Stifel Nicolaus analyst Chris Wheaton reiterated a Buy rating on Vaalco Energy (EGY – Research Report) today and set a price target of p753.00.
Chris Wheaton’s rating is based on the strategic financial maneuvers undertaken by Vaalco Energy, which have positioned the company for future growth. The introduction of a new $300 million revolving credit facility is a significant factor, as it replaces an existing undrawn facility and provides the company with the financial flexibility needed to execute planned investment campaigns. This facility not only supports organic growth but also opens up possibilities for future acquisitions, ensuring that the company can maintain its current dividend even if oil prices fall below the forecasted $70 per barrel.
Additionally, the credit facility is secured by Vaalco’s assets in Gabon, Egypt, and Côte d’Ivoire, and offers favorable interest terms that align with the previous Glencore debt facility. The structured amortization plan and borrowing base redetermination every six months further enhance financial stability. Wheaton’s Buy rating reflects confidence in Vaalco’s ability to manage its liquidity effectively, even under scenarios where oil prices drop to $50 per barrel, ensuring the company’s resilience and potential for shareholder returns.