Q1 2024 VAALCO Energy Inc Earnings Call
Good day and welcome to the VAALCO energy first quarter 'twenty 'twenty four earnings conference call.
Operator: Good day, and welcome to the VAALCO 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 and then 1 on your telephone keypad. If at any time your question has been answered and you would like to withdraw your question, Please press star then 2. 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.
Operator: All participants will be in listen only mode.
Operator: Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
Operator: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.
Operator: If at any time. Your question has been addressed and you would like to withdraw your question.
Operator: Please press Star then two.
Operator: 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.
Al Petrie: Thank you operator, welcome to VAALCO Energy's first quarter 2024 conference call. After I cover the forward looking statements George macro our CEO will review key highlights of the first quarter Ron <unk>. Our CFO will then provide a more in depth financial review George will then return.
Al Petrie: Thank you, Operator. Welcome to VAALCO 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 ask you to limit your questions to one and a follow-up. You can always re-enter the queue with additional questions.
Al Petrie: For some closing comments before we take your questions. During a question answer session. We ask you to limit your questions to one and a follow up.
Al Petrie: Can always reenter 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.
Al Petrie: 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 FARD-looking statements. Investors are cautioned that FARD-looking statements are not guarantees of future performance, and actual results or developments may differ materially from those projected in the FARD-looking statement.
Al Petrie: During the course of this conference call the company, but we're making forward looking statements investors are cautioned that forward looking statements are not guarantees of future performance.
Al Petrie: Those actual results or developments may differ materially from those projected in the forward looking statements VAALCO disclaims any intention or obligation to update or revise any forward looking statements.
Al Petrie: VAALCO 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 I turn the call over to George.
George: As a result of new information future events or otherwise accordingly, you should not place undue reliance on forward looking statements.
Al Petrie: These and other risks are described in our earnings release presentation posted on our website and in the reports we filed with the SEC, including our Form 10-K. Please note that this conference call is being recorded and now let me turn the call over to George.
George: Thank you.
George Walter: 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're 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 VAALCO's assets with the new acquisitions. We announce that we will close the Svenska acquisition in an all-cash deal for $40.2 million on April 30, 2024.
George: Good morning, everyone and welcome to our first quarter 2024 earnings Conference call.
George Walter: We began 2024 with positive operational and financial results, including strong earnings and adjusted EBITDA generation.
George Walter: In addition, we closed the <unk> 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.
George Walter: We returned over $12 million to shareholders in Q1, 2024 through dividends and buybacks.
George Walter: Let's begin our overview of bulk whose assets with the new acquisition.
George Walter: We are nice, but we closed since the acquisition in an all cash deal for $40 2 million on April 30th 2024.
George Walter: This was done very quickly and efficiently and ahead of our internal expectations. Our team traveled to Côte d'Ivoire to meet directly with the Ministry of Hydrocarbons to officially introduce VAALCO 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 Cote d'Ivoire baobab field in Block CI40 has strong production and reserves.
George Walter: This was done very quickly and efficiently and ahead of our internal expectation.
George Walter: Our team traveled to Cote d'ivoire to meet directly with the Ministry of hydrocarbon to officially introduce VAALCO has a new partner on block <unk>.
George Walter: We are adding an asset with strong current production and reserves at a very attractive price.
George Walter: This acquisition is highly accretive on key shareholder metrics and provides a number of strong asset to support our future growth.
George Walter: It provides us with additional diversification strategically expands our west African focused area.
George Walter: The Cote d'ivoire be above field in blocks <unk> has strong production and reserves.
George Walter: We are excited to be partnering with Petri C and CNR International and believe the Baobab field, the next phase of drilling, and the discovered yet undeveloped Kisipo 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. Botel Futs reflects a positive impact on production and production expense per barrel, which should lead to improved margins and greater adjusted EBITDA.
George Walter: We are excited to be partnering with Petro C. CNR International and believe the baobab field. The next phase of drilling on the discovered yet undeveloped kisser pool field in Cote d'ivoire is an outstanding asset with significant upside potential.
George Walter: In Yesterdays earnings release, we updated our full year and second quarter 2024 guidance Boto post reflects the positive impact to production and production expense per bottle, which should lead to improved margins and greater adjusted EBITDAX.
George Walter: We entered this year, we expect to provide additional information on the beer Bob F. P. S. O project planned in 2025 and future Baobab drilling plans. After we've had time to further our relationship with CNR in international.
George Walter: Later this year, we expect to provide additional information on the BAOBAB FPSO project planned in 2025 and future BAOBAB drilling plans after we've had time to further our relationship with CNR International and get you a more detailed understanding of the Operators Development Plan. 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 frags.
George Walter: Giving you more detailed understanding of the operators development plans.
George Walter: Turning to Egypt, as we disclosed last quarter. The first half of 2024 is focused on high rate of return on capital Workover projects to help mitigate decline.
George Walter: In the first quarter, we had six workovers, including five re completions on track there.
George Walter: 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.
George Walter: This work added about 800 barrels of oil per day, helping to offset natural decline.
George Walter: In addition to the successful Workovers I'm very proud of a major milestone that we accomplished in the first quarter of 2024 and Egypt.
George Walter: I've gone over 1 million man hours without a lost time incident.
George Walter: This is a testament to our commitment to safety training and dedication of all of our people in the field.
George Walter: 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 program 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 it is confirmed.
George Walter: As I mentioned on our last call. We have a 10 to 15 well drilling program, but we are currently evaluating for the second half of this year.
George Walter: This program remains contingent upon completion of the program evaluation and confirmation of a drilling rig for the period.
George Walter: We have not included this program in our 'twenty 'twenty four capex guidance I'm, one odd it until confirmed however, if we proceed with the program we anticipate additional 'twenty 'twenty four capex of approximately $18 million, which will also generate additional production.
George Walter: However, if we proceed with the program, we anticipate an 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.
George Walter: We have seen some post of announcements from the government in 2024, and particular payment of aged receivables, which is very encouraging.
George Walter: In Canada, we successfully drilled four wells in the first quarter of 2024 or $2 75 mile lateral wells.
George Walter: 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 will contribute to 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.
George Walter: 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 under coming on production with encouraging results.
George Walter: The other two wells are expected to be placed online within the next 14 days on all four wells completely jammed production by the end of the month.
George Walter: You can see the impact in our production and our sales guidance that we put out yesterday in our press release and that Ron will review in more detail later.
George Walter: 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 favor of liquids, which contributes to the strong production performance and to our overall profitability.
George Walter: In addition, we are also targeting an exploration of appraisal well in the third quarter of 2024 and our southern acreage.
George Walter: 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.
George Walter: Our existing well portfolio has an increasing gas oil ratio on the new wells will rebalance this more in favor of liquids, which contributes to the strong production performance and to our overall profitability.
George Walter: Turning to Gabon, we completed our previous drilling campaign in the fourth quarter of 2022, Uninvested only minimal capex dollars in Gabon in 2023.
George Walter: 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 well. The FSO and field reconfiguration projects in 2022 allowed us to minimize downtime, increase 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, Southeast Itame, and North Chibuila fields.
George Walter: Primarily related to maintenance capex on long lead drilling equipment.
George Walter: We have seen positive overall production results. Since then with strong production uptime and improve the client comes on the well.
George Walter: The episode Unfilled reconfiguration projects in 2022 have allowed us to minimize downtime capturing efficiency and reduce overall opex.
George Walter: Looking ahead to 2025, we are actively working on the final technical and commercial aspects of our next drilling campaign at Etame.
George Walter: Activities are planned at the Etame Aboody southeast Etame North tubular field.
George Walter: We have a plan drilling campaign of between five and seven well that includes a mix of development and exploration wells, along with a gas well or infield power requirements that will substantially reduce fuel costs and the field going forward.
George Walter: 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 in-field power requirements that will substantially reduce fuel costs in the field going forward. As discussed previously, in 2014 at the Ebury Field, we encountered increasingly low levels of H2S in the three oil wells after they had been on production or testing. We were able to keep the well with the lowest levels of H2S, the Aburi 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.
George Walter: As discussed previously in 2014 at the Buda field, we encountered increasing low levels at least to us the three oil wells after they had been on production or tested.
George Walter: Are you able to keep the well with the lowest levels of me to ask the Aboody two H well on production using a chemical treatment solution, but the three H M 48 wells were shut in due to the high <unk> level that we're trending to be too high for chemical treatment to be effective.
George Walter: As a result, we were left with between 8 to 12 million barrels of oil as a contingent resource due to H2S contamination. We are currently remeasuring 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 modeling efforts to assess and forecast future potential H2S levels in the 2H well and also other proposed wells.
George Walter: As a result.
George Walter: We were left with between eight to 12 million barrels of oil is contingent resource G to each to ask contamination.
