Click here to close now.


News Feed Item

VAALCO Energy Announces Third Quarter 2012 Results

HOUSTON, Nov. 8, 2012 /PRNewswire/ -- VAALCO Energy, Inc. (NYSE: EGY) today reported that third quarter 2012 revenues were $37.6 million compared to $37.4 million in the third quarter of 2011.  Net income attributable to VAALCO was $106,000 or $0.00 per diluted share for the third quarter of 2012, after incurring a non-cash impairment of $7.6 million for a write-down of VAALCO's investment in the Granite Wash.  Net income attributable to VAALCO was $2.4 million or $0.04 per diluted share for the comparable period in 2011. 

(Logo: )

Robert Gerry, Chairman and CEO, commented: "VAALCO is now engaged in a number of exploration and development projects that we believe will add substantial value for the benefit of our shareholders.  Over the ensuing months, we anticipate drilling high potential exploration wells in three countries in West Africa, while also adding additional development wells to our portfolio in Gabon."

Exploration and Development Update

The Company provided the following update on its exploration and development program:

Offshore Equatorial Guinea

As previously announced, on November 1, 2012 the Company acquired a 31% non-operated working interest in Block P, located offshore Equatorial Guinea, at a cost of $10.0 million.  Two exploration wells are expected to be drilled on this block in 2013.


VAALCO has contracted for a drilling rig to commence work on its multi-well program offshore Gabon, planned to begin in the fourth quarter of 2012, starting with drilling a development well in Avouma, workovers on the Avouma and Ebouri platforms to replace electrical submersible pumps and drilling an exploration well in the Ebouri field.  A decision to drill an additional exploration well during the drilling campaign will be made following the processing of recently acquired 3-D seismic data. 

The Company and its partners are proceeding with plans to build two new platforms offshore Gabon, one to be located in the Etame field and the other in the Southeast Etame / North Tchibala area.  These platforms will provide the capacity to drill multiple wells in the Etame field, Southeast Etame discovery area, and the North Tchibala field.  Platform fabrication work is expected to commence in the first quarter of 2013 with installation of the platforms expected to occur in 2014.

As previously announced, in the third quarter, the Company shut-in two of its three producing wells in the Ebouri field, offshore Gabon, after detecting the presence of hydrogen sulfide (H2S) on the Ebouri platform.  The Company continues to maintain production offshore Gabon at approximately 19,000 barrels per day, including from one well in the Ebouri field.  Investigations are underway to ascertain the root cause of the H2S and develop a plan to produce the remaining reserves in a timely manner.  It appears that additional capital investment will be required to produce the impacted reserves which may include re-working the wells with upgraded metallurgy including wellhead replacements and installing H2S processing equipment on the platform. 

In October 2012, drilling of the N'Gongui 2 well on the Mutamba Iroru block, onshore Gabon  commenced resulting in a hydrocarbon discovery.  Sidetracks to appraise the discovery commenced in late October 2012.


As previously announced, a partner has been identified to acquire the available 40% working interest in Block 5, offshore Angola, and the party has been submitted to the Angolan government for approval.  In November 2012, the government advised the Company that it has entered into negotiations with the potential partner.  Once a new partner has been named, the consortium expects to proceed with the drilling of a pre-salt exploratory well. 

United States

The Company's second well in the Poplar Dome field, EPU-133, was spudded in June 2012, and was hydraulically fractured.  This well is being considered for installation of electrical submersible pumps ("ESPs") in an effort to establish production during the fourth quarter of 2012.  Using ESPs to obtain production has been successfully utilized on other wells in this area.  The Company plans to drill the third obligation well during the fourth quarter of 2012.  Previously, a vertical exploration well, EPU-120, was completed in June 2012 and has been temporarily suspended to retest certain formations or to convert the well into a horizontal producing well.    

During the third quarter of 2012, the Company drilled two wells, Bolke 7-01H and Bolke 11-01H, in the Salt Lake Field located in Sheridan County, Montana.  Hydraulic fracturing on the Bolke 7-01H well began in November 2012.  Following the installation of electrical submersible pumps, the Bolke 11-01H is undergoing a 30 day test to determine commerciality.  The results of this test are expected in the fourth quarter of 2012. 

