Vermilion Energy Inc (VET.TO)

Buy or Sell? Probably a good time to Sell. This has been a name that has been fairly good and he has liked it because of its international exposure. It is currently being driven by a gas field off the Irish coast which has helped overall earnings quite a bit as there are no royalties with that find. However, commodities are range bound at best. It is very hard for any company to square the circle when you’ve got a 6-week revenue line. Because this is getting international Brent prices, it gets stronger currencies, but overall this is a Hold.

A buy for the long run? A great story and a great management team. An excellent history in terms of ROE and the capital employed. They have a minority interest in an offshore natural gas project in Ireland, and that is bringing in a lot of cash flow. They’ve really put themselves in a position to be able to pay their dividend and to maintain and grow production. Quite a high growth for the space in terms of production, because of the asset. This is a story that you hold onto for the long-term. She sees any volatility as a buying opportunity.

Thinks the dividend is fairly safe. He really likes the company. It has been his main energy producer holding in the past 5 years. Good management and are doing a good job focusing on returns, every time they deploy $1 of capital. Well diversified. They have operations in Europe, Australia and Western Canada. Dividend yield of 5.14%.

A great name. They pay $0.215 per month in dividends, and cash flow was $1.10 in the quarter, so they are in good shape. Volume wise they were flat at 64,000 in production. Located in Europe, so they get very good prices for their gas. The balance sheet is in great shape. Debt is $1.3 billion against equity of $1.6 billion. He thinks you might see the price at $38-$40, and at that point he feels it would be a table pounding Buy.

Ranks pretty well in his ranking system. Technically it is very strong, probably in the top 15% of all the companies he looks at. He likes the diversified nature of their assets. They have a good dividend and seem to be very well-managed.

Respects management and feels they run a great business. It has had a nice run recently along with other oil/gas stocks in the last few months. Natural gas prices have been very strong, but he would worry a little about the sustainability. Longer-term there are a lot of supply concerns with natural gas. Perhaps some of the recent strength has been driven by an inventory drop.

This is a really good company. It is in Canada, Europe and Australia, and it has oil/gas in different places. The one knock against it is that in January it had too much debt. However, if commodities are recovering, that is not a problem.

This is a conservative play in the energy space. They are not all Canadian. This name came up because oil fell back to $40 today. This stock is at the bottom end of its price channel.

There is nothing wrong with this stock. It has a good yield and there is diversification. Europe is helpful in the sense you have a bit of diversity. Well run, managed and diversified.

An interesting Canadian stock. A significant part of their holdings are in Europe, which is where they have been expanding. Just bought into one of the German geological areas that shows some promise. Payout ratio is pretty high, but it is a European stock. They are gas and oil with some working interest in Canada, but the European side is the most interesting. Can’t see them cutting the 6.3% dividend at this point.

(Market Call Minute.)

Geographically diversified with European operations. Good balance sheet. It generates free cash flow which supports the yield of 5.94%. You’d have to see quite a downturn of current prices to see the dividend being in jeopardy. Since 2011, they have gone from 35,000 barrels a day to 65,000. With Carob coming on, it should get even better.

Canadian Natural Resources (CNQ-T) or Vermilion (VET-T)? Both are core holdings. 2 different sizes with this one being an intermediate. This is more of an international diversified company. Its next big catalyst is Carob coming on in Australia and will be a big driver of cash flow generation. Likes them both. 5.8% dividend yield.

Has seemed to take forever for Coribb to finally come online, and that is ramping up now. Full ramp is going to take another 3-4 months. Feels the dividend is sustainable. During the weak period of January-March, a lot of fund flow found its way into those names that were perceived to be much lower risk. This was one of them. Because of that the stock held up very well, relative to many of its peers. As a result, it never fell as much as oil fell. Because of that he finds the valuation not overly compelling. Feels the 6% dividend yield is sustainable.

When he starts putting money back into a sector, he likes to go into the one that did the best. This one did the best which means money stayed with it. Assets are not just in Canada, but offshore as well, mostly in Europe. They get the higher pricing of Brent. Dividend yield of 6.04%.