Micro Cap Value Idea: Texas Vanguard Oil (TVOC)

I have some more micro cap value ideas besides Conrad Industries. Next up is Texas Vanguard Oil (TVOC) which engages in the production of onshore oil and natural gas, mainly in Texas.

At $8.50, the market cap is $12 million and enterprise value is approximately $5 million. Annualized EBITDA (based on YTD) is $2 million, so EBITDA/EV yield is 40%.

As of December 31, 2009, the company’s oil reserves were 431,638 barrels; and natural gas reserves were 2,108,346 MCF. It also had 8,018.08 net undeveloped acres under lease. So, the reserves are 572,000 boe (assuming a 15:1 ratio), which means the EV/boe is $8.91. Net net current assets per share is $4.65.

Another way to look at the valuation is to take the net current assets and add the PV-10 of the oil and gas reserves. That gives a figure about 20% higher than the market price, although that's based on the PV-10 from 2009. Oil prices were much lower then, which means that both the quantity and valuation of the reserves are understated relative to what they would be today.

Whopper Investments has done a post about TVOC as well.