RE:Why so long?prested wrote
I guess by now even the most sceptical investors must have realized that VET is going to the moon. Whether it is the $53 the NBC suggests or the $100 our good friend Oldsnagger posits. The question I wrestle with is; why is it taking so long?
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"The question i wrestle with is why it it take so long?"
While it is nice to see the shareprice going up everyday of a stock you own we also have to remember that aprox. 9 months ago VET was trading at $7.40 per share. Today we are at $26.41 That is more than a triple in 9 months. If we keep going at that pace VETs shareprice would be at $85, 9 months from now.
Part of the reason that VET is looked down on by some is that it is thought to have high debt. That may have been true a few years ago at $50 to $60 oil when they were well over $2 billion in debt and had Free cashflow per year of aprox. $400 million which was all going to pay the dividend. The situation now is a lot different from then and the market hasnt completely noticed. Firstly the high oil and gas prices and the Corrib acquisition result in VET now having a Free cashflow next year of aprox. $2.5 billion if oil prices hold. Compare that to a debt of $1.4 billion and this company does not have high debt at all even at much lower oil prices.
For 5 or 6 years VET payed out a large dividend when oil prices were low. The company burned up a lot of oil resources in those years and did not have any cash left after paying the dividend to buy new assets. Now that they have a lot of cashflow they are paying down debt and have to spend some money to replace some assets hence the current aprox. $500 million acquisition. This will increase debt for some time but also gives VET a new oil asset which should produce a lot of oil for the next 20 years.
VET was not being run well for 5 or 6 years with a high debt that was never payed down while paying out all the Free cashflow in dividends while burning up 90 000 barrels per day of oil resources. Those mistakes take time to correct but along with high oil and gas prices and some excellent, acquisitions especially Corrib which is essentially free and will generate billions in profits things are turning around for this company.
Sooner or later when the huge cashflow keeps piling up along with a much higher dividend and lower debt the market will finally take notice.