HOUSTON, May 07, 2024 (GLOBE NEWSWIRE) -- VAALCO Energy, Inc. (NYSE:EGY, LSE: EGY)) ("VAALCO" or the "Company") today reported operational and financial results for the first quarter of 2024.  First Quarter 2024 Highlights and Recent Key Items: Closed the accretive all cash acquisition of Svenska Petroleum Exploration AB ("Svenska") for a net purchase price of $40.2 million; Following the planned shutdown for maintenance in April, the Baobab field is back on production with a current rate in excess of 5,000 VAALCO working interest ("WI")(1) barrels of oil equivalent per day ("BOEPD") (99% oil); Strategically expands West African focus area with a sizeable producing asset that has significant upside potential and future development opportunities in Cote d'Ivoire, a well-established and investment-friendly country; Reported Q1 2024 net income of $7.7 million ($0.07 per diluted share) and Adjusted Net Income(2) of $6.5 million ($0.06 per diluted share); Delivered strong Adjusted EBITDAX(2) of $61.7 million and funded $16.7 million in cash capital expenditures from cash on hand and cash from operations; Achieved production of 16,848 net revenue interest ("NRI")(3) BOEPD and WI(1) production of 21,807 BOEPD; Reported NRI sales of 1,490,000 barrels of oil equivalent ("BOE"), or 16,373 BOEPD, near the high end of guidance; Posted unrestricted cash of $113.3 million after paying out $6.5 million in dividends in the quarter and completing $5.5 million in share buybacks; Since inception of the share buyback program, VAALCO has purchased approximately $30 million in shares; and Announced quarterly cash dividend of $0.0625 per share of common stock to be paid on June 21, 2024.   (1)   All WI production rates and volumes are VAALCO's working interest volumes, where applicable   (2)   Adjusted EBITDAX, Adjusted Net Income, Adjusted Working Capital and Free Cash Flow are Non-GAAP financial measures and are described and reconciled to the closest GAAP measure in the attached table under "Non-GAAP Financial Measures."   (3)   All NRI production rates are VAALCO's working interest volumes less royalty volumes, where applicable         George Maxwell, VAALCO's Chief Executive Officer commented, "We continue to deliver strong operational and financial results in line with or ahead of our guidance. Sales for the first quarter were near the high end of guidance and our costs were below the low end of guidance. Coupled with a strong pricing environment, VAALCO was able to generate solid earnings and Adjusted EBITDAX. We continued to return meaningful cash to our shareholders through our ongoing dividend program. Additionally, we finalized the agreements in Equatorial Guinea and are proceeding with our Front-End Engineering Design ("FEED") study. We anticipate the completion of the FEED study will lead to an economic Final Investment Decision ("FID") which will enable the development of the Venus Plan of Development ("POD"). In April, we closed the all cash Svenska acquisition, ahead of schedule, for a net purchase price of $40.2 million. It has been a very productive start to 2024." "We continue to enhance our diversified portfolio by building size and scale that allows VAALCO to generate significant free cash flow and execute our strategic vision. We are excited to be partnering with Petroci and CNR International, and believe the Baobab field in Cote d'Ivoire is an outstanding asset with significant upside potential. We have updated our full year 2024 guidance and released our second quarter guidance, both of which reflects the positive impact to production and production expense per barrel, which should lead to improved margins and greater Adjusted EBITDAX. As you can see, this acquisition is highly accretive on key metrics to our shareholder base and provides another strong asset to support future growth and returning value to shareholders."  Operational Update  Egypt VAALCO focused on enhancing production in the first quarter of 2024 through a series of planned workovers, as well as through interventions using the OGS-10 rig. VAALCO finalized the K-81 recompletion at the start of the first quarter which was a carry-over from its 2023 drilling activity. The EA-55 well, drilled in October 2023, was fraced and put online in January 2024. Three additional workover recompletions were completed in the first quarter with one more in progress. With the low cost of workovers, the well economics are strongly positive. A summary of the Egyptian workover campaign's impact in Q1 2024 is presented below: VAALCO Egypt 2024 Workover Wells   Well Workover date Type Completion Zone   PerforationInterval (ft)     IP-30 Rate(BOPD)   K-81 1-Jan-24 Recompletion Asl-D     13.1       154   EA-55 10-Jan-24 Frac & Complete Redbed   Hydraulic Frac       143   H-22 7-Feb-24 Recompletion Yusr-A     9.8       82   K-65_ST1 14-Feb-24 Recompletion Asl-D     13.1       43*   K-85 16-Mar-24 Recompletion Asl-D     13.1       420   K-84 21-Mar-24 Under WO Recompletion Asl-G     16.4     In Progress                         Canada The 2024 drilling campaign commenced in January with the drilling of 9-12-30-4W5, spud on January 17th. The well was drilled to a total depth of 22,732 feet. The second well of the program, 10-12-30-4W5, was spud on February 9th, and drilled to a total depth of 21,736 feet. The third well of the program, 11-12-30-4W5 was spud on February 23rd, and drilled to a total depth of 21,624 feet. The fourth well of the program was spud on March 9th, and drilled to a total depth of 20,669 feet. Each of