Vaalco Energy (NYSE:EGY) highlighted what management called a “transitional year” in 2025 as the company delivered sales and production above its increased guidance, while major projects in Côte d’Ivoire and Gabon positioned the portfolio for a second-half 2026 uplift and further growth into 2027.
On the company’s fourth-quarter and full-year 2025 earnings call, CEO George Maxwell emphasized operational consistency and portfolio repositioning, including the divestiture of Canadian assets and expanded positions in West Africa. CFO Ron Bain said Vaalco generated $173.4 million of adjusted EBITDAX and $212.7 million of net cash from operating activities in 2025, while a non-cash impairment tied to the Canada sale drove a fourth-quarter net loss.
2025 financial results shaped by Canadian impairment
Adjusted EBITDAX for the year was $173.4 million, and net cash from operating activities was $212.7 million. However, the company reported a fourth-quarter net loss of $58.6 million, or $0.56 per diluted share, which Bain said was “driven primarily by a non-cash impairment charge of $67.2 million due to the sale of our Canadian assets.” After earning $17.2 million of net income in the first nine months of 2025, Vaalco ended the year with a net loss of $41.4 million.
On realized pricing in the fourth quarter, management pointed to figures disclosed in the earnings release, including approximately $58 in Gabon, $54 in Egypt, and $53 in Canada.
Côte d’Ivoire: Baobab restart targeted for Q2 2026; CI-705 and Kossipo add upside
Maxwell said the Baobab field on Block CI-40 had no Vaalco production or interest prior to April 2024, when the company completed the Svenska acquisition. The Baobab FPSO ceased hydrocarbon operations on Jan. 31, 2025, with final lifting occurring in early February. The FPSO departed the field in late March and arrived at a Dubai shipyard in mid-May 2025, ahead of schedule. Maxwell said refurbishment “went very well,” and the FPSO departed Dubai in early February 2026 and remained on track to return to Baobab, with the field expected to restart in the second quarter of 2026.
Development drilling is expected to begin later in 2026 after the FPSO returns to service. Maxwell outlined a program including three producers, two to three injectors, and two workovers, with a plan to batch drill top-hole sections of five wells and then complete them. Management said it expects at least one well to be on full production by year-end 2026.
On the CI-705 exploration block, Maxwell said Vaalco announced a farming agreement in March 2025 under which it will operate with a 70% working interest and a 100% paying interest through seismic reprocessing and interpretation, with potential drilling of up to two exploration wells. The company has received seismic data and is conducting geological work to assess the block’s prospectivity.
Vaalco also discussed the Kossipo field on CI-40. Maxwell said that in February 2026 the company was confirmed as operator with a 60% working interest and is preparing a field development plan supported by new ocean bottom node seismic data. He noted the field was discovered in 2002 and appraised in 2019 with Kossipo-2A, which tested at over 7,000 barrels of oil per day. Management’s current assessment cited estimated gross 2C resources of approximately 102 million boe and 293 million boe in place.
In the Q&A, management said Kossipo spending in 2026 is expected to be limited to around $10 million for preparation and development of the field development plan. Maxwell said the company expects “big CapEx” for Kossipo to begin in 2028, describing an anticipated timeline that includes submission of the development plan before year-end, an engineering phase of roughly six to 12 months after approval, and evaluation of tie-back options to Baobab versus a standalone development.
Gabon: drilling campaign underway; exploration sidetrack planned
In Gabon, Maxwell said Vaalco completed a planned full-field maintenance shutdown in July 2025 for safety inspections and maintenance, the first such shutdown since the FSO was brought online in 2022. The company began its phase three drilling program in the fourth quarter with two pilot wells in the Etame field and then moved to drill the Etame 15H-ST development well in December 2025.
Maxwell said the rig also drilled an exploration prospect in West Etame. While the well encountered 10 meters of high-quality Gamba sands, the target zone was water-bearing and not commercial. The lower portion is to be plugged and abandoned, but the wellbore will be utilized for a sidetrack in the upper portion to drill the ET-14H development well in the main fault block of Etame, which management said had been de-risked by pilot well results. Maxwell said the sidetracked well was expected to be completed in April, after which the rig is expected to move to the SEENT and Ebouri platforms for additional wells and workovers.
For the Niosi Marin and Guduma Marin exploration blocks, Maxwell said a seismic survey commenced in November 2025 and was completed in the first quarter of 2026, with interpretation expected to continue into the second and third quarters of 2026.
In follow-up questions, Maxwell said Gabon gross production at the end of the drilling program could be in the range of 20,000 to 23,000 barrels per day, up from a recent gross range of 14,000 to 16,000 barrels per day, depending on factors including potential drilling of a gas well to support gas lift and injection and performance from a planned Ebouri well.
