Vaalco Energy (NYSE:EGY) — Investor Presentation

0:02 Good morning, ladies and gentlemen, and welcome to the VAALCO ENERGY Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself, but the company can review all questions submitted today, and we'll publish those responses where it's appropriate to do so on the Investor Meet company platform.

0:30 And before we begin, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from VAALCO ENERGY. George, good morning, sir. Good morning, and thank you very much for that introduction. Good morning, ladies and gentlemen. Thank you for taking the time to to come to this presentation. Today, we're gonna give you an overview of VAALCO ENERGY with a US listed oil and gas company focused predominantly in Africa. We have been running the business now for just under four years, it was since we took over with an objective to grow the business and derisk and diversify the portfolio. So what you'll hear today is where we've been in the past four years, where we particularly have been in 2024, and some of the forward looking plans we have into 2025 and into 2026 with the existing, organic portfolio.

1:25 We've worked hard to expand the portfolio in Africa and, have successfully done that, particularly in 2022 and again in 2024. And, we'll go through some of that with you. So at this time, we'll we'll jump into the presentation, and, we'll come back, on camera for the q and a.

1:51 So you can see there we've a very experienced management team, myself and and Ron who are who's with me in the in the presentation today in the room. Thor Prueckle is our chief operating officer. He's currently in Houston at the moment based over there. We're also also based in Houston and spent our time moving between The US and and Europe and Africa. And you can see we've got considerable experience within the executive team. If we look at our performance metrics, four years ago when we took over the company, it was running around about 5,000 barrels a day working interest and had a single asset to have a single country production focusing Gabon. As I said in the preamble, we we had an objective to derisk that position, to give some reserve life to the company, to give some diversification to the production and the cash flows of the company, and do that within the the confines of, of the market and and the debt issues that the the company were facing at that time.

2:57 If you look at some of the key metrics on, on slide four, you you can see how we performed over that period when we look at the, production growth that, has happened through 2024, exiting 2024 with a working interest position of around 25,000 barrels per day, which is five times where where where it was when we took over. And, and we'll get within the slide, but we've got a reserve based on the on the SEC one p, up to, 45,000,000 barrels again, four times, four and a half times where we were when we took over, and a two p position, close to a 100,000,000 barrels, again, five times where it was when we took over. So the companies had a a very successful period. We are very focused in in Africa. You can see our operations where we operate as in Gabon, Egypt, Equatorial Guinea. And we also have operations in Cote D'Ivoire where we have non operated position for production and an operated position we just recently acquired at the beginning of of this year for exploration.

4:03 We also have a position in Canada, which is a small production operation for about 3,000 barrels a day. But that's came along with one of the with that one of the acquisitions, but it contributes well to the business. One of the key focuses of the company during these acquisitions, both making sure we get the cultural mix correct for working in Africa. As you saw in the on the bios of the executives, we we all have considerable experience working after decades of experience living and working in Africa. So getting that cultural position correct has has always been key and very close to that is the health and safety issue. And you can see there, we're very proud now to be well over 3,000,000 man hours with LTI free.

4:51 And that's a considerable improvement from some of the businesses we acquired where we were concerned about some of the the LTI rate ratios. If we look at how we've looked from the stock market side, we've looked at how we've improved liquidity in the company. Liquidity was was down around 200,000 shares per day down in 2021. Our liquidity is now averaging somewhere around between 1 and 1,300,000 shares a day. So about just over 1%, 1.3 of the company trading every day in New

5:24 York. We've also looked at the register, to see how we can, improve, the register to get into some long only hold stocks because as you know, oil and gas is is is a longer play for some of the the benefits that come with that. And we've moved to about 63 above 60% institutional shareholding, which is a big transition from where we were back in 2021. But predominantly, our shareholding is is North American based. And recently, in the last two years, we've actually moved into the Russell three thousand. So we've moved into become an index stock also. Moving to the next slide, you can see geographically where our portfolio is. You know, we've recently acquired more assets in Cote D'Ivoire, where we are, like I say, operated and non operated.

6:15 We're one of our primary assets in Gabon, which is the Atami, and and also in Equatorial Guinea, where we have a development plan for 2026 and 2027. We have key operations in in Egypt, where we produce just about 10,500 barrels a day in that particular country with opportunities to further expand in the license areas that are currently undeveloped. And in Canada, as I mentioned earlier, we're doing roughly about 3,000 barrels a day just in onshore onshore drilling location. This is the only location where we also have gas sales. So it's predominantly liquids and NGLs, but we do have about 30% of that as gas.

