Results Reflect Board’s Failure to Cut Costs and Undertake
Disciplined Capital Spending
Group 42 and Bradley Radoff Intend to Solicit Consents to
Bring Urgently Needed Change to VAALCO by Replacing Majority of the Board
Group 42, Inc. and Bradley Radoff (and related entities), together the
beneficial owners of approximately 11.1% of the outstanding shares of
VAALCO Energy, Inc. ("VAALCO" or the "Company") (NYSE:EGY),
today issued the following statement regarding VAALCO’s third quarter
earnings announcement:
“VAALCO’s third quarter results reveal the current Board’s continuing
inability to cut costs and implement more disciplined capital spending.
Despite an extremely challenging environment for commodity prices and
industry wide cost cutting, VAALCO’s cash G&A expenses remain
unacceptably high. The Company’s cash G&A for the three months ended
September 30, 2015 grew 47.6% from the second quarter of 2015,
increasing to $3.1 million from $2.1 million. Cash G&A for the nine
months ended September 30, 2015 grew 6.3% versus the same period a year
ago, increasing to $8.5 million from $8.0 million.
“The Company’s Capex for the three months ended September 30, 2015 was
$31 million, an astounding amount relative to the Company’s revenues for
the same quarter of only $17.5 million, as well as relative to its
market capitalization. VAALCO has also once again increased its Capex
guidance for 2015 from $83 to $86 million, an increase from guidance
issued just three months ago of $70 to $80 million.
“It is clear to us that VAALCO’s Board of Directors has failed to
implement the changes needed to succeed in this difficult environment,
underscored by the approximately $285 million in market value the
Company has lost over the last 12 months. Further, once again the Board
has proven unable to properly manage financial reporting due to poor
oversight and financial controls as the Company was required last week
to postpone its previously announced date for the third quarter earnings
release.
“It is time for a leadership change at VAALCO that can sustainably rein
in the Company’s culture of overspending and poor corporate governance.
That is why we have announced our intention to solicit consents from our
fellow stockholders to replace four of the Company’s current members of
the Board. In contrast to current directors and executives who are
compensated with stock grants, director fees and compensation packages,
our interests are fully aligned with those of all stockholders. We
strongly believe that VAALCO sorely and urgently needs a Board
reconstituted to include directors with the right qualifications,
experience and incentives to effect meaningful improvements at VAALCO.”
Please note that the biography for Pete Dickerson that was included in
Group 42 and Bradley Radoff’s press release dated November 6, 2015 has
been revised below to match the version included in the Preliminary
Consent Statement filed by Group 42 and Bradley Radoff with the
Securities and Exchange Commission:
Pete J. Dickerson, age 60, has served as an independent consultant,
offering commercial and transactional advice in his capacity as a senior
upstream oil and gas professional, since June 2015. Since April 2015 he
has served as West Africa Consultant for Well Flow International, a
company that provides technology-enabled wellbore cleanup tools,
associated chemicals and well intervention and stimulation chemicals,
and which is a subsidiary of Group 42, Inc. Prior to consulting for Well
Flow, Mr. Dickerson served as Head of Commercial, Planning and Economics
for Tullow Oil Plc. (“Tullow”), a leading independent oil exploration
and production company, from February 2002 to June 2014. Mr. Dickerson
was intimately involved in all of Tullow’s business development
activities and played a key role in the organization’s dramatic growth.
Mr. Dickerson also served on Tullow’s original Executive Committee,
Senior Leadership and Crisis Management teams. Prior to joining Tullow,
Mr. Dickerson joined Lovegrove and Associates, an upstream A&D advisory
firm, in 1993, as manager and eventually director. During his time with
Lovegrove and Associates, Mr. Dickerson was involved in over 100
projects for more than 40 clients in the upstream energy industry. The
Canadian Imperial Bank of Commerce (“CIBC”) acquired Lovegrove and
Associates in 1996. Mr. Dickerson continued to serve as Managing
Director for CIBC in the oil & gas team and originated Tullow’s
transformational acquisition of UK assets from BP. In 1985 Mr. Dickerson
joined Sun International Exploration & Production Company (“Sun E&P”) as
the Planning Manager for U.K. and Europe. Shortly thereafter, Dickerson
assumed the role of Planning Manager for its entire International E&P
Division. Before Sun E&P withdrew from international ventures, Mr.
