VAALCO Energy, Inc. (NYSE: EGY) today reported operational and
financial results for the first quarter 2019.
Highlights and Recent Key
Items:
- Produced 3,496 barrels of oil per day (“BOPD”) net
during the first quarter of 2019 which was reduced by approximately
200 BOPD due to a third-party work stoppage on the Floating
Production, Storage and Offloading vessel (“FPSO”);
- Reported Net Income of $6.5 million ($0.10 per diluted
share) for the first quarter of 2019;
- Generated Adjusted EBITDAX of $9.7 million for the
first quarter of 2019;
- Increased working capital from continuing operations,
excluding lease liabilities, by $4.1 million during the first
quarter 2019, which contributed to the increase in cash and cash
equivalents to $46.2 million;
- Sonangol E.P., as National Concessionaire, has agreed
to terminate VAALCO’s obligations in Angola in exchange for a cash
payment of $4.5 million from VAALCO and elimination of the
receivable from Sonangol P&P; and
- Initiated a process to pursue a dual listing of its
common stock on the London Stock Exchange to position the Company
alongside its international peer group and to create greater
trading liquidity through access to a broader international
institutional investor base.
Net income totaled $6.5 million in the first
quarter of 2019 compared with $8.7 million in the same period of
2018, and $10.4 million in the fourth quarter of 2018. Net
income for the first quarter of 2019 was impacted by non-cash
benefits and charges of: income of $5.7 million from discontinued
operations, net of tax, due to the settlement of outstanding
obligations in Angola ($0.09 per diluted share); $3.0 million
($0.05 per diluted share) related to the unrealized loss on crude
oil swaps; and an expense of $1.8 million ($0.03 per diluted share)
related to deferred income tax. Adjusting for the net
positive impact of these non-cash items totaling $0.9 million,
first quarter Adjusted Net Income would have been $5.6 million
($0.09 per diluted share). First quarter 2019 net income was
also impacted by a $1.7 million ($0.03 per diluted share) non-cash
charge for Stock Appreciation Rights (“SARs”). Adjusted
EBITDAX totaled $9.7 million in the first quarter of 2019 compared
with $14.5 million in the same period of 2018, and $16.9 million in
the fourth quarter of 2018. The average realized price for
crude oil in the first quarter of 2019 was $64.17 per barrel, a
decrease of 7% from $68.69 per barrel in the first quarter of
2018. In the fourth quarter of 2018, the average realized
price for crude oil was $64.52 per barrel.
Adjusted EBITDAX, Adjusted Net Income and
Working Capital from Continuing Operations are Non-GAAP financial
measures and are described and reconciled to the closest GAAP
measure in the attached table under “Non-GAAP Financial
Measures.”
Cary Bounds, VAALCO’s Chief Executive Officer
commented: “We continue to deliver strong results operationally,
further enhance our financial position and deliver value to our
shareholders. We are extremely pleased with the Angola
settlement agreement, which we believe is fair for both parties and
allows us to move forward and focus on our future with an even
stronger balance sheet.”
“In the first quarter we generated strong
Adjusted EBITDAX of $9.7 million and grew our cash position to
$46.2 million. We have begun buying long lead items for our
2019 drilling program and have signed the contract for the rig to
begin drilling in the second half of the year. We have seen
commodity prices rebound lately and are excited about the
significant long-term opportunities at Etame. We think this is the
right time for us to seek a dual listing of our common stock on the
London Stock Exchange, which we believe will provide us access to a
broader group of international institutional investors and
analysts. We have a team with a clearly differentiated African
expertise, a strong producing asset with significant upside in
Gabon and a clean balance sheet with no debt. The outlook for
VAALCO is very promising and we remain poised financially and
operationally to deliver profitable growth and add meaningful value
for our shareholders.”
