They floated the secondary at $ 54 and couldn't bring it upon themselves to say what the price was.
Traded right thru that to 52.30 today from a high 62.87 10 days ago. Value destruction of 17 %, with crude being up over $5 bbl in same time span.
When you can't explain a bizarre move call it a strategic decision which will re rate to $150 a share or more. The market has spoken on what they think of the deal.
I expect sell side to put on glowing reports in next few days so they can dump shares the firm bought at $54
Vital Energy (VTLE) Update - Sept 14
Re: Vital Energy (VTLE) Update - Sept 14
I have seen too many large acquisitions at the top of the market ultimately fail. This one being financed with high rate debt. As the acquired properties are from private companies an investor is left taking the word of management as to quality of the operations and acreage. Time will tell but I am not impressed with this one. Looks too much to me to be an effort to significantly grow for the sake of growth.
Re: Vital Energy (VTLE) Update - Sept 14
I think sl68 is short VTLE.
Re: Vital Energy (VTLE) Update - Sept 14
Thanks for getting that update right out Dan, this one is looking pretty interesting at this point. It will be interesting to see if any of the other analysts follow Siebert's lead and move up their price targets.
Am I right that they set new hedges anticipating the new production from the acquisitions even before they've closed? I realize the deals will probably all close but you never know for sure.
The ink on your update was not even dry before it became slightly obsolete -- they did a secondary offering for another 2.75M shares. Not exactly sure why they thought they needed to do this -- about half of their consideration was already in the form of stock.
Using your pro-forma forecast of next year's EBITDA coming in at right around $1.2B the EV/EBITDA multiple looks like it will be under 3 by year-end (with a little debt pay-down from FCF). This looks like a pretty low multiple for a company that is growing as much as VTLE is.
Am I right that they set new hedges anticipating the new production from the acquisitions even before they've closed? I realize the deals will probably all close but you never know for sure.
The ink on your update was not even dry before it became slightly obsolete -- they did a secondary offering for another 2.75M shares. Not exactly sure why they thought they needed to do this -- about half of their consideration was already in the form of stock.
Using your pro-forma forecast of next year's EBITDA coming in at right around $1.2B the EV/EBITDA multiple looks like it will be under 3 by year-end (with a little debt pay-down from FCF). This looks like a pretty low multiple for a company that is growing as much as VTLE is.
Re: Vital Energy (VTLE) Update - Sept 14
Vital did add more hedges and now have ~72.8% of 2024 oil hedged at a blended price of ~$75/bbl.
My forecast is that their realized price will be ~$79/bbl net of cash settlements on their hedges and regional price differentials.
~40% of their 2024 natural gas is hedged with Swaps at ~$3.47, which is actually higher than my assumptions that HH ngas will average $3.25 next year.
None of their NGLs are hedged.
My 2024 revenue forecast is $1,875.3 million.
TipRanks' revenue forecast of $1.6 billion for 2024 is too low because Gabriele Sorbara at Siebert Williams Shank & Co (rated 5-Star by TipRanks) is the only analysts that has submitted a new forecast. The other six analysts that follow VTLE are still working on it. Gabriele's updated price target is $96/share. The other six analysts have price targets ranging from $54 to $122.
Note that my 2024 is based on 32.2 million shares (up from 18.6 million shares in Q2). My forecast assumes all of the convertible equity is converted to common stock in 2024. That is highly unlikely.
My forecast is that their realized price will be ~$79/bbl net of cash settlements on their hedges and regional price differentials.
~40% of their 2024 natural gas is hedged with Swaps at ~$3.47, which is actually higher than my assumptions that HH ngas will average $3.25 next year.
None of their NGLs are hedged.
My 2024 revenue forecast is $1,875.3 million.
TipRanks' revenue forecast of $1.6 billion for 2024 is too low because Gabriele Sorbara at Siebert Williams Shank & Co (rated 5-Star by TipRanks) is the only analysts that has submitted a new forecast. The other six analysts that follow VTLE are still working on it. Gabriele's updated price target is $96/share. The other six analysts have price targets ranging from $54 to $122.
Note that my 2024 is based on 32.2 million shares (up from 18.6 million shares in Q2). My forecast assumes all of the convertible equity is converted to common stock in 2024. That is highly unlikely.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Vital Energy (VTLE) Update - Sept 14
>convertible equity is converted to common stock in 2024. That is highly unlikely.
I think its highly likely and the only reason they did the convertible route is because shareholders have to vote for the share increases by mid next year. This was a stopgap measure. It would be unlikely if the price fell below the conversion price in which case they keep them and earn the coupon.
It certainly dilutes the c/s whether or not they convert
I think its highly likely and the only reason they did the convertible route is because shareholders have to vote for the share increases by mid next year. This was a stopgap measure. It would be unlikely if the price fell below the conversion price in which case they keep them and earn the coupon.
It certainly dilutes the c/s whether or not they convert