Vaalco Energy (NYSE: EGY): The road to 50 mboe/d by 2030
• During the capital markets day last week, Vaalco outlined a production growth profile reaching >45 mboe/d in 2029 and 50 mboe/d in 2030 – surpassing the peak production of ~40 mboe/d that we had anticipated.• Production is expected to reach ~30 mboe/d by mid-2026 , driven by the 2025/2026 drilling program in Gabon and the restart of production at Baobab in Côte d’Ivoire (CI).
• The next major increase is forecasted for 3Q28, with the start-up of Venus in EG, adding +20 mbbl/d gross production. Further growth will come from the Kossipo development in CI, pushing total production to 50 mboe/d by early 2030.
• As we update our production, financial and capex forecasts and contingent resources estimates, we re-iterate our target price of US$10/sh in line with our new ReNAV. The story is about doubling production (fully funded) while maintaining a high level of dividend distribution (currently ~7.4% yield). Excluding Kossipo and Baobab Phase 6, Vaalco’s 2026–2029 aggregate free cash flow, at US$65/bbl Brent, is forecast to equal the current market capitalization.
Exploration and reserves upside
Multiple areas offer significant reserves upside. The Gabon drilling program includes an exploration well at West Etame and five optional rig slots, allowing flexibility to capitalize on potential opportunities. The Etame field holds 14 mmbbl WI 2C resources, representing 82% of the YE24 WI 2P reserves in Gabon. The Elili prospect on the Niosi Marin exploration block has 19–85 mmboe prospective resources, with a 44% chance of success. In CI, the Baobab field is estimated to contain 20.9 mmboe WI 2C resources, equivalent to 89% of CI WI 2P reserves. This reflects an anticipated increase in recovery factor from 14% to 30%. Development of these contingent resources is set to begin in Phase 6 from 2030, without requiring additional appraisal drilling. The neighboring Kossipo field holds 24.6 mmboe 2C resources, representing 105% of CI WI 2P reserves. Plans are in place for Kossipo to be developed as a tie-back to Baobab, with first oil expected in 2030.
Financials and Valuation
The net capex for the 2025/2026 drilling program in Gabon is ~US$161 mm, while the Baobab FPSO refurbishment is projected at ~US$140 mm. Phase 5 drilling at Baobab is expected to require ~US$162 mm. Over the next four years, we assume capex of ~US$30 mm per year in Egypt. Our Core NAV for Vaalco is US$5.69/sh. Derisking the 2C resources in Gabon adds US$1.60/sh, those in Egypt, US$1.46/sh and those in CI a further US$3.66/sh. Exploration success would add further value. Our ReNAV is US$9.93/sh.
VAALCO Energy is an independent energy company engaged in the acquisition, exploration, development and production of crude oil. The company is primarily engaged in its Etame Production Sharing Contract related to the Etame Marin block located offshore the Republic of Gabon in West Africa. The company also owns interests in an undeveloped block offshore Equatorial Guinea, West Africa.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
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