Vermilion Energy Inc T.VET

Q4 is shaping up....

[MyHoneyPot]

In Q3 Australia production was 2040 boe/day, more normal productiion is around 4,000 boe a day. This should bode well for the 4th quarter.

Also it was encouraging to hear the infastructure in Croatia had infasture available for the production of 5000 - 8000 boe/day.  In Q4 they are expection to produce more than 2000 boe/day. They have a lot of running room and they had a lot of success. 

European Gas

1000 boe/day = 6 *$15.52 *1000 boe*365 days = 34 million (approximate) dollars. 

It sounds like VET could have as much as 6000 boe/day of running room in terms of infastructure in Croatia, I am sure these wells are not that expensive as they are not very deep (reservoir depth of 885 metres ). Just filling up the infastructure in Croatia could add significant cash, with little risk. 

In 2024 it looks like VET the company is going to generate about 2 billion in petroleum sales. 

if the ramped up in Croatia that alone potentially could add 6 * 34 million (200 million dollars) or about 10% growth. The gas in Croatia is not competing with shale gas in Canada, it is competing with LNG supplies that are potentially more expensive. 

It looks like an inflection point for Vet, and i like the idea of leaving more cash on the balance sheet so they can fill up infastructure in Croatia, and potentially grow sales 10%. The cost to buy back 10% of the shares would be significantly higher to create the same outcome. 

Looks like VET is off to the races and really excited to see the strategy for 2025. 

Every 1000 boe of european potentially has the protential to add 1.5% to the companies sales for 2025. So that German wells look really exciting, and natural gas is the perfect transition fuel for then next 40? years. 

The argurement of share buybacks in Canada is that you don't want to increase production in a crowded marketplace. That same logic does not exist in Germany or Croatia. VET really has a small share float already, and it is good to be different that the companies that will end up spending 10 years to buy back they share slowly. 

I am really glad i took the time to research VET i owned it a few year ago but the landscape looks a lot different today. 

IMHO

[Quintessential1]

The cost to buy back 10% of the shares would be significantly higher to create the same outcome.  It's actually pretty much the same cost to buyback 10% of the shares and as long as the share price stays this low that appears to be what they intend to do moving forward.  Besides buybacks are a more guaranteed outcome at a much lower decline rate. Don't be that chick that tries

[MyHoneyPot]

They said they are going to allocate 50% to buybacks and 50% to debt reduction as long as their debt is more than 500 million.  If the debt falls below 500 million the will reevaluate their shareholder framework. IMHO

[Quintessential1]

Yes which means increased buybacks and dividends not increased cap-ex.  I'm sure there is a shareprice cut-off point for buybacks but I doubt it is below $15 per share. It would be nice if their shareholder framework reevaluation came with a debt target too. "We are on track to return 50% of EFCF to shareholders in 2024 through our fixed dividend and variable share buybacks

[MyHoneyPot]

I am all for more Capex in Germany and Croatia, because it is way more effective then buybacks. Every 6 MMcf of natural gas in Germany or Croatia will add 1.5% to petroleum sales.  In Croatia that may be able to add as much as 36 MMcf which would add almost 10% to petroleum sales.  36 MMcf of gas may be only 6-10 wells.  The buybacks are appropriate in North America where we

[Quintessential1]

Except the cost isn't significantly higher for the same outcome and that outcome is guaranteed without added sustaining capital year after year they just pay back.  The time to make hay is while the share price is low.  Cap-ex can be shifted from Canadian assets to European assets but shareholder returns can't.  If you had done your DD you would know that. Again, stop

[MyHoneyPot]

Well i had a good discussion with their IR guy, and these are windfall prices for natural gas that they can hedge into 2027, pretty good.  They have hit their debt target and they said clearly (In the confrence call) that they are not going to increase share buybacks from the current level, until the debt goes down futher. Less than 500 million, then they will review their return of capital

[Quintessential1]

"They have hit their debt target and they said clearly (In the confrence call) that they are not going to increase share buybacks from the current level, until the debt goes down futher. Less than 500 million, then they will review their return of capital strategy.  No personal attack just a little metaphor to get my point across.  So buybacks and dividends continue at a 50% of