VAALCO Energy, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Segment Information

Segment Information

12 Months Ended

Dec. 31, 2017

15. SEGMENT INFORMATION

Our operations are based in Gabon, Equatorial Guinea and the U.S. Each of our three reportable operating segments is organized and managed based upon geographic location. Our 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 which are not allocated to the reportable operating segments.

Segment activity of continuing operations for the years ended December 31, 2017, 2016 and 2015 and long-lived assets and segment assets at December 31, 2017 and 2016 are as follows:


	Year Ended December 31, 2017
(in thousands)	Gabon		Equatorial Guinea		U.S.		Corporate and Other		Total
Revenues-oil and natural gas sales	$	76,978	$	—	$	47	$	—	$	77,025
Depreciation, depletion and amortization		6,196		—		1		260		6,457
Bad debt expense and other		452		—		—		—		452
Operating income (loss)		28,488		(122)		352		(8,767)		19,951
Other, net		3,142		15		—		(1,044)		2,113
Interest expense, net		(1,414)		—		—		—		(1,414)
Income tax expense (benefit)		11,638		—		—		(1,260)		10,378
Additions to property and equipment - accrual		1,576		—		—		126		1,702


	Year Ended December 31, 2016
(in thousands)	Gabon		Equatorial Guinea		U.S.		Corporate and Other		Total
Revenues-oil and natural gas sales	$	59,460	$	—	$	324	$	—	$	59,784
Depreciation, depletion and amortization		6,531		—		151		244		6,926
Impairment of proved properties		—		—		88		—		88
Bad debt expense and other		1,222		—		—		—		1,222
Other operating expense		8,853		—		—		—		8,853
Operating income (loss)		3,901		(384)		(72)		(7,836)		(4,391)
Other, net		(22)		(8)		—		(1,985)		(2,015)
Interest expense, net		(2,614)		—		—		1		(2,613)
Income tax expense		9,248		—		—		—		9,248
Additions to property and equipment - accrual		(4,242)		—		—		181		(4,061)


	Year Ended December 31, 2015
(in thousands)	Gabon		Equatorial Guinea		U.S.		Corporate and Other		Total
Revenues-oil and natural gas sales	$	79,947	$	—	$	498	$	—	$	80,445
Depreciation, depletion and amortization		32,125		—		633		240		32,998
Impairment of proved properties		78,080		—		3,242		—		81,322
Bad debt expense and other		2,968		—		—		—		2,968
Operating income (loss)		(87,243)		(1,342)		(4,366)		(10,155)		(103,106)
Other, net		(1,034)		(33)		—		(469)		(1,536)
Interest expense, net		(1,144)		—		—		(181)		(1,325)
Income tax expense		13,238		—		—		1,349		14,587
Additions to property and equipment - accrual		66,269		—		—		150		66,419



(in thousands)	Gabon		Equatorial Guinea		U.S.		Corporate and Other		Total
Long-lived assets from continuing operations:
As of December 31, 2017	$	12,638	$	10,000	$	—	$	583	$	23,221
As of December 31, 2016		17,291		10,000		—		728		28,019

Information about our most significant customers

For the period from the second quarter of 2014 and through April 2015, our crude oil from Gabon was sold under a contract with The Vitol Group at the spot market for a fixed per barrel fee. Beginning in May 2015, we sold our crude oil production from Gabon under a term contract with pricing based upon an average of Dated Brent in the month of lifting, adjusted for location and market factors. The contracted purchasers were TOTSA Total Oil Trading SA (“Total”) for May through July of 2015 and Glencore Energy UK Ltd. (“Glencore”) for August of 2015 through December of 2017. The contract with Glencore U.K. ends in January 2019. Sales of oil to Glencore were approximately 100% of total revenues for 2017.