Capital One Securities, Inc. 9th Annual Energy Conference December 11, 2014
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Capital One Securities, Inc.
9th Annual Energy Conference
December 11, 2014
NYSE:EGY
Safe Harbor Statement
This presentation includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements included in this presentation that address activities, events or developments that VAALCO
expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements include expected capital expenditures, future
drilling plans, objectives and operations, prospect evaluations, negotiations and relations with governments and third parties, reserve growth, estimated
revenues and losses, and projected costs, timing and amount of future production. These statements are based on assumptions made by VAALCO based on its
experience perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances.
Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond VAALCO's control. These risks include, but are not
limited to, inflation, general economic conditions, oil and gas price volatility, the VAALCO's success in discovering, developing and producing reserves, lack of
availability drilling equipment and services, availability of and capital, environmental risks, drilling risks, foreign operational risks, regulatory changes, the
uncertainty inherent in estimating reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures,
and other risks. Additional information on risks and uncertainties that could affect our business prospects and performance are provided in the most recent
reports of VAALCO filed with the Securities and Exchange Commission. These forward-looking statements are based on VAALCO’s current expectations and
assumptions about future events and are based on currently available information as to the outcome and timing of future events. VAALCO cautions you that
forward-looking statements are not guarantees of future performance and that 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.
The SEC requires oil and gas companies, in their filings with the SEC, to disclose proved reserves that a company has demonstrated by actual production or
conclusive formation tests to be economically and legally producible under existing economic and operating conditions. VAALCO uses the terms “estimated
ultimate recovery,” “EUR,” “probable,” “3P,” “possible,” and “non-proven” reserves, reserve “potential” or “upside,” “unrisked potential” or other descriptions of
volumes of reserves potentially recoverable through additional drilling or recovery techniques that are not classified as proved reserves, may not have been
calculated as defined by SEC regulations and that the SEC’s guidelines may prohibit us from including in any future filings with the SEC. These estimates are by
their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of being actually realized by the
company. VAALCO believes these estimates are reasonable, but such estimates have not been reviewed by independent engineers. Estimates may change
significantly as development provides additional data, and actual quantities that are ultimately recovered may differ substantially from prior estimates. Production
forecasts are dependent upon many assumptions, including estimates of production decline rates from existing wells and the outcome of future drilling activity.
Although VAALCO believes the forecasts are reasonable, VAALCO can give no assurance they will prove to have been correct. They can be affected by
inaccurate assumptions and data or by known or unknown risks and uncertainties.
Market and industry data and forecasts used in this presentation have been obtained from independent industry sources as well as from research reports
prepared for other purposes. Although VAALCO believes these third-party sources to be reliable, VAALCO has not independently verified the data obtained from
these sources and VAALCO cannot assure you of the accuracy or completeness of the data. Forecasts and other forward-looking information obtained from
these sources are subject to the same qualifications and uncertainties as the other forward looking statements in this presentation.
Inquiries:
VAALCO Energy, Inc.
