RE:National Bank's Analysis of the Westbrick Acquisition.
This is interesting, and it is 25% liquids, and it sounds like Westbrick has the capacity to produce 68,000 boe/month at one point.
However 1.1 billion for 50,000 boe/day 4 gas plants 1.1 million gross acres
Well the rest of vet is approximately 3 billion dollars 86,000 boe/day.
Clearly it seems like your getting two time the boe for every dollars, but we know that these boe's will not be the same netbacks as VET but you get roughly twice as many for the money.
This deal will add to FFO and FCF and may be good timing with LNG Canada coming on in the next few months, mid 2025.
What will happen here is that VET will be producing between 140-150,000 boe day.
But with their international exposure they are getting superior returns.
I think this deal was done in a responsible way, and they did not dilute the share holders i am good with that. I actually don't think their debt is to high, i think their stock price is to low and the market cap of the company should be around 4 billion and not 2.2 billion.
With Westbrick acquisition the 40% that is going to dividends/share buybacks is equal to what 50% was before with less debt. So potentially they can buy back a significant amount of stock. About 20 million a quarter in dividends, the rest will be share buybacks.
I like the deal and feel the stock should be trading significantly higher, in the 20 dollars. Especially with over 50% of european gas hedged at 17 dollars for 2025-2026-and adding hedges in 2027
IMHO
MHP