VAALCO Energy (EGY) investor relations material

Strategic positioning in Africa

• Focus on under-invested African basins with established infrastructure and investment-friendly PSCs, enabling efficient capital deployment and export routes.

• Expansion driven by majors divesting shallow water assets, creating accretive entry points in Gabon, Egypt, and Ivory Coast.

• Gabon asset has produced 17,000 bbl/day and 150 million bbl cumulatively since 2004.

• Egypt acquisition in 2022 provided scale, operational efficiencies, and stable, flexible cash flow.

• Ivory Coast entry in 2024 through a $42 million acquisition, now producing 4,500 bbl/day.

Market dynamics and competition

• West Africa seen as a secure supply source, away from conflict zones, attracting more interest amid global instability.

• Ongoing industry consolidation offers further acquisition opportunities as majors focus on ultra-deep water.

• Strong local presence and reputation in Gabon aids relationships with other host governments.

• Local management in each country is key for regulatory and community engagement, facilitating new licenses like CI-705 in Ivory Coast.

Fiscal regimes and contract structures

• African countries design PSCs to attract foreign investment, with high cost recovery ceilings (up to 80%) in Gabon and Ivory Coast.

• Ivory Coast offers additional capital uplifts (25% for Baobab, 15% for CI-705) to incentivize investment.

• Profit oil allocations favor contractors: 45% in Gabon, 53% in Ivory Coast, with no additional corporate taxes due to in-kind tax settlement.

• Egypt’s lower cost ceiling (40%) shifts more barrels to the contractor at low prices, providing stable cash flow.