EXHIBIT 2

EXHIBIT 2
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AMENDED & RESTATED REGISTRATION RIGHTS AGREEMENT

by and among

VAALCO ENERGY, INC.,

NISSHO IWAI CORPORATION

and

THE 1818 FUND II, L.P.

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Dated as of August 23, 2002
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TABLE OF CONTENTS

PAGE NO.
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1. Background............................................................1

2. Registration Under Securities Act, etc................................1

2.1 Registration on Request......................................1
2.2 Incidental Registration......................................3
2.3 Registration Procedures......................................4
2.4 Underwritten Offerings.......................................7
2.5 Preparation; Reasonable Investigation........................8
2.6 Limitations, Conditions and Qualifications
to Obligations under Registration Covenants..................9
2.7 Indemnification..............................................9

3. Definitions..........................................................12

4. Rule 144 and Rule 144A...............................................14

5. Amendments and Waivers...............................................14

6. Nominees for Beneficial Owners.......................................14

7. Notices..............................................................14

8. Assignment...........................................................16

9. Calculation of Percentage Interests in Registrable Securities........16

10. No Inconsistent Agreements...........................................16

11. Remedies.............................................................16

12. Certain Distributions................................................16

13. Severability.........................................................17

14. Entire Agreement.....................................................17

15. Headings.............................................................17

16. GOVERNING LAW........................................................17

17. Counterparts.........................................................17


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AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this "Agreement"),
dated as of August 23, 2002, by and among VAALCO ENERGY, INC., a Delaware
corporation (the "Company"), THE 1818 FUND II, L.P., a Delaware limited
partnership (the "Fund"), and NISSHO IWAI CORPORATION, a corporation organized
under the laws of Japan ("NIC" and together with the Fund, the "Purchasers").

1. BACKGROUND. Pursuant to a Stock Acquisition Agreement and Plan
of Reorganization, dated February 17, 1998 (the "Purchase Agreement"), among the
Company, the Fund and 1818 Oil Corp., a Delaware corporation, the Fund agreed to
purchase from the Company, and the Company agreed to issue to the Fund (i) an
aggregate of 10,000 shares of preferred stock, par value $25.00 per share (the
"Preferred Stock"), of the Company and (ii) an aggregate of 3,763,441 shares of
common stock, par value $.01 per share (the "Common Stock"), of the Company.

Pursuant to a Subordinated Credit Agreement, dated as of June 10, 2002,
as amended, by and among the Company and the Fund (the "Credit Agreement"), the
Fund received warrants to purchase shares of Common Stock and pursuant to a
Stock Purchase Agreement, dated as of August 23, 2002, by and among the Company,
NIC and Vaalco International, Inc., a Delaware corporation (the "Stock Purchase
Agreement"), NIC received warrants to purchase shares of Common Stock
(collectively, the "Warrants").

The Company and 1818 wish to amend and restate this Agreement so that
(i) the shares of Common Stock issuable upon exercise of the Warrants are
covered by this Agreement, (ii) NIC becomes a party to this Agreement and (iii)
certain other changes agreed to by the parties hereto are reflected in the
Agreement. Accordingly, the parties hereby amend and restate the Registration
Rights Agreement, dated April 21, 1998 between the Company and 1818 Fund (the
"1998 Agreement") with this Agreement superseding the 1998 Agreement in its
entirety.

Capitalized terms used herein but not otherwise defined shall have the
meanings given them in Section 3.

2. REGISTRATION UNDER SECURITIES ACT, ETC.

2.1 REGISTRATION ON REQUEST.

(a) REQUEST. At any time, or from time to time,
one or more holders (the "Initiating Holders") of not less than 5% of the
Registrable Securities may, upon written request, require the Company to effect
the registration under the Securities Act of any Registrable Securities held by
such Initiating Holders. The Company promptly will give written notice of such
requested registration to all other holders of Registrable Securities who may
join in such registration, and thereupon the Company will use its best efforts
to effect, at the earliest possible date, the registration under the Securities
Act



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(i) the Registrable Securities that the
Company has been so requested to register by such Initiating Holders,
and

(ii) all other Registrable Securities
that the Company has been requested to register by the holders thereof
(such holders together with the Initiating Holders hereinafter are
referred to as the "Selling Holders") by written request given to the
Company within 30 days after the giving of such written notice by the
Company, all to the extent requisite to permit the disposition of the
Registrable Securities so to be registered.

