Document:

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                                                                    EXHIBIT 10.3

                             SUBSCRIPTION AGREEMENT

VAALCO International, Inc.
4600 Post Oak Place, Suite 309
Houston, Texas 77027

Ladies and Gentlemen:

     This subscription agreement (this "Agreement") is intended to set forth
certain agreements of the undersigned (the "Stockholder") and VAALCO
International, Inc., a Delaware corporation (the "Company"), with respect to the
offering for sale by the Company of shares of common stock, par value $.001 per
share (the "Common Stock").

     1. Subscription. Subject to the terms and conditions hereof, the
Stockholder, hereby irrevocably subscribes for and agrees to purchase 10,000
shares of Common Stock (collectively, the "Shares") for the sum of $3,291,315 in
cash on or before December 31, 2002.

     2. Acceptance of Subscription: Delivery of Shares. The Stockholder
understands and agrees that this subscription is made subject to the following
terms and conditions:

          (a) The subscription for the Shares shall be deemed to be accepted
only when this Subscription Agreement has been accepted in writing by the
Company;

          (b) The Shares to be issued and delivered on account of this
subscription will be issued in the name of, and delivered to, the Stockholder or
its assignee, and the Stockholder agrees to comply with the terms of this
Agreement; and

     3. Miscellaneous.

          (a) This Agreement shall be governed by and construed in accordance
with the laws of Texas, notwithstanding principles of conflicts of laws.

          (b) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof, and may be amended only by a
writing executed by all parties hereto.

          (c) This Agreement and the terms and conditions contained herein shall
be binding upon the heirs, executors, legal representatives, administrators,
successors and permitted assigns of the Stockholder. The rights, interests or
obligations of the Stockholder under this Agreement may be assigned or otherwise
transferred with the prior written consent of the Company.

                                       1

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     IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
                        , 2002.
-------------------- ---

                                              ----------------------------------
                                              VAALCO ENERGY, INC.

The Company hereby accepts the foregoing subscription subject to the terms and
conditions hereof as of                      , 2002.
                        ----------------- ---

                                              VAALCO INTERNATIONAL, INC.

                                              By:
                                                  ------------------------------
                                              Name:
                                                    ----------------------------
                                              Title:
                                                     ---------------------------

                                       2<PAGE>

                                                                    EXHIBIT 10.4

                AMENDED & RESTATED REGISTRATION RIGHTS AGREEMENT

                                  by and among

                              VAALCO ENERGY, INC.,

                             NISSHO IWAI CORPORATION

                                       and

                             THE 1818 FUND II, L.P.

                     ---------------------------------------

                           Dated as of August 23, 2002

                     ---------------------------------------

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                      Page No.
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<S>  <C>                                                                                                 <C>
1.   Background...........................................................................................1

2.   Registration Under Securities Act, etc...............................................................1

     2.1  Registration on Request.........................................................................1
     2.2  Incidental Registration.........................................................................3
     2.3  Registration Procedures.........................................................................4
     2.4  Underwritten Offerings..........................................................................7
     2.5  Preparation; Reasonable Investigation...........................................................8
     2.6  Limitations, Conditions and Qualifications to Obligations under Registration Covenants..........9
     2.7  Indemnification.................................................................................9

3.   Definitions.........................................................................................12

4.   Rule 144 and Rule 144A..............................................................................14

5.   Amendments and Waivers..............................................................................14

6.   Nominees for Beneficial Owners......................................................................14

7.   Notices.............................................................................................14

8.   Assignment..........................................................................................16

9.   Calculation of Percentage Interests in Registrable Securities.......................................16

10.  No Inconsistent Agreements..........................................................................16

11.  Remedies............................................................................................16

12.  Certain Distributions...............................................................................16

13.  Severability........................................................................................17

14.  Entire Agreement....................................................................................17

15.  Headings............................................................................................17

16.  GOVERNING LAW.......................................................................................17

17.  Counterparts........................................................................................17
</TABLE>

                                      -i-

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          AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this "Agreement"),
dated as of August 23, 2002, by and among VAALCO ENERGY, INC., a Delaware
corporation (the "Company"), THE 1818 FUND II, L.P., a Delaware limited
partnership (the "Fund"), and NISSHO IWAI CORPORATION, a corporation organized
under the laws of Japan ("NIC" and together with the Fund, the "Purchasers").

          1. Background. Pursuant to a Stock Acquisition Agreement and Plan of
Reorganization, dated February 17, 1998 (the "Purchase Agreement"), among the
Company, the Fund and 1818 Oil Corp., a Delaware corporation, the Fund agreed to
purchase from the Company, and the Company agreed to issue to the Fund (i) an
aggregate of 10,000 shares of preferred stock, par value $25.00 per share (the
"Preferred Stock"), of the Company and (ii) an aggregate of 3,763,441 shares of
common stock, par value $.01 per share (the "Common Stock"), of the Company.

          Pursuant to a Subordinated Credit Agreement, dated as of June 10,
2002, as amended, by and among the Company and the Fund (the "Credit
Agreement"), the Fund received warrants to purchase shares of Common Stock and
pursuant to a Stock Purchase Agreement, dated as of August 23, 2002, by and
among the Company, NIC and Vaalco International, Inc., a Delaware corporation
(the "Stock Purchase Agreement"), NIC received warrants to purchase shares of
Common Stock (collectively, the "Warrants").

          The Company and 1818 wish to amend and restate this Agreement so that
(i) the shares of Common Stock issuable upon exercise of the Warrants are
covered by this Agreement, (ii) NIC becomes a party to this Agreement and (iii)
certain other changes agreed to by the parties hereto are reflected in the
Agreement. Accordingly, the parties hereby amend and restate the Registration
Rights Agreement, dated April 21, 1998 between the Company and 1818 Fund (the
"1998 Agreement") with this Agreement superseding the 1998 Agreement in its
entirety.

          Capitalized terms used herein but not otherwise defined shall have the
meanings given them in Section 3.

          2. Registration Under Securities Act, etc.

               2.1 Registration on Request.

                    (a) Request. At any time, or from time to time, one or more
holders (the "Initiating Holders") of not less than 5% of the Registrable
Securities may, upon written request, require the Company to effect the
registration under the Securities Act of any Registrable Securities held by such
Initiating Holders. The Company promptly will give written notice of such
requested registration to all other holders of Registrable Securities who may
join in such registration, and thereupon the Company will use its best efforts
to effect, at the earliest possible date, the registration under the Securities
Act

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                         (i) the Registrable Securities that the Company has
     been so requested to register by such Initiating Holders, and

                         (ii) all other Registrable Securities that the Company
     has been requested to register by the holders thereof (such holders
     together with the Initiating Holders hereinafter are referred to as the
     "Selling Holders") by written request given to the Company within 30 days
     after the giving of such written notice by the Company, all to the extent
     requisite to permit the disposition of the Registrable Securities so to be
     registered.

                    (b) Registration of Other Securities. Whenever the Company
shall effect a registration pursuant to this Section 2.1, no securities other
than Registrable Securities shall be included among the securities covered by
such registration unless (subject to Section 2.1(f)) the Selling Holders of not
less than 51% of all Registrable Securities to be covered by such registration
shall have consented in writing to the inclusion of such other securities.

                    (c) Registration Statement Form. Registrations under this
Section 2.1 shall be on such appropriate registration form of the Commission as
shall be reasonably selected by the Company.

                    (d) Effective Registration Statement. A registration
requested pursuant to this Section 2.1 shall not be deemed to have been effected
(i) unless a registration statement with respect thereto has become effective
and remained effective in compliance with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities covered by such
registration statement until the earlier of (x) such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof set forth in such
registration statement and (y) 180 days after the effective date of such
registration statement, except with respect to any registration statement filed
pursuant to Rule 415 under the Securities Act, in which case the Company shall
use its best efforts to keep such registration statement effective until such
time as all of the Registrable Securities cease to be Registrable Securities,
(ii) if after it has become effective, such registration is interfered with by
any stop order, injunction or other order or requirement of the Commission or
other governmental agency or court for any reason not attributable to the
Selling Holders and has not thereafter become effective, or (iii) if the
conditions to closing specified in the underwriting agreement, if any, entered
into in connection with such registration are not satisfied or waived, other
than solely by reason of a failure on the part of the Selling Holders.

                    (e) Selection of Underwriters. The underwriter or
underwriters of each underwritten offering of the Registrable Securities so to
be registered shall be selected by the Selling Holders of more than 50% of the
Registrable Securities to be included in such registration and shall be
reasonably acceptable to the Company.

