Note 5 - Segment Information

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

5. SEGMENT INFORMATION

The Company’s operations are based in Gabon, Egypt, Canada and Equatorial Guinea. Each of the reportable operating segments are organized and managed based upon geographic location. The Company’s Chief Executive Officer, who is the chief operating decision maker evaluates the operation of each geographic segment separately primarily based on Operating income (loss). The operations of all segments include exploration for and production of hydrocarbons where commercial reserves have been found and developed. Revenues are based on the location of hydrocarbon production. Corporate and other is primarily corporate and operations support costs that are not allocated to the reportable operating segments. No transactions occurred between segments. 

Segment activity of continuing operations for the years ended December 31, 2022, 2021 and 2020 and long-lived assets and segment assets at December 31, 2022 and 2021 are as follows:

	Year ended December 31, 2022
(in thousands)	Gabon			Egypt			Canada		Equatorial Guinea			Corporate and Other			Total
Revenues:
Crude oil, natural gas and natural gas liquids sales	$	306,775		$	37,710		$	9,841	$	—		$	—		$	354,326
Operating costs and expenses:
Production expense		96,854			11,936			1,972		1,899			—			112,661
FPSO demobilization		8,867			—			—		—			—			8,867
Exploration expense		258			—			—		—			—			258
Depreciation, depletion and amortization		34,651			10,444			2,921		—			127			48,143
General and administrative expense		3,101			—			—		538			6,438			10,077
Bad debt expense and other		2,743			—			—		339			—			3,082
Total operating costs and expenses		146,474			22,380			4,893		2,776			6,565			183,088
Other operating income, net		38			—			—		—			—			38
Operating income (loss)		160,339			15,330			4,948		(2,776	)		(6,565	)		171,276
Other income (expense):
Derivative instruments gain (loss), net		—			—			13		—			(37,825	)		(37,812	)
Interest (expense) income, net		(1,446	)		(596	)		—		—			8			(2,034	)
Other expense, net		(1,484	)		—			—		—			(6,564	)		(8,048	)
Total other Income (expense), net		(2,930	)		(596	)		13		—			(44,381	)		(47,894	)
Income (loss) from continuing operations before income taxes		157,409			14,734			4,961		(2,776	)		(50,946	)		123,382
Income tax (benefit) expense		68,509			6,254			—		1			(3,344	)		71,420
Income (loss) from continuing operations		88,900			8,480			4,961		(2,777	)		(47,602	)		51,962
Loss from discontinued operations, net of tax		—			—			—		—			(72	)		(72	)
Net income (loss)	$	88,900		$	8,480		$	4,961	$	(2,777	)	$	(47,674	)	$	51,890
Consolidated capital expenditures (1)	$	162,375		$	168,012		$	103,263	$	—		$	710		$	434,360

(1) - Includes assets acquired in the TransGlobe acquisition

	Year Ended December 31, 2021
(in thousands)	Gabon			Equatorial Guinea			Corporate and Other			Total
Revenues:
Crude oil and natural gas sales	$	199,075		$	—		$	—		$	199,075
Operating costs and expenses:
Production expense		80,717			532			6			81,255
Exploration expense		1,579			—			—			1,579
Depreciation, depletion and amortization		20,972			—			88			21,060
General and administrative expense		1,301			321			13,144			14,766
Bad debt expense and other		875			-			—			875
Total operating costs and expenses		105,444			853			13,238			119,535
Other operating expense, net		(440	)		—			—			(440	)
Operating income		93,191			(853	)		(13,238	)		79,100
Other income (expense):
Derivative instruments loss, net		—			—			(22,826	)		(22,826	)
Interest income, net		—			—			10			10
Other (expense) income, net		6,925			(3	)		(3,428	)		3,494
Total other income (expense), net		6,925			(3	)		(26,244	)		(19,322	)
Income (loss) from continuing operations before income taxes		100,116			(856	)		(39,482	)		59,778
Income tax (benefit) expense		12,392			1			(34,549	)		(22,156	)
Income (loss) from continuing operations		87,724			(857	)		(4,933	)		81,934
Loss from discontinued operations, net of tax		—			—			(98	)		(98	)
Net income (loss)	$	87,724		$	(857	)	$	(5,031	)	$	81,836
Consolidated capital expenditures (1)	$	79,169		$	—		$	52		$	79,221

(1) Includes assets acquired in the Sasol acquisition.

