VAALCO Energy, Inc. Announces First Quarter 2022 Results
VAALCO Energy, Inc. (NYSE: EGY) reported a strong Q1 2022 with net income of $12.2 million ($0.20/share) and adjusted net income rising to $21.1 million ($0.36/share). Production increased by 7% to 8,051 NRI BOPD. Adjusted EBITDAX grew 49% to $33.5 million. Operational challenges impacted sales, leading to 616,000 barrels sold. VAALCO's exit production rate in Q1 was approximately 9,500 NRI BOPD. The company announced a dividend of $0.0325/share and maintained a solid balance sheet with $18.9 million in cash. Plans are in place for further drilling and lower operational costs through FSO conversion.
- Net income for Q1 2022 reached $12.2 million, a 23% year-over-year increase.
- Adjusted EBITDAX surged 49% quarter-over-quarter to $33.5 million.
- Production increased 7% to 8,051 NRI BOPD compared to Q4 2021.
- First two development wells exceeded internal expectations with strong initial production rates.
- No debt and unrestricted cash balance of $18.9 million enhance financial stability.
- Announced a quarterly cash dividend of $0.0325 per common share.
- Sales volume decreased to 616,000 barrels compared to 709,000 in Q4 2021 due to operational issues.
- Net income fell significantly from $34.4 million in Q4 2021 to $12.2 million in Q1 2022.
Reports Net Income of
HOUSTON, May 03, 2022 (GLOBE NEWSWIRE) -- VAALCO Energy, Inc. (NYSE: EGY, LSE: EGY) today reported operational and financial results for the first quarter of 2022.
Highlights and Recent Key Items:
- Reported strong Q1 2022 net income of
$12.2 million ($0.20 per diluted share) and Adjusted Net Income(1) of$21.1 million ($0.36 per diluted share); - Increased Adjusted EBITDAX(1) by
49% quarter-over-quarter to$33.5 million in Q1 2022; - Increased Q1 2022 production by
7% to 8,051 net revenue interest (“NRI”)(2) barrels of crude oil per day (“BOPD”), or 9,254 working interest (“WI”)(3) BOPD, compared to Q4 2021;- Exit rate for Q1 2022 production increased to approximately 9,500 NRI BOPD
- As previously disclosed, temporary operational issues reduced production in February;
- Sold 616,000 barrels of oil in Q1 2022 due to field start-up operational issues which pushed out the timing of third lifting until April 4th; VAALCO is guiding Q2 2022 sales to be between 975,000 and 1,025,000 barrels of oil;
- Successfully drilled, completed and placed on production the first two development wells of the 2021/2022 drilling campaign;
- Began production from the Etame 8H-ST in February with an initial production (“IP”) rate of approximately 5,000 gross BOPD;
- Completed and brought online the Avouma 3H-ST in April with an IP rate of 3,100 gross BOPD;
- Strong IP rates for both wells exceeded internal estimates;
- Commenced operations on the ETBSM 1HB-ST well, the third of four currently planned wells;
- Funded
$23.1 million cash capital expenditures during Q1 2022 with cash on hand and cash from operations; - Maintained a strong balance sheet with no debt and an unrestricted cash balance of
$18.9 million , not including the proceeds from the March lifting of$44.6 million , which were received in April 2022, plus$3.8 million in non-operating joint owner receivables; - Progressing field reconfiguration and conversion to Floating Storage and Offloading vessel (“FSO”) at the Etame field on time and on budget; and
- Announced quarterly cash dividend payment of
$0.03 25 per common share to be paid in Q2 2022 and physically paid our maiden dividend of$0.03 25 per common share on March 18, 2022.
(1) Adjusted EBITDAX, Adjusted Net Income, and Adjusted Working Capital are Non-GAAP financial measures and are described and reconciled to the closest GAAP measure in the attached table under “Non-GAAP Financial Measures.”
