Good day, and welcome to the VAALCO Energy, Inc. Fourth Quarter 2024 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. By pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Al Petrie, Investor Relations. Please go ahead.

Thank you, operator. Welcome to VAALCO Energy's fourth quarter and full year 2024 conference call. Avtar will cover the forward-looking statements. George Maxwell, our CEO, will review key highlights of 2024 and discuss our plans for 2025. Ron Bain, our CFO, will then provide a more in-depth financial review. George will then return for some closing comments before we take your questions. During our question and answer session, we ask you to limit your question to one and a follow-up. You can always re-enter the queue with additional questions. I'd like to point out that we have posted a supplemental investor deck on our website 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 our earnings release, the presentation posted on our website, and in the reports we filed with the SEC including our Form 10-K. Please note that this conference call is being recorded. Let me turn the call over to George.

Thank you, Al. Good morning, everyone, and welcome to our fourth quarter and full year 2024 earnings call. Over the past two years, we have delivered record-breaking operational and financial results while meeting or exceeding our quarterly guidance targets. Maintaining operational excellence and consistent production across our portfolio is essential to expanding adjusted EBITDAX which has allowed us to grow inorganically and also to fund organic growth initiatives, better positioning VAALCO for the future. Before I go into more details about the exciting opportunities that we have across our asset base, let me first summarize some high-level financial and operational results that led to a record-breaking year and some key items that have occurred thus far in 2025. For the full year 2024, we increased our adjusted EBITDAX to $303 million, a new company record. We also had record production of almost 25,000 working interest barrels equivalent per day and record sales of almost 20,000 net interest barrels per day. Our SEC proved reserves grew 57% year over year to 45 million BOE and our 2P CPR reserves grew to 96.1 million BOE. We sustained our commitment to returning cash to shareholders in 2024. Over the past two years, we have returned $83 million to our shareholders through our ongoing dividend program and share buybacks. We completed the Svenska acquisition in April 2024, and by year-end 2024, we had already seen a 1.8 times payback on the initial investment. We have positive momentum as we enter 2025 both operationally and financially. We are building size, scale, and profitability to sustainably grow VAALCO. I would now like to go through and give an update on our diverse portfolio of high-quality assets, beginning with our newest assets in Côte d'Ivoire. I would like to remind you that a year ago, we had…

We're very pleased with the growth of our SEC proved reserve base despite a significant decline in pricing. Our acquisition in Côte d'Ivoire, coupled with our positive reserve revisions to field performance in Gabon and drilling results in Egypt and Canada, more than offset production and slightly lower pricing. SEC proved reserves at year-end increased 57% to 45 million BOE, and PV-10 increased 11% from $342 million to $379 million dollars. Our 2P CPR estimate, which includes proven and probable reserves, using VAALCO's management's assumption for future pricing, and costs reported on a working interest basis prior to deductions for government royalties, saw a year-over-year increase of 24% to 96.1 million BOE. The 2P C CPR NPV-10 saw a 9% increase to $687 million at year-end 2024. The value of our Svenska acquisition, as well as our efforts across our asset base to improve production, manage costs, and expand our asset through drilling, can be seen in the positive results from our reserve report. We have a strong runway of opportunities that will continue to add value. As you can see from our SEC proved reserves, 2P CPR reserves, and corresponding PV-10 values compared to our current market cap, our stock is quite undervalued. In closing, we have an outstanding diversified portfolio of assets that have significant upside opportunities. We remain focused on growing production, reserves, and value for our shareholders. I would like to thank our hardworking team who continue to operate and execute our plans. Over the past two years, we have significantly diversified our book portfolio, enhancing our capacity to generate operational cash flow and adjusted EBITDAX. We return capital to shareholders, grow our cash reserves, while increasing our credit facility capacity. We are well positioned to execute the projects in our enhanced portfolio. Our proven track…

