VAALCO Energy, Inc. (EGY) | Investment Case

1. Company Snapshot

1.a. Company Description

VAALCO Energy, Inc., an independent energy company, acquires, explores for, develops, and produces crude oil and natural gas.The company holds Etame production sharing contract related to the Etame Marin block located offshore in the Republic of Gabon in West Africa.It also owns interests in an undeveloped block offshore Equatorial Guinea, West Africa.

VAALCO Energy, Inc.was incorporated in 1985 and is headquartered in Houston, Texas.

Show Full description

1.b. Last Insights on EGY

VAALCO Energy's recent performance was negatively impacted by the FPSO refurbishment project, which is temporarily reducing annual production. The project, a significant capital expense, will not recur soon, but its current impact is weighing on the company's short-term results. Additionally, the Egyptian receivables initially climbed but began to reverse in the second half of fiscal year 2024, contributing to the company's recent challenges.

1.c. Company Highlights

Last Price	3.56
Change Percentage	0.14%
Open	3.55
Previous Close	3.56
Market Cap ( Millions)	372
Volume	801994
Year High	5.08
Year Low	3
M A 50	3.81
M A 200	3.74

FCF Yield	11.17%
Dividend Yield	7.01%
ROE	7.68%
Debt / Equity	29.74%
Net Debt / EBIDTA	32.44%
Price To Book	0.72
Price Earnings Ratio	9.55
Price To FCF	8.95
Price To sales	0.79
EV / EBITDA	1.75

2. Disappointing EPS, Strong Revenue Growth Ahead

The company's third-quarter financial performance was marked by an EPS of -0.1, missing estimates of -0.04. Despite this, the company's adjusted EBITDAX was $130.5 million through the first 9 months of 2025, indicating a strong operational performance. Revenue growth is expected to be robust, with analysts estimating a 20.9% increase next year.

Publication Date: Nov -30

                                    📋 Highlights
                                    Production Guidance Met:
                                                NRI production at 15,405 BOE/day, working interest at 19,887 BOE/day, and NRI sales at 12,831 BOE/day, aligning with or exceeding targets.
Updated Full-Year Guidance:
                                                Raised production/sales midpoint by 5% and reduced capital guidance by 20%, reflecting operational efficiency and strong Q3 performance.
Cote d'Ivoire Expansion:
                                                FPSO refurbishment underway with a 10-year license extension on CI-40, set to drive development drilling starting in 2026.
Financial Strength:
                                                Generated $130.5M adjusted EBITDAX (YTD 2025) and returned $20M to shareholders via dividends, with $24M unrestricted cash on hand.

                                

Operational Highlights

The company's production and sales performance were strong, with NRI production of 15,405 BOE per day and working interest production of 19,887 BOE per day, both at or above guidance. The company's diverse portfolio of high-quality assets is expected to drive growth, with significant development drilling planned in Cote d'Ivoire and a drilling program underway in Gabon.

Valuation Metrics

To understand what's priced in, we can look at the company's valuation metrics. The P/S Ratio is 0.8, indicating that the company's revenue is not highly valued by the market. The EV/EBITDA ratio is 1.76, suggesting that the company's enterprise value is relatively low compared to its EBITDA. Additionally, the Dividend Yield is 6.98%, making it an attractive option for income-seeking investors.

Guidance and Outlook

The company has raised the midpoint of its full-year production and sales guidance by about 5% and lowered its capital guidance by almost 20%. The company's guidance for Q4 2025 indicates continued strong production, with working interest BOE per day expected to be between 20,300 and 22,200. As Ronald Bain stated, "We've reduced spud-to-take-online cycle time significantly over the last three years" in Egypt, indicating operational efficiency gains.

Growth Prospects

The company has multiple major projects underway that are anticipated to meaningfully grow production and reserves. The FPSO refurbishment in Cote d'Ivoire is expected to be completed by May 2026, with production expected to return to normal levels within 6-8 weeks after the FPSO is back online. The company's commitment to Gabon and Cote d'Ivoire is expected to drive growth and improve the profit profile through Q4 and beyond.

3. NewsRoom

American Century Companies Inc. Has $15.97 Million Position in Vaalco Energy Inc $EGY

Dec -03

Source: defenseworld.net

VAALCO Energy, Inc. (EGY) Discusses Capital Program Adjustments and Production Outlook Across Asset Portfolio Transcript

Dec -02

Source: seekingalpha.com

VAALCO Energy, Inc. Announces Participation in Water Tower Research Fireside Chat on December 2, 2025

Nov -20

Source: globenewswire.com

Vaalco Energy: The Lowest Quarter Has Completed

Nov -11

Source: seekingalpha.com

VAALCO Energy, Inc. (EGY) Q3 2025 Earnings Call Transcript

Nov -11

Source: seekingalpha.com

Vaalco Energy (EGY) Reports Q3 Loss, Lags Revenue Estimates

Nov -11

Source: zacks.com

VAALCO Energy, Inc. Announces Third Quarter 2025 Results

Nov -10

Source: globenewswire.com

Vaalco Energy, Inc. Declares Fourth Quarter 2025 Dividend

Nov -10

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.50%)

6. Segments

Crude Oil, Natural Gas and Natural Gas Liquids

Expected Growth: 4.5%

VAALCO Energy's growth is driven by increasing global demand for energy, particularly in emerging markets. Rising crude oil prices and growing natural gas consumption, fueled by its clean-burning properties, support the company's growth prospects.

