HOUSTON, March 16 /PRNewswire-FirstCall/ -- VAALCO Energy, Inc.
(NYSE: EGY) today reported results for the full-year and fourth
quarter of 2008. 2008 operating and financial highlights include:
-- Replaced 166% of production; -- Increased proved reserves by 19%
to 7.4 million barrels oil equivalent; -- Increased discretionary
cash flow by 27% to $66.6 million; -- Increased net income by 56%;
-- Maintained strong balance sheet with $125.4 million of cash and
$5 million of debt as of December 31, 2008. The Company anticipates
continuing its growth in 2009. Highlights include: -- Commenced
drilling a second horizontal development well in North Ebouri
(EEBOM-3H), with completion and first oil production expected in
March 2009; -- Commenced drilling on a gas prospect in the British
North Sea in which VAALCO has a 25% working interest; -- Commenced
moving the Nabors 864 rig for an exploratory well (N'Gongui-1)
onshore Gabon in the Mutamba concession, with drilling expected to
commence in late March or early April 2009; -- Plan to drill
Southeast Etame prospect offshore Gabon during the 2nd or 3rd
quarter of 2009. For the twelve months ended December 31, 2008,
VAALCO reported net income of $29.7 million or $0.50 per diluted
share compared to net income of $19.1 million or $0.32 per diluted
share in the twelve months ended December 31, 2007. Full year 2008
revenues were $169.5 million compared to $125.0 million in 2007.
Discretionary cash flow (a non-GAAP financial measure) for full
year 2008 was up 27% to $66.6 million compared to $41.4 million in
2007. "We are pleased with our 2008 performance as we successfully
increased production, proved up further reserves and generated
strong cash flow," said Robert Gerry, Chairman and CEO of VAALCO.
"We replaced 166% of our production and increased our reserve base
by 19%. With our new development wells in Ebouri coming on line, we
will increase production year over year and expect a continued
positive performance in 2009. VAALCO's strong balance sheet and
multiple drilling prospects position us well to further grow our
reserves and drive enhanced value for VAALCO shareholders in the
coming year and beyond." As previously announced, VAALCO has
expanded its development program with two new development wells
(EEBOM-2H and EEBOM-3H) in North Ebouri. With these two new wells,
the Company expects total production from the Etame block to be
approximately 25,000 barrels of oil per day (bopd), which would
maximize the current throughput oil capacity of the Floating
Production, Storage and Offloading (FPSO) facility serving the
Etame, Avouma / Tchibala and Ebouri fields. In addition, VAALCO
plans to drill exploratory wells onshore Gabon in the Mutamba
concession and offshore Southeast Etame and Angola. The Company
also has a 25% interest in a gas prospect in the British North Sea
on which it is currently drilling. 2008 Financial Results
Discussion For the year ended December 31, 2008, VAALCO sold
1,827,000 net barrels of crude oil equivalent at an average price
of $92.81 per barrel compared to 1,759,000 net barrels of crude oil
equivalent at an average of $71.10 per barrel for the twelve months
ended December 31, 2007. 2008 operating income was $106.5 million
compared to $68.7 million for 2007. Capital expenditures for the
year ended December 31, 2008 were $25.7 million consisting
primarily of costs to install the Ebouri platform, drill the
appraisal and development well in Ebouri, perform FPSO facility
upgrades, and for onshore drilling activities. Production expenses
for 2008 were $18.5 million as compared to $15.1 million for 2007.