(b) REGISTRATION OF OTHER SECURITIES. Whenever
the Company shall effect a registration pursuant to this Section 2.1, no
securities other than Registrable Securities shall be included among the
securities covered by such registration unless (subject to Section 2.1(f)) the
Selling Holders of not less than 51% of all Registrable Securities to be covered
by such registration shall have consented in writing to the inclusion of such
other securities.

(c) REGISTRATION STATEMENT FORM. Registrations
under this Section 2.1 shall be on such appropriate registration form of the
Commission as shall be reasonably selected by the Company.

(d) EFFECTIVE REGISTRATION STATEMENT. A
registration requested pursuant to this Section 2.1 shall not be deemed to have
been effected (i) unless a registration statement with respect thereto has
become effective and remained effective in compliance with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by such registration statement until the earlier of (x) such time as all
of such Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
such registration statement and (y) 180 days after the effective date of such
registration statement, except with respect to any registration statement filed
pursuant to Rule 415 under the Securities Act, in which case the Company shall
use its best efforts to keep such registration statement effective until such
time as all of the Registrable Securities cease to be Registrable Securities,
(ii) if after it has become effective, such registration is interfered with by
any stop order, injunction or other order or requirement of the Commission or
other governmental agency or court for any reason not attributable to the
Selling Holders and has not thereafter become effective, or (iii) if the
conditions to closing specified in the underwriting agreement, if any, entered
into in connection with such registration are not satisfied or waived, other
than solely by reason of a failure on the part of the Selling Holders.

(e) SELECTION OF UNDERWRITERS. The underwriter
or underwriters of each underwritten offering of the Registrable Securities so
to be registered shall be selected by the Selling Holders of more than 50% of
the Registrable Securities to be included in such registration and shall be
reasonably acceptable to the Company.

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(f) PRIORITY IN REQUESTED REGISTRATION. If the
managing underwriter of any underwritten offering shall advise the Company in
writing (and the Company shall so advise each Selling Holder of Registrable
Securities requesting registration of such advice) that, in its opinion, the
number of securities requested to be included in such registration exceeds the
number that can be sold in such offering within a price range acceptable to the
Selling Holders of 66-2/3% of the Registrable Securities requested to be
included in such registration, the Company, except as provided in the following
sentence, will include in such registration, to the extent of the number and
type that the Company is so advised can be sold in such offering, Registrable
Securities requested to be included in such registration, pro rata among the
Selling Holders requesting such registration on the basis of the estimated gross
proceeds from the sale thereof. If the total number of Registrable Securities
requested to be included in such registration cannot be included as provided in
the preceding sentence, holders of Registrable Securities requesting
registration thereof pursuant to Section 2.1, representing not less than 33-1/3%
of the Registrable Securities with respect to which registration has been
requested and constituting not less than 66-2/3% of the Initiating Holders,
shall have the right to withdraw the request for registration by giving written
notice to the Company within 20 days after receipt of such notice by the Company
and, in the event of such withdrawal, such request shall not be counted for
purposes of the requests for registration to which holders of Registrable
Securities are entitled pursuant to Section 2.1 hereof. In connection with any
such registration to which this Section 2.1(f) is applicable, no securities
other than Registrable Securities shall be covered by such registration.

(g) LIMITATIONS ON REGISTRATION ON REQUEST.
Notwithstanding anything in this Section 2.1 to the contrary, in no event will
the Company be required to effect, in the aggregate, more than four
registrations pursuant to this Section 2.1.

(h) EXPENSES. The Company will pay all
Registration Expenses in connection with any registration requested pursuant to
this Section 2.1.

