Segment Reporting Disclosure [Text Block] |
4. SEGMENT INFORMATION
The Company’s operations are based in Gabon, Egypt, and Canada, and the Company has an undeveloped block in Equatorial Guinea. Each of the Company’s reportable operating segments is organized and managed based upon geographic location. The Company’s Chief Executive Officer, who is the chief operating decision maker, and management review and evaluate the operation of each geographic segment separately, primarily based on operating income (loss). The operations of all segments include exploration for and production of hydrocarbons where commercial reserves have been found and developed. Revenues are based on the location of hydrocarbon production. Corporate and other is primarily corporate and operations support costs that are not allocated to the reportable operating segments.
Segment activity of continuing operations for the three and six months ended June 30, 2023 and 2022 as well as long-lived assets and segment assets at June 30, 2023 and December 31, 2022 are as follows:
|
|
Three Months Ended June 30, 2023 |
|
(in thousands) |
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
|
Equatorial Guinea |
|
|
Corporate and Other |
|
|
Total |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and natural gas liquids sales |
|
$ |
77,924 |
|
|
$ |
21,308 |
|
|
$ |
10,008 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
109,240 |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production expense |
|
|
23,931 |
|
|
|
11,089 |
|
|
|
3,255 |
|
|
|
386 |
|
|
|
(57 |
) |
|
|
38,604 |
|
FPSO Demobilization - Norms Waste Disposal |
|
|
5,647 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,647 |
|
Exploration expense |
|
|
43 |
|
|
|
14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
57 |
|
Depreciation, depletion and amortization |
|
|
19,457 |
|
|
|
13,757 |
|
|
|
4,747 |
|
|
|
— |
|
|
|
42 |
|
|
|
38,003 |
|
General and administrative expense |
|
|
318 |
|
|
|
202 |
|
|
|
— |
|
|
|
87 |
|
|
|
4,788 |
|
|
|
5,395 |
|
Credit losses and other |
|
|
518 |
|
|
|
— |
|
|
|
— |
|
|
|
162 |
|
|
|
— |
|
|
|
680 |
|
Total operating costs and expenses |
|
|
49,914 |
|
|
|
25,062 |
|
|
|
8,002 |
|
|
|
635 |
|
|
|
4,773 |
|
|
|
88,386 |
|
Other operating income (expense), net |
|
|
(62 |
) |
|
|
(241 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(303 |
) |
Operating income |
|
|
27,948 |
|
|
|
(3,995 |
) |
|
|
2,006 |
|
|
|
(635 |
) |
|
|
(4,773 |
) |
|
|
20,551 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments loss, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
31 |
|
|
|
31 |
|
Interest (expense) income, net |
|
|
(1,376 |
) |
|
|
(503 |
) |
|
|
— |
|
|
|
— |
|
|
|
176 |
|
|
|
(1,703 |
) |
Other (expense) income, net |
|
|
(619 |
) |
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
81 |
|
|
|
(537 |
) |
Total other expense, net |
|
|
(1,995 |
) |
|
|
(503 |
) |
|
|
1 |
|
|
|
— |
|
|
|
288 |
|
|
|
(2,209 |
) |
Income (loss) from continuing operations before income taxes |
|
|
25,953 |
|
|
|
(4,498 |
) |
|
|
2,007 |
|
|
|
(635 |
) |
|
|
(4,485 |
) |
|
|
18,342 |
|
Income tax (benefit) expense |
|
|
16,251 |
|
|
|
4,261 |
|
|
|
— |
|
|
|
— |
|
|
|
(8,924 |
) |
|
|
11,588 |
|
Income (loss) from continuing operations |
|
|
9,702 |
|
|
|
(8,759 |
) |
|
|
2,007 |
|
|
|
(635 |
) |
|
|
4,439 |
|
|
|
6,754 |
|
Loss from discontinued operations, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
|
|
(2 |
) |
Net income (loss) |
|
$ |
9,702 |
|
|
$ |
(8,759 |
) |
|
$ |
2,007 |
|
|
$ |
(635 |
) |
|
$ |
4,437 |
|
|
$ |
6,752 |
|
Consolidated capital expenditures |
|
$ |
1,375 |
|
|
$ |
8,526 |
|
|
$ |
6,491 |
|
|
$ |
— |
|
|
$ |
36 |
|
|
$ |
16,427 |
|
|
|
Six Months Ended June 30, 2023 |
|
(in thousands) |
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
|
Equatorial Guinea |
|
|
Corporate and Other |
|
|
Total |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil, natural gas and natural gas liquids sales |
|
$ |
114,661 |
|
|
$ |
56,092 |
|
|
$ |
18,890 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
189,643 |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production expense |
|
|
38,346 |
|
|
|
22,199 |
|
|
|
5,509 |
|
|
|
748 |
|
|
|
2 |
|
|
|
66,804 |
|
FPSO Demobilization - Norms Waste Disposal |
|
|
5,647 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,647 |
|
Exploration expense |
|
|
51 |
|
|
|
14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
65 |
|
Depreciation, depletion and amortization |
|
|
29,302 |
|
|
|
24,552 |
|
|
|
8,458 |
|
|
|
— |
|
|
|
108 |
|
|
|
62,420 |
|
General and administrative expense |
|
|
936 |
|
|
|
381 |
|
|
|
— |
|
|
|
216 |
|
|
|
9,086 |
|
|
|
10,619 |
|
Credit losses and other |
|
|
1,453 |
|
|
|
— |
|
|
|
— |
|
|
|
162 |
|
|
|
— |
|
|
|
1,615 |
|
Total operating costs and expenses |
|
|
75,735 |
|
|
|
47,146 |
|
|
|
13,967 |
|
|
|
1,126 |
|
|
|
9,196 |
|
|
|
147,170 |
|
Other operating income, net |
|
|
(62 |
) |
|
|
(241 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(303 |
) |
Operating income (loss) |
|
|
38,864 |
|
|
|
8,705 |
|
|
|
4,923 |
|
|
|
(1,126 |
) |
|
|
(9,196 |
) |
|
|
42,170 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments gain, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
52 |
|
|
|
52 |
|
Interest (expense) income, net |
|
|
(2,883 |
) |
|
|
(1,311 |
) |
|
|
(4 |
) |
|
|
— |
|
|
|
249 |
|
|
|
(3,949 |
) |
Other income (expense), net |
|
|
(102 |
) |
|
|
— |
|
|
|
1 |
|
|
|
(1 |
) |
|
|
(1,575 |
) |
|
|
(1,677 |
) |
Total other expense, net |
|
|
(2,985 |
) |
|
|
(1,311 |
) |
|
|
(3 |
) |
|
|
(1 |
) |
|
|
(1,274 |
) |
|
|
(5,574 |
) |
Income (loss) from continuing operations before income taxes |
|
|
35,879 |
|
|
|
7,394 |
|
|
|
4,920 |
|
|
|
(1,127 |
) |
|
|
(10,470 |
) |
|
|
36,596 |
|
Income tax expense (benefit) |
|
|
22,829 |
|
|
|
9,253 |
|
|
|
— |
|
|
|
— |
|
|
|
(5,723 |
) |
|
|
26,359 |
|
Income (loss) from continuing operations |
|
|
13,050 |
|
|
|
(1,859 |
) |
|
|
4,920 |
|
|
|
(1,127 |
) |
|
|
(4,747 |
) |
|
|
10,237 |
|
Loss from discontinued operations, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(15 |
) |
|
|
(15 |
) |
Net income (loss) |
|
$ |
13,050 |
|
|
$ |
(1,859 |
) |
|
$ |
4,920 |
|
|
$ |
(1,127 |
) |
|
$ |
(4,762 |
) |
|
$ |
10,222 |
|
Consolidated capital expenditures |
|
$ |
5,064 |
|
|
$ |
20,097 |
|
|
$ |
16,656 |
|
|
$ |
— |
|
|
$ |
36 |
|
|
$ |
41,852 |
|
|
|
Three Months Ended June 30, 2022 |
|
(in thousands) |
|
Gabon |
|
|
Equatorial Guinea |
|
|
Corporate and Other |
|
|
Total |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil and natural gas sales |
|
$ |
110,985 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
110,985 |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production expense |
|
|
25,360 |
|
|
|
175 |
|
|
|
(60 |
) |
|
|
25,475 |
|
Exploration expense |
|
|
67 |
|
|
|
— |
|
|
|
— |
|
|
|
67 |
|
Depreciation, depletion and amortization |
|
|
8,173 |
|
|
|
— |
|
|
|
18 |
|
|
|
8,191 |
|
General and administrative expense |
|
|
565 |
|
|
|
110 |
|
|
|
2,859 |
|
|
|
3,534 |
|
Bad debt expense and other |
|
|
571 |
|
|
|
— |
|
|
|
— |
|
|
|
571 |
|
Total operating costs and expenses |
|
|
34,736 |
|
|
|
285 |
|
|
|
2,817 |
|
|
|
37,838 |
|
Other operating income (expense), net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Operating income |
|
|
76,249 |
|
|
|
(285 |
) |
|
|
(2,817 |
) |
|
|
73,147 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments loss, net |
|
|
— |
|
|
|
— |
|
|
|
(9,542 |
) |
|
|
(9,542 |
) |
Interest (expense) income, net |
|
|
(158 |
) |
|
|
— |
|
|
|
40 |
|
|
|
(118 |
) |
Other (expense) income, net |
|
|
(856 |
) |
|
|
(1 |
) |
|
|
(1,254 |
) |
|
|
(2,111 |
) |
Total other expense, net |
|
|
(1,014 |
) |
|
|
(1 |
) |
|
|
(10,756 |
) |
|
|
(11,771 |
) |
Income from continuing operations before income taxes |
|
|
75,235 |
|
|
|
(286 |
) |
|
|
(13,573 |
) |
|
|
61,376 |
|
Income tax (benefit) expense |
|
|
36,423 |
|
|
|
1 |
|
|
|
9,828 |
|
|
|
46,252 |
|
Income from continuing operations |
|
|
38,812 |
|
|
|
(287 |
) |
|
|
(23,401 |
) |
|
|
15,124 |
|
Loss from discontinued operations, net of tax |
|
|
— |
|
|
|
— |
|
|
|
(20 |
) |
|
|
(20 |
) |
Net income |
|
$ |
38,812 |
|
|
$ |
(287 |
) |
|
$ |
(23,421 |
) |
|
$ |
15,104 |
|
Consolidated capital expenditures (1) |
|
$ |
38,102 |
|
|
$ |
— |
|
|
$ |
67 |
|
|
$ |
38,169 |
|
|
|
Six Months Ended June 30, 2022 |
|
(in thousands) |
|
Gabon |
|
|
Equatorial Guinea |
|
|
Corporate and Other |
|
|
Total |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil and natural gas sales |
|
$ |
179,641 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
179,641 |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production expense |
|
|
43,441 |
|
|
|
394 |
|
|
|
— |
|
|
|
43,835 |
|
Exploration expense |
|
|
194 |
|
|
|
— |
|
|
|
— |
|
|
|
194 |
|
Depreciation, depletion and amortization |
|
|
12,826 |
|
|
|
— |
|
|
|
38 |
|
|
|
12,864 |
|
General and administrative expense |
|
|
1,158 |
|
|
|
209 |
|
|
|
7,161 |
|
|
|
8,528 |
|
Credit losses and other |
|
|
1,063 |
|
|
|
— |
|
|
|
— |
|
|
|
1,063 |
|
Total operating costs and expenses |
|
|
58,682 |
|
|
|
603 |
|
|
|
7,199 |
|
|
|
66,484 |
|
Other operating income (expense), net |
|
|
(5 |
) |
|
|
— |
|
|
|
— |
|
|
|
(5 |
) |
Operating income |
|
|
120,954 |
|
|
|
(603 |
) |
|
|
(7,199 |
) |
|
|
113,152 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments loss, net |
|
|
— |
|
|
|
— |
|
|
|
(41,300 |
) |
|
|
(41,300 |
) |
Interest (expense) income, net |
|
|
(164 |
) |
|
|
— |
|
|
|
43 |
|
|
|
(121 |
) |
Other (expense) income, net |
|
|
(1,494 |
) |
|
|
(2 |
) |
|
|
(1,311 |
) |
|
|
(2,807 |
) |
Total other expense, net |
|
|
(1,658 |
) |
|
|
(2 |
) |
|
|
(42,568 |
) |
|
|
(44,228 |
) |
Income from continuing operations before income taxes |
|
|
119,296 |
|
|
|
(605 |
) |
|
|
(49,767 |
) |
|
|
68,924 |
|
Income tax (benefit) expense |
|
|
49,256 |
|
|
|
1 |
|
|
|
(7,633 |
) |
|
|
41,624 |
|
Income from continuing operations |
|
|
70,040 |
|
|
|
(606 |
) |
|
|
(42,134 |
) |
|
|
27,300 |
|
Loss from discontinued operations, net of tax |
|
|
— |
|
|
|
— |
|
|
|
(32 |
) |
|
|
(32 |
) |
Net income |
|
$ |
70,040 |
|
|
$ |
(606 |
) |
|
$ |
(42,166 |
) |
|
$ |
27,268 |
|
Consolidated capital expenditures (1) |
|
$ |
69,882 |
|
|
$ |
— |
|
|
$ |
67 |
|
|
$ |
69,949 |
|
(in thousands) |
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
|
Equatorial Guinea |
|
|
Corporate and Other |
|
|
Total |
|
Long-lived assets from continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2023 |
|
$ |
193,501 |
|
|
$ |
165,813 |
|
|
$ |
111,677 |
|
|
$ |
10,000 |
|
|
$ |
749 |
|
|
$ |
481,740 |
|
As of December 31, 2022 (1) |
|
|
213,204 |
|
|
$ |
168,012 |
|
|
$ |
103,263 |
|
|
$ |
10,000 |
|
|
$ |
793 |
|
|
$ |
495,272 |
|
(1) - Includes assets acquired in the TransGlobe acquisition
(in thousands) |
|
Gabon |
|
|
Egypt |
|
|
Canada |
|
|
Equatorial Guinea |
|
|
Corporate and Other |
|
|
Total |
|
Total assets from continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2023 |
|
$ |
384,554 |
|
|
$ |
270,653 |
|
|
$ |
118,604 |
|
|
$ |
11,144 |
|
|
$ |
44,058 |
|
|
$ |
829,013 |
|
As of December 31, 2022 (1) |
|
|
395,393 |
|
|
$ |
293,640 |
|
|
$ |
110,071 |
|
|
$ |
10,861 |
|
|
$ |
45,676 |
|
|
$ |
855,641 |
|
(1) - Includes assets acquired in the TransGlobe acquisition
Information about the Company’s most significant customers
The Company currently sells crude oil production from Gabon under term crude oil sales and purchase agreements (“COSPAs”) or crude oil sales and marketing agreements ("COSMA or COSMAs") with pricing based upon an average of Dated Brent in the month of lifting, adjusted for location and market factors. The Company was previously party to a COSPA with ExxonMobil Sales and Supply LLC (“Exxon”) that covered sales from February 2020 through July 2022 with pricing based upon an average of Dated Brent in the month of lifting, adjusted for location and market factors. This COSPA has been terminated.
As discussed further in Note 11, on May 16, 2022, VAALCO Gabon (Etame), Inc. (the “Borrower”) entered into a facility agreement (the “Facility Agreement”) by and among the Company, VAALCO Gabon, SA (“VAALCO Gabon”), Glencore Energy UK Ltd., as mandated lead arranger, technical bank and facility agent (“Glencore”), the Law Debenture Trust Corporation P.L.C., as security agent, and the other financial institutions named therein (the “Lenders”), providing for a senior secured reserve-based revolving credit facility (the “Facility”) in an initial aggregate maximum principal amount available of up to $50.0 million. In connection with the entry into the Facility Agreement, the Company entered into a COSMA with Glencore pursuant to which the Company agreed to make Glencore the exclusive offtaker and marketer of all of the crude oil produced from the Etame G4-160 Block, offshore Gabon during the period from August 1, 2022 until the Final Maturity Date of the Facility (as defined in the Facility Agreement). Pursuant to the COSMA, Glencore agreed to buy and market the Company’s crude oil with pricing based upon an average of Dated Brent in the month of lifting, adjusted for location and market factors.
For the three and six months ended June 30, 2023 sales of crude oil to Glencore made up 100% of Etame revenues. For the three and six months ended June 30, 2022, sales of crude oil to ExxonMobil Sales and Supply LLC made up 100% of Etame revenues. For the three months ended June 30, 2023, the EGPC covered 100% of the Company's crude oil sales in Egypt. For the six months ended June 30, 2023, Mercuria covered 100% of the Company’s crude oil sales in Egypt in the first quarter, while the EGPC covered 100% of sales in the second quarter. For the three and six months ended June 30, 2023, revenues in Canada were concentrated in three separate customers. These customers were Plains Midstream (50.9%), AltaGas (19.1%), and PetroGas Energy (18.60%). Concentrations of accounts receivable are similar to the revenue percentages.
|