Vaalco Energy (EGY) risk factors, FY2024 10-K

Risks Relating to Our Business, Operations and Strategy

1. 01Our business requires significant capital expenditures and we may not be able to obtain needed capital or financing to fund our exploration and development activities or potential acquisitions on satisfactory terms or at all
2. 02Unless we are able to replace the proved reserve quantities that we have produced through acquiring or developing additional reserves, our cash flows and production will decrease over time
3. 03The Company does not always control decisions made under joint operating agreements, and the parties under such agreements may fail to meet their obligations
4. 04There is also a risk that these parties may at any time have economic, business, or legal interests or goals that are
5. 05We have limited control over the assets we do not operate
6. 06Our offshore operations involve special risks that could adversely affect our results of operations
7. 07water contamination and other environmental conditions and deficiencies in the mechanical integrity of equipment are not necessarily observable even when an inspection is undertaken. Any unidentified problems could result in material liabilities and costs that negatively impact our financial condition
8. 08Our reserve information represents estimates that may turn out to be incorrect if the assumptions on which these estimates are based are inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present values of our reserves
9. 09this document are based on various assumptions required by the SEC, including non-escalated prices and costs and capital expenditures subsequent to December 31, 2024, and, therefore, are inherently imprecise indications of future net revenues
10. 10If our assumptions underlying accruals for abandonment and decommissioning costs are too low, we could be required to expend greater amounts than expected
11. 11We may not generate sufficient cash to satisfy our payment obligations under the Merged Concession Agreement or be able to collect some or all of our receivables from EGPC, which could negatively affect our operating results and financial condition
12. 12We could lose our interest in Block P in Equatorial Guinea if we do not meet our commitments under the production sharing contract
13. 13There are no assurances that we will be able to extend the Block CI-40 PSC
14. 14The FPSO in Côte d'Ivoire ceased hydrocarbon production on January 31, 2025 for scheduled maintenance. Our results will be adversely affected until the FPSO is returned to service which may be a time later than we expect
15. 15Commodity derivative transactions that we enter into may fail to protect us from declines in commodity prices and could result in financial losses or reduce our income
16. 16Our derivative contracts typically consist of a series of commodity swap contracts, such as puts, collars and fixed price swaps, and are limited in duration
17. 17We are exposed to the credit risks of the third parties with whom we contract
18. 18Our business could be materially and adversely affected by security threats, including cybersecurity threats, and other disruptions
19. 19Current and future geopolitical events outside of our control could adversely impact our business, results of operations, cash flows, financial condition and liquidity
20. 20Production cuts mandated by the government of Gabon, a member of OPEC, could adversely affect our revenues, cash flow and results of operations
21. 21The ability of the OPEC+ to agree on and to maintain crude oil price and production controls has also had, and is likely to continue to have, a significant impact on the market prices of crude oil
22. 22We have less control over our investments in foreign properties than we would have over our domestic investments
23. 23We have operated in Gabon since 1995 and believe we have good relations with the current Gabonese government. However, there can be no assurance that present or future administrations or governmental regulations in Gabon will not materially adversely affect our operations or cash flows
24. 24Equatorial Guinea, any new PSC or equivalent agreement for the exploration and exploitation of hydrocarbons is subject to presidential ratification before it can become effective
25. 25Our operations may be adversely affected by political and economic circumstances in the countries in which we operate
26. 26Some of these risks may be higher in the developing countries in which we conduct our activities, namely, Gabon, Cote d'Ivoire, Equatorial Guinea and Egypt
27. 27Inflation could adversely impact our ability to control costs, including operating expenses and capital costs
28. 28Our results of operations, financial condition and cash flows could be adversely affected by changes in currency exchange rates
29. 29We operate in international jurisdictions, and we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-corruption laws
30. 30no assurance that our internal control policies and procedures, compliance mechanisms or monitoring programs will protect us from recklessness, fraudulent behavior, dishonesty or other inappropriate acts or adequately prevent or detect possible violations under applicable anti-bribery and anti-corruption legislation
31. 31Our business could suffer if we lose the services of, or fail to attract, key personnel
32. 32We are subject to relinquishment obligations under certain of our title documents
33. 33We may be exposed to the risk of earthquakes in Alberta, Canada
34. 34There may be valid challenges to title or legislative changes which affect our title to the oil, natural gas and NGLs properties we control in Canada
35. 35Our results of operations, financial condition and cash flows could be adversely affected by changes in currency regulations
36. 36Our results of operations, financial condition and cash flows could be adversely affected by changes to interest rates
37. 37The development of our estimated proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated proved undeveloped reserves may not be ultimately developed or produced

Risks Relating to Our Industry

1. 38Crude oil, natural gas and NGLs prices are highly volatile and a depressed price regime, if prolonged, may negatively affect our financial results
2. 39The occurrence of certain of these events may have a material adverse effect on our business, results of operations and financial condition
3. 40Exploring for, developing, or acquiring reserves is capital intensive and uncertain
4. 41The crude oil, natural gas, and NGLs industry is intensely competitive. Our competitors include major integrated oil companies and substantial independent energy companies, many of which possess greater financial, technological, personnel and other resources than we do
5. 42In addition, competition due to advances in renewable fuels may also lessen the demand for our products and negatively impact our profitability
6. 43Weather, unexpected subsurface conditions and other unforeseen operating hazards may adversely impact our crude oil, natural gas and NGLs activities
7. 44An increased societal and governmental focus on ESG and climate change issues may adversely impact our business, impact our access to investors and financing, and decrease demand for our product
8. 45We face various risks associated with increased opposition to and activism against crude oil, natural gas and NGLs exploration and development activities

Risks Relating to Legal and Regulatory Matters

1. 46Our operations are subject to risks associated with climate change and potential regulatory programs meant to address climate change; these programs may impact or limit our business plans, result in significant expenditures or reduce demand for our product
2. 47Compliance with applicable environmental laws and other government regulations could be costly and could negatively impact production
3. 48We are also subject to a wide variety of laws relating to health and safety, taxes, employment, labor standards, money laundering, terrorist financing, and other matters in the jurisdictions in which we operate
4. 49We have been, and in the future may become, involved in legal proceedings with governmental bodies and private litigants, and, as a result, may incur substantial costs in connection with those proceedings

Risks Relating to the 2025 Facility Agreement

1. 50The borrowing base under the 2025 Facility may be reduced pursuant to the terms of the 2025 Facility Agreement, which may limit our available funding for exploration and development. We may have difficulty obtaining additional credit, which could adversely affect our operations and financial position

Risks Relating to Ownership of Our Common Stock

1. 51The price of our Common Stock may fluctuate significantly
2. 52We currently intend to pay dividends on our common stock; however, no assurance can be given that we will be able to pay dividends to our stockholders in the future at indicated levels or at all
3. 53Dual-listing on the NYSE and the LSE may lead to an inefficient market in our common stock
4. 54Substantial future sales of our common stock, or the perception that such sales might occur, or additional offerings of our common stock could depress the market price of our common stock
5. 55Any issuance of preferred shares will rank in priority to our shares of common stock
6. 56Our certificate of incorporation and bylaws do not contain any rights of pre-emption in favor of existing stockholders, which means that stockholders may be diluted if additional shares of common stock are issued
7. 57The choice of forum provisions in our Third Amended and Restated Bylaws (the “Bylaws”) could limit our stockholders’ ability to obtain a favorable judicial forum for disputes