2k hedge fund analysis

“VAALCO Energy, Inc. (VAALCO) is an independent energy company. The Company is engaged in the acquisition, exploration, development and production of crude oil and natural gas. The Company's segments include Gabon, Equatorial Guinea, the United States, and Corporate and other, which includes corporate and operations support. The Company owns interests in an undeveloped block offshore Equatorial Guinea, West Africa. It owns producing properties and conducts exploration activities as an operator in Gabon, West Africa.” — Taken from TradingView

VAALCO Energy, Inc. (EGY) is a company that we find extremely undervalued, both in current revenue and future revenue. The company, upon initial investment, traded at 1.25 P/E and ~3 Forward P/E. The company has done well to reduce debt and operate explorations fully independent of outside financing. Although the company is relying on Brent Crude price (currently $58) and the margins that they can produce at, they intelligently have already hedged future prices of around 40% of the production at $67. This is comparable to EGY’s free cash flow break even cost of $47 per barrel.

While their are always risks associated with companies dealing in EGY’s industry, such as Brent Crude price, machinery malfunction, territorial/governmental issues, etc. we believe that EGY has set itself up to be a very profitable company in the near future. Add to this the share repurchase program that will, at current prices, allow the company to buy back over 7% of shares and the future of earnings looks promising.

current price target = $5.50