Vital Energy $VUX has “more than doubled production” but the market hasn’t noticed this yet – it was not yet in financials. Easy cashflow, more growth potential and a future stock multibagger using Q4 2021 numbers financials and 900 BOE/D production + higher oil prices of $100 WTI today
Share Price: 0.40
Market Cap: 32 Mln
Shares Outstanding: 81 Mln
Shares Diluted: 82.2 Mln
Management Ownership: >50%
Q4 is for October-December 2021. WTI oil prices have gone up a lot since so Q1 January-March have WTI market prices of somewhere $90 and at the moment we are seeing +$100. Let’s remember that viewing the Q4 financials in the MD&A. Q1 Financials will be out in a month, end of May.
Vital Energy has been able to more than double its production due to 3 new wells as stated in the 5 October 2021 press release (enclosed down below). From 385 barrels in Q2 to 911 barrels daily in Q4. Furthermore, the company owns many more properties, as stated in the MD&A, and has more potential sites for new wells. 4 of the 8 properties are in production, meaning there isn’t a dependency on one location/property. The cost structure is easy as after the Operational Netbacks the company has only limited expenses. Cashflow in Q4 was used to pay back a loan, note 11, of a total 3.8 Mln and make the balance sheet even cleaner.
Considering the high cash flow due to low costs and high oil prices, together with >50% insider ownership, this is not a risk.
As can be seen below, the operational netback in Q4 was $70 dollars with a revenue of $84 per BOE. The average WTI was $77 in Q4. Let us remember that this is October – December and right now oil price is at $100 WTI.
*Please see MD&A on Sedar!
Balance Sheet and Income Statement
*Please see on Sedar!
Insider Ownership
Management owns >50% of the shares so the float is tightly hold
https://www.vitalenergyoil.com/investor/stockqoute.html
Oil Proved Reserves 31 December 2021 – they have more locations for drilling left
*Please see on Sedar!
Valuation
If you use the IWC (Microcap ETF) P/E ratio for the full year 2022 profit per share – expected based on production, oil price and cost structure – the stock is worth a lot more. That is for a company with a good balance sheet and a clear cashflow, not something you find in most microcaps as with this ETF. Therefore, using a P/E of 10-15 sounds very reasonable to me. This leaves out the potential growth of new oil wells. https://stockanalysis.com/etf/iwc/
Considering the production only started to increase since August, and oil prices are now at $100 WTI, I see a completely different picture for FY 2022.
Oil Industry
I’m positive towards oil as the world still needs oil. From 2011-2019 the world energy consumption increased by 10% and oil consumption source increased at the same rate according to this source. https://ourworldindata.org/grapher/global-energy-substitution?country=~OWID_WRL
Disclaimer: This is my personal opinion, please do your own homework*
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