VAALCO Energy, Inc. has entered into crude oil commodity swap agreements for a total of 672,533 barrels at a Dated Brent weighted average price of $66.51 per barrel for the period from and including May 2021 through October 2021. These swaps will settle on a monthly basis.
The Company is hedging a majority of its 2021 production volumes to protect cash flows which are expected to be used to fund the 2021/2022 drilling program of up to four wells and the potential Floating Storage and Offloading (“FSO”) unit capital upgrade costs if an agreement is executed. The Company entered into similar commodity swap agreements in January 2021. In total, VAALCO now has 70% of its production hedged through October 2021 at a Dated Brent weighted average price of $62.27 per barrel.
George Maxwell, Chief Executive Officer, commented, “We have locked in strong Free Cash Flow over the next six months by capitalizing on the continued strength in crude oil prices. This is particularly important as we are benefitting from the additional volumes associated with the acquisition of Sasol’s interest at Etame that closed in late February. With these additional hedges we have materially derisked our work program from a funding standpoint, and expect our capital commitments over the next 12 months to be fully funded through our cash flow and cash on hand. In addition, we have maintained the opportunity for us to benefit from further increases in oil prices since we have not hedged all of our production and the term of these new contracts is for just six months.”