(2) All NRI production rates and volumes are VAALCO’s
(3) All WI production rates and volumes are VAALCO’s
George Maxwell, VAALCO’s Chief Executive Officer commented, “We are delivering operationally, benefiting from the improved commodity price environment, and generating significant cash flow, allowing us to execute on our accretive growth strategy, fully fund our capital commitments and firmly place VAALCO in a financially stronger position. We are very encouraged by our highly successful 2021/2022 drilling campaign results thus far, with the first two wells in the campaign both having initial rates above our internal expectations. We generated
“As we look to the second quarter and the remainder of 2022, we are excited by the results of our drilling campaign, continued strong commodity pricing, and potential organic growth opportunities at Etame and Equatorial Guinea as well as inorganic opportunities that we continue to evaluate. Our ability to execute on our strategy and deliver strong operational results allows us to continue to return meaningful cash to shareholders through our dividend while continuing to enhance the overall value of our assets. The current environment provides an opportunity to return cash to our shareholders and we believe that it is important for E&P companies to demonstrate a commitment to shareholder returns. VAALCO is poised for continued success in this strong commodity price environment, with no debt and strong free cash flow generation. We remain firmly focused on maximizing shareholder returns while we continue to progress our strategic objective of accretive growth.”
Operational Update
Gabon
2021/2022 Drilling Campaign
VAALCO began its 2021/2022 drilling campaign in December 2021 with the drilling of the Etame 8H-ST development well. The well came online in February 2022 and had an IP rate of approximately 5,000 gross BOPD, but was choked back to about 4,200 BOPD for reservoir management purposes. VAALCO moved the contracted jack-up rig to the Avouma platform to drill the Avouma 3H-ST development well. The well was completed and brought online in April with an IP rate of approximately 3,100 gross BOPD. This is another highly successful development well targeting the Gamba reservoir.
VAALCO is currently drilling the ETBSM 1HB-ST well, also on the Avouma platform, which is targeting the Gamba reservoir while also testing the Dentale formation, which is productive in other areas in the Etame license, with the potential to complete and produce from the Dentale in this well. The Company is currently planning to drill a fourth well following the ETBSM 1HB-ST well as part of its 2021/2022 drilling campaign. VAALCO continues to estimate the total cost of the 2021/2022 drilling campaign at Etame to be between
FSO Conversion and Field Reconfiguration
In August 2021, VAALCO and its co-venturers at Etame approved the Bareboat Contract and Operating Agreement (collectively, the “FSO Agreements”) with World Carrier Offshore Services Corp to replace the existing Floating Production, Storage and Offloading unit (“FPSO”) with an FSO at the Etame Marin block offshore Gabon for up to eight years with additional option periods available. The current FPSO contract expires in September 2022. VAALCO currently believes that all of the associated engineering, long-lead equipment and significant contracts are proceeding in-line with the anticipated timelines and expected delivery schedules for the deployment of the FSO in the third quarter of 2022. Field reconfiguration began in March 2022, as planned. The Cap Diamant, a double-hull crude tanker built in 2001 that is being re-engineered as the new FSO, entered the shipyard in late February 2022 on schedule in Bahrain, for the final modifications and certifications. VAALCO expects the vessel will begin sea trials in late June before being mobilized to Gabon.
In March, VAALCO announced that it had contracted with DOF Subsea to perform subsea construction and installation services to support the subsea reconfiguration associated with the conversion to the FSO. DOF Subsea will provide all personnel, crew and equipment necessary to assist with reconfiguring the Etame field subsea infrastructure to flow field production to the replacement FSO. Engineering and design work in relation to the field infrastructure upgrade has been completed with subsea work planned to commence in July and be completed before the FSO is operational in September 2022.
Compared to the current FPSO agreement, the new FSO is expected to significantly reduce storage and offloading costs by almost
Consortium Provisionally Awarded Two Offshore Blocks in Gabon
The consortium of VAALCO, BW Energy and Panoro Energy (the “BWE Consortium”) has been provisionally awarded two blocks in the 12th Offshore Licensing Round in Gabon. The award is subject to finalizing the terms of the production sharing contracts (“PSC”) with the Gabonese government. BW Energy will be the operator with a
The two blocks will be held by the BWE Consortium and the PSCs will provide for two exploration periods totaling eight years which may be extended by two additional years. During the first exploration period, the joint owners intend to reprocess existing seismic and carry out a 3-D seismic campaign and have also committed to drilling one exploration well on each of the two blocks. In the event the consortium elects to enter the second exploration period, the BWE Consortium will be committed to drilling at least one exploration well on each of the awarded blocks.
