Vermilion Energy Inc. press release
Vermilion Energy Inc. Announces Results for the Three and Six Months Ended June 30, 2025
TSX - Toronto Stock Exchange · Canada
Canada NewsWire
CALGARY, AB , Aug. 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 and six months ended June 30, 2025.
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The unaudited interim financial statements and management discussion and analysis for the three and six months ended June 30, 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
Q2 2025 Results
Generated $260 million ( $1.68 /basic share) (2) of fund flows from operations ("FFO") (1) , compared to $256 million ( $1.66 /basic share) in Q1 2025. Exploration and development ("E&D") capital expenditures (3) were $115 million , resulting in free cash flow ("FCF") (5) of $144 million , compared to $74 million in the prior quarter. Reported net loss of $233 million ( $1.51 /basic share), which consisted of net earnings of $74 million ( $0.48 /basic share) from continuing operations and net loss of $308 million ( $1.99 /basic share) from discontinued operations, reflecting a non-cash adjustment to the book value of the Saskatchewan and United States assets held for sale. Vermilion's corporate average realized natural gas price in Q2 2025 was $4.88 /mcf, approximately triple the AECO 5A benchmark of $1.69 /mcf. Net debt (6) decreased from $2.1 billion at March 31, 2025 to $1.4 billion at June 30, 2025 , with a net debt to four quarter trailing FFO (7) of 1.4 times. Net debt at June 30, 2025 includes the net working capital impact of assets held for sale, which represents the estimated cash proceeds received from the Saskatchewan and United States dispositions that closed subsequent to the quarter. Vermilion returned $26 million to shareholders through dividends and share buybacks, comprising $20 million in dividends and $6 million of share buybacks. During the quarter, the Company repurchased and cancelled 0.7 million shares through the NCIB, and announced the renewal of the NCIB for the period of July 12, 2025 to July 11, 2026 , subsequent to the quarter. Production averaged 136,002 boe/d (9) (63% natural gas and 37% crude oil and liquids), comprising 106,379 boe/d (9) from the North American assets and 29,623 boe/d (9) from the International assets. Included in production from the North American assets is 15,453 boe/d (9) from the Saskatchewan and the United States assets, which are presented as assets held for sale. Production from the Montney averaged approximately 15,000 boe/d in Q2 2025, an increase of approximately 2,500 boe/d from Q1 2025 due to production from new wells brought online in the quarter and increased takeaway capacity from the operated infrastructure expansion completed earlier this year. Our operational teams achieved a new benchmark for Vermilion with an average DCET cost of $8.5 million per well for the two most recent pads, while maintaining initial production results in-line with expectations. We believe the $8.5 million is repeatable and is now our go-forward cost estimate for an extended-reach Mica well, which reduces our future development cost by an incremental $50 million on a NPV10 (12) basis. Production from the Deep Basin assets averaged 76,000 boe/d, reflecting a full quarter of production from the integrated Westbrick assets. The integration continues to exceed our initial expectations as we identified additional synergies in Q2 2025, bringing our total post-acquisition synergies to over $200 million (NPV10) (12) . Production from Germany averaged 6,000 boe/d, including a full quarter contribution from the Osterheide well, which continues to produce above expectations due to stronger than anticipated seasonal demand. With Vermilion's 2024 Scope 1 emissions intensity decreasing 16% from 2019, we are retiring our 2025 target of a 15 to 20% reduction relative to 2019, and are focusing on our 2030 target of a 25 to 30% Scope 1 + Scope 2 emissions intensity reduction relative to 2019. The full Sustainability Report is available at https://www.vermilionenergy.com/sustainability .
