Vermilion Energy Inc. press release

Vermilion Energy Inc. Announces Results for the Year Ended December 31, 2024 and Significant European Gas Discovery

2025-03-05

TSX - Toronto Stock Exchange · Canada

Canada NewsWire

CALGARY, AB , March 5, 2025 /CNW/ - Vermilion Energy Inc. ("Vermilion" or the "Company") (TSX: VET) (NYSE: VET) is pleased to report operating and condensed financial results for the year ended December 31, 2024.

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The audited financial statements, management discussion and analysis and annual information form for the year ended December 31, 2024 will be available on the System for Electronic Document Analysis and Retrieval Plus ("SEDAR+") at www.sedarplus.ca , on EDGAR at www.sec.gov/edgar.shtml , and on Vermilion's website at www.vermilionenergy.com .

Highlights

Year End 2024 Results

Fund flows from operations ("FFO") (1) was $1,206 million ( $7.63 /basic share) (2) , representing a 6% increase over the prior year, or 9% on a per basic share basis, reflecting the positive impact from our share repurchase program. Free cash flow ("FCF") (4) of $583 million increased 9% on a per basic share basis relative to 2023. Net loss was $47 million ( $0.30 /basic share) compared to $238 million net loss ( $1.45 /basic share) in the prior year. The current year net loss was impacted by unrealized losses on derivative instruments and unrealized foreign exchange losses due to a weakening Canadian dollar. Net debt (5) decreased by over $110 million to $967 million , representing a net debt to four quarter trailing FFO ratio (6) of 0.8 times. The Company fully repaid the $79 million lease obligation associated with the Montney Battery construction completed in 2024, implying approximately $190 million of effective debt reduction. Vermilion returned $216 million ( $1.37 /basic share) to shareholders through dividends and share buybacks, representing 52% of excess free cash flow ("EFCF") (4) , including the repurchase and cancellation of 9.3 million shares which reduced the outstanding common shares by 5% to 154.3 million as at December 31, 2024 . Production averaged 84,543 boe/d (7) (54% natural gas and 46% crude oil and liquids), comprised of 53,542 boe/d (7) from the North American assets and 31,001 boe/d (7) from the International assets. Production increased by 1% over the prior year, or 4% on a per share basis. Year end proved developed producing ("PDP") reserves were 168 mmboe (16) and total proved plus probable ("2P") reserves were 435 mmboe (16) , reflecting a reserve life index of 5.4 years and 14.1 years, respectively. The after-tax net present value of PDP reserves, discounted at 10%, is $2.8 billion (16) and the after-tax net present value of 2P reserves, discounted at 10%, is $5.2 billion (16) , or $27.62 per basic share (16) after deducting year-end net debt.

Q4 2024 Results

Generated $263 million ( $1.70 /basic share) (2) of FFO (1) and $62 million of FCF (4) , compared to $372 million and $229 million , respectively, in the prior year. . As a result of strong European gas prices, Vermilion's corporate average realized natural gas price in Q4 2024 was $8.47 /mcf, compared to $1.48 /mcf for the AECO 5A benchmark. Returned $36 million to shareholders, including $18 million in share repurchases and $18 million in dividends. Net loss was $18 million compared to an $803 million net loss in the prior year. Exploration and development ("E&D") capital expenditures (3) were $201 million and include capital associated with drilling the Weissenmoor Sud deep gas exploration well in Germany , which was accelerated from Q1 2025. Production averaged 83,536 boe/d (7) (56% natural gas and 44% crude oil and liquids), comprised of 52,293 boe/d (7) from the North American assets and 31,243 boe/d (7) from the International assets. In Germany , Vermilion successfully tested the Wisselshorst deep gas exploration well (0.6 net) at a restricted rate of 21 mmcf/d (14) of natural gas with a flowing wellhead pressure of 6,200 psi. Subsequent to year-end, the Company tested a second zone in this well at a restricted rate of 20 mmcf/d (14) of natural gas with a flowing wellhead pressure of 6,200 psi. Based on these initial test results and evaluation performed, this well is estimated to contain 68 Bcf of recoverable natural gas (19) , representing Vermilion's largest discovery in Europe over the past decade. Subsequent to year-end, Vermilion completed drilling operations on the Weissenmoor Sud deep gas exploration well (1.0 net) and discovered hydrocarbons, marking a third discovery in Germany . The well is currently being tested.

