What changed in this filing

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Item 1A. Risk Factors

2024-03-15 compared with 2023-04-06 · 157 added, 202 removed, 532 unchanged (40% of the section changed)

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Additional risks not presently known to us or that we consider immaterial based on information currently available to us may also materially adversely affect us.

Risks Relating to Our Business, Operations and Strategy

Risks Relating to Our Business, Operations and Strategy

Our business requires significant capital expenditures and we may not be able to obtain needed capital or financing to fund our exploration and development activities or potential acquisitions on satisfactory terms or at all.

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Historically, we have financed these expenditures primarily with cash from operations, debt, asset sales and private sales of equity.

We are the operator of the Etame Marin block offshore Gabon, and are responsible for contracting on behalf of all the remaining parties participating in the project and rely on our joint venture owners to pay for 36.4% of the offshore Gabon budget.

With respect to Block P, the EG MMH approved our appointment as technical operator in August 2020 and, since we were appointed, we will rely on the timely payment of cash calls by our joint venture owners to pay for 46.3% (including the 20% carry of GEPetrol’s costs) of the Equatorial Guinea budget.

We are the operator of the Etame Marin block offshore Gabon, and are responsible for contracting on behalf of all the remaining parties participating in the project and rely on our joint venture owners to pay for 36.4% of the offshore Gabon budget.

With respect to Block P, the EG MMH approved our appointment as technical operator in August 2020 and, since we were appointed, we will rely on the timely payment of cash calls by our joint venture owners to pay for 46.3% of the Equatorial Guinea budget, except during any development phases where we have agreed or will agree to carry their interests.

The continued economic health of our joint venture owners could be adversely affected by low crude oil prices, thereby adversely affecting their ability to make timely payment of cash calls.

If low crude oil, natural gas and NGLs prices, operating difficulties or declines in reserves result in our revenues being less than expected or limit our ability to enter into debt financing arrangements, or our joint venture owners fail to pay their share of project costs, we may be unable to obtain or expend the capital necessary to undertake or complete future drilling programs or to acquire additional reserves.

We do not currently have any commitments for future external funding for capital expenditures or acquisitions beyond cash generated from operating activities and our $50 million Facility Agreement (the commitments under which decreases to $43.75 million beginning October 1, 2023).

Our ability to secure additional or replacement financing to finance expenditure beyond our current committed capital expenditure for the next 12 months may be limited.

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If we are unable to increase our proved quantities, there will likely be a material impact on our cash flows, business and operations.

We may not enter into definitive agreements with the BWE Consortium to explore and exploit new properties, and we may not be in a position to control the timing of development efforts, the associated costs or the rate of production of the reserves operated by the BWE Consortium or from any non-operated properties in which we have an interest. 

On October 11, 2021 we announced our entry into a consortium with the “BWE Consortium” and that the BWE Consortium had been provisionally awarded two blocks, G12-13 and H12-13, in the 12th Offshore Licensing Round in Gabon.

The award is subject to concluding the terms of the production sharing contracts with the Gabonese government.

On October 11, 2021, we announced our entry into a consortium with the “BWE Consortium” and that the BWE Consortium had been provisionally awarded two blocks, G12-13 and H12-13, in the 12th Offshore Licensing Round in Gabon.

Negotiations to finalize the commercial terms were held in 2023, however they were halted late in the year due to the presidential elections.

The negotiations were kick started again at the request of the Gabonese Government in early February 2024, where the consortium and the government came to an agreement on the fiscal terms on February 9, 2024.

The next step is concluding the terms of the production sharing contracts with the Gabonese government.

BW Energy will be the operator with a 37.5% working interest and we and Panoro Energy will have a 37.5% working interest and 25% working interest, respectively, as non-operating joint owners.

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If we are unable to negotiate and enter into definitive agreements with each party, we may not be able to explore, develop and exploit new properties, and our results of operations could be materially adversely affected.

We may have limited control over matters relating to development and exploitation activities, including the timing of and capital expenditures for such activities, in projects where we are not the operator, including properties operated by the BWE Consortium.

We may have limited control over matters relating to development and exploitation activities, including the timing of and capital expenditures for such activities, in projects where we are not the operator, including properties operated by the BWE Consortium.

The success and timing of development and exploitation activities on such properties, depends upon a number of factors, including:

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the availability of suitable offshore drilling rigs, drilling equipment, support vessels, production and transportation infrastructure and qualified operating personnel;

the operator’s expertise, financial resources and willingness to initiate exploration or development projects;

approval of other participants in drilling wells;

risk of other a non-operator’s failure to pay its share of costs, which may require us to pay our proportionate share of the defaulting party’s share of costs;

selection of technology;

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the rate of production of the reserves;

the operator’s desire to drill more wells or build more facilities on a project inconsistent with our capital budget, whether on a cash basis or through financing, which may limit our participation in those projects or limit the percentage of our revenues from those projects.

The occurrence of any of the foregoing events could have a material adverse effect on our anticipated exploration and development activities.

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In addition, there may be production risks for which we are currently unaware.

For example, the production of hydrogen sulfide at certain of our Etame Marin block wells creates unexpected production losses and delays in our development plans;

Business –

Segment and Geographic Information –

Gabon Segment –

Hydrogen Sulfide Impact .”

The development of new subsea infrastructure and use of floating production systems to transport crude oil from producing wells may require substantial time for installation or encounter mechanical difficulties and equipment failures that could result in loss of production, significant liabilities, cost overruns or delays.

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The resulting regulatory costs or penalties, and the results of third-party lawsuits, as well as associated legal and support expenses, including costs to address negative publicity, could well exceed the actual costs of containment and clean-up.

As a result, a well control incident could result in substantial liabilities for us and have a significant negative impact on our earnings, cash flows, liquidity, financial position and stock price.

As a result, a well control incident could result in substantial liabilities for us and have a significant negative impact on our earnings, cash flows, liquidity, financial position and stock price.

Acquisitions and divestitures of properties and businesses may subject us to additional risks and uncertainties, including that acquired assets may not produce as projected, may subject us to additional liabilities and may not be successfully integrated with our business.

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difficulties in the assimilation of the assets and operations of the acquired business, especially if the assets acquired are in a new business segment or geographic area;

the diversion of management’s attention from other business concerns during the acquisition and throughout the integration process;

losses of key employees at the acquired businesses;

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In addition, we may be required to recognize losses in accordance with exit or disposal activities.

The proposed acquisition of Svenska may not be consummated and if consummated, we may not realize the anticipated benefits expected from the acquisition.

On February 29, 2024, Buyer and Seller, entered into the Share Purchase Agreement pursuant to which the Buyer will purchase all of the issued shares in the capital of Svenska for $66.5 million in cash, subject to adjustment as described in the Share Purchase Agreement.

Pursuant to the terms and subject to the conditions of the Share Purchase Agreement, upon Closing, Buyer will acquire Svenska and, as a result, Svenska’s primary asset:

a 27.39% non-operated working interest in the deepwater producing Baobab field in Block CI-40, offshore Cote d’Ivoire in West Africa.

Buyer will also acquire a 21.05% non-operated working interest in OML 145, a non-producing discovery located offshore of Nigeria that is not expected to be developed at this time.

The Purchase Price will be funded by a combination of a dividend of cash on Svenska’s balance sheet to the Seller immediately prior to the consummation of the Acquisition and a portion of VAALCO’s cash-on-hand.

VAALCO estimates that cash due from VAALCO at Closing will be in the range of approximately $30 to $40 million.

Closing is subject to obtaining necessarily regulatory approvals in Cote d’Ivoire and Sweden and the satisfaction of other customary closing conditions.

If the closing conditions are not satisfied or waived within nine months of date of the Share Purchase Agreement, then either the Buyer or the Seller may, at its discretion, terminate the Share Purchase Agreement.

