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Aug 12, 2022

Vermilion hikes dividend, looks to buyback more shares

Our international diversity helps boost free cash flow: Vermilion president

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Vermilion Energy Inc. announced Thursday that it will hike its quarterly dividend 33 per cent, to $0.08 per share, at the time of its next scheduled payment on Oct. 17 — and it mapped out a plan to share even more of its wealth with investors in the coming months and into next year.

As part of its “Return of Capital” strategy, Vermilion stated it anticipates returning 25 per cent of free cash flow to shareholders in the second half of this year and up to 75 per cent in 2023. The Calgary-based oil and gas producer said that will initially occur via share buybacks — and that it will also consider regular and special dividends, as well as a substantial issuer bid.
 
“We see value in our shares,” Dion Hatcher, president of Vermilion Energy, said in a TV interview on Friday.  
 
“We’ve been buying back about one and a half million of shares a day (in) dollar amount and for the second half of the year that equates to 25 per cent of our free cash flow,” he added. 
 
One of the main drivers behind Vermilion’s free cash is its European footprint, as the domino effect from that continent’s energy crunch has propelled natural gas prices to multi-year highs.
 
Despite the rise in oil and gas prices, Hatcher explained that Vermilion decided to protect its levels of capital return allocation by using a base case of US$55 oil instead of the current elevated pricing.
 
“What we want to do is ensure that dividend is resilient under much lower commodity prices,” he said.