Good morning. My name is Sia, and I will be the conference operator today. At this time, I would like to welcome everyone to the VAALCO Energy Second Quarter 2017 Earnings Conference Call. [Operator Instructions]. At this time, I would like to turn the conference over to Liz Prochnow, Chief Accounting Officer. Please go ahead, ma'am.

Thanks, operator. And on behalf of the management team, I welcome all of you to today's conference call to review VAALCO's second quarter 2017 operating and financial performance. After I cover the forward-looking statements, Cary Bounds, our Chief Executive Officer, will review key highlights of the second quarter, along with operational results; Phil Patman, our Chief Financial Officer, will then provide a more in-depth financial review. Cary will then return for some closing comments before we take your questions. [Operator Instructions] I would like to point out that we posted an updated investor deck on our website this morning that has additional financial analysis, comparisons and updated guidance that should be helpful. With that, let me proceed with our forward-looking statement comments. 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, sources of future capital funding and liquidity, future strategic alternatives, prospect evaluations, negotiations with governments and third parties, reserve growth and other operations. Statements made during this conference call that address activities, events or developments that VAALCO expects, believes 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 those 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 yesterday's press release and in the reports we file with the Securities and Exchange Commission, including the Second Quarter 2017 Form 10-Q that was filed yesterday and the previously filed 2016 Form 10-K. Please note that this conference call is being recorded. Let me turn the call over to Cary.

Thank you, Liz. Good morning, everyone, and welcome to our Second Quarter 2017 Earnings Conference Call. During the second quarter of 2017, we continued to add value by delivering solid production results and positive earnings. Our average production for the quarter of 4,363 barrels of oil per day net was at the high end of our guidance range. We reported income from continuing operations of $2.5 million or $0.04 per share, which compared very favorably with a loss from continuing operations of $0.01 per share in the same period last year. Our second quarter 2017 results were less than the first quarter of 2017 when we reported income from continuing operations of $0.07 per share that benefited from higher oil prices. In the second quarter, we also generated operating income of $5.6 million and adjusted EBITDAX of $8.6 million. Our 2017 results demonstrate our ability to increase our financial strength by maximizing production. I will spend the next few minutes reviewing our second quarter operational results and expand on recent and near-term operational events. And then, in a few minutes, Phil will go into more details regarding our financial results. VAALCO's total production decreased 6% from 4,622 barrels of oil per day in the first quarter of 2017 to 4,363 barrels of oil per day in the second quarter of 2017. We closely monitor our wells and make every effort to maximize production, but we will continue to experience natural production declines, which may be offset by workovers to restore production in existing wells or by drilling additional development wells. In July, we undertook our planned annual Etame full field shutdown for maintenance and inspection of our FPSO and 4 platforms at Etame. The field is back online producing approximately 15,000 barrels of oil per day gross following the 9-day…

Thank you, Cary. Our second quarter 2017 income from continuing operations was $2.5 million or $0.04 per share, adjusted EBITDAX totaled $8.6 million and operating income was $5.6 million. Our Q2 2017 income compared favorably with the loss of $0.5 million from continuing operations in the second quarter of 2016, but was down $4.4 million in this year's first quarter primarily due to lower oil prices and increased production expense. Second quarter oil sales totaled 414,000 net barrels compared with 436,000 net barrels in the same period a year ago and 394,000 net barrels in the first quarter of 2017. Our realized oil price for the second quarter of 2017 averaged $46.83 per barrel, up 15% from $40.79 in the second quarter of 2016, but down 10% from $51.99 in the first quarter of 2017. Beginning with our third quarter 2016 earnings, the operating results of our Angola segment have been classified as discontinued operations in our financial statements. This was the result of our decision in September 2016 to discontinue operations in Angola and withdraw from our production sharing agreement. Our loss from discontinued operations in the second quarter of 2017 totaled $163,000. In order to limit VAALCO's commodity price risk, in 2016, the company hedged its oil sales by purchasing oil puts. As of June 30, 2017, VAALCO had unexpired crude oil put contracts covering 360,000 barrels of anticipated sale volumes for the period from July 2017 through December 31, 2017 at a weighted average price of $50. The company recorded a noncash mark-to-market gain of $130,000 related to the puts during the second quarter of 2017, which was included in other net in the consolidated statements of operations. We received cash payments of $144,000 in July in settlement of our June put contract when prices fell below…

Thanks, Phil. As we look to the future, we remain confident in our premier Etame asset and believe that we can add value through development drilling, all the while leveraging our existing infrastructure and technical expertise to pursue attractive acquisition opportunities. As we have mentioned before, there are several key goals that we will continue to move forward in the near-term. One of our primary goals is to secure an extension on our existing license in Gabon. We continue to have constructive discussions and working sessions with the Gabonese government on these matters and are encouraged by the progress we are making. While the current Etame license expires in June 2021, we believe that with the recovery in oil prices and the potential for additional development drilling, the block could produce for many years beyond 2021. We continue to evaluate several near-term economic development drilling opportunities that will utilize our current offshore infrastructure and extend the economic life and reserves at Etame. We will monitor oil price expectations and our balance sheet over the coming months to determine when the appropriate time might be to begin our next drilling program. The additional Etame development drilling opportunities, combined with the license extension, will establish a solid foundation of value creation for 2018 and beyond. Another key strategic step we have continued to progress forward is the divesture of non-core assets. We have discontinued our operations in Angola to focus on development opportunities in Gabon and elsewhere in West Africa. We continue to have productive meetings with Angolan officials to resolve the question of any potential cost that could be assessed for not drilling the remaining commitment wells. We will resume discussions after the Angolan elections in August. We would like to settle this issue quickly and are targeting the second half of 2017 or early 2018 to come to an agreement that will allow us to remove the $15 million liability from our balance sheet. This would strengthen our balance sheet and could potentially lead to an increase in our borrowing capacity. In early April, we closed the sale of non-core U.S. assets, the East Poplar Unit in Montana, for cash and the transfer of the asset retirement obligations. With these divestitures, our focus is squarely on increasing recoverable reserves at Etame, strengthening our balance sheet, raising capital for development projects and continuing to deliver solid operational results. VAALCO is poised to add significant value to our shareholders in 2017 and beyond. And with that, operator, we are ready to take questions.

[Operator Instructions]. And we do have a response from Matt Dhane with Tieton Capital Management.

I was hoping to discuss, if we could, the maintaining of the production guidance even though you have the well that went out on South Tchibala. What in particular -- what fields, what areas have performed above your expectations year-to-date that allowed you to maintain your production guidance even in the face of this well going out again here?

Great. Matt, this is Cary. And to answer your question, there is really no one specific well or one specific area that is outperforming another area. The first half of 2017, we experienced very, very little unplanned downtime and that's what's put us ahead even in the face of losing the South Tchibala 2-H well on the Avouma platform. And so going forward, we still have to make an assumption that there will be some unplanned downtime events, but we had a good run in the first half of the year.

Great. And in regards to the FPSO, the cost escalation that's impacting your costs here going forward, I don't -- I guess, I don't understand fully what is causing that. What's -- is it your contract with the FPSO [indiscernible]? What's led to that cost escalation for the production costs here for the rest of this year?

Right. Under our current contract, every couple of years, we negotiate a day rate escalation. And I'll use -- I'll emphasize the word negotiate. And those negotiations are underway. And so we're -- it's part of our contract and we're working with the FPSO operator to minimize any future cost increase and work with them to keep their operating cost down. We've -- all of our vendors have been able to find ways to reduce costs and we expect the same from our FPSO operator.

So even in the current pricing environment, there is a real chance that the FPSO costs are likely to increase though?

Right. They may increase and we built that into our -- well, we've accrued for those increases, yes, and -- but we're still negotiating the final day rate escalation.

[Operator Instructions]. And at this time, there are no further responses.

All right. Thank you, everyone, for joining our quarterly conference call and have a great day.

Ladies and gentlemen, thank you for participating in today's conference call. You may now disconnect.