About VAALCO Energy

VAALCO Energy, Inc. operates as an independent energy company. The company engages in the acquisition, exploration, development, and production of crude oil, natural gas and natural gas liquids (NGLs). The company’s primary source of revenue historically has been from the Etame PSC related to the Etame Marin block located offshore Gabon in West Africa. The Etame Marin block covers an area of approximately 46,200 gross acres located 20 miles offshore in water depths of approximately 250 feet. The company’s working interest in the Etame Marin block is 58.8%, and it is designated as the operator on behalf of the Etame Consortium. The block is subject to a 7.5% back-in carried interest by the government of Gabon, which they have assigned to a third party. The company is also a member of a consortium with BW Energy and Panoro Energy (the BWE Consortium). The BWE Consortium has been provisionally awarded two blocks in the 12th Offshore Licensing Round in Gabon. The award is subject to concluding the terms of PSCs with the Gabonese government. BW Energy will be the operator with a 37.5% working interest, with VAALCO (37.5% working interest) and Panoro Energy (25% working interest) as non-operating joint owners. The two blocks, G12-13 and H12-13 are adjacent to the company’s Etame PSC, as well as BW Energy and Panoro’s Dussafu PSC offshore Southern Gabon and cover an area of 2,989 square kilometers and 1,929 square kilometers, respectively. On October 13, 2022, VAALCO and VAALCO Energy Canada ULC (AcquireCo), the company’s indirect wholly-owned subsidiary, completed the previously announced business combination involving TransGlobe Energy Corporation (TransGlobe), whereby AcquireCo acquired all of the issued and outstanding TransGlobe common shares pursuant to a plan of arrangement (the Arrangement) and TransGlobe became a direct wholly-owned subsidiary of AcquireCo and an indirect wholly-owned subsidiary of VAALCO in accordance with the terms of an arrangement agreement entered into by VAALCO, AcquireCo and TransGlobe on July 13, 2022 (the Arrangement Agreement). The post-Arrangement company (the Combined Company) is a leading African-focused operator with a strong production and reserve base and a diverse portfolio of assets in Gabon, Egypt, Equatorial Guinea and Canada. The company also owns an interest in an undeveloped block offshore Equatorial Guinea, West Africa. Strategy The company owns crude oil, natural gas and NGLs producing properties and conduct operating activities in Egypt, Canada, and offshore Gabon, with a focus on maximizing the value of its current resources and expanding into new development opportunities across Africa. The key elements of the company’s strategy are to focus on maintaining production and lowering costs to increase margins and preserve optionality to capitalize on an increase in crude oil, natural gas and NGLs prices; continue its focus on operating safely and complying with internationally accepted environmental operating standards; optimize production through careful management of wells and infrastructure; continue planning for additional development at Etame, Egypt, and Canada, as well as future activity in Equatorial Guinea; opportunistically hedge against exposures to changes in crude oil, natural gas or NGLs prices; and actively pursue strategic, value-accretive mergers and acquisitions of similar properties to diversify its portfolio of producing assets. Segment and Geographic Information The company’s operating segments are Gabon, Egypt, Canada and Equatorial Guinea. Gabon segment Offshore – Etame Marin Block The Etame PSC related to the Etame Marin block is located offshore Gabon. The Etame Marin block covers an area of approximately 46,200 gross acres located 20 miles offshore in water depths of approximately 250 feet. The company’s working interest in the Etame Marin block is 58.8%, and it is designated as the operator on behalf of the Etame Consortium. The block is subject to a 7.5% back-in carried interest by the government of Gabon, which they have assigned to a third party. The company’s working interest will decrease to 57.2% in June 2026 when the back-in carried interest increases to 10%. The term of the Etame PSC with Gabon related to the Etame Marin block located offshore Gabon extends through 2028 with two five-year options to extend the PSC (PSC Extension). The PSC Extension provides the company with the extended time horizon necessary to pursue developing the resources it have identified at Etame. Egypt segment In Egypt, as of December 31, 2022, the company’s interests are spread across two regions: the Eastern Desert, which contains the West Gharib, West Bakr and North West Gharib merged concessions, and the Western Desert, which contains the South Ghazalat concession. The Eastern Desert merged concession is approximately 45,067 acres and the Western Desert, South Ghazalat concession, is