No assurance can be given that the required approvals will be obtained or that the required conditions to closing will be satisfied or waived in a timely manner or at all, and accordingly consummation of the Acquisition may be delayed or not occur at all.

If consummated, the success of the Acquisition will depend, in part, on our ability to realize the anticipated benefits from combining our business with Svenska’s business.

The anticipated benefits and efficiencies of the Acquisition may not be realized fully or at all, may take longer to realize than expected, may not be realized or could have other adverse effects that we do not currently foresee.

The failure to realize the anticipated benefits and synergies expected from the Acquisition could adversely affect our business, financial condition and operating results.

Our reserve information represents estimates that may turn out to be incorrect if the assumptions on which these estimates are based are inaccurate.

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There are numerous uncertainties inherent in estimating quantities of proved crude oil, natural gas and NGLs reserves, including many factors beyond our control.

Reserve engineering is a subjective process of estimating the underground accumulations of crude oil, natural gas and NGLs that cannot be measured in an exact manner.

The estimates included in this document are based on various assumptions required by the SEC, including non-escalated prices and costs and capital expenditures subsequent to December 31, 2022, and, therefore, are inherently imprecise indications of future net revenues.

Reserve engineering is a subjective process of estimating the underground accumulations of crude oil, natural gas and NGLs that cannot be measured in an exact manner.

The estimates included in this document are based on various assumptions required by the SEC, including non-escalated prices and costs and capital expenditures subsequent to December 31, 2023, and, therefore, are inherently imprecise indications of future net revenues.

Estimates of economically recoverable crude oil, natural gas and NGLs reserves and the future net cash flows from them are based upon a number of variable factors and assumptions, such as historical production from the properties, production rates, ultimate reserves recovery, timing and amount of capital expenditures, marketability of crude oil, natural gas and NGLs, royalty rates, the assumed effects of regulation by governmental agencies, and future operating costs, all of which may vary materially from actual results.

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Our reserve estimates are prepared using an average of the first day of the month prices received for crude oil, natural gas and NGLs for the preceding twelve months.

Future reductions in prices, below the average calculated for 2022, would result in the estimated quantities and present values of our reserves being reduced. The forecast prices and costs assumptions assume changes in wellhead selling prices and take into account inflation with respect to future operating and capital costs.

Future reductions in prices, below the average calculated for 2023, would result in the estimated quantities and present values of our reserves being reduced.

The forecast prices and costs assumptions assume changes in wellhead selling prices and take into account inflation with respect to future operating and capital costs.

Our proved reserves are in foreign countries and are or will be subject to service contracts, production sharing contracts and other arrangements.

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Our existing properties in Egypt and Canada are onshore.

The costs to abandon offshore on onshore wells and the related infrastructure may be substantial. For financial accounting purposes, we record the fair value of a liability for an asset retirement obligation in the period that it is incurred and capitalize the related costs as part of the carrying amount of the long-lived assets.

The estimated liability is reflected in the “Asset retirement obligations”

and the “Accrued liabilities and other”

line items of our consolidated balance sheet.

The costs to abandon offshore on onshore wells and the related infrastructure may be substantial.

For financial accounting purposes, we record the fair value of a liability for an asset retirement obligation in the period that it is incurred and capitalize the related costs as part of the carrying amount of the long-lived assets.

The estimated liability is reflected in the “Asset retirement obligations” and the “Accrued liabilities and other” line items of our consolidated balance sheet.

As part of the Etame Marin block production license, we are subject to an agreed-upon cash funding arrangement for the eventual abandonment of all offshore wells, platforms and facilities on the Etame Marin block.

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On an annual basis over the remaining life of the production license, we must fund a portion of these estimated abandonment costs.

Business –

Segment and Geographic Information –

Gabon Segment –

Abandonment Costs ”

for further information.

Future changes to the anticipated abandonment cost estimates could change our asset retirement obligations and increase the amount of future abandonment funding payments we are obligated to make.

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66/1953 as amended and its Executive Regulations issued by Minister of Industry Decree No.

758/1972 as amended (the “Fuel Materials Law”), liabilities in respect of decommissioning movable and immovable assets (other than wells) passes to the Egyptian Government through the transfer of ownership from the contractor to the government under the cost recovery process.

The model concession agreements do not deal with area handover and abandonment upon termination, expiration or withdrawal from a concession agreement and certain articles in the Fuel Materials Law may apply, albeit the matter in practice is within the discretion of the EGPC.

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Under the Alberta LMF, the AER began to set annual mandatory closure spend targets for all licensees with inactive inventory in 2022.

Under the AER’s Closure Nomination Program, introduced in February 2023 through an update to AER Directive 088:

Licensee Life-Cycle Management, eligible landowners or land rights holders can nominate oil and gas wells and facilities that have been inactive or abandoned for longer than five years, for closure, at the expense of the licensee.

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On January 19, 2022, subsidiaries of TransGlobe executed the Merged Concession Agreement with the EGPC, which is effective upon the Merged Concession Effective Date.

As part of the conditions precedent to the signing of the Merged Concession Agreement by the Minister of Petroleum & Mineral Resources on behalf of the Egyptian Government, TransGlobe remitted the initial modernization payment of $15 million and signature bonus of $1 million.

In accordance with the Merged Concession Agreement, TransGlobe made a modernization payment to the EGPC in the amount of $10 million on February 1, 2022.

In accordance with the Merged Concession Agreement, we agreed to substitute the 2023 payment and issue a $10.0 million credit against receivables owed from EGPC.

The modernization payments under the Merged Concession Agreement total $65 million and are payable over six years from the Merged Concession Effective Date.

Under the Merged Concession Agreement, TransGlobe will be required to pay an additional $10 million on February 1st for each of the next three years.

In addition, TransGlobe has committed to spending a minimum of $50 million over each five-year period for the 15 years of the primary term (total $150 million).

Under the Merged Concession Agreement, VAALCO is obligated to make modernization payments that total $65 million and are payable over six years from the Merged Concession Effective Date of which $45.0 million have been paid.

Under the Merged Concession Agreement, TransGlobe will be required to pay an additional $10 million on February 1st for each of the next two years.

In accordance with the Merged Concession Agreement, we agreed to substitute the 2023 and 2024 payments and issue two $10.0 million credits against receivables owed from EGPC.

In addition, VAALCO has also committed to spending a minimum of $50 million over each five-year period for the 15 years of the primary term (total $150 million).

Our ability to make scheduled payments arising from the Merged Concession Agreement will depend on our financial condition and operating performance, which would be subject to then prevailing economic, industry and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond our control.

We may be unable to maintain a level of cash flow sufficient to permit us to satisfy the payment obligations under the Merged Concession Agreement.

If we are unable to satisfy our obligations, it is possible that the EGPC could seek to terminate the Merged Concession Agreement, which would negatively affect our operating results and financial condition. 

In addition, as of the Merged Concession Effective Date, there was an adjustment of funds owed to us for the difference between historic and Merged Concession Agreement commercial terms applied against Eastern Desert production from the Merged Concession Effective Date.

The cumulative amount of the effective date adjustment was estimated at $67.5 million. However, the cumulative amount of the effective date adjustment is currently being finalized with EGPC and could result in a range of outcomes based on the final price per barrel negotiated. At December 31, 2022, we received $17.2 million of the receivable and the remaining $50.3 million is recorded on our consolidated balance sheet in Receivables-Other, net. If the EGPC’s financial position becomes impaired or it disputes or if the EGPC refuses to pay some or all of the said amount, our ability to fully collect such receivable from the EGPC could be impaired, which could negatively affect our operating results and financial condition.

The cumulative amount of the effective date adjustment was estimated at $67.5 million.

However, the cumulative amount of the effective date adjustment is currently being finalized with EGPC and could result in a range of outcomes based on the final price per barrel negotiated.

At December 31, 2023, the remaining $50.3 million is recorded on our consolidated balance sheet in Receivables-Other, net.

