VAALCO Energy, Inc. (“Vaalco” or the “Company”) reported operational and financial results for the second quarter of 2025.
Second Quarter 2025 Highlights and Recent Key Items:
Reported net income of $8.4 million ($0.08 per diluted share), Adjusted Net Income(1) of $2.3 million ($0.02 per diluted share) and Adjusted EBITDAX(1) of $49.9 million;
Produced 16,956 net revenue interest (“NRI”)(2) barrels of oil equivalent per day (“BOEPD”), above the high end of guidance, or 21,654 working interest (“WI”)(3) BOEPD, toward the high end of guidance;
Sold 19,393 NRI BOEPD, above the high end of guidance;
Reported a net cash(4) position of $7.9 million that did not include approximately $24.0 million of cash receivables that was collected in July 2025;
Reiterated full year guidance which previously included a reduction to capital expenditures in Q1 2025 by approximately 10%, without impacting full year production or sales guidance; and
Declared quarterly cash dividend of $0.0625 per share of common stock to be paid on September 19, 2025.
George Maxwell, Vaalco’s Chief Executive Officer, commented, “We continue to consistently deliver successful quarterly results that either meet or exceed our guidance. Both our sales and NRI production for the second quarter of 2025 were above the high end of guidance, leading to solid net income of $0.08 per diluted share and Adjusted EBITDAX of $49.9 million. We continue to execute our strategic vision as we prepare for multiple production enhancing drilling campaigns across our diversified asset base. In Côte d’Ivoire, the FPSO refurbishment project is well underway, with the vessel at the shipyard in Dubai and we are preparing for a drilling campaign in 2026 to augment the production and economic life of the Baobab field. In Gabon, we are preparing for the 2025/2026 drilling program which is expected to begin near the end of Q3 2025 as we wait for the drilling rig to complete its current commitments. In Egypt, we continue to efficiently drill wells and the success of the program in the first half of the year is expected to lead to incremental projects in the second half of 2025. As a reminder, in the first quarter, we entered into a new reserves-based credit facility that will supplement our internally-generated cash flow and cash balance to assist in funding our robust organic growth projects. In the second quarter we drew on this facility, as planned, and will continue to utilize it to assist in our growth plans.”
“We believe that we are well positioned to fund the significant growth and opportunities that we have planned over the next few years which should lead to even greater growth and value for the remainder of the decade. In May, we provided additional details at our Capital Markets Day regarding the meaningful upside that we believe is available to drive future organic growth and support our commitment to consistent shareholder returns. Our track record of success in delivering results at or above expectations should provide our investors with assurance that we will execute on the portfolio of opportunities we discussed in the Capital Markets Day presentation.”
Operational Update
Gabon
The Company secured a drilling rig in December 2024 for its 2025/2026 drilling program, which is expected to begin near the end of Q3 2025 as we wait for the drilling rig to complete its current commitments. The program includes drilling multiple development wells, and appraisal or exploration wells, and perform workovers, with options to drill additional wells. Vaalco plans to drill the wells at both the Etame platform and at its Seent platform, as well as a re-drill and several workovers in the Ebouri field to access production and reserves that were previously removed from proved reserves due to the presence of hydrogen sulfide.
In July 2025, the Company performed planned, staged shutdowns of the Gabon platforms to perform safety inspections and necessary maintenance to increase the integrity and reliability of the assets.
Egypt
The drilling campaign in Egypt, which commenced in December 2024, continued through Q2 2025. During the quarter, Vaalco completed six wells and three of the wells drilled during Q2 2025 will be hydraulically fractured in Q3 2025. Based on detailed analysis completed in Q1 2025 to evaluate the well inventory potential, a series of workover re-completions, re-activations and well optimizations have also been carried out resulting in an incremental production gain.
Canada
In 2024, Vaalco drilled and completed five horizontal wells in Canada, with all laterals being greater than two miles long. These wells continue to meet production expectations and the Company is monitoring their longer-term performance for future drilling opportunities. In 2025, the Company has decided to defer the drilling of additional wells in Canada to reduce the Company's overall capital expenditures.
