Good morning, and welcome to VAALCO Energy’s First Quarter 2025 Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Chris Delange, Investor Relations Coordinator. Please go ahead.

Thank you, operator. Welcome to VAALCO Energy’s First Quarter 2025 Conference Call. After I cover the forward-looking statements, George Maxwell, our CEO, will review operational and financial highlights, discuss our updated operational plans for 2025 and add some closing comments before we take your questions. During our question-and-answer session, we ask you to limit your questions to one and a follow-up. You can always reenter the queue with additional questions. I would like to point out that we posted a supplemental investor deck on our website that has additional financial analysis, comparisons, and guidance that should be helpful. With that, let me proceed with our forward-looking statement comments. During the course of this conference call, the company will be making forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance, and those 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. Accordingly, you should not place undue reliance on forward-looking statements. These and other risks are described in our earnings release, the presentation posted on our website, and in the reports we file with the SEC, including our Form 10-K. Please note that this conference call is being recorded. Let me turn the call over to George.

Thank you, Chris. Good morning, everyone, and welcome to our first quarter 2025 earnings conference call. In Q1 2025, we delivered net income of $7.7 million, or $0.07 per share, and adjusted EBITDAX of $57 million. This was driven by net revenue interest production of 17,764 barrels of oil equivalent per day, which was above the high end of guidance. Working interest production of 22,402 barrels of oil equivalent was at the high end of guidance, as were net revenue interest sales of 19,074 barrels of oil equivalent per day. Prices in Q1 2025 were nearly flat compared to Q4 2024, but we have seen a decline in pricing so far in Q2. We also entered into a new reserves-based revolving credit facility in the first quarter to supplement our internally generated cash flow and cash on hand as needed for our growth initiatives. As Ron discussed in the last call, we have an initial commitment of $190 million, with the ability to grow to $300 million as we aim to fund projects across our diverse portfolio. Over the past two years, we have delivered record-breaking operational and financial results while meeting or exceeding our quarterly guidance targets. Maintaining operational excellence and consistent production across our portfolio is crucial to expanding adjusted EBITDAX, which has allowed us to grow inorganically and better fund organic growth initiatives, positioning VAALCO for the future. We had a robust start to 2025, but I want to remind everyone that this will be a transitional year as we had production come offline in Q1 at Cote d'Ivoire as planned for the FPSO project, and we do not expect to kick off the drilling campaign in Gabon until Q3. This means significant production uplift should start at the end of 2025 and into 2026. Before I delve into more details about our assets, I want to address the current macroeconomic environment and how VAALCO is responding to the uncertainty and commodity prices. In light of the softer commodity pricing, we are adjusting discretionary capital spending and delaying some smaller projects. We have decided to cut about 10% from our capital budget in 2025, which includes the drilling program in Canada due to pricing and some smaller projects that can be postponed until we see more stability in commodity prices. Given the strong production performance in Gabon and Egypt thus far in 2025, we believe that the 10% reduction in capital expenditures will not impact our production or sales for the year. Our guidance for the full year 2025 has remained unchanged, except for the 10% reduction in capital. Long-term projects such as the FPSO project in Cote d'Ivoire and the drilling campaign in Gabon are proceeding as planned, as these are long-term initiatives that extend economic field life by adding production and reserves. These projects require several years of planning, and their economics are evaluated on a longer-term basis. Additionally, there are fiscal benefits in our African production sharing contracts related to lower commodity prices that provide some protection from price declines and allow for additional cost pool recovery to encourage ongoing investment even during lower pricing periods. Let me now provide some details about our assets, starting with Cote d'Ivoire. A year ago, we had no production or interest in Cote d'Ivoire, and then in April 2024, we rapidly completed the Svenska acquisition, securing a valuable asset. The FPSO ceased hydrocarbons production as scheduled on January 31, 2025, with the final lifting of crude oil occurring in early February. The vessel is currently being towed to the shipyard in Dubai for refurbishment. Significant development drilling is expected to commence in 2026 after the FPSO returns to service, with potential meaningful additions to production from the main Baobab field. The Council of Ministers has recently approved a 10-year extension of the license on CI-40, extending it to 2038. We are making a substantial investment in this project, but given the license extension and the 125% cost oil