Capital One Securities, Inc. 8th Annual Energy Conference
New Orleans, LA
December 13, 2013
Steve Guidry, CEO NYSE:EGY
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 field
Development
Current West Africa
Exploration Program
Transformational
Transaction
Strong Etame Marin
Cash Flow
3
VAALCO: Poised for Growth
Strong high margin base business Near term low risk growth opportunities Balanced long term growth strategy
1985 Founded in Houston by Virgil A WALSTON and Charles ALCORN
1986
Acquired operating interests in four fields offshore Palawan,
Philippines (as Alcorn International)
1992
Brought on stream West Linapacan Field – first “deep water” production (1140 ft) in ASEAN
1995 Signed Etame Marin Permit PSA, Offshore
1998 Etame Field discovery (Etame Marin Permit)
2002 First oil from Etame Field
2004 Ebouri, Avouma discoveries (Etame Marin Permit)
2005 Signed PSA in Mutamba Iroru, Onshore Gabon
2006 Signed PSA in Block 5 Offshore Angola. Listed on the NYSE.
2007-09 Avouma and Ebouri Platforms installed and production commenced
2011 Southeast Etame Field discovery (Etame Marin Permit)
2012
N’Gongui Field discovery (Mutamba Iroru Permit). Signed PSA in Block P Offshore Equatorial Guinea.
4
VAALCO Company Milestones
5
VAALCO – 2013 Highlights
Progressed Etame Expansion and Southeast Etame/N. Tchibala project construction
Installation planned for Q3-2014
Resolved ownership in Angola Block 5/06 Sonangol P&P assigned 40% WI
Developed shared operatorship model with GEPetrol for Equatorial Guinea Block P
Dimba exploration well set to spud
Stock repurchase of $10.7 MM
Board approved $117 MM – 2014 capital budget Largest ever capital budget
Leadership transition completed
West Africa Focus
6
Block 5 Working Interest 40.0%
1,400,000 gross acres 560,000 net acres
Offshore Exploration
Mutamba Iroru Permit Working Interest 41%
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
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
VAALCO’s Profile
7
Key Metrics
Market Capitalization(1) $360 MM
Cash Balance (Unrestricted)(2) $100 MM
Debt(2) $ – MM
Production (Net)(1) 4,400 BOPD
Reserves (2P)(3) 11.2 MMBOE
% Oil(3) 98%
% Operated(3) 100%
Employees(1) 100
(1) As of 12/10/2013 (2) As of 9/30/2013 (3) As of 12/31/2012
Efficient Reserve Replacement, Etame Marin Permit
8
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
1P
Re
se
rve
s (
MM
BO
)
Gross EUR 1P Reserves
Cost Metrics (2002-2013)
Development Costs $14 /BBL
Exploration Costs $ 3 /BBL
DD&A $ 9 /BBL
VAALCO’s Reserves, Etame Marin Permit
9
48%
25%
27%
3P Reserves (MMBO) Proved Probable Possible
Reserves Breakdown (As of 12/31/2012) (1)
Proved 7.45 MMBO
Probable 3.76 MMBO
Possible 4.21 MMBO
TOTAL RESERVES 15.42 MMBO
(1) Based on the NSAI Independent Reserve Report
Oily and Leveraged to Brent
10
$85.00
$90.00
$95.00
$100.00
$105.00
$110.00
$115.00
$R
ev
/Bb
l
Realized Oil Price Per BBLCompared to Brent BBL (2012)
$85.00
$90.00
$95.00
$100.00
$105.00
$110.00
$115.00
$R
ev
/Bb
l
Realized Oil Price Per BBLCompared to Brent BBL (2012)
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
To
tal %
of
Pro
du
cti
on
Oil / Gas Production
% Gas
% Oil
Operator with a 28.1% net W.I. Partners: Addax, Sasol, Tullow, Sojitz and PetroEnergy
Oil production - 18,000 BOPD gross 4,400 BOPD net
Cumulative production through Q3 2013 - 77.5 million barrels
Construction of two new platforms underway
Pursuing Etame Permit exploration opportunities and extension
Offshore Gabon – Etame Marin Permit
11
GABON Port Gentil
Libreville
Etame Marin Permit Working Interest 28.1%
Ebouri
SE Etame
Etame
Avouma
North Tchibala
Etame Expansion Project
12
New Etame Platform
$175 MM gross investment in the new platform
($49 MM net)
4 pile, 8 slot platform in water depth of 85 meters
Initial 3 well development $25 MM gross per well
($7 MM net per well)
Develop 10 MMBOE incremental gross reserves
Installation in 2H 2014
South East Etame / North Tchibala (SEENT Project)
13
New SEENT Platform
$150 MM gross investment in the new platform
($42 MM net)
4 pile, 8 slot platform in water depth of 85 meters
Initial 3 well development $25 MM gross per well
($7 million net per well)
Develop 7 MMBO reserves gross reserves
Installation in 2H 2014
SEENT Jacket
Etame Jacket Etame Deck
Construction of Etame and SEENT platforms on schedule for 2H 2014 installation
Total investment of Etame and SEENT projects $544 MM gross ($152 million net)
Facilities - $325 MM Wells - $219 MM
Project Delivery
14
15
Expected spud December 2013 3,000m well depth
Gamba primary target Dry Hole Cost - $19 MM gross ($8.5 MM net)
Lucina secondary target Gamba 5-35 mmbo ~ gross recoverable
53m water depth Lucina 4-81 mmbo ~ gross recoverable
Offshore Gabon: Dimba Prospect
10 km
A’ A
N
A
A’
16
Onshore Gabon: Mutamba Iroru Permit
N’Gongui discovery well drilled in Q4 2012
Encountered 49 feet of oil pay in the Gamba Formation
41% partner TOTAL operates the Atora Field 6 miles to the North
Plan of Development underway for submittal to Gabon Government
Negotiations currently in progress on establishing the production area and renewal of exploration acreage
Rabi Kounga Field Cum: 840 MMBO EUR 900 MMBO
Atora Field Cum: 38 MMBO
N’Gongui Discovery
Bende Field
Gamba-Ivinga Field Cum: 286 MMBO & 568 BCF
EUR 350 MMBO
VAALCO Prospect
VAALCO Lead
Loengo
A A’
Block 5 Block 20 Block 21
Ombundi Baleia -1A
Mobil Discovery
Lontra-1
Cobalt Discovery
Cobalt Discovery
Mavinga-1
Cobalt Prospect
Cameia -1
Cobalt Discovery
Cameia-2
Cobalt Prospect
Possible Oil Zone
Confirmed Oil Zone
Basement
Salt
Basement
Salt
~15 miles ~65 miles
Offshore Angola: Large Pre-salt Structures in the Kwanza Basin
17
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
18
Offshore Angola: Block 5 Prospects and Leads
PreSalt Lead or Prospect
Post Salt Prospect
Block 5
Atlantic Ocean
Mubafo Discovery NE NE
NE NE SW
SW SW
SW
Post Salt Discovery
Kindele Prospect WD=101m Potential=20-28-49 MMbls
Jack Prospect WD=75m Potential=22-33-55 MMbls
Loengo Prospect WD=108m Potential=70-104-250 MMbls
Ombundi Lead WD=500m+ Potential=100-400-760 MMbls
19
Offshore Equatorial Guinea: Block P
Acquired 31% W.I. in 57,000 gross acres (PDA area) in November, 2012
2005 discovery – Venus
Working with GEPetrol (Operator) to develop a joint operatorship model
Two exploration wells expected to be drilled in the near future
Marathon 1,100 mmboe
Exxon 1,300 mmboe
Hess 600 mmboe
BLOCK P PDA
Equatorial Guinea
20
Offshore Equatorial Guinea: Block P
20
Atlantic
Atlantic Ocean
PDA
Boundary
57,000 acres
232 km2
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
21
VAALCO – Summary
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 Need to balance exploration growth with acquisitions