894627--3/16/2010--VAALCO_ENERGY_INC

related topics

{gas, price, oil}

{operation, international, foreign}

{loss, insurance, financial}

{operation, natural, condition}

{capital, credit, financial}

{cost, regulation, environmental}

{personnel, key, retain}

{control, financial, internal}

{customer, product, revenue}

{competitive, industry, competition}

Almost all of the value of our production and reserves is concentrated in a single block offshore Gabon, and any production problems or reductions in reserve estimates related to this property would adversely impact our business. Our results of operations and financial condition could be adversely affected by changes in currency exchange rates. A decrease in oil and gas prices may adversely affect our results of operations and financial condition. If there is a sustained economic downturn or recession in the United States or globally, oil and natural gas prices may fall and may become and remain depressed for a long period of time, which may adversely affect our results of operations. Unless we are able to replace reserves which we have produced, our cash flows and production will decrease over time. Substantial capital, which may not be available to us in the future, is required to replace and grow reserves. We may need access to the capital markets to fund a portion of our growth strategy. The recent unprecedented disruption in the capital markets may adversely affect our growth strategy. Our drilling activities require us to risk significant amounts of capital that may not be recovered. Weather, unexpected subsurface conditions and other unforeseen operating hazards may adversely impact our oil and gas activities. Our reserve information represents estimates that may turn out to be incorrect if the assumptions upon which these estimates are based are inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present values of our reserves. We have less control over our foreign investments than domestic investments, and turmoil in foreign countries may affect our foreign investments. A time extension for the drilling of two exploration wells in Angola is necessary to protect certain amounts invested in that country. Competitive industry conditions may negatively affect our ability to conduct operations. Compliance with environmental and other government regulations could be costly and could negatively impact production. If our assumptions underlying accruals for abandonment costs are too low, we could be required to expend greater amounts than expected. From time to time we may hedge a portion of our production, which may result in our making cash payments or prevent us from receiving the full benefit of increases in prices for oil and gas. We rely on our senior management team and the loss of a single member could adversely affect our operations. We rely on a single purchaser of our Gabon production, which could have a material adverse effect on our results of operations. There are inherent limitations in all control systems, and misstatements due to error or fraud that could seriously harm our business may occur and not be detected.

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894627--3/16/2010--VAALCO_ENERGY_INC_/DE/