George Walter: We're currently re measure in the east to west concentrations in the two H and for each well to validate the field's current levels and expect to complete our H two S testing in the second quarter of 2024.
George Walter: The testing is being done to support our modeling efforts to assess and forecast future potential H two S levels in the two H well and also other proposed wells.
George Walter: We continue to look for the most cost-effective path forward to increase production at Ebury. 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.
George Walter: We continue to look for the most cost effective path forward to increase production Ulta beauty.
George Walter: We are reviewing two methodologies to address in Sweden, the oil at the booty mechanical and chemical treatment going forward.
George Walter: Once we determine the optimal solution going forward, we plan to conduct more cohorts of the two H and forage wells and replaces a three inch well with a more optimally located well. In addition, we will test an unbilled fault block in the field with a new well.
George Walter: Coupled with our plans to Derisk the crude sweetening process will result in an opportunity not only to commercialize the currently stranded H two S oil, it's a beauty, but also to potentially add resources with an exploration well.
George Walter: Combined with our plans to de-risk the crude sweetening process will result in an opportunity not only to commercialize the currently stranded H2S oil at Oubouri 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 county field, we have just completed a revised evaluation of the field's potential.
George Walter: Our ability to use our engineering knowledge of new technologies to drive lower cost and access more oil has been paramount to extending the life of the Etame field.
George Walter: Anytime we feel we have just completed a revised evaluation of the field's potential.
George Walter: 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 process. The exploration prospect sits within the reach of the Itali platform, so 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.
George Walter: Based on the results of this new evaluation, we identified a number of opportunities.
George Walter: We are planning to additional production wells at Etame and to test a nearby exploration prospect.
George Walter: The exploration prospect sits within reach of the Italian 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.
George Walter: We have three slots open at the Etame platform. So we have the auction if both of the early pilot wells are attractive on the exploration well is successful to drill a second production well from the Etame main fault block, resulting in a potential third well all the etame platform.
George Walter: We continue to spend a lot of time examining our assets and 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.
George Walter: We continue to spend a lot of time examining ross it how to make them more efficient and profitable.
George Walter: We are expecting to spend between 30 and $40 million and long lead items in 2020 for preparing for and in anticipation of the drilling campaign.
George Walter: Progress on blocks G and H is ongoing PSC negotiations are continuing between the partnership and the government government and we have made some encouraging progress this quarter.
George Walter: PSC negotiations are continuing between the Partnership and the Government, and we have made some encouraging progress this quarter. On March 25, 2024, we announced the finalization of documents in Equatorial Guinea related to the Venus Block P Plan of Development. The finalization of these agreements included a carrier arrangement between the partners Atlas and G-Patrol.
George Walter: On March 25th 2024, we announced the Finalization of documents and Equatorial Guinea related to the venous block P plan of development.
George Walter: The Finalization of these agreements included a carry arrangement of the partners Atlas and G petrol.
George Walter: 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 field study. We anticipate the completion of the FEES study will lead to an Economic Final Investment Decision or FID, which will enable the development of VENUS.
George Walter: This arrangement is on commercial terms that software plus 7% at total currently 12, 5%.
George Walter: This improves our one P economics on those previous announced and we have included an illustration of this in our accompanying slide deck.
George Walter: We will now proceed with our front end engineering and design or feed study.
George Walter: We anticipate the completion of the feed study will lead to an economic final investment decision RFID, which will enable live development of Venus.
Ronald Y. Bain: 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.
George Walter: We're 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.
Ronald Y. Bain: We look forward to discussing this new era of operations in more detail once the feed study is complete.
Ronald Y. Bain: We're starting 2024 by delivering on or exceeding our guidance operationally on the solid financial results have outpaced analyst expectations.
Ronald Y. Bain: They are focused on growing production reserves and value for our shareholders.
Ronald Y. Bain: I would like to thank our hard-working team who continue to operate and execute our plan. 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 instill confidence for the future. With that, I'd like to turn the call over to Ron to discuss our financial results.
Speaker Change: I would like to thank our hard working team, who continue to operate and execute your plant.
Ron: 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.
Ron: We are well positioned to execute projects within our enhanced portfolio and a proven track record of success in these past few years to instill confidence for the future.
Ron: With that I'd like to turn the call over to wrong to share our financial results.
Ron: Thank you George and good morning, everyone.
Ronald Y. Bain: Thank you, George, and good morning, everyone. I will provide some insight into the drivers of our financial results, with a focus on the key points. Let me begin by echoing George's comments about our continued success into 2024, driven by strong operational performance, quickly closing on our highly accretive acquisition, and solid financial results. In the first quarter, we generated $7.7 million in net income, or $0.07 per share, and $61.7 million in adjusted EBITDAX. Both were ahead of consensus estimates.
Ronald Y. Bain: I will provide you some insight into the drivers for our financial results with a focus on the key points.
Ronald Y. Bain: Let me begin by echoing George's comments about our continued success into 2024.
Ronald Y. Bain: Driven by strong operational performance quickly closing on our highly accretive acquisition and solid financial results.
Ronald Y. Bain: In the first quarter, we generated $7 $7 million and net income or seven cents per share and.
Ronald Y. Bain: And $61 7 million and adjusted EBIT docks.
Ronald Y. Bain: Both were ahead of consensus estimates.
Ronald Y. Bain: Well, it's turned to production in seals, which along with realized pricing drives our revenue.
Ronald Y. Bain: Let's turn to production and sales, which, along with realized prices, drive our revenue. Production for the first quarter remained solid, and sales were almost 16,400 barrels of oil equivalent per day at the high end of our guidance, with our sales for the quarter also at the higher end of our guidance. We completed a lifting in Gabon in March, as you can see by the strong sales results.
Ronald Y. Bain: Production for the first quarter remained solid and seals were almost 16400 barrels of oil equivalent per day at the high end of our guidance well their sales for the quarter also at the higher end of the guidance.
Ronald Y. Bain: We completed a lifting in Gabon in March, but you can see by the strong sales results.
Ronald Y. Bain: I'd like to reiterate that with a diversified portfolio of assets, we will have changes from quarter to quarter in the mix of sales from each of our producing areas. This change in mix impacts our realized prices and, ultimately, our revenue and earnings. But if you look at the bigger picture, and over a full year, you will see impressive growth across our expanding portfolio of producing assets. We close the Svenska acquisition on April 30th, and this means that all production, sales, and financial results for the assets will be incorporated into our results from May 1st forward. So, the second quarter will have two months of Swenska impact, and the full year numbers will have eight months of impact.
Ronald Y. Bain: I'd like to reiterate that with a diversified portfolio of assets, we will have changes from quarter to quarter in the mix of sales from each of our producing areas.
Ronald Y. Bain: This change in mix impact, so realized pricing and ultimately our revenue and earnings.
Ronald Y. Bain: But if you look at the bigger picture maneuvered a full year, you will see impressive growth across our expanding portfolio of producing assets.
Ronald Y. Bain: We closed the <unk> acquisition on April 30, and this means that all production seals and financial results for the assets will be incorporated into our results for me the first forward.
Ronald Y. Bain: So the second quarter, we will have two months of <unk> impact on the full year numbers eight months of impact.
Ronald Y. Bain: Pricing remains strong, and our hedging program has always looked to help mitigate risk and protect our commitment to shareholder return. We have costless collars in place for 2024, and our current hedge positions were disclosed in the earnings release. Realized hedge costs in the quarter were $24,000. Turning to costs, our production costs for the first quarter of 2024 were below the low end of guidance on an absolute basis and at the bottom end of guidance on a per barrel basis.
Ronald Y. Bain: Pricing remains strong and our hedging program has always looked to help mitigate risk and protect our commitment to shareholder return.
Ronald Y. Bain: We've costless collars in place for 2024, and our current hedge positions were disclosed in the earnings release.
Ronald Y. Bain: Realized hedge costs in the quarter were $24000.
Ronald Y. Bain: Turning to costs, our production costs for the first quarter of 2024 were below the low end of guidance on an absolute basis and at the bottom end of guidance on a per barrel basis.
Ronald Y. Bain: While we remain focused on capturing synergies and keeping our costs low to enable us to maximize margins and increase our cash flow, some of the lower costs were driven by the timing of projects across our assets. G and A costs were also in line with guidance. When compared to the combined G&A costs seen in 2022 by both VAALCO and Transglobe, we've seen meaningful reductions in costs well ahead of our target synergies. The final integration and reorganization of the business are behind us, and we have commenced a back-office process improvement project with the implementation of a single cloud-based ERP across the whole company.
Ronald Y. Bain: While we remain focused on capturing synergies and keeping our costs low to enable us to maximize margins and increase our cash flow some of the lower costs were driven by timing of projects across our assets.
Ronald Y. Bain: G&A costs were also in line with guidance.
Ronald Y. Bain: When compared to the combined G&A costs seen in 2022 by both vocal on Trans Globe, where you've seen meaningful reductions in costs well ahead of our target synergies.