Thank you, Ron. As you have heard this morning, we have successfully delivered strong operational and financial results for the past several years by successfully executing our strategic vision. Our strategy remains unchanged. Operate efficiently, invest prudently, maximize our asset base and look for accretive opportunities. We have delivered record growth and profitability over the past three years, and we are poised to deliver more in the future. Looking across our asset base, we have a multitude of projects to execute. In Gabon, we have an extensive drilling campaign at Itami that should add reserves and production. The FPSO refurbishment project, and we are working with the operator on the development drilling program that should begin in 2026. Also in Côte d'Ivoire will be acquiring additional regional well data licensing seismic data and conducting further geological evaluations of our newest blocks CI-705, where we are the operator with a 70% working interest. We have additional drilling campaigns planned in Egypt and Canada to help offset decline. In Equatorial Guinea, we are progressing the FEED study and looking to take the project to FID in the first half of 2025. Our entire organization is actively working to deliver sustainable growth and strong results to continue funding our capital programs while also returning value to shareholders through our top quartile dividend. I believe we have gained credibility over the three years having delivered on our commitments to the market and to our shareholders, and we will continue to deliver the exciting slate of projects that we have over the next few years. We're in an enviable financial position with a much stronger and diverse portfolio of producing assets with significant future upside potential. Over the past two years, we have returned over $83 million to our shareholders through dividends and share buybacks and we are on pace to deliver another $0.25 per share annual dividend for 2025 which, at our current share price, is a dividend yield of about 6.5%. We are truly excited about the future, and VAALCO now has multiple producing areas and future prospects that have diversified and derisked our profile and sources of income. Our disciplined approach to maximizing value for shareholders by delivering growth in production, reserves, and cash flow has not been reflected in our stock price, but we believe that we will see the market begin to properly value VAALCO as we execute on our organic opportunities over the next few years. Thank you. And with that, operator, we are ready to take questions.

Thank you. We will now begin the question and answer session. And your first question today Thank you. Good morning.

George, on the exploration projects in both Gabon and CI, can you talk about the cycle times? I mean, I know there's a tremendous amount of variables in there, but the cycle times between when you drill and when you might be able to produce it and if you make a discovery?

Yeah. Well, the cycle times, first and foremost, on the two new blocks in Gabon would be basically just been approved, and the decrease is just being issued. So where we are with that in conjunction with our partners BW Energy and Pronoro, is I think in the coming weeks, we're gonna have the first TCM with the partners, and that will start to outline the work program and budget for twenty-five and twenty-six. So the first activity there is going to be a seismic acquisition. And that's likely to take place sometime in Q1 2026. And then from seismic acquisition in Q1, we then go to the processing and interpretation, which is likely to take up most of 2026. There's also a commitment well, so I I don't see us actually spinning the drill bit on the first block until late 2026 at the earliest, probably early 2027. And on the Côte d'Ivoire block, it's slightly different. We've we've formed into that. There is a third-party seismic acquisition has already taken place by, I think, it's TGS. So we would be looking at acquiring that source data and taking that into interpretation. So that would probably again, so the acquisition of that information would be into Q2 or Q3 this year. And then probably six months of interpretation to identify and firm up the targets. And then you may see in the supplemental deck that was published this morning, we have a little bit of an overview of 705, and we've kind of given you a little bit of information as to where we already see some targets identified within the block that made it interesting for us to make that acquisition. And 705 is again likely to be once we've got the interpretation, we don't have a commitment to drill, but we have an option to drill. So the commitment is really just seismic acquisition and interpretation then move to the next phase, which would be committing a drilling program over those identified targets. Just a secondly,

the capital campaign in 2026 in both Cabone and CI, can you talk about what impact that will have on your cost recovery pools as you move into 2026?

Yes, that's a great question because when we look at the CapEx spend and you look at the absolute number between 270 and $330 million, you immediately think, well, that's a very large number. But you have to take into account particularly in the producing asset of Gabon, that we start to recover that capital as soon as we have the successful wells on production. So the actual cash sink from that capital isn't at the headline number. And when when when we look at the starting position of the of the drilling program for Gabon, that's due to start in the beginning of Q3. And as I mentioned in the earlier script, we're hoping to to get to at least two wells drilled and completed and on stream before the end of the year. So that cash that's going out, it's already coming back in before the end of this year. More importantly, when we look at CDI it's in an open and and a different scenario because it is all cash out because the asset is currently off production. But to incentivize the investment, the production sharing contract does offer a 25% uplift for every dollar that you invest. So as we look at the position in CDI, which is about 40 to 45% of our capital program this year, you already have a 25% uplift uplift in that investment as soon as production recommences in early 2026. So it's an extremely attractive PSC that incentivizes this level of investment. Thank you.

