DEF 14A 1 ny20008384x1_def14a.htm DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

	☐			Preliminary Proxy Statement
	☐			Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
	☒			Definitive Proxy Statement
	☐			Definitive Additional Materials
	☐			Soliciting Material Pursuant to §240.14a-12

VAALCO ENERGY, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

	☒			No fee required.
	☐			Fee paid previously with preliminary materials.
	☐			Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

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VAALCO ENERGY, INC.

9800 Richmond Avenue, Suite 700

Houston, Texas 77042

Dear Fellow Shareholders:

2022 was a productive year for VAALCO.

Our share price increased by 43%, production was up by 44% and SEC proved reserves were nearly 2.5 times over 2021 levels.

We had Net Income of $51.9 million and record Adjusted EBITDAX of $186.6 million.⁽¹⁾

We initiated both a dividend and a share buyback program that returned more than $12 million to our shareholders in 2022, and approximately $25 million to our shareholders since inception.

And we continue to have no bank debt on our balance sheet.

2022 was a transformational year for VAALCO.

We closed a strategic business combination with TransGlobe Energy Corporation in October. The scaling, balance sheet strength, and geographic diversification that this affords us will buttress our opportunities for sustainable shareholder returns, continued growth and success.

In addition to acquiring assets in Canada and Egypt, our work in 2022 allowed us to finalize, in the first quarter of this year, multiple substantive documents with the government and our partners in Equatorial Guinea, where we anticipate a strong, efficient and economic development of our exciting discovery, with first oil projected for 2026.

We successfully delivered a highly complex full field reconfiguration, maintenance turnaround, and upgraded Floating Storage and Offloading vessel (“FSO”) installation in Gabon, which significantly increased our storage capacity, reduces our expected storage and offloading costs, and should result in corresponding increased recovery and reserves from our Gabon assets.

We are optimistic for the future.

We remain intent on generating meaningful cash flow to fund increased shareholder dividends, share buybacks, capital expenditures and potential additional acquisitions.

We are constantly reviewing opportunities to improve efficiency and safety within our operations, in addition to screening opportunities for accretive growth within our strategic area of focus.

We remain committed to driving total shareholder return.

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Your vote is important.

VAALCO is your company. Even if you plan to attend the meeting in person, please follow the instructions provided to you and vote your shares today.

We thank you sincerely for your continued belief, support and interest in our business.

We, the Board, thank you for your continued support of, and interest in, our business.

Signed,

The Board of Directors

(1)	Adjusted EBITDAX is a Non-GAAP financial measure and is described and reconciled to the closest GAAP measure in “Appendix A – Non-GAAP Financial Measures.”

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VAALCO ENERGY, INC.

9800 Richmond Avenue, Suite 700

Houston, Texas 77042

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To the Shareholders of VAALCO Energy, Inc.:

The 2023 Annual Meeting of Shareholders of VAALCO Energy, Inc. (the “Company”) will be held at the Hilton Houston Westchase, 9999 Westheimer Road, Houston, Texas 77042, on Thursday, June 8, 2023, at 8:30 a.m. Central Time (the “Annual Meeting”). We intend to hold our annual meeting in person.

The Annual Meeting is being held:

1.	To elect five directors, each for a term of one year;

2.	To ratify the appointment of BDO USA, LLP as the Company’s independent registered public accounting firm for 2023;

3.	To approve, on an advisory basis, the compensation of our named executive officers;

4.	To approve, on an advisory basis, the frequency of our future advisory votes on the compensation of our named executive officers; and

5.	To transact such other business as may properly come before the Annual Meeting or any adjournments, postponements, or recesses thereof.

These proposals are described in the accompanying proxy materials. You will be able to vote at the Annual Meeting, or any adjournment, postponement or recess thereof, only if you were a shareholder of record at the close of business on April 21, 2023.

We are providing our shareholders access to our proxy materials over the Internet. To do this, we are mailing a Notice of Internet Availability of Proxy Materials (the “Notice”). The Notice contains instructions on how to access those documents over the Internet, and how to request a paper copy of our proxy materials.

