20205 TTF estimate $16.99 The TTF gas price is significant for Vermillion $16.99 mmcf (2025)
Slide 12 TTF Gasprice Estimate 2025 $16.99 mmcf This slide has not been updated with the net debt to trailing FFO number, but as part of the earning call they announced that their Net Debt to FFO was .6X and that this is the lowest net debt ratio they have had in 15 years.
In this 15 year period the stock has traded higher than 75 dollars in 2014.
Last quarter VET did not really adhere to their 50-50 ratio in terms of use of free cashflow and paid off more debt and bought fewer shares then they could. Vermillion debt position is in a place they have never been in historically (Last 15 Years).
Maybe they want to have a bit of a war chest for when the NetherLands assets come for sale next year.
In any case we know there are projects in the pipeline, like the ramp up of the new gas plant on SA-10, the tie in of SA-07 exploration results, the tie in of the first German well as well.
My concern is this, with the current low evaluation of the stock, VET can't issue shares or use it as currency. So they are going to have to acquire more debt. If they maintain the same posture regarding debt and the share price does not appreciate, the shareholders may be caught in a value trap.
My feeling is this, the stock is trading at a 34% trailing FCF price. Which suggests any investment in shares will be fully returned in less than three years. Pretty fantastic place to be in, no other oil and gas stock that i am aware of is in that position.
So I do think the made the right call and being on the receiving end of LNG shipments is the right place to be. Now we just need to get some cadence and scale in Europe to get more interest in the stock.
Mica looks good, and when you consider it has 13,000 boe of production currently and a battery, and CEI their next door neighbors who have essentially no production, are waiting for a battery, taking on debt, with 4,000 boe/day behind pipe have an enterprise value in excess of 500 million dollars.
VET is to cheap every which way you look at it.
IMHO
MHP