1. VAALCO Energy Risk Analysis EMBA 11 Team 7 Mark Caulfield Tom Donegan Jack Nickels Michael Rowley Rick Shafer

2. About VAALCO VAALCO Energy, Inc. is a Houston-based independent energy company principally engaged in the acquisition, exploration, development and production of crude oil and natural gas. VAALCO's strategy is to increase reserves and production through the exploration of oil and gas properties with a high emphasis on international opportunities. The company's properties and exploration acreage are located primarily in Gabon and Angola, West Africa.

3. Identified Risk Almost all of the value of VAALCO’s production and reserves are concentrated in a single block offshore Gabon, and any production problems or inaccuracies in reserve estimates related to this property would adversely impact business. We rely on a single purchaser of our Gabon production, which could have a material adverse effect on our results of operations. Unless we are able to replace reserves which we have produced, our cash flows and production will decrease over time.

4. Crises Scenario Taxes imposed on petroleum firms (economic risk), Nationalization of oil production assets by foreign governments (political/economic risk), and Loss of senior executive due to political risks, e.g., kidnapping (political/operational risk) –Crisis Communication Plan - Kidnapping of Senior Executive: –Substantial part of assets concentrated off Western African coasts of Gabon and Angola –Gabon and Angola part of Africa's Guld of Guinea region –Gulf of Guinea seeing increasing acts of piracy and kidnapping –Waters of Nigeria, in the Gulf of Guinea region, second-most dangerous waters, after Somalia –Gulf of Guinea may produce 25% of U.S.'s oil by 2015

5. Issue: Cost Benefit Analysis Currently working on ways to estimate potential losses as they relate to each risk. Difficult to find detailed industry information as a basis for estimates

6. Questions ?????