VAALCO Energy, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Segment Information

Segment Information

3 Months Ended

Mar. 31, 2019

4. SEGMENT INFORMATION

Our operations are based in Gabon and we have an undeveloped block in Equatorial Guinea. Each of our two reportable operating segments is organized and managed based upon geographic location. Our Chief Executive Officer, who is the chief operating decision maker, and management review and evaluate the operation of each geographic segment separately primarily based on operating income (loss). The operations of all segments include exploration for and production of hydrocarbons where commercial reserves have been found and developed. Revenues are based on the location of hydrocarbon production. Corporate and other is primarily corporate and operations support costs which are not allocated to the reportable operating segments.

Segment activity of continuing operations for the three months ended March 31, 2019 and 2018 as well as long-lived assets and segment assets at March 31, 2019 and December 31, 2018 are as follows:


	Three Months Ended March 31, 2019
(in thousands)	Gabon		Equatorial Guinea		Corporate and Other		Total
Revenues-oil and natural gas sales	$	19,765	$	—	$	—	$	19,765
Depreciation, depletion and amortization		1,479		—		74		1,553
Bad debt expense and other		(29)		—		—		(29)
Operating income (loss)		9,530		(186)		(3,798)		5,546
Derivatives instruments loss, net		—		—		(1,912)		(1,912)
Other, net		(172)		(2)		(64)		(238)
Interest income		1		—		186		187
Income tax expense		2,491		10		252		2,753
Additions to oil and natural gas properties and equipment - accrual		681		(187)		191		685


	Three Months Ended March 31, 2018
(in thousands)	Gabon		Equatorial Guinea		Corporate and Other		Total
Revenues-oil and natural gas sales	$	27,643	$	—	$	2	$	27,645
Depreciation, depletion and amortization		1,059		—		65		1,124
Bad debt expense and other		(56)		—		—		(56)
Operating income (loss)		15,697		(30)		(2,629)		13,038
Other, net		69		3		(3)		69
Interest expense, net		(354)		—		—		(354)
Income tax expense		4,042		—		—		4,042
Additions to oil and natural gas properties and equipment - accrual		428		—		(1)		427


(in thousands)	Gabon		Equatorial Guinea		Corporate and Other		Total
Long-lived assets from continuing operations:
As of March 31, 2019	$	41,607	$	10,000	$	460	$	52,067
As of December 31, 2018	$	42,195	$	10,187	$	342		52,724


(in thousands)	Gabon		Equatorial Guinea		Corporate and Other		Total
Total assets from continuing operations:
As of March 31, 2019	$	142,224	$	10,083	$	49,193	$	201,500
As of December 31, 2018	$	103,401	$	10,320	$	49,301		163,022

Information about our most significant customers

We sell our crude oil production from Gabon under term contracts with pricing based upon an average of Dated Brent in the month of lifting, adjusted for location and market factors. From August 2015 through January 2019, we sold our crude oil to Glencore Energy UK Ltd. (“Glencore”). We signed a new contract with Mercuria Energy Trading SA (“Mercuria”) which covers sales from February 2019 through January 2020 with pricing based upon an average of Dated Brent in the month of lifting, adjusted for location and market factors. Sales of oil to Glencore and Mercuria were approximately 100% of total revenues for the period during the terms of their contracts.