Outlook

Subsequent to year-end, closed the acquisition of Westbrick Energy Ltd. ("Westbrick"), adding approximately 50,000 boe/d (16) of Deep Basin liquids-rich natural gas. The integration of the Westbrick assets and employees is underway and progressing as planned, including the continuation of the two-rig Q1 2025 drilling program initiated by Westbrick prior to the deal announcement. 2025 capital budget and production guidance have been revised to incorporate the closing of the Westbrick acquisition for an end of February 2025 close date versus the previously forecasted mid-February 2025 close. Production is expected to range between 125,000 to 130,000 boe/d (17) (62% natural gas including 14% European gas) (17) with E&D capital expenditures (3) of $730 to $760 million (68% North America , 32% International, with over 70% of total capital expenditures to be invested in its global gas franchise) (17) . In aggregate, 38% of expected net-of-royalty production is hedged for 2025. In particular, western Canadian gas hedges in 2025 and 2026 have been undertaken at pricing that exceeds the pricing assumed in acquiring Westbrick and locks in strong economics for the ensuing capital program. Based on forward commodity prices, Vermilion forecasts 2025 FCF (4) of approximately $400 million . Approximately 60% of EFCF (4) will be allocated to debt reduction with 40% of EFCF allocated to shareholder returns, inclusive of the $0.13 per share quarterly base dividend. The variable component of shareholder returns will continue to be allocated towards share buybacks. Declared a quarterly cash dividend of $0.13 per common share, payable on April 15, 2025 to shareholders of record on March 31, 2025 . This represents an 8% increase over the Q4 2024 dividend, marking the fourth increase to Vermilion's quarterly dividend since 2021.

| ($M except as indicated) | Q4 2024 | Q3 2024 | Q4 2023 | 2024 | 2023 | | Financial | | | | | | | Petroleum and natural gas sales | 504,352 | 490,095 | 522,969 | 1,981,407 | 2,022,555 | | Cash flows from operating activities | 212,587 | 134,547 | 343,831 | 967,751 | 1,024,528 | | Fund flows from operations (1) | 262,698 | 275,024 | 372,117 | 1,205,783 | 1,142,611 | | Fund flows from operations ($/basic share) (2) | 1.70 | 1.76 | 2.27 | 7.63 | 6.98 | | Fund flows from operations ($/diluted share) (2) | 1.68 | 1.75 | 2.27 | 7.55 | 6.98 | | Net earnings (loss) | (18,316) | 51,697 | (803,136) | (46,739) | (237,587) | | Net (loss) earnings ($/basic share) | (0.12) | 0.33 | (4.91) | (0.30) | (1.45) | | Cash flows used in investing activities | 154,672 | 145,828 | 132,932 | 634,868 | 576,435 | | Capital expenditures (3) | 200,659 | 121,269 | 142,887 | 622,980 | 590,191 | | Acquisitions (9) | 5,257 | 1,642 | 25,724 | 22,101 | 273,018 | | Dispositions | — | — | 14,855 | — | 197,007 | | Asset retirement obligations settled | 23,282 | 15,332 | 28,937 | 55,334 | 56,966 | | Repurchase of shares | 17,637 | 40,106 | 28,736 | 140,707 | 94,838 | | Cash dividends ($/share) | 0.12 | 0.12 | 0.10 | 0.48 | 0.40 | | Dividends declared | 18,521 | 18,642 | 16,227 | 75,327 | 65,248 | | % of fund flows from operations (10) | 7 % | 7 % | 4 % | 6 % | 6 % | | Payout (12) | 242,462 | 155,243 | 188,051 | 753,641 | 712,405 | | % of fund flows from operations (11) | 92 % | 56 % | 51 % | 63 % | 62 % | | Free cash flow (4) | 62,039 | 153,755 | 229,230 | 582,803 | 552,420 | | Long-term debt | 963,456 | 903,354 | 914,015 | 963,456 | 914,015 | | Net debt (6) | 966,882 | 833,331 | 1,078,567 | 966,882 | 1,078,567 | | Net debt to four quarter trailing fund flows from operations (7) | 0.8 | 0.6 | 0.9 | 0.8 | 0.9 | | Operational | | | | | | | Production (8) | | | | | | | Crude oil and condensate (bbls/d) | 30,327 | 29,837 | 32,866 | 31,427 | 31,727 | | NGLs (bbls/d) | 6,612 | 7,547 | 7,412 | 7,100 | 7,296 | | Natural gas (mmcf/d) | 279.59 | 280.73 | 283.91 | 276.10 | 269.83 | | Total (boe/d) | 83,536 | 84,173 | 87,597 | 84,543 | 83,994 | | Average realized prices | | | | | | | Crude oil and condensate ($/bbl) | 100.06 | 103.55 | 107.91 | 104.29 | 102.43 | | NGLs ($/bbl) | 29.38 | 27.49 | 33.38 | 30.61 | 31.54 | | Natural gas ($/mcf) | 8.47 | 6.57 | 8.48 | 6.72 | 8.17 | | Production mix (% of production) | | | | | | | % priced with reference to WTI | 29 % | 32 % | 29 % | 31 % | 33 % | | % priced with reference to Dated Brent | 15 % | 13 % | 17 % | 15 % | 13 % | | % priced with reference to AECO | 33 % | 33 % | 31 % | 32 % | 33 % | | % priced with reference to TTF and NBP | 23 % | 22 % | 23 % | 22 % | 21 % | | Netbacks | | | | | | | Operating netback ($/boe) (12) | 43.92 | 41.89 | 57.48 | 47.18 | 49.22 | | Fund flows from operations ($/boe) (13) | 34.67 | 34.78 | 48.83 | 38.71 | 37.90 | | Average reference prices | | | | | | | WTI (US $/bbl) | 70.27 | 75.10 | 78.32 | 75.72 | 77.63 | | Dated Brent (US $/bbl) | 74.67 | 80.18 | 84.05 | 80.76 | 82.62 | | AECO ($/mcf) | 1.48 | 0.69 | 2.30 | 1.46 | 2.64 | | TTF ($/mcf) | 18.73 | 15.52 | 17.45 | 14.89 | 17.40 | | Share information ('000s) | | | | | | | Shares outstanding - basic | 154,344 | 155,348 | 162,271 | 154,344 | 162,271 | | Shares outstanding - diluted (14) | 157,837 | 158,912 | 166,456 | 157,837 | 166,456 | | Weighted average shares outstanding - basic | 154,954 | 156,624 | 163,335 | 158,068 | 163,719 | | Weighted average shares outstanding - diluted (14) | 156,184 | 157,502 | 163,335 | 158,068 | 163,719 |

