Vermilion Energy - Q2 FFO in line; oil price upgrade drives valuation
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 H218 and 2019. We use EIA short-term WTI price projections of US$66/bbl in 2018 and US$62/bbl in 2019. Our valuation increases from C$53.8/share to C$57.9/share as a result.Vermilion Energy, through its subsidiaries, is engaged in the business of oil and natural gas exploitation, development, acquisition and production in Canada, France, the Netherlands, Australia and Ireland.
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