Vitesse Energy’s 8.2% dividend yield is appetizing for energy bulls.
Vitesse Energy’s dividend is a priority
Lee Samaha (Vitesse Energy): With the market continuing to accord low valuations to the energy sector, it’s hardly surprising that the sector is embroiled in a deal-making frenzy. As such, some oil & gas exploration and production companies with high dividends, such as Devon Energy and Diamondback Energy, are focusing more on acquisitions and share buybacks than dividends this year.
In common with Devon and Diamondback, Vitesse also gushing out cash and trades on an excellent free cash flow (FCF) yield. However, Vitesse’s acquisition activity (investing in development assets in its core North Dakota region) is much more piecemeal and in line with its usual strategy.
Vitesse is not an owner/operator of assets. Instead, it invests in minority interests in wells operated by well-established partners. As of May Vitesse has interests in 6,932 wells with a working interest averaging 2.7% per well.
Unlike Devon and Diamondback (which pay a fixed and variable dividend), Vitesse simply pays a fixed dividend, which currently is $0.525 a quarter or $2.10 a year, yielding 8.2% at the current price. As such, Vitesse offers an excellent option for investors bullish on energy prices (ultimately, the earnings and cash flow of all three are oil-price-led) and who prefer dividends upfront.
