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Vermilion Energy Inc T.VET

Alternate Symbol(s):  VET

Vermilion Energy Inc. is a Canada-based international energy producer. The Company seeks to create value through the acquisition, exploration, development, and optimization of producing assets in North America, Europe, and Australia. Its business model emphasizes free cash flow generation and returning capital to investors when economically warranted, augmented by value-adding acquisitions. The Company’s operations are focused on the exploitation of light oil and liquids-rich natural gas conventional and unconventional resource plays in North America and the exploration and development of conventional natural gas and oil opportunities in Europe and Australia. The Company operates through seven geographical segments: Canada, the United States, France, Netherlands, Germany, Ireland, and Australia. In Canada, the Company is a key player in the highly productive Mannville condensate-rich gas play. It holds a 100% working interest in the Wandoo field, offshore Australia.


TSX:VET - Post by User

Bullboard Posts
Comment by largeinveston Nov 03, 2019 9:12pm
216 Views
Post# 30303322

RE:RE:RE:RE:Reckless to be paying such a huge dividend

RE:RE:RE:RE:Reckless to be paying such a huge dividendWhat would be "reckless" is to cut the dividend after having it steadily rise for 17 years with NO CUTS, regardless of what the price of oil did.  Its called hedging and its done for a reason.  The dividend is not set by what the price of the stock is trading at, its set by the ability of the company to cover all maintenance capex and dividends from cashflow.  And to that end, VET is covered down to $52.50 WTI, before the payout ratio would rise above 100% as stated by the CEO in the last conference call.  

The CEO has clearly laid out all his objectives for you to see, 

1.  Protection of the balance sheet, yes if oil or gas prices were to materially drop for a prolonged period of time, you would get a 50% cut.  That hasn't happened yet. 

2.  Protection of the dividend, this comes before growth and before debt repayments.  That may come as a surprise to pay dividends before the principle on the debt, but the debt is termed out for many years at very low rates.  The theory goes that we will get an oil super spike again to $100 or $150 bucks even if it only lasts for a year, and the extra cash flow from that would basically pay off the entire debt burden in a one year period.  Its going to happen..Somebody will blow something up, or something will go offline..You think the world is going to be wonderful safe place for the next decade and oil will always trade at a measly $55 a bbl?  Even if that doesn't happen, the reserves from VET will last another 50-100 years (Have you seen our recycle ratio!)  The debt would just inflate away...

3.  Share buybacks

4.  Repay debt

So if you don't like those objectives and are unhappy with how the CEO is running the company, there are plenty more for you to choose from.  If you enjoy your "quarterly dividends"  There are plenty of bank stocks for that or even TOU.  
Bullboard Posts