VAALCO Energy, Inc.

What they do

VAALCO produces crude oil, natural gas and natural gas liquids from offshore and onshore assets in West and North Africa. Volumes are reported on both a working interest (WI) and net revenue interest (NRI) basis, with sales occurring through periodic liftings in Gabon and Côte d'Ivoire and ongoing sales in Egypt. The company operated the Baobab field FPSO offshore Côte d'Ivoire and holds a 60% WI in the Kossipo field, and it divested its Canadian assets during the first half of 2026.

Revenue drivers

• Gabon crude oil liftings — Gabon contributed two liftings in Q2 2026 and two more are expected in Q3 2026; the Phase Three Drilling Program began in Q2 2026 and multiple wells have been drilled and brought online.
• Egypt crude oil sales — Egyptian sales increased in Q2 2026 and trade receivables there fell from $31.6 million at December 31, 2025 to $12.9 million at June 30, 2026; drilling resumed in Egypt in May 2026.
• Côte d'Ivoire (Baobab) production — The Baobab FPSO completed a yearlong dry dock refurbishment and production restarted in June 2026; Q3 2026 is expected to include the first 2026 lifting in Côte d'Ivoire.
• Divested Canadian assets — VAALCO divested all of its Canadian assets during the first half of 2026, which the CEO said added material cash to the balance sheet; held-for-sale balances of $31.8 million noncurrent assets at December 31, 2025 were carried on the balance sheet.

Recent performance

Q2 2026 revenues were $135.2 million, up from $96.9 million in Q2 2025, and net income was $42.4 million ($0.39 per diluted share). Sales volumes were 17,812 NRI BOEPD, up 47% from Q1 2026 and above the midpoint of guidance, while WI production was 21,796 BOEPD. First half 2026 net loss was $51.3 million, driven by a $51.9 million derivative loss and $22.5 million of exploration expense in the first quarter. Adjusted EBITDAX was $54.8 million in Q2 2026 versus $11.6 million in Q1 2026. Full year 2025 revenue was $359.3 million with a net loss of $41.4 million.

Strategy

Management is focused on executing drilling campaigns across its African portfolio: completing the Gabon Phase Three program, expanding the Egyptian drilling campaign, and starting the Phase Five Drilling Program at Baobab expected to provide production uplift in 2027. The company was confirmed as operator with a 60% WI in the Kossipo field in Côte d'Ivoire and divested all Canadian assets. Capital expenditures of $103.6 million in Q2 2026 covered the Gabon program, completion of the Côte d'Ivoire FPSO dry dock refurbishment, and materials for the 2026 Côte d'Ivoire campaign. VAALCO pays a quarterly cash dividend, most recently declared at $0.0625 per share payable September 22, 2026.

Risks

• Commodity price and derivative exposure — A $51.9 million net derivative loss in the first half of 2026 drove the half-year net loss, showing earnings sensitivity to oil price movements.
• Production concentration and operational interruptions — Output depends on a small number of fields including the Baobab FPSO, which was offline for a yearlong refurbishment before restarting in June 2026.
• Egypt receivables and joint venture credit — The company carried a $3.1 million allowance for credit losses on joint venture owner accounts at June 30, 2026, and Egypt trade receivables remained $12.9 million.
• Leverage increase — Long-term debt rose to $177.0 million at June 30, 2026 from $60.0 million at December 31, 2025, while cash and equivalents fell to $30.4 million.

Outlook

Management forecasts Q3 2026 sales of 17,200 to 18,900 NRI BOPD and production of 19,600 to 21,600 NRI BOPD, a 23% increase over Q2 2026 at the midpoint, including a full quarter from Côte d'Ivoire. Q3 2026 is expected to include two liftings in Gabon, continued higher Egyptian sales, and the first 2026 lifting in Côte d'Ivoire. The company affirmed its raised full year 2026 NRI production and sales guidance (up 8% and 12% at the midpoint versus prior guidance) while keeping the 2026 capital budget unchanged despite added Egyptian drilling.