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| AUTHOR:
jbarnes2 |
RANK:
m100  |
DATE:
Nov 04, 2005 |
PAST
RANK:     |
Disclosure: I hold a long term core position professionally and we have tripled our over all exposure to this stock today. I have been a buyer in size today for my fund.
I also will be highlighting this stock in my next formal stock write up to be released in the near future.
Press Release Source: VAALCO Energy, Inc.
VAALCO Energy Announces 3rd Quarter 2005 Earnings Results
Thursday November 3, 5:51 pm ET
HOUSTON, Nov. 3 /PRNewswire-FirstCall/ -- VAALCO Energy, Inc. (Amex: EGY - News; the "Company"), announced that for the third quarter of 2005 earnings were $11.9 million or $0.20 per diluted share. This compared to net income of $9.2 million or $0.16 per diluted share for the comparable period in 2004. The higher earnings were attributable to higher crude oil prices, partially mitigated by higher income taxes paid in 2005. The Company sold 453,000 net barrels at an average price of $58.75 per barrel during the third quarter of 2005 compared to 447,000 barrels at an average price of $40.77 per barrel in the third quarter of 2004.
For the nine months ended September 30, 2005, the Company earned $24.2 million or $0.41 per diluted share compared to $18.3 million or $0.32 per diluted share in the nine months ended September 30, 2004. The increase in income was due to higher crude oil sales of approximately 1,311,000 barrels of oil equivalent in the nine months ended September 30, 2005 compared to 1,051,000 barrels of oil equivalent in the nine months ended September 30, 2004. Crude oil prices were also higher averaging $50.58 per barrel of oil equivalent and $36.15 in the nine months ended September 30, 2005 and 2004, respectively.
Discretionary cash flow, a non-GAAP financial measure of the amount of cash generated that can be used for working capital, debt service or future investments, was $14.8 million and $31.6 million for the three months and nine months ended September 30, 2005.
Robert L. Gerry, III, Chairman and CEO, stated, "Third quarter 2005 earnings reflect the steady performance of the Etame Field. With the addition of the Etame 6H well during the third quarter, production rates from the field have stabilized at over 18,000 barrels of oil per day.
"Construction for the Avouma Field Development has returned to normal following the recent hurricanes. We expect to complete platform construction in April of 2006, and have committed to a drilling rig commencing in September 2006 to drill the two Avouma development wells after the platform is installed. First production is anticipated late in 2006.
"We continue to make progress with our seismic processing and interpretation over the Ebouri discovery, and will finalize a development plan for the field in the next several months. The seismic also covers a new exploration prospect which we hope will indicate a new wildcat location."
Abbreviated financial results:
Three Months Ended Nine months Ended
September 30, September 30,
(Unaudited-in thousands
of dollars) 2005 2004 2005 2004
Revenues 26,240 18,253 65,983 38,021
Operating costs and expenses 4,743 4,732 16,238 10,937
Operating Income (Loss) 21,497 13,521 49,745 27,084
Other Income (Expense) 171 (21) 475 (123)
Income tax expense (8,306) (2,974) (23,089) (6,254)
Loss from discontinued
operations (25) (164) (16) (141)
Minority Interest in
earnings of subsidiaries (1,434) (1,121) (2,952) (2,217)
Net Income 11,903 9,241 24,163 18,349
Basic Income per
Common Share $0.21 $0.30 $0.48 $0.74
Diluted Income per
Common Share $0.20 $0.16 $0.41 $0.32
Discretionary Cash Flow
Unaudited - (thousands of dollars)
Three Months Ended Nine months Ended
September 30, 2005 September 30, 2005
Net Income 11,903 24,163
Depletion, depreciation
and amortization 1,428 4,335
Other non-cash charges:
Minority interest 1,434 2,952
Amortization of capitalized
debt issuance costs 40 119
Discretionary cash flow 14,805 31,569
Summary Statistics
Three Months Ended Nine months Ended
September 30, September 30,
(Unaudited) 2005 2004 2005 2004
