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Thursday, November 12, 2015
Release
HOUSTON, Nov. 11, 2015 /PRNewswire/ — VAALCO Energy, Inc. (EGY) today responded to misleading comments with respect to the Company’s cash general and administrative (G&A) expense and capital expenditures (capex) made by Group 42, Inc. (“Group 42”) and Bradley L. Radoff (collectively, the “Group 42−BLR Group”), VAALCO stockholders who have announced the intention to solicit consents to replace a majority of VAALCO’s duly elected independent directors.
The Company commented:
“In an apparent attempt to advance their Board control agenda, the Group 42−BLR Group has today made misleading comments about VAALCO’s cash G&A expense and capex for the third quarter of 2015.
“The Group 42−BLR Group failed to note that G&A expenses have declined year over year to $3.5 million (excluding $300,000 of severance costs), or $8.63 per barrel of oil equivalent (BOE), as compared to $4.0 million, or $14.97 per BOE, in the three months ended September 30, 2014. Consistent with its 2015 cost initiatives, the Company has been cutting aggregate future executive and management cash compensation 30% compared with 2013. VAALCO has also reduced corporate staff in Houston by approximately 15%, as well as reduced contract services and other third party costs. The full benefit of these reductions will be realized in 2016.
“In addition, the Group 42−BLR Group criticized VAALCO’s cash G&A expense in the third quarter of 2015 without noting that certain third quarter expenses, including severance costs, will result in significant savings for VAALCO stockholders over time.
“When criticizing VAALCO’s capex in the third quarter, the Group 42−BLR Group failed to mention that capex was driven by the Company’s successful drilling campaign offshore Gabon, through which VAALCO grew total production in the third quarter of 2015 to approximately 4,800 net barrels of oil equivalent (BOE) per day, up 6% from 4,550 net BOE per day in the second quarter of 2015, and above the high end of third quarter guidance of 4,400 to 4,700 BOE per day.
“The VAALCO Board of Directors and management team remain committed to acting in the best interests of the Company and all VAALCO stockholders. Unfortunately, we believe that the Group 42−BLR Group has intentionally cherry-picked data to misrepresent the well-documented progress we are making to drive value in a challenging environment for the oil and gas industry.”
As previously announced, VAALCO’s Board of Directors, in consultation with its financial and legal advisors, is reviewing Group 42−BLR Group’s solicitation materials. VAALCO’s Board of Directors will advise VAALCO stockholders of its recommendation regarding the Group 42−BLR Group’s solicitation in due course and advises VAALCO stockholders to refrain from taking any action (including returning any consent card sent by the Group 42−BLR Group) at this time.
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