Production expenses were higher in 2008 due to increased volumes
sold (17 liftings in 2008 versus 14 liftings in 2007) as well as
higher costs for boat rentals, FPSO tariffs, helicopter charges and
fuel costs. Exploration costs for 2008 were $14.9 million as
compared to $15.3 million for 2007. In 2008, the Company incurred
$9.2 million of expenses for unsuccessful exploration wells,
including $6.4 million in remaining costs for a well in the British
North Sea in the first quarter of 2008. In early 2009, the Company
drilled two unsuccessful wells, one in the Mutamba Iroru block,
onshore Gabon and one offshore in the North Etame area of the Etame
Marin block. Costs incurred and charged to expense in the 2008
fourth quarter were $2.5 million for the onshore Gabon well and
$0.3 million for the North Etame well. The Company's share of the
additional estimated costs to be charged to expense in the first
quarter of 2009 are $5.5 million and $3.8 million for the Gabon and
North Etame wells, respectively. 2008 exploration costs also
include $3.0 million in the fourth quarter to acquire and process
seismic data in Angola, $1.1 million for aeromagnetic gravity data
acquired over the Mutamba Iroru block onshore Gabon and seismic
acquisition and processing costs associated with the Etame Marin
block of $0.7 million. In 2008, the Company incurred $73.0 million
of income taxes compared to $48.1 million paid in 2007, which were
paid in Gabon. The increased tax in Gabon 2008 versus 2007 was due
to higher production rates and oil prices. On December 31, 2008,
the Company had cash balances of $125.4 million and funds in escrow
of $23.1 million. The Company believes that these cash balances
combined with cash flow from operations will be sufficient to fund
the Company's 2009 non-discretionary capital expenditure budget of
approximately $56.7 million to further develop the Ebouri field,
for exploration programs in Gabon, Angola and the British North Sea
and for additional investments in working capital resulting from
potential growth. Fourth Quarter 2008 Results VAALCO reported a net
loss of $7.5 million or $0.13 per diluted share for the fourth
quarter of 2008 compared to net income of $2.0 million or $0.03 per
diluted share for the comparable period in 2007. Fourth quarter
2008 revenues were $16.5 million compared to $37.0 million in the
fourth quarter of 2007. The 2008 fourth quarter results reflect the
overall decline in crude oil prices from the year-ago quarter,
which resulted in lower average selling prices for the Company's
product, as well as an increase in production and exploration costs
as VAALCO ramped up its drilling program. During the fourth quarter
of 2008, VAALCO sold 399,000 net barrels of crude oil equivalent at
an average price of $41.29 per barrel compared to 425,000 net
barrels of crude oil equivalent at an average price of $86.92 per
barrel in the fourth quarter of 2007. Operating loss was $0.1
million in the fourth quarter of 2008 compared to operating income
of $17.4 million in the fourth quarter of 2007. Discretionary Cash
Flow Discretionary cash flow (a non-GAAP financial measure) shows
the amount of cash generated by the Company that can be used as
working capital, to reduce debt, or for future investment
activities. Discretionary cash flow is presented because management
believes it is a useful adjunct to net cash flow provided by
operating activities under accounting principles generally accepted
in the United States (GAAP). The measure is widely used by
investors and professional research analysts in the valuation,
comparison, rating and investment recommendations of companies
within the oil and gas exploration and production industry.
Discretionary cash flow can be reconciled to net cash provided by
operating activities in the Statement of Consolidated Cash Flows
filed with the SEC as follows: Unaudited - (thousands of dollars)
Three Months Ended Twelve Months Ended December 31, December 31,
2008 2007 2008 2007 -----------------------------------------
Discretionary Cash Flow 416 16,490 66,578 52,220 Working Capital
Changes, net of non-cash 40,635 5,076 40,000 (8,988) ------ -----
------ ------- Net cash provided by operating activities 41,051
21,566 106,578 43,232 Conference Call As previously announced, the
Company will hold a conference call to discuss its fourth quarter
and full-year 2008 results on Tuesday, March 17, 2009 at 10:00 a.m.
