egy20240331_10q.htm

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 March 31, 2024

☐	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	76-0274813
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

9800 Richmond Avenue Suite 700 Houston, Texas	77042
(Address of principal executive offices)	(Zip code)

(713) 623-0801

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock	EGY	New York Stock Exchange
Common Stock	EGY	London Stock Exchange

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non‑accelerated filer

☐

Smaller reporting company

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 3, 2024, there were outstanding 103,455,525 shares of common stock, $0.10 par value per share, of the registrant.

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VAALCO ENERGY, INC. AND SUBSIDIARIES

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PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Condensed Consolidated Balance Sheets March 31, 2024 and December 31, 2023	2
Condensed Consolidated Statements of Operations and Comprehensive Income Three Months Ended March 31, 2024 and 2023	3
Condensed Consolidated Statements of Shareholders’ Equity Three Months Ended March 31, 2024 and 2023	4
Condensed Consolidated Statements of Cash Flows Three Months Ended March 31, 2024 and 2023	5
Notes to Condensed Consolidated Financial Statements (unaudited)	7
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33
ITEM 4. CONTROLS AND PROCEDURES	34
PART II. OTHER INFORMATION	35
ITEM 1. LEGAL PROCEEDINGS	35
ITEM 1A. RISK FACTORS	35
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	35
ITEM 5. OTHER INFORMATION	47
ITEM 6. EXHIBITS	37

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PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

VAALCO ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

	*As of March 31, 2024*			*As of December 31, 2023*
	*(in thousands)*
ASSETS
Current assets:
Cash and cash equivalents	$	113,321		$	121,001
Restricted cash		140			114
Receivables:
Trade, net of allowances for credit loss and other of $0.8 and $0.5 million, respectively		44,897			44,888
Accounts with joint venture owners, net of allowance for credit losses of $0.8 and $0.8 million, respectively		35			1,814
Egypt receivables and other, net of allowances for credit loss and other of $6.0 and $4.6 million, respectively		44,591			45,942
Crude oil inventory		2,386			1,948
Prepayments and other		12,374			12,434
Total current assets		217,744			228,141

Crude oil, natural gas and NGLs properties and equipment, net		457,419			459,786
Other noncurrent assets:
Restricted cash		—			1,795
Value added tax and other receivables, net of allowances for credit loss and other of $0.0 and $0.0 million, respectively		5,033			4,214
Right of use operating lease assets		1,444			2,378
Right of use finance lease assets		89,587			89,962
Deferred tax assets		30,329			29,242
Abandonment funding		6,268			6,268
Other long-term assets		1,323			1,430
Total assets	$	809,147		$	823,216
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	16,747		$	22,152
Accounts with joint venture owners		3,836			5,990
Accrued liabilities and other		60,345			67,597
Operating lease liabilities - current portion		1,466			2,396
Finance lease liabilities - current portion		10,974			10,079
Foreign income taxes payable		37,836			19,261
Total current liabilities		131,204			127,475
Asset retirement obligations		47,644			47,343
Operating lease liabilities - net of current portion		—			33
Finance lease liabilities - net of current portion		77,802			78,293
Deferred tax liabilities		71,228			73,581
Other long-term liabilities		8,679			17,709
Total liabilities		336,557			344,434
Commitments and contingencies (Note 10)
Shareholders’ equity:
Preferred stock, $25 par value; 500,000 shares authorized, none issued		—			—
Common stock, $0.10 par value; 160,000,000 shares authorized, 121,940,831 and 121,397,553 shares issued, 103,455,525 and 104,346,233 shares outstanding, respectively		12,194			12,140
Additional paid-in capital		358,827			357,498
Accumulated other comprehensive income		426			2,880
Less treasury stock, 18,485,306 and 17,051,320 shares, respectively, at cost		(77,566	)		(71,222	)
Retained earnings		178,709			177,486
Total shareholders' equity		472,590			478,782
Total liabilities and shareholders' equity	$	809,147		$	823,216

See notes to condensed consolidated financial statements.

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VAALCO ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)

	Three Months Ended March 31,
	2024			2023
	*(in thousands, except per share amounts)*
Revenues:
Crude oil, natural gas and natural gas liquids sales	$	100,155		$	80,403
Operating costs and expenses:
Production expense		32,089			28,200
Exploration expense		48			8
Depreciation, depletion and amortization		25,824			24,417
Transaction costs related to acquisition		1,313			—
General and administrative expense		6,710			5,224
Credit losses and other		1,812			935
Total operating costs and expenses		67,796			58,784
Other operating income (expense), net		(166	)		-
Operating income		32,193			21,619
Other income (expense):
Derivative instruments gain (loss), net		(847	)		21
Interest expense, net		(935	)		(2,246	)
Other income (expense), net		(487	)		(1,153	)
Total other expense, net		(2,269	)		(3,378	)
Income before income taxes		29,924			18,241
Income tax expense		22,238			14,771
Net income	$	7,686		$	3,470
Other comprehensive income (loss)
Currency translation adjustments		(2,454	)		(125	)
Comprehensive income	$	5,232		$	3,345

Basic net income per share:
Net income per share	$	0.07		$	0.03
Basic weighted average shares outstanding		103,659			107,387
Diluted net income per share:
Net income per share	$	0.07		$	0.03
Diluted weighted average shares outstanding		104,541			108,752

See notes to condensed consolidated financial statements.

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VAALCO ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)

	*Common Shares Issued*		*Treasury Shares*			*Common Stock*		*Additional Paid-In Capital*		*Accumulated Other Comprehensive Loss*			*Treasury Stock*			*Retained Earnings*			*Total*
	*(in thousands)*
Balance at January 1, 2024		121,398		(17,051	)	$	12,140	$	357,498	$	2,880		$	(71,222	)	$	177,486		$	478,782
Shares issued - stock-based compensation		543		—			54		393		—			—			—			447
Stock-based compensation expense		—		—			—		936		—			—			—			936
Treasury stock		—		(1,434	)		—		—		—			(6,344	)		—			(6,344	)
Dividend distributions		—		—			—		—		—			—			(6,463	)		(6,463	)
Other comprehensive loss		—		—			—		—		(2,454	)		—			—			(2,454	)
Net income		—		—			—		—		—			—			7,686			7,686
Balance at March 31, 2024		121,941		(18,485	)	$	12,194	$	358,827	$	426		$	(77,566	)	$	178,709		$	472,590

Common Shares Issued

Treasury Shares

Common Stock

Additional Paid-In Capital

Accumulated Other Comprehensive Loss

Treasury Stock

Retained Earnings

Total

SEC Form 10-Q filed by VAALCO Energy Inc.