Vermilion Energy Inc. press release

Vermilion Energy Inc. Announces Results for the Three Months Ended March 31, 2025

2025-05-07

TSX - Toronto Stock Exchange · Canada

Canada NewsWire

CALGARY, AB , May 7, 2025 /CNW/ - Vermilion Energy Inc. ("Vermilion", "We", "Our", "Us" or the "Company") (TSX: VET) (NYSE: VET) is pleased to report operating and condensed financial results for the three months ended March 31, 2025.

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The unaudited interim financial statements and management discussion and analysis for the three months ended March 31, 2025 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

Q1 2025 Results

Generated $256 million ( $1.66 /basic share) (2) of fund flows from operations ("FFO") (1) , compared to $263 million ( $1.70 /basic share) in Q4 2024. Exploration and development ("E&D") capital expenditures (3) were $182 million , resulting in free cash flow ("FCF") (4) of $74 million , compared to $62 million in the prior quarter. As a result of strong European gas prices, Vermilion's corporate average realized natural gas price in Q1 2025 was $7.80 /mcf, compared to $2.17 /mcf for the AECO 5A benchmark. Closed the Westbrick acquisition at the end of February 2025 , adding approximately 50,000 boe/d of liquids rich gas and establishing a dominant position in the Deep Basin of Alberta . To date, the Company has identified operational and development synergies of approximately $100 million ( $0.65 /basic share) on a NPV10 (5) basis, and anticipates additional synergies may be identified and realized as the acquired assets are further integrated. Net debt (6) increased to $2,063 million , reflecting the close of the Westbrick acquisition in February 2025 . Net debt to four quarter trailing FFO (7) , including the trailing 12-month contribution of the Westbrick assets, is 1.7 times. Vermilion returned $37 million to shareholders through dividends and share buybacks, comprising $20 million in dividends and $17 million of share buybacks. During the quarter, the Company repurchased and cancelled 1.3 million shares through the NCIB, and issued 1.1 million shares as part of the Westbrick acquisition. Production averaged 103,115 boe/d (8) (60% natural gas and 40% crude oil and liquids), comprising 73,760 boe/d (8) from the North American assets and 29,355 boe/d (8) from the International assets. Q1 2025 production includes approximately one month of production associated with the Westbrick acquisition. In Germany , Vermilion successfully tested the second zone on the Wisselshorst deep gas exploration well (0.6 net) in Q1 2025. This zone flow tested at a restricted rate of 20 mmcf/d (15) of natural gas with a flowing wellhead pressure of 6,200 psi, resulting in a combined test flow rate of 41 mmcf/d from both zones. The well is expected to be brought on production in the first half of 2026. The Osterheide deep gas exploration well (1.0 net) in Germany was successfully commissioned and brought online at the end of Q1 2025 and has produced at a restricted rate of approximately 7 mmcf/d or 1,200 boe/d (16) since startup. Overall, the 2024 three (2.6 net) well deep gas exploration program in Germany has proven up 85 Bcf (60 Bcf net) (17) from the first two (1.6 net) wells and discovered a geological structure large enough to support up to six follow-up drilling locations. The after-tax net present value (5) of the three (2.6 net) wells drilled to date is estimated at approximately $150 million ( $1.00 /basic share), with the bulk of capital already spent and positive cash flow beginning in Q2 2025. At the Mica Montney, the recent 8-4 BC pad was drilled, completed, equipped and tied-in at a cost of approximately $9 million per well, which is at the low end of our previously stated target cost range and further improves the development economics. This equates to an approximately $100 million reduction in future development costs or approximately $50 million ( $0.30 /basic share) on a NPV10 (5) basis. In addition, our recent infrastructure expansion, which facilitates near-term and future production growth from our BC Montney asset, was completed ahead of schedule and under budget.

Outlook

The 2025 capital budget and guidance remains unchanged as we continue to prioritize free cash flow and debt reduction, while returning capital to shareholders through the dividend and ongoing share buybacks. With the Westbrick acquisition closed and the Q1 2025 drilling program complete, Q2 2025 production is anticipated to average between 134,000 to 136,000 boe/d (62% natural gas), including full contribution from the Westbrick assets. Vermilion is well positioned to manage through the current market volatility with over 50% of net-of-royalty production hedged for the remainder of 2025 combined with approximately $1 billion of liquidity on the balance sheet and no near-term debt maturities. The Company will continue to monitor the macro and commodity price environment and is prepared to adjust the capital program if necessary. Declared a quarterly cash dividend of $0.13 per common share, payable on July 15, 2025 to shareholders of record on June 30, 2025 .

