UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant x                            Filed by a Party other than the Registrant ¨

Check the appropriate box:

¨ Preliminary Proxy Statement

¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

¨ Definitive Proxy Statement

x Definitive Additional Materials

¨ Soliciting Material Pursuant to §240.14a-12

VAALCO ENERGY, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

x No fee required.

¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

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(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

VAALCO Energy, Inc.

May 2008

2

Safe Harbor Statement

Important Information.

VAALCO filed with the SEC definitive proxy materials (the “Proxy Materials”). The Proxy Materials contain

important information

about

VAALCO,

the

2008

Annual

Stockholders

Meeting

and

our

nominees

and

other

directors

in the

solicitation. VAALCO’s stockholders are urged to read the Proxy Materials carefully. Stockholders may obtain additional free

copies of

the

Proxy

Materials

and

other

relevant

documents

filed

with

the

SEC

by

VAALCO

through

the

website

maintained

by the

SEC at www.sec.gov. The Proxy Materials and other relevant documents may also be obtained free of charge from VAALCO at

VAALCO Energy, Inc., 4600 Post Oak Place, Suite 309, Houston, Texas 77027; or by phone at (713) 623-0801. The Proxy

Materials are also available on VAALCO’s website at www.vaalco.com. The contents of the websites referenced above are not

deemed to be incorporated by reference into the Proxy Materials.

Forward-Looking Statements.

This

document

includes

“forward-looking

statements”

as

defined

by

the

U.S.

securities laws.

Forward-looking statements are those concerning VAALCO’s plans, expectations, and objectives for future drilling, completion and

other operations

and

activities.

All

statements

included

in

this

document

that

address

activities,

events

or

developments that

VAALCO expects,

believes

or

anticipates

will

or

may

occur

in

the

future

are

forward-looking

statements.

These

statements include

future production rates, completion and production timetables and costs to complete well. These statements are based on

assumptions made

by

VAALCO

based

on

its

experience

perception

of

historical

trends,

current

conditions,

expected future

developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of

assumptions, risks and uncertainties, many of which are beyond VAALCO’s control. These risks include, but are not limited to,

inflation, lack of availability of goods, services and capital, environmental risks, drilling risks, foreign operational risks and

regulatory changes. Investors are cautioned that forward-looking statements are not guarantees of future performance and that

actual results or developments may differ materially from those projected in the forward-looking statements. These risks are

further described in VAALCO’s annual report on Form 10-K for the year ended December 31, 2007 and other reports filed with the

SEC which

can

be

reviewed

at

http://www.sec.gov,

or

which

can

be

received

by

contacting

VAALCO

at

4600

Post

Oak Place,

Suite 309, Houston, Texas 77027, (713) 623-0801.

The Securities

and

Exchange

Commission

generally

permits

oil

and

gas

companies,

in

filings

with

the

SEC,

to

disclose only

proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and

legally producible under existing economic and operating conditions. In this document, we describe volumes of oil that we believe

may be

discovered

in

the

future

through

our

existing

exploration

program.

These

amounts

are

not

proved

reserves

as

defined by

the SEC. These estimates are by their nature more speculative than estimates of proved reserves and accordingly are subject to

substantially greater risk of being actually realized by VAALCO.

This presentation is being made on the afternoon of May 20, 2008. The content of this presentation contains time-sensitive

information that

is

accurate

only

as

of

the

time

hereof.

VAALCO

will

not

be

reviewing

or

updating

the

material

contained herein.

3

Agenda

I.

Introduction and VAALCO Overview

II.

Superior Returns and Financial Performance

III.

VAALCO’s Board: Experienced, Proven and Committed

to Maximizing Stockholder Value

4

Attendees

•

Robert H. Allen

Independent Director

Audit Committee

†

(Chairman)

Compensation Committee (Chairman)

•

Robert L. Gerry

Chairman and

Chief Executive Officer

•

W. Russell Scheirman

President, Chief Financial Officer

and Director

†

Audit Committee Financial Expert as determined by the Board under SEC regulations

I.

Introduction and VAALCO Overview

6

VAALCO’s Nominees Are the Right

Choice

•

Independent and engaged Board made up of successful and experienced industry leaders

–

Responsible for successful implementation of corporate strategy and stock price appreciation

–

Broad and complementary expertise in areas critical to VAALCO’s business

–

5 of 7 directors independent under NYSE listing requirements

–

All committees constituted solely of independent directors

•

Superior long-term value creation and financial performance

–

503% cumulative stockholder return over the last 5 years

–

Outperformed

peer

group

over

each

of

the

last

6-month,

1-year,

3-year

and

5-year

periods

–

31% 5-year average ROIC (among top 5% of the oil & gas industry)