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                    (f) Priority in Requested Registration. If the managing
underwriter of any underwritten offering shall advise the Company in writing
(and the Company shall so advise each Selling Holder of Registrable Securities
requesting registration of such advice) that, in its opinion, the number of
securities requested to be included in such registration exceeds the number that
can be sold in such offering within a price range acceptable to the Selling
Holders of 66-2/3% of the Registrable Securities requested to be included in
such registration, the Company, except as provided in the following sentence,
will include in such registration, to the extent of the number and type that the
Company is so advised can be sold in such offering, Registrable Securities
requested to be included in such registration, pro rata among the Selling
Holders requesting such registration on the basis of the estimated gross
proceeds from the sale thereof. If the total number of Registrable Securities
requested to be included in such registration cannot be included as provided in
the preceding sentence, holders of Registrable Securities requesting
registration thereof pursuant to Section 2.1, representing not less than 33-1/3%
of the Registrable Securities with respect to which registration has been
requested and constituting not less than 66-2/3% of the Initiating Holders,
shall have the right to withdraw the request for registration by giving written
notice to the Company within 20 days after receipt of such notice by the Company
and, in the event of such withdrawal, such request shall not be counted for
purposes of the requests for registration to which holders of Registrable
Securities are entitled pursuant to Section 2.1 hereof. In connection with any
such registration to which this Section 2.1(f) is applicable, no securities
other than Registrable Securities shall be covered by such registration.

                    (g) Limitations on Registration on Request. Notwithstanding
anything in this Section 2.1 to the contrary, in no event will the Company be
required to effect, in the aggregate, more than four registrations pursuant to
this Section 2.1.

                    (h) Expenses. The Company will pay all Registration Expenses
in connection with any registration requested pursuant to this Section 2.1.

               2.2 Incidental Registration.

                    (a) Right to Include Registrable Securities. If the Company
at any time proposes to register any shares of Common Stock or any securities
convertible into Common Stock under the Securities Act by registration on any
form other than Forms S-4 or S-8, whether or not for sale for its own account,
it will each such time give prompt written notice to all registered holders of
Registrable Securities of its intention to do so and of such holders' rights
under this Section 2.2. Upon the written request of any such holder (a
"Requesting Holder") made as promptly as practicable and in any event within 15
days after the receipt of any such notice, the Company will use its best efforts
to effect the registration under the Securities Act of all Registrable
Securities that the Company has been so requested to register by the Requesting
Holders thereof; provided, however, that prior to the effective date of the
registration statement filed in connection with such registration, immediately
upon notification to the Company from the managing underwriter of the price at
which such securities are to be sold, if such price is below the price that any
Requesting Holder shall have indicated to be acceptable to

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                                                                               4

such Requesting Holder, the Company shall so advise such Requesting Holder of
such price, and such Requesting Holder shall then have the right to withdraw its
request to have its Registrable Securities included in such registration
statement; provided further, that if, at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each Requesting Holder of Registrable Securities and (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from any obligation of the Company to pay the Registration Expenses in
connection therewith), without prejudice, however, to the rights of any holder
or holders of Registrable Securities entitled to do so to cause such
registration to be effected as a registration under Section 2.1, and (ii) in the
case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such other securities. Notwithstanding anything contained in this
Section 2.2(a), the Company shall not, if any Requesting Holder shall have
requested the registration of shares of Common Stock issuable upon conversion of
any Preferred Stock or exercise of any Warrants or other warrants issued under
the Credit Agreement, consummate the sale of the securities included in the
registration until such time as any applicable waiting period under the
Hart-Scott-Rodino Act shall have expired or early termination thereunder shall
have been granted if such Requesting Holder notifies the Company that it is
required to make a filing under the Hart-Scott-Rodino Act before it may convert
its Preferred Stock. No registration effected under this Section 2.2 shall
relieve the Company of its obligation to effect any registration upon request
under Section 2.1.

                    (b) Priority in Incidental Registrations. If the managing
underwriter of any underwritten offering shall inform the Company by letter of
its opinion that the number or type of Registrable Securities requested to be
included in such registration would materially adversely affect such offering,
and the Company has so advised the Requesting Holders in writing, then the
Company will include in such registration, to the extent of the number and type
that the Company is so advised can be sold in (or during the time of) such
offering, first, all securities proposed by the Company to be sold for its own
account and second, all other securities proposed to be registered pro rata on
the basis of the estimated proceeds from the sale thereof.

                    (c) Expenses. The Company will pay all Registration Expenses
in connection with any registration effected pursuant to this Section 2.2.

               2.3 Registration Procedures. If and whenever the Company is
required to effect the registration of any Registrable Securities under the
Securities Act as provided in Sections 2.1 and 2.2, the Company will, as
expeditiously as possible:

                    (i) prepare and (within 90 days after the end of the period
     within which requests for registration may be given to the Company or in
     any event as soon thereafter as practicable) file with the Commission the
     requisite registration statement to effect such registration and thereafter
     use its best efforts

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     to cause such registration statement to become effective; provided,
     however, that the Company may discontinue any registration of its
     securities that are not Registrable Securities (and, under the
     circumstances specified in Sections 2.2(a) or 2.6, if applicable, its
     securities that are Registrable Securities) at any time prior to the
     effective date of the registration statement relating thereto;

