Vermilion Energy

CN: VET

C$555.7m market cap

C$3.51 last close

Vermilion Energy is an international E&P with assets in Europe, North America and Australia. Management expects FY20 production to average 94–98kboed. Commodity price exposure is spread across global oil and gas benchmarks including Brent, WTI, Henry Hub, TTF and NBP.

Investment summary

Following the departure of Anthony Marino as president and CEO of Vermilion (VET), the newly established executive committee announced its intent to maintain a strong balance sheet with low financial leverage, manage the total payout ratio at less than 100% and protect equity. The committee’s near-term priorities include continuing to navigate the company through the COVID-19 pandemic with a primary focus on HSE (health, safety and environment) and business continuity; continuing to find additional operational efficiencies and cost reductions; pay down debt, target a debt-to-cash flow ratio of less than 1.5x; review projects to determine appropriate pace of development and capex allocation; strengthen the leadership role in ESG; and review the shareholders’ return policy and determine the appropriate time to reinstate the dividend and/or share buyback. Our updated valuation stands at C$9.6/share.

Y/E Dec
Revenue (C$m)
EBITDA (C$m)
PBT (C$m)
EPS (c)
P/E (x)
P/CF (x)
2018A 1526.0 1037.0 355.0 226.0 1.6 0.6
2019A 1747.0 976.0 220.0 20.0 17.6 0.7
2020E 1094.0 569.0 (28.0) 214.0 1.6 1.1
2021E 1222.0 713.0 172.0 101.0 3.5 0.8
Industry outlook

Vermilion’s operations are in OECD countries and predominantly onshore; political, operational and subsurface risk is well spread. Vermilion benefits from realisations based on a number of regional commodity prices including Brent, WTI crude and Henry Hub, TTF, NBP and AECO gas.

Last updated on 21/10/2020
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Sector
Oil & gas
Share price graph
Balance sheet
Forecast net debt (C$m) 1972
Forecast gearing ratio (%) 193
Price performance
%
1m
3m
12m
Actual (4.4) (47.6) (82.2)
Relative* (5.8) (47.8) (82.0)
52-week high/low C$21.9/C$2.5
*% relative to local index
Key management
Kyle Preston IR Director