| ($M except as indicated) | Q1 2025 | Q4 2024 | Q1 2024 | | Financial | | | | | Petroleum and natural gas sales | 568,846 | 504,352 | 508,035 | | Cash flows from operating activities | 280,384 | 212,587 | 354,295 | | Fund flows from operations (1) | 256,029 | 262,698 | 431,358 | | Fund flows from operations ($/basic share) (2) | 1.66 | 1.70 | 2.68 | | Fund flows from operations ($/diluted share) (2) | 1.65 | 1.68 | 2.64 | | Net earnings (loss) | 14,953 | (18,316) | 2,305 | | Net (loss) earnings ($/basic share) | 0.10 | (0.12) | 0.01 | | Cash flows used in investing activities | 1,255,746 | 154,672 | 181,343 | | Capital expenditures (3) | 182,119 | 200,659 | 190,442 | | Acquisitions (9) | 1,120,998 | 5,257 | 9,752 | | Asset retirement obligations settled | 9,347 | 23,282 | 4,975 | | Repurchase of shares | 16,576 | 17,637 | 36,409 | | Cash dividends ($/share) | 0.13 | 0.12 | 0.12 | | Dividends declared | 20,043 | 18,521 | 19,183 | | % of fund flows from operations (10) | 8 % | 7 % | 4 % | | Payout (12) | 211,509 | 242,462 | 214,600 | | % of fund flows from operations (11) | 83 % | 92 % | 50 % | | Free cash flow (4) | 73,910 | 62,039 | 240,916 | | Long-term debt | 1,874,033 | 963,456 | 933,506 | | Net debt (6) | 2,062,805 | 966,882 | 944,496 | | Net debt to four quarter trailing fund flows from operations (7) | 1.7 | 0.8 | 0.7 | | Operational | | | | | Production (8) | | | | | Crude oil and condensate (bbls/d) | 32,386 | 30,327 | 32,695 | | NGLs (bbls/d) | 9,167 | 6,612 | 7,046 | | Natural gas (mmcf/d) | 369.36 | 279.59 | 274.59 | | Total (boe/d) | 103,115 | 83,536 | 85,505 | | Average realized prices | | | | | Crude oil and condensate ($/bbl) | 99.36 | 100.06 | 104.26 | | NGLs ($/bbl) | 31.56 | 29.38 | 34.16 | | Natural gas ($/mcf) | 7.80 | 8.47 | 6.10 | | Production mix (% of production) | | | | | % priced with reference to AECO | 43 % | 33 % | 32 % | | % priced with reference to TTF and NBP | 17 % | 23 % | 21 % | | % priced with reference to WTI | 28 % | 29 % | 32 % | | % priced with reference to Dated Brent | 12 % | 15 % | 15 % | | Netbacks | | | | | Operating netback ($/boe) (12) | 38.48 | 43.92 | 62.07 | | Fund flows from operations ($/boe) (13) | 27.77 | 34.67 | 53.86 | | Average reference prices | | | | | WTI (US $/bbl) | 71.42 | 70.27 | 76.96 | | Dated Brent (US $/bbl) | 75.66 | 74.67 | 83.24 | | AECO ($/mcf) | 2.17 | 1.48 | 2.50 | | TTF ($/mcf) | 20.81 | 18.73 | 11.77 | | Share information ('000s) | | | | | Shares outstanding - basic | 154,177 | 154,344 | 159,859 | | Shares outstanding - diluted (14) | 157,665 | 157,837 | 164,044 | | Weighted average shares outstanding - basic | 154,173 | 154,954 | 161,221 | | Weighted average shares outstanding - diluted (14) | 155,609 | 156,184 | 163,648 |

| (1) | Fund flows from operations (FFO) is a total of segments and non-GAAP financial measure most directly comparable to net earnings 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) | Net present value ("NPV10") is a supplementary financial measure which represents the total present value of future cash flows, discounted back to their present value using a 10% discount rate. Management uses this measure to determine the current value of long-term cash flow, considering the time value of money over the period assessed. NPV10 of synergies associated with the Westbrick acquisition are expected to be realized within approximately 10 years. | | | | | (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. | | | | | | Subsequent to February 26, 2025, net debt to four quarter trailing funds flows from operations is calculated inclusive of Westbrick Energy's pre-acquisition four quarter trailing funds flow from operations, as if the acquisition of Westbrick Energy occurred at the beginning of the four-quarter trailing period, to reflect the Company's ability to repay debt on a pro forma basis. | | | | | (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 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 zone being tested 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) | Osterheide Z2 well and facility were commissioned on March 27, 2025 and the gas was brought to pipeline specification. Sales commenced on March 31, 2025 at restricted rates between 4 mmcf/d and 8 mmcf/d. A 72-hour test was conducted in April 2025 at rates of 16.9 mmcf/d to verify plant functionality and operability at its design parameters. The production rates from the well are restricted due to seasonal off-take demand on the pipeline network. | | | | | (17) | At March 5, 2025, Wisselshorst Z1a well was assigned 68.3 Bcf Property Gross (43.8 Bcf net) 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. 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. At December 31, 2024, Osterheide Z2 was assigned 16.4 Bcf (16.4 Bcf net) total proved plus probable conventional natural gas reserves, as evaluated by McDaniel, which is included in the McDaniel Reserves Report for the year then ended. |