VAALCO Energy, Inc. (EGY)

This small oil and gas exploration, and mining company, has a great P/E ratio, proven oil reserves on hand, solid and consistent growth over the past 5 years. Recently a major shareholder urged the sale of the company, and this company may find itself in a position where investors are given a premium for their investment. Nonetheless, this company has demonstrated solid performance and shareholder value at current trading prices.

So, guys and gals, here it goes a top quality pitch... WooooHooooooooooooo.

The Return On Invested Capital(ROIC) is over 100%
The earnings yield is 28%

The stock is selling really cheap. I saw a similar situation in WNR and nowadays it's one my best picks ever!

Also the CEO is getting himself a very nice amount of shares, some via aquisition but mostly options, anyway, as long as he doesnt sell his options it means he believes in the company!

Enterprise Value/EBITDA - 3.623 .... also very low. In a few years even if the company doesnt grow, you'll double your money! Trust me.

The only risk is that if energy prices (fossil fuels) fall too abrupty, this company will fall down too, but I don't see that as very probable to happen. Come on, energy moves the world! I see the price of electricity going down soon with all this wind and solar power trend, then the coal price will drop and eventually uranium, natural gas, and oil may drop too as they lose the market of electricity production, but oil is here for staying decades, you probably won't see any cars and trucks moved on electricity during the next decade.

Outperform, Big Time!

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and now for something completely different

(from vaalcom.com)
VAALCO Energy, Inc. is a Houston-based independent energy company principally engaged in the acquisition, exploration, development and production of crude oil and natural gas. VAALCO's strategy is to increase reserves and production through the exploration of oil and gas properties with a high emphasis on international opportunities. The company's properties and exploration acreage are located primarily in Gabon and Angola, West Africa.

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HOUSTON– March 5, 2007 – VAALCO Energy, Inc. (NYSE:EGY) announced that for the year ended December 31, 2006, total oil and gas sales were $98.3 million, up 16% from $84.9 million in 2005. Operating income for the year was $74.3 million, up 17% from $63.6 million in 2005. The Company’s net income for the year was a record $40.3 million, or $0.67 per diluted share, up 38% from last year’s net income of $29.2 million, or $0.50 per diluted share.

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HOUSTON - (PR Newswire) – May 9, 2007 – VAALCO Energy, Inc. (EGY – NYSE), (the “Company”) announced that for the first quarter of 2007 earnings were $4.6 million or $0.08 per diluted share. The Company incurred $5.1 million of costs during the quarter to acquire 3-D seismic data in Angola and Gabon. As a company using the successful efforts accounting method, this amount was expensed in the quarter. First quarter 2007 earnings compared to net income of $11.0 million or $0.18 per diluted share for the comparable period in 2006. The Company sold 511,000 net barrels at an average price of $57.03 per barrel during the first quarter of 2007 compared to 512,000 net barrels at an average price of $60.93 per barrel in the first quarter of 2006.

>>> I got a comment on this one too. So, they made less money on the first quarter of 2007 than 2006. Great, the stock colapsed. But if the oil price trend keeps up as usual, how much will they make, say, the first quarter of 2009 if oil costs 72 dollars a barrel ? A LOTTA money!

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.

Another interesting small-cap oil company with strong institutional ownership and 10 times more cash than debt. I think the next few years will be good ones for EGY, and as a result beat the S&P 500.

Every once in a while I try to find companies lack look solid going forward that have small analyst coverage, where it is easy to make the mistake of not pricing in the current growth of some companies. I generally stick with sectors that look good, but should have continued growth going forward. A company I found is Vaalco Energy Inc. They are quite interesting as they seem to have a good balance sheet and very good reserves in oil and gas. The only downside is their large exposure to Africa where political unrest can be quite high, but on paper this company looks real good, and may be a take out candidate as some of the bigger companies find they are undervalued.

With consolidation looking to continue through the year and big companies unable to find growth they will have to buy it. Companies like Exxon and Chevron have been forecasting slower growth going forward and they know the only way to increase this are... More Every once in a while I try to find companies lack look solid going forward that have small analyst coverage, where it is easy to make the mistake of not pricing in the current growth of some companies. I generally stick with sectors that look good, but should have continued growth going forward. A company I found is Vaalco Energy Inc. They are quite interesting as they seem to have a good balance sheet and very good reserves in oil and gas. The only downside is their large exposure to Africa where political unrest can be quite high, but on paper this company looks real good, and may be a take out candidate as some of the bigger companies find they are undervalued.

With consolidation looking to continue through the year and big companies unable to find growth they will have to buy it. Companies like Exxon and Chevron have been forecasting slower growth going forward and they know the only way to increase this are to buy it. This being said Vaalco has an impressive balance sheet. They have managed to keep debt low and provide decent growth. With oil being the new hedge against inflation it may be better to look at this as a buying opportunity. Every dollar spent on oil increases our debt and deficit, so it is reasonable that oil is being traded on the weak dollar. Vaalco is a very small company with 40 employees. Their market cap is $388 million up from $295 at the end of last year. Their reserves are 5,993 MBOE and proven reserves are 4,688 MBOE. 99% of this is oil with the remaining 1% natural gas. Their average production in 2007 was 5,200+ BOED. They operate in 3 countries and were 100% operational for last year.

West Africa is an interesting proposition as reserves seem to be quite good, but many do not want to enter these regions as they have political issues, but Vaalco maintains their first strategy is to produce oil through exploration to increase cash and acquire and find new growth. They have had a good run of increasing reserves through the drill bit and are planning to continue doing so. They want to expand their West African base and maintain financial responsibility as they are sticking with what they know and have worked for them.

The growth opportunity looks to hit at the end of this year. Currently, in Gabon they have four wells that produce 12,000 barrel per day. This is a 48,000 total. Of this they have a 28% interest which puts their part of the production at 13,400 barrels per day. At the end of this year they will have an additional 5,000 barrels per day or approximately a 30% increase. They also have two new wells that look to produce another 10000 barrels per day. They also have 1.4 billion barrels of reserves that they are tapping this year, but production numbers are not out yet. They also have a possible 500 million barrels in Angolia but only 5 tapped wells have shown oil and they are still mainly in development with this. If we look back to 2007 they only produced 5200 barrels a day and it looks by the end of this year there will be a dramatic increase. It could increase five fold if everything goes right. With a forward PE of ten this looks like they could unbelievably undervalued. Plus the company has very little debt as their debt to equity ratio is only .035. Their $5 million in debt they have is easily paid for with their levered free cash flow of $33 million. Quarterly revenue growth was up 132% although earnings have missed as they have been paying to increase operations without acquiring debt. Their earnings misses have been due to higher costs with respects to expansion and it has caused their stock price to be cut in half over the last two years. This is important as they look to have the ability to crush going forward. These higher costs decreased earnings by one half from 2006 to 2007. For 2008 they have figured their earnings on the price of oil being $70 as opposed to it trying to hit $120. For 2008 they are approximating production to double after other party's interest is removed.

The current chart shows a breakout at current price levels and makes the one year estimate of $5 by analysts seem low. Barrels of oil sales were increased by 27% year over year although prices averaged $87 a barrel and under $60 in the last quarter. Lastly, Delorme currently owns 8% of the company that experienced a 30% loss over last year and is pushing the company to sell. The company could see at least a 50% increase from today's prices if an offer was to be made. I think this is a nice short term play on a pullback as when the stock pops it will be huge.

10/2006

78 B-

Earnings Per Share (EPS) Rating
98
Relative Price Strength (RS) Rating
91
Industry Group Relative Strength (Grp RS) Rating
D+
Sales + Profit Margins + ROE (SMR) Rating
A
Accumulation/ Distribution (Acc/Dis) Rating
C

Bottomed out. Hoping for a hot summer. Should have checked the Farmer's Almanac first though. Did you know the Almanac has had over 85% accuracy in predicting weather? Anyhow, Graham would not call this "intelligent investing", but he can shove it.

VAALCO has been a strong stock over the past year or so, though it has dropped some with the decline of oil prices. Over time I believe oil prices will rise and the company is making the right moves to advance. It has just been listed on the NYSE, moving from the American Exchange as of Nov. 11. and was added to the Russell 2000 a few months ago. I think the wider exposure will attract investors.

low PE underappreciated smaller cap oil & the battered nat gas industry stock

A outstanding small cap energy company with working interest in various parts of Africa, UK, Texas Gulf, and Gulf of Mexico. Great management with the experience to guide through todays murky waters. Looking to expand its production facilities. Various new leads, including 2 major prospects, first will begin to be drilled in December with an estimated 20 million barrel surplus as well as 1 off the coast of Gamba with an estimated 10 million barrel surplus. Near its 52 week low, with oil prices steadly begining to increase. Great time to get in.

The best oil company that I know that is currently traded below its fair value. My estimate is around $9-10 for the end of 2009.

many R Catholics; few muslims. oil/gas fund economy of gabon. elected "dictator" has Bush-like powers.

They have great overseas explortions and are goinf up very soon

Appears to be oversold and with the demand for more new oil not going away this seems like a good entry point for this stock.

It isn't getting easier to find natural gas.

I used to own this one but sold it around $10.20. This would be a great place to start buying.

Nimble independents will do well.

EGY i s a small oil and gas exploration company. P/E is 12. Sales growth for the TTM is 50% with a net profit margin of 45%. Debt to equity ratio is also very low. Target is $11.

Cramer likes it, I like it. Oil demand is going to continue to grow. World population is soaring. Foreign markets are beginning to burn oil likes its going out of style, which is going to make it go out of style..