10QSB: Optional form for quarterly and transition reports of small business issuers
Published on May 15, 2003
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 0-20928
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VAALCO ENERGY, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 76-0274813
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4600 Post Oak Place
Suite 309
Houston, Texas 77027
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (713) 623-0801
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No __.
As of May 14, 2003, there were outstanding 21,216,649 shares of
Common Stock, $.10 par value per share, of the registrant. In addition, as of
such date there were outstanding 10,000 shares of Preferred Stock which are
convertible into 27,500,000 shares of Common Stock.
Transitional Small Business Disclosure Format (Check one)
Yes __ No X.
VAALCO ENERGY, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets (Unaudited)
March 31, 2003 and December 31, 2002.....................................3
Statements of Consolidated Operations (Unaudited)
Three months ended March 31, 2003 and 2002...............................4
Statements of Consolidated Cash Flows (Unaudited)
Three Months ended March 31, 2003 and 2002...............................5
Notes to Consolidated Financial Statements.................................6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.....................................10
PART II. OTHER INFORMATION...............................................15
2
VAALCO ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of dollars, except number of shares and par value amounts)
See notes to consolidated financial statements.
3
VAALCO ENERGY, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
(Unaudited)
(in thousands of dollars, except per share amounts)
See notes to consolidated financial statements.
4
VAALCO ENERGY, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited)
(in thousands of dollars)
See notes to consolidated financial statements.
5
VAALCO ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2003
(Unaudited)
1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of VAALCO Energy, Inc. and
subsidiaries (collectively, "VAALCO" or the "Company"), included herein are
unaudited, but include all adjustments consisting of normal recurring
accruals which the Company deems necessary for a fair presentation of its
financial position, results of operations and cash flows for the interim
period. Such results are not necessarily indicative of results to be
expected for the full year. These financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Form 10-KSB for the year ended December 31, 2002.
VAALCO Energy, Inc., a Delaware corporation, is a Houston-based independent
energy company principally engaged in the acquisition, exploration,
development and production of crude oil and natural gas. VAALCO owns
producing properties and conducts exploration activities as operator of
consortiums internationally in Gabon and the Philippines. Domestically, the
Company has interests in the Texas Gulf Coast area.
VAALCO's subsidiaries holding interests in Gabon are VAALCO Energy
(International), Inc., VAALCO Gabon (Etame), Inc. and VAALCO Production
(Gabon), Inc. VAALCO's Philippine subsidiaries include Alcorn (Philippines)
Inc., Alcorn (Production) Philippines Inc. and Altisima Energy, Inc. VAALCO
Energy (USA), Inc. holds interests in certain properties in the United
States.
2. RECENT DEVELOPMENTS
On September 8, 2002 the Company, as operator of the Etame Field offshore
Gabon, commenced production from the field at an average rate of
approximately of 14,500 BOPD. Production is from three subsea wells
connected via flexible flowlines to a floating production storage and
offloading tanker ("FPSO").
To fund its share of the development costs, on April 19, 2002, the Company
entered into a $10.0 million credit facility with the International Finance
Corporation ("IFC"), a subsidiary of the World Bank. The credit facility
required that the Company provide $10.0 million of cash collateral to
secure borrowings under the facility until the "project completion date."
The project completion date was generally defined as the date after which
the field had produced at an average rate of 14,250 BOPD for at least 90
days and the estimated net proved reserves attributable to the field is at
least 16.5 million barrels of oil. The Company borrowed $7.0 million of the
$10.0 million that it used as cash collateral from the 1818 Fund, which
owns a majority of the Company's common stock on a fully diluted basis.
Another investor that is not affiliated with the Company provided the $3.0
million balance.
The Company was notified by the IFC that the project completion date
occurred on March 31, 2003. On April 1, 2003, the $10.0 million cash
collateral posted by the Company was released. The $10.0 million of cash
collateral was repaid to the 1818 Fund and the investor
6
VAALCO ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2003
(Unaudited)
on April 1, 2003. Also during April 2003, the Company paid accrued interest
expense on the 1818 Fund loan of $0.7 million.
In connection with the 1818 Fund loan, the Company issued warrants to
purchase 15.0 million shares of its common stock to the 1818 Fund (7.5
million of which terminated when the loan was repaid on April 1, 2003). The
Company issued the other lender warrants to purchase 4.5 million shares of
common stock on the same terms as the warrants issued to the 1818 Fund
(2.25 million of which terminated when the loan was repaid on April 1,
2003). As the Company only drew a total of $10.0 million under the loan
facility, the 1818 Fund will be required to return an additional 2.25
million warrants. A total of 7.5 million warrants to purchase shares of
common stock will remain outstanding associated with the loan transaction.
The Company was carrying unamortized debt discount of $1.5 million
associated with the issuance of the warrants at March 31, 2003, which
amount will be expensed in connection with the repayment of the 1818 Fund
loan in the second quarter of 2003.
3. EARNINGS PER SHARE
The weighted average common shares outstanding represent those of
historical VAALCO for the applicable periods.
The Company accounts for earnings per share in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 128 - "Earnings per Share,"
which establishes the requirements for presenting earnings per share
("EPS"). SFAS No. 128 requires the presentation of "basic" and "diluted"
EPS on the face of the income statement. Basic EPS is calculated using the
average number of common shares outstanding during each period. Diluted EPS
assumes the conversion of preferred stock to common stock and the exercise
of all stock options having exercise prices less than the average market
price of the common stock using the treasury stock method. The Company's
preferred stock is convertible into 27.5 million shares of common stock.
4. FUTURE ABANDONMENT COSTS
In August 2001, FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." SFAS No. 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible, long-lived assets
and the associated asset retirement costs. This statement requires that the
fair value of a liability for an asset retirement obligation be recognized
in the period in which it is incurred by capitalizing it as part of the
carrying amount of the long-lived assets. As required by SFAS No. 143, the
Company adopted this new accounting standard on January 1, 2003. The
statement requires the systematic, accretion and depreciation of future
abandonment costs of tangible assets such as platforms, wells, service
assets, pipelines, and other facilities. SFAS No. 143 requires that the
fair value of a liability for an asset's retirement obligation be recorded
in the period in which it is incurred if a reasonable estimate of fair
value can be made, and that
7
VAALCO ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2003
(Unaudited)
the corresponding cost is capitalized as part of the carrying amount of the
related long-lived asset. The liability is accreted to its then present
value each period, and the capitalized cost is depreciated over the useful
life of the related asset. If the liability is settled for an amount other
than the recorded amount, a gain or loss is recognized.
Pursuant to the January 1, 2003 adoption of SFAS No. 143 the Company:
. recognized a gain during the first quarter of 2003 of $1.717
million for the cumulative effect of accounting change;
. increased assets by $1.252 million to add the net asset
retirement costs to the carrying costs of the Company's oil and
gas properties;
. reduced the accrued liability for future abandonment costs by
$0.573 million to reflect the present day fair value of the asset
retirement obligation ("ARO") liability;
. increased accumulated depletion by $0.109 million to record prior
period depletion of the ARO asset.
Adopting SFAS No. 143 had no impact on our reported cash flows. During the
quarter ending March 31, 2003, the company accrued $41,000 in ARO
liabilities to reflect the fair value of the ARO at March 31, 2003.
5. RECENT ACCOUNTING PRONOUNCEMENTS
In December 2002, FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure, an amendment of SFAS No. 123,"
which addresses alternative methods of transition for a voluntary change to
the fair value based method of accounting for stock-based employee
compensation. In addition, this statement amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on
reported results. During the first quarter of 2003, an officer of the
company performed a cashless exercise of options for 221,000 shares,
resulting in compensation expense of $276,250, which was recorded as
general and administrative expense. The provisions of SFAS No. 148 had no
material effect for the three months period ending March 31, 2003.
