Other Etame co-owners did not exercise their pre-emptive rights to acquire an additional stake in the NYSE: EGY domain

HOUSTON, December 21, 2020 (GLOBE NEWSWIRE) – VAALCO Energy, Inc. (NYSE: EGY; LSE: EGY) (“VAALCO” or the “Company”) today announced that, in connection with the previously announced acquisition of VAALCO to Sasol Gabon SA (“Sasol”) of the direct 27.8% stake in Sasol⁽¹⁾ in the Etame Marin block off the coast of Gabon, the other co-owners of the Etame Marin block did not exercise their preferential subscription rights. Accordingly, VAALCO will now move forward with the acquisition of all of Sasol’s active participation in the field.

Regarding Gabon’s offshore DE-8 block, the holder of a 60% stake, Perenco, has exercised its preferential rights. As a result, Perenco acquires the 40% untapped stake in Sasol⁽¹⁾, releasing VAALCO from the potential obligation to drill an appraisal well. VAALCO will not be subject to any conditional payment due relating to Block DE-8. The terms of the sale and purchase contract did not assign a material value to the undeveloped resource of block DE-8, as such, the purchase price of the direct 27.8% stake in Sasol⁽¹⁾ of $ 44 million less customary post-effective date adjustments has not changed. The maximum amount of future contingency payments has been reduced from $ 6 million to $ 5 million.

Additional details regarding the transaction were included in a press release issued on November 17, 2020. As VAALCO currently owns and operates a 31.1% working interest⁽¹⁾ in Etame, the transaction will almost double the total production and reserves of VAALCO.

Cary Bounds, CEO, said: “We are delighted to move forward with this very attractive and profitable acquisition. Based on production performance in November, our production capacity, including volumes acquired from Sasol, would be over 9,000 barrels of oil per day and with the recent increase in oil prices this should significantly improve our free cash flow profile in 2021. This transaction reduces our breakeven cost per barrel by increasing production with minimal increases in general and administrative costs. While we are disappointed not to participate in Block DE-8, this eliminates the cost of drilling the appraisal well, reducing our overall capital commitment in 2021 from $ 7 million to $ 9 million and removing the potential obligation for contingencies of $ 1 million. We are even more confident in the future for VAALCO and this acquisition coupled with new proprietary 3-D seismic data that we are processing on the entire Etame Marin block will allow us to maximize the value of our Gabonese resources. We are well positioned to grow profitably and generate free cash flow in the short and long term, which should increase value for our shareholders. “

An updated investor presentation with additional information is available at www.vaalco.com in the Investor Relations section.

About VAALCO

VAALCO, founded in 1985, is an independent energy company based in Houston, USA, with generation, development and exploration assets in the West Africa region.

The Company is an operator established in the region, holding a 33.6% stake in the Etame Marin block, located off the coast of Gabon, which to date has produced more than 119 million barrels of crude oil and of which the Company is the operator.

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Forward-looking statements

This document includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included in this document that deal with the activities, events, plans, expectations, objectives or developments that VAALCO foresees, believes or foresees will occur or could occur in the future are forward-looking statements. These statements may include statements related to the impact of the COVID-19 pandemic, including the recent sharp decline in global demand for crude oil and the resulting oversupply of crude oil and the sharp drop in prices. resulting oil, production quotas imposed by Gabon, disruptions in global supply chains, quarantine of our workforce or downsizing and other issues related to the pandemic, well results, wells to be drilled and put into production, future levels of drilling and operational activity and associated expectations, implementation of the company’s business plans and strategy, outlook assessments, prospective resources and reserve growth, its activities in Equatorial Guinea, the expected sources and the potential difficulties in obtaining future financing and future liquidity, its ability to restore production in wells n on producers, future operating losses, future changes in crude oil and natural gas prices, future strategic alternatives, current acquisitions and acquisitions, capital expenditures, future drilling plans, acquisition and interpretation of seismic data and costs thereof, negotiations with governments and third parties, timing of Gabon’s income tax settlement and expectations regarding processing facilities, production, sales and financial projections. These statements are based on assumptions made by VAALCO based on its experience and its perception of historical trends, current conditions, expected future developments and other factors that it considers appropriate in the circumstances. These statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of VAALCO. These risks include, but are not limited to, the volatility of crude oil and natural gas prices, the failure to close the deal, the impact of production quotas imposed by Gabon in response to production cuts. agreed as a member of OPEC, inflation, economic conditions, the COVID-19 outbreak, the company’s success in finding, developing and producing reserves, differences in production and sales due to the timing of fundraising, decisions of future lenders, liquidity risks, lack of availability of goods, services and capital, environmental risks, drilling risks, foreign regulatory and operational risks and regulatory changes .

Investors are cautioned that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in forward-looking statements. VAALCO disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Inside information

This announcement contains inside information as defined in Regulation (EU) No. 596/2014 on Market Abuse (“MAR”) and is made in accordance with the Company’s obligations under article 17 of MAR.