Shares of VAALCO Energy Inc. soared on Wednesday after it announced it had paid off the outstanding US$7mln balance on its amended term loan agreement with the International Finance Corp (IFC).
VAALCO soared 8.4% to US$2.33 in afternoon trading.
The Houston, Texas energy company says it now has no debt on the balance sheet for the first time since 2014. The early repayment of US$7mln has resulted in savings of over US$0.3mln in interest over the next year.
VAALCO said it is realizing "significant" cash flow generation due to the strong improvement in Brent oil prices.
“We are realizing significant cash flow generation due to the strong improvement in Brent oil prices with no hedges currently in place. This is allowing us to eliminate all of our outstanding debt and strengthen our balance sheet,” said VAALCO CEO Cary Bounds.
Brent Crude jumped last week to above US$80 after having traded mostly constrained in the narrow US$55-to-US$ 60 range for the past year and a half.
The Houston energy company said it began workover operations last week to restore production to two wells currently shut-in on the Avouma platform. It estimates production of 750 barrels of oil per day may be restored if both workovers are successful.
“With the additional 750 barrels of oil per day of production that these wells could bring back online if the workover operations are successful, coupled with higher Brent pricing, we will continue to enhance our ability to generate cash in 2018,” said Bounds.
Things are looking up for VAALCO as oil demand continues to be strong, following stronger-than-expected demand last year.