VAALCO Energy, Inc. (“Vaalco” or the “Company”) reported operational and financial results for the third quarter of 2025.
Third Quarter 2025 Highlights and Recent Key Items:
Reported net income of $1.1 million ($0.01 per diluted share), Adjusted Net Loss(1) of $10.3 million ($(0.10) per diluted share) and Adjusted EBITDAX(1) of $23.7 million;
Produced 15,405 net revenue interest (“NRI”)(2) barrels of oil equivalent per day (“BOEPD”), at the high end of guidance, or 19,887 working interest (“WI”)(3) BOEPD, above the midpoint of guidance;
Sold 12,831 NRI BOEPD, at the high end of guidance;
Increased full year production and sales guidance midpoints due to strong quarterly performance that has been near the high end of guidance through the first nine months of 2025;
Further decreased full year capital guidance midpoint by 19% or $58 million from original 2025 guidance; and
Declared quarterly cash dividend of $0.0625 per share of common stock to be paid on December 24, 2025.
George Maxwell, Vaalco’s Chief Executive Officer, commented, “We continue to deliver consistent quarterly results that either meet or exceed our guidance. Both our sales and NRI production for the third quarter of 2025 were above the midpoint of guidance, leading to solid financial results. We have positively adjusted our full year 2025 guidance taking into account the production and sales results through the first nine months of the year. Additionally, we have decreased the midpoint of our full year capital guidance twice this year, for a total of $58 million, all while raising full year production expectations driven by operational efficiency and well performance. We also have kept absolute production expense in line with previous guidance and with the increased sales, we are seeing a reduction on our per barrel costs against original guidance. 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 back in May.”
“We are well positioned to deliver growth 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 have been waiting for the 2025/2026 drilling program to commence once the contracted rig completes its current commitments. The rig is completing its final well commitment and we expect it to arrive at Etame to begin our drilling campaign in late November. In Egypt, we continue to efficiently drill wells and the success of the program has benefitted our production results. As a reminder, in the first quarter of 2025, we entered into a new reserves-based credit facility to supplement our internally-generated cash flow and cash balance to assist in funding our robust organic growth projects. Shortly after the third quarter, we successfully completed our semi-annual redetermination with the lenders and have increased their commitments on the $300 million facility from $190 million to $240 million, increasing our available liquidity. This enhances our ability to fund the significant growth and opportunities that we have planned over the next few years as we seek to drive the next phase of growth and generate meaningful value for our shareholders for the remainder of the decade.”
Operational Update
Gabon
The Company secured a drilling rig in December 2024 in conjunction with its 2025/2026 drilling program, which is expected to begin during the fourth quarter of 2025, once the drilling rig completes 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 plan to drill wells at both the Etame platform and at its Seent platform, as well as a re-drill and a number of 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. This is the first full field maintenance shutdown that Vaalco has performed since the new Floating Storage and Offloading vessel (“FSO”) was brought online in 2022. All fields were successfully brought back online and the planned turnaround was completed on budget and with no safety or environmental incidents.
Egypt
The current drilling campaign in Egypt began in December 2024 and has continued through the third quarter of 2025. During the third quarter of 2025, four development wells were drilled in the Eastern Desert, of which three were completed during the same period and the fourth well was completed in October 2025. Also, during the third quarter of 2025, Vaalco drilled one exploration well in the Western Desert which was completed in October 2025. Additionally, continuous well interventions, workovers and optimization activities were carried out throughout the third quarter of 2025 to enhance production levels.
Canada
In early 2025, the Company decided to defer the drilling of additional wells in Canada based on a reassessment of capital allocation priorities across the portfolio and to ensure that investment is directed toward projects with the highest expected returns. Therefore, the Canadian division is looking towards lower-cost optimization projects to enhance productivity by year-end.
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 progressing well and has now been underway for the last five months 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, potentially bringing meaningful additions to production from the main Baobab field in CI-40. The Company is also evaluating the potential future development of the Kossipo field, which is 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. Vaalco has completed the initial Front End Engineering and Design study that confirmed the viability of the development concept and is currently evaluating alternative technical solutions which may deliver enhanced economic value.
Financial Update – Third Quarter of 2025
Vaalco reported net income of $1.1 million ($0.01 per diluted share) for Q3 2025 which was down compared with net income of $8.4 million ($0.08 per diluted share) in Q2 2025 and net income of $11.0 million ($0.10 per diluted share) in Q3 2024. The decrease in earnings compared with Q2 2025 was driven by lower realized pricing and lower sales volume in Q3 2025 of 1,180 MBOE compared to a sales volume of 1,765 MBOE in Q2 2025 partially offset by lower production expense, depreciation, depletion and amortization (“DD&A”), and lower income tax expense.
Adjusted EBITDAX totaled $23.7 million in Q3 2025, compared with $49.9 million in Q2 2025. The decrease was primarily due to lower realized pricing and lower sales volumes partially offset by lower production expense. Adjusted EBITDAX was down from $92.8 million generated in Q3 2024 primarily due to lower realized pricing and lower sales volumes.
In Q3 2025, Vaalco had a net revenue decrease of $35.9 million or 37% compared to Q2 2025 primarily due to lower average realized price received of $51.26 per BOE in Q3 2025 compared to $54.87 per BOE in Q2 2025, a decrease in the total NRI sales volumes of 1,180 MBOE which was 33% lower than the Q2 2025 volumes of 1,765 MBOE and was lower compared to 2,134 MBOE for Q3 2024. Q3 2025 NRI sales were at the high end of Vaalco’s guidance. The lower sales and production volumes in Q3 2025 compared to Q2 2025 was primarily a result of a planned and successful full field maintenance shutdown in Gabon which occurred in July 2025.
