Financial Data and Key Metrics Changes - The company reported a quarterly production increase of 7% to 19,676 NRI barrels of oil equivalent per day, or 24,863 barrels on a working interest basis, exceeding production guidance [11][12] - Adjusted EBITDAX grew by 37% to $65.3 million, which was $17.5 million higher than Q1 2023, despite lower realized pricing [13][45] - Cash from operations was $77.6 million, funding $27.1 million in capital expenditures, with a strong cash balance of $46.2 million at quarter-end and no bank debt [13][50] Business Line Data and Key Metrics Changes - In Egypt, the drilling campaign included 12 vertical wells, achieving a significant reduction in drilling time from an average of 38 days per well in 2022 to 8-15 days in 2023, representing a 60% reduction [16][18] - Canada set a production record in 2023, with the completion of the drilling and completions program, and plans to optimize future prospects with longer lateral wells [20][29] - Gabon saw strong production numbers despite minimal new capital expenditures in 2023, benefiting from the new FSO's cost savings and increased storage capacity [22][23] Market Data and Key Metrics Changes - The company experienced a 47% increase in sales compared to Q1 2023, driven by higher production and sales volumes in Gabon, Egypt, and Canada [12][39] - Brent crude prices dropped about 4% quarterly, impacting realized pricing, particularly in Egypt where all Q2 sales were sold domestically [39][40] - Natural gas liquid and natural gas pricing in Canada saw significant declines, with benchmark natural gas pricing down 39% [40] Company Strategy and Development Direction - The company aims to optimize production, manage costs, and allocate capital for future growth, focusing on operational efficiencies and environmental stewardship [8][18] - Plans for 2024 include a three to four well drilling program, contingent on rig availability and market conditions [31][68] - The company is engaged in final PSC negotiations regarding blocks G and H in Gabon, indicating potential for future growth [32][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued strong performance in the second half of 2023, with expectations to build cash reserves for future projects [63][68] - The company noted increased competition in their operational areas, particularly from European oil and gas companies, which may complicate future opportunities [106] - Management highlighted the importance of maintaining operational efficiency and maximizing shareholder returns amidst changing market dynamics [64][115] Other Important Information - The company has returned $15 million through a share buyback program since November 2022 and plans to continue this program [9][66] - The company is bank debt-free and has a strategic vision focused on growth and maximizing shareholder returns [34][61] - An updated supplemental earnings deck was provided for better transparency regarding sales pricing and production at the country level [59] Q&A Session Summary Question: Is it too early to talk about potential CapEx for the 2024-2025 Gabon drilling program? - Management indicated that preliminary numbers are being worked on, and they are gathering market information for well locations and types of wells to be drilled [73][78] Question: What is causing the dramatic decrease in drilling times in Egypt? - Management attributed the decrease to better coordination on equipment delivery and changes in personnel, leading to improved drilling and completion efficiency [80][81] Question: Can you quantify the positive impact of the SEENT gasline fix on costs? - The fix is expected to reduce diesel costs by approximately $500,000 to $600,000 per month once completed, with repair costs estimated between $2 million and $3 million [87][89] Question: What is the update on the contiguous property in Gabon with BW? - Progress has been made, but finalization may not occur before the upcoming elections in Gabon [117] Question: Where are you in understanding the geology of the Dentale? - The company is studying the Dentale's geology, focusing on permeability issues and planning for future drilling campaigns [121][124]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number 1-32167 VAALCO Energy, Inc. (Exact name of registrant as specified in its charter) Delaware 76-0274 ...

Operational Highlights - Q1 2023 production increased to 18,306 net BOEPD, up 27% from Q4 2022 and up 127% from Q1 2022[3] - Strong drilling results in Egypt added over 1,000 BO/d in early May[3] - VAALCO finalized documents for Block P in Equatorial Guinea, including the Venus development[3] Financial Highlights - The company paid a quarterly cash dividend of $0.0625 per share for Q1 2023, a 92% increase from $0.0325 per share in 2022[4] - Q1 2023 net income was $3.5 million ($0.03 per diluted share), and Adjusted Net Income was $7.3 million ($0.07 per diluted share)[4] - VAALCO returned $10.5 million to shareholders through share buybacks from November 2022 to May 9, 2023[4] - Adjusted EBITDAX for Q1 2023 was $47.8 million[10] - The company had a strong, bank debt-free balance sheet with $52.1 million in unrestricted cash and $40.2 million in Adjusted Working Capital[10] Production and Sales - VAALCO sold 1,224,000 NRI BOE in Q1 2023, with Q2 2023 NRI BOE sales guidance of 1,420,000 to 1,570,000[7]

VAALCO Energy, Inc. (NYSE:EGY) Q1 2023 Earnings Conference Call May 10, 2023 11:00 AM ET Company Participants Chris Delange - Investor Relations Coordinator George Maxwell - Chief Executive Officer Ron Bain - Chief Financial Officer Conference Call Participants John White - ROTH Capital Stephane Foucaud - Auctus Advisors Charlie Sharp - Canaccord Jeff Robertson - Water Tower Research Bill Dezellem - Tieton Capital Operator Ladies and gentlemen, thank you for standing by. Welcome to the VAALCO Energy First Q ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part contains the unaudited condensed consolidated financial statements and related notes for VAALCO Energy, Inc [ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)](index=4&type=section&id=ITEM%201.