–

66%

revenue

CAGR

over

the

last

5

years

–

81% EBITDA CAGR over the last 5 years

•

Track record of superior operating achievements

–

82%

success

rate

in

exploration

drilling

since

1998,

when

Etame

drilling

began

–

100% success rate in the drilling and completion of development wells since 1998

–

50% increase in production since 2002

•

Strong growth expected to continue

–

Drilling program underway exposes VAALCO stockholders to 8x current reserves

–

7 planned exploration wells, 2 development wells, arrangements in place to contract for rigs

–

Drilling to commence this summer

1.  Unless

otherwise

indicated,

figures

in

this

presentation

are

as

of

the

market

close

on

May

16,

2008

2.  The

peer

group

is

as

defined

by

RiskMetrics

(ISS);

details

slide

14

1

2

7

VAALCO Overview

•

Houston-based independent

exploration and production

company (“E&P”)

•

Exploration activities primarily in

West Africa –

offshore Gabon,

onshore Gabon, offshore Angola

–

Opportunistic minority

participations in UK North Sea

exploration

•

Production (100% oil) located

offshore Gabon

•

26 full-time employees: Houston (9),

Gabon (10) and Angola (7)

•

20-30 contractors worldwide

depending on activity level

VAALCO is an Important Presence and a

Valued Long-Term Partner in Gabon and Angola

Gabon

Angola

8

Exceptional West African Opportunity

•

Africa holds a significant and growing portion of world oil reserves

•

By 2010, West Africa is expected to account for 1 of 3 new barrels pumped worldwide and

by 2015, the U.S. is projected to import 25% of all its oil from

Africa, up from 15% in 2007

–

8% of global proved reserves

–

High proportion of new field discoveries

–

Strong reserve growth of discovered fields

•

Gabon

–

Long history of energy production under stable

contract terms

–

Former French colony independent since 1960

under French civil law

–

Population 1.3 MM (about size of Colorado)

•

Angola

–

Oil sales and related activities constitute

approximately one-half of GDP and 90% of exports

–

Has emerged as a major African oil producer

following the end of the country’s civil war in 2002

–

One of the world’s fastest growing economies

because of strong production growth

–

Population 15.5 MM

West Central Africa Oil Endowment

Produced

13%

Reserves

18%

Mean

Undiscover

ed

69%

West Central Africa Reserves

Angola

61%

Congo

12%

Equatorial

Guinea

12%

Gabon

15%

9

Focused and Disciplined Business Strategy

•

Seek exploration opportunities in proven hydrocarbon

basins where modern technology has the potential to

unlock previously hidden reserves

–

In areas with acceptable political risk where positive

market conditions provide niche opportunities

•

Increase reserves primarily through the drill-bit while

continually reviewing potential property and corporate

acquisitions at reasonable prices

•

Focused primarily on West Africa asset base

•

Maintain financial discipline to support growth

•

Optimize cash flows from producing assets

–

Etame Marin Concession

Efficient, Low Cost Operator with Exceptional

Exploration and Production Track Record

10

Exceptional Track Record and Expertise

•

82%

success

rate

in

exploration

drilling

since

1998,

when

Etame

drilling

began

•

100% success rate in the drilling and completion of development wells

•

Industry-wide, success rates are approximately 1 in 3 for exploration drilling

VAALCO’s Drilling Success Rates are

Among the Best in the Industry

1.  Source: U.S. Energy Information Administration (EIA)

VAALCO Drilling History (1998 to date)

Exploration & Appraisal Wells

Development Wells

Well

Date

Field

Type

Result

Well

Date

Field

Type

Result

ET-1V

'98

Etame

Expl.

Success

ET-3H

'02

Etame

Devel.

Success

ET-2V

'99

Etame

App.

Success

ET-4H

'02

Etame

Devel.

Success

ET-3V

'01

Etame

App.

Success

ET-5H

'04

Etame

Devel.

Success

ET-4V

'01

Etame

App.

Success

ET-6H

'05

Etame

Devel.

Success

EBO-1

'03

Ebouri

Expl.

Success

ET-6HST

'05

Etame

Devel.

Success

ET-5HP

'04

Etame

Pilot

Success

ETBSM-1

'06

Etame

Devel.

Success

EAVOM-1

'04

Avouma

Expl.

Success

EAVOM-2H

'06

Avouma

Devel.

Success

EAVSM-1

'05

Avouma

Expl.

Dry Hole

(1)

EBO-1 ST1

Ebouri

App.

Success

EBO-1 ST2

Ebouri

App.

Success

UKCS 9/28b

'07

na

Expl.

