXX transaction Dated of driven increased TransGlobe This from proved approximately Brent from by $XXX largely of million pricing reserves by SEC $XX.X PV-XX utilizing The per to XXX% SEC and barrel our pricing the the increase. was

interest pricing equivalent. future estimate, crude of oil for basis cost and management XX.X a prior CPR government XXX% using XP barrels which and million Our saw reported probable to on includes of proven to reserves oil royalties working year-over-year assumptions VAALCO's Brent escalated for increase a deductions

than XXXX. CPR NPV-XX like only Xx increased NPV-XX XP $XXX more management XXXX CPR small The pricing around million. $XXX.X kept overall as than out million SEC to volume at significantly XP XP CPR cap market for and I increases is under these pricing year-end million current our played The similar would role point year-on-year. proved in was from that at reserves a of $XXX year-end to higher broadly our

We have significantly positive a net debt cash undervalued. capital position, no remain working and and but

drilled from ET valuation by we fields from area. field saw Etame and revisions Etame asset I by strong Southeast well. well Gabon, will now at [Iburi] the positive reserves Etame driven At review XH and primarily as newly as performance technical the and

South production at SEC for XX.X drill account XX% proved XXXX Avouma barrels revisions. by Dentale North oil. proved were Taking pricing production revisions Tchibala new upward down and year-over-year our SEC Etame the net result positive well technical reserves from at disappointing and well XXXX, these outweighed the We Gamba into and movements Tchibala of reserves Etame. However, to were field million with of X% replaced

for Our XXXX. did by proved NPV Etame increase XXX year-end at to and XXX% XX SEC million

we at As work confident increase of I stated future Etame, drilling identifying at help on earlier, grading the remain believe potential high our the future. future better which we in We continue reserves in to locations to value our Etame. will and

pricing, drilling rig with and drilling opportunities. to XXXX, weighted pending Etame availability return in heavily campaign commodity to Gamba planning a on are We at

that base, like will the be reserve are we not TransGlobe would two VAALCO's now acquired that last comparisons areas. you those we transaction. to these I bases discuss year year-over-year giving asset the with I to remind I since adding for

Egypt. to now Turning

and million SEC Our $XXX for XXXX. our oil, SEC X.X net proved at NPV barrels were reserves year-end Egypt of XX XXXX proved million was

overall, proved of strong impacts our focusing offset due bit on positive For Egypt pricing. We reserves, and to XXXX in higher a quite reserve Egypt. XX% see XXXX, SEC due was opportunities pools the upside be development capital cost had we'll potential reduced pricing we in despite and replacement a by program to upside

our barrels XXXX SEC Canada, net Canada reserves at million our proved $XXX equivalent. year-end XXXX. Looking oil SEC proved at X.X of XX NPV for And was were million

in most program reserves replacement strong the driven reserves, XXXX not had a of captured reserve SEC base. we wells the XXX% these proved XXXX For reserve has by previous capital that due SEC to being

In enter a summary, be there to would is team lot hard-working vision. and operate our I to XXXX. excited we continue execute strategic thank about like to who our as on

We progress to TransGlobe while acquisition continuing and scale. all capturing the have and of already synergies size make more build meaningful towards continue captured to

Etame We another have campaign. full at complex highly completing drilling completed and the field FSO configuration while

We economic XXXX. documents remaining Guinea are and P for with Block Equatorial first working on oil efficient concluding strong, in anticipate development at the Venus discovery a of projected and

of on operating firmly regard highest remain and shareholder maximizing focused and debt-free with accretive our ESG. towards while the are We return growth opportunities strategic vision

would to I like call Ron to share that, our results. the financial over With to turn

Ron Bain

George. you, Thank

operational Let several me execution echoing projects quarter begin the the TransGlobe including corporate of George's our by of on XXXX. and the about comments closing in simultaneously, acquisition complex fourth

on execute operating today are XXXX I am record shareholders. as we we our adding and better positioned annual performance to while beyond, our to pleased our to value And and returning in look with XXXX. strategy

on more XX% XX%. our fourth increasing generated cash This the costs field clearly crude We've hand, $XX.X Turning with and sales FSO contributed than and of our initiatives completions pricing, oil year-over-year production to have was realized reconfiguration our and to million closing Etame of primarily XXXX. XXXX. share million higher and XX, benefited as EBITDAX our and to an million in These the in of only on buyback. after at price the average oil and cash financials. record quarterly TransGlobe fund a $XXX.X double on acquisition We by the increased in us $XX.X adjusted quarter XXXX as well the allowed sales EBITDAX and drilling impact The increasing volumes October to from conversion financials by flow for acquisition, due strategic our which adjusted CapEx, record XXXX. was factors including dividends

