VIA STOCKWATCH Vermilion Energy Inc. (VET) lost 80 cents to $15.17 on 3.1 million shares, after trumpeting an "accelerated return of capital." It reminded investors of its earlier promise to devote 30 per cent of its free cash flow to dividends and buybacks, as well as its promise to increase this to 50 per cent later this year. Now it says it is ready to make this switch "starting immediately." The most immediate effect will be on buybacks. Vermilion already raised its quarterly dividend to 12 cents from 10 cents in December, for a current yield of 3.2 per cent.
The announcement came alongside Vermilion's year-end financials. Fourth quarter production of 87,600 barrels a day was in line with analysts' predictions, while cash flow of $2.27 a share was well above predictions of $1.91 a share (and would have still exceeded predictions even without a 16-cent-a-share boost from one-time tax adjustments). Vermilion added proudly that its year-end net debt of $1.1-billion is the lowest level in a decade. It patted itself on the back for its "strong financial position and continued operational momentum."
The stock nonetheless took a dive. While this is partly explainable as a correction -- like Tourmaline, Vermilion's shares have climbed fairly steadily over the past two weeks -- investors may also have looked askance at Vermilion's year-end reserve report. This showed a nearly 20-per-cent plunge in 2P (proved and probable) reserves to 429.8 million barrels as of Dec. 31 from 522.7 million a year earlier. The company blamed asset sales and technical revisions from downgrading assets that are "not prioritized for investment under our current plans."
GLTA