VET · Vermilion Energy
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $12.45
Note written ·
Price against the kill line
11.7% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $12.45, on record since 11 November 2026. The shares are down 6.9% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $12.45, which would put the shares back above their 50-day average and show them leading the S&P 500. Fourth-quarter 2026 free cash flow above the C$122 million reported for the second quarter would also show the case wrong.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Energy
Filed figures are not available: no quarterly report in US GAAP with the SEC (a foreign filer reports on Form 20-F or 40-F).
All filed numbers
What Vermilion Energy reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): the share of shares outstanding is not available, 9.9 days of average trading to cover, −6.8% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $0 | $0 |
The thesis
Vermilion Energy's shares are more likely to lag the S&P 500 over the next three months. Free cash flow fell to C$90.5 million in the third quarter of 2026 from C$122 million in the second, and the 2027 budget raises spending. The fourth-quarter 2026 report, expected around 3 March 2027, shows whether cash flow recovers.
The company reported on 4 November 2026. Production was 117,349 barrels of oil equivalent per day (boe/d), 71% natural gas, inside the 116,000–118,000 boe/d guide. Fund flows from operations were C$236.9 million, but exploration and development spending of C$146.5 million took free cash flow down.
The shares closed at $10.89 on 12 November 2026, after closes of $10.23 on 9 November 2026, $10.34 on 10 November 2026 and $10.64 on 11 November 2026. That is below the 200-day average of $11.59 and the 50-day average of $12.3, both adjusted. The market already prices a weaker cash-flow quarter: the shares sit 26.5% below the 52-week intraday high of $14.82 set on 20 March 2026.
Bullish and bearish views on Vermilion Energy Inc.
The bull case on Vermilion Energy Inc. (VET), in brief: production met the guide. The bear case: free cash flow fell.
Bull case
- Production met the guide. Third-quarter output was 117,349 boe/d, inside the 116,000–118,000 boe/d range (Vermilion Form 6-K, 4 November 2026).
- Operating cash flow held. Fund flows from operations were C$236.9 million in the third quarter, against C$231 million in the second. The fall in free cash flow came from higher spending, not weaker operations.
- Debt came down. Net debt was C$1,165.4 million at 30 September 2026, from C$1,224.1 million at 30 June 2026. The company repurchased C$19.7 million of shares in the quarter.
- The 2027 budget points to growth. Vermilion guided 2027 production to 122,000–126,000 boe/d on 4 November 2026. It targets a quarterly dividend of C$0.14 from the first quarter of 2027, subject to board approval; the company declared C$0.135 on the same day.
- The shares have bounced. They closed at $10.89 on 12 November 2026, up from $10.23 on 9 November 2026, which was the lowest of the last six sessions.
Bear case
- Free cash flow fell. The C$90.5 million of third-quarter free cash flow compares with C$122 million in the second quarter (Vermilion Form 6-K, 4 November 2026).
- Spending rises in 2027. The budget sets exploration and development spending at C$675–725 million. Production growth of about 2% is the return the company guides for that spending.
- A net loss. Vermilion reported a third-quarter net loss of C$34.6 million, or C$0.23 per basic share. CTV News attributed it to unrealized derivative losses.
- Hedge cover is thinner next year. The company hedged 53% of expected net-of-royalty production for the rest of 2026 and 38% for 2027, so 2027 cash flow depends more on gas prices.
- Analysts are neutral. RBC Capital maintained its Hold rating on 6 November 2026, per a company news headline. No upgrade followed the report in company news through 12 November 2026.
Price setup
The shares closed at $10.89 on 12 November 2026. The 3-month change is –3.4%, measured from the adjusted close of $11.27 on 14 August 2026. The 52-week closing low is $7.83 on 7 January 2026, and the 52-week intraday high is $14.82 on 20 March 2026.
The last close is under both the 200-day average of $11.59 and the 50-day average of $12.3. The 50-day average is the level the shares would need to reclaim before the price trend favours the shares leading the index. Closes of $10.45 on 6 November 2026 and $10.23 on 9 November 2026 mark the post-report low area.
No Form 4 insider filings appear in Vermilion's recent SEC filings, which list only the 40-F filed on 4 March 2026. The company bought back C$19.7 million of shares in the third quarter.
Catalysts ahead
- 1 December 2026: End of the EU gas-storage 90% fill-target window. Shapes winter European gas demand, which drives the unhedged part of Vermilion's gas revenue.
- ~3 March 2027 (est.): Fourth-quarter 2026 results and full-year report. Shows whether free cash flow recovers above the C$90.5 million of the third quarter as spending moves toward the 2027 budget.
- ~March 2027 (est.): Board approval of the targeted dividend increase to C$0.14 per quarter. The third-quarter release made the increase conditional on board approval; approval would signal confidence in 2027 cash flow.
What would change the view
A daily close above $12.45, which would put the shares back above their 50-day average and show them leading the S&P 500. Fourth-quarter 2026 free cash flow above the C$122 million reported for the second quarter would also show the case wrong.
What it trades with
Vermilion trades with European natural-gas prices, the Dutch TTF benchmark in particular, and with Canadian energy equities. About 71% of third-quarter production was natural gas. Hedges cover 53% of expected 2026 production and 38% of 2027, so the shares follow gas prices with a lag. Results are in Canadian dollars while the New York line quotes in US dollars, which adds a currency layer.
The evidence, claim by claim (8)
- Third-quarter 2026 production was 117,349 boe/d, 71% natural gas, inside the 116,000–118,000 boe/d guide. Vermilion third-quarter 2026 report (Form 6-K) · as of
- Third-quarter 2026 free cash flow was C$90.5 million against C$122 million in the second quarter; exploration and development spending was C$146.5 million; fund flows from operations were C$236.9 million. Vermilion third-quarter 2026 report (Form 6-K) · as of
- Net debt was C$1,165.4 million at 30 September 2026, down from C$1,224.1 million at 30 June 2026; third-quarter share repurchases were C$19.7 million. Vermilion third-quarter 2026 report (Form 6-K) · as of
- Third-quarter net loss was C$34.6 million (C$0.23 per basic share), attributed to unrealized derivative losses. Vermilion third-quarter 2026 report; CTV News · as of
- 53% of expected net-of-royalty production is hedged for the rest of 2026 and 38% for 2027. Vermilion third-quarter 2026 report (Form 6-K) · as of
- The 2027 budget guides production to 122,000–126,000 boe/d with exploration and development spending of C$675–725 million, and targets a quarterly dividend of C$0.14 from the first quarter of 2027. Vermilion third-quarter 2026 report (Form 6-K) · as of
- RBC Capital maintained its Hold rating on Vermilion Energy. Company news headline · as of
- Vermilion declared a cash dividend of C$0.135 per share. Company news release · as of
Sources
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