Attn: Gregory R. Hullinger
4600 Post Oak Place, Suite 300
Houston, TX 77027
Ph: 713-623-0801
2 www.vaalco.com
Poised for Growth
Strong high margin base business
Near term low risk growth opportunities
Balanced long term growth strategy
Discovered
Undeveloped
Resource Acquisition
Strong Current West Africa
Exploration Program
Cash Flow
Near Term
Developments
3
West Africa Focus
Block P
Working Interest 31.0%
57,000 gross acres
18,000 net acres
Bata
Offshore Exploration
& Development EQUATORIAL
GUINEA
Etame Marin Permit
Working Interest 28.1%
760,000 gross acres
213,000 net acres
Offshore Production
Libreville
and Exploration
GABON
Port Gentil
Mutamba Iroru Permit
Working Interest 41.0%
270,000 gross acres
111,000 net acres
Onshore Exploration
& Development Luanda
ANGOLA
Block 5
Working Interest 40.0%
1,400,000 gross acres
560,000 net acres
Offshore Exploration
4
Company Profile
Key Metrics
Share Price(1) $4.62
52-Week Range(1) $4.49 - $9.67
Market Capitalization(1) $267 million
Cash Balance(2) $ 133 million
Revolving Debt Facility(2) $ 65 million
- Current Borrowings(2) $ 15 million
Net Production(1) 3,500 BOPD
2013 EBITDAX $ 118 million
Reserves (2P)(3) 11 MMBOE
% Oil (Brent Based Pricing) 98%
% Operated 100%
Employees(1) 107 (1) As of 12/10/2014
Corporate 44 (2) As of 9/30/2014
International 63 (3) As of 12/31/2013
5
Efficient Reserve Development - Etame Marin Permit
Gross Production (BOPD)
Etame Original Forecast Etame Base Actual Etame Additional Actual Avouma Ebouri
25,000 Exploitation and development
20,000 Repeatable performance
15,000 New development – Q4 2014
10,000 Growth in EUR
5,000
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
EUR 1PEUR
Gross Reserves
1P Reserves Cost Metrics
120.0
(2002-2013)
100.0
1P Reserves (MMBO)
80.0 Development Costs $14 /BBL
60.0
Exploration Costs $ 3 /BBL
40.0
20.0 DD&A $ 9 /BBL
0.0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
6
Development Projects
Etame Deck Installed SEENT Deck Installation
“Completed in 3Q 2014” “Completed in 3Q 2014”
7
Offshore Gabon – Etame Marin Permit
Operator with a 28.1% net W.I.
Partners: FPSO “Petroleo Nautipa”
Long-term contract with Tinworth through 2020
Sinopec (Addax), Sasol, Sojitz , PetroEnergy Ebouri Capacity: 30,000 bbls of total fluids per day
and Tullow Capacity: 25,000 bbls of oil per day
Oil production averaged - 16,250 gross
(4,015 net) BOPD for 9 months 2014
Cumulative production through Etame
9/30/2014 – 83.6 million barrels
SE Etame
Installation of two new platforms
completed 3Q 2014
Proposed the 7th extension to the Libreville
GABON
Etame Marin Exploration Permit Port Gentil North
Tchibala
Etame Marin Permit
South Tchibala
Working Interest 28.1% &
Avouma
8
Etame Field Expansion Project
Development Project No. 1
New Etame Platform
$175 million gross ($49 million net) Etame
investment in the new platform
4 pile, 8 slot platform in water depth of 85
meters
Initial 3 well development $25 million gross
($7 million net) per well
Transocean “Constellation II” jackup rig
Develop 10 MMBOE incremental gross
reserves
SE Etame
Expansion Timing
Jacket and deck installation completed
Initial well “Etame 8-H” was tested and shut-in
due to hydrogen sulfide (H2S) production
2nd Well “Etame 10-H” expected to spud this week
Average well depth 1,900 meters Existing Wells
Initial Planned Wells
9
SE Etame & North Tchibala Fields Project
Development Project No. 2
New SEENT Platform
$150 million gross ($42 million net) investment in
the new platform SE Etame
4 pile, 8 slot platform in water depth of 85 meters
Initial 3 well development $25 million gross
($7 million net) per well
Develop 7 MMBO gross reserves
Gross in place resource potential of over 100 MMBO
Stratigraphic Column
Expansion Timing
Jacket and deck installation completed
Commissioning underway North
Tchibala
Spud initial well 2Q 2015
Gamba well depth ~1,900 meters
Dentale well depth ~2,750 meters Initial Planned Wells
10Ebouri Redevelopment Project
Development Project No. 3
