VAALCO Energy, Inc.

Good morning and welcome to the ValPAL Energy first quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Al Petre, Investor Relations Coordinator. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Valco Energy's first quarter 2022 earnings conference call. After I cover the forward-looking statements, George Maxwell, our CEO, will review key highlights along with operational results. Ron Bain, our CFO, will then provide a more in-depth financial review. George will then return for some closing comments before we take your questions. During our question and answer session, we ask you to limit your questions to one and a follow-up. You can always re-enter the queue with additional questions. I'd like to point out that we posted a first quarter 2022 supplemental investor deck on our website this morning that has additional financial analysis, comparisons, and guidance that should be helpful. With that, let me proceed with our forward-looking statement comments. During the course of this conference call, the company will be making forward-looking statements. Investors have cautioned that forward-looking statements are not guarantees of future performance, and those actual results or developments may differ materially from those projected in the forward-looking statements. FALCO disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Accordingly, you should not place undue reliance on forward-looking statements. These and other risks are described in yesterday's press release, the presentation posted on our website, and in the reports we follow with the SEC, including our Form 10-K. Please note that this conference call is being recorded. Let me now turn the call over to George.

Thank you, Al. Good morning, everyone, and welcome to our first quarter 2022 earnings conference call. We continue to execute on our strategic vision built around accretive growth while creating and returning value to our shareholders. Production in Q1 2022 was up 6% and adjusted EBITDA increased by 49% over Q4 2021. We have now successfully drilled, completed and placed on production the first two development wells of our current drilling campaign at Itami. Our first well was a development well, the Itami 8H sidetrack, which was highly successful, came online in February and exceeded our internal forecasts. We then moved the rig from the Itami platform to the Avuma platform, drilled and brought online the Avuma 3H sidetrack development well in late April, also above our internal forecasts. We are now drilling the third well of our four currently planned wells in the 2021-2022 programme. We are also progressing the field reconfiguration and conversion to an FSO at Itami on time and on budget. In March we paid our first quarterly cash dividend and announced that we are paying our second quarterly cash dividend later this quarter. As you can see, we are delivering on our strategic objectives and in many cases exceeding expectations, which has firmly placed Valco in a financially enviable position. Turning to our first quarter 2022 operational and financial results, we produced an average of 8,015 net barrels of oil per day. We had two liftings in the quarter, which resulted in total oil sales of 616,000 barrels sold. As we discussed in the last call, due to operational and weather factors, we had some operational issues which resulted in reduced production in February and lower liftings in the first quarter. At the end of March, with the recovery from the downtime and addition of the successful Itami 88 sidetrack well, our production rate increased to 9,500 barrels of oil net per day and is well above that level now. In the first quarter, we saw sustained higher oil prices, which drove revenue significantly higher as well. Our adjusted net income, excluding the impact of unrealized derivatives and deferred income taxes, was a very strong $21.1 million, or $0.36 per share. Our adjusted EBITDAX was $33.5 million in Q1 2022, compared with $22.6 million last quarter. We have currently more than sufficient line of sight to fund our 2021-2022 drilling campaign, FSO conversion capital and dividend from cash on hand and operational cash flow in 2022. We continue to be focused on growing our production levels through this period of high oil prices. Turning our attention to the future, our strategic vision is built on accretive growth through organic drilling opportunities, expanding our margins and accretive acquisitions. We have used the 3D seismic that we acquired over TAMI to maximise the impact of our 2021-2022 drilling campaign. Additionally, we are de-risking future drilling locations and potentially identifying new drilling locations with further 3D processing. In February, we reported that we completed and placed the 8H sidetrack well on line at rates above our initial estimates. In late April, the Avuma 3H sidetrack development well was completed and brought online again with initial rates above our internal estimates. The rig has stayed on the Avuma platform, and we have begun on the third well in the program, the South Jubuela 1HB sidetrack development well. This well is targeting the Gamba reservoir, but is also being drilled deeper to test the dental formation. As a reminder, the dentile is productive in another area of Itamia and if this well has good shows, we can potentially complete and produce from the dentile and the gamba. This well can move 2p gamba reserves to PDP and is exciting as it could also bring contingent resources in the dentile to PDP and potentially de-risk additional dentile resources. For the second quarter 2022 we are estimating our production to be between 10,000 and 10,700 barrels of oil per day net. At the