VAALCO Energy(US:EGY)2023-04-05 16:00Operations 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].