VAALCO Energy Reports Q3 2025 Results with Adjusted Net Loss and Operational Highlights

Q3 2025 headline numbers: slim profit, adjusted loss, guidance tweaked

Vaalco Energy reported net income of $1.1 million ($0.01 per diluted share) for Q3 2025, but on an adjusted basis posted a loss of $10.3 million. Adjusted EBITDAX came in at $23.7 million. Production on a net revenue interest basis (NRI – after royalties) averaged 15,405 boepd, at the high end of guidance, with sales of 12,831 boepd also at the high end.

Management lifted full-year production and sales guidance midpoints and cut the capital spending midpoint again, now reduced by a cumulative $58 million versus the original 2025 plan. A quarterly cash dividend of $0.0625 per share has been declared for payment on 24 December 2025.

Key metric	Q3 2025	Q2 2025	Q3 2024
Net income	$1.1 million	$8.4 million	$11.0 million
Adjusted net income (loss)	$(10.3) million	$2.3 million	$7.9 million
Adjusted EBITDAX	$23.7 million	$49.9 million	$92.8 million
NRI production (boepd)	15,405	16,956	21,770
NRI sales (MBOE)	1,180	1,765	2,134
Realised price ($/BOE)	$51.26	$54.87	$65.41
Total commodity sales	$61.0 million	$96.9 million	$140.3 million
Production expense (excl. offshore workovers & stock comp)	$29.8 million	$40.3 million	$42.2 million
Cash at period end	$24.0 million	$74.3 million	not disclosed
Net debt	$27.9 million	$(14.3) million	not disclosed

What moved the quarter: planned Gabon downtime and softer pricing

Versus Q2 2025, revenue and earnings fell on lower sales volumes and prices. NRI sales dropped to 1,180 MBOE, down 33%, with the realised price slipping 7% to $51.26/BOE. Management pin the volume decline on a planned full-field maintenance shutdown in Gabon during July, which was completed on budget and without incidents.

Cost-side, there were improvements. Production expense fell 26% quarter-on-quarter to $29.8 million, while DD&A dropped 27% to $20.6 million. On a per-barrel basis, however, unit costs rose versus Q2 due to lower volumes: production expense was $25.24/BOE and G&A was $6.07/BOE.

Operational walk-around: where Vaalco is spending and drilling

Gabon – drilling campaign imminent, maintenance done

• Rig secured for the 2025/2026 programme; expected to arrive at Etame in late November once current commitments finish.
• Programme includes multiple development, appraisal/exploration wells and workovers, including activity at Etame, Seent and Ebouri (targeting reserves impacted by hydrogen sulphide).
• July saw staged shutdowns for safety inspections and maintenance across platforms. All fields are back online.

Egypt – steady drilling and interventions

• Ongoing campaign since December 2024. In Q3 2025, four Eastern Desert development wells were drilled (three completed in the quarter; the fourth in October).
• One Western Desert exploration well was drilled and completed in October.
• Continuous interventions and workovers supported production levels.

Côte d’Ivoire – FPSO in dry dock, 2026 drilling secured

• Baobab FPSO left the field in March and has been in Dubai since May for refurbishment; production ceased on 31 January 2025.
• A rig has been secured for significant development drilling expected to start in 2026 after the FPSO returns. Kossipo potential is being evaluated.

Canada – capital deferred, optimisation instead

• Drilling deferred earlier in 2025 to prioritise higher-return projects elsewhere; focusing on lower-cost optimisation to enhance productivity by year-end.

Equatorial Guinea – development concept advancing

• On Block P (60% WI), initial front-end engineering and design is complete for the Venus discovery, and alternative technical solutions are under evaluation.

Costs, taxes and cash: good discipline, but free cash flow negative year-to-date

Despite lower volumes, absolute production expense was contained at $29.8 million, and DD&A reduced sharply. G&A excluding stock-based comp was $7.2 million, essentially flat on Q2. Vaalco recorded an income tax benefit of $3.6 million, reflecting a $12.2 million deferred tax benefit offsetting $8.6 million of current tax. This includes a $3.9 million favourable oil price adjustment in Gabon; excluding that, income taxes were $0.3 million for the period.

