VAALCO Energy, Inc. (EGY) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the VAALCO Energy investor presentation. [Operator Instructions] And before we begin, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. I would now like to hand you over to the executive management team from VAALCO Energy. George, good morning, sir.

Good morning, and thank you very much for that introduction. Good morning, ladies and gentlemen. Thank you for taking the time to come to this presentation. Today, we're going to give you an overview of VAALCO Energy. We're a U.S. listed oil and gas company focused predominantly in Africa. We have been running the business now for just under 4 years, and ever since we took over with an objective to grow the business and derisk and diversify the portfolio. So what you'll hear today is where we've been in the past 4 years, where we particularly have been in 2024 and some of the forward-looking plans we have into 2025 and into 2026 with the existing organic portfolio. We've worked hard to expand the portfolio in Africa and have successfully done that, particularly in 2022 and again in 2024. And we'll go through some of that with you. So at this time, we'll jump into the presentation, and we'll come back on camera for the Q&A. So you can see there, we have a very experienced management team, myself and Ron, who is with me in the presentation today in the room. Thor Pruckl is our Chief Operating Officer. He's currently in Houston at the moment, based over there. We are also based in Houston and spend our time moving between the U.S. and Europe and Africa. And you can see we've got considerable experience within the executive team. If we look at our performance metrics, 4 years ago when we took over the company, it was running around about 5,000 barrels a day of working interest and had a single asset, a single country production focusing Gabon. And as I said in the preamble, we had an objective to derisk that position to give some reserve life to the company, to give some diversification to the production and the cash flows of the company and do that within the confines of the market and debt issues that the company was facing at that time. If you look at some of the key metrics on Slide 4, you can see how we performed over that period when we look at the production growth that has happened through 2024, exiting 2024 with a working interest position of around 25,000 barrels per day which is 5x where it was when we took over. And we'll get later in the slide, but we've got a reserve based on the SEC 1P up to 45 million barrels again, 4x, 4.5x where we were when we took over and a 2P position close to 100 million barrels, again, 5x what it was when we took over. So the company has had a very successful period. We are very focused in Africa. You can see our operations where we operate as in Gabon, Egypt, Equatorial Guinea. And we also have operations in Côte d'Ivoire, where we have a nonoperated position for production and an operated position we just recently acquired at the beginning of this year for exploration. We also have a position in Canada, which is a small production operation for about 3,000 barrels a day, but that came along with one of the acquisitions, but it contributes well to the business. One of the key focuses of the company during these acquisitions, both making sure we get the cultural mix correct for working in Africa. As you saw in the bios of the executives, we all have considerable experience working after decades of experience living and working in Africa. So getting that cultural position correct has always been key and very close to that is the health and safety issue. And you can see there, we're very proud now to do well over 3 million man hours with LTI free. And that's a considerable improvement from some of the businesses we acquired where we were concerned about some of the LTI ratios. If you look at how we've looked from the stock market side, we've looked at how we've improved liquidity in the company. Liquidity was down around 200,000 shares per day down in 2021. Our liquidity is now averaging somewhere around between 1 million and 1.3 million shares a day. So about just over 1% to 1.3% of the company trading every day in New York. We've also looked at the register to see how we can improve the register to get into some long-only hold stocks because, as you know, oil and gas is a longer play for some of the benefits that come with that. And we've moved to about 63% or above 60% institutional shareholding, which is a big transition from where we were back in 2021. Predominantly, our shareholding is North American based. And recently, in the last 2 years, we've actually moved into the Russell 3000. So we've moved in to become an index stock also. Moving to the next slide. You can see geographically where our portfolio is. We've recently acquired more assets in Côte d'Ivoire, where we are, like I say, operated and nonoperated. We've one of our primary assets in Gabon, which is the Etame and also in Equatorial Guinea, where we have a development plan for 2026 and 2027. We have key operations in Egypt, where we produce just the 10,500 barrels a day in that particular country with opportunities to further expand in the license areas that are currently undeveloped. And in Canada, as I mentioned earlier, we're doing roughly about 3,000 barrels a day just in onshore drilling locations. This is the only location where we also have gas sales. So it's predominantly liquids and NGLs, but we do have about 40% of that as gas. If you look at the next slide, and it starts to indicate what I mentioned earlier. When we look at where we were for our production on a working interest basis at 5,500 and full year 2024 that we announced recently in our earnings call at just under 25,000 where we went for a fivefold increase in production. And also, you can see the SEC 1P proved reserves with a fourfold increase and a fourfold increase also in the 2P working interest position. We've been very successful in how we've completed our acquisitions. We've done this over a 4-year period, completing and retaining, the company is completely debt-free. So retaining a very strong balance sheet through these periods. Exercising some great operational results as we've improved the businesses that we've bought. And at that time, managing to significantly enhance production. The contracts that we have with our host governments in country are -- they are incentivized for investment. And that's an important point that we'll get on to as we look at each of the countries in the following present slides. I'll pass this to Ron on the next one. He can talk to you through some of the solid financial foundation.

