Vaalco Energy, Inc. · NYSE:EGY
Vaalco Energy — Merger or Acquisition (August 2022)
40 slides from Vaalco Energy's merger presentation, Aug 8, 2022
Slide 1: Combination of VAALCO Energy, Inc. & TransGlobe Energy Corporation
Combination of VAALCO Energy, Inc. & TransGlobe Energy Corporation A Diversified African-focused E&P Business XK vaatcoenerGy,ic, TransGlobe Energy CORPORATION August 2022 Supporting Sustainable Shareholder Returns &
Slide 2: All-Share Business Combination of VAALCO & TransGlobe
Slide 2 All-Share Business Combination of VAALCO & TransGlobe Unanimously supported by both Boards Key Terms Management Team& Employees Recommended all-share business combination, with resulting equity ownership of 54.5% VAALCO, 45.5% TransGlobe(1) 0.6727 of a VAALCO share per TransGlobe share Repre
Slide 3: Accelerating Shareholder Returns and Value Growth
Slide 3 Accelerating Shareholder Returns and Value Growth Creating a world-class African-focused E&P supporting sustainable shareholder returns and growth Declaration of dividends and terms of the buyback are subject to board approval. Equivalent dividend and buyback value per share calculated as US
Slide 4: A Diversified African-Focused E&P
Canada (onshore) P D A E Slide 4 A Diversified African-Focused E&P 1 0 400+ 400+ 400+ 400+ 400+ 400+ Gabon (offshore) P D A E Egypt (onshore) P D A E Equatorial Guinea (offshore) P D A E P D A E Production Development Appraisal Near-Field Exploration Yukon Quebec Ontario British Columbia Northwest t
Slide 5: Debt Free Balance Sheet Underpins a Robust Financial Framework
Slide 5 Debt Free Balance Sheet Underpins a Robust Financial Framework Stronger foundation to fund enhanced shareholder returns and growth 1 0 [100 to 200[ [0 to 100[ [300 to 400[ [200 to 300[ 400+ 400+ 400+ 400+ 400+ 400+ Includes proceeds from VAALCO’s March 2022 lifting of US$44.6 million, which
Slide 6: Returning Meaningful Value to Shareholders
Slide 6 Returning Meaningful Value to Shareholders Better positioned for expanded and more sustainable through-cycle shareholder returns 1 0 [100 to 200[ [0 to 100[ [300 to 400[ [200 to 300[ 400+ 400+ 400+ 400+ 400+ 400+ Shareholder Return is Paramount for the Combined Company(1) Supplemental Shareh
Slide 7: Strong Production Underpins Cash Flow Generation
Slide 7 Strong Production Underpins Cash Flow Generation Net Revenue Interest (“NRI”) share of volumes on a working interest basis, after deduction of royalty. TransGlobe NRI production guidance based on management estimates of the royalty and tax rates used for calculation. Aggregated figure prepar
Slide 8: Combination Supports Significant Adjusted EBITDA Growth
Enhanced Adjusted EBITDA generation could allow: Increased and sustainable dividends Expanded share buybacks More optionality in capital allocation Acceleration of organic growth opportunities Larger inorganic acquisition targets Slide 8 Combination Supports Significant Adjusted EBITDA Growth Buildi
Slide 9: Adding Future Value Through Synergies
Annualized estimated savings Adding Future Value Through Synergies Slide 9 Unlocking additional value through cost reductions and operational optimization through the use of best practices Combined Company could capture cost synergies of up to US$30 to US$50 million through 2030 that would otherwise
Slide 10: A Reserve Base to Support Long-Term Growth
Slide 10 A Reserve Base to Support Long-Term Growth Net Revenue Interest (“NRI”) share of volumes on a working interest basis, after deduction of royalty. Reserves estimates prepared in accordance with U.S. Standards. See “Disclaimer - Caution to U.S. and Canadian Investors Regarding Management’s Re
Slide 11: Significant Upside in the Enlarged Resource Base
Slide 11 Significant Upside in the Enlarged Resource Base Full-cycle combined portfolio supports long-term reserve and production growth, and facilitates improved capital ranking 1 0 [100 to 200[ [0 to 100[ [300 to 400[ [200 to 300[ 400+ 400+ 400+ 400+ 400+ 400+ RESOURCES RESERVES PRODUCTION Etame O
Slide 12: Enhanced Proposition for Global Capital Markets
Enhanced Proposition for Global Capital Markets Slide 12 Bringing together two companies with a strong equity market track record VAALCO and TransGlobe Share Price 2-Year Performance vs. Brent(1)(2) Source: FactSet as at 13 July 2022 VAALCO, TransGlobe share price and Brent performance are rebased t
Slide 13: Potential for Increased Trading Multiples
Potential for Increased Trading Multiples Building size and scale to accretively grow value and support an enhanced return profile US-Listed Peers(1) Source: FactSet as at 7 August 2022 US peer group includes: Riley Exploration Permian, SandRidge Energy, W&T Offshore, Kosmos Energy. UK peer group in
Slide 14: Hedging Strategy Protects Cash Flow Generation
VAALCO entered into new costless collars in July 2022 Protects shareholder return and investment commitments to the market in the near-term No hedges currently in place beyond 2022 No hedging required if RBLs are undrawn Slide 14 Hedging Strategy Protects Cash Flow Generation Opportunistically addin
Slide 15: Transaction Timeline
Slide 15 Transaction Timeline Completion expected in Q3/Q4 2022 Subject to shareholder approval and satisfaction of other closing conditions. 13 July 2022 Arrangement agreement signed – 13 July 2022 August 2022 Shareholder proxy documents filed with SEC and TSX Q3 / Q4 2022 Shareholder meetings in S
Slide 16: Experienced Team to Deliver Combination Benefits
Slide 16 Experienced Team to Deliver Combination Benefits Demonstrable track record of creating and delivering value to shareholders >25 years’ experience in O&G Founded Eland Oil & Gas Plc in 2009, served as CEO and Board member Eland admitted to trading on AIM for £134.9m market cap and sold to Se
Slide 17: Strengthened Oversight and Governance
Andrew L. Fawthrop Chairman Slide 17 Strengthened Oversight and Governance T T T George Maxwell Chief Executive Officer Cathy Stubbs Director Fabrice Nze-Bekale Director David Cook Director Edward LaFehr Director Timothy Marchant Director Aspire Holdings, LLC Independent Non-Executive Directors
Slide 18: Asset Overviews
Creating a Diversified African E&P Business Supporting Sustainable Growth & Shareholder Returns ASSET OVERVIEWS
Slide 19: Egypt: Eastern Desert Merged Concession
Slide 19 Located onshore in Egypt’s Eastern Desert with 76,205 gross acreage position Three previous PSCs were combined into one concession, ratified in early 2022 20-year (15-year primary + 5-year option) contract period Improved fiscal terms to support future growth US$50m minimum investment in ea
Slide 20: Egypt: Positioned for Long-Term Value Creation
Slide 20 Drilled over 250 wells in past 10+ years 2P reserves (NRI) of 17.4 mmbbl; 1P (NRI): 12.4 mmbbl(1) Including South Ghazalat 2P reserves (NRI) of 0.2 mmbbl; 1P reserves (NRI) of 0.2 mmbbl 2022E NRI production forecast at 6.6 – 7.2 mboe/d Positioned for long-term value creation, with new fisca
Slide 21: Egypt: Eastern Desert PSC Terms
Slide 21 Egypt: Eastern Desert PSC Terms Cost Oil – Company PSC expenditures are recovered out of 40% of all petroleum produced Profit Oil – Of the remaining 60% of all petroleum produced (after cost recovery) the production is shared between the Company and EGPC based on the above table Excess Cost
Slide 22: Egypt: Effective Date Adjustment
Slide 22 Egypt: Effective Date Adjustment Value benefit to TransGlobe is captured in recommended exchange ratio Calculation of Amount Upon execution of the Merged Concession, there was an effective date adjustment owed to TransGlobe for the difference between historic and Merged Concession agreement
Slide 23: Canada: Harmattan Cardium Assets
Slide 23 Canada: Harmattan Cardium Assets A core play in the Western Canadian Sedimentary Basin (WCSB) with substantial potential remaining Cardium assets in the WCSB covering 52,425 gross acres WI Production 2022 Q1 production (NRI) of 2.1 mboepd(1) 2022 average production guidance (NRI) of 2.1 mbo
Slide 24: Gabon: Etame Offshore License
Slide 24 Operator of Etame licences in Gabon with 63.6%(1) participating interest Located in prolific South Gabon basin in shallow water (~85m) 46,300 gross acres; 27,200 net acres Significant production potential: Produced ~126 gross mmbbl to date Production grown from 4,853 NRI bbl/d in FY’20 to 9
Slide 25: Etame: Track Record of Success
Slide 25 Etame: Track Record of Success Growing production and reserves through the drill bit, PSC extensions, increasing margins and extending field life Consistent acreage extensions and seven successful drilling programs over 20 years and a long track record of growing reserves 80% exploration su
Slide 26: Etame: PSC Terms
Slide 26 Etame: PSC Terms Key Terms Government back-in - Tullow 7.5% carried through June 2026, 10% thereafter Abandonment Abandonment fund fully funded through operations Production and Development Term 10 yrs through 2028 plustwo 5 yr options Profit Oil Split (BOPD) Contractor State 0 - 10,000 50%
Slide 27: Gabon: Provisional Offshore Blocks
Slide 27 Gabon: Provisional Offshore Blocks Provisionally awarded two blocks in 12th Offshore Licensing Round in Gabon, subject to concluding PSC terms with the Gabonese government Block G12-13 covers an area of 2,989 km2 and block H12-13 covers an area of 1,929 km2 2 exploration periods totaling 8
Slide 28: Equatorial Guinea: Block P
Slide 28 Equatorial Guinea: Block P 57,300 gross acres; 26,300 net acres All wells drilled on Block P have oil shows or oil sands PSC license period is for 25 years from date of approval of a development and production plan GEPetrol carried through to 1st production, to be recovered from their share
Slide 29: Actively Delivering Tangible Growth
Slide 29 Actively Delivering Tangible Growth 1 0 [100 to 200[ [0 to 100[ [300 to 400[ [200 to 300[ 400+ 400+ 400+ 400+ 400+ 400+ Q3 ‘22 Q4 ‘22 Q1 ‘23 Q2 ‘23 Q3 ‘23 Q4 ‘23 Gabon - Etame FSO Commences Operations Well Drilling Gabon & Equatorial Guinea Block G12-13: PSC Negotiations Block P: Field Deve
Slide 30: Environmental, Social, Governance
Slide 30 Environmental, Social, Governance Cultural alignment and shared track record for environmental stewardship enhances Combined Company’s ability to deliver an effective ESG agenda Zero significant/reportable environmental incidents past 5/10 years Scale enhances development of climate resilie
Slide 31: Summary
Creating a Diversified African E&P Business Supporting Sustainable Growth & Shareholder Returns SUMMARY
Slide 32: Accelerating Shareholder Returns and Value Growth
Slide 32 Accelerating Shareholder Returns and Value Growth Creating a world-class African-focused E&P supporting sustainable shareholder returns and growth Declaration of dividends is subject to board approval. Equivalent dividend and buyback value per share calculated as US$ million value divided b
Slide 33: Appendix
Creating a Diversified African E&P Business Supporting Sustainable Growth & Shareholder Returns APPENDIX
Slide 34: Appendix: Adjusted EBITDA and Net Cash Reconciliation
Slide 34 Appendix Adjusted EBITDA TransGlobe 2021 Production Split (Canadian Standards) Working Interest Production Product Sales Egypt crude oil bopd 10,578 11,202 Canada light and medium crude oil bopd 758 758 Canada NGL boepd 740 740 Canada conventional natural gas mcfd 4,667 4,667 VAALCO(1) Tran
Slide 35: Appendix: Reserves and Production Disclosure
Slide 35 Appendix Reserves and production figures of VAALCO and TransGlobe are prepared under different standards and may not be directly comparable. See “Disclaimer - Caution to U.S. and Canadian Investors Regarding Management’s Reserve Estimates.” for more information. Reserve Disclosure(1) VAALCO
Slide 36: Disclaimers
Slide 36 Disclaimers No Offer or Solicitation This investor presentation (“Presentation”) shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the proposed arrangement (“proposed arrangement”) between VAALCO Energy, Inc. (“VAALCO”)
Slide 37: Disclaimers (cont.): Caution Regarding Management's Reserve Estimates
Slide 37 Disclaimers (cont.) Caution to U.S. and Canadian Investors Regarding Management's Reserve Estimates Aggregated reserves figures prepared by management and not reviewed by competent person as required by local requirements. Reserve estimates of VAALCO and TransGlobe are prepared under differ
Slide 38: Disclaimers (cont.): Participants in the Proposed Arrangement Solicitation
Slide 38 Disclaimers (cont.) Participants in the Proposed Arrangement Solicitation VAALCO, TransGlobe and their respective directors and executive officers may be deemed participants in the solicitation of proxies from VAALCO’s stockholders in connection with the proposed arrangement. VAALCO’s stock
Slide 39: Disclaimers (cont.): Oil & Gas Advisories Relating to TransGlobe Reserves
Slide 39 Disclaimers (cont.) Oil & Gas Advisories Relating to TransGlobe Reserves The estimates of TransGlobe's December 31, 2021 reserves set forth in this presentation have been prepared by GLJ Ltd. (“GLJ”), an independent qualified reserves evaluator, as of December 31, 2021 in accordance with NI
Slide 40: Creating a Diversified African E&P Business Supporting Sustainable Growth & Shareholder Returns
Creating a Diversified African E&P Business Supporting Sustainable Growth & Shareholder Returns