transaction million the $X.XX net We which XXXX income diluted the a TransGlobe of $X.X a also in million acquisition, quarter reported million combination. and costs with fourth of $XX.X or tax $X per $XX.X share deferred million included in gain a expense associated on

the income income XXXX full net reported on diluted the VAALCO the a on acquisition, share as same factors costs, $X.X unrealized million well. XXXX. gain charge, acquisition, per for FPSO the costs included drove and of per $XX.X unrealized record meaningfully of with in transaction to gain $XX.X FPSO adjusted net After adjusted TransGlobe million adjusted XXXX, diluted normalizing $X.XX costs full $XX.X in a compared totaled million as deferred a an or deferred $XX.X net or for adjusted share, demobilization million charges For our associated $X.XX $X.XX million gains. or derivative $XXX.X that net $XX.X increase expense, for The income million share derivative year tax million and $X.X which EBITDAX the income in year transaction to combination, helped diluted gain, tax million per

up the from to our transaction XX% XXXX. benefit and TransGlobe after program in drilling October full period due from the year XXXX the production day Production was for XXXX. for compared was day oil XX% in of net third of quarter the the barrels by fourth net X,XXX per XX,XXX barrels up of to quarter XX, XXXX per Production same the of equivalent oil

commodity sales XX% In were million higher year our and per the to BOE, the increased Sales with BOE. compared strong for Egypt With by of XXXX. the Offsetting in X.XX versus quarter our Canada to QX liquids, volumes time. XXX,XXX be oil. when which barrel are we of quarter XX% fourth than pleased sales realization, was Gara was across our the XXXX pricing full in quarter past these $XX.XX commodity third of we oil volumes realized in XXXX. pricing pricing was and the was benefit tied had fourth and Gabon, it continued the the to Despite the XX% decline, in quarter, Egyptian price a natural million high equivalent QX Brent only Ras Canada natural which of driven the blended sales will containing gas gas blend, X.XX first XXXX decrease

We continue us to to surety our to fund capital implement protect our and shareholder risk a to provide help commitment hedging returns. program also program, to mitigate

We collars, first least price the a to half production with via have year through the our a at $XXX. floor $XX for upside of protected costless of percentage of

look in the we and and As to our examine XXXX near we term. outlay our term the capital beyond, at continue will spending strategy implement and longer

in website. Our the full information be release in year-end presentation supplemental position as found on can derivative earnings our our well as

boats, Production quarter and million, and miscellaneous $XX.X workovers was driven to for XXXX compared pressures offshore inflationary compensation XXXX sales full and of expenses. the volumes, in higher was million. costs. The inflationary fuel, year personnel, expense, chemicals stock-based pressure levels the for to work sequential excluding higher of seen These were operational prior Turning XXXX. periods, fourth in by was increases and $XXX.X

XXXX. may but continue into to reduce for looking the cost believe be continues increased elevated inflationary to driven levels There for pressures and expense, safely the costs our monitoring are We competition that ways services. by

From could service we million. the in in well first We in lower of XXXX, were safety demand of past pricing. both XXXX. macro higher benefit believe commodity continue three of the supply But offshore pressures across a valve higher higher the offshore that overall a level, services and had Both due chain. the two for to saw from Gabon workovers driving the across $X.X providers replacement. number years, no performed quarters two with of workovers in we decrease the we one a is required costs quarter as fourth industry. the We inflationary supply the in the Over workovers

to Etame XH and well, result We an a The second restart restore production ESP base of lower was offline to upper went ESP restore restore to the to the or which was were production enabled on the ESP able failure that well as production in to QX production. VAALCO at supporting upper Southeast the Etame.

had contract more continue a produce This we charge million. were from XXXX, FPSO Nautipa to producing XXXX. these allowed than quarter original the to similar no guided the had onetime QX. and transition we FPSO to to of costs funded incurred $X.X costs we us demobilization After allowed to third the of the costs previously FSO. related term abandonment the of In barrels beyond retire into fourth us for expenses cash fund. the onetime incurred These in year-end, were There the as quarter were the the

which amortization Depreciation, and of depletable costs higher XXXX, with Egypt XXXX. depletion XXXX due field depletion acquisition. to the quarter higher well fair ended TransGlobe to amortization the the to compared is December both months FSO as with following as reconfiguration associated expense the the and three value of increased up million of step the depreciation, than to associated Canada DD&A than in periods The expense million and fourth increase the XX, higher was million, $X.X of for $X $XX.X third and quarter in

periods expense administrative with million and million quarter $X negative The XXXX operational driven to compensation primarily in projects. was increase third stock-based for a of the by large corporate million the expense, fourth decrease which percentage XXXX. XXXX, General involving a prior quarter high decreased charged of to a realized a to $X.X majority fourth in compared the $X.X and quarter of costs resources, in compared of excluding projects