approximately 7,340 acres. Both of the company’s Egyptian blocks are PSCs among the Egyptian General Petroleum Corporation (EGPC), the Egyptian government and it. The company is the operator and has a 100% working interest in both PSCs. The Egyptian PSCs provide for the government to receive a percentage gross royalty on the gross production. The company is the contractor in all of its PSCs. Canada segment In Harmattan, Canada, the company owns production and working interests in certain facilities in the Cardium light oil and Mannville liquids-rich gas assets. Harmattan is located approximately 80 kilometers north of Calgary, Alberta. This property produces oil and associated natural gas from the Cardium and Viking zones and liquids-rich natural gas from zones in the Lower Mannville and Rock Creek formations at vertical depths of 1,200 to 2,600 meters. The Harmattan property covers 46,100 gross acres of developed land and 29,300 gross acres of undeveloped land. The company also owns a 100% working interest in a large oil battery and a compressor station where a majority of oil volumes are handled. All gas is delivered to a third party non-operated gas plant for processing. Under the Modernized Royalty Framework (the MRF) in Alberta, producers initially pay a flat royalty of 5% on production revenue from each producing well until payout, which is the point at which cumulative gross revenues from the well equals the applicable drilling and completion cost allowance. The MRF applies to the hydrocarbons produced by wells spud or re-entered on or after January 1, 2017. The Royalty Guarantee Act (Alberta) came into effect in July 2019, amending the Mines and Minerals Act (Alberta) and guaranteeing no major changes to the oil and gas royalty structure for a period of 10 years. Equatorial Guinea segment The company acquired a 31% working interest in an undeveloped portion of a block (Block P) offshore Equatorial Guinea in 2012. The Equatorial Guinea Ministry of Mines and Hydrocarbons (EG MMH) approved its appointment as the operator of Block P on November 12, 2019. The company acquired an additional working interest of 12% from Atlas Petroleum, thereby increasing its working interest to 43% in 2020, in exchange for a potential future payment of $3.1 million to Compania Nacional de Petroles de Guinea Equitoria, (GEPetrol) in the event that there is commercial production from Block P. On August 27, 2020, the amendment to the production sharing contract to ratify the company’s increased working interest and appointment as operator was approved by the EG MMH. In April 2021, Crown Energy, who held a 5% working interest, elected to default on its obligations from Block P. On April 12, 2021, the majority of non-defaulting parties assigned the defaulting party’s interest to the non defaulting parties. As a result, its working interest increased to 45.9% with the approval of a fourth amendment to the production sharing contract by the EG MMH. On July 15, 2022, VAALCO, on behalf of itself and Guinea Ecuatorial de Petroleós (GEPetrol), submitted to the EG MMH a plan of development for the Venus development in Block P. On September 26, 2022, the EG MMH approved the submitted plan of development. Final documents to effect the plan of development are subject to EG MMH approval. The Block P production sharing contract provides for a development and production period of 25 years from the date of approval of a development and production plan for the area associated with the Venus development. In February of 2023, the company acquired an additional 14.1% participating interest, increasing its participating interest in the Block to 60.0%. In March 2023, Atlas voted to participate in the Venus Development. Amendment 5 of the PSC was approved by all parties in March 2023, with this updated participating interest, and execution of the Venus development plan has been initiated. Customers For the year ended December 31, 2022, the company sold its crude oil production from Gabon under a term contract with pricing in the month of lifting, adjusted for location and market factors. The company’s contract and three extension amendments with ExxonMobil Sales and Supply LLC (ExxonMobil), covered 100% of its crude oil sales from February 2020 through the end of July 2022 with pricing based upon an average of Dated Brent in the month of lifting, adjusted for location and market factors. Revenues from sales of crude oil to Glencore were 100% of the company’s Gabonese revenues from customers for the period of August 2022 through December 2022. Egypt For the period of October 14, 2022, through December 31, 2022, EGPC covered 100% of the company’s crude oil sales in Egypt. Regulatory The company’s exploration and production activities offshore Gabon are subject to Gabonese regulations. History VAALCO Energy, Inc. was founded in 1985. The company, a Delaware corporation, was incorporated in 1985.