Vermilion Energy Inc. T.VET

Acqusition of 20,000 acres-may prove to be worth it

[EnergyWatcher55]

VET mgmt has said in the past that it would acquire assets that are next to them to give more inventory depth.  The 20,000 acres VET acquired in the US is supposed to provide efficiences in production at half the cost via horizontal drilling. Could be a great deal for VET. 
Good luck to all!

[clamlinguine]

Not a great idea to be shopping for aquisitions when oil is $80 a barrel and your over your head in debt. VET has been presented with a gift from heaven to get back on sound financial footing, hopefully even rid themselves of bankers altogether, but they choose shopping instead. 

[geemonet]

They were still able to pay off 76 million or 4% of their net debt. Gotta spend money to make money. 

[clamlinguine]

Yeah great, at that rate they'll be debt free in 8 years. Good companys will be virtually debt free at the end of next year if they aren't there already.This may be a sunset industry, we don't need to spend profits on longer production, certainly not yet. 

[geemonet]

I do agree with you, I was miffed when they spent the 90 mill. But on the plus side it's adjacent to infrastructure. Won't need a new shop, won't need more operators, will have existing relationships with service contractors in the area. The only thing that makes this a bad decision is that we'd rather see the money spent on debt reduction. Just be thankful that they didn't do

[Oldnagger]

Actually , you may recall the idea tossed around by Eric Nuttal earlier this year to marry VET with PXT (parex resources) PXT has growing production in Columbia with no debt, 360 Million USD of cash plus a high dividend rate and share buybacks all supported by an over  30 % Fcf return . VET should really take a serious look, could be a marriage made in heaven !!

[Moemoney42]

Also of note is that even though WTI is trading ~$80+ lately.. the share prices of many companies are not in sync with that price.. Q4 and next year we could see the equities catch up to this disconnect, and this small tuck in purchase could easily re-rate to a higher value with good drill potential and profitability next year.. ;-)

[stockmarket1]

I'm in the camp of 2022 being again a fairly decent year for VET. For us Canadians, our TFSA buff up accounts are soon approaching and I plan on taking advantage of this discounted price! If you think VET will get above, let's say, $18 in 2022.....I can't see why anyone wouldn't accumulate. Especially, with the expected dividend in 2022. Easy!

[Tommy123]

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[geemonet]

They didn't add to the debt. They reduced it by 76 million or 4% over the quarter. this isn't dragons den, these deals don't happen over night. It would have been negotiated when oil was lower than it is today. We probably got a steal of a deal on the property.

[Tommy123]

This post has been removed in accordance with Community Policy

[clamlinguine]

They could have reduced the debt by a reasonable $152 million instead of a paltry $76 mil.