Earnings call transcript Q1 2023

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the VAALCO Energy First Quarter 2023 Conference Call. [Operator Instructions] This conference is being recorded, and a replay will be made available on the company's website following the call.

I would now like to turn the conference over to Chris Delange, Investor Relations Coordinator. Please go ahead.

Chris Delange

operator. you, Thank and conference everyone, VAALCO first Energy's Good welcome XXXX call. quarter morning, to cover George After will forward-looking the I statements, highlights with review Maxwell, along operational results. key CEO, our more CFO, then our review. Bain, Ron provide a in-depth will financial comments George your we questions. some take before will for then return closing

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

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

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

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

turn me George. the Let call over to

George Maxwell

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

year, We shorter. be today's will have our prepared pleasantly each of calls over had lot but the last in a to review comments

and of which built sheet our reporting transformational a more with company business combination a diversified TransGlobe, shareholder the stronger This base. and capital on optimizing plans growth VAALCO into fine-tuning to a of We focused drilling, production, now has balance with our integrating a future production have costs, made TransGlobe progress returns. as first are significant managing was combined allocating scale our following operations, quarter and and full

of saw working I would XX,XXX first key barrels a day equivalent quarterly basis. and production increase We some accomplishments interest like oil barrels NRI the of per to were equivalent for highlights to and oil a of point out XX,XXX or on the high-end of quarter. at XX%

You how compare you first year first grown production can production we XXX%. we have last truly see when with quarter year, are up quarter this

$X We million than QX, only generated to EBITDA, lower timing was despite pricing. sales million $XX.X which lower and adjusted in lifting realized due lower

debt. quarter-end grow from million which also balance cash generated fund at in cash our to us We $XX to allowed and CapEx million operations, XX.X with million still $XX.X in no

We also program. paid stock to our our quarterly common buyback by continued XX% dividend in increased through QX, which repurchase was and

With positive We second and quarter financially, Canada, four diversified VAALCO. assets as scale in momentum a across have to area. are and our enter substantially and XXXX, I grow size of Egypt, both will building detailing activity portfolio including operational each countries, we and Gabon, the Guinea, little of time we operationally Equatorial spend

spending the with largest where begin we of the Let's in have first amount quarter. capital Egypt,

extended this per lateral. of a minimal approximately well barrels The ever on of expect is first our recent drilling day flowing on Egypt, Egypt, we XXX Arta past, on well cleanup continue period X,XXX-foot wells and in focused which the to horizontal vertical drilling acreage. was well Nukhul at The across drilled. oil water, the an In are time. only We were opportunities in well horizontal included with our acreage for

We we wells for wells. drill well do XXXX as information or was the Egypt. drill initially to micro-seismic either initial additional the plan in horizontal future another well, lateral give we well and transaction We planned later Arta XXXX. the data refine to and to look additional and potentially closed. drilling going can will designed study before in the also horizontal results, as much us This techniques, evaluation We're horizontal collection use on which and before completion in

achieve in XX per we that days overall and performance XX drilling we with from We days results. be of and days wells XXXX. we believe the the average seeing On future production overall, believe changes we can for vertical well to days performance roughly significantly been days on to XX will now pleased had better we basis, very wells positive able to days, to are continue that very to XXXX an We completions overall well seeing. compared to which in wells the are as XX design the X a completions around make per XX drilling drill is and vertical faster future to moving economics,

QX, production After wells added over completing XXX required wells January One frac vertical and with work of in in well with we development XXXX. barrels five day. May day per end horizontal vertical the XXXX, nearly these very from decline the drilled rates. production cover QX a perform and the those optimization per and the wells conjunction well wells to early X,XXX Arta-XX of other in for of in additional our stimulation well at four oil at work oil continue well, excess barrels and completed of These wells production increasing

recently. two reviewing additional resulted were in time facilities We cost Egypt and that and the This effort changes in and meaningful meaningful enacted effort have have operations. spent

The back that production. a we oil per to improvement day relieve pressure, barrel and steps XXX bottlenecks which first in in is took resulted pressure

pipe of of of to potential on lines. the improving The and for prevent installation composites measures ability sites containment lines second well by to new improve stills increased with secondary old was and our replacement spoolable capture and use

make oil this record early a In daily XX,XXX move we a level that barrels uncontained will April, spills. towards had two-year over believe per significant Egypt. eliminating in We of day production of

XX part wells be drill this drilled expect completions to second to six of and continue the program our in XX XXXX Egypt We quarter. still and drilling about develop our wells to is program we significant in in Egypt Our to assets. as capital a of plan one year core

In XXXX December and online you wells, these but completions XXXX. Canada, delayed, recall, wells and drilled in January as late we several were came

two drilled additional the online first those in wells quarter, also were and brought We May. in wells

drilling QX our a lateral. later intention X-mile lateral of Our a X-mile wells overall laterals, move X.X-mile consisted a X-mile future drilling to improving longer to It economics and and is of with three exclusively the programs.

drilling If in cycle the frac times facility XP We an currently that drilling this lengths, our have believe are and combine and cycle we future both with pad our in we overall where Canada, economics evaluating lateral optimization, to impressive further and ways production materially working optimize Canada, base. times. improve intensity, shortening we can we opportunities resource on of

Turning to Gabon.

know, we you campaign quarter As of fourth drilling in completed our the XXXX-XXXX XXXX.

