Vaalco Energy (NYSE: EGY) and Chesapeake Granite Wash Trust (NYSE:CHKR) are both small-cap oils/energy companies, but which is the better business? We will compare the two companies based on the strength of their risk, valuation, institutional ownership, earnings, analyst recommendations, dividends and profitabiliy.

Institutional & Insider Ownership

37.4% of Vaalco Energy shares are held by institutional investors. Comparatively, 0.9% of Chesapeake Granite Wash Trust shares are held by institutional investors. 2.6% of Vaalco Energy shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Vaalco Energy and Chesapeake Granite Wash Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Vaalco Energy -21.75% 37.50% 2.97%
Chesapeake Granite Wash Trust 84.03% 31.59% 31.59%

Analyst Recommendations

This is a summary of current ratings and target prices for Vaalco Energy and Chesapeake Granite Wash Trust, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vaalco Energy 0 1 0 0 2.00
Chesapeake Granite Wash Trust 0 0 0 0 N/A

Vaalco Energy currently has a consensus price target of $2.00, suggesting a potential upside of 117.39%. Given Vaalco Energy’s higher possible upside, analysts plainly believe Vaalco Energy is more favorable than Chesapeake Granite Wash Trust.

Volatility and Risk

Vaalco Energy has a beta of 0.33, suggesting that its share price is 67% less volatile than the S&P 500. Comparatively, Chesapeake Granite Wash Trust has a beta of 0.47, suggesting that its share price is 53% less volatile than the S&P 500.

Valuation and Earnings

This table compares Vaalco Energy and Chesapeake Granite Wash Trust’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Vaalco Energy $70.07 million 0.77 $25.46 million ($0.26) -3.54
Chesapeake Granite Wash Trust $11.63 million 9.45 $13.56 million $0.29 8.10

Vaalco Energy has higher revenue and earnings than Chesapeake Granite Wash Trust. Vaalco Energy is trading at a lower price-to-earnings ratio than Chesapeake Granite Wash Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

Chesapeake Granite Wash Trust pays an annual dividend of $0.40 per share and has a dividend yield of 17.0%. Vaalco Energy does not pay a dividend. Chesapeake Granite Wash Trust pays out 137.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Vaalco Energy beats Chesapeake Granite Wash Trust on 8 of the 14 factors compared between the two stocks.

Vaalco Energy Company Profile

VAALCO Energy, Inc. is an independent energy company. The Company is engaged in the acquisition, exploration, development and production of crude oil and natural gas. Its segments include Gabon, Angola, Equatorial Guinea, the United States, and Corporate and other, which includes corporate and operations support. It owns producing properties and conducts exploration activities as an operator in Gabon, West Africa; conducts exploration activities as an operator in Angola, West Africa, and participates in exploration and development activities as a non-operator in Equatorial Guinea, West Africa. In the United States, it operates unconventional resource properties in North Texas and hold undeveloped leasehold acreage in Montana. It also owns minor interests in conventional production activities as a non-operator in the United States. Its Etame Marin block is located offshore the Republic of Gabon. It owns over 640-acre lease in the Hefley field (Granite Wash formation) in North Texas.

Chesapeake Granite Wash Trust Company Profile

Chesapeake Granite Wash Trust (the Trust) is a trust formed to own royalty interests for the benefit of Trust unit holders. The royalty interests held by the Trust (Royalty Interests) are derived from Chesapeake Energy Corporation’s (Chesapeake) interests in specified oil and natural gas properties located in the Colony Granite Wash play in Washita County. Chesapeake conveyed the Royalty Interests to the Trust from its interests in approximately 70 existing horizontal wells (Producing Wells) and Chesapeake’s interests in over 120 horizontal development wells (Development Wells) to be drilled on properties within the Area of Mutual Interest (AMI). The AMI lies within Washita County in western Oklahoma and is limited to Colony Granite Wash formation, where Chesapeake holds approximately 40,500 gross acres. Chesapeake has drilled and completed over 90 wells within the AMI. The Colony Granite Wash is located at the eastern end of Des Moines-age granite wash fields.

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