the stock-based This negative months expense $X million expense compensation and current quarter three expense of year a was with noncash of is $X.X full for for G&A for And a tax fourth year of was XXXX. a the decrease XX% costs, XXXX tax it deferred full G&A million. comprised compensation, XX, million, the $X.X tax XXXX, $X.X XXXX, compared excluding million. For of ended was a the XXXX, the full million. $X.X of December year $X.X million. was expense stock-based Income

occurred barrels From an availability a on paid in of through net Gabonese due Canada That in going cash using the accrued We Egypt. is payable tax will December is losses. for the the barrels actual their for pricing. Gabon time XXXX. then annual The of in they profit operating at on both and adjust tax oil standpoint, in estimated to our quarterly during lifting No lifting. value year cost quarter end lift the the cash based pricing the taxes We government the the the only lifting takes tax in occurs.

The in it outflow current working an barrels. impacts from settled impacts cash year, taking of the This working extending Then up during our we why recap, by December tax was state liability to which we capital the liability when it's the capital. payables. their statement. settle, flow build the on overall akin is cash To operations

a We recent continue very trade at paying debt around strong in and yield double what stock a is our which we a of rate in we expense December the million, despite a free. an to XXXX, comprised $XX.X Gabon million XX.X%. The was ended tax adjusted of deferred than XXXX. of rate and Income expense EBITDAX low being PSC EBITDAX tax was multiple tax $XXX.X of in XXXX, of expense of tax to million. a generated for effective generated With XXst For $XX.X more year price current $X.XX, compared in the million dividend XX.X% tax $XX.X year of

should XXXX, TransGlobe combination, on commodity we a in depending the in see with adjusted step-up Additionally, prices. EBITDAX

about much now reason that that excellent to increased very opportunity truly attractive than undervalued an implies Our our higher companies buy cash cap should of a excited market be is we right balance. investment that are shares our our to and trading share and discount buyback multiple at We value common that at program. similar-sized we believe a another a we're are We intrinsic is believe their enjoy.

our the of XXXX, of XX, million. had September and year breakdown had $X December lifting, provided of from costs to costs. in were deck. events the settled the singular in acquisition TransGlobe which the date source for completion-related cash balance supplementary million of state annual million XXth use fourth only had and unrestricted quarter. $XX is cash A with occurred the completion together VAALCO the liability At in This, of $XX we tax that

XX, Lifted of barrels XXst working through million grew compared accounts at receivable. million December inclusion negative sales were December, successfully outstanding XX, outstanding $XX Receivables in were cargo TransGlobe sales a generally at QX, and grew had September for million with Egypt of with were with the a only offshore. export is December XXXX. We provided February with the $XX cargoes. capital in of Adjusted EGPC $XX at There direct September XXXX, $XX.X to we in invoices. via XXXX. XXX,XXX and paid Monetization million

has million approximately payment this In with of QX. have and companies addition, TGA of to via $X in per $X EGPC successfully due to cash $XX a sister million million in the drilling campaign Historically, XXXX commencing QX, managed pay this payment for we annual $XX as payment expenditure our historically, provided month was Again, as a through had offset. via commitment we but per concession, part annum cash a February achieved modernization in not offsets. five the to of an and merged were years million

that's accounts Canadian was again, December, collected $X.X collected million, Gabon was in for receivable million for and since in accounts January. receivable and And since $X.X January.

Teli where backdated changed $XX the lease with to EGPC Nautipa collection. approximately finance other the FSO assets the have with items Other work assets balance on lease of completion replacement assets within FPSO contract of continue and the entitlement out of the with worth Right-of-use are with of hold million operating coming highlighting we EGPC the receivable sheet and assets.

revolving loan VAALCO X, the TransGlobe on At Branches. of to closing extending there assumed the exit existing an we the January decided we with Treasury merger, completely. conjunction time In which the with And repaid. funds, facility were facility merger, XXXX, Alberta

our with current to banking work include expand our group to continue potentially and will incorporate We to facility TransGlobe assets. the

continue has to case available our and no utilize are the debt for the additional to of third build opportunities XXXX, we been quarter to facilities accretive As since carrying value. our acquisition

acquisitions, full an FSO XXXX-XXXX associated cash the on million well net and Canada. expenditures $XXX.X in accrual drilling the on basis related capital were the million excluding year a as program, with drilling on expenditures, and basis. $XXX.X to costs field activity These XXXX, Egypt Etame as reconfiguration conversion For totaled primarily the

share XXXX, $X.XXXX cash in XXXX. to per XXXX about $X.X dividends common million total QX in per equates quarterly share a for That of paid In shareholders to beginning through of VAALCO cash in $X.XX returned dividends annually.