Equatorial Guinea
VAALCO will have a
Financial Update – First Quarter of 2022
Net income of
Adjusted Net Income for the first quarter of 2022 increased significantly to
Adjusted EBITDAX totaled
| Revenue and Sales | Q1 2022 | Q1 2021 | % Change Q1 2022 vs. Q1 2021 | Q4 2021 | % Change Q1 2022 vs. Q4 2021 | ||||||||||||||
| Production (NRI BOPD) | 8,051 | 5,180 | 55 | % | 7,554 | 7 | % | ||||||||||||
| Sales (NRI BO) | 616,000 | 619,000 | (0 | ) | % | 709,000 | (13 | ) | % | ||||||||||
| Realized crude oil price ($/BO) | $ | 109.65 | $ | 61.31 | 79 | % | $ | 77.31 | 42 | % | |||||||||
| Total crude oil sales ($MM) | $ | 68.7 | $ | 39.8 | 73 | % | $ | 56.4 | 22 | % | |||||||||
VAALCO had two liftings in the first quarter of 2022, which resulted in total sales volumes of 616,000 barrels compared to 709,000 barrels in the fourth quarter of 2021 and 619,000 barrels for the same period in 2021. The Company experienced higher production in Q1 2022, but due to operational and weather factors, only two liftings occurred. First quarter of 2022 realized pricing rose
| Costs and Expenses | Q1 2022 | Q1 2021 | % Change Q1 2022 vs. Q1 2021 | Q4 2021 | % Change Q1 2022 vs. Q4 2021 | |||||||||||||||||
| Production expense, excluding workovers ($MM) | $ | 18.4 | $ | 16.1 | 14 | % | $ | 19.0 | (3 | ) | % | |||||||||||
| Production expense, excluding workovers ($/BO) | $ | 29.83 | $ | 26.02 | 15 | % | $ | 26.82 | 11 | % | ||||||||||||
| Workover expense ($MM) | $ | — | $ | — | — | % | $ | 4.5 | (100 | ) | % | |||||||||||
| Depreciation, depletion and amortization ($MM) | $ | 4.7 | $ | 4.1 | 15 | % | $ | 4.1 | 15 | % | ||||||||||||
| Depreciation, depletion and amortization ($/BO) | $ | 7.59 | $ | 6.70 | 13 | % | $ | 5.83 | 30 | % | ||||||||||||
| General and administrative expense, excluding stock-based compensation ($MM) | $ | 3.6 | $ | 3.0 | 20 | % | $ | 2.2 | 64 | % | ||||||||||||
| General and administrative expense, excluding stock-based compensation ($/BO) | $ | 5.80 | $ | 4.83 | 20 | % | $ | 3.08 | 88 | % | ||||||||||||
| Stock-based compensation expense ($MM) | $ | 1.4 | $ | 1.6 | (13 | ) | % | $ | 0.4 | 100 | % | |||||||||||
| Current income tax expense ($MM) | $ | 5.7 | $ | 3.4 | 68 | % | $ | 5.2 | 10 | % | ||||||||||||
| Deferred income tax benefit ($MM) | $ | (10.3 | ) | $ | (0.3 | ) | 3,333 | % | $ | (16.1 | ) | (36 | ) | % | ||||||||
Total production expense, excluding workovers, increased compared to the same period in 2021 and was slightly lower than the fourth quarter 2021. The increase compared to Q1 2021 was primarily driven by a full quarter of production in Q1 2022 from the acquisition of Sasol’s interest in Etame that closed in February 2021, compared with just over one month in Q1 2021. Production expense for the first quarter of 2022 included approximately
Depreciation, depletion and amortization (“DD&A”) expense in the first quarter of 2022 on a per NRI barrel of crude oil sales basis was higher compared to the prior periods presented due to higher depletable costs associated with the 2021/2022 drilling campaign.
