Vital Energy (VTLE) Valuation Update - May 17

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dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Vital Energy (VTLE) Valuation Update - May 17

Post by dan_s »

The Forge Energy Acquisition via joint agreement with NOG is a very significant transaction for Vital Energy.

We will be publishing an updated profile on VTLE tomorrow morning. Read it carefully.

Vital Energy (formerly Laredo Petroleum) is based in Tulsa. I believe that is one reason it does not get the attention it deserves from the Wall Street Gang. On a per share basis it is the most profitable company in the Sweet 16. Analysts don't like going to Tulsa and this Company's management team really needs to get out and tell their story more often.

I have updated my forecast/valuation model based on the assumption that the Forge Energy acquisition will close in June. In addition to current production of ~9,500 Boepd net to Vital's 70% working interest, it will add over 100 high-quality drilling locations in the Delaware Basin, a sub-basin of the Permian Basin. I believe the Wall Street Gang has believed Vital's Permian Basin leasehold to be of low quality and some of it may be, but the financial results they put up in 2022 ($37.67 EPS and $47.75 Adjusted Operating CFPS) tells me something is working for them.

At the time of this post VTLE was trading for $43.93.

My updated valuation increases by $8 to $122 per share. VTLE's 52-week trading range is $39.74 to $120.86, so it was near my valuation back in June, 2022. Obviously, much higher oil & gas prices had something to do with that price spike.

My updated forecast shows 2023 results could be $23.16 EPS and $45.44 operating CFPS. TipRanks consensus for 2023 is $22.73 EPS and $46.10 operating CFPS. There is NOTHING which I can find that justifies this stock trading for less than 1X operating CFPS.

Vital's December 31, 2022 reserve report shows a PV10 Net Asset $279/share.
Dan Steffens
Energy Prospectus Group
Roadster
Posts: 85
Joined: Tue Dec 14, 2010 7:34 pm

Re: Vital Energy (VTLE) Valuation Update - May 17

Post by Roadster »

Is that a typo ???

Vital's December 31, 2022 reserve report shows a PV10 Net Asset $279/share.

Total debt is approximately $ 101 per share

So net is $ 178? versus stock price of $43.61 ??
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: Vital Energy (VTLE) Valuation Update - May 17

Post by dan_s »

Per Vital's December 31, 2022 reserve report.
> Proved Reserves were 302.3 MMBoe (39% oil and 74% proved developed)
> PV10 Value was $4,755 million at 12/31/2022 based on SEC guidelines ($90.12/bbl oil and $5.20/mcf of ngas)

So:
$ 230 million current assets as of 3-31-2023 per 10Q
$4,755 million PV10 of just P1 reserves at 12-31-2022
($1,718 ) million total debt as of 3-31-2023 per 10Q
-----------
$3,267 million
/ 18.604 million shares as of April 30, 2023 < Includes shares issued for Driftwood Acquisition.
----------
$175 per share PV10 net asset value

Note that this does not include the proved reserve they got with the Driftwood Acquistions that they got when the deal closed on April 3, 2023.

Obviously the PV10 based at 12-31-2022 is based on much higher SEC oil & gas pricing guidelines, but there is NO WAY this stock should be trading at less than 1X operating cash flow per share.
Dan Steffens
Energy Prospectus Group
Fraser921
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Joined: Mon Mar 22, 2021 11:48 am

Re: Vital Energy (VTLE) Valuation Update - May 17

Post by Fraser921 »

What multiple to fcf is it trading for?

OCF less cap ex , less interest exp , less less stock grants

Is cap ex free?
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: Vital Energy (VTLE) Valuation Update - May 17

Post by dan_s »

You can find the answers on the Excel spreadsheet model for Vital.

Per my forecast, Vital is on pace to generate Adjusted Operating Cash Flow of $845 million.
Their capital expenditure budget (not including the money spent on the Driftwood and Forge Energy acquisitions) is $625 to $675 million.
So, "Free Cash Flow from Operations" should be in the range of $170 to $220 million (at the midpoint that is $10.48 FCF per share).
Dan Steffens
Energy Prospectus Group
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