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Shareholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. Shareholders who receive future proxy materials by email will save us the cost of printing and mailing documents and will reduce the impact of meetings of shareholders on the environment. A shareholder’s election to receive proxy materials by email will remain in effect until the shareholder terminates that election.

By Order of the Board of Directors,

Andrew L. Fawthrop

Chair of the Board

Houston, Texas

April 28, 2023

YOUR VOTE IS IMPORTANT!

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF THE SHAREHOLDERS TO BE HELD ON

JUNE 8, 2023, AT 8:30 A.M., CENTRAL DAYLIGHT TIME:

The Proxy Statement and our Annual Report for 2022 are available at www.proxyvote.com.

If you have any questions or need assistance voting your shares, please call our proxy solicitor:

D.F. King & Co., Inc.

48 Wall Street, 22^nd Floor

New York, NY 11005

Banks and Brokerage Firms, please call: (212) 269-5550

Shareholders, please call toll free: (800) 967-5019

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Leadership Letter			1
Notice of 2023 Annual Meeting of Shareholders			3
Proxy Statement Summary			7
Proposal No. 1—Election of Directors			18
Board Composition, Independence and Communications			23
Corporate Governance			27
Board Committee Membership and Meetings			31
2022 Non-Employee Director Compensation			36
Proposal No. 2—Ratification of Appointment of Independent Registered Public Accounting Firm			38
Fees Billed by Independent Registered Public Accounting Firm			39
Audit Committee Report			40
Proposal No. 3—Advisory Resolution on Executive Compensation			41
Executive Officers			42
Compensation Discussion and Analysis			44
Compensation Committee Report			57
Executive Compensation			58
Proposal No. 4—Advisory Resolution on Frequency of Advisory Vote on Executive Compensation			70
Pay Versus Performance			66
Security Ownership of Certain Beneficial Owners and Management			71
Other Matters			73
Appendix A—Non-GAAP Financial Measures			76

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VAALCO ENERGY, INC.

9800 Richmond Avenue, Suite 700

Houston, Texas 77042

PROXY STATEMENT

2023 ANNUAL MEETING OF SHAREHOLDERS

This Proxy Statement is provided in connection with the solicitation of proxies by our Board of Directors (the “Board”) to be voted at our 2023 Annual Meeting of Shareholders (our “Annual Meeting”), and at any postponement, adjournment or recess of the Annual Meeting. In this Proxy Statement, VAALCO Energy, Inc. is referred to as the “Company,” “our company,” “we,” “our,” “us” or “VAALCO.”

Matters To Be Voted On

	Item for Business	Board Vote Recommendation	Further Details (Page No.)
1.	Election of five directors	FOR EACH DIRECTOR NOMINEE	18
2.	Ratification of the appointment of independent registered public accounting firm	FOR	38
3.	Advisory resolution on executive compensation	FOR	41
4.	Advisory resolution on the frequency of advisory resolutions on executive compensation	ONE YEAR	70

YOUR VOTE IS IMPORTANT

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, WE ENCOURAGE YOU TO VOTE

AND SUBMIT

YOUR PROXY BY INTERNET, TELEPHONE OR MAIL.

Governance Principles

The Board’s Corporate Governance Principles, which include guidelines for determining director independence and qualifications for directors, are published on VAALCO’s website at www.VAALCO.com. This website also makes available the charters for each of the Audit Committee, Compensation Committee, and Environmental, Social and Governance (“ESG”) Committee, and other corporate governance materials. These materials are also available in print to any shareholder upon request. The Board regularly reviews corporate governance developments and modifies its Corporate Governance Principles, committee charters and key practices as warranted.

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PROXY STATEMENT SUMMARY

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider in making voting decisions. You should read the entire Proxy Statement carefully before voting.

Annual Meeting Information

The Board is soliciting proxies for our 2023 Annual Meeting and any adjournment, postponement or recess thereof.

	Time and Date:			8:30 a.m. Central Daylight Time, on June 8, 2023
	Location:			Hilton Houston Westchase, 9999 Westheimer Road, Houston, Texas 77042
	Record Date:			April 21, 2023
	Proxy Materials Distribution Date:			April 28, 2023
	Voting Rights:			Each share of common stock is entitled to one vote
	Electronic Access to Proxy Materials and Voting:			www.proxyvote.com

Items of Business and Voting Recommendations

	Item for Business	Board Vote Recommendation	Further Details (Page No.)
1.	Election of five directors	FOR EACH DIRECTOR NOMINEE	18
2.	Ratification of the appointment of independent registered public accounting firm	FOR	38
3.	Advisory resolution on executive compensation	FOR	41
4.	Advisory resolution on the frequency of advisory resolutions on executive compensation	ONE YEAR	70

Financial and Business Information

We are a Houston, Texas-based independent energy company primarily engaged in the acquisition, development and production of crude oil, natural gas and natural gas liquids (“NGL”). Historically, our primary source of revenue was from a production sharing contract that we entered into with the Republic of Gabon related to the Etame Marin block located offshore Gabon in West Africa. As a result of our transformational acquisition of TransGlobe Energy Corporation (“TransGlobe”), we are a leading African-focused operator with a strong production and reserve base and a diverse portfolio of assets in Gabon, Egypt, Canada, and Equatorial Guinea.

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Throughout 2022, we continued to deliver operationally and generate significant cash flow. Our 2022 results firmly place VAALCO in a financially stronger position, poised to execute accretive growth initiatives in the future. Key highlights of our business and our performance in 2022 and the first part of 2023 include:

•	Closing the strategic and transformational business combination with TransGlobe on October 13, 2022;

•	Net income of $51.9 million ($0.73 per diluted share) and Adjusted Net Income⁽¹⁾ of $104.3 million ($1.49 per diluted share) and Adjusted EBITDAX⁽¹⁾ of $186.6 million for 2022;

•	10,217 net revenue interest (“NRI”)⁽²⁾barrels of oil equivalent per day (“BOEPD”), or 12,177 working interest (“WI”)⁽³⁾BOEPD produced, and approximately 3.7 million barrels of oil equivalent sold in 2022;

•	Increased quarterly cash dividend by 92%, to $0.0625 per share of common stock, in the first quarter of 2023 ($0.25 annualized), from $0.0325 per share ($0.13 annualized) in 2022;

•	Returned approximately additional $9 million to shareholders through share buybacks from initiation of program in November 2022 through April 21, 2023;

•	Successfully completed the Floating, Storage and Offloading vessel (“FSO”) installation and field reconfiguration at Etame;

•	Grew Adjusted Working Capital⁽¹⁾to $48.8 million at year-end 2022, an increase of 257% compared to the prior year;

•	Finalized multiple substantive documents with our partners and the Ministry of Mines & Hydrocarbons in Equatorial Guinea for Block P, which includes the Venus development; and

•	Increased year-end 2022 SEC proved reserves by 149% to 27.9 million barrels of oil equivalent, with the standardized measure value up 529%, to $624.5 million.

(1)	Adjusted EBITDAX, Adjusted Net Income (Loss) and Adjusted Working Capital are Non-GAAP financial measures and are described and reconciled to the closest GAAP measure in the attached table under “Non-GAAP Financial Measures.”

(2)	All NRI production rates are VAALCO's working interest volumes less royalty volumes, where applicable.

(3)	All WI production rates and volumes are VAALCO’s working interest volumes.

We focus on supporting sustainable shareholder returns and growth. We have no bank debt and remain firmly focused on our strategic vision of achieving significant shareholder returns by maximizing the value of, and free cash flow from, our existing resource base, coupled with highly accretive inorganic growth opportunities.

ESG Highlights

We put in place practices to support the rule of law, transparency and good governance, and to oppose corruption. We believe it is also important to contribute to society through business activities, social investment and philanthropic programs. Our core values are supporting and developing our employees and communities, promoting and practicing good environmental stewardship, and improving the quality of life of the people we interact with. Below are highlights of steps we have taken to help promote these values.

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ESG Oversight

In October 2020, we mandated that our ESG Committee oversee policies and programs relating to social responsibility and environmental sustainability. In early 2022, we hired a full-time ESG Engineer to coordinate technical aspects of the Company’s ESG initiatives. Last year we also created a committee comprised of a cross section of employees, with full participation by our executive team, charged with monitoring adherence to our ESG standards and communicating findings on an ongoing basis to our ESG Committee.

In June 2022 we released our 2021 ESG Report, which included key ESG sustainability metrics and a detailed analysis of our accomplishments and dedication to our people, the environment, and the countries where we operate.

We prioritize ESG metrics in our executive compensation program to drive execution on these issues. The compensation plan’s ESG score considers total recordable incident rate, carbon footprint reduction targets and company-wide participation in ESG training.

Human Capital

Corporate Governance. We believe our director nominees exhibit a robust mix of skills, experience, diversity and perspectives. We value building diverse teams, embracing different perspectives, fostering an inclusive environment, and supporting diversity of thought, perspective, sexual orientation, gender, gender identity and expression, race, ethnicity, culture and professional experience. Our governance highlights include:

✔	Ms. Stubbs sits on every Board committee and chairs the Audit Committee;

✔	80% of our director nominees are independent;

✔	100% of the members of the Audit, Compensation and ESG Committee are independent;

✔	The Chairman of the Board is independent;

✔	All directors stand for election annually; and

✔	In 2022, each director nominee attended at least 75% of the Board meetings and the meetings of the committees on which he or she served.

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Diversity of our Workforce. We have a long-standing commitment to equal employment opportunity and a robust and rigorously enforced Equal Employment Opportunity policy. We are proud to disclose that, as of December 31, 2022:

✔	Approximately 20% of our management team in Houston is female;

✔	Approximately 25% of our management team in Egypt is female;

✔	Approximately 16% of our management team in Canada is female;

✔	Approximately 19% of our management team in Gabon is female;

✔	93% of our Gabon workforce is Gabonese; and

✔	90% of our Egyptian workforce is Egyptian.

Workforce Health and Safety

We are fully committed to the health and safety of our employees and contractors. We maintain a goal of zero accidents, injuries, unsafe work practices or unsafe conditions for our employees. We prioritize and assure adequate employee training on health and safety issues. We have designed health and safety training programs to reduce risk across our operations, communicated high and insistent expectations of our partners, and created systems that support conformance to these standards.

Environmental Stewardship

We are committed to responsible environmental stewardship. We take precautions to protect natural resources and to prevent accidents from occurring. We have consistently operated our facilities within the International Convention for the Prevention of Pollution from Ships (“MARPOL”) water discharge standard. In 2022, we had no regulatory reportable spills or loss of containment that impacted the environment.

Health, Safety and Environmental Management Systems. Our Internal Resources for Administering Safety (“IRAS”) system was developed to effectively communicate across the various levels and functions within VAALCO safety and environmental objectives, goals and performance measures set by management. Our IRAS system is designed to align with International Organization for Standardization (“ISO”) 45001. Our program incorporates numerous elements in order to achieve the highest level of risk mitigation possible. These elements include:

✔	Incorporating environmental management issues and results to annual incentives;

✔	Quarterly management auditing of offshore platforms and one HSE certified compliance employee offshore on the platforms at all times;

✔	Establishment of quantifiable goals with deadlines for continuous improvement of environmental protection and worker safety;

✔	Collecting, monitoring, measuring and trending of key environmental and safety data; and

✔	Robust safety and environmental training programs and requirements for employees and contractors.

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Greenhouse Gas Emissions. We are committed to managing our emissions and seek to identify, evaluate and measure climate-related risks by incorporating them in our management process and field development plans. During 2022, we continued to build upon our work from the previous year and have identified several areas in which we were able to achieve significant impacts on overall emissions.

✔	Replaced and upgraded offshore power generation with state of the art, cleaner burning units that will reduce overall field emissions.

✔	Completed replacement of single hull FPSO to a newer generation double-hull FSO.

✔	Continued implementing a field wide hydrocarbon emissions detection program.

Water Management. Because we operate offshore, we have a limited impact on water availability. All produced water is treated to meet or exceed MARPOL standards.

Biodiversity and Decommissioning. Conservation of biodiversity is an integral part of our commitment to the communities with which we work. In 2022, we progressed initiatives related to tracking wildlife inventory levels and managing interaction of wildlife and communities to minimize the impact of development on critical species.

