VAALCO Energy, Inc. announced higher revenues in 2007 compared with 2006, although net income was affected by an increased depletion rate, a higher effective income tax rate and a dry hole cost.
The Company said its total oil and gas sales for the year ended December 31, 2007 were $125.0 million, up 27% from $98.3 million in 2006. Operating income for the year was $68.7 million, down 8% from $74.3 million in 2006. Net income for 2007 decreased to $19.1 million, or $0.32 per diluted share, from $40.3 million, or $0.67 per diluted share in 2006. In 2007, net income included a pre-tax charge of $8.1 million for an unsuccessful well in the North Sea.
Depletion costs for 2007 were higher due to higher depletion rates at the Avouma and South Tchibala fields in the Etame concession, which commenced production in January 2007. Income taxes increased $11.4 million, primarily due to higher commodity prices and increased production.
Robert L. Gerry, III, Chairman and CEO, stated, "VAALCO continues to pursue its strategy to add proved reserves, revenues and maintain strong cash flow, through accelerated exploration and production from our Etame properties offshore Gabon and our other high potential properties including onshore Gabon and offshore Angola."
VAALCO sold 1,759,000 net barrels of oil equivalent at an average price of $71.16 per barrel during 2007, compared with 1,554,000 barrels of oil equivalent at an average price of $63.26 in 2006. It ended 2007 with 6.2 million barrels of total proved reserves, up from 6.0 million barrels at year-end 2006. Total proved plus probable reserves were 10.4 million barrels at year-end 2007.
"The replacement of reserves in 2007 reflects the continued performance of our fields on the Etame concession and the positive impact of higher oil prices," Gerry said.
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