2.2 INCIDENTAL REGISTRATION.

(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If
the Company at any time proposes to register any shares of Common Stock or any
securities convertible into Common Stock under the Securities Act by
registration on any form other than Forms S-4 or S-8, whether or not for sale
for its own account, it will each such time give prompt written notice to all
registered holders of Registrable Securities of its intention to do so and of
such holders' rights under this Section 2.2. Upon the written request of any
such holder (a "Requesting Holder") made as promptly as practicable and in any
event within 15 days after the receipt of any such notice, the Company will use
its best efforts to effect the registration under the Securities Act of all
Registrable Securities that the Company has been so requested to register by the
Requesting Holders thereof; PROVIDED, HOWEVER, that prior to the effective date
of the registration statement filed in connection with such registration,
immediately upon notification to the Company from the managing underwriter of
the price at which such securities are to be sold, if such price is below the
price that any Requesting Holder shall have indicated to be acceptable to

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such Requesting Holder, the Company shall so advise such Requesting Holder of
such price, and such Requesting Holder shall then have the right to withdraw its
request to have its Registrable Securities included in such registration
statement; PROVIDED FURTHER, that if, at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each Requesting Holder of Registrable Securities and (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from any obligation of the Company to pay the Registration Expenses in
connection therewith), without prejudice, however, to the rights of any holder
or holders of Registrable Securities entitled to do so to cause such
registration to be effected as a registration under Section 2.1, and (ii) in the
case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such other securities. Notwithstanding anything contained in this
Section 2.2(a), the Company shall not, if any Requesting Holder shall have
requested the registration of shares of Common Stock issuable upon conversion of
any Preferred Stock or exercise of any Warrants or other warrants issued under
the Credit Agreement, consummate the sale of the securities included in the
registration until such time as any applicable waiting period under the
Hart-Scott-Rodino Act shall have expired or early termination thereunder shall
have been granted if such Requesting Holder notifies the Company that it is
required to make a filing under the Hart-Scott-Rodino Act before it may convert
its Preferred Stock. No registration effected under this Section 2.2 shall
relieve the Company of its obligation to effect any registration upon request
under Section 2.1.

(b) PRIORITY IN INCIDENTAL REGISTRATIONS. If the
managing underwriter of any underwritten offering shall inform the Company by
letter of its opinion that the number or type of Registrable Securities
requested to be included in such registration would materially adversely affect
such offering, and the Company has so advised the Requesting Holders in writing,
then the Company will include in such registration, to the extent of the number
and type that the Company is so advised can be sold in (or during the time of)
such offering, FIRST, all securities proposed by the Company to be sold for its
own account and SECOND, all other securities proposed to be registered pro rata
on the basis of the estimated proceeds from the sale thereof.

(c) EXPENSES. The Company will pay all
Registration Expenses in connection with any registration effected pursuant to
this Section 2.2.

2.3 REGISTRATION PROCEDURES. If and whenever the Company
is required to effect the registration of any Registrable Securities under the
Securities Act as provided in Sections 2.1 and 2.2, the Company will, as
expeditiously as possible:

(i) prepare and (within 90 days after the end of
the period within which requests for registration may be given to the
Company or in any event as soon thereafter as practicable) file with
the Commission the requisite registration statement to effect such
registration and thereafter use its best efforts

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to cause such registration statement to become effective; PROVIDED,
HOWEVER, that the Company may discontinue any registration of its
securities that are not Registrable Securities (and, under the
circumstances specified in Sections 2.2(a) or 2.6, if applicable, its
securities that are Registrable Securities) at any time prior to the
effective date of the registration statement relating thereto;

(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective and to comply with the provisions
of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement until the
earlier of (a) such time as all of such Registrable Securities have
been disposed of in accordance with the intended methods of disposition
by the seller or sellers thereof set forth in such registration
statement and (b) 180 days after the effective date of such
registration statement, except with respect to any registration
statement filed pursuant to Rule 415 under the Securities Act if the
Company is eligible to file a registration statement on Form S-3, in
which case the Company shall use its best efforts to keep the
registration statement effective and updated, from the date such
registration statement is declared effective until such time as all of
the Registrable Securities cease to be Registerable Securities;

(iii) furnish to each seller of Registrable
Securities covered by such registration statement, such number of
conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case including all exhibits),
such number of copies of the prospectus contained in such registration
statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the Securities
Act, and such other documents, as such seller may reasonably request;

(iv) use its best efforts (x) to register or
qualify all Registrable Securities and other securities covered by such
registration statement under such other securities or blue sky laws of
such States of the United States of America where an exemption is not
available and as the sellers of Registrable Securities covered by such
registration statement shall reasonably request, (y) to keep such
registration or qualification in effect for so long as such
registration statement remains in effect and (z) to take any other
action that may be reasonably necessary or advisable to enable such
sellers to consummate the disposition in such jurisdictions of the
securities to be sold by such sellers, except that the Company shall
not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this subdivision (iv) be obligated to
be so qualified or to consent to general service of process in any such
jurisdiction;

(v) use its best efforts to cause all
Registrable Securities covered by such registration statement to be
registered with or approved by such other federal or state governmental
agencies or authorities as may be necessary in

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the opinion of counsel to the Company and counsel to the seller or
sellers of Registrable Securities to enable the seller or sellers
thereof to consummate the disposition of such Registrable Securities;

(vi) in the case of an underwritten or "best
efforts" offering, furnish at the effective date of such registration
statement to each seller of Registrable Securities, and each such
seller's underwriters, if any, a signed counterpart of:

(x) an opinion of counsel for the
Company, dated the effective date of such registration
statement and, if applicable, the date of the closing under
the underwriting agreement, and

(y) a "comfort" letter signed by the
independent public accountants who have certified the
Company's financial statements included or incorporated by
reference in such registration statement,

covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in
the case of the accountants' comfort letter, with respect to events
subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' comfort
letters delivered to the underwriters in underwritten public offerings
of securities and, in the case of the accountants' comfort letter, such
other financial matters, and, in the case of the legal opinion, such
other legal matters, as the underwriters may reasonably request;

(vii) cause representatives of the Company to
participate in any "road show" or "road shows" reasonably requested by
any underwriter of an underwritten or "best efforts" offering of any
Registrable Securities;

(viii) notify each seller of Registrable Securities
covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act,
upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, in the light of the
circumstances under which they were made, and at the request of any
such seller promptly prepare and furnish to it a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made;

(ix) otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make
available to its

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security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first full calendar month
after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder, and promptly
furnish to each such seller of Registrable Securities a copy of any
amendment or supplement to such registration statement or prospectus;

(x) provide and cause to be maintained a
transfer agent and registrar (which, in each case, may be the Company)
for all Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such
registration; and

(xi) if any class of securities of the Company is
listed on any national securities exchange or automated quotation
system at the time of the effectiveness of any registration statement,
the Company shall use its best efforts to list all Registrable
Securities covered by such registration statement on such national
securities exchange or automated quotation system.

The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company in a reasonably prompt
manner such information regarding such seller and the distribution of such
securities as the Company may from time to time reasonably request in writing;
PROVIDED, that any such information shall be given or made by a seller of
Registrable Securities without representation or warranty of any kind whatsoever
except representations with respect to the identity of such seller, such
seller's Registrable Securities and such seller's intended method of
distribution or any other representations required by applicable law.

Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in subdivision (viii) of this
Section 2.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (viii) of this
Section 2.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.

2.4 UNDERWRITTEN OFFERINGS.

(a) REQUESTED UNDERWRITTEN OFFERINGS. If
requested by the underwriters for any underwritten offering by holders of
Registrable Securities pursuant to a registration requested under Section 2.1,
the Company will use its best efforts to enter into an underwriting agreement
with such underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to each such holder of Registrable Securities
and the underwriters and to contain such representations and

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warranties by the Company and such other terms as are generally prevailing in
agreements of that type, including, without limitation, indemnities to the
effect and to the extent provided in Section 2.7. The holders of the Registrable
Securities proposed to be sold by such underwriters will reasonably cooperate
with the Company in the negotiation of the underwriting agreement. Such holders
of Registrable Securities to be sold by such underwriters shall be parties to
such underwriting agreement and may, at their option, require that any or all of
the representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made to
and for the benefit of such holders of Registrable Securities and that any or
all of the conditions precedent to the obligations of such underwriters under
such underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. No holder of Registrable Securities shall be
required to make any representations or warranties to, or agreements with, the
Company other than representations or warranties regarding the identity of such
holder, such holder's Registrable Securities and such holder's intended method
of distribution or any other representations required by applicable law.

(b) INCIDENTAL UNDERWRITTEN OFFERINGS. If the
Company proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any
Requesting Holder of Registrable Securities, use its best efforts to arrange for
such underwriters to include all the Registrable Securities to be offered and
sold by such Requesting Holder among the securities of the Company to be
distributed by such underwriters, subject to the provisions of Section 2.2(b).
The holders of Registrable Securities to be distributed by such underwriters
shall be parties to the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such Requesting Holder of Registrable
Securities shall not be required to make any representations or warranties to or
agreements with the Company or the underwriters other than representations or
warranties regarding the identity of such Requesting Holder, such Requesting
Holder's Registrable Securities and such Requesting Holder's intended method of
distribution or any other representations required by applicable law.

(c) UNDERWRITING DISCOUNTS AND COMMISSION. The
holders of Registrable Securities sold in any offering pursuant to Section
2.4(a) or Section 2.4(b) shall pay all underwriting discounts and commissions of
the underwriter or underwriters with respect to the Registrable Securities sold
thereby.

2.5 PREPARATION; REASONABLE INVESTIGATION. In connection
with the preparation and filing of each registration statement under the
Securities Act pursuant to this Agreement, the Company will give the holders of
Registrable Securities registered under such registration statement, the
underwriters, if any, and their respective counsel

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the opportunity to participate in the preparation of such registration
statement, each prospectus included therein or filed with the Commission, and
each amendment thereof or supplement thereto, and will give each of them such
reasonable access to its books and records and such opportunities to discuss the
business of the Company with its officers and the independent public accountants
who have certified its financial statements as shall be necessary, in the
opinion of such holders' and such underwriters' respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.

2.6 LIMITATIONS, CONDITIONS AND QUALIFICATIONS TO
OBLIGATIONS UNDER REGISTRATION COVENANTS. The Company shall be entitled to
postpone for a reasonable period of time (but not exceeding 90 days) the filing
of any registration statement otherwise required to be prepared and filed by it
pursuant to Section 2.1 if the Company determines, in its good faith judgment,
that such registration and offering would interfere with any material financing,
acquisition, corporate reorganization or other material transaction involving
the Company or any of its affiliates and promptly gives the holders of
Registrable Securities requesting registration thereof pursuant to Section 2.1
written notice of such determination, containing a general statement of the
reasons for such postponement and an approximation of the anticipated delay. If
the Company shall so postpone the filing of a registration statement, holders of
Registrable Securities requesting registration thereof pursuant to Section 2.1,
representing not less than 33-1/3% of the Registrable Securities with respect to
which registration has been requested and constituting not less than 66-2/3% of
the Initiating Holders, shall have the right to withdraw the request for
registration by giving written notice to the Company within 30 days after
receipt of the notice of postponement and, in the event of such withdrawal, such
request shall not be counted for purposes of the requests for registration to
which holders of Registrable Securities are entitled pursuant to Section 2.1
hereof.

2.7 INDEMNIFICATION.

(a) INDEMNIFICATION BY THE COMPANY. The Company
will, and hereby does, indemnify and hold harmless, in the case of any
registration statement filed pursuant to Section 2.1 or 2.2, each seller of any
Registrable Securities covered by such registration statement and each other
Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act, and their respective
directors, officers, partners, members, agents and affiliates against any
losses, claims, damages or liabilities, joint or several, to which such seller
or underwriter or any such director, officer, partner, member, agent, affiliate
or controlling person may become subject under the Securities Act or otherwise,
including, without limitation, the fees and expenses of legal counsel (including
those incurred in connection with any claim for indemnity hereunder), insofar as
such losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make

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the statements therein in light of the circumstances in which they were made not
misleading, and the Company will reimburse such seller or underwriter and each
such director, officer, partner, member, agent, affiliate and controlling Person
for any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, liability, action or
proceeding; PROVIDED, HOWEVER, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such seller or underwriter, as the case may be, specifically stating that it is
for use in the preparation thereof; and PROVIDED, FURTHER, that the Company
shall not be liable to any Person who participates as an underwriter in the
offering or sale of Registrable Securities or any other Person, if any, who
controls such underwriter within the meaning of the Securities Act, in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such Person's failure to
send or give a copy of the final prospectus, as the same may be then
supplemented or amended, to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such final prospectus. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such seller or any such director, officer, partner, member, agent
or controlling person and shall survive the transfer of such securities by such
seller.

(b) INDEMNIFICATION BY THE SELLERS. As a
condition to including any Registrable Securities in any registration statement,
the Company shall have received an undertaking satisfactory to it from the
prospective seller of such Registrable Securities, to indemnify and hold
harmless (in the same manner and to the same extent as set forth in Section
2.7(a)) the Company, and each director of the Company, each officer of the
Company and each other Person, if any, who participates as an underwriter in the
offering or sale of such securities and each other Person who controls the
Company or any such underwriter within the meaning of the Securities Act, with
respect to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto,
if such statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by such seller specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement; PROVIDED, HOWEVER, that
the liability of such indemnifying party under this Section 2.7(b) shall be
limited to the amount of the net proceeds received by such indemnifying party in
the offering giving rise to such liability. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling person and shall survive
the transfer of such securities by such seller.

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(c) NOTICES OF CLAIMS, ETC. Promptly after
receipt by an indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in Section 2.7(a) or (b), such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action; PROVIDED, HOWEVER, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding subdivisions of this Section 2.7, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, to the
extent that it may wish, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; PROVIDED, HOWEVER, that any indemnified
party may, at its own expense, retain separate counsel to participate in such
defense. Notwithstanding the foregoing, in any action or proceeding in which
both the Company and an indemnified party is, or is reasonably likely to become,
a party, such indemnified party shall have the right to employ separate counsel
at the Company's expense and to control its own defense of such action or
proceeding if, in the reasonable opinion of counsel to such indemnified party,
(a) there are or may be legal defenses available to such indemnified party or to
other indemnified parties that are different from or additional to those
available to the Company or (b) any conflict or potential conflict exists
between the Company and such indemnified party that would make such separate
representation advisable; PROVIDED, HOWEVER, that in no event shall the Company
be required to pay fees and expenses under this Section 2.7 for more than one
firm of attorneys in any jurisdiction in any one legal action or group of
related legal actions. No indemnifying party shall be liable for any settlement
of any action or proceeding effected without its written consent, which consent
shall not be unreasonably withheld. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation or which requires action other
than the payment of money by the indemnifying party.

(d) CONTRIBUTION. If the indemnification
provided for in this Section 2.7 shall for any reason be held by a court to be
unavailable to an indemnified party under Section 2.7(a) or (b) hereof in
respect of any loss, claim, damage or liability, or any action in respect
thereof, then, in lieu of the amount paid or payable under Section 2.7(a) or
(b), the indemnified party and the indemnifying party under Section 2.7(a) or
(b) shall contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating the same, including those incurred in connection with any claim
for indemnity hereunder), (i) in such proportion as is appropriate to reflect
the relative fault of the Company and the prospective sellers of Registrable
Securities covered by the registration statement which resulted in such loss,
claim, damage or liability, or action or proceeding in respect thereof, with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action or proceeding in respect thereof, as well as any
other relevant equitable considerations or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as shall
be appropriate to

12

reflect the relative benefits received by the Company and such prospective
sellers from the offering of the securities covered by such registration
statement; PROVIDED, HOWEVER, that for purposes of this clause (ii), the
relative benefits received by the prospective sellers shall be deemed not to
exceed the amount of proceeds received by such prospective sellers. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. Such prospective sellers'
obligations to contribute as provided in this Section 2.7(d) are several in
proportion to the relative value of their respective Registrable Securities
covered by such registration statement and not joint. In addition, no Person
shall be obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's consent, which
consent shall not be unreasonably withheld.

(e) OTHER INDEMNIFICATION. Indemnification and
contribution similar to that specified in the preceding subdivisions of this
Section 2.7 (with appropriate modifications) shall be given by the Company and
each seller of Registrable Securities with respect to any required registration
or other qualification of securities under any federal or state law or
regulation of any governmental authority other than the Securities Act.

(f) INDEMNIFICATION PAYMENTS. The
indemnification and contribution required by this Section 2.7 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or expense, loss, damage or liability
is incurred.

3. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:

"COMMISSION" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.

"CREDIT AGREEMENT" has the meaning set forth in Section 1.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934, as amended, shall
include a reference to the comparable section, if any, of any such similar
Federal statute.

"HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder.

"PERSON" means any individual, firm, corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint

13

venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.

"REGISTRABLE SECURITIES" means any shares of Common Stock issued or
issuable upon conversion of the Preferred Stock, any shares of Common Stock
issued or issuable upon exercise of any Warrants, or any warrants issued under
the Credit Agreement, any Related Registrable Securities and any shares of
Common Stock owned by any of the Purchasers. As to any particular Registrable
Securities, once issued, such securities shall cease to be Registrable
Securities when (a) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, (b) they shall have been sold as permitted by Rule 144 (or any
successor provision) under the Securities Act and the purchaser thereof does not
receive "restricted securities" as defined in Rule 144, (c) they shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not, in the opinion of counsel for
the holders, require registration of them under the Securities Act or (d) they
shall have ceased to be outstanding. All references to percentages of
Registrable Securities shall be calculated pursuant to Section 9.

"REGISTRATION EXPENSES" means all expenses incident to the Company's
performance of or compliance with Section 2, including, without limitation, all
registration and filing fees, all fees of any national securities exchange or
automated quotation system, all fees and expenses of complying with securities
or blue sky laws, all word processing, duplicating and printing expenses,
messenger and delivery expenses, the fees and disbursements of counsel for the
Company and of its independent public accountants, including the expenses of
"cold comfort" letters required by or incident to such performance and
compliance, any fees and disbursements of underwriters customarily paid by
issuers or sellers of securities (excluding any underwriting discounts or
commissions with respect to the Registrable Securities) and the reasonable fees
and expenses of one counsel to the Selling Holders (selected by Selling Holders
representing at least 50% of the Registrable Securities covered by such
registration). Notwithstanding the foregoing, in the event the Company shall
determine, in accordance with Section 2.2(a) or Section 2.6, not to register any
securities with respect to which it had given written notice of its intention to
so register to holders of Registrable Securities, all of the costs of the type
(and subject to any limitation to the extent) set forth in this definition and
incurred by Requesting Holders in connection with such registration on or prior
to the date the Company notifies the Requesting Holders of such determination
shall be deemed Registration Expenses.

"RELATED REGISTRABLE SECURITIES" means with respect any shares of
Preferred Stock (or shares of Common Stock issued or issuable upon conversion or
exercise of the Preferred Stock, the Warrants or any other warrants issued under
the Credit Agreement) and Common Stock, any securities of the Company or any
other Person which are issued or issuable in respect of, or in exchange for,
such shares of Preferred Stock or Common Stock, Warrants, or such other warrants
by way of a

14

dividend or stock split or as a result of a merger, consolidation,
combination, reclassification, reorganization or otherwise.

"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act of 1933, as amended, shall include a
reference to the comparable section, if any, of any such similar Federal
statute.

"STOCK PURCHASE AGREEMENT" has the meaning set forth in Section 1.

"WARRANTS" has the meaning set forth in Section 1.

4. RULE 144 AND RULE 144A. The Company shall take all actions
reasonably necessary to enable holders of Registrable Securities to sell such
securities without registration under the Securities Act within the limitation
of the provisions of (a) Rule 144 under the Securities Act, as such Rule may be
amended from time to time, (b) Rule 144A under the Securities Act, as such Rule
may be amended from time to time, or (c) any similar rules or regulations
hereafter adopted by the Commission. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.

5. AMENDMENTS AND WAIVERS. This Agreement may be amended with the
consent of the Company and the Company may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, only if the
Company shall have obtained the written consent to such amendment, action or
omission to act, of the holder or holders of at least 50% of the Registrable
Securities affected by such amendment, action or omission to act. Each holder of
any Registrable Securities at the time or thereafter outstanding shall be bound
by any consent authorized by this Section 5, whether or not such Registrable
Securities shall have been marked to indicate such consent.

6. NOMINEES FOR BENEFICIAL OWNERS. In the event that any
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes of
any request or other action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
shares of Registrable Securities held by any holder or holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.

