VAALCO Energy(EGY) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the full year 2024, the company increased its adjusted EBITDAX to $303 million, a new record [8] - Record production reached almost 25,000 working interest barrels equivalent per day, with record sales of nearly 20,000 net interest barrels per day [9] - SEC proved reserves grew 57% year over year to 45 million BOE, while 2P CPR reserves increased to 96.1 million BOE [31][32] Business Line Data and Key Metrics Changes - In Côte d'Ivoire, the company completed the Svenska acquisition in April 2024, which contributed positively to reserves and production [10][11] - Canadian production was approximately 75% liquid in Q2 through Q4, improving the production mix [17] - In Egypt, the company focused on high-rate return capital workover projects, completing twelve workovers in 2024 [20][21] Market Data and Key Metrics Changes - The company reported a stable pricing environment in Q4 2024, with production costs below guidance [41] - The production costs for the full year 2024 were$ 22.48 per barrel, slightly lower than the previous year [42] - The company expects production sales for 2025 to be lower than 2024 due to the FPSO shutdown and natural decline [53] Company Strategy and Development Direction - The company aims to grow production, reserves, and shareholder value through a diversified portfolio of assets [34][35] - Plans include extensive drilling campaigns in Gabon and Côte d'Ivoire, with a focus on maximizing asset value [62] - The company is progressing with the FEED study for the Venus Block P in Equatorial Guinea, anticipating an FID in 2025 [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's operational and financial momentum entering 2025, despite a challenging pricing environment [10][31] - The company highlighted its commitment to returning cash to shareholders, having returned $83 million over the past two years [10][34] - Management believes the stock is undervalued compared to its SEC proved reserves and 2P CPR reserves [33] Other Important Information - The company has entered into a new revolving credit facility with an initial commitment of$ 190 million, expandable to $300 million [50] - The FPSO refurbishment project is on schedule, with commissioning expected to start in early May 2026 [108] - The company has not experienced any lost-time incidents in 2024, reflecting its commitment to safety [22] Q&A Session Summary Question: Can you talk about the cycle times for exploration projects in Gabon and Côte d'Ivoire? - Management indicated that seismic acquisition for Gabon is expected in Q1 2026, with drilling likely not starting until late 2026 or early 2027 [71][72] Question: What impact will the capital campaign in 2026 have on cost recovery pools? - Management noted that capital spent in Gabon will start recovering as soon as successful wells are in production, while Côte d'Ivoire will see a 25% uplift in investment once production resumes [78] Question: How do you expect production to change with the upcoming drilling campaigns? - Management expressed optimism about achieving significant production increases from the Gabon drilling campaign, which has been expanded to five wells [86][88] Question: What are the critical path items for the FPSO refurbishment? - Management highlighted the importance of the turn bearing ordered for the FPSO, with expectations for commissioning to begin in early May 2026 [108] Question: How many H2S wells are planned for the upcoming drilling program? - Management confirmed that the Aburi platform currently has two wells tied in, with plans for additional wells in the 2025-2026 program [124][126]