VAALCO Energy, Inc.

Good day and welcome to the Valco Energy third quarter 2023 earnings conference call. All participants will be in a 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 a touch tone phone. 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 Petrie, Investor Relations Coordinator. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Valco Energy's third quarter 2023 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 summary financial review. George will then return for some closing comments before we take your questions. Thor Prekl, our Chief Operating Officer, is also with us today and will be available for Q&A. 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 2023 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 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. 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 filed with the SEC, including our Form 10-K. 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 2023 earnings conference call. I am very pleased with our ability to deliver exceptional operational and financial results in 2023, exceeding our guidance and expectations following the translob combination that occurred a year ago. Our focus has been on optimising production, managing our costs, capturing operational and cost synergies, all while executing capital drilling campaigns to enhance profitability and growth. Through the execution of this strategy, we have significantly grown our cash position even while fully funding our capital programme, shareholder dividends and buybacks, all while remaining bank debt free. We are generating the growth in adjusted EBITDAX and cash that will allow us to fund exciting future projects across our diverse portfolio of high returning assets. We paid our third quarter dividend and announced the fourth quarter dividend, fulfilling the commitment we made to nearly double the dividend that we paid in 2022. To date, we have returned over $20 million through our shared buyback programme since November 2022, and this programme is ongoing. I would now like to point out some key highlights and accomplishments for the third quarter. We are at the high level of our production guidance with 18,844 NRI barrels of oil equivalent per day, or 24,430 on a working interest basis. This was driven by record production levels in Egypt from our successful drilling programme as well as high operational uptime in Gabon. As a reminder, we have not drilled any new wells in Gabon since 2022, but our commitment to operational excellence and the new FSO have helped to minimise decline and maintain production uptime at high levels in 2023. You can clearly see how we have grown when you compare third quarter production this year with third quarter production last year, we are up 106%. Sales were at the high end of guidance as we benefited from a large export cargo in Egypt during the third quarter. We have since had a lifting of 600,000 gross barrels of oil in Gabon that occurred in the first week of October 2023 that will benefit our fourth quarter. The diversity of our asset base has allowed us to grow and generate significant growth in production, cash flow and adjusted EBITDAX. Our third quarter adjusted EBITDAX of $71.4 million was up 9% compared to Q2 2023 and up 68% compared to Q3 2022. In the first nine months of 2023, we have generated almost $90 million of free cash flow and distributed 41% of that free cash flow back to shareholders through dividends and buybacks. Even after fully funding our capital programmes and paying dividends and buybacks, we have still grown unrestricted cash to over $100 million at the end of Q3 2023, up 124% since June 30th. We have a positive momentum as we enter 2024, both operationally and financially, and we are building size and scale to substantially grow Valco. I would now like to discuss some key updates across our diverse portfolio of assets. Let's begin with Egypt, where we have invested the largest amount of capital in 2023. Our drilling campaign in Egypt has seen some very positive results. We have completed our 2023 campaign faster and at lower cost than we had originally planned. We finalised the last well in the programme in October and in 2023 we drilled 18 verticals including one injector well and two exploration wells as well as a horizontal well. In Q3 we had a $1.2 million exploration expense associated with the East Arta 54 vertical well. While the well was not commercially viable, the logs and cores that we took on this exploration well showed oil bearing formations that we believe will allow us to drill additional economic wells in the future. Overall, we had a very economic drilling programme with strong production performance and we are very pleased with our drilling performance in 2023. On the vertical wells, we are seeing significantly faster drilling performance moving from a 2022 average of about three wells drilled every four months to now drilling two wells per month, which is a 60% reduction in cycle time. By drilling the wells faster, we are cutting costs meaningfully and improving the economics of our wells in Egypt. In addition to the drilling efficiencies, we have also spent time and effort in Egypt reviewing the facilities and overall production operations. As I have detailed before, these efforts have resulted in increased production, lower costs and better safety and environmental performance in Egypt. We continue to set production records in 2023 since we acquired the properties, which is one of the key areas driving our ability to exceed guidance with our total company production. We believe that Egypt has a lot of value and organic drilling opportunities and it will compete for our 2024 capital budget, which we are currently working on. In Canada we drilled two wells in the first quarter of 2023, a 1.5 mile lateral and a 3 mile lateral. Both wells were drilled and completed safely and cost effectively without incident. The wells were tied in and equipped in April and early May with overall cycle times that were significantly less than historical cycle times. The wells began flowing in May with good production rates and in early July the pumps and rods were installed on both wells. Both Wales' production rates exceeded expectations, and we are now monitoring their long-term performance. We also believe that to better optimise our Canadian prospects going forward, we will move to 2.5 and 3-mile laterals almost exclusively, which we believe will further improve the economics of our development programme. Canada also set production record in 2023, another reason we are performing so well as a company and exceeding our production targets. With our 2023 drilling and completion programmes completed in Canada, we are evaluating facility and pad optimisation, future development wells and further refining our completion techniques in anticipation of potential future drilling campaigns in Canada. Turning to Gabon, as you know, we completed our 2021-2022 drilling campaign in the fourth quarter of 2022 and invested only minimal new CAPEX dollars in Gabon in 2023, primarily related to maintenance CAPEX and long lead drilling equipment. Despite no 2023 drilling programme, we have seen strong overall production results in 2023 by focusing on operational excellence. Last year's FSO and field reconfiguration projects have allowed us to operate more efficiently and economically in 2023, while enhancing production uptime and minimising decline until the next drilling campaign. The impact of the cost savings from the new FSO are helping to offset some other higher costs from inflationary and industry supply pressures. We are pleased to have completed the minor pipeline work on the Scent gas line last month at a cost of approximately $4 million, so it will help lower capex in Q4 and beyond as a result of lower diesel costs by more than half a million per month. We are currently evaluating our locations for the next drilling campaign at Itami, which we are currently projecting to be a 3-4 well programme with additional well options. We continue to review rig options for our 2024 drilling programme. The market for drilling units remains very tight and we plan to provide a further update on the plan campaign as our review progresses. We have delivered outstanding results in 2023 and I'm excited as we move into 2024 and believe that we will continue to grow production, reserves and value for our shareholders. I would like to thank our hard-working team who continue to operate and execute our plans. We are bank debt free and remain firmly focused on our strategic vision of accretive growth while maximising 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.