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NYSE:EGY
Capital One Securities, Inc.
9th Annual Energy Conference
December 11, 2014
2
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.
Inquiries:
VAALCO Energy, Inc.
Attn: Gregory R. Hullinger
4600 Post Oak Place, Suite 300
Houston, TX 77027
Ph: 713-623-0801
www.vaalco.com
Safe Harbor Statement
Near Term
Developments
Current West Africa
Exploration Program
Discovered
Undeveloped
Resource Acquisition
Strong Cash Flow
3
Poised for Growth
Strong high margin base business Near term low risk growth opportunities Balanced long term growth strategy
West Africa Focus
4
Block 5 Working Interest 40.0%
1,400,000 gross acres 560,000 net acres
Offshore Exploration
Etame Marin Permit Working Interest 28.1%
760,000 gross acres 213,000 net acres
Offshore Production and Exploration
Mutamba Iroru Permit Working Interest 41.0%
270,000 gross acres 111,000 net acres
Onshore Exploration & Development
Block P Working Interest 31.0%
57,000 gross acres 18,000 net acres
Offshore Exploration & Development
GABON Port Gentil
Libreville
Luanda
ANGOLA
EQUATORIAL GUINEA
Bata
Company Profile
5
Key Metrics
Share Price(1) $4.62
52-Week Range(1) $4.49 - $9.67
Market Capitalization(1) $267 million
Cash Balance(2) $ 133 million
Revolving Debt Facility(2)
- Current Borrowings(2)
$ 65 $ 15
million million
Net Production(1) 3,500 BOPD
2013 EBITDAX $ 118 million
Reserves (2P)(3) 11 MMBOE
% Oil (Brent Based Pricing) 98%
% Operated 100%
Employees(1)
Corporate International
107 44 63
(1) As of 12/10/2014 (2) As of 9/30/2014 (3) As of 12/31/2013
Efficient Reserve Development - Etame Marin Permit
6
Cost Metrics (2002-2013)
Development Costs $14 /BBL
Exploration Costs $ 3 /BBL
DD&A $ 9 /BBL
0
5,000
10,000
15,000
20,000
25,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Gross Production (BOPD) Etame Original Forecast Etame Base Actual Etame Additional Actual Avouma Ebouri
Exploitation and development
Repeatable performance
New development – Q4 2014
Growth in EUR
0.0
20.0
40.0
60.0
80.0
100.0
120.0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
1P
Re
serv
es
(MM
BO
)
EUR 1P ReservesGross EUR 1P Reserves
7
Development Projects
SEENT Deck Installation “Completed in 3Q 2014”
Etame Deck Installed “Completed in 3Q 2014”
Operator with a 28.1% net W.I. Partners: Sinopec (Addax), Sasol, Sojitz , PetroEnergy and Tullow
Oil production averaged - 16,250 gross (4,015 net) BOPD for 9 months 2014
Cumulative production through 9/30/2014 – 83.6 million barrels
Installation of two new platforms completed 3Q 2014
Proposed the 7th extension to the Etame Marin Exploration Permit
Offshore Gabon – Etame Marin Permit
8
GABON Port Gentil
Libreville
Etame Marin Permit Working Interest 28.1%
Ebouri
SE Etame
Etame
South Tchibala & Avouma
North Tchibala
FPSO “Petroleo Nautipa” Long-term contract with Tinworth through 2020
Capacity: 30,000 bbls of total fluids per day Capacity: 25,000 bbls of oil per day
Etame Field Expansion Project
9
New Etame Platform
$175 million gross ($49 million net) investment in the new platform
4 pile, 8 slot platform in water depth of 85 meters
Initial 3 well development $25 million gross ($7 million net) per well
Transocean “Constellation II” jackup rig
Develop 10 MMBOE incremental gross reserves
Expansion Timing
Jacket and deck installation completed
Initial well “Etame 8-H” was tested and shut-in due to hydrogen sulfide (H2S) production
2nd Well “Etame 10-H” expected to spud this week
Average well depth 1,900 meters Existing Wells
Initial Planned Wells
Etame
SE Etame
Development Project No. 1
SE Etame & North Tchibala Fields Project
10
New SEENT Platform
$150 million gross ($42 million net) investment in the new platform
4 pile, 8 slot platform in water depth of 85 meters
Initial 3 well development $25 million gross ($7 million net) per well
Develop 7 MMBO gross reserves
Gross in place resource potential of over 100 MMBO
Expansion Timing
Jacket and deck installation completed
Commissioning underway
Spud initial well 2Q 2015
Gamba well depth ~1,900 meters
Dentale well depth ~2,750 meters Initial Planned Wells
SE Etame
North Tchibala
Development Project No. 2
Stratigraphic Column
Existing Wells
Initial Planned Wells
Ebouri Redevelopment Project
New Crude Sweetening Platform
$200 - $250 million gross ($56 - $70 million net) investment in the new platform to remove H2S
1 new Ebouri development well at $27 million gross ($7.5 million net)
Reentry of existing Ebouri wells bores at $11 million gross ($3 million net) per well
Develop 9 MMBOE incremental gross reserves at Ebouri
Crude Sweetening Platform
11
Ebouri
Etame
SE Etame
Expansion Timing
Front End Engineering + Design 2H 2014
Final Investment Decision 1H 2015
Installation expected early 2017
Development Project No. 3
12
Onshore Gabon- Mutamba Iroru Permit
VAALCO operated with 41% working interest
N’Gongui discovery well drilled in Q4 2012
Encountered 49 feet of oil pay in the Gamba Formation
Revised production sharing contract term sheet was signed in 3Q 2014
Final PSC negotiations underway
Plan of Development underway for submittal to Gabon Government
Potential first oil production - 2017
Shell Rabi Kounga Field Cum: 840 MMBO EUR 900 MMBO
TOTAL Atora Field
Cum: 38 MMBO
VAALCO N’Gongui Discovery
Shell Bende Field
Shell Gamba-Ivinga Field
Cum: 286 MMBO & 568 BCF EUR 350 MMBO Discoveries
Rabi Kounga Pipeline
VAALCO Permit
Development Project No. 4
13
Offshore Equatorial Guinea - Block P
VAALCO joint operatorship model with 31% working interest
VAALCO has proposed the development of the Venus discovery occurring prior to the drilling of exploration wells
Subsea development
Leased FPSO
2 production wells
1 water injection well
17-21 million BOE gross EUR
Project sanction 2015
Potential first oil production - 2018
Marathon 1,100 mmboe
Exxon 1,300 mmboe
Hess 600 mmboe
VAALCO Block P
PDA
Noble 210 mmboe
Oil Blocks
VAALCO Block
Atlantic
Atlantic Ocean
Block P PDA
A’
A
Venus
Europa
SW Grande
Marte
Development Project No. 5
Anticipated Sequence of Milestones
14
Gabon Activity
Set Etame / SEENT Platforms
Central Crude Sweetening Project
FEED
Development
Drill Development Wells at Etame
3 Etame Wells
3 SEENT Wells
Ebouri Wells
Mutamba Development (Onshore Gabon)
EG Activity
Venus Development
Drill Block P Exploration Wells
1st Well
2nd Well
Angola Activity
Process Angola Seismic
Drill Block 5 Exploration Wells
1st Well - Post Salt (Kindele)
2nd Well - Pre Salt
(Sustained low oil price may slow project timing)
15
Exploration Projects
Transocean semi-submersible rig “Celtic Sea”
Transocean jackup rig “Constellation II”
16
Angola Block 5 - Prospects and Leads
Mubafo Discovery NE
NE SW
SW
Kindele Prospect (Post Salt) WD=101m : 20-49 MMbls*
Ombundi Lead (Pre Salt) WD=500m+ : 100-760 MMbls*
Jack Prospect (Post Salt) WD= 75m : 22-55 MMbls*
VAALCO Loengo Prospect (Post Salt and Pre Salt)
WD= 108m : 70-250 MMbls*
Prospects
Oil Discoveries
Gas Discoveries
A
A’
Maersk AZUL-1
Cobalt Mavinga-1
Cobalt CAMEIA-1 & CAMEIA-2
Cobalt Lontra-1
VAALCO Block 5
Mobil Baleia-1A
Prospects
Oil Discoveries
Cobalt Bicuar-1A
KWANZA BASIN
Gas Discoveries
Cobalt Orca-1
NE SW
NE SW
* Gross Unrisked Recoverable Resources
Angola Block 5 – Kindele Post Salt Prospect
17
Kindele Prospect
$38 million gross ($19 million net ) - DHC
Expected spud late January 2015
Mucanzo sand target (Pinda group)
Water depth 101 meters
Planned total depth 2,250 meters
Transocean “Celtic Sea” semi-submersible rig
20-49 million gross unrisked recoverable resources
Kindele-1
Mubafo-1 1988 Conoco
Discovery Tested 1100
BOPD
Mubafo Discovery Kindele Prospect Discovery
Prospects
A’
A
A’ A
A
Block 5 Block 20
Possible Oil Zone
Confirmed Oil Zone
Angola Block 5 – Pre Salt Prospects
Confirmed Gas Zone
Large presalt structures in the Kwanza Basin
VAALCO operated with 40% WI (Sonangol P&P 40% WI)
Currently processing 3D seismic in advance of first presalt prospect late 2015/early 2016