If the EGPC’s financial position becomes impaired or it disputes or if the EGPC refuses to pay some or all of the said amount, our ability to fully collect such receivable from the EGPC could be impaired, which could negatively affect our operating results and financial condition.

The Egyptian PSCs contain assignment provisions which, if triggered, could adversely affect our business.

On October 13, 2022, VAALCO completed its business combination transaction with TransGlobe whereby TransGlobe became an indirect wholly-owned subsidiary of VAALCO.

Legacy subsidiaries of TransGlobe are party to the Egyptian PSCs, which contain restrictive wording relating to assignments of rights under such agreements which, if triggered, require consent of the Egyptian Government in connection with any such assignment (the “Assignment Provisions”).

If triggered, the Assignment Provisions also provide that (i) in certain circumstances, the EGPC has the right to acquire the interest intended to be assigned;

and (ii) an assignment fee is payable to the EGPC in an amount equal to 10% of the value of each assignment.

We do not believe the Arrangement triggered the Assignment Provisions. We have engaged and are continuing to engage, in discussions with the office of the Minister of Petroleum and Mineral Resources and the EGPC, for the purpose of clarifying that the Arrangement did not trigger the Assignment Provisions.

If the Arrangement is deemed to have triggered the Assignment Provisions and an assignment fee is payable, such payment could have an adverse effect on the value of our assets and could adversely affect our results of operations or financial condition. Further, although we are not aware of any reported cases of a concession being terminated on such grounds, it is possible that the Egyptian Government could seek to terminate the Egyptian PSCs for breach of the Assignment Provisions.

We do not believe the Arrangement triggered the Assignment Provisions.

EGPC has not concurred that no assignment fee is payable.

We are continuing to engage in discussions with the office of the Minister of Petroleum and Mineral Resources and the EGPC for the purpose of resolving the matter.

Resolution of this matter could result in a range of outcomes and no assurance can be given that such outcomes will not involve an offset of amounts owed by EGPC to VAALCO.

If the Arrangement is deemed to have triggered the Assignment Provisions or VAALCO agrees to make payment to EGPC as part of a resolution, such payment could have an adverse effect on the value of our assets and could adversely affect our results of operations or financial condition.

We could lose our interest in Block P in Equatorial Guinea if we do not meet our commitments under the production sharing contract.

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We and our Block P joint venture owners are evaluating the timing and budgeting for development and exploration activities in the block.

We have completed a feasibility study of a standalone production development opportunity of the Venus discovery on Block P and on July 15, 2022 submitted to the EG MMH a plan of development for Block P which on September 16, 2022 was approved by the government of Equatorial Guinea, but there can be no certainty any such transaction will be completed or that we will be able to commence drilling operations in Block P. If the joint venture owners of Block P fail to meet the commitments under the production sharing contract amendment, our capitalized costs of $10 million associated with Block P interest would be impaired.

Due to delays by the partners in agreeing on certain terms relating to joint operations, the EG MMH delayed commencement of the Plan of Development, but on August 24, 2023, the EG MMH directed that activities relating to the Plan of Development resume.

There can be no certainty any such transaction will be completed or that we will be able to commence drilling operations in Block P.

If the joint venture owners of Block P fail to meet the commitments under the production sharing contract amendment, our capitalized costs of $10 million associated with Block P interest would be impaired.

Commodity derivative transactions that we enter into may fail to protect us from declines in commodity prices and could result in financial losses or reduce our income.

In order to reduce the impact of commodity price uncertainty and increase cash flow predictability relating to the marketing of our crude oil, natural gas and NGLs we have entered into and may continue to enter into derivative arrangements with respect to a portion of our expected production.

Our derivative contracts typically consist of a series of commodity swap contracts, such as puts, collars and fixed price swaps, and are limited in duration. 

The following are the hedges outstanding at December 31, 2022:

In order to reduce the impact of commodity price uncertainty and increase cash flow predictability relating to the marketing of our crude oil, natural gas and NGLs we have entered into and may continue to enter into derivative arrangements with respect to a portion of our expected production.

Our derivative contracts typically consist of a series of commodity swap contracts, such as puts, collars and fixed price swaps, and are limited in duration.

The following table shows the hedges outstanding at December 31, 2023:

Settlement Period

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Weighted Average Call Price

January 2023 to March 2023

The following additional hedges were entered into in 2023:

January 2024 - March 2024

April 2024 - June 2024

The following table shows the additional hedges entered into in 2024:

Settlement Period

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Weighted Average Call Price

April 2023 to June 2023

July 2023 to September 2023

July 2024 - September 2024

The hedge counterparty will be obligated to make payments to us to the extent that the floating (market) price is below an agreed fixed (strike) price.

However, hedging agreements expose us to risk of financial loss if the counterparty to a hedging contract defaults on our contract obligations.

Disruptions in the market could also lead to sudden changes in the liquidity of the counterparties to our hedge transactions which in turn limit our ability to perform under their hedging contracts with us. Even if we accurately predict sudden changes, our ability to negate the risk may be limited depending upon market conditions.

However, hedging agreements expose us to risk of financial loss if the counterparty to a hedging contract defaults on our contract obligations.

Even if we accurately predict sudden changes, our ability to negate the risk may be limited depending upon market conditions.

If the creditworthiness of our counterparties deteriorates and results in their non-performance, we could incur a significant loss.

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In addition, certain types of derivative arrangements may limit the benefit that we could receive from increases in the prices for crude oil.

natural gas and NGLs, and may expose us to cash margin requirements.

natural gas and NGLs, and may expose us to cash margin requirements.

We are exposed to the credit risks of the third parties with whom we contract.

We may be exposed to third-party credit risk through our contractual arrangements with government entities party to our PSCs, our current or future joint venture owners, marketers of our petroleum and natural gas production and other parties.

In addition, we may be exposed to third-party credit risk from operators of properties in which we have a Working Interest or Royalty Interest.

In the event such entities fail to meet their contractual obligations to us, such failures may have a material adverse effect on our business, financial condition, results of operations and prospects.

In addition, poor credit conditions in the industry generally and among our joint venture owners may affect a joint venture owner’s willingness to participate in our ongoing capital program, potentially delaying the program and the results of such program until it finds a suitable alternative partner.

To the extent that any of such third parties go bankrupt, become insolvent, or make a proposal or institute any proceedings relating to bankruptcy or insolvency, it could result in our inability to collect all or a portion of any money owing from such parties.

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In addition, if our significant customers cease to purchase or reduce the volume they purchase of our crude oil, natural gas or NGLs, the loss or reduction could have a detrimental effect on our production volumes and may cause a temporary interruption in sales of, or a lower price for, our crude oil, natural gas and NGLs.

In addition, we are and may in the future be exposed to third-party credit risk through our contractual arrangements with governmental entities in Gabon or the EGPC.

Significant changes in the crude oil industry, including fluctuations in commodity prices and economic conditions, environmental regulations, government policy, royalty rates and other geopolitical factors, could adversely affect our ability to realize the full value of our accounts receivable from government entities in Gabon or the EGPC.

In addition, we are and may in the future be exposed to third-party credit risk through our contractual arrangements with governmental entities in Gabon or the EGPC.

Historically, we have had significant account receivables outstanding from governmental entities in Gabon and the EGPC.

While the EGPC has made regular payments of these amounts owing, the timing of these payments has historically been longer than the normal industry standard.

In the event the Governments of Gabon or Egypt fails to meet their respective obligations, such failures could materially adversely affect our financial and operational results.

In addition, EGPC has at times faced difficulties in accessing foreign exchange markets for the purpose of obtaining U.S.

dollars in exchange for Egyptian Pounds.

In the event the Governments of Gabon or Egypt fails to meet their respective obligations or we are forced to accept payment in foreign currencies, such failures could materially adversely affect our financial and operational results.

We are also exposed to third-party credit risk through our banking relationships in the jurisdictions in which we operate.

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If any of these security breaches were to occur, they could lead to losses of sensitive information, critical infrastructure or capabilities essential to our operations and could have a material adverse effect on our reputation, financial position, results of operations and cash flows.

Cybersecurity attacks in particular are becoming more sophisticated, and geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine, may further heighten the risk of such attacks.

We rely extensively on information technology systems, including internet sites, computer software, data hosting facilities and other hardware and platforms, some of which are hosted by third parties, to assist in conducting our business.

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Additionally, certain cyber incidents, such as surveillance, may remain undetected for an extended period.

Events outside of our control, such as the ongoing COVID-19 pandemic and Russia ’

s invasion of Ukraine, could adversely impact our business, results of operations, cash flows, financial condition and liquidity.

We face risks related to epidemics, outbreaks and other macroeconomic events that are outside of our control.

The global or national outbreak of an illness or any other communicable disease or any other public health crisis such as the COVID-19 pandemic, and effects of the occurrence of certain geopolitical events such as the ongoing military conflict between Russia and Ukraine and the slowdown of the Chinese economy could significantly disrupt our business and operational plans and adversely affect our results of operations, cash flows, financial condition and liquidity.

Although we are not able to enumerate all potential risks to our business resulting from the ongoing COVID-19 pandemic, the conflict between Russia and Ukraine or the slowdown of the Chinese economy, we believe that such risks include, but are not limited to, the following:

Current and future geopolitical events outside of our control could adversely impact our business, results of operations, cash flows, financial condition and liquidity.

We face risks related to geopolitical events, international hostility, epidemics, outbreaks and other macroeconomic events that are outside of our control.

The occurrence of certain geopolitical events, including those arising from terrorist activity, international hostility, public health crisis, and the economic impact of global trade tension and the imposition of tariffs, could significantly disrupt our business and operational plans and adversely affect our results of operations, cash flows, financial condition and liquidity.

For instance, the ongoing conflicts in the Middle East and between Russia and Ukraine have and may continue to cause geopolitical instability, and adversely impact the global economy, supply chains and specific markets and industries.

Although we are not able to enumerate all potential risks to our business resulting from these and other similar events, we believe that such risks include, but are not limited to, the following:

disruption to our supply chain for materials essential to our business, including restrictions on importing and exporting products;

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cybersecurity attacks, particularly as digital technologies may become more vulnerable and experience a higher rate of cyberattacks in the current environment of remote connectivity;

litigation risk and possible loss contingencies related to COVID-19 and its impact, including with respect to commercial contracts, employee matters and insurance arrangements;

any reductions of our workforce to adjust to market conditions, including severance payments, retention issues, and possible inability to hire employees when market conditions improve;

logistical challenges, including those resulting from border closures and travel restrictions, as well as the possibility that our ability to continue production may be interrupted, limited or curtailed if workers and/or materials are unable to reach our offshore platforms and FSO charter vessel or our counterparties are unable to lift crude oil from our FSO charter vessel;

we may be subject to actions undertaken by national, regional and local governments and health officials to contain the virus or treat its effects, including travel restrictions and temporary closures;

we may be materially adversely affected by the effects of sanctions and other penalties imposed on Russia by the U.S., the European Union and other countries;

we may experience a structural shift in the global economy and our demand for crude oil, natural gas and NGLs as a result of changes in the way people work, travel and interact, or in connection with a global recession or depression.

We cannot reasonably estimate the period of time that the COVID-19 pandemic, Russia’s invasion of Ukraine and related market conditions will persist;

We cannot reasonably estimate the period of time that these conditions will persist;

the full extent of the impact they will have on our business, results of operations, cash flows, financial condition and liquidity;

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After terminating its membership with OPEC in 1995, Gabon re-joined OPEC as a full member in July 2016.

OPEC+ ”) to reduce the gap between excess supply and demand in an effort to stabilize the international oil market.

Historically and from time to time, members of OPEC have entered into agreements to reduce worldwide production of crude oil, including the agreement reached in April 2020 among OPEC member countries and other leading allied producing countries (collectively, “OPEC+”) to reduce the gap between excess supply and demand in an effort to stabilize the international oil market.

Gabon undertook measures to comply with such OPEC+ production quota agreement.

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In July 2021, OPEC+ agreed to increase production beginning in August 2021 and to gradually phase out prior production cuts by September 2022.

The decision to increase in production was reaffirmed by an OPEC+ meeting held on February 2, 2022.

The decision to increase production was reaffirmed by an OPEC+ meeting held on February 2, 2022.

However, as a result of the recent decline in oil prices, on October 5, 2022, OPEC+ announced plans to reduce overall oil production by 2 MMBbls per day starting November 2022.

We have not received any mandate to reduce its current oil production from the Etame Marin block as a result of the OPEC+ initiative and currently, our production is not impacted by OPEC+ curtailments.

We have not received any mandate to reduce current oil production from the Etame Marin block as a result of the OPEC+ initiative and currently, our production is not impacted by OPEC+ curtailments.

However, any future reduction in our crude oil production or export activities for a substantial period could materially and adversely affect our revenues, cash flows and results of operations.

Gabon remains a member of OPEC+.

There were no required curtailments in 2023.

We have less control over our investments in foreign properties than we would have over our domestic investments.

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Our operations require, and any future opportunistic acquisitions may require, protracted negotiations with host governments, local governments and communities, local competent authorities, national oil companies, and third parties.

The Gabonese government’s oil company may seek to participate in crude oil projects in a manner that could be dilutive to the interest of current license holders, and the Gabonese government is under pressure from the Gabonese labor union to require companies to hire a higher percentage of Gabonese citizens.

In 2016, the government of Gabon conducted an audit of our operations in Gabon, covering the years 2013 through 2014.

We received the findings from this audit and responded to the audit findings in January 2017.

Since providing our response, there have been changes in the Gabonese officials responsible for the audit.

We are working with the current representatives to resolve the audit findings.

Between 2019 and 2021, the government of Gabon conducted an audit of our operations in Gabon, covering the years 2015 and 2016. While the impact of any adverse findings relating to these assessments is not anticipated to have a materially significant negative impact on our reported earnings or cash flows, we can make no assurances that this will be the case.

Host governments may also conduct audits of our operations, the results of which may have a significant negative impact on our reported earnings or cash flows.

Host governments may seek to participate in oil, natural gas or NGLs projects in a manner that could be diluted to our interests.

Host governments may also require us to hire a specified percentage of local citizens in our operations.

In addition, if a dispute arises with respect to our foreign operations, we may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons, especially foreign crude oil ministries and national oil companies, to the jurisdiction of the U.S.

In December 2021 and during 2022, the Bank of Central African States (“BEAC”), which is the central bank for CEMAC, passed new regulations and instructions for the CEMAC FX regulations, which were introduced in 2018, that only apply to the extractive industry.

In December 2021 and during 2022, the Bank of Central African States (“BEAC”), which is the central bank for the Central African Economic and Monetary Community (CEMAC), passed new regulations and instructions for the CEMAC FX regulations, which were introduced in 2018, that only apply to the extractive industry.

The intent of the new regulations is to ensure the application of the FX regulations as of January 1, 2022, without impeding the operations of the extractive industry.

Due to the lack of necessary banking infrastructure and preparedness by the banking sector and the various government agencies to apply the new regulations, it is foreseeable that we will run the risk of seeing delays in paying our vendors and domiciliation of goods and services into the CEMAC region throughout 2023 and beyond.

As part of securing the first of two five-year extensions to the Etame PSC in 2016, we agreed to a cash funding arrangement for the eventual abandonment of all offshore wells, platforms and facilities on the Etame Marin block.

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The Etame PSC provides that these payments must be denominated in U.S.

After continued discussions with CEMAC, they agreed to the return of the USD funds and on January 12, 2023, the abandonment funds were returned to the USD account of the Gabonese branch of the international commercial bank. We were allowed to re-establish a USD denominated account and made whole for the original USD amount. Pursuant to Amendment No.

5 of the Etame PSC, we are working with Directorate of Hydrocarbons in Gabon on establishing a payment schedule to resume funding of the abandonment fund in compliance with the Etame PSC.

We were allowed to re-establish a USD denominated account and made whole for the original USD amount.

Pursuant to Amendment No.

5 of the Etame PSC, we are working with Directorate of Hydrocarbons in Gabon on establishing a payment schedule to resume funding of the abandonment fund in compliance with the Etame PSC.

Private ownership of crude oil reserves under crude oil leases in the U.S.

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may be materially affected by host governments.

While the laws of each of Gabon and Equatorial Guinea recognize private and public property and the right to own property is protected by law, the laws of each country reserve, at the respective government’s discretion, the right to expropriate property and terminate contracts (including the Etame PSC and the Block P PSC) for reasons of public interest, subject to reasonable compensation, determinable by the respective government in our discretion.

based on daily production rates, which such “profit oil”

has been and can continue to be taken in-kind through taking crude oil barrels rather than making cash payments.

The terms of the Etame PSC include provisions for, among other things, payments to the government of Gabon for a 13% Royalty Interest based on crude oil production at published prices and payments for a shared portion of “profit oil,” based on daily production rates, which such “profit oil” has been and can continue to be taken in-kind through taking crude oil barrels rather than making cash payments.

We have operated in Gabon since 1995 and believe we have good relations with the current Gabonese government.

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Further, in Equatorial Guinea, any new PSC or equivalent agreement for the exploration and exploitation of hydrocarbons is subject to presidential ratification before it can become effective.

In addition, the majority of TransGlobe’s current production is located in Egypt.

As such, we are now subject to political, economic and other uncertainties in Egypt.

We are also now subject to political, economic and other uncertainties in Egypt.

Any of the factors detailed above or similar factors could have a material adverse effect on our business, results of operations or financial condition.

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Our operations may be adversely affected by political and economic circumstances in the countries in which we operate .

Our operations are subject to risks of loss due to civil strife, acts of war, acts of terrorism, piracy, disease, guerrilla activities, insurrection and other political risks, including tension and confrontations among political parties, that may result in:

Our operations are subject to risks of loss due to civil strife, acts of war, acts of terrorism, piracy, disease, guerrilla activities, insurrection, military activities and other political risks, including tension and confrontations among political parties, that may result in:

volatility in global crude oil prices, which could negatively impact the global economy, resulting in slower economic growth rates, which could reduce demand for our products;

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Some of these risks may be higher in the developing countries in which we conduct our activities, namely, Gabon, Equatorial Guinea and Egypt.

For example, in Gabon, the Gabonese administration has experienced a succession of large-scale strikes since 2021, general and unlimited strikes have been initiated by workers in the oil sector, by agents of the Ministry of Foreign Affairs, by air traffic controllers and by the collectors of financial regimes.

Both Gabon and Equatorial Guinea have had ongoing border disputes, and the Gulf of Guinea, covering Gabon, is often presented as a high risk zone for piracy.

There has been significant civil unrest and widespread protests and demonstrations throughout the Middle East, including Egypt, since 2011.

Abdel Fattah el-Sisi was elected President of Egypt in 2014 following a few years of widespread protests, demonstrations and civil unrest.

Since this time, political and economic stability has returned to the country leading to a positive impact in business confidence, but this remains a jurisdiction with political and economic risk.

While we monitor the economic and political environments of the countries in which we operate, loss of property and/or interruption of our business plans resulting from civil unrest could have a significant negative impact on our earnings and cash flow.

For example, in September 2023, Gabon experienced a largely non-violent, military coup d’état and the country’s leadership changed hands.

The group leading the coup created a Committee for the Transition and Restauration of Institutions and a new president was sworn in on the basis of a transition charter adopted by the group leading the coup.

The new president has indicated that a new constitution for Gabon will be adopted and that elections will be held after a transition period.

No assurance can be given that any such new constitution will be adopted or if adopted, that the content thereof will be in line with Gabon’s existing laws.

Any of these developments may have an adverse effect on our operations and financial results.

While we monitor the economic and political environments of the countries in which we operate, loss of property and/or interruption of our business plans resulting from civil or political unrest could have a significant negative impact on our earnings and cash flow.

In addition, losses caused by these disruptions may not be covered by insurance, or even if they are covered by insurance, we may not have enough insurance to cover all of these losses.

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Inflation could adversely impact our ability to control costs, including operating expenses and capital costs.

Although inflation has been relatively low in recent years, it rose significantly in the second half of 2021 and through 2022.

Inflation rose significantly in the second half of 2021 and through 2023.

In addition, global and industry-wide supply chain disruptions have resulted in shortages in labor, materials and services.

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We are also exposed to foreign currency exchange risk related to certain cash, accounts receivable, long-term debt, lease obligations and accounts payable and accrued liabilities denominated in Canadian dollars, and on cash balances denominated in Egyptian pounds.

Some collections of our accounts receivable from the Egyptian Government are received in Egyptian pounds, and while we are generally able to spend the Egyptian pounds received on accounts payable denominated in Egyptian pounds, there remains foreign currency exchange risk exposure on Egyptian pound cash balances.

Some collections of our accounts receivable from the Egyptian Government are received in Egyptian pounds, and while we are generally able to spend the Egyptian pounds received on accounts payable denominated in Egyptian pounds, there remains foreign currency exchange risk exposure on Egyptian pound cash balances.

In addition, from time to time, emerging market countries such as those in which we operate adopt measures to restrict the availability of the local currency or the repatriation of capital across borders.

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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.

While our management has concluded that our internal control over financial reporting is effective, we do not expect that the relevant internal controls and disclosure controls will prevent or detect all possible errors or all instances of fraud, and this risk is and may continue to be heightened in the context of our integration of TransGlobe’s control systems.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

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A failure of the controls and procedures to detect error or fraud could seriously harm our business and results of operations.

We have identified material weaknesses in our internal control over financial reporting which has caused us to conclude our disclosure controls and procedures and our internal control over financial reporting were not effective as of December 31, 2022 and could, if not remediated, adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner, investor confidence in our company and, as a result, the value of our common stock.

We are required to evaluate the effectiveness of our disclosure controls and procedures and our internal control over financial reporting on a periodic basis and publicly disclose the results of these evaluations and related matters in accordance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002.

We have identified certain material weaknesses in internal control over financial reporting in the areas of (i) accounting for leases, (ii) accounting for complex areas, specifically, business combinations, (iii) consolidation reporting related to recently acquired business operations, and (iv) accounting for income taxes, as described in “Item 9A.

Controls and Procedures”

of this Form 10-K.

As a result of such material weaknesses, our management concluded that our disclosure controls and procedures and our internal control over financial reporting were not effective as of December 31, 2022.

A “material weakness”

is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

We are actively engaged in developing and implementing a remediation plan, as described in “Item 9A.

Controls and Procedures”

of this Form 10-K, designed to address these material weaknesses, but our remediation efforts are not complete and are ongoing.

Although we are working to remedy the ineffectiveness of the Company’s internal control over financial reporting, there can be no assurance as to when the remediation plan will be fully developed, when it will be fully implemented or the aggregate cost of implementation.

Until our remediation plan is fully implemented, our management will continue to devote significant time and attention to these efforts.

If we do not complete our remediation in a timely fashion, or at all, or if our remediation plan is inadequate, there will continue to be an increased risk that we will be unable to timely file future periodic reports with the SEC and that our future consolidated financial statements could contain errors that will be undetected.

If we are unable to report our results in a timely and accurate manner, we may not be able to comply with the applicable covenants in our financing arrangements and may be required to seek additional amendments or waivers under these financing arrangements, which could adversely impact our liquidity and financial condition.

Further and continued determinations that there are material weaknesses in the effectiveness of the Company’s internal control over financial reporting could reduce our ability to obtain financing or could increase the cost of any financing we obtain and require additional expenditures of both money and our management’s time to comply with applicable requirements.

Any failure to implement or maintain required new or improved controls, or any difficulties we encounter in their implementation, could result in additional material weaknesses or material misstatement in our consolidated financial statements.

Any misstatement could result in a restatement of our consolidated financial statements, cause us to fail to meet our reporting obligations, reduce our ability to obtain financing or cause investors to lose confidence in our reported financial information, leading to a decline in our stock price.

We cannot assure you that we will not discover additional weaknesses in our internal control over financial reporting.

We are required to furnish a report by management, and our independent registered public accounting firm is required to provide an attestation report, on the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002.

If we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to provide us with an unqualified report regarding the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our financial statements.

This could result in a decrease in the value of our common stock.

Failure to comply with the Sarbanes-Oxley Act of 2002 could potentially subject us to sanctions or investigations by the SEC, NYSE, or other regulatory authorities.

Furthermore, as we grow our business, our disclosure controls and internal controls will become more complex, and we may require significantly more resources to ensure the effectiveness of these controls.

If we are unable to continue upgrading our financial and management controls, reporting systems, information technology and procedures in a timely and effective fashion, additional management and other resources may need to be devoted to assist in compliance with the disclosure and financial reporting requirements and other rules that apply to reporting companies, which could adversely affect our business, financial position and results of operations.

We may not have enough insurance to cover all of the risks we face.

Our business is subject to all of the operating risks normally associated with the exploration for and production, gathering, processing, and transportation of crude oil, natural gas and NGLs, including blowouts, cratering and fire, any of which could result in damage to, or destruction of, crude oil, natural gas and NGLs wells or formations, production facilities, and other property, as well as injury to persons.

For protection against financial loss resulting from these operating hazards, we maintain insurance coverage, including insurance coverage for certain physical damage, blowout/control of a well, comprehensive general liability, worker’s compensation and employer’s liability.

Our business is subject to all of the operating risks normally associated with the exploration for and production, gathering, processing, and transportation of crude oil, natural gas and NGLs, including blowouts, cratering and fire, any of which could result in damage to, or destruction of, crude oil, natural gas and NGLs wells or formations, production facilities, and other property, as well as injury to persons.

However, our insurance coverage may not be sufficient to cover us against 100% of potential losses arising as a result of the foregoing, and for certain risks, such as political risk, nationalization, business interruption, war, terrorism, and piracy, for which we have limited or no coverage.

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The loss of the services of our Chief Executive Officer or Chief Financial Officer, as well as any loss of the services of one or more other members of our senior management, could delay or prevent the achievement of our objectives.

We do not maintain any “key-man”

insurance policies on any of our senior management, and do not intend to obtain such insurance.

We do not maintain any “key-man” insurance policies on any of our senior management, and do not intend to obtain such insurance.

In addition, due to the specialized nature of our business, we are highly dependent upon our ability to attract and retain qualified personnel with extensive experience and expertise in evaluating and analyzing drilling prospects and producing crude oil, natural gas and NGLs from proved properties and maximizing production from crude oil, natural gas and NGLs properties.

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The AER has developed monitoring and reporting requirements that apply to all oil and natural gas producers working in certain areas where the likelihood of an earthquake is higher, and implemented the requirements in Subsurface Order Nos.

2, 6, and 7 (the “Seismic Protocol Regions”).

While we do not have operations in the Seismic Protocol Regions, we own production and working interest facilities and assets in the Harmattan area of west central Alberta and are exposed to the risks of earthquakes in that region.

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Therefore, our estimated proved undeveloped reserves may not be ultimately developed or produced.

At December 31, 2022, approximately 15% of our total estimated proved reserves were undeveloped reserves. Recovery of undeveloped reserves requires significant capital expenditures and successful drilling.

At December 31, 2023, approximately 22% of our total estimated proved reserves were undeveloped reserves.

Recovery of undeveloped reserves requires significant capital expenditures and successful drilling.

Our reserves data assumes that we can and will make these expenditures and conduct these operations successfully.

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If we choose not to spend the capital to develop these reserves, or if we are not otherwise able to successfully develop these reserves, we will be required to write-off these reserves.

In addition, under the SEC’s reserve rules, because proved undeveloped reserves may be recognized only if they relate to wells planned to be drilled within five years of the date of their initial recognition, we may be required to write-off any proved undeveloped reserves that are not developed within this five-year time frame.

Risks Relating to Our Industry

Risks Relating to Our Industry

Crude oil, natural gas and NGLs prices are highly volatile and a depressed price regime, if prolonged, may negatively affect our financial results.

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These factors include, but are not limited to, increases in supplies from U.S.

shale production, international political conditions, including war, uprisings and political unrest in the Middle East and Africa, the domestic and foreign supply of crude oil, natural gas and NGLs, actions by OPEC+ member countries and other state-controlled oil companies to agree upon and maintain crude oil price and production controls, the level of consumer demand that is impacted by economic growth rates;

shale production, international political conditions, including war, uprisings, terrorism and political unrest in the Middle East and Africa, slowdowns to the global supply chain, the domestic and foreign supply of crude oil, natural gas and NGLs, actions by OPEC+ member countries and other state-controlled oil companies to agree upon and maintain crude oil price and production controls, the level of consumer demand that is impacted by economic growth rates;

weather conditions;

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the health of international economic and credit markets;

and changes in the level of demand resulting from global or national health epidemics and concerns, such as the ongoing COVID-19 pandemic.

and changes in the level of demand resulting from global or national health epidemics and concerns.

In addition, various factors including the effect of federal, state and foreign regulation of production and transportation, general economic conditions, changes in supply due to drilling by other producers and changes in demand may adversely affect our ability to market our crude oil, natural gas and NGLs production.

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Drilling activities are subject to many risks, including the risk that no commercially productive reservoirs will be encountered.

There can be no assurance that new wells that we drill will be productive or that we will recover all or any portion of our investment.

Drilling for crude oil, natural gas and NGLs may involve unprofitable efforts, not only from dry wells, but also from wells that are productive but do not produce sufficient net revenues to return a profit after drilling, operating and other costs.

There can be no assurance that new wells that we drill will be productive or that we will recover all or any portion of our investment.

Drilling for crude oil, natural gas and NGLs may involve unprofitable efforts, not only from dry wells, but also from wells that are productive but do not produce sufficient net revenues to return a profit after drilling, operating and other costs.

The cost of drilling, completing and operating wells is often uncertain and cost overruns are common.

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Competitive industry conditions may negatively affect our ability to conduct operations.

The crude oil, natural gas, and NGLs industry is intensely competitive. Our competitors include major integrated oil companies and substantial independent energy companies, many of which possess greater financial, technological, personnel and other resources than we do.

The crude oil, natural gas, and NGLs industry is intensely competitive.

Our competitors include major integrated oil companies and substantial independent energy companies, many of which possess greater financial, technological, personnel and other resources than we do.

We may be outbid by our competitors in our attempts to acquire exploration and production rights in crude oil, natural gas and NGLs properties.

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and environmental hazards such as crude oil spills, natural gas leaks, ruptures and discharges of toxic gases, underground migration, and surface spills or mishandling of well fluids, including chemical additives, the occurrence of any of which could result in substantial losses due to injury and loss of life, severe damage to and destruction of property, natural resources and equipment, pollution and other environmental damage, clean-up responsibilities, regulatory investigation and penalties and suspension of operations.

Climate change could have an effect on the severity of weather (including hurricanes and floods), sea levels, the arability of farmland, and water availability and quality.

Climate change could have an effect on the severity of weather (including hurricanes, floods and wildfires), sea levels, the arability of farmland, and water availability and quality.

If such effects were to occur, our exploration and production operations may be adversely affected.

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An increased societal and governmental focus on ESG and climate change issues may adversely impact our business, impact our access to investors and financing, and decrease demand for our product .

An increased expectation that companies address environmental (including climate change), social and governance (“ESG”) matters may have a myriad of impacts on our business.

An increased expectation that companies address environmental (including climate change), social and governance (“ESG”) matters may have a myriad of impacts on our business.

Some investors and lenders are factoring these issues into investment and financing decisions.

They may rely upon companies that assign ratings to a company’s ESG performance.

Unfavorable ESG ratings, as well as recent activism around fossil fuels, may dissuade investors or lenders from engaging with us in favor of companies in other industries, which could negatively impact our share price or our access to capital.

They may rely upon companies that assign ratings to a company’s ESG performance.

Unfavorable ESG ratings, as well as recent activism around fossil fuels, may dissuade investors or lenders from engaging with us in favor of companies in other industries, which could negatively impact our share price or our access to capital.

Moreover, while we have and may continue to create and publish voluntary disclosures regarding ESG matters from time to time, many of the statements in those voluntary disclosures are based on hypothetical expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith.

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In Canada, opposition by Indigenous groups to our operations, development or exploration activities may negatively impact us.

Opposition by Indigenous groups to the conduct of our operations, development or exploratory activities in any of the jurisdictions in which we conduct business may negatively impact us in terms of public perception, diversion of management’s time and resources, legal and other advisory expenses, and could adversely impact our progress and ability to explore and develop properties.

Some Indigenous groups have established or asserted Indigenous treaty and title rights to portions of Canada.

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Continued development of common law precedent regarding existing laws relating to Indigenous consultation and accommodation as well as the adoption of new laws are expected to continue to add uncertainty to the ability of entities operating in the Canadian oil and gas industry to execute on major resource development and infrastructure projects, including, among other projects, pipelines that could adversely impact our progress and ability to explore and develop properties in Canada.

For example, Canada is a signatory to the United Nations Declaration of the Rights of Indigenous Peoples (“UNDRIP”) and the principles set forth therein may continue to influence the role of Indigenous engagement in the development of the oil and gas industry in Western Canada.

In June 2021, the United Nations Declaration on the Rights of Indigenous Peoples Act (Canada) (“UNDRIP Act”) came into force in Canada.

The UNDRIP Act requires the Government of Canada to take all measures necessary to ensure the laws of Canada are consistent with the principles of UNDRIP and to implement an action plan to address UNDRIP’s objectives.

Adding further uncertainty, on June 29, 2021, the British Columbia Supreme Court issued a judgement in Yahey v British Columbia (the “Blueberry Decision”), in which it determined that the cumulative impacts of industrial development on the traditional territory of the Blueberry River First Nation (“BRFN”) in northeast British Columbia had breached BRFN’s treaty rights.

In June 2021, the United Nations Declaration on the Rights of Indigenous Peoples Act (Canada) (“UNDRIP Act”) came into force in Canada.

The Blueberry Decision may lead to similar claims of cumulative effects across Canada in other areas covered by treaties.

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Compliance with environmental and other government regulations could be costly and could negatively impact production.

The laws and regulations of the U.S., Canada, Egypt, Equatorial Guinea and Gabon control our current business.

These laws and regulations may require that we obtain permits for our development activities, limit or prohibit drilling activities in certain protected or sensitive areas or restrict the substances that can be released in connection with our operations.

The laws and regulations of the U.S., Canada, Egypt, Equatorial Guinea and Gabon control our current business.

These laws and regulations may require that we obtain permits for our development activities, limit or prohibit drilling activities in certain protected or sensitive areas or restrict the substances that can be released in connection with our operations.

Our operations could result in liability for personal injuries, property damage, natural resource damages, crude oil spills, discharge of hazardous materials, remediation and clean-up costs and other environmental damages.

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As a result, we may incur substantial liabilities to third parties or governmental entities and may be required to incur substantial remediation costs.

We could also be affected by more stringent laws and regulations adopted in the future, including any related to climate change and GHG and the use of hydraulic fracturing fluids, resulting in increased operating costs. 

These laws and governmental regulations, which cover matters including drilling operations, taxation and environmental protection, may be changed from time to time in response to economic or political conditions and could have a significant impact on our operating costs, as well as the crude oil, natural gas and NGLs industry in general.

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Investigations by governmental authorities could also have a material adverse effect on our business, results of operations and financial condition.

Risks Relating to the Facility Agreement

Risks Relating to the Facility Agreement

A significant level of indebtedness incurred under the Facility may limit our ability to borrow additional funds or capitalize on acquisition or other business opportunities in the future.

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The Facility Agreement governing our Facility with Glencore contains certain affirmative and negative covenants, including, among other things, as to compliance with laws (including environmental laws and anti-corruption laws), delivery of quarterly and annual financial statements and borrowing base certificates, conduct of business, maintenance of property, maintenance of insurance, entry into certain derivatives contracts, restrictions on the incurrence of liens, indebtedness, asset dispositions, restricted payments.

In addition, the Facility Agreement (i) requires us to maintain a ratio of Consolidated Total Net Debt to EBITDAX (as each term is defined in the Facility Agreement) for the trailing 12 months not exceeding 3.0x;

(ii) requires us to maintain consolidated cash and cash equivalents shall not lower than $10.0 million;

and (iii) restricts our ability to:

dispose of assets, enter into guarantees or indemnities, enter into certain material contracts, merger or consolidate, or transfer all or substantially all of our assets and the assets of our subsidiaries, or pursue other corporate activities.

We were in compliance with covenants under the Facility Agreement as of December 31, 2023.

Restrictions contained in the Facility governing any future indebtedness may reduce our ability to incur additional indebtedness, engage in certain transactions or capitalize on acquisition or other business opportunities.

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place us at a competitive disadvantage to those who have proportionately less debt.

Our ability to comply with these covenants could be affected by events beyond our control and we cannot assure you that we will satisfy those requirements.

In addition, our ability to comply with the Facility Agreement's covenants could be affected by events beyond our control and we cannot assure you that we will satisfy those requirements.

A prolonged period of oil and gas prices at declined levels could further increase the risk of our inability to comply with covenants to maintain specified financial ratios.

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We may also be prevented from taking advantage of business opportunities that arise if we fail to meet certain ratios or because of the limitations imposed on us by the restrictive covenants under the Facility.

If we experience in the future a continued period of low commodity prices, our ability to comply with the Facility ’

s debt covenants may be impacted.

Under the Facility Agreement, we are subject to certain debt covenants, including that (i) the ratio of Consolidated Total Net Debt to EBITDAX (as each term is defined in the Facility Agreement) for the trailing 12 months shall not exceed 3.0x and (ii) consolidated cash and cash equivalents shall not be lower than $10.0 million.

We were in compliance with covenants under the Facility through December 31, 2022;

however, commodity prices have been extremely volatile in recent history and a protracted future decline in commodity prices could cause us to not be in compliance with certain financial covenants under the Facility in future periods.

A breach of the covenants under the Facility would cause a default, potentially resulting in acceleration of all amounts outstanding under the Facility.

Certain payment defaults or acceleration under the Facility could cause a cross-default or cross-acceleration of other future outstanding indebtedness.

Such a cross-default or cross-acceleration could have a wider impact on our liquidity than might otherwise arise from a default or acceleration of a single debt instrument.

If an event of default occurs, or if other future debt agreements cross-default, and the lenders under the affected debt agreements accelerate the maturity of any loans or other debt outstanding, we may not have sufficient liquidity to repay all of our outstanding indebtedness.

The borrowing base under the Facility may be reduced pursuant to the terms of the Facility Agreement, which may limit our available funding for exploration and development.

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In the future we may depend on the Facility for a portion of our capital needs.

The initial maximum borrowing base under the Facility is $50.0 million (which maximum is reduced to $43.75 million beginning on October 1, 2023) and is re-determined on March 31 and September 30 of each year.

