Loss-Making Vintage Energy Limited (ASX:VEN) Expected To Breakeven In The Medium-Term

With the business potentially at an important milestone, we thought we'd take a closer look at Vintage Energy Limited's (ASX:VEN) future prospects. Vintage Energy Limited acquires, explores for, and develops oil and gas properties in Australia. The AU$18m market-cap company posted a loss in its most recent financial year of AU$11m and a latest trailing-twelve-month loss of AU$22m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Vintage Energy's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Vintage Energy

Expectations from some of the Australian Oil and Gas analysts is that Vintage Energy is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of AU$2.7m in 2025. The company is therefore projected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 118% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Vintage Energy given that this is a high-level summary, though, take into account that generally energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 25% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Vintage Energy which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Vintage Energy, take a look at Vintage Energy's company page on Simply Wall St. We've also put together a list of key aspects you should look at:

1. Valuation: What is Vintage Energy worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Vintage Energy is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Vintage Energy’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com