Net oil and gas sales (MBOE) 453 447 1,311 1,051
Average price ($/bbl) $58.75 $40.77 $50.58 $36.15
Production costs ($/bbl) $6.63 $6.38 $6.42 $6.64
Depletion costs ($/bbl) $3.15 $3.45 $3.31 $3.11
General and administrative
costs ($/bbl) $0.39 $0.57 $0.69 $0.44
Debt/Proved reserves ($/BOE) --- --- $0.26 $0.49
Capital Expenditures
($thousands) --- --- 11,683 12,525
Debt/Capitalization ($/$) --- --- $0.02 $0.05
Cash and cash equivalents
($thousands) --- --- 45,321 27,574
Working capital ($thousands) --- --- 41,583 23,180
Total long term debt
($thousands) --- --- 500 1,500
Discretionary cash flow measures the amount of cash generated by the Company that can be used as working capital, to reduce debt, or for future investment activities. Discretionary cash flow is presented because management believes it is a useful adjunct to net cash flow provided by operating activities under accounting principles generally accepted in the United States (GAAP). The measure is widely used by investors and professional research analysts in the valuation, comparison, rating and investment recommendations of companies within the oil and gas exploration and production industry. Discretionary cash flow can be reconciled to net cash provided by operating activities in the Statement of Consolidated Cash Flows filed with the SEC as follows:
Unaudited - (thousands of dollars)
Three Months Ended Nine months Ended
September 30, 2005 September 30, 2005
Discretionary Cash Flow 14,805 31,569
Working Capital Changes,
net of non-cash 2,813 671
Exploration expense 133 2,451
Net cash provided by
operating activities 17,751 34,691
Basic and diluted shares consist of the following:
Three months ended Nine months ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
Item 2005 2004 2005 2004
Basic weighted average
common stock issued
and outstanding 56,557,989 31,149,276 50,052,368 24,730,309
Preferred stock
convertible to
common stock --- 18,533,505 5,104,040 24,489,352
Dilutive warrants --- 5,947,434 1,308,771 5,842,577
Dilutive options 1,791,958 3,038,532 1,806,498 2,097,109
Total diluted
shares 58,349,947 58,668,747 58,271,677 57,159,347
VAALCO Energy, Inc. will hold an investor conference call Tuesday, November 8, 2005 at 10:00 a.m. CST. Interested parties may participate by dialing 1 (866) 686-6743. International parties may dial 1 (847) 413-3136. Please be prepared to provide the following information to gain access to the conference call:
Confirmation Number: 13147551
Host Name: Russell Scheirman
Company: VAALCO Energy, Inc.
Conference call replay will be available beginning 1 hour after the conference is over and run through December 7, 2005 by dialing 1-877-213-9653 and entering the pass code 13147551#. International parties may dial 1 (630) 652-3041 and entering the pass code 13147551#.
This press release includes "forward-looking statements" as defined by the U.S. securities laws. Forward-looking statements are those concerning VAALCO's plans, expectations, and objectives for future drilling, completion and other operations and activities. All statements included in this press release that address activities, events or developments that VAALCO expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements include future production rates, completion and production timetables and costs to complete well. These statements are based on assumptions made by VAALCO based on its experience perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond VAALCO's control. These risks include, but are not limited to, inflation, lack of availability goods, services and capital, environmental risks, drilling risks, foreign operational risks and regulatory changes. Investors are cautioned that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. These risks are further described in VAALCO's annual report on form 10K/SB for the year ended December 31, 2004 and other reports filed with the SEC which can be reviewed at http://www.sec.gov , or which can be received by contacting VAALCO at 4600 Post Oak Place, Suite 309, Houston, Texas 77027, (713) 623-0801.
