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Asset Diversity Supports Growth and Cash Returns to Shareholders

We hosted a fireside chat with CEO George Maxwell on June 4, 2024, to discuss the company’s latest acquisition, which added a non-operated working interest in Block CI-40 offshore Côte d’Ivoire, and management’s strategy to add value from its diverse asset base spanning five countries. This report contains a transcript of the conversation, which can be accessed on demand. The link is accessible in our full report. VAALCO closed the Côte d’Ivoire acquisition on April 30, 2024, for $40.2 million. The cash purchase price was funded with cash from the balance sheet, which totaled $113.3 million on March 31, 2024. Management’s FY24 production guidance includes 2.8-3.1 MBOE of production from the producing Baobab field on Block CI-40. Management provided updated proved reserve data for the Baobab field on July 16, 2024. As of December 31, 2023, SEC proved reserves totaled 16.9 MMBOE(93% oil), a 30% uplift from the 1P (proved) working interest (WI) CPR reserve estimate as of October 1, 2023. Estimated 2P (proved plus probable) WI CPR reserves were increased to 22.5 MMBOE (93% oil) as of year-end 2023, from 21.7 MMBOE (97% oil) as of the October date. The Baobab field holds significant future development potential. The best estimate WI contingent resource (2C) for the field is 20.4 MMBOE. The existing FSPO serving the field is scheduled to be taken off station in 2025 for an upgrade and maintenance cycle before returning in 2026. The work will prepare it for the next development drilling program expected in 2025/2026. Management expects to work collaboratively with Canadian Natural Resources (CNR), the operator of Block CI-40. Planning is underway for the next drilling campaign at the Etame field offshore Gabon. The campaign will leverage learnings from the last campaign completed in 2022 and the full-field reconfiguration completed in 4Q22. Management expects to update its plans to commercialize 8-12 MMBOE of oil at the Ebouri field, which has been partially curtailed because of high H2S content since 2014 on its upcoming earnings call in early August. In Canada, management is working its acreage position to allow for longer-lateral horizontal wells to maximize returns. Encouraging results on four new 2.75-mile laterals reported on May 29, 2024, underpin management’s belief that 2.5- to 3.0-mile laterals will improve returns. A well on the southern portion of VAALCO’s acreage is planned for 3Q24. Positive results could derisk the acreage. Management’s portfolio approach to building VAALCO’s asset base aims to have positions in several countries, with each exposing the company to multiple growth opportunities. Each country is led by a Country Manager to operate efficiently and build ties with host governments. The existing portfolio of short- and long-cycle projects support VAALCO’s goal of returning cash to shareholders. Management is carefully managing the capital spending cycles with the dividend in mind to grow the underlying asset base and deliver attractive returns.