RE:Let's bring the discussion back to VEREN Hello Pierre, I don't think it's fair to compare WCP and VRN as we have in the past. You are correct that previously the share prices fluctuated up/down with on leading the other at points in time and vice versa. I was a believer they were relatively similar up until last year that VRN had turned a corner up until year.
After years of incurring massive debt and a change in CEOs, I was of the belief last fall that VRN was committed to reducing debt, keeping it low, and rewarding shareholders. Unfortunately just as in the past, the company and board opted to go on a spending spree and rack debt back up to where it was during the last oil/financial crisis. Shareholders were AGAIN told that they would have to wait until debt was brought back under control... another 2 or 3 years out.
Add to this the fiasco of the flood of shares released into the market last year, followed by instutional effort to raise the price so they could off load shares from their books with minimal loss, it's clear VRN is now trading near where the real market values the company. Add to this the winds of potentially lower oil prices starting early next year, and we could see VRN once again at significant risk.
With Trump taking office two months from now and his committment to stop the Ukraine war in his first week of office, I think oil markets (and companies) are at serious risk of a massive sell off. If Trump is able to end hostilities, I fully expect the market will sell off oil and companies in anticipation of sanctions against Russia being lifted, Russian markets re-opening, and perhaps most importantly Russian oil flowing/trading again in the open market. Throw in a Canadian government that is hell bent on setting a global narrative that Canada is sunsetting fossil fuels and capping, and it's easy to see how precarious a position many Canadian E&Ps will find themselves in. I think we're on the cusp of a oil meltdown similar to what occurred almost 10 years ago.
If it plays out this way, I would not be surprised to see VRN trade sub $5 CDN (possibly lower). WCP will undoubtedly also fall, however I think the days of thinking WCP and VRN are similar are over.
Just my thoughts this cold Wednesday morning. GLTA whether you hold VRN or WCP.
pierrelebel wrote:
Over the last ten years I have been a shareholder of Veren (Crescent Point) and Whitecap, on and off.
In the last few years both companies were valued by the market at around Cdn$6 billion - give or take a billion either way.
At times Veren (Crescent Point) traded for $1 above WCP and at other times it was trading for $1 less than WCP.
Today we find WCP still valued at Cdn$6 billion while VRN is down to Cdn$4.5 billion (Q3 results were a major factor).
The spread between their trading prices now exceeds Cdn$3
It may be time to consider trading WCP for VRN. I expect that VRN and WCP shares will both trade for about the same price by the end of 2025. This Cdn$3 spread may not last long. The difference in yield between them is less than 1%, so not an important factor.
Good luck to all.