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Acquisitions And Dispositions | 9 Months Ended
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Sep. 30, 2016
Acquisitions And Dispositions [Abstract] |
Acquisitions And Dispositions | 4. AQUISITIONS AND DISPOSITIONS Sojitz Acquisition On July 28, 2016, we signed a purchase and sale agreement to acquire an additional 2.98% working interest (3.23% participating interest) in the Etame Marin block located offshore the Republic of Gabon from Sojitz Etame Limited (“Sojitz”), which represents all interest owned by Sojitz in the concession. The acquisition has an effective date of August 1, 2016, and closing is expected by December 31, 2016, subject to customary closing conditions. Payment for the acquisition is expected to be primarily funded by cash on hand; however, we intend to issue a request to the IFC to borrow the $5.0 million potentially available under the Additional Term Loan. Completion of the transaction is not contingent on obtaining approval of our request. Sale of Certain U.S. Properties On September 21, 2016, we signed a letter of intent to sell our interests in two wells in the Hefley field in North Texas for $850,000. We expect this transaction to be concluded during the fourth quarter of 2016. On October 17, 2016, we signed a letter of intent to sell our interests in the East Poplar Dome field in Montana for $250,000. We expect this transaction to be concluded during the fourth quarter of 2016. Based on the net book value for these assets as of September 30, 2016, we expect any gain/loss to be insignificant. Discontinued Operations - Angola In November 2006, we signed a production sharing contract for Block 5 offshore Angola. The four year primary term, with an optional three year extension, awarded us exploration rights to 1.4 million acres offshore central Angola, with a commitment to drill two exploratory wells. In October 2014, we entered into the Subsequent Exploration Phase (“SEP”) which extended the exploration period to November 30, 2017 and required us and our partner to drill two additional exploration wells. Our working interest is 40% and we carry the Angolan national oil company, Sonangol P&P, for 10% of the work program. On September 30, 2016, we notified Sonangol P&P, our joint venture partner, that we were withdrawing from the joint operating agreement effective October 31, 2016. Further to our decision to withdraw from Angola, we have taken actions to begin closing our office in Angola and do not intend to conduct future activities in Angola. As a result of this strategic shift, as of September 30, 2016, the Angola segment met all the criteria to be classified as assets held for sale; therefore, we classified all the related assets and liabilities as those of discontinued operations in the condensed consolidated balance sheets. The operating results of the Angola segment have been classified as discontinued operations for all periods presented in our condensed consolidated statements of operations. We segregated the cash flows attributable to the Angola segment from the cash flows from continuing operations for all periods presented in our condensed consolidated statements of cash flows. The following tables summarize selected financial information related to the Angola segment’s operations as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015. Summarized Results of Discontinued Operations ﻿
﻿ |  |  |  |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |  |  |  |
﻿ |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
﻿ |  | 2016 |  | 2015 |  | 2016 |  | 2015
﻿Operating costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |
﻿Exploration expense |  | $ | 15,269 |  | $ | 32 |  | $ | 15,270 |  | $ | 27,878
﻿Depreciation, depletion and amortization |  |  | 3 |  |  | 3 |  |  | 9 |  |  | 9
﻿General and administrative expense |  |  | 400 |  |  | 1,135 |  |  | 994 |  |  | 2,127
﻿Bad debt expense (recovery) and other |  |  | - |  |  | - |  |  | (7,629) |  |  | -
﻿Total operating costs and expenses |  |  | 15,672 |  |  | 1,170 |  |  | 8,644 |  |  | 30,014
﻿Other operating income (loss), net |  |  | (7) |  |  | - |  |  | (28) |  |  | -
﻿Operating income (loss) |  |  | (15,679) |  |  | (1,170) |  |  | (8,672) |  |  | (30,014)