Good morning, everyone. First of all, I'd like to say that since George and I came in back in 2021, you can see and demonstrated through the growth not only production and reserves, but our financial returns too. In each of those years, we've outperformed our own expectations in relation to past historic numbers, had record revenues, record production and record profitability also in that period. We've had no debt. Although we had a facility, we had a facility back in 2021, we had a $50 million facility predominantly with Glencore, which was unused. It was basically there as a safety net, and we kept financial discipline all the way through not to go into that debt profile. And on the bottom left-hand corner there, you can see our EBITDAX per quarter. In the last year, we finished 2024 with over $300 million in EBITDAX, $303 million in EBITDAX. That's generating a very good operational cash flow at the same time. And that basically allowed us back in 2021 to basically go for our very first dividend as a company. As George said earlier, when we got into the Russell 3000. We're indexed in through New York, but also listed obviously in London as well. And that Russell Index itself with that dividend, we actually produced one of the highest yield dividends in the NYSE. Certainly, in the top quartile and has been in the top quartile for the last couple of years. We pay effectively on a quarterly basis, about $0.0625 per quarter, $0.25 per annum. And at this point in time, that's yielding -- with the present share price, that's yielding an over an 8% yield. So pretty attractive yield over there. And we introduced that dividend back in 2021. We sensitized that dividend to a $65 oil price. So a $65 Brent price and above is a sensitized dividend position. We're paying that through 2025, and we've got no plans to change that position. We also introduced this year, we've got a new facility with a group of lenders, predominantly South African banks. That facility allows us to look at a commitment there of $190 million. It's got the ability to grow to $300 million through an accordion. At this point in time, through Q4, as you can see, we had over $80 million in cash reserves and sufficient working capital reserves through Q1 and beyond. So we're still debt free, and we have the capability to look at over $270 million in liquidity. Moving on to the next slide. When you look at our value proposition, as I say, when we compare ourselves to our peer group at the end of 2024, our dividend yield, and there's a number of our competitors that don't pay a dividend. We've always paid a dividend. George and I, both from VAALCO perspective and even before VAALCO in a previous company, we put shareholder returns at the top of our listing. We've done not only with dividends. We've also looked at buybacks. We completed a $30 million dollar buyback in 2024. So effectively, in the last 2 years, we've paid back over $83 million in shareholder returns. And with the dividend this year, that's over $100 million has been returned to shareholders over a 2.5- to 3-year period. If you look at our enterprise value -- and forgive me, our enterprise value and our market cap is moving on a daily basis at the moment. As you can imagine, the volatility in the marketplace with our President, 47th President taking the actions he has, has meant that these slides need to be updated quite regularly. But our enterprise value compared to our 2024 EBITDAX, as you can see, again, stacks up extremely well to any of our competition, any of our peer group at just over 1.4x. And indeed, I think at one point last week, we were trading at 1x our EBITDAX. So again, a very convincing value proposition when you take all of those things into account. I'll pass it back to George now as we go through the key milestones.

