Vermilion Energy Inc T.VET

Using $100mm /qtr in FCF

[PipelessPauper]

I don’t agree with this figure, but for argument’s sake, let’s use it.
So ~$400 mm / yr FCF.

Based on their cash costs of ~ $48/boe, and working backwards from $400 mm FCF, 159,500,000 mm shares, you get a per boe sales price of:

$60.89 / boe

obvoiusly we can see prices for WTI/Brent/AECO/TTF/HH translate into much higher than $60.89/boe currently, but let’s continue to use it.

currently, mkt cap for VET’s 159,500,000 shares is $1,438,690,000. (9.02 x 159.5 mm)

Meaning the 400 mm / yr figure for FCF represents a 

27.8% FCF yield (400/ 1438.690)

EVEN IF we were to use that $60.89 /boe sales figure, it would be reasonable to assume ~ 50% to a div, and 50% to continuing debt repayment. 

That translates into a montly divided of $12.5 cents/share

Again, this is based on 400mm FCF / year or a $60.89 / boe realization.
Prices are MUCH higher than that now.

If you’re trying to reconcile their 2021 FCF per JULY Presentation (of approx $450mm for 2021).... you need to remember Q1 WTI avg’d ~ $57, and gas ~ $2.80 HH.
Also, remember that they had locked in with lower hedge realizations in first half of the year.

To get a true pic of their potential FCF, use today’s WTI/BRENT/AECO/TTF/HH price on 85,000 boe/d of production for 12 months.

You’ll see that their FCF comes in around ~ $683 mm for just 1 year. Unhedged. At $70 WTI.

Imagine what it would be at $100 WTI (where I see prices going by DEC 2021. 

You dont have to. FCF would be $1,613,300,000 for 1 year, or over $400mm / qtr. If paid ALL as dividends, that works out to $10.12 /share dividend. Or a 112% implied yield at today’s close.

112% implied div yield. Insane.

This stock is STUPID cheap. It’s why it’s my top holding and why I bought 40,000 more shares in the high 8’s.
I now hold 100,000 shares with a $8.62 cost avg, and expect VERY GOOD THINGS.

[Oldnagger]

I also am very bullish on pricing, as I predict shortages of just about everything coming by this winter. However Covid refuses to die and there seems to be an abundance of stupid people who for some strange reason want to keep it alive. Then add on top of that another overwhelming abundance of morons who want to kill our most prosperous and necessary industry. My guess is that one of the

[geemonet]

You're missing that they aren't selling barrels for $70 bucks. It's mostly hedged at much cheaper prices. In a few months the price per barrel that they're getting will go up. But the debt : ffo won't be at 1.5X any time soon. And let's also remember that FFO can tank at any time if opec changes their mind.  i wish I wish I wish you were right. But.... I think your

[PipelessPauper]

“ I’ll address the hedging comment in another post. but first, this: ” But the debt : ffo won't be at 1.5X any time soon.” 85k boe / d is 31,025,000 boe / year. at 70 wti and ~ their $48 / boe cash cost, that’s $682,550,00 a year. Before ~ 325-350mm capex I don’t know why this is hard for you to understand. It’s straitforward math

[mnztr]

they are targeting 1.5 ratio based on FFO not FCF. But yes there are a way from it, unless oil hits $90 then they will be there by Q4.

[PipelessPauper]

They’re there now with WTI at $70 31,025,000/year [85k boe/d] x $70 = $2,171,750,000 debt is $1,950,000,000. ratio target is $1,950,000,000/1.5 = $1,300,000,000 of debt  in fact price could fall as low as $42 WTI, and they’d still hit their 1.5x target

[PipelessPauper]

As for this comment, it’s simply wrong “You're missing that they aren't selling barrels for $70 bucks. It's mostly hedged at much cheaper prices.” I don’t know how to post an image to a URL, but I have a chart that shows VET as having the lowest hedges in NA shale companies and nearly unhedged after Q2 2021 [about 1500 bbls oil vs 85000 boe production] If you want the picture, send

[PipelessPauper]

EU nat gas is 70% hedged at ~ $7.50 till start of 2022

[mnztr]

So then each $ on mmbt is 9M upside + the fund they may have received from hedging, they do get money for selling calls. So if they think gas prices will be around 8 and they sell a call at 7+ 1 then then its essentially 8.

[geemonet]

Well shid bobby, hope it works out for us 

[stockmarket1]

Wow. Thanks P.P. That's great math metrics here. Question? For my use & knowledge....how did you calculate some of these figures below? I know " market cap: but.... IE $60.89 /boe........or this -- 27.8% FCF yield (400/ 1438.690)?  Thanks :) 

[PipelessPauper]

Sure!  To get $60.89, you just work backwards. we KNOW their production is ~ 85,000 boe/d we KNOW thier cash cost is ~ $48/ boe we PLUG IN his $400 mm CASH FLOW then you solve for price Sales price = $48 + ($400mm / 31,025,000 boe/year)          = $60.89

[stockmarket1]

Great...thank you :)