Loading...
•
Jun 30, 2022
VAALCO Q2 2022 Earnings Report
Reported strong financial and operational results driven by high commodity prices and increased sales volumes.
Key Takeaways
VAALCO Energy, Inc. reported a strong second quarter in 2022, marked by a 157% increase in net income to $15.1 million, or $0.25 per diluted share, compared to Q2 2021. Adjusted EBITDAX increased by 81% quarter-over-quarter to $60.8 million, driven by strong pricing and increased sales volumes. The company also maintained a strong balance sheet with no debt and an unrestricted cash balance of $53.1 million.
Reported net income of $15.1 million ($0.25 per diluted share) and Adjusted Net Income of $30.7 million ($0.52 per diluted share).
Adjusted EBITDAX increased by 81% quarter-over-quarter to $60.8 million.
Average daily production increased by 14% to 9,211 net revenue interest barrels of crude oil per day.
Funded $37.1 million cash capital expenditures during Q2 2022 with cash on hand and cash from operations.
VAALCO
VAALCO
Forward Guidance
Third quarter 2022 production expected to be 8,000 to 8,700 NRI BOPD, sales guidance is 6,100 to 8,600 NRI BOPD, and the 2022 exit rate for December is expected to be between 10,500 and 11,500 net BOPD.
Positive Outlook
- Following the completion of the FPSO to FSO changeover and full field turnaround, the Company expects the 2022 exit rate for December to be between 10,500 and 11,500 net BOPD.
- The company continues to opportunistically hedge a portion of its expected production in 2022 to lock in strong cash flow generation to assist in funding its capital program and dividend.
- VAALCO will acquire each TransGlobe share for 0.6727 of a VAALCO share of common stock, which represents a 24.9% premium per TransGlobe common share based on the companies’ respective 30-day volume weighted average share prices as of market close on July 13, 2022.
- The Block P PSC provides for a development and production period of 25 years from the date of approval of the POD.
- Compared to the current FPSO agreement, the new FSO is expected to significantly reduce storage and offloading costs by almost 50%, increase effective capacity for storage by over 50%, and lead to an extension of the economic field life, resulting in a corresponding increase in recovery and reserves at Etame.
Challenges Ahead
- Third quarter 2022 production guidance is expected to be 8,000 to 8,700 NRI BOPD, which is temporarily impacted by the FPSO to FSO changeover and full field turnaround.
- Third quarter 2022 sales guidance is 6,100 to 8,600 NRI BOPD, which takes into account potentially two or three liftings in the quarter.
- Third quarter 2022 production expense, excluding workovers, is expected to be $30.00 to $33.00 per barrel of oil sales, which is higher due to FPSO to FSO changeover and full field turnaround.
- The energy industry is experiencing inflationary pressures related to goods and services particularly impacting fuel prices, services and equipment prices, availability of equipment and global logistic cost increase and delays.
- Transition to the new FSO could result in additional costs, interruption in production and delayed sales to customers, potentially materially