Q: What are your thoughts on Vermillion latest quarter results? Would you be a buyer here?
5i Research Answer:
We would be comfortable buying VET for sector exposure, considering its dividend and very low valuation. Crude production in the quarter was 32,695 b/d, down 1.8% but ahead of estimates. Natural gas production rose 11%. Free cash flow was $241M, nearly triple the prior year and $50M ahead of estimates. Good growth is expected this year, but skewed towards the second half. A deep gas exploration well in Germany has been a success. Net debt is now well less than 1X cash flow and VET plans to continue a strong capital return program to shareholders (50% of free cash flow).