Vermilion Energy Inc T.VET

Free cash flow

[RevT79]

How much money is vet making daily with this price of oil?
I read everyb1$ up oil price is 17 millions$more fcf.
thats would mean 340m $ more than there budget!!
cash cow I would say!!!

[geemonet]

At Jan 13 strip price wti ($53) they was expecting 200 mill DVD for the year, every buck above $53 brings in an additional 17 mil fcf. So at $58 wti they're bringing in 285 mil fcf. 1 billion debt to be paid off before div payments so we're only waiting 3.5 years for the div to come back instead of the budgeted 5 years!!!

[EnergyWatcher55]

With a low float, VET could buy back its shares to reward its shareholders while paying down debt.  

[Commr51bkd]

What are you smoking, Deemonet?  600M debt to be paid off, not 1B, to get to the 1.5B debt target stated by VET mgmt.  Also, the dividend could be reinstated well before "3.5 years", since the company is not making it a prerequisite to reach that target before reinstituting the dividend.  The size may be modest at first, but it will not be 3.5 years before the divident is

[downtozero]

Bringing back the dividend would certainly help push the share price back up. I would prefer dividend over stock buyback. First pay down $600M debt ($200M in 2020, $400M in 2021) then dividend (2022), then share buyback (later).

[Nystrom]

Or just pay down 600M debt in 2021. In Q3 2020 (last reported results) VET had 83M FCF and paid down 55M debt @ $41 WTI Imagine what $58 WTI is going to look like

[geemonet]

I was going by the info on their website. net debt to ffo trailing 4Q was 3.67. They state that their PRIORITY is to get that ratio to 1.5. I'm assuming that at any point Saudi Arabia or Russia or others may open the taps and put oil back to 30-40 so ffo is static in my calculations. The only way to get net debt to ffo at a ratio of 1.5 is to cut the debt in half, net debt is 2 billion. 2

[geemonet]

So 285 mill fcf a year/365 would be around 780k fcf per day. 

[Nystrom]

At $37 VET is breakeven including 300M for capex.  About 30% of production is hedged so it does take away some upside when prices are up but also downside when prices drop.  Just an example, in 2020 Q3 ending Sept 30 2020, VET had FCF 83M, paid down 55M of debt at an average of $41 WTI.  Projecting forward we'll just use WTI pricing but obviously Brent and Ng prices

[EnergyWatcher55]

VET is now a cash machine. 

[YJ2019]

700M FCF seems to be consistent with the company stated number shown in their "Corporate Presentation February 2021", slide #10, on their website.

[geemonet]

That graph doesn't show fcf to be 700 mil. It shows fcf+capex is 700 mil, capex is 300 mil. So it shows fcf at 400 with wti at 60

[YJ2019]

You are right. Indeed, from the graph, at $60, FFO is around $700M, minus $300M capex, FCF is $400M. But how to squre this with the following calculation: "2020 Q3 ending Sept 30 2020, VET had FCF 83M with average of $41 WTI". "+US$1/bbl change in oil = +$17MM of FCF". Therefore, for a full year, at $60, FCF should be around $83M * 4 + (60-41) * $17M = $655M.  

[Nystrom]

I don't understand how that makes sense though.  If VET states all expenses, including cap ex, breakeven is at $37 WTI  Then 85,000 BPD x $23 (60-37) = almost 2M FCF per day or over 700M FCF / year I know there is a cost of heding which is roughly 30% of nearterm production (higher on ng and lower on oil).  In Q3 2020 Vet had 83M FCF at $41 WTI so how could they only have

[geemonet]

Maybe taxes? If they're just breaking even they probably won't be paying a lot in tax, if they're printing cash then ol uncle Turdface is going to want his cut. 

[cleareye]

Nystrom, Are you providing an equivalency in wti to all the other markets such as European gas, Australian oil, NA natural gas? The sales mix is very conplicated, with hedges in each market. I would be surprised if you could reduce all the products in all the markets to an wti equivalency. This may be the reason that you say: "It doesn't make sense". However, as a rough model

[Oldnagger]

Lets say that when we all sharpen our pencils we come out with FCF = 400 million dollars per year. Then FCF per share = 2.50 and FCF yield = 37% So how to explain the poor share price performance lately? Well IMHO the lack of relative performance corresponds with the recent invention of the Nutso Index. Which posits that share values should be compared based on the number of years required to

[yggdrasill]

Or, the market could simply be lagging oil prices because investors don't trust that oil will maintain these gains. A year ago they got burned pretty badly. Give it a little time for confidence to build.    

[RevT79]

I have a feeling that nutall as some beef against vermillion! listening to him talk it's almost like they got caught buying at big premium because of divvies and end up lossong their shirts! soooo it's probably more personal than a number matter!

[stockmarket1]

Who gives a rats as* what nutall thinks or says. He's just one person and a horrible stock picker. He's good with words and thats about it. I'll let the market and Vermillion's management decide it's fate. Everytime I see his BNN past top picks.... I laugh seeing how much they consistently tank.

[Nystrom]

Hey Cleareye, You are correct I am using WTI as a general benchmark for all which I know is not fully accurate. However it was VET themselves stated as a generalization, WTI @ $37 as breakeven all costs+capex included.  Brent is moving in lockstep with WTI and euro+ NA gas prices are higher than normal and they are more hedged to gas than oil and therefor should see a greater benefit to

[cleareye]

Hi Nystrom et al, I agree with the higher values for FCF. I think we suffer from  being logical "moderns" in a postmodern world. We logically believe that the pipe attached to our home providing natural gas has to be attached to a supporting infratructure. And, we are investing in that infrastructure. I am an Albertan, an enigineer, and a modern man. We are investing here while

[Oldnagger]

Unfortunately wh$re will remain with us for a much longer while , The reason is the $ sign you have placed in the middle. As I stated not far back  I also hold IPCO and it is being badly treated . what it has in common with VET is european Investors who I believe are spearheading this market price stodginess. Other factors I have alluded to may be this ridiculous theory recently elucidated by

[cleareye]

Hey Oldnagger, I once pressed a wind-turbine project promoter on what happens when we take energy out of the wind system. He was an engineer. He understood. He eventually suggested that he shouldn't be talking to me. He had a convertible bmw, was charming with the ladies, and generally enjoyed his false reality. Just waiting for the postmodern crowd to divest from companies like VET and

[Oldnagger]

I am with you on the stockhouse syndrome I am starting to feel like King Canute. If you get a chance pop over to NVA I have asked a real analyst (Marner16)for his opinion on BNN  9points etcetera well worth everyones time !!

[YJ2019]

It is confusing. Eric Nuttall threw a number of $340M FCF today on bnn for VET. Not sure how he got that number. If $700M is about right, then the number of years it takes VET to buyback outstanding shares and debt is only 4.1 years, half of what Eric showed in the graph today.

[downtozero]

Maybe different assumptions on capital spending. VET needs to spend more next year to keep the revenue up, otherwise they'll drop another 10% like this year. Oil up yesterday, 9-point up, VET down. Oil up today, 9-point up, VET flat. What Nutall says seems to have some influence on O&G share prices.