Ronald Y. Bain: The final integration and reorganization of the business is behind US and we have commenced a back office process improvement project with the implementation of a single cloud based ERP across the whole company.
Ronald Y. Bain: Noncash DD&A cost increased quarter over quarter, primarily due to year end depletion adjustments, mostly in Egypt. There were made in the fourth quarter. Once we complete the door reserves evaluation and 2023 CPR.
Ronald Y. Bain: Non-cash DD&A costs increased quarter over quarter primarily due to year-end depletion adjustments, mostly in Egypt, that were made in the fourth quarter once we completed our reserves evaluation and 2023 CPR. Compared to the prior year, in 2023, we've seen an increase in absolute dDNA costs because of the additional investment in new wells brought online in both Egypt and Canada in 2023. Year-on-year dDNA costs on a per barrel basis are down 13%.
Ronald Y. Bain: Compared to the prior year and 2023, we've seen an increase in absolute DD&A costs because of the additional investment in new wells brought online for both Egypt and in Canada in 2023.
Ronald Y. Bain: Year on year DD&A costs on a per barrel basis are down 13%.
Ronald Y. Bain: In November 2023, we agreed on a practical with the Gabonese state for a long standing debt on T V. A together with an outstanding debt from the government owned Sugata refinery.
Ronald Y. Bain: In November 2023, we agreed on a protocol with the Gabonese state for a long-standing debt on TVA together with an outstanding debt from the government-owned Sagara Refinery. This was by way of transfer of state profit or loans to the TAMI contractors in settlement of its debt. This has reduced the quantity of barrels we are holding as foreign taxes payable, and this will be settled with the estate lifting of the remaining barrels in May 2024.
Ronald Y. Bain: This was by way of transfer of steep profitable barrels to the Tommy contractors and settlement of its debt.
Ronald Y. Bain: This reduced the quantity of bottles were holding as foreign taxes payable and this will be settled with the state and listing of the remaining barrels in May 'twenty 'twenty four.
Ronald Y. Bain: We had no Gabonese state listing in 2023, primarily due to the Protocol Agreement, but we had a state listing in 2022 of approximately 600,000 barrels. Tax costs in the first quarter of about $22.2 million resulted in an effective tax rate of about 74% in the quarter. This was higher than prior quarters and driven by both the revaluation of tax on all barrels held for Gabon as well as some discreet permanent differences at corporate for deal costs for Swenska and an increase in our overall credit loss reserve.
Ronald Y. Bain: We had new company state lifting in 2023, primarily due to the practical agreement, but how to state listing in 2022 or approximately 600000 barrels.
Ronald Y. Bain: Tax cost in the first quarter of about $22 $2 million resulted in effective tax rate of about 74% in the quarter.
Ronald Y. Bain: This was higher than prior quarters, and driven by both revaluation of tax all boroughs helfand, Gabon as well as some discrete permanent differences at corporate for deal cost first vanska and an increase in our overall credit loss reserve.
Ronald Y. Bain: As I stated before in Gabon, our foreign income taxes are settled by the government through in kind oil payments.
Ronald Y. Bain: As I stated before, in Gabon, our foreign income taxes are settled by the government through in-kind oil payments. At the end of each quarter, we have to mark to market the in-kind oil. So, in general, when prices rise, it has a negative impact on our accrued taxes, and if prices fall, we see a benefit, thus reducing our tax liability. However, we cannot control the movement of the underlying commodity price to which this in-kind oil is marked.
Ronald Y. Bain: At the end of each quarter, we have to mark to market the in kind oil so.
Ronald Y. Bain: So in general when prices rise it has a negative impact to our accrued taxes and if prices fall, we see a benefit thus reducing our tax liability.
Ronald Y. Bain: We cannot control the movement of the underlying commodity price to which this in kind oil is mark too.
Ronald Y. Bain: We continue to guide that 60-65% is the correct effective tax rate over the long term, excluding discrete items. Turning now to the balance sheet and cash flow statement. Unrestricted cash was down slightly to $113 million as of March 31, 2024. Also, in April, we used about $40 million of this cash to fund the Svenska acquisition. In the last call, we discussed likely working capital movements, some of which occurred in the fourth quarter of 2023 related to the reduction in accounts payable associated with the 2023 capital program.
Ronald Y. Bain: We continue to guide that 60% to 65% effective tax rate is the correct effective tax rate over the long term excluding discrete items.
Ronald Y. Bain: Turning now to the balance sheet and cash flow statement.
Ronald Y. Bain: Unrestricted cash was down slightly to $113 million as of March 31st 2024.
Ronald Y. Bain: Also in April we used about $40 million of this cash to fund this fenske acquisition.
Ronald Y. Bain: In the last call, we discuss likely working capital movement, some of which occurred in the fourth quarter 2023 related to the reduction in accounts payable associated with the 2023 capital program.
Ronald Y. Bain: In the first quarter of 'twenty 'twenty four we experienced a small decrease in the Egyptian accounts receivable we.
Ronald Y. Bain: In the first quarter of 2024, we experienced a small decrease in Egyptian accounts receivable. We sold all production as domestic sales in the first quarter, but we also had multiple offsets, including our annual modernization payment. The £10 million annual modernization payment was negotiated as an offset against EGPC accounts receivable.
Ronald Y. Bain: We sold all production as domestic sales in the first quarter, but we also had multiple lawsuits, including our on your modernization payment.
Ronald Y. Bain: The 10 million annual Modernisation payment was negotiated as an offset against E. G. P. C accounts receivable.
Ronald Y. Bain: We also had cash collections and other available EGPC sister company offsets, more than recovering a full quarter of domestic sales. Additionally, in Q1, we had certain annual cash payments that tend to be paid early in the new year, including our domestic market obligation in Gibbon and our annual energy package insurance renewal and annual staff costs. Finally, as part of being a responsible operator and a community partner in Gabon, we are implementing community engagement projects sanctioned by the PSC that were previously undertaken.
Ronald Y. Bain: We also had cash collections and other available E. G. P. C sister company offsets more than recovering a full quarter of domestic sales.
Ronald Y. Bain: Additionally, in Q1, we had certain annual cash payments that tend to be paid early in the new year included in our domestic market obligation in Gabon, and our annual energy package in children's renewal and annual staff costs.
Ronald Y. Bain: Finally, as part of being a responsible operator and a community partner in Gabon, we are executing on community engagement project sanction by the PSC that were previously accrued. These items also reduce cash in the first quarter of 2024.
Ronald Y. Bain: These items also reduced cash in the first quarter of 2024. With that said, we're pleased that the Egyptian government has made a concerted effort to reduce its backdated billed payables. In the first quarter, it reduced its backdated billed payables with VAALCO by about 25% of its agreed outstanding age receivables as of the 31st of December 2023.
Ronald Y. Bain: With that said, we're pleased that the Egyptian government has made a concerted effort to reduce its part D to build payables.
Ronald Y. Bain: And the first quarter reduced its backdated bills payables with VAALCO by about 25% of its agreed outstanding receivables as of the 31st of December 2023.
Ronald Y. Bain: As has been the case since the third quarter of 2018, we are cutting no bank debt and credit facilities available to utilize for additional accretive acquisition opportunities continue to build value.
Ronald Y. Bain: As has been the case since the third quarter of 2018, we are carrying no bank debt and have credit facilities available to utilise for additional accretive acquisition opportunities to continue to build value. In Q1 2024, VAALCO paid a quarterly cash dividend of six and a quarter cents per common share, or six and a half million dollars, and our share buyback was about five and a half million dollars. Over $12 million in shareholder returns in the quarter. We also announced the second dividend payment of the year, which will be paid in June.
Ronald Y. Bain: In Q1, 2024, VAALCO paid a quarterly cash dividend of $6 quarter cents per common share or $6 $5 million and our share buyback was about five and a half million dollars.
Ronald Y. Bain: Over $12 million in shareholder returns in the quarter.
Ronald Y. Bain: We also announced the second dividend payment of the year, which will be paid in June.
Speaker Change: Let me now turn to guidance, but I will give you some key highlights and updates.
Ronald Y. Bain: Let me now turn to guidance, where I will give you some key highlights and updates. I want to remind you that guidance now includes the recently closed Svenska acquisition for the second quarter and for the full year 2024. Also, our full guidance breakout is in the earnings release and in our supplemental slide deck on our website, with production breakout of both working interest and net revenue interest. For the total company, we are forecasting Q2 2024 production to be between 23,800 and 27,000 working interest barrels of oil equivalent per day, and between 19,000 and 21,800, Net Revenue Interest, Barrels of Oil Equivalent per Day. This is up significantly from the first quarter due to the Svensk acquisition, expected new wells in Canada, and slightly offset by natural decline.