Borrowings under the Facility are limited to a borrowing base amount calculated pursuant to the Facility Agreement based on our proved producing reserves and a portion of our proved undeveloped reserves.

The initial maximum borrowing base under the Facility is $50.0 million (which maximum was reduced to $43.8 million beginning on October 1, 2023) and is re-determined on March 31 and September 30 of each year.

Borrowings under the Facility are limited to a borrowing base amount calculated pursuant to the Facility Agreement based on our proved producing reserves and a portion of our proved undeveloped reserves.

The lenders will re-determine the borrowing base based on forecasts of cash flow and debt service projections with respect to the borrowing base assets, which may result in a reduction of the borrowing base.

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If funding is not available when needed, or is available only on unfavorable terms, it could adversely affect our development plans as currently anticipated, which could have a material adverse effect on our production, revenues and results of operations.

Restrictive debt covenants could limit our growth and our ability to finance our operations, fund our capital needs, respond to changing conditions and engage in other business activities that may be in our best interests.

The Facility Agreement contains a number of significant affirmative and negative covenants that, among other things, restrict our ability to:

dispose of assets;

enter into guarantees or indemnities;

incur indebtedness;

enter into certain material contracts;

merge or consolidate, or transfer all or substantially all of our assets and the assets of our subsidiaries;

pursue other corporate activities.

Also, the Facility Agreement requires us to maintain compliance with certain financial covenants.

Our ability to comply with these financial covenants may be affected by events beyond our control, and, as a result, we may be unable to meet these financial covenants.

These financial covenants could limit our ability to obtain future financings, make needed capital expenditures, withstand a future downturn in our business or the economy in general or otherwise conduct necessary corporate activities.

We may also be prevented from taking advantage of business opportunities that arise because of the limitations imposed on us by the restrictive covenants under the Facility Agreement.

A breach of any of these covenants or our inability to comply with the required financial covenants could result in an event of default under the Facility Agreement.

When oil and/or natural gas prices decline for an extended period of time or when our liquidity is constrained, our ability to comply with these covenants becomes more difficult.

Although we are currently in compliance with these covenants, if in the future oil and gas prices decline for an extended period of time, we may default on one or more of these covenants.

Such a default, if not cured or waived, may allow the Lenders to accelerate the related indebtedness and could result in acceleration of any other indebtedness to which a cross-acceleration or cross-default provision applies.

An event of default under the Facility Agreement would permit the Lenders to cancel all commitments to extend further credit under the Facility.

Furthermore, if we were unable to repay the amounts due and payable under the Facility Agreement, the Lenders could proceed against the collateral granted to them to secure that indebtedness.

In the event that the Lenders accelerate the repayment of our borrowings under the Facility, we and our subsidiaries may not have sufficient assets to repay that indebtedness.

As a result of these restrictions, we may be:

limited in how we conduct our business;

unable to raise additional debt or equity financing during general economic, business or industry downturns;

unable to compete effectively or to take advantage of new business opportunities.

Risks Relating to Ownership of Our Common Stock

Risks Relating to Ownership of Our Common Stock

The price of our Common Stock may fluctuate significantly.

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In addition, the stock markets can experience considerable price and volume fluctuations.

Recent volatility in the financial markets has resulted in significant price and volume fluctuations that have affected the market prices of equity securities without regard to a company’s operating performance, underlying asset values or prospects.

Accordingly, the market price of our common stock may decline even if our operating results, underlying asset values or prospects have not changed.

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On February 14, 2023, we announced that our board of directors adopted a quarterly cash dividend policy of an expected $0.0625 per share of common stock commencing in the first quarter of 2023.

On November 1, 2022, we announced the approval by our board of directors of the share buyback program, which provides for an aggregate purchase of currently outstanding common stock up to $30 million over 20 months.

We also announced that we entered into the 10b5-1 Plan in order to effectuate, share buybacks in an aggregate amount of up to $30 million which commenced on November 17, 2022, and ends no later than August 16, 2024.

On November 1, 2022, the Company announced that the Company’s board of directors formally ratified and approved a share buyback program.

The board of directors also directed management to implement a Rule 10b5-1 trading plan (the “10b5-1 Plan”) to facilitate share purchases through open market purchases, privately negotiated transactions, or otherwise in compliance with Rule 10b-18 under the Securities Exchange Act of 1934.

The 10b5-1 Plan provides for an aggregate purchase of currently outstanding common stock up to $30 million over a maximum period of 20 months.

Payment for shares repurchased under the share buyback program will be funded using the Company's cash on hand and cash flow from operations.

To the extent we have adequate cash on hand and cash flows from operations, we will consider continuing to take these actions in the future.

1 unchanged sentence

As a result, no assurance can be given that we will be able to continue to pay dividends to our stockholders or the terms on which we will effectuate share buybacks in the future or that the level of any future dividends will achieve a market yield or increase or even be maintained over time, any of which could materially and adversely affect the market price of our common stock.

Dual-listing on the NYSE and the LSE may lead to an inefficient market in our common stock.

Dual-listing on the NYSE and the LSE may lead to an inefficient market in our common stock.

Our common stock is quoted on the NYSE and the LSE.

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This could result in time delays and additional cost for stockholders.

Our common stock is quoted and traded in USD on the NYSE and traded in GBX on the LSE.

Our common stock is quoted and traded in USD on the NYSE and traded in GBX on the LSE.

The market price of our common stock on those exchanges may also differ due to exchange rate fluctuations.

5 unchanged sentences

Any issuance of preferred shares would rank in priority to our shares of common stock with respect to the payment of dividends, liquidation, and other matters.

Our certificate of incorporation and bylaws do not contain any rights of pre-emption in favor of existing stockholders, which means that stockholders may be diluted if additional shares of common stock are issued.

Our stockholders do not have pre-emptive rights and we, without stockholder consent, may issue additional shares of common stock, preferred shares, warrants, rights, units and debt securities for general corporate purposes, including, but not limited to, working capital, capital expenditures, investments, acquisitions and repayment or refinancing of borrowings.

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Additionally, to the extent that pre-emptive rights are granted, stockholders in certain jurisdictions may experience difficulties or may be unable to exercise their pre-emptive rights.

The choice of forum provisions in our Third Amended and Restated Bylaws (the “

Bylaws ”

) could limit our stockholders ’

ability to obtain a favorable judicial forum for disputes.

Our Bylaws provide that the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for (i) any derivative action or proceeding brought in the name or right of the Company or on its behalf, (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee, stockholder or other agent of the Company to the Company or the stockholders, (iii) any action arising or asserting a claim arising pursuant to any provision of the General Corporation Law of Delaware (the “DGCL”) or any provision of our Restated Certificate of Incorporation, as amended (the “Charter”), or the Bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) any action asserting a claim governed by the internal affairs doctrine, including, without limitation, any action to interpret, apply, enforce or determine the validity of the Charter or the Bylaws.

The choice of forum provisions in our Third Amended and Restated Bylaws (the “ Bylaws ” ) could limit our stockholders ’ ability to obtain a favorable judicial forum for disputes.

Nonetheless, pursuant to our Bylaws, the foregoing provisions will not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.

Our Bylaws further provide that unless we consent in writing to the selection of an alternative forum, the federal district courts of the U.S.

Our Bylaws further provide that unless we consent in writing to the selection of an alternative forum, the federal district courts of the U.S.

shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.

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Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and have consented to the provisions in the Bylaws related to choice of forum.

The choice of forum provisions in our Bylaws may limit our stockholders’

ability to obtain a favorable judicial forum for disputes with us.

Additionally, the enforceability of choice of forum provisions in other companies’

governing documents has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our Bylaws to be inapplicable or unenforceable in such action.

The choice of forum provisions in our Bylaws may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.

Additionally, the enforceability of choice of forum provisions in other companies’ governing documents has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our Bylaws to be inapplicable or unenforceable in such action.

If so, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.

Unresolved Staff Comments

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors