VAALCO Energy (NYSE: EGY): Very strong performance in 3Q23
• 3Q23 NRI production was nearly 19 mboe/d, near the top range of the 3Q23 guidance range of 17.5-19.2 mboe/d.• 3Q23 sales volumes were almost 19.9 mboe/d, at the higher end of the guidance range of 18.4-20.6 mboe/d.
• VAALCO held >US$100 mm in cash and cash equivalents at the end of September. This is above the already high cash position we were forecasting (US$91 mm). The cash position at the end of September is more than twice the cash the company held at the end of June (US$46 mm).
• In addition, VAALCO had another lifting in Gabon of about 0.6 mmbbl (gross) in early October that will contribute to the 4Q23 financials.
• This highlights the very cash-generative nature of the business. We forecast that VAALCO will hold almost US$130 mm in cash and cash equivalents at YE23. This is after having paid >US$25 mm in dividends and bought back US$20 mm in shares.
• Pending further details on the balance sheet at the end of September, we re-iterate our target price of US$9.00 per share.
Cashflow and value
Assuming US$90/bbl in 4Q23, we forecast that VAALCO will hold ~US$130 mm in net cash at YE23 (~30% of the current market cap). This is after shareholder distributions and does not include the potential for an important reduction of receivables in Egypt.
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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