Ronald Y. Bain: I want to remind you that guidance now includes the recently closed <unk> acquisition for the second quarter and for the full year 2024.
Ronald Y. Bain: Also our full guidance breakout is in the earnings release and the door supplemental slide deck on our website with production breakout of both working interest and net revenue interest.
Ronald Y. Bain: For the total company. We are forecasting Q2 2024 production to be between 23000 827000, working interest barrels of oil equivalent per day.
Ronald Y. Bain: And between 19000.
Ronald Y. Bain: 21800, net revenue interest barrels of oil equivalent per day.
Ronald Y. Bain: This is up significantly from the first quarter due to this venture acquisition expected new wells in Canada, and slightly offset by natural decline.
Ronald Y. Bain: For the full year 2024, we're now forecasting our total company production to be between 23,600 and 26,500 barrels of oil equivalent per day, and between 18,900 and 21,400 barrels of net revenue interest per day. Looking at production by asset, we're expecting natural decline in Gabon and Egypt. Although we do have a capital workover program in Egypt in the first half of 2024, that should help mitigate the decline.
Ronald Y. Bain: For the full year 2024, we're now forecasting our total company production to be between 23000 626500, working interest barrels of oil equivalent per day and between 18000 921400 net revenue interest.
Ronald Y. Bain: <unk> barrels of oil equivalent per day.
Ronald Y. Bain: Looking at production by asset, we'd expect did not show a decline in Gabon in Egypt, Although we do have a copper ore Workover program in Egypt in the first half of 2024 that should help mitigate decline.
Ronald Y. Bain: In Canada as I mentioned, we expect year over year growth from our drilling campaign in Cote d'ivoire. We're in flight operations for me through to December and our full year numbers.
Ronald Y. Bain: In Canada, as I mentioned, we expect year-over-year growth from our drilling campaign, and the Côte d'Ivoire will reflect new operations from May through to December in our full year numbers. For the second quarter and for full year 2024, we are assuming our sales will be more or less in line with our production. In Gibbon, we're expecting two listings in the quarter, with one of them being a government listing. The government lifting flows through our sales and is offset by settling the accrued tax liability that we're holding on the balance sheet.
Ronald Y. Bain: For the second quarter and for full year 2024, we're assuming our sales will be more or less in line with our production.
Ronald Y. Bain: In Gabon were expecting two listings in the quarter with one of them being a government lifting.
Ronald Y. Bain: The government lifting flows through our sales and is offset by settling the accrued tax liability that we're holding on the balance sheet is net cash neutral for VAALCO in the quarter.
Ronald Y. Bain: It's net cash neutral for VAALCO in the quarter. Our absolute operating costs are expected to go up with the Swenska addition, but we are projecting our per barrel of oil equivalent range to decrease due to the Swenska volume. We're also expecting small increases in absolute DNA, as we noted previously. Finally, looking at our CapEx, our 2024 capital spend has increased to be between $115 and $140 million as we prepare for the 2025 Swenska FPSO change-out.
Ronald Y. Bain: Our absolute operating costs are expected to go up with the Svenska addition, but we are projecting our per barrel of oil equivalent range to decrease due to the Transco volume. We're also expecting small increases in absolute G&A as we noted previously.
Ronald Y. Bain: Finally, looking at our Capex, our 2020 for capital spend has increased to be between 115 on a $140 million as we prepare for the 2025 Svenska Fps's changeover.
Ronald Y. Bain: The anticipated next drilling campaigns in both Gabon, Ivory coast and the Canadian in 2024 drilling program.
Ronald Y. Bain: The anticipated next drilling campaigns in both Gabon and Ivory Coast and the Canadian 2024 drilling program. For the second quarter, we're expecting a range of between $30 million and $50 million for Orcapex. In closing, despite our recent strong stock price performance, we believe that we continue to trade at a low multiple of EBITDAX, despite having a dividend yield and being bank debt free. With the Swenska acquisition, we're forecasting a meaningful increase in production and sales, which should also increase our ability to generate adjusted EBITDAX and operational cash flow in 2024. We are very well positioned to execute and fund a CAPEX program across multiple producing assets over the next several years. With that, I will now turn the call back over to George.
George Walter: For the second quarter, we're expecting a range of between $30 million and $50 million for our Capex.
Ronald Y. Bain: In closing despite a recent strong stock price performance, we believe that we continue to trade a little multiple of EBITDAX, despite having a dividend yield and being bank debt free.
Ronald Y. Bain: With this venture acquisition, we are forecasting a meaningful increased in production and sales. We should also increase our ability to generate adjusted EBIT docks and operational cash flow in 2024.
George Walter: We are very well positioned to execute and fund our capex program across multiple producing assets over the next several years.
Ronald Y. Bain: With that I'll now turn the call back over to George.
George Walter: Thanks, Ron.
George Walter: Thanks Ron. We will continue to execute our strategy focused on operating efficiently, investing prudently, maximizing our asset base, and looking for accretive opportunities. As you have heard this morning, we are off to a very strong start in 2024, both operationally and financially. With the closing of the Swenska acquisition at the end of April, we will see a positive impact on production, sales, OPEX per BOE, operational cash flow, and adjusted EBITDA. Additionally, we have the Canadian Development Wealth coming online in the second quarter. We are planning a drilling campaign at Itami, and we are progressing the feed study in Equatorial Guinea and optimizing production while executing workovers in Egypt.
George Walter: We'll continue to execute our strategy focused on operating efficiently investing prudently in maximizing our asset base and looking for accretive opportunities.
George Walter: As you have heard this morning, we're off to a very strong start in 2024, both operationally and financially.
George Walter: With the closing of the <unk> acquisition at the end of April we will see a positive impact to production sales opex per Boe.
George Walter: Operational cash flow and adjusted EBITDAX.
George Walter: Additionally, we have the Canadian development wells coming online in the second quarter.
George Walter: We are planning a drilling campaign at Tommy and we're progressing the feed study in Equatorial Guinea, and optimizing production, while executing workovers in Egypt.
George Walter: Our entire organization is actively working to deliver sustainable growth and strong results. I believe we have gained credibility over the past two years by delivering on our commitments to the market and to our shareholders, and we will continue to deliver with the exciting slate of projects we have over the next few years. We are in an enviable financial position with no back debt and an even stronger portfolio of producing assets with future potential upside.
George Walter: Our entire organization is actively working to deliver sustainable growth and strong results.
George Walter: I believe we are getting credibility over the past two years have been delivered on our commitments to the market until shareholders and we will continue to deliver with the exciting slate of projects. We have over the next few years.
George Walter: We are in an enviable financial position with no bank debt and an even stronger portfolio of producing assets with future potential upside.
George Walter: In addition to funding our capital program, we have remained focused on returning value to our shareholders. In Q1 2024, we will return $12 million to our shareholders through dividends and buybacks. We are on pace to deliver another $0.25 per share annual dividend for 2024, matching what we paid out in 2023, which at our current share price is a dividend yield of about 4.5%. As Ron discussed, our 2024 guidance now includes the Svenska Acquisition Incorporated. But I want to reiterate that the second quarter only has two months of Svenska Incorporated and the full year only eight months due to the April 30th closing date.
George Walter: In addition to funding our capital program, we have remained focused on returning value to our shareholders.
George Walter: In Q1, 2024, when it turned $12 million to shareholders through dividends and buybacks.
George Walter: We are on pace to deliver another 25 cents per share annual dividend for 2020 for matching what we paid out in 2023, which our current share price as a dividend yield of about four 5% as.
George Walter: As Ron discussed our 2024 guidance now has this fence to acquisition incorporated but I want to reiterate that the second quarter only have two months of central incorporated in the full year only eight months due to the April 30th closing date.
George Walter: Regardless this highly accretive acquisition will materially increase our operational and financial results.
Speaker Change: Before I open up the call to questions I would like to point out that as part of our commitment to environmental stewardship, social awareness and good corporate governance, we have made a concerted effort in addressing and improving our ESG transparency and reporting which can be seen in the sustainability report that we published in April 2024.
George Walter: Regardless, this highly attritive acquisition will materially increase our operational and financial results. Before I open up the call to questions, I would like to point out that, as part of our commitment to environmental stewardship, social awareness, and good corporate governance, we have made a concerted effort to address and improve our ESG transparency and reporting, which can be seen in the sustainability report that we published in April 2024. During 2023, we greatly enhanced our leadership team, appointing new group-level heads of functions to centralize accountability and set global standards, processes, and plans for the business that align with industry best practices.
George Walter: Furthermore, the appointment of a Director of Sustainability and Regulatory Reporting has enabled a holistic approach to ESG management, performance, and disclosure. This sustainability report represents our most detailed report in accordance with the Task Force on Climate-Related Financial Disclosures, TCFD, to date, including an assessment of the business resilience and impact of physical climate risk. As we continue to drive our decarbonization program, we are pleased to report a 19% reduction in Scope 1 emissions from the previous year.
