An independent energy company principally engaged in the acquisition, exploration, development and production of crude oil and natural gas.
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What I mean to say is this is a company that is not outrageously overpriced. My other favorite small caps in this arena look like they’ve run ahead of themselves, while EGY has room to go.
The Pitch
Vaalco owns producing and exploration in Gabon and exploration in Angola. While Africa is politically unsettling to me, with risk comes reward. EGY has 88 M in cash, which equates to roughly 1/3 of the 260 M market cap. Also, unlike many peers, they have maintained very low debt, which calms me quite a bit. Did I mention they are actively buying back shares (which suggests management prudently believes them to be undervalued)? I like the direction in which the company is going, and forgive me if I fail to delve deeply into the numbers. I’m headed out of town in a few hours and much still to do. For a look at what they’ve accomplished in the last year, click here for the 2008 annual report.
The Bottom Line
In my opinion, oil prices will stay down only temporarily in the long run, so I’m looking for value oriented ways to capitalize on the trend. Uncertainty reflected in the current share price should hopefully provide an opportunity to profit.
Disclosure: I am long EGY . I am not a financial advisor and the above is solely my opinion, NOT advice. Do your own research and contact a financial professional for help if necessary. My opinions do not take into account your specific situations or needs.