Exhibit 99.1

VAALCO ENERGY, INC. ANNOUNCES

SECOND QUARTER 2021 RESULTS



REPORTS NET INCOME OF $5.9 MILLION, OR $0.10 PER DILUTED SHARE



HOUSTON – August 11, 2021 - VAALCO Energy, Inc. (NYSE: EGY, LSE: EGY) today reported operational and financial results for the second quarter of 2021.



Highlights and Recent Key Items:  







George Maxwell, VAALCO’s Chief Executive Officer commented, “We are pleased with our strong second quarter operational results that were driven by sales volumes above the high end of guidance, NRI production of

---

 

over 8,000 BOPD and robust commodity pricing.  We continue to generate strong cash flow from operations as we build our cash position for the upcoming drilling campaign at Etame. We have generated $40.0 million in Adjusted EBITDAX in the first half of 2021 which is more than we generated in all of 2019 or 2020. The benefits derived from our acquisition of Sasol’s interest at Etame were clearly evident.” 



“Our operational performance coupled with continued strong pricing and our hedges gives us the confidence to continue to execute on our strategy of accretive growth. We secured a jack-up rig for our 2021/2022 drilling campaign and continue to work with our joint owners at Etame on our shared goal of executing another successful drilling campaign with the goal of adding significantly to our production and reserves. Success on all four wells currently planned within the drilling campaign could result in an increase in production of 7,000 to 8,000 gross barrels of oil per day and significant reserve additions for the two appraisal wellbores that would be converted from resources into 2P reserves at year-end 2022. We are excited to get our next drilling campaign underway later this year.”



“We recognize that operating safely for the protection of our employees and for the environment is of paramount importance. We are pleased to have completed our second ESG report that was primarily developed in close alignment with the recommendations of SASB as we significantly enhanced our disclosures and related discussions. The core values outlined in our report are a part of our culture and have guided our success and provided the foundation for VAALCO’s operations in West Africa. Our Board has empowered all of our employees to create a working environment that assures our success as a trusted operator, a generous partner to the communities where we operate, and as good stewards to the environment.”



“We remain very excited about our opportunities at Etame and in Equatorial Guinea on Block P. We have completed our feasibility study for the standalone development of the Venus discovery in Block P and we are moving forward now with a field development concept.  We believe that VAALCO is in a very enviable position, with no debt, strong cash flow generation, self-funding of organic opportunities and the ability to actively search for accretive acquisitions. We will continue to operate efficiently and work on expanding our netbacks to generate additional cash flow. As you can see, we are firmly focused on maximizing shareholder return opportunities and operating with the highest regards toward ESG while we progress our refreshed strategic objectives focused on accretive growth.”

Operational Update

Gabon



Seismic and 2021/2022 Drilling Campaign



In December 2020, VAALCO completed the acquisition of approximately 1,000 square kilometers of new dual-azimuth proprietary 3-D seismic data over the entire Etame Marin block. The Company expects the seismic data to enhance sub-surface imaging by merging legacy data with newly acquired seismic allowing for the first continuous 3-D seismic over the entire block. The processing of the seismic data began in January 2021, and during the second quarter, the Company has accelerated the seismic processing in order to maximize the impact to the upcoming drilling campaign. VAALCO expects all the data to be fully processed and analyzed by the fourth quarter of 2021. The seismic data will be used to optimize drilling locations for the 2021/2022 drilling campaign, as well as to de-risk future drilling locations and potentially identify new drilling locations. 



In conjunction with its 2021/2022 drilling program planned to begin later this year, VAALCO has executed a contract with Borr Jack-Up XIV Inc., an affiliate of Borr Drilling Limited, to drill at least two development wells and two appraisal wellbores with options to drill additional wells. The contract provides, among other things, that

---

 

the drilling rig can be on location as early as December of this year, with the exact timing dependent on other commitments related to the rig. The Company estimates the cost of the 2021/2022 drilling campaign at Etame to be between $115.0 million and $125.0 million gross, or $73.0 million and $79.0 million, net to VAALCO’s 63.6% participating interest.



