Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Victoria Oil & Gas – transforming from a sentiment play to a fundamental one

By Ben Turney

28 October 2015 08:29

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Victoria Oil & Gas (VOG) delivered a fairly upbeat set of results this morning. Although the company recorded a $50.8million loss, $49.8million of this stemmed from an impairment charge relating to the company’s West Medvezhye project in Russia. The much more positive news was that operations in Cameroon delivered a profit after tax of $5.4million. Even so, the market appears to have been fairly underwhelmed by this and Victoria Oil & Gas’ share price is off 2.5% at 58p, last seen. This values the company at £64.6million. The question now is might there be a value case for buying this stock with a medium outlook?

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Comments

eshaitan

30 October 2015, 20:09

A nice summary there Ben, its good to see someone at shareprophets covering VOG. The company has had to write down all assets in Kazakhstan and Russia, I don’t think they ever though Cameroon would be the territory that came good. Its possible some day some value may be realised from the Russian asset but no one is holding their breath!

VOG are reporting quarterly now and q3 interims should be due shortly, it’s the wet season so will be our worst time of year for production as electricity should be provided mainly be Hydro power, but I’m expecting a really good update with gas taken well above the minimum off take agreement by the electricity company.

I suppose the mcap at 60 million seems quite high but VOG has little debt (thanks to diluting shareholders), now owns it’s gas processing plant outright and has also laid a substantial amount of pipeline in Cameroon. This coming financial year we should hopefully generate cash and finish with a positive p/e below 10. A lot of the costs are now fixed and the company expects to add 8 new business customers in one part of Douala alone this year, and by doubling the capacity of their processing plant should be looking at more large power contracts.

As you can tell I’m biased but they have a first mover advantage, and a monopoly on pipeline and gas supply at the moment. The last 12 months were transformational, fingers crossed the next 12 months will be the same.