Non-Commercial

(1) Although dry, effectively proved-up additional Avouma reserves

1

11

Current Exploration Program Represents the Highest Level

of Exploration and Development in the Company’s History

•

Drilling 7 exploration and 2 development wells over the next 6 to 18 months

•

On

an

unrisked

basis,

this

drilling

program

exposes

VAALCO

stockholders

to

>

50

MM  

net

barrels

(>

8x

VAALCO’s

current

6.2

MMbbl

in

reserves)

–

Even at modest success rates, potential for dramatic increases in stockholder value

•

Arrangements

in

place

to

contract

for

2

offshore

jackup

drilling

rigs

for

Gabon

–

Anticipate drilling at least 3 exploration wells and 1-2 development wells

–

In addition to 2 development wells already underway

•

2 years of preparation and

planning with partners and

host governments

During this time VAALCO

acquired and interpreted

seismic, contracted for its

concession in Angola and

constructed 2, $100 MM

platforms for installation in

Gabon

2008 is Expected to Be a Break-Out Year for Value Creation

VAALCO Properties -

Reserves and Resources

Property

Etame

Marin

Mutamba

Iroru

Angola

Block 5

NW

Vulcan

Total

Proved Reserves

(net mmboe)

6.2

0.0

0.0

0.0

6.2

Potential of Leads in Drilling

Program

(unrisked

mmboe)

Gross

71.5

36.3

42.3

6.0

156.1

Net to VAALCO

17.6

15.7

16.9

1.5

51.7

Exploration Acerage

(gross)

Acres

759,040

270,333

1,410,478

12,000

2,451,851

GOM Blocks Equivalent

152

54

282

2

490

12

Focused, Stable and Professional Management

Over the Lengthy E&P Business Cycle

Stock Price

Surges

As

We

Move

to

the

Drilling

Phase

–

Precisely

Where

We

are Now

Relative Performance (%)

.

1Q 223% YOY

.

Plan

6H

after

Eb

seismic

.

Write off 2V

4Q affected by cost account,

development spend for 05

8

Eb/Av dev plans,

lower

sales

from

missed lifting

AMEX app

.

Angola PSA

2Q NI up

Eb

dev plan approved

Et extension, Eb

dev plan,         

Angola operator

.

FPSO contract

Buyback & Pill

UKCS farm-in

Seismic                                          

expenses

Cost acct benefit,                         

reserve upgrade

Av 1st oil

Et 2 dev and 3 expl

wells, Mut

2 wells 4Q, Angola seeking rig

for wells 9/28b non-comm

Av Eb

dev plans             

complete,

expl

well

.

YE

UKCS farm-in

YE, reserve upgrade

6H 1st oil

5H 1st oil

AMEX listing

Eb

disc

Bl. 5 Award

.

Mut

PSA

IFC revolver

1818 Fund Exit

1.

Russell 3000/2000

Listed NYSE,

approved

UKCS

Fortune

Cramer

Business Week

-100

0

100

200

300

400

500

600

700

800

900

05/19/03

10/20/03

03/15/04

08/16/04

01/18/05

06/20/05

11/21/05

04/24/06

09/25/06

02/26/07

07/30/07

12/31/07

II.

Superior Returns and Financial

Performance

14

Superior Stock Price Performance and

Stockholder Returns

•

VAALCO’s stock price

performance has exceed that of

its

peer

group

–

and

far

exceeded the broader market –

over all meaningful periods

1.

The peer group is as defined by the independent

governance

and

proxy

advisory

firm

RiskMetrics

(ISS):

Brigham Exploration Co. (NasdaqNM:BEXP), Callon

Petroleum Co. (NYSE:CPE), Carrizo Oil & Gas Inc.

(NasdaqNM:CRZO), Delta Petroleum Corp.

(NasdaqNM:DPTR), Edge Petroleum Corp.

(NasdaqNM:EPEX),

TXCO

Resources,

Inc.

(NasdaqNM:TXCO), Goodrich Petroleum Corp.

(NYSE:GDP), Harvest Natural Resources Inc.

(NYSE:HNR), Pacific Ethanol, Inc. (NasdaqNM:PEIX),

PrimeEnergy

Corp. (NasdaqSC:PNRG), Quest Resource

Corp. (NasdaqNM:QRCP); peer group companies are

indexed on a market capitalization weighted basis; in this

presentation, over the 5-year measurement period, the

peer group index excludes Pacific Ethanol, Inc.