New Crude Sweetening Platform
Ebouri $200 - $250 million gross ($56 - $70 million net) investment in the new
platform to remove H2S
1 new Ebouri development well at $27 million gross ($7.5 million net)
Reentry of existing Ebouri wells bores at $11 million gross
($3 million net) per well
Develop 9 MMBOE incremental gross reserves at Ebouri
Existing Wells
Initial Planned Wells
Expansion Timing
Front End Engineering + Design 2H 2014
Etame
Final Investment Decision 1H 2015
Installation expected early 2017
Crude Sweetening Platform
SE Etame
11Onshore Gabon- Mutamba Iroru Permit
Development Project No. 4
Shell
VAALCO operated with 41% Rabi Kounga Field
working interest Cum: 840 MMBO
EUR 900 MMBO
N’Gongui discovery well drilled in
Q4 2012 Rabi Kounga Pipeline
Encountered 49 feet of oil pay in
the Gamba Formation TOTAL VAALCO
Atora Field N’Gongui Discovery
Revised production sharing Cum: 38 MMBO
contract term sheet was signed in
3Q 2014
Shell
Final PSC negotiations underway Bende Field
Plan of Development underway for
submittal to Gabon Government
Shell
Potential first oil production - 2017 VAALCO Permit Gamba-Ivinga Field
Cum: 286 MMBO & 568 BCF
Discoveries
EUR 350 MMBO
12Offshore Equatorial Guinea - Block P
Development Project No. 5
VAALCO joint operatorship model with 31%
working interest Marathon
1,100 mmboe
VAALCO has proposed the development of the
Venus discovery occurring prior to the drilling of
exploration wells
Subsea development Noble
210 mmboe
Exxon
Leased FPSO 1,300 mmboe
2 production wells VAALCO
Block P
1 water injection well PDA
17-21 million BOE gross EUR
Project sanction 2015 Block P
PDA
Potential first oil production - 2018 A’ Marte
Atlantic
Ocean
Hess
Atlantic 600 mmboe
Venus
SW Grande
Oil Blocks
Europa VAALCO Block
A
13Anticipated Sequence of Milestones
Gabon Activity
Set Etame / SEENT Platforms
Central Crude Sweetening Project
FEED
Development
Drill Development Wells at Etame
3 Etame Wells
3 SEENT Wells
Ebouri Wells
Mutamba Development (Onshore Gabon)
EG Activity
Venus Development
Drill Block P Exploration Wells
1st Well
2nd Well
Angola Activity
Process Angola Seismic
Drill Block 5 Exploration Wells
1st Well - Post Salt (Kindele)
2nd Well - Pre Salt
(Sustained low oil price may slow project timing)
14Exploration Projects
Transocean semi-submersible rig Transocean jackup rig
“Celtic Sea” “Constellation II”
15Angola Block 5 - Prospects and Leads
Kindele Prospect (Post Salt) Jack Prospect (Post Salt)
WD=101m : 20-49 MMbls* WD= 75m : 22-55 MMbls*
VAALCO
Mubafo Discovery SW NE
SW NE Block 5
A
Cobalt
Orca-1 Mobil
Baleia-1A
Cobalt
Lontra-1
Cobalt
Mavinga-1 Cobalt
A’ Bicuar-1A
Cobalt
CAMEIA-1 & CAMEIA-2
VAALCO Loengo Prospect
Ombundi Lead (Pre Salt) Maersk (Post Salt and Pre Salt)
WD=500m+ : 100-760 MMbls* WD= 108m : 70-250 MMbls*
AZUL-1
SW NE SW NE
KWANZA BASIN
Prospects
Oil Discoveries
Gas Discoveries
* Gross Unrisked Recoverable Resources
16Angola Block 5 – Kindele Post Salt Prospect
Kindele Prospect Kindele-1
A
$38 million gross ($19 million net ) - DHC
Mubafo-1
Expected spud late January 2015 1988 Conoco
Discovery
Mucanzo sand target (Pinda group) Tested 1100
BOPD
Water depth 101 meters
Planned total depth 2,250 meters
Transocean “Celtic Sea” semi-submersible rig
20-49 million gross unrisked recoverable resources
A’
Mubafo Discovery Kindele Prospect
A’ A Discovery
Prospects
17Angola Block 5 – Pre Salt Prospects
VAALCO VAALCO
VAALCO VAALCO
Cobalt Mobil Cobalt Cobalt Cobalt Cobalt
Prospect Lead
Block 5 Loengo Prospect
Loengo Ombundi
Discovery Discovery
Orca -1 Baleia -1A
Discovery
Lontra -1
Discovery
Mavinga-1
Discovery Discovery
Bicuar -1A
A ~15 miles ~65 miles Cameia -1
Cameia-2 A’
VAALCO
Ombundi Lead A
Cobalt
Orca-1 Mobil
Baleia-1A
Cobalt
Lontra-1
Cobalt
Mavinga-1 Cobalt
A’ Bicuar-1A
Cobalt
CAMEIA-1 & CAMEIA-2
Maersk
AZUL-1
Block 5 Block 20 Block 21
KWANZA BASIN Large presalt structures in the Kwanza Basin Possible Oil Zone
Prospects VAALCO operated with 40% WI (Sonangol P&P 40% WI) Confirmed Oil Zone