﻿Other income: |  |  |  |  |  |  |  |  |  |  |  |
﻿Interest income |  |  | - |  |  | - |  |  | 3,201 |  |  | -
﻿Other, net |  |  | 6 |  |  | 2,023 |  |  | 551 |  |  | 2,183
﻿Total other income |  |  | 6 |  |  | 2,023 |  |  | 3,752 |  |  | 2,183
﻿Income (loss) from discontinued operations before income taxes |  |  | (15,673) |  |  | 853 |  |  | (4,920) |  |  | (27,831)
﻿Income tax expense |  |  | 110 |  |  | - |  |  | 3,077 |  |  | -
﻿Income (loss) from discontinued operations |  | $ | (15,783) |  | $ | 853 |  | $ | (7,997) |  | $ | (27,831)
﻿ Assets and Liabilities Attributable to Discontinued Operations ﻿
﻿ |  |  |  |  |  |
﻿ |  |  |  |  |  |
﻿ |  | September 30, |  | December 31,
﻿ |  | 2016 |  | 2015
﻿ASSETS |  |  |  |  |  |
﻿Current assets: |  |  |  |  |  |
﻿Accounts with partners |  | $ | 1,723 |  | $ | 8,091
﻿Prepayments and other |  |  | 24 |  |  | 278
﻿Total current assets |  |  | 1,747 |  |  | 8,369
﻿Property and equipment - successful efforts method: |  |  |  |  |  |
﻿Equipment and other |  |  | - |  |  | 143
﻿ |  |  | - |  |  | 143
﻿Accumulated depreciation, depletion, amortization and impairment |  |  | - |  |  | (127)
﻿Net property and equipment |  |  | - |  |  | 16
﻿Total assets |  | $ | 1,747 |  | $ | 8,385
﻿ |  |  |  |  |  |
﻿LIABILITIES |  |  |  |  |  |
﻿Current liabilities: |  |  |  |  |  |
﻿Accounts payable |  | $ | 104 |  | $ | 2,708
﻿Foreign taxes payable |  |  | 3,077 |  |  | -
﻿Accrued liabilities and other |  |  | 15,475 |  |  | 1,421
﻿Total current liabilities |  | $ | 18,656 |  | $ | 4,129
﻿ Drilling Obligation Under the production sharing agreement for Block 5, we and our working interest partner, Sonangol P&P, were obligated to perform exploration activities in Angola that would result in drilling or commencing four wells by November 30, 2017. With the drilling of the Kindele #1 in 2015, the obligation was reduced to three wells. Under the contract, VAALCO is required to pay a $5.0 million penalty for each of the three wells not completed; however, the penalty amounts can be reduced by exploration expenses incurred. Prior to the September 30, 2016 quarterly reporting period, we classified the $15.0 million commitment for drilling these wells as long term restricted cash on our balance sheet. As a result of our decision to terminate the contract, we are no longer reflecting the $15.0 million as restricted cash. We believe that a substantial portion of the penalty amount has been reduced due to exploration expenditures made. Support for our determination is being presented to Angola government authorities, and we anticipate further discussions on this matter. However, due to the uncertainties as to the ultimate outcome, we have accrued a $15.0 million liability for the penalty which represents what we believe to be the maximum potential amount due under the agreement. Other Matters – Partner Receivable The government-assigned working interest partner was delinquent in paying their share of the costs several times in 2009 and was removed from the production sharing contract in 2010 by a governmental decree. Efforts to collect from the defaulted partner were abandoned in 2012. The available 40% working interest in Block 5, offshore Angola was assigned to Sonangol P&P effective on January 1, 2014. We invoiced Sonangol P&P for the unpaid delinquent amounts from the defaulted partner plus the amounts incurred during the period prior to assignment of the working interest totaling $7.6 million plus interest in April 2014. Because this amount was not paid and Sonangol P&P was slow in paying monthly cash call invoices since their assignment, we placed Sonangol P&P in default in the first quarter of 2015. On March 14, 2016, we received a $19.0 million payment from Sonangol P&P for the full amount owed us as of December 31, 2015, including the $7.6 million of pre-assignment costs and default interest of $3.2 million. The $7.6 million recovery is reflected in the “Bad debt expense (recovery) and other” line of our summarized results of discontinued operations. Default interest of $3.2 million is shown in the “Interest income” line of our summarized results of discontinued operations.

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