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An overhead shot of an oil facility in Alberta.KEVIN VAN PAASSEN/The Globe and Mail

The secret to wealth is to buy great companies when everyone else is selling. There are lots of opportunities to do that in the energy sector right now. The uncertainty over how low the price of oil will go and how long this environment will last has produced a massive sell-off with some names down more than 50 per cent from their 2014 highs.

Vermilion Energy Inc. hasn't dropped that much but as of the close of trading on Jan. 9 it had retreated 34 per cent from its June 20 high of $78.24 on the TSX. I think it is oversold at this level and therefore offers an excellent opportunity for investors who are prepared to deal with the volatility that will pervade the energy sector in the coming months.

Although it is headquartered in Calgary, the company has extensive overseas operations in Europe and Australia. The business model aims at annual organic production growth of 5 per cent or more along with providing reliable and increasing dividends to investors. Vermilion is targeting growth in production primarily through the exploitation of light oil and liquids-rich natural gas conventional resource plays in Western Canada, the exploration and development of high impact natural gas opportunities in the Netherlands and Germany, and through drilling and workover programs in France and Australia. Vermilion also holds an 18.5 per cent working interest in the Corrib gas field in Ireland. The stock pays a monthly dividend of $0.215 per share, which provides a current yield of 5 per cent.

The company recently announced 2015 guidance, which forecast a 22 per cent reduction in capital expenditure from 2014, due to the low oil price. However, management said it expects to increase production by 15 per cent and indicated the company would make further cuts in its capital budget rather than reduce the dividend or compromise the strong balance sheet.

There's short-term downside here if the price of oil drops further but the mid to long-term prospects are excellent and the current price looks cheap.

You will have to be patient, as the recovery will take time. However, you'll have the benefit of a healthy dividend while you're waiting for the turnaround.

Ask your adviser if this is a suitable investment for your account.

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