And your next question today will come from Christopher Wheaton with Stifel. Please go ahead.

Thank you very much indeed. Couple of questions, if I may. Firstly, just coming back to the point on CapEx. In Gabon, time we had a big drilling campaign in 2022, we were able to get production up not quite doubled sequentially year on year. I'm interested in do you think you could achieve something similar given the additional drilling you've you've got planned for late this year into 2026. That's obviously then going to have, you know, quite a significant impact on volumes certainly exit volumes from, say, 2026 onwards. And then also,

coming back to Côte d'Ivoire, I'd love to understand more how much of that CapEx is FPSO, how much of that is long lead time for the drilling plan for '26 because it feels like as soon as the FPSO is back, you want to be drilling as well because you wanna be putting as much flow through your new FPSO as possible. And also to maximize the cost recovery as you just mentioned in your last answer, George. I think I've also got a question on working capital that maybe I'll finish off with Ron after those two, but that is those two for starters. Thank you.

Okay. So let me start with the Gabon program. As all the listeners will be aware, we were trying to initiate this program back in 2024. As a four-well program. We went back to reevaluate the whole performance of Itami based on the enhanced performance we were seeing from the production after the field reconfiguration. So that forced us to go back and look again rather than just have a run-in-the-mill standard drilling campaign. Are there are things we're now seeing post-reconfiguration that can enhance the opportunity of the drilling campaign? And as you've seen, when we were talking about this over a year ago, we were talking about a four-well campaign. We're now talking about a five-well campaign with five options. So we have seen a lot of opportunities to get the drill bit spinning again in the TAMI that's been very prolific for us in the past. So, yes, we obviously have some forecasts for IP rates for the for the first two wells going in. We are, to answer the question on the cost recovery, and I think Ron mentioned it in his script, we do see a GOC lifting coming in Q1, but with the level of investment going into Gabon this year, we don't really see another government lifting for the rest of the year. So the cost pool will increase with that investment in the drilling activity. The target has always been longevity into the next phase of the Itami license, which is 2028 to 2033. I think the success base of this particular program highlights both the prolific nature of Itami and gives us much more confidence and comfort that we're going right through into the mid-2030s with production on this asset. When we look at the Côte d'Ivoire position, yes, there are long lead items in relation to the drilling campaign have already been purchased. So the vast majority of the capital you're seeing coming through for Côte d'Ivoire relates to the MBT refurbishment. In 2025. And that will continue into 2026. We're awaiting discussions with the operator about the rig selection and rig confirmation. We expect to be able to see something about that in Q2. Brady, No. It's gonna a follow-up on that. Thor's just gonna Thor's just gonna augment that a little bit for you.

Just to step back to the Gabon program. One of the things that we were able to do with the delay in the program from 2024 was the Aburi sour wells and the Aburi enhancements on the sour processing facilities to coincide with that drilling program. Great. Thank you. And Ron, one question for me on working capital. There's been quite a significant outflow in the year. I wondered if you were expecting any of that to reverse in 2025 because that was obviously quite a significant hit to your free cash flow generation this year. Oh, sorry. 2024.

Indeed, Chris. I'd really say two parts to that. First part is yes. We see, obviously, with the CDI, we are that with the FPSO shut in Q1, the outstanding receivables and the oil on crude oil inventory is all collected in in Q1. Additionally, in 2024, and I kinda laid it out in my speech earlier. In Egypt, we obviously had in the first half of the year, I would say we were a little bit slow to pivot to the fact that our crude was being refined in country. And that meant we'd lagged we'd lagged collections in our first half of the year. Our new country manager came in in the summer took a little bit of speed, obviously, with the administrative EGPC changes at the same time that needed to settle down. But really, from about August of September time, we really got off after it. What you'll see is our collections, we've definitely improved in the second half of the year. Has improved further into Q1 2025. That's partly because, you know, we've looked at different ways of being able to work with the state and with our suppliers. With approximately 90-95% of all supplies in country being paid in Egyptian pounds, we can accept more Egyptian pounds from the state. As you know, US dollars has always been an issue for the state, especially in 2024. Both with the Kaiser conflict impacting the Suez Canal, and the tourism intervened. So that's been worked with eGPC, your partner, to be able to do that, and with our suppliers. It's working very well for us now into Q1. We're seeing, as I stated, revenues and collections keeping pace with one another, and indeed in Q1 so far, we're outpacing that.

