Use access key #2 to skip to page content.
$7.27 0.07 (0.97%)
9/5/2008 4:02 PM

VAALCO Energy, Inc. (EGY)

CAPS Rating:
*****

An independent energy company principally engaged in the acquisition, exploration, development and production of crude oil and natural gas.

View All Commentary (EGY)

Recs

7

Avatar 8Buckeye (< 20) Submitted: 10/11/06 1:22 AM : Outperform Start Price: $7.30 EGY Score: 5.17

I first found this company back in ~ early 2003 and bought my first shares for around$.98 . It had found oil in the Etame field and had just brought it on production in late 2002. They had a nice find in an area of the world that leaves you wondering how stable it would be . I had seen the upward trend in oil and ngas coming at this time. Even though the company only had the one area/country of operation/production I just felt that this was a chance worth taking and bought many more shares and still have some I first originally purchased.

The management seems to have a good knowledge of this area of the world and a understanding of the Gabon government/politics and Gabon geology. They have now started to grow this company outside of Gabon though they have not yet had any production . They have made the Ebouri and Avouma discoveries and will be adding the Avouma to production shortly and Ebouri next year. They now have the cash to seek out other growth in the North Sea and on their newest concession in Gabon .They seem to have the expertise to do well in this area of the world and don't seem to be doing follish things with the cash that they're generating and the prospects look bright for growth or maybe even to be taken over at some point.They have a nice looking balance sheet with very little debt.

Report this Post Replies: 1 | Reply

Avatar 8Buckeye (< 20) Submitted: 12/14/06 4:30 PM

Recs: 2 | Rec This

UPDATE 12/14/06 RBC capital came out with an Underperform call and a $6 price targeton EGY. I really don't understand the logic on this. Here is an EX&P company that will be growing their production about 40% within the next 3 months if the Avouma project goes as planned. In another another 14 to 15 months they will be adding the Ebouri discovery to production if all goes well which will bring total added production to close to 80%. Most companies are lucky to add 10% production yr.

This is a company that is only trading at ~12 x's TTM earnings and will be throwing off FCF at a greatly increased rate. They will be adding probably close to double to their proved reserves. All the value metrics on this stock will be getting better not worse. Add in the posibilities of disruption to supplies, etc, and the demand in the world for oil and the need for more discoveries and EGY's past performance. Now I know I have some questions about the Angolan agreement since they announced the intention to join OPEC but EGY still has other prospects. They have some still in the Etame block, the onshore Gabon concession, the North sea ,etc.

They do this at the same time they have raised the price targets and gave outperform calls on many of the drillers and suppliers to the E&P industry. I think that would mean that they don't see the price of fossil fuels going down but yet they call a $6 price on EGY. Somebody needs to explain this to me.

Report this Post Reply

Featured Broker Partners