FSO in drilling details. campaign excellence, the Etame are quarter, the evaluating this efficiently decline, reconfiguration including and is complete have and Also and and summer, for to fourth our planning XXXX including completed production We operate we to uptime we this field to the allowing more while focusing locations we'll advise enhancement us and in next which campaign. project, minimize when at operational review more and next expect economically, drilling the currently market

performance end at quarter guidance. at first were lower of guidance, by high-end our the costs Etame production overall, of our saw our our the Overall, strong levels at driven production strong and

supply we higher FSO, We they but during the that costs offset are the and of our some industry inflationary have impact cost by been call. from pressures last seeing the savings new discussed partially from

more minor We for for in OpEx This have $X normally month a resulted reduced supply for within has has months. fuel per the for diesel work next some field. pipeline using us power which the gas period, underway, generation about temporary few adding the used Etame million

Our cost no guidance the need temporary reflects second year adjust production full saw quarter this increase, we production but guidance. to

on turn are as future VAALCO. potential Block Equatorial where a its that held with to discussion MMH a previously partners discovered offshore potential. productive we for working March Houston. undeveloped Guinea, interest well Equatorial additional another area and holds Guinea the In now XXXX, that P meetings me in and VAALCO as exploration in has resources, Let significant

relating finalized the we meetings, to these sustained which included contract. production-sharing P, the Block During for venous documents development multiple

in meetings we between finalization March, having documents PSC completed continue the the to towards the partners, documentation ministry. the our Following work of with

finalization forward and Venus in more project top overall detailed project, project with drilling of the our the of reducing moving objective the cost documentation development conjunction now the JOA size with partners. with review the a are subject the to We with of of

campaign lower Following which location to development overall detailed facilities water will and production also XXXX. the included identify the a and QX We're options activity prime building review, peer for QX mobilization options single facilities. the throughout all the costs. drilled for of and producers drilling of detailed a seabed survey detailed we Planned for the X reduce are through X a as injector costs drilling are considering X wells, evacuation

that move JOA impact documentation, Upon million million amount expenditures XXXX, $X into we guidance to of capital completion believe XXXX million. will for to our this $XX full-year of between the $XX not plan we but

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

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

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

thank our grow our of In value in that closing, production, shareholders. XXXX and plans. operate into VAALCO will exciting and lot continue help there hard-working team would moving and who a like to execute and I XXXX projects for to our developments are to continue reserves,

make of and We acquisition already continue the more wells, to meaningful capturing scale. size progress and have continue oil captured TransGlobe to synergies build towards

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

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

Ron Bain

and everyone. George, Thank good you, morning,

echoing look and by and our to value today George's XXXX adding Let we while continued our was year, positioned XX% but we the the quarter adjusted strategy, me EBITDAX about shareholders. as in This better million our this first performance. are of In to XXXX, we generated of the quarter XXXX. begin execute $XX.X slightly on And XX.X beyond, in to comments returning million. than less the of quarter fourth million up XX.X from first the of strong

from quarter related lower of declined quarter large Egypt Canada, and with of production and XXXX. first fourth to loss and the Revenue benefited volumes no derivatives lifting We delayed compared sales full in pricing. lower a realized the a from quarter to due the from essentially impact from had

income mainly $X.X quarter net the or fourth million and quarter reported with to diluted due lower decline share earnings million share in the in compared per of was pricing. $XX.X $X.XX This of XXXX, per volumes oil or realized in sales first XXXX. $X.XX We of

gain purchase to interest the expense we income was of Higher offset Other expense, taxes, million a costs. transaction expense $XX.X income million lease the increased bargain XXXX, of net other costs. mainly due quarter increased that FSO income during and fourth partially $X by recorded

the by XXXX, tax bargain During the monitor quarter it the the on a each during out related recorded year. higher first the to purchase regard that first our of certain million. $X.X we and original gain full-year assumptions effective rate period to then of for the position acquisition the year, we In reduced of project adjustment quarter tax based for balance transition the

this We in fourth forecasted be increase the are profit utilized. This that QX forecasting pool to is cost Gabonese when due government XXXX. our barrels fully Gabonese oil to quarter our the rate increases will tax in year's

rate. in income discusses transition tax share. oil million XXXX for After and and tax impact the affects deferred our net $X.X expense, adjusted QX or of a slide per on adjustment how that have our and cost $X.XX totaled profit period deck diluted for normalizing that accounts oil our the We investment

XXXX. reconfiguration benefited day, the for field of net quarter Egypt a well was production up the from quarter the first XXXX, running TransGlobe Production QX quarter acquisition XXX% occurred and XX, XX,XXX of the equivalent from having that the Canada on fourth and a in quarter up of barrels XXXX XX% as per from clearly from oil successful entire FSO quarter the and XX,XXX XXXX field full first of back per that of equivalent barrels XXXX. full increase in in for the of net as oil day the October and following increases closed from Gabon in We

from of barrels with Sales was million but fourth about XX%, up XX% XXXX, first the of down equivalent, quarter compared volumes in quarter. X.XX which QX XXXX were the oil

of have X, oil due barrel we Gabon planned XXXX delayed equivalent. weather If the XXX,XXX barrels a originally million lower conditions, NRI for mentioned gross last to our was QX listing these sales would As April adverse volumes. call, sales in sales, volumes resulted March been X.X were in XXXX until added during sales to which

lifting moved was We for on is the about from expect timing where between second quarter the per QX. equivalent slightly and first as fourth quarter in commodity to basis Realized QX oil cargo increase be being the but barrels quarter, quarter impacted This due Egypt, X% XX,XXX guidance day. is the the result total a XX,XXX quarter, Gabon a to to XXXX. lifting XX% than sales to total of below NRI and than the pricing of of production lower less in the first in timing

was it Gabon where only and will Egyptian and the While be commodity also gas natural production, pricing Brent driven Brent. or year natural trades we liquids, had in-line Gara to gas a including blended Ras price oil. versus prices point when oil oil blend, that past fallen, a tied with that the by have slightly to from like I'd out With ago above just Canadian

as in contracts our In deck, didn't yesterday regard new release since call. to earnings we and our any our hedging, last shown investment add in

to continue mitigate us commitment protect program will to hedging to and a We also our return. risk implement help shareholder to

via $XXX. colors, late through production summer floor price of upside have of around for a costless with percentage year We of an our of a $XX this protected

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

primarily and Turning at compared XXXX FSO the the was fourth and the related associated quarter lower Production decreased field for workovers due with lower a XX.X quarter conversion which the to guidance. costs costs to of of reconfiguration, our costs. $XX.X the million in of to compensation expense XXXX, completion volumes. expense, sales stock-based lower low-end the of Production excluding million, was first to

the expense a over a result We quarter, recorded $X.X in XXXX. totaled Workovers workover in offshore QX of million credit of million. XXXX $X.X in in first accruals

for lifting in QX planned. As lifting morning, due had our which delays we did having equipment field book the weather Gabon, we costs extra longer have marine than to to this due increase discussed in

We also in due personnel have to relation higher costs operating commodity-related cost and to inflation. year-on-year

safely weakened believe and We levels. continue inflation are driven reduce slow expense, into ways all XXXX, activity that costs unless further operating our to down levels and by monitoring looking for elevated cost will but prices

the two number supply past saw the Over years, across we service overall in the a of chain. providers decrease

that use the In is in also this will in but produced into believe at is XXXX, higher pipeline resolved natural have continue QX temporarily We higher these we pressures, diesel addition about work. with gas to will gas some resulting million be costs preventing the month. underway term. normal early near resulting QX usage, inflationary costs driving in the gas additional $X pipeline work of the completion This of Etame and in diesel of per

the with equivalent excluding The XXXX, the March fourth expense to stock-based first $XXX,XXX oil of expense, decreased XX.X administrative XXXX, DD&A for million, $X.X of XXXX. for of from about compared expenses sales was totaled up three XX, XX.X the X%, in a incurred year-end of million ended the million in and credit the fourth quarter primarily quarter XXXX. compensation which months since due per quarter volumes. barrel lower reflects of capital costs additional General XXXX, rate

fourth quarter to the operational that a of majority The high realized in resources, costs corporate increase percentage from period projects. charged which projects large benefited during of those a involving

associated higher audit. first range, with compared the non-cash XXX,XXX, XXXX XXXX quarter guidance the quarter. compensation of first G&A expense stock-based for within in with the fourth XXX,XXX G&A costs did our a include it was audit While negative was year-end quarter

million a provision expense $X.X is XXXX was tax deferred million. ended months Income current the and million three a tax and comprised of March XX.X XX.X expense tax of of for XX,

only Egypt. tax on in standpoint, Gabon is oil profit losses. barrels the cash payable paid tax cash net explained from and availability tax As is the of No to the previously, in both due operating a Canada,

government value We Gabonese for the tax the effective kind increased. through the We based most took estimated pricing the an annual recent the using last They earlier occurs. estimated will barrels year The their adjust lift listing has taxes during discussed time our takes they December. rate then the I actual listing. oil their cost quarterly the for pricing. accrued on of why in quarter-end lifting at

funded the million quarterly on In buybacks of position of flow [ph] $XX.X CapEx, at million all the first cash million. the and cash dividends capital and $XX while cash at compared at hand first end quarter, with grew XX.X to from XXXX. at our and capital our year-end with we Adjusted working year-end quarter-end [$XX.X share slightly XX at declined million] quarter XX.X to totaled million XXXX, working March

back where EGPC balance and dated to worth with entitlement assets $XX we work approximately the EGPC include continue million Other on other with hold items sheet highlighting closely receivable of collection.

third to been of since build As to facilities XXXX, have opportunities accretive debt case acquisition the has available recurring to bank credit for additional and utilize quarter the no continue value.

paid quarterly QX returned capital For net in in for That In to XXXX. million and programs These on shareholders Canada. a were total cash drilling $X.X million on share totaled through in an related per quarter, basis. XXXX, $X.XX [$X.XXXX] XX.X [ph] basis Egypt share our expenditures expenditures cash to to of primarily XX.X dividends equates the of first in beginning accrual million per a cash about dividends VAALCO and common XXXX annually.

the May yesterday, of In on annually. stockholders paid record on we for dividend And share June addition, XXXX, and XX. on same amount dividend share The quarterly to the to second dividend $X.XX for the announced $X.XXX XX, XXXX the was XXXX quarter doubling payable approved XX QX Board March nearly or per per of XXXX.

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

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

guidance. turn now to me Let

As taken interest we in year-end XXXX barrels. only discuss all between recent The a our and NRI report production, guidance. or difference full-year Since reminder, paid represents I production guidance and provided not our interest, working call, both QX working of during with we the we revenue net our interest. have changed royalties will

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

production be between X,XXX expecting of Looking asset, be NRI X,XXX are NRI day. equivalent barrels Gabon by X,XXX be oil between and of barrels per Egypt X,XXX to and per X,XXX we oil X,XXX to at Canada NRI of barrels day. to day and oil NRI per and between

For the the our second be March quarter XX,XXX barrels oil that are lifting of delayed to volumes XXX,XXX day, XXXX, benefit second will of sales quarter. expecting equivalent per the reflecting we to XX,XXX of barrels

lowering includes also this earlier, liftings discussed timing. due in Egypt I As to

Turning expect basis to working basis $XX.XX to basis. interest costs million XXXX, we on an or per a or excluding and between BOE production $XX.XX XX.X of BOE an the and and absolute workover on for be per XX and expense, between second on $XX quarter compensation between NRI stock million $XX

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

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

million the $XX still million be $XX we looking be Finally, between lower of range CapEx $XX XXXX, the spending and full-year are investment million. compared quarter to We're with forecasting in and and million. expecting capital the $XX modestly should quarter first at XXXX between for second

As our spend first the of on you is heavily QX QX our weighted half that XXXX. towards year capital this by spending total our forecast can capital see

program in drilling and Canada. is and XXXX, our focused In completions Egypt

of in maintenance have we future capital. XX% earmarked capital the Canada, maintenance and lead was Approximately campaign split remaining capital. for XXXX the items some for XX% our long long addition, some and with Gabon Egypt, In between lead drilling items,

XX we X X wells in to drill planned have XX and between Canada, wells to Egypt. We wells planning wells. in And are

shows second capital broken that on out deck and of out supplemental XXXX developed the point guidance included quarter quarter full-year also a before that quarter, at each by a in cash like the slide to cash a netback break-out to our presentation for see we where liquids we again the CapEx in netbacks and flow this company major our can natural reference. it last I'd areas costs slide the website. and and You netback blended realized There's approximate changes. total gas, working we've for different pricing, free

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

oil, are which Canadian all and a on that market have based sold of discount in. gas the we trade Now natural they NGLs, on

in we a Gara with marked Ras Egypt, the our of further Brent Also for which discount blend, generally of crude. quality are a off is discount to

our areas additional scenarios. to this that hoping a provide and very around being to producing recent EBITDAX, dividend pricing will company trade we our of bank low at price different at in despite debt are transparency profitability clarity yield With We paying information total free. stock strong and $X.XX, and better the of continue multiples

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

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

benefiting relatively stable to levels Overall, the year a that a start of the diverse to quarter and significant are long-term our more cash from flow invest we've us sustainability free with had allows in business. portfolio and with generate activity good

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

George Maxwell

Thanks, Ron.

sales flow start. position grew We $XX.X already. with buybacks all and increasing positively able XXXX while and to efforts cash dividends cash synergies of million. end CapEx, to results realized quarterly margins with our shows accomplished cash-on-hand have towards quarter generate strong adjusted slightly and continued this our is to heard were begun of and commodity which and the XXXX funding impact you've all strong off first the capturing As We EBITDAX, lower morning, our at of to a pricing, this share

We and cost quarterly are being projecting savings captured increased we additional continue expect in sales QX. to in XXXX,

we dividend Additionally, dividend quarterly remained remains payment, share to level. we In shareholders. focused doubled which returning and XXXX, the announced at the per have nearly our on value QX QX $X.XX

repurchase in buyback continued through program common to shares approved XXXX. the also We

the first shareholders we of the million Through through common to seven million return buybacks. months returned have program, approximately repurchased X.X and XX.X shares

We and debt growing and are delivering what we the on solid to in a our a to are shareholders, we committed balance. market no financial position and with cash

unchanged, invest look and remains and strategy prudently, base, operate maximize opportunities. increase, our shareholders, our efficiently, accretive return value Our to asset for

we In first down facilities significantly and ramped and focused we finished XXXX. drilling saw the The the capital our Canada and capital lower quarter, projects in heavily drilling half to spend weighted should But are have on the million quarter, $XX Egypt you spend as in Gabon, to in is in XXXX. allow build million the $XX first CapEx our us cash range of year. we meaningful of throughout profile last as forecasted mentioned

a to to obligations cash ongoing future above for pricing, generated commitment are on existing dividends drilling Based reserve at our current buybacks. strip is percentage our commodity projected current forecasting to shareholders through XXXX returning we are million This operating about of which up and build $XX share flow cash developments. a and shareholders. the demonstrates flow in for throughout campaigns significant our plans The our XXXX prices, significant cash our

as in the increases as P, grow Etame. the working and continue planning reserves. activity for Block evaluating partners well at campaign to Both at production plan are our venous exciting discovery development EG see in for the XXXX, with locations drilling on will in which next significant should We and

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

questions, part the social environmental to a and concerted reporting. and made ship, governance, fuel open point and our improving good I transparency commitment Before the awareness, corporate that like to of have we in call to as ESG addressing our I effort would out

groups. our with personnel organization study, responsibility key EST engineer materiality the engaging completed with XXXX, input by a key we stakeholder During for from led with across

global and created informed Working with framework the Accounting GRI the reported Sustainability an by external the an topics material SASB. VAALCO consultancy we Board, materiality which group, initiative, against ESG reporting Standards

adopted we and the task focus on framework response drive the climate climate-related on to opportunities. force disclosures, financial Additionally, TCFD, to change our of risks

We received In our our have has our established we was steps which to This that senior steering a our and significant of direction management decarbonization decarbonization approach. setting progress taken program, is objective developed a responsible reviewed which by accordance Board. with of reduction comprised to carbon efforts. for the our reduce footprint, emissions group, is

you. our The forward and scoped report currently recent the tab. of Early website found published XXXX. due Sustainability being report ESG be on was covers April are performance our and that Thank can progress I've updating ESG VAALCO's projects in available initiatives on stage look related key indicators under that is and in most we to mentioned Everything stakeholders annual in course. our

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

Operator

We question begin Please will Roth Capital. White Instructions] now first go [Operator the of is ahead. The session. from question-and-answer John

John White

split your that covered the Mr. Yes. CapEx between his completion Good morning. in and regions Bain – remarks. My question on was drilling three and about CapEx

So, to congratulations and back pass say the on the it I'll operator quarter.

Ron Bain

Thanks, John.

Operator

Advisors. The next Auctus from Stephane from Please go is question ahead. Foucaud

Stephane Foucaud

few morning, for Good as and questions my guys. Congratulations for well. A questions. me thanks taking

is again I'm apple. And the to The apple I'm whether with Egypt comparing first receivable. one see trying on and

had is, And QX, my have well in rate difference end recovery? Egypt receivable. [ph] and in [XXX it cost, total. the we first XXX at be about in I question. million about suggest we the of economics the payments including end would And think And million] million is of which of are QX, seems saying receivable. of XXX At horizontal December, receivable So, XX case that got the is you the That XX was million receivable you're and of vertical you that IP Egypt, will total million Egypt, terms you. between could second talk fantastic. in Thank my question for

Ron Bain

I that, of around first your understand Egypt, the on question It's liquidity Stephane. Ron if that here. I'll receivables for take part correctly. Thanks Okay. question and

think is, barrels receivables, $XX.X offshore. a thing is got EGPC in a trader. taken to dealing listed million of actually cargo country first out was we I the had involved worth That there. XXX,XXX QX, that and we and paid obviously, We're obviously mind with because, no there's which in bear of great

certainly regards obviously, for we that through QX. EGPC, heard are issues we see receivables some companies other not having, the With it of generally, to the but did

and of we $XX.X sales million, were sales domestic in Stephane. about And cash through directly offsets collections January Our QX $XX.X or about sold million.