Acquisition of Sasol’s Interest at Etame



In November 2020, VAALCO signed a sale and purchase agreement (“SPA”) to acquire Sasol Gabon S.A.’s (“Sasol’s”) 27.8% working interest in the Etame Marin block offshore Gabon (the “Sasol Acquisition”), and on February 25, 2021, the Company completed the acquisition. The effective date of the transaction was July 1, 2020.  The Sasol Acquisition increased VAALCO’s working interest to 58.8%, almost doubling the Company’s total production and reserves.  Reserves, production and financial results for the interests acquired have been included in the Company’s results for periods after February 25, 2021. Based on management’s internal estimates, the Company estimates that approximately 2.7 MMBO of proved NRI reserves and 9.1 MMBO of 2P CPR WI reserves were acquired.



Under the terms of the SPA, a contingent payment of $5.0 million was payable to Sasol should the average Dated Brent price over a consecutive 90-day period from July 1, 2020 to June 30, 2022 exceed $60.00 per barrel. The conditions related to the contingent payment were met and on April 29, 2021, VAALCO paid the $5.0 million contingent amount to Sasol in accordance with the terms of the SPA.

Equatorial Guinea

VAALCO will have a 45.9% WI in Block P offshore Equatorial Guinea, once the Ministry of Mines and Hydrocarbons approves the new amendment to the production sharing contract. VAALCO has completed a feasibility study of a standalone production development opportunity of the Venus discovery on Block P.  The Company is now proceeding to a field development concept and will work closely with the other joint venture owners to complete this over the coming months.  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.

Financial Update – Second Quarter of 2021

Net income of $5.9 million ($0.10 per diluted share) for the second quarter of 2021 reflected strong sales and higher prices that were partially offset by a $10.0 million loss on derivative instruments, of which $5.7 million was an unrealized loss. In the first quarter of 2021, net income was $9.9 million ($0.17 per diluted share) which included a $7.7 million bargain purchase gain related to the Sasol Acquisition and a $6.0 million loss on derivative instruments, of which $4.2 million was an unrealized loss.  Net income for the second quarter of 2020 totaled $0.6 million ($0.01 per diluted share) which reflected the impact of lower realized crude oil prices of $28.31 per barrel for the quarter. The second quarter of 2020 also included a loss on derivatives of $0.8 million and an income tax benefit of $2.2 million. 

   

Adjusted Net Income for the second quarter of 2021 was $8.4 million ($0.14 per diluted share) in line with the first quarter 2021 of $8.7 million or ($0.15 per diluted share), and $3.1 million higher than the $5.3 million ($0.09 per diluted share) in the second quarter of 2020, primarily as a result of increased sales and realized pricing partially offset by higher production expense, exploration expenses, DD&A and realized loss on derivative contracts.



Adjusted EBITDAX totaled $21.9 million in the second quarter of 2021, an increase of 22% compared with $18.0 million in the first quarter of 2021 and more than double from $10.1 million in the same period of 2020.   Adjusted

---

 

EBITDAX for the second quarter of 2021 was higher compared to the first quarter of 2021 primarily due to increased sales volumes and improved realized prices compared to the prior year. Adjusted EBITDAX for the second quarter of 2021 was higher compared to the second quarter of 2020 primarily due to increased sales volumes and improved realized prices partially offset by higher production expense, higher general and administrative expense and higher realized loss on derivative contracts.





VAALCO had two liftings in the second quarter of 2021, which resulted in total sales volumes of 642,000 barrels compared to 619,000 barrels in the first quarter of 2021 and 631,000 barrels for the same period in 2020. The increase in volumes in the second quarter of 2021 is primarily due to the additional ownership interest in the Etame field following the closing of the Sasol Acquisition. The second quarter of 2021 realized pricing increased 14% compared to the first quarter of 2021 and 146% compared to the second quarter of 2020. Following the sharply lower prices realized due to the COVID-19 pandemic and OPEC-related pricing issues in March 2020, pricing in 2021 has recovered to pre-pandemic pricing levels.





Total production expense, excluding workovers, increased compared to the same period in 2020 primarily due to an increase in working interest associated with the Sasol Acquisition but was flat compared to the first quarter of 2021, despite higher sales.  The per-unit production expense, excluding workovers, decreased 4% in the second quarter of 2021 as compared to the first quarter of 2021 due to increased sales, but increased 30% compared to the second quarter of 2020 due to an increase in working interest costs associated with the Sasol Acquisition but had flat sales compared to the second quarter of 2020. Production expense for the second quarter of 2021 included

---

 

approximately $0.8 million in additional costs related to proactive employee-related measures taken in response to the pandemic. 

