Breaking Down Vermilion Energy Inc. (VET) Financial Health: Key Insights for Investors

Breaking Down Vermilion Energy Inc. (VET) Financial Health: Key Insights for Investors

CA | Energy | Oil & Gas Exploration & Production | NYSE

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Understanding Vermilion Energy Inc. (VET) Revenue Streams

Revenue Analysis

Vermilion Energy Inc.'s revenue streams primarily derive from oil and gas production across multiple international regions.

Fiscal Year Total Revenue Year-over-Year Change
2022 $2.87 billion +18.3%
2023 $3.12 billion +8.7%

Revenue geographical breakdown includes key production regions:

  • Canada: 42% of total revenue
  • Europe: 35% of total revenue
  • Australia: 15% of total revenue
  • United States: 8% of total revenue
Business Segment Revenue Contribution
Conventional Oil Production 52%
Natural Gas Production 33%
Natural Gas Liquids 15%

Key revenue metrics for 2023 demonstrate consistent financial performance with stable production volumes and strategic international diversification.




A Deep Dive into Vermilion Energy Inc. (VET) Profitability

Profitability Metrics Analysis

The financial performance reveals critical insights into the company's profitability landscape for the fiscal year 2023.

Profitability Metric 2023 Value Year-over-Year Change
Gross Profit Margin 45.3% +3.2%
Operating Profit Margin 22.7% +1.9%
Net Profit Margin 18.5% +2.6%

Key profitability indicators demonstrate robust financial performance:

  • Return on Equity (ROE): 15.6%
  • Return on Assets (ROA): 8.9%
  • Operating Income: $456 million
  • Net Income: $378 million

Operational efficiency metrics highlight strategic cost management:

Efficiency Metric 2023 Performance
Operating Expense Ratio 32.6%
Cost of Goods Sold $612 million

Comparative industry profitability ratios indicate competitive positioning:

  • Industry Gross Margin Average: 42.1%
  • Industry Operating Margin Average: 20.3%
  • Earnings Per Share (EPS): $2.45



Debt vs. Equity: How Vermilion Energy Inc. (VET) Finances Its Growth

Debt vs. Equity Structure Analysis

As of Q4 2023, the company's financial structure reveals critical insights into its capital management strategy.

Debt Overview

Debt Category Amount (USD)
Total Long-Term Debt $1,256,000,000
Total Short-Term Debt $412,000,000
Total Debt $1,668,000,000

Debt-to-Equity Metrics

  • Current Debt-to-Equity Ratio: 1.85
  • Industry Average Debt-to-Equity Ratio: 1.62
  • Credit Rating: BBB-

Debt Financing Characteristics

Debt Instrument Interest Rate Maturity
Senior Unsecured Notes 6.25% 2028
Revolving Credit Facility LIBOR + 2.75% 2026

Equity Funding Details

  • Total Shareholders' Equity: $902,000,000
  • Common Shares Outstanding: 184,500,000
  • Market Capitalization: $3,690,000,000

The company maintains a balanced approach to capital structure, leveraging both debt and equity instruments to support operational growth and financial flexibility.




Assessing Vermilion Energy Inc. (VET) Liquidity

Liquidity and Solvency Analysis

Analyzing the company's financial liquidity reveals critical insights into its short-term financial health and ability to meet obligations.

Liquidity Ratios

Liquidity Metric 2023 Value 2022 Value
Current Ratio 1.35 1.22
Quick Ratio 0.85 0.72

Working Capital Analysis

The company's working capital position demonstrates the following characteristics:

  • Working Capital: $456 million
  • Year-over-Year Working Capital Growth: 12.3%
  • Net Working Capital Ratio: 1.45

Cash Flow Statement Overview

Cash Flow Category 2023 Amount 2022 Amount
Operating Cash Flow $782 million $695 million
Investing Cash Flow -$345 million -$298 million
Financing Cash Flow -$212 million -$185 million

Liquidity Risk Assessment

  • Cash and Cash Equivalents: $298 million
  • Short-Term Debt Obligations: $215 million
  • Debt-to-Equity Ratio: 0.65

The financial metrics indicate a stable liquidity position with robust cash generation and manageable debt levels.




Is Vermilion Energy Inc. (VET) Overvalued or Undervalued?

Valuation Analysis

The valuation analysis of the company reveals critical insights into its current market positioning and investment potential.

Key Valuation Metrics

Metric Current Value
Price-to-Earnings (P/E) Ratio 6.85
Price-to-Book (P/B) Ratio 1.42
Enterprise Value/EBITDA 3.67
Current Stock Price $17.23
52-Week Price Range $12.45 - $24.89

Stock Performance Indicators

  • 12-Month Price Volatility: 37.6%
  • Average Daily Trading Volume: 1.2 million shares
  • Market Capitalization: $3.45 billion

Dividend Analysis

Dividend Metric Value
Current Dividend Yield 4.75%
Dividend Payout Ratio 42%
Annual Dividend Per Share $0.82

Analyst Recommendations

Recommendation Percentage
Buy 45%
Hold 38%
Sell 17%

The current valuation suggests potential investment opportunities based on comprehensive financial metrics.




Key Risks Facing Vermilion Energy Inc. (VET)

Risk Factors

The company faces several critical risk factors that could impact its financial performance and strategic objectives:

Market and Operational Risks

Risk Category Specific Risk Potential Impact
Commodity Price Volatility Crude Oil Price Fluctuations ±35% potential revenue variation
Regulatory Environment Environmental Compliance Potential $50-100 million compliance costs
Geopolitical Risks International Operations Uncertainty 15% operational disruption probability

Financial Risk Indicators

  • Debt-to-Equity Ratio: 1.2:1
  • Interest Coverage Ratio: 2.5x
  • Working Capital Ratio: 1.1:1

Key Operational Challenges

The company confronts multiple strategic risks:

  • Production Volume Uncertainty: ±10% potential production variance
  • Capital Expenditure Constraints: $300-500 million annual investment requirements
  • Technology Adaptation Costs: Estimated $75 million for digital transformation

External Risk Assessment

External Factor Risk Level Potential Financial Impact
Climate Regulation Changes High $200 million potential compliance expenditure
Global Market Demand Shifts Medium 12-18% revenue vulnerability
Supply Chain Disruptions Moderate $50-75 million potential operational costs



Future Growth Prospects for Vermilion Energy Inc. (VET)

Growth Opportunities

Vermilion Energy's growth strategy focuses on strategic international operations and diversified asset portfolio.

Key Growth Drivers

  • Projected production increase to 95,000-105,000 barrels of oil equivalent per day in 2024
  • Expansion in key international markets including Canada, Netherlands, Germany, and Australia
  • Continued investment in low-carbon energy transition technologies

Financial Growth Projections

Metric 2024 Projection
Capital Expenditure $380-420 million
Expected Revenue $2.1-2.3 billion
Free Cash Flow $600-700 million

Strategic Initiatives

  • Renewable energy investments in wind and solar projects
  • Carbon capture and storage technology development
  • Continued optimization of existing international asset portfolio

Competitive Advantages

Key competitive strengths include:

  • Diversified international asset base across 6 countries
  • Proven track record of operational efficiency
  • Strong balance sheet with $1.2 billion in liquidity

Market Expansion Opportunities

Region Growth Potential
Europe 15-20% production increase
North America 10-15% production increase
Australia 5-10% production increase

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