VAALCO Energy Announces Agreement With Group 42-BLR Group And Changes To Board Composition And Other Shareholder Friendly Actions

GROUP 42-BLR GROUP SUPPORTS BOARD ACTIONS TO ENHANCE SHAREHOLDER VALUE; WITHDRAWS CONSENT SOLICITATION

UNDER AGREEMENT, VAALCO TERMINATES STOCKHOLDER RIGHTS PLAN AND CANCELS PLANS FOR SPECIAL MEETING

HOUSTON, Dec. 23, 2015 /PRNewswire/ -- VAALCO Energy, Inc. (NYSE: EGY) ("VAALCO" or "the Company"), today announced that it has entered into an agreement with Group 42, Inc., Bradley L. Radoff and certain other participants (collectively, the "Group 42-BLR Group"), which beneficially owns approximately 11.1% of the Company's outstanding stock, regarding the composition of the VAALCO Board of Directors and certain other positive changes.  In connection with the agreement, the Group 42-BLR Group has withdrawn its consent solicitation to replace a majority of the directors of VAALCO, and the Company has cancelled its plans for a special meeting of stockholders on January 5, 2016.

Under the terms of the agreement, incumbent directors Messrs.James B. Jennings and O. Donaldson Chapoton will retire from the Board, effective immediately.  VAALCO will appoint the Chairman of Group 42, Mr. Michael Keane, to its Board and the Nominating and Corporate Governance and Compensation committees effective immediately. In connection with the settlement with the Group 42-BLR Group, the Board has also appointed another independent director, a representative of another stockholder of the Company.   In addition, VAALCO has committed to nominate for election a mutually agreeable independent member to its Board at the 2016 annual meeting of stockholders.  VAALCO has agreed to fix the size of the Board at no more than seven members until the 2016 annual meeting of stockholders at which time it will be increased to no more than eight members. The Company has also agreed to separate its Chairman and Chief Executive Officer roles. Mr. Andrew Fawthrop will assume the role of Chairman of the Board and Mr.Michael Keane will become Vice Chairman, effective immediately.

Pursuant to the agreement, VAALCO has also terminated its stockholder rights plan. 

The Group 42-BLR Group agreed to vote all of its shares in favor of the VAALCO Board's nominees at the 2016 annual meeting of stockholders and has entered into other customary standstill and voting commitments. 

Andrew Fawthrop, VAALCO's newly appointed Chairman, commented: "We believe this agreement with the Group 42-BLR Group reflects a collaborative solution and we have appreciated their valuable input on ways to improve the Company.  We welcome Michael as a new independent director of the VAALCO Board and expect to benefit from his perspective as we continue to execute our strategy to drive enhanced value for stockholders and ensure that VAALCO successfully navigates a challenging environment for the oil and gas industry. On behalf of the Board, I want to thank Jim and Don for their distinguished service and contributions to VAALCO.  Jim and Don have provided the VAALCO Board with valuable insights and direction drawn from decades of combined business experience."

"We appreciate VAALCO's constructive approach and the collaborative solutions offered by all parties and believe this agreement represents a great step in the right direction for VAALCO and its stockholders," said Paul A. Bell, Group 42's Chief Executive Officer and a principal member of the Group 42-BLR Group.  "We look forward to working together with Steve and his team towards our mutual goal of positioning VAALCO for success and increasing long-term value for all stockholders."

Steve Guidry, Chief Executive Officer and Director, said: "We are pleased to have reached an agreement. We look forward to working with our new board members in focusing and executing on our business strategy."

The Delaware Chancery Court ruled as invalid the provision in VAALCO's stockholder-approved charter that states the Company's duly elected directors can be removed from office only for cause.  

Vinson & Elkins L.L.P. and Young Conaway Stargatt & Taylor, LLP are serving as legal counsel to the Company.  Olshan Frome Wolosky LLP is serving as legal advisor to the Group 42-BLR Group. 

About Michael Keane

Mr. Keane is an executive with over 25 years of experience in business strategy, corporate finance and investment banking. He has served as the Chairman of the Board at Group 42, Inc. since 2010. Keane was previously a Clinical Professor of Finance at the University of Southern California's Marshall School of Business where he served for more than 10 years teaching courses in investments and corporate finance. He has also been a corporate finance executive for several NYSE-traded companies and was Managing Director of Investment Banking for Susquehanna International Group, Seidler Companies, Incorporated, and Kemper Securities, where he specialized in mergers and acquisitions, public offerings and private placements.  Michael Keane holds a law degree from the University of Texas, and an MBA in Finance from the University of Chicago.

About VAALCO

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

About Group 42, Inc.

Group 42 is a U.S.-based holding company that delivers innovative energy services to international and enterprise class customers around the globe. Through its subsidiaries and international joint ventures, it partners with other multinational energy companies that have expertise in applying technology-oriented solutions. Group 42 operates in North America, Asia Pacific, the Arabian Gulf, West Africa and the North Sea.

About Bradley L. Radoff

Bradley L. Radoff is a private investor.

Forward Looking Statements

This news release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those concerning VAALCO's plans, expectations, and objectives for future drilling, completion and other operations and activities. All statements, other than statements of historical facts, included in this news release that address activities, events or developments that VAALCO expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements include expected capital expenditures, future drilling plans, prospect evaluations, liquidity, negotiations with governments and third parties, expectations regarding processing facilities, and reserve growth. These statements are based on assumptions made by VAALCO based on its experience, perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond VAALCO's control. These risks include, but are not limited to, oil and gas price volatility, inflation, general economic conditions, the Company's success in discovering, developing and producing reserves, lack of availability of goods, services and capital, environmental risks, drilling risks, foreign operational risks, and regulatory changes. These and other risks are further described in VAALCO's annual report on Form 10-K for the year ended December 31, 2014, subsequent quarterly reports on Form 10-Q, and other reports filed with the SEC, which can be reviewed at http://www.sec.gov, or which can be received by contacting VAALCO at 9800 Richmond Avenue, Suite 700, Houston, Texas 77042, (713) 623-0801. Investors are cautioned that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. VAALCO disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. VAALCO assumes no obligation to update any forward-looking statement as of any future date.

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SOURCE VAALCO Energy, Inc.

For further information: Investor Contacts - Don McCormack, Chief Financial Officer, 713-212-1038, OR Al Petrie, Investor Relations Coordinator, 713-543-3422

Tech Bloc Wins 2015 Tech Flash Titans Award

A local nonprofit has made waves in the San Antonio tech scene and was awarded the San Antonio Business Journal's tech Flash Titans award for its work. Eric Bell, Group 42's Vice President of Corporate Development, serves on Tech Bloc's board. Tech Bloc is a nonprofit activating San Antonio's tech industry as one voice to support public and private work needed to build a robust tech economy for SA into the 21st century.

On Dec. 10, the San Antonio Business Journal wrote:

"The San Antonio Business Journal recognized its 2015 Tech Flash Titans Awards winners during an evening event Dec. 9 at the McNay Art Museum. More than 300 people from the tech community came out to honor 15 winners — consisting of people and organizations — in 10 categories meant to reflect the broad spectrum of tech-based activity in the Alamo City.

"Tech Bloc is a tech- and urban-centric organization seeking to position San Antonio to better compete internationally as a tech city. A voice for the technology ecosystem in San Antonio, Tech Bloc is uniting students, workers, job creators and urbanists to promote technology education, innovation, job growth and entrepreneurship. Tech Bloc works with regional leaders to enhance San Antonio's urban livability and improve its attractiveness as a career destination for creative-class workers and entrepreneurs.

"Since its inception in May [2015], Tech Bloc has created a movement that has energized and unified a large portion of San Antonio's technology community. Following decisions by rideshare service companies to not comply with city of San Antonio operating requirements, Tech Bloc rallied pro-rideshare interests across the community and became a key stakeholder in bringing various interests back into negotiations."

Group 42 Sponsors 10th Annual Salvation Army Angel Tree Golf Tournament

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Group 42 sponsored the 10th Annual IPAC Angel Tree Golf Tournament benefiting The Salvation Army of San Antonio, held at Oak Hills Country Club on Dec. 7, 2015. After the event, 100% of proceeds are given by the Salvation Army of San Antonio to help children and families in the area who need assistance during the holiday season.

In 2014, the Angel Tree Golf Tournament raised enough money to assist over 7,000 children and families throughout the San Antonio area. To date, the Angel Tree Golf Tournament has yielded over $500,000, which all goes to supporting those in our community who need it the most. 

For more than 100 years, The Salvation Army has been faithfully serving Texans, and Group 42 remains committed to helping our neighbors in need through supporting the Salvation Army.

Group 42 and Bradley Radoff Set the Record Straight for VAALCO Shareholders

NEW YORK--(BUSINESS WIRE)--Group 42, Inc. and Bradley Radoff (and related entities) (“the Group”), together the beneficial owners of approximately 11.1% of the outstanding shares of VAALCO Energy, Inc. ("VAALCO" or the "Company") (NYSE: EGY), and the Company’s largest stockholder, today issued the following statement to explain in clear and simple terms the legal questions VAALCO has misleadingly raised with regard to the Group’s intended consent solicitation:

  • Our consent solicitation is a legal, valid and proper process to replace directors on VAALCO’s Board. VAALCO’s claim is that their directors have a duty to enforce a Charter provision that is invalid under Delaware law. We do not agree that any Delaware Board has a duty to shut down shareholder action in order to enforce an invalid provision in violation of the state statute.
  • Our consent solicitation is the most efficient, effective and democratic way for the shareholders’ voices to be heard. So why is the Board offering to call a special meeting instead? Simple. Because as disclosed in the Company’s filing with the SEC this morning, at such a special meeting, as a pre-condition to shareholders voting on our proposals they will first have to approve by the vote of 66 2/3% of the outstanding shares an amendment to the invalid Charter provision that does not need to be amended for a valid removal of directors. In other words, by adding a requirement that shareholders invalidate the already invalid provision the Board is making it more likely that they will keep their jobs.
  • The Board’s claim that it is “committed to shareholder democracy” seems disingenuous at best given their actions. We do not view as “shareholder democracy” an attempt to force shareholders to pursue an unnecessary special meeting process that imposes hurdles to shareholders voicing their positions. Certainly not when there is a perfectly valid consent solicitation process that we, their largest shareholder, are already pursing. A Board committed to shareholder democracy would not have adopted a poison pill despite their shareholders unequivocally voting against a poison pill just a few years ago.
  • The Board claims that we have “threatened litigation” and otherwise tries to imply that our pursuit of a valid consent solicitation is a choice for protracted and expensive litigation. This is once again not true. We have not threatened litigation because we do not see any reason to go to court when the Delaware statute is extremely clear in its language that “any director or the entire board may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors…” If the Board’s view of shareholder democracy involves challenging in court shareholders’ ability to remove directors despite the clear language of the statute then this is their prerogative. We do not desire litigation, however, should the Board attempt to enforce invalid charter provisions, we will most vigorously defend our right and the rights of all VAALCO shareholders to replace the Company’s directors as permitted by the Delaware statute. Similarly, if we successfully gather sufficient number of consents to remove VAALCO directors and the Board attempts to disregard shareholders and challenges the results we will be relentless in seeking validation of the results in the Delaware courts if necessary and seeing the shareholders’ will implemented.

It is clear to us that the Board is simply trying to avoid accountability for VAALCO’s share price being down 56% this year, the reckless drilling of a $27.2 million dry hole, and G&A costs that are impossible to justify in light of the current environment.

So instead the Board is apparently trying to change the conversation with confusing and misleading statements that run counter to the facts and the law. We feel it is important to set the record straight with shareholders and make clear that our intended consent solicitation is legal and valid. As a result, we remain committed to proceeding with soliciting consents to replace a majority of the Company’s Board of Directors. We will not allow VAALCO’s transparent attempts to mislead investors to get in the way of overdue change at the Company.

Further, we reiterate our Group’s willingness to meet with the Board at any time to discuss a reasonable settlement that would bring meaningful change to VAALCO. We remain disappointed that despite our extensive efforts to engage with the Board over the past four months, they continue to only repeat the same inadequate offer, demonstrating a complete lack of good faith to resolve this situation. Our only objective is to deliver value for all shareholders of VAALCO, and we remain steadfast in this conviction.

About Group 42, Inc.:

Group 42 is a U.S.-based holding company that delivers innovative energy services to international and enterprise class customers around the globe. Through its subsidiaries and international joint ventures, it partners with other multinational energy companies that have expertise in applying technology-oriented solutions. Group 42 operates in North America, Asia Pacific, the Arabian Gulf, West Africa and the North Sea.

About Bradley L. Radoff:

Bradley L. Radoff is a private investor based in Houston, Texas.

CERTAIN INFORMATION CONCERNING THE PARTICIPANTS

Group 42, Inc. (“Group 42”), together with the other participants named herein (collectively, the “Group 42-BLR Group”), has made a preliminary filing with the Securities and Exchange Commission (“SEC”) of a consent statement and an accompanying consent card to be used to solicit consents from stockholders of VAALCO Energy, Inc., a Delaware corporation (“VAALCO” or the “Company”), for a number of proposals, the ultimate effect of which would be to remove four current members of the Board of Directors of VAALCO, and replace them with the Stockholder Group’s four highly qualified director nominees.

THE GROUP 42-BLR GROUP STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ THE CONSENT STATEMENT AND OTHER CONSENT MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH CONSENT MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE ATHTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THIS CONSENT SOLICITATION WILL PROVIDE COPIES OF THE CONSENT STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS' CONSENT SOLICITOR.

Group 42, Inc., Paul A. Bell, BLR Partners LP (“BLR Partners”), BLRPart, LP (“BLRPart GP”), BLRGP Inc. (“BLRGP”), Fondren Management, LP (“Fondren Management”), FMLP Inc. (“FMLP”), The Radoff Family Foundation (“Radoff Foundation”), Bradley L. Radoff, Pete J. Dickerson, Michael Keane, and Joshua E. Schechter are participants in this solicitation.

As of the date hereof, Group 42 owned directly 2,499,692 shares of Common Stock. Paul A. Bell, who serves on the board and as the President and Chief Executive Officer of Group 42, may be deemed to beneficially own the 2,499,692 shares owned by Group 42. As of the date hereof, BLR Partners owned directly 1,951,095 shares of Common Stock. BLRPart GP, as the general partner of BLR Partners, may be deemed to beneficially own the 1,951,095 shares owned by BLR Partners. BLRGP, as the general partner of BLRPart GP, may be deemed to beneficially own the 1,951,095 shares owned by BLR Partners. Fondren Management, as the investment manager of BLR Partners, may be deemed to beneficially own the 1,951,095 shares owned by BLR Partners. FMLP, as the general partner of Fondren Management, may be deemed to beneficially own the 1,951,095 shares owned by BLR Partners. As of the date hereof, the Radoff Foundation owned directly 85,000 shares of Common Stock. As of the date hereof, Bradley L. Radoff owned directly 1,938,905 shares of Common Stock and, as the sole stockholder and sole director of each of BLRGP and FMLP and a director of Radoff Foundation, may be deemed to beneficially own the 1,951,095 shares owned by BLR Partners and the 85,000 shares owned by the Radoff Foundation. As of the date hereof, none of Messrs. Dickerson, Keane or Schechter beneficially owned any shares of Common Stock.

 

Contacts

Investors:
Innisfree M&A Incorporated
Scott Winter / Jonathan Salzberger
212-750-5833
or
Media:
Sloane & Company
Elliot Sloane, 212-446-1860
or Dan Zacchei, 212-446-1882