10th Mar 2020 12:40
(Alliance News) - Vaalco Energy Inc warned on Tuesday it will be reviewing future expenditure following the slump in world oil prices.
The stock was untraded at 115.00 pence on Tuesday in London. Shares are down 13% in the past month.
Energy firms have been battered this week by a fall in the oil price. Brent was quoted USD37.35 a barrel on Tuesday, falling to closed to USD30 overnight on Sunday, amid the coronavirus outbreak and a failure by major oil producing nations to agree production cuts.
Houston-based Vaalco, which has producing assets at Etame in Gabon, West Africa, said it is continuing to "screen" a number of new opportunities, despite the growth potential in Gabon.
However, it also warned: "Vaalco intends to manage both operating expenses as well as capital expenditure levels in view of the existing and expected pricing environment.
"In addition, the company continues to evaluate all uses of cash and whether to pursue growth opportunities in light of ongoing economic conditions."
Vaalco believes its operational cash flow break-even level in 2020 is about USD31 per barrel, while its corporate cash flow break-even, excluding capital expenditure, is about USD38.50 per barrel.
Turning to 2019 results, Vaalco posted a 19% fall in revenue to USD84.5 million. Pretax profit more than halved, to USD21.0 million from USD55.5 million.
Production in 2019 averaged 3,476 net revenue interest barrels of crude oil per day, meaning a 7.3% decline year-on-year.
Looking to 2020, Vaalco sees production between 4,400 barrels and 5,000 barrels per day.
"We are very proud of the significant success we achieved in 2019 and thus far in 2020 and our progress toward accomplishing our goals. We executed a highly successful 2019/2020 drilling and workover program, that began in September 2019, and which we funded with cash on hand and through operational cash flow," said Chief Executive Cary Bounds.
"We successfully drilled two development wells that are exceeding production expectations and two successful appraisal wells. A third development well should also add production when it is completed and brought online later this month."
Vaalco is in a "sound" financial position, Bounds said, and the company still expects solid cash flow from operations in 2020 despite the falling oil price.
By George Collard; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
Vaalco Energy