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

November 08, 2010 | About:
10qk

10qk

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VAALCO Energy Inc. (EGY) filed Quarterly Report for the period ended 2010-09-30.

Vaalco Energy Inc. has a market cap of $378.63 million; its shares were traded at around $6.71 with a P/E ratio of 16.77 and P/S ratio of 3.28. EGY is in the portfolios of Jeremy Grantham of GMO LLC, Chuck Royce of Royce& Associates, Columbia Wanger of Columbia Wanger Asset Management.

Highlight of Business Operations:

For the nine months ended September 30, 2010, cash used in financing activities was $4.4 million, consisting primarily of distributions to a noncontrolling interest owner of $4.5 million. For the nine months ended September 30, 2009, cash used in financing activities was $11.6 million consisting of $4.5 million used for distributions to noncontrolling interest holders and $7.2 million for the purchase of treasury shares.

Exploration expense was $0.7 million for the three months ended September 30, 2010 compared to $0.9 million in the comparable period in 2009. For the three months ended September 30, 2010, exploration expense included seismic reprocessing costs in Angola of $0.1 million and prior year dry hole costs for withholding taxes at the Mutamba Iroru block of $0.2 million. Exploration expense for the three months ended September 30, 2009 consisted primarily of additional dry hole costs incurred on the two unsuccessful exploration wells in onshore Gabon of $0.5 million, and $0.1 million for the unsuccessful exploration well in the British North Sea.

General and administrative expenses for the three months ended September 30, 2010 and 2009 were $0.9 million and $3.3 million for each period, respectively. In the three months ended September 30, 2010, the Company benefited from overhead reimbursement associated with production and development operations on the Etame Marin block in Gabon and Block 5 in Angola which reduced general and administrative expenses by $1.3 million compared to a $0.3 million reduction of general and administrative expenses in the three months ended September 30, 2009. During the three months ended September 30, 2010 and September 30, 2009, the Company incurred stock based compensation expense of $0.2 million and $0.4 million, respectively. Included in the general and administrative expenses for the three months ended September 30, 2009 was an expense for retirement benefits of $0.3 million, and other employee related expenses of $0.4 million.

Exploration expense was $2.1 million for the nine months ended September 30, 2010 compared to $34.8 million in the comparable period in 2009. Exploration expense for the nine months ended September 30, 2010 included seismic reprocessing costs in Angola of $0.5 million, seismic reprocessing and site survey work on the Etame Marin block totaling $0.4 million and onshore Gabon exploration expense of $0.6 million, which included $0.4 million of dry hole costs associated with the two 2009 unsuccessful exploration wells. Exploration expense for the nine months ended September 30, 2009 included $32.6 million of dry hole costs. The dry hole costs included $9.2 million for a well in the British North Sea, $20.7 million for two wells in onshore Gabon and $2.7 million for a well in offshore Gabon. Additionally, seismic processing costs in Angola totaled $0.8 million for the nine months ended September 30, 2009.

General and administrative expenses for the nine months ended September 30, 2010 was $5.9 million compared to $7.1 million in the nine months ended September 30, 2009. In the nine months ended September 30, 2010, the Company benefited from overhead reimbursement associated with production and development operations on the Etame Marin block in Gabon and Block 5 in Angola which reduced general and administrative expenses by $2.8 million compared to a $1.8 million reduction of general and administrative expenses in the nine months ended September 30, 2009. Included in the general and administrative expenses for the nine months ended September 30, 2010 and 2009 was an accrual for retirement benefits of $0.4 million and $1.5 million, respectively. Included in the general and administrative expenses for the nine months ended September 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.

Other income for the nine months ended September 30, 2010 was an expense of $0.5 million compared to other income of $0.4 million for the nine months ended September 30, 2009. The other expense recorded in the nine months ended September 30, 2010 was primarily due to a foreign exchange loss of $0.6 million, compared to a foreign exchange gain of $0.2 million for the same period in 2009. Interest income received on amounts on deposit was $0.1 million in the nine months ended September 30, 2010 compared to $0.6 million in the nine months ended September 30, 2009. The decrease in interest income received on amounts on deposit reflects lower interest rates in 2010. In the nine months ended September 30, 2009 interest expense and financing charges associated with the Companys IFC loan was $0.5 million, net of capitalized interest expense.

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