General and administrative (“G&A”) expense, excluding stock-based compensation, in the first quarter of 2022 was higher than both the fourth quarter of 2021 and the first quarter of 2021 primarily as a result of higher salary and wages and audit related costs partially offset by lower legal fees.
Non-cash stock-based compensation expense for the first quarter of 2022 was
Foreign income taxes are attributable to Gabon and are settled by the government taking their oil in-kind. Income tax expense for the three months ended March 31, 2022 was a benefit of (
Environmental, Social and Governance
As part of the Company’s commitment to environmental stewardship, social awareness and good corporate governance, VAALCO is publishing its annual ESG report in the second quarter of 2022. VAALCO remains focused on showing progress and improvement in its environmental, social and governance metrics.
Response to COVID-19 Pandemic
VAALCO remains fully committed to the health and safety of all its employees and contractors. The Company continues to take proactive steps to manage any disruption in its business caused by COVID-19 and to protect the health and safety of its employees. As of May 3, 2022, VAALCO has experienced no material impact on its Gabon facilities directly associated with COVID-19; however, the Company has incurred higher costs related to proactive measures taken in response to the pandemic. These costs were approximately
Capital Investments/Balance Sheet
For the first quarter of 2022, net capital expenditures, excluding acquisitions, totaled
At the end of the first quarter of 2022, VAALCO had an unrestricted cash balance of
Cash Dividend Policy
The Company announced its quarterly cash dividend of
Hedging
The Company has continued to opportunistically hedge a portion of its expected production in 2022 to lock in strong cash flow generation to assist in funding its capital program and dividend. On September 24, 2021, VAALCO entered into additional commodity swaps at a Dated Brent weighted average price of
At March 31, 2022, the unexpired commodity swaps were for an underlying quantity of 954 MBbls and had a fair value of
See the following table for the unexpired barrels as of April, 2022.
| Settlement Period | Type of Contract | Index | Barrels | Weighted Average Price | ||||||||
| May 2022 to June 2022 | Swaps | Dated Brent | 230,000 | $ | 72.00 | |||||||
| May 2022 to June 2022 | Swaps | Dated Brent | 156,000 | $ | 85.01 | |||||||
| July 2022 to September 2022 | Swaps | Dated Brent | 375,000 | $ | 76.53 | |||||||
Guidance
Second quarter 2022 production guidance is expected to be 10,000 to 10,700 BOPD, which represents a
The Company plans to drill and complete four wells as part of its 2021/2022 drilling campaign. VAALCO expects to fund its 2022 capital expenditures fully from cash on hand and cash flow from operations. All of the Company’s guidance metrics are in the Q1 2022 Supplemental Information presentation that will be posted to its website tomorrow morning prior to the conference call.
Conference Call
As previously announced, the Company will hold a conference call to discuss its first quarter 2022 financial and operating results on Wednesday, May 4, 2022, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time and 3:00 p.m. London Time). Interested parties may participate by dialing (833) 685-0907. Parties in the United Kingdom may participate toll-free by dialing 08082389064 and other international parties may dial (412) 317-5741. Participants should request to be joined to the “VAALCO Energy First Quarter 2022 Conference Call.” This call will also be webcast on VAALCO’s website at www.vaalco.com. An archived audio replay will be available on VAALCO’s website.
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 / Jon Krinks/ 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 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 VAALCO’s 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, VAALCO’s 2021/2022 drilling campaign, 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 acquisitions, capital expenditures, future drilling plans, prospect evaluations, 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.
