| Schedule I - Parent Company Financial Statements |
SCHEDULE I — PARENT COMPANY FINANCIAL STATEMENTS
VAALCO ENERGY, INC.
CONDENSED UNCONSOLIDATED BALANCE SHEETS
(in thousands, except number of shares and par value amounts)
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December 31,
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2017
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2016
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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576
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$
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1,038
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Receivables:
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Other
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101
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21
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Prepayments and other
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599
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1,696
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Total current assets
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1,276
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2,755
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Equipment and other
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1,304
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1,225
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1,304
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1,225
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Accumulated depreciation, depletion and amortization
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(721)
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(497)
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Net property and equipment
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583
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728
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Other noncurrent assets:
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Restricted cash
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50
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—
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Deferred tax asset
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1,260
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—
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Investment in subsidiaries
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8,091
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—
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Total assets
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$
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11,260
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$
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3,483
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LIABILITIES AND EQUITY (DEFICIT)
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Current liabilities:
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Accounts payable
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$
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98
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$
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310
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Accrued liabilities and other
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873
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1,024
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Total current liabilities
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971
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1,334
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Losses in excess of investment in subsidiaries
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—
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2,507
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Total liabilities
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971
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3,841
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Commitments and contingencies
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VAALCO Energy Inc. shareholders’ equity (deficit):
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Common stock, $0.10 par value; 100,000,000 shares authorized, 66,443,971 and 66,109,565 shares issued, 58,862,876 and 58,554,470 shares outstanding
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6,644
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6,611
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Additional paid-in capital
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71,251
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70,268
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Less treasury stock, 7,581,095 and 7,555,095 shares at cost
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(37,953)
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(37,933)
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Accumulated deficit
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(29,653)
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(39,304)
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Total equity (deficit)
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10,289
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(358)
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Total liabilities and equity (deficit)
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$
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11,260
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$
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3,483
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See accompanying notes to the condensed unconsolidated financial statements.
VAALCO ENERGY, INC.
STATEMENTS OF CONDENSED UNCONSOLIDATED OPERATIONS
(in thousands)
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Year Ended December 31,
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2017
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2016
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2015
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Operating costs and expenses:
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Depreciation, depletion and amortization
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$
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260
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$
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244
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$
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240
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General and administrative expense
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8,489
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7,935
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7,550
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Shareholder matters
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—
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(332)
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2,372
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Total operating costs and expenses
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8,749
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7,847
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10,162
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Other operating income (expense), net
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(12)
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16
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—
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Operating loss
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(8,761)
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(7,831)
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(10,162)
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Other income (expense):
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Interest expense, net
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—
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(2)
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(181)
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Other, net
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(1,044)
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(1,985)
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(469)
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Equity in subsidiary earnings (losses)
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18,196
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(16,732)
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(146,495)
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Total other income (expense)
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17,152
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(18,719)
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(147,145)
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Income before income taxes
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8,391
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(26,550)
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(157,307)
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Income tax (benefit) expense
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(1,260)
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—
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1,349
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Net income (loss)
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$
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9,651
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$
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(26,550)
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$
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(158,656)
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See accompanying notes to the condensed unconsolidated financial statements.
VAALCO ENERGY, INC.
STATEMENTS OF CONDENSED UNCONSOLIDATED CASH FLOWS
(in thousands of dollars)
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Year Ended December 31,
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2017
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2016
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2015
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net income (loss)
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$
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9,651
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$
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(26,550)
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$
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(158,656)
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Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
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Depreciation, depletion and amortization
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260
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244
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240
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Other operating loss, net
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12
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—
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—
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Deferred tax asset
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(1,260)
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—
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1,349
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Stock-based compensation
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1,098
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192
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3,810
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Equity in (earnings) losses from subsidiaries
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(18,196)
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16,732
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146,495
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Commodity derivatives net (gain) loss
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1,032
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—
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—
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Cash settlements received on matured commodity derivative contracts
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195
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—
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—
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Change in operating assets and liabilities:
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Other receivables
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(80)
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(21)
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293
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Prepayments and other
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(130)
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(955)
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(236)
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Accounts payable
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(212)
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(658)
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753
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Accrued liabilities and other
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(272)
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(1,855)
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517
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Net cash used in operating activities
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(7,902)
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(12,871)
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(5,435)
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CASH FLOWS FROM INVESTING ACTIVITIES
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Investment in subsidiaries
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—
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—
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(7,044)
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Return of investment in subsidiaries
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7,598
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12,556
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—
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Decrease in restricted cash
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(50)
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1,582
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8,418
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Property and equipment expenditures
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(127)
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(178)
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(160)
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Net cash provided by investing activities
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7,421
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13,960
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1,214
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CASH FLOWS FROM FINANCING ACTIVITIES
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Proceeds from the issuances of common stock
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39
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—
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441
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Treasury shares
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(20)
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(51)
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—
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Net cash provided by (used in) financing activities
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19
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(51)
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441
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NET CHANGE IN CASH AND CASH EQUIVALENTS
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(462)
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1,038
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(3,780)
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CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
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1,038
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—
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3,780
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CASH AND CASH EQUIVALENTS AT END OF YEAR
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$
|
576
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$
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1,038
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$
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—
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See accompanying notes to the condensed unconsolidated financial statements.
Notes to Condensed Unconsolidated Financial Statements
Note 1- The condensed financial statements of VAALCO Energy, Inc. (the “Parent Company”) have been prepared pursuant to Rule 5-04 of Regulation S-X of the Securities Exchange Act of 1934, as amended, because certain of VAALCO’s subsidiaries are contractually prohibited from making payments, loans or transferring assets to the Parent Company or other affiliated entities. Specifically, under the terms of our IFC Term Loan, VAALCO Gabon S.A. could be restricted from transferring assets or making dividends, if the positive and negative covenants are not in compliance with the Term Loan. The restricted net assets associated with each of these entities exceed 25% of the consolidated net assets of VAALCO Energy, Inc. as of December 31, 2017 and 2016.
For purposes of these financial statements, the Parent Company’s investments in wholly owned subsidiaries are accounted for under the equity method. Under this method, the accounts of the subsidiaries are not consolidated. The investments in and advances to subsidiaries are recorded in the unconsolidated balance sheets. The Parent Company’s share of income (loss) from operations of the subsidiaries is reported as equity in subsidiary earnings, net of tax, in its unconsolidated statements of operations. These statements should be read in conjunction with the consolidated financial statements and notes thereto, included in Part II, Item 8 of in this Annual Report on Form 10-K.
The Parent Company and certain of its subsidiaries file a consolidated tax return for U.S. federal income taxes. The amount of income tax expense for the Parent Company financial statements represents the amount attributable to the U.S. federal and state tax jurisdictions. Income tax expense for foreign jurisdictions has been included in the applicable subsidiary’s results.
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