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

6 Months Ended

Jun. 30, 2018

5. SEGMENT INFORMATION

Our operations are based in Gabon and 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 and six months ended June 30, 2018 and 2017 as well as long-lived assets and segment assets at June 30, 2018 and December 31, 2017 are as follows:


	Three Months Ended June 30, 2018
(in thousands)	Gabon		Equatorial Guinea		Corporate and Other		Total
Revenues-oil and natural gas sales	$	24,425	$	—	$	1	$	24,426
Depreciation, depletion and amortization		971		—		64		1,035
Bad debt expense and other		145		—		—		145
Operating income (loss)		10,147		(85)		(4,339)		5,723
Other, net		(199)		(6)		(1,019)		(1,224)
Interest expense, net		(43)		—		13		(30)
Income tax expense		3,582		—		—		3,582
Additions to property and equipment - accrual		(527)		—		(15)		(542)


	Six Months Ended June 30, 2018
(in thousands)	Gabon		Equatorial Guinea		Corporate and Other		Total
Revenues-oil and natural gas sales	$	52,068	$	—	$	3	$	52,071
Depreciation, depletion and amortization		2,030		—		129		2,159
Bad debt expense and other		89		—		—		89
Operating income (loss)		25,844		(115)		(6,968)		18,761
Other, net		(130)		(3)		(1,022)		(1,155)
Interest expense, net		(397)		—		13		(384)
Income tax expense		7,624		—		—		7,624
Additions to property and equipment - accrual		(955)		—		(14)		(969)


	Three Months Ended June 30, 2017
(in thousands)	Gabon		Equatorial Guinea		Corporate and Other		Total
Revenues-oil and natural gas sales	$	20,415	$	—	$	10	$	20,425
Depreciation, depletion and amortization		1,902		—		68		1,970
Bad debt expense and other		183		—		—		183
Operating income (loss)		8,090		(15)		(2,488)		5,587
Other, net		237		7		94		338
Interest expense, net		(378)		—		—		(378)
Income tax expense		3,096		—		—		3,096
Additions to property and equipment - accrual		(625)		—		—		(625)


	Six Months Ended June 30, 2017
(in thousands)	Gabon		Equatorial Guinea		Corporate and Other		Total
Revenues-oil and natural gas sales	$	41,661	$	—	$	30	$	41,691
Depreciation, depletion and amortization		3,711		—		128		3,839
Bad debt expense and other		281		—		—		281
Operating income (loss)		19,050		(53)		(5,262)		13,735
Other, net		299		9		(86)		222
Interest expense, net		(781)		—		—		(781)
Income tax expense		6,290		—		—		6,290
Additions to property and equipment - accrual		(814)		—		—		(814)



(in thousands)	Gabon		Equatorial Guinea		Corporate and Other		Total
Long-lived assets from continuing operations:
Balance at June 30, 2018	$	10,659	$	10,000	$	468	$	21,127
Balance at December 31, 2017		12,638		10,000		583		23,221

Assets from continuing operations:
Balance at June 30, 2018	$	64,846	$	10,089	$	22,169	$	97,104
Balance at December 31, 2017		63,122		10,095		3,580		76,797

Information about our most significant customers

For the period from August of 2015 through June 2018, we sold our crude oil production from Gabon under a term contract with Glencore Energy UK Ltd. (“Glencore”) with pricing based upon an average of Dated Brent in the month of lifting, adjusted for location and market factors. The contract with Glencore ends in January 2019. Sales of oil to Glencore were approximately 100% of total revenues for the three and six months ended June 30, 2018 and 2017.