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VAALCO ENERGY INC /DE/ (EGY)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $121.7M, diluted EPS was $0.11, and Adjusted EBITDAX was $76.2M; NRI sales were 1.872M BOE. Sequentially, revenue fell 13% and YoY declined 18% on timing of offshore cargoes and slightly lower realized pricing .
  • Net income rose 6% q/q to $11.7M as production expenses and DD&A fell q/q, partially offsetting lower sales; realized commodity price was $64.77/BOE (vs. $65.41 in Q3) .
  • 2025 guidance embeds lower volumes due to Baobab FPSO dry-dock, and a CapEx ramp to $270–$330M; VAALCO added a new $190M revolver (up to $300M) and maintained its $0.0625/share quarterly dividend .
  • Management highlighted 57% YoY SEC proved reserves growth to 45.0 MMBOE, an expanded Gabon drilling program beginning Q3 2025, and said Q4 Adjusted EBITDAX was ahead of consensus, supporting a re-rating catalyst as execution unfolds through 2026 .

What Went Well and What Went Wrong

What Went Well

  • Record financial performance: FY 2024 Adjusted EBITDAX reached $303.0M, and Q4 Adjusted EBITDAX was $76.2M; CFO noted Q4 was “ahead of consensus estimate” .
  • Operational delivery: Q4 production landed at the midpoint of guidance (20,775 NRI BOEPD; 25,300 WI BOEPD) and NRI sales of 20,352 BOEPD were toward the high end of guidance .
  • Cost control: Q4 production expense fell 14% q/q to $36.5M ($19.52/BOE), below prior guidance, with DD&A decreasing vs. Q3; “our production costs for the fourth quarter were below the low end of guidance” (CFO) .

What Went Wrong

  • Revenue headwinds: Q4 commodity sales fell to $121.7M, down 13% q/q and 18% YoY, primarily on cargo timing and slightly lower realized pricing .
  • DD&A mix: Q4 DD&A of $37.0M was 82% higher YoY driven by Côte d’Ivoire depletable costs (partly offset by lower Gabon/Egypt/Canada) .
  • Other expense and FX: Q4 other income (expense), net was an expense of $9.7M, including a $6.4M reduction to the Svenska bargain purchase gain and foreign currency losses .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$149.154 $140.334 $121.721
Net Income ($USD Millions)$43.991 $10.990 $11.664
Diluted EPS ($USD)$0.41 $0.10 $0.11
Operating Income ($USD Millions)$80.939 $44.083 $38.507
Adjusted EBITDAX ($USD Millions)$95.881 $92.764 $76.233
Realized Commodity Price ($/BOE, NRI)$73.96 $65.41 $64.77
Production (NRI BOEPD)18,065 21,770 20,775
Sales (NRI BOE)1,994,000 2,134,000 1,872,000

Segment net revenue (by area)

Segment Net Revenue ($USD Thousands)Q3 2024Q4 2024
Gabon47,608 47,167
Egypt34,544 38,981
Canada8,387 7,528
Côte d’Ivoire49,795 28,045
Total140,334 121,721

KPIs

KPIQ4 2023Q3 2024Q4 2024
Average Daily Sales Volumes (BOE)21,912 23,198 20,352
Production Expense ($/BOE)$23.27 $19.83 $19.57
DD&A ($/BOE)$10.20 $22.04 $19.79
G&A Expense ($MM)$7.005 $6.929 $8.454
Income Tax Expense ($MM)$37.574 $32.574 $17.192

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/OutcomeChange
NRI Sales Volume (BOEPD)Q4 202418,600–20,800 20,352 actual Delivered at high end
Production Expense ($MM)Q4 2024$40.8–$47.3 $36.641 actual Below guidance (positive)
DD&A ($/BOE)Q4 2024$21.00–$24.00 $19.79 actual Below guidance (positive)
Production (NRI BOEPD)Q1 2025—16,550–17,650 New
Sales Volume (NRI BOEPD)Q1 2025—18,000–19,200 New
Production (NRI BOEPD)FY 2025—14,500–16,710 New
Production Expense ($MM)FY 2025—$148.5–$161.5 New
DD&A ($/BOE)FY 2025—$18.00–$22.00 New
Cash G&A ($MM)FY 2025—$25.0–$31.0 New
CAPEX ($MM)FY 2025—$270–$330 New
Dividend per ShareQ1 2025$0.0625 (prior cadence) $0.0625 declared for Q1 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Côte d’Ivoire Baobab FPSO refurbishmentPrep and LOI with Modec; dry-dock planned in 2025 Ceased hydrocarbon ops Jan 31; tow to Dubai ~Mar 24; quay arrival late May ‘25; depart Jan ‘26; commissioning early May ‘26; first oil mid/late May ‘26 Progressing on schedule
Gabon drilling campaign (Etame)Expected early/mid-2025; planning locations Rig secured Dec; program begins Q3 2025; 3 infill + 1 exploration + high GOR well + 2 workovers; 5 firm + 5 options Program expanded; firmed
Egypt receivables/collectionsEGPC confirmed $51.7M payable; working capital pressure Collections outpacing revenues in early 2025; $10M annual payment offset via aged receivables Improving collections
Financing capacityN/ANew $190M revolver (up to $300M) to fund 2025–26 projects Liquidity enhanced
H2S processing (Ebouri sour wells)N/ASuccessful test of Ebouri 4H (~1,600 bbl/d) within modeled H2S; enables sour development sequencing in 2026 Capability unlocked

