VAALCO Energy, Inc.

Good morning and welcome to the Valco Energy Third Quarter 2022 Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. During the question and answer session, we ask you to limit your questions to one and a follow-up. Please note this event is being recorded. I would now like to turn the conference over to Al Petrie, Investor Relations Coordinator. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Valco Energy's third quarter 2022 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. Please keep in mind that George and Ron will only be speaking to Valco Energy's third quarter results and not Transglobe's, as the business combination did not close until Q4. 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 third 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 of comments. During the course of this conference call, the company will be making forward-looking statements. Investors are 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. BALCO 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 filed with the SEC including our Form 10-K and Forms 10-Q. Please note that this conference call is being recorded, and let me now turn the call over to George.

Thank you, Al. Good morning, everyone, and welcome to our third quarter 2022 earnings conference call. We continued our solid financial and operational results in the third quarter. We benefited from sustained high Brent pricing over $103 per barrel and solid sales of 731,000 barrels. This combination allowed us to continue to generate significant cash flow, execute on our accretive growth strategy, and fully fund our capital commitments. We remain committed to paying out dividends to our shareholders, and with a debt-free balance sheet, we are clearly in a very strong financial position. We delivered adjusted EBITDAX of 42.4 million and have now generated £136.8 million of adjusted EBIT DAX in the first nine months of 2022. To put this in perspective, we generated £85.8 million in all of 2021 and £26.6 million in 2020. We have used this to pay three quarterly dividends thus far in 2022 and the Board approved a fourth dividend pay bill in the fourth quarter of this year. Our strong balance sheet remains debt free and our unrestricted cash balance grew to 69.3 million, which does not include 16.8 million in proceeds from our September lifting that were received in October. As you can see, we have grown our cash position even while we execute on our capital growing program, as well as the field reconfiguration and conversion to an FSO at Atami. In addition to our operational and financial results, we had several other major projects occurring these past few months. Operationally in Gabon, we are very pleased to have successfully delivered a highly complex, full-field reconfiguration, maintenance turnaround and upgraded FSO installation in October. This project was completed despite a difficult global supply chain environment and is a testament to the dedication of our workforce and partners who helped complete this project, underlying Valco's status as a quality operator. As we have said before, we expect to realise substantial and sustainable operating cost savings from this project that will begin in the fourth quarter and carry on throughout the remainder of the decade. Our successes were not just in Gabon. In September, we received approval of the plan of development for the Venus discovery at Block P, Equatorial Guinea. And we are diligently negotiating final documents amongst all our parties for approval by the Ministry of Mines and Hydrocarbons. We anticipate a strong, efficient and highly economic development of this exciting discovery and look forward to proceeding with our plans to begin producing in Equatorial Guinea over the next few years. and to adding significantly to our reserves once final documents are agreed and approved. On October 13, we completed the transformational combination with Transglobe, which has built a business of scale with a stronger balance sheet and a more diversified baseline of production that will underpin Valco's future opportunities for success. Valco now has a diversified portfolio of assets across four countries, Gabon, Egypt, Equatorial Guinea, and Canada. This larger diversified production base should allow us to generate meaningful cash flow to fund increased stockholder dividends, share buybacks, and potential supplemental stockholder returns at a rate that would not have been achievable by either Valco or Transglobe on a standalone basis. As part of the value proposition around the combination of these two great companies was a significant increase to shareholder returns. On August 8th, we announced that Valco's board approved the share buyback program of up to $30 million to be commenced promptly subject to completion of the proposed combination of Valco and Transco taking place and confirmation by the new enlarged board. The proposed share buyback was in addition to the previously announced post-closing targeted dividend of 25 cents per share annually. The dividend is to be paid quarterly with the first payment planned to be made in the first quarter of post completion. On November 1st, a couple of weeks post the closing of the combination, we announced the newly expanded board had formally ratified and approved the share buyback program for an aggregate purchase of currently outstanding common stock up to $30 million. Following this earnings call and after listing our quarterly blackout period, we will now be able to commence the program to repurchase our equity. We believe the market has not yet incorporated the value that will be created from the combination of our two companies into a single entity, and right now is a particularly opportune time to initiate the buyback program given our recent stock price. The second component to returning shareholder value was to double the dividend the quarter following the completion of the transaction. On October 31st, we reiterated our plan to increase our dividend to 25 cents per share annually, commencing in Q1 2023. When you combine the increased dividend with our buyback program, we will be returning about 50 cents per diluted share back to our shareholders in 2023. Our stock has been trading between $5 and $5.50, so this represents a 9% to 10% dividend and buyback yield which is quite healthy when compared to other energy companies. Bottom line is we are delivering exactly what we said we would, and we are looking at maximizing shareholder value. This is done through returning some of that value, but also prudently investing in the future in our very promising asset basis across four countries to continue to grow cash flow. We continue to evaluate additional accretive acquisition opportunities to investor cash and that will continue to build value. We are delivering on our strategic objectives and delivering strong financial results which have firmly placed Valco in a financially enviable position. We successfully completed the highly complex FSO installation, field reconfiguration and full field turnaround in October. As we have noted, we expect to realise substantial and sustainable operating cost savings from this project that will begin in the fourth quarter and carry on through the remainder of the decade. The new FSO provides us with additional flexibility and has an effective capacity for storage that is approximately 50% larger than the previous FPSO. The lower overall costs will also lead to an extension of the economic field life, resulting in a corresponding increase in recovery and reserves at Itami. From a cost standpoint, like all other E&P companies, we have seen some higher costs driven by inflationary pressures that are impacting the project. There is a lot of pressure on fuel prices, services, equipment prices, availability of equipment and consumables, and global logistic costs and delays. We have also had to employ additional engineering as well as incurring increased supply chain and inspection costs. I would like to put this into perspective for you. We had about five times the number of personnel in the field during the project with additional boats, equipment and operational responsibilities, all working to ensure that we coordinate and complete the substantial project with minimal downtime to our production. To reduce project risk exposure, we elected to use a larger offshore installation vessel that we mobilised from Europe. This vessel brought the flexible pipe rails with it instead of us shipping the rails from Europe. This increased project costs but eliminated the use of a dedicated heavy lift transportation vessel or double handling the pipe in a West African port. We calculated that this decision reduced the number of interface points by as much as 30%, helping to mitigate the overall project risk. A project of this magnitude with regards to ITAMI occurs once every 20 years, and I am proud of how our team managed and minimalized the risk associated with such a large project and complex project. These factors have increased our estimated capital costs associated with the FSO conversion and field reconfiguration by about $10 million net to Valco. We expect the related capital spend in 2022 to be between 30 and 40 million net to Valco, which is in addition to our 2021-2022 drilling campaign costs. This capital investment is projected to save approximately 13 to 16 million annually net to Valco in operating costs through 2030. Another area that holds significant future value for Valco is Equatorial Guinea. On September 26, we announced the approval of our Venus Discovery Development Plan at Block P by the Government of Equatorial Guinea. Upon execution of final documents amongst all parties which we are negotiating and approval by the Government, we anticipate having a majority working interest in the project as operator. The Block P PSC provides for a development and production period of 25 years from the date of approval of the POD subject to the completion of final PSC amendment documentation, which we are diligently working towards. We are excited and look forward to adding significantly to our reserves once final documents are agreed and approved. There is also additional future upside with the Europa development and exploration upside with Saturno and Southwest Grande prospects. As part of the development of the Venus Discovery, we are planning to spud the first development well in early 2024. Over the next three years, we will work to acquire, convert and install production facilities to support the discovery. We also expect to spud an additional development and water injection well in before potentially bringing the field online in 2026. We are committed to profitably exploiting the resource potential in EG, and are excited to be adding a fourth producing asset into the portfolio. Turning our attention to the drilling campaign at Hitami. We have had tremendous success at Hitami Drilling and developing the vast resource over the past 20 years. In February we reported that we completed and placed the 8HST well online at rates above our initial estimates. In late April, the Avuma 3HST development well was completed and brought online again with rates above our initial internal estimates. The third well, South Tubuela 1HBST, encountered two potential dental producing zones, the D1 and the D9. But the production rates from the D1 zone were below the minimum recommended operating range for the ESP. We may return to the well in the future to complete the D9 dentile interval that had 15 metres of net hydrocarbon shows and an estimated original oil in place range of between 4 and 15 million barrels. We recently finished the drilling and completion of the North Tubela 2HST well, also targeting a dentile formation. This well was ready to flow in late October, but has remained shut in due to other operational factors, including the recent work over activity and continued optimizing of the TAMI field following the FSO and field reconfiguration. The well is currently cleaning up and we're recovering frac fluid, water and oil. We had a large frac in this well and thus far only about 20% of the frac fluid has been recovered. We will continue to flow the well and we'll update the market accordingly. Following the 2H ST well, we performed our first of two workovers. The workover on the north to Whela 1H well was needed due to a safety valve in the well that required replacement. With the rig already on site, it was easier and more economic to utilize the rig to complete the workover following the completion of the 2H ST well. The final well operation plan for the rig is another workover, the ETSEM 4H, which is expected to restore production of between 1,000 and 1,500 gross bars of oil per day upon completion. This well went offline in early September as a result of an upper ESP failure, and we were unable to restart the upper or the lower ESP to restore production. Again, utilizing the rig for the workovers, instead of new wells that were previously planned is reducing the overall total cost of the 2021-2022 drilling campaign at Itami. We will defer the additional wells we'd originally targeted for a future drilling campaign at Itami. With the anticipated success of the 2HST well and the work over on the ETSEM4H well, we expect our December exit rate this year at Itami to be between 10,000 and 10,500 net barrels of oil per day. This coupled with the addition of the transglobe production should allow us to enter 2023 around 19,500 to 20,000 net barrels of oil equivalent per day, setting us up for a strong opening to 2023. In summary, there is a lot to be excited about as we enter 2023. We have completed the highly complex FSO and full field reconfiguration at Hitami while completing another drilling campaign. We have an approved development plan for the Venus Discovery at Equatorial Guinea. We are incorporating the Transglobe team and assets building size and scale. I would like to thank our hardworking team who continue to operate and execute on our strategic vision. We are firmly focused on our strategic vision of accretive growth while 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.