Bruce Murray Vermilion Energy Inc VET-T DON'T BUY Mar 19, 2024

Company has turned around - last quarter very strong. Believes energy prices will remain high. Company progressing in de-leveraging. Free cash flow will be returned to shareholders (~50%). Dividends are robust, and company on the way to recovery. Good valuation that offers safety for long term investors.  

Not his favourite in energy. If it break its 200-day moving average it will move even higher though. But if fundamentals continue to do well, so will VET. The stock is well-positioned.

The biggest knock is that they have 5 operations round the world when they need focus. It remains challenged and deserves to trade at a discount. Look elsewhere for less risk and more reward.

Too much noise. A tax-loss candidate. Don't buy. The warm winter meant weak heating demand. Also, their assets are too scattered, lacking focus, while the dividend isn't attractive enough. Some flagship assets will decline. It's a value trap.

Sell it. Value trap. Too many assets, not enough geographical concentration. The free cashflow yield that everyone's fallen in love with rolls off significantly in 2 years.

Looking at 2026, they're almost negative free cashflow because they're benefiting from European gas hedges that are about to roll off.

Too geographically exposed. Inventory light. Hedge on gas about to expire. Not a good option for investors. 

Owns shares, and has suffered share price depreciation. Europe pricing very hard on business. Company is going to have to re-evaluate Europe assets. Better options in the energy sector for investors. 

Owns shares. Believes company has a lot of potential. European gas prices have been low, but still relatively strong. Largest independent gas producer in all of Europe. Very good shareholder discipline - has paid lots of dividends. Good capital allocation.