Community Involvement

We take pride in our reputation as a good corporate citizen, and we continue to support the communities where we operate. We view our support and involvement in local communities as being critical to our “social license to operate.”

✔	In 2022, we provided significant funding to rehabilitate schools, provide medical supplies and support various non-governmental organizations that improve the social fabric of local communities in Gabon.

✔	With the support of the Ministry of Petroleum, we completed numerous projects in the health and education sectors in rural Gabon.

✔	In partnership with Space For Giants, we initiated a trial program to deploy electric fencing to facilitate peaceful coexistence of elephants and local agriculture.

✔	We have been an active participant in the Aswan Flood Relief Project under the Ministry of Petroleum in Egypt, and have sponsored rebuilding in the affected villages.

✔	We are evaluating corporate social responsibility opportunities to fund in Ras Gharib, Egypt, to build on the support we provided to the hospital in Ras Gharib.

✔	We are actively engaged in the Egyptian Ministry of Petroleum’s industrywide Corporate Social Responsibility initiative.

✔	We continue to support the Krause Children’s Center in Houston.

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Proposal No. 1—Election of Directors

Director Nominees

On March 10, 2023, the Board, upon recommendation of the ESG Committee, voted to nominate the individuals named in the table below for election, which will result in a reduction of the number of directorships from seven to five after the Annual Meeting. The Board asks you to elect the five nominees named below as directors for a term that expires at the 2024 annual meeting of shareholders. The table below provides summary information about the five director nominees. For more information about the director nominees, see page 18.

Name	Director Since	Independence Status	Board Committees
Andrew L. Fawthrop	2014	Independent	Audit, Compensation, ESG, Strategic, Technical and Reserves
George W. M. Maxwell	2020	Not Independent	Strategic, Technical and Reserves
Edward LaFehr	2022	Independent	Technical and Reserves
Fabrice Nze-Bekale	2022	Independent	Audit, Compensation, ESG, Strategic
Cathy Stubbs	2020	Independent	Audit, Compensation, ESG, Strategic, Technical and Reserves

Vote Required

The five nominees who receive the greatest number of “FOR” votes cast by the shareholders, a plurality, will be elected as our directors. There is no cumulative voting. Abstentions and broker non-votes will not be taken into account for purposes of determining the outcome of the election of directors. Accordingly, if you own your shares through a broker, you must give the broker instructions to vote your shares in the election of directors. Otherwise, your shares will not be voted.

Proposal No. 2—Ratification of Appointment of Independent Registered Public Accounting Firm

Auditor Ratification

The Board is asking you to ratify the selection of BDO USA, LLP (“BDO”) as our independent registered public accounting firm for the fiscal year ending December 31, 2023. Even if our shareholders ratify the appointment of BDO, the Audit Committee may, in its sole discretion, terminate such engagement and direct the appointment of another independent registered public accounting firm at any time during the year. For additional information concerning BDO, including the fees billed to us for services provided by BDO during 2022 and 2021, see page 39.

Vote Required

The approval of the ratification of the appointment of BDO as the Company’s independent registered public accounting firm requires the vote of a majority of votes cast affirmatively or negatively. For this proposal, abstentions will have no effect on the vote. Broker non-votes are not applicable to the proposal because your broker has discretionary authority to vote your common stock in the absence of affirmative instructions from you with respect to this proposal.

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Proposal No. 3—Advisory Resolution on Executive Compensation

Say-on-Pay

Pursuant to Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are asking our shareholders to approve, on an advisory or non-binding basis, the compensation of our named executive officers (“NEOs”) as disclosed in this Proxy Statement. For a detailed description of our executive compensation program, see “Compensation Discussion and Analysis” beginning on page 44.

Vote Required

The approval, on an advisory basis, of the compensation of our NEOs requires the vote of a majority of votes cast affirmatively or negatively. For this proposal, abstentions and broker non-votes will have no effect on the vote.

Proposal No. 4—Advisory Resolution on Frequency of Say-on-Pay

Frequency of Say-on-Pay

Pursuant to Section 14A of the Exchange Act, we are asking our shareholders to vote, on an advisory o

SEC Form DEF 14A filed by VAALCO Energy Inc.