And that when you say outpacing that, Ron, that's excluding Côte d'Ivoire?

Yes. That's excluding Côte d'Ivoire. I'm specifically just looking at Egypt on its own there, Chris. When I say it's chasing revenue.

Right. I just wanted to make sure I understood what perimeter you you were referring to in that comment. Brilliant. That's really helpful. Ron. Thanks very much indeed. I'll hand it back to the operator. Thank you.

Your next question today will come from Charlie Sharp with Canaccord. Please go ahead.

The presentation earlier, A question really on Côte d'Ivoire and the refurbishment of the FPSO. What are the critical path items in this process that you will be looking for in that work in Dubai that you might be announcing to the market as well? And what what do you see as the timing for that field coming back, the Baobab, excuse me, Baobab field coming back on stream? Thank you.

Well, I'll start with part of it and then I'll hand it over to Thor who knows a lot more about this. But I think the first thing critical to understand is, as I thought, we are not the operator. We are integral and inside the project with with our own personnel, working very closely with CNR. Because of the size and nature of this project and the importance to our success, we have a team working directly with the operator in the execution of this project. The second thing we would say, Charlie, is that when we look at the timeline of the project where we are today, we're already 10% through the timeline of the project and slightly I'm gonna say slightly ahead, Thor. But I'll let Thor give you more detail.

Yeah. So so so thanks, Trevor. I mentioned earlier the production was shut in January 31, which was on schedule to tow to Dubai, should commence here on March 24. The disconnection was completed, so essentially, the the tow line tugs are are either in place or being put in place for that for that to start. The critical path, I guess aside from sort of the normal ship ship work that has to be done in the dry dock, is probably the turn bearing. That turn bearing was ordered, I think, almost a year ago and is on route to Dubai. From West Germany. So that's probably one of the key milestones that we're looking for. We expect that the keysight arrival in late May, and we expect it to leave the keysight in January of '26. With commissioning starting in early May of '26. Depending on how the commissioning works, it'll be anytime between mid to late May for first oil.

That's helpful. Thank you. And then the follow-on from that is, I'm just looking at your slide sixteen, key milestones and catalysts. With that now coming on stream, sometime maybe Q2, late Q2 next year. And the bulk, I suppose, of the Javan drilling campaign next year. How should we think about CapEx next year? Should should we think it'll be for Gabon and Côte d'Ivoire? Pretty similar to this year, but a bit more weighted towards Gabon?

The Gabon drilling program should be entering its final phases late 2026. CapEx profile on CDI on the FPSO should be pretty well done. By May, with drilling program commencing probably in July is is what we're seeing of '26 there.

The other thing to bear in mind, Charlie, is that we've got the potential for five options on the Gabon drilling campaign. Depending on how successful we are in the firm program, we may look at extending that program. As we mentioned, in the script earlier, we do expect to immediately roll into CDI drilling campaign in phase five on Bayababb to hook up as soon as the vessels be commissioned.

Yeah. In fact, I believe some of the some of the risers for the drilling program are being installed during the commissioning phase.

Okay. Good. Yeah. The additional filling in for the wire. It sounds like we should be thinking in terms of a similar CapEx level next year to this year.

I would say obviously, we don't give guidance for 2026 at this time, but you can see the work program flowing through, so it's a reasonable assumption. The only difference I would say again is that the with both assets fully on production, the the recovery of that CapEx will be really accelerated, particularly through CDI.

Okay. Yeah. That's great. Thank you.

Your next question today will come from Bill Dezellem with Tieton Capital. Please go ahead.

Relative to the wells that have H2S, Now that you have found a way to process that, does that open up a significant amount of acreage that previously was essentially closed off or off-limits to you because of your lack processing capability?