(NasdaqNM:PEIX), which entered trading on the Nasdaq

Global Market on March 24, 2005. 5-year and 3-year

relative performance charts use weekly average prices

Stockholder Returns

503%

143%

49%

61%

-100%

0%

100%

200%

300%

400%

500%

600%

VAALCO

Peer Group

S&P 500

Source: CapitalIQ

1

15

5-Year Average ROIC

31%

14%

10%

7%

7%

6%

5%

2%

-1%

-2%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

#1 Among Peers on 5-Year Return on

Invested Capital (ROIC)

†

†

Using John S. Herold, Inc.’s methodology, 5-Year ROIC

calculated as the 5-year weighted average of the sum of net

income to common plus preferred dividends plus minority

interest expense plus adj. net interest expense; over

average capital employed (year-end + prior year-end / 2),

calculated as the sum of: ST debt plus LT debt plus

volumetric production payments plus book value of common

plus book value of preferred plus minority Interest

•

5-Year ROIC

far in excess of peer

group and among the highest in

the industry

Peer Group

Average 5%

Note: figures for Quest Resource Corporation are not available because of change in reporting periods

Source: John S. Herold, Inc.

16

VAALCO 5-Year Revenue Growth

$0

$20

$40

$60

$80

$100

$120

$140

2003

2004

2005

2006

2007

#1 Among Peers on 5-Year Revenue Growth

5-Year Revenue Growth (CAGR)

66%

59%

52%

43%

38%

36%

34%

28%

23%

-38%

-60%

-40%

-20%

0%

20%

40%

60%

80%

Note: figures for Quest Resource Corporation are not available because of change in reporting periods

Source: John S. Herold, Inc.

Peer Group

Average 31%

17

5-Year EBITDA Growth

$0

$20

$40

$60

$80

$100

$120

2003

2004

2005

2006

2007

#

2 Among Peers on 5-Year EBITDA

†

Growth

†

Note: in

order

to

adjust

for

differences

between

oil

and

gas

companies

that

use

“successful

efforts”

accounting

and

those

that “full

cost”

accounting (see next slide for details), EBITDA is calculated before exploration costs (commonly known as EBITDAX)

Note: figures for Quest Resource Corporation are not available because of change in reporting periods

Source: John S. Herold, Inc., CapitalIQ

Peer Group

Average 38%

5-Year EBITDA Growth (CAGR)

186%

81%

73%

69%

60%

40%

36%

34%

24%

-177%

-200%

-150%

-100%

-50%

0%

50%

100%

150%

200%

250%

18

Successful Efforts Accounting, “Liftings”

and the “Cost Account”

1.

Successful

efforts

1

accounting

is

the

SEC’s

preferred

method

of

accounting

for

exploration

–

use

of the successful efforts convention results in unusually low net income in any period

where there are exceptional exploration expenses, such as an unsuccessful well or large

payments for the acquisition of seismic data

–

VAALCO uses the convention as we believe it is a more transparent way to report performance

2.

Irregularity

in

the

timing

of

crude

oil

sales

(so-called

“liftings”)

results

in

unusually

low

net

income in any period that a lifting is missed, and unusually high net income in periods where

there

are

extra

liftings

to

“catch-up”

with

inventory

–

VAALCO’s

taxes

are

recognized

based

on

barrels

of

oil

produced

per

month

2

,

but

revenues

are

recognized

only

when

oil

is

sold

(lifted)

–

At any time VAALCO can have up to 1.1 MM gross barrels in inventory

3.

In

the

Etame

concession,

VAALCO

receives

a

form

of

tax

deduction

for

capital

spending

(“costs”)

and

can

carry-forward

amounts

not

yet

deducted

in

a

“cost

account”

–

VAALCO

experiences higher taxes, and lower net income, in any period where there is limited capital

spending and no balance in the Cost Account

1.  Under the successful efforts convention, all exploration costs except those related to successful drilling are expensed in the period

incurred; under the full cost convention, the cost of both successful and unsuccessful exploration efforts are fully capitalized

2.  Under U.S. and Gabonese law and VAALCO’s production sharing agreement (PSA) with the government of Gabon

All 3

of These Transitory Factors Impacted VAALCO’s Net

Income in the First Quarter of 2008

19

Nanes Delorme Partners’

Arguments

Rest on Incorrect Assertions

•

Assertion: VAALCO’s stock price has underperformed its peers

–

VAALCO’s

stock

price

performance

exceeds

that

of

the

ISS

peer

group

over 6-month, 1-year, 3-year and 5-year lookbacks

5-Year Relative Performance

-100

0

100

200

300

400

500

600

700

800

3-Year Relative Performance

-50

0

50

100

150

200

250

1-Year Relative Performance

-40

-30

-20

-10

0

10

20

30

40

50

60

VAALCO

S&P 500 Index

Peer Group

20

Nanes Delorme Partners’

Arguments

Rest on Incorrect Assertions

•

Assertion:  VAALCO is undervalued on the basis of two ratios: (a) Enterprise

Value (EV) / EBITDA and (b) Price / Earnings (P/E)

–

Nanes

states

these

ratios

to

be

“virtually all relevant comparable valuation

metrics”;

however,

Nanes

knows

–

or

should

know

as

a

self-described

“specialist”

in

the

oil

and

gas

industry

–

that

EV/EBITDA

and

P/E

ratios mean

very little in the context of small-cap E&Ps

–

EV / EBITDA:

•

“EBITDA multiples…

are less useful for valuing oil and gas reserves, where

depletion factors and exploration and development expenditures are difficult

to

incorporate

in

a

single

EBITDA

multiple

factor”

–

John

S.

