Ladies and gentlemen, thank you for standing by and welcome to the Third Quarter 2014 Earnings Report Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct question-and-answer period. (Operator Instructions) As a reminder, today's conference call is being recorded. I would now like to turn the conference over to your host, Mr. Greg Hullinger. Please go ahead.

Thank you, Ana. Thanks to all of you for joining us on the call today to review the VAALCO Energy's third quarter 2014 operating and financial performance. After I cover the forward-looking statements narrative Steve Guidry, VAALCO Energy's Chief Executive Officer and Chairman of the Board will speak on the key issues followed by a financial review that I will present. I will then be followed by Russell Scheirman, the Company's President and Chief Operating Officer. Russ will provide a review of our operations in the three West African countries, where we have exploration and production activity. Following the presentations, all three of us will be pleased to answer any questions you may have. With that, let me proceed with our forward-looking statements guidance. During the course of this conference call, the company will be making forward-looking statements. We caution you that any statement that is not a statement of historical fact is a forward-looking statement. Forward-looking statements are those concerning VAALCO's plans, expectations, future drilling, and completion activities, expected capital expenditures, prospect evaluations, negotiations with governments and third parties, reserve growth, and other operations. Statements made during this conference call that address activity, events or developments that VAALCO expects, beliefs or anticipates, will, or may occur in the future are forward-looking statements. These statements are based on assumptions made by VAALCO based on its experience perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond VAALCO's control. Investors are cautioned that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. VAALCO disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Accordingly, you should not place undue reliance on forward-looking statements. These and other risks are described in the yesterday's press release titled Forward-looking statements and in the reports we filed with the Securities and Exchange Commission, notably the 2013 SEC Form 10-K filed with the Commission on March 13, 2014. Please note that this conference call is being recorded and with that guidance, let me turn the meeting over to Steve Guidry. Steve?'

Thank you, Greg and good morning, everyone and thanks to all of you for joining us this morning. Let me begin with some brief comments about our third quarter results and the status of some of our key projects. VAALCO's third quarter financial results were impacted by lower prices and reduced lifting due to the scheduled maintenance that was performed by the operator of our FPSO facility located offshore Gabon, together with significantly lower realized oil prices. The FPSO maintenance was in large part, to prepare the vessel for the tie-ins of the infrastructure necessary to produce the wells from our two new platforms. We believe, this progress puts us in a position to realize the benefit of the increased production in future periods, as we bring additional developmental wells on stream. Turning to our operational performance first, we are particularly proud of the outstanding performance of our project team, as they flawlessly delivered not one, but two fully constructed production platforms from South Louisiana to the Continental Shelf of Gabon, on time and on budget. In fact the platforms were constructed, transported and installed within one day of the project scheduled that was established some 18 months earlier. Moreover, the work was completed without harm to a single person or the environment. To add a bit more color, our team managed to commission the utility systems on the platforms. Before the platforms left the dock in Louisiana, which made the process of hook up and commissioning in Gabon much more efficient. Further testament to the quality of our multidisciplinary team was the arrival of the Transocean Constellation II jack-up rig, which began drilling the Etame 8-H well exactly on schedule and is making great progress in this regard. This will be the first, of at least six new development…

Thank you, Steve. I will be providing you with an overview of the key financial information for the third quarter of 2014 that we reported yesterday in our 10-Q filing with the SEC and our earnings press release. The company reported net income of $3.1 million or $0.05 per diluted share for the third quarter of 2014. This compared to net income of $2.4 million or $0.04 per diluted share in the third quarter of 2013. For the first nine months of the year, the company reported net income of $20.8 million or $0.36 per diluted share compared to net income of $16.7 million or $0.29 per diluted share in the third quarter of 2013. Net income for the first nine months of 2014 was 25% higher than the net income reported for the same period in 2013. The financial results for the third quarter of 2014 were driven by a few key factors that I will explain in more detail in a minute. These factors include, the fact that two liftings occurred during the quarter totaling 1.0 million barrels on a gross basis compared to 1.4 million barrels left on a gross basis from three liftings in the prior year quarter. Certainly, the financial results for the quarter were impacted by the global falling oil prices and that has negative impact on our quarterly revenues. Third factor is that, we recorded a bad debt allowance of $1.8 million and I'll talk more about that in just a minute. Next I'll provide some details that are relevant when looking at our third quarter financial results. Revenues in the third quarter, 2014 of $24.5 million were 35% lower than the $37.7 million, we reported in the third quarter, 2013. VAALCO's share of the two liftings during the quarter totaled approximately 255,000…

Thanks, Greg. Starting with Gabon production average just under 16,000 barrels per day during the third quarter, which is 3,900 barrels per day net to VAALCO? The production decrease in the third quarter, I think as both and Greg and Steven mentioned was due to the six-day [indiscernible] shutdown by the FPSO owners to prepare the FPSO vessel to proceed the new production from the Etame and Southeast Etame/north Tchibala platforms. We call that second on, the SEENT platform. In addition, we also upgraded the fire and safety systems onboard and performed other maintenance activities to keep the vessel in maximum uptime, when we were running vessel. The shutdown was accomplished with no safety or environmental incidents. Steve mentioned that installed that we installed both platform successfully on time and on budget, within 30 days on installing the first platform on a time, we mobilized the constellation two drilling rig over the platform over the Etame platform and commence drilling operations. We are planning three wells at Etame, followed by three wells at SEENT in the initial campaign on these platforms. There are other potential locations which will evaluate as we get the results of these first six wells. Additionally, we anticipate drilling a dry gas well off of the SEENT platform after the six developmental wells and this will provide us with a fuel gas source to run the power generation to power all the ESP's that we have on the facilities, for these new wells, that will allow us to eliminate the use of diesel and save substantial amounts of money in our operated cost. The first well, which is the Etame 8-H well is being drilled in the Northern part of the Etame field and we recently set nine and five casing after tagging the Gamba sand.…

Thank you, Russ. When we closed out last quarter, we focused on really operational progress we've made on five fronts. The Etame expansion, the SEENT expansion, the Centralized crude sweetening project of the Ebouri redevelopment as we now call it and the projects on Venus development of Block P and the ongoing efforts in onshore Gabon at Mutamba. Since that call, certainly all markets have changed significantly, but VAALCO and our balance sheet remained as strong as ever. Now because we've committed to maintain a high degree of financial flexibility that our strong balance sheet provides, we think it's prudent at this time to review our 2015 capital budget and of the future years spending in order to determine just what impact these oil prices might have and our development project and on our ongoing operations. We maintain a high level of confidence in the economic viability of the work activity on the Etame Marin investment offshore Gabon, even at the somewhat lower prices been what we are seeing today. however, a period of sustained lower Brent crude pricing may result in us having to maybe tap the breaks a bit, possibly prompting a deferral with some of our longer term capital projects and triggering around the belt tightening related to our operating cost structure. You know regarding Block P and our onshore Block in Gabon and Mutamba. We're continuing to review these opportunities under various oil price and capital cost scenarios to ensure that the project are sufficiently robust. In this regard, we will be more deliberate and cautious in making these investment decisions. We remain convinced, that our hard work and our cooperation with our partners and our host governments will result in successful execution. Lastly, by the time of our next call we expect to have drilled and potentially tested the Kindele exploration well in Angola that Russ talked about targeting a post-salt structure on Block 5. We have waited a very long time spread out first well on Block 5 and we are very excited to finally get that opportunity. So with that, that concludes our opening prepared comments. What we will do now is, open it up to questions, Ana?

(Operator Instructions) and our first question comes from Leo Mariani from RBC. Please go ahead.

Can you talk to what, current production is at the Etame or in Block? Obviously you had a recent well shut in, can you achieve the sense of kind of where it is right now?

