VET - simply compellingIt is not often that you find a stock simply mispriced, that is my opinion here.
Over the last 4 quarters the average FFO has been 314 million dollars.
Over the last 4 quarters the average FCF has been 174 million dollars.
That is a 12 month FFO of 1256 million and 696 million in FCF.
The dividend is less than 19 million a quarter leaving FCF on the balance sheet of roughly 620 million dollars. With 155 million share that is roughly 4 dollars a share has been added to the balance sheet in the last 12 months, this gives no value to the Capex investment that the company has made in its producing properties, and exploration.
Many of their investment are for future years, like none of the Germany drilling will impact 2024, it will have a greater impact in 2025, and for many years after 2025.
So really the stock should be worth at least 4 dollars more than a year ago, but nov,27 2023 it was trading for $17 dollars.
My thesis is this, a compelling buy with 27% FCF return, and buying back shares and paying down debt, while i expect to see a good quarter in Q4.
Gas is over $2 dollar AECO, likely to impact that shut in production so that it comes back on stream, Croiatia is producing north of 2000 boe/day into a plant that can produce 2500 boe/day. Wandoo is finished it maintenance, and should be up 4000 boe day in Q4. They are trying to tie in that 1st German well as fast as possible.
VET is simply mispriced and i don't believe there is another energy company in Canada that has had a 27% FCF yield over the last 12 months.
I am simply loading the truck up here as Mica just came on last quarter, and Germany is not to far down the road. This stock could be rerated with a blink of an eye, and you will have missed a big opportunity.
VET is simply mispriced, at these levels. The fundementals of the company are too strong, very strong pricing advantages, and nice bite sized prospects that seem to be making steady progress.
IMHO
MHP