VAALCO Energy, Inc. EGY is set to release first-quarter results on May 3. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 30 cents per share on revenues of $55.3 billion.

Let’s delve into the factors that might have influenced the West Africa-focused oil and gas finder’s results in the March quarter. But it’s worth taking a look at EGY’s previous-quarter performance first.

Highlights of Q4 Earnings & Surprise History

In the last-reported quarter, the Houston, TX-based international upstream operator beat the consensus mark on higher production and commodity prices. EGY had reported adjusted earnings per share of 21 cents, a penny above the Zacks Consensus Estimate. Revenues of $56.4 million generated by the firm also outperformed the Zacks Consensus Estimate by 20%.

VAALCO Energy beat the Zacks Consensus Estimate for earnings twice in the last four quarters and missed in the other two, resulting in an earnings surprise of 8.9%, on average. This is depicted in the graph below:

Vaalco Energy Inc Price and EPS Surprise

Vaalco Energy Inc price-eps-surprise | Vaalco Energy Inc Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for the first-quarter bottom line has been revised 43.4% downward in the past seven days. The estimated figure indicates a 100% jump year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 39.1% increase from the year-ago period.

Factors to Consider

EGY is likely to have cashed in on the surge in hydrocarbon realizations. In the previous three-month period, VAALCO’s average realized unit price for oil was $77.31 per barrel – a substantial increase from $42.07 in the year-ago period. The increase in crude price is most likely to have continued in the to-be-reported quarter, with oil revisiting its multi-year highs following geopolitical tensions and the ongoing macroeconomic recovery. This price boost is likely to have buoyed the first-quarter revenues and cash flows of VAALCO.

The company is also expected to have benefited from higher production during the three-month period ended March period. In the fourth quarter of 2021, the company’s output averaged 7,554 barrels of oil per day, up 62% from a year ago. The uptick is most likely to have continued in the to-be-reported quarter, thanks to EGY’s impressive production profile from its assets in the Gabon offshore Etame license.

On a somewhat bearish note, a higher expense structure might have dampened some of the positive impact. VAALCO Energy’s total operating cost in the fourth quarter increased some 90% year over year to $30.5 million. The upward cost trajectory is likely to have continued in the first quarter due to spurring production and labor-related outgo.