Most of these companies are major players, who diversified away from just producing oil years ago. They own refineries, service stations, and other lines of business that aren’t directly linked to crude prices. In fact, as prices go down, people drive more.
Despite most other producers cutting back production in the last couple of years, Vermilion has pushed ahead. It produced approximately 40,000 barrels of oil per day in 2014. 2016’s production was just over 60,000 barrels per day and management expects to hit 75,000 barrels per day in 2018.
This means the company can actually afford its 4.7% dividend. Management projects approximately $350 million in free cash flow will be generated in 2017. It’ll pay out approximately $100 million in cash dividends. That leaves it plenty of excess cash available to pay down debt or buy back shares.