VAALCO Energy (EGY) is drawing attention after reporting full year 2025 production and sales volumes around the midpoint and top of guidance, alongside encouraging drilling results at its Etame complex offshore Gabon.

The production and sales update lands after a strong run in the share price, with a 7 day share price return of 23.29% and a 30 day share price return of 31.20%. The 5 year total shareholder return of 136.12% points to momentum that has built over a longer period.

If VAALCO’s drilling results have you thinking about where growth might come from next, it could be worth checking out aerospace and defense stocks as another source of ideas beyond traditional energy names.

With the shares up 23.29% over 7 days and 31.20% over 30 days, yet trading at a steep discount to the average analyst price target, it is reasonable to ask whether there is still value here or whether the market is already pricing in future growth.

Most Popular Narrative: 47.8% Undervalued

Against VAALCO Energy’s last close of $4.50, the most followed narrative points to a fair value of $8.63, framing the recent share price move in a very different light.

The upcoming large-scale drilling campaign in Gabon, backed by secured multi-well rig commitments, is aimed at high-quality, low-cost assets with a strong production track record. This should expand reserves, support higher sustainable net margins, and reinforce long-term cash flow visibility in an environment of constrained new upstream supply.

Curious how a moderate revenue path, thinner profit margins, and a much higher future earnings multiple can still support that valuation gap? The full narrative lays out the earnings, cash flow and discount rate assumptions that hold this fair value together.

Result: Fair Value of $8.63 (UNDERVALUED)

However, the story could change quickly if offshore project delays or weaker realized oil prices affect revenues and margins more than analysts currently anticipate.

Build Your Own VAALCO Energy Narrative

If you see the numbers differently or prefer to piece together your own view from the raw data, you can build a custom thesis in just a few minutes with Do it your way.

A great starting point for your VAALCO Energy research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.