return on capital expenditures, this investment will yield solid economic growth in the future. In March 2025, we announced a farm-in agreement for the CI-705 block offshore Cote D'Ivoire, where we will operate with a 70% working interest and a 100% paying interest under a commercial carry arrangement through the seismic reprocessing and interpretation stages, and potentially drill up to two exploration wells. We invested $3 million to acquire our interest in this new block and are partnering with Ivory Coast Exploration Oil & Gas SAS and PETROCI. We plan to conduct a detailed integrated geological analysis to assess and mature our understanding of the block's overall prospectivity. We believe the block is favorably situated in a proven hydrocarbon system within the prolific Tano Basin, approximately 70 kilometers west of our CI-40 block. We have shown our ability to acquire, develop, and enhance value through accretive acquisitions, and we are excited about the prospects in Cote D'Ivoire. In Egypt, in the fourth quarter of 2024, we contracted a rig and drilled two wells, initiating a drilling campaign that has continued into the first half of 2025. In the first quarter of 2025, we drilled an additional five wells and completed four of them, achieving an average 30-day initial production rate of approximately 120 barrels of oil per day. We plan to drill three to four more wells in the second quarter of 2025, with strong results anticipated from the first well. Both the drilling program and the workover program in Egypt contribute solid production and remain economical even in lower price environments. I am also very proud of our strong safety performance in Egypt. We have not experienced a lost time incident in 2024, and so far in 2025, we have maintained this record, totaling over 4.3 million man hours without an incident, which reflects our ongoing commitment to safety. Moving on to Gabon, even though we have not drilled a well there for over two years, we are pleased with the overall positive production results, including strong production uptime and improved decline curves on the wells. We secured a drilling rig in December 2024 for our 2025-2026 drilling program, which is scheduled to begin in Q3 2025. However, the timing of the drilling program depends on the rig's availability. We signed a contract for a firm commitment of five wells, with an option for five additional wells. We aim to drill two wells and complete one in 2025, with the remainder of the program occurring in 2026. There are options to drill additional wells if information gathered during the program improves our understanding of existing well locations. Since the last call, we have continued to evaluate the well sequencing and testing of the Ebouri shut-in wells. We are pleased that the extended flow test on the Ebouri 4H well has continued into the second quarter, with production at around 1,000 barrels of oil per day. Originally, we wanted to collect data on the hydrogen sulfide concentrations at this site to assist in equipment design and evaluate our chemical crude sweetening process. The well has now flowed for over four months, with the H2S concentration aligning with our modeling expectations, confirming our capacity to chemically treat the oil. The well's production has also contributed to exceeding guidance in Q1 2025, providing further production costs for chemicals. We expect to work over this well during the program, potentially enhancing oil production. Regarding our exploration blocks in Gabon, Niosi Marin and Guduma Marin, we are collaborating with our partners and the operator BW Energy on future plans for these blocks. A seismic survey to fulfill a work commitment on Niosi is planned for late 2025 or early 2026. Given the closeness of these blocks to the producing fields of Etame and Dussafu, we are enthusiastic about their future potential. In Canada, we successfully drilled four wells with lateral lengths of 2.75 miles in early 2024, which helped improve the liquid mix of our production, enhancing our financial performance. As I noted in the last call, we also drilled a well in our Southern Acreage in Q4 2024. Due to limited horizontal subsurface data across our Southern Acreage, this well was drilled to gain better insights into the acreage and possibly add reserves. The well flowed approximately 200 barrels of oil per day during initial testing, and we have since shut it in while we assess options for connecting it to production. This positive outcome could result in future reserves and resources for our Southern Acreage. While we remain hopeful about drillable inventory in Canada, we opted not to drill wells this year because of current commodity price uncertainties. We will continue to monitor well performance and plan for future drilling opportunities. Turning to Equatorial Guinea, we are currently conducting our front-end engineering design study, or FEED study. We anticipate that completing this study will lead to an economic final investment decision in 2025, enabling the development of our Venus discovery. We are keen to move forward with our plans to develop, operate, and start producing from this discovery in Block P offshore Equatorial Guinea in the coming years. Now, let's discuss some of our financial results. In the first quarter, we spent $58 million in capital expenditures on a cash basis, which was below our guidance range. Our unrestricted cash balance as of March 31, 2025, was $40.9 million, a decrease of about $40 million from year-end 2024. This was primarily due to elevated capital spending and the state lifting in Gabon, which settled our in-time taxes of about $30 million. We expect this to be our only state lifting in Gabon in 2025. Our foreign income taxes are settled by the government through oil liftings in Gabon and Cote D'Ivoire, while the government takes its share in Egypt. The state lifting in Gabon in Q1 also affected our working capital outflow. Despite this outflow, we successfully reduced our receivables balance in Egypt, which helped partially counterbalance the impact of the state lifting. We concluded the first quarter without bank debt, with an undrawn $190 million credit facility available to fund our capital projects. Let me now turn to guidance. I would like to emphasize that our full guidance breakout is available in our earnings release and in our supplemental slide deck on our website, including a production breakdown by asset. As previously mentioned, we are lowering our full-year capital budget from a range of $270 million to $330 million down to $250 million to $300 million, while our full-year production and sales guidance remains unchanged. For the second quarter, we expect to spend between $65 million and $85 million in capital expenditures. Net revenue interest production is projected to be between 15,400 and 16,800 barrels of oil equivalent per day, with sales expected to range from 17,800 to 19,300 barrels of oil equivalent per day. We anticipate three liftings in Gabon during Q2, which accounts for our sales guidance being higher than our production guidance. It's important to note that the FPSO project in Cote D'Ivoire began in Q1, and production and sales for the Baobab field are not expected until the FPSO returns in 2026. Production expenses for Q2 are expected to align with Q1 2025 when normalized for one-time expenses. In light of current commodity price uncertainty, we are vigilantly monitoring every dollar spent. Similar to our capital spending, we are also looking to defer discretionary spending in operating and general administrative expenses. Regarding hedging, we have added some additional hedges, now having 70,000 barrels of oil per month hedged in Q2 with a floor price of $65. In July, we have 160,000 barrels of oil per month hedged at a floor of about $65, and in August and September, we have 60,000 barrels of oil per month hedged at the same floor. Additionally, we have gas hedges covering 75% of our anticipated gas production from May through October this year. Our hedging program is designed to mitigate risk and protect our commitment to shareholder returns. As you’ve heard today, we have a history of delivering strong operational and financial results consistently at or above expectations every quarter, as well as making highly accretive acquisitions that have significantly grown VAALCO. We have an exciting assortment of organic projects we will execute over the next few years, which we expect will double our size and enhance our ability to generate even more cash flow for future growth. Next week, we will hold our Capital Markets Day, where we will provide further details about the upside potential across our diversified asset portfolio. I want everyone to leave our Capital Markets Day with an understanding that VAALCO is on the right trajectory, with numerous high-quality upside opportunities within our portfolio. Furthermore, we have an exceptional team whose operational, technical, and financial expertise will be showcased during the presentation. This, combined with our track record of meeting or exceeding expectations, should instill confidence within the investment community regarding our ability to fulfill our commitments, driving our valuation in line with the cash flows and NPV potential that VAALCO can deliver in the future. Our strategy remains stable: operate efficiently, invest judiciously, maximize our asset base, and pursue accretive opportunities. We are in a strong financial position, boasting a robust and diverse portfolio of producing assets with substantial future upside potential. Our entire organization is dedicated to delivering sustainable growth and strong results, ensuring we can continue funding our capital programs while also returning value to our shareholders through a top-tier dividend yield. In Q1 2025, we distributed a quarterly cash dividend of $0.0625 per common share, amounting to approximately $6.5 million. We have also announced the second dividend payment of 2025, which will be issued later in June, and we remain on track to provide another annual dividend of $0.25 per share for 2025, which equates to a yield exceeding 7.5% at our current share price. After the second quarter 2025 dividend payment, VAALCO will have returned over $100 million to shareholders through dividends and share buybacks since the initiation of the first dividend in 2022. We are truly excited about our future, as VAALCO now has multiple producing areas and prospects that present a diversified risk profile and sources of income for many years to come. Our disciplined approach to maximizing value for our shareholders by enhancing growth in production, reserves, and cash flow has not yet been reflected in our stock price, but we believe the market will start to properly value VAALCO as we carry out our organic opportunities. Thank you, and with that, operator, we are ready to take questions.

We will now start the question-and-answer session. The first question comes from Jeff Robertson with Water Tower Research. Please proceed.

Thank you. Good morning. George, can you comment on the production profile at Gabon over the back half of 2025 and how it fits into your guidance? And I'm wondering if you have any downtime in the numbers that would be caused by the drilling campaign that you'll start in the third quarter?

Yes, we can. The first answer to that is no, we don't have any significant planned downtime related to the drilling program for 2025. However, we do have planned preventative maintenance downtime in July. We have, in relation to the drilling program, we do see a slight uptick in production towards the end of Q4, which is the delivery of the first well that should be back on production in Q4, but within our guidance, there's not a significant amount of production included from the drilling campaign.

So, with the third quarter then, would you expect that to be the lowest quarter of the year for production given the maintenance schedule?

Yes, we would. Because we're going to be at, I think, between 7 and 10 days.

In NCI, can you talk at all yet about how the development drilling campaign starts to look in 2026? And are you looking for are you and the partner looking for a rig there? Or when might you expect to start that? I know you'll probably talk about that in much more detail next week.

Yeah. We have some more detail on that next week. Obviously, the Phase 5 drilling is scheduled to start midyear 2026. The operator is actively working on securing the rig, and we'll wait for the operator to make that announcement as and when that's concluded. But right now, everything is on schedule for midyear 2026 for that campaign.

Thank you.

And your next question comes from Stephane Foucaud with Auctus Advisor. Please go ahead.

Good afternoon, everyone. In light of the lower oil prices and the upcoming activities in 2026 and 2027, particularly in Gabon and Cote D'Ivoire, I would like to know how you would prioritize these projects if oil prices remain low.

Okay. Well, it depends obviously what you classify as a low oil price. Obviously, we've always been sensitizing around $65 when it comes to our dividend, and when it comes to our capital project. And as you're aware, Stephane, particularly in Africa, the PSCs are extremely forgiving on low oil prices and in many cases remain very economic at low oil prices as your cost of entitlement increases. So when we look at the priority of projects, obviously anything that can enhance production through existing facilities in Gabon or in CDI is much more economic than a Bluewater development. So that being said, the biggest Bluewater development we have would be in Equatorial Guinea. And as we've already communicated to the market, that particular project, given its short tenure of up to 60 months of production and the terms of that PSC, does make it very attractive. So the bolt-on opportunities would be what we would look at if oil prices fell below the $60 levels on a longer-term basis. But when we did do the analysis of the only Bluewater development we have on EG, we did sensitize that down to $50. When we did that at the time, now the other thing we haven't seen quite yet in a lower oil price environment is the service and equipment market moving towards lower prices to enable those developments to be far more economic. So if there were a sustained low oil price environment, we would expect to see on the service side a corresponding reduction in the cost that would support further economic development even at lower prices.

Okay. Just to add on to that, we are starting to see some softening of supplier costs as well in the industry.

Okay. Thank you. And my follow on, so Ebouri seems to be going very well, $1,000 a day continued in Q2. How does that compare with your expectation? Is it better? Is it in line, and what does that mean for the developments in terms of economics?

Okay. It doesn't mean anything. I mean, Ebouri 4H was brought online in order to get further information on reservoir performance, further information on the H2S concentrations. And one of the things we've always cautioned about 4H is that this well was shut in for about eight or nine years and is still running on the older versions of the ESPs. So we've taken advantage of the resilience of that well to continue to produce beyond our testing expectations. When we look at what impact does it have on the redevelopment of Ebouri, it just gives us further information and a greater degree of confidence that the solution that we've established on downhole chemical scavenging is going to be more than sufficient to continue that development in Ebouri. So it's a great boost to Q1. It was unplanned. And for our guidance, 4H continues to produce, but it's also something we've taken out of our guidance because it really is just a test well.

Thank you.

Your next question comes from Chris Wheaton with Stifel. Please go ahead.

Thank you, gentlemen. Good morning. A couple of questions for me, really around working capital, if I may. Firstly, on Gabon, are you able to give an indication of how big the working capital swing later in the year will be as the government lifting is absorbed? Looking at the difference between your sales and your production numbers, it looks to be about $20 million or so at 1Q oil prices. Secondly, another broader question on working capital. We've seen reasonably meaningful outflow over the last two years now. I think cumulatively since the beginning of '23 is a total of $49 million of working capital. So I'm interested in, again, coming back to my first question, how much of that is the Gabon lifting? But also if there's a chance that some of this working capital is structural that it won't actually come back into the business in the next sort of 9 to 12 months or so? Those are kind of my key questions I'd like for now. Thank you.

Chris, it's Ron. Thanks for that. Let me take Gabon. As you can see in Q1, we had the state lift in February. And you can see on the earnings release that the cash equivalent value for that oil lift for us was just over $30 million. There were also coal lifts, both partner less and state less for obviously CDI in Q1, too. And I think that's about another $1 million. So we actually paid cash taxes through those oil lifts of about $31 million in the quarter. And that really is the outflow driving the outflow in working capital in Q1. We had some receivables collections which helped minimize that overall impact. Now what that will do is effectively that represents our taxes for the year, we believe, in Gabon, and there'll be nothing in CDI because we're out of production in 2025. So what you will see is your foreign tax payable and the balance sheet start to grow over the next, the coming months, six to nine months. So if anything, it's going to be a working capital improvement, Chris, because we won't have a state lift until into 2026 in Gabon and we certainly won't have a state lift until 2026 in CDI. Hopefully that helps answer that question.

No, that's great. Thank you very much.

No problem.

And can I just have a follow-up on Egypt, please? You've got your $32 million back in the quarter from Egypt, which I have to say very well done. Does that represent all of the sort of the aged receivable that was outstanding that you'd managed to get reclassified, I think it was in the third quarter of last year, reclassified as a payable? So it looks like you've got most of that receivable issue in Egypt resolved now. I guess the question is, if that's been resolved, does that mean the Egyptian government is expecting you to put some of that back into more CapEx in Egypt because obviously that would be the quid pro quo, but it feels like at current oil price that isn't probably what you ought to be doing?

Again, great question, Chris. The situation in relation to Egypt. First and foremost, let me just make sure and clarify. The movement of $32 million I think you believe you see in the cash flow is in relation to the contractual backdated entitlement, which at one point in time was over $60 million. We've managed to collect the bulk of, in fact, all of that over the last year and a bit. Now what I would say is we haven't seen a $30 million reduction in Egyptian receivables in the quarter. The overall position on receivables improved by about $8 million or $9 million because although there are payments and offsets going against that contractual backdated, the oldest, your current receivables are actually there’s a detrimental issue there. So net net, Chris, I just want to make sure that people understand the receivables did not come in by $30 million; they came in by closer to $10 million. Now what that also means is, as you know, we started drilling at the end of 2024. I think we completed two wells in Q4 2024 and we've been drilling in Q1, and I think we completed about five wells in Q1. That current campaign, I think, is somewhere between 12 and 15 wells, should be completed by the end of Q2. So we will be in a situation where we've met our contractual requirements and indeed our work program that we agreed with EGPC. And I'd just again like to thank our local team who are doing a great job with EGPC and making sure that everyone at the end of the day are aligned to the verbal agreements that we have with one another.

That's great. That's brilliant. That's really, really helpful answer, Ron. Thank you very much indeed.

No problem.

Seeing no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to George Maxwell for any closing remarks.

Thank you very much. As I mentioned earlier, we had a very strong Q1, following a solid Q4 in 2024. Our Capital Markets Day is scheduled for next Wednesday, and details are available on our website. We will provide an outline for 2028 and 2029. One of the key points is that the growth in our organic portfolio has created numerous opportunities for the company over the coming years. We are confident in the resources we currently have, both human and financial, to implement the plans that will be presented on Wednesday. Our message is that we do not need to seek additional resources to execute these plans. Thank you all for attending the conference, and I want to express my gratitude to my colleagues at VAALCO for their efforts in Q1. I look forward to discussing our Q2 results with you. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.