Since its IPO in 2007, Vanguard Natural Resources LLC (VNR) has rewarded investors with a steadily increasing dividend and a significantly higher share price. However, over the last year-and-a-half, the share price growth has stagnated, pushing the yield on VNR shares well above its peers.
Vanguard Natural Resources is an E&P energy company with an emphasis on the P - production. The company's business model is to purchase producing oil and gas assets with long projected production lives and some potential for increased production through drilling. It its short history to date, Vanguard Natural Resources has completed a total of 15 acquisitions out of the 50 or so the company evaluates each year. After the most recent acquisition of natural gas assets in the Arkoma basin, the company has 136 MMboe of proved reserves. About one-third of the reserves are crude oil and about 14% natural gas liquids - NGL's - leaving just over half in natural gas.
Vanguard Natural Resources attempts to hedge the majority of its oil and gas production. Currently 80% of crude oil production through 2014 is hedged with a price floor of $90.89. For natural gas, 85% of projected production through the first half of 2017 at $5.11 MMbtu. About half of the crude hedging is done with collars, allowing some upside price participation.
"My well came in big, so big, Bick and there's more down there and there's bigger wells. I'm rich, Bick. I'm a rich 'un. I'm a rich boy." - Jett Rink
Don't believe anything I say. Do your own DD. Insert huge disclaimer here ____________.