through our QX. year-end So, receivable reduction from we actually a to in had

We ended $XX.X have $XX in million some – that on AR got backdated receivables we barrels liquidity cargo's ministry then, EGPC up trade That's discussions is color the to the you worth about of there. the the on we giving course, receivable, that. probably to with QX continue which million entitlement realize of QX based to and still with and in and

regards million are vertical wells the old – capital A is for guys used drilled in guys, the at million. to wells seeing jump VAALCO themselves around million, our obviously, George to offshore especially Egypt or who components, million. $XX But With on well about $X our typically $X one. under in being this can $XX are just vertical

that last obviously, lateral, the that six you some, $X probably the well Egypt. well again that well is The many drilled over fact the actually and globally that was providers time first lateral And that Arta seen our there's have just increases service of to a We in Egypt. coming million, long that issues chain beginning due drilled about the in costs at supply months, was operating not long QX, $X.X million. see in in we've the that

although day are you these of differentiation very per may So XXX wells costs. low looking return well wells. of the above of that's economic, about barrels such see coming barrels oil Because of out between internal XXX cost, These well discussions we're rates a XXX%. at

our for but we're again, The as a Egypt that position. quite crystallize the to inventory. happy economic have going to is criteria forward lifting on to those are up we in QX we continue So part in don't invest only export we and long as listing cash QX, in QX continue at building negative

exit QX will as have inventory push cargo. enough We QX to for we a

Stephane Foucaud

with And regards you. to... Thank

George Maxwell

wells. the first the – vertical it's we've to drilling significant on in the seen I Arta the the two numbers XXX particular on add – in well Egypt. in is earlier production still in a that currently complexity Egypt, as Nukhul cleanup. We've improvements points, not call, in just drilling considerable Arta-XX, just the in campaign, the well, mentioned from and success campaign within Obviously, particularly producing around is day barrels I'll seen

length that cleanup the So, we we next expect few of low of – well. also lateral, to because we months. a it rate decline the the continue that over expect on very But

on now times that to or that So, drilling well that I cycle and When we well it's the at drill took we lateral, drill campaign. historic but a are well, pushing complete, to economic Egypt we're the is from a look – still of between difficult mean time to traditional efficiencies maximum in due the the to the really achieving well position the and complete. the just was it very some it

So, more relatively well, actually even X the X.X every to though we're we're month. driving wells costs because about million it's drilling those low, are basically per million, complete costs managing X.X

through getting program So, that the very, staying do quickly drilling very gains in getting CapEx, all within and currently to we the CapEx we're QX. comfortably

Stephane Foucaud

you. Thank Great.

Operator

Please The of Sharp Canaccord. ahead. next question Charlie go is from

Charlie Sharp

the key you. if before very internal I that of capital say, over in next the in a level, Thank year? and update again Gabon return to the terms gentlemen. point to morning need Guinea of the bed and good expenditure you thank rising next months, sort high Equatorial operations. you – six external the let's and much thoughts can appreciate Yes, and you numbers I just QX highlight for next wonder

George Maxwell

that that for partly I question, missed Was the key Guinea Equatorial Charlie. and Gabon, points?

Charlie Sharp

Yes.

Just place internally and key of look that the like next you sort year in you high-level what need exactly externally will before in know to [indiscernible]? points get

George Maxwell

Okay.

this some from wells, pan had me leg reference the latter two campaign a the first wells let well well, very Gabon. Dentale the sands So, Gamba We the there. from didn't out of Gamba on strong for had And on mixed start modeled we it we standpoint. fourth performance the didn't drilling Dentale in well then success find and the then from – the the two results. exploration a obviously, with Obviously, year, in had sands. on as the on had And last bag a third we

for are these we for addition opportunities seismic to drilling new the step-out taken additional look the [indiscernible]. in To in of risk step and XXXX continue the in factors what either the to acquired campaign was all at fill Gamba the have accelerants, also we are So, points reduced overall taking to targets the in around and data campaign geological Etame analysis that risk and the interpreted at XXXX. looking but where opportunities opportunities for we

prospects and for or six be the key next few So, for the us is place subsurface lower increase months, are for the we the to to as we analysis of production the geological going and so XXXX, for around the campaign success. the mapping [indiscernible] is where to well Etame one the put together XXXX looking the risk and field, the and key analysis understand months continuing drilling last at increase reason the

So the in and a that's Gabon the structure dive the key risk now is the focus subsurface right deep into profile. really

would the about the documentation, the of CapEx to that With and I finalization in the mentioned as we've studies also on kicking the six call, meetings. do you and regard of got external production – the to seven completion documentation mentioned to move Guinea, the and TCM summer, of or and documents that agreeing free earlier off that's anticipate completed get brought mentioned be Equatorial we with call, upcoming be Once point on finalizing that the partners. on of element that a – the detailed with which we I to sitting one partners our so will are the down into by

and with rig area the the, a mention, of three for shelf we'll that. of in come obviously And top the doing survey of work location doing optimizing that side rather with side the effectiveness be campaign within wells looking the practical through that the economic of conducting a the year out the venous around piece seabed schedule top dedicated program facility. going as I the that and analysis at internal this is And efficiencies side work for is than moving the

Charlie Sharp

Thank great. That’s you.