doubling $X.XX annually. quarterly share nearly addition, for the XXXX. Board XXXX, on record was XXXX, March stockholders paid business on per The In share of the to QX XXXX March or approved XX, the of at dividend XX, dividend close to $X.XXXX per

previously, base as stated a acquisition. and is result result of dividend our asset ability direct As TransGlobe cash of the flow generation a growing the increased

November has in up of about stock share the shares. that $X.X buyback program million. a Through Board outstanding X.XX XXXX, worth or million purchase aggregate to repurchased of provides Additionally, $XX for a an approved XXXX, of shares of VAALCO currently March XX, common million total

XXXX and deck. October on have the XXXX guidance completion both QX of TransGlobe acquisition are year guidance the incorporated on XX, all we our supplemental into our costs assets XXXX, and on full available With forward the moving

production production all As represents our royalties barrels. working a in and net interest reminder, with interest of realized working between difference taken and or interest. net The we interest show paid revenue

our of XX,XXX and oil XXXX be day. per For company, NRI BOE to equivalent we per interest the QX XX,XXX barrels and are XX,XXX between and between production working total forecasting XX,XXX on day

per BOE X,XXX between Canada Gabon asset, by NRI X,XXX to X,XXX production to and NRI between between per X,XXX Egypt we're be BOE and BOE at be Looking per X,XXX and X,XXX and day. NRI be to day; day; expecting

we are XXXX, XX,XXX and to BOE be BOE forecasting XX,XXX company per XX,XXX production year between our between WI XX,XXX day full and the NRI day. per For total

production X,XXX asset, between Gabon day. X,XXX and to and be at to and be Looking are per NRI by Canada expecting per we and NRI NRI to per day; X,XXX Egypt BOE day; X,XXX between be BOE between X,XXX X,XXX BOE

case. XXXX, full For sales the But be our in not assuming our production. for the line year we was quarter, first with will the this are

our because were QX March shifted lifting in into April. Gabon will You sales production that than notice from lower

We lifting oil have of early in of barrels about XXX,XXX just this April. completed

for XXXX. the cost to first quarter Turning

between excluding We per $XX absolute $XX working $XX of and million on basis. on million oil to workover barrel between equivalent stock compensation expect production interest or be expense, an and basis $XX.XX a and

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

Our between for the million. expected $X.X is combined cash company and to be G&A $X.X million

For stock compensation the to on an and between $XX and $XX basis, full year excluding workover we production or $XXX be and million absolute per expense, offshore million between BOE. $XXX XXXX, expect

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

company be combined $XX and to the Our cash G&A between million. million is expected $XX for

Finally, $XX XXXX, CapEx are looking first we and CapEx and for of the million of quarter at million $XX forecasting spend. between

between year focused is million. XXXX, Canada. and program drilling and $XX we For $XX Egypt in the million are forecasting In full XXXX, completion and our

long In future addition, we some lead capital. Gabon have drilling in the maintenance items and campaign for some

maintenance our is with XXXX for XX% the items earmarked XX% long capital. of between Egypt, Canada, Approximately and capital lead remaining split

capital target Equatorial at development Venus in assessing any EG associated does half planned capital XXXX more the to which and for be include first not in first P, forecast. we full are XXXX Egypt. wells of is of with can and Guinea the seen production We XXXX. information drill wells. Block needs year through from to for weighted to have our capital we timeline are have we compared and associated will XXXX EG but with the move planning amount as And with in X This plan the guidance the discovery in XX a in Canada, XX Also, spending between our X QX we

full guidance in first XXXX slide website. on and our supplemental quarter deck can the year You see

slide the a the we areas a netbacks is presentation There of before break added costs that out to gas. each pricing cash flow for cash and natural and liquids also the by netback we've to free netback company major realized changes. a broken shows different working where CapEx total out Additionally, a approximately blended capital

it based Gabon Brent on a with the Traditionally, dated sold was and One is differential overall, a that costs a shown But of differential. premium in sometimes was a discount. sometimes negligible. VAALCO

profitability sold natural off Gara which discount of which Blend, in the they Egypt, at NGLs, are marked We're pricing company clarity and the crude. that producing and additional that our is the based different of at of Canadian hoping to have Brent and to quality with of will for provide a information generally we Now market discount discount in Ras further oil, gas we're the in. areas this all on Also a better trade total a transparency scenarios.