                    (ii) prepare and file with the Commission such amendments
     and supplements to such registration statement and the prospectus used in
     connection therewith as may be necessary to keep such registration
     statement effective and to comply with the provisions of the Securities Act
     with respect to the disposition of all Registrable Securities covered by
     such registration statement until the earlier of (a) such time as all of
     such Registrable Securities have been disposed of in accordance with the
     intended methods of disposition by the seller or sellers thereof set forth
     in such registration statement and (b) 180 days after the effective date of
     such registration statement, except with respect to any registration
     statement filed pursuant to Rule 415 under the Securities Act if the
     Company is eligible to file a registration statement on Form S-3, in which
     case the Company shall use its best efforts to keep the registration
     statement effective and updated, from the date such registration statement
     is declared effective until such time as all of the Registrable Securities
     cease to be Registerable Securities;

                    (iii) furnish to each seller of Registrable Securities
     covered by such registration statement, such number of conformed copies of
     such registration statement and of each such amendment and supplement
     thereto (in each case including all exhibits), such number of copies of the
     prospectus contained in such registration statement (including each
     preliminary prospectus and any summary prospectus) and any other prospectus
     filed under Rule 424 under the Securities Act, in conformity with the
     requirements of the Securities Act, and such other documents, as such
     seller may reasonably request;

                    (iv) use its best efforts (x) to register or qualify all
     Registrable Securities and other securities covered by such registration
     statement under such other securities or blue sky laws of such States of
     the United States of America where an exemption is not available and as the
     sellers of Registrable Securities covered by such registration statement
     shall reasonably request, (y) to keep such registration or qualification in
     effect for so long as such registration statement remains in effect and (z)
     to take any other action that may be reasonably necessary or advisable to
     enable such sellers to consummate the disposition in such jurisdictions of
     the securities to be sold by such sellers, except that the Company shall
     not for any such purpose be required to qualify generally to do business as
     a foreign corporation in any jurisdiction wherein it would not but for the
     requirements of this subdivision (iv) be obligated to be so qualified or to
     consent to general service of process in any such jurisdiction;

                    (v) use its best efforts to cause all Registrable Securities
     covered by such registration statement to be registered with or approved by
     such other federal or state governmental agencies or authorities as may be
     necessary in

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     the opinion of counsel to the Company and counsel to the seller or sellers
     of Registrable Securities to enable the seller or sellers thereof to
     consummate the disposition of such Registrable Securities;

                    (vi) in the case of an underwritten or "best efforts"
     offering, furnish at the effective date of such registration statement to
     each seller of Registrable Securities, and each such seller's underwriters,
     if any, a signed counterpart of:

                         (x) an opinion of counsel for the Company, dated the
          effective date of such registration statement and, if applicable, the
          date of the closing under the underwriting agreement, and

                         (y) a "comfort" letter signed by the independent public
          accountants who have certified the Company's financial statements
          included or incorporated by reference in such registration statement,

     covering substantially the same matters with respect to such registration
     statement (and the prospectus included therein) and, in the case of the
     accountants' comfort letter, with respect to events subsequent to the date
     of such financial statements, as are customarily covered in opinions of
     issuer's counsel and in accountants' comfort letters delivered to the
     underwriters in underwritten public offerings of securities and, in the
     case of the accountants' comfort letter, such other financial matters, and,
     in the case of the legal opinion, such other legal matters, as the
     underwriters may reasonably request;

                    (vii) cause representatives of the Company to participate in
     any "road show" or "road shows" reasonably requested by any underwriter of
     an underwritten or "best efforts" offering of any Registrable Securities;

                    (viii) notify each seller of Registrable Securities covered
     by such registration statement at any time when a prospectus relating
     thereto is required to be delivered under the Securities Act, upon
     discovery that, or upon the happening of any event as a result of which,
     the prospectus included in such registration statement, as then in effect,
     includes an untrue statement of a material fact or omits to state any
     material fact required to be stated therein or necessary to make the
     statements therein not misleading, in the light of the circumstances under
     which they were made, and at the request of any such seller promptly
     prepare and furnish to it a reasonable number of copies of a supplement to
     or an amendment of such prospectus as may be necessary so that, as
     thereafter delivered to the purchasers of such securities, such prospectus
     shall not include an untrue statement of a material fact or omit to state a
     material fact required to be stated therein or necessary to make the
     statements therein not misleading in the light of the circumstances under
     which they were made;

                    (ix) otherwise use its best efforts to comply with all
     applicable rules and regulations of the Commission, and make available to
     its

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     security holders, as soon as reasonably practicable, an earnings statement
     covering the period of at least twelve months, but not more than eighteen
     months, beginning with the first full calendar month after the effective
     date of such registration statement, which earnings statement shall satisfy
     the provisions of Section 11(a) of the Securities Act and Rule 158
     promulgated thereunder, and promptly furnish to each such seller of
     Registrable Securities a copy of any amendment or supplement to such
     registration statement or prospectus;

                    (x) provide and cause to be maintained a transfer agent and
     registrar (which, in each case, may be the Company) for all Registrable
     Securities covered by such registration statement from and after a date not
     later than the effective date of such registration; and

                    (xi) if any class of securities of the Company is listed on
     any national securities exchange or automated quotation system at the time
     of the effectiveness of any registration statement, the Company shall use
     its best efforts to list all Registrable Securities covered by such
     registration statement on such national securities exchange or automated
     quotation system.

