Vermilion Energy to Sell Saskatchewan & Manitoba Assets for $415M

Vermilion Energy Inc. VET, a Canada-based oil and gas company, has announced the divestment of its Saskatchewan and Manitoba assets. It has inked an agreement for the sale of these assets for a total of $415 million in cash. The company states that the cash proceeds from the deal will be allocated toward debt repayment and the advancement of deleveraging processes, with the aim of strengthening the balance sheet and improving its financial position.

Asset Overview: Production, Reserves and Liabilities

Vermilion expects to end the current year with a net debt of $1.5 billion at current strip commodity prices. The Saskatchewan and Manitoba assets included in the sale produce approximately 10,500 barrels of oil equivalent per day (boe/d) at present. The company expects the assets to yield about $110 million of annual net operating income at current strip commodity prices.

Vermilion noted that the assets included Proved Developed Producing reserves of approximately 30 million boe as of Dec. 31, 2024. The assets also have undiscounted future abandonment liabilities worth $250 million. The transaction is anticipated to close in the third quarter of 2025, contingent upon receiving necessary regulatory approvals.

Revised 2025 Outlook

Following the conclusion of this deal, VET expects its full-year average daily production to lie in the range of 120,000-125,000 boe. Additionally, capital expenditures for the year are expected to lie between $680 million and $710 million. This indicates a reduction of $50 million related to the divestment of its assets. Vermilion has stated that it will continue to revise its capital spending as the energy market exhibits extreme volatility at present. The company will focus on increasing its free cash flow instead of growing production in 2025 and 2026.

VET’s Zacks Rank & Key Picks

VET currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the energy sector are Flotek Industries Inc. FTK, Energy Transfer ET and RPC, Inc. RES. While Flotek Industries sports a Zacks Rank #1 (Strong Buy) at present, Energy Transfer and RPC carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Flotek Industries specializes in green chemistry, which provides innovative solutions aimed at reducing the environmental impact of the energy industry. Flotek develops specialty chemicals tailored for both domestic and international energy producers, as well as oilfield service companies. These chemicals not only help reduce the environmental impact of hydrocarbon production but also lower operational costs.

Energy Transfer is a midstream player that owns and operates one of the most diversified portfolios of energy assets in the United States. Boasting a pipeline network extending more than 130,000 miles, its network spans over 44 states. With a presence in all the major U.S. production basins, the company’s outlook seems positive.

RPC generates strong and stable revenues through a diverse range of oilfield services, including pressure pumping, coiled tubing and rental tools. The company is strongly committed to returning value to its shareholders through consistent dividend payments and share buybacks, making it an attractive choice for investors seeking steady returns.

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This article originally published on Zacks Investment Research (zacks.com).

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