Herold,

Inc.

Valuation Methodology

–

P/E Ratios:

•

“…

oil

industry

earnings

are

frequently

impacted

by…

fluctuations

in

commodity prices, the timing of exploration costs, income tax rates that vary

with

the

geographic

location

of

operations,

and

other

accounting

vagaries

associated with capital intensive businesses. As a consequence, reported

net income and, hence P/E ratios, are of limited utility in the valuation of an

oil company.”

–

John S. Herold, Inc. Valuation Methodology

E&Ps, and Smaller E&P’s

in Particular, Are Not

Valued on the Basis of Simplistic Multiples

III.

VAALCO’s Board: Experienced, Proven

and Committed to Maximizing

Stockholder Value

22

VAALCO’s Board: Independent,

Engaged and Experienced

•

More than 100 years of

combined experience in the

E&P

industry, including

international development

•

4 of 7 directors current or

former executive officers in

the industry

•

5 of 7 directors have served

as directors of other public

companies

•

Balanced portfolio of

complementary experience:

–

International government

relations and diplomacy

–

Geology and geophysics

–

Finance and accounting

–

Investment banking

–

Tax law

In 2007:

•

8 full board meetings

•

Quarterly sessions with

only independent directors

•

7 committee meetings

–

Audit (4)

–

Compensation (2)

–

Governance and

Nominating (1)

•

Board closely monitors

implementation of strategy

and operational results

–

Board and all committee

meetings conclude with an

executive session of

independent directors only

•

5 of 7 directors are

independent under NYSE

listing requirements

–

The 2 others being the

Company’s CEO and CFO

•

All committees are

comprised solely of

independent directors

–

Audit

–

Compensation

–

Governance and

Nominating

INDEPENDENT

ENGAGED

EXPERIENCED

23

Continuing Director Nominees Possess

Critical Skills and Experience

•

President since 1992; designed and implemented all of VAALCO’s exploration, drilling

and development campaigns since joining the Company in 1991

•

30+ years experience in the petroleum industry

•

Former petroleum reservoir engineer with Exxon, management consultant with McKinsey

& Company

and

investment

banker

with

Copeland,

Wickersham

and

Wiley, a leading

investment banking boutique specializing in the oil and gas industry

•

Member of the Audit Committee

•

Pioneer of Canadian oil and gas Industry; 50+ years of experience in the petroleum

industry includes 10 years as President of Mobil Oil Canada Ltd.

•

Honors include: inductee into Petroleum Hall of Fame, Honorary Doctorate from the

University

of

Alberta,

named

on

Albertans

who

had

an

impact

on

the

20

th

century

•

Current director of Softrock

Minerals and Carma.; former Chairman of Shiningbank

Energy Income Fund, Chairman of Serenpet, President, CEO and Chairman of Poco

Petroleum

Ltd.,

President

and

CEO

of

Bowtex

Energy

(Canada)

and

Chairman

and

CEO

of Mobil Oil Canada

•

Member of the Nominating and Corporate Governance and Compensation committees

•

35+ years of experience in the petroleum industry

•

Former Ambassador to Great Britain with long standing business connections in the oil

and gas industry

•

Provides valuable perspectives on international relations in support of VAALCO’s West

African exploration efforts

Continuing

Directors

Have

Been

Central

To

Success

Over

The

Long-Term

E&P

Cycle

Their Experience And Leadership Are Central To Current Drilling Program

William S. Farish

Director since 2004

Arne R. Nielsen

Director since 1989

W. Russell Scheirman

President & CFO

Director since 1991

24

VAALCO’s Other Directors Are Also

Accomplished Leaders

Areas of Expertise

•

45+ years in petroleum industry

•

Chairman, CEO since 1997

Other Directorships

Current

•

Plains Exploration and Production

•

Integrity Bank

Former

•

Vice Chairman Nuevo Energy

Executive Experience

•

Founder, President, COO of

Nuevo Energy

•

SVP of Energy Assets

International

Other

•

Director, Texas Children’s Hospital

•

Member, University of Texas

Advisory Council

Areas of Expertise

•

Tax law for international

corporations

•

Legislative/Regulatory affairs

Other Directorships

Former

•

American Exploration Company

Executive Experience

•

Member of the Executive

Committee, Breen Investors

•

Partner-in-Charge, Baker

Botts, LLP

Other

•

Former Assistant Secretary for

Tax Policy at the U.S. Treasury

Department

•

Nominated by President Reagan,

confirmed by U.S. Senate and

represented the Administration in

presenting tax policy to U.S.

