Vermilion Energy is an 18-year-old energy producer with a knack for keeping costs down. It's a value commodity stockpicker's dream as it has not only a growing share price but also an impressive 5.3 per cent yield, a reason why Will Smith, manager of IC Top 100 fund City Natural Resources High Yield Trust (CYN), says it's his favourite stock at the moment.
Vermilion Energy is a Canada-based oil producer with a strategy that involves the execution of full-cycle exploration and production programmes, focused on the acquisition, exploration, development and optimisation of producing properties.
But what exactly gives it the edge on the competition? It pioneers the latest drilling technology and is able to utilise horizontal drilling to maximise efficiency, allowing it to drill faster and cheaper.
Vermilion Energy has reduced the cost of drilling a well from $5.5m to $3m, thanks to the new technology. And it can now drill three to four kilometres in three to four weeks – it used to only manage 500m in that time.
Mr Smith likes the fact that it's a diverse company with sites all over the world, including in Canada, the Netherlands, Australia and France. The company also holds an 18.5 per cent non-operated interest in the Corrib gasfield off Ireland. And Mr Smith recently has been pleased that the share price has increased by 9 per cent in about two months. On the dividend yield, he says: "You really can't complain with a yield like that in today's climate."
Management and directors of Vermilion Energy hold approximately 8 per cent of the outstanding shares and say they are "dedicated to consistently delivering superior rewards for all [our] stakeholders".
Vermilion is listed on the Toronto Stock Exchange (currently trading at around C$56.72) and the New York Stock Exchange (currently trading at around $54.13) under the symbol VET. You can buy it through UK stockbrokers that deal foreign shares.