| (1) | Fund flows from operations (FFO) is a total of segments and non-GAAP financial measure most directly comparable to net loss and is calculated as sales less royalties, transportation expense, operating expense, G&A expense, corporate income tax expense (recovery), PRRT expense, interest expense, equity based compensation settled in cash, realized (gain) loss on derivatives, realized foreign exchange (gain) loss, and realized other (income) expense. The measure is used by management to assess the contribution of each business unit to Vermilion's ability to generate income necessary to pay dividends, repay debt, fund asset retirement obligations, and make capital investments. FFO does not have a standardized meaning under IFRS Accounting Standards and therefore may not be comparable to similar measures provided by other issuers. More information and a reconciliation to net earnings (loss), the most directly comparable primary financial statement measure, can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. | | | | | (2) | Fund flows from operations per basic share and diluted share is calculated by dividing fund flows from operations (total of segments and non-GAAP financial measure) by the basic weighted average shares outstanding as defined under IFRS Accounting Standards. Fund flows from operations per diluted share is calculated by dividing fund flows from operations by the sum of basic weighted average shares outstanding and incremental shares issuable under the equity based compensation plans as determined using the treasury stock method. Management assesses fund flows from operations on a per share basis as we believe this provides a measure of our operating performance after taking into account the issuance and potential future issuance of Vermilion common shares. More information and a reconciliation to cash flows used in investing activities, the most directly comparable primary financial statement measure, can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. Capital expenditures is also referred to as E&D capital expenditures. | | | | | (3) | Capital expenditures is a non-GAAP financial measure most directly comparable to cash flows used in investing activities and is calculated as the sum of drilling and development costs and exploration and evaluation costs. Management considers capital expenditures to be a useful measure of our investment in our existing asset base. Capital expenditures does not have a standardized meaning under IFRS Accounting Standards and therefore may not be comparable to similar measures provided by other issuers. More information and a reconciliation to cash flows used in investing activities, the most directly comparable primary financial statement measure, can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. Capital expenditures is also referred to as E&D capital expenditures. | | | | | (4) | Free cash flow (FCF) and excess free cash flow (EFCF) are non-GAAP financial measures most directly comparable to cash flows from operating activities. FCF is calculated as FFO less drilling and development costs and exploration and evaluation costs and EFCF is calculated as FCF less payments on lease obligations and asset retirement obligations settled. FCF is used by management to determine the funding available for investing and financing activities including payment of dividends, repayment of long-term debt, reallocation into existing business units and deployment into new ventures. EFCF is used by management to determine the funding available to return to shareholders after costs attributable to normal business operations. FCF and EFCF do not have standardized meanings under IFRS Accounting Standards and therefore may not be comparable to similar measures provided by other issuers. More information and a reconciliation to cash flows from operating activities, the most directly comparable primary financial statement measure, can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. | | (5) | Free cash flow per basic share is a non-GAAP financial measure and is not a standardized financial measure under IFRS Accounting Standards and may not be comparable to similar measures disclosed by other issuers. It is calculated using FCF and basic shares outstanding.FCF is used by management to determine the funding available for investing and financing activities including payment of dividends, repayment of long-term debt, reallocation into existing business units and deployment into new ventures. | | | | | (6) | Net debt is a capital management measure in accordance with IAS 1 "Presentation of Financial Statements" that is most directly comparable to long-term debt and is calculated as long-term debt (excluding unrealized foreign exchange on swapped USD borrowings) plus adjusted working deficit (capital), a non-GAAP financial measure described in the "Non-GAAP and Other Specified Financial Measures" section of this document. Management considers this a helpful representation of Vermilion's net financing obligations after adjusting for the timing of working capital fluctuations. More information and a reconciliation to long-term debt, the most directly comparable primary financial statement measure, can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. | | | | | (7) | Net debt to four quarter trailing fund flows from operations is a non-GAAP ratio and is not a standardized financial measure under IFRS Accounting Standards and therefore may not be comparable to similar measures disclosed by other issuers. Net debt to four quarter FFO is calculated as net debt divided by FFO from the preceding four quarters. Management uses this measure to assess the Company's ability to repay debt. More information can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. | | | | | (8) | Please refer to Supplemental Table 4 "Production" of the accompanying Management's Discussion and Analysis for disclosure by product type. | | | | | (9) | Acquisitions is a non-GAAP financial measure and is not a standardized financial measure under IFRS Accounting Standards and therefore may not be comparable to similar measures disclosed by other issuers. Acquisitions is calculated as the sum of acquisitions, net of cash acquired, acquisitions of securities and net acquired working capital (deficit). Management believes that including these components provides a useful measure of the economic investment associated with our acquisition activity and is most directly comparable to cash