In a recent update, National Bank analyst Travis Wood has adjusted his price target for Vermilion Energy (VET, Financial). The new target has been lowered to C$17, down from the previous C$19. Despite the reduced price target, the firm maintains an Outperform rating on the shares, indicating continued confidence in the company's market performance.
VET Key Business Developments
Release Date: March 06, 2025
- Average Production: 84,543 BOEs per day for 2024, with a 4% annual production per share growth.
- International Production Increase: 12% year over year.
- North American Production Decrease: 5% year over year.
- Fund Flow: $1.2 billion or $7.63 per share, a 9% increase over 2023.
- Free Cash Flow: $583 million or $3.69 per share, a 9% increase over 2023.
- E&D Capital Program: $623 million executed within budget.
- Shareholder Returns: $216 million returned, including $75 million in dividends and $141 million in share buybacks.
- Net Debt: Decreased by 10% to $967 million, with a net debt to trailing funds flow ratio of 0.8 times.
- Proved Plus Probable Reserves: Increased by 1% to 435 million BOEs.
- Fourth Quarter Production: 83,536 BOEs per day.
- Fourth Quarter Fund Flows: $263 million or $1.70 per share.
- Fourth Quarter Free Cash Flow: $62 million, with $36 million returned to shareholders.
- Net Present Value of Reserves: $2.8 billion for PDP reserves and $5.2 billion for 2P reserves, discounted at 10%.
- 2025 Production Guidance: Expected between 125,000 to 130,000 BOEs per day.
- 2025 Capital Expenditures: $730 million to $760 million.
- 2025 Free Cash Flow Forecast: $400 million.
- Unhedged FFO Per Share Forecast: Increase from $5.61 in 2024 to approximately $7.50 in 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vermilion Energy Inc (VET, Financial) delivered strong operational and financial results in 2024, with production averaging 84,543 BOEs per day, exceeding the midpoint of their original guidance.
- The company achieved a 9% increase in fund flow and free cash flow on a per-share basis compared to 2023.
- Vermilion Energy Inc (VET) successfully executed a $623 million E&D capital program within budget, investing in growth projects in Germany, Croatia, and the BC Montney.
- The company announced an 8% increase in their quarterly dividend, marking the fourth consecutive increase since reinstating the dividend.
- Vermilion Energy Inc (VET) reduced net debt by 10% in 2024, achieving the lowest net debt to trailing funds flow ratio in over a decade.
Negative Points
- North American production decreased by 5% year over year, primarily due to the divestment in Southeast Saskatchewan.
- Net debt increased slightly in Q4 due to the stronger US dollar and the full repayment of the Montney battery lease.
- The company faces downstream capacity constraints and seasonality constraints in their German gas exploration program, which may limit initial production rates.
- Vermilion Energy Inc (VET) is in the process of divesting non-core assets in Southeast Saskatchewan and Wyoming, which could impact future production levels.
- The company is exposed to potential impacts from US tariffs on Canadian energy exports, although they do not expect a material impact at this time.