In September 2012, the Company acquired a 100% working interest in approximately 10,000 acres in Harding County, South Dakota.  The primary objective for this property is the Red River formation.  Pursuant to the terms of the acquisition, VAALCO is obligated to drill and complete a well, or reenter and complete an existing well within twelve months of the acquisition date.  The Company expects to drill the initial well on the property in the fourth quarter of 2012.

Third Quarter 2012 Financial Results Discussion

Total Revenues

Total oil and natural gas revenues were $37.6 million for the three months ended September 30, 2012 compared to $37.4 million for the same period of 2011.

Oil Revenues


Crude oil revenues for the three months ended September 30, 2012 were $37.0 million, as compared to revenues of $36.4 million for the same period 2011.  In the three months ended September 30, 2012, the Company sold approximately 342,000 net barrels of oil from three liftings at an average price of $107.94/Bbl, while in the three months ended September 30, 2011 it sold approximately 322,000 net barrels of oil equivalent from two liftings at an average price of $113.09/Bbl. 

United States

Condensate sales from the Granite Wash formation wells, located in Hemphill County, Texas for the three months ended September 30, 2012 were $178,000, resulting from the sale of approximately 2,000 net barrels of oil condensate at an average price of $77.48/Bbl.  For the same period in 2011, condensate sales from the Granite Wash formation wells were $146,000, resulting from the sale of approximately 2,000 net barrels of oil condensate at an average price of $74.63/Bbl.

Natural Gas Revenues

United States

Natural gas revenues including revenues from natural gas liquids for the three months ended September 30, 2012 were $0.5 million compared to $0.8 million for the comparable period in 2011.  Natural gas sales were 147 MMcf at an average price of $3.32/Mcf for the three months ended September 30, 2012.  For the same period of 2011, natural gas sales were 137 MMcf at an average price of $5.62/Mcf.

Capital Expenditures

Capital expenditures were $20.6 million for the third quarter and $44.1 million for the nine months of 2012, primarily associated with the Company's drilling campaign in the United States, its platform modification costs and advance purchases for the upcoming drilling program offshore Gabon, and its onshore Gabon drilling program.  For the fourth quarter of 2012, the Company anticipates its share of capital expenditures will approximate $32.0 million for the acquisition of a block in Equatorial Guinea, completion of wells underway in Montana, new wells in Montana and South Dakota, completion of the onshore Gabon well, offshore infrastructure projects in Gabon and the initial drilling costs of a multi-well program scheduled to begin late in the fourth quarter offshore Gabon.

Operating Costs and Expenses

Total production expenses for the three months ended September 30, 2012 were $5.9 million compared to $4.5 million for the three months ended September 30, 2011. The increase in year-over year production expense is mainly due to a retroactive FPSO cost associated with a contract extension and revision, and higher production costs as a result of lower expenses capitalized associated with unsold crude oil inventory, which was partially offset by a lower Domestic Market Obligation ("DMO") charge payable to the Republic of Gabon.

Exploration expense was $0.7 million for the three months ended September 30, 2012 compared to $1.3 million for the comparable period in 2011.

During the three months ended September 30, 2012 the Company recorded an impairment loss of $7.6 million to write down its investment in the Granite Wash formation of North Texas to its fair value of $7.7 million.

Income tax expense amounted to $14.2 million and $17.1 million for the three months ended September 30, 2012 and 2011, respectively.  In the three months ended September 30, 2012 and 2011, the income taxes were all paid in Gabon.  Income tax expense was lower than in the same period of 2011 due to a lower percentage of oil allocated as "profit oil" versus "cost oil" in Gabon.

Balance Sheet

On September 30, 2012, the Company had unrestricted cash of $136.3 million and no debt.  The Company expects its cash balances plus cash from operations will be more than sufficient to fund the Company's remaining 2012 capital expenditure budget and potential growth investments.

Conference Call

As previously announced, the Company will hold a conference call to discuss its third quarter 2012 results on Friday, November 9, 2012 at 10:00 a.m. Central Time (11:00 a.m. Eastern Time).  Interested parties may participate by dialing 1 (800) 288-3976.  International parties may dial 1 (612) 332-0636.  The confirmation code is 268383.  This call will also be webcast on VAALCO's website at

An audio replay will be available beginning approximately one hour after the end of the conference call through December 9, 2012 on the Company's website and by dialing 1 (800) 475-6701.  International parties may dial 1 (320) 365-3844.  The confirmation code is 268383.

Summary financial results for the quarter are tabulated below.

 Three months ended, 

 Nine months ended 

 (Unaudited - in thousands of dollars) 

 September 30,


 September 30,


 September 30,


 September 30,







 Operating costs and expenses, less impairment charge 





 Impairment of proved properties 





 Operating Income 





 Other income, net 





 Income tax expense 





 Net Income 





 Less net income - noncontrolling interest 





 Net income (Loss) - VAALCO Energy, Inc. 





 Basic net income per share attributable to VAALCO Energy, Inc. 

$     0.00

$      0.04

$      0.34

$     0.45

 Diluted net income per share attributable to VAALCO Energy, Inc. 

$     0.00

$      0.04

$      0.33


$     0.44

Other financial results:

 Three months ended, 

 Nine months ended 


 September 30, 2012 

 September 30, 2011 

 September 30, 2012 

 September 30, 2011 

Net oil sales (MBbls)





Net gas sales (MMCF)





Net oil and gas sales (MBOE)





Average oil price ($/bbl)





Average gas price ($/MCF)





Average price ($/BOE)





Production costs ($/BOE)





Depletion costs ($/BOE)





General and administrative costs ($/BOE)





Capital Expenditures ($thousands)





Basic and diluted share information:

 Three months ended, 

 Nine months ended 

 September 30, 2012 

 September 30, 2011 

 September 30, 2012 

 September 30, 2011 

 Basic weighted average common stock 

  issued and outstanding 





 Dilutive options 





 Total dilutive shares 





Forward-Looking Statements

This document includes "forward-looking statements" as defined by the U.S. securities laws. Forward-looking statements are those concerning VAALCO's plans, expectations, and objectives for future drilling, completion and other operations and activities. All statements included in this document that address activities, events or developments that VAALCO expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements include future production rates, expected capital expenditures, prospect evaluations, drilling timing, license expiration concerns, completion and production timetables, and costs to complete wells. These statements are based on assumptions made by VAALCO based on its experience,  perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond VAALCO's control. These risks include, but are not limited to, inflation, lack of availability of goods, services and capital, environmental risks, drilling risks, foreign operational risks and regulatory changes. Investors are cautioned that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. These risks are further described in VAALCO's annual report on Form 10-K for the year ended December 31, 2011, on Part II, Item 1A of Form 10-Q for the quarter ended March 31, 2012 and other reports filed with the SEC which can be reviewed at, or which can be received by contacting VAALCO at 4600 Post Oak Place, Suite 309, Houston, Texas 77027, (713) 623-0801.


VAALCO Energy, Inc. is a Houston based independent energy company principally engaged in the acquisition, exploration, development and production of crude oil. VAALCO's strategy is to increase reserves and production through the exploration and exploitation of oil and natural gas properties with high emphasis on international opportunities. The Company's properties and exploration acreage are located primarily in Gabon and Angola, West Africa and the United States.


Investor Contact

Greg Hullinger

Chief Financial Officer


Media Contact

Tim Lynch / Jed Repko

Joele Frank, Wilkinson Brimmer Katcher



More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
As organizations shift towards IT-as-a-service models, the need for managing & protecting data residing across physical, virtual, and now cloud environments grows with it. CommVault can ensure protection & E-Discovery of your data - whether in a private cloud, a Service Provider delivered public cloud, or a hybrid cloud environment – across the heterogeneous enterprise.
Growth hacking is common for startups to make unheard-of progress in building their business. Career Hacks can help Geek Girls and those who support them (yes, that's you too, Dad!) to excel in this typically male-dominated world. Get ready to learn the facts: Is there a bias against women in the tech / developer communities? Why are women 50% of the workforce, but hold only 24% of the STEM or IT positions? Some beginnings of what to do about it! In her Day 2 Keynote at 17th Cloud Expo, San...
PubNub has announced the release of BLOCKS, a set of customizable microservices that give developers a simple way to add code and deploy features for realtime apps.PubNub BLOCKS executes business logic directly on the data streaming through PubNub’s network without splitting it off to an intermediary server controlled by the customer. This revolutionary approach streamlines app development, reduces endpoint-to-endpoint latency, and allows apps to better leverage the enormous scalability of PubNu...
Apps and devices shouldn't stop working when there's limited or no network connectivity. Learn how to bring data stored in a cloud database to the edge of the network (and back again) whenever an Internet connection is available. In his session at 17th Cloud Expo, Ben Perlmutter, a Sales Engineer with IBM Cloudant, demonstrated techniques for replicating cloud databases with devices in order to build offline-first mobile or Internet of Things (IoT) apps that can provide a better, faster user e...
SYS-CON Events announced today that Catchpoint, a global leader in monitoring, and testing the performance of online applications, has been named "Silver Sponsor" of DevOps Summit New York, which will take place on June 7-9, 2016 at the Javits Center in New York City. Catchpoint radically transforms the way businesses manage, monitor, and test the performance of online applications. Truly understand and improve user experience with clear visibility into complex, distributed online systems.Founde...
In today's enterprise, digital transformation represents organizational change even more so than technology change, as customer preferences and behavior drive end-to-end transformation across lines of business as well as IT. To capitalize on the ubiquitous disruption driving this transformation, companies must be able to innovate at an increasingly rapid pace. Traditional approaches for driving innovation are now woefully inadequate for keeping up with the breadth of disruption and change facin...
I recently attended and was a speaker at the 4th International Internet of @ThingsExpo at the Santa Clara Convention Center. I also had the opportunity to attend this event last year and I wrote a blog from that show talking about how the “Enterprise Impact of IoT” was a key theme of last year’s show. I was curious to see if the same theme would still resonate 365 days later and what, if any, changes I would see in the content presented.
The revocation of Safe Harbor has radically affected data sovereignty strategy in the cloud. In his session at 17th Cloud Expo, Jeff Miller, Product Management at Cavirin Systems, discussed how to assess these changes across your own cloud strategy, and how you can mitigate risks previously covered under the agreement.
Cloud computing delivers on-demand resources that provide businesses with flexibility and cost-savings. The challenge in moving workloads to the cloud has been the cost and complexity of ensuring the initial and ongoing security and regulatory (PCI, HIPAA, FFIEC) compliance across private and public clouds. Manual security compliance is slow, prone to human error, and represents over 50% of the cost of managing cloud applications. Determining how to automate cloud security compliance is critical...
Most of the IoT Gateway scenarios involve collecting data from machines/processing and pushing data upstream to cloud for further analytics. The gateway hardware varies from Raspberry Pi to Industrial PCs. The document states the process of allowing deploying polyglot data pipelining software with the clear notion of supporting immutability. In his session at @ThingsExpo, Shashank Jain, a development architect for SAP Labs, discussed the objective, which is to automate the IoT deployment proces...
Culture is the most important ingredient of DevOps. The challenge for most organizations is defining and communicating a vision of beneficial DevOps culture for their organizations, and then facilitating the changes needed to achieve that. Often this comes down to an ability to provide true leadership. As a CIO, are your direct reports IT managers or are they IT leaders? The hard truth is that many IT managers have risen through the ranks based on their technical skills, not their leadership ab...
In his General Session at DevOps Summit, Asaf Yigal, Co-Founder & VP of Product at, explored the value of Kibana 4 for log analysis and provided a hands-on tutorial on how to set up Kibana 4 and get the most out of Apache log files. He examined three use cases: IT operations, business intelligence, and security and compliance. Asaf Yigal is co-founder and VP of Product at log analytics software company In the past, he was co-founder of social-trading platform Currensee, which...
Countless business models have spawned from the IaaS industry – resell Web hosting, blogs, public cloud, and on and on. With the overwhelming amount of tools available to us, it's sometimes easy to overlook that many of them are just new skins of resources we've had for a long time. In his general session at 17th Cloud Expo, Harold Hannon, Sr. Software Architect at SoftLayer, an IBM Company, broke down what we have to work with, discussed the benefits and pitfalls and how we can best use them ...
We all know that data growth is exploding and storage budgets are shrinking. Instead of showing you charts on about how much data there is, in his General Session at 17th Cloud Expo, Scott Cleland, Senior Director of Product Marketing at HGST, showed how to capture all of your data in one place. After you have your data under control, you can then analyze it in one place, saving time and resources.
The Internet of Things (IoT) is growing rapidly by extending current technologies, products and networks. By 2020, Cisco estimates there will be 50 billion connected devices. Gartner has forecast revenues of over $300 billion, just to IoT suppliers. Now is the time to figure out how you’ll make money – not just create innovative products. With hundreds of new products and companies jumping into the IoT fray every month, there’s no shortage of innovation. Despite this, McKinsey/VisionMobile data...