Join today and have your say! It’s FREE!

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.
Please Try Again
{{ error }}
By providing my email, I consent to receiving investment related electronic messages from Stockhouse.

or

Sign In

Please Try Again
{{ error }}
Password Hint : {{passwordHint}}
Forgot Password?

or

Please Try Again {{ error }}

Send my password

SUCCESS
An email was sent with password retrieval instructions. Please go to the link in the email message to retrieve your password.

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.
Quote  |  Bullboard  |  News  |  Opinion  |  Profile  |  Peers  |  Filings  |  Financials  |  Options  |  Price History  |  Ratios  |  Ownership  |  Insiders  |  Valuation

Vermilion Energy Inc T.VET

Alternate Symbol(s):  VET

Vermilion Energy Inc. is a Canada-based international energy producer. The Company seeks to create value through the acquisition, exploration, development, and optimization of producing assets in North America, Europe, and Australia. Its business model emphasizes free cash flow generation and returning capital to investors when economically warranted, augmented by value-adding acquisitions. The Company’s operations are focused on the exploitation of light oil and liquids-rich natural gas conventional and unconventional resource plays in North America and the exploration and development of conventional natural gas and oil opportunities in Europe and Australia. The Company operates through seven geographical segments: Canada, the United States, France, Netherlands, Germany, Ireland, and Australia. In Canada, the Company is a key player in the highly productive Mannville condensate-rich gas play. It holds a 100% working interest in the Wandoo field, offshore Australia.


TSX:VET - Post by User

Post by MyHoneyPoton Dec 03, 2024 4:07pm
140 Views
Post# 36343707

Confusion in the Oil + Gas Space ( Gas value in terms of $)

Confusion in the Oil + Gas Space ( Gas value in terms of $)
You see a lot of rah rah and the fan fare regarding big well result from a shale well with steep declines, but the same excitement does not exist when you drill a deep gas well that will produce for many many year with limited declines. 

People look a boe's as a measure of production, but what they should look at is the dollars associated with the production, that ultimately result in  the form of FFO + FCF.

It is much more economical to operate 116.66 mcf of Gas. or rougly 19,443 boe of natural gas, VET could likely average $17 Canadian a MCF in Q4 or about $102 a boe/Canadian.  (In Q3 TTF gas was around 15 dollars)

AECO gas price still has not broken $2.00 dollars in Canada, so for every mcf of european gas you produce, you need to produce 8.5 mcf if you are selling at AECO. 

So just on a cash sales equivalent bases in Q4 European Gas sales will likely be in the range of 19443 boe/day *102 *92 day =  $182,453,112  just for European Gas in Q4. 

To generate the same petroleum sales in Canada, with an average quarter price $1.80  AECO (generous), you would have to produce 183,000 boe/day of natural gas. Or approximately 1.1 Bcf a day.

Sounds like some pretty big Gas producers in Canada doesn't it. (ARX =1.286 BCF, PEY .638 BCF, TOU 2.554 BCF)

This shows the cash generation ability of VET production are the right end of LNG (receiving end). 

The economics are likely even better than stated because you have to operate 8.5 times the gas volumes to get the same cash sales. 

In Q4 I would expect roughly 30 million more from Europe Gas.

So you can see the huge value in European production, and I am expecting VET will have even higher FCF in Q4 even though oil has been soft, the Canadians dollar has been soft as well which is good for energy. 

In north america VET produced 164 MMcf of gas daily, add that to the 1.1 Bcf equivalent production value of the European gas (1.264 Bcf), and it makes VET a major producer.  

disclaimer - (made some assumptions, and subject to clarical errors)

IMHO
MHP
<< Previous
Bullboard Posts
Next >>