I’ve been overly bearish on the Canadian oil and gas sector for quite some time, and from a long-term perspective, this feeling continues to hold. That said, any time a sector gets beaten up to the degree Canada’s energy patents has been, one can always find interesting pockets of value to consider nibbling at. In this article, I’m going to discuss why Vermilion Energy (TSX:VET)(NYSE:VET) could be one such company.
Vermilion is a midsized oil producer, pumping out around 100,000 barrels of oil from Western Canada, and also Europe. The company’s European portfolio of assets does give the Canadian company unique leverage to Brent pricing which has traditionally always been the highest margin production for Vermillion in the past due to the favorable pricing and production economics.
Vermilion’s portfolio of production assets is thus much more attractive than many of its Canadian oil-sands-only peers, giving this company an immediate leg up.
Vermilion’s share price has remained under pressure of late due mainly to the move made by the company’s management team to aggressively cut its dividend approximately four months ago.
This dividend cut came after various adamant statements by management and some analysts that the dividend would never be cut, making this move detrimental for yield-focused investors. That said, Vermilion does have a decent current dividend yield for fresh money investors.
The company also provides new investors with excellent leverage to rising oil prices, making Vermilion an interesting value play for those bullish on oil.
Invest wisely, my friends.