Management Commentary

  • “We have delivered another successful and record setting performance in 2024… nearly tripling production and quadrupling proved reserves… and generating record production, sales and Adjusted EBITDAX… We…plan…major projects…expected to deliver a step-change in organic growth” — CEO George Maxwell .
  • “In the fourth quarter, we reported $76 million in adjusted EBITDAX, ahead of consensus estimate… production costs… below the low end of guidance” — CFO Ron Bain .
  • “SEC proved reserves… increased 57% to 45 million BOE… PV‑10 increased… our stock is quite undervalued” — CEO George Maxwell .

Q&A Highlights

  • Exploration cycle times: Gabon exploration seismic likely Q1 2026, drilling late ’26/early ’27; CI‑705 seismic acquisition/interpretation through 2025 with optional drilling thereafter .
  • Cost recovery pools: Gabon cost oil recovers quickly as wells come onstream; Côte d’Ivoire PSC offers 25% uplift on invested dollars when production resumes in 2026, materially enhancing capital recovery .
  • FPSO dry-dock critical path: Turret bearing delivery and dry-dock timeline; tow late March, quay arrival late May ’25, depart Jan ’26, commissioning early May ’26, first oil mid/late May ’26 .
  • Gabon sour wells: Ebouri 2H (~1.3–1.5 kbbl/d) and Ebouri 4H (~1.6 kbbl/d) performance validates chemical sweetening; sour well drilling sequenced for 2026 given severe service equipment lead times .
  • Working capital: Expect reversals with Côte d’Ivoire crude inventory monetization in Q1 and improving Egypt collections (outpacing revenues) .

Estimates Context

  • Wall Street consensus (S&P Global) was not available during this analysis window; therefore, detailed EPS/revenue/EBITDA comparisons vs consensus are unavailable. Management stated Q4 Adjusted EBITDAX was ahead of consensus on the call .
  • Given 2025 guidance (lower volumes due to Baobab dry-dock and Gabon ramp later in the year), sell-side models likely need to reduce 2025 production/sales and increase 2025 BOE costs, with upward revisions for 2026 as FPSO returns and Etame wells are online .

Key Takeaways for Investors

  • 2024 set records (Adjusted EBITDAX $303.0M; SEC reserves +57% to 45.0 MMBOE), while Q4 showed resilient earnings despite lower sales; cost performance was strong with expenses below guidance .
  • Near-term (2025) is an investment year: expect lower production/sales due to Baobab FPSO outage, higher CapEx ($270–$330M) and elevated BOE costs; model a step-up in 2026 as Côte d’Ivoire returns and Gabon contributions ramp .
  • Liquidity improved via a new $190M revolver (growth to $300M), supporting robust project execution without sacrificing shareholder returns (dividend maintained) .
  • Côte d’Ivoire PSC terms (25% uplift on invested capital) and validated H2S mitigation in Gabon should enhance project economics and open incremental sour-well inventory for 2026 sequencing .
  • Working capital dynamics are stabilizing: Q1 monetization in Côte d’Ivoire and improved Egypt collections reduce cash volatility and support funding cadence .
  • Valuation optionality: Reserve/PV‑10 expansion and multi‑year organic growth slate (Etame, Baobab Phase 5, Equatorial Guinea Venus) provide catalysts for re‑rating as execution milestones are met .
  • Trading lens: Near-term stock reactions likely hinge on FPSO dry-dock progress updates, rig mobilization and early well results in Gabon, and any updates to Egypt receivables; weakness on 2025 volume guide could be an opportunity ahead of 2026 volume/EBITDAX inflection .

Additional sources consulted:

  • Q4 2024 8‑K earnings release and exhibits (financials, guidance, reserves) .
  • Q4 2024 earnings call transcript (prepared remarks and Q&A) .
  • Prior two quarters’ earnings releases for trend analysis (Q3 and Q2 2024) .