Thank you, Ron. So this slide is trying to give you an idea of the catalysts and the activities that are coming up. And it's fair to say, as Ron pointed out, in the last 2 years, we have focused a lot on efficiencies and growing production. We've looked at value accretive acquisitions. And I think if you look at how the company has performed in that 2.5 to 3 years, it's undoubted that the acquisition have been significantly value accretive. And in '23 and '24, we've had quite light CapEx use. So we've taken advantage of the operational cash flow to show that dividend and also that buyback potential to our shareholders without in any way impairing the investing opportunities that are within our organic assets. 2025 and 2026, we enter into a heavy CapEx period where we're -- we're looking at significant investments. We're going to have at least 3, potentially 4 drill bits spinning in our areas with lots of catalysts to these results. And I'll just briefly go through each of the areas separately. So as you have perhaps seen in our announcements to our Q4 results and our guidance in Q1, we're planning a Gabon drilling program commencing in mid-Q3 2025. Now this program, we had originally planned to commence in 2024. We delayed it primarily to and ensure we could maximize the value of the program. It initially started as a 4-well program. And then we started looking at one of the fields in Gabon called Ebouri, which had been shut in 2014 due to H2S issues. We went through an evaluation study mechanism on the H2S to see if there's any way we could safely recover those reserves from that field taking care of the [ sour ] gas. We have successfully done that. We've put together a program with downhole chemicals to successfully rehabilitate that field and that has now come into this 2025, 2026 drilling program. That has added significantly to the program. So now we're looking at a drilling program with 5 firm wells and 5 optional wells, so potentially a program that could run through to the end of 2026. We're looking at that drilling campaign to, like I said, restart the Ebouri field significantly, further wells expanding the Etame field and also wells on the SEENT field that all come into the central processing facility that we designed and constructed in 2022. So what that does with this particular drilling campaign, as you can see in that little chart there, it starts to really push forward to the key decisions for investment in that Gabon PSC right through into the early 2030s and provides that area of longevity. And that's quite important when you look at some of the economic benefits that we get from this PSC. We get about 80% cost ceiling, and this allows us to recover that cost of investment very quickly. So when we're looking at the investment, the total investment in the drilling program could be as high as $250 million, but you're recovering the first $40 million of that within 3 to 4 months. So you're not really at $250 million that you have to have as available liquidity in the balance sheet once you get the program rolling. In addition, we've been looking at how we continue to invest in the areas that we are already located. So Gabon, the company has been there for decades. We've recently last year, closed on 2 new blocks with our partners, BWE and Panoro. And those 2 exploration blocks reside between Etame, our main producing block and Dussafu, which is a main producing block for BWE. So that's a very, very exciting and interesting hydrocarbon play that we see between these 2 major hydrocarbon-producing areas and that gives us some excitement that we've got opportunities for significant tieback opportunities to existing infrastructure. That will further give us longevity in the infrastructure in Gabon. As I jump quickly to Egypt. Egypt has been a big success case for us. We've been working hard to improve the facilities, debottleneck the facilities and reduce back pressure. We did that in 2023 and '24. The reduction of the back pressure in the system gave us effectively almost 1,000 barrels a day of free oil. And we've continued to invest in a drilling campaign and in a workover program. So through 2024, our workover program has successfully arrested decline, and we've commenced a 10 to 15 million drilling program late 2024, that's commenced all the way through into 2025, and we should complete that around May or June. When we look at the efficiencies generated in Egypt, we've reduced our D&C time from an average of somewhere close to 38 to 40 days down to 15. And that's just about the best that you can get. It's also as a result of good supply chain management, good logistics support and good planning around the wells. But it means that we are getting much more efficient and we're getting a much bigger bang for our buck. The well costs have come down to half of what they were previously, and the performance has improved. We're moving to a working -- a workover program to the second half of the year and still look for more potential opportunities to further expand the drilling. As I mentioned in the preamble, there are some concessions that we own and operate that are under evaluation right now that are not in production, but we have successfully refracked the well in the Western Desert, which is looking promising for a field development plan. Canada, when we acquired that as part of the Egyptian acquisition, we've looked to make that small operation as efficient as it can be. It's got a firm strategic 5-year plan that returns capital every year. And it's -- albeit, it's a small operation, it does -- it's a very, very efficient operation. We produced the overheads in Canada significantly, probably by about 60% in order to have that operation being able to return to the central units. The key issue here is to change the strategy, look at land optimization and start to do the 2.5 to 3-mile laterals. We no longer do 1-mile laterals because they're not efficient, and the 2.5 to 3-mile laterals are giving us much better payback. In Equatorial Guinea, we've had that asset for some time. We have proven reserves there in the Venus structure. We've been working diligently through a plan of development that we've got approved with the government. We've spent sometime having negotiations with partners to get that alignment. That alignment is now there. And now we're looking at a FEED study to see how can we reduce the capital. And that's really primarily because this particular accumulation, we evacuated quite quickly, probably within 60 months. And we've got a 5-year cycle to produce that 25 million barrels, but that's not equates to the tax efficiency. So we're trying to look at how we