That's a tough one to answer. It does unlock additional locations. Some of those locations are we're looking at inside the 2025-2026 program. So we do have an additional well planned for Aburi in that firm program. So depending on that, it may allow us to look further afield from Aburi. There are also some wells that are sort of isolated between Aburi and Eton that may possibly down the road allow us to look a bit closer that we originally drilled and showed some levels of h2s that are not tied in right now.

Great. Thank you both. I appreciate it.

Your next question today will come from Jamie Wilen with Wilen Management. Please go ahead.

Yes. On the H2S wells, how many are we going to be looking at initially? Are those the first part of the drilling program and do we have the tools in hand to be ready to extract them? And can you tell us the approximate volumes that those wells were doing when they were shut in?

Okay. The Aburi platform currently has two wells that are tied in. The third one is tied in but not producing. The Aburi IIH has been online for some time and it produces anywhere between thirteen and fifteen hundred barrels a day. It's a fairly low H2S concentration well. The Aburi 4H was shut in about ten years ago due to high H2S levels. That well was brought on in December on a test basis to see if we could handle high-rate H2S with the chemical programs that we're using now. There was some question when we brought that well on because it's sitting for so long whether the ESPs were actually going to operate. In fact, ESPs came online and the well is producing as of yesterday around 1600 barrels a day at a higher level of H2S, which we're still able to handle with the chemical injection programs, still within our model. Both those wells will will get a workover. In the program coming up. In addition to that, we're drilling a third Aburi well into a sour area and expect it to be somewhere in that same range.

These are the first wells you're going to be drilling?

Sorry. Are those the first in sequence?

Yes. That's the question.

No. Those are the tail end of the sequence, actually. The first wells are Itami wells. Then a Laodis well, then an exploration well, and then your Aburi wells.

So within the sequencing, is that a 2026 number?

Yeah. The last Aburi well at in the current sequence that we're looking at would be a 2026 well. A lot of that, Jamie, is due to the long lead items. When we put these wells on tests and we understand what we've got for H2S concentrations service, and the lead time on the severe service, now we can specify it as as much longer than the standard completions that we do at Hitami. So if they can be accelerated, of course, we'll we'll look at resquencing the program to ensure that we put production wells ahead of instance, the exploration well. But it's all down to delivery of the equipment.

Okay. And lastly, on Côte d'Ivoire, what is the actual cost for the FPSO as opposed how much we're putting into items for the next drilling campaign there? Will the FPSO create any efficiencies that will be helpful when it returns?

The work on the FPSO itself is is pretty well putting it back into the original condition. There will be probably some enhancements on the instrumentation monitoring equipment, valving, and those types of things. Increased levels of trim, obviously, the swivel is a big issue there. But overall, the FPSO is able to handle the handle the production quite well. There's no real topside significant changes that have to be done, a lot of modernization is ridiculous amounts too. Okay. Thank you. I'm sorry, metal replacement.

This concludes our question and answer session. I would like to turn the conference back over to George Maxwell for any closing remarks.

Thank you, operator. As we have grown the company over the last few years, we've created a portfolio now organically that can make a significant step change as we come into 2026. Put a couple of light CapEx years in 2023 and 2024, but we've put a lot of technical work and technical effort into our key point forward production targets, particularly in Gabon, We've looked at how we've managed to recover the positions in Egypt, and arrest decline through through workovers and neutrals. We've successfully refracked the South Gasolat position, another another of our concessions in Egypt. Where, you know, we'll be looking at that later in 2025 to see if we can build an even bigger program in the Western Desert for Egypt. And we've we've we've we we based the program in Canada to go for a longer laterals and more economically viable wells. We have an exciting project to hopefully get through to FID with Equatorial Guinea, which would give us, again, a massive boost to production in 2027. So we now have a lot more opportunities with a diverse portfolio to derisk our positions even though we have considerable investing activities in 2025 and 2026. As I said earlier, those investing activities with the quality of the production sharing contracts we have with our host governments make this a very exciting investment. We'll be monitoring closely our execution of these projects because the key for us as we've done in previous years is to deliver deliver these projects on time, on budget, whether we operate them or whether we don't operate them. We will be very focused on delivering that and communicating that throughout the year. So with that, I'd like to thank everyone for their time today. Thank everyone for their attendance and and the qualities of the questions. Thank you very much.

Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.