Strategic Review - Value not articulated by Investments Made
I have some concerns regarding a stock that in Dec 2023, traded at a share price as high as $19.20 a share. In Q3, 2023 the produciton averaged 82,727 boe/day.
Now in 2024 a year later we are going to have an average production of 84,500 - 85,000 boe day for 2024. We have added valueable production in Croatia, and NE BC, Mica, very high netback production. Exploration success in Germany.
Now in the last 4 quarter VET has generated $750 million in FCF and paid out approximately 76 million dollars (dividends) - only 12% of the FCF.
So a company that had a share price of $19.20 a year ago that added 674 million dollars of cash FCF to the balance sheet, and now we have a share price trading at $14.20 today.
So it kinds of looks like this to the Vet investors
Dec 2023($19.20 share) +$674 million FCF (4 qtr) + 2,500 boe/prod + 590 M/Capex =$14.20 share
So the numbers suggest there is a detachment between the price the stock trades for and the investment in the company and its ability to increase shareholder value in a tangabile way.
Increasing production 2500 boe/day does not improve stock price, Adding 674 million FCF to the balance sheet, Spending roughtly 600 million Capex, None of this had added any value to the stock on a per share basis, and quite bluntly why invest any more in the balance sheet of the company unless they get meaningful shareholder returns.
Investing approximatley $4.50 FCF a share while funding a capex buget and see no returns is unheard of for a stock trading in the $14 dollar range.
Really some form of strategic review is in order, because something is broken here. That $4.50 a share in FCF applied to the balance sheet is share holder money, you can't tell shareholder you can invest 700 million dollars and not see any meaningful return, that is not associated with appreciation of the assets, being the company's value.
IMHO
MHP