midpoint of guidance this would be 29% increase compared to the first quarter. In addition we are forecasting a significant increase in sales between 10,700 and 11,300 net barrels of oil per day. At the midpoint of guidance this would be a 61% increase compared to the first quarter. This is a particularly opportune time to have significantly increased sales at the prices we are seeing now. Hand in hand with the production increase will be margin expansion and our per barrel cost reductions. As we have previously advised, about 90% of production costs are fixed and as production increases, our barrel costs will decrease. Every new barrel we bring online is more economic because of the low variable costs, so as we grow production, we're also growing our margin per barrel and reducing our costs per barrel. For the second quarter, we expect our barrel production costs, excluding workovers, to be between $22 and $25, which represents a 20% decrease at the midpoint of guidance compared to the first quarter. From a capital standpoint, we continue to see our capital expenditures related to the 2021-2022 drilling program, the field reconfiguration at Atami, and the FSO conversion to be in the range of 90 to 110 million for the full year 2022. We expect to spend about 40 to 50 million in capex in the second quarter of this year. We continue to forecast that all of our capital commitments in 2022, as well as our dividend, will be fully funded from cash in hand and cash from operations. With the drilling program at Tatami progressing forward nicely, we are also managing our FSO solution project simultaneously at Tatami, which will reduce costs and improve margins. Last August, we announced that we had signed and received partner approval for the new FSO solution. The new FSO will significantly reduce storage and offloading costs by about 50%, increase effective capacity for storage by over 50%, and lead to an extension of economic field life resulting in a corresponding increase in recovery and reserves at Atami. During this second quarter, we signed a major construction contract with DOF for the field reconfiguration and upgrade. This secured a significant portion of the work scope for the overall FSO project. The field reconfiguration work has begun and the CAP diamond conversion are on schedule and on budget. We are expecting that the vessel will begin sea trials in late June before being mobilised to Gabon. As a reminder, our estimated capital costs associated with the FSO conversion and field reconfiguration in 2022 are expected to be between 25 to 30 million net to Valco and are included in our CAPEX guidance. This capital investment is projected to save approximately 13 to 16 million net to Valco in operational costs through 2030, giving the project a very attractive payback period of only about two years. We will continue to keep our shareholders appraised of the progress of both the field reconfiguration and the FSO conversion through our press releases. In October, we announced exciting new opportunities in Gabon. Valco has entered into a consortium with BW Energy and Panoro Energy. The consortium has been provisionally awarded two blocks in the 12th Offshore Licensing Round in Gabon, with two exploration periods totalling eight years, which may be extended by a further two years. The two blocks, G12-13 and H12-13, are adjacent to Valco's Itami PSC, as well as BW Energy and Panoro's Disafu PSC offshore southern Gabon. The majority of these two blocks are in water depth similar to Itami. Both Intami and Disafu have been highly successful exploration development and production projects undertaken by the consortium members over the past 20 years, with approximately 250 million barrels discovered to date. The consortium is working through detailed production sharing contract discussions with the Gabonese government. Another area that holds significant future potential for Valco is Equatorial Guinea. We have a substantial working interest in Block P and we are evaluating several development, step-out and exploration opportunities on our acreage. We are excited about our opportunities on the block and believe it makes sense to move this project forward with a more definable timeline and potential development. Last summer, we completed our feasibility study for the standalone development of the Venus Discovery in Block P and we are moving forward now with the field development concept. We are in advanced discussions with our partners and government and anticipate making significant progress towards an agreement to allow approval within the second quarter 2022. We are committed to profitably exploiting the resource potential of our assets and EG could become a significant operational asset moving forward. Turning to our ESG efforts, we recently recruited a full-time ESG manager who will be based in Houston. We are in the process of completing our annual ESG report and it should be published in the second quarter ahead of our annual general meeting. We remain focused on showing progress and improvement in our environmental, social and government metrics. In summary, there is a lot to be excited about as we enter the second quarter of 2022. We are accretively growing production at Atami through our successful drilling campaign while continuing to progress forward exciting projects in Gabon and Equatorial Guinea. I would like to thank our hardworking team here at Valco who continue to operate and execute our strategic vision. As you can see, we are firmly focused on maximizing shareholder return opportunities and operating with the highest regards towards ESG. With that, I would like to turn the call over to Ron to share our financial results.