%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20%28unaudited%29) This section presents VAALCO Energy, Inc.'s unaudited condensed consolidated financial statements and related notes, covering financial position, operations, equity, and cash flows [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of VAALCO's financial position, detailing assets, liabilities, and shareholders' equity at specific points in time Condensed Consolidated Balance Sheets (in thousands) | Item | As of March 31, 2023 (in thousands) | As of December 31, 2022 (in thousands) | | :----------------------------------- | :---------------------------------- | :----------------------------------- | | Total Assets | $823,983 | $855,641 | | Total Liabilities | $368,808 | $389,536 | | Total Shareholders' Equity | $455,175 | $466,105 | | Cash and cash equivalents | $52,119 | $37,205 | | Trade receivables, net | $30,795 | $52,147 | | Crude oil inventory | $11,778 | $3,335 | | Accounts payable | $49,982 | $59,886 | | Retained earnings | $140,639 | $147,024 | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) This section outlines VAALCO's financial performance over specific periods, including revenues, expenses, operating income, and net income Condensed Consolidated Statements of Operations and Comprehensive Income (in thousands) | Item | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Crude oil, natural gas and NGLs sales | $80,403 | $68,656 | | Total operating costs and expenses | $58,784 | $28,646 | | Operating income | $21,619 | $40,005 | | Derivative instruments gain (loss), net | $21 | $(31,758) | | Income tax expense (benefit) | $14,771 | $(4,628) | | Net income | $3,470 | $12,164 | | Basic net income per share | $0.03 | $0.21 | | Diluted net income per share | $0.03 | $0.20 | [Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) This section details changes in VAALCO's shareholders' equity, including retained earnings, treasury stock, and dividend distributions Condensed Consolidated Statements of Shareholders' Equity (in thousands) | Item | Balance at January 1, 2023 (in thousands) | Balance at March 31, 2023 (in thousands) | | :----------------------------------- | :-------------------------------------- | :------------------------------------- | | Total Shareholders' Equity | $466,105 | $455,175 | | Retained Earnings | $147,024 | $140,639 | | Treasury Stock | $(47,652) | $(53,029) | | Dividend Distributions (Q1 2023) | N/A | $(6,735) | - Retained earnings decreased by **$6.385 million** in Q1 2023, primarily due to dividend distributions and a cumulative effect adjustment from ASU 2016-13 adoption, partially offset by net income[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from VAALCO's operating, investing, and financing activities over specific periods Cash Flow Activity (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash provided by (used in) operating activities | $42,006 | $(758) | | Net cash used in investing activities | $(27,700) | $(23,148) | | Net cash used in financing activities | $(13,539) | $(2,118) | | Net change in cash, cash equivalents and restricted cash | $458 | $(26,024) | | Cash, cash equivalents and restricted cash at end of period | $60,234 | $46,290 | - The significant increase in net cash provided by operating activities in Q1 2023 was driven by lower cash settlements on derivative contracts and positive changes in receivables and foreign income taxes, despite lower net income[278](index=278&type=chunk) - Net cash used in financing activities increased due to higher dividend distributions (**$6.7 million**) and treasury stock repurchases (**$5.4 million**) in Q1 2023[280](index=280&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [1. ORGANIZATION AND ACCOUNTING POLICIES](index=9&type=section&id=1.%20ORGANIZATION%20AND%20ACCOUNTING%20POLICIES) This note details VAALCO's core business, significant accounting policies, and key operational factors including OPEC+ impacts and supply chain issues - VAALCO is an independent energy company engaged in the acquisition, exploration, development, and production of crude oil, natural gas, and NGLs, with operations in Gabon, Canada, and Egypt, and opportunities in Equatorial Guinea[17](index=17&type=chunk)[245](index=245&type=chunk) - OPEC+ announced plans to reduce overall oil production, including a voluntary reduction by the Gabonese government of **8 thousand barrels per day** starting May 2023, though VAALCO has not received a mandate to reduce its current oil production from the Etame Marin block[21](index=21&type=chunk)[328](index=328&type=chunk) - The average Brent crude oil price for the three months ended March 31, 2023, was **$81 per barrel**, a decrease from **$100 per barrel** for the same period in 2022[22](index=22&type=chunk)[339](index=339&type=chunk) - The company is experiencing lengthened lead times and increased prices for materials due to global supply chain issues, the Russia-Ukraine conflict, China's economic slowdown, inflation, and higher interest rates[23](index=23&type=chunk)[24](index=24&type=chunk)[325](index=325&type=chunk) Cash, Cash Equivalents and Restricted Cash Reconciliation (in thousands) | Item | As of March 31, 2023 (in thousands) | As of December 31, 2022 (in thousands) | | :--------------------------------- | :---------------------------------- | :----------------------------------- | | Cash and cash equivalents | $52,119 | $18,939 | | Restricted cash - current | $76 | $4,230 | | Restricted cash - non-current | $1,771 | $1,752 | | Abandonment funding | $6,268 | $21,369 | | **Total** | **$60,234** | **$46,290** | - The Gabonese Directorate of Hydrocarbons approved a **$26.6 million** (**$15.6 million** net to VAALCO) abandonment funding payment associated with the FPSO retirement in Q1 2023, which the company received[32](index=32&type=chunk)[159](index=159&type=chunk) - As of March 31, 2023, the company had **$16.8 million** in current receivables from the Gabon refinery for crude oil delivered and **$50.3 million** remaining from a **$67.5 million** effective date adjustment related to the Egypt Merged Concession Agreement[36](index=36&type=chunk)[37](index=37&type=chunk) - Upon adopting ASU 2016-13 on January 1, 2023, the company recognized a **$3.1 million** provision for current expected credit losses on other receivables (Gabon refinery) as a cumulative effect adjustment to retained earnings, with an additional **$0.4 million** provision recorded in Q1 2023[42](index=42&type=chunk) Fair Value of Financial Instruments (Level 2) (in thousands) | Item | As of March 31, 2023 (in thousands) | As of December 31, 2022 (in thousands) | | :--------------- | :---------------------------------- | :----------------------------------- | | Derivative asset | $124 | $102 | | SARs liability | $297 | $556 | [2. NEW ACCOUNTING STANDARDS](index=19&type=section&id=2.%20NEW%20ACCOUNTING%20STANDARDS) This note details the adoption of Accounting Standards Update 2016-13 (ASU 2016-13) on January 1, 2023, which mandates measuring credit losses based on expected credit losses. The company recognized a $3.1 million cumulative-effect adjustment to retained earnings upon adoption - VAALCO adopted ASU 2016-13 (ASC 326) on January 1, 2023, using the modified-retrospective approach[84](index=84&type=chunk) - Upon adoption, the company recognized a **$3.1 million** Expected Credit Loss (ECL) allowance as an opening balance adjustment to retained earnings[84](index=84&type=chunk) [3. ACQUISITIONS AND DISPOSITIONS](index=19&type=section&id=3.%20ACQUISITIONS%20AND%20DISPOSITIONS) This note discusses the significant business combination with TransGlobe Energy Corporation on October 13, 2022, which expanded VAALCO's operations into Egypt and Canada, and the financial impact of this merger. It also covers the classification of Angola and Yemen operations as discontinued - VAALCO completed the acquisition of TransGlobe Energy Corporation on October 13, 2022, issuing approximately **49.3 million** VAALCO shares to TransGlobe shareholders, resulting in VAALCO stockholders owning approximately **54.5%** of the combined company[85](index=85&type=chunk)[86](index=86&type=chunk) - The TransGlobe merger increased 'Crude oil, natural gas and NGLs sales' by **$43.7 million** and 'Net income' by **$9.7 million** for the three months ended March 31, 2023[89](index=89&type=chunk)[252](index=252&type=chunk) - An initial **$10.8 million** bargain purchase gain was recognized from the TransGlobe acquisition, later reduced to **$9.4 million** due to a deferred tax liability adjustment in Egypt[91](index=91&type=chunk) - Operations in Angola and Yemen have been classified as discontinued, with no material financial impact on the company's financial position, results of operations, or cash flows for the periods presented[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk)[276](index=276&type=chunk)[277](index=277&type=chunk) [4. SEGMENT INFORMATION](index=23&type=section&id=4.%20SEGMENT%20INFORMATION) This note provides a breakdown of VAALCO's financial performance and assets by geographic operating segment: Gabon, Egypt, Canada, Equatorial Guinea, and Corporate and Other. It highlights revenues, operating income, and capital expenditures for continuing operations Segment Revenues (Three Months Ended March 31, 2023) (in thousands) | Segment | Crude oil, natural gas and NGLs sales (in thousands) | | :------------------ | :--------------------------------------------------- | | Gabon | $36,737 | | Egypt | $34,784 | | Canada | $8,882 | | Equatorial Guinea | $0 | | Corporate and Other | $0 | | **Total** | **$80,403** | Segment Operating Income (Loss) (Three Months Ended March 31, 2023) (in thousands) | Segment | Operating income (loss) (in thousands) | | :------------------ | :------------------------------------- | | Gabon | $10,916 | | Egypt | $12,700 | | Canada | $2,917 | | Equatorial Guinea | $(491) | | Corporate and Other | $(4,423) | | **Total** | **$21,619** | - Consolidated capital expenditures for the three months ended March 31, 2023, totaled **$25.425 million**[100](index=100&type=chunk) - For Q1 2023, Glencore Energy UK Ltd. accounted for **100%** of Etame revenues in Gabon, and Mercuria accounted for **100%** of crude oil sales in Egypt, while Canada's revenues were concentrated in two customers (**59%** and **21%**)[103](index=103&type=chunk)[104](index=104&type=chunk) [5. EARNINGS PER SHARE](index=25&type=section&id=5.%20EARNINGS%20PER%20SHARE) This note details the calculation of basic and diluted earnings per share (EPS) for the three months ended March 31, 2023, and 2022, including the reconciliation of net income and weighted average shares outstanding Earnings Per Share Summary | Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Basic net income per share | $0.03 | $0.21 | | Diluted net income per share | $0.03 | $0.20 | | Basic weighted average shares outstanding (in thousands) | 107,387 | 58,702 | | Diluted weighted average shares outstanding (in thousands) | 108,752 | 59,179 | [6. REVENUE](index=26&type=section&id=6.%20REVENUE) This note outlines VAALCO's revenue recognition policies and sources across its operating segments in Gabon, Egypt, and Canada, detailing how sales, royalties, and profit oil arrangements contribute to net revenues Gabon Net Revenues (Three Months Ended March 31) (in thousands) | Item | 2023 (in thousands) | 2022 (in thousands) | | :-------------------------- | :------------------ | :------------------ | | Sales under COSPA or COSMA | $42,601 | $76,486 | | Carried interest recoupment | $0 | $1,112 | | Royalties | $(5,864) | $(8,942) | | **Net revenues** | **$36,737** | **$68,656** | Egypt Net Revenues (Three Months Ended March 31, 2023) (in thousands) | Item | 2023 (in thousands) | | :------------ | :------------------ | | Gross sales | $54,621 | | Royalties | $(19,340) | | Selling costs | $(497) | | **Net revenues** | **$34,784** | Canada Net Revenues (Three Months Ended March 31, 2023) (in thousands) | Item | 2023 (in thousands) | | :------------ | :------------------ | | Oil revenue | $6,654 | | Gas revenue | $958 | | NGL revenue | $2,463 | | Royalties | $(1,193) | | **Net revenues** | **$8,882** | - In Gabon, the government's share of Profit Oil can satisfy corporate income tax liability, which is reported as revenue with a corresponding income tax expense[115](index=115&type=chunk)[116](index=116&type=chunk) - Egypt's production is shared with the government through Production Sharing Contracts (PSCs), with cost oil used for cost recovery and profit oil split based on production levels and oil prices[123](index=123&type=chunk) [7. CRUDE OIL, NATURAL GAS and NGLs PROPERTIES AND EQUIPMENT](index=29&type=section&id=7.%20CRUDE%20OIL%2C%20NATURAL%20GAS%20and%20NGLs%20PROPERTIES%20AND%20EQUIPMENT) This note details VAALCO's crude oil, natural gas, and NGLs properties and equipment, including the successful efforts accounting method, impairment reviews, and capitalized equipment inventory. It provides updates on PSC terms and undeveloped leasehold costs across Gabon, Egypt, and Equatorial Guinea Net Crude Oil and Natural Gas Properties, Equipment and Other (in thousands) | Item | As of March 31, 2023 (in thousands) | As of December 31, 2022 (in thousands) | | :--------------------------------------------------- | :---------------------------------- | :----------------------------------- | | Net crude oil and natural gas properties, equipment and other | $499,953 | $495,272 | - The Etame Marin Block PSC in Gabon was extended to September 17, 2028, with two additional five-year extension options, and the Cost Recovery Percentage increased to **80%** until September 16, 2028[133](index=133&type=chunk)[135](index=135&type=chunk) - The Egypt Merged Concession Agreement (effective January 20, 2022) has a 15-year primary term, requiring annual **$10.0 million** modernization payments from February 2023 through February 2026 and minimum financial work commitments of **$50.0 million** per five-year period[136](index=136&type=chunk)[137](index=137&type=chunk) - VAALCO's participating interest in Equatorial Guinea's Block P increased to **60.0%** in February 2023, and the plan of development for the Venus discovery was approved in September 2022, providing a 25-year development and production period[147](index=147&type=chunk)[148](index=148&type=chunk)[274](index=274&type=chunk) Undeveloped Leasehold Costs (As of March 31, 2023) (in thousands) | Region | Amount (in thousands) | | :---------------- | :-------------------- | | Equatorial Guinea | $10,000 | | Gabon | $13,700 | | Egypt | $13,600 | | Canada | $16,700 | [8. DERIVATIVES AND FAIR VALUE](index=33&type=section&id=8.