RE:Looking for OpinionsIf i talk to much about ARX it just attrack critics.
VET is essentialy at 67% liquids company and is really at a point where it should breakout, in my opinion. (europe gas trades a oil liquids prices)
When VET buys back 40 milion dollars in shares a quarter it essentially add 2% to produciton, something they have been doing on a quarterly basis with a compounding effect. I think this is great and considering the buybacks and the solid performance the stock poise for a breakout so the covered calls are great for risk mitigation, but i would myself take them off the table before the next earning release. This stock is going higher.
Croatia gas production came on last quarter without a lot of fanfare?, but it added almost 2000 boe/day of European gas, which offset the Wandoo turnaround, Wandoo should be restored next quarter and in Croatia they have increased production, all high netback production.
ARX believes they have the best assets on the planet, this is why they shutin sunrise last quarter (250 MMcf) because they could not market the gas and corporately only got $1.78 Mcf.
VET decision making and management seem very reasonable with a balanced approach. The CEO has only been in place since March 2023, but this is a major turnaround story in my opinion. ARX would be out of their comfort zone operating internationally owning VETS assets.
I look at VET at a time when North America is struggling with abundant cheap gas, they are on the right side of the LNG trade in countries that are feeling the brunt of high energy prices. They have critical mass and momentum and the CEO understands the European landscape from an operational perspective, Europe may be the future for VET.
It looks to me like VET is now getting critical mass and increased production in Europe, they are going to get more traction in 2025, and the Germany wells are truely exciting, really could be a game changer. I had an expert Engineer friend industry recognized CEO engineer look at these wells and he just bought in on Friday, above 14 dollars.
Vet is very low risk right now especially as they hit their debt target, and really think Mica has not been on production that long and is not fully recognized however it looks good. The company VET owns 20% of next to Mica with almost no production and the adjacent land block is almost worth 500 million enterprise value, Mica value is not properly valued yet in Vet market cap.
I would not write covered call here unless you want to sell out and move on, or as part of a more active trading strategy. (This is what I would do, your might have different objectives)
I think your average price is reasonable, Vet is significantly undervalued, i would say likely it could easily be a double from here quickly.
In fact I don't know how long management will be able to do a buyback at these prices, so they really should load up while they can. The debt is in a fantastic position and if they keep buying back roughly 2% of the float a quarter in a diciplined manner they can still do debt reduction, and this will provide them dry prowder for future accretive acquisitions.
The only challenge I see right now, is i can't imagine much being accretive for VET because it is trading to cheap. It is a compelling, saying that they will out perform the North American energy market and an Opportunistic Buy because it is getting dragged down with the North American oil+gas market.
I continue to buy at these levels and with the dividend this stock is a steal.
IMHO
MHP