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Acquisitions And Dispositions | 9 Months Ended
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Sep. 30, 2017
Acquisitions And Dispositions [Abstract] |
Acquisitions And Dispositions | 3. AQUISITIONS AND DISPOSITIONS Sojitz Acquisition On November 22, 2016, we closed on the purchase of 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 had an effective date of August 1, 2016 and was funded with cash on hand. The following amounts represent the preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed in the Sojitz acquisition. The final determination of fair value for certain assets and liabilities will be completed as soon as the information necessary to complete the analysis is obtained. These amounts will be finalized as soon as possible, but no later than one year from the date of the acquisition. ﻿
﻿ |  |
﻿ |  | November 22, 2016
﻿ |  | (in thousands)
﻿Assets acquired: |  |
﻿Wells, platforms and other production facilities | $ | 5,754
﻿Equipment and other |  | 684
﻿Value added tax and other receivables |  | 297
﻿Abandonment funding |  | 546
﻿Accounts receivable - trade |  | 888
﻿Prepayments and other |  | 220
﻿Liabilities assumed: |  |
﻿Asset retirement obligations |  | (1,731)
﻿Accrued liabilities and other |  | (747)
﻿Total identifiable net assets and consideration transferred | $ | 5,911
All assets and liabilities associated with Sojitz’s interest in Etame Marin block, including oil and gas properties, asset retirement obligations and working capital items were recorded at their fair value. In determining the fair value of the oil and gas properties, we prepared estimates of oil and natural gas reserves. We used estimated future prices to apply to the estimated reserve quantities acquired and the estimated future operating and development costs to arrive at the estimates of future net revenues. The valuations to derive the purchase price included the use of both proved and unproved categories of reserves, expectation for timing of production and amount of future development and operating costs, projections of future rates of production, expected recovery rates, and risk adjusted discount rates. Other significant estimates were used by management to calculate fair value of assets acquired and liabilities assumed. We may record purchase price adjustments as a result of changes in such estimates. These assumptions represent Level 3 inputs. Sale of Certain U.S. Properties In April 2017, we completed the sale of our interests in the East Poplar Dome field in Montana for $0.3 million, resulting in a gain of approximately $0.3 million during the nine months ended September 30, 2017. Discontinued Operations - Angola In November 2006, our Angolan subsidiary, Vaalco A ngola (Kwanza), Inc., (“VAALCO Angola”), signed a production sharing contract for Block 5 offshore Angola (“PSA”). The four year primary term, referred to as the Initial Exploration Phase (IEP”), with an optional three year extension, awarded VAALCO Angola exploration rights to 1.4 million acres offshore central Angola, with a commitment to drill two exploratory wells. The IEP was extended on two occasions to run until December 1, 2014. In October 2014, VAALCO Angola entered into the Subsequent Exploration Phase (“SEP”) which extended the exploration period to November 30, 2017 and required VAALCO Angola and the co-participating interest owner, the Angolan national oil company, Sonangol P&P, to drill two additional exploration wells. VAALCO Angola’s working interest is 40%, and it carries Sonangol P&P, for 10% of the work program. On September 30, 2016, VAALCO Angola notified Sonangol P&P that it was withdrawing from the joint operating agreement effective October 31, 2016. On November 30, 2016, VAALCO Angola notified the national concessionaire, Sonangol E.P., that it was withdrawing from the PSA. Further to the decision to withdraw from Angola, VAALCO Angola has taken actions to begin reducing its office in Angola and reducing future activities in Angola. As a result of this strategic shift, 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 assets and liabilities as of September 30, 2017 and December 31, 2016 and its results of operations for the three and nine month periods ended September 30, 2017 and 2016. Summarized Results of Discontinued Operations ﻿
﻿ |  |  |  |  |  |  |  |  |  |  |  |
﻿ |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
﻿ |  | 2017 |  | 2016 |  | 2017 |  | 2016
﻿ |  | (in thousands)
﻿Operating costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |
﻿Exploration expense |  | $ | — |  | $ | 15,269 |  | $ | — |  | $ | 15,270
﻿Depreciation, depletion and amortization |  |  | — |  |  | 3 |  |  | — |  |  | 9
﻿General and administrative expense |  |  | 174 |  |  | 400 |  |  | 512 |  |  | 994
﻿Bad debt recovery and other |  |  | — |  |  | — |  |  | — |  |  | (7,629)
﻿Total operating costs, expenses and (recovery) |  |  | 174 |  |  | 15,672 |  |  | 512 |  |  | 8,644
﻿Other operating loss, net |  |  | — |  |  | (7) |  |  | — |  |  | (28)
﻿Operating loss |  |  | (174) |  |  | (15,679) |  |  | (512) |  |  | (8,672)
﻿Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |
﻿Interest income |  |  | — |  |  | — |  |  | — |  |  | 3,201
﻿Other, net |  |  | — |  |  | 6 |  |  | (3) |  |  | 551
﻿Total other income (expense) |  |  | — |  |  | 6 |  |  | (3) |  |  | 3,752
﻿Loss from discontinued operations before income taxes |  |  | (174) |  |  | (15,673) |  |  | (515) |  |  | (4,920)
﻿Income tax expense |  |  | — |  |  | 110 |  |  | 3 |  |  | 3,077
﻿Loss from discontinued operations |  | $ | (174) |  | $ | (15,783) |  | $ | (518) |  | $ | (7,997)
﻿ Assets and Liabilities Attributable to Discontinued Operations ﻿
﻿ |  |  |  |  |  |
﻿ |  | September 30, 2017 |  | December 31, 2016
﻿ |  | (in thousands)
﻿ASSETS |  |  |  |  |  |
﻿Current assets: |  |  |  |  |  |
﻿Accounts with partners |  | $ | 2,773 |  | $ | 2,139
﻿Total current assets |  |  | 2,773 |  |  | 2,139
﻿Total assets |  | $ | 2,773 |  | $ | 2,139
﻿ |  |  |  |  |  |
﻿LIABILITIES |  |  |  |  |  |
﻿Current liabilities: |  |  |  |  |  |
﻿Accounts payable |  | $ | 215 |  | $ | 77
﻿Foreign taxes payable |  |  | — |  |  | 3,078
﻿Accrued liabilities and other |  |  | 15,185 |  |  | 15,297
﻿Total current liabilities |  |  | 15,400 |  |  | 18,452
﻿Total liabilities |  | $ | 15,400 |  | $ | 18,452
Drilling Obligation Under the PSA, Vaalco A ngola and the other participating interest owner, Sonangol P&P, were obligated to perform exploration activities that included specified seismic activities and drilling a specified number of wells during each of the exploration phases identified in the PSA. The specified seismic activities were completed, and one well, the Kindele #1 well, was drilled in 2015. The PSA provides a stipulated payment of $10.0 million for each exploration well for which a drilling obligation remains under the terms of the PSA, of which VAALCO Angola’s participating interest share would be $5.0 million per well. We have reflected an accrual of $15.0 million for a potential payment as of September 30, 2017 and December 31, 2016, respectively, which represents what we believe to be the maximum potential amount attributable to VAALCO Angola’s interest under the PSA. However, we are curre ntly engaged in discussions and meetings with newly appointed representatives from Sonangol E.P. regarding this potential payment and other possible solutions and believe th at the ultimate amount paid could be substantiall y less than the accrued amount. 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 recovery and other” line item of our summarized results of discontinued operations for the nine months ended September 30, 2016. Default interest of $3.2 million is shown in the “Interest income” line item of our summarized results of discontinued operations for the nine months ended September 30, 2016.

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