%20DERIVATIVES%20AND%20FAIR%20VALUE) This note describes VAALCO's use of derivative financial instruments, primarily collars, to mitigate crude oil price volatility, noting that hedge accounting is not elected. It provides details on outstanding contracts and subsequent hedging activities - VAALCO uses commodity derivative instruments (swaps and costless collars) to hedge price risk for a portion of its anticipated crude oil production, but does not elect hedge accounting[152](index=152&type=chunk)[285](index=285&type=chunk) Outstanding Derivative Contracts (As of March 31, 2023) | Settlement Period | Type of Contract | Index | Monthly Volumes (Bbls) | Weighted Average Put Price (per Bbl) | Weighted Average Call Price (per Bbl) | | :---------------- | :--------------- | :---------- | :--------------------- | :----------------------------------- | :------------------------------------ | | April 2023 - June 2023 | Collars | Dated Brent | 95,500 | $65.00 | $100.00 | - Subsequent to March 31, 2023, on April 3, 2023, the company entered into additional collars for July-September 2023, covering **95 thousand barrels per month**, with a weighted average put price of **$65.00 per barrel** and call price of **$96.00 per barrel**[156](index=156&type=chunk)[332](index=332&type=chunk) - Derivative instruments gain (loss), net changed from a loss of **$(31.758) million** in Q1 2022 to a gain of **$0.021 million** in Q1 2023[155](index=155&type=chunk) [9. CURRENT ACCRUED LIABILITIES AND OTHER](index=34&type=section&id=9.%20CURRENT%20ACCRUED%20LIABILITIES%20AND%20OTHER) This note itemizes the components of VAALCO's current accrued liabilities and other as of March 31, 2023, and December 31, 2022, showing a decrease in total accrued liabilities Current Accrued Liabilities and Other (in thousands) | Item | As of March 31, 2023 (in thousands) | As of December 31, 2022 (in thousands) | | :----------------------------------- | :---------------------------------- | :----------------------------------- | | Total accrued liabilities and other | $80,707 | $91,392 | | Accrued accounts payable invoices | $21,185 | $28,360 | | Capital expenditures | $27,850 | $26,618 | | Gabon DMO, PID and PIH obligations | $11,569 | $10,509 | | Egypt modernization payments | $9,373 | $9,933 | | Accrued wages and other compensation | $2,626 | $8,161 | [10. COMMITMENTS AND CONTINGENCIES](index=34&type=section&id=10.%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines VAALCO's significant commitments and contingencies, including abandonment funding, the FPSO charter, regulatory audits, dividend policy, share buyback program, and obligations under the Egypt Merged Concession Agreement and government-related receivables - The estimated abandonment funding for the Etame Marin block is **$81.3 million** (**$47.8 million** net to VAALCO) on an undiscounted basis, with the balance of the abandonment fund at **$10.7 million** (**$6.3 million** net) as of March 31, 2023[158](index=158&type=chunk)[306](index=306&type=chunk) - The FPSO charter was extended through October 4, 2022, with demobilization fees totaling **$15.3 million** gross (**$8.9 million** net), and VAALCO relinquished control in Q4 2022[161](index=161&type=chunk)[162](index=162&type=chunk) - VAALCO declared a quarterly cash dividend of **$0.0625 per common share** for Q1 2023 (paid March 31, 2023) and for Q2 2023 (to be paid June 23, 2023)[167](index=167&type=chunk)[246](index=246&type=chunk)[322](index=322&type=chunk) - A share buyback program for up to **$30 million** over 20 months was approved, with approximately **$22.5 million** remaining available for repurchase as of March 31, 2023[170](index=170&type=chunk)[324](index=324&type=chunk) - Under the Egypt Merged Concession Agreement, VAALCO has three further annual **$10.0 million** modernization payments due from February 2024 to February 2026, and minimum financial work commitments of **$50.0 million** per each five-year period[173](index=173&type=chunk)[174](index=174&type=chunk)[308](index=308&type=chunk) - A **$20.3 million** receivable from the Sogara refinery in Gabon for domestic market crude oil delivery is past due since November 2022, with ongoing discussions for recovery[178](index=178&type=chunk) [11. DEBT](index=37&type=section&id=11.%20DEBT) This note confirms that VAALCO had no outstanding debt as of March 31, 2023, and December 31, 2022. It details the senior secured reserve-based revolving credit facility (RBL Facility) with Glencore and the closure of TransGlobe's ATB Facility - VAALCO had no outstanding debt as of March 31, 2023, and December 31, 2022[179](index=179&type=chunk) - The company has a senior secured reserve-based revolving credit facility (RBL Facility) of up to **$50.0 million** with Glencore, with a borrowing base of **$50.0 million** as of March 31, 2023, and no amounts were outstanding under the facility[180](index=180&type=chunk)[185](index=185&type=chunk)[298](index=298&type=chunk)[303](index=303&type=chunk) - TransGlobe's credit facility with ATB Financial was repaid in full in October 2022 and formally closed on January 5, 2023[188](index=188&type=chunk) [12. LEASES](index=38&type=section&id=12.%20LEASES) This note explains VAALCO's accounting for operating and financing leases under ASC 842, including the recognition of Right of Use (ROU) assets and lease liabilities. It provides a breakdown of lease costs and future maturities Lease Cost (Three Months Ended March 31) (in thousands) | Item | 2023 (in thousands) | 2022 (in thousands) | | :-------------------- | :------------------ | :------------------ | | Finance lease cost | $4,365 | $66 | | Operating lease cost | $583 | $4,196 | | Short-term lease cost | $1,360 | $1,014 | | Variable lease cost | $0 | $1,338 | | **Total lease expense** | **$6,308** | **$6,614** | Weighted-Average Lease Terms and Discount Rates (As of March 31, 2023) | Lease Type | Weighted-Average Remaining Lease Term (years) | Weighted-Average Discount Rate | | :-------------- | :-------------------------------------------- | :----------------------------- | | Finance leases | 9.33 | 8.13% | | Operating leases | 1.14 | 10.29% | Future Maturities of Lease Liabilities (As of March 31, 2023) (in thousands) | Year | Operating Leases (in thousands) | Finance Leases (in thousands) | | :-------- | :------------------------------ | :---------------------------- | | 2023 | $1,829 | $10,377 | | 2024 | $672 | $13,759 | | 2025 | $33 | $15,559 | | 2026 | $0 | $16,156 | | 2027 | $0 | $15,023 | | Thereafter | $0 | $51,561 | | **Total Lease Liabilities** | **$2,407** | **$87,377** | [13. ASSET RETIREMENT OBLIGATIONS](index=41&type=section&id=13.%20ASSET%20RETIREMENT%20OBLIGATIONS) This note summarizes the changes in VAALCO's asset retirement obligations (ARO), including accretion, additions, revisions, and settlements. It also discusses the specific ARO considerations for Canadian and Egyptian operations Changes in Asset Retirement Obligations (in thousands) | Item | As of March 31, 2023 (in thousands) | As of December 31, 2022 (in thousands) | | :-------------------------- | :---------------------------------- | :----------------------------------- | | Beginning balance | $42,001 | $40,694 | | Accretion | $556 | $1,958 | | Additions | $0 | $6,134 | | Revisions | $79 | $(43) | | Settlements | $(123) | $(6,577) | | Foreign currency gain (loss) | $74 | $(165) | | **Ending balance** | **$42,587** | **$42,001** | - Additions in Q4 2022 included **$6.1 million** for Canadian assets due to the TransGlobe Arrangement[202](index=202&type=chunk) - Settlements in Q4 2022 included **$6.6 million** for FPSO decommissioning fees[203](index=203&type=chunk) - No asset retirement obligation is recorded for Egypt PSCs as of December 31, 2022, due to liabilities passing to the Egyptian Government or EGPC's discretion on decommissioning[205](index=205&type=chunk)[206](index=206&type=chunk) [14. SHAREHOLDERS' EQUITY](index=42&type=section&id=14.