Source: VAALCO Energy, Inc. |
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| AUTHOR:
mkoza |
RANK:
m100 |
DATE:
Nov 09, 2005 |
PAST
RANK:  |
| Does anybody know how much in the way of reserves are attached to their recent discoveries? Based on the reserves disclosed to date, EGY's oilfields only have about four years of life left. |
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| AUTHOR:
jbarnes2 |
RANK:
m100 |
DATE:
Nov 11, 2005 |
| PAST
RANK: |
Mkoza,
The company just announced a new concession in Gabon on shore. The company is about to bring online a new field this year, has a second field in development plans and now a new concession.
This is one of the few buy and hold values I see in the market at this time.
Here is a copy of the write up that was posted to a different forum today.
_________________
Vaalco Energy is a rare case of undiscovered value in the energy sector, and is valued at an extreme discount to both proven reserves and current operating performance. At the current run rate based on third quarter results recently released, it has a p/e of about 4.5 and checks in with an enterprise value of only 1.9 times EBITDA. Not only are the company's current operating results compelling, but the stock also trades at a discount to reserve valuations and the next drilling prospect (Avouma) will bring approximately 50% more production online in the next 12 months. Couple EGY's attractive current valuation with the fact that the next drilling prospect has already been successfully tested with an exploration well, and you have a recipe for a low risk, high reward investment in Vaalco.
INTRODUCTION
The Company operates the Etame field on behalf of a consortium of five companies offshore of the Republic of Gabon (West Africa). The Phase 1 development of the field occurred in 2002 and consisted of completing three wells producing into an FPSO. Phase 2 development commenced in 2004 with two wells planned, one of which has already been drilled and completed. The second well of the Phase 2 development was drilled during the middle of 2005. The Company's subsidiary, VAALCO Gabon Etame, Inc. operates and owns a 28.07% interest in the Etame Field. After completion of the first Phase 2 wells, the Etame field is currently producing at approximately 18,500 BOPD. Almost all of the Company's oil production is located offshore of Gabon and the Company produces into a 1.1 million barrel FPSO and sells cargos to Shell Western Supply and Trading, Limited at spot market prices.
EGY attractive valuation is partially the result of an overreaction to a September 12, 2005 news item and the fact that the market had to absorb roughly 65% of the outstanding shares of the company in a relatively short time period earlier in 2005.
On September 12th, the company announced that it had to cut back production levels after the addition of the new well brought online in Q3. "The higher initial production levels experienced with the addition of the Etame 6H well resulted in pressure interference with nearby wells and some declines in their productivity. Rather than risk local pressure decline, and possible damage to the reservoir, the Etame ET-3H well will be shut in. By resetting production the consortium expects improved aquifer support and stable production." This development didn't change reserves in place or materially affect the long-term prospects of the company. Even after shutting in 3H, the addition of the new well still raised net production levels.
"In connection with a merger with 1818 Oil Corp. in 1998, the Company issued to the 1818 Fund II, L.P. (the "1818 Fund") Common Stock and Preferred Stock which votes as a class with the Common Stock on an as converted basis, representing approximately 65% of the outstanding voting power of the Company on an as converted basis." In late 2004 and early 2005, the 1818 Fund decided to wind down its operations and liquidate. The Fund sold its entire 35,898,695 stake of EGY common stock in a series of block trades in March 2005. The shares sold by the Fund represented approximately 63.9% of Vaalco's outstanding common. All these shares had to be absorbed by the market in a relatively short time period, and now we have a good balance of ownership with no party owning more than 10% of the company.
CURRENT FINANCIALS
In Q32005, Vaalco earned $11.9 million or $0.20 per diluted share on $26.2 million in revenue. The company generated $22.9 million in EBITDA, and ended the quarter with essentially no debt and $45 million of cash in the bank. The company's enterprise value based on the diluted share count currently stands at only $174 million.