With over the George. back call that, I will turn now to

George Maxwell

Ron. Thanks,

companies, portfolio. completed that VAALCO. scale, XXXX As additional We of cash and very creating derisked year successful all-equity size, flow, an diversity and you two a was TransGlobe and undervalued provides combination a heard, VAALCO for more us geographical transformative

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

Block approval the operational projects We and negotiating and successfully for XP full proved XXX% at developed value at year-end XXX% XX of comprehensive approval to Canada XP of Etame CPR compared of P the current $XXX documents Our in campaigns oil cap million Gabon, years in drilling and nearly received equivalent. to invested a increased our around NPV at Equatorial million field and the XX.X reserves conversion equivalent government to Guinea the million. barrels final and from most reserves reconfiguration. our and by for the one $XXX the completed increased CPR Venus discovery are partners. barrels POD XXXX oil of complex in FSO market for and with million We is XX.X Egypt The XX

the share dividend which have the to XXXX, first program, buybacks. doubled million $X.X buyback for while the also nearly March shareholders $XX dividend a million we in program six implemented we in of that through first ever returned months We And began out XX. implementing paid the VAALCO and XXXX, And through QX program.

us our it out as during governed sets even that blackout windows by Our allows buy plan shares to are a buybacks XX-Xb plan for buybacks. the

been blackout $XX oil were point August prices buyback much also we I a December commitment stress that and we XXXX made XXXX. have like since and in higher, in We share to communicated when oil have of the to the that buyback would commitment. period tested out

that to below continued and cash a stock is $XX level our buy good of given we believe flow. back use have We undervalued the the stock oil

we We're shareholders, delivering an on what we to we as committed and to and market are XXXX. position enviable in enter our the

simple: share maximize for XXXX, profile look Our XXXX, shareholders, cash increase the In year. for lower to base and and efficiently, build forecasted opportunities. guidance prudently to our In significantly value to through million spend obligations, allow our $XX be and $XX will drilling are forecasting is existing range and above $XX about shareholders to in flow and The generated and returned cash build for plan future are we up for should accretive calls our strategy a return is which meaningful operate development. million dividends million our to campaigns the asset CapEx invest XXXX capital reserve us throughout buybacks. a over

potential In will to return enhance evaluating to as shareholders opportunities. or look addition, the well accretive accelerate we as

programs towards the back of Egypt of majority obligations show projections will XXXX Canada and cash XXXX weighted the half our half in are generation in above capital weighted the the because our year. However, first our of that current the for be

of and value We deliver to will long-term are Thank remain superior VAALCO confident future our the very you. continue shareholders. excited for to that we

that, we with are And questions. operator, ready to take

Operator

come Auctus first session. now Stephane And question from Instructions] [Operator question-and-answer will begin Advisors. will our We Foucaud the with here

Stephane Foucaud

moving follow-up for some Ron. balance of trying with on I'm reconcile the sheet to capital. on the working visibility Thanks have that. part comments some the that the you I made,

income So great. confirm -- sheet million, is that, accrued there could $XX is is of think you looking which a ranks referring in Egypt, tax about that Is be liability XX balance $XX receivable that the I to Then mostly the the big currently at foreign million talked million. has liabilities. would

mostly in but you confirm much? it there finance some operating be And whether could And lastly, That if has the lease, it's that why be would could CapEx, great. are think liabilities, jump so you noncurrent would confirm reason? that, jumped or it's great. I if the in

Ron Bain

to can for of I on you one nothing think think I the balance it's a Hi, the taxes. -- those. That's take you're Yes, Stephane. referring I'll It's -- I way above. foreign Thank line that. just is other net with do line the income -- sheet. to the each

$XX composition balance. The entitlement does million of other that include in the backdated the net

is million I $XX stated that particular on within that's the As balance. call, that roughly about

there. number Looking liabilities, through of accrued the there's a things different in

that the quite TransGlobe and because of doubling taken payables at in high of year. the we've accrued your is end company. size the the One, got virtually You've

capital beginning accruals go up at it. we out the payables There's So got of of accrued end the gone with which our the along XXXX. that's in expenditure, year

went about we from that think year. the previous I [$XX million] where up were

got got buildup mechanical always You've the year, or basically wages a the compensation relation year. of in -- the at and during accrued bonuses the costs. PTO end to higher you've of part That's any

or also for current Egypt, which million. $XX liability the about within the for approximately course, got modernization there, of the we've is payment current And

the there are take liability you things, in that $XX those in the big section. that we million those as So have increases the up take you to

term through and both that put GAAP the we've mean taken onto consideration that in to look finance there lease the obviously with have got We from -- the that XX-plus it in. Nautipa lease Teli liability years was X a balance is we becomes X, plus that operating there at taken and time, you an had options. and leases, And we live for been U.S. is into at the I before. yes. point lease. finance had sheet. years. that the we work in The The of standard, When obviously a asset X-year And right-of-use we went perspective, a October. That's asset. It's

So through lease you've got least coming the the contract got over will finance X-year reducing there last drivers the basically life. for in really tally, the its be that and Nautipa it main was new the in, And operating off, lease got period. at then as years leases, the going that's and the which few you've for

Stephane Foucaud

is payable, about the which the So of what's as this follow-up account as How million. split part XX? between my back the I'm the -- do what to And for other liability, coming would -- current you -- accrued? question, be for $XX in

Ron Bain

Yes.