Outlook
Subsequent to the second quarter, Vermilion closed the previously announced Saskatchewan and United States asset divestments for total gross proceeds of $535 million . The net proceeds were used to reduce debt, positioning us to exit the year with net debt (6) of approximately $1.3 billion (13) . The 2025 capital budget and guidance remains unchanged from the updated guidance provided on June 5, 2025 , as we continue to prioritize free cash flow and debt reduction, while returning capital to shareholders through the dividend and share buybacks. Vermilion expects Q3 2025 production to average between 117,000 to 120,000 boe/d (67% natural gas) (13) , reflecting the respective July 2025 closing dates of the Saskatchewan and United States asset divestments, planned seasonal turnarounds, and shut-in gas due to low summer AECO prices. Declared a quarterly cash dividend of $0.13 per common share, payable on October 15, 2025 , to shareholders of record on September 29, 2025 .
| ($M except as indicated) | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | Financial | | | | | | | Fund flows from operations (1) | 259,678 | 256,029 | 236,703 | 515,707 | 668,061 | | Fund flows from operations ($/basic share) (2) | 1.68 | 1.66 | 1.48 | 3.35 | 4.16 | | Fund flows from operations ($/diluted share) (2) | 1.67 | 1.65 | 1.47 | 3.35 | 4.11 | | Net earnings (loss) | | | | | | | Net earnings (loss) from continuing operations | 74,385 | 3,703 | (108,807) | 78,088 | (117,438) | | Net (loss) earnings from discontinued operations | (307,843) | 10,307 | 26,382 | (296,593) | 37,318 | | Net (loss) earnings | (233,458) | 14,953 | (82,425) | (218,505) | (80,120) | | Net earnings (loss) from continuing operations ($/basic share) | 0.48 | 0.02 | (0.68) | 0.51 | (0.73) | | Net (loss) earnings from discontinued operations ($/basic share) | (1.99) | 0.07 | 0.17 | (1.92) | 0.23 | | Net (loss) earnings ($/basic share) | (1.51) | 0.10 | (0.52) | (1.42) | (0.50) | | Cash flows from operating activities | 140,467 | 280,384 | 266,322 | 420,851 | 620,617 | | Cash flows used in investing activities | 198,989 | 1,255,746 | 153,025 | 1,454,735 | 334,368 | | Capital expenditures (3) | 115,489 | 182,119 | 110,610 | 297,608 | 301,052 | | Acquisitions (4) | 1,591 | 1,120,998 | 5,450 | 1,122,589 | 15,202 | | Repurchase of shares | 6,323 | 16,576 | 46,555 | 22,899 | 82,964 | | Cash dividends ($/share) | 0.13 | 0.13 | 0.12 | 0.26 | 0.24 | | Dividends declared | 20,022 | 20,043 | 18,981 | 40,065 | 38,164 | | Free cash flow (5) | 144,189 | 73,910 | 126,093 | 218,099 | 367,009 | | Long-term debt | 1,951,250 | 1,874,033 | 915,364 | 1,951,250 | 915,364 | | Net debt (6) | 1,413,321 | 2,062,805 | 906,715 | 1,413,321 | 906,715 | | Net debt to four quarter trailing fund flows from operations (7) | 1.4 | 1.7 | 0.7 | 1.4 | 0.7 | | Shares outstanding - basic ('000s) | 154,019 | 154,177 | 158,174 | 154,019 | 158,174 | | Weighted average shares outstanding - diluted ('000s) (8) | 155,778 | 155,609 | 161,069 | 154,258 | 162,022 | | Operational | | | | | | | Production (9) | | | | | | | Crude oil and condensate (bbls/d) | 37,449 | 32,386 | 32,879 | 34,933 | 32,787 | | NGLs (bbls/d) | 12,656 | 9,167 | 7,196 | 10,921 | 7,121 | | Natural gas (mmcf/d) | 515.38 | 369.36 | 269.39 | 442.78 | 271.99 | | Total (boe/d) | 136,002 | 103,115 | 84,974 | 119,649 | 85,240 | | Average realized prices | | | | | | | Crude oil and condensate ($/bbl) | 85.07 | 99.36 | 108.93 | 91.75 | 106.49 | | NGLs ($/bbl) | 24.68 | 31.56 | 31.61 | 27.55 | 32.87 | | Natural gas ($/mcf) | 4.88 | 7.80 | 5.69 | 6.09 | 5.90 | | Average realized price ($/boe) | 43.71 | 61.71 | 62.46 | 51.45 | 62.97 | | Production mix (% of production) | | | | | | | % priced with reference to AECO | 50 % | 43 % | 33 % | 46 % | 32 % | | % priced with reference to TTF and NBP | 13 % | 17 % | 20 % | 15 % | 21 % | | % priced with reference to WTI | 28 % | 28 % | 32 % | 29 % | 32 % | | % priced with reference to Dated Brent | 9 % | 12 % | 15 % | 10 % | 15 % | | Netbacks | | | | | | | Operating netback ($/boe) (10) | 28.60 | 38.48 | 40.32 | 32.85 | 51.44 | | Fund flows from operations ($/boe) (11) | 21.25 | 27.77 | 30.87 | 24.03 | 42.61 |