George Walter: During 2023, we greatly enhanced our leadership team appointing new group level head of functions to centralize our capability set global standards processes and plans for the business to align with industry best practices.
George Walter: Furthermore, the appointment of a director of sustainability and regulatory reporting has enabled a holistic approach to ESG management performance on disclosure.
George Walter: This sustainability report represents our most detailed report in accordance with the task force on climate related financial disclosures Tcf T to date, including.
George Walter: Including assessment of the business resilience and impact of physical climate risk.
George Walter: As we continue to drive our Decarbonization program. We are pleased to report a 19% reduction in scope one emissions from the previous year.
George Walter: The 2023 Sustainability Report is available on our website under the Sustainability tab. We are truly excited about the future, and VAALCO now has multiple producing areas and future prospects that have completely diversified our risk profile and our sources of income. Even though we have been highly successful over the past two years in developing and growing our assets, we remain disciplined in our approach to maximizing value for our shareholders by delivering growth in production, reserves, and cash flow. Thank you, and with that operator, we are ready to take questions.
George Walter: The 2023 sustainability report is available on our website under the sustainability tab.
George Walter: We are truly excited about the future and Vulcan that has multiple producing areas in future prospects to have completely diversified our risk profile under sources of income.
George Walter: Even though we have been highly successful over the past two years developing and growing our assets will remain disciplined in our approach to maximizing value for our shareholders by delivering growth and production reserves and cash flow. Thank.
George Walter: Thank you and with that operator, we're ready to take questions.
Speaker Change: We will now begin the question and answer session.
Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question is from Chris Wheaton with Stiefel.
Operator: If you ask a question you May press Star then one on your telephone keypad. If you are using a speakerphone. Please pick up your handset before pressing the keys.
Operator: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Operator: At this time, we will pause momentarily to assemble our roster.
Christopher Courtenay Wheaton: Oh no.
Operator: The first question is from Chris Wheaton.
Operator: Default.
Christopher Courtenay Wheaton: Please go ahead.
Christopher Courtenay Wheaton: Thank you very much good afternoon or good morning, guys. Thank you very much indeed for the call today.
Christopher Courtenay Wheaton: Thank you very much. Good afternoon or good morning, guys. Thank you very much, indeed, for the call today.
Christopher Courtenay Wheaton: I know Al said only one question. I'll do one question in two parts, maybe. Firstly, could you perhaps outline a bit more the $40 million or so allocated to CapEx in the year, how much that breaks down between additional spending on Canada and additional spending on Cote d'Ivoire, and also maybe if you could identify what's in that additional Cote d'Ivoire CapEx, that would be really helpful, because that... Quite a bit of CapEx to be spent ahead of the FPSO shutdown next
Christopher Courtenay Wheaton: I know outside only one question I'll take one question in two parts, maybe firstly could you, perhaps outline a bit more the $40 million delta the capex in the year have marched that breaks down between.
Christopher Courtenay Wheaton: Additional spending on.
Christopher Courtenay Wheaton: Canada or additional spending on Cote d'ivoire, and also maybe if you could identify what's in that additional clarity guar capex that would be really helpful. Because they're there.
Christopher Courtenay Wheaton: Quite a bit of capex to be spending ahead of the FDA site shutdown next year.
Christopher Courtenay Wheaton: There was also a question I had on... Egyptian oil price realizations, which seem a bit low in the quarter. I wonder if that was related to the receivables payment that, Ron, you referred to in your discussion earlier. It's about $10 lower quarter on quarter, and I just wondered why that was. That would be my question. Thank you.
Christopher Courtenay Wheaton: There's also a question.
Christopher Courtenay Wheaton: I had on.
Christopher Courtenay Wheaton: Egyptian oil price realizations, which seems a bit low in the quarter I wonder if that was related to the.
Christopher Courtenay Wheaton: Receivables payment that wrong, you referred to in your.
Christopher Courtenay Wheaton: Your discussion earlier, it's about $10 lower quarter on quarter and I, just wondered why that Walsh.
Christopher Courtenay Wheaton: That would be my questions. Thank you.
Christopher Courtenay Wheaton: As Christmas George on the on the Capex side, obviously, we've gotten a little bit of detail as to what caused the increase in the capex guidance position. Initially, obviously, where we're now doing a fifth well and kind of down in the southern part of the harmattan area to add too.
George Walter: Thanks Chris, it's George. On the CAPEX side, obviously, we've given a little bit of detail as to what has caused the increase in the CAPEX guidance position. Initially, obviously, we're now doing a fifth well in Canada in the southern part of the Hamilton area to prove out the opportunity to increase reserves and resources there. So that's part of it. We've also added the feed study for Equatorial Guinea to get to the FID position for the first quarter of 2025.
George Walter: Right.
George Walter: The opportunity to increase reserves and resources there.
George Walter: So that's part of that we've also added in the feed study for Equatorial Guinea, you get to the position for first quarter of 2025 and with regard to the investment insight Bill Bob and we're looking at a number of the forecast coming out right now released.
George Walter: And also with regard to the investment inside Baobab, we're looking at a number of forecasts coming out right now relating to LLIs that aren't purely for LLIs on the FPS refurbishment but also relate to the potential drilling campaign in Phase The FPSO requirements and also for the potential drilling program that is increasing the main part of the $40 million on LLR.
George Walter: Allies aren't purely for L. O lies on the F. P. S refurbishment, but also relate to the potential drilling campaign.
George Walter: These five it'd be about who can not only it's a mixture of the of.
George Walter: The F P S O requirements and and also for the potential drilling program that are increasing the main part of the of the $40 million on L. O I's.
Speaker Change: Hey, Chris it's drawn out okay.
Ronald Y. Bain: Chris, it's Ron. I'll take the question on Egyptian oil price realization between Q1 and Q4. The first part, I would say, it's got nothing to do with the related payments. The related payments You may have heard from a number of companies that EGPC started to pay down some of its outstanding receivables as of the 31st of December 2023, and we were also party to that. We got about 25% of our age receivables as of the 31st of December on their books paid. So that was the first thing.
Ronald Y. Bain: Correct.
Ronald Y. Bain: It gets you know price realization between Q1 and Q4.
Ronald Y. Bain: The first part I would say, it's got nothing to do with the related payments and their related payments.
Ronald Y. Bain: We recommend that you may have heard from a number of companies that <unk> start to compare your guidance some advances outstanding receivables as of 30 <unk>.
Ronald Y. Bain: First of December 2023, and.
Ronald Y. Bain: We were we were also.
Ronald Y. Bain: To that we got about 25% of earnings receivables.
Ronald Y. Bain: First in December on their books. So so that was that was the first thing.
Ronald Y. Bain: The second thing in relation to the average realized price, it did come down about $11. In Q4, effectively, we sold domestically, but domestically in Egypt, there was cargo that EGPC had, so that was obviously within the price that everyone was provided. In Q1, we basically are in the situation where they're utilizing the blend now for the refineries locally, so they've been trialing that out, and that was the domestic market price for those refineries. So that's really the difference in pricing. It's down about $11, quarter to quarter.
Ronald Y. Bain: Second thing in relation to the average realized price.
Ronald Y. Bain: They'd come down about 11, Bulks in Q4, effectively we sold domestically, but domestically and.
Ronald Y. Bain: In Egypt. There was there was cargo the MTBC had so that was obviously within the price that everyone was was provided in Q1.
Ronald Y. Bain: Basically are in a situation where the utilizing the blend now for the refineries locally so they've been trailing down right.
Ronald Y. Bain: And that was the market price domestically to lose refineries. So that's really the difference in pricing, it's down about 11, Bulks, Florida quarter.
Speaker Change: Just kind of one follow up if possible does that mean.
Christopher Courtenay Wheaton: Just kind of one follow-up question, if possible: does that mean if a new blend is being trialed with the domestic refineries, does that mean this $10 Delta is more likely to be where the realisation is going to be in forthcoming quarters, or is it still going to be dependent on that mix of domestic versus international sales?
Christopher Courtenay Wheaton: Our new plan is being trialed.
Christopher Courtenay Wheaton: Domestic refineries does that mean this $10 delta is more likely to be wed realizations getting to be.
Christopher Courtenay Wheaton: Forthcoming quarters or is it still going to be dependent on that makes it domestic versus international things.
Ronald Y. Bain: I think it would be very much dependent, Chris, you know, at the end of the day, it was a trial that they went through in Q1. So, you know, we cannot say that that's locked in. And we're continuing to talk locally with EGPC's key marketing department in relation to obtaining our own cargoes too. So, no, I wouldn't take that as being a locked-in price.
Christopher Courtenay Wheaton: I think it would be very much dependent.
Ronald Y. Bain: Chris.
Ronald Y. Bain: End of the day it was a trial that they went through in Q1.
Ronald Y. Bain: So we cannot see that that's locked in and we're continuing to talk a locally with <unk> key marketing department in relation to obtain their own cargo is too. So no I wouldn't say that it's been a locked in price.
Speaker Change: Great. Thanks, very much indeed.
Christopher Courtenay Wheaton: Great, thanks very much indeed.
Christopher Courtenay Wheaton: Our next question is from Stefan <unk>.
Stephane Guy Patrick Foucaud: The next question is from Stephane Foucaud with Octus Advisors. Please go ahead. Good morning.
Stephane Guy Patrick Foucaud: Todd.
Stephane Guy Patrick Foucaud: With Octopus advisors. Please go ahead.
Stephane Guy Patrick Foucaud: Good morning guys, thanks for taking my question. The question is on Côte d'Ivoire, and I appreciate that it's in the early stage, but I was trying to understand the order of magnitude of production when things come back in 2026. Are we talking of... a 50% increase? Transcribed by https://otter.ai, to have a sense. So that's my first question. Devoir. Now that the transaction is closed, I was wondering whether... I'll perhaps provide some further detail on the fiscal term.
Stephane Guy Patrick Foucaud: Good morning, guys. Thanks for taking my question.
Stephane Guy Patrick Foucaud: Question is on Cote d'ivoire, and I appreciate that it's early stage because I was trying to.
Stephane Guy Patrick Foucaud: I understand the old deal.
Stephane Guy Patrick Foucaud: Yeah.
Stephane Guy Patrick Foucaud: Awesome.
Stephane Guy Patrick Foucaud: Things come back in 'twenty.
Stephane Guy Patrick Foucaud: How are we talking.
Stephane Guy Patrick Foucaud: 50% increase.
Stephane Guy Patrick Foucaud: <unk>.
Stephane Guy Patrick Foucaud: Well that magnitude.
Stephane Guy Patrick Foucaud: Wise.
Speaker Change: Thank you.
Stephane Guy Patrick Foucaud: Two two ought to have a sense. So that's my first question.
Speaker Change: My second question is for Sean.
Stephane Guy Patrick Foucaud: Now that the.
Stephane Guy Patrick Foucaud: Closed.
Stephane Guy Patrick Foucaud: I was wondering.
Stephane Guy Patrick Foucaud: Awesome.
Tim: This is Tim.
Stephane Guy Patrick Foucaud: So I think looking at.
Stephane Guy Patrick Foucaud: So I think looking at C&R, it looks at the real... [inaudible] But I was wondering whether you paid a corporate tax or whether the government paid a corporate tax in Cote d'Ivoire, and lastly, if there is any cost pool that you could benefit from.
Stephane Guy Patrick Foucaud: Percent.
Stephane Guy Patrick Foucaud: But I was wondering whether you.
Stephane Guy Patrick Foucaud: Jackson.
Stephane Guy Patrick Foucaud: Okay.
Stephane Guy Patrick Foucaud: Okay.
Stephane Guy Patrick Foucaud: In Cote d'ivoire.
Stephane Guy Patrick Foucaud: Is there any cost.
Speaker Change: Thank you.
Stephane Guy Patrick Foucaud: Okay. Thanks, Stefan so with regard to the F. P. S O.
Joel: Yeah, Joel going offline.
Speaker Change: Looking at that right now, but the information received from the operator, we're reviewing that.
George Walter: at that right now with the information received from the operator. We're reviewing that. It's absolutely impossible for us to say what the position will be coming on post the refurbishment of the FPSO. However, one would expect that the existing production would have some flush production coming back into it. But there's quite a lot of work to do on the subsurface side to understand exactly how that would take place and the timing of that.
George Walter: It's absolutely impossible for us to say, what the the position would be coming on post the refurbishment of the F. P. S. O. One would expect that the existing production would have some flush production coming back into it.
George Walter: But that said, there's quite a lot of work to do on the subsurface side to understand exactly how that would take place and the timing of that.
George Walter: But that would be our expectation, but at this point in time, we've yet to sit down with the operator and get an understanding of both the timeline and the projections around that.
George Walter: But that would be our expectation. But at this point in time, we've yet to sit down with the operator and get an understanding of both the timelines and the projections around that. Obviously, there's also the potential of that drilling program happening concurrently, which would We obviously have a model that works with that, and that's still subject to discussions and validations with the operators.
George Walter: Obviously, there's also the potential of that drilling program happening concurrently.
George Walter: Would also increase the volumes but.
George Walter: We obviously have a model that works with that and that said its still subject to discussions and validation with the operator.
George Walter: Stefan its Ron I'll take the second part of your question and if I heard you correctly on the physical terms in Cote d'ivoire.
Ronald Y. Bain: Stephane, it's Ron. I'll take the second part of your question if I heard you correctly on the physical terms in Code of War. In our supplemental deck, you'll see on slide nine, we've given elements of the PSC's physical terms there. I'm happy to go through that with you outside of the call to make sure that your model's up to date.
Ronald Y. Bain: Stephane, it's Ron.
Ronald Y. Bain: In our supplemental deck, you'll see on slide nine we've given elements of the PSC PSC its physical terms there.
Ronald Y. Bain: Happy to go through that with you.
Ronald Y. Bain: I would say to the KOL and to.
Ronald Y. Bain: To make sure that your models up to date.
Speaker Change: Okay. Thank you.
Ronald Y. Bain: Again, if you have a question. Please press Star then one.
Operator: Again, if you have a question, please press star then 1. The next question is from Bill Dezellem with Eaton Capital.
Operator: The next question is from Bill doesn't align with Eaton capital. Please go ahead.
William J. Dezellem: Please go ahead. Yes. Thank you. Thank you. Thank you.
George Walter: Thank you, that's Cuyattin Capital. May I start with Svenska also, and given that that is non-operated, I guess the question is, when are you ready for the next transaction, the next acquisition? And with that in mind, what does the pipeline look like?
William J. Dezellem: Thank you Diane and capital May I start with.
George Walter: Vince also.
George Walter: Given that that is non operated.
George Walter: I guess the question is when are you ready for the next for the next transaction in the next acquisition and with that in mind, what does the pipeline look like.
Speaker Change: Thanks, though.
Speaker Change: Difficult one to answer.
George Walter:
George Walter: The opportunity set for growth is something we've been focused on and I think our track record in the last few years demonstrate the market that we're serious about the growth opportunity for this company.
George Walter: something we've been focused on, and I think our track record in the last three years has demonstrated to the market that we're serious about the growth opportunities for this company and where we're taking it. Of course, there are many, many transactions around that can fit into our portfolios. Yes, we have to carefully consider, post-the Cote d'Ivoire acquisition, how the cash flow profiles fit into the growth opportunities because it's absolutely paramount that we maximize the opportunities from our existing portfolio before we start looking over the fence at something else. But in this business, in this industry, there's always a very steady pipeline of opportunities that are always under evaluation.
George Walter: And where we're taking it.
George Walter: Of course, there are many many transactions.
George Walter: Around that time.
George Walter: Into your portfolio.
George Walter: Yes, the we have to consider.
George Walter: Consider.
George Walter:
George Walter: Paul the Caldwell acquisition, how the cash flow profiles, they tend to the growth opportunities because its absolutely paramount that we maximize.
George Walter: The opportunity is from our existing portfolio before we start looking over the fence or something else.
George Walter: But in this business in this industry. There is always a very steady pipeline of opportunities that almost under evaluation.
George Walter: Great, thank you. And then the BW Consortium was not referenced in the press release or your opening remarks. Would you please update us on what's happening there?
Speaker Change: Great. Thank you and then the.
Speaker Change: The BW consortium was not referenced in our in the press release or your opening remarks would you please update us relative.
Speaker Change: Happening there.
George Walter: Yeah, of course I will. I mean, and the reason we didn't update is that there's basically been no movement. There's been a lot of discussions with the partners and the DGH, and those discussions are ongoing. I think we still have a few points to resolve. But as I said in the last call, I mean, given that we've been on this mouse wheel for about 18 months with G&H, the activity levels in the last 6 to 8 weeks have certainly intensified.
Speaker Change: Yeah of course and.
George Walter: The reason the reason we didn't update has basically been no movement. There has been a lot of discussions with our with the partners and the the Dth and and those are ongoing I think we have.
George Walter: A few points still to resolve them.
George Walter: But but as I said in the last call I mean, given that we've been on this this mostly for about 18 months, but G&A is the activity levels in the last six to eight weeks have certainly intensified.
George Walter: Multiple meetings between the partners and with them with the Dth and.
George Walter: There have been multiple meetings between the partners and with the DGH, and, you know, we had follow-up meetings in the last week or so. So I'm still confident that we'll come to a resolution in the very near future over the outstanding issues which surround some of the legal and contractual terms, and I am hopeful to be able to give an announcement on that soon.