After bringing the new well online at the beginning of August, the higher production levels for August and September brought Q3 to a total quarterly production and revenue base about equal to the current run rate of 18,500 BOPD. Production in future quarters should be similar to Q3 until the new Avouma field is brought online late in 2006.
Judging EGY's financial ratios versus its peers over the trailing twelve months, Vaalco has a PE of only 8 versus an industry average of 16, and a price to sales of 2.8 versus an industry average of 3.5. EGY's annualized PE based on Q3 earnings currently stands at 4.5, while its annualized price to sales ratio is 2.1.
LONG TERM DEBT
As of September 30, 2005, the Company had a term loan with the International Finance Corporation ("IFC"), a subsidiary of the World Bank in the amount of $2.0 million. In June 2005, the Company executed a loan agreement for a $30.0 million revolving credit facility secured by the assets of the Company's Gabon subsidiary.
While the company expects cash on hand and current cash flow to be sufficient to fund capex over the next 2 years, the facility may be utilized to finance a portion of the Avouma and Ebouri development activities if they find projects outside of the Etame concession to pursue (note all the "announced" development activities for 2006 and 2007 lie within the "Etame" permit). The facility goes through June 2008 at which point it can be extended, or converted to a term loan. It is anticipated that this facility will become effective during the fourth quarter of 2005 after requisite loan registration filings with the Gabon government are completed. This facility will replace the existing term credit facility, which will be repaid (the balance is currently less than $1 million outstanding).
PROVEN RESERVE VALUATION
As of December 31, 2004, the company's last annual report indicated that the "Standardized measure of discounted future net cash flows at 10% showed the present value of oil reserves to be $123.3 million based on year end oil prices. As of the end of 2004, in Gabon, the price was $40.28 per barrel representing a $0.19 discount to the spot price of Dated Brent Crude at December 31, 2004. In Texas the price was $42.76 per barrel of oil."
It goes without saying that since the company's average sale price was $58.75 per barrel during the third quarter of 2005, the reserves have room for upward valuation adjustments. Based on current commodity prices, an upward adjustment of about 25% to reserve valuations would be conservative and prudent when considering the fact that oil prices are nearly 50% higher that they were at the beginning of 2005. After replacing the net property and equipment line on the balance sheet with a more realistic valuation of reserves, Vaalco's tangible assets alone are worth approximately $20 million more than the company's entire enterprise value.
In addition, it goes without saying that the market is placing zero value on the reserves of future drilling projects, which have a potential for a profound impact on reserve valuations. Approximately 2.5 million barrels of proved developed reserves were added just on completion of the Etame-6H well alone as noted in the press release from August 1st, 2005.
The Company maintains a policy of not booking proved reserves on discoveries until such time as a development plan has been prepared for the discovery. Additionally, the development plan is required to have the approval of the Company's partners in the discovery. Furthermore, if a government agreement that the reserves are commercial is required to develop the field, this approval must have been received prior to booking any reserves. For the Ebouri discovery, because of the decision to participate in a seismic shoot over Ebouri and other areas in the northern part of the Etame Block, the Company did not request any approvals for the development of the Ebouri discovery from its partners or the government, pending seismic results. Therefore, the Company had not booked any reserves for the Ebouri discovery when reserves were last reported, on December 31, 2004. The Company also has likewise not booked any reserves associated with the North Tchibala discovery on the Etame block.
Note that based on the map of the existing planned drilling locations, North Tchibala lies directly between two proven locations- Etame and Avouma (approximately 5 miles from each). And the Ebouri discovery is only about 5 miles north-east of the main Etame field. There are numerous other leads within Vaalco's existing permit boundary, and the odds of substantial future upward adjustments to reserve valuations remain high.
