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, 2018

5. SEGMENT INFORMATION

Our operations are based in Gabon and Equatorial Guinea. Each of our two 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, 2018, 2017 and 2016 and long-lived assets and segment assets at December 31, 2018 and 2017 are as follows:


	Year Ended December 31, 2018
(in thousands)	Gabon		Equatorial Guinea		Corporate and Other		Total
Revenues-oil and natural gas sales	$	104,938	$	—	$	5	$	104,943
Depreciation, depletion and amortization		5,176		—		420		5,596
Bad debt expense and other		(77)		—		—		(77)
Operating income (loss)		61,930		(470)		(10,173)		51,287
Other, net		92		(4)		4,244		4,332
Interest expense, net		(396)		—		251		(145)
Income tax benefit		(26,670)		—		(16,584)		(43,254)
Additions to oil and natural gas properties and equipment - accrual		38,430		187		17		38,634


	Year Ended December 31, 2017
(in thousands)	Gabon		Equatorial Guinea		Corporate and Other		Total
Revenues-oil and natural gas sales	$	76,978	$	—	$	47	$	77,025
Depreciation, depletion and amortization		6,196		—		261		6,457
Bad debt expense and other		452		—		—		452
Operating income (loss)		28,488		(122)		(8,415)		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 oil and natural gas properties and equipment - accrual		1,576		—		126		1,702


	Year Ended December 31, 2016
(in thousands)	Gabon		Equatorial Guinea		Corporate and Other		Total
Revenues-oil and natural gas sales	$	59,460	$	—	$	324	$	59,784
Depreciation, depletion and amortization		6,531		—		395		6,926
Impairment of proved properties		—		—		88		88
Bad debt expense and other		1,222		—		—		1,222
Operating income (loss)		3,901		(384)		(7,908)		(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 oil and natural gas properties and equipment - accrual		(4,242)		—		181		(4,061)



(in thousands)	Gabon		Equatorial Guinea		Corporate and Other		Total
Long-lived assets from continuing operations:
As of December 31, 2018	$	42,195	$	10,187	$	342	$	52,724
As of December 31, 2017		12,638		10,000		583		23,221


(in thousands)	Gabon		Equatorial Guinea		Corporate and Other		Total
Total assets from continuing operations:
As of December 31, 2018	$	103,401	$	10,320	$	49,301	$	163,022
As of December 31, 2017		63,121		10,095		3,581		76,797

Information about our most significant customers

For the years ended December 31, 2018, 2017 and 2016, 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 purchaser was Glencore Energy UK Ltd. (“Glencore”) for these periods and through January 2019. Sales of oil to Glencore were approximately 100% of revenues sold to customers for 2018, 2017 and 2016. We have signed a new contract with Mercuria Energy Trading SA which covers sales from February 2019 through January 2020.