VAALCO Energy Announces 223% Increase in 1Q05 Results

VAALCO Energy, Inc. (Amex: EGY), announced that for the first quarter of 2005 earnings were $7.3 million or $0.20 per basic share and $0.12 per diluted share. This compared to net income of $3.3 million or $0.15 per basic share and $0.05 per diluted share for the comparable period in 2004. The Company sold 519,000 net barrels at an average price of $44.58 per barrel during the first quarter of 2005 compared to 265,000 barrels at an average price of $30.83 per barrel in the first quarter of 2004. The increased oil sales were due in part to timing differences associated with liftings from the Etame field and from the increase in production as a result of the ET-5H development well. Production was approximately 15,000 barrels of oil per day before opening the ET-5H well and production has been stable at approximately 19,000 barrels per day since December 2004.

Discretionary cash flow, a non-GAAP financial measure of the amount of cash generated that can be used for working capital, debt service or future investments, was $9.8 million for the three months ended March 31, 2005.

Robert L. Gerry, III, Chairman and CEO stated, "First quarter 2005 earnings benefited from increased production rates as compared to first quarter 2004 as a result of the addition of the Etame 5H development well last August. We have just spudded an exploration well, the EAVSM-1, on a prospect south of the Avouma discovery. That well should reach total depth in about 30 days. After the EAVSM-1 well is drilled, we will commence the drilling of the Etame 6H development well to further increase production from the Etame field. Upon a successful completion we anticipate raising field wide production to between 23,000 and 25,000 barrels per day.

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