Judged against three of the company's peers (other AMEX listed small cap stocks with 100% of their oil production off shore) - TGA, TMY, and CNR-EGY comes in at very attractive valuations to tangible assets. Applying the same methodology above (increasing proven reserves by 25%) we see that EGY checks in at an EV to tangible assets ratio of only .90 versus a ratio of 1.5 for TMY, 1.9 for TGA, and 4.2 for CNR. These are all conservative estimates because 2005 reserve additions are not included. However, EGY stands out by any measure.
FUTURE DRILLING PROJECTS
The next series of wells will be drilled in the Avouma prospect in mid 2006. This is a high reward, low risk project as the Avouma exploration well tested 6600 barrels per day on a half inch choke. There will be 2 initial wells tied into this platform, and both are expected to be producing at rates similar to the exploration well. The platform for the field is currently being built, and drilling will commence next year. Management expects a gross production rate of 10,000 to 12,000 BOPD from this field by the end of 2006, which would translate into 2800 to 3370 BOPD net production owned by EGY (approximately a 50% increase to current production levels). The reserve pool of this field is independent of the existing Etame production field and will not affect current flow rates.
Management is also optimistic about the Ebouri prospect (which is about 5 miles northeast of the existing production field) and may announce platform development and drilling plans for that prospect in the coming months. Ebouri could come online in early 2007 and also add significantly to reserves and production rates.
Capex for any of the fields within the existing Etame permit will be limited to only the platform for each field and a pipeline to the FPSO. With the relatively close proximity to the existing oil storage location, the existing FPSO will be used for oil storage for each of these future prospects. Therefore, the production cost per barrel will go down after the Avouma field is producing.
Management is also presently evaluating at least two opportunities for reserve growth "through the drill bit" outside of the existing Etame permit. Management understands that in the current competitive energy environment a small company like Vaalco can't compete by buying reserves, but rather that exploration is necessary. The company desires to be the operator of any new field, and also desires to retain an ownership position of 50% to 100% of any upcoming prospects. The company has an exceptional balance sheet, exceptional cash flows, and a large untapped credit line by which to grow the company's reserves substantially through the drill bit. Management desires to stay relatively debt free. However they are willing to use the credit line if the right opportunities present themselves.
OTHER DEVELOPMENTS
The company has also realized this year that it needs to increase awareness and knowledge of the company on Wall Street. In the Q3 conference call, management stated that three analysts are currently in the process of picking up coverage of the company. Management also stated that they are looking to hire a professional IR firm to assist with shareholder relations.
CATALYSTS
* Increasing production by 50% over the next 12 months.
* Decrease in the company's production cost per barrel in Gabon upon bringing Avouma field online.
* Analyst coverage by three new firms and hiring professional IR.
* Upward revisions to proven reserve valuations.
* Continued solid operational performance and gradual valuation ratio increase in-line with peer valuations.
* Announcement of drilling plans for Ebouri and other prospects outside the Etame permit. |
|
| AUTHOR:
moydodyr |
RANK:
m100 |
DATE:
Jan 12, 2006 |
PAST
RANK:  |
EGY good news -- locks in a new contract to receive price close to Brent (extra $3.75/barrel), qualifies for Angola fields licensing, moves ahead in the North Sea, plans to complete Gabon Avouma platform early 2006.
===========================================================
VAALCO Extends Etame Block and Enters into New Crude Oil Sales Agreement
VAALCO Energy, Inc. (the "Company") announced that it has reached an agreement with the Government of Gabon for a five-year extension of the Etame Marine Permit. The extension, which will go into effect July 2006, is divided into a three-year first term and an optional two-year second term. An exploration well is required during each term.
Separately, the Company also announced that it will now sell its Etame crude oil to Trafigura Beheer B.V. Trafigura was the high bidder for the contract which is based on Rabi Light. At current market prices, the Company would expect to receive a price of approximately Dated Brent less $1.25. This represents a significant improvement over the beginning of 2004, when due to weakness in the Rabi price, the Company was receiving Dated Brent less approximately $5.00. The first lifting under the new contract of approximately 720,000 barrels is ongoing.
