Veren Inc T.VRN

RBC

[retiredcf]

June 5, 2024

Veren Inc.
Highlights from the RBC Global Energy, Power & Infrastructure Conference 2024

TSX: VRN | CAD 10.73 | Outperform | Price Target CAD 13.00

Sentiment: Neutral

We hosted Craig Bryksa (President & Chief Executive Officer) and Ken Lamont (Chief Financial Officer) at the RBC Global Energy, Power & Infrastructure Conference in New York, with discussions mainly revolving around its Alberta Montney development, recent dispositions, deleveraging of the business, and overall operations. We rate Veren Outperform.

• Key Conference Takeaways. VRN walked through its core operations and recent Montney property additions, with the oil- weighted asset offering a complementary (and short-cycle) addition to the portfolio. The company reiterated its 8 rig program for their entire portfolio, with the team outlining select completion optimizations (ie testing plug and perf, sliding sleeves) in an effort to maximize productivity. Sizeable M&A is on hold for now with asset dispositions largely complete, although infrastructure dispositions could be an option at the right price. VRN reiterated that its Viewfield assets are generally core to the company's portfolio and represent long cycle assets.

• ReturnofCapital-Ongoing.VRNreiterateditsbasedividend($0.115/sh)andanticipatesreturning60%ofitsFCFtoshareholders in 2024 via base dividends, shares repurchases and special dividends (continued preference toward share repurchases). When the company's debt target of $2.2 billion is achieved, the company will review an increase to 75% of FCF.

• 2024 & 2025 Outlook - Integration of Alberta Montney assets. As previously announced, VRN’s 2024 production guidance has been updated to 195 mboe/d (midpoint) (from 202 mboe/d) to reflect the previously announced divestiture, and capital expenditures remain unchanged at $1.45bn. VRN's identified inventory in the Montney, Duvernay and Saskatchewan maps to roughly 1,900 wells in the 10 year plan (5,400 total), of which 1,579 are currently booked to 2P reserves. Under the 10 year plan, VRN expects to produce 300 mboe/d in 2033, leaving ~10 years of premium inventory remaining.

• Commodity Price Exposure. VRN has a commodity mix of ~35% natural gas and 65% liquids for 2024. The company uses a normalized oil hedging strategy (2024: ~35%), with a mix of swaps, costless and three-way collars at an average hedged price of C$102.07/bbl.

[Moemoney42]

" Sizeable M&A is on hold for now with asset dispositions largely complete, although infrastructure dispositions could be an option at the right price" They did this in Sask. and disposed of their gas handling facilities for, if my memory serves me correctly, around $500 million? That would sure put a dent in the debt levels quickly..! And could possibly bring the debt below a $2 B