| (1) | Fund flows from operations (FFO) is a total of segments and non-GAAP financial measure most directly comparable to net earnings (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. Fund flows from continuing operations and fund flows from discontinued operations are calculated in the same manner as FFO and are most directly comparable to net earnings (loss) from continuing operations and net earnings (loss) discontinued operations, respectively. | | | | | (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. Fund flows from continuing operations per basic and diluted share and fund flows from discontinued operations per basic and diluted share are calculated in the same manner as FFO per basic and diluted share. | | | | | (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) | 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. | | | | | (5) | 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. | | (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 fund flows from operations is calculated inclusive of Westbrick Energy's pre-acquisition four quarter trailing fund flows from operations, as if the acquisition of Westbrick Energy occurred at the beginning of the four-quarter trailing period, and exclusive of the four quarter trailing fund flows from discontinued operations from assets held for sale to reflect the Company's ability to repay debt on a pro forma basis. | | | | | (8) | 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. | | | | | (9) | Please refer to Supplemental Table 4 "Production" of the accompanying Management's Discussion and Analysis for disclosure by product type. | | | | | (10) | 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. | | | | | (11) | 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. Fund flows from continuing operations per boe and fund flows from discontinued operations per boe are calculated in the same manner as FFO per boe. | | | | | (12) | 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. | | | | | (13) | Based on Company estimates as at July 21, 2025. Year-end 2025 net debt reflects 2025 full year average reference prices as follows: WTI US$66.21/bbl, AECO $1.90/mcf, TTF $17.34/mmbtu, USD/CAD 1.39. |
Message to Shareholders
Vermilion significantly advanced its North American high-grading initiative in Q2 2025, announcing the divestment of its Saskatchewan and United States assets. These divestments were a key component of Vermilion's broader strategic transition into a global gas producer, enabling us to enhance operational scale in long-duration assets and better position the company for sustainable, profitable growth. Both divestments were subsequently closed in July 2025 and the proceeds used to reduce our outstanding debt balance. On a go-forward basis, Vermilion has a production base of approximately 120,000 boe/d (70% natural gas) with over 90% of production coming from our global gas assets in Canada and Europe and over 80% of capital directed toward these assets.
Following the divestments and continued integration of the Westbrick Energy Ltd. ("Westbrick") acquisition, which closed earlier in the year, we have taken additional steps to further streamline the business by reorganizing our Canadian business unit. This has resulted in dedicated technical and corporate teams concentrating exclusively on our Deep Basin and Montney liquids-rich gas assets. We continue to identify upside as we fully integrate Westbrick, including proving up additional locations with our successful first half drilling program, reducing service costs with the larger development program and renegotiating processing fees on favourable terms. To date, we have identified over $200 million (NPV10) (2) of synergies post-acquisition, which demonstrates the benefits of our dominant Deep Basin position and our continued focus on enhancing profitability.
In Germany , the Osterheide deep gas well produced above expectations during its first quarter on production, while the Wisselshorst deep gas well remains on schedule to come online in the first half of 2026. These wells provide Vermilion with organic European gas growth, and we will continue to allocate capital to the Germany deep gas program given strong project economics. In addition, we will continue to evaluate opportunities in our core European operations, specifically pursuing European gas acquisition opportunities that complement our existing portfolio and enhance value for our shareholders.