Vaalco Energy (LSE:EGY) on Friday reported a net loss of $39.8 million, or $0.38 per diluted share, for the third quarter of 2026, reversing the $42.4 million net income booked in the second quarter and down from net income of $1.1 million a year earlier.
The London-listed oil and gas producer, which operates assets across Gabon, Côte d'Ivoire, Equatorial Guinea and Egypt, said the swing to loss was driven primarily by a non-cash loss on derivative instruments.
Production rose about 21% quarter-on-quarter to 20,145 net revenue interest (NRI) barrels of oil equivalent per day, with all three producing areas, Egypt, Côte d'Ivoire and Gabon, contributing increases. Sales reached 18,454 NRI barrels of oil per day, toward the high end of guidance and up 4% from the second quarter.
Earnings (adjusted EBITDAX) climbed 30% to $71.1 million from $54.8 million in the second quarter, which Vaalco attributed to higher realised commodity prices and sales volumes.
The quarter's net loss included $34.7 million of unrealised hedging losses, with total commodity derivative losses of $57.0 million comprising the unrealised figure plus a $22.3 million realised loss on matured contracts.
"The third quarter results continue to demonstrate our ability to successfully execute on our strategy as we deliver on our forecasts and grow production in a strong commodity price environment," said George Maxwell, Vaalco's chief executive.
Field restart after refurb
The Baobab field offshore Côte d'Ivoire, which resumed production in June after a yearlong floating production, storage and offloading (FPSO) vessel refurbishment, completed its first crude oil lifting in August and began Phase Five drilling in September, with the first well expected onstream by year-end and additional wells coming online in the first half of 2027.
In Gabon, Vaalco completed its Phase Three drilling campaign, bringing the ETSEM-3H development well onstream and demobilising the rig in early October; the company said year-over-year working-interest production at the Etame field is up almost 2,500 barrels of oil per day.
Egypt's 2026 drilling campaign, which began in May, saw five development wells drilled and completed during the quarter, with two further wells completed in October; Vaalco said it now plans an ongoing drilling programme in Egypt into 2027.
Net capital expenditures totalled $86.9 million on a cash basis, near the low end of third-quarter guidance of $75 million to $115 million.
Read more about Vaalco Energy
- 07/10/26Vaalco completes Gabon drilling campaign and starts Baobab Phase 5
- 09/06/26Vaalco Energy restarts Baobab field after FPSO refurbishment
- 21/04/26Vaalco Energy posts 2,850 BOPD net from Etame 14H
Vaalco ended the quarter with $51.3 million in cash and cash equivalents, long-term debt of $239.0 million, and approximately $61.0 million of remaining liquidity on its reserves-based lending facility.
The company declared a quarterly cash dividend of $0.0625 per share, to be paid 22 December to shareholders of record as of 20 November.
Looking ahead
For the fourth quarter, Vaalco forecast sales volumes of 20,800 to 22,600 NRI barrels of oil per day, an 18% increase at the midpoint versus the third quarter, with production expected between 18,800 and 20,900 NRI barrels of oil per day.
Fourth-quarter capital expenditure guidance was reduced to between $55 million and $75 million.
Looking to 2027, Maxwell said the company is "projecting significant increases in production and strong sales, which coupled with continued attractive pricing should generate solid operational cash flow and Adjusted EBITDAX generation," adding that Vaalco expects to generate free cash flow in the second half of 2027 assuming sustained commodity pricing.
The company pointed to upcoming development decisions at the Venus field in Equatorial Guinea and the Kossipo field in Côte d'Ivoire, which he said "should organically double the company's production."