Published on March 14, 2008
VAALCO
Energy, Inc.
4600
Post Oak Place, Suite 309
Houston,
Texas 77027
Tel:
(713) 623-0801
Fax:
(713) 623-0982
HOUSTON,
March
13 /PRNewswire-FirstCall/ -- VAALCO
Energy, Inc.
(NYSE:
EGY), today announced higher revenues and proved reserves in 2007 compared
with
2006, although net income was affected by an increased depletion rate, a higher
effective income tax rate and a dry hole cost.
The
Company said its total oil and gas sales for the year ended December 31, 2007
were $125.0 million, up 27% from $98.3 million in 2006. Operating income for
the
year was $68.7 million, down 8% from $74.3 million in 2006. Net income for
2007
decreased to $19.1 million, or $0.32 per diluted share, from $40.3 million,
or
$0.67 per diluted share in 2006. In 2007, net income included a pre-tax charge
of $8.1 million for an unsuccessful well in the North Sea. Depletion costs
for
2007 were higher due to higher depletion rates at the Avouma and South Tchibala
fields in the Etame concession, which commenced production in January 2007.
Income taxes increased $11.4 million, primarily due to higher commodity prices
and increased production.
Robert
L.
Gerry, III,
Chairman and CEO, stated, "VAALCO continues to pursue its strategy to add proved
reserves, revenues and maintain strong cash flow, through accelerated
exploration and production from our Etame properties offshore Gabon
and our
other high potential properties including onshore Gabon
and
offshore Angola."
VAALCO
sold 1,759,000 net barrels of oil equivalent at an average price of $71.16
per
barrel during 2007, compared with 1,554,000 barrels of oil equivalent at an
average price of $63.26 in 2006. It ended 2007 with 6.2 million barrels of
total
proved reserves, up from 6.0 million barrels at year-end 2006. Total proved
plus
probable reserves were 10.4 million barrels at year-end 2007.
"The
replacement of reserves in 2007 reflects the continued performance of our fields
on the Etame concession and the positive impact of higher oil prices," Gerry
said.
In
the
meantime, Gerry noted that the 2008 production outlook is for continued
year-over-year expansion. "In 2007, we substantially increased production from
our Etame properties offshore Gabon
to
approximately 22,500 gross barrels per day, while accelerating our exploration
activities. Production from our South Tchibala and Avouma fields at Etame began
in January 2007 and accelerated during the fourth quarter following the start
of
upgrades to our contracted FPSO. The platform for the Ebouri field is expected
to be installed this summer, with first production by year-end. With Ebouri
production, year-over-year production increases at Etame should continue through
2009."
Fourth-quarter
2007 oil and gas sales were $37.0 million, up 133% from $15.9 million in 2006.
Operating income was $17.4 million for the fourth quarter, up 96% from $8.9
million in 2006. Higher income taxes reduced net income to $2.0 million, or
$0.03 million per diluted share for the fourth quarter of 2007, as compared
to
$5.3 million, or $0.09 per diluted share in the fourth quarter of
2006.
Fourth-quarter
sales totaled 424,000 net barrels at an average price of $87.03 in 2007,
compared with 277,000 net barrels at an average price of $57.36 per barrel
during the fourth quarter of 2006. The last lifting of the quarter occurred
on
December 31, 2007. Unsold crude oil remaining in the FPSO at year-end was
approximately 337,000 barrels.
VAALCO's
current exploration and development schedule includes up to seven wells to
be
drilled in Gabon,
Angola
and the
North Sea over the course of the next six to eighteen months.
"We
hope
to extend the size of the Ebouri field with a delineation well this summer,
which could add approximately 24 million gross recoverable barrels to our
reserve estimates," Gerry added. "We also anticipate drilling two new prospects
offshore Gabon,
and two
prospects onshore in Gabon
by
year-end. Each of the offshore prospects has gross reserve potential in excess
of 20 million barrels, while the onshore targets, where VAALCO has a 100%
working interest, range in potential from 10 to 20 million
barrels."
He
added
that in Angola,
VAALCO
is studying a large structure that could be drilled in early 2009. "The
structure has target zones above and below the salt, which makes it especially
attractive for our first prospect there. We believe our exploration program
will
yield substantial reserve adds from the drill bit as we are going after
approximately 100 million barrels of un-risked reserves net to VAALCO. We look
forward to rewarding our shareholders in the months to come with our aggressive
drilling program."
Other
Items
VAALCO
Energy
also
said that has it received a letter addressed to its Board of Directors from
Nanes
Delorme Partners I LP,
identifying itself as a shareholder of VAALCO and referencing its Schedule
13D
filing with the Securities
and Exchange Commission.
reporting ownership of approximately 8% of VAALCO's common shares. The Company
stated that the Board acknowledges receipt of the letter and will evaluate
its
contents in due course.
The
Company has scheduled a conference call on Thursday March 13, 2008 at 10:00
am
CDT. Interested parties may participate in the call by dialing either
1-866-418-3599 or 1-847-619-6341 and entering Confirmation Number
20925176.
Conference
call replay will be available beginning 1 hour after the conference is over
and
run through April 12, 2008 by dialing 877-213-9653 or 630-652-3041 and entering
passcode 20925176.
This
press release 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 press release 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, completion and production
timetables and costs to complete well. 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 10K for the year ended December 31, 2007 and other reports filed
with the SEC which can be reviewed at http://www.sec.gov,
or
which can be received by contacting VAALCO at 4600 Post Oak Place, Suite 309,
Houston,
Texas
77027,
(713) 623-0801.
The
United States Securities and Exchange Commission
permits
oil and gas companies, in their filings with the SEC, to disclose only proved
reserves that a company has demonstrated by actual production or conclusive
formation tests to be economically and legally producible under existing
economic and operating conditions at oil and gas prices in effect at the time
of
the estimate, without future escalation. We include in this press release an
estimate of resource potential and probable reserves, that the SEC's guidelines
strictly prohibit us from including in filings with the SEC. Investors are
urged
to consider closely the disclosure in our Form 10-K, available from us at
http://www.vaalco.com
or from
the SEC at http://www.sec.gov.
For
further information contact:
W.
Russell Scheirman
713-623-0801
Summary
financial statistics are provided in the tables below.
Abbreviated
financial results:
|
Three
Months Ended December 31,
|
|
Year
Ended December 31,
|
|||||||||||
|
(Unaudited
- in thousands of dollars)
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|
|||||
|
Revenues
|
36,957
|
15,873
|
125,044
|
98,325
|
|||||||||
|
Operating
costs and expenses
|
19,529
|
6,985
|
56,371
|
23,995
|
|||||||||
|
Operating
Income (Loss)
|
17,428
|
8,888
|
68,673
|
74,330
|
|||||||||
|
Other
Income (Expense)
|
809
|
682
|
2,940
|
1,925
|
|||||||||
|
Income
tax expense
|
(14,813
|
) |
(3,419
|
) |
(48,081
|
) |
(30,496
|
) | |||||
|
Loss
from discontinued operations
|
--
|
(1
|
) |
(51
|
) |
(242
|
) | ||||||
|
Minority
Interest in earnings of subsidiaries
|
(1,438
|
) |
(860
|
) |
(4,429
|
) |
(5,174
|
) | |||||
|
Net
Income
|
1,985
|
5,290
|
19,052
|
40,343
|
|||||||||
|
Diluted
Income per Common Share
|
$
|
0.03
|
$
|
0.09
|
$
|
0.32
|
$
|
0.67
|
|||||
Proved
Reserves:
|
|
Oil
(MBbls)
|
Gas
(MMcf)
|
|||||
|
BALANCE
AT DECEMBER 31, 2005
|
7,827
|
21
|
|||||
|
Production
|
(1,552
|
)
|
(11
|
)
|
|||
|
Revisions
of previous estimates
|
(1,585
|
)
|
7
|
||||
|
Extensions
and discoveries
|
1,306
|
--
|
|||||
|
BALANCE
AT DECEMBER 31, 2006
|
5,996
|
17
|
|||||
|
Production
|
(1,756
|
)
|
(20
|
)
|
|||
|
Revisions
of previous estimates
|
1,979
|
64
|
|||||
|
BALANCE
AT DECEMBER 31, 2007
|
6,214
|
61
|
|||||
Summary
Statistics:
|
Three
Months Ended December 31,
|
|
Year
Ended December 31,
|
|||||||||||
|
(Unaudited)
|
2007
|
|
2006
|
|
2007
|
|
2006
|
||||||
|
Net
oil and gas sales (MBOE)
|
424
|
277
|
1,759
|
1,554
|
|||||||||
|
Average
price ($/bbl)
|
$
|
87.03
|
$
|
57.36
|
$
|
71.16
|
$
|
63.26
|
|||||
|
Production
costs ($/bbl)
|
$
|
9.49
|
$
|
10.39
|
$
|
8.57
|
$
|
7.86
|
|||||
|
Depletion
costs ($/bbl)
|
$
|
10.41
|
$
|
5.99
|
$
|
10.21
|
$
|
4.32
|
|||||
|
General
and administrative costs ($/bbl)
|
$
|
4.45
|
$
|
4.56
|
$
|
4.55
|
$
|
1.54
|
|||||
|
Debt/Proved
reserves ($/BOE)
|
-
|
-
|
$
|
0.80
|
$
|
0.83
|
|||||||
|
Capital
Expenditures ($thousands)
|
-
|
-
|
14,520
|
33,224
|
|||||||||
|
Debt/Capitalization
($/$)
|
-
|
-
|
$
|
0.04
|
$
|
0.04
|
|||||||
|
Cash
and cash equivalents ($thousands)
|
-
|
-
|
76,450
|
60,979
|
|||||||||
|
Working
capital ($thousands)
|
-
|
-
|
85,779
|
57,495
|
|||||||||
|
Total
long term debt ($thousands)
|
-
|
-
|
5,000
|
5,000
|
|||||||||
Basic
and diluted shares consist of the following:
|
|
Three
months ended
|
Year
ended
|
|||||||||||
|
Item
|
|
Dec.
31, 2007
|
|
Dec.
31, 2006
|
Dec.
31, 2007
|
Dec.
31, 2006
|
|||||||
|
Basic
weighted average common stock
issued and outstanding
|
59,178,082
|
58,820,395
|
59,133,888
|
58,135,850
|
|||||||||
|
Dilutive
options
|
808,976
|
1,855,462
|
957,034
|
2,340,023
|
|||||||||
|
Total
diluted shares
|
59,987,058
|
60,675,857
|
60,090,922
|
60,475,874
|
|||||||||