%20SHAREHOLDERS%27%20EQUITY) This note provides information on VAALCO's common stock, preferred stock, and treasury stock. It highlights the increase in authorized common shares following the TransGlobe acquisition and details the ongoing share buyback program - On October 13, 2022, authorized common stock increased from **100 million** to **160 million shares**, with approximately **49.3 million shares** issued to TransGlobe shareholders as part of the merger[208](index=208&type=chunk) - A share buyback program was approved on November 1, 2022, for an aggregate purchase of up to **$30 million** of common stock over 20 months[210](index=210&type=chunk) Common Stock Repurchases (Three Months Ended March 31, 2023) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Amount Remaining for Purchase | | :--------------------------- | :------------------------------- | :--------------------------- | :------------------------------------ | | January 1, 2023 - January 31, 2023 | 350,832 | $4.27 | $25,502,669 | | February 1, 2023 - February 28, 2023 | 326,992 | $4.59 | $24,003,172 | | March 1, 2023 - March 31, 2023 | 303,176 | $4.95 | $22,503,206 | | **Total** | **981,000** | | | [15. STOCK-BASED COMPENSATION AND OTHER BENEFIT PLANS](index=43&type=section&id=15.%20STOCK-BASED%20COMPENSATION%20AND%20OTHER%20BENEFIT%20PLANS) This note details VAALCO's stock-based compensation plans, including stock options, restricted shares, RSUs, PSUs, DSUs, and stock appreciation rights (SARs), and the associated compensation expense. It also covers the available shares under the 2020 Long-Term Incentive Plan Stock-Based Compensation Expense (Three Months Ended March 31) (in thousands) | Item | 2023 (in thousands) | 2022 (in thousands) | | :---------------------------------- | :------------------ | :------------------ | | Stock-based compensation - equity awards | $675 | $404 | | Stock-based compensation - liability awards | $(26) | $1,018 | | **Total stock-based compensation** | **$649** | **$1,422** | - As of March 31, 2023, **3.989 million shares** were available for future grants under the 2020 Long-Term Incentive Plan[214](index=214&type=chunk) - Awards from the TransGlobe merger, including RSUs, PSUs, and DSUs, were converted to equity awards settled in VAALCO common stock from the 2020 Plan[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk) Stock Appreciation Rights (SARs) Activity (Three Months Ended March 31, 2023) | Item | Number of Shares Underlying SARs (in thousands) | Aggregate Intrinsic Value (in thousands) | | :-------------------------- | :-------------------------------------------- | :--------------------------------------- | | Outstanding at March 31, 2023 | 139 | $304 | [16. INCOME TAXES](index=47&type=section&id=16.%20INCOME%20TAXES) This note details VAALCO's income tax provision, effective tax rate, and the components of current and deferred tax expense. It highlights the impact of foreign taxes and oil price adjustments on the tax expense Provision for Income Taxes (Three Months Ended March 31) (in thousands) | Item | 2023 (in thousands) | 2022 (in thousands) | | :-------------------- | :------------------ | :------------------ | | U.S. Federal Current | $0 | $0 | | U.S. Federal Deferred | $586 | $(12,486) | | Foreign Current | $12,300 | $5,691 | | Foreign Deferred | $1,885 | $2,167 | | **Total** | **$14,771** | **$(4,628)** | - The effective tax rate for Q1 2023 was **60.96%**, compared to **67.9%** for Q1 2022 (excluding discrete items)[235](index=235&type=chunk) - Q1 2023 current tax expense includes a **$3.2 million** unfavorable oil price adjustment related to the government of Gabon's allocation of Profit Oil[235](index=235&type=chunk) [17. OTHER COMPREHENSIVE INCOME](index=48&type=section&id=17.%20OTHER%20COMPREHENSIVE%20INCOME) This note clarifies that all of VAALCO's other comprehensive income (loss) is attributable to currency translation adjustments from TransGlobe's Canadian operations, whose functional currency is the Canadian dollar - VAALCO's other comprehensive loss for the three months ended March 31, 2023, was **$(0.1) million**[236](index=236&type=chunk) - This loss entirely arises from currency translation adjustments of TransGlobe Energy Corporation's Canadian operations, whose functional currency is the Canadian dollar, into USD[236](index=236&type=chunk)[237](index=237&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=49&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's analysis of VAALCO's financial condition, operational results, and key developments for the reported periods [CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS](index=49&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section outlines the inherent risks and uncertainties associated with forward-looking statements, emphasizing potential material differences in actual results - The report contains forward-looking statements subject to risks such as commodity price volatility, operational hazards, regulatory changes, and economic conditions, which could cause actual results to differ materially from expectations[239](index=239&type=chunk)[240](index=240&type=chunk)[245](index=245&type=chunk) - VAALCO disclaims any duty to update forward-looking statements, which are based on current expectations and best judgment, but actual events and results may vary materially[243](index=243&type=chunk)[244](index=244&type=chunk) [INTRODUCTION](index=50&type=section&id=INTRODUCTION) This section introduces VAALCO as an independent energy company engaged in crude oil, natural gas, and NGLs operations across multiple regions - VAALCO is a Houston-based independent energy company focused on the acquisition, exploration, development, and production of crude oil, natural gas, and NGLs[245](index=245&type=chunk) - The company operates in Gabon, Egypt, and Canada, with development and exploration opportunities in Equatorial Guinea, and has discontinued operations in Angola and Yemen[245](index=245&type=chunk) [RECENT DEVELOPMENTS](index=51&type=section&id=RECENT%20DEVELOPMENTS) This section highlights recent corporate actions, including dividend policy changes, share buyback programs, and the impact of the TransGlobe merger - VAALCO increased its quarterly cash dividend policy to **$0.0625 per common share**, with payments made on March 31, 2023, and declared for June 23, 2023[246](index=246&type=chunk) - A share buyback program was ratified for up to **$30 million** over 20 months, funded by cash on hand and cash flow from operations[248](index=248&type=chunk) - The TransGlobe merger, completed on October 13, 2022, increased 'Crude oil, natural gas and NGLs sales' by **$43.7 million** and 'Net income' by **$9.7 million** for Q1 2023[250](index=250&type=chunk)[252](index=252&type=chunk) - VAALCO entered into a senior secured reserve-based revolving credit facility (RBL Facility) of up to **$50.0 million** on May 16, 2022[253](index=253&type=chunk) [Recent Operational Updates](index=52&type=section&id=Recent%20Operational%20Updates) This section provides updates on drilling campaigns, infrastructure transitions, and production enhancements across VAALCO's operating assets - In Gabon, VAALCO completed its 2021/2022 drilling campaign, transitioned to a Floating Storage and Offloading (FSO) vessel in October 2022, and commissioned a gas lift compression system in Q1 2023, enhancing production and reliability[254](index=254&type=chunk)[255](index=255&type=chunk) - In Egypt, VAALCO completed the Arta 77Hz horizontal well and drilled and cased five development wells (EA-53, K-81, K-79, Arta-80 Red Bed, and Arta 81 Red Bed) in Q1 2023, with initial production rates ranging from **192 bopd** to **504 bopd**[258](index=258&type=chunk)[260](index=260&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk) - In Canada, two wells were tied in and producing in early 2023, and the 2023 drilling campaign commenced in January 2023 with two wells expected online in May 2023[268](index=268&type=chunk)[269](index=269&type=chunk) [ACTIVITIES BY ASSET](index=53&type=section&id=ACTIVITIES%20BY%20ASSET) This section details production volumes, working interests, and development plans for VAALCO's key assets in Gabon, Egypt, Canada, and Equatorial Guinea - Gabon's Etame Marin Block has 17 producing wells, with Q1 2023 production of **1.603 million barrels** (**820 thousand barrels** net)[270](index=270&type=chunk) - In Egypt, VAALCO holds a **100%** working interest in the Eastern Desert and Western Desert concessions, with Q1 2023 Eastern Desert production of **903 thousand barrels** (**616 thousand barrels** net)[271](index=271&type=chunk) - Canadian assets in Harmattan produced **239 thousand barrels of oil equivalent** (**211 thousand barrels of oil equivalent** net) in Q1 2023 from Cardium light oil and Mannville liquids-rich gas assets[273](index=273&type=chunk) - VAALCO's participating interest in Equatorial Guinea's Block P increased to **60.0%** in February 2023, and the Venus development plan has been initiated[274](index=274&type=chunk) [DISCONTINUED OPERATIONS - ANGOLA AND YEMEN](index=54&type=section&id=DISCONTINUED%20OPERATIONS%20-%20ANGOLA%20AND%20YEMEN) This section confirms the classification of Angola and Yemen operations as discontinued, noting their immaterial financial impact - The Angola and Yemen segments are classified as discontinued operations, having no material impact on VAALCO's financial position, results of operations, or cash flows for Q1 2023 and Q1 2022[276](index=276&type=chunk)[277](index=277&type=chunk) [CAPITAL RESOURCES AND LIQUIDITY](index=55&type=section&id=CAPITAL%20RESOURCES%20AND%20LIQUIDITY) This section analyzes VAALCO's cash flows, capital expenditures, hedging strategies, and overall liquidity position, including future commitments Cash Flow Summary (Three Months Ended March 31) (in thousands) | Cash Flow Activity | 2023 (in thousands) | 2022 (in thousands) | | :--------------------------------------- | :------------------ | :------------------ | | Net cash provided by (used in) operating activities | $42,006 | $(758) | | Net cash used in investing activities | $(27,700) | $(23,148) | | Net cash used in financing activities | $(13,539) | $(2,118) | - Accrual basis capital expenditures for Q1 2023 were **$25.4 million**, primarily for development drilling programs in Egypt and Canada[281](index=281&type=chunk) - VAALCO uses commodity derivative instruments (swaps and costless collars) to hedge price risk for a portion of its anticipated crude oil production, as required when drawing on the RBL Facility[285](index=285&type=chunk)[286](index=286&type=chunk) - Unrestricted cash on hand was **$52.1 million** at March 31, 2023[288](index=288&type=chunk) - VAALCO believes it has sufficient liquidity from existing cash balances and cash flow from operations (including Egypt and Canada segments) to support current cash requirements[296](index=296&type=chunk) - The Egypt Merged Concession Agreement requires **$10.0 million** annual modernization payments from February 2024-2026 and minimum financial work commitments of **$50.0 million** per five-year period[297](index=297&type=chunk)[308](index=308&type=chunk) - The RBL Facility has an aggregate maximum principal amount of up to **$50.0 million**, with a borrowing base of **$50.0 million** as of March 31, 2023, and no outstanding borrowings were reported[298](index=298&type=chunk)[299](index=299&type=chunk)[303](index=303&type=chunk) - The estimated abandonment funding for the Etame Marin block is approximately **$81.3 million** (**$47.8 million** net to VAALCO) on an undiscounted basis, with a fund balance of **$10.7 million** (**$6.3 million** net) at March 31, 2023[306](index=306&type=chunk) - VAALCO is part of the BWE Consortium, provisionally awarded two blocks in Gabon, committing to seismic campaigns and drilling exploration wells[311](index=311&type=chunk) - Key trends and uncertainties include geopolitical climate (Russia-Ukraine, China slowdown) impacting global supply chain, inflation, OPEC+ production cuts (Gabon voluntary reduction of **8 thousand barrels per day** from May 2023), ESG focus, and potential COVID-19 impacts[325](index=325&type=chunk)[326](index=326&type=chunk)[327](index=327&type=chunk)[328](index=328&type=chunk)[329](index=329&type=chunk)[330](index=330&type=chunk) [RESULTS OF OPERATIONS](index=63&type=section&id=RESULTS%20OF%20OPERATIONS) This section provides a detailed comparison of VAALCO's financial performance, including revenues, expenses, and net income, for the reported periods - Net income decreased to **$3.5 million** for Q1 2023, compared to **$12.2 million** for Q1 2022[336](index=336&type=chunk) - Crude oil and natural gas revenues increased by **$11.7 million** (**17%**) to **$80.4 million** in Q1 2023, driven by higher sales volumes from the TransGlobe acquisition, partially offset by lower realized sales prices[337](index=337&type=chunk)[340](index=340&type=chunk) Revenue Change Breakdown (Q1 2023 vs Q1 2022) (in thousands) | Factor | Change (in thousands) | | :----- | :-------------------- | | Price | $(53,832) | | Volume | $66,690 | | Other | $(1,111) | | **Total** | **$11,747** | Production and Sales Volumes & Prices (Three Months Ended March 31) | Item | 2023 | 2022 | | :------------------------------------------ | :--- | :--- | | Net crude oil, natural gas and NGLs production (MBoe) | 1,647 | 725 | | Net crude oil, natural gas and NGLs sales (MBoe) | 1,224 | 616 | | Average realized crude oil, natural gas and NGLs price ($/Boe) | $65.68 | $109.65 | | Average Dated Brent spot price ($/Bbl) | $81.07 | $100.87 | - Production expenses increased by **$9.8 million** (**54%**) to **$28.2 million** in Q1 2023, primarily due to the TransGlobe combination and higher operating costs, though per barrel production expense decreased to **$23.91 per barrel** from **$29.83 per barrel** due to higher sales volumes[343](index=343&type=chunk) - Depreciation, depletion and amortization costs increased by **$19.7 million** (**423%**) to **$24.4 million** in Q1 2023, mainly due to the FSO, field reconfiguration capital costs at Etame, and the fair value step-up of TransGlobe assets[345](index=345&type=chunk) - Derivative instruments gain (loss), net changed from a loss of **$(31.8) million** in Q1 2022 to an immaterial gain of **$0.021 million** in Q1 2023[350](index=350&type=chunk) - Income tax expense (benefit) shifted from a benefit of **$(4.6) million** in Q1 2022 to an expense of **$14.8 million** in Q1 2023[353](index=353&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=66&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section details VAALCO's exposure to various market risks, including foreign exchange risk, counterparty risk, and commodity price risk, and outlines the potential financial impact of adverse changes in these areas - VAALCO is exposed to foreign exchange risk, particularly with the Central African CFA Franc (XAF) in Gabon (net monetary assets of **$22.6 million** at March 31, 2023) and the Canadian dollar (CAD) in Canada, where a **10%** XAF weakening against the USD would reduce net assets by **$2.1 million**[356](index=356&type=chunk)[357](index=357&type=chunk) - Counterparty risk on derivative instruments is mitigated by engaging creditworthy financial institutions[359](index=359&type=chunk) - Commodity price risk is a major exposure, where a **$5 per barrel** decrease in crude oil price would cause a **$2.3 million** decrease per quarter in Gabon revenues/operating income (based on **459 thousand barrels** sales) and a **$1.1 million** decrease in Canada (based on **211 thousand barrels** sales)[361](index=361&type=chunk)[364](index=364&type=chunk) - VAALCO had unexpired derivative instruments covering approximately **287 thousand barrels** of production through June 2023 and an additional **285 thousand barrels** from July through September 2023 to hedge against crude oil price declines[366](index=366&type=chunk) - Interest rate risk is minimal as of March 31, 2023, with no amounts drawn under the RBL facility[367](index=367&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=68&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section reports that VAALCO's disclosure controls and procedures were not effective as of March 31, 2023, due to previously disclosed material weaknesses. However, management believes the financial statements are fairly presented and is actively implementing a remediation plan, with integration of TransGlobe's controls expected in Q2 2023 - VAALCO's disclosure controls and procedures were not effective as of March 31, 2023, due to material weaknesses in internal control over financial reporting[368](index=368&type=chunk) - Despite the material weaknesses, management believes the consolidated financial statements in this report fairly represent the company's financial condition, results of operations, and cash flows[369](index=369&type=chunk) - VAALCO is integrating TransGlobe's internal controls and plans to incorporate them into the evaluation of disclosure controls and procedures starting in Q2 2023[370](index=370&type=chunk) - A remediation plan is being implemented to address the material weaknesses, with expected completion by the end of fiscal year 2023[371](index=371&type=chunk) [PART II. OTHER INFORMATION](index=69&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part contains additional information not covered in the financial statements, including legal matters, risk factors, equity sales, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=69&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section states that VAALCO is involved in litigation and governmental/regulatory proceedings in the ordinary course of business, but management believes none of these are material to the company's operations - VAALCO is subject to litigation claims and governmental and regulatory proceedings arising in the ordinary course of business[374](index=374&type=chunk) - Management's opinion is that none of the current claims and litigation are material to the company's business[374](index=374&type=chunk) [ITEM 1A. RISK FACTORS](index=69&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers readers to the comprehensive discussion of potential risks and uncertainties in VAALCO's 2022 Form 10-K, stating that there have been no material changes in these risk factors since that filing - For a discussion of potential risks and uncertainties, readers are referred to Item 1A. 'Risk Factors' in VAALCO's 2022 Form 10-K[376](index=376&type=chunk) - There have been no material changes in the company's risk factors from those described in its 2022 Form 10-K[376](index=376&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=69&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section reports no unregistered sales of equity securities during the quarter and provides details on VAALCO's dividend policy and the ongoing share buyback program, including the number of shares repurchased and the remaining authorization - There were no unregistered sales of equity securities during the quarter ended March 31, 2023[377](index=377&type=chunk) - VAALCO declared a quarterly cash dividend of **$0.0625 per common share**, paid on March 31, 2023, and declared for June 23, 2023[379](index=379&type=chunk) - A share buyback program was approved on November 1, 2022, for an aggregate purchase of up to **$30 million** of common stock over 20 months[381](index=381&type=chunk) Issuer Repurchases of Common Stock (Quarter Ended March 31, 2023) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Amount Remaining for Purchase | | :--------------------------- | :------------------------------- | :--------------------------- | :------------------------------------ | | January 1, 2023 - January 31, 2023 | 350,832 | $4.27 | $25,502,669 | | February 1, 2023 - February 28, 2023 | 326,992 | $4.59 | $24,003,172 | | March 1, 2023 - March 31, 2023 | 303,176 | $4.95 | $22,503,206 | | **Total** | **981,000** | | | - Subsequent to March 31, 2023, and through May 9, 2023, an additional **666,812 shares** were repurchased, leaving **$19.503 million** available under the program[383](index=383&type=chunk) [ITEM 6. EXHIBITS](index=71&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents, employment agreements, Sarbanes-Oxley certifications, and Inline XBRL documents - Exhibits include corporate governance documents (Restated Certificate of Incorporation, Bylaws), employment-related agreements (Separation Agreement, Consulting Agreement), Sarbanes-Oxley Section 302 and 906 certifications, and Inline XBRL documents[384](index=384&type=chunk)

VAALCO Energy, Inc. (NYSE:EGY) Q4 2022 Earnings Conference Call April 6, 2023 10:00 AM ET Company Participants Al Petrie - Investor Relations Coordinator George Maxwell - Chief Executive Officer Ron Bain - Chief Financial Officer Conference Call Participants Stephane Foucaud - Auctus Advisors Jeffrey Robertson - Water Tower Research Charlie Sharp - Canaccord Genuity Bill Dezellem - Tieton Capital Operator Good morning and welcome to the VAALCO Energy Fourth Quarter and Full Year 2022 Earnings Conference ...

