Many investors seem to be overlooking that Vermilion Energy's production is nearly 50% weighted to natural gas
. From Q2 2020, 45% of corporate production was natural gas
. Vermilion was suffering from an extensive Eurogas bear market thanks to unprofitable shale production flooding Europe's shores in addition to a warm winter in Europe and Asia. TTF
and JKM gas prices collapsed to just about the same as Henry Hub. In addition, until last year, Alberta's AECO (basis for VET's Canadian gas production) was devastated with unfavourable differentials due to challenges on the NGTL system which were solved October 2019. So now we have a return of premium pricing back in Europe on TTF
and NBP; in addition to a strong AECO gas market in Canada which has room for improvement. I added ahead of earnings
on short positioning as I suspected they would get hammered overlooking fundamentals; however, the actual fundamentals didn't appear because of hedges, so hold onto this until 2021 and beyond. Q1 will be a great quarter for Vermilion Energy.