VAALCO Energy Gains on Q1 Earnings Release, Analysts Review and Target

VAALCO Energy, Inc. (NYSE: EGY) is a Houston-based independent energy company principally engaged in the acquisition, development, and production of crude oil. The Company’s properties and acreage are located primarily in Gabon and Equatorial Guinea in West Africa.


The company continues Good positive cash flow of $14.6 million in the first quarter of 2018 and recently announced that its subsidiary paid off the outstanding balance on its Amended Term Loan Agreement with the International Finance Corporation (“IFC”) and begun workover operations last week to restore production to two wells currently shut-in on the Avouma platform.


The company’ liquidity continues to improve as it realizes significant cash flow due to the strong improvement in Brent oil prices with no hedges currently in place. This is allowing EGY to eliminate all of its outstanding debt and strengthen the balance sheet.


Before this, on May 7th, the company announced highest Quarterly Earnings Since Second Quarter of 2014. The company Reported income from continuing operations of $8.7 million ($0.15 per diluted share) for the first quarter of 2018, which was 146% higher compared with $3.5 million ($0.06 per diluted share) in the fourth quarter of 2017.


Moving forward with Brent trading at multiyear highs, no hedges in place for EGY, the company anticipate further meaningful growth in its cash position. Already in 2018, it has grown its unrestricted cash significantly above the year-end 2017 balance of $19.7 million to $27.4 million net of partner advances. Vaalco also paid down its debt substantially.


The market is hugely excited about the successful first quarter in 2018. Moreover, from a forward-looking perspective, the company project further improvement as EGY continues to deliver on its guidance and strengthen its balance sheet. Furthermore, the management of the company is confident in its premier Etame asset, and they have several development drilling opportunities that it is considering drilling early next year, depending on approvals from the Gabon government and its partners.

Considering recent developments, analysts see promise in the company and believe it will provide a robust fundamental appeal to the investors as well as momentum players trading the stock. Several brokerage firms have initiated coverage on the company, and the stock currently has an average rating of “Buy” and a consensus price target of $3.75. 


About the company: VAALCO Energy, Inc. is a Houston, Texas-based independent energy company principally engaged in the acquisition, exploration, development, and production of crude oil. VAALCO’s strategy is to increase reserves and production through the development and exploitation of international oil and natural gas properties. The Company’s properties and exploration acreage are located primarily in Gabon and Equatorial Guinea in West Africa.


Other key updates:

Significant Development Opportunities at Etame
• Development opportunities identified that would extend the economic life
• Over 71 MMBO of gross unrisked recoverable contingent resources
• Operating infrastructure in place to support the development
Etame License Extension
• Current license terminates in 2021• License extension would enhance the economics of new development wells
Angola Exit
• Relinquishing exploration license in Angola to focus on development in Gabon
• VAALCO believes that the accrued $15 million liability will be substantially less• The resolution would strengthen the balance sheet and improve access to capital
• Leverage existing infrastructure, technical expertise and experience in international, offshore major projects and production operations
• Seeking attractively valued new development opportunities in West Africa
• Evaluating value accretive merger and acquisition opportunities


First Quarter 2018 Results:

Revenue: Total oil sales for the first quarter of 2018 were $27.6 million, compared to $17.2 million in the fourth quarter of 2017.  During the first quarter of 2018, VAALCO sold approximately 393,000 net barrels of oil at an average price of $68.69 per barrel, compared to 280,000 net barrels at an average price of $59.89 per barrel in the fourth quarter of 2017.

Profitability: As previously disclosed, income from continuing operations, operating income, and Adjusted EBITDAX were positively impacted this quarter by higher realized Brent pricing, no commodity hedges in place and the split lifting that took place during the period from December 31, 2017, to January 1, 2018. Adjusted EBITDAX totalled $14.5 million in the first quarter of 2018 compared with $10.4 million in the same period of 2017, and $3.9 million in the fourth quarter of 2017.


Liquidity and financial flexibility: Already in 2018, it has grown its unrestricted cash significantly above the year-end 2017 balance of $19.7 million to $27.4 million net of partner advances. Vaalco also paid down its debt significantly.


VAALCO Free Cash Flow Overview (2018E)

Key risk factors and potential stock drivers:

  • The company’ business risk profile is exposed to significant industry and regulatory risk. The oil and natural gas industry are affected by many factors.  Government regulations, particularly in the areas of taxation, energy, climate change and the environment, can have a significant impact on operations and profitability.
  • Global energy prices have been under pressure since their mid-2014 highs. Crude oil saw its price plummet from $99 per barrel (dated Brent) in 2014 to just $34 per barrel in January 2016. Crude oil prices are expected to move upward but remain at sub-$70/bbl in fiscal 2019, and their medium-term price outlook remains stable. Going forward, the focus will continue to be on oil and natural gas prices.
  • The company’s operational and market risk profile is exposed to risk related to competitive forces. The oil and natural gas industry are intensely competitive, and EGY competes with numerous other oil and natural gas exploration and production companies.  Some of these companies have substantially greater operational and financial resources than EGY.


Stock Chart:


  • On Thursday, May 31st, 2018, EGY is trading at $2.3099, on an average volume of 774,884 million shares exchanging hands. Market capitalization is $136.078 million. The current RSI is at 69.35
  • In the past 52 weeks, shares of EGY have traded as low as $0.6790 and as high as $2.6610
  • At $2.31, shares of EGY are trading above its 50-day moving average (MA) at $1.27 and above its 200-day moving average (MA) at $0.91
  • The present support and resistance levels for the stock are at $2.12 & $2.46 respectively.


