VAALCO Energy has reported final financial and operating results for the fourth quarter and full year of 2022. On October 13, 2022, VAALCO completed the business combination with TransGlobe Energy; as a result, VAALCO’s fourth quarter and full year 2022 results include the combined assets from the closing day through the end of 2022.
Highlights and Key Items:
- Reported full year ("FY") 2022 net income of $51.9 million ($0.73 per diluted share) and Adjusted Net Income(1) of $104.3 million ($1.49 per diluted share);
- Recorded fourth quarter 2022 net income of $17.8 million ($0.17 per diluted share) and Adjusted Net Income of $19.2 million ($0.19 per diluted share);
- Closed the strategic and transformational business combination with TransGlobe on October 13, 2022;
- Increased quarterly cash dividend by 92% to $0.0625 per share of common stock for the first quarter of 2023 ($0.25 annualized), from $0.0325 per share ($0.13 annualized) in 2022;
- Returned additional $7.5 million to shareholders through share buybacks from initiation of program in November 2022 through March 31, 2023;
- Increased FY 2022 average daily production by 44% to 10,217 net revenue interest (“NRI”)(2) barrels of oil equivalent per day (“BOEPD”), or 12,177 working interest (“WI”)(2) BOEPD;
- Sold 3,677,000 barrels of oil equivalent in 2022;
- Delivered fourth quarter 2022 production of 14,390 NRI BOEPD, or 18,262 WI BOEPD;
- Sold 1,371,000 barrels of oil equivalent in fourth quarter of 2022;
- Generated record Adjusted EBITDAX(1) of $186.6 million in FY 2022 and $49.8 million of Adjusted EBITDAX in the fourth quarter of 2022;
- Funded $159.9 million in cash capital expenditures during 2022 with cash on hand and cash from operations;
- Increased year-end 2022 SEC proved reserves by 149% to 27.9 million barrels of oil equivalent (“MMBOE”) with the standardized measure value up 529% to $624 million;
- Increased year-end 2P CPR WI(4) reserves, which also includes Equatorial Guinea, by 292% to 76.4 MMBOE with 2P WI CPR PV-10(4) value up 344% to $815 million, using management assumptions for future commodity pricing;
- Grew Adjusted Working Capital(1) to $48.8 million at year-end 2022, an increase of 257% compared to the prior year;
- Finalized multiple substantive documents with VAALCO's partners and the Ministry of Mines & Hydrocarbons in Equatorial Guinea for Block P which includes the Venus development; and
- Announced 2023 operational and financial guidance including capital expenditure range of $70 to $90 million for full year 2023.
- Adjusted EBITDAX, Adjusted Net Income, Adjusted Working Capital and PV-10 are Non-GAAP financial measures and are described and reconciled to the closest GAAP measure in the attached table under “Non-GAAP Financial Measures.”
- All NRI production rates are VAALCO's working interest volumes less royalty volumes, where applicable.
- All WI production rates and volumes are VAALCO’s working interest volumes.
- See “Supplemental Non-GAAP Financial Measures” below concerning 2P CPR WI reserves and 2P CPR WI PV-10.
George Maxwell, VAALCO’s Chief Executive Officer commented:
'In 2022, we transformed VAALCO into a diversified, multi-country company focused on sustainable growth and returning value to shareholders. We delivered record financial results, completed a major acquisition and successfully executed multiple high-impact operational projects. Production volumes grew 44% in 2022, and coupled with a strong commodity pricing environment, VAALCO was able to generate significant operating cash flow and record Adjusted EBITDAX grew to over $186 million. This allowed us to fully fund dividend and share buyback programs, a $160 million capital program focused on lowering long-term costs, and growing production while closing on a major acquisition and remaining debt free. We are in a financially stronger position entering 2023 with more reserves, production and future potential than at any other time in our history. We are a diversified, multinational exploration and production company with 2P WI CPR reserves of 76.4 million barrels of oil equivalent.
'This past year, we completed the transformational combination with TransGlobe which has built a business of scale with a stronger balance sheet and a more diversified baseline of production that will underpin VAALCO’s future opportunities for success. We are focused on generating meaningful cash flow to fund our increased stockholder dividends, share buybacks, capital expenditures and potential additional acquisitions. We have achieved the first tranche of synergies related to the acquisition. We now have a streamlined management team and Board and have captured the savings from delisting TGA and eliminating other related duplicative public company costs. We continue to rationalize our operational and G&A costs in 2023 as we look to attain additional synergies beyond what we originally anticipated.
'In Gabon, we are very pleased to have successfully delivered a highly complex, full field reconfiguration, maintenance turnaround and upgraded FSO installation. This project was completed in October despite a difficult global supply chain environment and is a testament to the dedication of our workforce and partners who helped complete the project, underlining VAALCO’s status as a quality operator. The new FSO provides us with additional flexibility and has an effective capacity for storage that is 50% larger than our relinquished FPSO. It also reduces our expected storage and offloading costs by 50% which we believe will lead to an extension of the economic field life, resulting in a corresponding increase in recovery and reserves at Etame. We also completed our 2021/2022 drilling program in Gabon that materially increased production and extended the economic life of the field. We expect full payback on the cost of the program by later this year.
'In March 2023, we held productive meetings with the MMH and our partners in Houston. During these meetings we finalized multiple substantive documents for Block P which includes the Venus development, relating to the Production Sharing Contract. We are working on concluding remaining documents and expect to update the market in the second quarter of 2023. We anticipate a strong, efficient and economic development of this exciting discovery with first oil projected for 2026. We believe that there are clear strategic benefits in further diversifying the revenue generation and country focus of our portfolio. VAALCO has a proven operating track record for a development of this kind and we look forward to demonstrating these capabilities as we progress the Venus discovery into production and further demonstrates the meaningful value of our asset base.
'We are clearly well-positioned for continued success in this current commodity price environment, with no net debt and strong free cash flow generation. We have made significant progress integrating the TransGlobe team and assets into our strategic vision. We are firmly focused on delivering meaningful shareholder returns while continuing to progress our objective of accretive growth.'
TransGlobe Combination
On July 14, 2022, VAALCO announced that it had entered into a definitive arrangement agreement pursuant to which VAALCO would acquire all of the outstanding common shares of TransGlobe in a stock-for-stock strategic business combination. Following shareholder approval by both companies, on October 13, 2022, VAALCO closed the strategic combination with TransGlobe Energy. The combined Company is trading on the NYSE and LSE under the ticker symbol EGY. The combined Company is a leading African-focused operator with a strong production and reserve base, a diverse portfolio of assets in Gabon, Egypt, Equatorial Guinea and Canada, and significant future growth potential. The impact from the combination is reflected in VAALCO’s fourth quarter 2022 results following the closing on October 13, 2022.
Click here for full announcement
Source: VAALCO Energy
