BURKENROAD REPORTS Investment Conference April 25, 2014 New Orleans, LA

Transcription

1 BURKENROAD REPORTS Investment Conference April 25, 2014 New Orleans, LA NYSE:EGY

2 Safe Harbor Statement This presentation includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements included in this presentation 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 expected capital expenditures, future drilling plans, objectives and operations, prospect evaluations, negotiations and relations with governments and third parties, reserve growth, estimated revenues and losses, and projected costs, timing and amount of future production. 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, general economic conditions, oil and gas price volatility, the VAALCO's success in discovering, developing and producing reserves, lack of availability drilling equipment and services, availability of and capital, environmental risks, drilling risks, foreign operational risks, regulatory changes, the uncertainty inherent in estimating reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and other risks. Additional information on risks and uncertainties that could affect our business prospects and performance are provided in the most recent reports of VAALCO filed with the Securities and Exchange Commission. These forward-looking statements are based on VAALCO s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. VAALCO cautions you 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. VAALCO disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. The SEC requires oil and gas companies, in their filings with the SEC, to disclose proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. VAALCO uses the terms estimated ultimate recovery, EUR, probable, 3P, possible, and non-proven reserves, reserve potential or upside, unrisked potential or other descriptions of volumes of reserves potentially recoverable through additional drilling or recovery techniques that are not classified as proved reserves, may not have been calculated as defined by SEC regulations and that the SEC s guidelines may prohibit us from including in any future filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of being actually realized by the company. VAALCO believes these estimates are reasonable, but such estimates have not been reviewed by independent engineers. Estimates may change significantly as development provides additional data, and actual quantities that are ultimately recovered may differ substantially from prior estimates. Production forecasts are dependent upon many assumptions, including estimates of production decline rates from existing wells and the outcome of future drilling activity. Although VAALCO believes the forecasts are reasonable, VAALCO can give no assurance they will prove to have been correct. They can be affected by inaccurate assumptions and data or by known or unknown risks and uncertainties. Market and industry data and forecasts used in this presentation have been obtained from independent industry sources as well as from research reports prepared for other purposes. Although VAALCO believes these third-party sources to be reliable, VAALCO has not independently verified the data obtained from these sources and VAALCO cannot assure you of the accuracy or completeness of the data. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward looking statements in this presentation. 2 Inquiries: VAALCO Energy, Inc. Attn: Gregory R. Hullinger 4600 Post Oak Place, Suite 300 Houston, TX Ph:

3 Poised for Growth Strong high margin base business Near term low risk growth opportunities Balanced long term growth strategy Discovered Resource Acquisition Strong Cash Flow Near field Development Current West Africa Exploration Program 3

4 West Africa Focus Block P Working Interest 31.0% 57,000 gross acres 18,000 net acres Offshore Exploration & Development Bata EQUATORIAL GUINEA Mutamba Iroru Permit Working Interest 41.0% 270,000 gross acres 111,000 net acres Onshore Exploration & Development Etame Marin Permit Working Interest 28.1% 760,000 gross acres 213,000 net acres Offshore Production and Exploration Libreville GABON Port Gentil Luanda 4 Block 5 Working Interest 40.0% 1,400,000 gross acres 560,000 net acres Offshore Exploration ANGOLA

5 Company Profile Key Metrics Share Price (1) $ Week Range (1) $ $9.11 Market Capitalization (1) $516 million Cash Balance (2) $144 million Revolving Debt Facility (Undrawn) (1) $ 65 Net Production Reserves (2P) (2) % Oil (Brent Based Pricing) 98% % Operated 100% Employees (2) Corporate International million 4,400 BOPD 11 MMBOE (1) As of 4/21/2014 (2) As of 12/31/2013 5

6 1P Reserves (MMBO) Efficient Reserve Development - Etame Marin Permit Gross Production (BOPD) Etame Original Forecast Etame Base Actual Etame Additional Actual Avouma Ebouri 25,000 20,000 15,000 10,000 Exploitation and Development skills Repeatable performance Next development underway Growth in EUR 5, EUR 1P Reserves Gross EUR 1P Reserves Cost Metrics ( ) Development Costs Exploration Costs DD&A $14 /BBL $ 3 /BBL $ 9 /BBL

7 Reserves - Etame Marin Permit 3P Reserves Proved Probable Possible 26% 50% 24% Proved Probable Possible Reserves Summary (1) (As of 12/31/2013) Total Reserves 7.2 MMBO 3.4 MMBO 3.8 MMBO 14.4 MMBO (1) Fully Engineered by Netherland Sewell & Associates, Incorporated 7

