Q2 2022 VAALCO Energy Inc Earnings Call
Good day and welcome to the VAALCO energy second quarter 2022 earnings conference call.
All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. 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 VAALCO Energy's second quarter 2022 conference call.
After I cover the forward looking statements George Maxwell our CEO will review key highlights along with operational results.
Ron <unk>, our CFO will then provide a more in depth financial review John .
Sure then return for some closing comments before we take your questions.
During our question and answer session. We ask you to limit your questions to one and a follow up.
Can always reenter the queue with additional questions I'd like to point out that we posted a second 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 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 VAALCO disclaims any intention or obligation.
Location 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 our reports.
We filed 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 second quarter of 2022 earnings Conference call. We had a very strong second quarter, which included record sales volumes of almost 1 million bottles.
We also benefited from substantial hi, Blaine pricing over $113 per bottle.
This combination allowed us to generate significant cash flow execute our accretive growth strategy and fully fund our capital commitments.
We continue to pay a dividend to our shareholders and with a debt free balance sheet. We're clearly in a very strong financial position.
We delivered record adjusted EBITDAX was 281% over the prior quarter to $68 million.
To put this in perspective, we generated $79 million in all of 2021 and $22 million in 2020.
We have no generated over $94 million and adjusted EBITDAX in the first six months of 2022 newly as much as in the full year 2021 and 2020 combined.
We have used this to paid two quarterly dividends, thus far in 2022, and the board approved a third dividend for the third quarter of this year.
Balance sheet remains debt free and our unrestricted cash balance grew to $53 $1 million, which does not include $73 million in proceeds from May and June lifting that were received in July and August .
We're also progressing the field reconfiguration and conversion to an episode at Etame.
The new episode is arriving in offshore Gabon. This week and we are planning the full field turnaround and hook up in the third quarter.
As we have said before we expect to realize 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.
We also announced that we are exercising our options on the rig in Etame to two additional wells to the 2021 2022 drilling program.
We believe maintaining the rigor is currently favorable pricing was the right decision to allow us to continue to maximize the value potential of our Italian resource.
In July we submitted a plan of development in Equatorial Guinea for block P.
We look forward to receiving approval from the minister of mines and hydrocarbons and once the development plan is approved we expect to add new to P reserve for their discoveries on block P.
As you can see we are delivering on our strategic objectives and delivering strong financial result, which was firmly placed focal any financially enviable position.
Before I get into more detail about our second quarter results I would like to briefly discuss the transaction with Transco, which I will discuss in more detail following ones with you Okay excellent financial results.
On Monday, we put additional announcement about strategic and accretive combination with chancellor.
But also the board has approved a share buyback program of up to $30 million, which is equivalent of up to 27 cents per diluted share that will come into effect subject to the combination transaction being completed.
The proposed share buyback is in addition to the $28 million or 25 cents per diluted share annually, but we have targeted a shareholder dividends payable on a quarterly basis following the transaction closing.
We believe this further enhances the value of the transaction to both sets of shareholders and demonstrates the strength of the cash flows that we expect the combined company to generate.
We also posted an updated presentation and podcast on the website provided updated our supplemental information further demonstrating the value to both sets of shareholders.
Q2, 2022 operational and financial highlights Tony.
Turning to our record setting second quarter 2022 operational and financial results. We produced an average of 9211 net barrels of oil per day, which was an increase of 14% over the first quarter of 2022.
We had four listings in the quarter, which resulted in record oil sales of 958000 net bottle sold.
In the second quarter, we also saw sustained higher oil prices, which resulted in significantly higher revenue.
Our adjusted EBITDAX was $68 million in Q2, 2022, a record high for golf car driven by record sales and higher realized oil pricing.
These factors enable us to fully fund a 2021 2022 drilling campaign.
So conversion unrelated field reconfiguration costs.
To pay dividends from cash on hand, and operational cash flow.
We remain focused on maximizing our ability to generate cash flow and execute on our strategic objectives.
And the S. S. All we're well on target with the timing of our episodes solution project field reconfiguration at Etame.
