12th May 2020 15:43
(Alliance News) - Vaalco Energy Inc on Tuesday said it has kept its 2020 production guidance unchanged, despite swinging to a loss for the first quarter as costs rose and revenue declined.
For the three months to the end of March, Vaalco reported a pretax loss of USD19.3 million, compared to a profit of USD3.6 million the year before, as the company suffered from an impairment of USD30.6 million related to its investment in the Etame Marine block, offshore Gabon, as a result of the decline in forecasted oil prices.
Meanwhile, revenue dropped by 7.0% to USD18.4 million from USD19.8 million the prior year. This came as, despite a 41% increase in 4,944 net revenue interest barrels of oil per day, sales dropped by 7% to 294,000 barrels and the realised crude oil price also declined by 7% to USD59.54 per barrel.
The first quarter output was near the high end of its guidance range of 4,700 to 5,000 barrels per day.
Looking ahead, Vaalco said it has experienced no material disruptions in operations due to the Covid-19 crisis and has taken several steps to minimise the effects of the pandemic and the low oil price environment.
Vaalco has kept its 2020 production guidance at 4,400 to 5,000 barrels of oil per day, and expects output for the second quarter to be between 5,000 and 5,400 bopd.
"With the global Covid-19 pandemic coupled with supply and demand imbalances, the energy industry is facing extraordinary challenges never seen before. Thus far, Vaalco's operations have not been materially disrupted by the global Covid-19 pandemic, and we have managed through the logistical challenges that we have faced since the outbreak. Vaalco continues to put the safety of our workers and local stakeholders first and contingency plans are in place in the event that we are directly impacted. In response to the decline in Brent pricing, Vaalco has taken several actions to minimise capital and operational spending to preserve cash flow and reduce our breakeven costs," said Chief Executive Officer Cary Bounds.
Shares in Vaalco Energy were untraded on Tuesday in London, last quoted at 70.00 pence.
By Dayo Laniyan; [email protected]
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