Total production expense (excluding offshore workovers and stock compensation) of $29.8 million in Q3 2025 decreased by 26% compared to Q2 2025 and 29% compared to Q3 2024. The decrease in Q3 2025 compared to Q2 2025 and Q3 2024 was driven by a reduction in production expenses in the Côte d’Ivoire and Gabon segments.
DD&A expense for Q3 2025 was $20.6 million, which was 27% lower than $28.3 million in Q2 2025 and 56% lower than $47.0 million in Q3 2024. The decrease in Q3 2025 DD&A expense compared to Q2 2025 and Q3 2024 was 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, increased to $7.2 million in Q3 2025, essentially flat with $7.1 million in Q2 2025. G&A expense increased from $6.0 million in Q3 2024 primarily due to higher professional service fees and salaries and wages. Q3 2025 cash G&A was at the midpoint of the Company’s guidance.
Non-cash stock-based compensation expense increased to $1.7 million for Q3 2025 compared to $1.4 million for Q2 2025 and higher compared to $0.9 million for Q3 2024.
Exploration expense was $0.4 million for Q3 2025 compared to $2.5 million for Q2 2025. This decrease was attributable to the purchase of seismic data to be used in Block 705 in Cote d’Ivoire in Q2 2025. There were minimum exploration costs incurred in Q3 2024.
Total other income (expense), net, was an expense of $3.4 million for Q3 2025 compared to an expense of $1.8 million for Q2 2025 and an expense of $0.5 million during Q3 2024. Other income (expense), net, includes gains or losses on derivatives, interest expense and foreign currency losses.
Vaalco reported an income tax benefit for Q3 2025 of $3.6 million which was comprised of a $8.6 million current tax expense, offset by a deferred tax benefit of $12.2 million. Income tax benefit includes a $3.9 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 $0.3 million for the period. Income tax expense for Q3 2024 was $32.6 million which is comprised of current tax expense of $33.7 million including a $1.8 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 $35.5 million for the period.
Financial Update - First Nine Months of 2025
Net sales for the first nine months of 2025 decreased to 4,662 MBOE compared to 5,388 MBOE in the first nine months of 2024. The decrease 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 price for the first nine months of 2025 was $57.42 per BOE, representing a decrease of 13% from $65.99 realized in the first nine 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 nine months of 2025 of $17.2 million, which compares to $46.8 million for the first nine months of 2024. The decrease in net income for the nine months ended September 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 and lower realized pricing in 2025.
Capital Investments/Balance Sheet
For the third quarter of 2025, net capital expenditures totaled $48.3 million on a cash basis and $55.4 million on an accrual basis, well below its third quarter guidance of $70 million to $90 million. 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.
As of September 30, 2025, Vaalco had an unrestricted cash balance of $24.0 million. Working capital at September 30, 2025 was $7.5 million compared with $56.2 million at December 31, 2024, while Adjusted Working Capital at September 30, 2025 totaled $24.2 million.
In March 2025, Vaalco entered into a new reserves based revolving credit facility (the “new facility”) that had initial aggregate commitments of $190.0 million and the ability to grow to $300.0 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 September 30, 2025, the Company had $60.0 million outstanding borrowings.
Effective October 17, 2025, the Lenders unanimously approved an increase in the Company’s borrowing base under the new facility from $186.6 million to $190.0 million after the Company completed its semi-annual borrowing base redetermination process. In addition, the Lenders also approved to (i) extend the first date on which the Initial Total Commitments will be reduced from September 30, 2026 to March 31, 2027, and (ii) amend the semi-annual commitment reduction amounts from $19.0 million to $10.0 million on March 31, 2027, and $22.5 million starting on September 30, 2027.
In addition, on November 7, 2025, subject to certain conditions precedent, certain existing lenders under the new facility agreed to increase their initial commitment effective January 23, 2026 (the “Effective Increase Date”) so that the aggregate borrowing base under the 2025 RBL Facility as of the Effective Increase Date would increase from $190.0 million to $240.0 million. The increase in commitments was undertaken with the existing accordion feature included in the new facility.
Quarterly Cash Dividend
Vaalco paid a quarterly cash dividend of $0.0625 per share of common stock for the third quarter of 2025 on September 19, 2025. The Company also recently announced its next quarterly cash dividend of $0.0625 per share of common stock for the fourth quarter of 2025 ($0.25 annualized), to be paid on December 24, 2025 to stockholders of record at the close of business on November 21, 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 cash flow generation to assist in funding its capital and shareholder return programs.
The Company has continued to add more hedges as part of a rolling hedging program to provide downside protection against a volatile commodity price backdrop. The Company now has approximately 500 Mbls of the remaining 2025 oil production hedged with an average floor price of approximately $61.00 per barrel. In addition, the Company took advantage of periods of higher oil prices during the third quarter to add more hedges for the 2026 hedging program. The Company now has approximately 800 Mbls of oil production hedged for the first half of 2026 with an average floor price of approximately $62.00 per barrel.
Conference Call
As previously announced, the Company will hold a conference call to discuss its third quarter 2025 financial and operating results, Tuesday, November 11, 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 Third 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 “Q3 2025 Supplemental Information” investor deck will be posted to Vaalco’s website prior to its conference call on November 11, 2025 that includes additional financial and operational information.