Operator

Tower of Please next Robertson question is The from go Research. Water Jeff ahead.

Jeff Robertson

on talk for to from you just operations X mean the the what could you that improve that in benefits there production? showed how trying Slide to deck, in Egypt George, field about efforts. is of much lifting optimization more you do and seen all heavy production have Can

George Maxwell

and that mean the very done amount of I of a period blockages the show together facilities about Egypt. reducing a Ministry production the got will and Yes. after locations. mentioned, we've – EGPC to considerable we the and presentation eliminating back time, in field on We've the work production short the both scenario, in a in putting be and were for in before and I as locations pressure

we're done mentioned, on benefits drilling when So, in the the heavy view know And But stores lifting right think, look that. and my a [ph]. really the I think of room lot optimization, optimization, production we've focused the of lift beside [Ron] relation now production is, optimization. I at reaping to I I on as the heavy and in we're I

items hundred well is South, the a So, looking can which to [has on field. one barrels we're we're if plans. our But bring we regard lot to production, a reducing workover [ph] the of back see at other few the well] in day drilling per that that

into as second key elements a first the position in operations the that the and been with been other That's feeling the field there inside preventing big CSG earlier, through opportunity program is quarter. reducing us on, that I going the for improve the we spills. mentioned of we've the working uncontained for The field quarter and

if do But add pass we I'll to think color more any to Ron, to that he over operation. have still wants to I there.

Ron Bain

Yes. for think, mean, the projects. the stage I Thanks, George. put – we've we've big of of I lot sort set Yes, a

still I I items guess, There think provide, results and that we're inventory around going guess, positive at, that will is specifically us I forward. downtime, large, looking impact pipeline of a smaller covered and polishing make we oil can I the But impact other electrification a most think think that significant integrity, you've facility of integrity, emissions, crude ones on going off. forward. we

Jeff Robertson

talked improving outcome about efficiency I on an operating Canada, that you impact capital have think designs think program? including pad facilities. about In XXXX and well, work how a of Will you the all as

George Maxwell

happen we between we figure to we need try have conditions time Well, our Canada. within lines I'll definitely. let that Ron reduce and in But a minute. need always complete and said jump existing most in that the we in ensure drilling to that out environmental and

same we end. drill cycle in the how So, months suspended wells on have basically do now complete and and for

in QX is QX those I into and seen improvement a we've significant think what times. cycle in coming

were earlier a online we've Canada mentioned above delayed the on moment. And the production barrels call, the to seen online As in well on got at wells basis wells XXXX come in a BOE we've where in to we've two coming point day two X,XXX from the seen that another QX. QX

level production record if So for not almost, operation. a that

So, we are driving those efficiencies.

production. We dividends the Canada with are and the increased times, see both reducing those are Egypt in to we in starting cycle and

So, we've Anything when there be. QX production would to want plan the actually and to levels that, to add our right at look that in Ron? we we're up position where we guidance achieved, you

Ron Bain

in Canada I the it's have weather. mentioned George, of able to technology mean, long I is as those and and to a think key time. infrastructure, you the sense is, times. the times What and Yes. cycle causes surrounding to, that access I predominantly Canada already, engage the the the a guess, technology cycle unique being you services and is lot

building fits those that, breakup a spring window the faster guess, your that and I allows times. you in And weather cycle are these program the in fall. into that periods it's So,

horizontals, on drilling be long the Canadian is an And drilling laterals, to needs the drilling when long focus to horizontals. not oilfield perspective, a short segment our From so comes it experienced laterals. again,

so So, that. geared and the – you've up versus got is it thing do to X.X-mile drilling laterals you've place work doing other the at laterals X-mile the facilities already pre-facility and of got when ahead already tie comes pipelines in to in, time that we're then the campaign the looking

Canada make successful. will that things is those of combination a it's So,

Jeff Robertson

Thank you.

Operator

one for have more We person. time questions from

comes question Dezellem Bill Tieton Capital. of from ahead. go Next Please

Bill Dezellem

Thank you. That’s Capital. Tieton

to need me was that this give you a timing move missing of tele what was consistent the I the quarter? the little liftings. a going that, with am thinking or start clarification lot in Let because different was I the FSO What more to that lifting. I

Ron Bain

George, one I you want. that could take if

George Maxwell

go No, fine. That's Yes. ahead.

