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Vaalco Energy Inc (EGY)
NYSE:EGY
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Vaalco Energy (EGY) AI Stock Analysis

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EGY

Vaalco Energy

(NYSE:EGY)

Rating:75Outperform
Price Target:
$4.50
▲(19.05%Upside)
Vaalco Energy's strong financial performance and attractive valuation are significant strengths, supporting a favorable stock outlook. The company faces commodity price challenges and project delays, but maintains robust operational and financial strategies. Technical indicators suggest stability, and the earnings call highlights positive production outcomes despite external pressures.
Positive Factors
Company Expansion
VAALCO's M&A activities have expanded their operations into Gabon, Egypt, Canada, and Cote D'Ivoire, demonstrating strong growth and diversification capabilities.
Debt Facility
The new $300 million revolving credit facility enhances funding flexibility and supports the potential to maintain dividends while pursuing investment opportunities.
Shareholder Returns
VAALCO's operational success is expected to generate significant free cash flow, which supports ongoing shareholder returns and potential dividend growth.
Negative Factors
Free Cash Flow
The forecasted free cash flow for 2025 is lower than previously expected, though minimal changes are anticipated for 2026.
Production Guidance
Guidance for FY25E anticipates a reduction in production due to the FPSO redevelopment project in Cote d'Ivoire, resulting in a temporary loss of approximately 4kboe/d.
Working Capital Outflow
In FY24, significant working capital outflow of approximately $70 million resulted in a low free cash flow of just $1.5 million.

Vaalco Energy (EGY) vs. SPDR S&P 500 ETF (SPY)

Vaalco Energy Business Overview & Revenue Model

Company DescriptionVAALCO 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.
How the Company Makes MoneyVaalco Energy generates revenue through the exploration, development, and production of oil and natural gas. The company's primary revenue stream comes from the sale of crude oil extracted from its offshore assets, particularly in the Etame Marin block offshore Gabon. Vaalco sells its produced oil to various customers, including international oil trading companies and refineries, often through long-term contracts or spot market sales. The company's revenue is influenced by several factors, including global oil prices, production levels, operational efficiency, and the successful execution of exploration and development projects. Strategic partnerships and joint ventures with other energy companies also play a crucial role in sharing risks and enhancing operational capabilities, contributing to Vaalco's earnings.

Vaalco Energy Earnings Call Summary

Earnings Call Date:May 08, 2025
(Q1-2025)
|
% Change Since: 12.17%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Neutral
VAALCO Energy's Q1 2025 earnings call highlighted strong financial and operational performance, including meeting or exceeding production guidance and maintaining shareholder returns through dividends. However, the company is facing challenges with commodity price volatility leading to budget cuts and production downtime due to project delays. The financial position remains strong with a new credit facility and safety milestones in Egypt standing out positively.
Q1-2025 Updates
Positive Updates
Strong Production and Financial Performance
In Q1 2025, VAALCO delivered net income of $7.7 million and adjusted EBITDAX of $57 million. NRI production was 17,764 barrels of oil equivalent per day, above the high end of guidance.
New Credit Facility and Financial Position
VAALCO entered into a new reserves-based revolving credit facility with an initial commitment of $190 million, with the ability to grow to $300 million, to support growth initiatives.
Cote d'Ivoire Developments and License Extension
The Council of Ministers approved a 10-year extension of the license on CI-40, extending it to 2038. Significant development drilling is expected in 2026 after FPSO refurbishment.
Safety Milestone Achieved in Egypt
VAALCO achieved over 4.3 million man hours without a lost time incident in Egypt, demonstrating a strong safety commitment.
Dividend Payments and Shareholder Returns
VAALCO paid a quarterly cash dividend of $0.0625 per share and announced a second dividend payment for 2025, maintaining a commitment to a $0.25 per share annual dividend.
Negative Updates
Commodity Price Volatility and Budget Adjustments
Due to softer commodity pricing, VAALCO decided to cut about 10% from its capital budget in 2025, delaying some smaller projects.
Production Downtime and Project Delays
Production came offline in Q1 at Cote d'Ivoire for the FPSO project, and the drilling campaign in Gabon is not expected to kick off until Q3, with meaningful production uplift expected by late 2025 into 2026.
Working Capital Challenges
VAALCO experienced an outflow in working capital due to a state lifting in Gabon to settle in-time taxes of about $30 million, affecting cash flow.
Company Guidance
During VAALCO Energy's Q1 2025 conference call, the company provided several key metrics and guidance for the year. VAALCO reported a net income of $7.7 million, or $0.07 per share, and an adjusted EBITDAX of $57 million, driven by NRI production of 17,764 barrels of oil equivalent per day, which exceeded guidance expectations. The company announced a 10% reduction in the capital budget for 2025, adjusting it to a range of $250 million to $300 million, citing a decline in commodity prices. However, this reduction is not expected to impact the production or sales guidance for the year. VAALCO's full-year NRI production guidance remains unchanged, and a strong performance is anticipated in Gabon and Egypt. The company also highlighted its ongoing projects, such as the FPSO refurbishment in Cote d'Ivoire and the drilling campaign in Gabon set to begin in Q3 2025, which are expected to drive future production growth. Additionally, VAALCO continues to focus on maintaining financial discipline through operational efficiencies and strategic hedging to manage commodity price uncertainties.

