VAALCO Response to Media Speculation
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Insights
The potential acquisition of Svenska by VAALCO Energy represents a strategic move that could significantly alter VAALCO's production capabilities and financial position. The acquisition of a 27.39% interest in Block CI-40, with its substantial daily production, would likely enhance VAALCO's revenue stream, provided the oil prices remain favorable. Funding the acquisition with cash on hand suggests that VAALCO is in a healthy liquidity position, which is a positive indicator for investors. However, the lack of debt financing could also mean that VAALCO is avoiding additional leverage, which could be a conservative strategy to maintain financial flexibility in a volatile oil market.
Investors should monitor the progress of this deal closely, as the successful completion of the acquisition could lead to upward revisions of earnings forecasts and potentially increase the company's stock valuation. Conversely, any setbacks or failure to obtain regulatory and government approvals could negatively impact investor sentiment. It's also important to consider the geopolitical risks associated with offshore operations in Cote d'Ivoire, which could influence the long-term profitability of this investment.
The acquisition of a stake in an offshore block is a significant development in the oil and gas sector, particularly for a company like VAALCO Energy, which is seeking to expand its portfolio. Block CI-40's current working interest production is a substantial asset and the increase in daily production capacity for VAALCO could improve its standing in the competitive oil market. The industry norm for acquisitions of this nature typically involves a mix of cash and debt; hence, VAALCO's intention to use cash on hand is noteworthy.
Investors should consider the operational synergies that may arise from this acquisition and how it aligns with VAALCO's existing exploration and production activities. The impact on the company's reserves and long-term growth potential should be assessed, along with the ability to efficiently integrate Svenska's operations. The successful acquisition could also signal to the market VAALCO's transition into a more significant player within the industry.
From a market perspective, VAALCO Energy's announcement has the potential to influence investor perceptions and the company's market capitalization. The acquisition would not only expand VAALCO's asset base but also diversify its operational geography. Market reaction to such strategic moves often hinges on the perceived value creation and the ability of the acquiring company to leverage new assets to drive growth. The oil and gas sector is prone to price volatility and the addition of new production assets can provide a buffer against market downturns.
Additionally, the market will be looking for signals of how the acquisition might affect VAALCO's operational costs, especially in the context of offshore production, which typically involves higher capital expenditure. The long-term benefit to shareholders will largely depend on the integration of the new assets and the management's ability to optimize production costs while maximizing output.
HOUSTON, Feb. 27, 2024 (GLOBE NEWSWIRE) -- The Board of Directors of VAALCO Energy, Inc. (NYSE: EGY; LSE: EGY) ("VAALCO" or the "Company") notes the recent media speculation in Africa Intelligence and confirms that the Company is in discussions with the owner of Svenska Petroleum Exploration AB (“Svenska”) regarding a possible debt-free corporate transaction to acquire Svenska whose primary asset is a
Should the possible acquisition proceed, it is expected to be funded by cash on hand. The possible acquisition is also expected to be subject to a number of customary closing conditions, including regulatory and government approvals.
There can be no assurance that a definitive agreement for the possible acquisition will be entered into or, if a definitive agreement is entered into, that the possible acquisition will proceed to completion, and the Company will issue a further statement as appropriate.
For Further Information
| VAALCO Energy, Inc (General and Investor Enquiries) Website: | +00 1 713 543 3422 www.vaalco.com |
| Stifel, Nicolaus & Company, Inc. (Financial Adviser) Callum Stewart / Simon Mensley | +44 (0) 20 7710 7600 |
| Al Petrie Advisors (US Investor Relations) Al Petrie / Chris Delange | +00 1 713 543 3422 |
| Buchanan (UK Financial PR) Ben Romney / Barry Archer | +44 (0) 207 466 5000 vaalco@buchanan.uk.com |
Important notice
This announcement is not intended to, and does not, constitute, represent or form part of any offer, invitation or solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise.
Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created by those laws and other applicable laws and "forward-looking information" within the meaning of applicable Canadian securities laws. Where a forward-looking statement expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. All statements other than statements of historical fact may be forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "intend," "forecast," "outlook," "aim," "target," "will," "could," "should," "may," "likely," "plan" and "probably" or similar words may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this press release include, but are not limited to, statements relating to (i) estimates of production and sales volumes and cash position as of, and for the quarter ended, December 31, 2023; (ii) estimates of future drilling, production, sales and costs of acquiring crude oil, natural gas and natural gas liquids; (iii) expectations of future commodity prices; (iii) expectations on future capital expenditures; and (iv) expectations regarding future exploration and the development, growth and potential of VAALCO’s operations, project pipeline and investments, and schedule and anticipated benefits to be derived therefrom. Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to: risks relating to any unforeseen liabilities of VAALCO or Svenska; the ability to generate cash flows that, along with cash on hand, will be sufficient to support operations and cash requirements; the impact and costs of compliance with laws and regulations governing oil and gas operations; the risks described under the caption "Risk Factors" in VAALCO's 2022 Annual Report on Form 10-K filed with the SEC on April 6, 2023.
Inside Information
This announcement contains inside information as defined in Regulation (EU) No. 596/2014 on market abuse which is part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR") and is made in accordance with the Company's obligations under article 17 of MAR. The person responsible for arranging the release of this announcement on behalf of VAALCO is Matthew Powers, Corporate Secretary of VAALCO.
FAQ
What is VAALCO Energy, Inc. discussing regarding Svenska Petroleum Exploration AB?
What is the primary asset of Svenska Petroleum Exploration AB?
How is the possible acquisition of Svenska expected to be funded?
What is the current working interest production of Svenska in Block CI-40?
What are the closing conditions for the acquisition of Svenska?