can reduce the capital to make it a much more tax-efficient opportunity and that's what the FEED study is working on. We expect the results of that FEED study. We did expect them in Q1. We're now expecting them by the end of Q2 with a new geo model and you'll hear more about that in our Capital Markets Day on May 14. We'll talk about that. But with that greater CapEx efficiency, we should be able to move into FID towards the middle of sort of Q3 this year. And then moving forward into FDP. As we see with commodity prices, it does impact some projects, but there is other benefits when commodities prices go down, equipment prices, they do lag, but eventually, you do see them coming down, and we're seeing some benefits of that both in our marine spreads in Gabon and our marine spreads in Côte d’Ivoire and also in the opportunities in Equatorial Guinea. Moving to Côte d’Ivoire. Last year, we acquired a company that had a nonoperated interest in the Baobab field, which is operated by CNRL. We are -- we feel we get a perfect acquisition by the end of 2024. The returns on all proceeds from production on that asset were 1.8x what we paid to buy into it. So a very, very prolific purchase. The FPSO has now gone off station for refurbishment. So we had some production in January, and that production is now ceased probably through until Q2 2026. As I mentioned earlier, in Gabon, where we have a heavy CapEx program, however, we are in production. So it -- that CapEx has returned very quickly. In Côte d’Ivoire, we're out of production. We're investing along with our partners to rehabilitate the FPSO, which is currently en route to Dubai. We expect it to leave dry dock in Q1 2026 and be back on station and hooked up at the end of Q1, sometime in Q2. First, we're having to think those dollars into that project, and they don't come back until 2026 when we go back on production. One of the key benefits of this contract is for every invested dollar we have, we get $1.25 back. So even with the dollar going in, you've already got a 25% return regardless of oil price coming back from your cost oil position. And you know there's no risk because you know there's production there as soon as you're hooked up again. So it is an investing activity. It is a deep cash sink for us in '25 and early '26, but the return is quite prolific once we get back on production. I'll move to the next slide. There are some of the key highlights. You can see the MV10/FPSO that was one station there on -- in Côte d’Ivoire. Like I said, it's currently en route to Dubai, and I'll just move to the next slide. So in line with our strategy, when we've entered the country, we don't rely on others to do our talking for us. We made the investment. We decided we're going to be there. We open an office, and we have our own boots on the ground and that's really to ensure that we are -- we have our own voice with our host governments and also to look at opportunities in the areas that we're investing in. And you can see very quickly as we made the investment last year, put our staff on the ground in Abidjan, that we start to see opportunities popping up around this. And this one was a particularly nice opportunity that we like. CI-705 is -- the block is an exploration block. It's in excess of 2,000 square kilometers with water depths starting at the beats of 0 going down to about 1,800 meters. It's been a very hot area right now. I mean you're probably all aware of the ENI Baleine discovery, which is, I think, about 60 kilometers to the west -- sorry, to the east of us. So you can see the prospectivity in that block. So we're very excited with a very low entry cost for us. We farmed in to get a 70% working interest and be the operator. So for us, for this CI-705, we'll be looking at seismic acquisition and then target identification for a drill program sometime around 2027. So we look at where we are with the production of what Côte d’Ivoire gave us through 2024. As I mentioned that from the investment to the point of disconnection, we had an actual cash payback of 1.8x what our original investment is. And you can see, they are the main CI-40 Baobab production with the upside opportunities in Kossipo. So working in conjunction with the operator, we hopefully see Kossipo development and evaluation towards an FDP sometime in 2025, 2026. What we are looking at is as soon as the FPSO returns in station in Q2 2026, it's going into a drilling program on the Baobab field for what they call Phase 5 to further enhance production once the FPSO is back and hooked up again. And what has happened recently is that the -- sorry, the license on CI-40 has been extended through 2038. And when we look at the production profiles that we have internally, we have strong production right the way through 2038. In Gabon, we've looked at production optimization. You can see our working interest at just around 8,600 barrels a day. Bear in mind that in Gabon, we haven't drilled in Gabon since the beginning of 2022. So it's been on decline since then. But what we have seen in Gabon, in 2022, we actually did an FPSO change out in our own field. So if you think for oil companies, changing out an FPSO is once in a 20-,30-year event. So some oil companies never have to go through it. We did experience that and did that successfully in 2022. So we have considerable engineering and project management experience in that area, which has been beneficial to contributing towards our support of the MV10 change out on Baobab. So we've got a lot of in-house knowledge in performing these activities. One of the byproducts of that change out similar to Egypt, but on a bigger scale, has been the reduction in some of the back pressure that was going back into the reservoir from the topsides operations. And that has seen a significant improvement in reservoir performance through 2023 and 2024. We're now rebasing that, so you'll see it in our guidance in 2025. So although we haven't been drilling in Gabon for 2 years, we still have seen an arrest of decline or decline shallower than the [indiscernible] would have originally forecasted due to that reduction in back pressure. So it's a significant asset and it's a significant improvement. And it's worth indicating that when we look at the Etame field that at one time, the original forecast when this field came on stream in 2002, it had a 5-year life. We've since produced 145 million barrels from this field, and it continues to give and we continue to see forecast into the 2030s for this. So again, a significant contract, a significant opportunity, a significant cash-generative position for the company. I'll let Ron give you some Egypt updates.

