Vermilion Energy (VET-T) The index's big loser of the year, for the second year in a row, no less. Its stock has plunged from around $21 at the start of 2020 and from around $30 at the start of 2019. Each year saw a toppling of a different pillar of Vermilion's strength. In 2019, the company drew comfort from its widespread asset base, believing that the healthy European gas markets would offset the ailing North American oil markets. Then European gas prices cratered to record lows heading into the summer of 2019 and investors began to flee. Vermilion tried to hold on to them by turning its dividend into something of a sacred cow, repeatedly telling investors that it had never once cut its dividend and did not plan to start now. Then 2020 came and put paid to that notion as well. The dividend was slashed twice in March and suspended in April.
From a March low of just $2.10, the stock has rallied to today's close of $5.68, under the new leadership of president Curtis Hicks. He took over from ousted president and chief executive officer Tony Marino in May. (Vermilion does not plan to appoint a new CEO. Instead it is relying on an executive management committee, an unusual model in most of the sector, but one which Vermilion has used in the past.) Mr. Hicks is trying to rebuild Vermilion's reputation as a low-risk, financially conservative producer focused on free cash flow. For now, the extra cash will go toward debt repayment, but Mr. Hicks has hinted that a (smaller) dividend could return eventually. Investors should learn more about Vermilion's near-term plans when it releases its 2021 guidance in the new year.
Business Reporter |