Prospects
Oil Discoveries
Gas Discoveries
A
A’
Loengo
A’ Ombundi
VAALCO Prospect
VAALCO Lead
Cobalt Discovery
Orca -1
Mobil Discovery Baleia -1A
Cobalt Discovery
Lontra -1
~15 miles ~65 miles
Cobalt Discovery
Cobalt Discovery
Cobalt Discovery
Mavinga-1 Bicuar -1A Cameia -1
Cameia-2
Maersk AZUL-1
Cobalt Mavinga-1
Cobalt CAMEIA-1 & CAMEIA-2
Cobalt Lontra-1
VAALCO Loengo Prospect
VAALCO Ombundi Lead
Mobil Baleia-1A
VAALCO Block 5
Prospects
Oil Discoveries
Cobalt Bicuar-1A
KWANZA BASIN
Gas Discoveries
Cobalt Orca-1
18
Block 21
SW Grande:Tertiary Channels
Albian/Aptian Structures
Marte:Late Cretacous
Turbidites
Upper Cretaceous Sands
A’A
Venus Field
EuropaDiscovery
19
Equatorial Guinea Block P - Prospects and Leads
19
Atlantic
Atlantic Ocean
VAALCO
PDA
Boundary
57,000 acres
Block P PDA
Discoveries
Prospects
SW Grande 10-180 MMBO*
Europa Discovery
Venus Field 17 - 21 MMBO*
Marte 16-70 MMBO*
A’
A
SW Grande Marte
Exploration Play Types
Proposed exploratory drilling post Venus development (2017+) Water depth 250 – 425m Well depths 1,500 – 2,000m
* Gross Unrisked Recoverable Resources
2014 – Estimated CAPEX Expenditures
20
Gross $millions
VAALCO
$millions
Development
Etame
Facilities $ 211 $ 59
Drilling 69 20
Exploration
Angola
3-D Seismic 7 3
Gabon
Dimba 27 12
Total $ 314 $ 94
2014 Components (Net) $millions
Construction of platforms $ 59
Development wells 20
Exploration wells 12
Seismic 3
Total $ 94
63% 21%
13%
3%
2014 CAPEX
Construction of Platforms
Development Wells
Exploration
Seismic
21
Why Invest in VAALCO Now?
Near Term Development Projects Etame expansion project SEENT expansion project Ebouri redevelopment Mutamba Iroru development Venus Field development
Proven International Low Cost Operator 100% operated In 3 out of top 4 West Africa producing countries Projects on time, on budget
Solid Financial Position Increasing production profile in 2015 Unrestricted Cash Position + Borrowing Base Financing development and exploration activities with cash flow
High Impact Exploration Prospects Exposure in excess of 1.9 BBOE net unrisked resources
Identifying Potential Discovered Resource Acquisition Acquisition would balance development / exploration portfolio
22
APPENDIX
Biography on Key Executives Mr. Guidry assumed the role of Chief Executive Officer for VAALCO Energy, Inc. on October 21, 2013. At that time, he was also appointed to our Board of Directors and became Chairman of the Board on June 4, 2014. Prior to joining VAALCO, Mr. Guidry was Vice President of Business Development for Marathon Oil Corporation since July 2011, where he was responsible for acquisitions of strategic opportunities for value growth. Mr. Guidry also held numerous executive management positions, including President of Marathon Oil Libya Limited from October 2008 to July 2011. Prior to the Libya assignment, he was Regional Vice President for Marathon Oil’s North American Production Operations. Mr. Guidry oversaw all of the company’s exploration and production activities onshore and offshore U.S. He also spent five years leading Marathon Oil’s Central Africa Business Unit, overseeing project expansions and operations in Equatorial Guinea, Gabon and Angola. Throughout his career, he has held challenging technical, staff and managerial positions in the company’s domestic and international production organizations. Mr. Guidry graduated from the University of Louisiana Lafayette in 1980 with a bachelor’s degree in petroleum engineering. He is a member of the Society of Petroleum Engineers, and served on the board of directors for the Corporate Council on Africa, the Independent Petroleum Association of America, the U.S. Oil and Gas Association and was a member of the Upstream Committee of the American Petroleum Institute. We believe Mr. Guidry’s strong operational background and experience, particularly in the international arena, is a valuable asset to our Board.