The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company in a reasonably prompt
manner such information regarding such seller and the distribution of such
securities as the Company may from time to time reasonably request in writing;
provided, that any such information shall be given or made by a seller of
Registrable Securities without representation or warranty of any kind whatsoever
except representations with respect to the identity of such seller, such
seller's Registrable Securities and such seller's intended method of
distribution or any other representations required by applicable law.

          Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in subdivision (viii) of this
Section 2.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (viii) of this
Section 2.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.

               2.4 Underwritten Offerings.

                    (a) Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offering by holders of Registrable Securities
pursuant to a registration requested under Section 2.1, the Company will use its
best efforts to enter into an underwriting agreement with such underwriters for
such offering, such agreement to be reasonably satisfactory in substance and
form to each such holder of Registrable Securities and the underwriters and to
contain such representations and

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                                                                               8

warranties by the Company and such other terms as are generally prevailing in
agreements of that type, including, without limitation, indemnities to the
effect and to the extent provided in Section 2.7. The holders of the Registrable
Securities proposed to be sold by such underwriters will reasonably cooperate
with the Company in the negotiation of the underwriting agreement. Such holders
of Registrable Securities to be sold by such underwriters shall be parties to
such underwriting agreement and may, at their option, require that any or all of
the representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made to
and for the benefit of such holders of Registrable Securities and that any or
all of the conditions precedent to the obligations of such underwriters under
such underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. No holder of Registrable Securities shall be
required to make any representations or warranties to, or agreements with, the
Company other than representations or warranties regarding the identity of such
holder, such holder's Registrable Securities and such holder's intended method
of distribution or any other representations required by applicable law.

                    (b) Incidental Underwritten Offerings. If the Company
proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any
Requesting Holder of Registrable Securities, use its best efforts to arrange for
such underwriters to include all the Registrable Securities to be offered and
sold by such Requesting Holder among the securities of the Company to be
distributed by such underwriters, subject to the provisions of Section 2.2(b).
The holders of Registrable Securities to be distributed by such underwriters
shall be parties to the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such Requesting Holder of Registrable
Securities shall not be required to make any representations or warranties to or
agreements with the Company or the underwriters other than representations or
warranties regarding the identity of such Requesting Holder, such Requesting
Holder's Registrable Securities and such Requesting Holder's intended method of
distribution or any other representations required by applicable law.

                    (c) Underwriting Discounts and Commission. The holders of
Registrable Securities sold in any offering pursuant to Section 2.4(a) or
Section 2.4(b) shall pay all underwriting discounts and commissions of the
underwriter or underwriters with respect to the Registrable Securities sold
thereby.

               2.5 Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, the underwriters, if
any, and their respective counsel

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                                                                               9

the opportunity to participate in the preparation of such registration
statement, each prospectus included therein or filed with the Commission, and
each amendment thereof or supplement thereto, and will give each of them such
reasonable access to its books and records and such opportunities to discuss the
business of the Company with its officers and the independent public accountants
who have certified its financial statements as shall be necessary, in the
opinion of such holders' and such underwriters' respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.

               2.6 Limitations, Conditions and Qualifications to Obligations
under Registration Covenants. The Company shall be entitled to postpone for a
reasonable period of time (but not exceeding 90 days) the filing of any
registration statement otherwise required to be prepared and filed by it
pursuant to Section 2.1 if the Company determines, in its good faith judgment,
that such registration and offering would interfere with any material financing,
acquisition, corporate reorganization or other material transaction involving
the Company or any of its affiliates and promptly gives the holders of
Registrable Securities requesting registration thereof pursuant to Section 2.1
written notice of such determination, containing a general statement of the
reasons for such postponement and an approximation of the anticipated delay. If
the Company shall so postpone the filing of a registration statement, holders of
Registrable Securities requesting registration thereof pursuant to Section 2.1,
representing not less than 33-1/3% of the Registrable Securities with respect to
which registration has been requested and constituting not less than 66-2/3% of
the Initiating Holders, shall have the right to withdraw the request for
registration by giving written notice to the Company within 30 days after
receipt of the notice of postponement and, in the event of such withdrawal, such
request shall not be counted for purposes of the requests for registration to
which holders of Registrable Securities are entitled pursuant to Section 2.1
hereof.