Stephane Foucaud

part and what over might or guidance, when the understand let payment that at from, to coming I and CapEx to doesn't goes to capital it? trying me some OpEx -- guidance I'm of what double $XX not, I be last explain million? for -- working CapEx account of I'm where what is is and the what top look into OpEx really guidance year on mean that this announced carry avoid the within understand counting payable, trying comes between

Ron Bain

Yes.

Okay.

So of extent obviously, $XX that's million that the and with the Liabilities accounts accrued payables about got million got million. areas. sitting another then which again to XX between down in you've roughly that between $XX and line are capital accruals, separate the expenditure, the CapEx Others. invoices and in is of we've the section And in Accrued that $XX But all in different million that's particular

again, But the you've Stephane. million in, million, -- for should I million be XX that us, So a think of doubled timing. that million about would size between Traditionally, XX virtually and doubled XX would been we've XX XX got somewhere in million mark say is you probably running with in degree that's total. coming TransGlobe because

going think So million million will the balance there's count that of unwind. year. is I That in traditionally -- period-on-period. and end increase think Stephane between overall But I it's certainly would XX to it's reverse. somewhere extent the full the nothing at see don't do I an to XX that

$X crude by of of earlier, by in course, element that in an then, stated you're as offset will million There about QX. unwind? timing QX the there. talking was or wages, Is we The $X of million paid And it an payment, modernization EGPC. increase be

basically, receivables $XX against had we EGPC. had settled that liability with we So million that that we've

the in will out definitely you? help that Does period. move So that

Stephane Foucaud

Yes.

Operator

Jeff from will question come next Robertson with Tower Water Research. Our

Jeffrey Robertson

maybe a VAALCO's bit talk incremental different what And to terms current talked acquisition the been year which kind about you might you Can of a VAALCO with as what TransGlobe with times in opposed cycle for looking about George, little lives. countries acquisition acquisitions. XXXX, its of an more profile project added in portfolio ago? you in what characteristics fit to generally two have of the

George Maxwell

of -- to for and I That's where price exceedingly good mean it at acquisition. is particularly acquisition we've be our first Jeff. And investment PV-XX compelling, to little question, anything, valuation over XP our before more of in stock buyback and the us bit with mentioned into million, reserve got a stock foremost, Yes. as large a a go consider portfolio $XXX the I go has action moment. earlier, a to we to really

the behind for the the longer thing behind a the of second stream. And life and reserve acquisition was drive revenue the was drive TransGlobe part company. and derisking twofold. platform But the that was base, diversification One so the we have

start So we're immediately into the the producing are will looking foremost, revenue that a assets. going moment, are when assets at cash to the backyard to looking first we new and contribute in for We're -- opportunities and we for that flow. at it's our the look market and country, unless in

to skill that, our assets fit that And set. in addition

a that, XX-year considerably skill of span increased XX, these onshore is has forward. to so with TransGlobe And lot to water the report of life we offshore. have as set we the have since well to driver expertise acquisition longevity ensure include around for TransGlobe our as Now similar a the reserves, shallow to

Jeffrey Robertson

of free from flow? less starts half growing 'XX first weighted you in therefore, sounds cash terms of with CapEx, production a year and that capital have And in cash of flow is in half the benefit impact and imply free that to the question, profile more the second it like the therefore, answer mentioned, that the 'XX Ron, production program you the capital to Egypt, and

Ron Bain

Yes. cash impact drilling with say I have the definitely seeing going on and an flow you're from on to some tangible production we're would underway, free QX that. already

to in very the modeling a half I you're the is to as we what say of Jeff, your So weighted first year, would you've stated. that much on correct, CapEx part got that it

generating half a half of of flow free year. the cash and that second the flow the will impacted lot by of from free first year cash So in the be

Operator

next Canaccord. Sharp our And question will come with Charlie from

Charlie Sharp

and gentlemen. the Appreciate good you, Thank presentation. Yes. morning,

production I a expense. on on Just if the really questions I two it. question, may, guess

XXX And range the lens you've to Firstly, expense. at secondly give the just to that assume applying geographically production production range, out can XXX production if related that range then approximate us million, the breakdown production million that production I turns of expense a looking I an a the expense? $XX indicated, is think it, of you on that barrel

production? presentation, And in partially the to XX, which so where production Or XX or just I comes are highlight to Is that from? other that to there where that related wonder factors? related you

Ron Bain

at think are for guidance I overall we production whole the When can assume same those. we be for sales I year. and the Okay, Charlie, take going the year, look to the

sales expense the basis. And actually year, production is a so most of done of a on barrel oil

So statistics calculate the they them, that's way models. are sales particular will it when the be effectively based those why look on you