Gabon
Average net oil production in the first quarter
of 2019 was 3,496 BOPD which was reduced due to a third-party work
stoppage on the FPSO utilized to collect and store production from
the Etame Marin field reducing average production for the quarter
by approximately 200 BOPD. Had that unexpected interruption
not occurred, the Company would have been above the mid-point of
its production guidance range. In the first quarter of 2018,
average net production was 3,611 BOPD and in the fourth quarter of
2018 it was 3,717 BOPD.
VAALCO and its joint owners are proceeding with
executing a development drilling program in 2019. The Company has
secured a rig to drill up to three development wells and two
appraisal wellbores beginning in the third quarter of 2019 and
finishing in the first quarter of 2020. The Company believes that
there is significant reserve upside associated with the two
appraisal wellbores as they may confirm up to approximately five
MMBO of net resources that could be converted into 2P reserves. The
Company is forecasting that the cost of the drilling program of $25
million to $30 million will be funded by cash on hand and cash
generated from operations.
Angola Settlement
VAALCO and Sonangol E.P., the National
Concessionaire, recently finalized and signed a settlement
agreement which allows for the termination of VAALCO’s rights,
liabilities and outstanding obligations for Block 5 in Angola. The
settlement agreement was signed in the first quarter of 2019. The
settlement agreement includes a cash payment of $4.5 million from
VAALCO and elimination of the receivable from Sonangol P&P. The
receivable is related to joint interest billings and was reflected
as current assets from discontinued operations at year-end
2018. The cash payment from VAALCO will become due within 15
days after the execution of an executive decree from the Ministry
of Mineral Resources and Petroleum. As a result, the Company
adjusted a previously accrued liability and recognized an after tax
non-cash benefit from discontinued operations of $5.7 million in
the first quarter of 2019.
Equatorial Guinea
VAALCO has a 31% working interest in Block P, an
undeveloped portion of a block offshore Equatorial Guinea. VAALCO
is currently awaiting the Equatorial Guinea Ministry of Mines and
Hydrocarbons (“EG MMH”) to approve its appointment as operator for
Block P. Compania Nacional de Petroleos de Guinea Equatorial
(“GEPetrol”) is the state-owned oil company and one of the joint
venture owners in Block P. GEPetrol was required to introduce
a new investor or joint venture owner to the EG MMH by March 28,
2019, and it has fulfilled this requirement. Upon EG MMH
approving the new joint owner, the Contractor group has one year to
drill an exploration well. VAALCO intends to seek a partner
on a promoted basis that will cover all or substantially all of the
cost to drill an exploratory well. If the joint venture
owners fail to drill an exploration well, VAALCO would lose its
interest in the license, and the associated costs would become
impaired. As of March 31, 2019, the Company had $10.0 million
recorded for the book value of the undeveloped leasehold costs
associated with the Block P license. VAALCO and its joint
venture owners are evaluating the timing and budgeting for
development and exploration activities under a development and
production area in the block, including the approval of a
development and production plan.
Dual Listing on the London Stock
Exchange
VAALCO has identified an opportunity to attract
greater trading liquidity and shareholder interest by pursuing a
Standard Listing on the London Stock Exchange while maintaining its
existing listing on the New York Stock Exchange. A London
listing would better position the Company alongside its
international peer group, including peers that are focused on West
Africa, and may generate increased interest through access to
specialist international oil and gas investors and a broader range
of equity research analysts. The Company is dedicated
to realizing full value for its business in West Africa and
believes this is a prudent step toward enhancing shareholder value.
Exploratory work on this additional listing will progress over the
next four to six months, and if the Company elects to proceed, the
timing of final filing documents will be driven by the availability
of financial information at the time the work is complete.
2019 - First Quarter Financial
Results
Total oil sales for the first quarter of 2019
were $19.8 million, compared to $27.6 million in the first quarter
of 2018. During the first quarter of 2019, VAALCO sold
approximately 297,000 net barrels of oil at an average price of
$64.17 compared to approximately 393,000 net barrels at an average
price of $68.69 per barrel during the first quarter of 2018.
During the fourth quarter of 2018, the Company sold
approximately 401,000 net barrels of oil at an average price of
$64.52 per barrel. Sales volumes were lower between the
periods because sales volumes for the three months ended March 31,
2018 included 95,525 barrels associated with the last lifting in
2017 which was not completed until January 1, 2018. Net
revenues of $6.5 million associated with these net volumes were
reported as revenue in 2018 in the three months ended March 31,
2018. In addition, the fourth quarter of 2018 included
multiple liftings in the month of December increasing the sales
volumes for that quarter.
In June 2018, VAALCO executed commodity swaps at
a Dated Brent weighted average price of $74 per barrel for the
period from and including June 2018 through June 2019 for a
quantity of approximately 400,000 barrels. As of March 31, 2019,
the estimated mark-to-market value of the remaining commodity price
swaps for 68,000 barrels in 2019 was an asset of $0.5 million,
which is recorded on the “Prepayments and other” line item on the
condensed consolidated balance sheet.
On May 6, 2019, the Company entered into
commodity swaps at a Dated Brent weighted average of $66.70 per
barrel for the period from and including July 2019 through June
2020 for a quantity of 500,000 barrels. These swaps settle on
a monthly basis.
Costs and Expenses
Total production expense, excluding workovers,
was $8.1 million, or $27.30 per barrel of oil sales, in the first
quarter of 2019, compared to $10.7 million, or $27.17 per barrel of
oil sales, in the first quarter of 2018, and $9.6 million, or
$23.84 per barrel of oil sales in the fourth quarter of 2018.
First quarter 2019 costs were lower as a result of lower sales
volumes.
Depreciation, depletion and amortization
(DD&A) expense was $1.6 million, or $5.23 per barrel of oil
sales in the three months ended March 31, 2019 compared to $1.1
million, or $2.86 per barrel of oil sales in the comparable period
in 2018, and $2.3 million, or $5.75 per barrel of oil sales in the
fourth quarter of 2018. DD&A per barrel increased from
2018 due to the increase in depletable costs associated with the
PSC bonus payment paid in 2018.
General and administrative (G&A) expense
excluding non-cash stock compensation for the first quarter 2019
was $2.7 million, or $9.15 per barrel of oil sales, as compared to
$2.3 million, or $6.14 per barrel of oil sales in the first quarter
2018 and $2.5 million, or $5.82 per barrel of oil sales in the
fourth quarter of 2018. General and administrative expense includes
$1.7 million, $0.3 million, and $(1.5) million of stock-based
compensation expense for the quarters ended March 31, 2019 and 2018
and December 31, 2018, respectively. Stock-based compensation
expense related to SARs was $1.7 million during the three months
ended March 31, 2019 as compared to $0.2 million in the comparable
2018 period, and therefore accounted for the bulk of the increase.
Because the Company’s SARs are cash settled, these awards are
adjusted to fair value each period, and as a result of the increase
in VAALCO’s stock price in 2019, the amount of expense has
increased significantly.
Income tax for the first quarter of 2019 was an
expense of $2.8 million compared to an expense of $4.0 million for
the same period in 2018, and an expense of $11.3 million in the
fourth quarter of 2018. Income tax expense for the three
months ended March 31, 2019 includes $1.8 million of deferred tax
expense and a current tax provision of $1.0 million. For the three
months ended March 31, 2018, VAALCO had a current provision of $4.0
million and no amounts related to the deferred provision. The
decrease in the current provision is primarily attributable to
Gabon income taxes which were impacted by the decline in revenues
between periods. With respect to deferred income tax, for
periods prior to the three months ended September 30, 2018, the
Company had full valuation allowances on its net deferred tax
assets, and deferred income tax was zero.