Depreciation, depletion and amortization (“DD&A”) expense in the second quarter of 2021 on a per NRI barrel of crude oil sales basis was higher compared to the prior periods presented due to higher depletable costs associated with the Sasol Acquisition. 



General and administrative (“G&A”) expense, excluding stock-based compensation, in the second quarter of 2021 was higher than the prior periods primarily as a result of additional severance costs associated with changes in key personnel.

Non-cash stock-based compensation expense was impacted by the change in the stock appreciation rights (“SARs”) liability as a result of changes in the Company’s stock price during the quarter. For the second quarter of 2021, the stock-based compensation expense related to SARs was an expense of $0.4 million compared to an expense of $0.7 million for the second quarter of 2020. For the first quarter of 2021 there was expense of $1.2 million related to SARs.



Foreign income taxes are attributable to Gabon and are settled by the government taking their oil in-kind. Income tax expense for the three months ended June 30, 2021 was $2.8 million. This is comprised of $(3.3) million of deferred tax benefit and a current tax expense of $6.1 million. Income tax benefit for the three months ended June 30, 2020 was a benefit of $2.2 million and included $(3.4) million of deferred tax benefit and a current tax expense of $1.2 million.  Income tax expense for the three months ended March 31, 2021 was $3.1 million, and was comprised of $(0.3) million of deferred tax benefit and a current tax expense of $3.4 million.  For all three periods, VAALCO’s overall effective tax rate was impacted by non-deductible items associated with operations and deducting foreign taxes rather than crediting them for United States tax purposes.



Financial Update – First Six Months of 2021



Production for the first six months of 2021 was higher by 27% at 1,196 MBbls net crude oil compared to 942 MBbls net crude oil production in the first six months of 2020.  The increase in production was driven by the additional production associated with the Sasol Acquisition completed in February 2021. The first half of 2021 saw sales volume increase 36% to 1,261 MBbls net crude oil compared to 925 MBbls for the first half of 2020.  Crude oil sales are a function of the 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 2021 was $65.54 per barrel, representing an increase of 71% from $38.24 realized in the first six months of 2020.  This sharp increase in crude oil price reflects the downward pressure resulting from the COVID pandemic as well as supply and demand imbalances that occurred in 2020 and the recovery in 2021 from these factors. 



The Company reported net income for the six months ended June 30, 2021 of $15.8 million, which compares to net loss of $52.2 million for the same period of 2020.  The significant increase in operating results for the six months ended June 30, 2021 compared to the same period in 2020 was primarily due to increased sales volumes and higher oil prices in the first half of 2021 while the same period in 2020 included charges of $30.6 million for the impairment of proved crude oil and natural gas properties and $42.8 million to increase the valuation allowance on deferred tax assets, offset by a $(10.7) million deferred tax benefit.



---

 

Environmental, Social and Governance



In June 2021, VAALCO issued its 2020 Environmental, Social and Governance (“ESG”) report, which is now available on VAALCO’s web site, www.vaalco.com, under the “Sustainability” tab. This report provides detailed information about VAALCO’s ESG initiatives and related key performance indicators for the three-year period 2018 through 2020. In the creation of this document, the Company consulted the Sustainability Accounting Standards Board’s (“SASB”) Oil and Gas Exploration and Production Sustainability Accounting Standard, the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”), the Sustainable Development Goals (“SDG’s”) promulgated by the United Nations and other reporting guidance from industry frameworks and standards.



Response to COVID-19 Pandemic



VAALCO remains fully committed to the health and safety of all its employees and contractors.  In response to the COVID-19 pandemic, VAALCO has continued to take the following measures:





VAALCO expects to continue to take proactive steps to manage any disruption in its business caused by COVID-19 and to protect the health and safety of its employees.  As of August 11, 2021, VAALCO has experienced no material impact on its Gabon operations directly associated with COVID-19; however, the Company has incurred higher costs related to proactive measures taken in response to the pandemic.  These costs were approximately $1.4 million during the first half of 2021.



Capital Investments/Balance Sheet



For the second quarter of 2021, net capital expenditures, excluding acquisitions, totaled $3.1 million on a cash basis and $1.8 million on an accrual basis. These expenditures were primarily related to the purchase of a mobile workover unit, equipment and enhancements, as well as early costs associated with the 2021/2022 drilling program.