8 Margin per Barrel - Etame Marin Permit Net Cash Flow Summary ($/bbl) 2013 Net Cash Flow Summary (%/bbl) 2013 Royalty OPEX Workovers G&A Taxes (Profit Oil) DD&A Margin $ 108 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $39 $10 $19 $6 $4 $16 $14 Margin DD&A Taxes (Profit Oil) G&A Workovers OPEX Royalty 36% 9% 17% 13% 15% 6% 4% $0 8

9 $Rev/Bbl Total % $Rev/Bbl of Production Oily and Leveraged to Brent % $ $ % $ % $ % $ % $ % $85.00 Oil / Gas Production Realized Oil Price Per BBL Compared to Brent BBL (2012) % Gas % Oil $ $ $ $ $95.00 $90.00 $85.00 Realized Oil Price Per BBL Compared to Brent BBL (2012) Comparators Anadarko ENI Harvest Shell SINOPEC TOTAL Tullow Oil 9

10 10 Development Projects

11 Offshore Gabon Etame Marin Permit Operator with a 28.1% net W.I. Partners: Addax, Sasol, Sojitz, PetroEnergy and Tullow Oil production - 18,000 BOPD gross Cumulative production through million barrels Construction of two new platforms underway Evaluating possible 7th extension to the Etame Marin Exploration Permit Ebouri Etame Libreville Port Gentil GABON SE Etame North Tchibala Etame Marin Permit Working Interest 28.1% South Tchibala & Avouma 11

12 Etame Field Expansion Project New Etame Platform $175 million gross investment in the new platform ($49 million net) 4 pile, 8 slot platform in water depth of 85 meters Initial 3 well development $25 million gross per well ($7 million net per well) Develop 10 MMBOE incremental gross reserves Existing Wells Initial Planned Wells Installation in 2H 2014 Spud initial well late

13 SE Etame & North Tchibala Fields Project New SEENT Platform $150 million gross investment in the new platform ($42 million net) 4 pile, 8 slot platform in water depth of 85 meters Initial 3 well development $25 million gross per well ($7 million net per well) Develop 7 MMBO gross reserves Gross in place resource potential of over 100 MMBO Installation in 2H 2014 Spud initial well 1H 2015 Initial Planned Wells 13

14 Onshore Gabon- Mutamba Iroru Permit VAALCO operated with 41% working interest Shell Rabi Kounga Field Cum: 840 MMBO EUR 900 MMBO N Gongui discovery well drilled in Q Encountered 49 feet of oil pay in the Gamba Formation Negotiations currently in progress on establishing the production area and renewal of exploration acreage Plan of Development underway for submittal to Gabon Government TOTAL Atora Field Cum: 38 MMBO Shell Bende Field Shell Gamba-Ivinga Field Cum: 286 MMBO & 568 BCF EUR 350 MMBO Rabi Kounga Pipeline VAALCO N Gongui Discovery Discoveries 14

15 15 Exploration Projects

16 Offshore Angola - Block 5 VAALCO Block 5 VAALCO Ombundi Lead VAALCO Loengo Prospect VAALCO Prospect Loengo VAALCO Lead Ombundi Mobil Discovery Baleia -1A Cobalt Discovery Lontra-1 Cobalt Discovery Mavinga-1 Cobalt Prospect Cobalt Discovery Cobalt Discovery Bicuar -1A A ~15 miles ~65 miles Cameia -1 Cameia-2 A Mobil Baleia-1A Cobalt Lontra-1 Salt Cobalt Mavinga-1 Cobalt CAMEIA-1 & CAMEIA-2 Cobalt Bicuar-1A Basement Salt Maersk AZUL-1 Basement KWANZA BASIN Prospects Oil Discoveries Gas Discoveries 16 Block 5 Block 20 Block 21 Large Pre-salt Structures in the Kwanza Basin VAALCO operated with 40% WI (Sonangol P&P 40% WI) Possible Oil Zone Confirmed Oil Zone Confirmed Gas Zone

17 Block 5 - Prospects and Leads Kindele Prospect (Post Salt) WD=101m Gross Potential=20-49 MMbls Block 5 Jack Prospect (Post Salt) WD=75m Gross Potential=22-55 MMbls SW Mubafo Discovery NE SW NE Atlantic Ocean Post Salt Discovery Post Salt Prospect PreSalt Lead or Prospect Ombundi Lead (Pre Salt) WD=500m+ Gross Potential= MMbls Block 5 Loengo Prospect (Pre&Post Salt) WD=108m Gross Potential= MMbls SW NE SW NE 17 1Q 2014 VAALCO / Sonangol P&P Reprocessing Deep-Water 3-D Seismic

18 Offshore Equatorial Guinea - Block P Marathon 1,100 mmboe Equatorial Guinea Acquired 31% W.I. in 57,000 gross acres (PDA area) in November, discovery Venus Working with GEPetrol (operator) to develop a joint operatorship model Two exploration wells expected to be drilled in the near future Exxon 1,300 mmboe Hess 600 mmboe VAALCO BLOCK P PDA Oil Blocks VAALCO Block 18

19 Block P - Prospects and Leads Block P PDA A Marte MMBO VAALCO PDA Boundary 57,000 acres 232 km2 Atlantic Ocean SW Grande Exploration Play Types Marte Atlantic SW Grande MMBO Venus Field MMBO A 19 Europa Discovery Discoveries Prospects 19

20 Attributes of Exploration Opportunities Attributes Angola Block 5 EG Block P Etame Marin Blocks have existing hydrocarbon (oil) discoveries Prospects are liquids prone Shallower water (75m 500m) Normally pressured regime Shallower targeted structures Lower commerciality threshold State of the art 3D processing and imaging Development schemes replicates experience Total unrisked mean net recoverable resource potential ~ 700 MMBOE 20

21 2014 Capital Budget Gross VAALCO $millions $millions Development Etame Facilities $ 187 $ 54 Drilling Exploration Angola 3-D Seismic 7 3 Loengo EG S.W. Grande Gabon Dimba 21 8 Total $ 356 $ Components (Net) Construction of platforms $ 54 Development wells 13 Exploration wells 47 Seismic 3 Total $ CAPEX 3% Construction of platforms Development wells 40% 46% Exploration Seismic 11% 21

22 Sequence of Milestones Drill Dimba Set Etame / SEENT Platforms Ebouri Crude Sweetening Project Pre-feed Development Drill Development Wells 3 Etame Wells 3 SEENT Wells 3 Ebouri Wells Process Angola Seismic Drill Block P (2 wells) 1st Well 2nd Well Drill Angola (2 wells) 1st Well 2nd Well Mutamba Development Mutamba First Oil 22

23 Strong Financial Position 12/31/2013 Financial Position ($ millions) Cash Balance $144 Working Capital 122 Net PP&E 139 Retained Earnings $ 224 Shares Outstanding (millions) 12/31/ /31/ Financial Performance ($ millions) Revenues $ 169 Operating Income 77 Net Income 43 EBITDAX $ 118 EPS 2013 $ $.01 Funds Available for Growth ($ millions) Working Capital $ 122 Revolving Credit Facility 65 Total $ % Working Capital 65% Revolving Credit Facility 23

24 Strong Cash Flow with Focus on Growth Strong high margin base business Stable production profile 100% operated 98% oil leveraged to Brent Near term low risk growth Near field development opportunities Projects on time, on budget Attractive project economics Long term growth strategy In 3 out of top 4 West Africa producing countries Exposure in excess of 700 MMBOE unrisked net recoverable resource potential Balance exploration growth with discovered resource acquisitions 24

25 25 APPENDIX

26 Pro-forma Consolidated Balance Sheets 12/31/ /31/2012 Assets Cash & cash equivalents $ 130,529 $ 130,800 Restricted cash 13,196 12,131 Accounts receivables 22,230 13,113 Other current assets 2,339 3,955 PP&E, net 138, ,608 Other non-current assets 1,349 1,349 Total assets $ 308,167 $ 267,956 Liabilities & Owners' Equity Current liabilities $ 45,829 $ 45,063 Asset Retirement Obligation & Other 11,464 10,368 Shareholders' equity 250, ,525 Total liabilities & owners equity $ 308,167 $ 267,956 (Amounts in thousands) 26

27 Pro-forma Income Statements 12 months ended 12/31/ , months ended 12/31/2012 $ Revenues $ 195,287 Operating costs and expenses (92,052) (108,694) Operating Income $ 77,225 $ 86,593 Other expense, net (38) 559 Income tax expense (34,115) (81,813) Net Income $ 43,072 $ 5,339 Less net income - noncontrolling interest - (4,708) Net income - VAALCO Energy, Inc. $ 43,072 $ 631 (Amounts in thousands) 27