Vermilion Energy Lowers 2021 Exploration Budget To $300M

Canadian oil and gas producer Vermilion Energy has approved an exploration and development (E&D) capital budget of $300 million for 2021. The capital budget is 17% lower than in the year-ago period.

Vermilion Energy (VET) said that it aims to utilize the 2021 capital budget in maximizing returns, improving free cash flow, and facilitate debt reduction. The company said, “Our $300 million capital program is fully funded at a WTI [West Texas Intermediate] oil price of approximately $37/bbl [barrel of oil] on an unhedged basis, assuming all other commodity prices held at the January 13, 2021 commodity strip.”

The energy producer also expects its capital program to deliver annual average production of 83,000 to 85,000 boe/d [barrels of oil equivalent per day]. (See VET stock analysis on TipRanks)

On Jan. 15, Raymond James analyst Chris Cox upgraded the stock to Buy from Hold and also raised the price target to $6.27 (17.4% upside potential). The analyst cites significant improvement in the company’s outlook after revising commodity price assumptions.

Unlike Cox, the rest of the Street is sidelined on the stock with the analyst consensus of a Hold based on 6 Holds, 2 Buys and 1 Sell. The average analyst price target of $5.26 implies downside potential of about 1.5% to current levels. Shares have declined 65.8% in one year.

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