               2.7 Indemnification.

                    (a) Indemnification by the Company. The Company will, and
hereby does, indemnify and hold harmless, in the case of any registration
statement filed pursuant to Section 2.1 or 2.2, each seller of any Registrable
Securities covered by such registration statement and each other Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls such seller or any such underwriter
within the meaning of the Securities Act, and their respective directors,
officers, partners, members, agents and affiliates against any losses, claims,
damages or liabilities, joint or several, to which such seller or underwriter or
any such director, officer, partner, member, agent, affiliate or controlling
person may become subject under the Securities Act or otherwise, including,
without limitation, the fees and expenses of legal counsel (including those
incurred in connection with any claim for indemnity hereunder), insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make

<PAGE>

                                                                              10

the statements therein in light of the circumstances in which they were made not
misleading, and the Company will reimburse such seller or underwriter and each
such director, officer, partner, member, agent, affiliate and controlling Person
for any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, liability, action or
proceeding; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such seller or underwriter, as the case may be, specifically stating that it is
for use in the preparation thereof; and provided, further, that the Company
shall not be liable to any Person who participates as an underwriter in the
offering or sale of Registrable Securities or any other Person, if any, who
controls such underwriter within the meaning of the Securities Act, in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such Person's failure to
send or give a copy of the final prospectus, as the same may be then
supplemented or amended, to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such final prospectus. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such seller or any such director, officer, partner, member, agent
or controlling person and shall survive the transfer of such securities by such
seller.

                    (b) Indemnification by the Sellers. As a condition to
including any Registrable Securities in any registration statement, the Company
shall have received an undertaking satisfactory to it from the prospective
seller of such Registrable Securities, to indemnify and hold harmless (in the
same manner and to the same extent as set forth in Section 2.7(a)) the Company,
and each director of the Company, each officer of the Company and each other
Person, if any, who participates as an underwriter in the offering or sale of
such securities and each other Person who controls the Company or any such
underwriter within the meaning of the Securities Act, with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by such seller specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement; provided, however, that
the liability of such indemnifying party under this Section 2.7(b) shall be
limited to the amount of the net proceeds received by such indemnifying party in
the offering giving rise to such liability. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling person and shall survive
the transfer of such securities by such seller.

<PAGE>

                                                                              11

                    (c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in Section 2.7(a) or (b), such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party,
give written notice to the latter of the commencement of such action; provided,
however, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under the
preceding subdivisions of this Section 2.7, except to the extent that the
indemnifying party is actually prejudiced by such failure to give notice. In
case any such action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it may
wish, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party; provided, however, that any indemnified party may, at
its own expense, retain separate counsel to participate in such defense.
Notwithstanding the foregoing, in any action or proceeding in which both the
Company and an indemnified party is, or is reasonably likely to become, a party,
such indemnified party shall have the right to employ separate counsel at the
Company's expense and to control its own defense of such action or proceeding
if, in the reasonable opinion of counsel to such indemnified party, (a) there
are or may be legal defenses available to such indemnified party or to other
indemnified parties that are different from or additional to those available to
the Company or (b) any conflict or potential conflict exists between the Company
and such indemnified party that would make such separate representation
advisable; provided, however, that in no event shall the Company be required to
pay fees and expenses under this Section 2.7 for more than one firm of attorneys
in any jurisdiction in any one legal action or group of related legal actions.
No indemnifying party shall be liable for any settlement of any action or
proceeding effected without its written consent, which consent shall not be
unreasonably withheld. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation or which requires action other than the
payment of money by the indemnifying party.

                    (d) Contribution. If the indemnification provided for in
this Section 2.7 shall for any reason be held by a court to be unavailable to an
indemnified party under Section 2.7(a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under Section 2.7(a) or (b), the indemnified party
and the indemnifying party under Section 2.7(a) or (b) shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same,
including those incurred in connection with any claim for indemnity hereunder),
(i) in such proportion as is appropriate to reflect the relative fault of the
Company and the prospective sellers of Registrable Securities covered by the
registration statement which resulted in such loss, claim, damage or liability,
or action or proceeding in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action or
proceeding in respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to

<PAGE>

                                                                              12

reflect the relative benefits received by the Company and such prospective
sellers from the offering of the securities covered by such registration
statement; provided, however, that for purposes of this clause (ii), the
relative benefits received by the prospective sellers shall be deemed not to
exceed the amount of proceeds received by such prospective sellers. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. Such prospective sellers'
obligations to contribute as provided in this Section 2.7(d) are several in
proportion to the relative value of their respective Registrable Securities
covered by such registration statement and not joint. In addition, no Person
shall be obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's consent, which
consent shall not be unreasonably withheld.