Yes. No problem. So in Egypt, obviously, the Egyptian assets and the Canadian assets, we basically acquired with a TransGlobe acquisition back in October 2022. And as George mentioned before, a lot of that focus since takeover was twofold. It was on operational efficiencies, reduce the cycle time in relation to spud to tie-up in both Egypt and in Canada and production optimization through improved backflows, doing a little bit of maintenance and improving the efficiencies of the facilities themselves over that time period. And that's given us a number of benefits. It's given us a degree of free oil when commodity prices have been high. And we've taken advantage of the fact that when we purchased TransGlobe back in October 2022, they just got the merged concession, has been in play for about a year. And we had a significant cost pool that we could take advantage of. And we did -- we still see that through 2023 and into 2024. In 2024, we completed a drilling program at the beginning of the year. And then in the back end of the year, we effectively went on to a workover program with the sole purpose of that workover program being to sustain production against the decline level. And the decline level in this asset base is probably better than a number of decline profiles in some of the Egyptian assets, obviously, that our peer group have. It's about 20%. So we completed through 2024 a number of workovers that arrested that decline and kept production levels up there. As George mentioned, too, we went back into in the Western Desert, the South Ghazalat well and refracked that in late Q4 2024. And we're -- we've got some excitement there and some plans for that asset going forward. It is in part to the merged concession. It is a concession, it's on its own. And that's something that we'll be talking with our partners, EGPC and the state on in 2025. On Canada, again, this is a story of economic returns. When we looked at -- we look to the Canadian operation back in late 2022, the first thing that came to mind was that the internal rates of return for this 1 mile and 1.5 miles horizontal wells there. Although economic, there were internal rates of return at 25% plus. They really weren't stacking up well in relation of investment return to our other assets. So we basically gave our management team in Canada a challenge to improve and at least get to the internal rate of returns that was comparable to their peer group. And that really was done through a land optimization program, making sure that we have the correct parcels aligned to match up to be able to do sort of 2 to 3-mile lateral wells. We completed 2 of those in 2023 and we completed another 4 of those in 2024. In both occasions, we had wells that actually were in the top 10 producers in the Alberta region in each of those years. So very great, great performances on those drilling programs. And indeed, internal rates of return now on those wells of above 125%. So again, something that we're quite proud of and proud of that team for getting it as operationally efficient as it can be. There is a component of gas in here, which does mean that we tend to make sure we get drilling, at least once a year to basically keep that GOR ratio basically as low as possible. We generally are trying to maintain a 75% to 80% liquids ratio in Canada. And to date, we've done that extremely well.