Oil Discoveries
Confirmed Gas Zone
Gas Discoveries Currently processing 3D seismic in advance of first
presalt prospect late 2015/early 2016
18Equatorial Guinea Block P - Prospects and Leads
Block P VAALCO
PDA PDA Exploration Play Types
Boundary
57,000 acres
Marte SW Grande
16-70 MMBO* A Marte A’
A’
Atlantic
Ocean
SW Grande: Europa
Tertiary Channels
Discovery Marte:
Late Cretacous
Turbidites
Upper Cretaceous
Sands
Venus Field
Atlantic
Albian/Aptian Structures
SW Grande
10-180 MMBO* Venus Field
17 - 21 MMBO*
Discoveries
Prospects
Proposed exploratory drilling post Venus development (2017+)
Water depth 250 – 425m
Europa Discovery Well depths 1,500 – 2,000m
A
19
* Gross Unrisked Recoverable Resources
192014 – Estimated CAPEX Expenditures
Gross VAALCO 2014 Components (Net)
$millions $millions
$millions
Development Construction of platforms $ 59
Etame Development wells 20
Facilities $ 211 $ 59 Exploration wells 12
Drilling 69 20 Seismic 3
Exploration Total $ 94
Angola
3-D Seismic 7 3 2014 CAPEX
Gabon 3%
Dimba 27 12
13%
Total $ 314 $ 94 Construction of Platforms
Development Wells
21% 63% Exploration
Seismic
20Why Invest in VAALCO Now?
Near Term Development Projects
Etame expansion project
SEENT expansion project
Ebouri redevelopment
Mutamba Iroru development
Venus Field development
Proven International Low Cost Operator
100% operated
In 3 out of top 4 West Africa producing countries
Projects on time, on budget
Solid Financial Position
Increasing production profile in 2015
Unrestricted Cash Position + Borrowing Base
Financing development and exploration activities with cash flow
High Impact Exploration Prospects
Exposure in excess of 1.9 BBOE net unrisked resources
Identifying Potential Discovered Resource Acquisition
Acquisition would balance development / exploration portfolio
21APPENDIX 22
Biography on Key Executives
Mr. Guidry assumed the role of Chief Executive Officer for VAALCO Energy, Inc. on October 21, 2013. At that time, he was also appointed to our Board of Directors
and became Chairman of the Board on June 4, 2014.
Prior to joining VAALCO, Mr. Guidry was Vice President of Business Development for Marathon Oil Corporation since July 2011, where he was responsible for
acquisitions of strategic opportunities for value growth. Mr. Guidry also held numerous executive management positions, including President of Marathon Oil
Libya Limited from October 2008 to July 2011.
Prior to the Libya assignment, he was Regional Vice President for Marathon Oil’s North American Production Operations. Mr. Guidry oversaw all of the
company’s exploration and production activities onshore and offshore U.S. He also spent five years leading Marathon Oil’s Central Africa Business Unit,
overseeing project expansions and operations in Equatorial Guinea, Gabon and Angola. Throughout his career, he has held challenging technical, staff and
managerial positions in the company’s domestic and international production organizations.
Mr. Guidry graduated from the University of Louisiana Lafayette in 1980 with a bachelor’s degree in petroleum engineering. He is a member of the Society of
Petroleum Engineers, and served on the board of directors for the Corporate Council on Africa, the Independent Petroleum Association of America, the U.S. Oil
and Gas Association and was a member of the Upstream Committee of the American Petroleum Institute. We believe Mr. Guidry’s strong operational background
and experience, particularly in the international arena, is a valuable asset to our Board.
In October of 2008, Mr. Scheirman was appointed Chief Operating Officer following his overseeing of the planning, fabrication, and installation of the Avouma
Field and Ebouri Field production platforms offshore Gabon. Mr. Scheirman continues to serve as President of VAALCO Energy, Inc., a position held since
1992. Mr. Scheirman served as Chief Financial Officer from 1991 to 2008. From 1991 to 1992, Mr. Scheirman served as Executive Vice President of the Company.