VAALCO Opens Aberdeen Office
To support future drilling activity and planned exploration activity in the U.K. sector of the North Sea, VAALCO has opened an office in Aberdeen, Scotland. The company plans to enter into two partnerships to perform studies of the blocks upcoming in the 24th Licensing round expected to occur in June 2006. One will focus on the Central North Sea area, and one will be focused on the Southern Gas Basin and Fallow Discoveries. The Company has budgeted approximately $2.0 million to support these North Sea Activities in 2006.
VAALCO Pre-Qualified by Sonangol as Operator for Angolan Licensing Round
In another new venture area, VAALCO has successfully qualified as an Operator for bidding in the upcoming Angolan Licensing Round. Seven blocks are up for bid, with three of them being shallow water blocks of interest to the Company. VAALCO was one of twenty-nine companies qualified and one of only a handful of independents successfully able to qualify. Bids are due March 31, 2006.
Mr. Robert Gerry stated, "We have begun the diversification process for VAALCO as promised. The award of the Mutamba Iroru block in Gabon has strengthened our position within Gabon where our core assets lie. The Avouma platform is expected to be fully constructed by April 2006, with installation in Gabon over the summer. We still anticipate first production from Avouma in the fourth quarter of 2006. We are analyzing the seismic data obtained over Ebouri with hopes to file a development plan with the government in the near future. The opening of an office in Aberdeen commences our North Sea initiative and we continue to pursue other potential projects in West Africa through such activities as the Angolan bid round and discussions with other operators."
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|
| AUTHOR:
jhagedorn |
RANK:
Top Quartile |
DATE:
Jan 23, 2006 |
| PAST
RANK: |
| Another big move today for EGY - Any price targets over the next 1 to 2 years? Thanks, John |
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| AUTHOR:
moydodyr |
RANK:
m100 |
DATE:
Feb 08, 2006 |
| PAST
RANK: |
I am currently reducing my EGY position.
We had a strong run and the market valuation is no longer dirt cheap. The energy market is entering a weak spot, thanks to warm winter weather, building inventories and expectations of seasonal demand drop next month.
EGY will be releasing 4th quarter 2005 earnings in the first week of March. They will be disappointing. While this is a temporary setback, the "hot money" chasing this stock lately will likely go chase something else.
So I am feeling comfortable to take some profits here at $7/share and wait for the next opportunity. |
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| AUTHOR:
teriksen |
RANK:
m100 |
DATE:
Feb 10, 2006 |
| PAST
RANK: |
| I have the same thoughts and am taking some profits as well. |
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| AUTHOR:
aebnoether |
RANK:
Top Return |
DATE:
Feb 15, 2007 |
| PAST
RANK: |
time to buy again?
ae |
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| AUTHOR:
fenrig |
RANK:
--- |
DATE:
Mar 06, 2007 |
| PAST
RANK: |
Today might be time to buy... They just took a huge haircut.
BUT, the new Avouma wells are flowing 6,000 barrels per day, NOT 10-12K as expected by management (see Jbarnes' note above).
Expect some clarification on this in the conference call.
Also, oil is sitting pretty at 60$ around a time when the shoulder season should be showing up. If oil drops back to 55-50$, Egy will take even larger haircuts (including, IMHO huge chunks of scalp).
The North Sea prospects turned out to be a no-go, so they'll have to shut down that office or try for more fields later. (I hope they write it off as a mistake and carry on in Africa!)
Good news is that they are starting to move on a number of prospects and if any of them hit, the current price is simply a bad joke.
So, over all, I think today might be good for a nibble, say 25-50% of what you want to invest in here. Take a bigger bite near the end of the month if you like the taste. |
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| AUTHOR:
jmfunes |
RANK:
Top Quartile |
DATE:
Mar 08, 2007 |
| PAST
RANK: |
| Can someone please explain to me why this stock is not rebounding? I don't see what is dragging it down. |
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