VAALCO Energy, Inc.
Q1 2021 Earnings Call Transcript

Published: 13 May 2021

[Operator:]

Good morning everyone and welcome to the VAALCO Energy First Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please also note, today’s event is being recorded. At this time, I’d like to turn the conference call over to Al Petrie, Investor Relations Coordinator. Sir, please go ahead.

[Al Petrie:]

Thank you, Jamie. Good morning, everyone. And welcome to VAALCO Energy’s first quarter 2021 conference call. After I cover the forward-looking statements, George Maxwell, who was named CEO in April, will review key highlights along with operational results. Jason Doornik, our Chief Accounting Officer and Controller, will then provide a more in-depth financial review. George will then return for more closing comments before we take your questions. During our Q&A session, we ask you limit your questions to one and a follow-up. You can always re-enter the queue with additional questions.

[George Maxwell:]

Al, thank you very much for the introduction. Good morning, everyone and welcome to our first quarter 2021 earnings conference call. It's a pleasure for me to speak with you this morning as my first call as the new Chief Executive. Before we discuss our results, I'd like to take a few moments to thank Cary Bounds for his dedication and valued years of executive leadership at VAALCO. He was an integral part of our success and we wish him well in his future endeavors. At this point, let me review number of significant accomplishments he helped VAALCO achieve this past year that have placed us in an enviable position to achieve meaningful and accretive long term growth. In early 2020, on the heels of a highly successful drilling campaign that included three development wells that exceeded expectations on two successful appraisal wellbores, the world economy and the energy industry was severely impacted by COVID-19. We saw oil prices fall sharply due to the global pandemic, as well as supply and demand imbalances. Despite these difficulties, VAALCO continue to generate positive free cash flow throughout 2020, due in large part to our strong production increase. 2020’s production was 40% higher year-over-year, as a result of our drilling campaign’s success. We also had hedges in place through last year that provided us good protection when oil prices fell dramatically. We were able to overcome the challenges in 2020 while maintaining a strong balance sheet and financial flexibility.

[Jason Doornik:]