Capital Investments/Balance
Sheet
During the three months ended March 31, 2019,
VAALCO invested approximately $0.8 million in capital expenditures
on a cash basis, primarily for equipment and other. The
Company has commitments for capital expenditures related to the
drilling of two development wells and two appraisal well bores at
an estimated cost of $20.5 million, net to VAALCO. The
Company is planning to drill these wells and a possible third well
in the second half of 2019 and first quarter of 2020. The
third well is subject to approval by the joint venture owners and
the government of Gabon. VAALCO currently expects any capital
expenditures made during 2019 will be funded by cash on hand and
cash flow from operations.
At the end of the first quarter, VAALCO had
Working Capital from Continuing Operations excluding lease
liabilities of $33.8 million, and an unrestricted cash balance of
$46.2 million. The unrestricted cash balance included $4.4
million of cash attributable to non-operating joint venture owner
advances.
Beginning with the first quarter of 2018, the
government of Gabon elected to lift its share of oil (which is
reported as current income tax expense) separately from the Etame
Marin joint interest owners. As a result, Gabon income taxes
are now being settled when the government of Gabon lifts its share
of production. Such settlements are expected to occur once or
twice per year, depending on production levels. The
government of Gabon took its first lifting of oil since making its
election in September 2018. At March 31, 2019, VAALCO had
$4.5 million of foreign taxes payable.
Conference Call
As previously announced, the Company will hold a
conference call to discuss its second quarter financial and
operating results May 9, 2019, at 9:00 a.m. Central Time (10:00
a.m. Eastern Time). Interested parties may participate by dialing
(844) 841-1668. International parties may dial (661)
378-9859. The confirmation code is 8855286. 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.
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 amounts due in connection with the Company’s withdrawal
from Angola, expected sources of future capital funding and future
liquidity, future operating losses, future changes in oil and
natural gas prices, future strategic alternatives, capital
expenditures, future drilling plans, prospect evaluations,
negotiations with governments and third parties, timing of the
settlement of Gabon income taxes, expectations regarding processing
facilities, production, sales and financial projections, reserve
growth, and other issues related to VAALCO’s exit from
Angola. 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, oil and gas price
volatility, inflation, general economic conditions, 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,
the risk that the negotiations with the government of the Republic
of Angola will be unsuccessful, lack of availability of goods,
services and capital, environmental risks, drilling risks, foreign
regulatory and operational risks, and regulatory changes.
These and other risks are further described in
VAALCO's annual report on Form 10-K for the year ended December 31,
2018, quarterly reports on Form 10-Q and other reports filed with
the SEC which can be reviewed at http://www.sec.gov, or which can
be received by contacting VAALCO at 9800 Richmond Avenue, Suite
700, Houston, Texas 77042, (713) 623-0801. 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.
About VAALCO
VAALCO Energy, Inc. is a Houston, Texas based
independent energy company principally engaged in the acquisition,
exploration, development and production of crude oil. VAALCO’s
strategy is to increase reserves and production through the
development and exploitation of international oil and natural gas
properties. The Company's properties and exploration acreage are
located primarily in Gabon and Equatorial Guinea in West
Africa.
