Vital Energy (VTLE) Valuation Update - Apr 22

[dan_s]

I have updated my forecast model for Vital Energy and it has been posted to the EPG website. My valuation stays the same at $102/share.

Here is what I did:
> Lowered interest expense on row 34.
> Increased the outstanding share count from 37 to 38 million, which is probably a bit too high.
> I adjusted the production mix slightly, increasing the NGL percentage 0.5% and lowering the natural gas percentage by 0.5%.
> Adjusted a bit lower the "cushions" in my quarterly estimates of operating cash flow because I have more confidence in estimated revenues for Q1 and Q2 and I had a $100 million cushion in 2025 that has been lowered to $50 million.
> The realized prices I'm still using for NGLs is probably too low.

My valuation multiple stays at 3.25 X annualized operating cash flow for 2023 to 2025. 2024 CFPS is counted twice.
> Vital is a "Growth" company. Production increased 17.1% in 2023 and the midpoint of their guidance (119,000 Boepd) is conservative.
> My production forecast of 122,000 Boepd is just a Wild Ass Guess by me and it is also probably too low.

TipRanks: "In the last 3 months, 9 ranked analysts set 12-month price targets for VTLE. The average price target among the analysts is $58.75. The 9 price targets range from $42 to $80." < In the past 12 months, Vital has made 7 acquisitions. Since all of them are from private companies most of the Wall Street Gang are not giving Vital full credit for those acquired and accretive assets. It will take several quarters for the "Gang" to get this one right.

TipRanks' forecasts for 2024 Revenues, Net Income per share and Operating Cash Flow per share are all higher than what I have in my 2024 model.