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VAALCO Energy Inc. Reports Operating Results (10-Q)

August 09, 2010 | About:
10qk

10qk

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VAALCO Energy Inc. (EGY) filed Quarterly Report for the period ended 2010-06-30.

Vaalco Energy Inc. has a market cap of $341.95 million; its shares were traded at around $6.06 with a P/E ratio of 31.89 and P/S ratio of 2.97. EGY is in the portfolios of Jim Simons of Renaissance Technologies LLC, Columbia Wanger of Columbia Wanger Asset Management, Chuck Royce of Royce& Associates, George Soros of Soros Fund Management LLC, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

For the six months ended June 30, 2010, cash used in financing activities was $1.4 million consisting of distributions to a noncontrolling interest of $1.5 million and the receipt of $0.1 million in proceeds from the issuance of common stock upon the exercise of stock options. For the six months ended June 30, 2009, cash used in financing activities of $3.6 million consisted of distributions to a noncontrolling interest owner of $3.0 million and repurchase of shares of $0.6 million.

Exploration expense was $0.4 million for the three months ended June 30, 2010 compared to $13.5 million in the comparable period in 2009. For the three months ended June 30, 2010, exploration expense consisted primarily of seismic reprocessing and site survey work on the Etame Marin block. Exploration expense for the three months ended June 30, 2009 consisted primarily of dry hole costs totaling $12.1 million. The dry hole costs included $6.7 million for a well in the British North Sea, $5.0 million for two wells in onshore Gabon and $0.3 million for a well in offshore Gabon.

General and administrative expenses for the three months ended June 30, 2010 and 2009 were $2.6 million and $3.9 million, respectively. Included in the general and administrative expenses for the three months ended June 30, 2010 and 2009 was an accrual for retirement benefits of $0.3 million and $1.2 million, respectively. Also during the three months ended June 30, 2010 and 2009, the Company incurred stock based compensation expense of $0.6 million and $0.4 million, respectively. In both of the three months ended June 30, 2010 and 2009, the Company benefited from overhead reimbursement associated with production and development operations on the Etame Marin block.

Exploration expense was $1.4 million for the six months ended June 30, 2010 compared to $34.0 million in the comparable period in 2009. Exploration expense for the six months ended June 30, 2010 included seismic reprocessing costs in Angola of $0.4 million, seismic reprocessing and site survey work on the Etame Marin block totaling $0.4 million and onshore Gabon exploration expense of $0.4 million, which included $0.2 million of dry hole costs associated with the two 2009 unsuccessful exploration wells. Exploration expense for the six months ended June 30, 2009 included $32.0 million of dry hole costs. The dry hole costs included $9.1 million for a well in the British North Sea, $20.2 million for two wells in onshore Gabon and $2.7 million for a well in offshore Gabon.

General and administrative expenses for the six months ended June 30, 2010 and 2009 were $4.9 million and $3.9 million, respectively. Included in the general and administrative expenses for the three months ended June 30, 2010 and 2009 was an accrual for retirement benefits of $0.3 million and $1.2 million, respectively. During the six months ended June 30, 2010, the Company incurred $1.7 million of stock based compensation compared to $1.1 million incurred in the six months ended June 30, 2009. Included in the general and administrative expenses for the six months ended June 30, 2009 was an offset for a retroactive compensation adjustment of $0.9 million that benefited the Company by charging the adjustment to the Gabon partners. In both of the six months ended June 30, 2010 and 2009, the Company benefited from overhead reimbursement associated with production and development operations on the Etame Marin block.

Other income (expense) for the six months ended June 30, 2010 was an expense for $0.2 million compared to income of $1.5 million for the six months ended June 30, 2009. The other expense recorded in the six months ended June 30, 2010 was primarily due to a foreign exchange loss of $0.2 million, compared to a foreign exchange gain of $1.0 million for the same period in 2009. Interest income received on amounts on deposit was $0.1 million in the six months ended June 30, 2010 compared to $0.6 million in the six months ended June 30, 2009. The decrease in interest income received on amounts on deposit reflects an interest rate adjustment and lower interest rates and amounts invested in 2010. Interest expense and financing charges was nil for the six months ended June 30, 2010 compared to $0.1 million for the six months ended June 30, 2009 associated with the Companys IFC loan, net of capitalized interest expense.

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