VAALCO Energy, Inc.

Good day and welcome to the Valco Energy first quarter 2024 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. If at any time your question has been addressed and you would like 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. Welcome to Valco Energy's first quarter 2024 conference call. After I cover the forward-looking statements, George Maxwell, our CEO, will review key highlights of the first quarter. 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 asked 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 supplemental investor deck on our website 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 will caution 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. Valco 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 our earnings release, the presentation posted on our website, and in the reports we file with the SEC, including our Form 10-K. Please note that this conference call is being recorded, and now let me turn the call over to George.

Thank you, Al. Good morning, everyone, and welcome to our first quarter 2024 earnings conference call. We began 2024 with positive operational and financial results, including strong earnings and adjusted EBITDAX generation. In addition, we closed the Svenska acquisition at the end of April, ahead of schedule, and we are excited about incorporating those operational and financial results into our numbers for the rest of 2024, beginning in Q2. We returned over $12 million to shareholders in Q1 2024 through dividends and buybacks. Let's begin our overview of Valco's assets with the new acquisition. We announced that we closed the Svenska acquisition in an all-cash deal for $40.2 million on April 30th, 2024. This was done very quickly and efficiently and ahead of our internal expectations. Our team travelled to Côte d'Ivoire to meet directly with the Ministry of Hydrocarbons to officially introduce Valco as a new partner on Block CI40. We are adding an asset with strong current production and reserves at a very attractive price. This acquisition is highly accretive on key shareholder metrics and provides another strong asset to support our future growth. It provides us with additional diversification and strategically expands our West African focus area. The Côte d'Ivoire Baobab field in block CI40 has strong production and reserves. We are excited to be partnering with Petrocy and CNR International and believe the Baobab field, the next phase of drilling, and the discovered yet undeveloped Kisapo field in Côte d'Ivoire is an outstanding asset with significant upside potential. In yesterday's earnings release, we updated our full year and second quarter 2024 guidance, both of which reflects the positive impact to production and production expense per barrel, which should lead to improved margins and greater adjusted EBITDAX. Later this year, we expect to provide additional information on the Baobab FPSO project planned in 2025 and future Baobab drilling plans after we have had time to further our relationship with CNR International and get a more detailed understanding of the operator's development plans. Turning to Egypt, as we disclosed last quarter, the first half of 2024 is focused on high rate of return capital workover projects to help mitigate decline. In the first quarter, we had six workovers, including five recompletions and fracs. This work added about 800 barrels of oil per day, helping to offset natural decline. In addition to the successful workovers, I am very proud of a major milestone that we accomplished in the first quarter of 2024 in Egypt. We have gone over 1 million man hours without a lost time incident. This is a testament to our commitment to safety, training and dedication of all of our people in the field. As I mentioned on our last call, we have a 10 to 15 well building programme that we are currently evaluating for the second half of this year. This program remains contingent on completion of the program evaluation and confirmation of a drilling rig for the period. We have not included this program in our 2024 CAPEX guidance and won't add it until confirmed. However, if we proceed with the program, we anticipate additional 2024 CAPEX of approximately $18 million, which will also generate additional production. We have seen some positive announcements from the government in 2024, in particular payment of age receivables, which is very encouraging. In Canada, we successfully drilled four wells in the first quarter of 2024, all 2.75 mile lateral wells. In late March, we released the drilling rig and we began completing all four wells. We have now successfully completed all four wells and two of the wells have been unloading fluid and are coming on production with encouraging results. The other two wells are expected to be placed online within the next 14 days and all four wells contributing production by the end of the month. You can see the impact in our production and sales guidance that we put out yesterday in our press release and that Ron will review in more detail later. In addition, we are also targeting an exploration appraisal well in the third quarter of 2024 in our southern acreage. In our southern acreage, we have minimal subsurface information and this exploration well, if successful, could prove up additional long lateral wells in the future with the potential to add proved undeveloped locations. Our existing well portfolio has an increasing gas-oil ratio and the new wells will rebalance this more in favour of liquids, which contributes to the strong production performance and to our overall profitability. Turning