VAALCO ENERGY, INC AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
| As of March 31, 2022 | As of December 31, 2021 | |||||||
| ASSETS | (in thousands) | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 18,939 | $ | 48,675 | ||||
| Restricted cash | 4,230 | 79 | ||||||
| Receivables: | ||||||||
| Trade, net | 44,616 | 22,464 | ||||||
| Accounts with joint venture owners, net of allowance of | 3,764 | 345 | ||||||
| Other, net | 11,612 | 9,977 | ||||||
| Crude oil inventory | 4,634 | 1,593 | ||||||
| Prepayments and other | 8,408 | 5,156 | ||||||
| Total current assets | 96,203 | 88,289 | ||||||
| Crude oil and natural gas properties, equipment and other - successful efforts method, net | 121,935 | 94,324 | ||||||
| Other noncurrent assets: | ||||||||
| Restricted cash | 1,752 | 1,752 | ||||||
| Value added tax and other receivables, net of allowance of | 5,692 | 5,536 | ||||||
| Right of use operating lease assets | 6,872 | 10,227 | ||||||
| Right of use finance lease assets | 1,795 | — | ||||||
| Deferred tax assets | 50,296 | 39,978 | ||||||
| Abandonment funding | 21,369 | 21,808 | ||||||
| Other long-term assets | 2,596 | 1,176 | ||||||
| Total assets | $ | 308,510 | $ | 263,090 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 10,509 | $ | 18,797 | ||||
| Accounts with joint venture owners | — | 3,233 | ||||||
| Accrued liabilities and other | 91,409 | 49,444 | ||||||
| Operating lease liabilities - current portion | 6,429 | 9,642 | ||||||
| Finance lease liabilities - current portion | 341 | — | ||||||
| Foreign income taxes payable | 8,819 | 3,128 | ||||||
| Current liabilities - discontinued operations | 7 | 13 | ||||||
| Total current liabilities | 117,514 | 84,257 | ||||||
| Asset retirement obligations | 34,377 | 33,949 | ||||||
| Operating lease liabilities - net of current portion | 461 | 587 | ||||||
| Finance lease liabilities - net of current portion | 1,411 | — | ||||||
| Total liabilities | 153,763 | 118,793 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity: | ||||||||
| Preferred stock, | — | — | ||||||
| Common stock, | 6,986 | 6,956 | ||||||
| Additional paid-in capital | 77,272 | 76,700 | ||||||
| Less treasury stock, 11,003,316 and 10,939,323 shares, respectively, at cost | (44,234 | ) | (43,847 | ) | ||||
| Retained earnings | 114,723 | 104,488 | ||||||
| Total shareholders' equity | 154,747 | 144,297 | ||||||
| Total liabilities and shareholders' equity | $ | 308,510 | $ | 263,090 | ||||
VAALCO ENERGY, INC AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
| Three Months Ended | |||||||||||||
| March 31, 2022 | March 31, 2021 | December 31, 2021 | |||||||||||
| (in thousands except per share amounts) | |||||||||||||
| Revenues: | |||||||||||||
| Crude oil and natural gas sales | $ | 68,656 | $ | 39,774 | $ | 56,379 | |||||||
| Operating costs and expenses: | |||||||||||||
| Production expense | 18,360 | 16,133 | 23,495 | ||||||||||
| Exploration expense | 127 | 142 | 293 | ||||||||||
| Depreciation, depletion and amortization | 4,673 | 4,148 | 4,132 | ||||||||||
| General and administrative expense | 4,994 | 4,547 | 2,545 | ||||||||||
| Bad debt expense and other | 492 | 101 | 61 | ||||||||||
| Total operating costs and expenses | 28,646 | 25,071 | 30,526 | ||||||||||
| Other operating expense, net | (5 | ) | (360 | ) | - | ||||||||
| Operating income | 40,005 | 14,343 | 25,853 | ||||||||||
| Other income (expense): | |||||||||||||
| Derivative instruments loss, net | (31,758 | ) | (5,954 | ) | (1,756 | ) | |||||||
| Interest (expense) income, net | (3 | ) | 5 | 1 | |||||||||
| Other (expense) income, net | (696 | ) | 4,580 | (594 | ) | ||||||||
| Total other expense, net | (32,457 | ) | (1,369 | ) | (2,349 | ) | |||||||
| Income from continuing operations before income taxes | 7,548 | 12,974 | 23,504 | ||||||||||
| Income tax expense (benefit) | (4,628 | ) | 3,086 | (10,884 | ) | ||||||||
| Income from continuing operations | 12,176 | 9,888 | 34,388 | ||||||||||
| Income from discontinued operations, net of tax | (12 | ) | (19 | ) | (26 | ) | |||||||
