Diversified Asset Portfolio Supports Free Cash Flow
A diverse mix of producing assets in Gabon, Egypt, and Canada, coupled with future development projects in Equatorial Guinea and Cote d’Ivoire, positions VAALCO with an asset base that could generate substantial free cash flow to reinvest for growth and continue returning cash to shareholders in the coming years. VAALCO closed the Svenska acquisition on April 30, 2024, for $40.2 million in cash. The primary asset is a 27.39% non-operated working interest in the deepwater producing Baobab field in Block CI-40 offshore Cote d’Ivoire. The asset adds another oil-producing asset in West Africa to support VAALCO’s free cash flow profile. The Baobab FPSO is scheduled to be taken off station in 2025 for maintenance and upgrades, returning in 2026. Production is expected to restart in 2026 coinciding with the commencement of a fully appraised development program. Management believes significant incremental potential exists in Baobab and the nearby Kossipo development. Final approval of the Joint Operating Agreement (JOA) by the partners and the Government of Equatorial Guinea announced on March 25, 2024, cleared the way to complete the work to support a Final Investment Decision (FID) for the Venus Block-P development project. VAALCO’s asset portfolio exposes the company to ~99 MMBOE of 2P CPR working interest reserves. 2P CPR reserves are proved plus probable estimated reserves based on Competent Person’s Reports (CPRs). YE23 proved reserves, prepared under SEC guidelines, were 28.6 MMBOE. The 2P CPR estimates reflect potential upside embedded in the asset base that could support future free cash flow generation. VAALCO’s upcoming 1Q24 earnings release will include updated 2Q24 and FY24 guidance incorporating the Cote d’Ivoire acquisition and is expected to include a status update for the Venus Block-P project in Equatorial Guinea. VAALCO is scheduled to release 1Q24 earnings and operational results after the market close on Tuesday, May 7, 2024. Management will host a conference call on Wednesday, May 8, 2024, at 10:00 am CT (11:00 am ET/4:00 pm London time). Current guidance, issued on March 13, 2024, excluded the impact of the Cote d’Ivoire acquisition. We will update our estimates to include the Boabab field following management’s guidance update. Our current 1Q24 and FY24 estimates are outlined in Figures 4 to 6.VAALCO Energy is an independent energy company engaged in the acquisition, exploration, development and production of crude oil. The company is primarily engaged in its Etame Production Sharing Contract related to the Etame Marin block located offshore the Republic of Gabon in West Africa. The company also owns interests in an undeveloped block offshore Equatorial Guinea, West Africa.
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