VAALCO Energy Reports Q1 2025 Financial Results with Increased Revenues and Decreased Operating Income

VAALCO Energy, Inc. reported its financial results for the first quarter of 2025, revealing a net income of $7.7 million, a slight increase from $7.7 million in the same period of 2024. The company's revenues from crude oil, natural gas, and natural gas liquids sales rose by approximately 10%, totaling $110.3 million compared to $100.2 million in the prior year. This increase was primarily driven by contributions from the Côte d'Ivoire segment, which had not been included in the previous year's results. Despite the revenue growth, operating income decreased to $26.2 million from $32.2 million, attributed to higher production expenses and depreciation costs.

The company's total operating costs and expenses increased significantly, rising to $84.1 million from $67.8 million year-over-year. Production expenses alone surged by 40% to $44.8 million, largely due to government audit settlements and increased chemical costs associated with H2S treatment. Additionally, depreciation, depletion, and amortization expenses rose to $30.3 million, reflecting the impact of the recent acquisition of Svenska Petroleum Exploration Aktiebolag. The overall increase in costs outpaced revenue growth, leading to a decline in operating income.

Strategically, VAALCO has made significant acquisitions, including the Baobab floating production storage and offloading vessel in Côte d'Ivoire for $20 million and a 70% working interest in the CI-705 block offshore Côte d'Ivoire for approximately $3 million. These acquisitions are expected to enhance the company's operational capabilities and expand its asset portfolio in the region. The company also completed the Svenska acquisition in April 2024, which has contributed to its revenue growth in the current quarter.

Operationally, VAALCO's production activities are concentrated in several regions, including Gabon, Egypt, and Côte d'Ivoire. The company reported a total production of 1.7 million barrels of oil equivalent (Mboe) for the quarter, with Gabon contributing $52.2 million in revenue, a decrease from the previous year due to lower realized prices. In Egypt, revenues decreased to $33.9 million, while the Canadian segment saw a slight increase to $6.2 million. The company continues to focus on enhancing production through planned drilling campaigns and workovers, particularly in Egypt and Gabon.

Looking ahead, VAALCO maintains a cautious outlook, emphasizing the importance of commodity price stability and operational efficiency. The company has sufficient liquidity, with $40.9 million in cash and a $190 million reserve-based revolving credit facility, which provides financial flexibility for ongoing and future projects. However, management acknowledges the potential impact of geopolitical events and market volatility on its operations and financial performance. The company plans to continue monitoring market conditions and adjusting its strategies accordingly to ensure sustainable growth.