We came across a bullish thesis on Vermilion Energy Inc. (VET) on Substack by Unemployed Value Degen. In this article, we will summarize the bulls’ thesis on VET. Vermilion Energy Inc. (VET)'s share was trading at $7.55 as of March 7^th. VET’s trailing and forward P/E were 2.54 and 26.67 respectively according to Yahoo Finance.

Aerial view of an oil and natural gas drilling operation on a leasehold position.

Vermilion Energy (VET) continues to prioritize growth over immediate profitability, with CEO Dion Hatcher pushing forward on drilling despite GAAP net income turning negative. This aggressive strategy, however, has yielded significant rewards, particularly with a major natural gas discovery in Germany. The 68 billion cubic feet of proven reserves hold a market value exceeding $1 billion, presenting a timely windfall as Germany, in dire need of hydrocarbons, shifts away from Green Party influence in its government. This discovery aligns with the thesis that European drilling could become the contrarian energy story of the decade.

Following the Westbrick acquisition, Vermilion’s management has signaled a clear intent to pay down debt rapidly, favoring deleveraging over direct capital returns to shareholders. To fund this strategy, the company is exploring the sale of its Wyoming and Saskatchewan production. While divesting these liquids-rich assets to support a gas-heavy acquisition raises concerns, especially for those biased toward oil over natural gas, the move strategically consolidates Vermilion’s holdings. Historically, the company’s scattered assets made it an unlikely acquisition target, but with Westbrick’s synergies and a streamlined portfolio, a buyout scenario has become increasingly plausible. The risk, however, is that VET gets acquired at a depressed valuation, well below its true potential. While a $15 takeover might be possible in the near term, the company’s fundamentals suggest it could rally to $40 under the right conditions.

Vermilion's share buyback program has been slow to materialize, and while an acceleration is uncertain, it remains a possibility. Management has described the Westbrick deal as opportunistic, leveraging existing operational ties and contiguous acreage. Whether this signals further acquisitions or a shift toward more aggressive shareholder returns remains to be seen. Past behavior suggests a continued focus on expansion, but with growing pressure, a shift in capital allocation may yet occur.

Vermilion Energy Inc. (VET) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held VET at the end of the fourth quarter which was 13 in the previous quarter. While we acknowledge the risk and potential of VET as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than VET but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.