Investor ContactAl
Petrie 713-543-3422
VAALCO ENERGY, INC AND SUBSIDIARIESConsolidated
Balance Sheets (Unaudited)(in thousands, except share and per share
amounts)
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
2019 |
|
2018 |
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
46,195 |
|
|
$ |
33,360 |
|
Restricted cash |
|
788 |
|
|
|
804 |
|
Receivables: |
|
|
|
|
|
Trade |
|
9,036 |
|
|
|
11,907 |
|
Accounts with joint venture owners, net of allowance of $0.5
million for both periods presented |
|
77 |
|
|
|
949 |
|
Other |
|
1,076 |
|
|
|
1,398 |
|
Crude oil inventory |
|
1,274 |
|
|
|
785 |
|
Prepayments and other |
|
3,580 |
|
|
|
6,301 |
|
Current assets - discontinued operations |
|
— |
|
|
|
3,290 |
|
Total current assets |
|
62,026 |
|
|
|
58,794 |
|
Oil and natural gas properties
and equipment - successful efforts method: |
|
|
|
|
|
Wells, platforms and other production facilities |
|
409,283 |
|
|
|
409,487 |
|
Work-in-progress |
|
1,130 |
|
|
|
519 |
|
Undeveloped acreage |
|
23,771 |
|
|
|
23,771 |
|
Equipment and other |
|
9,843 |
|
|
|
9,552 |
|
|
|
444,027 |
|
|
|
443,329 |
|
Accumulated depreciation,
depletion, amortization and impairment |
|
(391,960 |
) |
|
|
(390,605 |
) |
Net oil and natural gas properties, equipment and other |
|
52,067 |
|
|
|
52,724 |
|
Other noncurrent assets: |
|
|
|
|
|
Restricted cash |
|
921 |
|
|
|
920 |
|
Value added tax and other receivables, net of allowance of $1.3
million and $2.0 million, respectively |
|
1,444 |
|
|
|
2,226 |
|
Right of use operating lease assets |
|
36,631 |
|
|
|
— |
|
Deferred tax assets |
|
37,021 |
|
|
|
40,077 |
|
Abandonment funding |
|
11,390 |
|
|
|
11,571 |
|
Total assets |
$ |
201,500 |
|
|
$ |
166,312 |
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
$ |
4,174 |
|
|
$ |
8,083 |
|
Accounts with joint venture owners |
|
4,421 |
|
|
|
304 |
|
Accrued liabilities and other |
|
15,158 |
|
|
|
14,138 |
|
Operating lease liabilities |
|
10,334 |
|
|
|
— |
|
Foreign taxes payable |
|
4,505 |
|
|
|
3,274 |
|
Current liabilities - discontinued operations |
|
4,675 |
|
|
|
15,245 |
|
Total current liabilities |
|
43,267 |
|
|
|
41,044 |
|
Asset retirement
obligations |
|
15,014 |
|
|
|
14,816 |
|
Long-term operating lease
liabilities |
|
26,297 |
|
|
|
— |
|
Other long term
liabilities |
|
624 |
|
|
|
625 |
|
Total liabilities |
|
85,202 |
|
|
|
56,485 |
|
Commitments and
contingencies |
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
Preferred stock, none issued, 500,000 shares authorized, $25 par
value |
|
— |
|
|
|
— |
|
Common stock, $0.10 par value; 100,000,000 shares authorized,
67,327,997 and 67,167,994 shares issued, 59,711,298 and 59,595,743
shares outstanding, respectively |
|
6,733 |
|
|
|
6,717 |
|
Additional paid-in capital |
|
72,417 |
|
|
|
72,358 |
|
Less treasury stock, 7,616,699 and 7,572,251 shares, respectively,
at cost |
|
(37,932 |
) |
|
|
(37,827 |
) |
Retained earnings |
|
75,080 |
|
|
|
68,579 |
|
Total shareholders' equity |
|
116,298 |
|
|
|
109,827 |
|
Total liabilities and shareholders' equity |
$ |
201,500 |
|
|
$ |
166,312 |
|
|
VAALCO ENERGY, INC AND SUBSIDIARIESConsolidated Statements of
Operations (Unaudited)(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
March 31, 2019 |
|
March 31, 2018 |
|
December 31, 2018 |
Revenues: |
|
|
|
|
|
|
|
|
Oil and natural gas sales |
$ |
19,765 |
|
|
$ |
27,645 |
|
|
$ |
27,606 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
|
Production expense |
|
8,219 |
|
|
|
10,960 |
|
|
|
9,157 |
|
Exploration expense |
|
— |
|
|
|
— |
|
|
|
2 |
|
Depreciation, depletion and amortization |
|
1,553 |
|
|
|
1,124 |
|
|
|
2,307 |
|
General and administrative expense |
|
4,439 |
|
|
|
2,603 |
|
|
|
976 |
|
Bad debt recovery and other |
|
(29 |
) |
|
|
(56 |
) |
|
|
(9 |
) |
Total operating costs and expenses |
|
14,182 |
|
|
|
14,631 |
|
|
|
12,433 |
|
Other operating income (expense), net |
|
(37 |
) |
|
|
24 |
|
|
|
33 |
|
Operating income |
|
5,546 |
|
|
|
13,038 |
|
|
|
15,206 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
Derivative instruments gain (loss), net |
|
(1,912 |
) |
|
|
— |
|
|
|
6,300 |
|
Interest income (expense), net |
|
187 |
|
|
|
(354 |
) |
|
|
128 |
|
Other, net |
|
(238 |
) |
|
|
69 |
|
|
|
216 |
|
Total other expense, net |
|
(1,963 |
) |
|
|
(285 |
) |
|
|
6,644 |
|
Income from continuing
operations before income taxes |
|
3,583 |
|
|
|
12,753 |
|
|
|
21,850 |
|
Income tax expense |
|
2,753 |
|
|
|
4,042 |
|
|
|
11,346 |
|
Income from continuing
operations |
|
830 |
|
|
|
8,711 |
|
|
|
10,504 |
|
Income (loss) from
discontinued operations, net of tax |
|
5,671 |
|
|
|
(52 |
) |
|
|
(80 |
) |
Net income |
$ |
6,501 |
|
|
$ |
8,659 |
|
|
$ |
10,424 |
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per
share: |
|
|
|
|
|
|
|
|
Income from continuing operations |
$ |
0.01 |
|
|
$ |
0.15 |
|
|
$ |
0.17 |
|
Income (loss) from discontinued operations, net of tax |
|
0.09 |
|
|
|
0.00 |
|
|
|
0.00 |
|
Net income per share |
$ |
0.10 |
|
|
$ |
0.15 |
|
|
$ |
0.17 |
|
Basic weighted average shares outstanding |
|
59,630 |
|
|
|
58,863 |
|
|
|
59,547 |
|
Diluted net income (loss) per
share: |
|
|
|
|
|
|
|
|
Income from continuing operations |
$ |
0.01 |
|
|
$ |
0.15 |
|
|
$ |
0.17 |
|
Income (loss) from discontinued operations, net of tax |
|
0.09 |
|
|
|
0.00 |
|
|
|
0.00 |
|
Net income per share |
$ |
0.10 |
|
|
$ |
0.15 |
|
|
$ |
0.17 |
|
Diluted weighted average shares outstanding |
|
60,683 |
|
|
|
58,863 |
|
|
|
60,445 |
|
|
VAALCO ENERGY, INC AND SUBSIDIARIESConsolidated Statements of
Cash Flows (Unaudited)(in thousands)
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
CASH FLOWS FROM OPERATING
ACTIVITIES: |
|
|
|
|
|
Net income |
$ |
6,501 |
|
|
$ |
8,659 |
|
Adjustments to reconcile net
income to net cash provided by (used in) operating activities: |
|
|
|
|
|
(Income) loss from discontinued operations |
|
(5,671 |
) |
|
|
52 |
|
Depreciation, depletion and amortization |
|
1,553 |
|
|
|
1,124 |
|
Other amortization |
|
60 |
|
|
|
60 |
|
Deferred taxes |
|
1,742 |
|
|
|
— |
|
Unrealized foreign exchange gain |
|
(12 |
) |
|
|
(75 |
) |
Stock-based compensation |
|
1,723 |
|
|
|
314 |
|
Derivatives instruments loss |
|
1,912 |
|
|
|
— |
|
Cash settlements received on matured derivative contracts, net |
|
1,131 |
|
|
|
— |
|
Bad debt recovery and other |
|
(29 |
) |
|
|
(56 |
) |
Other operating (income) loss, net |
|
37 |
|
|
|
(24 |
) |
Operational expenses associated with equipment and other |
|
(109 |
) |
|
|
172 |