| Net income | $ | 12,164 | $ | 9,869 | $ | 34,362 | |||||||
| Basic net income per share: | |||||||||||||
| Income from continuing operations | $ | 0.21 | $ | 0.17 | $ | 0.58 | |||||||
| Loss from discontinued operations, net of tax | — | — | — | ||||||||||
| Net income per share | $ | 0.21 | $ | 0.17 | $ | 0.58 | |||||||
| Basic weighted average shares outstanding | 58,702 | 57,636 | 58,613 | ||||||||||
| Diluted net income per share: | |||||||||||||
| Income from continuing operations | $ | 0.20 | $ | 0.17 | $ | 0.58 | |||||||
| Loss from discontinued operations, net of tax | — | — | — | ||||||||||
| Net income per share | $ | 0.20 | $ | 0.17 | $ | 0.58 | |||||||
| Diluted weighted average shares outstanding | 59,179 | 58,461 | 59,002 | ||||||||||
VAALCO ENERGY, INC AND SUBSIDIARIES (Need to be updated)
Consolidated Statements of Cash Flows (Unaudited)
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| (in thousands) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 12,164 | $ | 9,869 | ||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
| Loss from discontinued operations, net of tax | 12 | 19 | ||||||
| Depreciation, depletion and amortization | 4,673 | 4,148 | ||||||
| Bargain purchase gain | - | (7,651 | ) | |||||
| Deferred taxes | (10,318 | ) | 1,809 | |||||
| Unrealized foreign exchange loss (gain) | 116 | (400 | ) | |||||
| Stock-based compensation | 1,422 | 1,559 | ||||||
| Cash settlements paid on exercised stock appreciation rights | (205 | ) | (852 | ) | ||||
| Derivative instruments loss, net | 31,758 | 5,954 | ||||||
| Cash settlements paid on matured derivative contracts, net | (12,500 | ) | (1,710 | ) | ||||
| Bad debt expense and other | 492 | 101 | ||||||
| Other operating expense, net | 5 | 360 | ||||||
| Operational expenses associated with equipment and other | 240 | 247 | ||||||
| Cash advance for other long-term assets | (1,452 | ) | — | |||||
| Change in operating assets and liabilities: | ||||||||
| Trade receivables | (22,152 | ) | (12,647 | ) | ||||
| Accounts with joint venture owners | (6,652 | ) | 275 | |||||
| Other receivables | (1,723 | ) | (53 | ) | ||||
| Crude oil inventory | (3,041 | ) | 5,795 | |||||
| Prepayments and other | (876 | ) | (3,240 | ) | ||||
| Value added tax and other receivables | (1,076 | ) | (149 | ) | ||||
| Accounts payable | (10,132 | ) | (6,627 | ) | ||||
| Foreign income taxes receivable/payable | 5,691 | 5,524 | ||||||
| Accrued liabilities and other | 12,814 | (576 | ) | |||||
| Net cash (used in) provided by continuing operating activities | (740 | ) | 1,755 | |||||
| Net cash used in discontinued operating activities | (18 | ) | (13 | ) | ||||
| Net cash (used in) provided by operating activities | (758 | ) | 1,742 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Property and equipment expenditures | (23,148 | ) | (1,198 | ) | ||||
| Acquisition of crude oil and natural gas properties | — | (17,858 | ) | |||||
| Net cash used in continuing investing activities | (23,148 | ) | (19,056 | ) | ||||
| Net cash used in discontinued investing activities | — | — | ||||||
| Net cash used in investing activities | (23,148 | ) | (19,056 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from the issuances of common stock | 198 | 347 | ||||||
| Dividend distribution | (1,929 | ) | — | |||||
| Treasury shares | (387 | ) | (403 | ) | ||||
| Net cash used in continuing financing activities | (2,118 | ) | (56 | ) | ||||
| Net cash used in discontinued financing activities | — | — | ||||||
| Net cash used in financing activities | (2,118 | ) | (56 | ) | ||||
| NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (26,024 | ) | (17,370 | ) | ||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD | 72,314 | 61,317 | ||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ | 46,290 | $ | 43,947 | ||||
VAALCO ENERGY, INC AND SUBSIDIARIES
Selected Financial and Operating Statistics
(Unaudited)
| Three Months Ended | ||||||||||
| March 31, 2022 | March 31, 2021 | December 31, 2021 | ||||||||
| NRI SALES DATA | ||||||||||
