INCOME TAXES

6 Months Ended

Jun. 30, 2025

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Vaalco and its domestic subsidiaries file a consolidated U.S. federal income tax return. Certain foreign subsidiaries also file tax returns in their respective local jurisdictions including Canada, Egypt, Equatorial Guinea, Gabon, Côte d'Ivoire and Nigeria.

The foreign taxes payable are attributable to Gabon and Côte d'Ivoire as of June 30, 2025 and 2024.

The Company’s effective tax rate for the three months ended June 30, 2025, and 2024, excluding the impact of discrete items, was 52.91% and 43.78%, respectively. The Company’s effective tax rate for the six months ended June 30, 2025 and 2024, excluding the impact of discrete items, was 58.36% and 54.58%, respectively. For the three and six months ended June 30, 2025 and 2024, the Company’s overall effective tax rate was primarily impacted by tax rates in foreign jurisdictions higher than the US statutory rate and by non-deductible items associated with operations.

For the three months ended June 30, 2025, the income tax expense of $7.0 million includes a $3.1 million favorable oil price adjustment as a result of the change in value of the government of Gabon's allocation of Profit Oil between the time it was produced and the time it was taken in-kind. After excluding this impact, income taxes were $10.1 million for the period. For the six months ended June 30, 2025, the income tax expense of $23.1 million includes a $2.4 million favorable oil price adjustment as a result of the change in value of the government of Gabon's allocation of Profit Oil between the time it was produced and the time it was taken in-kind. After excluding this impact, income taxes were $25.4 million for the period.

As of June 30, 2025, the Company had no material uncertain tax positions. The Company’s policy is to recognize potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.