Vital Energy (VTLE) Valuation Update - Feb 22

[dan_s]

At the time of this post VTLE was trading at $47.66, which is less than 2X my 2024 operating cash flow per share forecast of $27.26 (based on the fully diluted share count). TipRanks 2024 forecasts are slightly higher than my 2024. TipRanks CFPS forecasts are $29.69 for 2024 and $30.60 for 2025.

My updated current valuation is $104/share.

The only negative that I see for VTLE is that it does not pay a dividend.

2023 results were outstanding: 17.1% year-over-year production growth, $1.5 billion of revenues, GAAP Net Income of $695 million ($34.32/share), Adjusted Operating Cash Flow of $884.4 million with free cash flow of $217.1 million.

Based on the midpoint of the Company's 2024 guidance, production will increase 23.3% year-over-year to 119,000 Boepd (48% oil, 24.5% NGLs and 27.5% natural gas). Based on my forecast, revenues will exceed $1.8 billion and operating cash flow will exceed $1.0 billion ($27.26/share). Free cash flow should be $350 to $400 million.

The balance sheet is in good shape with no long-term debt due until 2027.
PV10 Net Asset Value of just the Company's Proved Reserves as of 12-31-2023 was $67.65/fully diluted share.

This morning three energy sector analysts submitted updated price targets to TipRanks of $50, $67 and $80.

Vital Energy is a pure play on the Permian Basin. Based on my forecast, it is a "Screaming Takeover Target".

[aja57]

Dan, any thoughts that Permian could buy Vital?

[dan_s]

Possible, but PR is primarily interested in the Delaware Basin and Vital gets most of its revenues from the Midland Basin.