Growth Offensive: Vaalco's African Expansion Thesis

Vaalco Energy is accelerating its African expansion, focusing on tangible growth in West Africa. The company's recent $3 million acquisition of a 70% interest in the CI-705 offshore block in Côte d'Ivoire positions it adjacent to ENI's Calao discovery, targeting potential oil and gas finds. This move leverages existing infrastructure and domestic market growth, supporting a 2025–2026 project pipeline aimed at organic expansion.

Strong fundamentals back this push. Vaalco delivered a 57% increase in year-end reserves to 45 million barrels of oil equivalent (MMBOE) and 7% higher production in 2024. Strategic investments, like the $40.2 million acquisition of Svenska Petroleum, showed strong returns with a 1.8x payback, highlighting cost efficiency in operations such as low-cost workovers in Egypt.

Looking ahead, Vaalco plans a $270–330 million capital budget in 2025 for drilling, FPSO refurbishment, and exploration in Gabon and Equatorial Guinea. This includes refurbishing the FPSO Baobab and advancing Gabon drilling campaigns in 2025/2026. However, operational frictions like H2S management in the Ebouri field remind us that growth comes with cost considerations and execution risks. The penetration rate in Africa is rising, but sustained upside depends on overcoming these challenges and maintaining disciplined capital allocation.