| Crude oil (MBbls) | 616 | 619 | 709 | |||||||
| NRI PRODUCTION DATA | ||||||||||
| Crude oil (MBbls) | 725 | 466 | 695 | |||||||
| Average daily production volumes (BOPD) | 8,051 | 5,180 | 7,554 | |||||||
| AVERAGE SALES PRICES: | ||||||||||
| Crude oil (Per Bbl) | $ | 109.65 | $ | 61.31 | $ | 77.31 | ||||
| COSTS AND EXPENSES (Per Bbl of sales): | ||||||||||
| Production expense | $ | 29.81 | $ | 26.06 | $ | 33.14 | ||||
| Production expense, excluding workovers* | 29.83 | 26.02 | 26.82 | |||||||
| Depreciation, depletion and amortization | 7.59 | 6.70 | 5.83 | |||||||
| General and administrative expense** | 8.11 | 7.35 | 3.59 | |||||||
| Property and equipment expenditures, cash basis (in thousands) | $ | 14,689 | $ | 1,198 | $ | 8,099 | ||||
*Workover costs excluded from the three months ended March 31, 2022 and 2021 and December 31, 2021 are
**General and administrative expenses include
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDAX is a supplemental non-GAAP financial measure used by VAALCO’s management and by external users of the Company’s financial statements, such as industry analysts, lenders, rating agencies, investors and others who follow the industry, as an indicator of the Company’s ability to internally fund exploration and development activities and to service or incur additional debt. Adjusted EBITDAX is a non-GAAP financial measure and as used herein represents net income before discontinued operations, interest income net, income tax expense, depletion, depreciation and amortization, exploration expense, non-cash and other items including stock compensation expense and unrealized commodity derivative loss.
Management uses Adjusted Net Income to evaluate operating and financial performance and believes the measure is useful to investors because it eliminates the impact of certain non-cash and/or other items that management does not consider to be indicative of the Company’s performance from period to period. Management also believes this non-GAAP measure is useful to investors to evaluate and compare the Company’s operating and financial performance across periods, as well as facilitating comparisons to others in the Company’s industry. Adjusted Net Income is a non-GAAP financial measure and as used herein represents net income before discontinued operations, deferred income tax expense, unrealized commodity derivative loss and non-cash and other items.
Management uses Adjusted Working Capital as a measurement tool to assess the working capital position of the Company’s continuing operations excluding leasing obligations because it eliminates the impact of discontinued operations as well as the impact of lease liabilities. Under the lease accounting standards, lease liabilities related to assets used in joint operations include both the Company’s share of expenditures as well as the share of lease expenditures which its non-operator joint venture owners’ will be obligated to pay under joint operating agreements. Adjusted Working Capital is a non-GAAP financial measure and as used herein represents working capital excluding working capital attributable to discontinued operations and current liabilities associated with lease obligations.
Adjusted EBITDAX and Adjusted Net Income have significant limitations, including that they do not reflect the Company’s cash requirements for capital expenditures, contractual commitments, working capital or debt service. Adjusted EBITDAX and Adjusted Net Income should not be considered as substitutes for net income (loss), operating income (loss), cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDAX and Adjusted Net Income exclude some, but not all, items that affect net income (loss) and operating income (loss) and these measures may vary among other companies. Therefore, the Company’s Adjusted EBITDAX and Adjusted Net Income may not be comparable to similarly titled measures used by other companies.
The tables below reconcile the most directly comparable GAAP financial measures to Adjusted Net Income, Adjusted EBITDAX and Adjusted Working Capital.
