Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Equity Bottom-Up

<ul><li>Our updated estimates include the impact of the Svenska acquisition, which closed on April 30, 2024, and was included in management’s latest guidance update following the release of 1Q24 financial and operating results.</li><li>The acquisition added a 27.39% non- operated working interest in the CI-40 license located offshore Côte d’Ivoire.</li><li>On May 7, 2024, management increased the midpoint of FY24 working interest (WI) production guidance to ~25.0 MBOE/d from 22.1 MBOE/d.</li></ul>

Our updated estimates include the impact of the Svenska acquisition, which closed on April 30, 2024, and was included in management’s latest guidance update following the release of 1Q24 financial and operating results.The acquisition added a 27.39% non- operated working interest in the CI-40 license located offshore Côte d’Ivoire.On May 7, 2024, management increased the midpoint of FY24 working interest (WI) production guidance to ~25.0 MBOE/d from 22.1 MBOE/d.

VAALCO Energy, Inc. - Estimate Update Including Cote D'Ivoire Contribution

Equity Capital Markets and Advisory Business, Auctus Advisors

Auctus Advisors

Equity Capital Markets and Advisory Business

Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector. The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy. Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors. Auctus provides Corporate Broking, Equity Research and Investment Banking services.

<ul>
<li>The YE23 SEC net 1P reserves in Cote d’Ivoire are estimated at 16.9 mmboe; which compares very favorably with the previous estimate for the WI 1P reserves of 13 mmboe (as of 01/10/2023).</li>
<li>The YE23 WI 2P reserves are now estimated at 22.5 mmboe.</li>
<li>Adding back production over November and December 2023 (assuming ~5 mbbl/d production), the new estimate represents an increase of ~1.1 mmboe vs the previous estimate of 21.7 mmboe at the end of October 2023.</li>
</ul>


The YE23 SEC net 1P reserves in Cote d’Ivoire are estimated at 16.9 mmboe; which compares very favorably with the previous estimate for the WI 1P reserves of 13 mmboe (as of 01/10/2023).
The YE23 WI 2P reserves are now estimated at 22.5 mmboe.
Adding back production over November and December 2023 (assuming ~5 mbbl/d production), the new estimate represents an increase of ~1.1 mmboe vs the previous estimate of 21.7 mmboe at the end of October 2023.


VAALCO Energy (NYSE: EGY): Increased reserves and resources estimate in Cote d’Ivoire

<ul>
<li>VAALCO has brought online four new long (2.75 mile) lateral wells in Canada.</li>
<li>Three wells delivered IP rates of 500 bbl/d while the fourth well flowed 350 bbl/d for a total production capacity addition of 1.85 mbbl/d.</li>
<li>This is a good result and compares with individual IP30 oil rates of 374-444 bbl/d achieved at the two wells drilled in 2023.</li>
</ul>


VAALCO has brought online four new long (2.75 mile) lateral wells in Canada.
Three wells delivered IP rates of 500 bbl/d while the fourth well flowed 350 bbl/d for a total production capacity addition of 1.85 mbbl/d.
This is a good result and compares with individual IP30 oil rates of 374-444 bbl/d achieved at the two wells drilled in 2023.


VAALCO Energy (NYSE: EGY): Very good operating update in Canada

<ul>
<li>1Q24 WI production was 21,807 boe/d, in line with our expectations.</li>
<li>VAALCO held ~US$113 mm in cash at the end of March, which is also in line.</li>
<li>With the completion of the acquisition of Svenska, the company now expects to produce 23.6-26.5 mboe/d in FY24.</li>
</ul>


1Q24 WI production was 21,807 boe/d, in line with our expectations.
VAALCO held ~US$113 mm in cash at the end of March, which is also in line.
With the completion of the acquisition of Svenska, the company now expects to produce 23.6-26.5 mboe/d in FY24.


VAALCO Energy (NYSE: EGY): Good quarter. Gearing-up for growth

<ul><li>A diverse mix of producing assets in Gabon, Egypt, and Canada, coupled with future development projects in Equatorial Guinea and Cote d’Ivoire, positions VAALCO with an asset base that could generate substantial free cash flow to reinvest for growth and continue returning cash to shareholders in the coming years.</li><li>VAALCO closed the Svenska acquisition on April 30, 2024, for $40.2 million in cash.</li><li>The primary asset is a 27.39% non- operated working interest in the deepwater producing Baobab field in Block CI-40 offshore Cote d’Ivoire.</li></ul>

A diverse mix of producing assets in Gabon, Egypt, and Canada, coupled with future development projects in Equatorial Guinea and Cote d’Ivoire, positions VAALCO with an asset base that could generate substantial free cash flow to reinvest for growth and continue returning cash to shareholders in the coming years.VAALCO closed the Svenska acquisition on April 30, 2024, for $40.2 million in cash.The primary asset is a 27.39% non- operated working interest in the deepwater producing Baobab field in Block CI-40 offshore Cote d’Ivoire.

VAALCO Energy, Inc. - Diversified Asset Portfolio Supports Free Cash Flow

United States

Nordic American Tankers Limited is a shipping company that owns and charters Suezmax tankers for oil transportation.  The Company's ships are all active in the spot freight market.

Teekay Corporation provides international crude oil and petroleum product transportation services to major oil companies, major oil traders, and government agencies.  The Company provides its services through a fleet of medium size oil tankers worldwide.