On cash, Q3 capital spend was $48.3 million (cash basis), below guidance, driven by project costs and long-lead items for Gabon, Egypt and Côte d’Ivoire. Cash ended the quarter at $24.0 million, with $60.0 million drawn on the reserves-based facility, leaving net debt at $27.9 million. For the first nine months, Free Cash Flow was negative at $(45.8) million.

Balance sheet and liquidity: RBL expanded and term eased

Vaalco entered a new reserves-based revolving credit facility in March with initial commitments of $190.0 million and an accordion to $300.0 million. As of 30 September, $60.0 million was outstanding. In October, lenders nudged the borrowing base to $190.0 million (from $186.6 million), extended the first commitment reduction to 31 March 2027 and eased the reduction schedule.

Post-quarter, existing lenders agreed to increase commitments to $240.0 million effective 23 January 2026, boosting available liquidity ahead of multi-year growth programmes.

Hedging: collars provide downside protection into 2026

• Q4 2025 oil collars on 480,000 bbls with a weighted average floor of $60.83 and ceiling of $67.81 per barrel.
• 2026 H1 collars on 800 Mbbls with an average floor of approximately $62.00 per barrel.
• Gas swaps in Canada continue on AECO with staged volumes into late 2026 at fixed CAD/GJ prices.

Management notes roughly 500 Mbbls of remaining 2025 oil production hedged at an average floor around $61.00, with additional 2026 hedges added during price strength.

Guidance updated: production up, capex down

Full-year 2025 guidance

• NRI production ranges by area: Gabon 15,900-16,910 boepd; Egypt 6,800-7,200 boepd; Canada 7,200-7,600 boepd; Côte d’Ivoire 1,600-1,800 boepd; Corporate/Other 300-310 boepd.
• Production expense: $152.0-$158.0 million; cash G&A: $28.0-$32.0 million.
• CAPEX excluding acquisitions: $225-$260 million (midpoint reduced by 19% or $58 million from the original 2025 plan).
• DD&A: $16.00-$20.00/BOE on an NRI basis.

Q4 2025 guidance

• NRI production: Gabon 15,600-17,300 boepd; Egypt 6,900-7,700 boepd; Canada 7,200-7,900 boepd; Côte d’Ivoire 1,500-1,700 boepd.
• Production expense: $36.0-$44.5 million; cash G&A: $7.0-$9.0 million.
• CAPEX excluding acquisitions: $90-$110 million.

Dividend: consistency maintained, but always at Board discretion

Vaalco paid $0.0625 per share in September and plans the same for December, equivalent to $0.25 annualised. The statement reiterates that future dividends remain subject to Board approval and business conditions.

Josh’s take: why this matters for shareholders

• Operations executed to plan. Hitting the high end on NRI sales and production despite a scheduled Gabon shutdown is a solid operational result.
• Near-term financial softness is understandable. Lower realised prices and sales volumes pulled EBITDA and net income down. The adjusted loss reflects that backdrop.
• Positive capital discipline. Cutting the capex midpoint by $58 million while still increasing full-year production guidance midpoints is encouraging.
• Liquidity reinforced ahead of growth. Upsizing the RBL to $240.0 million from January 2026 provides flexibility to fund the Gabon programme and Baobab’s 2026 restart and drilling.
• Watch the cash bridge. Year-to-date Free Cash Flow is $(45.8) million and cash closed at $24.0 million with $60.0 million drawn, so execution of the coming drilling programmes and timing of Côte d’Ivoire’s return are key to restoring cash generation.
• Unit costs and G&A. Per-barrel costs are elevated versus last year due to lower volume throughput. A return to higher volumes should help, but it is a watch item.

Bottom line: Vaalco is setting up for an activity-heavy 2025/2026 with the Gabon rig mobilising and Baobab refurbishment on track. The quarter lacks fireworks financially, but the combination of stronger guidance, trimmed capex and expanded liquidity points to a clearer runway for the next phase of growth. As ever in E&P, delivery against the drilling schedule and commodity prices will call the tune.