Vermilion Energy Inc T.VET

Mark to market

[Oldnagger]

To the accountants and CPA's out there, Is mark to market accounting really necessary when a company such as VET produces and markets the very same fungible product that is being hedged ?
It would seem that VET's position is no different than  a producer selling on a fixed price contract.
My further question would be, if mark to market is not necessary, then why is VET doing it ? It seems to me that the resulting accounting provisions only add to investor's confusion. While I can fully see the need for mark to market in a company that is merely speculating on a futures position without producing the underlying commodity, this is clearly not the case here.
Two other thoughts, would mark to market apply if the hedge book was positive ? 
I do not see other producers in Canada (or even the USA ) using mark to market , Could it be a requirement imposed by the Europeans ?
Any light that can be shed on the subject would be enormously useful IMHO

[CashGreenGold]

they're doing it because of the generally accepted accoing principles (GAAP). Because of Sarbanes Oxley. In the GFC, banks were carrying mortage portfolios at almost any value they wanted.  They were basically a PLUG    We found out pretty fast what the TRUE value of those mortage loan books were....

[Oldnagger]

O! What a tangled web we weave when first we practice to deceive !!

[Rational43]

Mark to market is GAAP and IFRS compliant financial reporting, unless a company chooses to utilize specific Hedge Accounting rules, which are gruesomely tiresome to track, so almost no non financial entity does.   VET does not have a choice in the matter, and if prices fall from Q3 to Q4, VET will have a huge "gain" on the MTM value swinging back the other way.  

[GregC24]

The answer to this question is in the MD&A posted on the Vermilion website.  Anyone invested in the stock should be reading the MD&A. https://www.vermilionenergy.com/files/Q3_2021_VET_MDA.pdf Look at page 18.  In the chart at the top of the page you will see a line item for Unrealized Losses.  $279m.  UNREALIZED.   What does that mean?  Well, read

[Oldnagger]

Thanks for taking the time guys your answers are impeccable. Now hopefully , many investors will be able to understand and thus we will all be able to make those paper gains and ultimately realized gains that we all deserve !!

[sclarda]

Oldnagger wrote Thanks for taking the time guys your answers are impeccable. Now hopefully , many investors will be able to understand and thus we will all be able to make those paper gains and ultimately realized gains that we all deserve !! --------------------------------------------------------------- "Now hopefully many investors will be able to understand."  Many

[lashing]

LOL the backslap club pretending again. YOu guys havent explained anything as you dont understand anything to begin with. You THINK you do but wow ...... so much nonsense posted.  Its sad. You chase anyone that does know anything from this website.

[Quintessential1]

Yup they are right and the market is wrong.  Just like they are right and the world is wrong. They are the smartest guys they know.  Just ask them. This week's drop in share price brought to you by dummies in the market not a poor ER with a surprise 3 x consensus EPS loss.

[clamlinguine]

Anyone selling because of the paper losses on the hedges, or were surprised by them, knows very little about the company. The only negative thing about the report was the stunning spend of $76 million for future production which we don't need or want. We want debt reduction asap so that divy can be responsibly restored...asap. imo

[clamlinguine]

I remember one of the first and dumbest posts I ever made on stockhouse was raging about mark to market losses of Encana. I was an idiot then. I'm still an idiot, but less of one...imo...lol.

[SchoolNmoe42]

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