Congress

Areas of Expertise

•

45+ years in petroleum industry

•

Geology and Geophysics

•

Operating and management

experience in VAALCO’s core

asset locations

Other Directorships

Former

•

Pan-Ocean Energy

Executive Experience

•

MD, Chevron Africa & Mid-East

MD, Chevron Africa

•

Deputy MD Europe, Chevron

•

VP of Geoman, a Gulf affiliate

•

GM, Gulf Exploration of UKCS

•

Assistant to VP, Chevron

Overseas Exploration

Other

•

Ph.D. Geology and Geophysics

Areas of Expertise

•

50+ years in petroleum industry

•

Accounting (CPA)

•

Investment/Finance

Other Directorships

Current

•

First City Bancorporation

•

American Mining Congress

Former

•

Gulf Resources and Chemical

Corporation

•

Gulf Canada Resources

•

Gulf Indonesia Resources

•

Federal Express

•

University of Texas Investment

Management Company

Executive Experience

•

Chairman, CEO of Gulf

Resources

•

Chairman, CEO of Chemical

Corporation

Other

•

Managing Partner of Challenge

Investment Partners

•

Regent Emeritus of Texas A&M

•

Board of Trustees of Baylor

College of Medicine

Robert H. Allen

Luigi P. Caflisch

O. Donaldson Chapoton

Robert L. Gerry, III

25

Committed to Maximizing Stockholder Value

•

VAALCO’s Board is always open to considering bona fide offers that would provide

stockholders

with

full

and

fair

value

for

their

shares

–

NO

such

offers

have

been

received

•

VAALCO’s Board, with assistance of its financial and legal advisors, continuously reviews

the Company’s business plans and other value creating opportunities / strategic options

•

Retained

independent

financial

advisors

over

1

year

ago

and

have

been

evaluating:

•

Concessions, farm-ins and acquisitions

•

Acquisitions

of

additional

working

interests

in

the

Etame

concession

•

Growth capital

financing

structures

including

PIPEs

(private

investment

public

equity)

•

Other opportunities / strategic options

•

Now is not the right time to sell VAALCO

•

Stockholders are poised to benefit from the current drilling program

•

Selling

now

would

transfer

the

value

of

a

potential

discovery

to

the

acquiror

•

E&Ps do not receive full value on resources that have not been proved-out by drilling

•

Uncertain market conditions (including commodity price volatility and credit market

instability)

are

likely

to

inhibit

a

robust

sale

process

and

the

ability

to

obtain

full

and

fair

value for stockholders

•

After

careful

analysis

and

consideration,

in

September

2007

VAALCO’s

Board

–

with

the

assistance

of

the

Company’s

financial

and

legal

advisors

–

adopted

a

stockholders’

rights

plan (“Poison Pill”), as an appropriate defense to prevent an opportunistic acquisition at

prices below VAALCO’s intrinsic value

26

Why Even One Nanes Delorme / Pilatus Energy Nominee is

Bad

for

Stockholders

–

Who

Are

They?

Nanes Delorme

•

Proxy campaign led by Julien

Balkany, a 27-year

old French citizen

•

Formed 2000 by Daryl Nanes; based in New York

–

Suffered $323,510 net loss in 2007

•

Broker and adviser on African oil & gas

transactions including:

–

Surestream

Petroleum’s

“exclusive advisor”

in a

sale of up to 40% of its interests in the Ndunda

Block, Democratic Republic of Congo

–

“Sole financial advisors”

to Afren

in its acquisition

of oil & gas properties in Angola

2

–

all of Afren’s

oil

& gas assets are located in West Africa

–

Advisor to Maurel

& Prom, a company with

extensive oil & gas operations in Gabon and

Congo (Brazzaville), West Africa

•

Self-proclaimed hedge fund formed January 2008

•

Affiliated with investment bank Bear Stearns

Pilatus Energy

•

Founded in 2006; based in Zug, Switzerland

•

Purportedly

led

by

Loik

Le

Floch-Prigent

–

“The name of the former Elf CEO doesn't appear on

their list of executives but it is he who makes all of

their investment decisions.”

•

Le Floch-Prigent

was convicted by a French court in

2003, sentenced to 5-years in prison and fined

€375,000 for fraud, embezzlement, bribery and a

kickback scheme through his management of Elf

Aquataine

(known as “the Elf Affair”)

4,5

–

“probably the biggest political and corporate sleaze

scandal to hit a western democracy since the

second

world

war”

6

–

Used $145 MM of public funds used to buy influence

and contacts in Africa

7

–

Accused of embezzling millions from Elf and using

company

funds

to

obtain

political

influence

8

•

Le Floch-Prigent

was convicted again 1 year ago for

misappropriating funds in connection with a bogus

jobs scheme, receiving a 15-month suspended

sentence and €60,000 fine

4

•

Reported to have acquired oil and gas properties in

Mali

and Congo

and to be pursuing assets in

Cameroon,

Guinea

and

the

Ivory

Coast

1.

