Hello, and welcome to the VAALCO Energy, Inc.'s Third Quarter 2019 Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Al Petrie, Investor Relations Coordinator. Please go ahead, sir.

Thank you, Operator. Good morning, everyone, and welcome to VAALCO Energy's Third Quarter 2019 Conference Call. After I cover the forward-looking statements, Cary Bounds, our Chief Executive Officer, will review key highlights of the third quarter along with operational results. Liz Prochnow, our Chief Financial Officer, will then provide a more in-depth financial review. Cary will then return for some closing comments before we take your questions. During our question-and-answer session, we ask you to limit your questions to 1 and a follow-up. You can always re-enter the queue with additional questions. I'd like to point out that we posted an investor deck on our website this morning that has additional financial analysis, comparisons and guidance that should be helpful. With that, let me proceed with our forward-looking statement comments. During the course of this conference call, the company will be making forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and those 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. Accordingly, you should not place undue reliance on forward-looking statements. These and other risks are described in yesterday's press release, the presentation posted on our website and in our reports we file with the Securities and Exchange Commission, including the 10-Q that was disseminated earlier today. Please note that this conference call is being recorded. And now let me now turn the call over to Cary.

Thank you, Al. Good morning, everyone, and welcome to our Third Quarter 2019 Earnings Conference Call. We've had a very exciting past few months and have achieved several significant milestones. In August, we completed our annual planned maintenance shutdown at Etame and restored production with no safety or environment incidents. In September, we kicked off our 2019-2020 drilling campaign and recently announced the Etame 9P appraisal drilling results, which were better than expected for the Gamba and Dentale reservoirs. On September 26, we began trading on the London Stock Exchange, which complements our listing on the New York Stock Exchange by providing us the opportunity to diversify our shareholder base and attract additional research coverage. The new listing also gives us additional options to raise new capital to grow our business in the future. In October, we began drilling the Etame 9H horizontal development well targeting the Gamba reservoir. We plan to update you on the results in the coming weeks. Turning to operational results for the third quarter. We produced an average of 3,081 net barrels of oil per day, which was within our guidance range. We completed our annual planned maintenance shutdown at Etame in August, on schedule and on budget and subsequently restarted production. Production and sales volumes were lower in the quarter by about 250 net barrels of oil per day due to the temporary shutdown. Production was also impacted by the loss of the Etame 10H, Etame 4H and North Tchibala 2H wells that are temporarily shut-in. Earlier this year, the electric submersible pump failed in the Etame 10H well after operating for 4.5 years. Prior to the pump failure, the Etame 10H well was producing approximately 200 net barrels of oil per day. We are considering utilizing the Vantage drilling rig to perform a…

Thank you, Cary, and good morning, everyone. As Cary mentioned, it's an exciting time for us at VAALCO, with our drilling program well underway and with the early positive results. Additionally, we completed our listing on the London Stock Exchange, and we are very pleased to have 2 new analysts now providing research coverage on our company. In the third quarter, we reported a net loss of $3.9 million or $0.07 per diluted share. This was impacted by a noncash expense of $5.1 million or $0.09 per share related to deferred income tax, which was partially offset by noncash benefit of $1.8 million or $0.03 per diluted share related to unrealized gains on crude oil swaps. Adjusting for the net impact of these items totaling $3.4 million, third quarter adjusted net loss was $0.6 million or $0.01 per share. Third quarter 2019 net loss was also impacted by lower revenues reflecting lower sales volumes as well as a $1.2 million or $0.02 per diluted share noncash expense for stock options, restricted stock and stock appreciation rights. Adjusted EBITDAX totaled $4.5 million in the third quarter of 2019, which was likewise impacted by lower pricing and production. Through the first 9 months of 2019, we have generated $27.1 million of adjusted EBITDAX, which has helped us fund our capital program and remain free cash flow positive. Third quarter 2019 oil sales totaled 279,000 net barrels compared with 329,000 net barrels in the same period a year ago and 357,000 net barrels in the second quarter of 2019. Third quarter 2019 sales volumes were impacted by lower production volumes during the quarter, which was the result of the planned full field maintenance shutdown that occurred in August 2019 as well as the impact from the wells currently shut-in. For the fourth quarter…

Thanks, Liz. Over the past several years, we have worked diligently to strengthen our financial position and create opportunities for growth. We are debt free with over $45 million in cash on hand, excluding cash attributable to joint owner advances, and we are generating strong operational cash flow that can be used to fund our drilling program. The 2019-2020 drilling program is the first in a series of drilling campaigns where we hope to create significant value. I am pleased that we have already seen results that are better than expected from the first appraisal well in the program. We are looking forward to the expected production increase from the next 2 Etame development wells on the drilling schedule, followed by an appraisal wellbore at Southeast Etame with the potential to add meaningful reserves. I believe that moving forward, we will create substantial value for our shareholders by growing reserves and production at Etame and building our asset portfolio through mergers and acquisitions. In short, this is a very exciting time for VAALCO, and we are well-positioned to deliver profitable and accretive growth. Thank you. And with that, operator, we are ready to take questions.

