Vital Energy (VTLE) Valuation Update - July 12

[dan_s]

I have updated my forecast/valuation model for VTLE, increasing my stock valuation by $8 to $122.

On a per share basis, Vital is the most profitable company in the Sweet 16. In 2022 and leading the pack again this year.

Q2 production of 89,500 Boepd came in at 3,500 Boepd above my forecast.

Vital closed the Driftwood Acquisition on April 3 and the Forge Energy Asset Package Acquisition on June 30. For Q3 and Q4, Vital will be focused on maintaining production in the ~92,000 Boepd range (~50% oil) to maximize free cash flow. If oil prices move over $80/bbl this quarter, which seems more likely each day, Vital will be in great shape heading into 2024.

The "missing piece" for Vital was lack of "running room" in the Permian Basin. The two acquisitions solved that problem.

TipRanks' consensus forecast for 2023 ($45.29 operating CFPS) is actually higher than my forecast of $41.79 operating CFPS. THERE IS NOTHING THAT JUSTIFIES THIS STOCK TRADING FOR LESS THAN 2X CFPS.