Africa Energy Intelligence (AEI), “The New African Oil Trail Blazers”, 2/20/08

2.

AEI, “Abbas

I. Yousef

Al Yousef”, 12/19/07

3.

AEI, “Le Floch-Prigent’s

New Incarnation”, 12/5/07

4.

Reuters News, “Curtain Comes Down on Final Elf Graft Trial”, 5/25/07

5.

Associated Press, “Paris Court Orders Former Elf Chairman Freed From Prison

on Medical Grounds”, 4/8/04

6.

The Guardian, “Gigantic Sleaze Scandal Winds Up as Former Elf Oil Chiefs are

Jailed”, 11/13/03

7.

Associated Press, “Former French Oil Chief Testifies that Money Went to

African Leaders”, 3/19/03

8.

Reuters News, “Former Elf Head Blames Unhappy Marriage for Graft”, 4/14/03

3

3

2,3

27

Why Even One Nanes Delorme / Pilatus Energy Nominee is

Bad for Stockholders –

Significant

Conflicts of Interest

•

The

most

competitive

and

important

area

of

activity

for

E&P

companies

is

the

search for prospective drilling acreage and related information (such as

whether properties are available and seismic data)

•

Protecting

this

sensitive,

proprietary

information

is

crucial

to

an

E&P

company’s success and a critical driver of value creation

•

We

believe

installing

any

competitor’s

paid

representatives

onto

VAALCO’s

Board

would

inhibit

discussion

and

create

an

untenable

situation

that

limits

meaningful

review

of

VAALCO’s

opportunities

and

prospects

–

In

our

view,

this

would be detrimental to stockholder value and the future of VAALCO

Nanes Delorme Partners and Pilatus Energy Have Significant Conflicts

of Interest –

They Do Not Belong on VAALCO’s Board

28

Why Even One Nanes Delorme / Pilatus Energy Nominee is

Bad

for

Stockholders

–

True

Intentions

Are

Unknown

•

Pilatus acquired ~4.5% of VAALCO (just shy of

SEC disclosure requirements) only recently,

between November 30, 2007 and January 30,

2008;

Nanes

Delorme

was

not

even

formed

until January 22, 2008

–

Nanes told VAALCO on at least 3 occasions

that

its

unnamed

limited

partner

was

not

a

competitor

–

Pilatus

was

only

identified

May

5,

almost

2 months

after the initial 13D, and an

amended proxy

•

Pilatus’/Nanes’

goals are unclear; objectives

do not seem aligned with other stockholders

–

Refused

on at least 2 occasions to enter into a

non-disclosure agreement

–

Refused

an

offer

by

VAALCO

–

made

prior

to

VAALCO

learning

of

Pilatus’

involvement

–

of

1 Board

seat

and

membership

on

a

committee

to review alternatives

–

Demanded

(although a 7.9% holder): 3 Board

seats and formation of a “special committee”,

controlled by Nanes, to review alternatives

including a corporate sale

Pilatus

Nanes

Delorme

Nov. 28, 2007 –

Jan. 16, 2008

Purchases 1.125 MM shares

Jan. 18 & Jan. 22, 2008 formed:

Nanes

Balkany

Partners I

Nanes

Balkany

Management

Nanes

Delorme Partners I

Jan. 30

Has 2.7 MM shares (~4.5%)

Feb. 14

Transfers all

to Nanes

Feb. 22 –

Mar. 3

Purchases 0.65 MM shares

requiring 13D filing (~5.6%)

Mar. 4 –

Mar. 11

Purchases 1.35 MM shares

for a total of 4.7 MM (~7.9%)

Mar. 11 & Mar. 12

Sends letter to Board, then

files 13D, 1 day before earn-

ings; no mention of Pilatus

Week

of

April

7

CEO & CFO agree to meet Nanes

on April 15; prior to meeting, on

April 11, Nanes

notifies VAALCO

it will seek its own directors

April 15 -

April 22

Balkany

refuses to identify

unnamed, secret limited partner;

tells VAALCO its partner is

not

in the oil & gas business

April 24

-

VAALCO

files

Proxy

April 25

-

Nanes

files

preliminary

proxy; does

not

identify Pilatus

May 5

-

Nanes

files

amended

preliminary proxy revealing

identity of limited partner as

Pilatus Energy

29

Why Even One Nanes Delorme / Pilatus Energy Nominee is

Bad

for

Stockholders

–

No

Substantive

Ideas

•

Nanes other stated ideas for VAALCO make little sense:

–

Core

asset

divestitures

–

What

assets,

short

of

a

sale

of

the

entire

company,

does

Nanes

Delorme propose to divest?

