There are 2 articles on this stock available only to PRO subscribers.
- Vermilion Energy has a remarkable 20-year record of delivering total returns at a 36.6% compound annual growth rate.
- The company has achieved this long-term record by a relentless focus on capital efficiency.
- VET is not resting on its laurels. Growth in production is set to accelerate; funds flow per share will continue growing ~20%.
- The Corrib project comes online in mid-2015, adding an estimated 9,700 boe/day (net) for Vermilion. That's 24% of total 2013 average production.
- As a result of the growth in production and funds flow, VET should top $85 by next summer.
- Latest acquisition continues the company's history of value-oriented and accretive deals; cash flow of new assets will self-fund future growth.
- Based on current netbacks, VET paid ~50% below the cash flow value of proved reserves; potential upside for another doubling of the assets' reserves due to unbooked drilling locations.
- Bargain deal buys reserves on the cheap and opens up a new core area for the company in the Williston Basin.
- For $400 million (~5.5% of EV), VET grew proved reserves by 8%. Conservative upside is another 4% growth in proved reserves.
- This lightly followed Canadian energy company has a 15-year total return CAGR of 25%.
- Bullish catalysts include the outlook for strong European natural gas prices for years to come and the Corrib natural gas project in Ireland.
- Long-term success is due to a very selective acquisition strategy combined with focused high-return capital investments.
- The current yield is 4.1%.