Vaalco Energy, Inc. (together with its consolidated subsidiaries “we”, “us”, “our”, “Vaalco” or the “Company”) is a Houston, Texas-based independent energy company engaged in the acquisition, exploration, development and production of crude oil, natural gas and natural gas liquids (“NGLs”) properties. We have a diversified African-focused asset portfolio in Gabon, Egypt, Côte d'Ivoire, Nigeria and Equatorial Guinea, as well as producing properties in Canada.

These unaudited condensed consolidated financial statements (“Financial Statements”) reflect the opinion of management and all adjustments necessary for a fair presentation of results for the interim periods presented. All adjustments are of a normal recurring nature unless disclosed otherwise. Interim period results are not necessarily indicative of results expected for the full year.

These Financial Statements have been prepared in accordance with rules of the Securities and Exchange Commission (“SEC”) and do not include all the information and disclosures required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. They should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, which includes a summary of the significant accounting policies.

Allowance for credit losses and other – The Company estimates the current expected credit losses based primarily using either an aging analysis or discounted cash flow methodology that incorporates consideration of current and future conditions that could impact its counterparties’ credit quality and liquidity. Uncollectible receivables are written off when a settlement is reached for an amount that is less than the outstanding historical balance or when the Company has determined that the balance will not be collected.

The following table provides an analysis of the change of the aggregate credit loss allowance and other allowances.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
	(in thousands)

Balance at beginning of period	$	(2,556)	$	(12,604)	$	(2,554)	$	(6,029)
Credit losses and other	(288)		(69)		(925)		(5,222)
Credit recoveries and other	(196)		—		439		—
Reversal of allowance resulting from the settlement of the related receivable	—		11,200		—		11,200
Foreign currency loss	—		(425)		—		(1,847)
Balance at end of period	$	(3,040)	$	(1,898)	$	(3,040)	$	(1,898)

Fair Value of Derivative Instruments – The following table, set forth by level within the fair value hierarchy, shows the Company’s derivatives that were accounted for at fair value as of September 30, 2025 and December 31, 2024.


		As of September 30, 2025
	Balance Sheet Line	Level 1		Level 2		Level 3		Total
		(in thousands)
Assets
Derivative asset	Prepayments and other	$	—	$	89	$	—	$	89

		$	—	$	89	$	—	$	89
Liabilities
Derivative liability	Accrued liabilities and other	$	—	$	613	$	—	$	613
		$	—	$	613	$	—	$	613


		As of December 31, 2024
	Balance Sheet Line	Level 1		Level 2		Level 3		Total
		(in thousands)
Assets
Derivative asset	Prepayments and other	$	—	$	119	$	—	$	119
Derivative asset, noncurrent	Other long term assets	$	—	$	1,209	$	—	$	1,209
		$	—	$	1,328	$	—	$	1,328
Liabilities
Derivative liability	Accrued liabilities and other	$	—	$	17	$	—	$	17
		$	—	$	17	$	—	$	17