VAALCO Announces the Closing of the Acquisition of Additional Interest in the Etame Field From Sasol
VAALCO Energy, Inc. (NYSE: EGY) has completed its acquisition of Sasol Gabon S.A.'s 27.8% working interest in the Etame Marin block, raising its total working interest to 58.8%. This strategic move nearly doubles VAALCO's production and reserves, with an expected increase in free cash flow starting in 2021. The acquisition, costing $29.6 million, was fully funded from cash on hand. A contingent payment of up to $5 million may apply if Brent oil prices exceed $60 per barrel for 90 consecutive days between July 2020 and June 2022.
- Increased working interest to 58.8%, nearly doubling production and reserves.
- Expected immediate accretion with minimal additional costs.
- Projected significant cash flow increase in 2021 due to rising oil prices.
- Fully funded acquisition using existing cash, avoiding debt.
- None.
HOUSTON, Feb. 25, 2021 (GLOBE NEWSWIRE) -- VAALCO Energy, Inc. (NYSE: EGY; LSE: EGY) (“VAALCO” or the “Company”) today announced that it has now completed the previously announced acquisition of Sasol Gabon S.A.’s (“Sasol”)
Key Highlights
- Nearly doubles VAALCO’s total net production and reserves;
- Expected to be immediately accretive to VAALCO, with minimal additional variable costs;
- Anticipated to materially increase free cash flow(2) in 2021 and beyond, particularly in the current increasing price environment;
- Paid
$29.6 million in cash to Sasol, taking into account the agreed upon transaction price of$44 million , the deposit already paid and post-effective date adjustments, with a future contingent payment of up to$5 million ; and - Funded the closing of the acquisition entirely from cash on hand and cash from operations.
Cary Bounds, Chief Executive Officer, commented, “We are extremely pleased to close this transformational and accretive transaction in a rising price environment. All cash payments were funded entirely by cash on hand. With the additional production from the acquisition, we are forecasting significant cash flow generation in 2021. In addition, we believe the recently acquired 3D seismic will improve our subsurface interpretation at Etame and lead to another successful drilling campaign, starting late this year or early next year, funded from cash on hand and cash from operations. Sustained operational and robust financial performance at Etame serves as the foundation for growing the Company through future accretive acquisition opportunities in line with our strategy and operational expertise in West Africa.”
The transaction had an economic effective date of July 1, 2020. Taking into account the
Contingent Payments
Under the terms of the agreement, a contingent payment of
(1) Prior to the closing of the acquisition, VAALCO’s working interest in Etame was
(2) Free cash flow is calculated as (i) revenues less production expenses, general and administrative expense, annual abandonment funding and current income tax expense divided by (ii) the number of NRI barrels of oil sold.
About VAALCO
VAALCO, founded in 1985, is a Houston, USA based, independent energy company with production, development and exploration assets in the West African region.
The Company is an established operator within the region, holding a
For Further Information
| VAALCO Energy, Inc. (General and Investor Enquiries) | +00 1 713 623 0801 |
| Website: | www.vaalco.com |
| Al Petrie Advisors (US Investor Relations) | +00 1 713 543 3422 |
| Al Petrie / Chris Delange | |
| Buchanan (UK Financial PR) | +44 (0) 207 466 5000 |
| Ben Romney / Kelsey Traynor / James Husband | VAALCO@buchanan.uk.com |
Forward Looking Statements
This document includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this document that address activities, events, plans, expectations, objectives or developments that VAALCO expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements may include statements related to the impact of the COVID-19 pandemic, including the recent sharp decline in the global demand for and resulting global oversupply of crude oil and the resulting steep decline in oil prices, production quotas imposed by Gabon, disruptions in global supply chains, quarantines of our workforce or workforce reductions and other matters related to the pandemic, well results, wells anticipated to be drilled and placed on production, future levels of drilling and operational activity and associated expectations, the implementation of the Company’s business plans and strategy, prospect evaluations, prospective resources and reserve growth, its activities in Equatorial Guinea, expected sources of and potential difficulties in obtaining future capital funding and future liquidity, its ability to restore production in non-producing wells, future operating losses, future changes in crude oil and natural gas prices, future strategic alternatives, future and pending acquisitions, capital expenditures, future drilling plans, acquisition and interpretation of seismic data and costs thereof, negotiations with governments and third parties, timing of the settlement of Gabon income taxes, and expectations regarding processing facilities, production, sales and financial projections. These statements are based on assumptions made by VAALCO based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond VAALCO’s control. These risks include, but are not limited to, crude oil and natural gas price volatility, the impact of production quotas imposed by Gabon in response to production cuts agreed to as a member of OPEC, inflation, general economic conditions, the outbreak of COVID-19, the Company’s success in discovering, developing and producing reserves, production and sales differences due to timing of liftings, decisions by future lenders, the risks associated with liquidity, lack of availability of goods, services and capital, environmental risks, drilling risks, foreign regulatory and operational risks, and regulatory changes.
Investors are cautioned that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. VAALCO disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Inside Information
This announcement contains inside information as defined in Regulation (EU) No. 596/2014 on market abuse (“MAR”) and is made in accordance with the Company’s obligations under article 17 of MAR.
FAQ
What is the significance of VAALCO Energy's acquisition of Sasol's interest in EGY?
How much did VAALCO pay for the Sasol acquisition?
What financial benefits are expected from the Sasol acquisition?
Is there a contingent payment related to the acquisition?