Erin Energy Corporation operates as an independent oil and gas exploration and production company. The Company offers crude oil, natural gas, and other oil products. Erin Energy owns a portfolio of onshore and offshore assets in the United States, Nigeria, Kenya, Gambia, South Africa, and Ghana.

Clean Energy Fuels Corporation designs, builds, finances and operates natural gas filling stations for vehicle fleets.  The Company also helps its customers acquire and finance natural gas vehicles and obtain local, state, and federal clean air rebates and incentives.

REX American Resources Corporation is invested in ethanol production entities. The Company produces ethanol, and dried and modified distillers grains, as well as leases real estate properties.

Ranger Oil Corporation operates as an oil and gas company. The Company offers exploration, development, and production of oil and natural gas. Ranger Oil serves customers in the United States.

Overseas Shipholding Group, Inc. provides ocean transportation services for crude oil and refined petroleum products. The Company delivers crude oil, petroleum products, and liquefied natural gas throughout the world. Overseas Shipholding Group owns and operates a fleet of vessels registered internationally.

NGL Energy Partners LP serves as a full service midstream provider. The Company's operations focus on crude oil logistics, water treatment services, NGL logistics and retail propane. NGL Energy Partners operates in the United States.

SandRidge Energy, Inc. explores and produces natural gas and crude oil. The Company owns and operates gas gathering, processing facilities, carbon dioxide treating, and transportation facilities. SandRidge Energy serves customers in the United States.

Ardmore Shipping Corp is engaged in the ownership and operation of product and chemical tankers in worldwide trade.  The Company provides shipping services to customers through voyage charters, commercial pools and time charters.

AAG Energy Holdings Limited is  an energy exploration and development company. The Company engages in coalbed methane exploration and development.

Henan Dayou Energy Co., Ltd. engages in the exploitation and distribution of coal in China. The company, through its subsidiaries, is also involved in the production and sale of mining equipment and accessories, as well as the provision of consulting services of coal mine technologies.

Deep Yellow Limited is an advanced stage uranium exploration company progressing its core Namibian projects.

PT ABM Investama Tbk invests in energy resources, energy services and energy infrastructure.  Through subsidiaries, the Company mines coal; offers mining services; offers logistics and warehousing services; generates electricity; and manufactures equipment for the mining, oil and natural gas, electricity generation, and transportation industries.

MITSUUROKO GROUP HOLDINGS CO., LTD. wholesales a variety of fuel products such as liquefied petroleum gas, coal, and briquettes products.  The Company also sells gas appliances and oil-heating equipment.  MITSUUROKO operates office leasing business as well.

Rain Industries Limited engages in the production of cement and other related products. The Company manufactures and markets cement, calcined petroleum coke, coal tar pitch, and specialty chemicals.

PT Baramulti Suksessarana Tbk is a coal mining company in Kalimatan.

Esso Thailand PCL is a fully integrated oil business, including oil refinery and production. The Company provides liquefied petroleum gas (LPG), gasoline, aviation fuel, diesel, marine fuel, lubricants, aromatic products and other related products such as purified terephthalic acid (PTA), solvents, plasticizers, and benzene concentrate stream.

Taiyuan Coal Gasification Co., Ltd. produces and markets coal, coke, gas, and related chemical products.  The Company's products are supplied  to north China and east China areas.

Taiyuan Coal Gasification Company, (000968 CH)

Shenzhen Guangju Energy Co., Ltd. distributes and sells petroleum products and liquefied petroleum gas (LPG).  The Company also provides warehousing services and invests in electric power generation.

Shenzhen Guangju Energy Co, Ltd. (000096 CH)

VAALCO Energy, Inc. acquires, explores, and develops crude oil and natural gas properties. The Company owns producing properties and conducts exploration activities in the Philippines and Gabon, and has interest in the Texas Gulf Coast area. VAALCO, through participation in a partnership, has additional international exploration interests in South and North America and Africa.

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VAALCO Energy (EGY US)

VAALCO Energy, Inc. - Estimate Update Including Cote D'Ivoire Contribution

On May 7, 2024, management increased the midpoint of FY24 working interest (WI) production guidance to ~25.0 MBOE/d from 22.1 MBOE/d.

Water Tower Research

VAALCO Energy (NYSE: EGY): Increased reserves and resources estimate in Cote d’Ivoire

The YE23 SEC net 1P reserves in Cote d’Ivoire are estimated at 16.9 mmboe; which compares very favorably with the previous estimate for the WI 1P...

Auctus Advisors

VAALCO Energy (NYSE: EGY): Very good operating update in Canada

Three wells delivered IP rates of 500 bbl/d while the fourth well flowed 350 bbl/d for a total production capacity addition of 1.85 mbbl/d.

Auctus Advisors

VAALCO Energy (NYSE: EGY): Good quarter. Gearing-up for growth

1Q24 WI production was 21,807 boe/d, in line with our expectations. VAALCO held ~US$113 mm in cash at the end of March, which is also in line.

Auctus Advisors

VAALCO Energy, Inc. - Diversified Asset Portfolio Supports Free Cash Flow

The primary asset is a 27.39% non- operated working interest in the deepwater producing Baobab field in Block CI-40 offshore Cote d’Ivoire.

Water Tower Research

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