So back to the next development, which is Equatorial Guinea, again, a very large prospective block, again, 2,000 square kilometers. And you can see the map there on highlighted. As we talked earlier, we have a development plan on Venus, which you can see indicated there on the map. That's a 25 billion barrel 2P structure, 16.5 million 1P. And that's the key development opportunity. And all of our strategy, we're predominantly focused as a production company. So wherever we go, we go production first before we go deep exploration. You see here in Block P, we're focused on production on Venus. And then you can see the grayer shadows around there with some great large structures for exploration potential. But with production would come first, and we've done exactly the same in Côte d'Ivoire. We've secured great exploration potential, underpinned by production. Exactly same in Gabon, we've got underpin a significant production and exploration potential in the 2 blocks we've recently acquired. The opportunity for Equatorial Guinea, again presents itself to give us yet another production area. And like I said, in the -- when we looked at the forward-looking plan, that it is a significant step change in production when it comes in because, I mean the evacuation period is so short. And we'll just go forward to the compelling of the next slide.

Okay. I will jump in. Yes. So why invest in VAALCO? So going back to what you've heard today and just summing things up. So first of all, we're listed in both London and in New York. We're predominantly institutionally owned, but no institution or indeed any shareholder owns more than 9% of our stock. We have a greater than 2% held by management. We have a dividend that is in the top quartile yield providers in the New York Stock Exchange. 97% free float with volumes over 1 million a day. So essentially, we turn about 1% of our book on a daily basis. If you look at our concessions, we have very favorable PSC terms in West Africa. We got CapEx and OpEx recoverability through cost oil with a cost of typically between 75% and 80%. CDI, as you know, and we talked about with the investment we've got in Côte d'Ivoire that provides for a 125% return on that capital investment. So for every dollar that's invested, we get $1.25 back in [ cost curve ]. African physical stability has probably been better than what we've seen in the West. I mean, we just look at our own country in the U.K. and what the physical challenges have been there for the oil and gas industry. What we've seen is very stable physical stability in our core assets in Gabon and CDI and Egypt. These are stable physical regimes. We -- as a management team, we've got proven business development capabilities. I don't think there's been any other small to mid-cap E&P provider that has turned around 4 deals in 5 years. We've done that. Three of those deals all being in cash and 1% in equity. And that one deal that was done 100% in equity was building scale and diversity overall for the business. We've had very quick paybacks in each of them. We do this the company over that time period. And if you look at our total shareholder return, we've outperformed the S&P 500 over that time period. We've got world-class oil reservoirs. We've been in production for more than 20 years in Etame and indeed in Baobab. We've extracted over 140 million barrels, and indeed, over 145 million barrels now in Etame and over 150 million barrels been extracted in Baobab. The Baobab has $1 billion STOIP. We've got current reserve life now from a 2P basis of 11.5 years. And we've added and supplemented to that with the recent exploration blocks in both Gabon and Ivory Coast. We've shown and demonstrated our operational excellence. We've changed out an FPSO in Gabon in 2022, and we've taken the spud to hookup time in both Egypt and Canada down considerably. We've prioritized returns in Canada and got that business to look at 2.5 to 3-mile laterals rather than its tendency to use 1-mile laterals [ pre ] takeover. We've increased the reserve life across the organization and have the average production cost close to $22 per barrel if you look at our 2024 annual results. So from a growth point of view, we have organic development opportunities now that can easily see our working interest, which for 2024 was around 25,000 barrels per day. Could see that double to 50,000 barrels per oil per day in the next 5 years. We've shown and demonstrated financial discipline. We've had no bank debt during that time period. And we've got overall liquidity today of greater than $250 million. And we're trading at very low multiples and a significant discount to our core value. With that, I'll hand you back to George for the last slide.

Thank you, Ron. I mean it's -- hopefully, we've given you impression of what we are trying to build as a company, is not just financially stable, but it has a degree of longevity. It focuses on the key attributes of an investment opportunity when we look at our host governments and how we conduct ourselves in country, how we conduct ourselves in the marketplace. How we have the financial discipline to not overstress the company regardless of the demands that are being put upon it. And we surround ourselves with great colleagues and management to ensure that the culture of the company is diversified, not just from the headquarters in Houston, but that same message is being delivered on a day-by-day basis by our country managers in West Africa, predominantly who are local managers, they're not expatriates. And that means that with the kind of way we run the company, we have a unique on-the-ground knowledge not just of running the existing business, but also the opportunities that, that can create for us to expand the business in each of these geographical districts. So for us, it's -- it's been -- we're halfway through the journey. As Ron said, we've got an organic portfolio right now that can and should have the ability to exceed 50,000 barrels per day working interest in the coming few years. We will be demonstrating that in our Capital Markets Day in a lot more detail. As you know, we've spent a lot of today looking backwards with a bit of a taste of what the forward-looking plan looks like. And if you can join us on May 14, we'll be going into the forward-looking plan in a lot more detail. So with that, thank you very much for your attendance. And hopefully, we've given you some interesting things to think about.

Perfect. George, Ron, if I may just jump back in now. Thank you very much indeed for your presentation this morning. Why don't you just bring back up your camera for the Q&A. [Operator Instructions] George and Ron, as you can see that we have received a number of questions throughout your presentation this morning. I thank you to all of those on the call for taking the time to submit their questions. But Barry, at this point, if I may hand over to you to chair the Q&A with the team. And if I pick up from you at the end, that would be great.

Yes. So we've had a couple of questions come through. First one, what led you to choose Côte d’Ivoire as a focal point for strategic expansion? And how does the regulatory and investment climate compared to Gabon or Egypt?

Well, it was opportunities -- I think one of the things we have to be clear about is that in our executive team, we have a lot of experience in West Africa. So there is very, very few jurisdictions in Africa that we have not either resided in or worked in. So when opportunities present themselves, we don't particularly focus initially on the country, we focus on what the geology looks like. And if we like the geology, then that's really what starts to drive it. Then we look at are we in a geopolitical environment that we understand, the geopolitical environment that we could operate within and nearly every case, when we look at these, the answer is yes. And so when the opportunity for Côte d’Ivoire was presented to itself, the first thing we look at is how can we differentiate ourselves to get into bilateral discussions rather than a process discussion, and that's really where we start to drive these things. Everything we do starts in the geology, it starts in the rocks. If the rocks don't work, then we're just spinning our wheels. And looking at the investment comparisons between Gabon and Côte d’Ivoire, very, very similar. Both very investable jurisdictions, both very stable governments, both very promotional for foreign investment and have -- inherently, we have access to good people, good facilities, equipment. So we're not constrained by the environment and been able to jump straight in and start the operation. So it's -- but I'm not -- I know that the question is singled out just 2 of the jurisdictions. But I will say that if you look down in the West African coast from the very north down to Namibia, that's not a jurisdiction that would cause of any concern to go in and evaluate.

In Côte d’Ivoire, in regard to the production forecast out to 2038, does this assume new discoveries? Or this is based on already discovered resources and contingent resources?

For our -- and again, I have to emphasize, this is our forecast. The operator may have a different forecast. So it does involve a success scenario on the Phase 5 drilling, which we're very confident on because we're drilling into a 2P environment. And it does also include that we find a position in Kossipo that gives us an economic FDP. But again, when we look at the volumes that are in Kossipo, we believe that is possible. I think when we look at the existing production, if you look at a Phase 5 failure case, then, of course, it's shorter than 2038. But when you look at the STOIP in Baobab alone over 1 billion barrels, our confidence levels of having a higher recovery factor than 15% are quite high.

A question on Canada and the IRR that was forecast and your views on gas prices in Canada.

Yes. Those IRRs are not focused. Those are our well economics. That's generally -- those long 3, 3.5-mile laterals will give you those returns. Obviously, commodity price dependent. And what we've done on gas pricing for 2025 effectively is that we've got a hedge in place for 75% of our 1P gas. So our expected gas, 75% of that is covered through to the end of October and the hedge position, I think, was CAD [ 2.15 per GAG ]. So we were happy with that because it was above where we were budgeting for 2025. So we took that risk out to play to guarantee that cash flow. So we hope when we get closer to the end of October that within the winter season and the gas prices will be higher then. But certainly, from the position for the most part of 2025, where we're very comfortable with that gas position.

And a related question on sensitivity to oil price. What's your view on that?

Yes. I mean we've -- like any oil and gas company, I presume, over the last 2 weeks, we've all been running various different scenarios at different oil prices. And I mean, when we look at our breakeven prices, and they will vary depending on the assets. But our African assets are very robust assets for basically sensitized to the oil price. And indeed, the one thing that shareholders are particularly interested in is making sure that for shareholder returns and our dividend itself, can we pay that shareholder return at lower oil prices. As I say, when we put the dividend in place in 2021, we looked 5 years into the future. At that point in time, the company looked completely different to what it does today. It was a single asset, but we sensitized to $65 rate. And that position is still holding at this point today. We've committed to that dividend in 2025, and we've got no plans to change that dividend whatsoever. And indeed, in getting the new lending facility with our suite of lenders, that was also rooting into the facility that we will be paying that dividend out in 2025. So I know it's not necessarily answering it what question regarding what oil price presents a challenge. Certainly, oil prices today do not present us for the challenge.

And one last question. Any plans to initiate a new share buyback?

Well, I think we tried to cover that a little bit in the presentation. We went through a buyback when we have lean CapEx years where we see our operating cash flow far exceeds our investing activity. And we're committed to that at that time, albeit it would be ideal to be in the same situation right now given the lower stock prices. However, we are in a heavy investing year right now. So certainly, for 2025, the priority is to get the dollar into the ground to extract the barrel. When we're through these big CapEx periods when we get to mid-2026, and of course, we'll be looking at that. But as I said during the presentation, as a relatively small company, we have 3 -- over the next 12 to 15 months, we have 3 drill bits spinning, which is considerable. When you look at the profile we have and the portfolio we have and that, that is really to position the company and give it the next step of growth in a stable production platform and the cash flows coming from our stable production platform and the success on the drilling campaign, we should expect to see share price growth from the drill bit rather than from the buyback, but we need to get through this CapEx period first.

And that's all questions from online.

Perfect guys, if I may just jump back in there. Thank you very much indeed for being so generous for your time and addressing all of those questions that came in. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. But George, perhaps before now just really looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments just to wrap up with, that would be great.

Thank you very much I'm sure for many of people joining in the call, this may be your first introduction to VAALCO because we're based in Houston. We're listed in New York. But predominantly, our assets are on this side of -- of the pond down in Africa. Hopefully, we've demonstrated to the investor and the potential investor that we have grown the company under a very good stewardship. One of the questions asked about the volatility and commodity prices right now. Well, we're very fortunate in coming into such volatility with such a strong balance sheet. So we're not being impacted with a debt burden coming into it, which, again, is a testament to how we've grown the company to date. The key next step, as I said, we're potentially spinning 3 drill bits. There's a number of catalysts communication on a success basis on the drilling from almost now through to mid- end 2026. We've taken a lot of time in developing our drilling programs to ensure that they have the highest possibility of success. Even the exploration well that we're planning to drill in Gabon has a chance of success of over 60%. So it's nowhere near a wildcat well. So we tend to be a little bit cautious in ensuring that we can deliver exactly what we state to our investors that we're planning to deliver and hopefully get into a position to exceed that. We talked a little bit about the forward-looking position for each of our assets. And hopefully, if the audience can join us on May 14, we'll go through a lot more detail on our Capital Markets Day. There will be less talk about what we've done and a lot more detail about what we're going to do, and that will take you through for the next 5 years and give you a little bit of a taste of the type of asset quality and the type of contracting quality we have in the portfolio at the moment. But with that, I thank everyone for taking the time to attend today and listening to us. Thank you very much.

Perfect, George. That's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the management team of VAALCO Energy, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.