                    (e) Other Indemnification. Indemnification and contribution
similar to that specified in the preceding subdivisions of this Section 2.7
(with appropriate modifications) shall be given by the Company and each seller
of Registrable Securities with respect to any required registration or other
qualification of securities under any federal or state law or regulation of any
governmental authority other than the Securities Act.

                    (f) Indemnification Payments. The indemnification and
contribution required by this Section 2.7 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.

          3. Definitions. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:

          "Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.

          "Credit Agreement" has the meaning set forth in Section 1.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934, as amended, shall
include a reference to the comparable section, if any, of any such similar
Federal statute.

          "Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder.

          "Person" means any individual, firm, corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint

<PAGE>

                                                                              13

stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.

          "Registrable Securities" means any shares of Common Stock issued or
issuable upon conversion of the Preferred Stock, any shares of Common Stock
issued or issuable upon exercise of any Warrants, or any warrants issued under
the Credit Agreement, any Related Registrable Securities and any shares of
Common Stock owned by any of the Purchasers. As to any particular Registrable
Securities, once issued, such securities shall cease to be Registrable
Securities when (a) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, (b) they shall have been sold as permitted by Rule 144 (or any
successor provision) under the Securities Act and the purchaser thereof does not
receive "restricted securities" as defined in Rule 144, (c) they shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not, in the opinion of counsel for
the holders, require registration of them under the Securities Act or (d) they
shall have ceased to be outstanding. All references to percentages of
Registrable Securities shall be calculated pursuant to Section 9.

          "Registration Expenses" means all expenses incident to the Company's
performance of or compliance with Section 2, including, without limitation, all
registration and filing fees, all fees of any national securities exchange or
automated quotation system, all fees and expenses of complying with securities
or blue sky laws, all word processing, duplicating and printing expenses,
messenger and delivery expenses, the fees and disbursements of counsel for the
Company and of its independent public accountants, including the expenses of
"cold comfort" letters required by or incident to such performance and
compliance, any fees and disbursements of underwriters customarily paid by
issuers or sellers of securities (excluding any underwriting discounts or
commissions with respect to the Registrable Securities) and the reasonable fees
and expenses of one counsel to the Selling Holders (selected by Selling Holders
representing at least 50% of the Registrable Securities covered by such
registration). Notwithstanding the foregoing, in the event the Company shall
determine, in accordance with Section 2.2(a) or Section 2.6, not to register any
securities with respect to which it had given written notice of its intention to
so register to holders of Registrable Securities, all of the costs of the type
(and subject to any limitation to the extent) set forth in this definition and
incurred by Requesting Holders in connection with such registration on or prior
to the date the Company notifies the Requesting Holders of such determination
shall be deemed Registration Expenses.

          "Related Registrable Securities" means with respect any shares of
Preferred Stock (or shares of Common Stock issued or issuable upon conversion or
exercise of the Preferred Stock, the Warrants or any other warrants issued under
the Credit Agreement) and Common Stock, any securities of the Company or any
other Person which are issued or issuable in respect of, or in exchange for,
such shares of Preferred Stock or Common Stock, Warrants, or such other warrants
by way of a

<PAGE>

                                                                              14

dividend or stock split or as a result of a merger, consolidation, combination,
reclassification, reorganization or otherwise.

          "Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act of 1933, as amended, shall include a
reference to the comparable section, if any, of any such similar Federal
statute.

          "Stock Purchase Agreement" has the meaning set forth in Section 1.

          "Warrants" has the meaning set forth in Section 1.

          4. Rule 144 and Rule 144A. The Company shall take all actions
reasonably necessary to enable holders of Registrable Securities to sell such
securities without registration under the Securities Act within the limitation
of the provisions of (a) Rule 144 under the Securities Act, as such Rule may be
amended from time to time, (b) Rule 144A under the Securities Act, as such Rule
may be amended from time to time, or (c) any similar rules or regulations
hereafter adopted by the Commission. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.

          5. Amendments and Waivers. This Agreement may be amended with the
consent of the Company and the Company may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, only if the
Company shall have obtained the written consent to such amendment, action or
omission to act, of the holder or holders of at least 50% of the Registrable
Securities affected by such amendment, action or omission to act. Each holder of
any Registrable Securities at the time or thereafter outstanding shall be bound
by any consent authorized by this Section 5, whether or not such Registrable
Securities shall have been marked to indicate such consent.

