Quarterly report pursuant to Section 13 or 15(d)

Dispositions

v3.10.0.1
Dispositions
9 Months Ended
Sep. 30, 2018
Dispositions [Abstract]  
Dispositions

3.  DISPOSITIONS

Discontinued Operations - Angola

In November 2006, we signed a production sharing contract for Block 5 offshore Angola (“PSA”). Our working interest is 40%, and we carry Sonangol P&P, for 10% of the work program.  On September 30, 2016, we notified Sonangol P&P that we were withdrawing from the joint operating agreement effective October 31, 2016. On November 30, 2016, we notified the national concessionaire, Sonangol E.P., that we were withdrawing from the PSA. Further to the decision to withdraw from Angola, we have taken actions to close our office in Angola and reduce future activities in Angola. As a result of this strategic shift, we classified all the related assets and liabilities as those of discontinued operations in the condensed consolidated balance sheets. The operating results of the Angola segment have been classified as discontinued operations for all periods presented in our condensed consolidated statements of operations. We segregated the cash flows attributable to the Angola segment from the cash flows from continuing operations for all periods presented in our condensed consolidated statements of cash flows. The following tables summarize selected financial information related to the Angola segment’s assets and liabilities as of September 30, 2018 and December 31, 2017 and its results of operations for the three and nine months ended September 30, 2018 and 2017.

Summarized Results of Discontinued Operations



 

 

 

 

 

 

 

 

 

 

 



Three Months Ended September 30,

 

Nine Months Ended September 30,



2018

 

2017

 

2018

 

2017



(in thousands)

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

General and administrative expense

$

23 

 

$

174 

 

$

387 

 

$

512 

Total operating costs and expenses

 

23 

 

 

174 

 

 

387 

 

 

512 

Operating loss

 

(23)

 

 

(174)

 

 

(387)

 

 

(512)

Other expense:

 

 

 

 

 

 

 

 

 

 

 

Other, net

 

 

 

 —

 

 

(29)

 

 

(3)

Total other expense

 

 

 

 —

 

 

(29)

 

 

(3)

Loss from discontinued operations before income taxes

 

(21)

 

 

(174)

 

 

(416)

 

 

(515)

Income tax expense

 

 —

 

 

 —

 

 

 —

 

 

Loss from discontinued operations

$

(21)

 

$

(174)

 

$

(416)

 

$

(518)



Assets and Liabilities Attributable to Discontinued Operations





 

 

 

 

 

 



 

September 30, 2018

 

December 31, 2017



 

(in thousands)

ASSETS

 

 

 

 

 

 

Accounts with joint venture owners

 

$

3,222 

 

$

2,836 

Total current assets

 

 

3,222 

 

 

2,836 

Total assets

 

$

3,222 

 

$

2,836 



 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

32 

 

$

158 

Accrued liabilities and other

 

 

15,159 

 

 

15,189 

Total current liabilities

 

 

15,191 

 

 

15,347 

Total liabilities

 

$

15,191 

 

$

15,347 

Drilling Obligation

Under the PSA, we and the other participating interest owner, Sonangol P&P, were obligated to perform exploration activities that included specified seismic activities and drilling a specified number of wells during each of the exploration phases identified in the PSA. The specified seismic activities were completed, and one well, the Kindele #1 well, was drilled in 2015. The PSA provides a stipulated payment of $10.0 million for each of the three exploration wells for which a drilling obligation remains unfulfilled under the terms of the PSA, of which our participating interest share would be $5.0 million per well. We have reflected an accrual of $15.0 million for a potential payment as of September 30, 2018 and December 31, 2017, respectively, which represents what we believe to be the maximum potential amount attributable to VAALCO Angola’s interest under the PSA. We are currently engaged in discussions with recently appointed representatives from Sonangol E.P. regarding a possible resolution to this potential payment.