Operations and Interests - The company holds a 58.8% working interest in the Etame Marin block offshore Gabon, which is subject to a 7.5% back-in carried interest by the government, increasing to 10% in June 2026[47]. - In Egypt, the company has a 100% working interest in two PSCs covering approximately 52,407 acres, with a merged concession agreement that includes a $15 million modernization payment and a $1 million signature bonus[51]. - The Merged Concession in the Eastern Desert has a primary term of 15 years and includes minimum financial work commitments of $50 million for each five-year period[51]. - The company increased its working interest in Block P offshore Equatorial Guinea to 60% after acquiring an additional 14.1% interest in February 2023[65]. - The production sharing contract for Block P provides a development and production period of 25 years from the approval date of the development plan[64]. - The Harmattan property in Canada covers 46,100 gross acres of developed land and 29,300 gross acres of undeveloped land, producing oil and associated natural gas[59]. Financial Performance - The cumulative effective date adjustment from the Merged Concession Agreement in Egypt is estimated at $67.5 million, with $17.2 million already received[51]. - The average price for crude oil reserves in Gabon was $100.35 per Bbl in 2022, up from $69.10 per Bbl in 2021, reflecting a 45% increase[72][77]. - Total proved reserves as of December 31, 2022, are 27,957 MBoe, with 22,403 MBbls of crude oil, 16,539 MMcf of natural gas, and 2,797 MBbls of NGLs[75]. - The standardized measure of discounted future net cash flows increased to $624,465 thousand in 2022 from $99,258 thousand in 2021[79]. - The company incurred approximately $148 million in costs for the 2021/2022 drilling program, netting about $94 million to its participating interest[83]. - In 2022, net sales volumes included 3,559 MBbl of crude oil, 335 MMcf of natural gas, and 63 MBbl of NGLs, with an average sales price of $97.24 per barrel for crude oil and $4.00 per Mcf for natural gas[88]. - The production cost per barrel of oil equivalent (BoE) was $30.12 in 2022, compared to $29.97 in 2021 and $22.93 in 2020, indicating an increase in production costs over the years[88]. - A $5 per barrel decrease in crude oil price could lead to a $18.4 million decrease in annual revenues and operating income, and a $16.5 million decrease in net income[441]. Workforce and Diversity - As of December 31, 2022, the company had 185 full-time employees, with 90 in Gabon, 30 in Egypt, 21 in Canada, and 44 in Houston, along with 73 contractors across these locations[94]. - Approximately 16% of the management team are female employees, and 93.3% of the Gabon workforce is Gabonese, reflecting the company's commitment to diversity and inclusion[95]. Regulatory Environment - The company’s operations are subject to regulatory changes in the countries it operates, which can increase costs and affect operations, particularly in Gabon[105]. - The 2019 Hydrocarbons Law repealed the 2014 Hydrocarbons Law entirely and includes provisions for both upstream and downstream segments[112]. - Existing Production Sharing Contracts (PSCs) and other petroleum contracts remain effective until expiration, but renewals are subject to the 2019 Hydrocarbons Law[113]. - The 2019 Hydrocarbons Law mandates that foreign producers must operate through a company incorporated in Gabon, not through branches of foreign entities[114]. - The Gabon Oil Company is entitled to acquire a maximum 15% stake at market value in all PSCs as of the date of signature[116]. - The State of Gabon may acquire an equity stake of up to 10% at market value in operators holding exclusive development and production authorizations[116]. - The Alberta Energy Regulator (AER) requires regulatory approval for all oil and natural gas projects in Alberta, including environmental impact assessments[121]. - The Greenhouse Gas Pollution Pricing Act (GGPPA) mandates emission reductions for oil and gas producers, with Alberta's TIER regulation strengthening facility-specific benchmarks[122]. Risk Management - The company maintains insurance coverage for various operational hazards, but is not fully insured against all risks, which could adversely affect its financial position[104]. - The company is exposed to market risks from fluctuations in foreign exchange rates and commodity prices, which could materially affect its financial condition[436]. - The Hydrocarbons Law allows the Appointed EG Petroleum Ministry to suspend operations if deemed necessary for safety or environmental protection[135]. - The company does not utilize derivative instruments to manage foreign exchange risk, maintaining nominal balances in British Pounds Sterling[440]. Debt and Financing - As of December 31, 2022, the company had a zero balance on its Facility[443]. - Loans under the Facility will incur interest at LIBOR plus an Applicable Margin of 6.00% until the third anniversary of the Facility Agreement[443]. - After the third anniversary, the Applicable Margin will increase to 6.25% until the Final Maturity Date[443]. - Increases in interest rates could adversely impact the company's results of operations and cash flows[443].

VAALCO Energy, Inc. (NYSE:EGY) Q3 2022 Earnings Conference Call November 9, 2022 11:00 AM ET Company Participants Al Petrie - Investor Relations Coordinator George Maxwell - Chief Executive Officer Ron Bain - Chief Financial Officer Conference Call Participants John White - ROTH Capital Stephane Foucaud - Auctus Advisors Charlie Sharp - Canaccord Bill Dezellem - Tieton Capital Jamie Wilen - Wilen Management Operator Good morning and welcome to the VAALCO Energy Third Quarter 2022 Conference Call. All partic ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number 1-32167 VAALCO Energy, Inc. (Exact name of registrant as specified in its charter) Delaware 76-02 ...

VAALCO Energy, Inc. (NYSE:EGY) Q2 2022 Earnings Conference Call August 11, 2022 10:00 AM ET Company Participants Al Petrie - IR, George Maxwell - CEO Ron Bain - CFO Conference Call Participants William Dezellem - Tieton Capital Operator Good day, and welcome to the VAALCO Energy Second Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. ...