VAALCO Energy, Inc. (EGY)

metoo105 (99.70) Submitted: 5/27/07 9:12 PM

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To respond, there's a lot of misery and corruption in Africa.

Here's wheat I really think: somehow the Gabon counts as a standup locale because their dictator has managed to milk their oil reserves to a per capita GDP is double their neighbors at a value of like 5k. It's depressing, I wholeheartedly agree. (And yet, pinko though I am, I am increasingly starting to believe that non-WTO led market reforms might be the best hope for this place.)

EGY is not as egregious than some others, but still represents the handiwork of some hacks who bribed, or rather, donated their way into a concession or two, and is now taking ridiculous profits for their "capital" and "expertise." The sad fact is they have offered very little, and now extract profits clearly in excess of their investments. Good for us though, no?

Unlike your WNR, the country risk for this stock is incredible and the risk of renationalization of the reserves within the next ten years if probably like 80%.

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DrTEP (85.81) Submitted: 7/09/07 11:43 AM

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Thanks metoo for this heads-up. I'm a just-learning investor - kinda pink myself around the edges. I looked only at the numbers and thought - hmmmm. Now I'll think hmmmm again!

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GeordieMc (82.36) Submitted: 7/11/07 8:34 PM

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I don't know if I'm missing something... I've seen people here claiming the complete opposite of what I'm about to say. But I was looking at their '06 annual report:

http://www.vaalco.com/presentations/2006_Annual_Report.pdf

and I'm a little worried about their reserves (numbers are on page 16). Their total proven reserves (they call them "proved reserves"... to my amusement) have been steadily declining since 2004 and maybe longer (the annual report only lists numbers back to '04)

Proven Developed Reserves: 4,686 (2006) 5,326 (2005) 4,738 (2004)
Proven Undeveloped Reserves: 1,305 (2006) 2,501 (2005) 3,996 (2004)
Total Reserves: 5,991 (2006) 7,827 (2005) 8,734 (2004)


(Sorry about ugly formating... for some reason it isn't publishing my returns) I'm not sure how these numbers are crunched and at what point properties they own with reserves get added into these numbers. Their assets are steadily increasing and they are clearly reinvesting in the company. But with depletion like this they won't be in business long if they can't buy up more reserves soon.

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8Buckeye (< 20) Submitted: 7/13/07 5:36 PM

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They will be adding to the reserves with the Avouma and Ebouri field. The Avouma came on line early 2007 so I think those reserves should show up then as proven. The Ebouri probably won't come on line until 2008 . Yes reserves are being drawn down from the Etame field but at the same time they are adding reserves. The reserves have at least another 5 years worth of revenue if they were to not add anymore reserves.

As of right now they have 6 exploration wells planned for next year. They have ~$80M of cash to pay for this exploration along with there partners kicking in their part . They are looking at two wells on the Etame Block, propspect "A", the geoligist claim that there is a good possibility of 300M barrels at this field alone. They are also will be drilling two wells at their onshore Moumba concession Gabon and two more at their Angola concession.

EGY is not as egregious than some others, but still represents the handiwork of some hacks who bribed, or rather, donated their way into a concession or two, and is now taking ridiculous profits for their "capital" and "expertise." The sad fact is they have offered very little, and now extract profits clearly in excess of their investments.

This sounds like a rant here more about the ills of Africa than any factual knwoledge as to how these concessions were obtained. EGY obtained the rights to their concessions because they were abandoned by larger oil companies who previously owned these. There was no malicious intent or political ploy. Say what you want about the Gabon government but EGY like many of the bigger players there are just doing it by the rules of Gabon and Gabon is getting handsomely awarded for it. If you want to dump on EGY's profit motives then jump on the motives of every other company who does biz in Africa, of course that won't make you right but it will be a lot more fair.

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GeordieMc (82.36) Submitted: 7/13/07 10:19 PM

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Thanks a lot for the explanation. I had sort of assumed that something like that was the case as the balance sheet indicates significant accumulation of assets. But I'll still feel better once I see the numbers listed on the reserves.

Thanks.

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goldstockanalyst (< 20) Submitted: 8/31/07 5:10 AM

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True ROIC is 77%

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MFRB101 (69.85) Submitted: 10/31/07 5:29 PM

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what do you think now that the oil has touched $94. I am long on this stock but still need to understand a lot about the company. I dont mind the fact that its been so thinly followed but hoping someone like you can enlighten the picture a bit more

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darkflame (97.84) Submitted: 11/01/07 8:00 PM

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Well, I must be honest and say that I didn't really study the company seriously.

But check this...

http://biz.yahoo.com/t/98/4174.html

If the Charmain/CEO is accumulating stock himself exercicing his options and not selling them, then that he is convinced the company is worth it. He might be wrong of course, but he knows more than what we can know and so I will trush his opinion :-)

If I have any other good advice, it might be research a bit about this sort of business and read their annual reports. I'm a little bit "out of the market" because I've spoted a few opportunities which I consider nearly perfect and won't move much of my money soon, well, unless they become overvalued like PTR. But when I sell PTR I will just buy more of the other stocks I already have.

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