Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

No more spending for Vaalco this year

Offshore drilling equipment
Vaalco's operations offshore Gabon

Vaalco Energy posted a net loss of $52.8 million for the first quarter of the year, driven by a non-cash charge of $59.1mn as a result of lower oil prices.

The company noted that it had completed its 2019-20 drilling campaign and the Vantage Drilling jack-up had been released on April 9. No further spending is expected this year.

Production was up in the quarter, by 35% versus the fourth quarter of 2019, as a result of the drilling work. Output reached 4,944 barrels per day on a net revenue interest basis, at the high end of its forecast production.

Following the end of the drilling campaign, and release of the rig, the South Tchibala 2H well stopped production as a result of a downhole mechanical failure. This had been providing 225 bpd to Vaalco net. The US-based company said that it did not expect this to be tackled until the next drilling campaign.

The adjusted net income for the period was $6.9mn. Results benefited from the timing of liftings. One cargo that had been due to be exported was delayed into the second quarter, protecting the company’s average price for the first period.

Another area was hedging, with Vaalco having secured prices of $66.7 per barrel from July 2019 to June 2020 covering the production of 500,000 barrels. After June, though, Vaalco does not currently have any derivatives in place to protect against declining prices.

With no debt in place, the company has scope for deciding whether to buy protection from price swings or not.

Production costs are forecast to be $20-24 per barrel this year following cost savings.

“In response to the decline in Brent pricing, Vaalco has taken several actions to minimise capital and operational spending to preserve cash flow and reduce our breakeven costs. We released the Vantage rig in early April following the completion of our successful 2019-2020 drilling programme, and we have no material capital expenditures remaining in 2020,” said the company’s CEO Cary Bounds.

“While we have deferred all discretionary capital expenditures including drilling until the global oil pricing environment improves, we remain confident in the long-term viability of our inventory of drilling opportunities.”

Vaalco also has a stake in a Block P, offshore Equatorial Guinea. The company is in talks with a Nigerian company, Leven Hydrocarbon, on possible co-operation that might see Vaalco’s costs for an exploration well carried.

Nothing binding has been agreed and any deal would require approval from the government.

Recommended for you

More from Energy Voice

Latest Posts