Fitch gives Vermilion debt BB-

Fitch Ratings said it assigned a first-time long-term issuer default rating of BB- to Vermilion Energy Inc. and a senior unsecured rating of BB-/RR4. The outlook is stable.

“Vermilion's rating reflects its diversified international asset base; above-average price realizations, stemming from its exposure to higher priced international oil and natural gas indices; strong netbacks and cash flow generation; good leverage and coverage for the rating category; low break-evens ($40 WTI to cover sustaining capital + dividend); and low base decline rate,” the agency said in a news release.

“Ratings concerns include the company's high dividend payout, which is unusual among high yield entities and limits the company's financial flexibility; high revolver balance; modest size and reserve base; limited growth prospects and a lack of scale in a number of its plays outside of North America.”

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