7:06 If we look at the next slide and it starts to indicate what I'd mentioned earlier, when we look at where we were for our production on working interest basis at 5,500 and full year 2024 that we announced recently in our earnings call at just under 25,000 that we've we've went for a five fold increase in production. And also, you can see the SEC one p proved reserves with a four fold increase and a four fold increase also in the two p working interest position. We've been very successful in in how we've completed our acquisitions. We've done this over a four year period completing retaining the company's completely debt free. Retaining a very strong balance sheet through these periods,

7:52 exercising some great operational results as we've improved the businesses that we've bought, and at that time, managing to significantly enhance enhance production. The contracts that we have with our host governments and country are they are incentivized for investment. And that's an important point that we'll get onto as we look at each of the countries in in each in the following present slides. I'll pass this to Ron in the next one. He can talk to you through some of the solid financial foundation. Good morning, everyone. First of all, I'd like to say that since George and I came in back in 2021, you you can see and demonstrated through the growth of not only production and reserves, but our financial returns too.

8:43 In each each of those years, we we vote performed our own expectations in relation to to past historic numbers, had record revenues, record production, and record profitability all throughout that period. And we've had no debt, although we've had a facility. We had a facility back in 2021. We had a 50,000,000 facility predominantly with Glencore, which was unused. It was it was basically there as a safety net and, you know, we've kept financial discipline all the way through not to go into to that that debt profile. And on the bottom left hand corner there, you can see, you know, our EBITDAs per quarter. In the last year, we we finished twenty twenty four with over 300,000,000 in EBITDAS, 303,000,000 in EBITDAS.

9:38 That's generating a very good operational cash flow at the same time. And that basically allowed us back in 2021 to basically go for our very first dividend as a company. As George said earlier, we well, we got into the Russell three thousand. We're indexed in through New York, but also listed obviously in London as well. And that Russell Index itself, with that dividend, we we actually produced one of the highest yield dividends in the NYSE, certainly in the top quartile and has been in the top quartile for the last couple of years. We pay effectively on a quarterly basis about 6.25¢ per quarter, 25¢ per per annum.

10:28 And at this point in time, that's yielding with a present share price, that's yielding an over an 8% yield. So very attractive yield over there. And we introduced that dividend back in 2021. We sensitized that dividend to a $65 oil price. So a $65 Brent price and above is is a sensitized dividend position. We're paying that through 2025 and we've got no we've got no plans to to change that position. We also introduced this year, we got a new facility with a group of lenders, predominantly South African banks. That facility allows us to look at a commitment there of a $190,000,000.

11:17 It's got the ability to grow to $300,000,000 through an accordion. At this point in time, through q four, as you can see, we had over 80,000,000 in in cash reserves and and sufficient working capital reserves to through through q one and beyond. So we're we're still debt free and we have the capability to look at over 270,000,000 in in liquidity. Moving on to the next slide. When you look at our value proposition, as I say, when we compared ourselves to our peer group at the end of twenty twenty four, our our dividend yield and, you know, there's a number of our competitors don't don't pay a dividend. We've we've always paid a dividend, George and I, both from from a VAALCO perspective. And even before VAALCO in a previous company, you know, we've put shareholder returns at the top of our our listing.

12:18 We've done not only with with dividends, we've also looked at buybacks. We completed a $30,000,000 buyback in 2024. So effectively, in the last two years, we've paid back over $83,000,000 in shareholder returns. And with the dividend this year, that's over a 100,000,000 has been returned to to shareholders over a sort of two and a half to three year period. If you look at our enterprise value and and forgive me, our enterprise value value and and our and our market cap is is moving on a daily basis at the moment as as you can imagine. The volatility in the marketplace with our with our president, forty seven president, taking the actions he has has meant that these slides need to be updated quite quite regularly. Ideally.

13:06 But our enterprise value compared to our twenty twenty four EBIT docs as you can see, again, stacks up extremely well to to any of our competition, any of our peer group at just over 1.4 times. And indeed, I think at one point last week, we were trading at one times our EBIT DAC. So again, a very convincing value proposition when you take all of those things into account. I'll pass you back to George now as we go through the key milestones. Thank you, Ron. So this slide is is trying to give you a a an idea of of the catalyst and the activities that are coming up. And it's fair to say, as as Ron pointed out, in the last two years, we've we have focused a lot on efficiencies and and growing production.