At the end of the second quarter of 2021, VAALCO had an unrestricted cash balance of $22.9 million. The unrestricted cash balance includes $2.0 million of cash attributable to net non-operating joint venture owner advances. Working capital at June 30, 2021 was $(9.0) million compared with $(15.8) million at March 31, 2021, while Adjusted Working Capital at June 30, 2021 totaled $4.3 million, compared with $(2.7) million at March 31, 2021.



Hedging



On January 22, 2021, the Company entered into commodity swaps at a Dated Brent weighted average price of $53.10 per barrel for the period from and including February 2021 through January 2022 for a quantity of 709,262 barrels. 



---

 

On May 6, 2021, the Company entered into additional commodity swaps at a Dated Brent weighted average price of $66.51 per barrel for the period from and including May 2021 through October 2021 for a quantity of 672,533 barrels.



At June 30, 2021, the unexpired commodity swaps were for an underlying quantity of 729,123 barrels and had a fair value of $9.9 million and is reflected in “Accrued liabilities and other” line of the condensed consolidated balance sheet.   



On August 6, 2021, the Company entered into additional commodity swaps at a Dated Brent weighted average price of $67.70 per barrel for the period from and including November 2021 through February 2022 for a quantity of 314,420 barrels. After entering into this hedge, VAALCO has 70% of its production hedged through October 2021 and 50% of its production hedged from November 2021 through February 2022. The Company has hedged a large portion of its remaining 2021 and early 2022 production volumes to protect cash flows to assure funding of its planned 2021/2022 drilling program.



Guidance



Third quarter 2021 production is expected to be 7,000 to 7,800 BOPD, which includes a planned seven-day full field maintenance turnaround. Third quarter sales volumes are expected to be 7,800 to 8,500 BOPD. Production expense, excluding workovers, is expected to be $20 to $22 million, or $27.00 to $30.00 per barrel of oil sales. In the third quarter, VAALCO is planning to complete two workovers for a total cost between $8 to $10 million. net to VAALCO.



VAALCO‘s full year 2021 guidance for production, sales volumes, production expense (excluding workovers) and capital remains unchanged. The Company has all of its guidance metrics in the Q2 2021 supplemental presentation posted to its website.



Conference Call



As previously announced, the Company will hold a conference call to discuss its second quarter financial and operating results on Thursday August 12, 2021, 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 2021 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.  



About VAALCO



VAALCO, founded in 1985, is a Houston, USA based, independent energy company with production, development and exploration assets in the West African region.

The Company is an established operator within the region, holding a 58.8% working interest in the Etame Marin Block, located offshore Gabon, which to date has produced over 120 million barrels of crude oil and of which the Company is the operator. VAALCO also owns a working interest on Block P in Equatorial Guinea.

---

 

For Further Information



Forward Looking Statements



This document 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, other than statements of historical facts, included in this document that address activities, events, plans, expectations, objectives or developments that VAALCO expects, believes or anticipates will or may occur in the future are forward-looking statements.  These statements may include statements related to the impact of the COVID-19 pandemic, including the sharp decline in the global demand for and resulting global oversupply of crude oil and the resulting steep decline in oil prices, future production quotas imposed by Gabon, disruptions in global supply chains, quarantines of VAALCO’s workforce or workforce reductions and other matters related to the pandemic, well results, wells anticipated to be drilled and placed on production, future levels of drilling and operational activity and associated expectations, the implementation of the Company’s business plans and strategy, prospect evaluations, prospective resources and reserve growth, VAALCO’s 2021/2022 drilling campaign, its activities in Equatorial Guinea, expected sources of and potential difficulties in obtaining future capital funding and future liquidity, its ability to restore production in non-producing wells, its ability to find a replacement for the FPSO or to renew the FPSO charter, future operating losses, future changes in crude oil and natural gas prices, future strategic alternatives, future acquisitions, capital expenditures, future drilling plans,  interpretation of seismic data and costs thereof, negotiations with governments and third parties, timing of the settlement of Gabon income taxes, and expectations regarding processing facilities, production, sales and financial projections.  These statements are based on assumptions made by VAALCO based on its experience and 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, crude oil and natural gas price volatility, the impact of future production quotas imposed by Gabon in response to production cuts agreed to as a member of OPEC, inflation, general economic conditions, the outbreak of COVID-19, the Company’s success in discovering, developing and producing reserves, production and sales differences due to timing of liftings, decisions by future lenders, the risks associated with liquidity, lack of availability of goods, services and capital, environmental risks, drilling risks, foreign regulatory and operational risks, and regulatory changes. 



Investors are cautioned 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.



---

 

Inside Information



This announcement contains inside information as defined in Regulation (EU) No. 596/2014 on market abuse (“MAR”) and is made in accordance with the Company’s obligations under article 17 of MAR.





---

 

VAALCO ENERGY, INC AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)



---

 

VAALCO ENERGY, INC AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)





---

 

VAALCO ENERGY, INC AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)





---

 



VAALCO ENERGY, INC AND SUBSIDIARIES

Selected Financial and Operating Statistics

(Unaudited)





*Workover costs excluded from the three months ended June  30, 2021 and 2020 and March 31, 2021 are $0.4 million, $(0.1) million and $0.0 million, respectively. Workover costs excluded from the six months ended June  30, 2021 and 2020 are $0.4 million and  $2.8 million, respectively.

**General and administrative expenses include $0.80, $1.14 and $2.52 per barrel of oil of sales of stock-based compensation expense in the three months ended June  30, 2021, and 2020 and March 31, 2021, respectively. General and administrative expenses include $1.73 and  $(2.00) per barrel of oil of sales of stock-based compensation expense in the six months ended June  30, 2021, and 2020, respectively.



NON-GAAP FINANCIAL MEASURES



Adjusted EBITDAX is a supplemental non-GAAP financial measure used by VAALCO’s management and by external users of the Company’s financial statements, such as industry analysts, lenders, rating agencies, investors and others who follow the industry, as an indicator of the Company’s ability to internally fund exploration and development activities and to service or incur additional debt. Adjusted EBITDAX is a non-GAAP financial measure and as used herein represents net income before discontinued operations, interest income net, income tax expense, depletion, depreciation and amortization, exploration expense, non-cash and other items including stock compensation expense and unrealized commodity derivative loss.



Management uses Adjusted Net Income to evaluate operating and financial performance and believes the measure is useful to investors because it eliminates the impact of certain non-cash and/or other items that management does not consider to be indicative of the Company’s performance from period to period. Management also believes this non-GAAP measure is useful to investors to evaluate and compare the Company’s operating and financial performance across periods, as well as facilitating comparisons to others in the Company’s industry. Adjusted Net Income is a non-GAAP financial measure and as used herein represents net income before discontinued operations, deferred income tax expense, unrealized commodity derivative loss and non-cash and other items.

Management uses Adjusted Working Capital as a measurement tool to assess the working capital position of the Company’s continuing operations excluding leasing obligations because it eliminates the impact of discontinued operations as well as the impact of lease liabilities.  Under the lease accounting standards, lease liabilities related to assets used in joint operations include both the Company’s share of expenditures as well as the share of lease expenditures which its non-operator joint venture owners’ will be obligated to pay under joint operating agreements. Adjusted Working Capital is a non-GAAP financial measure and as used herein represents working capital excluding working capital attributable to discontinued operations and current liabilities associated with lease obligations.

 

Adjusted EBITDAX and Adjusted Net Income have significant limitations, including that they do not reflect the Company’s cash requirements for capital expenditures, contractual commitments, working capital or debt service. Adjusted EBITDAX and Adjusted Net Income should not be considered as substitutes for net income (loss), operating income (loss), cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDAX and Adjusted Net Income exclude some, but not all, items that affect net income (loss) and operating income (loss) and these measures may vary among

---

 

other companies. Therefore, the Company’s Adjusted EBITDAX and Adjusted Net Income may not be comparable to similarly titled measures used by other companies.



The tables below reconcile the most directly comparable GAAP financial measures to Adjusted Net Income, Adjusted EBITDAX and Adjusted Working Capital.



VAALCO ENERGY, INC AND SUBSIDIARIES

Reconciliations of Non-GAAP Financial Measures

(Unaudited)

(in thousands)



(1)  No adjustments to weighted average shares outstanding





---

 



VAALCO ENERGY, INC AND SUBSIDIARIES

Reconciliations of Non-GAAP Financial Measures

(Unaudited)

(in thousands)







---