Côte d'Ivoire
As part of the planned dry dock refurbishment, the Baobab Floating Production, Storage and Offloading (“FPSO”) vessel ceased hydrocarbon production on January 31, 2025 and the final lifting of crude oil from the FPSO took place in February 2025. The vessel departed from the field in late March 2025 and arrived at the shipyard in Dubai ahead of schedule in mid-May 2025. The FPSO refurbishment is now underway in the shipyard. A rig has been secured for significant development drilling which is expected to begin in 2026 after the FPSO returns to service bringing meaningful additions to production from the main Baobab field in CI-40. The Company is also evaluating the anticipated impact of the potential future development of the Kossipo field, which is also on the CI-40 license.
Equatorial Guinea
Vaalco owns a 60% working interest in an undeveloped portion of Block P offshore Equatorial Guinea where it is the designated operator. The Company has an existing plan of development of the Venus field discovery on Block P, which focuses on key areas of drilling evaluations, facilities design, market inquiries and metocean review. The Company completed a Front End Engineering and Design study and is currently targeting a Final Investment Decision by the end of 2025.
Financial Update – Second Quarter of 2025
Vaalco reported net income of $8.4 million ($0.08 per diluted share) for Q2 2025 which was up compared with net income of $7.7 million ($0.07 per diluted share) in Q1 2025 and down 70% compared with net income of $28.2 million ($0.27 per diluted share) in Q2 2024. The increase in earnings compared with Q1 2025 was driven by higher sales volume in Q2 2025 of 1,765 MBOE compared to a sales volume of 1,717 MBOE in Q1 2025 and lower production expense, depreciation, depletion and amortization (“DD&A”) and lower income tax expense partially offset by lower realized pricing driven by a decrease in oil market index prices.
Adjusted EBITDAX totaled $49.9 million in Q2 2025, a 12% decrease from $57.0 million in Q1 2025. The decrease was primarily due to lower realized pricing offset by higher sales volumes and lower production expense. Adjusted EBITDAX was down 31% from $72.5 million generated in Q2 2024 primarily due to lower realized pricing.
In Q2 2025, Vaalco had a net revenue decrease of $13.4 million or 12% compared to Q1 2025 primarily due to lower average realized price received of $54.87 per barrel in Q2 2025 compared to $64.27 per barrel in Q1 2025, offset by an increase in the total NRI sales volumes of 1,765 MBOE which was 3% higher than the Q1 2025 volumes of 1,717 MBOE but was flat compared to 1,764 MBOE for Q2 2024. Q2 2025 NRI sales were above the high end of Vaalco’s guidance.
Total production expense (excluding offshore workovers and stock compensation) of $40.3 million in Q2 2025 decreased by 10% compared to Q1 2025 and 23% compared to Q2 2024. The decrease in Q2 2025 compared to Q1 2025 and Q2 2024 was driven by a reduction in production expenses in the Côte d’Ivoire segment.
DD&A expense for Q2 2025 was $28.3 million, which was 7% lower than $30.3 million in Q1 2025 and 15% lower than $33.1 million in Q2 2024. The decrease in Q2 2025 DD&A expense compared to Q1 2025 and Q2 2024 is due primarily to a reduction in DD&A expenses in the Côte d’Ivoire segment.
General and administrative (“G&A”) expense, excluding stock-based compensation, decreased to $7.1 million in Q2 2025 from $7.8 million in Q1 2025 due to lower salaries and wages, IT expense and other expenses and increased from $6.6 million in Q2 2024. The increase in G&A expenses compared to Q2 2024 was primarily due to higher professional service fees, salaries and wages, and accounting and legal fees. Q2 2025 cash G&A was within the Company’s guidance.
Non-cash stock-based compensation expense was $1.4 million for Q2 2025 flat compared to Q1 2025 and higher compared to $0.9 million for Q2 2024.
Exploration expense was $2.5 million for Q2 2025 which was attributable to the purchase of seismic data to be used in Block 705 in Cote d’Ivoire. There were no exploration costs incurred in Q1 2025 or Q2 2024.
Other income (expense), net, was an expense of $1.8 million for Q2 2025, compared to an expense of $2.4 million for Q1 2025 and income of $17.1 million during Q2 2024. Other income (expense), net, normally consists of foreign currency losses and interest expense, net. In Q2 2024, there was a $19.9 million bargain purchase gain associated with the Svenska acquisition offset by $3.1 million in transaction costs related to the Svenska acquisition.
Income tax expense (benefit) was an expense for Q2 2025 of $7.0 million which includes a $3.1 million favorable oil price adjustment as a result of the change in value of the government of Gabon's allocation of Profit Oil between the time it was produced and the time it was taken in-kind. After excluding this impact, income taxes were $10.1 million for the period. Income tax expense for Q2 2024 was an expense of $9.3 million. This expense is comprised of current tax expense of $10.4 million including a $1.1 million favorable oil price adjustment as a result of the change in value of the government of Gabon's allocation of Profit Oil between the time it was produced and the time it was taken in-kind. After excluding this impact, current income taxes were $10.4 million for the period.
Financial Update - First Six Months of 2025
WI Sales for the first six months of 2025 increased to 4,358 MBOE compared to 4,134 MBOE in the first six months of 2024. The increase was driven primarily by timing, number and size of crude oil liftings in each quarter and do not always coincide with volumes produced in any given period.
The average realized crude oil price for the first six months of 2025 was $65.62 per barrel, representing a decrease of 12% from $74.75 realized in the first six months of 2024. This decrease in crude oil price reflects the softening of commodity prices over the past year.
The Company reported net income for the first six months of 2025 of $16.1 million, which compares to $35.8 million for the first six months of 2024. The decrease in net income for the six months ended June 30, 2025 compared to the same period in 2024 was primarily due to the bargain purchase gain related to the Svenska acquisition completed in April 2024, along with lower realized pricing in 2025.
Capital Investments/Balance Sheet
For the second quarter of 2025, net capital expenditures totaled $45.9 million on a cash basis and $40.9 million on an accrual basis. These expenditures were primarily related to project costs and long-lead items for Gabon, Egypt and Côte d'Ivoire and the development drilling program in Egypt.
On June 30, 2025, Vaalco had an unrestricted cash balance of $67.9 million. During July 2025, the Company received cash payments of current receivables totaling approximately $24.0 million, primarily related to collection of approximately $19.0 million receivable for the lifting that occurred in Gabon in late June and approximately $5.0 million received from EGPC. Working capital at June 30, 2025 was $62.8 million compared with $56.2 million at December 31, 2024, while Adjusted Working Capital at June 30, 2025 totaled $79.9 million.
In March 2025, Vaalco entered into a new reserves based revolving credit facility (the “new facility”) with an initial commitment of $190 million and the ability to grow to $300 million, led by The Standard Bank of South Africa Limited, Isle of Man Branch with other participating banks and financial partners. The new facility, which is subject to customary administrative conditional precedents, replaces the Company’s previously undrawn revolving credit facility. The Company arranged the new facility primarily to provide short-term funding that may be needed from time-to-time to supplement its internally generated cash flow and cash balance as it executes its planned investment programs across its diversified asset base over the next few years. As of June 30, 2025, the Company had $60.0 million outstanding borrowings.
Quarterly Cash Dividend
Vaalco paid a quarterly cash dividend of $0.0625 per share of common stock for the second quarter of 2025 on June 27, 2025. The Company also recently announced its next quarterly cash dividend of $0.0625 per share of common stock for the third quarter of 2025 ($0.25 annualized), to be paid on September 19, 2025 to stockholders of record at the close of business on August 22, 2025. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by the Vaalco Board of Directors.
Hedging
The Company continued to hedge a portion of its expected future production to lock in strong cash flow generation to assist in funding its capital and shareholder return programs.
Conference Call
As previously announced, the Company will hold a conference call to discuss its second quarter 2025 financial and operating results, Friday, August 8, 2025, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time and 3:00 p.m. London Time). Interested parties may participate by dialing (833) 685-0907. Parties in the United Kingdom may participate toll-free by dialing 08082389064 and other international parties may dial (412) 317-5741. Participants should request to be joined to the “Vaalco Energy Second Quarter 2025 Conference Call.” This call will also be webcast on Vaalco’s website at www.vaalco.com. An archived audio replay will be available on Vaalco’s website.
A “Q2 2025 Supplemental Information” investor deck will be posted to Vaalco’s website prior to its conference call on August 8, 2025 that includes additional financial and operational information.