Vermilion Energy: Buy It Before The Hedges Expire

Vermilion Energy is rated a buy with roughly 25 to 30 percent probability-weighted upside. The market prices the stock as if its hedges never expire, but they roll off contractually. Hedged production falls from 47 percent for the remainder of 2026 to roughly 30 percent through 2028. VET earned $20.55 per BOE last quarter and $25.65 before hedging losses. Continuing operations production rose 4.3 percent to 125,787 BOE per day. European gas is only 13 percent of volumes but drives a realized gas price more than triple AECO. Gross long-term debt rose in 2026, though 61 percent of that was non-cash currency translation. Decommissioning obligations of $1.09 billion sit outside every leverage metric management cites. Probability-weighted across bear, base and bull scenarios, the model points to $19.45 per share, or US$13.82. This is a scenario range rather than a single price target.

Vermilion earned $20.55 (US$14.60) per barrel of cash flow last quarter, and $25.65 (US$18.23) before hedging losses. That five-dollar gap is the whole investment case. It closes not because commodity prices cooperate but because contracts expire. The hedged share of production falls.