We have arrived at a valuation range of C$6.1–13.0/share, resulting in an average blended valuation of C$9.6/share (up 9%). Producing assets consist of seven gas and eight oil-producing fields with extensive infrastructure in place. This does not cover the full amount of our combined estimated cash outflows of C$478m for the year, encompassing sustaining capex of C$360m, in line with company guidance, and cash dividends of C$118m, already paid. Vermilion currently trades at an FY21e P/CF of 0.9x relative to Canadian, US and rest of the world group peers, which trade at 2.0x, 2.6x and 3.8x respectively. His earlier roles included COO, at Delphi Energy and various technical and management positions at Dominion E&P/Dominion Exploration Canada and Phillips Petroleum Company. This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. Zacks Rank Education -- Learn more about the Zacks Rank Exhibit 2: SE Saskatchewan emissions intensity per boe (2018 increase due to Spartan asset acquisition), Exhibit 3: SE Saskatchewan emissions compared to operated production. Our FY20 and FY21 commodity price forecasts are based on EIA estimates (11 August 2020) and imply that given H120 price realisations, Brent and WTI would stand at an average of US$43.11/bbl and US$33.99/bbl for the remainder of the year, respectively.
The company succeeded in reducing emissions intensity by 45% between 2014 and 2017, even as it increased energy production. In 2015, Mr Donadeo was recognised for his outstanding service to France with official appointment to the National Order of the Legion of Honour at the rank of Chevalier. This reflects the effects of higher price realisations in 2021. In Exhibit 11, we provide a peer group valuation as at 11 September 2020, which reflects the impact of the macroeconomic headwinds the oil and gas industry is facing. Capital activity for the remainder of the year will be minimal and focused predominantly on maintenance activities. We never take payment in stock, options or warrants for any of our services. In these roles, he helped guide Vermilion to expand operations from two countries in 2003 to 10 in 2018.
We also note that since mid-March 2020, following the initial reaction to the coronavirus pandemic and to low oil prices, oil and gas companies’ market capitalisations have slightly recovered. However, it has recovered and learned from them by abiding with these principles, which provide flexibility and balance sheet headroom during periods of low commodity prices. This structure has been used by Vermilion in the past and facilitates collaborative decision-making based on the collective knowledge and experience of the team. He has more than a decade of industry experience with diverse roles in finance/treasury, corporate planning and corporate development with Vermilion, and previously with Lightstream Resources and Tristar Oil & Gas. The investment or investment activity to which this document relates is available only to such persons. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style. Since our founding more than 20 years ago, Vermilion has been guided by our core values of Excellence, Trust, Respect and Responsibility. This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person. Today, Vermilion is France’s largest oil producer, constituting approximately two-thirds of the domestic oil production. Since the company’s reported balance does not at present break down the debt components for the covenant calculation, we utilise long-term debt plus finance leases as a proxy for debt to EBITDA metric. Utilisation rates for LNG plants in the US have already fallen below 70% and are likely to decline further in Q320, although this will depend on prices in Europe and Asia, and the continued impact of COVID-19 in Europe. Certain Zacks Rank stocks for which no month-end price was available, pricing information was not collected, or for certain other reasons have been excluded from these return calculations. At low commodity price levels, its gearing multiples exceed the current total debt to EBITDA covenants.