He episodes, arriving at the tell me this week and we're planning for the changeover later in the third quarter.
As we have noted we expect to realize substantial and sustainable operating cost savings from this project that will begin in the fourth quarter on colleagues through the remainder of the decade.
The new episodes provides us with additional flexibility and has an effective capacity for storage there is 50% larger than our current S. P. S O.
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 Etame.
From a cost standpoint like all other E&P companies, we have seen higher costs driven by inflationary pressures that are impacting the project.
There's a lot of pressure on fuel prices services and equipment prices availability of equipment and consumable on global logistic costs and delays.
We have also had to employ additional engineering as well as increased supply chain and inspection costs.
I would like to put this into perspective for you we have about five times the number of personnel in the field right now with additional boots equipment and operational responsibility all working to ensure that we coordinate and complete the substantial project on time with minimal downtime toward production.
A project of this magnitude with regards to Tommy occurs once every 20 years and we are doing all we can to manage and minimize the risk associated with such a large and complex project.
Nonetheless until we fully complete the decommissioning of the F. P. S O, bringing the emphasis the onemain and completing the full field reconfiguration, we will continue to have uncertainty and risk that is being actively managed.
To reduce project risk exposure, we elected to use a larger offshore installation vessel that'd be mobilized from Europe .
This vessel brought the flexible pipe rails with it instead of a shipping these real from Europe .
This increased project costs, but eliminated the use of a dedicated Hindi list transportation vessel or double handling of the pipe and a west African port.
We calculate this decision reduced the number of interface points by as much as 30% helping to mitigate overall project risk.
These factors have increased our estimated capital cost associated with the episode conversion I'm field reconfiguration by about $10 million net to VAALCO.
We expect the related capital spend in 2020 to be between $30 million to $40 million net to VAALCO, which is in addition to our 2021 2022 drilling campaign calls.
This capital investment is projected to save approximately $13 million to $16 million net to VAALCO and operating costs through 2030.
Equatorial Guinea.
Another area of the whole significant future potential for VAALCO is equatorial Guinea, we have a substantial working interest in block P. M. We are evaluating several development.
And exploration opportunities on our records.
We are excited about our opportunities on the block and believe it makes sense to move this project forward with a more definable timeline for development.
Last month, we submitted a plan of development and Equatorial Guinea for block P to the minister of mines and hydrocarbons.
Once the development plan is approved we will hold an 80% working interest as a result of our joint venture owner opted not to participate.
We look forward to receiving the approval soon so that we can continue to move forward with our discovery of block P, which is expected to add meaningful to pud reserves upon approval of the P. O D I'm, providing another strong operational asset to the portfolio.
As we work through the approval process, we will provide more details about potential timing capital cost reserves and production estimates.
We are committed to profitably exploit them the resource potential of all our assets and are pleased with our progress at Equatorial Guinea.
2021, and 2022 drilling campaign.
Turning your attention to the drilling campaign at Etame, we have exercised the options on the current rig to extend the program by two additional well with.
If a tremendous success at etame drilling and developing the vast resource over the past 20 years.
February we reported we have completed and placed the eight H S T well online at rates above our initial estimates.
In late April the boom of three H S. T development, well was completed and brought online a game with rates above our initial internal estimates.
The third well set to below one H B S. T encountered two potential dental producing zones with D. One of the two nine.
What we had initially planned to produce the gamba interval in this well at Westin are not economic in this well bore we build a deeper exploration phase of this well targeting the D. One son for production and targeting the D nine times.
The D. One was the new Etame interval in which we had not previously produced and it presents us with some challenges with permeability and porosity.
We completed the zone using a small frac pack.
Do we have the option to come back in the future and complete a very attractive dental D. Nine zone, which we are currently producing at north tubular.
But D. One completion came in at the low end of our expectations with an average production rate of 150 to 200 net barrels per day.
Production rates are below the minimum recommending operating range for the E. S. P.
As a result, we have had to cycle, well, which means we shut in a low pressure to build and then pulled the well shut in again and repeat the process to prevent E. S. P damage.