I barrel XX%, to I XX%, cost in area, probably XX% be Egypt for slide, basically and look cost and say the the in a to XX% you just we The when extent, area, there. the on still those I going confirmation in When that the full I majority and at certain of Charlie. remaining XX, would part Canada, at that obviously, overall But Gabon. remaining guidance would to in costs. would obviously of I that operating between year probably look blended Egypt the is composition that's Canada. far, by they're that by put the basis, point the by somewhere overall of wait per guess that composition to, to a I netback XX would to I know

Charlie Sharp

I That's very helpful. And one small may. follow-up, if

progress documentation? them Can be little bit that on a another of update about You described some Guinea should just and QX. that terms you made there more as documentation you've in say indicated I think And Equatorial at in you to be details commercialize sort able you give it around some see in to what Venus as the you flesh least? the going that of plan at to the us QX, means, are of moment

George Maxwell

where plan the meetings can those on got a with meetings, outstanding whilst time some properly were or in been contract we relation we equity what of and other to not of our for off is partners and is historically percentages still number Well, were here looking plan had Okay. weeks that we've working say ago, with with issues. at government, signed In we the few Charlie. and Houston in plan to amendment I emanate. had development issues were some things, of few development excellent of One development in the two regards sharing production the we that and the to with approved. We QX one a that a

near were So we in joint amendments executed us then of to within the finalize agreement be the in forward the do remain those I expect amendments basically outstanding, these partners, allow had future. very move with government. two can't between the March the go PSC moment of to at details into those. we to amendments so and operating but executed But the Both outstanding

essentially of development, at looking topside gating the have drilling that criteria DSP each we the extended XXXX the went to plans When QX program a doing development of we we look lease of long peer through at of itself, the an and review from in through facilities. the

the So the complexity input currently -- of improve efficiency the of and the the development the to with optimizing peer reduce that the of both development. review we're

because be where in But the looking producers finalizing include and drilling looking and at it there moving them injector leaving drill the at economics relation the work same as of plan of Block when So opposed studies the drilling at do makes then as water with we'll two work there side. to to to may in we 'XX wells development XXXX, look in that up the majority the That the we time at top just are staggered -- coming the sense. the will rig P more for optimized. in all in the the

planned do phase real development will the for location So to complete in utilize detailed plan. -- to able and more of we in early then end the towards looking at and to to be we can 'XX survey the finalize We'll in development. the when timeline XXXX, for ensure mop -- engineering we will and I for year. and that the at rig we drilling our construction that wells this It us unit the is seabed XXXX, certainly look XXXX, what we're the program that locate activity the happen a expect drill Venus put same the on that

Charlie Sharp

That's terrific.

Operator

Tieton guest Bill more have with Dezellem take We one we with questions, time will and for questions Capital. from

Bill Dezellem

I have two questions.

spirit and than you would you originally question comment more with all, of of call, in X early expenses. that release know And an that is we more First guess the essence synergies to the additional Or of that, please you're your was thinking further you million anticipated? expect administrative TransGlobe for noted in of in the looking looking been I discuss the are really Was and million -- achieved about? the deliver comment? I there X be other has type should the with that beyond savings press

George Maxwell

how we're already at the expectation the these part Egypt the the look Bill, both of we're at when part further part and efficiencies second -- we and look Canada, let the we of I'll improve first synergies. we take of on synergies, in the take question, at I'll business, looking the the of operating Ron When operations.

been time -- the cycles. the of record look we when through campaign wells, drilling been we've the and two the of we've latter in we've time. moment Egypt, between cycle and the drilling in part in what doing majority in at the that hit complete the reductions reducing last We, QX at So last QX

Canada reduce comes and starting hookup. methodology Egypt. We're to cycle and we're and completion the same no drilling applying time operations with the greater So to between when efficiencies that more challenges to inside see much to it drill same

becomes So more to oil at have our much obviously efficient have earlier allows and us that much synergies, on capital the great time for a production spend. these

Ron Bain

Yes.

I as at the for the on the deck we mainly that we than got of looking million the we've on we vote, looking on think million right million part somewhere really synergies X That's of put fronts. G&A taking the term, were side Just investment short and back achieved well, when that X time shareholder component away. -- on between couple our Bill, G&A more X a the were

TransGlobe First we in the Toronto where listed listed London, only had of all, was not but too. situation in

with and those combine managed the So we get managed to we've listing particular to out of filings. local

TransGlobe TransGlobe we cost. based. UK saved a office, that mid-January. executives So were effectively business the All they considerable The basically were those left executives, on the

a got there we others we've of through, costs, worked very, We've to we had number on including not savings we've in that insurance had ATB that a managed for were very facility. their quickly. identified and both that cost targeting including -- the the duplicative they So of we and services There's when take out. we're -- professional those variety at look it, that different businesses, we're interest

So achieved. than more already X

and We're on be G&A tool now a point really focusing we're looking I where would view is we're think looking from an at we think future got functions. of will looking too. at improvements I I the itself back-office will ERP at we've in the systems, say, process, bring in near on control That or everyone system get efficiencies in would rather having can today. three same we four different which than our that so

what So target XXXX. build we that's and for

Bill Dezellem

production relative And what What's sands. is said more time well helpful. Egypt to the level? you you do -- are of And that what That's the the think XXHC line good terms wells Egypt, to you about a encountered that in Arta the normal had then some bring drilling on? in with in

George Maxwell

Okay. right The up clean now. well is on

in into look that really turn the a at had of we We're efficiencies in I down time but going So is end working we're of the interest When mean come basis. day a we is year. cycle -- the production until towards of making both XX% the I rate inside around improvement think flowing. on XX,XXX a QX and cleanup I done, completion least Egypt. on can't interest production changes on Egypt on basis at barrels working sorry, as gross already seeing the we a a the gross it

start improvement. do see to we So

in they turn facility, perform cycles at activities emptying the more into to looking we annually traditionally much these looking production get in QX. system We've reduce the these quarterly we storage are see in the Egypt. and that of how can efficiency out moving looked some at We at to we're that

from we're think to I that. So starting see and benefits --

venture look And cooperation. improvements at how considerable in we EGPC, When the partner the relationship between program. again, company there joint and in seeing we in the its we're execute

think of can I So we're we our that still hopeful in very Egypt. efficiencies continue is key the It focuses. to improve one

managing Ron talked the cash in earlier that situation Egypt. how heard we've been and You about

liquidity on -- that and going operators are make the other as dialogue. We and very statements that, through. regard we've focus a very keep that a the cash close position We Egypt around close difficulties country to in is seen

make will partners the to We moment, and operation the make is -- continue we our improvements and as interaction the investments. it as at remains the as long with the will

Bill Dezellem

what you total favorable being final then lack That's to of multiple TransGlobe it remarks that today components that be VAALCO that valuation? is amount in a to prepared leading your your -- are acquisition With And helpful. my that's being missing, or the you of question or spent time referencing of relative got fair remarks in said, think investors undervalued. whether do opening

George Maxwell

what discussed producer either market the London in But market, need at level African-focused we've always is or good of discount discuss. New the African a past, mean, traditionally, trades in an York the to West we a the discount. or question. That's I as

gives out? both towards confidence here Well, United the from goes it's in think in step to years big the reserves? the the giving with because the and have a made what the we've What's Where value that flow. you the and a we I are position can come three, market cash market been missing market missing? two, longevity. suture in analysts questions issues the is London today the of have number That four its that invest Where States, may

surety. more there forward lot through forward-looking with to The the Equatorial a at sheet puts that TransGlobe value that that ever is moment. acquisition, missing Guinea that our that acquisition been I into position market development -- puts provides And it the in Gabon, us XXXX balance than in before. addition the Equatorial has gives through have Guinea think in went in the The It position. we we've

that the a continue which for We significant can production in significant to lead XXXX, work people -- but don't we we've guided out. number a revenue guiding from in guide that to numbers and will to, itself EBITDAX we're to number

run sit continue we're that on you sheet. in Xx we I analysts equation, and that are to value sometimes So down less say step think and that our you're running EBITDAX, the values basically looking change than then at as emphasize these balance once for

Bill Dezellem

both. And a have Great. good weekend. Thank you

Operator

the any remarks. George our to conference session. like Maxwell And this back question-and-answer I'd turn to concludes for closing over

George Maxwell

earnings everyone to and XXXX we some our It's put where the in us for I'd a call. thank and hopefully, have color and been we've point. see like questions that also assisted our managed XXXX asked to to activities of ability some put from that listening given the around you. color XXXX the we've QX Thank lot around into listeners more delayed emphasize

I think clearly the has company transformed.

for regard numbers value, for in the ability just shareholders, value reserve to flow I in buybacks. appreciation you at that in ability potential and think with and that we dividends look our stock, to delivering our capital for our not generation, the base back but the when particularly also the today, talked ability and about future utilizing company for cash cash significant the

the to been commitment May also state that we clearly versus me its look sheet. value results. that QX continue that buyback state continue there our in do is in heard a contained stock we've is the our as be position will Again, to company balance comes blackout regard in sometime which and as talking in accelerate You soon closing period, about the perhaps the opportunity price out at will Well, the that. depressed remarks that with the to of to

everyone thank listening I today. for So

follow-up a conversation do As to of they every able Thank management. and shareholder, you in want every or want I that. have always with to and to the willing at get for Chris say very Al much. touch We're call, with if end

Operator

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

You may now disconnect your lines.

VAALCO Energy (EGY) 6 Apr 232022 Q4 Earnings call transcript