13:52 We've looked at value accretive acquisitions. And I think if you look at how the company's performed in that two and a half to three years, it's it's undated that the acquisitions have been significantly value accretive. In '23 and '24, we've had quite light CapEx years. So we've taken advantage of that operational cash flow to to show that dividend and also that buyback potential to our shareholders without, in any way impairing the investing opportunities that are within our organic assets. 2025 and 2026, we enter into a heavy CapEx period where we're we're looking at significant investments. We're gonna have at least three potentially four drill bits spinning in our areas with lots of catalyst to these results. And I'll just briefly go through each of the areas separately.

14:45 So as you have perhaps seen in our our announcements through our q q four results and our guidance in q one, we're planning a Gabon drilling program commencing in mid q three twenty twenty five. Now this program, we had originally planned to commence in 2024. We delayed it primarily to ensure we could maximize the value of the program. It initially started as a as a four well program, and then we started looking at one of the fields in in Gabon called the Buri, which had been shut in in 2014 due to h two s issues. We went through an evaluation and studied mechanism on the h two s to see if there's any way we could safely recover those reserves from that field, taking care of the of, of the sour gas.

15:38 We have successfully done that. We've put together a program with Downhole Chemicals to successfully rehabilitate that field, and that has now come into this twenty twenty five, twenty twenty six drilling program. That has added significantly to to the program. So now we're looking at a drilling program with five firm wells and five optional wells. So potentially a program that could run through to the end of twenty twenty six. We're we're looking at that drilling campaign to, like I said, restart the Buri field significantly, further wells expanding the Atami field and also wells on the Scent field that all come into that central processing facility, that we designed and constructed in 2022.

16:26 So what that does with this particular drilling campaign, as you can see in that little chart there, it starts to really push forward, to the key decisions for investment in that Gabon PSC right through into the early twenty thirties and provide provides that area of longevity. And that's quite important when you look at some of the economic benefits that we get from this PSC. We get, you know, 80% cost ceiling and which allows us to recover that cost of investment very quickly. So when we're looking at the investment, the total investment in the drilling program could be as high as as $250,000,000. But you're recovering, the first $40,000,000 of that within three to four months. So you're not really at $250,000,000 that you have to have as available liquidity in the balance sheet once you get the program rolling.

17:19 In addition, we've we've been looking at how we continue to invest in the areas that we'd already we're already located. So Gabon, the company's been there for for decades. We've recently, last year, closed on two new blocks with our partners, BWE and Panoro. And those two exploration blocks reside between Itami, our main producing block, and Disifu, which is the main producing block for BWE. So there's a a very, very exciting and interesting hydrocarbon play that we see between these two major hydro carbon producing areas. And that gives us some excitement that we've got opportunities for significant tie back opportunities to existing infrastructure. That will further give us longevity in the in the infrastructure in Gabon.

18:07 As I jump quickly to Egypt, Egypt's been a big success case for us. We've been working hard to improve the facilities, improve the debottleneck the facilities and reduce back pressure. We did that in 2023 and '24. Reduction of the back pressure in the system gave us effectively almost a thousand barrels a day of free oil. And we've continued to, invest in the in the drilling campaign and in a workover program. So through 2024, our workover program has successfully arrested decline, and we commenced a 10 to 15 well drilling program late twenty twenty four that's commenced all the way through into into 2025, and we should complete that around May or June.

18:54 We when we look at the efficiencies generated in Egypt, now we've reduced our d and c time from an average of somewhere close to thirty eight to forty days down to fifteen. And, that's just about the best that you can get. It's also, as a result of, you know, good supply chain management, good logistic support, and,

19:16 good good planning around the wells. But it means that we are getting much more efficient and we're getting a much bigger bang for our buck. The well costs have come down to half what they were previously, and the performance has has has improved. We'll move into a working a workover program to the second half of the year and still look for more potential opportunities to to further expand the drilling. As I mentioned in the preamble, there are some concessions that we we we own and operate that are under evaluation right now that are not in production. But we have successfully refract a well in the Western Desert, which is looking promising for a field development plan. Canada, when we acquired that as part of the Egyptian acquisition, we've looked to make that small operation as efficient as it can be.

