Vaalco Energy, Inc. (LSE:EGY) reported a 21% increase in third-quarter 2026 production compared with the previous quarter, while adjusted EBITDAX rose 30% to $71.1 million, supported by higher sales volumes and realised commodity prices.
The Africa-focused oil producer recorded working interest production of 25,284 barrels of oil per day (BOPD), equivalent to 20,145 BOPD on a net revenue interest (NRI) basis. NRI sales averaged 18,454 BOPD, up 4% quarter on quarter.
Despite the operational improvement, Vaalco reported a net loss of $39.8 million, or $0.38 per diluted share, primarily reflecting losses on commodity derivatives.
Higher Production Supports Revenue Growth
Net revenue increased 9% quarter on quarter to $147.0 million, compared with $135.2 million in the second quarter. Adjusted EBITDAX rose from $54.8 million to $71.1 million, compared with $23.7 million in the third quarter of 2025.
The company recorded $34.7 million in unrealised hedging losses during the quarter, contributing to its reported net loss.
Vaalco invested $86.9 million in capital expenditure, primarily supporting drilling programmes in Gabon and Egypt and the restart and development of production in Côte d’Ivoire.
Chief Executive George Maxwell said production increased across all three producing regions, with higher sales volumes and pricing contributing to the improvement in adjusted EBITDAX.
Drilling Programmes Advance Across African Portfolio
In Gabon, Vaalco completed its Phase Three drilling programme, bringing the ETSEM-3H development well into production and releasing the drilling rig in early October.
In Côte d’Ivoire, production resumed at the Baobab field in June, followed by the first crude oil lifting in August. Phase Five drilling commenced in September, with the first production well expected online near the end of 2026 and additional wells planned for the first half of 2027.
In Egypt, five development wells were drilled and completed during the third quarter, with two additional wells completed in October.
The company is also progressing development planning for the Kossipo field in Côte d’Ivoire and the Venus project offshore Equatorial Guinea.
Fourth-Quarter Production and Sales Guidance
Vaalco expects fourth-quarter NRI production between 18,800 and 20,900 BOPD, with NRI sales forecast at 20,800 to 22,600 BOPD.
The midpoint of the sales guidance represents an increase of approximately 18% compared with the third quarter.
Fourth-quarter capital expenditure is forecast between $55 million and $75 million, while full-year 2026 capital expenditure guidance stands at $300 million to $330 million.
The company expects increased production in 2027 and is targeting free cash flow generation during the second half of that year, subject to sustained commodity prices.
Quarterly Dividend Maintained
Vaalco declared a quarterly cash dividend of $0.0625 per share, payable on December 22, 2026, to shareholders of record on November 20.
At September 30, the company held $51.3 million in cash and cash equivalents and reported long-term debt of $239.0 million.
The latest results reflect increased production and adjusted operating earnings, although derivative losses affected reported profitability. Vaalco continues to invest in its African development portfolio, with additional production expected from ongoing drilling programmes.
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