flows used in investing activities. More information and a reconciliation to acquisitions, net of cash acquired and acquisition of securities, the most directly comparable primary financial statement measure, can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. | | | | | (10) | Dividends % of FFO is a non-GAAP ratio that is not standardized under IFRS Accounting Standards and may not be comparable to similar measures disclosed by other issuers. Dividends % of FFO is calculated as dividends declared divided by FFO. The ratio is used by management as a metric to assess the cash distributed to shareholders. More information can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. | | | | | (11) | Payout and payout % of FFO are a non-GAAP financial measure and a non-GAAP ratio, respectively, that are not standardized under IFRS Accounting Standards and may not be comparable to similar measures disclosed by other issuers. Payout is most directly comparable to dividends declared. Payout is calculated as dividends declared plus drilling and development costs, exploration and evaluation costs, and asset retirement obligations settled, and payout % of FFO is calculated as payout divided by FFO. More information and a reconciliation to dividends declared, the most directly comparable primary financial statement measure, can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. | | | | | (12) | Operating netback is a non-GAAP financial measure that is not standardized under IFRS Accounting Standards and may not be comparable to similar measures disclosed by other issuers. Operating netback is most directly comparable to net (loss) earnings and is calculated as sales less royalties, operating expense, transportation expense, PRRT expense, and realized hedging (gain) loss, and when presented on a per unit basis is a non-GAAP ratio. Management assesses operating netback as a measure of the profitability and efficiency of our field operations. More information and a reconciliation to net (loss) earnings, the most directly comparable primary financial statement measure, can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. | | | | | (13) | Fund flows from operations per boe is a non-GAAP ratio that is not standardized under IFRS Accounting Standards and may not be comparable to similar measures disclosed by other issuers. FFO per boe is calculated as FFO divided by boe production. FFO per boe is used by management to assess the profitability of Vermilion's business units and Vermilion as a whole. More information can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. | | | | | (14) | Diluted shares outstanding represents the sum of shares outstanding at the period end plus outstanding awards under the Long-term Incentive Plan, based on current estimates of future performance factors and forfeiture rates. | | | | | (15) | Wisselshorst Z1a well (64% working interest) was tested in December 2024. Flow rates, during the initial clean-up phase, of up to 21.2 mmcf/d with a flowing wellhead pressure of 6,150 psi on an adjustable choke were achieved. The completion fluid was recovered during the clean-up flow period. During the main flow period the well tested at a rate of 20.1mmcf/d over a five-hour flow period with a flowing wellhead pressure 6,250 psi on a 24/64" fixed choke. A final shut-in pressure of 7,020 psi and a bottom hole pressure of 8,679 psi were recorded following the well test of this zone. The zone being tested is the Rotliegend Havel formation, which was encountered at 5,054m measured depth ("MD") and a 124.4m gas column was logged with 50.8m of net reservoir and average effective porosity of 9.3%. A second zone in the well was tested in January 2025 where peak rates of 20.3 mmcf/d at a flowing well head pressure of 6,189 psi were recorded. During the main flow period rates of 18.8 mmcf/d over a five-hour flow period with a flowing wellhead pressure of 6,334 psi were achieved on a 24/64" fixed choke. A final shut-in pressure of 7,001 psi and a bottom hole pressure of 8,756 psi were recorded following the well test of this zone. The second zone in the well is the Rotliegend Dethlingen formation, which was encountered at 5,000m MD and a 38.2m gas column was logged with 25.5m of net reservoir and average effective porosity of 9.9%. Test results are not necessarily indicative of production performance or ultimate recovery. | | | | | (16) | Estimated gross proved, developed and producing, total proved, and total proved plus probable reserves as evaluated by McDaniel & Associates Consultants Ltd. ("McDaniel") in a report dated March 4, 2025 with an effective date of December 31, 2024 (the "McDaniel Reserves Report"). See Vermilion's annual information form for the year ended December 31, 2024 for additional information, including reserve pricing assumptions. Per share metrics calculated using basic shares outstanding at December 31, 2024. | | | | | (17) | Estimated 2025 Westbrick production based on Company estimates as of March 5, 2025. | | | | | (18) | Based on Company 2025 estimates and 2025 full year average reference prices as at March 3, 2025: Brent US$71.29/bbl; WTI US$67.56/bbl; LSB = WTI less US$6.83/bbl; TTF $20.49/mmbtu; NBP $20.36/mmbtu; AECO $2.21/mcf; CAD/USD 1.43; CAD/EUR 1.51 and CAD/AUD 0.90. | | | | | (19) | At March 5, 2025, Wisselshorst Z1a well has been assigned 68.3 Bcf Property Gross total proved plus probable conventional natural gas reserves, as evaluated by McDaniel & Associated Consultants Ltd. ("McDaniel"), a qualified reserves evaluator, in the Rotliegend Havel zone and recently tested Dethlingen zone. This represents a significant increase in the reserves assigned by McDaniel effective December 31, 2024, of 32.9 Bcf Property Gross total proved plus probable conventional natural gas reserves, due to the strong test results in existing Rotliegend Havel and Dethlingen zones. Vermilion has recorded 21.1 Bcf of Gross proved plus probable reserves as of December 31, 2024 based on its 64.165% working interest. The evaluation was prepared in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the Canadian Oil and Gas Evaluations Handbook ("COGEH"). "Property Gross" reserves are total reserves before working interest has been applied. "Gross" means in relation to Vermilion's interest in production or reserves, Vermilion's working interest (operating or non-operating) share before deduction of royalty obligations and without including any royalty interests of Vermilion. |