20:03 It's got a firm strategic five year plan that returns capital every year. It's albeit it's a small operation, it does it's a very, efficient operation. We've reduced the the overheads in Canada significantly, probably by about 60% in order to to have that operation being able to return to the central units. The key issue here is change the strategy, look at land optimization, and start to do the two and a half to three mile laterals. We no longer do one mile laterals because they're they're not efficient and the and the two and a half to three mile laterals are giving us much better payback. In Equatorial Guinea, we've had the asset for some time. We we've have proven reserves there in the in the various structure.

20:54 We've been working diligently through a plan of development that we've got approved with the government. We've spent some time having negotiations with partners to get that alignment. That alignment's now there. And now we're looking at a a feed study to see how can we reduce the capital. And that's really primary because this particular accumulation, we we evacuated quite quite quickly, probably within sixty months. So we've got a five year cycle to produce that 25,000,000 barrels. But that's not equates to the tax efficiency. So we're trying to look at how we can reduce the capital to make it a much more tax efficient opportunity, and that's what the FEED study is working on. We expect the results of that FEED study. We had did expect them in q one. We're now expecting them by the end of q two with a with a new geo model, and you'll hear more about that in our capital markets day on May 14. We'll talk about that.

21:51 But with that greater CapEx efficiency, we we should be able to move into FID towards the middle of sorry, q three this year, and then moving forward into into FTP. As we see with commodity prices, it does impact some projects, but there is other benefits when commodity prices go down. Equipment prices, they do lag, but eventually you do see them coming down and we're seeing some benefits of that both in our marine spreads in Gabon and our marine spreads in, in Cote D'Ivoire and also in in the opportunities in Equatorial Guinea.

22:27 Moving to Cote D'Ivoire. Last year, we acquired a company that had a non operated interest in the Baobab field, which is operated by CNRL. We are we we feel we get a a a perfect acquisition by the end of twenty twenty four. The the returns on oil proceeds from production on on the asset were 1.8 times what we we paid to buy into it. So we're very, very prolific purchase. The FPSO has now gone off station for refurbishment. So we we had some production in January, and that production is now ceased probably through until q two twenty twenty six. So as I mentioned earlier in Gabon where we have a heavy CapEx program, however, we are in production so it, that CapEx has returned very quickly.

23:20 In Cote D'Ivoire, we're out of production. We're we're investing, along with our partners to rehabilitate the, the FPSO, which is currently en route to Dubai. We expect it to, leave dry dock in q one twenty twenty six and be back on station and hooked up at the end of q one sometime in q two.

23:41 Whilst we're having to sync those dollars into that project and they don't come back until 2026 when we go back on production. One of the key benefits of this contract is for every invested dollar we have, we get $1.25 back. So even with the dollar going in, you know, you've already got a 25% return regardless of oil price coming back from your cost oil position. And you know, it's not there's no risk because you know there's production there as soon as you're hooked up again. So you're it it is an investing activity. It is a deep cash sink for us in in '25 and early twenty six, but the return is quite prolific once we get back on production. And we'll move to the next slide. There are some of the key highlights. You can see the m v ten FPSO that was on station there on in Cote D'Ivoire. Like I say, it's it's currently en route to to Dubai.

24:36 And I'll just move to the next slide. So in line with our strategy, when we've entered the country, we we we don't rely on others to to do or talking for us. We we make the investment. We decide we're going to be there. We open an office and we have our own boots on the ground. And that's really to ensure that we are we have our own voice with our host governments and also to look at opportunities in the areas what they were investing And you can see very quickly as we made the investment last year, put our our our staff on the ground in Abidjan that we we start to see opportunities popping up around this. And this one was a particularly nice opportunity that we liked. CI 705 is a is it the block is an exploration block. It's an exact excess of 2,000 square kilometers with water depths starting at the Beach Of 0 going down to about 1,800 meters.

25:27 It's in a very hot area right now. I mean, you're probably all aware of the ENI Berlin discovery, which is, I think, about 60 kilometers to to the west sorry, to the east of us. But you can see that the the prospectivity in that block. So we're very excited. It was a very low entry cost for us. We formed in to get a 70% working interest and and be the operator. So for us, for this c o seven zero five, we'll be looking at seismic acquisition and then target identification for a drill program sometime around 2027.

26:09 So we look at where we are with the the production of what gave us through 2024. As I mentioned, that from the investment to the point of disconnection, No. We we had a a an actual cash payback of 1.8 times what our original investment is. And you can see there the main CI 40 build up production with the upside opportunities in in Kisipu. So working in conjunction with the operator, we'll hopefully see a Kisipu development and evaluation towards an FTP sometime in in 2025, 2026. What we are looking at is as soon as the FPSO returns in station in q two twenty twenty six, it's going into drilling program on the Beobab field for what they call phase five to further enhance production once the FPSOs back and hooked up again.

27:06 And and

27:08 what has happened recently is that the the f p sorry. The license on c I 40 has been extended through 2038. And when we look at the production profiles that we have internally, we have a strong production right the way through 2038. In Gabon, we've looked at production optimization. You can see our working interest at just around 8,600 barrels a day. Bear in mind that for in Gabon, we haven't drilled in Gabon since the beginning of 2022. So it's been on decline since then. But what we have seen in Gabon, in 2022, we we actually did an FPSO change out in our own field. So if you think for oil companies, changing out an FPSO is is once in a twenty, thirty year event. So some world companies never have to go through it. We we did experience that and and did that successfully in 2022.

28:05 So we have considerable engineering and project management experience in that area, which has been beneficial to contributing towards our support of the m v 10 change out on Beobab. So we've got a lot of in house knowledge in in performing these activities. One of the byproducts of of that change similar to to Egypt, but in a bigger scale has been the reduction in some of the back pressure that was going back into the reservoir from the top sides operations. And that has seen a significant improvement in reservoir performance through 2023 and 2024. We're now rebasing that, so you'll see it in our guidance in 2025. So although we haven't been drilling in Gabon for two years, we still have seen an arrest of decline or decline shallower than the modeling would have originally forecast due to that reduction in back pressure. So it's a significant asset and it's a significant improvement.

29:07 And it's worth it's worth indicating that when we look at the Itami field that at one time, there is no forecast when this field came on stream in 2020 2002, it had a five year life. We've since produced a 145,000,000 barrels from this field and it continues to give and we continue to see forecasts into the twenty thirties for this. So again, a significant contract, a significant opportunity, and significant cash generative position for for the company.

29:40 I'll let Ron give you some Egypt updates. Yep. No problem. So in Egypt, obviously, the Egyptian assets and the Canadian assets, we we basically acquired with the Transglobe acquisition back in October 2022. And as George mentioned before, you know, a lot of that focus since takeover was was twofold. That was on operational efficiencies, reduced the the the cycle time in in relation to spot to tie up in both Egypt and in Canada, and and product and production optimization through through improved back flows, doing a little bit of maintenance and improving proving the efficiencies of of of the of the facilities themselves over over that time period.

30:31 And that's given us a number of benefits. It's given us a degree of free oil when when commodity prices have been high. And we've taken advantage of the fact that when we purchased Translope back in October 2022, they just got the the merged concession. It had been in in in play for about a year, and we had a significant cost pool that we could take advantage of. And and we did we did see that through 2023 and into 2024. In 2024, we completed a drilling program at the beginning of the year, and then the back end of the year, we effectively went on to a workover program with the the sole purpose of that workover program being to sustain production, against the the the decline level. And the decline level in in this this asset basis is probably better than a number of decline profiles in in in some of the Egyptian assets, obviously, that that our peer group have. It's about 20%.

31:34 So, you know, we we completed through 2024 a number of workovers that that arrested that decline and and kept production levels up there. As George mentioned too, we we went back into in the Western Desert, the the South Gaza well and refrac that in late q four twenty twenty four. And we're you know, we've got some some excitement there and some plans for for that asset going forward. It isn't part of the

32:05 the merge concession. It is a concession. It's on its own. And that's something that we'll be talking with with our partners, EGYPC and and the state on in 2025. Moving on. On Canada, again, you know, this is a story of economic returns. When we looked at we looked at the Canadian operation back in late twenty twenty two, the first thing that came to mind was that the internal rates of return for this sort of mile, mile and a half horizontal wells there. Although economic, there were there were internal rates of return of 25% plus. They really weren't stacking up well in relation of investment return to our other assets.

32:54 So we we basically gave our management team in Canada a a challenge to to improve and at least get to the internal rate of returns that was comparable to their peer group. And that really was done through a land optimization program, making sure that we had the correct parcels aligned to match up to be able to do sort of two to three mile lateral wells. We completed two of those in in 2023 and we completed another four of those in in 2024. In both occasions, we had wells that actually were in the top 10 producers in the Alberta region in each of those years. So so very great, great performances on on those on those drilling programs and indeed internal rates are returned now on those wells of above above a 125%.

33:51 So again, something that, we're we're quite proud of and proud of that team for getting it is is operationally efficient, as as it can be. There is a component of gas in here, which does mean that, you know, we we tend to to make sure we get drilling at least once a year to to basically keep that GOR ratio basically as low as possible. We generally are are trying to maintain a 75 to 80% liquids ratio in Canada. And today, we've done that extremely well. So back to next development, which is Equatorial Guinea. Again, a a very large, prospective block. Again, 2,000 square kilometers, and you can see the map there on highlighted.

34:42 As we've we talked earlier, now we have a a development plan on on Venus, which you can see indicated there on the map. That's a a 25,000,000,000 barrel two p structure, sixteen point five million one p.

34:56 And that's the the the the key development opportunity. In all of our strategy, we're predominantly focused as a production company. So wherever we go, we'll go production first before we go deep exploration. You you see here in block p where we're focused on production on Venus and then you can see the grayer shadows around there with some great large structures for exploration potential. But with production, we'd come first, and we've done exactly the same in court of while we've we've secured great exploration potential underpinned by by production. Exactly same in Gabon. We've got underpin a significant production and exploration potential in the two blocks we've recently acquired. The the the opportunity for for Equatorial Guinea again presents itself to give us yet another production area.

35:48 And like I said in the when we looked at the forward looking plan that, you know, it is it is a significant step change in production when it comes in because, I mean, the evacuation period is is so short. And we'll just go forward to the compelling of the next slide. Okay. I'll jump in here. So the know, why why why invest in VAALCO? So going back through what what you've heard, you know, today and just summon things up. So first of all, we're listed in both London and in New York. We're predominantly institutionally owned, but no institution or indeed any shareholder owns more than than 9% of our stock. We have a bit greater than 2% held by management. We have a dividend that is in the top quartile yield providers in in the New York Stock Exchange, 97% free float with volume is over 1,000,000 a day. So essentially, we we turn about 1% of our book on a daily basis.

36:51 If you look at our, our concessions, we have very favorable PSC terms in West Africa. We have got CapEx and OpEx, recoverability through cost oil with a cost stop typically between 7580%. CDI, as you know, and we've talked about with the investment we've got in Cote D'Ivoire, that provides for a 125% return of that capital investment. So for every dollar that's invested, we get a dollar 25 back in cost. African physical stability is is probably been better than what we've seen in the West. I mean, we just look at our own country in The UK and and what what the physical challenges have been there for for the oil and gas industry.

37:40 What we've seen is very stable physical, stability in our core assets in Gabon, in CDI, any in Egypt, you know. These are these are stable physical regimes. We as a management team, we've got proven business development capabilities. I don't think there's been any other, small to mid cap E and P provider that's turned around four deals in in five years. We've done that. Three of those deals all being in cash, and 1% in in equity. And that one that, one deal that was done a 100% in equity was was building scale and diversity overall for the business. We've had very quick paybacks in each of them. We've derisked the company over that, time period.

38:27 And if you look at our total shareholder return, we've outperformed the S and P 500 over that time period. We've got world class oil reservoirs. We've been in production for more than twenty years in the time and indeed in Beobab in Beobab. We've extracted over a 140,000,000 barrels, indeed over a 145,000,000 barrels now in in the time and over a 150,000,000 barrels been extracted in Beobab, with Beobab having a billion dollar stope. We've current reserve life now from a two p basis of 11.5. And, we've we've added and supplemented to that with the recent exploration blocks in both Gabon and Ivory Coast. We've shown and demonstrated our operational excellence. We've changed out an FPSO in Gabon in 2022, and we've taken the spud to hookup time in both Egypt and Canada down considerably.

39:24 We've prioritized returns in Canada and got that business to look at two and a half to three mile laterals rather than its its tendency to use one mile laterals pre takeover. We've increased the reserve life across the organization and have the average production cost close to $22 per bottle if you look at our 2024 annual results. So from a growth point of view, we have organic development opportunities now that can easily see our working interest, which for 2024 was around 25,000 barrels per day. Could see that double to 50,000 barrels per oil per day in the next five years.

40:11 We've shown and demonstrated financial discipline. We've had no bank debt during that time period, and we've got overall overall liquidity today of greater than $250,000,000. And we're trading at very low multiples and a significant discount to our core value. With that, I'll hand you back to George for the last slide. Thank you, Ron. I mean, it's it's hopefully, we've given you impression of of what we are trying to build as a company. It's not just financially stable, but it has a degree of longevity. It focuses on the key attributes, of of an investment opportunity when we look at our host governments and how we conduct ourselves in country, how we conduct ourselves in the marketplace, how we have the financial discipline to not overstretch the company regardless of the demands that are being put upon it. And we surround ourselves with with, you know, great colleagues and management to ensure that the the culture of the company is diversified not just from from the headquarters in Houston, but that same message is being delivered on a day by day basis by our our our country managers in West Africa predominantly who are who are local managers. They're not they're not expatriates.

41:27 And that that means that with the kind of way we we run the company, we we have a a unique on the ground knowledge, not just of running the the existing business, but also the opportunities that that can create for for us to expand the business in each of these geographical districts. So for us, it's it's been a it it we're halfway through the the the the journey. As Ron said, I know we've we've got an organic portfolio right now that can and and should have the ability to exceed 50,000 barrels per day working interest in the in the coming few years. We will be demonstrating that in our Capital Markets Day in a lot more detail. As you know, we'll we spent a lot of today looking backwards with a with a bit of a taste of what the forward looking plan looks like. And, if you can't join us on May 14, we'll be going into the forward looking plan in a in a lot more detail.

42:24 So with that, thank you very much for your your attendance and, hopefully, we've given you some some interesting things to think about. Perfect. George, Ron, if I may just jump back in there. Thank you very much indeed for your presentation this morning. I'll just bring back up your camera for the q and a. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that have been submitted already, I just like to remind you that a recording of this presentation along with a copy of the slides and the published q and a, can all be accessed via your investor dashboards. George, Ron, as you can see that we have received a number of questions throughout your presentation this morning. Thank you to all of those on the call for taking the time to submit their questions.

43:09 But, Barry, at this point, sir, if I may hand over to you to chair the q and a with the team. And if I pick up from you at the end, that would be great. Thank you. Yes. So we've had a couple of questions come through. First one, what led you to choose Cote D'Ivoire as a focal point for strategic expansion? And how does the regulatory and investment climate compare to Gabon or Egypt? Well, it was opportunities are I think one of the things we have to be clear about is that in our executive team, we have a a lot of experience in West Africa. So there's very, very few jurisdictions in Africa that we not either resided in or worked in. So when opportunities present themselves, we don't particularly focus initially on the country.

43:56 We focus on what the geology looks like. And if we like the geology, then then that's really what starts to drive it. Then we look at, are we in a a geopolitical environment that we understand, a geopolitical environment that we can operate within? And and and nearly every case when we look at these, the answer is the answer is yes. And so when the opportunity for a code of work was presented to itself, the first thing we look at is how can we differentiate ourselves to get into bilateral discussions rather than a process discussion. And that's really where we we start to drive these things. Everything we do starts in the in the geology. It starts in the rocks. If the rocks don't work, then we're just spinning our wheels. And looking at the investment comparisons between Gabon and Cote D'Ivoire, very, very similar.

44:44 Both very investable jurisdictions, both very stable governments, both very promotional for foreign investment and and, you know, have inherently, we have access to good people, good facilities, equipment. So we're not we're not constrained by by that by the environment and being able to jump straight in and and start the operation. So it's but I'm not I know that in the question, single date just two of the jurisdictions, but I I will say that if you look down the West African coast from from the very North down to to Namibia, there's not a jurisdiction that would would cause us any concern to go in and evaluate.

45:38 In, in regard to the production forecast out to 2038, does this assume new discoveries or this is based on already discovered resources and contingent resource? For for our and again, I have to emphasize this is this is our our forecast. The operator may have a a different forecast. So it it does involve a success scenario on the phase five drilling, which we're very confident on because we're drilling into a two p environment. And it does also include that we we find a a position in Kisipu that gives us an economic FTP. But again, when we look at the volumes that are in Kisipu, we believe that it's possible. I think when we look at the existing production, if we look at a phase five, failure case, then, of course, it's it's shorter than twenty thirty eight.

46:30 But when you look at the the stope and baobab alone over a billion barrels, our confidence levels of having a higher recovery factor than 15% are quite high. A question on Canada the IRR that was forecast your views on gas prices in Canada. Yeah. Those IRRs are not forecast. Those are are are those are our well economics. That's generally, you know, those those long three, three and a half mile laterals will will give you those returns. Obviously, commodity price dependent. And what we've done on gas pricing for 2025 effectively is that we've we've got a hedge in place for 75% of our one p gas.

47:24 So our expected gas, 75% of that's covered through to the end of October. And the hedge position, I think, was Canadian dollar $2.15 per g g. So we're we we were happy with that because it was it was above where we were we were budgeting for for 2025. So we took that risk out to play to guarantee that cash flow. So we'd hope when we get closer to the end of October that we're in the winter season and and gas prices will will be higher then. But certainly from from the position for for the most part of 2025, we're we're very comfortable with with our gas position. And a related question on sensitivity to oil price.

48:12 What's your what's your view on that? Yeah. I mean, we've like any any oil and gas company, I presume over the last two weeks, we've we've all been running various different scenarios at at different oil prices. And, you know, I mean, when we when we look at our our our breakeven prices and they will they will vary depending on on the assets, but our African assets are are very robust assets for for basically sensitized to to the oil price. And indeed, you know, the one thing that shareholders are are particularly interested in is is making sure that for shareholder returns and our and our dividend itself, can we pay that that that shareholder return out at at lower oil prices? As I say, when we put the dividend in place in 2021, we we looked five years into into the future at that point in time. The company looked completely different to what it does today.

49:13 It was a single asset, but we sensitized to $65 grant. And and that that position is still holding at this point today. We've committed to that dividend in in 2025, and we've got we've got no plans to change that dividend whatsoever. And indeed, in getting the new lending facility with our suite of lenders, that was also written into the facility that we will be paying that dividend out in 2025. So I know it's it's not necessarily answering it. What question regarding what oil price presents a challenge? Certainly, oil prices today do not present us with a challenge. And one last question. Any plans to initiate new share buybacks?

50:01 Well, I think we we tried to cover that a little bit in the presentation. We we went through a buyback when we have lean CapEx years where we see our operating cash flow far exceeds our our investing activity and and we committed to to that at that time. Albeit, it would be ideal to be in the same situation right now given the the lower stock prices. However, we're in a heavy investing year right now. So certainly for 2025, the priority is is to get the dollar into the ground to extract the barrel. When we're through these big CapEx periods, when we get to mid twenty twenty six, and of course, we'll be we'll be looking at that. But as I said during the presentation, as a as a relatively small company, we we we have three over the next twelve to fifteen months, we have three drill bits spinning, which is considerable when you look at the the profile we have and the portfolio we have. And that that is really to position the company and give it the next step of growth in a stable production platform. And then in the cash flows coming from that stable production platform and the success on the drilling campaign, we should expect to see share price growth from the drill bit rather than from the buyback.

51:14 But but we need to get through this CapEx period first. And that's all questions from online. Perfect. Guys, if I may just jump back in there. Thank you very much indeed for being so generous for your time then addressing all of those questions that came in. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. But, George, perhaps before now, just really looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that'd be great. Thank you very much, Matt. I'm sure for many people joining the call, this may be your first introduction to VAALCO because, you know, we're we're based in we're based in Houston. We're listed in New York, but predominantly our assets are on this side of, of the pond, down in down in Africa.

52:02 Hopefully, we've demonstrated, to to the the investor and the potential investor that that, you know, we have grown the company under a very good stewardship. One of the the the questions asked about the the volatility in commodity prices right now, well, we're we're very fortunate in coming into such volatility with such a strong balance sheet. So we're not being impacted with, with a debt burden coming into it, which, again, is testament to how we've grown the company to date. The key the key next step, as I said, you know, we we we're potentially spilling spinning three drill bits. There's a number of catalyst communication on on a success basis on the drilling from from almost now through to mid end twenty twenty six.

52:53 We've taken a lot of time in developing our drilling programs to ensure that they have the highest possibility of success. Even the exploration well that we're planning to drill in Gabon has a chance of success of over 60%. So it's nowhere near a wildcat well. So we we we tend to be a little bit cautious in ensuring that we can deliver exactly what we state to our investors that we're planning to deliver and hopefully get into a position to exceed that. We talked a little bit about the, the forward looking position, for each of our our our assets. And, hopefully, if, if the audience can join us on May 14, we'll go through a lot more detail on our Capital Markets There'll be less talk about what we've done and a lot more detail about what we're going to do. And that will take you through for the next the next five years and give you a little bit of a taste of the type of asset quality and the type of contracting quality we have in the portfolio at the moment. But with that, I thank everyone for for taking the time to attend today and and listening to us. Thank you very much. Perfect, George. That's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations?

54:11 This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of VAALCO ENERGY, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.