Central Time (11:00 a.m. Eastern Time). Interested parties may
participate by dialing 1 (800) 230-1059. International parties may
dial 1 (612) 234-9959. The confirmation code is 990472. This call
will also be webcast on VAALCO's web site at
http://www.vaalco.com/. An audio replay will be available beginning
approximately one hour after the end of the conference call through
April 17, 2009 on the Company's website and by dialing 1 (800)
475-6701. International parties may dial 1 (320) 365-3844. The
confirmation code is 990472. Summary financial results for the
quarter and full year are tabulated below. Abbreviated Financial
Results: Three Months Ended Year Ended Dec. 31, Dec. 31, Unaudited
- (thousands ------------------ ------------------- of dollars)
2008 2007 2008 2007 ---- ---- ---- ---- Revenues 16,470 36,957
169,525 125,044 Operating costs and expenses 16,559 19,529 63,053
56,371 Operating Income (Loss) ------ ------ ------ ------ (89)
17,428 106,472 68,673 Other Income (Expense) 706 808 2,275 2,940
Income tax expense (7,771) (14,813) (73,014) (48,081) Gain (loss)
from discontinued operations - - - (51) Minority Interest in
earnings of subsidiaries (297) (1,438) (6,011) (4,429) -----
------- ------- ------- Net Income (7,451) 1,985 29,722 19,052
Basic Income per Common Share ($0.13) $0.03 $0.51 $0.32 Diluted
Income per Common Share ($0.13) $0.03 $0.50 $0.32 Summary
Statistics: Three Months Ended Year Ended December 31, December 31,
------------------ ---------------- (Unaudited) 2008 2007 2008 2007
---- ---- ---- ---- Net oil and gas sales (MBOE) 399 425 1,827
1,759 Average price ($/BOE) $41.29 $86.92 $92.81 $71.10 Production
costs ($/bbl) $8.99 $9.49 $10.11 $8.57 Depletion costs ($/bbl)
$6.84 $10.41 $10.37 $10.21 General and administrative costs ($/bbl)
$9.23 $4.45 $5.90 $4.55 Debt/Proved reserves ($/BOE) - - $0.67
$0.80 Capital Expenditures ($thousands) - - 25,700 14,520
Debt/Capitalization ($/$) - - $0.03 $0.04 Cash and cash equivalents
($thousands) - - 125,425 76,450 Working capital ($thousands) - -
89,243 85,779 Total long term debt ($thousands) - - 5,000 5,000
Basic and diluted share information: Year Ended Item December 31,
2008 December 31, 2007 ---- ----------------- -----------------
Basic weighted average common stock issued and outstanding
58,675,789 59,133,888 Dilutive options 611,081 957,034 -------
------- Total diluted shares 59,286,871 60,090,922 ==========
========== Reserve Information Oil (MBbls) Gas (MMcf) BALANCE AT
DECEMBER 31, 2007 6,214 61 Production (1,824) (15) Revisions of
previous estimates 1,242 (16) Extensions and discoveries 1,790 -
BALANCE AT DECEMBER 31, 2008 7,422 30 Forward-Looking Statements
This document includes "forward-looking statements" as defined by
the U.S. securities laws. Forward-looking statements are those
concerning VAALCO's plans, expectations, and objectives for future
drilling, completion and other operations and activities. All
statements included in this document that address activities,
events or developments that VAALCO expects, believes or anticipates
will or may occur in the future are forward-looking statements.
These statements include future production rates, completion and
production timetables and costs to complete well. These statements
are based on assumptions made by VAALCO based on its experience
perception of historical trends, current conditions, expected
future developments and other factors it believes are appropriate
in the circumstances. Such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond
VAALCO's control. These risks include, but are not limited to,
inflation, lack of availability of goods, services and capital,
environmental risks, drilling risks, foreign operational risks and
regulatory changes. Investors are cautioned that forward-looking
statements are not guarantees of future performance and that actual
results or developments may differ materially from those projected
in the forward-looking statements. These risks are further
described in VAALCO's annual report on Form 10-K for the year ended
December 31, 2007 and other reports filed with the SEC which can be
reviewed at http://www.sec.gov/, or which can be received by
contacting VAALCO at 4600 Post Oak Place, Suite 309, Houston, Texas
77027, (713) 623-0801. About VAALCO VAALCO Energy, Inc. is a
Houston based independent energy company principally engaged in the
acquisition, exploration, development and production of crude oil.
VAALCO's strategy is to increase reserves and production through
the exploration and exploitation of oil and natural gas properties
with high emphasis on international opportunities. The Company's
properties and exploration acreage are located primarily in Gabon
and Angola, West Africa. Investor Contact Media Contact Greg
Hullinger Barrett Golden / Tim Lynch Chief Financial Officer Joele
Frank, Wilkinson Brimmer Katcher 713-623-0801 212-355-4449
DATASOURCE: VAALCO Energy, Inc. CONTACT: Investors, Greg Hullinger,
Chief Financial Officer, +1-713-623-0801; or Media, Barrett Golden
or Tim Lynch, both of Joele Frank, Wilkinson Brimmer Katcher,
+1-212-355-4449 Web Site: http://www.vaalco.com/
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