Thank you, George, and good morning, everyone. We reported strong net income of $9.9 million or $0.17 per diluted share in the first quarter of 2021, which included a $7.7 million non-cash bargain purchase gain, which was offset by $6 million loss on derivative instruments. $4.2 million of the loss on derivative instruments was an unrealized loss. As George mentioned, the first quarter reflected significant increase in sales and realized pricing. For comparison purposes, in the fourth quarter of 2020, we reported a net loss of $3.6 million or $0.06 per diluted share, which included the impact of $3.6 million in exploration expense related to the Etame seismic program during the quarter and $2.2 million of expense related to stock based compensation. For the first quarter of 2020, we reported a net loss of $52.8 million or $0.91 per diluted share, which included $30.6 million non-cash impairment charge due to lower crude oil prices, and non-cash deferred income tax charge of $35.6 million. Our adjusted net income for the first quarter of 2021 totaled $8.7 million or $0.15 per diluted share, as compared to an adjusted net loss of $5.6 million or $0.10 per diluted share for the fourth quarter of 2020. The increase in earnings was mainly due to higher revenues as a result of higher oil prices, higher sales. In the first quarter of 2020, VAALCO reported $6.9 million in adjusted net income or $0.12 per diluted share. Adjusted EBITDAX totaled $18 million in the first quarter of 2021, compared with $3.5 million in the prior quarter and $6 million in the same period of 2020. Adjusted EBITDAX for the first quarter of 2021 was higher than both prior periods, primarily due to increased sales volumes and higher realized prices. Production for the first quarter 5,180 net barrels of oil per day increased 11% from 4,662 net barrels of oil per day in the fourth quarter of 2020, driven by the Sasol acquisition volumes being included in the company's results after the closing date of February 25th, 2021. First quarter of 2021, production was at 5% from the first quarter of 2020. Sales volumes in the first quarter of 2021 was up 113% in the fourth quarter and up 111% compared to the same period in 2020. The increase in volumes in the first quarter of 2021 is primarily due to additional interest acquired and thus higher sales following the closing of the Sasol acquisition as well as three listings in Q1 2021 versus two listings in both the first and fourth quarter of 2020. Our crude oil price realization increased 46% $61.31 per barrel in the first quarter of 2021 versus $42.07 per barrel in the fourth quarter of 2020 was at 3% compared to $59.54 per barrel in the first quarter of 2020. In January, we entered into new crude oil commodity swap agreements for a total of 709,262 barrels at a Dated Brent weighted average price of $53.10 per barrel for the period from and including February 2021 through January 2022. These swaps settled on a monthly basis. Additionally, in May, we added more crude oil swaps 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. As George mentioned, we hedge a significant portion of our production volumes to lock in strong cash flows, which will enable VAALCO to fund our 2021, 2022 drilling program, FSO capital program, any potential future stock buyback program and still allow for some additional upside. We took similar trends actions in 2019 before we began 2019, 2020 program, and will continue to assess our needs to mitigate price risk and protect cash flow in the future as we consider any additional future derivative contracts. Turning to expenses, production expense excluding workovers for the first quarter of 2021 was $16 million, which is higher than the $6.6 million in the fourth quarter of 2020 and $6.9 million in the first quarter 2020, primarily due to higher sales and an increase working interest associated with the Sasol acquisition. The per unit production expense excluding workovers $26.06 per barrel in the first quarter of 2021, increase this compared to $22.26 per barrel in the fourth quarter to 2020 and $23.39 in Q1 2020. The per unit production expense excluding workovers increase was primarily due to higher crude oil inventory cost as a result of the Sasol acquisition and FPSO charter costs. Included in total production expense are COVID-19 related costs incurred to protect the health and safety of the company’s employees, which totaled approximately $0.6 million in the first quarter of 2020 and $0.4 million for the fourth quarter of 2020. Production expense for the second quarter of 2021 is projected to be between $15 million and $17 million or $24.50 to $27 per barrel of oil sales. Keep in mind that all of the guidance we're providing today includes the positive impact from the additional volumes we acquired from the Sasol effective on the day we closed February 25th, 2021. So for the second quarter of 2021, we will include all three months of financial results with Sasol interest included. Our production expense guidance excludes any potential future impacts from COVID-19 pandemic, not currently being experienced. DD&A for the first quarter was 4.1 million or $6.70 for net barrel of oil sales, compared with 1.3 million or $4.37 per barrel in the fourth quarter of 2020 and 3.1 million or $10.55 per barrel in the first quarter of 2020. DD&A was higher comparable for the fourth quarter of 2020 due to higher depletable costs associated with the Sasol acquisition and increased sales. The Q1 2020 DD&A rate was lower in the first quarter of 2020 due to the added costs associated with the 2019, 2020 drilling campaign being included in the depletable base in 2020. General and administrative expense for the first quarter of 2021 excluding stock based compensation expense was $3 million compared with $2.5 million in the fourth quarter of 2020 and $3.4 million in the first quarter of 2020. The increase in Q1 2021 compared to Q4 2020 results as increased the quarter taxes and increase 401 contributions to the larger employee contributions in their 401k, increased salaries, increased legal fees, and higher accounting and audit related fees. The per unit G&A rate excluding stock based compensation expense in the first quarter of 2021 was $4.83 per barrel oil sales with significantly lower than both the fourth quarter and the first quarter of 2020 due to increased sales volumes. For the second quarter, we are forecasting G&A, excluding stock based compensation to be between 3.5 million and 4.5 million or $5.50 to $7.20 per barrel. Noncash stock based compensation expense was impacted by the change in product liability as a result of changes in the company's stock price during the quarter. For the first quarter of 2021, stock based compensation expense related to SARS was an expense of 1.2 million compared to a benefit of 2.7 million for the first quarter of 2020. For the fourth quarter of 2020, there was an expense of 1.9 million related to SARS. Turning now to taxes. Income tax expense for the three months ended March 31, 21 was 3.1 million. This is comprised of a 0.3 million of deferred tax benefits and a current tax provision of 3.4 million. The deferred income tax expense for the 3 months ended March 31, 2021 included a 2.2 million income tax benefit associated with the Sasol acquisition. Income tax expense for the fourth quarter of 2020, including a 2.8 million deferred tax benefit and a current tax provision of 2 million. Income tax expense for the first quarter of 2020 included a 35.7 million of deferred tax expense and a current tax benefit of 2.2 million. Since March of 2020, VAALCO’s overall effective tax rate was impacted by non-deductible items associated with operations and deducting foreign taxes rather than crediting them for US tax purposes. At March 31, 2021, we had an unrestricted cash balance of 19.3 million, which included 1.7 million in net joint owner advances. Working capital at March 31, 2020, was a negative 15.8 million compared with a positive 11.4 million at December 31, 2020. While adjusted working capital at March 31, 2021 total the negative 2.7 million compared with a positive 24.3 million at December 31, 2020. For the first quarter of 2020. net capital expenditures excluding acquisitions totaled 1.2 million on a cash basis and $2.5 million on an accrual basis. These expenditures were primarily related to equipment enhancements, as well as early costs associated with the next drilling program. As has been the case since the second quarter of 2018, we are carrying no debt. With this, I will now turn the call back over to George.

[George Maxwell:]

Thank you, Jason. Thank you for that. I'll just give some closing comments. As we look at 2021 and beyond, this is a very exciting time for VAALCO. I believe it is the businesses are sustainable in order to provide benefits to all stakeholders with a focus on growth and investor returns. This is one of my guiding principles, I successfully applied in my previous executive roles, and I'm energized to build a successful foundation and lead the existing teams to grow VAALCO to the next level. Our board has empowered the management team to create a working environment that assures our success as a trusted operator, a generous partner to the communities where we operate and a good source to the environment. We are enhancing our presence in the UK and international markets, a move that we believe will support VAALCO’s accretive growth strategy and maximize shareholder returns. We have a strong asset base at Etame that is generating meaningful free cash flow in the current pricing environment, which was evident in our Q1 2021 results. Sustained operational excellence and robust financial performance as Etame serves as a foundation for growing VAALCO through organic drilling and future accretive acquisition opportunities in line with our strategy. As an example of our commitment to sustained operational excellence, we have signed an LOI for a new FSO unit that will reduce our operating costs by 15% to 25% and provide us additional operational flexibility moving forward. In April of this year, we also purchased a hydraulic workover unit that we have used in the past for less than $2 million for total considering. This unit is in Gabon and ready to be deployed at a moment's notice. That will allow us to respond to any world downtime issue quickly, which will save a significant time, production and cash flow should an ESP unit Gabon. Additionally, it will allow us to be proactive in changing ESPs and performing workovers which will further improve our operational uptime at Etame. But we are not simply looking to maintain production in Gabon and EG, there are meaningful development opportunities on our blocks in both countries that can enhance our business and provide a strong platform for organic growth and increased cash flow. As we continue to increase cash flows, we will also evaluate ways to return some of that free cash flow to develop share repurchase programs in the past, and we will consider similar programs in the future as well as potential dividends to complement our growth strategy. As you can see, we are executing our strategic vision and profitability growing VAALCO. Later this year, we will begin another drilling campaign at Etame and with our recent additional hedges, we have locked in sufficient cash flow generated from operations to fully fund this program, regardless of the oil price environment. We believe that VAALCO has a bright future and we remain committed to sustainably growing VAALCO through accretive acquisitions and successful drilling champions at Etame. With that, I'd like to thank you and pass this back to the operator, we're ready to take questions.

[Operator:]

Ladies and gentlemen, at this point, we'll begin the question-and-answer session. And our first question today comes from John White from ROTH Capital. Please go ahead with your question.

[John White:]

George, let me offer my congratulations on your appointment as CEO of VAALCO.

[George Maxwell:]

Thank you, John.

[John White:]

My first question is regarding the switch -- the potential switch from the FPSO to the FSO. You've talked in detail about reduction in operating costs, I believe you've touched on capacity, but could you talk a little bit more about capacity and the ability of the new FSO to handle higher production in future years?

[George Maxwell:]

Yes, of course, I can do that. The proposed FSO that we're -- we signed a letter of intent on is a SUEZMAX capacity, which is storage of an excess of 1 million barrels. So, it has the capability for us to discharge larger parcel sizes for crude oil fields, avoid the risk of us ever coming to tank, which is one of the issues that occasionally impacts operations and operators with the smaller storage capabilities such as the current FPSO that we have at the moment. It's also a much younger vessel than the one that's currently in the field by at least 20 years. And we have obviously the benefits and the technology of the younger vessel that come with that. So, when we look at the economics, it clearly is the vast reduction in the lease cost both charter and an end position. That's giving us the initial drive that we announced in the -- RNS a few weeks ago. But there is the added potential there to start looking at the larger cargo side which will give us an efficiency of oil price when we look at the sales values. Hopefully, that's answered your question.

[John White:]

Yes. Thank you for that detail. With production about 70% hedge for most of the year, is there any consideration to start to new drilling program sooner, or do you still need some time to work on the new seismic that was shot latter part of 2020 in early 2020 -- or 2021?

[George Maxwell:]

Yes, no, that's a good question. Whenever you're embarking on these types of campaigns, there are three key elements that you have to consider before you make a commitment on timing. The first and most obvious key consideration is financial. So, have you put yourself in a position where you can commit to the campaign without putting the company in any sort of financial stress and we've done that. The second point that you touched on is, are we comfortable with the surface and subsurface location targets for both the step out wells and the appraisals with relation to the processing that's currently underway. And for the timing of the wells, we're very comfortable with that position right now. And the probability of success on these wells will not change in any substantive form based on the reprocessing, when we move the subsurface target by a meter or two, but nothing more than that. But the third and most important thing to consider when you're looking to execute a program such as ours is making sure that you have all the assets in place at the right time. And that -- those assets are available to you and ready and able to execute the program when you're ready to commit to it. And currently, we're looking at assets that fit into that time horizon that we're considering. And it would really be a little bit of a stretch to move that forward. So that's really the pacing item for us with regard to the timing of the program, right now is asset availability.

[John White:]

And when you talk about asset availability, you're talking about drilling rigs that meet your requirements?

[George Maxwell:]

Absolutely. Looking at, I mean, of course, globally, there are lots of drilling rigs available, but we tried to optimize our -- both with drilling rig capability and geographical location that can reduce the modern beam cost. So that's really the pacing item for us.

[John White:]

Okay. Thank you for that and I'll pass it along, and I may jump back in the queue.

[George Maxwell:]

Okay. Thank you.

[Operator:]

Our next question comes from Stephane Foucaud from Auctus Advisors. Please go ahead with your question.

[Stephane Foucaud:]

Hi, guys. It's Stephane Foucaud. Thanks for taking my question. Two, the first one is around the FSO LOI. What would you expect to sum-up that LOI in something committed? And why is it just an LOI rather than would you -- would hit the non-binding rather than binding? Is it that you expect something potentially more attractive? And my second question is a quick one around accounting. I was, I think, I read the press release earlier that the -- I think the payment for the -- final payment for the acquisition was $29.6 million. But the account on the cash flow only shows $18 million. So I was wondering whether you could comment on that within the payment coming or whether is just that I misunderstood something? Thank you.

[George Maxwell:]

Thank you, Stephane. I'll deal with the first question. And I'll pass the other one to Jason and talk to the accounting on the acquisition. With relation to your first question on the why the LOI, why non-binding and do we expect any changes? Well, when we look -- it's very similar to John's question on drilling rigs. When we look to the opportunity to move from an FPSO to FSO, we did a very detailed scanning of the market to what fits our requirements, where we could see particularly infield enhancements by both in capacity for storage and operational positions and capabilities that a new FSO could provide us. And when we started to narrow down that particular skill set that asset availability, it very quickly came to a position where there weren't many assets available that met this criteria that we were looking for. So the reason we jumped in Non-Binding LOI was initially to secure our position on this asset. There's very little point doing the level of detailed engineering that we have done today and continuing to finalize that contractual position that we can't be sure this is the asset that we'll actually to place in the field. So that was the main driver for the Non-Binding LOI with result -- with regard to the cost structure and we're firming that up right now. But there's nothing that we've seen today that would give us any indication that the indicative cost positions that we've declared are not going to be achieved, and Jason, if you want to step in with the question on the acquisition centre?

[Jason Doornik:]

Thank you, George and good morning, Stephane. So on the cash flow statement for the Sasol acquisition, I believe you see, there's total cash out the door of roughly 17.9 million. And indeed you're correct, that this year, we paid 29.6 million to Sasol. But as part of the business combinations, definitely also got 11.8 million in restricted cash and so if you take the 29.6 million that we pay Sasol and you subtract from that the 11.8 million of funds that we received in this, you get to the 17.9 million, which is what's included in a cash flow statement.

[Stephane Foucaud:]

That's great and very clear. Thank you.

