Vermilion Energy Inc T.VET

Alternate Symbol(s): VET

Energy Oil & Gas E&P

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.

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Vermilion Energy Inc > Using $100mm /qtr in FCF

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Comment by stockmarket1on Jul 22, 2021 9:15am

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Post# 33586911

RE:Using $100mm /qtr in FCF

Wow. Thanks P.P. That's great math metrics here. Question? For my use & knowledge....how did you calculate some of these figures below? I know " market cap: but.... IE $60.89 /boe........or this -- 27.8% FCF yield (400/ 1438.690)?

Thanks :)

PipelessPauper wrote: I don’t agree with this figure, but for argument’s sake, let’s use it.
So ~$400 mm / yr FCF.

Based on their cash costs of ~ $48/boe, and working backwards from $400 mm FCF, 159,500,000 mm shares, you get a per boe sales price of:

$60.89 / boe

obvoiusly we can see prices for WTI/Brent/AECO/TTF/HH translate into much higher than $60.89/boe currently, but let’s continue to use it.

currently, mkt cap for VET’s 159,500,000 shares is $1,438,690,000. (9.02 x 159.5 mm)

Meaning the 400 mm / yr figure for FCF represents a

27.8% FCF yield (400/ 1438.690)

EVEN IF we were to use that $60.89 /boe sales figure, it would be reasonable to assume ~ 50% to a div, and 50% to continuing debt repayment.

That translates into a montly divided of $12.5 cents/share

Again, this is based on 400mm FCF / year or a $60.89 / boe realization.
Prices are MUCH higher than that now.

If you’re trying to reconcile their 2021 FCF per JULY Presentation (of approx $450mm for 2021).... you need to remember Q1 WTI avg’d ~ $57, and gas ~ $2.80 HH.
Also, remember that they had locked in with lower hedge realizations in first half of the year.

To get a true pic of their potential FCF, use today’s WTI/BRENT/AECO/TTF/HH price on 85,000 boe/d of production for 12 months.

You’ll see that their FCF comes in around ~ $683 mm for just 1 year. Unhedged. At $70 WTI.

Imagine what it would be at $100 WTI (where I see prices going by DEC 2021.

You dont have to. FCF would be $1,613,300,000 for 1 year, or over $400mm / qtr. If paid ALL as dividends, that works out to $10.12 /share dividend. Or a 112% implied yield at today’s close.

112% implied div yield. Insane.

This stock is STUPID cheap. It’s why it’s my top holding and why I bought 40,000 more shares in the high 8’s.
I now hold 100,000 shares with a $8.62 cost avg, and expect VERY GOOD THINGS.