VAALCO Energy Announces First Quarter 2004 Results

VAALCO Energy announced that for the first quarter of 2004 earnings were $3.3 million or $0.15 per basic share and $0.06 per diluted share. This compared to net income of $4.0 million or $0.19 per basic share and $0.06 per diluted share for the comparable period in 2003. First quarter 2003 earnings included a one time gain due to the effect of an accounting change of $1.7 million.

First quarter 2004 revenues were $8.2 million compared to $8.5 million in first quarter 2003. The Company sold 265,000 net barrels at an average price of $30.83 during the first quarter 2004 compared to 284,000 barrels at an average price of $30.14 in the first quarter of 2003. The lower oil sales were primarily due to timing differences associated with liftings from the Etame field.

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 $4.5 million for the three months ended March 31, 2004.

VAALCO has also signed an agreement with its former partners in the Philippines to sell all of its assets and interests in Service Contract 14 and Service Contract 6 in the Philippines. The agreement is subject to government approval which is expected by June 30, 2004. The sale of these interests will conclude the Company's operations in the country. Primary consideration for the sale is the assumption of all abandonment liabilities associated with the assets by the purchasers.