|
Change in operating assets and liabilities: |
|
|
|
|
|
Trade receivables |
|
2,871 |
|
|
|
(4,704 |
) |
Accounts with joint venture owners |
|
4,986 |
|
|
|
8,129 |
|
Other receivables |
|
311 |
|
|
|
37 |
|
Crude oil inventory |
|
(489 |
) |
|
|
1,984 |
|
Prepayments and other |
|
(202 |
) |
|
|
(804 |
) |
Value added tax and other receivables |
|
738 |
|
|
|
83 |
|
Accounts payable |
|
(3,923 |
) |
|
|
(1,291 |
) |
Foreign taxes payable |
|
1,037 |
|
|
|
1,849 |
|
Accrued liabilities and other |
|
(581 |
) |
|
|
149 |
|
Net cash provided by continuing operating activities |
|
13,586 |
|
|
|
15,658 |
|
Net cash used in discontinued operating activities |
|
(101 |
) |
|
|
(591 |
) |
Net cash provided by operating activities |
|
13,485 |
|
|
|
15,067 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
Property and equipment expenditures |
|
(788 |
) |
|
|
(423 |
) |
Net cash used in continuing investing activities |
|
(788 |
) |
|
|
(423 |
) |
Net cash used in discontinued investing activities |
|
— |
|
|
|
— |
|
Net cash used in investing activities |
|
(788 |
) |
|
|
(423 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
Proceeds from the issuances of common stock |
|
47 |
|
|
|
— |
|
Treasury shares |
|
(105 |
) |
|
|
— |
|
Debt repayment |
|
— |
|
|
|
(2,083 |
) |
Net cash used in continuing
financing activities |
|
(58 |
) |
|
|
(2,083 |
) |
Net cash used in discontinued
financing activities |
|
— |
|
|
|
— |
|
Net cash used in financing
activities |
|
(58 |
) |
|
|
(2,083 |
) |
NET CHANGE IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH |
|
12,639 |
|
|
|
12,561 |
|
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH AT BEGINNING OF PERIOD |
|
46,655 |
|
|
|
32,286 |
|
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH AT END OF PERIOD |
$ |
59,294 |
|
|
$ |
44,847 |
|
|
VAALCO ENERGY, INC AND SUBSIDIARIESSelected Financial and
Operating Statistics(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
March 31, 2019 |
|
March 31, 2018 |
|
December 31, 2018 |
NET SALES DATA: |
|
|
|
|
|
|
|
|
Oil (MBbls) |
|
297 |
|
|
393 |
|
|
401 |
Average daily sales volumes (bbls/day) |
|
3,300 |
|
|
4,367 |
|
|
4,359 |
NET PRODUCTION DATA |
|
|
|
|
|
|
|
|
Oil (MBbls) |
|
315 |
|
|
325 |
|
|
342 |
Average daily production volumes (bbls/day) |
|
3,496 |
|
|
3,611 |
|
|
3,717 |
|
|
|
|
|
|
|
|
|
AVERAGE SALES PRICES: |
|
|
|
|
|
|
|
|
Oil ($/Bbl) |
$ |
64.17 |
|
$ |
68.69 |
|
$ |
64.52 |
COSTS AND EXPENSES (PER BOPD
OF SALES): |
|
|
|
|
|
|
|
|
Production expense |
$ |
27.67 |
|
$ |
27.89 |
|
$ |
22.84 |
Production expense, excluding workovers* |
|
27.30 |
|
|
27.17 |
|
|
23.84 |
Depreciation, depletion and amortization |
|
5.23 |
|
|
2.86 |
|
|
5.75 |
General and administrative expense** |
|
14.95 |
|
|
6.62 |
|
|
2.43 |
Property and equipment
expenditures, cash basis (in thousands) |
$ |
788 |
|
$ |
423 |
|
$ |
922 |
*Workover costs excluded from the three months ended March 31,
2019 and 2018 and December 31, 2018 are $0.1 million, $0.3 million
and $ (0.4) million, respectively.**General and administrative
expenses include $5.80, $0.80 and $ (3.71) barrel of oil of sales
of stock-based compensation expense in the three months ended March
31, 2019, and 2018 and December 31, 2018, respectively.