these wells included a 2.75 mile lateral. The drilling rig was released on March 24th. Completion of the wells was initiated in late March, and was completed in April, followed by equipping and tie-in, with first production forecasted to be in May 2024. Gabon VAALCO is currently finalizing locations and planning for the next drilling campaign at Etame that is expected to occur late in 2024 and into 2025. In October 2022, VAALCO successfully completed its transition to a Floating Storage and Offloading vessel ("FSO") and related field reconfiguration processes. This project provides a low cost FSO solution that increases the storage capacity for the Etame block and improved operational performance. The Company continues to emphasize operational excellence, production uptime and enhancement in 2024 to minimize decline until the next drilling campaign. The focus is on the continued production optimization of the new flow line configurations through the Etame Facility, for final processing before being pumped to the FSO. This continued optimization and understanding of the post-reconfiguration process dynamics of the Etame platform, have resulted in a very high uptime of the Etame Facility and, in turn, the complete Etame field during the first quarter of 2024. Combining this with focus on individual well and facility chemical injection optimization and facility pipelines has provided more stable operations resulting in lower downtime. Through the end of 2023 and in the first quarter of 2024, this continued to be a focus with positive results in production rates and uptime. Financial Update – First Quarter of 2024 VAALCO reported net income of $7.7 million ($0.07 per diluted share) for the first quarter of 2024 which was down compared with net income of $44.0 million ($0.41 per diluted share) in the fourth quarter of 2023 and up compared to $3.4 million ($0.03 per diluted share) in the first quarter of 2023. The decrease in earnings compared to the fourth quarter of 2023 is mainly due to decreased sales revenue, increased depreciation, depletion and amortization ("DD&A") expense, transaction costs, and higher credit losses, partially offset by decreased production expense and lower income taxes. The increase in earnings compared to the first quarter of 2023 is primarily due to higher sales revenue due to increased volumes partially offset by higher production expense, transaction costs, higher DD&A expense, losses on derivatives and higher income taxes. Adjusted EBITDAX totaled $61.7 million in the first quarter of 2024, a decrease from $95.9 million in the fourth quarter of 2023, primarily due to lower sales and commodity pricing. The increase in first quarter 2024 Adjusted EBITDAX to $61.7 million compared with $47.8 million, generated in the same period in 2023, is primarily due to increased revenue as a result of increased sales. Quarterly Summary - Sales and Net Revenue                                                                     Three Months Ended     Three Months Ended   $ in thousands   March 31, 2024     December 31, 2023       Gabon     Egypt     Canada     Total     Gabon     Egypt     Canada     Total   Oil Sales     64,788       63,192       4,153       132,133       100,398       79,043       5,476       184,917   NGL Sales     —       —       1,977       1,977       —       —       2,019       2,019   Gas Sales     —       —       820       820       —       —       818       818   Gross Sales     64,788       63,192       6,951       134,931       100,398       79,043       8,313       187,754                                                                     Selling Costs & carried interest     1,174       (111 )     (143 )     920       1,711       —       (702 )     1,009   Royalties & taxes     (8,458 )     (26,120 )     (1,118 )     (35,696 )     (13,699 )     (24,393 )     (1,517 )     (39,609 )                                                                   Net Revenue     57,504       36,961       5,690       100,155       88,410       54,650       6,094       149,154                                                                     Oil Sales MMB (working interest)     770       950       61       1,781       1,165       1,023       77       2,265   Average Oil Price Received   $ 84.19     $ 66.52     $ 67.83     $ 74.21     $ 86.18     $ 77.27     $ 71.12     $ 81.65   Change                             -9 %                                 Average Brent Price                           $ 83.00                             $ 84.01   Change                             -1 %                                                                                                   Gas Sales MMCF (working interest)     —       —       469       469       —       —       471       471   Average Gas Price Received     —       —     $ 1.75     $ 1.75       —       —     $ 1.74     $ 1.74   Change                             1 %                                 Average Aeco Price ($USD)     —       —     $ 1.46     $ 1.46                     $ 1.86     $ 1.86   Change                             -22 %                                                                                                   NGL Sales MMB (working interest)     —       —       76       76       —       —       80       80   Average Liquids Price Received     —       —     $ 25.98     $ 25.98       —       —     $ 25.09     $ 25.09   Change                             4 %                                 Revenue and Sales   Q1 2024     Q1 2023     % Change Q1 2024 vs. Q1 2023     Q4 2023     % Change Q1 2024 vs. Q4 2023   Production (NRI BOEPD)     16,848       18,306       (8 )%     18,065       (7 )% Sales (NRI BOE)     1,490,000       1,224,000       22 %     1,994,000       (25 )% Realized commodity price ($/BOE)   $ 66.43     $ 65.68       1 %   $ 73.96       (10 )% Commodity (Per BOE including realized commodity derivatives)   $ 66.41     $ 65.63       1 %   $ 73.89       (10 )% Total commodity sales ($MM)   $ 100.2     $ 80.4       25 %   $ 149.2       (33 )%                                           VAALCO had net revenues decrease by $49.0 million or 33% as total NRI sales volumes of 1,490,000 BOE was lower than Q4 2023 but rose 22% compared to 1,224,000 BOE for Q1 2023. Q1 2024 NRI sales were at the higher end of VAALCO's guidance. The Company expects second quarter 2024 NRI sales to be between 18,100 and 20,000 BOEPD, reflecting the addition of the Svenska acquisition volume in May and June. Q1 2024 realized pricing (net of royalties) was 10% lower compared to Q4 2023 but slightly higher compared to Q1 2023.  Costs and Expenses   Q1 2024     Q1 2023     % Change Q1 2024 vs. Q1 2023     Q4 2023     % Change Q1 2024 vs. Q4 2023   Production expense, excluding offshore workovers and stock comp ($MM)   $ 32.1     $ 29.3       10 %   $ 46.3       (31 )% Production expense, excluding offshore workovers ($/BOE)   $ 21.58     $ 23.90       (10 )%   $ 23.27       (7 )% Offshore workover expense ($MM)   $ (0.1 )   $ (1.1 )     93.5 %   $ —       — % Depreciation, depletion and amortization ($MM)   $ 25.8     $ 24.4       6 %   $ 20.3       27 % Depreciation, depletion and amortization ($/BOE)   $ 17.3     $ 19.90       (13 )%   $ 10.20       70 % General and administrative expense, excluding stock-based compensation ($MM)   $ 5.9     $ 4.6       27 %   $ 6.1       (4 )% General and administrative expense, excluding stock-based compensation ($/BOE)   $ 3.9     $ 3.70       6 %   $ 3.0       31 % Stock-based compensation expense ($MM)   $ 0.9     $ 0.6       50.0 %   $ 0.9       - % Current income tax expense (benefit) ($MM)   $ 25.7     $ 12.3       109 %   $ 14.3       80 % Deferred income tax expense (benefit) ($MM)   $ (3.4 )   $ 2.5       (238 )%   $ (2.6 )     32 %                                           Total production expense (excluding offshore workovers and stock compensation) of $32.1 million in Q1 2024 was lower compared to Q4 2023 and slightly higher than the same period in 2023. The decrease in Q1 2024 expense compared to Q4 2023 was driven primarily by lower costs related to lower sales volumes. The increase in Q1 2024 compared to Q1 2023 was primarily driven by increased expense associated with higher sales as well as higher costs associated with boats, diesel and operating costs. VAALCO has seen withholding tax, inflationary and industry supply chain pressure on personnel and contractor costs. Q1 2024 had no offshore workovers, and the slightly negative workover expense in Q1 2024 was the result of a reversal of accruals. Q1 2024 production expense per BOE, excluding offshore workover expense, decreased to $21.58 per BOE which was down compared with Q4 2023 and Q1 2023 partially due to the devaluation of the Egyptian pound on local costs and lower engineering and maintenance spend mainly due to the timing of planned projects partially offset by higher workover costs in Egypt. DD&A expense for Q1 2024 was $25.8 million which was higher than $20.3 million in Q4 2023 and higher than $24.4 million in Q1 2023. The increase in Q1 2024 DD&A expense compared to Q4 2023 and Q1 2023 is due to higher depletable costs in Gabon, Egypt, and Canada.  General and administrative ("G&A") expense, excluding stock-based compensation, decreased to $5.9 million in Q1 2024 from $6.1 million in Q4 2023 and increased from $4.6 million in Q1 2023. The increase in general and administrative expenses compared to Q1 2023 is primarily due to higher professional service fees, salaries and wages, and accounting and legal fees. Q1 2024 cash G&A was within the Company's guidance. The Company has made meaningful progress toward reducing absolute G&A costs when compared against the combined TransGlobe and VAALCO Q1 2023 costs.  Non-cash stock-based compensation expense was $0.9 million for Q1 2024 compared to $0.6 million for Q1 2023. Non-cash stock-based compensation expense for Q4 2023 was $0.9 million. Other income (expense), net, was an expense of ($0.5) million for Q1 2024, compared to an expense of ($1.2) million during Q1 2023 and an expense of ($0.8) million for Q4 2023. Other income (expense), net, normally consists of foreign currency losses. Foreign income taxes for Gabon are settled by the government taking their oil in-kind. Q1 2024 income tax expense was an expense of $22.2 million and is comprised of current tax expense of $25.7 million and deferred tax benefit of $3.4 million. Current quarter tax was impacted by non-deductible items (such as the Svenska transaction costs) and the change in market value of tax barrels due to Gabon State mark-to-market at quarter end. Q4 2023 income tax expense was an expense of $37.6 million. This was comprised of $41.1 million of current tax expense and a deferred tax benefit of $3.5 million. Q1 2023 income tax expense was an expense of $14.8 million. This was comprised of $12.3 million of deferred tax expense and a current tax expense of $2.5 million. For all periods, VAALCO's overall effective tax rate was impacted by non-deductible items associated with derivative losses and corporate expenses. Capital ...