VAALCO Posts $39.8 Million Third-Quarter Loss Despite Production and Sales Growth
Key Facts
VAALCO Energy reported a net loss of $39.8 million, or $0.38 per diluted share, in the third quarter of 2026, compared with net income of $42.4 million in the second quarter and $1.1 million in the same period of 2025. The company said the loss included $34.7 million in unrealized hedge losses. Net losses from derivative instruments totaled $57.0 million, including $22.3 million in realized losses on contracts that came due. The company linked the unrealized loss primarily to a rise in the expected forward price curve. Its shares, listed under the ticker EGY, closed at $5.38 on November 5.
VAALCO said the earnings decline was driven mainly by hedge losses and depletion expenses, partly offset by higher revenue, while production expenses rose compared with the third quarter of 2025. By contrast, Adjusted EBITDAX increased to $71.1 million, up 30% from $54.8 million in the second quarter. The metric was about three times its $23.7 million level in the third quarter of 2025. The company attributed the improvement mainly to higher realized prices and sales volumes. The contrast between the accounting loss and adjusted operating metric highlights the effect of derivatives on the period's results.
Oil, gas and natural gas liquids sales totaled $146.975 million in the third quarter, compared with $135.166 million in the second quarter and $61.007 million in the third quarter of 2025. The regional table showed total net revenue at the same amount, comprising $73.849 million from Gabon, $45.321 million from Egypt and $27.831 million from Ivory Coast. Production rose to 25,284 barrels per day on a working-interest basis, or 20,145 barrels per day on a net-revenue-interest basis. Chief Executive George Maxwell said production increased 21% from the second quarter, rising in all three operating areas: Egypt, Ivory Coast and Gabon. The company's sales also reached 18,454 barrels per day on a net-revenue-interest basis, near the upper end of its guidance and up 4% from the previous quarter.
Net-revenue-interest sales volumes totaled 1.698 million barrels of oil equivalent, up 5% from the second quarter and 44% from the third quarter of 2025. The company attributed the quarterly increase to its first shipment from Ivory Coast in 2026 and higher sales in Egypt, while annual sales growth was linked to the resumption of production and sales in Ivory Coast. The average realized price rose to $83.64 per barrel of oil equivalent, from $80.77 in the second quarter and $51.26 in the year-earlier period. Maxwell said the quarter's results reflected production growth amid strong commodity prices. Higher volumes and realized prices supported an improvement in the adjusted operating metric despite the impact of derivative losses on net results.
Third-quarter capital expenditures were $86.9 million on a cash basis and $83.9 million on an accrual basis, within the guidance range of $75 million to $115 million. As of September 30, the company reported long-term debt of $239.0 million and cash and equivalents of $51.3 million, in addition to about $61.0 million in available liquidity under its existing reserve-based lending facility. These figures provide a picture of spending and available financing alongside expanding production and sales. The company also declared a cash dividend of $0.0625 per share, payable on December 22 to shareholders of record at the close of November 20. It scheduled a call to discuss the quarterly results for November 6, 2026, at 9 a.m. Eastern time.
VAALCO expects fourth-quarter 2026 sales to range from 20,800 to 22,600 barrels per day on a net-revenue-interest basis, representing an 18% increase at the midpoint compared with the third quarter. It estimated production for the same quarter at between 18,800 and 20,900 barrels per day on a net-revenue-interest basis. The company also set its expected fourth-quarter capital expenditure range at $55 million to $75 million. The guidance pairs expected sales growth with higher anticipated production, while capital spending continues in the coming period. These figures remain the company's estimates for the fourth quarter.