Vermilion Energy (VET-T) Anthony Marino CEO tried to reach audiences, this week with the same message he has been broadcasting for months -- and apparently with the same skeptical results. Vermilion's stock lost 31 cents to $20.79 today and is down 51 cents for the week. This came in spite of a BNN,ca appearance on Tuesday by president and CEO Tony Marino, who proclaimed that business is simply thriving. He gave particular attention, as usual, to the dividend. Vermilion pays a 23-cent monthly dividend with a dauntingly high yield of 13.2 per cent. As Vermilion and Mr. Marino frequently remind investors, the company has paid a dividend for 17 years, has raised it four times and has never cut it. Yet as Mr. Marino's interviewer on Tuesday pointed out, the market seems convinced that a cut is imminent. Mr. Marino maintained his position that it is entirely safe. He noted that Vermilion updated its forecasts last week and is currently projecting $950-million in cash flow this year. By comparison, the 2020 budget is $450-million and the dividend costs about $425-million. "We show ourselves overfunded, meaningfully overfunded," emphasized Mr. Marino. "... It's actually our lowest payout ratio since 2008." He called the dividend "completely economically warranted."
The market remained completely unconvinced. According to a research note in December by Canaccord Genuity analyst Dennis Fong (who had just been a road trip with Vermilion's management), the dividend looks sustainable at WTI oil prices of around $55 (U.S.) a barrel. The WTI benchmark closed today at $54.19. Mr. Marino may be an oil price bull -- many oil executives are, or they would not be in the business -- but at the moment, he is surrounded and outnumbered by bears.
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