We will continue to cycle, the well to project future reserve recovery expectations and better understand the C. One interval.
We're planning to turn to well in our next drilling campaign to complete the denying dental interval had 15 meters of night hydrocarbon shows and has an estimated original oil in place a range of four to 15 million barrels of oil.
Following the safe two Wheeler, one H B S T well the rig was mobilized to the southeast Etame north tubular scent platform to drill the E. T. B S. M. Two H S T well targeting the dental formation.
As productive in other areas of the Etame license.
We have some delays in the rig move as a result of waiting and whether it could come down well moving the rig from the boom of platform to the <unk> platform.
This caused a two week delay and we began operations on the well in late July .
As a reminder, this is a sidetrack well. So we are re entering an existing wellbore, which requires time to move production equipment and drill the plugs.
This is however, substantially cheaper than drilling a new well and we have utilized this method in the pasta minimized capital expense.
After setting up the equipment and completing operations to reenter the well we began drilling the E. T. B S. M. Two H S T well on August eight 2022.
We expect to reach TD and begin our completions in September .
This is targeting a dent Tulsa and is already productive in other areas of the Etame license and there's a separate geology from a D. One Sunday so to below <unk>.
Following the E T B S. M. Two H S. T O L. We are planning to perform some workovers and drilled two additional wells.
Both of the new wells will be targeting the gamba formation with the beauty for each development well in the northeast the boom of near field exploration well.
If successful only the Buda for each well will provide production uplift in the near term.
The north Eastern Boomer, well is a near field exploration play that could unlock significant reserve additions of between four and 22 million bottles.
If successful we will have to come back to this well in a future drilling campaigns to complete it and bring it online because it would require a subsea tie back.
For the third quarter of 2022 due to the full field turnaround episodes conversion of field reconfiguration, causing temporary downtime, we're guiding production to be in the 8000 to 8700 net barrels of oil per day are.
Earlier this month, we modestly lowered our full year production guidance due to the fed to below well results.
Our updated guidance for the full year is between 9000 and 9500 net barrels of oil per day.
With the additional new wells coming online in the fourth quarter and successful and the expected uplift plus production. Following the episode conversion from wells being shut in we expect a meaningful increase in fourth quarter production.
Depending on the timing and success of the new drill wells, we expect from December exit rate. This year to be between 10000 511500 net barrels of oil per day, which would be a new quarterly record for vocal.
This will set us up for a very strong opening 2023, and with continued strong oil pricing additional cash flow and adjusted EBITDA generation potential.
In addition, we are forecasting sales to be in line with production, which could potentially be another record high quarterly sales for vocal.
We also expect our production costs in the fourth quarter to be significantly lower on a per barrel basis due to the lower cost of the episode and the higher expected sales.
From a capital standpoint, we're now including costs associated with the two new wells, we added to the drilling program as well as some inflationary and engineering increases related to the field reconfiguration at Etame and the episodes conversion.
For the full year, we are increasing our capital guidance to between 130 and $150 million.
We continue to forecast the all of our capital commitments in 2022 are being fully funded from cash on hand and cash from operations.
All of our guidance for the third quarter and full year of 2022 can be found in the supplemental presentation deck, we posted to our website. This morning.
In clothing and in summary, there is a lot to be excited abate as we enter the second half of 2022.
We are appreciably growing production at Etame through our successful drilling campaign will continue to progress the exciting plan of development at Equatorial Guinea.
I would like to thank our hardworking team here at VAALCO has continued to operate and execute on our strategic vision, we're firmly focused on maximizing shareholder value and 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.
Thank you George and good morning, everyone.
Let me begin by saying I'm very pleased with our operational and financial performance are we remain very well positioned to execute on our strategy of accretive growth, while adding in returning value to our shareholders.
Turning to our record breaking quarterly financials, adjusted EBIT dikes rose, 81% to 68 million in the second quarter of 2022, compared with $33 5 million in the prior quarter and nearly triple the $21 9 million in the same period.
2021.
We've clearly benefited from our highest quarterly net sales volumes and sustained higher realized pricing.