Welcome to Traders News Source,

Stay tuned and keep an eye on your inbox for our next hot Small-Mid Cap stock report coming soon.
We have an outstanding track record for near-term gains in the Small Cap arena.
Do not forget to add us to your preferred/safe senders list within your email service provider. Expect one new Small Cap NASDAQ or NYSE listed company research report per week free of charge.

We only alert you to stocks we believe will offer up near-term trading profits.

Receive TEXT ALERTS the minute we initiate coverage
Text the word “Traders” to the number “213-493-8811” from your cell phone to receive small cap reports in real-time ahead of the crowd.


Traders News Source LLC (TNS) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering small and micro-cap equity markets. TNS has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE, NASDAQ and OTC exchanges. The other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles, and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below.
TNS has not been compensated; directly or indirectly; for producing or publishing this document.
The non-sponsored content contained herein has been prepared by a writer (the “Author”) and is fact checked and reviewed by a third-party research service company (the “Reviewer”) represented by a chartered financial analyst, for further information on analyst credentials, please email Vikas Agrawal, a CFA® charter holder (the “Sponsor”), provides necessary guidance in preparing the document templates. The Reviewer has reviewed and revised the content, as necessary, based on publicly available information which is believed to be reliable. Content is researched, written, and reviewed on a reasonable effort basis. The Reviewer has not performed any independent investigations or forensic audits to validate the information herein. The Reviewer has only independently reviewed the information provided by the Author per the procedures outlined by TNS. TNS is not entitled to veto or interfere in the application of such procedures by the third-party research service company to the articles, documents, or reports. Unless otherwise noted, any content outside of this document has no association with the Author or the Reviewer in any way.
Traders News Source is a wholly owned subsidiary of Traders News Source LLC, herein referred to as TNS LLC.
Traders News Source has not been compensated for this report by anyone and the opinions if any are that of the author Vikas Agrawal, CFA. Author’s Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I, wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in the article.
This web site, published by TNS LLC, and is an investment newsletter that is built on the premise of assisting individual investors in learning about investing. Our goal as publishers of financial information is to provide research and analysis of investments to our subscribers. TNS LLC does not give buy or sell recommendations. We do purchase distribution rights from analyst, financial writers and bloggers for a fee that may be licensed to issue price targets and recommendations. Furthermore, we encourage you to speak to a licensed professional prior to making an investment in any type of publicly traded security.
We do sell advertising to other companies including brokerage firms, web sites, publicly traded issuers, investor relations firms, and investment publications, among others. TNS LLC makes no warranty as to the policies of these organizations, and in no way endorses their offers, services, or the content of their advertisements.
When an advertiser is a publicly traded company or a third party acting on behalf of a public company, we fully disclose all compensation in the email advertisement. Such disclosure is included in a disclosure statement in each of the advertisements sent via email.
17B Disclosure
Our reports/releases are a commercial advertisement and are for general information purposes ONLY. We are engaged in the business of marketing and advertising companies for monetary compensation. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. The disclaimer is to be read and fully understood before using our services, joining our site or our email/blog list as well as any social networking platforms we may use.
PLEASE NOTE WELL: TNS LLC and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever.
Release of Liability: Through use of this website viewing or using you agree to hold TNS LLC, its operator’s owners and employees harmless and to completely release them from any and all liability due to any and all loss (monetary or otherwise), damage (monetary or otherwise), or injury (monetary or otherwise) that you may incur. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. TNS LLC encourages readers and investors to supplement the information in these reports with independent research and other professional advice. All information on featured companies is provided by the companies profiled, or is available from public sources and TNS LLC makes no representations, warranties or guarantees as to the accuracy or completeness of the disclosure by the profiled companies. None of the materials or advertisements herein constitute offers or solicitations to purchase or sell securities of the companies profiled herein and any decision to invest in any such company or other financial decisions should not be made based upon the information provide herein. Instead TNS LLC strongly urges you conduct a complete and independent investigation of the respective companies and consideration of all pertinent risks. Readers are advised to review SEC periodic reports: Forms 10-Q, 10K, Form 8-K, insider reports, Forms 3, 4, 5 Schedule 13D.
TNS LLC is compliant with the Can Spam Act of 2003. TNS LLC does not offer such advice or analysis, and TNS LLC further urges you to consult your own independent tax, business, financial and investment advisors. Investing in micro-cap and growth securities is highly speculative and carries an extremely high degree of risk. It is possible that an investor’s investment may be lost or impaired due to the speculative nature of the companies profiled.
The Private Securities Litigation Reform Act of 1995 provides investors a ‘safe harbor’ in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be “forward looking statements”. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as “projects”, “foresee”, “expects”, “will”, “anticipates”, “estimates”, “believes”, “understands”, or that by statements indicating certain actions & quote; “may”, “could”, or “might” occur.
Understand there is no guarantee past performance will be indicative of future results. In preparing this publication, TNS LLC has relied upon information supplied by its customers, publicly available information and press releases which it believes to be reliable; however, such reliability cannot be guaranteed. Investors should not rely on the information contained in this website. Rather, investors should use the information contained in this website as a starting point for doing additional independent research on the featured companies. The advertisements in this website are believed to be reliable, however, TNS LLC and its owners, affiliates, subsidiaries, officers, directors, representatives and agents disclaim any liability as to the completeness or accuracy of the information contained in any advertisement and for any omissions of materials facts from such advertisement. TNS LLC is not responsible for any claims made by the companies advertised herein, nor is TNS LLC responsible for any other promotional firm, its program or its structure.