[Operator Instructions]. The first question comes from Charlie Sharp with Canaccord.

Just one quick question. You outlined the successful results from the 9P well in Etame and how that might impact 9H and 11H. Have you had any chance yet to assess perhaps a wider implication across the license, or is that something that's work in train?

Right. That is work in progress, Charlie. That's a great question. And the better-than-expected results that we saw in the Gamba will affect, you're right, the 9H and 11H. But it affects the entire Etame field. And I say field. You know on the Etame license we have 4 fields, and the Etame field is 1 of them in the Gamba reservoir. There are 2 other wells right now, the 10 and the 12, that are producing from the platform. Or the 10 is shut-in, but, anyway, and then there's also the Subsea wells, the 6 and the 7. So we think the good news we saw in the Gamba actually spreads across all of those wells and are -- we're evaluating the results and the impact, and we'll work with our reserve auditors and probably make an announcement when we finish our year-end reserves.

The next question comes from Bill Dezellem with Tieton Capital.

I actually wanted to continue down this same path. What were you originally expecting in terms of the Gamba sands in terms of the thickness? It came out, you said at least 45 feet for the oil column. What was in your mind going in?

Well, that's really a range. And I would say at the low end of the range, probably half that thickness, but somewhere between 25 and 45 feet.

And so you also came out with your initial press release with the Dentale that you were thinking the sands were somewhere in the neighborhood of 35 feet. And then with the second release, you came out and said that it was at least 45 feet. What led to that upgrade in the Dentale sands in that intervening time?

Right. Right. What led to that -- that's a good question, Bill. We gathered information as we drilled the Etame 9P. The information we gathered was mainly well logs. And so it took some time to interpret those logs. There was an initial interpretation, and we wanted to get the news out very quickly with our initial interpretation. And then after our engineers and geoscientists had more time to study the logs, the interpretation improved, and so we made another announcement.

Great. Congratulations on that. And then talk, if you would, please, about the implications of the Dentale sand, which, if I understand correctly, is underneath the Gamba, and pretty much your entire production has been from the Gamba. So how do we think about this now that the Dentale, which is an entirely new reservoir, if I understand this correctly, being at the same thickness as the Gamba?

Well, what we found is what we call Oil Down To. So we know that there's at least 45 feet of oil; it could be thicker. And so that's part of what's driving the range of reserves. I mentioned 4 million to 15 million, 14 million barrels; 4 million to 14 million. So there's a range around thickness and then there's a range around aerial extent. How wide or what area does the Dentale cover? So that's what's driving the range 4 million to 14 million barrels of oil recoverable. It may take 2 to 3 wells to recover all of that oil, but that analysis is going on right now. So we're combining what we learned from the wellbore and the well logs that we took, combining that with our seismic interpretation and our mapping and coming up with our best estimate of where to drill development wells.

Cary, are you thinking that it is possible that with your assets that you just are on the verge of finding that you have double the oil than what you previously did? And what I'm thinking is that the Dentale, if it is the same as the Gamba.

Well, structurally, it's different. And so, no, the Dentale is not the same as the Gamba. It's a very good quality sand, but not as good as the Gamba. And like I said, structurally, it's different. But I would point you back. When I think of the future potential in the field, or I should say on the license, I would look across at all of our opportunities. And what we've said on our website in our investor deck is that we have a line of sight to another 123 million barrels of potential reserves and resources. And to date, we've produced over 110. So if everything works out as planned, we're halfway through the life of the field. Or I should say the life of the license.

Great. Thank you. And then I would like to ask relative to your share repurchase, what was the highest price that you paid?

We haven't really disclosed that separately. I mean, we have -- you can kind of gather some of the information. But I think the last quarter we disclosed that the average price was around $1.75 or so. Cumulatively, we're now at around $1.80. So the price has kicked up a bit during this past quarter, which you would expect.

Great. Thank you. And then 1 additional question. As I think about your drilling program, you had built cash coming into this. You are paying for the program out of cash and cash flow. Then it appears to me as though you'll be benefiting from increased production, cash generation. And then, I suspect, given what you have inferred, that you'll be coming back with another drilling program. And it almost seems as though you have a drill, produce, build cash -- or I guess increase production, build cash and repeat process that you're starting to develop. Are we understanding philosophically how you're thinking about this?

That is exactly correct. I have nothing to add to that, Bill. That's exactly what we are doing.

Okay. Thank you for the help and congratulations on making it through this quarter.

[Operator Instructions]. As there is nothing else at the present time, I would like to return the floor to Cary Bounds for any closing comments.

Yes. I'd like to thank everybody for joining our conference call today, and we look forward to another good quarter and our next call.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.