Vaalco Energy Financial Statement Overview

Summary
Vaalco Energy shows strong financial performance with robust revenue growth and profitability. Despite a slight decline in EBIT margin and return on equity, the company maintains efficiency and a resilient balance sheet with low leverage.
Income Statement
85
Very Positive
Vaalco Energy demonstrates strong revenue growth and profitability. The TTM (Trailing-Twelve-Months) data shows a robust gross profit margin of 40.6% and a healthy net profit margin of 11.9%. Despite a slight decline in EBIT margin from 28.5% to 26.4%, the company's revenue has grown steadily over the years. The EBITDA margin remains strong at 54.7%, indicating operational efficiency.
Balance Sheet
78
Positive
The balance sheet reflects a stable financial position with a debt-to-equity ratio of 0.19, indicating low leverage. The equity ratio is solid at 54.4%, suggesting a strong equity base. However, return on equity has decreased slightly, reflecting the need for improved net income relative to equity. Overall, the company maintains a healthy balance between debt and equity.
Cash Flow
80
Positive
Cash flow analysis shows a positive trajectory with a free cash flow growth rate of 867.4% from the previous year. The operating cash flow to net income ratio is strong at 2.14, showcasing effective conversion of earnings into cash. The free cash flow to net income ratio is also healthy at 1.71, demonstrating good cash flow management.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue478.99M455.07M354.33M199.07M67.18M
Gross Profit172.45M186.61M184.66M96.76M20.48M
EBITDA286.56M276.54M183.41M77.33M14.09M
Net Income58.49M60.35M51.89M81.84M-48.08M
Balance Sheet
Total Assets954.95M823.22M855.64M263.09M141.23M
Cash, Cash Equivalents and Short-Term Investments82.65M121.00M37.20M48.67M47.85M
Total Debt98.17M90.80M89.06M10.23M22.56M
Total Liabilities453.37M344.43M389.54M118.79M79.77M
Stockholders Equity501.58M478.78M466.11M144.30M61.46M
Cash Flow
Free Cash Flow10.72M126.37M-31.05M11.05M3.12M
Operating Cash Flow113.72M223.60M128.85M50.12M27.45M
Investing Cash Flow-102.12M-97.22M-123.21M-39.06M-24.33M
Financing Cash Flow-43.05M-56.82M-17.95M-57.00K-929.00K

Vaalco Energy Technical Analysis

Technical Analysis Sentiment
Positive
Last Price3.78
Price Trends
50DMA
3.59
Positive
100DMA
3.57
Positive
200DMA
4.15
Negative
Market Momentum
MACD
<0.01
Positive
RSI
54.60
Neutral
STOCH
28.50
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EGY, the sentiment is Positive. The current price of 3.78 is above the 20-day moving average (MA) of 3.73, above the 50-day MA of 3.59, and below the 200-day MA of 4.15, indicating a neutral trend. The MACD of <0.01 indicates Positive momentum. The RSI at 54.60 is Neutral, neither overbought nor oversold. The STOCH value of 28.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for EGY.

Vaalco Energy Peers Comparison

Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
77
Outperform
$309.71M2.3025.10%38.46%
75
Outperform
$392.44M6.7911.83%6.61%3.02%-8.43%
67
Neutral
$15.23B9.436.27%5.39%4.07%-71.82%
66
Neutral
$357.12M4.5438.79%8.45%-14.94%-25.19%
61
Neutral
$380.81M5.9414.68%4.24%-15.94%2.90%
61
Neutral
$268.93M251.9739.61%0.40%-85.94%-88.55%
45
Neutral
$307.28M-73.54%-280.78%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
EGY
Vaalco Energy
3.78
-3.02
-44.41%
SD
SandRidge Energy
10.38
-2.72
-20.76%
SJT
San Juan Basin Royalty
5.77
1.85
47.19%
GPRK
GeoPark
6.96
-2.74
-28.25%
GFR
Greenfire Resources
4.58
-2.57
-35.94%
ANNA
AleAnna
4.78
-6.19
-56.43%

Vaalco Energy Corporate Events

Executive/Board ChangesShareholder Meetings
Vaalco Energy Holds Annual Stockholders Meeting
Neutral
Jun 6, 2025

On June 5, 2025, Vaalco Energy, Inc. held its Annual Meeting of Stockholders, where 77,038,848 shares were represented. During the meeting, stockholders approved the election of five directors for a one-year term, ratified the appointment of KPMG LLP as the independent public accounting firm for the fiscal year ending December 31, 2025, and approved the compensation of the company’s named executive officers.

The most recent analyst rating on (EGY) stock is a Buy with a $744.00 price target. To see the full list of analyst forecasts on Vaalco Energy stock, see the EGY Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 24, 2025