How long does to fund our strategic initiatives with cash flow and cash on hand, including our 2021 2022 drilling campaign, Capex FSU conversion and field reconfiguration costs.
We also reported strong net income of $15 1 million or 25 cents per diluted share in the second quarter 2022 which included a $25 9 million deferred tax expense and an $11 5 million noncash unrealized derivative gain.
After normalizing for the deferred tax charge on the unrealized derivative gain or adjusted net income for the second quarter 2022 totaled 37 million or 52 cents per diluted share as compared to an adjusted net income of $21 1 million or 36 cents per diluted.
Sure for the first quarter of 2022.
And the second quarter of 2021, VAALCO reported $8 4 million and adjusted net income of 14 cents per diluted share.
Production for the quarter of 9211 net barrels of oil per day was higher compared to 8051 net barrels of oil per day in the first quarter of 2022, which was expected due to the new wells coming online from the drilling program production was up 14%.
<unk> from the same period in 2021.
Sales volumes in Q2, 2022, with a record high and up 56% from the first quarter and up 49% compared to the same period in 2021.
The increase in volumes is primarily due to having four listings in the second quarter of 2022 compared to only two in the first quarter.
In conjunction with the higher sales, we also had sustained higher crude oil price realization, which increased 3% to $113 38 per barrel in the second quarter of 2022 versus $109 0.65 per barrel in the first quarter of 2022 and was up 60.
3% compared to the $69 61 per barrel in the second quarter of 2022.
At the end of 2021 and the beginning of 2022, we hedged a portion of our expected production in 2022 to lock in strong cash flow generation to assist in funding our capital program and dividend.
The average price net of realized commodity derivatives was 91.3 dollars nine per barrel for the second quarter of 2022 and is up 2% compared to the 18 936 per barrel for the first quarter of 2022.
Our hedging program has provided us with surety of the largest capital program. The vocal has undertaken in over a decade.
On July the 25th 20, twenty-two volkow entered into Costless commodity carload arrangement for a quantity of 326000 barrels with a weighted average price of 70 Bucks per barrel and are we.
Weighted average coal price of 122 Bucks per barrel.
We have 701000 barrels hedged for the remainder of the year with our swaps in the third quarter and a costless collars in the fourth quarter.
Our food derivative position can be found in yesterday's earnings release as well as our Q2 supplemental information presentation on our website.
Turning to expenses production expense, excluding workovers for the second quarter of 2022 was $25 5 million.
This increase compared to prior quarters was primarily driven by higher costs associated with boats personnel chemicals and costs related with increased sales volumes.
We expect to see the supply chain issues higher marine cost chemicals fuel and personnel costs as well as continued inflationary pressures to continue through 2022.
There is increased competition for the services right now.
From a macro level, both the higher demand and the lower supply of services is driving costs higher across the industry.
During 2020 and into 'twenty, one due to the lower commodity prices and the Covid pandemic. We saw a decrease in the number of overall service providers across the supply chain.
Well, the less service providers, but greater demand for these services with the highest sustained oil prices. We believe inflationary pressures will continue in line with the record revenue generation.
Given the expected decrease in sales for the third quarter related to the F. S O change out full field reconfiguration and turnaround and associated lifting costs, our guidance range for production expense, excluding workovers for third quarter 2022 is expected to be 18 to 24.5.
Million or between 30 to 33 bucks per barrel of oil sales.
We are forecasting that the previously discussed inflationary and supply chain issues will continue throughout the year. Additionally, we are currently working with the F. P. S O charterer regarding timing for commencing shutdown of production schedule for decommissioning and associated costs to assure a smooth transition to the new FSU, which is also.
Living costs higher.
As a result, we are increasing our full year 2022 production expense slightly on an absolute basis to between $80 million to $90 million.
As a reminder, we have some production upside potential remaining with success in their drilling program during the second half of the year.
This would likely improve our exit rate heading into 2023 more so then impact the 2022 average, but as George noted we are optimistic about the remaining program from a production under deserve a standpoint.