VAALCO ENERGY, INC AND SUBSIDIARIES
Reconciliations of Non-GAAP Financial Measures
(Unaudited)
(in thousands)
| Three Months Ended | |||||||||||||
| Reconciliation of Net Income to Adjusted Net Income | March 31, 2022 | March 31, 2021 | December 31, 2021 | ||||||||||
| Net income | $ | 12,164 | $ | 9,869 | $ | 34,362 | |||||||
| Adjustment for discrete items: | |||||||||||||
| Discontinued operations, net of tax | 12 | 19 | 26 | ||||||||||
| Unrealized derivative instruments loss (gain) | 19,258 | 4,244 | (6,075 | ) | |||||||||
| Gain on Sasol Acquisition, net | — | (5,491 | ) | 302 | |||||||||
| Deferred income tax benefit | (10,319 | ) | (349 | ) | (16,067 | ) | |||||||
| Other operating expense, net | 5 | 360 | — | ||||||||||
| Adjusted Net Income | $ | 21,120 | $ | 8,652 | $ | 12,548 | |||||||
| Diluted Adjusted Net Income (Loss) per Share | $ | 0.36 | $ | 0.15 | $ | 0.21 | |||||||
| Diluted weighted average shares outstanding (1) | 59,179 | 58,461 | 59,002 | ||||||||||
(1) No adjustments to weighted average shares outstanding
| Three Months Ended | |||||||||||||
| Reconciliation of Net Income to Adjusted EBITDAX | March 31, 2022 | March 31, 2021 | December 31 2021 | ||||||||||
| Net income | $ | 12,164 | $ | 9,869 | $ | 34,362 | |||||||
| Add back: | |||||||||||||
| Impact of discontinued operations | 12 | 19 | 26 | ||||||||||
| Interest income, net | 3 | (5 | ) | (1 | ) | ||||||||
| Income tax expense (benefit) | (4,628 | ) | 3,086 | (10,884 | ) | ||||||||
| Depreciation, depletion and amortization | 4,673 | 4,148 | 4,132 | ||||||||||
| Exploration expense | 127 | 142 | 293 | ||||||||||
| Impairment of proved crude oil and natural gas properties | — | — | — | ||||||||||
| Non-cash or unusual items: | |||||||||||||
| Stock-based compensation | 1,422 | 1,559 | 361 | ||||||||||
| Unrealized derivative instruments loss (gain) | 19,258 | 4,244 | (6,075 | ) | |||||||||
| Gain on Sasol Acquisition, net | — | (5,491 | ) | 302 | |||||||||
| Other operating expense, net | 5 | 360 | — | ||||||||||
| Bad debt expense and other | 492 | 101 | 61 | ||||||||||
| Adjusted EBITDAX | $ | 33,528 | $ | 18,032 | $ | 22,577 | |||||||
VAALCO ENERGY, INC AND SUBSIDIARIES
Reconciliations of Non-GAAP Financial Measures
(Unaudited)
(in thousands)
| Reconciliation of Working Capital to Adjusted Working Capital | As of March 31, 2022 | As of December 31, 2021 | Change | |||||||||
| Current assets | $ | 96,203 | $ | 88,289 | $ | 7,914 | ||||||
| Current liabilities | (117,514 | ) | (84,257 | ) | (33,257 | ) | ||||||
| Working capital | (21,311 | ) | 4,032 | (25,343 | ) | |||||||
| Add: operating lease liabilities - current portion | 6,770 | 9,642 | (2,872 | ) | ||||||||
| Add: current liabilities - discontinued operations | 7 | 13 | (6 | ) | ||||||||
| Adjusted Working Capital | $ | (14,534 | ) | $ | 13,687 | $ | (28,221 | ) | ||||
FAQ
What were VAALCO Energy's Q1 2022 financial results?
How did VAALCO Energy's production change in Q1 2022?
What is the adjusted net income reported by VAALCO Energy for Q1 2022?
What is the cash dividend announced by VAALCO Energy for Q2 2022?
How has VAALCO Energy's adjusted EBITDAX performed in Q1 2022?
