SNPMF - VAALCO Energy: Cheaply Priced Before Drilling Campaign

• VAALCO is set to start its 2021/2022 drilling campaign this December with a new well offshore Gabon in West Africa.
• Entering the pandemic with no debt, VAALCO acquired opportunistically the working interest of a former JV partner and made a few other moves to increase production and lower costs.
• Cash flows look solid even in a $65 Brent world, but the drilling capex will consume much of the cash from operations next year.
• The drilling uncertainty naturally weighs down on the stock, but the market seems to price in a very low success probability even though VAALCO has been in Gabon since 1995.
• The recent oil price correction which brought VAALCO to $3 is a great buying opportunity; if the drilling news are good, de-risking could push the price up twofold or more.

For further details see: