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Edison Investment Research is terminating coverage on Diversified Gas & Oil (DGOC), Vermilion Energy (VET) and Circle Property (CRC). Please note you should no longer rely on any previous research or estimates for these companies. All forecasts should now be considered redundant.
Companies: Vermilion Energy Inc.
Vermilion Energy’s geographically diverse portfolio spreads geopolitical and pricing risk across different economies. The company has grown both organically and inorganically, and has delivered on environmental, social and corporate governance (ESG) objectives, being highly rated across multiple ESG rating platforms. Notwithstanding this, Vermilion has been affected by COVID-19 and has had to reassess its strategy on cash returns to shareholders. The board suspended the dividend, appointed Loren
Vermilion Energy recently reported Q120 production of 97.2kboed and fund flows from operations of C$170m. Even though the company has not observed a direct impact on its operations from COVID-19, results were already affected by the pandemic effects on global energy demand and current low commodity prices. In March, the board reduced the monthly dividend by 50% to C$0.115/share and announced a C$80–100m reduction to the annual capital budget. Subsequently, Vermilion suspended the monthly dividen
Vermilion Energy has recently reported record annual production of 100.3kboed and fund flows from operations (FFO) of C$908m for FY19. Key drivers to increased production include a full-year contribution from the Spartan assets acquired in May 2018. However, following recent macroeconomic headwinds such as the impact of the coronavirus and the Russia/Saudi Arabia price war, Vermilion updated its capex guidance and production estimates for the year. These significantly affect results; hence manag
Vermilion Energy’s geographically diverse portfolio spreads geopolitical and pricing risk across different economies. The company has grown both organically and inorganically through a series of new country entries, with a solid track record of hitting guidance targets. Additionally, management has delivered on environmental, social and corporate governance (ESG) objectives, being highly rated across multiple ESG rating platforms. Notwithstanding this, Vermilion has been affected by the current
VET’s Q2 FFO and production came in slightly below consensus, primarily owing to weaker oil production in France caused by downtime at a nearby refinery, and timing of its Australian oil sales. Strong test rates were reported from VET’s first operated exploration wells in Germany (8.8 mmcf/d restricted) and Croatia (15.0 mmcf/d), while test results from 4x new wells in Hungary were mixed. VET has also expanded its European presence again, signing contracts for 50% WI stakes in 580k acres in Ukra
Vermilion has reported Q219 FFO (fund flows from operations) of C$222.7m, 4.8% below consensus of C$233.8m and 8.2% below our forecast of C$242.5m despite a 14% increase in FFO y-o-y. Key drivers of the miss versus our forecast include reduced production in France due to a refinery outage which had a post-tax FFO impact of C$11m and an inventory build in Australia which had an impact of C$8m. At 103.0kboed, production was 1.2% ahead of our forecast despite the outage in France, driven by new wel
Vermilion Energy offers a geographically diverse production base, the ability to fund an 8.1% dividend yield and a forecast FY19 c C$530m capital programme, all achievable even at realised commodity prices c 3% below our base case (WTI US$56.1/bbl, Brent US$62.8/bbl). We adjust our FY19 and FY20 forecasts to reflect lower short-term commodity price expectations (based on the latest EIA forecasts of 12 March 2019). EIA’s FY19 WTI moves from US$64.9/bbl to US$56.1/bbl (-14%), driving down our fore
Vermilion has reported Q418 FFO of C$222.3m, 6.7% ahead of consensus C$208.3m and in line with our estimate of C$222.2m. At 101.6kboed, production was 2.7% ahead of our forecasts, with FFO/share 1.1% ahead at C$1.46/share. Guidance for 2019 production of 101–106kboed (with the mid-point implying 19% y-o-y growth) and the capex budget of C$530m remain unchanged. ROCE in 2018 was 9% compared to a five-year average of 4%. Our last published valuation was C$54.5/share, based on a blend of FY19 P/CF,
Vermilion’s investor day highlighted its self-funded growth and income business model. Management’s commitment to providing shareholders a sustainable dividend is supported by a deep and diverse portfolio of assets resilient to a volatile commodity price environment. Project inventory supports a recycle ratio of over 2.5 times and the short-cycle nature of growth capex means spend can be rapidly diverted to projects that offer the highest returns or are curtailed. Our base case valuation falls t
Vermilion Energy (VET) reported Q2 fund flows from operations (FFO) of C$193m, in line with consensus estimates and a 23% increase q-o-q. The acquisition of Spartan drove a 15% q-o-q increase in production to 80.6kboed, c 1% ahead of consensus, which includes volumes from Spartan after close of the C$1.4bn acquisition on 28 May 2018. We increase our expectations for FY18 FFO from C$887m to C$946m (+7%) and FY19 FFO from C$1,104m to C$1,208m (+9%), reflecting higher oil price expectations for H21
Vermilion reported 2Q18 production of 80,625 boe/d and cash flow of C$193 mm, which was in line with expectations. The company closed the Spartan Energy acquisition in 2Q18.
Vermilion’s acquisition of Spartan Energy has closed, and as such, we are off research restriction. We view the acquisition favourably noting that Vermilion was able to add another strong asset that can generate free cash flow to its portfolio. The Spartan acquisition satisfies Vermilion’s production and dividend growth model. The Spartan acquisition is immediately accretive to Vermilion with cash flow per share growth of 4% in 2018e (seven months of the year) and 12% in 2019e. With the acquisit
On 16 April 2018 Vermilion announced the proposed acquisition of Spartan Energy, a south-east Saskatchewan producer with estimated 2018 production of c 23kboed (91% oil) for a consideration of C$1.4bn, funded through C$1.23bn in Vermilion shares and the assumption of c C$175m of debt. The deal was priced at a 5% premium to Spartan’s closing price and is recommended by its board. In this note we incorporate Spartan’s asset base into our Vermilion forecasts and valuation based on the planned 15 Ju
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Companies: Savannah Energy Plc
Forecast and valuation update
Companies: IOG PLC
We are increasing our fair value estimate for Pantheon Resources to 208p, from under review (previously 184p). The change reflects what we believe was an unambiguously positive winter drilling campaign. This full note details the background analysis to the change in estimate of fair value, which includes a valuation table and an assessment of the forthcoming Alkaid#2 well.
Companies: Pantheon Resources plc
With several opportunistic but timely acquisitions in 2021, coupled with the recent surge in the oil price, Zenith Energy has, in our view, completely transformed itself and its value proposition to investors. While for various reasons it has not been easy for the market to fully recognise and reward this transformation, we expect 1) doubling production, 2) further strengthening of its balance sheet and 3) becoming Free Cash Flow (FCF) generative this year, will make it difficult for the market
Companies: Zenith Energy Ltd.
Alternative Resource Capital
Chariot has signed a front-end engineering and design (FEED) agreement with Schlumberger and Subsea 7 (the Subsea Integration Alliance) for the Anchois gas development project. Chariot and the Subsea Integration Alliance will adopt a “one team” integrated and collaborative approach to fast-track first gas from Anchois to maximise the return on investment for all stakeholders. The scope of work covers all the development's offshore elements including well completions and subsea production systems
Companies: Chariot Limited
AfriTin Mining (“ATM”) has announced another record-breaking quarter from Uis Phase 1. Tin production increased 13% QoQ to 152t for the three months to May (Q1 FY’23), supported by record recoveries, which along with cost initiatives drove a 16% improvement in All-In Sustaining Costs. The strong performance continues to support growth projects including incorporation of petalite lithium and tantalum by-products, upon which AfriTin recently announced positive drilling and metallurgical test work
Companies: AfriTin Mining Ltd.
Hannam & Partners
RCS-1 flow testing results
Companies: Arrow Exploration Corp.
EQTEC has reached a key milestone in its Southport energy from waste project with the appointment of Anaergia as EPC and O&M partner. This is a complex project using multiple waste treatment solutions and we see EQTEC’s inclusion as a demonstration that it’s technology can combine with these to create an optimal outcome.
Companies: EQTEC PLC
Trinity has announced the commencement of its highly anticipated onshore drilling campaign. The Company's fully funded, six well drilling programme will target an aggregate 450-1,100mmbbls of reserves at a cost of US$14-17m. In addition to drilling four “conventional” low angle wells, Trinity will also drill one horizontal well and one deeper appraisal well, with both the horizontal and deeper appraisal wells having the potential to deliver substantially higher production and economic returns ve
Companies: Trinity Exploration & Production Plc
Wentworth has announced a positive operational update ahead of its AGM to be held later today. Daily production year-to-date (YTD) has averaged 92.2MMscf/d, a c15% YoY increase (2021: 79.9MMscf/d) and ahead of Wentworth's 2022 guidance of 75-85MMscf/d. As noted previously, the strong performance of the Mnazi Bay asset YTD has allowed Wentworth to increase its total dividend distribution in respect of 2021 to 1.7p per share, a yield of c7.1%. Mnazi Bay continues to supply Tanzania with half of th
Companies: Wentworth Resources PLC
• Section II of the Northern Peruvian Pipeline has been temporary re-opened.
• As a result, 0.72 mmbbl of PetroTal’s Bretana oil has been tendered at the Bayovar port by Petroperu for the July lifting. This oil previously entered the pipeline in late 2020 for which PetroTal was paid just ~US$45/bbl at the time.
• PetroTal will receive the difference between this price and the price at which Petroperu will sell the oil in July (~US$120/bbl), generating over US$60 mm of price adjustment true-up r
Companies: PetroTal Corp.
Wentworth has announced the acquisition of a 25% non-operated working interest in the Ruvuma PSA from Scirocco Energy for an initial consideration of US$3m plus contingent payments of up to US$13m. The consideration is structured to ensure that the majority is only paid in a success case, providing Wentworth with a low-cost entry point into a high growth opportunity. The transaction has the potential to nearly double the Company's production by 2026 and add over 190Bcf of 2P reserves on a Final
• 2022 YTD gross production was 92 mmcf/d, ahead of our expectations of 89 mmcf/d for 1H22.
• The FY22 production guidance remains unchanged at 75-85 mmcf/d. It looks very conservative in our view.
• The company currently holds US$26 mm in cash and no debt. This is in line with our expectations.
• TPDC continues to be current with regards to receivables.
• We re-iterate our target price of £0.45 per share.
Steady growth and dividend
Our Core NAV for the company based on its 2P reserves only i