A Company Delima - Management needs to Act!That average FCF for VET is 188 million dollars over the last 4 quarters, or 752 million in FCF.
Their dividend obligation with 155 million shares is $18.6 million dollars a quarter.
That have acheived their debt target of .6 time trailing FFO, their lost debt in more than a decade.
So what could they do without adding any debt with 169.4 million dollars.
As an Example
Ideal #1
What if they bought back every share they could with 169.4 million dollars at a price of $15 dollars?
They could buyback 11.29 million shares or 7.2% of the company in a single Quarter.
That would in a compounding way increase the FFO and FCF per share by 7.2% in the next quarter and have the same impact as adding 6,120 boe of production with 15 years of reserves.
I think it is time the company need to take a stance, and say this is stupid the share price and we are going to fix it. Paying off more debt at this point is not meaningful.
Idea #2
Every quarter after the share buyback of 7.2% you raise the dividend by the same amount. So after they announce the share buybacks for the quarter they immediately raise the dividend for the next quarter in a way it does not add any stress to the balance sheet.
Ideal 3
Only once the stock has been rerated and management feels VET is trading at fair value do they look at other strategic opportunities (acquisitions, major capex, etc), because at the current price they is no opportunity that would be accretive to the FFO, FCF or the balance sheet as buying your own stock. Any acquisition would likely be a bad deal for shareholder unless its 100% cash.
Really the company is in a place with it should looks at some kind of strategic tactic.
I apologize if you think i am crazy, but i feel this is so compelling we should not be asleep at the wheel.
IMHO
MHP