	Year Ended December 31, 2020
(in thousands)	Gabon			Equatorial Guinea			Corporate and Other			Total
Revenues:
Crude oil and natural gas sales	$	67,176		$	—		$	—		$	67,176
Operating costs and expenses:
Production expense		37,298			1			16			37,315
Exploration expense		3,588			—			—			3,588
Depreciation, depletion and amortization		9,028			—			354			9,382
Impairment of proved crude oil and natural gas properties		30,625			—			—			30,625
General and administrative expense		1,064			430			9,201			10,695
Bad debt expense and other		1,165			—			—			1,165
Total operating costs and expenses		82,768			431			9,571			92,770
Other operating expense, net		(1,669	)		—			—			(1,669	)
Operating loss		(17,261	)		(431	)		(9,571	)		(27,263	)
Other income (expense):
Derivative instruments gain, net		—			—			6,577			6,577
Interest income, net		—			—			155			155
Other (expense) income, net		194			3			(68	)		129
Total other expense, net		194			3			6,664			6,861
Loss from continuing operations before income taxes		(17,067	)		(428	)		(2,907	)		(20,402	)
Income tax expense		16,204			1			11,476			27,681
Loss from continuing operations		(33,271	)		(429	)		(14,383	)		(48,083	)
Loss from discontinued operations, net of tax		—			—			(98	)		(98	)
Net loss	$	(33,271	)	$	(429	)	$	(14,481	)	$	(48,181	)
Consolidated capital expenditures	$	10,503		$	—		$	(9	)	$	10,494

(in thousands)	Gabon		Egypt		Canada		Equatorial Guinea		Corporate and Other		Total
Long-lived assets from continuing operations:
As of December 31, 2022 (1)	$	213,204	$	168,012	$	103,263	$	10,000	$	793	$	495,272
As of December 31, 2021 (2)		84,156	$	—	$	—	$	10,000	$	168	$	94,324

(1) - Includes assets acquired in the TransGlobe acquisition

(2) - Includes assets acquired in the Sasol acquisition

(in thousands)	Gabon		Egypt		Canada		Equatorial Guinea		Corporate and Other		Total
Total assets from continuing operations:
As of December 31, 2022 (1)	$	395,393	$	293,640	$	110,071	$	10,861	$	45,676	$	855,641
As of December 31, 2021 (2)		201,748	$	—	$	—	$	10,548	$	50,794	$	263,090

(1) - Includes assets acquired in the TransGlobe acquisition

(2) - Includes assets acquired in the Sasol acquisition

Information about the Company’s most significant customers

The Company currently sells crude oil production from Gabon under term crude oil sales and purchase agreements (“COSPAs”) or crude oil sales and marketing agreements ("COSMA or COSMAs") with pricing based upon an average of Dated Brent in the month of lifting, adjusted for location and market factors. 

As discussed further in Note 13, on May 16, 2022, VAALCO Gabon (Etame), Inc. (the “Borrower”) entered into a facility agreement (the “Facility Agreement”) by and among the Company, VAALCO Gabon, SA (“VAALCO Gabon”), Glencore Energy UK Ltd., as mandated lead arranger, technical bank and facility agent (“Glencore”), the Law Debenture Trust Corporation P.L.C., as security agent, and the other financial institutions named therein (the “Lenders”), providing for a senior secured reserve-based revolving credit facility (the “Facility”) in an initial aggregate maximum principal amount available of up to $50.0 million. In connection with the entry into the Facility Agreement, the Company entered into a COSMA with Glencore pursuant to which the Company agreed to make Glencore the exclusive offtaker and marketer of all of the crude oil produced from the Etame G4-160 Block, offshore Gabon during the period from August 1, 2022 until the final maturity date of the Facility (as defined in the Facility Agreement) which is May 15, 2027 unless early terminated. Pursuant to the COSMA, Glencore agreed to buy and market the Company’s crude oil with pricing based upon an average of Dated Brent in the month of lifting, adjusted for location and market factors.

From February 2019 through  January 2020, crude oil sales were to Mercuria Energy Trading SA (“Mercuria”). The Company entered an COSPA and amendments with ExxonMobil that covered sales from February 2020 through July 2022 with pricing based upon an average of Dated Brent in the month of lifting, adjusted for location and market factors. 

For the year ended December 31, 2022, Etame revenues from the sales of crude oil to Exxon made up 68% of revenues and sales of crude oil to Glencore made up 32% of revenues. For the period of October 14, 2022 through December 31, 2022, EGPC covered 100% of the Company’s crude oil sales in Egypt. For the period of October 14, 2022 through December 31, 2022, revenues in Canada were concentrated in three separate customers that constituted approximately 54%, 32% and 14% of revenues. Concentrations of accounts receivable are similar to the revenue percentages.