In November 2002, FASB Interpretation ("FIN") No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others," elaborates on the disclosure to be
made by a guarantor in its interim and annual financial statements about
its obligations under certain guarantees that it has issued. This
Interpretation also incorporates, without change, the guidance in FIN No.
34, which is being superceded. As set forth in the Interpretation, the
disclosures required are designed to improve the transparency of the
financial statement information about the guarantor's obligations and
liquidity risks related to guarantees issued. The fair values of guarantees
entered into after December 31, 2002, must be recorded as a liability of
the guarantor in its financial statements. Existing guarantees as of
December 31, 2002 are grandfathered from the
8
VAALCO ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2003
(Unaudited)
recognition provisions, unless they are later modified, but they are still
required to be disclosed.
The Company charters an FPSO for use in the Etame field, and as operator of
the Etame field, guaranteed the charter payments through September 2004.
The charter continues beyond that period unless one year's prior notice is
given to the owner of the FPSO. The Company obtained several guarantees
from its partners for their share of the charter payment. The Company's
share of the charter payment is 28.1%. The estimated obligations for the
full charter payment and the Company's share of the charter payments are as
follows:
$ thousands Full Charter Payment Company Share
-------------------- -------------
2003 $ 13,887 $ 3,902
2004 $ 12,709 $ 3,571
9
VAALCO ENERGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This report includes "forward looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended ("Exchange Act"). All statements other than
statements of historical fact included in this report (and the exhibits hereto),
including without limitation, statements regarding the Company's financial
position and estimated quantities and net present values of reserves, are
forward looking statements. The Company can give no assurances that the
assumptions upon which such statements are based will prove to have been
correct. Important factors that could cause actual results to differ materially
from the Company's expectations ("Cautionary Statements") are disclosed in the
section "Risk Factors" included in the Company's Forms 10-KSB and other periodic
reports filed under the Exchange Act, which are herein incorporated by
reference. All subsequent written and oral forward looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified by the Cautionary Statements.
INTRODUCTION
The Company's results of operations are dependent upon the difference between
prices received for its oil and gas production and the costs to find and produce
such oil and gas. Oil and gas prices have been and are expected in the future to
be volatile and subject to fluctuations based on a number of factors beyond the
control of the Company. The Company does not presently engage in any hedging
activities and has no plans to do so in the near future.
The Company participated in the development of the Etame Field, which the
Company operates on behalf of a consortium of five companies offshore of the
Republic of Gabon. Total cost of the development in 2002 was approximately $57.3
million ($17.4 million net to the Company inclusive of $1.5 million for the
Company share of the Gabon Government carried 7.5% interest) to execute the
development project. In 2002, substantially all of the Company's capital
resources and personnel were dedicated to the completion of the development
project. The Company has budgeted approximately $2.0 million in capital
expenditures net to the Company in Gabon for 2003.
The Company's production in the Philippines is from mature offshore fields with
high production costs. The Company's margin on sales from these fields (the
price received for oil less the production costs for the oil) is lower than the
margin on oil production from many other areas. As a result, the profitability
of the Company's production in the Philippines is affected more by changes in
oil prices than production located in other areas.
The Company's results of operations are also affected by currency exchange
rates. While oil sales are denominated in U.S. dollars, operating costs in the
Philippines and a portion of operating costs in Gabon are denominated in local
currencies. An increase in the exchange rate of the local currencies to the
dollar will have the effect of increasing operating costs while a decrease in
the exchange rate will reduce operating costs.
10
VAALCO ENERGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
A substantial portion of the Company's oil production is located offshore of
Gabon and the Philippines. In Gabon, the Company produces into a 1.1 million
barrel tanker and sells cargos to vessels of opportunity at spot market prices.
In the Philippines, the Company produces into 10,000 to 15,000 barrel barges,
which transport the oil to market. In the Philippines, due to weather and other
factors, the Company's production is generally highest during the first and
fourth quarters of the year. Weather is not normally a factor affecting Gabon
oil sales.