A detailed description of Vermilion’s diverse asset base can be found in Appendix A or in our. He joined Vermilion in 2013 as director of the Canada Business Unit and prior to that was VP, Corporate Development and Planning at Baytex Energy. Including the Zacks Rank, Zacks Industry Rank, Style Scores, the Price, Consensus & Surprise chart, graphical estimate analysis and how a stocks stacks up to its peers. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms and Conditions of Service. For FY20, under our current assumptions this will increase to 4.5x and starts decreasing in FY21 to 3.4x as commodity prices recover and the company focuses on reducing debt. In recent years, the company had drifted from these principles, with debt escalating while management remained overly committed to the dividend strategy. Mr Donadeo has more than 35 years’ experience in the oil and gas business, including mergers and acquisitions, gas marketing, production, exploitation, and field operations in western Canada and internationally in Australia, France, the Netherlands, Germany, Ireland, and Trinidad and Tobago. We stress test total debt/EBITDA at a 10% discount to our base case commodity price scenario, corresponding to a realised Brent price of c US$35/bbl average for the remainder of the year, driving estimated FY20 total debt/EBITDA to 4.1x. Exhibit 14: Debt, FFO and EBITDA base case sensitivities. Netherlands: Permitting for Weststellingwerf well. From 2000 to 2003, he was VP, Finance and CFO at NAL Oil & Gas Trust, and from 1998 to 2000 he was CEO of Caravan Oil & Gas. Mr Hicks began his career with ELAN Energy in 1983, serving as VP, Finance and CFO.
The Spartan assets, acquired in 2018, had an emissions intensity c 3.5x the company’s existing Canadian production and resulted in an increase in emission intensity, reflected in Exhibits 2 and 3. To achieve this, it continues to implement energy and emissions efficiency projects throughout its operations, while in France it has developed geothermal projects, deploying renewable energy that has synergies with its expertise in areas such as geoscience and drilling. Projects are under review to determine appropriate capital allocation, with a focus on profitable production. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. The monthly returns are then compounded to arrive at the annual return. The licences cover more than 930,000 net acres of land. VAT no. Jenson Tan – VP, Business Development: Mr Tan has over 15 years’ experience in exploration, development, and commercial negotiation in North America, Europe, Australia and Asia in both technical and managerial roles. He joined Vermilion in 2015 as operations controller and moved into an investor relations role in 2017, before advancing to director of finance in January 2018. The focus is now to return to the original business principles, which include maintaining a strong balance sheet with low financial leverage, consistently delivering results that meet or exceed expectations (as has already been observed in Q220), and to protect equity and minimise dilution. Debt, FFO and EBITDA base case sensitivities. However, the new management team is committed to return to Vermilion’s core business principles and the priority is to pay down debt. Vermilion holds a 100% interest in the Wandoo field, c 80km offshore the north-west coast of Australia. Source: Edison Investment Research. In these roles, he helped guide Vermilion to expand operations from two countries in 2003 to 10 in 2018. The weakness in commodity prices also affected H120 financial results, with Vermilion recording a net loss of C$1,390m in the six months to June 2020, reflecting an impairment charge of C$1,635m. ZacksTrade and Zacks.com are separate companies.
In lieu of filling the role of CEO, Vermilion has created an executive committee. However, management may need to take further measures to cover planned sustaining capital. Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. With the return of Mr Donadeo and Mr Hicks, the executive committee is now focused on returning to Vermilion’s original core business principles based on a conservative, long-term focus on balance sheet strength and capital discipline to generate returns. Vermilion is a global E&P with operations spanning developed economies including Europe, North America and Australia. Source: Edison Investment Research, Bloomberg. This results in declared dividends for FY20 of c C$90m. These include an increase in FY20 Brent to US$41.42/bbl (+25%) and WTI to US$35.50/bbl (+21%). Vermilion Energy Inc 3500, 520 3rd Avenue SWCalgary, Alberta T2P OR3Canada+1-403-476-8100www.vermilionenergy.com. More recently, the company had deviated from these principles to maintain its dividend. Mr Hicks began his career with ELAN Energy in 1983, serving as VP, Finance and CFO. Researching stocks has never been so easy or insightful as with the ZER Analyst and Snapshot reports. Zacks Rank stock-rating system returns are computed monthly based on the beginning of the month and end of the month Zacks Rank stock prices plus any dividends received during that particular month. It chose to focus on three regions that offer relatively stable political, fiscal and regulatory regimes: Europe, North America and Australia. However, Lorenzo Donadeo and Curtis Hicks have proved in the past that they are capable of leading the company even during periods of high volatility in the market and their main focus is to strengthen Vermilion’s balance sheet. Commodity price exposure is spread across global oil and gas As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. We also stress test management’s target of net debt to FFO under 1.5x.
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