Dickerson took on the additional responsibility of managing the
accounting function of the division. Mr. Dickerson began his career in
1978 as a Joint Venture Accountant for Gulf Oil Corporation (“Gulf Oil”)
and held various positions at Gulf Oil through 1985, including Senior
Financial Analyst. Mr. Dickerson holds a Bachelor of Science with
Honours in Chemistry and Business Administration from Kingston
University. The Group 42-BLR Group believes Mr. Dickerson’s upstream and
exploration and production and direct West Africa focused expertise, as
well as his extensive corporate strategy and governance experience, make
him an ideal candidate for the Board.
About Group 42, Inc.:
Group 42 is a U.S.-based holding company that delivers innovative energy
services to international and enterprise class customers around the
globe. Through its subsidiaries and international joint ventures, it
partners with other multinational energy companies that have expertise
in applying technology-oriented solutions. Group 42 operates in North
America, Asia Pacific, the Arabian Gulf, West Africa and the North Sea.
About Bradley L. Radoff:
Bradley L. Radoff is a private investor based in Houston, Texas.
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
Group 42, Inc. (“Group 42”), together with the other participants named
herein (collectively, the “Group 42-BLR Group”), has made a preliminary
filing with the Securities and Exchange Commission (“SEC”) of a consent
statement and an accompanying consent card to be used to solicit
consents from stockholders of VAALCO Energy, Inc., a Delaware
corporation (“VAALCO” or the “Company”), for a number of proposals, the
ultimate effect of which would be to remove four current members of the
Board of Directors of VAALCO, and replace them with the Stockholder
Group’s four highly qualified director nominees.
THE GROUP 42-BLR GROUP STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY
TO READ THE CONSENT STATEMENT AND OTHER CONSENT MATERIALS AS THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH CONSENT
MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV.
IN ADDITION, THE PARTICIPANTS IN THIS CONSENT SOLICITATION WILL PROVIDE
COPIES OF THE CONSENT STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON
REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS'
CONSENT SOLICITOR.
Group 42, Inc., Paul A. Bell, BLR Partners LP (“BLR Partners”), BLRPart,
LP (“BLRPart GP”), BLRGP Inc. (“BLRGP”), Fondren Management, LP
(“Fondren Management”), FMLP Inc. (“FMLP”), The Radoff Family Foundation
(“Radoff Foundation”), Bradley L. Radoff, Pete J. Dickerson, Michael
Keane, and Joshua E. Schechter are participants in this solicitation.
As of the date hereof, Group 42 owned directly 2,499,692 shares of
Common Stock. Paul A. Bell, who serves on the board and as the President
and Chief Executive Officer of Group 42, may be deemed to beneficially
own the 2,499,692 shares owned by Group 42. As of the date hereof, BLR
Partners owned directly 1,951,095 shares of Common Stock. BLRPart GP, as
the general partner of BLR Partners, may be deemed to beneficially own
the 1,951,095 shares owned by BLR Partners. BLRGP, as the general
partner of BLRPart GP, may be deemed to beneficially own the 1,951,095
shares owned by BLR Partners. Fondren Management, as the investment
manager of BLR Partners, may be deemed to beneficially own the 1,951,095
shares owned by BLR Partners. FMLP, as the general partner of Fondren
Management, may be deemed to beneficially own the 1,951,095 shares owned
by BLR Partners. As of the date hereof, the Radoff Foundation owned
directly 85,000 shares of Common Stock. As of the date hereof, Bradley
L. Radoff owned directly 1,938,905 shares of Common Stock and, as the
sole stockholder and sole director of each of BLRGP and FMLP and a
director of Radoff Foundation, may be deemed to beneficially own the
1,951,095 shares owned by BLR Partners and the 85,000 shares owned by
the Radoff Foundation. As of the date hereof, none of Messrs. Dickerson,
Keane or Schechter beneficially owned any shares of Common Stock.
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