EGY · VAALCO Energy, Inc.

VAALCO’s Q1 2026 results reflect a sharp financial contraction driven overwhelmingly by non-operational items: $94.2 million in derivative and exploration expenses — including $55.9 million in unrealized derivative losses — overwhelmed underlying operational performance. While Adjusted EBITDAX of $11.6 million signals core cash-generating capability, it fell significantly from $42.9 million in Q4 2025 and $57.0 million in Q1 2025, primarily due to lower sales volumes (1,094 MBOE, down 36% QoQ) caused by delayed Gabon liftings and the February 19 divestiture of Canadian assets. Notably, the government lifting in Gabon — used to settle foreign tax expense — reduced Q1 sales but is explicitly stated as the only such event in 2026, supporting management’s confidence in stronger Q2 results with two optimized liftings. Operationally, the quarter delivered tangible progress: Etame 15H and Etame 14H wells came online, adding ~4,850 gross BOPD combined; the Baobab FPSO was re-moored and remains on track for Q2 restart; and Vaalco secured operatorship of the Kossipo field with material upside potential. Critically, the company raised full-year 2026 production and sales guidance by 8% and 12% at the midpoint — without increasing its capital budget — signaling improved capital efficiency and execution discipline. Management attributes this to successful drilling outcomes, accelerated subsurface evaluation in Egypt, and de-risking via recent seismic work in Gabon and Côte d’Ivoire. The declared $0.0625 dividend — maintained despite the loss — underscores balance sheet resilience and commitment to shareholder returns. With Q2 expected to show meaningful sequential improvement in both sales and financials, and Phase Five drilling at Baobab slated for late 2026, the first quarter appears positioned as a transitional inflection point toward sustained growth.