Ron Bain

Yes.

target had I of segment we impact, liftings generally, scheduled the West months, winter safely. more lifting our So the the heavy in tanker roughly to X vessels for that Africa, guess, you And adjacent we to for lot And to a currents see to late in every Gabon March. X of particularly a weeks. ability be the

was for with we due I think basically to March. consecutive XXth, around unable five the or of were the lifting. that six and tanker proceed days actually And XXth to it currents, heavy hook-up

So, what X. think, lifting that happened I April April, into is early moved got

continue had FSO, So we delayed miss has the the the producing days, it the it did what contrary FPSO now. six additional previously was with first cutoff. ability but about the by due is have to The cargo into we to to FSO that volume quarter

been have of shut-in at we tank had in we probably normally, the the to lifting because because tops So, would had delayed. would have been past,

of now volume, cargo, then we happens continue the a is sale it can delayed cargo of our couple of that days, and production. but the it's impact additional because if or the producing doesn't movement delayed, What the it's

Bill Dezellem

helpful. really That's Sure.

was minimize weather. in way such FSO the the impact also a was impression my it to So, the of that positioned

So, that, you exactly implication really, really is wasn't find what strong were the originally did positioning that that hoped the for? currents you or maybe

George Maxwell

is a the as between with the guess, call guess most I time. positioning Well, currents the to vessel mitigate, I of the any trying of FSO judgment for

are of of current goes sort year the times in, XXX degrees there's January, Starting swing that way. current swing in March a massive So, February, April, Gabon. other when we that the know generally

location gives odds best the you a sort mooring come to trying liftings that location it's of with time. the on most So, up for a and

currents. So, No that issues time. days It's to started of underway. for on had another ago. lifting instance, It with scheduled was couple we a start

set three the it really handle lifting or the so so do you can you you most that those do up can up do of So, most liftings only it's guaranteed your vessel set of – time. your

Bill Dezellem

just of mother out other X for prepared a X and be months the little is going nature. on more XX to well really So,

George Maxwell

impacts with capacity quarter-to-quarter now actually from in the production, sales the FSO, end a if doesn't And quarter our just impact we have the it's additional Exactly. it lifting.

Bill Dezellem

didn't And Well, being what that the discuss an really Etame? was actually of line you I goal understand would helpful. project? Great. end that's field done fully and gas work then the being that's done ultimately,

George Maxwell

Sure.

process. during runs small or power from leak the a there's also identified intervention. that supplying Etame SEENT small fuel the require So, routine line We, inspections low-pressure to Etame is a generation diver FSO new the but nevertheless, flange our the SEENT platform, It's for And a Etame that of adjacent to up what will boiler supplies platform. to one leak, and league gas it flange from picked a fuel leak. very That platform a the we've platform gas, gas now as to flange service.

of are at this some point, boilers, the fuel that seeing. the the gas that. we're means fuel not [boats] because trying in scoping of or mitigate in tele to The work operators the out some is having of tie other and [ph] we're cost that with and those in we're that's impact area essentially cost So, to essentially the the burning additional available FSO that liquid the when boats with are that the obviously additional

Bill Dezellem

– If recall develop. partner potential one adjacent on new conjunction may. correctly, What Etame with to if Thank that? is update field with looking you. I then a I in helpful. all the That's you question, final at to were And a

George Maxwell

a been next months. has going were soon, certainly that Bill, did Panoro. is on that XX We actually in Gabonese partners, some hopeful data, in with of – BWE we The the on with conjunction it XX, because our have But are are relatively government the hopeful this months. guess good QX. I and in which we one, arriving some is discussions for hopeful few conclusion now

the been this adjacent the than G&A, six six that It Etame block do with we with there more last encouraged has is previous very seven in there say block progression key been to in has and to are to months. weeks or period

some next more time movement see we'll hopefully, report we So, it. the

Bill Dezellem

is Gabonese issue with government the George, So the partners? to the opposed as amongst

George Maxwell

– directly issues partners between the directly them met – I've government. the issues the and partners the and Gabonese directly DTH of the one with with no there's who

Bill Dezellem

Great. Thank you both.

Operator

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

George Maxwell

back Well, we've commodity the we on QX. got track We've had can seen in made I and sensitivity made the QX, strong in the much, very side performance to that a operator. pricing, that Difficulty] with on commitments. dividend however, those around we've for above you some maintained market production have regard very Thank because buyback which the levels [Technical to regard commodity we we to prices remained say

performance At that restricted The at the to conducting remain to and has repurchase as is maximize our our buyback period, it albeit are in adjust we undervalued stock addressing blackout price wrestle we're to not stock performance we but have these strong, for company's the we acknowledge that, position. will operating have mentioned, when opportunity Ron been on something how looking something share at is we that's with strong, the we levers and program. moment, we be have look accurately something to the we how that and

see contact discussion, that we [ph] of be the the got and and arranged time queue can't I end in sure who you to thank call, In the a you. very wants got today. much haven't meantime, queue, anyone Chris] for reach listening make at the to taken the can who out this and that, your we anyone fortunately but directly, say to I we'll that please and [our haven't to or always, have every As anyone for was call today,

Operator

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

now may You disconnect.

VAALCO Energy (EGY) 10 May 232023 Q1 Earnings call transcript