September 13, 2010 - VAALCO Energy, Inc.

VAALCO Energy, Inc.
Rodman and Renshaw
Annual Global Investment Conference
New York City
September 13, 2010
Robert L. Gerry III
Chairman and Chief Executive Officer
Corporate Information
Safe Harbor Statement
Robert L. Gerry III
Chairman and
Chief Executive Officer
W. Russell Scheirman
President and
Chief Operating Officer
Gregory R. Hullinger
Chief Financial Officer
Investor Relations Contact
Principal Corporate Office
4600 Post Oak Place
Suite 309
Houston, TX 77027
Phone: (713) 623-0801
Fax: (713) 623-0982
Web: www.vaalco.com
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 other than statements of historical facts
included in this presentation, including without limitation, business
strategies, plans and objectives of management of VAALCO for future
operations, and capital expenditures, are forward-looking statements.
There can be no assurances that such forward-looking statements
will prove to be correct. Important factors that could cause actual
results to differ materially from the forward-looking statements and
projections include inflation, availability of goods, services and
capital, environmental risks, drilling risks, volatility of commodity
prices, operational risks, foreign governmental risks and regulatory
changes.
The United States Securities and Exchange Commission permits oil
and gas companies, in their filings with the SEC, to disclose only
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
at oil and gas prices in effect at the time of the estimate, without
future escalation. We include in this presentation estimates of gross
reserve potential that the SEC's guidelines strictly prohibit us from
including in filings with the SEC. Investors are urged to consider
closely the disclosure in our Form 10-K, available from the SEC at
www.sec.gov.
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VAALCO Energy, Inc.
Company Profile
Resources and Market Data
Ticker (NYSE)
Employees
*Market Capitalization ($MM)
Management Ownership
52 Week Price Range
Average Daily Volume (last
90 days)
Reserve Data as of 12/31
EGY
75
$327
6%
$3.93 - $6.25
344,000
Proved & Probable Reserves (MBOE)
Proved Reserves (MBOE)
Proved Developed Reserves (MBOE)
Proved Developed (%)
Percent Oil
Key Financial Data ($MM)
1H 2010
2009
2008
Current Production
Q2 2010
Revenue
Net Income
Capex
Cash (incl. escrow)
Debt
Shares (Diluted - millions)
EPS (Diluted)
$64
$16
*$12
$97
57.0
$0.28
$115
$(7.9)
$56
$97
57.4
$(0.14)
$170
$30
$37
$149
$5
59.3
$0.50
Daily Production (BOED):
Gross / VAALCO Net
Operated Production Percentage
2009
2008
12,940
7,363
4,795
65%
99%
12,100
7,422
4,751
64%
99%
20,500 / 4,900
100%
Acreage
Acres held (gross/net ) in millions
2.4 / 1.1
*As of 8/31/2010
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VAALCO Energy, Inc.
VAALCO’s Strategy
•
Invest to increase reserves - through the drill bit
and/or selective acquisitions
•
Optimize production and reservoir management at the
four producing fields offshore Gabon
•
Focus on the West Africa asset base and acreage
positions to exploit the potential
•
Seek additional concessions and opportunities where modern data and
Company talent have the potential to unlock reserves
•
Review attractive transactions to acquire producing properties/acreage
with exploration upside
•
Maintain positive cash generation, financial discipline and
a strong balance sheet
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VAALCO Energy, Inc.
Current Focus Areas: West Africa
Mutamba Iroru Concession
270,000 gross acres
Onshore Exploration
Etame Marin Concession
760,000 gross acres
Offshore Production and
Exploration
Block 5
1,400,000 gross acres
Offshore Exploration
ANGOLA
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VAALCO Energy, Inc.
VAALCO Gabon Offshore Operations
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VAALCO Energy, Inc.
Offshore Gabon: Etame Marin Concession
7
•
VAALCO is the operator of the
concession
•
Four fields producing, all with
pipeline connections to
an FPSO facility
•
Nine wells currently producing
•
Additional development and
exploration wells planned for
2010
•
Oil production currently
averaging approximately
20,500 bopd gross
•
Future exploration opportunities
VAALCO Energy, Inc.
Offshore Gabon: Etame Field
FPSO
8
•
Initial discovery made
in 1998
•
Field declared commercial in
2001
•
Largest of four fields
•
First oil production September
2002
•
Production is from four wells
with subsea completions
•
Currently drilling horizontal 7H
development well
VAALCO Energy, Inc.
Offshore Gabon: Avouma & South Tchibala Fields
Platform
9
•
Discovery well completed
August 2004
•
Production commenced in
January 2007
•
One well in each field on
production from a single
platform
•
New South Tchibala horizontal
development well (ETBSM-2H)
to be drilled 2H 2010
VAALCO Energy, Inc.
Offshore Gabon: Ebouri Field
• Discovery well completed
January 2004
• Platform installed August
2008
• First production began in
January 2009; three wells
currently producing from the
platform
• In 2010, successfully
completed 4-H development
well and 3-H workover
Platform
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VAALCO Energy, Inc.
