Acquisition BenefitsThe acquisition is viewed positively given its accretion to earnings, dividend, FCF, and NAV.
Dividend AppealThe key appeal of the story remains an outsized dividend yield that looks to return more than 100% of excess cash to shareholders using current strip prices.
Dividend IncreaseVTS plans to increase its dividend from ~$2.10/sh to ~$2.25/sh annually, equating to a dividend yield of ~12%.
Dividend StrategyThe acquisition of Lucero Energy enabled the company to increase the base dividend by ~7%, de-lever the balance sheet, and add operated flexibility.