Prior to joining VAALCO Energy, Inc., Mr. Scheirman was an Associate at McKinsey & Company, Inc. from 1989 to 1991, an investment banker with Copeland,
Wickersham and Wiley from 1984 to 1989, and a Petroleum Reservoir Engineer for Exxon Company, U.S.A. from 1978 to 1984.
Mr. Scheirman holds a B.S. (Summa Cum Laude) and M.S. in Mechanical Engineering from Duke University (1977 and 1978, respectively) and an M.B.A. from
California Lutheran University (1984).
Mr. Hullinger joined VAALCO as our Chief Financial Officer in October 2008 after more than 30 years of finance and accounting experience at Shell Oil Company
and its parent company, Royal Dutch Shell.
Notable positions held by Mr. Hullinger at Shell Oil include Controller, Treasurer, CFO – Shell Deer Park Refining Company and CFO – Pecten Cameroon Company
(West Africa). For Royal Dutch Shell, Mr. Hullinger held the positions of International Audit Manager and as the Manager for Group Accounting, the unit
responsible for the financial consolidations, results and reporting.
Mr. Hullinger was twice elected Chairman of the Accounting Committee of the American Petroleum Institute. He holds a B.S. in Accounting from Louisiana State
University.
23Strong Financial Position
($’s in millions)
Financial Position 9/30/2014
Cash Balance (Includes Restricted) $ 146
Working Capital 113
Net PP&E 190
Current Borrowing Balance (IFC Loan) 15
Retained Earnings 278
Financial Performance (9 Months Ended 2014)
Revenues 105
Operating Income 40
Tax Expense 19
Net Income 21
EBITDAX 71
Funds Available for Growth
Working Capital 113
Remaining Credit Facility (IFC Loan) 50
Total Funds Available for Growth $ 163
Basic Shares Outstanding 9/30/2014 (in millions) 57.1
Earnings Per Share (9 Months Ended 2014) $ .36
24EBITDAX Reconciliation
9 months 12 months
ended ended
9/30/2014 12/31/2013
Revenues $ 104,658 $ 169,277
Operating costs and expenses (64,789) (92,052)
Operating income $ 39,869 $ 77,225
Depreciation, depletion and amortization 15,444 16,929
Exploration expenses 15,213 23,928
Total add backs $ 30,657 $ 40,857
EBITDAX $ 70,526 $ 118,082
(Amounts in thousands)
25Reserves - Etame Marin Permit
3P Reserves
Proved Probable Possible Reserves Summary(1)
(As of 12/31/2013)
Proved 7.2 MMBO
26%
Probable 3.4 MMBO
50%
Possible 3.8 MMBO
24%
Total Reserves 14.4 MMBO
(1) Fully Engineered by Netherland Sewell & Associates, Incorporated
26Margin per Barrel - Etame Marin Permit
Net Cash Flow Summary ($/bbl) Net Cash Flow Summary (%/bbl)
2013 2013
Royalty OPEX Workovers G&A Taxes (Profit Oil) DD&A Margin
$ 108
$110
$100 13%
$90 $39 Margin
$80 DD&A 36%
$70 Taxes (Profit Oil) 15%
$10
$60 G&A
$19 4%
$50 Workovers
$6 6%
$40 $4 OPEX 9% 17%
$30 $16 Royalty
$20
$10 $14
$0
27Attributes of Exploration Opportunities
Total unrisked mean net recoverable resource potential ~ 700 MMBOE
Angola EG Etame
Attributes Block 5 Block P Marin
Blocks have existing hydrocarbon (oil) discoveries
Prospects are liquids prone
Shallower water (75m – 500m)
Normally pressured regime
Shallower targeted structures
Lower commerciality threshold
State of the art 3D processing and imaging
Development schemes replicates experience
28VAALCO Strong Financial Position for Growth
Financed by Cash Flow
+
Current Cash Position
+ Financed by Capital Markets
Asset IFC Loan Transaction
Etame /SEENT Developments
Central Crude Sweetening Project
Mutamba Development
Venus Development
Angola Exploration Wells
EG Exploration Wells
Discovered Undeveloped Resource
“Acquisition Costs”
Discovered Undeveloped Resource
“Development Costs”
29You can also read
