Vermilion is the Canadian producer with an international advantage. While oil and gas producers struggle with depressed North American natural gas prices, Vermilion enjoys much better pricing with its global production. Being diversified internationally is unique for a Canadian independent.
Vermilion’s operating areas look more like list of countries participating in the Olympics than they do a list of assets belonging to an oil and gas explorer that’s not in the major league. Vermilion has operations in Canada, the U.S., France, Germany, Ireland, Australia and the Netherlands.
Those international operations have allowed Vermilion to continue to pay its dividend through this oil collapse while also maintaining a solid balance sheet. With natural gas prices well over $6 per Mbtu, Vermilion’s European production has been earning three times what North American gas has in 2016. Vermilion continues to maintain a sizeable amount of Canadian-based production with 25,000 boe/d, but international production is its lion’s share.
Vermilion, which was launched back in 1994, is one of the older independent producers still operating. The company listed for $0.10 per share on the Alberta stock exchange in the spring of 1996 and joined the TSX later that year. What drove Vermilion to Europe in the first place was a belief that asset prices in the mid-90s in Western Canada were too high. It was a quick change in strategy that only an entrepreneurial young company could make.
Two of Vermilion’s three initial co-founders are still on its board, with Lorenzo Donadeo acting as chairman and Claudio Ghersinich acting as a director. Vermilion’s diversified asset base may make it less appealing to larger suitors as an acquisition candidate, but that should suit long-time shareholders just fine as they should continue to receive a reliable and growing dividend stream for years to come.
VERMILION CHAIR LORENZO DONADEO