Q: May I have your thoughts on the turbulent stock, Vermilion Energy. In particular I am interested in Q4 2023 and the current metrics given the recent price drop. At what price would you consider taking an initial position? crystal ball - Do you anticipate another win-fall type tax coming in the EU?
With appreciation,
Ed
With appreciation,
Ed
5i Research Answer:
There is some uncertainty here with the CEO retiring. Sales of $523M were down 38% and below estimates. Production of 87,597 boe/d rose 2.5% and were in line with estimates. Natural gas production rose 21%. Free cash flow of $229M doubled and was ahead of $169M estimates. Q1 production guidance was 83,000 to 85,000 boe/d. VET increased its capital return target to 50% of free cash flow, which was a positive surprise. The dividend was raised 20%. The stock has been weak along with the sector but is VERY cheap on all metrics. The balance sheet is fine. We would be fine buying in the $14.50 range. We can't really predict any tax moves but think such moves are mostly priced in at 4X earnings.