Energy Prospectus

Just watched your latest video.

Why do the experts have 2 sells and a hold out of three opinions?
Does the 200 m revenue drop for q2 vs last year concern you?

Takeover premiums are non existent, I would be concerned someone takes them out cheap.

PS > You modeling worksheet is great and very useful. I like how one can make their own inputs.

I read somewhere that Permian players are getting less than $ 1 for WAHA NG

25 % of the float is shorted, wow

https://shortsqueeze.com/?symbol=vtle

VTle with an Ai twist

https://seekingalpha.com/article/4616065-vital-energy-is-an-ai-beneficiary

When you changed 24 oil price to $75 FCF was break even at capex mid point and negative at high end. At $50 oil in 24, yikes! It is apparent that their drilling inventory is not tier 1. I am trying to figure out why their EPS is so high relative to CFPS. Do you have copies of the sell and hold reports reflected in the model?

Vital's low share count is why small changes in the assumptions has a big impact on per share earnings and cash flow per share.

You need to download the forecast models to Excel on your computer to make changes in the assumptions.

If WTI does go down to $50/bbl (extremely unlikely IMO) they will significantly reduce D&C spending and so will all of the upstream companies. There is very little recoverable oil in the ground that is economic at $50 oil.

Vital does have a hedging program in place to reduce the oil price risk.

The Driftwood and Forge Energy acquisitions that closed in Q2 do give them more high-quality drilling inventory. Forge deal added ~100 HZ drilling locations in the Delaware Basin that is more oil prone.

Spend some time looking at the Statement of Cash Flow in their 10Q.

They certainly look better at $80-90 oil. Good to know latest acquisition has higher oil ratio. I hadn’t realized what a drag on revenue that gathering and transportation had until I watched your podcast. Obviously as tier one acreage is drilled up prices will need to stay high to keeping drilling activity going. Like they’re using AI to optimize completion and production management. I understand that many companies are using fiber optics to monitor completions and production to optimize well productivity.

100% of the upstream companies look better using $80 to $90 oil prices. If WTI does go to $90 at year end, a lot of companies will hedge with collars that have $75 floors and ceilings over $100. Collars at those prices will remove a lot of risk.

How do you decide which stocks to weight more than the others. Would vital energy be a stock he would overweight in the portfolio.

Stocks that deserve higher multiples have:
> Strong balance sheets and no near-term debt repayment obligations.
> Management Teams with excellent track record (this is why I like ESTE and PR so much)
> Currently generate more than enough operating cash flow to fund steady production growth.
> Lots of running room in regions with lots of infrastructure, so completing wells to sales is not an issue.
> For 2023 and 2024 it helps to have a production mix heavily weighted to crude oil.
> Plans to return some capital to shareholders via dividends and stock buybacks. < Personally, I prefer that free cash flow go first to paying off debt. However, the Wall Street Gang now prefers dividends.

Prior to this year, Vital (Larado Petroleum) did not have a strong track record of growth and lacked running room. They don't much Tier One leasehold in the Midland Basin. The Company has a new CEO and the two acquisitions they closed in Q2 add more oil production and more running room. The acquisition from Forge Energy adds ~100 HZ drilling locations in the Delaware Basin that should be oil-prone.

The low share count is a problem for some fund managers. They could solve that with a stock split.

Q2 actual production came in much higher than their guidance. Oil production increased by ~5,500 BOPD, which is very good news. Several more quarters of rising production will definitely draw more "love" from the Wall Street Gang.