CRITICAL ACCOUNTING POLICIES
The following describes the critical accounting policies used by VAALCO in
reporting its financial condition and results of operations. In some cases,
accounting standards allow more than one alternative accounting method for
reporting, such is the case with accounting for oil and gas activities described
below. In those cases, the Company's reported results of operations would be
different should it employ an alternative accounting method.
Successful Efforts Method of Accounting for Oil and Gas Activities
The Securities and Exchange Commission ("SEC") prescribes in Regulation S-X the
financial accounting and reporting standards for companies engaged in oil and
gas producing activities. Two methods are prescribed: the successful efforts
method and the full cost method. Like many other oil and gas companies, VAALCO
has chosen to follow the successful efforts method. Management believes that
this method is preferable, as the Company has focused on exploration activities
wherein there are risk associated with future success and as such earnings are
best represented by attachment to the drilling operations of the Company.
Costs of successful wells, development dry holes and leases containing
productive reserves are capitalized and amortized on a unit-of-production basis
over the life of the related reserves. For financial accounting purposes the
Company adopted SFAS No. 143 - "Accounting for Asset Retirement Obligations" on
January 1, 2003. This statement requires that the fair value of a liability for
an asset retirement obligation be recognized in the period in which it is
incurred by capitalizing it as part of the carrying amount of the long-lived
assets. Other exploration costs, including geological and geophysical expenses
applicable to undeveloped leasehold, leasehold expiration costs and delay
rentals are expensed as incurred.
In accordance with accounting under successful efforts, the Company reviews
proved oil and gas properties for indications of impairment whenever events or
circumstances indicate that the carrying value of its oil and gas properties may
not be recoverable. When it is determined that an oil and gas property's
estimated future net cash flows will not be sufficient to recover its carrying
amount, an impairment charge must be recorded to reduce the carrying amount of
the asset to its estimated fair value. This may occur if a field discovers lower
than anticipated reserves or if commodity prices fall below a level that
significantly effects anticipated future cash flows on the field. The Company
determines if an impairment has occurred through either identification of
adverse changes or as a result of the annual review of all fields.
11
VAALCO ENERGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Undeveloped acreage and Work in Progress
At March 31, 2003, the Company had undeveloped acreage on its balance sheet
totaling $515,000, representing costs that are not being amortized pending
evaluation of the respective leasehold for future development. The Company also
had $2.3 million of work in progress primarily in the form a suspended well and
seismic costs in Gabon. Unproved properties are assessed quarterly for
impairment in value, with any impairment charged to expense.
CAPITAL RESOURCES AND LIQUIDITY
Historically, the Company's primary source of capital resources has been from
cash flows from operations, private sales of equity, borrowings and purchase
money debt. During 2003, the Company anticipates participating in additional
exploration opportunities on the Etame Block, which will be funded by cash flow
from operations. Total capital expenditures for 2003 are budgeted to be $2.0
million net to the Company.
In April 2002, the Company and its subsidiary that owns the Etame field entered
into a $10.0 million credit facility with the IFC to partially finance its share
of the development costs of the Etame field. The Company's subsidiary made an
initial borrowing of $7.0 million in July 2002, and borrowed the balance of the
loan in October 2002. Until the project completion date, the Company guaranteed
the IFC loan and collateralized the loan with $10.0 million of cash deposited in
escrow. Project completion required gross production from the project is 14,250
BOPD for 90 days, estimated net proved reserves attributable to the field is
16.5 million barrels of oil and additional financial and other covenants to be
satisfied. The Company borrowed $7.0 million of the $10.0 million that it used
as cash collateral from the 1818 Fund, which owns a majority of the Company's
common stock on a fully diluted basis. Another investor that is not affiliated
with the Company provided the $3.0 million balance.
The Company was notified by the IFC that the project completion date occurred on
March 31, 2003. On April 1, 2003, the $10.0 million cash collateral posted by
the Company was released. The $10.0 million of cash collateral was repaid to the
1818 Fund and the investor on April 1, 2003. Also in April 2003, the Company
paid accrued interest expense on the 1818 Fund loan of $0.7 million.
In connection with the 1818 Fund loan, the Company issued warrants to purchase
15.0 million shares of its common stock to the 1818 Fund (7.5 million of which
terminated when the loan was repaid on April 1, 2003). The Company issued the
other lender warrants to purchase 4.5 million shares of common stock on the same
terms as the warrants issued to the 1818 Fund (2.25 million of which terminated
when the loan was repaid on April 1, 2003). As the Company only drew a total
of $10.0 million under the loan facility, the 1818 Fund will be required to
return an additional 2.25 million warrants. A total of 7.5 million warrants to
purchase shares of common stock will remain outstanding associated with the loan
transaction. Each warrant entitles the holder to purchase one share of Company
common stock for $0.50 per share.
12
VAALCO ENERGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Concurrent with the loan transaction, the Company sold 9.9% of the common stock
of the Company's subsidiary that owns the Etame project to the non-affiliated
lender for $3.3 million, which the Company used to finance a portion of the
development costs of the field.
On September 8, 2002, the Company commenced production from the Etame field
offshore Gabon. During the first quarter of 2003 the Company sold 1.09 million
barrels (226,000 barrels net to the Company). The Company also produces oil from
the Matinloc and Nido fields in the South China Sea, the Philippines. During the
first quarter of 2003, total oil production from the fields was approximately
53,000 gross barrels (12,000 barrels net).
Substantially all of the Company's crude oil and natural gas is sold at the well
head at posted or index prices under short-term contracts, as is customary in
the industry. In Gabon, the Company markets its crude oil under an agreement
with Shell Western Trading and Supply, Limited. The Company markets its share of
Philippines crude oil under an agreement with Caltex, a local Philippines
refiner. While the loss of these buyers might have a material effect on the
Company in the near term, management believes that the Company would be able to
obtain other customers for its crude oil.
Domestically, the Company produces from wells in Brazos County, Texas. The
Company has access to several alternative buyers for oil and gas sales
domestically.
RESULTS OF OPERATIONS
Three months ended March 31, 2003 compared to three months ended March 31, 2002
Revenues
Total revenues were $8.5 million for the three months ended March 31, 2003
compared to $144,000 for the comparable period in 2002. The increase in revenues
was due to the startup of production from the Etame field in Gabon in September
2002.
Operating Costs and Expenses
Total production expenses for the three months ended March 31, 2003 were
$1.7 million compared to $95,000 in 2002 also reflecting the startup of
operations at the Etame field. Production expenses exclude $609,000 of
production costs which have been capitalized related to 111,000 net barrels of
produced oil on board the FPSO, representing the Company's net share of crude
oil inventory. Depreciation, depletion and amortization were $1.5 million
compared to $5,000 in 2002. General and administrative expenses for the three
months ended 2003 and 2002 were $744,000 and $533,000. General and
administrative expenses in 2003 included $276,250 of compensation expense
associated with the cashless exercise of stock options by an officer of the
Company.
Other Income (Expense)
Interest income of $18,000 was received from amounts on deposit in 2003 compared
to $9,000 in the quarter ended March 31, 2002. Interest expense and financing
charges for the IFC loan
13
VAALCO ENERGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
and the 1818 Fund loan amounted to $588,000 in the quarter ended March 31, 2003.
The Company had no interest expense in the quarter ending March 31, 2002. The
Company recognized a gain of $1.7 million in the first quarter of 2003 from the
change in accounting principle associated with the adoption of SFAS No. 143 -
"Accounting for Asset Retirement Obligations."
Income Taxes
Income taxes amounted to $1.3 million and $2,000 for the quarters ending March
31, 2003 and 2002 respectively. The income tax in 2003 was paid in Gabon
associated with production from the Etame field. 2002 income tax was associated
with activity in the Philippines.
Minority Interest
The Company incurred $392,000 in minority interest charges in the quarter ending
March 31, 2003 associated with the VAALCO Energy (International), Inc.
subsidiary that is 90.01% owned by the Company. A minority interest credit of
$1,000 was incurred associated with minority interests in Altisima Energy in the
Philippines in the quarter ended March 31, 2002.
Net Income (Loss)
Net income attributable to common stockholders for the three months ended March
31, 2003 was $4.0 million, compared to a net loss attributable to common
stockholders of $484,000 for the same period in 2002. The net income in 2003 was
due to the startup of the Etame field in September 2002. Net income included a
$1.7 million one-time gain from the change in accounting principle associated
with the adoption of SFAS No. 143 on January 1, 2003.
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures. Based on their
evaluation as of a date within 90 days of the filing date of this Quarterly
Report on Form 10-Q, the Company's principal executive officer and principal
financial officer have concluded that the Company's disclosure controls and
procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities
Exchange Act of 1934 (the "Exchange Act")) are effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the Securities and
Exchange Commission.
(b) Changes in Internal Controls. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
14
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
3. Articles of Incorporation and Bylaws
3.1 Restated Certificate of Incorporation (incorporated by reference to
exhibit 4.1 to the Company's Registration Statement on Form S-3
filed with the Commission on July 15, 1998, Reg. No. 333-59095).
3.2 Certificate of Amendment to Restated Certificate of Incorporation
(incorporated by reference to exhibit 4.2 to the Company's
Registration Statement on Form S-3 filed with the Commission on
July 15, 1998, Reg. No. 333-59095).
3.3 Bylaws (incorporated by reference to exhibit 4.3 to the Company's
Registration Statement on Form S-3 filed with the Commission on
July 15, 1998, Reg. No. 333-59095).
3.4 Amendment to Bylaws (incorporated by reference to exhibit 4.4 to
the Company's Registration Statement on Form S-3 filed with the
Commission on July 15, 1998, Reg. No. 333-59095).
3.5 Designation of Convertible Preferred Stock, Series A (incorporated
by reference to exhibit 4.1 to the Company's Report on Form 8-K
filed with the Commission on May 6, 1998, File No. 000-20928)
99. Additional exhibits
99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002.
99.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002.
(b) REPORTS ON FORM 8-K.
None
15
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
VAALCO ENERGY, INC.
(Registrant)
By /s/ W. RUSSELL SCHEIRMAN
-----------------------------------------
W. Russell Scheirman, President,
Chief Financial Officer and Director
(on behalf of the Registrant and as the
principal financial officer)
Dated May 15, 2003
16
CERTIFICATIONS
I, Robert L. Gerry, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of VAALCO Energy,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Day: May 15, 2003
By: /s/ Robert L. Gerry
-------------------
Robert L. Gerry, Chief Executive Officer
(principal executive officer)
17
CERTIFICATIONS
I, W. Russell Scheirman, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of VAALCO Energy,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Day: May 15, 2003
By: /s/ W. Russell Scheirman
------------------------
W. Russell Scheirman, President and Chief Financial Officer
(principal financial officer)
18
EXHIBIT INDEX
EXHIBITS
3.1 Restated Certificate of Incorporation (incorporated by reference to
exhibit 4.1 to the Company's Registration Statement on Form S-3
filed with the Commission on July 15, 1998, Reg. No. 333-59095).
3.2 Certificate of Amendment to Restated Certificate of Incorporation
(incorporated by reference to exhibit 4.2 to the Company's
Registration Statement on Form S-3 filed with the Commission on July
15, 1998, Reg. No. 333-59095).
3.3 Bylaws (incorporated by reference to exhibit 4.3 to the Company's
Registration Statement on Form S-3 filed with the Commission on July
15, 1998, Reg. No. 333-59095).
3.4 Amendment to Bylaws (incorporated by reference to exhibit 4.4 to the
Company's Registration Statement on Form S-3 filed with the
Commission on July 15, 1998, Reg. No. 333-59095).
3.5 Designation of Convertible Preferred Stock, Series A (incorporated
by reference to exhibit 4.1 to the Company's Report on Form 8-K
filed with the Commission on May 6, 1998, File No. 000-20928).
99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002.
99.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002.
19