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 (expense) net, income tax expense,
depletion, depreciation and amortization, impairment of proved
properties, exploration expense, non-cash and other items including
stock compensation expense and unrealized commodity derivative
loss.
Adjusted EBITDAX has significant limitations,
including that it does not reflect the Company’s cash requirements
for capital expenditures, contractual commitments, working capital
or debt service. Adjusted EBITDAX should not be considered as a
substitute 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 excludes 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 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 EBITDAX Adjusted
Income from Continuing Operations and Working Capital from
Continuing Operations.
VAALCO ENERGY, INC AND SUBSIDIARIESReconciliations of Non-GAAP
Financial Measures(Unaudited)(in thousands)
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Reconciliation of Net
income to Adjusted EBITDAX |
March 31, 2019 |
|
March 31, 2018 |
|
December 31, 2018 |
Net income |
$ |
6,501 |
|
|
$ |
8,659 |
|
|
$ |
10,424 |
|
Add back: |
|
|
|
|
|
|
|
|
Impact of discontinued operations |
|
(5,671 |
) |
|
|
52 |
|
|
|
80 |
|
Interest expense (income), net |
|
(187 |
) |
|
|
354 |
|
|
|
(128 |
) |
Income tax expense |
|
2,753 |
|
|
|
4,042 |
|
|
|
11,346 |
|
Depreciation, depletion and amortization |
|
1,553 |
|
|
|
1,124 |
|
|
|
2,307 |
|
Exploration expense |
|
— |
|
|
|
— |
|
|
|
2 |
|
Non-cash or unusual
items: |
|
|
|
|
|
|
|
|
Stock-based compensation |
|
1,723 |
|
|
|
314 |
|
|
|
(1,486 |
) |
Unrealized derivative instruments (gain) loss |
|
3,043 |
|
|
|
— |
|
|
|
(5,584 |
) |
Equipment recovery (disposal) |
|
37 |
|
|
|
(24 |
) |
|
|
(33 |
) |
Bad debt recovery and other |
|
(29 |
) |
|
|
(56 |
) |
|
|
(9 |
) |
Adjusted EBITDAX |
$ |
9,723 |
|
|
$ |
14,465 |
|
|
$ |
16,919 |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Reconciliation of Net
Income to Adjusted Net Income |
March 31, 2019 |
|
March 31, 2018 |
|
December 31, 2018 |
Net income |
$ |
6,501 |
|
|
$ |
8,659 |
|
|
10,424 |
|
Adjustment for discrete
items: |
|
|
|
|
|
|
|
|
Discontinued operations, net of tax |
|
(5,671 |
) |
|
|
52 |
|
|
80 |
|
Unrealized derivative instruments (gain) loss |
|
3,043 |
|
|
|
— |
|
|
(5,584 |
) |
Deferred income tax expense |
|
1,742 |
|
|
|
— |
|
|
9,284 |
|
Adjusted net income |
$ |
5,615 |
|
|
$ |
8,711 |
|
$ |
14,204 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of
changes in working capital from continuing operations |
March 31,2019 |
|
December 31,2018 |
|
Change |
Current assets |
$ |
62,026 |
|
$ |
55,504 |
|
$ |
6,522 |
Current liabilities |
|
28,258 |
|
|
25,799 |
|
|
2,459 |
Working capital from
continuing operations (1) |
$ |
33,768 |
|
$ |
29,705 |
|
$ |
4,063 |
(1) Excludes current assets and current liabilities
attributable to discontinued operations and lease liabilities.
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