Yes, we are running about 14,500 barrels a day between 14,200 barrels and 14,500 barrels depending on, recycle one of the wells that Etame 4-H well. The Ebouri well was making about 2,500 barrels a day, when we had the tubing leak, so it was a strong well. So we are anxious to get on it next month and find out what the problem is and hopefully, get it back online, but that's what we are running right now.

Got it and you guys talked about getting to 20,000 barrels a day there in that concession. Is that kind of year end 2015 target, is that we should think about it?

I think, we'll get there before then. I think we'll get there, by the time we finished the three wells at Etame. If we get the Ebouri well back, if not by the time we've done the two workovers, kind of mid-year, we should be there and then as we roll additional wells in, we'll be tightening the decline curve and hopefully, maybe growing a little bit above it. We'll just have to see.

Okay and I guess, just in terms of the Mutamba situation here sounds like, you guys are kind of still working through some contract you gave us some parameters in terms of 10 million barrels to 12 million barrels of growth potential. Could you maybe speak to the rough kind of cost that you guys are thinking about on that project at this point?

It would be on the order of $10 to $12 a barrel to develop the initial phase of that. So it's, the economics are would be pretty good. We've got flow assurance issues, some other things to work through because it is waxy crude, but that's kind of the number, that's kind of the range we are looking at.

Leo, this is Steve, if you're referring to what we talked about this morning, we were talking about Block P heading 10,000 barrels to 12,000 barrel a day capacity.

I'm sorry, were you asking about Mutamba or were you asking about Block P?

I was asking about Mutamba.

Okay, yes. Mutamba, we're looking at on the order $10 to $12 a barrel of CapEx cost to work that. Initially, we'll be talking about a couple wells and those wells might do a 1,000 barrels to 1,500 barrels a day, but ultimately, it would be a multi-well onshore type development.

Okay, I guess in terms of just your balance sheet here. Looks like you guys drew some debt for the first time in a quite a while, but you're still sitting out of cash, can you just let us know, why you chose to go the debt additional out of the postages, using your tax?

That loan is sanctioned by the Government of Gabon, it's been approved the interest in fees under cost recoverable. We weren't to perfect that loan, so by drawing on it, we notified the Gabonese Government that we've made the draw and we , if you will got the facility kicked off and there is no longer any contingent things that IFC can say, we need this or we need that. We were able to get the facility activated. We want the IFC to have a little bit skin in the game. We called it, one of the reasons we went to the IFC as oppose to just a commercial bank, was because they're related to the World Bank and we think that, it's – some value in terms of them being our lender in an international scenario. So getting the facility kicked off, making sure that the Gabonese Government was aware, that we are using the loans, so that we can cost recover the interest and fees and then making sure the IFC's was kind of part of the process, so those were main reasons we did it.

Okay, that's helpful and I guess just in terms of your Block in Angola there. I guess, obviously you picked up two additional wells, you've got to deal over the next three years are those by definition exploration wells and you have flexibility for those potentially be development wells.

They're currently defined as exploration wells, but one of the options that we will pursue with the government is to seek relief around that and so, and getting time to get that done. So we will be petitioning the government for some, but at the sense right now, they're defined as exploration wells.

Okay, it's helpful and I guess in terms of your third quarter results. Obviously a little disappointment there on the liftings, where you had kind of an incomplete lifting the end of the third quarter. I know that you guys had changed up the way that you were kind of selling your oil production in the hope of being a little bit more consistent on your liftings, it didn't really happen, I guess you know this quarter here. Additionally just noticing that your oil price spread versus Brent also riding out, this quarter. Can you guys maybe talk about in a little more detail?

Yes, I mean unfortunately we picked a terrible environment to try this experiment like sweet crude is the one that, the United States is ramped in North Dakota and Texas and there is no longer any market for African like sweet crude coming into the US. We are kind of caught up in the same scenario, that a number of other countries are caught up including Nigeria that you have to look hard to find the buyer. We have found new buyer in Australia that it had took two cargos, one in the September and one in early October. They come back for more and they're going to lift again in December. We have another refinery in Wales that has taken two cargos, all of these are kind of new. Our traditionally market, which would come in to the Gulf Coast and go into Japan have dried up. So we're just having work to problem and it's a tougher problem probably then anytime since back in '08 and the difference is this time, we are on a slot basis rather than having somebody who is obligated to lift. So.

Alright, so I guess that implied it. You know, you'll have higher transportation cost, trying to get those barrels to Australia, that while you're pricing was any weaker here, you know it was about?

Yes, that's one of them and I will say we did sell one cargo in Japan and we took a very, a pretty steep discount on that and then, by the time they got it to Japan of oil prices have run way and they weren't able to resell the cargo. So but that was their problem. It's that kind of market, you know when you buy a cargo and you ship it to Japan or Australia, it takes six weeks to get there in this kind of market, a lot of things can change. So that makes people skittish in terms of what they're willing to do and so, we're just happen to deal with it.

Question on your G&A. obviously, it was up a fair bit this quarter around $4 million, I guess you had some higher personnel cost and that sounds like some outside consultancy type cost to me, should that kind of continue to occur, as we go into 4Q, 2016 how should we think about sort of run rate G&A for VAALCO?

Leo, about 50% of it is non-recurring, the other part actually is a little bit of increased personnel cost as we've ramped up for our two new wells and the couple of other positions. So in all manner, it will continue, but about 50% of that was non-recurring most of this was some legal cost, some of it was like our, shop registration filing and some other fees and charges.

Alright, thanks guys.

And our next question comes from Bill Dezellem from Tieton Capital Management. Please go ahead.

Thank you, relative to the audit issue that you're dealing with, how is that anticipated to effective onshore the Gabon properties or are they completely unrelated and the government doesn't even interact on those two fronts?

In terms of the special industry wide audit, the onshore block was totally excluded and I think it's because of minimal activity. The audit was confined to the offshore production block.

Greg, I guess well, I'm not going with this, just wondering though, if as it comes you getting approval and you making the final steps to being activities onshore if you get some sort of roadblocks throwing up as a result of you being tied up in the audit offshore?

Bill, I don't think that there is an issue there at all and on our onshore block, actually The Ministry of Hydrocarbon they conducted an audit every two years on our operations and they audit for Mutamba rural block as well and we have not had any issues whatsoever with audits of our past amount spent there. We had drilled a couple of wells in the past and all those costs have been verified by the audit that was performed by The Ministry of Hydrocarbon.

Thank you.

(Operator Instructions) and we have a question from Neil Nelson [ph] with DS [ph] Group. Please go ahead.

Can you give some color on the crude sweetening project as to whether your day consideration to during that on the top side of the FPSO or on the separate floater any cost cutting versus building a complete platform?

Neil. This is Russ. We looked at other options, we quickly ruled out putting it on the FPSO. We have found over the years, that anytime you cut anything on that FPSO it runs about three times, what you think it would cost just because of they don't have cranes to move things around, there is just a lot of logistical issues, we're trying to build the facility like this on the FPSO. The other thing we are doing with this crude sweetening project. We are going to take it to where we can take all the water and gas out of the oil and pump pipeline quality crude if you will over to the FPSO and we're doing this because it will further debottleneck the amount of fluids that we can treat throughout the Etame complex. So it just made more sense to put it on a platform. You can build those things in the yard, so much cheaper than if you try to stick build them offshore and you get away from the lease cost of having the lease uploading vessel, if we were to try new on a second floating vessel. So make more sense, to do with the platform.

Okay, thank you very much.

And there are no further questions in queue. Please continue.

Okay, so with that. We'll close down our third quarter financial review and again, we thank everyone for taking the time to join us on the call, this morning and you'll hear from us again in a few months time.

Ladies and gentlemen. This conference is available for replay at 12 PM and will remain available through December 11. The replay information and 1-800-475-6701 access code 340389. Again the dial in number is 800-475-6701 access code 340389. That does conclude our conference for today. Thank you for your participation and thank you for using AT&T. you may now disconnect.