to Gabon, we completed a previous drilling campaign in the fourth quarter of 2022 and invested only minimal capex dollars in Gabon in 2023, primarily related to maintenance capex and long lead drilling equipment. We have seen positive overall production results since then with strong production uptime and improved decline curves on the wells. The FSO and field reconfiguration projects in 2022 have allowed us to minimise downtime, capture efficiency and reduce overall OPEX. Looking ahead to 2025, we are actively working on the final technical and commercial aspects of our next drilling campaign at Itami. Activities are planned at the Itame, Iburi, South East Itam and North Chibwela fields. We have a planned drilling campaign of between five and seven wells that includes a mix of development and exploration wells along with a gas well for infield power requirements that will substantially reduce fuel costs in the field going forward. As discussed previously, in 2014 at the Iburi field, we encountered increasing low levels of H2S in the three oil wells after they had been on production or tested. We were able to keep the well with the lowest levels of H2S, the Iburi 2H well, on production using a chemical treatment solution, but the 3H and 4H wells were shut in due to the high H2S levels that were trending to be too high for chemical treatment to be effective. As a result, we were left with between 8 to 12 million barrels of oil as contingent resource due to H2S contamination. We are currently re-measuring the H2S concentrations in the 2H and 4H wells to validate the field's current levels and expect to complete our H2S testing in the second quarter of 2024. The testing is being done to support our modelling efforts to assess and forecast future potential H2S levels in the 2H well and also other proposed wells. We continue to look for the most cost-effective path forward to increase production at Iburi. We are reviewing two methodologies to address and sweeten the oil at Iburi, mechanical and chemical treatment going forward. Once we determine the optimal solution going forward, we plan to conduct workovers of the 2H and 4H wells, and replace the 3H well with a more optimally located well. In addition, we will test an undrilled fault block in the field with a new well. Coupled with our plans to de-risk the crude sweetening process will result in an opportunity not only to commercialise the currently stranded H2S oil at Aburi, but also to potentially add resources with an exploration well. Our ability to use our engineering knowledge and new technologies to drive lower costs and access more oil has been paramount to extending the life of the TAMI field. In the TAMI field, we have just completed a revised evaluation of the field's potential. Based on the results of this new evaluation, we identified a number of opportunities. We are planning two additional production wells at TAMI and to test a nearby exploration prospect. The exploration prospect sits within reach of the ATAMI platform, therefore the well will be drilled from the platform and if the well is successful, it will be immediately brought online as a production well. We have three slots open at the ATAMI platform, so we have the option if both of the early pilot wells are attractive and the exploration well is successful, to drill a second production well from the ATAMI main fault block, resulting in a potential third well for the ATAMI platform. We continue to spend a lot of time examining our assets, how to make them more efficient and profitable. We are expecting to spend between $30 and $40 million in long-lead items in 2024, preparing for and in anticipation of the drilling campaign. Progress on blocks G and H is ongoing. PSC negotiations are continuing between the partnership and the governing government, and we have made some encouraging progress this quarter. On March 25th, 2024, we announced the finalisation of documents in Equatorial Guinea related to the Venus Block P plan of development. The finalisation of these agreements included a carry arrangement of the partners Atlas and G-Patrol. This arrangement is on commercial terms at so far plus 7%, a total of currently 12.5%. This improves our 1P economics on those previously announced, and we have included an illustration of this in our accompanying slide deck. We will now proceed with our front-end engineering design, or feed study. We anticipate the completion of the feed study will lead to an Economic Final Investment Decision, or FID, which will enable the development of Venus. We are very excited to proceed with our plans to develop, operate and begin producing from the discovery in Block P offshore Equatorial Guinea in the next few years. and we look forward to discussing this new area of operations in more detail once the feed study is complete. We have started 2024 by delivering on or exceeding our guidance operationally and with solid financial results that have outpaced analyst expectations. We remain focused on growing production, reserves and value for our shareholders. I would like to thank our hard-working team who continue to operate and execute our plans. Over the past two years, we have greatly diversified our portfolio, which has expanded our ability to generate operational cash flow while growing our cash position and remaining bank debt-free. We are well positioned to execute the projects within our enhanced portfolio, and our proven track record of success in these past few years should instil confidence for the future. With that, I'd like to turn the call over to Ron to share our financial results.