The higher costs, coupled with a decrease in expected sales impact the cost per barrel range for production expense, excluding workovers and our updated full year guidance is 24 to $28.
We had no workovers in the first half of 2022, but based on timing we are forecasting two workovers in the second half of 2022.
DD&A for the second quarter of 2022 was $8 2 million or eight Bucks 55 per net barrel of oil sales compared with $4 7 million or $7 59 per barrel in the first quarter of 2022.
And $5 8 million or $9 five per barrel in the second quarter of 2021.
DD&A expense in the second quarter of 2022 on a per barrel basis was higher compared to the prior periods presented due to a higher depreciable cost associated with the 2021 2022 drilling campaign.
We anticipate D D to be in the range of $11 50 to $13 50 per barrel for the third quarter 2022, as a result of our ongoing drilling campaign.
General and administrative expense for the second quarter 2022, excluding stock based compensation expense was $2 $7 million at the low end of guidance compared with $3 6 million in the first quarter 2022, and $4 2 million in the second quarter of 2021, the decrease compared to <unk>.
P rates was primarily because of lower wages and a reduction in severance costs of key personnel, which occurred in the second quarter of 2021.
The per unit G&A rate, excluding stock based compensation in the second quarter of 2022 with $2 81 per barrel of oil sales, which was significantly lower than the first quarter of 2022 on the second quarter 2021, due to higher sales and lower expense.
For the third quarter of 2022, we expect cash G&A to be in the range of $2 million to $3 million.
We did slightly lower full year 2022, cash G&A guidance to nine and a half 211 and a half million dollars.
Deal costs for the Transco transaction are included in other expense.
Noncash stock based compensation expense for the second quarter of 2022 was not point 8 million and was comprised of non Sars related expense of not point $6 million and Sars related expense of not point 2 million.
For the first quarter 2022 stock based compensation was $1 4 million and for the second quarter 2021 stock based compensation expense was not <unk> 5 million.
Turning now to taxes.
Foreign income taxes attributable to Gabon on our settled by the government's taken their oil and kind of as a reminder, our tax rate in Gabon is about 52, 5% and can be offset by both production and capital costs.
Also impacting the overall corporate effective tax rate are nondeductible items like derivative losses, corporate costs and to a lesser extent some costs associated with operations like our Equatorial Guinea losses.
Income tax expense for the three months ended June 32022 was $46 $3 million.
This is comprised of a $25 9 million of deferred tax expense and a current tax expense of $20 4 million.
This was quite a bit higher than the income tax expense for the first quarter 2022 on the second quarter of 2021.
We benefited in Q1 2022 as we are done in the three previous quarters with valuation allowance release, a discrete tax benefit of approximately $12 7 million.
Our valuation allowances are now substantially released are no net operating losses from previous periods are being utilized.
And from a cash tax standpoint, the only tax paid is a profit or autos.
The tax rate in Gabon is more than the U S rate and we're now in a position, where we have credit and foreign taxes, rather than deducting them.
As you can see our increased sales and higher realized prices have contributed to higher revenue, but also a higher tax charge.
I'd like to refer you to supplemental information deck that we posted to our website. This morning, you'll find scenarios around the calculation of our cost and profit oil.
And 2022, we have benefited from a brought forward cost pool.
Hi, commodity pricing and strong production I assume full utilization of the carryforward cost pool in 2022.
The F S. Though on the drilling campaign will allow us to continue to take advantage of a favorable PSC terms to allocate as much as 80% of Costco through much of the second half of 2022.
Also within the supplemental deck.
We have updated our netback slide that shows the strong cash flow we are generating at current prices.
We've incorporated the midpoint of our updated 2022 guidance using a $90 realized oil price.
We remain on track to deliver our lower cost SSO solution on time, which will result in substantial savings on an absolute and per barrel basis, despite inflationary pressures.
Well the FSU in field reconfiguration occurring in Q3, we expect lower sales in the third quarter, but a recovery of production and sales in the fourth quarter with production exit rates for the fourth quarter expected to be between 10, and a half thousand and then the 11 and a half thousand net barrels of oil per day.
You can see the indicative fourth quarter margins on this slide as well with lower costs higher sales and increased margins.
We have generated $94 million and adjusted EBITDAX, thus far in 2022 on the potential to sell as much or more oil in the second half of 2022, we could be in for a record year in adjusted EBITDAX.
With our recent stock price around $5, we're trading a pretty low multiple of EBITDA of two times, despite paying a dividend and being debt free.
At June 30, 2021 we had an unrestricted cash balance of $53 $1 million.
This does not include the proceeds from our May listings of $73 million, which were received in July and on the first of August 2022.
Working capital at June 30th 2022 was negative $8 million compared with negative $21 $3 million at March 31, 2022.
The change in working capital is it related to the increase in tax people aligned with the plan government lift in October 2022.
Increased accounts payable, which was partially offset by an increase in accounts receivable.
For the second quarter 2022, net capital expenditures, excluding acquisitions totaled $37 $1 million on a cash basis and $38 1 million on an accrual basis.
These expenditures were primarily related to costs associated with the 2021 2022 drilling program, the FSU conversion and the Etame field reconfiguration.
As George mentioned for the third quarter 2022, we estimate our net capex to be approximately $40 million to $50 million.
With the increase in the number of wells for the drilling campaign from four to six wells, coupled with some inflation in supply chain cost increases to the FSU and fulfill turnaround our full year Capex guidance is now in the range of $130 million to $150 million.
As has been the case since the second quarter of 2018, we're carrying no debt.
Last week, the board of directors approved a cash dividend of three and a quarter cents per common share that as people in September 23rd 2022 to all stockholders of record at the close of business on August 24th 2022.
This equates to a full year 2020 to annualized dividend of <unk> 13 per share.
With that I will now turn the call back over to George.
Thanks, Ron.
As you heard this morning, the second quarter was a record breaking for vogtle.
The successful <unk> conversion on wholesale reconfiguration additional successful drilling and sustained higher oil pricing the fourth quarter will meet or exceed our second quarter strong results.
We are increasingly growing production and cash flow, while remaining focused on providing sustainable returns to our shareholders.
We're excited by the organic opportunities at Etame with our remaining 2021, and 2022 drilling program, well and the positive impact of our field Reconfigurations and episodes.
What P. In Equatorial Guinea provides an exciting opportunity one of development of the blue.
It will establish another asset with a strong platform for organic growth.
We are generating significant cash.
And have now paid two quarterly dividends, thus far in 2022 and announced a third but will be paid in September .
<unk> of this quarter.
We believe that prudently returning cash to shareholders is a great way to complement our accretive growth strategy.
We have done an excellent job growing vocal and I believe the next step is the accretive and transformational transaction, but we are progressing forward with <unk>.
Yes.
We believe that by combining these two companies, we should be able to expand and diversify our African.
Assets, both size scale and market cap and should allow us to generate meaningful cash flow to fund expanded shareholder dividend.
Share buybacks and potential supplemental shareholder returns at a rate that would not be achievable on a standalone basis.
As noted earlier, we have announced a target of 52 cents per share returned in dividends and buybacks beginning post closing.
Both companies have experienced teams that we believe will be complementary and help us to continue achieving our strategic vision.
Most importantly, we will remain firmly focused on maximizing shareholder return opportunities and operating with the highest regard towards ESG.
We're very excited for the future of the combined company and believe that it provides the opportunity to materially expand our ability to return value to our shareholders. While also growing volumes in the underlying business at a rate that neither balco all clients who.
I'll provide on a standalone basis.
Work on the transaction is proceeding as expected and over the past couple of weeks, we've been in discussion with our biggest shareholders and we appreciate the support that we heard.
We are confident that the combined company is stronger than either company on a standalone basis and will deliver superior long term value to our shareholders.
We expect to file a preliminary proxy statement asking stockholders to approve the arrangement later in August .
Once the proxy statement is finalized we will move to our stockholders on call a special meeting to vote on the transaction.
We currently expect to close the transaction in the third and fourth quarters of 2022.