Offshore Gabon: Southeast Etame Field
•
Discovery well drilled to depth
of 9,054 feet June 2010
•
Encountered 16 ft. of Gamba
sandstone; logged oil full to
base
•
Sidetrack indicated oil column
up to 90 ft. based on
estimated oil/water contact
August 2010
•
Further analysis underway to
estimate size and determine
development strategy
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VAALCO Energy, Inc.
Floating Production, Storage and Offloading Facility
FPSO “Petroleo Nautipa”
•
•
•
•
•
•
•
Long-term contract with Tinworth through 2015
Operations began 2002
1.1 million barrel storage capacity
Can accept up to 30,000 barrels of total fluids per day
25,000 bopd oil processing limit; reviewing alternatives to increase capacity
106 liftings through 7/31/2010
Produced in excess of 53 million bbls
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VAALCO Energy, Inc.
Offshore Gabon: Etame Marin Concession
Exploration Opportunities
Omangou Prospect
•
•
•
•
•
•
•
30.35% WI
260’ water depth
Well depth: 6,600 ft
Will test Gamba and Dentale reservoirs
$14.0 million gross cost
20 mmbo gross unrisked potential
2H 2010 spud date
Ebouri Field
Concession Area
Etame Field
Southeast Etame Field
Avouma and S. Tchibala Fields
Elili Prospect
•
•
•
•
•
•
30.35% WI
380’ water depth
Well depth: 11,500 ft
$22.3 million gross cost
85 mmbo gross unrisked potential
2011 spud date
(pending partner approval)
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VAALCO Energy, Inc.
Onshore Gabon: Mutamba Iroru Concession
• Permit Area 270,000
acres
• Rabi Pipeline runs within
SW edge of permit
• Executed farm-out
agreement with Total
August 2010
Rabi Kounga Field
EUR 1,100 MMBO
• Reprocess 400 km 2-D
seismic and drill one
exploration well in 2011
Gamba Field
EUR 290 MMBO
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VAALCO Energy, Inc.
Offshore Angola: Block 5 Exploration
•
40% operated interest, four-year permit
off SW Angola effective 12/1/06
•
Approx. 1.4 million acres gross
•
Sonangol estimates 50 million proven
barrels with possible 500 million barrels
•
Block has history of 12 wells drilled by
prior operator
- 7 dry wells
- 5 reported oil and/or oil
shows
•
Working with Sonangol to find
replacement partner and extend permit
•
Plan to drill two exploratory wells in
2011
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VAALCO Energy, Inc.
Angola Block 5: Offset Fields
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VAALCO Energy, Inc.
Offshore Angola: Block 5
Exploration Opportunities
Block 5 Outline
Kindele Prospect
•
•
•
•
•
•
50% WI
415’ water depth
Well depth: 6,500 ft
$31 million gross cost
41 mmbo gross unrisked potential
1H 2011 potential spud date
Area Detailed at Left
Loengo Prospect
•
•
•
•
•
•
50% WI
510’ water depth
Well depth: 11,100 ft
$35 million gross cost
93 mmbo gross unrisked potential
1H 2011 potential spud date
Jack Prospect
• 50% WI
• 250’ water depth
• Well depth: 7,050 ft
• $30 million gross cost
• 41 mmbo gross unrisked potential
• 1H 2011 potential spud date
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VAALCO Energy, Inc.
Angola Block 5 Prospects and Leads
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VAALCO Energy, Inc.
Financial Flexibility
• $97 million cash balance as of June 30, 2010
including amounts in escrow
• No long-term debt
• EBITDA (an approximate measure of operating
cash flow) was $33 million as of June 30, 2010
• 2010 Capital Expenditure budget of approximately
$35 - 40 million expected to be funded with cash
flow
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VAALCO Energy, Inc.
CAPEX Projection
2010 - 2011
Type
Country
Location
$Gross (mlns)
$Net (mlns)
Expected Timing
Development
Gabon
Ebouri 4H
$25.4
$7.7
Completed
Workover
Gabon
Ebouri 3H
$5.4
$1.6
Completed
Exploration
Gabon
SE Etame
$15.5
$4.7
Completed
Development
Gabon
Etame 7H
$44.0
$13.5
Drilling
Development
Gabon
S. Tchibala
$14.0
$4.3
2nd Half 2010
Development
Gabon
Omangou
$14.0
$4.3
2nd Half 2010
$118.3
$36.1
Sub-Total
Prospects
Exploration
Gabon
Elili
$22.3
$6.8
Exploration
Angola
Loengo
$35.3
$17.2
Exploration
Angola
Kindele
$30.6
$15.3
Exploration
Angola
Jack
$30.0
$15.0
Sub-Total
$118.2
$54.3
Total
$236.5
$90.4
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VAALCO Energy, Inc.
Why VAALCO?
•
Stable production profile
– 99% oil
– 100% operated
– Good development opportunities
•
Attractive reserve base
– 99% oil
– 64% proved developed
•
Strong balance sheet
– No long-term debt
– Expect 2010 budget funded with cash flow
•
Large acreage inventory in focus area
– Field development/expansion opportunities
– High potential prospects
•
Poised for growth
– Exciting exploratory prospects
– Acquisition opportunities
• Expand West Africa footprint
• Other areas
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VAALCO Energy, Inc.