Vermilion Energy Inc T.VET

Vermillion 2025 50% EFFC to shareholders + Debt Reduction

[MyHoneyPot]

Free cash flow (FCF) and excess free cash flow (EFCF) are non-GAAP financial measures comparable to cash flows from operating activities.

Excess free cash flow EFCF

Well in Q3 Vermillion bought back 40 million shares, and paid 19 million in dividends. Then they paid off 73 million in debt. 

While the share buyback almost equated to 2% of their outstanding share, it only cost 40 million dollars. The dividends of 19 million is the cost of the 12 cent a quarter dividend. This only consumed 38% of Vermillions FCF.

Question, name another company you know of that can buy back 2% of their shares while paying a 12 cents dividend, and only consume 38% of it FCF in a single quarter? Challenge to the board..

A Buyback of 2% of their shares a quarter effectively adds 1700 boe/day of CF, FCF distributed over the remaining shares or an improvement of 2% in economics pretty well over the entire company. ( Compounding Quarter upon Quarter)

Every quarter their costs are getting less as their divedend obligation is decreased by about 375,000 dollars and last quarter 73 million reducion in debt at 6% roughly a 4.38 million dollar anual interest cost reduction or about 1.1 million a quarter. The impact of the share buyback and debt reduction should reduce costs by roughly 1.5 million in Q4 2024. 

Vermillion talks about their 2025 budget where the capex will stay close to the same, but what i found interesting was this. 

We remain on track to achieve our 2024 production and capital guidance and are in the process of finalizing our 2025 budget which will target modest production growth on a similar level of capital budget as 2024, while maintaining our return of capital payout target. We are on track to return 50% of EFCF to shareholders in 2024 through our fixed dividend and variable share buybacks, representing approximately 10% of our market capitalization, and expect to continue providing ratable dividend increases and repurchasing shares in future periods. We believe Vermilion is well positioned to execute on this plan given our robust asset base and strong balance sheet, which is at the lowest leverage in well over a decade. We plan to release our 2025 budget later in the year and look forward to providing further details on our capital investment and shareholder return plans for 2025.

Vermillion has significant returns and production gas at the right end of the LNG train. I listened to ARX presentation and they say their sunrise sales into LNG Canada will be done at a price with a small premium to AECO, what the point. 

Q4 is shaping up to be another fine quarter with growing European Gas, Wandoo oil production coming on and AECO above $2 dollars, and a improved balance sheet VET should be trading significantly higher. 

IMHO
MHP

[Quintessential1]

2024 YTD share price increases ARX  +30% VET -10% POU +19% KEL +18% NVA +23% The point of sunrise gas?  It bought all of the other >1000000 montney acreage that makes the rest possible. Low cost profitable production. ARC's management is going to dance with the girl that brought them. ;-) BUY VET! GLTA Longs   

[MyHoneyPot]

Well, great but VET is mis priced, and provide metrics why those shares are going up. I own POU i know why it is going up, a major asset sale. Kelt they adding significant production and development the most prospective montney play around, NVA a large rampup in production mostly condensate. Arx i am not convinced of the value.   Every boe VET produces in Europe get roughly 3x the

[Quintessential1]

It would seem the market doesn't care about what you are convinced of. What a coincidence. ;-) "Arx i am not convinced of the value."  POU sold every flowing barrel they have  and still couldn't beat ARX perfomance YTD ARX added 20 000 boe/d 60% liquids turn key. All well doing the things that VET is ...buying back, reducing debt, increasing FCF. Next quarter they

[MyHoneyPot]

I sorry but it is untrue statement: "POU sold every flowing barrel they have  and still couldn't beat ARX perfomance YTD"  POU has 3 plays and north of 30,000 boe and almost 4 billion on the balance sheet with a 1 billion dollar line. In fact POU sold a big chunk of Kakwa to Seven Generations. They also have Liard and Horn River prospect listed on their projects. They

[loopsbutterfly]

Dont waste your time with him....

[Quintessential1]

"Flowing barrel"  These are facts: 2024 YTD share price increases ARX  +31% VET -11% POU +19% KEL +18% NVA +23% As of close today. Sorry if you can't deal with them.  "Unconvinced"  LOL BUY VET!   GLTA