–

Nanes Delorme itself states that “VAALCO is a company which has first class oil and gas

properties, with a balanced portfolio of assets and substantial exploration upside in Angola and

Gabon, which generates significant cash flow”

–

Alternative

listings

–

Nanes

Delorme

provides

no

support

whatsoever

for

its

assertion

that

share performance would be affected by an alternative listing

–

Clear

proof

to

the

contrary

–

superior

stockholder

returns

and

operating

performance

–

“Flowback”

likely to lead to stock price declines

–

Cease

North

Sea

activity

–

VAALCO’s

North

Sea

activity

is

a

small

part

of

our

overall

business and is consistent with our strategy of obtaining new assets in politically stable

regions where modern technology has the potential to unlock previously hidden reserves

–

70 discoveries currently in the appraisal or development stage representing ~ 3 billion barrels of

oil equivalent –

new entrants are involved in 46 of these projects¹

–

Well understood geology resulting in low exploration risk and high drilling success rates

–

Government policies encourage new entrants and accelerated E&P

–

Move

headquarters

to

London,

Paris

or

Geneva

and

close

office

in

Aberdeen

–

–

Houston

is

widely

known

as

the

oil

capital

of

the

world,

with

an

unsurpassed

pool

of

talent

and

a

low

cost

of

living

(the

same

cannot

be

said

for

London,

Paris

or

Geneva)

–

Aberdeen

is

where

all

of

the

drilling

professionals

for

VAALCO's

operations

are

based

and

is

an

established international center for drilling expertise

1. Hannon Westwood, May 2008

30

Nanes’

Nominees Add No

Significant

Skills or Experience

Leonard Toboroff

•

Current director of Engex, a closed-end investment

company focused on the biotechnology, technology,

gaming and distribution industries (market capitalization

of $9 MM), NOVT, a former developer of treatments for

vascular diseases (no significant current operations)

and SP Acquisition, a blank-check acquisition company

(no significant operations)

•

Director and Vice-Chairman of Allis-Chalmers Energy,

which provides drilling equipment to the onshore

domestic energy industry

W. Russell Scheirman

•

Designed and implemented all of VAALCO’s

exploration, drilling and development campaigns since

joining the Company in 1991

•

30+ years experience in the petroleum industry

•

Former petroleum reservoir engineer with Exxon,

consultant with McKinsey & Company and investment

banker

Clarence Cottaman

III

•

PetroFalcon

Board member since June 2003; since

2005, stock has fallen from a high of C$5.90 to C$1.50;

operating at a loss for the last 2 years

•

Expertise already well represented on VAALCO’s Board

Arne R. Nielsen

•

50+ years experience in the petroleum industry

•

Inductee into the Petroleum Hall of Fame

•

Extensive operating and Executive Management

industry experience, including 10 years as President of

Mobil Oil Canada

Julian Balkany

•

Age 27

•

Managing Director, Nanes Delorme, oil & gas M&A

investment broker to VAALCO’s competitors

•

No public company executive or Board experience

William S. Farish

•

Former Ambassador to Great Britain

•

Long standing industry business connections

•

35+ years experience in the petroleum industry

•

Valuable perspectives on international relations in

support of VAALCO’s West African efforts

31

VAALCO’s Nominees Are the Right

Choice

•

Independent and engaged Board made up of successful and experienced industry leaders

–

Responsible for successful implementation of corporate strategy and stock price appreciation

–

Broad and complementary expertise in areas critical to VAALCO’s business

–

5 of 7 directors independent under NYSE listing requirements

–

All committees constituted solely of independent directors

•

Superior long-term value creation and financial performance

–

503% cumulative stockholder return over the last 5 years

–

Outperformed peer group over each of the last 6-month, 1-year, 3-year and 5-year periods

–

31% 5-year average ROIC (among top 5% of the oil & gas industry)

–

66% revenue CAGR over the last 5 years

–

81% EBITDA CAGR over the last 5 years

•

Track record of superior operating achievements

–

82% success rate in exploration drilling since 1998, when Etame

drilling

began

–

100% success rate in the drilling and completion of development wells since 1998

–

50% increase in production since 2002

•

Strong growth expected to continue

–

Drilling program underway exposes VAALCO stockholders to 8x current reserves

–

7 planned exploration wells, 2 development wells, arrangements in place to contract for rigs

–

Drilling to commence this summer

32

VAALCO Energy, Inc.

Exceptional Exploration Track Record

Efficient, Low Cost Operator

Large, High Prospectivity

Exploration Portfolio

Strong Cash Flow for Exploration, Production and Acquisitions