George Walter: I had follow up meetings in the last week or so so I'm still confident that we will come to resolution in the very near future date standing issues, which are surrounding some of the legal and contractual terms and be hopeful they bill could give an announcement soon the only reason we didn't give an update is there hasn't been any significant movement.
George Walter: Other than additional meetings.
George Walter: And the 10K gave the impression that the government seems far more interested in interacting than they have in the past.
George Walter: And the 10-K gave the impression that the government seems far more interested in interacting than they have in the past.
George Walter: I would say that's probably too we have been since the there has been obviously.
George Walter: I would say that's probably true. Since there has obviously been, as everyone's aware, a change in administration, and our interaction with the new administration at the most senior level has been more than it has been in the past, so to the point where we as a company have met directly with the head of state, that has happened, and we have had dialogue at that level. So yeah, there has been a lot more activity with the governmental institutions in the last six months than perhaps we've seen previously.
George Walter: Everyone's aware change in administration, and our interaction with the new administration at the more senior level has been.
George Walter: More than it had been in the past so so to the point, where we as a company have met directly with the head of state that has happened and we have had a dialogue at that level and so yeah. There is there's a lot more activity with the governmental institutions in the last six months than perhaps we'd seen previously.
George Walter: Great, thank you. And one additional question, you referenced Equatorial Guinea and having made some good progress there. I don't think that I appreciate the amount of time it takes to go from where you're at today to the next stages. Would you walk us through a timeline, if you would please?
Speaker Change: Great. Thank you and then one additional question you referenced a.
George Walter: Equatorial Guinea, and having made some good progress there.
George Walter: Think that.
George Walter: I appreciate now the amount of time it takes to go from where you're at today.
George Walter: Through the next stages would you walk us through a timeline.
George Walter: If you would please.
George Walter: Yeah, I can do that. So, obviously, we've been, as a company, ready to start this journey for some 18 months since we've been trying to get resolution in the partner group, and that has been partly facilitated by the MMH in Equatorial Guinea. That resolution has now been completed, as I outlined, with a change in commercial terms, which included achieving additional equity to VAALCO in that process.
Speaker Change: Yeah, I can do that so obviously, we've been as a company we've been ready to start this journey for some 18 months since we've been trying to get resolution in the partner group.
George Walter: And that has been partly facilitated by the MH in Equatorial Guinea that resolution has now been completed.
George Walter: Aligned with our change in commercial terms, which included feeding additional equity to a debacle in that process.
George Walter: So, in that timeline, we'd always plan from the plan of development to then go into a detailed engineering study. And there are two purposes for that study. One is to, plans of development are conceptually based on both our subsurface analysis and the cost price analysis that are done at a desktop level for the engineering side. The feed study will then go out and test those concepts in the marketplace, both from a timeline and a cost perspective, and look to optimize both the CAPEX spend and or reduce the CAPEX spend with other mediums of how we can source the equipment at a lower cost or at the least cost, so we reduce our CAPEX sink.
George Walter: So in that timeline, we would always plan from the plan of development to then go into a detailed engineering study and has two purposes for that study one has two parts.
George Walter: Positive development or conceptually based on both our subsurface analysis and.
George Walter: Cost price analysis done on a desktop level for the engineering side.
George Walter: Feed study will language and test those concepts in the marketplace, both from a timeline and a cost perspective and look to optimize both the cafe expand and ore and reduced the capex them with other mediums of how we can source the equipment at a lower cost all at least cost we reduced our capex zinc and that certainly.
George Walter: And that's certainly part of the plan for the feed study. We estimate to get there, and that gets us to a final FID position. And at that point, we're locking in not just the detailed steps forward for development but also locking in the contracts and all the economics for the development. It's as equipment and as our industrial environment changes around us. Feed studies are always essential before you make commitments to major projects such as Venus.
George Walter: Part of the plan for the feed study.
George Walter: Estimate to get their wood tickets.
George Walter: Eight to 10 months to complete the feed.
George Walter: And that gets us to a final position at that point, we're locking in not just the.
George Walter: The detailed steps forward for development, but also looking at the contracts and all the economics for the development and it's.
George Walter: Equipment and other.
George Walter: Yeah.
George Walter: The industrial environment changes around us.
George Walter: Feed studies are always a central before you make commitments to major projects such as such as Venus.
George Walter: The objective we're trying to get to is to reduce the CAPEX spend, replace that CAPEX potentially with OPEX on a lease basis, and therefore make the project even more attractive from a return standpoint. So that's the main objective of the feed study, in addition to ensuring that the equipment we require to execute the project is available. Great, thank you.
George Walter: The objective, we're trying to get to is to reduce the capex spend the police that capex potentially with opex on a lease basis, and therefore make the project even more attractive from a from a return standpoint. So that's the main objective of the feed study in addition to ensuring that the equipment will require to execute the project.
George Walter: It is available.
William J. Dezellem: I thank you and appreciate you letting me ask more than a couple questions.
Speaker Change: Thank you and appreciate you letting me ask more than a couple of questions.
Speaker Change: That's great.
William J. Dezellem: Next we have a follow up question from Stefan <unk> with Optus Advisors go right ahead.
Stephane Guy Patrick Foucaud: Next, we have a follow-up question from Stephane Foucaud with Arctis Advisors. Go right ahead, please.
Stephane Guy Patrick Foucaud: Thank you. It's a bit of a follow-on on the question from Bill about acquisition and cash availability. CapEx Intensive for the coming years, but I guess EG as well, so how are you thinking about cash deployment? Cash Resources in the Context of Part 2, Very large project, having to be developed at the same time.
Stephane Guy Patrick Foucaud: Thank you.
Stephane Guy Patrick Foucaud: First off a follow on question from being about.
Stephane Guy Patrick Foucaud: Cash available.
Stephane Guy Patrick Foucaud: So.
Stephane Guy Patrick Foucaud: Hopefully you all would be capex intensive.
Stephane Guy Patrick Foucaud: And I guess at EG as well so how are you thinking about.
Stephane Guy Patrick Foucaud: Our cash deployment cash, which is in the context of prop too.
Speaker Change: Jack I think you did.
Stephane Guy Patrick Foucaud: But at the same time.
Speaker Change: Yeah Yeah.
Ronald Y. Bain: Hi Stephan, if I got your question correctly, your line is a little bit vague. Basically, operating cash flow for us this year, before FBSO goes off station, our operating cash flow should be strong between now and the end of the year. We've got CAPEX in there, but we're more than covering those CAPEX spends. At the same point in time, we are talking to a number of different financial institutions in relation to your facilities.
Ronald Y. Bain: I got your question correct sort of your line is a little bit vague.
Ronald Y. Bain: Basically obviously operating cash flow for us this year.
Ronald Y. Bain: Before.
Ronald Y. Bain: SBA circles goes off station, our operating cash flows should be strong between now and the end of the year, Yeah, We got capex in there, but we're more than covering the.
Ronald Y. Bain: This capex spend.
Ronald Y. Bain: At the same point in time, we are talking to a number of different financial institutions in relation to your facilities.
Ronald Y. Bain: You know we've got a facility in place, but we're three years ahead of the track in that. We're looking at new facilities. And I basically see a mixture of both operational cash flow, first and foremost, being utilized, as well as financing cash flow for these development projects. Because there will be time periods through 2025 or 2026 where we're going to have some spiky CAPEX spend. So that's what we're looking at, Stephan. Can't really go into the details of that at the moment. We're still working with those institutions.
Ronald Y. Bain: You know we bought a facility in place, but we're looking with three years of the trucking that we're looking at.
Ronald Y. Bain: <unk> facilities.
Ronald Y. Bain: And I basically see a mixture of both the operational cash flow first and foremost being utilized.
Ronald Y. Bain: Well as a financing cash flow for these development projects and because there will be time periods through 25, or 26, where you know where we're going to have some spiky capex spend so.
Ronald Y. Bain: That's what we're looking at stuff I can't really go into the detail of that at the moment, we're still working with those institutions.
Ronald Y. Bain: Yes.
Speaker Change: Thank you.
Speaker Change: Operator I have.
Operator: Operator, I have a question that I received by email that I oppose George and Thor on, and that is, when do we expect to get results on the new wells that we drilled in Canada that we said would be coming online soon?
Speaker Change: A question that I received by email opposed to George and Thor and that is when do we expect to get results on the new wells you drilled in Canada with everybody coming online soon.
George Walter: Yes, I can answer that. So the drilling program is completed, and the completions program has completed the first two wells. Actually, the first three wells are online. Two wells have been cleaned up and are flowing. The third well is on cleanup flow, and the fourth well we expect in about a week. Both two wells that are stabilized are above tight curves, tight curves. The third well is still in cleanup, and we'll know a bit more about the fourth well in about a week.
Speaker Change: Yes, I can answer that.
George Walter: The drilling program completed.
George Walter: Completions program has completed the first two wells.
Operator: Okay, thank you, Cora.
George Walter: Actually the first three wells are online two wells are cleaned up and are flowing third well is on clean up low.
Operator: And of course, we expect gone in about a week, both two wells that are stabilized or above type curves.
Operator: Groups.
Operator: Third well is still in cleanup in the fourth well, we'll know a bit more in about a week.
Cora: Okay. Thank you Thorn.
Operator: Operator.
Speaker Change: This concludes our question and answer session.
George Walter: This concludes our question and answer session. I would like to turn the conference back over to George Maxwell, CEO, for any closing remarks.
George Walter: I would like to turn the conference back over to George Maxwell CEO for any closing remarks.
George Walter: Thank you operator, I think it's I'm very pleased to be party to another successful set of results for Q1, where the companies performed well our assets are performing well, we continue to streamline and become more inflation in each of our leaders of operation and under us.
George Walter: Thank you, Operator. I'm very pleased to be part of another successful set of results for Q1, where the company has performed well, our assets are performing well, we continue to streamline and become more efficient in each of our areas of operation, and, as asked by a couple of questionnaires, we continue to look at opportunities in the marketplace where we can see where the skill sets that we have inside the company of operational excellence can add value to our shareholder base.
George Walter: A couple of questions question questionnaires, we continue to look at opportunities in the marketplace, where we can see where the skill sets that we have inside the company of operational excellence can add value to our shareholder base.
George Walter: With that in mind, when we look through the guidance for 2024, you know, we see that guidance levels being maintained. We see production in each of our areas of operation in Gabon and in Egypt and, as Thor just mentioned, in Canada improving. We'll be able to talk more about Cote d'Ivoire in the coming quarters and how that's performing and what the longer-term plans are once we've had discussions with the operator. And to that end, you know, we're starting to build a much more diversified portfolio company that is able to be much more sustainable in its delivery. And for that, I thank you.
George Walter: With that with that in mind, when we look through the guidance for 'twenty.
George Walter: <unk> four <unk>.
George Walter: We see that guidance levels.
George Walter: Being maintained we see the production in each of our areas of operation in Gabon, and in Egypt and in the store just mentioned in Canada improving.
George Walter: And we'll be able to talk more about.
George Walter: Called the Wawa in the coming quarters, and how that's performing and what the longer term plans are once we've had discussions with with the operator.
George Walter: And to that end, we are starting to build a much more diversified portfolio company.
George Walter: <unk> is able to be much more sustainable and its delivery and for that thank you very much.
George Walter: Operator.
Charlie Sharp: Operator. Yes, we do have one more question. I'm from Charlie Sharp with Canaccord. Please go ahead.
Speaker Change: Yes, we do have one more question.
Charlie Sharp: From Charlie sharp with Canaccord.
Charlie Sharp: Please go ahead.
Charlie Sharp: Ladies and gentlemen, I do apologize; I had some phone problems, so I had to redial. There is just one very quick follow-up question and a sort of slightly longer element to it, if I may. In Egypt, the results of the workovers in Q1, one or two of them have been quite good, others less so. I guess the first question really is, what is it that you look for that might make you commit to the second half workover program?
Charlie Sharp: Gentlemen, I do apologize I had some phone problems, so I have to read out.
Charlie Sharp: Just one very quick follow up question.
Charlie Sharp: On a sort of slightly longer element to it if I might.
Charlie Sharp: In Egypt.
Charlie Sharp: The results of the work overs in Q1 one.
Charlie Sharp: One or two of them have been quite good others less good I guess the first question really is what is it that you look for that might make you commit to the second half.
Charlie Sharp: Work over program and then the bigger question Israeli you know given the range of projects that you now have physically in West Africa and in Canada.
Charlie Sharp: And then the bigger question is really, given the range of projects that you now have, particularly in West Africa and in Canada, in terms of capital allocation, is Egypt looking, particularly with the issues there and uncertainties, less compelling to you than perhaps it did 12 months ago?
Charlie Sharp: In terms of capital allocation is Egypt looking particularly.
Charlie Sharp: Particularly with the issues, there and uncertainties as Egypt looking.
Charlie Sharp: Less compelling to you than perhaps at the 12 months ago.
George Walter: Let me take it in a number of parts there, Charlie. The first thing is with regard to the drilling campaign in Egypt. So we have the potential of a 12 to 15 well drilling campaign with an additional cap expenditure of around $18 million if we execute that campaign. The key contingency around that campaign right now is access to the drilling rig and the availability of equipment as opposed to the availability of target opportunities to drill.
Speaker Change: Let me take it in a number of parts of the hotel at the firstly with regard to the.
George Walter: The drilling campaign and you get so we have the potential of a 12 to 15 well drilling campaign.
George Walter: With an additional capex spend of around $18 million.
George Walter: We execute that campaign.
George Walter: Key contingency around that campaign right now is access to the drilling rig and the availability of equipment as opposed to the availability of target opportunities to drill.
George Walter: And so where we are for this year, primarily in 2024, you know, if we can secure and overcome those contingent elements, we will drill in Egypt because it will add additional production, and that will, even with the capital allocation issues, improve the PSC positions inside Egypt. Now, obviously, if we become more restricted in capital allocation, then, you know, the economic returns will be far more compelling, and that will start to be some of the drivers of capital allocation. And I'll pass this over to Ron.
George Walter: So where we are for this year primarily in 2024.
Ron: We can secure and overcome both contingent element we will go in Egypt, because it will add additional production.
George Walter: And.
Ron: That will even with the capital allocation issues will improve with PSC positions inside Egypt.
Ron: Obviously, if we become more restricted in capital allocation then.
George Walter: The.
Ron: Economic return will be more far more compelling and that that will start to be some of the drivers in capital allocation and a path possible with the wrong.
Ronald Y. Bain: Charlie, what I would add to that, George is exactly right, you know, we've got a number of things going on, as you know, you get this liquidity problem, this liquidity issue is certainly improving, you see, you saw the World Bank, you saw the land sales that they had, the UE, they devalued their currency, obviously, trying to control inflation on interest rates as well. So there's a number of things there that certainly look more positive, and where we were looking maybe in Q3, Q4 of 2023, but it's going to be a bit of a slow ride there, it's not going to be as quick as everyone would want it to be, and obviously, we're working with the state and EGPCs closely, as are all of our peer groups.
Ronald Y. Bain: Add to that I think Georgia is exactly right. We got a number of things going on as you know you get liquidity problem liquidity problem. These liquidity issue is certainly improving.
Ronald Y. Bain: You saw the World Bank. He saw the land sales that they had the UE.
Ronald Y. Bain: We devalued the currency.
Ronald Y. Bain: They tried to control and inflation on the interest rates as well. So there's a number of things there that certainly looks more positive than where we were looking maybe in Q3, Q4 2023, but it's going to be it's going to be the vessel right. There, it's not going to be used crickets.
Ronald Y. Bain: If everyone would want it to be and obviously, we're working towards.
Ronald Y. Bain: Speed and Edp seed closely.
Ronald Y. Bain: Almost all of our peer group.
Ronald Y. Bain: The other thing I would add in relation to the production decline in Egypt is that we are imminently taking in a second work over unit, so we sourced a second work over unit that will be taken in in Q2, so we'll have two work over units working through, you know, effectively through the next three months. Regardless of the discussion about the drilling campaign, two work over units will certainly help arrest production.
Ronald Y. Bain: That's the thing I would add in relation to the.
Ronald Y. Bain: Option decline in Egypt, we are imminently taken in the second Workover units we sourced.
Ronald Y. Bain: Workover unit that will be kicking in in Q2. So we will have two workover units.
Ronald Y. Bain: Working through.
Ronald Y. Bain: Effectively through the next three months.
Ronald Y. Bain: Regardless of the discussion on the drilling campaign to Workover unit School will certainly help arrest production decline.
George Walter: If I can just add to that. When we're drilling in Egypt, the drilling rig actually only does the drilling, and the workover rig does the workovers. So in order to minimize downtime on drills that need workovers, we're bringing in the second rig, the workover rig, for that exact purpose, to support the drilling rig when the drilling program starts up.
Speaker Change: If I can just add to that.
George Walter: When we're drilling in Egypt to drilling rig actually only done some drilling and Workover rig does the workovers.
George Walter: It's very helpful, thank you.
Charlie Sharp: Okay, great. I think that was your last question, correct?
George Walter: So in order to minimize downtime on wells that need workovers were bringing in a second rig the workover rig for that exact purpose to support the drilling weird when the drilling program starts up.
Charlie Sharp: Very helpful. Thank you.
Speaker Change: Okay, operator, I think that was your last question correct.
Operator: That is the last question. So, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: That is the last question.
Operator: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.