Vermilion Energy Inc T.VET

Napkin Math on German natural gas on 1 well.

[galaxyr]

Please correct me if I'm wrong.

According to the November presentation.  

Successfully completed testing operations on the Osterheide well (100% WI), flow tested at a restricted rate of 17 mmcf/d(1) with a wellhead pressure of 4,625 psi, expect deliverability would have been higher without testing equipment limitations.

one well is testing at a restricted rate of 17 mmcf/d that equates to 4982 megawatt hours per day.

EU natural gas TTF is sold in megawatt hours. TTF is currently 44 Euros per megawatt hour

4982 X 44 Euros = 219,000 Euros a day

219,000 X 365 days = approx 80 Million Euros a year.

80 Million Euros converted to CAD $$$  = approx $118 Million Canadian.

that is on just the one well, that has a restricted flow rate at the moment and the expected delivery would have been higher without testing equipement limitations.

Am I missing something.....

Seems to me that when the well is tied in and the others are drilled.  FCF from European operations will be the cash cow for Vermilion.

Any comments/ Am I missing something.   $118 Million a year of revenue from just one well??????

[Quintessential1]

Always has been the cash cow.  Let's hope they leave some for us this time.. They don't have 100% working interest in all wells in either Germany or Croatia so it's not all of their money and then we'll have to hope that the EU is done windfall taxing VET.   But yeah, it should be a good year. GLTY and all

[MyHoneyPot]

Do you mind elaborating on your concern regarding maybe they would leave some for us this time? Thanks

[Quintessential1]

I did.  WFTs.  They took the lion's share last time. Windfall Profit Taxes in Europe, 2024 https://taxfoundation.org/data/all/eu/windfall-tax-europe-2024/ GLTA

[MyHoneyPot]

In the investor call, they said they would tie the well in and produce it at 6 mmcf, for the first year. So you might have to redo you caculation with 6 mmcf a day. Very exciting numbers in any case, VET is on the right side of LNG shipment, and this is a great place to be when you can hedge out massively into the future.  VET is trading at less than 2 X FFO which is crazy cheap, and it is

[MyHoneyPot]

My caculation is like this, every 6 MMcf of gas produced increases VET cash from petroleum sales by 1.5%. (Roughly speaking over 30 million dollars) So essentially if they produced that well at 18 MMcf almost a 5% increase in Petroleum Sales for 2025. That is amazing cash generation.  When you look at VET market cap eveny convential Canadian production would suggest it trade higher.