VAALCO ENERGY INC /DE/ Q4 FY2024 earnings call

• Over the past two years, VAALCO has delivered record-breaking operational and financial results, maintaining operational excellence and consistent production to expand adjusted EBITDAX.
• In Côte d'Ivoire: Completed Svenska acquisition in April 2024, year-end 2024 SEC net proved reserves were higher than initial estimate, FPSO ceased operations as scheduled in January 2025, Council of Ministers approved ten-year license extension on CI-40, and formal agreement for CI-705 block was announced in March 2025.
• In Canada: Drilled four wells in the first quarter, completed and brought them online, with production mix shifting more to liquids.
• In Egypt: Focused on high-rate return capital workover projects, drilled two wells in the fourth quarter, and expected to drill additional eight to thirteen wells in 2025.
• In Gabon: Production was strong with positive uptime, a drilling rig was secured for a 2025-2026 drilling program, and testing of Abboudi shut-in wells was ongoing.
• In Equatorial Guinea: Finalized Venus Block P plan of development documents in March 2024, and began front-end engineering design study in the second half of 2024.

For the full year 2024, VAALCO Energy achieved a record adjusted EBITDAX of $303 million. It had record production of almost 25,000 working interest barrels equivalent per day and record sales of almost 20,000 net interest barrels per day. SEC proved reserves grew 57% year over year to 45 million BOE, and 2P CPR reserves grew to 96.1 million BOE. In Côte d'Ivoire, the Svenska acquisition was completed in April 2024, and by year-end 2024, it had a 1.8 times payback on the initial investment. In Canada, four wells were drilled in the first quarter of 2024, completed and brought online, with Canadian production becoming more liquid-oriented. In Egypt, 2024 focused on high-rate return capital workover projects, with twelve completed in the year. In Gabon, production was strong with positive uptime, and a drilling rig was secured in December 2024 for a 2025-2026 drilling program. In Equatorial Guinea, the Venus Block P plan of development documents were finalized in March 2024, and front-end engineering design study began in the second half of 2024.

• 2025 Q1 adoption is forecasted to be between 21,550 and 22,750 working interest BOE per day and between 16,500 and 17,650 net revenue interest BOE per day.
• Full year 2025 production is forecasted to be between 19,250 and 22,210 working interest BOE per day and between 14,500 and 16,710 net revenue interest BOE per day.
• 2025 capital spend is projected to be between $270 million and $330 million, with Q1 CapEx expected to be between $70 million and $90 million.
• 2026 is expected to see significant production growth with the FPSO back online in Côte d'Ivoire and the full impact of the Gabon drilling campaign realized.

• Operational risks such as delays in project execution, challenges with production sharing contracts, and potential disruptions in production due to technical issues.
• Market risks including fluctuations in oil and gas prices, which can impact revenue and profitability.
• Financial risks like cash flow management issues, debt repayment challenges, and currency exchange rate fluctuations.

Q: What are the critical path items in the refurbishment of the FPSO in Côte d'Ivoire and the timing for the Baobab field coming back on stream?

A: Critical path item is the turn bearing ordered almost a year ago on route to Dubai. FPSO is planned to be towed to Dubai in March 2025, and first oil is expected between mid to late May 2026.

Q: Relative to the wells that have H2S, Now that you have found a way to process that, does that open up a significant amount of acreage that previously was essentially closed off or off-limits to you because of your lack processing capability?

A: It does unlock additional locations. Some are in the 2025-2026 program, and there are plans for workovers and additional drilling in related areas.

Q: On the H2S wells, how many are we going to be looking at initially? Are those the first part of the drilling program and do we have the tools in hand to be ready to extract them? And can you tell us the approximate volumes that those wells were doing when they were shut in?

A: Aburi platform has wells with certain H2S levels, some were shut in, and the Aburi 4H well was producing around 1600 barrels a day. The first wells in sequence are Itami wells, then Laodis well, then an exploration well, and then Aburi wells, with some being in 2026.