Vital Energy Inc (Canada) V.VUX

Alternate Symbol(s): SNYXF

Energy Oil & Gas E&P

Vital Energy Inc. is an oil and gas exploration and development company, which is engaged in the acquisition of, exploration for and development of crude oil and natural gas in Western Canada. Its core property areas include the SE Saskatchewan property area, West Central Alberta property area, the original SW Saskatchewan property and East Central Alberta property areas. The SE Saskatchewan property area includes the two production properties - Lampman and Steelman, and four undeveloped and non-producing properties - Gainsborough, Dalesboro, Weyburn and Hume. The SW Saskatchewan property area includes two producing properties - Gull Lake and Pennant. The East Central Alberta property area includes two producing properties - Sullivan Lake and Baxter Lake. The West Central Alberta property area includes three undeveloped and non-producing properties - Pembina-1, Pembina-2 and Ante Creek. The Gull Lake property is covered with 3D seismic data and has over nine wells producing crude oil.

TSXV:VUX - Post by User

Vital Energy Inc (Canada) > What would be a reasonable P/E with the new situation?

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Comment by Dragoonon Jun 18, 2022 9:22am

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Post# 34766569

RE:What would be a reasonable P/E with the new situation?

https://www.morningstar.com/stocks/xtsx/vux/valuation here morningstar has an index of price/cash flow of 10 (9,62). Anyone any idea if the index 'Morningstar Canada GR CAD' is reasonable to use here? Looks like just an average of the Canadian market to me. Do you think a multiple of 10 to cashflow is reasonable?

Dragoon wrote:

Quote from Canadian (TSX) Oil and Gas Industry Analysis from Simply Wall St: 'The industry is trading close to its 3-year average PE ratio of 10.7x. ' This is Median Average P/E and currently P/E is at 10.0: https://simplywall.st/markets/ca/energy

Yes, this is probably large cap seeing the title with (TSX) but the links below clearly shows we still have a lot higher to go for VUX with this new Q4 & Q1 situation (clean balance sheet, new wells) that I think a P/E of 10 could be reasonable.

TSX Average P/E is 11.7 and 3-year Median 14.2: https://simplywall.st/markets/ca

I haven't found the Canada Microcap P/E but here is MSCI Canada Small Cap with Average P/E of 14.2: https://www.msci.com/documents/10199/bdd43dc5-cd39-4e0e-aa95-78620cfb5f2f

*I don't know the exact P/E calculations of these sources but it is about the bigger picture here and VUX current earnings:

Seeing CAD $4 cents profit in Q1, annually will be $16 cents when WTI was $94 US and $97 CAD in sales and operating production cost of $13 CAD in Q1. Most important is the structural change with Q4 due to new wells, confirmed again with Q1 numbers and now stable.

With oil at $120 that is a rough $20 CAD of the $25 extra in profits, using Q1 production. Let's use conservative 600 barrels*$20*90 days / 82 mln diluted shares *4 quarters = 5 cents annually extra profits with the higher oil prices using Q1.

Let's say a total annual earnings of $20 cents as they have drilling planned. Right now I see us at a P/E annually of 2-3. What do you think is reasonable for micro-cap oil stocks with no debt?

PS. Definitely looking forward to the 7 wells to drill with an expected 500 barrels of production according to the last MDA. Time will tell.