In October of 2008, Mr. Scheirman was appointed Chief Operating Officer following his overseeing of the planning, fabrication, and installation of the Avouma Field and Ebouri Field production platforms offshore Gabon. Mr. Scheirman continues to serve as President of VAALCO Energy, Inc., a position held since 1992. Mr. Scheirman served as Chief Financial Officer from 1991 to 2008. From 1991 to 1992, Mr. Scheirman served as Executive Vice President of the Company. Prior to joining VAALCO Energy, Inc., Mr. Scheirman was an Associate at McKinsey & Company, Inc. from 1989 to 1991, an investment banker with Copeland, Wickersham and Wiley from 1984 to 1989, and a Petroleum Reservoir Engineer for Exxon Company, U.S.A. from 1978 to 1984. Mr. Scheirman holds a B.S. (Summa Cum Laude) and M.S. in Mechanical Engineering from Duke University (1977 and 1978, respectively) and an M.B.A. from California Lutheran University (1984).
Mr. Hullinger joined VAALCO as our Chief Financial Officer in October 2008 after more than 30 years of finance and accounting experience at Shell Oil Company and its parent company, Royal Dutch Shell. Notable positions held by Mr. Hullinger at Shell Oil include Controller, Treasurer, CFO – Shell Deer Park Refining Company and CFO – Pecten Cameroon Company (West Africa). For Royal Dutch Shell, Mr. Hullinger held the positions of International Audit Manager and as the Manager for Group Accounting, the unit responsible for the financial consolidations, results and reporting. Mr. Hullinger was twice elected Chairman of the Accounting Committee of the American Petroleum Institute. He holds a B.S. in Accounting from Louisiana State University.
23
24
Strong Financial Position
($’s in millions)
Financial Position 9/30/2014
Cash Balance (Includes Restricted) $ 146
Working Capital 113
Net PP&E 190
Current Borrowing Balance (IFC Loan) 15
Retained Earnings 278
Financial Performance (9 Months Ended 2014)
Revenues 105
Operating Income 40
Tax Expense 19
Net Income 21
EBITDAX 71
Funds Available for Growth
Working Capital 113
Remaining Credit Facility (IFC Loan) 50
Total Funds Available for Growth $ 163
Basic Shares Outstanding 9/30/2014 (in millions) 57.1
Earnings Per Share (9 Months Ended 2014) $ .36
EBITDAX Reconciliation
25
9 months
ended
9/30/2014
12 months
ended
12/31/2013
Revenues $ 169,277 $
Operating costs and expenses (64,789) (92,052)
Operating income 39,869 $ 77,225 $
Depreciation, depletion and amortization 15,444 16,929
Exploration expenses 15,213 23,928
Total add backs 30,657 $ 40,857 $
EBITDAX (Amounts in thousands)
70,526 $ 118,082 $
104,658
Reserves - Etame Marin Permit
26
Reserves Summary(1) (As of 12/31/2013)
Proved 7.2 MMBO
Probable 3.4 MMBO
Possible 3.8 MMBO
Total Reserves 14.4 MMBO
(1) Fully Engineered by Netherland Sewell & Associates, Incorporated
50%
24%
26%
3P Reserves
Proved Probable Possible
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
$110
$14
$16
$4 $6
$19
$10
$39
Net Cash Flow Summary ($/bbl) 2013
Margin
DD&A
Taxes (Profit Oil)
G&A
Workovers
OPEX
Royalty
13%
15%
4%
6%
17% 9%
36%
Net Cash Flow Summary (%/bbl) 2013
Royalty OPEX Workovers G&A Taxes (Profit Oil) DD&A Margin
Margin per Barrel - Etame Marin Permit
27
$ 108
Attributes of Exploration Opportunities
28
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
29
VAALCO Strong Financial Position for Growth
Asset
Financed by Cash Flow +
Current Cash Position +
IFC Loan
Financed by Capital Markets Transaction
Etame /SEENT Developments
Central Crude Sweetening Project
Mutamba Development
Venus Development
Angola Exploration Wells
EG Exploration Wells
Discovered Undeveloped Resource “Acquisition Costs”
Discovered Undeveloped Resource “Development Costs”