VAALCO Notes Earnings Boost in Third Quarter

VAALCO announced that for the third quarter of 2008, net income was $22.3 million or $0.38 per diluted share compared to $8.8 million or $0.15 per diluted share for the comparable period in 2007. Third quarter 2008 revenues were $55.5 million compared to $34.8 million in the third quarter of 2007.

Discretionary cash flow was up 85% to $66.2 million for the nine months ended September 30, 2008 compared to $35.7 million in the same period of 2007. For the nine months ended September 30, 2008, net income was $37.2 million or $0.63 per diluted share compared to $17.1 million or $0.28 per diluted share in the nine months ended September 30, 2007.

"VAALCO's strong third quarter results reflect higher oil prices and crude volumes, as well as the expected benefit from a lower tax rate, attributable to increased capital expenditures during the quarter," said Robert L. Gerry, III, Chairman and CEO. "Our drilling and exploration program is continuing at one of the strongest rates in our history, with prospects in place to grow reserves and production. VAALCO's capital position remains strong, enabling us to capitalize on these opportunities."

As previously announced, VAALCO is planning seven additional development and exploration wells including a development well in the Ebouri field, three exploratory wells in the Etame block, two exploratory wells onshore Gabon in the Mutamba concession, one exploratory well in Angola, and a 25% interest in a gas prospect in the British North Sea. Together, these wells expose the Company to over 50 million net barrels, or an 8-fold potential increase to VAALCO's current 6.2 million barrels of proved reserves.

Financial Results Discussion

VAALCO sold 517,000 net barrels of crude oil equivalent at an average price of $107.48 per barrel during the third quarter of 2008 compared to 472,000 barrels of crude oil equivalent at an average price of $73.79 per barrel in the third quarter of 2007. Operating income was $41.8 million in the third quarter of 2008 compared to $23.8 million in the third quarter of 2007.

Crude oil sales for the nine months ended September 30, 2008 were 1,428,000 barrels of oil equivalent at an average price of $107.21 per barrel compared to 1,334,000 barrels of oil equivalent at an average $66.05 per barrel of oil equivalent for the nine months ended September 30, 2007. Operating income was $106.6 million in the nine months ended September 30, 2008 compared to $51.2 million in the same 2007 period.

Capital expenditures for the nine months ended September 30, 2008 were $16.9 million, primarily associated with the construction of the Ebouri development platform in Gabon.

 

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