7. Detailed Products

Crude Oil

VAALCO Energy, Inc. is an independent energy company that acquires, explores, develops, and produces crude oil from its properties located in West Africa.

Natural Gas

VAALCO Energy, Inc. also produces natural gas from its properties, which is used as a clean-burning fuel for power generation, industrial processes, and heating.

Liquids

VAALCO Energy, Inc. produces various types of liquids, including condensate and natural gas liquids, which are used as feedstocks for the production of petrochemicals and refined products.

Exploration Services

VAALCO Energy, Inc. provides exploration services to identify and develop new oil and gas reserves, including seismic surveys, drilling, and logging.

Production Services

VAALCO Energy, Inc. provides production services to optimize the production of oil and gas from existing fields, including well intervention, stimulation, and maintenance.

8. VAALCO Energy, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

VAALCO Energy, Inc. operates in the oil and gas industry, which has a moderate threat of substitutes. While there are alternative energy sources, the demand for oil and gas is still high, and the company's products are widely used.

Bargaining Power Of Customers

VAALCO Energy, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products are essential to its customers' operations, giving VAALCO a degree of pricing power.

Bargaining Power Of Suppliers

VAALCO Energy, Inc. relies on a few key suppliers for its operations, which gives them some bargaining power. However, the company's size and scale of operations also give it some negotiating power with its suppliers.

Threat Of New Entrants

The oil and gas industry has significant barriers to entry, including high capital costs and regulatory hurdles. This makes it difficult for new entrants to challenge VAALCO Energy, Inc.'s market position.

Intensity Of Rivalry

The oil and gas industry is highly competitive, with many established players competing for market share. VAALCO Energy, Inc. faces intense competition from larger and more established companies, which can put pressure on its prices and market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	15.94%
Debt Cost	10.54%
Equity Weight	84.06%
Equity Cost	10.54%
WACC	10.54%
Leverage	18.96%

11. Quality Control: VAALCO Energy, Inc. passed 8 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Dorchester Minerals

A-Score: 6.8/10

Value: 4.4

Growth: 5.8

Quality: 9.2

Yield: 10.0

Momentum: 1.5

Volatility: 9.7

1-Year Total Return ->

MorningStar Partners

A-Score: 6.4/10

Value: 6.4

Growth: 6.6

Quality: 4.8

Yield: 10.0

Momentum: 5.5

Volatility: 5.3

1-Year Total Return ->

SandRidge Energy

A-Score: 6.3/10

Value: 7.4

Growth: 3.3

Quality: 7.9

Yield: 9.0

Momentum: 4.0

Volatility: 6.0

1-Year Total Return ->

VAALCO Energy

A-Score: 5.7/10

Value: 8.1

Growth: 6.7

Quality: 5.9

Yield: 8.0

Momentum: 1.0

Volatility: 4.7

1-Year Total Return ->

PrimeEnergy Resources

A-Score: 5.4/10

Value: 6.3

Growth: 8.9

Quality: 7.2

Yield: 0.0

Momentum: 7.0

Volatility: 2.7

1-Year Total Return ->

Berry

A-Score: 4.9/10

Value: 7.3

Growth: 4.6

Quality: 4.2

Yield: 9.0

Momentum: 1.5

Volatility: 3.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

12.51%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

10.54%

VAALCO Energy, Inc. - US91851C2017

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on EGY

1.c. Company Highlights

Strong Momentum

Better Quality

Average Yield

Earnings Beats

Medium Volatility

Revenues Beats

Higher Growth

Earnings Miss

Cheaper

Higher Yield

Weak Momentum

Stable Momentum

Fairly Valued

Average Growth

Revenues Miss

2. Disappointing EPS, Strong Revenue Growth Ahead

Operational Highlights

Valuation Metrics

Guidance and Outlook

Growth Prospects

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.50%)

6. Segments

Crude Oil, Natural Gas and Natural Gas Liquids

Expected Growth: 4.5%

7. Detailed Products

Crude Oil

Natural Gas

Liquids

Exploration Services

Production Services

8. VAALCO Energy, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: VAALCO Energy, Inc. passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.56$

Current Price

3.56$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA