Vaalco Energy’s Earnings Call: Strong Performance Amid Challenges

Vaalco Energy ((EGY)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call from Vaalco Energy presented a balanced view of the company’s current standing and future prospects. The sentiment expressed during the call was a mix of strong operational performance and financial discipline, particularly highlighted by increased production guidance and cost efficiencies in Egypt. However, the company is also facing challenges such as delayed drilling programs and offline production in Cote d’Ivoire, which pose obstacles to immediate growth. Despite these hurdles, Vaalco Energy remains well-positioned to capitalize on future opportunities.

Strong Production Performance

Vaalco Energy reported impressive production figures, with NRI production reaching 15,405 BOE per day and working interest production at 19,887 BOE per day, both at the high end or above guidance. Additionally, NRI sales were at 12,831 BOE per day, aligning with the high end of guidance, showcasing the company’s robust operational capabilities.

Increased Full-Year Guidance

The company has raised the midpoint of its full-year production and sales guidance by approximately 5%, while simultaneously reducing capital guidance by nearly 20%. This adjustment reflects Vaalco’s confidence in its operational efficiency and ability to manage costs effectively.

Adjusted EBITDAX Generation

Vaalco Energy generated an adjusted EBITDAX of $130.5 million in the first nine months of 2025, indicating strong financial performance and the company’s ability to generate substantial earnings before interest, taxes, depreciation, amortization, and exploration expenses.

Cost Efficiency in Egypt

In Egypt, Vaalco drilled more wells faster and cheaper than initially budgeted, positively impacting production without increasing capital expenditure. This achievement underscores the company’s focus on cost efficiency and operational excellence.

Dividend Yield

Vaalco returned approximately $20 million to shareholders through dividends in the first nine months of 2025. The announcement of a Q4 dividend of $0.0025 per share provides a yield of about 7%, demonstrating the company’s commitment to returning value to its shareholders.

Cote d’Ivoire Production Offline

Production in Cote d’Ivoire came offline in Q1 2025 due to the FPSO project, with a meaningful production uplift now anticipated in 2026. This delay presents a challenge but also sets the stage for future growth once production resumes.

Sales and Pricing Decrease

The company experienced a 33% decrease in sales due to fewer listings in Gabon, coupled with a 7% quarter-on-quarter drop in pricing. These factors have impacted revenue but are part of the broader market dynamics that Vaalco is navigating.

Delayed Drilling Program in Gabon

Vaalco’s drilling program in Gabon has been delayed due to the rig’s completion of existing commitments, affecting the timing of production growth. This delay highlights the operational challenges the company faces in its efforts to expand production.

Forward-Looking Guidance

Looking ahead, Vaalco Energy is optimistic about its future, having met or exceeded production guidance for over two years. With a net revenue interest production of 15,405 BOE per day at the high end of guidance, the company has increased its full-year production and sales guidance by 5% while reducing capital guidance by 20%. Vaalco anticipates significant production uplift from major projects in 2026 and 2027, aiming to support organic growth initiatives and strengthen its industry position.

In summary, Vaalco Energy’s earnings call reflected a company that is navigating both opportunities and challenges with a strategic approach. While facing delays and offline production in certain regions, the company has demonstrated strong operational performance and financial discipline. The forward-looking guidance suggests a positive trajectory, with expectations of significant production growth in the coming years.