Thank you for that and operator, we're ready to take questions.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
Using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Jason while we're waiting for questions I wanted to point out to anyone who may have joined us.
From the webcast there was a technical problem, where the service provider had a linked going to a different conference call that was corrected about midway through the webcast and so anyone that wants to listen to the whole thing again, they will be able to do so a little bit later when the full recording attack on the website.
Our first question comes from Bill to sell them from Teton Capital. Please go ahead.
Tier two capital I have two questions today to start with first of all.
Hmm.
Your your D too well.
That you said you will look at completing in the next drilling campaign why wait why not just go ahead. While you were in the Wellbore I don't think I understand technically the the realities around that.
Okay, and primarily that's driven by the availability of completion equipment with already moved off the well site.
And I'd also already selected the additional options that we have for the for the rig.
Current program.
So when we were looking at and I think there's a slide in the supplemental part that gives us some good information.
Slide seven on the differentiation between the seasons, we were going through on the soap to below well for the D. One in the Dina and opportunity and then we were planning to take the rig pool.
Post that so the rig was already off the well site and away from the platform by the time, we were continuing to evaluate the D. One productivity by the time, we came to the conclusion of that analysis. The rig is actually than on the <unk> platform and performing production.
Drilling operations are.
And the next well so basically we have utilized all of our options and.
We will continue to obviously evaluate the denying and put the planning in place for going back into that Wellbore to look at the D nine and the 2023 campaign.
That's helpful. George Thank you and then how does extending the drilling program.
Current drilling program alter your original plan for the next drilling plan and program.
Or is that less relevant than how G. A tranche globe acquisition will ultimately alter that to that program.
Well I mean, obviously, we look at we've been looking at the programs and isolation of the the crimes globe opportunity. We it hasnt really impacted at all other than we have we see the opportunity to take forward. The two wells that we were.
You have highlighted.
The beauty foliage workover and the northeast the Zuma exploration well. These were the most mature targets that we had from our seismic analysis that we did from the analysis of the reprocessed and reevaluate the seismic that we did in 2020 in 2021 from from <unk>.
Side as we continue to evaluate that seismic a continues to give us additional targets, we will mature in time for the 2023 program. So when we look at the amount of targets that we have in that program.
It is not diminished by what we've pulled forward because the opportunities continue to increase as we continue to evaluate the seismic.
And finally, how many wells are you planning on drilling in the next drilling campaign.
At the moment, where we have a range of wells between four and six.
This will all of this will be subject to a ranking exercise that we will do over a whole capex program subject to the combination being approved by our shareholders because one of the key elements that we have and this opportunity with the increased acreage and increased capital investment opportunity is too.
We're the fastest most efficient economic returns are coming from the dollar that we invest in the ground.
Great. Thank you and congratulations on a great quarter.
Thank you.
We will have no more questions and with that I will turn the call back over to George Maxwell VAALCO CEO for closing comments.
Yeah.
Thank you very much operator, I think it's a it's a testament to the strategy and the work and the effort of all the stuff that VAALCO and both in the administrative side and the operational side and the geological side that has given starting to pay dividends through corporate.
Second quarter, and that's very evident we have considerable work going on in the third quarter undertaking some of the biggest changes that the bulk of them done in a number of years in the field reconfiguration I. Please have a look at the additional deck that we've added on to this this conference call and Youll see some of the.
Citing work that is ongoing in the field as I mentioned five times the number of personnel currently active in the field. At this time gives you a sense of scale as to the kind of reconfiguration operations that were undertaken.
We have a number of our exciting opportunities coming forward in in Q4 on completion of that we continue to focus on the transaction and again I would direct you to the additional materials that we've included in our podcast and a slide deck that was issued on Monday in relation to the.
The combination of opportunity and with that I think I'd like to thank our shareholders for the support we've received over the over the last since since I came on board last 15 months, we've seen the market is responding to our strategy. It is responding to how we are executing our business and it's responding to the levels of transparency that we can.
To communicate to the market.
So with that I. Thank you very much for listening to our call today and I look forward to providing you an update in Q3.
Conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.
[music].