[Operator:]

Our next question comes from Bill Dezellem from Tieton Capital. Please go ahead with your question.

[Bill Dezellem:]

Hi. Thank you. That's Tieton Capitol I have a group of questions. And I'd like to start also with the FSO. And very specifically, what is the capacity relative to the current FSO on a daily production basis, as opposed to the total storage basis, which I believe you gave up earlier?

[Jason Doornik:]

Okay. That's your first question. Processing capacity is completely different from storage capacity, as you've alluded to. Our processing capacity on the current FPSO is circa 25,000 barrels per day of liquids. That processing capacity will not change but the processing been moved to the platform. So we will maintain 25,000 barrels per day of liquids processing capacity within the field.

[Bill Dezellem:]

Okay. Thank you. And…

[Jason Doornik:]

And when we look at the storage capacity, the storage capacities, I think, have increased by about 400,000 barrels with the FPSO that namely sales.

[Bill Dezellem:]

Great, thank you. Second question is relative to your production guidance. You raise the second half production guidance, as you noted in your opening remarks. What led to that increase?

[Jason Doornik:]

The main the main cause or the main position behind that increase Bill is moving forward the work over from Q4 into Q3.

[Bill Dezellem:]

Great, thank you. And then, lastly, would you please repeat that of production impact from the drilling program? I think you were mentioning that in your opening remarks. And I just missed it.

[Jason Doornik:]

Yeah. The impact of the drilling would be between 7,000 and 8,000 barrels per day growth and I think the NRI from VAALCO would be 3,800 to 4,100 barrels per day.

[Bill Dezellem:]

And just for perspective, that's on top of the guidance that you've given for the second half of 7,200 barrels per day to 8,000 barrels per day, literally adding another 4,000 barrels a day on top of that are roughly a 50% increase?

[Jason Doornik:]

Yes. That would be correct left over to the decline curve point forward from December through to them you have all those four wells on screen.

[Bill Dezellem:]

Great. Thank you for that clarification.

[Operator:]

Our next question comes from Kenny Wiland from Wiland Management. Please go ahead with your question.

[Kenny Wiland:]

I chose three different areas. First on the FSO, given the favorable economics that the new storage vessel will have, are there only clauses in the existing contract that we could not terminate sooner to take advantage of the sooner? Is there some termination fee that we'd have to pay if we decided to move quicker?

[George Maxwell:]

To answer your question, there would be termination fees within the FPSO, if we look to shut down the contract earlier. However, that's not really even though sometimes a termination fee is an attractive option, given the levels of OpEx that you would expect to see in the same period. However, that's not really available to us. We've got -- when we look at the project timeline with Omni from the point of a contractual commitment, we take this vessel, and she goes into dry dock for a period of months to basically get not just into class, but get class certification for the next five years from on station, which has automatically evolved for a further five years. So we're making sure this vessel is fit for function in on station, in the field from 2022 through to at least 2032. So there's not really a significant opportunity time window to accelerate that refurbishment process in dry dock and get that vessel into field and take advantage of that. That's the first issue. The second issue was also we have some infield modifications to perform on the platforms and the some of the floor lines that will also be done during this time that the episodes in dry dock. So we don't really have from an engineering standpoint, that window you're looking at where we could accelerate by OPEC 7.

[Kenny Wiland:]

Okay. And when this transition occurs, is there a shutdown time that we will have to endure in 2022 to accommodate the new vessel?

[George Maxwell:]

Yes. We will -- we’ll have a shutdown period. It may be as long as a week or two. But what we look to do is coordinate that with our annual maintenance program. So we're not looking at an additional shutdown period during winter.

[Kenny Wiland:]

Okay. And George on the drilling program. Obviously, oil prices have been all over the map in the last 12 months. What are the current rig rates, or what kind of daily rig rate would you expect to pay?

[George Maxwell:]

Indicatively the rig, I mean, we’re in discussions to sell. So I'm probably not going to mention what rate I would happily pay, that might prejudice to some of the discussions we're having. But what we're seeing indicatively right now it's not out of the market from where the campaign was performed in 2019, 2020.

[Kenny Wiland:]

Okay. Excellent. And lastly, in the commentary, you mentioned that you would have free cash flow this year of $65 million. Yet you also mentioned that the free cash flow over the next 12 months would be sufficient to cover the FSL, the drilling campaign and any future buyback program. I calculate that number to be -- before the -- any buyback program $98 million to $110 million over the next 12 months versus what you were projecting at $65 million free cash flow during 2021. Can you reconcile those differences in numbers?

[George Maxwell:]

Yes. I mean, the main the main differences, but we're not get -- recording our free cash flow position for this year on existing production. We're taking the wells that are on-stream right now, in order to get to a position where we're confident that we cover all of our CapEx expenditures. That's a success based scenario, taking wells on-stream next year from the 20 -- the upcoming drilling campaign and an increase in the production. And that's what bounces that particular delta. So if you look at where we are, with a $65 million position right now, and if you roll that forward into the end of -- potentially, the end of the drilling campaign in April 2022, or April-May 2022. You can extrapolate that to a better $85 million position, but that's going to be enhanced by the additional production coming on-stream from these wells.

[Kenny Wiland:]

Excellent. Thanks, George and I wish you continued success. Thank you.

[George Maxwell:]

Thank you very much.

[Operator:]

Our next question comes from John White from ROTH Capital. Please, go ahead with your question.

[John White:]

Yes. I noticed there's not a lifting for the month of April on your website, is that to be posted shortly, or is there a reason for that?

[George Maxwell:]

No, there's no reason for that. I mean, the issue -- and all of these things, John, is that whenever we're doing listings, they're a mixture of the listing size and what we're producing. So we have listings ongoing almost every month, but there are periodic times where a parcel size may be requested a size larger than we could accommodate a monthly position. And we obviously look to accommodate the buyers to satisfy that. So that's sometimes gives us positions of not quite in monthly periodization.

[John White:]

Okay. So you'll be posting an April lifting.

[George Maxwell:]

We'll be posting a listing in May. That's definite, yes.

[John White:]

Okay. Thank you.

[Operator:]

And our next question comes from Charlie Sharp from Canaccord. Please, go ahead with your question.

[Charlie Sharp:]

Thank you very much for taking my question. It's another one about the FSO, if I may. And I just wonder, you've outlined in some detail the advantages in terms of cost savings down the line of using the FSO. Is there some chance that there may be operating costs transferred onto the current producing facilities themselves, once you introduce the FSO, that are currently part of the FPSO. And then secondly, I just wondered, if there are any particular engineering risks, given the diverse configuration of producing assets that you have, including subsea Tieback wells that might cause some concern in the transfer to the FSO?

[George Maxwell:]

Thank you, Charlie. And on your first question, no, there is no material transferring of fair production costs. And moving the production on to the existing platform capabilities, what we are doing is obviously, we're enhancing on the CapEx side, the production capability with a couple of additional windows on the rumor platform. But its not significant OpEx position to include in that redirection or processing. And with regard to the cost savings or the engineering Etame field activities. Yes, right now, you're correct that the two subsea wells tied back to the FPSO. We do have a redirection of those wells into the platform. Most of the infrastructure work, as I mentioned, relates to a couple of wind decks on boomer , some floor redirection on existing lines, and a new line moving towards the platform for the subsea line. So there's not -- there's no significant engineering, technology or engineering activities, both, top side or subsea, that is not well within our capabilities or standard. There are, as you asked our potential operation savings from the moving configuration that we're planning for the FSO, which will basically been current mood as a weather wind. And that gives us potential savings on offload position, because we will have the vessel moving with the current, as opposed to having to try and get tankers alongside the existing vessel, which is sometimes against the current. So there’s no major engineering issue and I think there are some environmental options for us that make the operation certainly less risk environment.

[Charlie Sharp:]

That's great. Thank you.

[Operator:]

And ladies and gentlemen, with that, we'll be concluding today's question-and-answer session. I'd like to turn the floor back over to management for any closing remarks.

[Al Petrie:]

Yes. I'd like to as my first call as Chief Executive. I'd like to thank everyone for the questions. I think we are as a company very excited by the opportunities we have in front of us. And we have an excellent producing asset. And we have some key upside assets, in EG that has development potential. And I think given the turbulence that we saw in 2020, the 2021 and beyond into 2022 look an exciting growth period for VAALCO certainly.

[Operator:]

Ladies and gentlemen, with that will conclude today's conference call. We do thank you for attending you. You may now disconnect your lines.