7. NOTICES. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopier,
courier service or personal delivery:

(a) if to the Fund:

15

The 1818 Fund II, L.P.
59 Wall Street
New York, NY 10005-2818
Attention: Walter Grist

with a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-3027
Telecopy: (212) 757-3990
Attention: Marilyn Sobel

(b) if to NIC:

Nissho Iwai Corporation
3-1, Daiba 2-chome,
Minato-ku, Tokyo 135-8655
JAPAN
Telecopy: 81-3-5520-2964
Attention: Shinichi Teranishi,
General Manager, Energy Project
Department

(c) if to any other holder of Registrable Securities, at
the address that such holder shall have furnished to the Company in writing in
the manner set forth herein, or, until any such other holder so furnishes to the
Company an address, then to and at the address of the last holder of such
Registrable Securities who has furnished an address to the Company; or

(d) if to the Company:

VAALCO Energy, Inc.
4600 Post Oak Place, Suite 309
Houston, TX 77027-0130
Attention: Russell Scheirman

with a copy to:

Haynes and Boone, LLP
1000 Louisiana, Suite 4300
Houston, TX 77002
Telecopy: (713) 547-2600
Attention: Guy Young

All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered to a
courier, if

16

delivered by overnight courier service; five Business Days after being deposited
in the mail, postage prepaid, if mailed; and when receipt is acknowledged, if
telecopied.

8. ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and, with respect to the
Company, its respective successors and permitted assigns and, with respect to
the Purchasers, any holder of any Registrable Securities, subject to the
provisions respecting the minimum numbers of percentages of shares of
Registrable Securities required in order to be entitled to certain rights, or
take certain actions, contained herein. Except by operation of law, this
Agreement may not be assigned by the Company without the prior written consent
of the holders of a majority in interest of the Registrable Securities
outstanding at the time such consent is requested.

9. CALCULATION OF PERCENTAGE INTERESTS IN REGISTRABLE SECURITIES.
For purposes of this Agreement, all references to a percentage of the
Registrable Securities shall be calculated based upon the number of shares of
Registrable Securities outstanding at the time such calculation is made,
assuming the conversion of all the outstanding Preferred Stock and the exercise
of all Warrants and any other warrants issued under the Credit Agreement.

10. NO INCONSISTENT AGREEMENTS. The Company will not hereafter
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the holders of Registrable Securities in this
Agreement. Without limiting the generality of the foregoing, the Company will
not hereafter enter into any agreement with respect to its securities that
grants, or modifies any existing agreement with respect to its securities to
grant, to the holder of its securities in connection with an incidental
registration of such securities higher priority to the rights granted to the
Purchasers under Section 2.2(b).

11. REMEDIES. Each holder of Registrable Securities, in addition
to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.

12. CERTAIN DISTRIBUTIONS. The Company shall not at any time make
a distribution on or with respect to the Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the resulting or surviving corporation and such Registrable
Securities are not changed or exchanged) of securities of another issuer if
holders of Registrable Securities are entitled to receive such securities in
such distribution as holders of Registrable Securities and any of the securities
so distributed are registered under the Securities Act, unless the securities to
be distributed to the holders of Registrable Securities are also registered
under the Securities Act.

17

13. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
Purchasers shall be enforceable to the fullest extent permitted by law.

14. ENTIRE AGREEMENT. This Agreement is intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings with respect to the subject matter
contained herein, other than those set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.

15. HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.

16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.

17. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which when so executed shall be deemed an original and all
of which taken together shall constitute one and the same instrument.



18

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective representatives hereunto duly
authorized as of the date first above written.


VAALCO ENERGY, INC.


By: /s/ Russell Scheirman
-----------------------------------
Name: Russell Scheirman
Title: President


THE 1818 FUND II, L.P.

By: Brown Brothers Harriman & Co.,
its General Partner


By: /s/ Walter W. Grist
-----------------------------
Name: Walter W. Grist
Partner: Managing Director


NISSHO IWAI CORPORATION


By: /s/ Shinichi Teranishi
-----------------------------------
Name: Shinichi Teranishi
Title: General Manager,
Energy Project Dept.