Egypt operations, receivables improvement, and Equatorial Guinea update
Maxwell said Egypt posted year-over-year production growth in 2025 after a drilling campaign that included 20 wells. He added that the company drilled eight extra wells faster and cheaper than budgeted for the same amount of capital, and ongoing optimizations, workovers, and recompletions improved performance. Maxwell said first-quarter 2026 production in Egypt was consistently above 11,000 barrels of oil per day, above a budget level of 10,700 barrels of oil per day.
In the Western Desert, management said the South Ghazalat exploration well confirmed the presence of oil and gas, with long-term testing and pressure monitoring indicating connectivity of an oil-bearing zone to a larger volume. Bain said the well was determined “currently not commercially viable,” but the team is updating mapping and volume estimates to support an economic development plan.
Bain also highlighted receivables progress in Egypt. He said EGPC collections accelerated in 2025 and “all of our aged receivables are now current.” Outstanding EGPC accounts receivable fell to $31 million at year-end 2025 from $113 million at the start of the year, even after invoicing more than $129 million of revenue. Vaalco collected more than $210 million in 2025, including an industry payment of $40 million received in the last week of the year, and Bain said collections continued to exceed revenue into the first quarter of 2026.
In Equatorial Guinea, Maxwell said the company completed a front-end engineering design (FEED) study for the Venus Block P plan of development. While FEED confirmed technical viability, it also highlighted risks and challenges tied to the shelf location. Management said it is evaluating a subsea development alternative intended to simplify drilling operations and well design.
Balance sheet, capital allocation, and 2026 guidance
Vaalco ended 2025 with $58.9 million in unrestricted cash, up nearly $35 million sequentially, and Bain said the company had no draws against its reserves-based lending (RBL) facility in the fourth quarter. The company entered a new RBL in 2025 with an initial commitment of $190 million and the ability to grow to $300 million; Bain said the current commitment level is $255 million with $60 million drawn at year-end 2025.
Vaalco returned $26.5 million to shareholders through dividends in 2025, including a $6.5 million quarterly dividend in the fourth quarter. Maxwell said the company has returned over $150 million to shareholders through dividends and buybacks since the fourth quarter of 2021.
On hedging, Bain said the company secured collars with a floor of about $65 per barrel for the balance of 2026 covering about 50% of production, with ceilings set based on market conditions at the time.
For 2026 guidance, Bain said forecasts incorporate only a portion of first-quarter Canadian production due to the mid-February close of the asset sale and assume Baobab returns online in the second quarter. Vaalco guided:
- Q1 2026 production: 18,700 to 20,600 working interest boe/d and 14,200 to 16,000 NRI boe/d
- Q1 2026 NRI sales: 11,200 to 12,900 boe/d
- Full-year 2026 production: 20,100 to 22,400 working interest boe/d and 16,100 to 17,950 NRI boe/d
- Full-year 2026 NRI sales: 14,900 to 18,050 boe/d
- 2026 exploration expense: $30 million to $35 million
- 2026 capital spending: $290 million to $360 million, including capitalized interest of about $22 million to $24 million for the full year
Management said the first quarter’s capital program is expected to be $90 million to $110 million. In the Q&A, the company said first-quarter CapEx was split roughly between the Gabon drilling program and Côte d’Ivoire FPSO-related work, and that remaining Baobab hookup and recommissioning costs were estimated at about $50 million (net to Vaalco). Bain added that if free cash flow exceeds expectations due to higher oil prices, the company’s priority would be to reduce reliance on additional RBL borrowings rather than increase shareholder returns in 2026.
Discussing project costs versus prior expectations, Bain said the gross cost estimate for the Baobab FPSO rebuild had increased by roughly $80 million to $100 million, primarily due to additional steelwork, with Vaalco’s share being one-third. He also said about $40 million to $50 million of Gabon drilling CapEx shifted from 2025 into 2026 due to timing. Management said it does not expect the Gabon drilling program to roll into 2027 and anticipates completion in early third quarter 2026.
On exit rates, management said it expects total company working-interest exit production to be around 25,000 to 26,000 boe/d by year-end 2026, reflecting that only one Côte d’Ivoire well is expected to be producing by then due to batch drilling.
About Vaalco Energy (NYSE:EGY)
Vaalco Energy, Inc is an independent energy company principally engaged in the exploration, development and production of crude oil and natural gas. Headquartered in Houston, Texas, Vaalco concentrates on offshore assets in West Africa, with a strategic emphasis on maintaining and optimizing cash-flow–generating properties. Founded in the mid-1980s, the company has built its reputation by focusing on high-impact drilling prospects and extending the productive life of its core fields through targeted infill wells and enhanced recovery techniques.
The company’s primary producing asset is the Etame Marin block offshore Gabon, where Vaalco holds a majority interest and serves as operator.
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