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Vermilion Energy (TSE:VET) Burns Out After Acquiring Westbrick
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Vermilion Energy (TSE:VET) Burns Out After Acquiring Westbrick

Canadian energy stock Vermilion Energy (TSE:VET) made a huge step today by picking up Westbrick Energy for a whopping $1.075 billion. The move will give Vermilion a major strategic advantage, though perhaps not a billion-dollar advantage. That is likely what investors though, as they sank Vermilion shares over 4% in Monday morning’s trading.

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By picking up Westbrick, Vermilion noted, it takes a “significant step forward in terms of upping its operations in the Deep Basin in Alberta. The Deep Basin is already well-known for its natural gas production, and given how many power plants are pivoting to natural gas, that should ensure a ready market for the stuff.

Vermilion expects the deal—which will close at some point in the first quarter of 2025 if all goes as planned—to mean the equivalent of an extra 50,000 barrels of oil per day, while also opening up 770,000 net acres, home to over 700 separate drilling locations.

Stepping Up Spending

Meanwhile, Vermilion also plans to do quite a bit more spending beyond picking up entire companies. It revealed that its capital spending plan for 2025 will run between $600 million and $625 million. Since that includes both drilling and infrastructure, it is a safe bet there will be no more billion dollar acquisitions for 2025.

And, Vermilion also looks to ramp up its dividend, though not by much. It will be going from C$0.12 per share to a hefty C$0.13 per share, noted a KXAN report. So Vermilion shareholders should be already contemplating how many packs of gum their hiked dividend will buy. It revealed that it looks to produce between 84,000 and 88,000 barrels per day equivalent, which is up about 2% against 2024 guidance. Finally, German test wells are looking good as well, with a restricted rate of 21 million cubic feet per day at a pounds per square inch (PSI) pressure of 6,150 at the wellhead.

Is Vermilion Stock a Good Buy?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on TSE:VET stock based on three Buys and four Holds assigned in the past three months, as indicated by the graphic below. After a 23.06% loss in its share price over the past year, the average TSE:VET price target of C$16.71 per share implies 37% upside potential.

See more TSE:VET analyst ratings

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