VAALCO Energy, Inc. (NYSE: EGY; LSE: EGY), a notable player in the global energy sector, has successfully completed the acquisition of Svenska Petroleum Exploration AB, a key exploration and production company based in Stockholm, Sweden. The acquisition, valued at $40.2 million, was fully financed through cash on hand without the need for debt or equity issuance. This strategic move not only bolsters VAALCO’s presence in West Africa but also enhances its asset portfolio with the inclusion of a 27.39% non-operated working interest in the Baobab field located in Block CI-40, offshore Cote d’Ivoire.

Significant Boost in Production and Reserves

The acquisition has proven to be immediately accretive to VAALCO’s shareholders, as it significantly enhances key performance metrics. The Baobab field, following a maintenance shutdown in April, is back in production with an output exceeding 5,000 barrels of oil equivalent per day (BOEPD) under VAALCO’s working interest. Furthermore, the asset brings estimated 1P working interest Certified Petroleum Reserves (CPR) as of October 1, 2023, of 13.0 million barrels of oil equivalent (MMBOE) and total 2P working interest CPR reserves of 21.7 million MMBOE.

Strategic Expansion in a Promising Region

The acquisition not only adds a substantial producing asset to VAALCO’s portfolio but also opens up significant future development opportunities in Cote d’Ivoire—a region known for its stable investment climate and substantial energy production potential. George Maxwell, VAALCO’s Chief Executive Officer, expressed his enthusiasm about the acquisition, stating, “This is highly accretive on key metrics to our shareholder base and provides another strong asset to support future growth.”

Fiscal Health and Future Outlook

With this acquisition, VAALCO continues to maintain a robust financial position with no bank debt, utilizing its strong balance sheet to fund growth activities and return value to its shareholders. The company plans to integrate this new asset into its Q2 2024 and full-year 2024 guidance, which will be discussed in detail in the upcoming first quarter earnings release and conference call scheduled for early May.

Advisory and Legal Support

VAALCO retained Stifel as its sole financial advisor for the transaction, with legal counsel provided by Mayer Brown International LLP. Svenska Petroleum Exploration AB was advised by Evercore Partners International LLP and GKA Advisors LLP on financial aspects, with Fieldfisher LLP serving as legal counsel.

The acquisition by VAALCO is a significant step in consolidating its market position and expanding its footprint in the lucrative West African oil and gas sector. The strategic investment in the Baobab field is expected to deliver substantial operational and financial benefits, enhancing VAALCO’s ability to generate significant free cash flow and execute its strategic vision effectively.

  energy sector investment, oil and gas acquisition, Svenska Petroleum Exploration AB, VAALCO Energy, West African oil production