          6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes of
any request or other action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
shares of Registrable Securities held by any holder or holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.

          7. Notices. All notices, demands and other communications provided for
or permitted hereunder shall be made in writing and shall be by registered or
certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:

                    (a)   if to the Fund:

<PAGE>

                                                                              15

                         The 1818 Fund II, L.P.
                         59 Wall Street
                         New York, NY 10005-2818
                         Attention: Walter Grist

                         with a copy to:

                         Paul, Weiss, Rifkind, Wharton & Garrison
                         1285 Avenue of the Americas
                         New York, NY 10019-3027
                         Telecopy: (212) 757-3990
                         Attention: Marilyn Sobel

                    (b)  if to NIC:

                         Nissho Iwai Corporation
                         3-1, Daiba 2-chome,
                         Minato-ku, Tokyo 135-8655
                         JAPAN
                         Telecopy: 81-3-5520-2964
                         Attention: Shinichi Teranishi,
                                 General Manager, Energy Project
                                 Department

                    (c) if to any other holder of Registrable Securities, at the
address that such holder shall have furnished to the Company in writing in the
manner set forth herein, or, until any such other holder so furnishes to the
Company an address, then to and at the address of the last holder of such
Registrable Securities who has furnished an address to the Company; or

                    (d)  if to the Company:

                         VAALCO Energy, Inc.
                         4600 Post Oak Place, Suite 309
                         Houston, TX 77027-0130
                         Attention: Russell Scheirman

                         with a copy to:

                         Haynes and Boone, LLP
                         1000 Louisiana, Suite 4300
                         Houston, TX 77002
                         Telecopy: (713) 547-2600
                         Attention: Guy Young

               All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; when delivered to a
courier, if

<PAGE>

                                                                              16

delivered by overnight courier service; five Business Days after being deposited
in the mail, postage prepaid, if mailed; and when receipt is acknowledged, if
telecopied.

          8. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and, with respect to the
Company, its respective successors and permitted assigns and, with respect to
the Purchasers, any holder of any Registrable Securities, subject to the
provisions respecting the minimum numbers of percentages of shares of
Registrable Securities required in order to be entitled to certain rights, or
take certain actions, contained herein. Except by operation of law, this
Agreement may not be assigned by the Company without the prior written consent
of the holders of a majority in interest of the Registrable Securities
outstanding at the time such consent is requested.

          9. Calculation of Percentage Interests in Registrable Securities. For
purposes of this Agreement, all references to a percentage of the Registrable
Securities shall be calculated based upon the number of shares of Registrable
Securities outstanding at the time such calculation is made, assuming the
conversion of all the outstanding Preferred Stock and the exercise of all
Warrants and any other warrants issued under the Credit Agreement.

          10. No Inconsistent Agreements. The Company will not hereafter enter
into any agreement with respect to its securities that is inconsistent with the
rights granted to the holders of Registrable Securities in this Agreement.
Without limiting the generality of the foregoing, the Company will not hereafter
enter into any agreement with respect to its securities that grants, or modifies
any existing agreement with respect to its securities to grant, to the holder of
its securities in connection with an incidental registration of such securities
higher priority to the rights granted to the Purchasers under Section 2.2(b).

          11. Remedies. Each holder of Registrable Securities, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.

          12. Certain Distributions. The Company shall not at any time make a
distribution on or with respect to the Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the resulting or surviving corporation and such Registrable
Securities are not changed or exchanged) of securities of another issuer if
holders of Registrable Securities are entitled to receive such securities in
such distribution as holders of Registrable Securities and any of the securities
so distributed are registered under the Securities Act, unless the securities to
be distributed to the holders of Registrable Securities are also registered
under the Securities Act.

<PAGE>

                                                                              17

          13. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
Purchasers shall be enforceable to the fullest extent permitted by law.

          14. Entire Agreement. This Agreement is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings with respect to the subject matter
contained herein, other than those set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.

          15. Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

          16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.

          17. Counterparts. This Agreement may be executed in multiple
counterparts, each of which when so executed shall be deemed an original and all
of which taken together shall constitute one and the same instrument.

<PAGE>

                                                                              18

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their respective representatives hereunto duly
authorized as of the date first above written.

                                              VAALCO ENERGY, INC.

                                              By:
                                                 -------------------------------
                                                 Name: Russell Scheirman
                                                 Title: President

                                              THE 1818 FUND II, L.P.

                                              By: Brown Brothers Harriman & Co.,
                                                  its General Partner

                                              By:
                                                  ------------------------------
                                                  Name: Walter W. Grist
                                                  Partner: Managing Director

                                              NISSHO IWAI CORPORATION

                                              By:
                                                 -------------------------------
                                                 Name:
                                                 Title:

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