Vermilion Energy Inc. press release

Vermilion Energy Inc. Reports Q3 2026 Results and Releases 2027 Budget with Planned 4% Dividend Increase

2026-11-04

TSX - Toronto Stock Exchange · Canada · Corporate Finance

PR Newswire

CALGARY, AB, Nov. 4, 2026/PRNewswire/ -- 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 nine months ended September 30, 2026.

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The unaudited interim financial statements and management discussion and analysis for the three and nine months ended September 30, 2026 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

Q3 2026 Results

Vermilion remains on track to deliver its upwardly revised full-year 2026 production guidance of approximately 122,400 boe/d within its capital budget of $620 million. Third quarter production averaged 117,349 boe/d(9) (71% natural gas), reflecting planned maintenance in Ireland, Germany, and Canada. The 32-day turnaround in Ireland was safely completed on-time and on-budget, reflecting Vermilion's track record of operational excellence, with production fully restored in September 2026.

Generated $237 million ($1.55/basic share)(2)of fund flows from operations ("FFO")(1)and over $90 million of free cash flow ("FCF")(6), fully funding $146 million of exploration and development ("E&D") capital expenditures(3).

Reduced net debt(7)by approximately $60 million to $1.17 billion at September 30, 2026, bringing net debt reduction to approximately $900 million over the past 18 months.

Returned $41 million to shareholders through dividends and share buybacks, including $21 million in dividends and $20 million of share repurchases, twice the value repurchased through the first half of 2026.

Realized an average natural gas sales price of $5.60/mcf, more than triple the AECO benchmark, reflecting structural exposure to premium international gas markets and portfolio diversification. Month ahead TTF averaged $25/MMBtu in the quarter and current prices for key European gas markets remain elevated.

Reported net loss of $35 million ($0.23/basic share), driven by unrealized losses on derivative instruments, partially offset by strong European gas and crude oil pricing. The unrealized losses on derivative instruments primarily reflect significant increases in forward oil and European gas prices during the quarter. These higher forward prices negatively impact current reported earnings through mark-to-market valuation of existing hedges, while improving Vermilion's revenue and FFO outlook.

In Germany, the Company completed the acquisition of producing assets, while bringing the Wisselshorst Z1a well (0.64 net) on production in July 2026. The acquired assets and production from Wisselshorst position Vermilion's German business for production of approximately 7,500 boe/d in Q4 2026(12), with current operating netbacks(10)supporting robust excess free cash flow ("EFCF")(6)generation.

In the Deep Basin, the Company had multiple wells ranked among the most prolific in Alberta during the quarter, including a condensate-rich well that produced 12.6 mmcf/d of natural gas and over 400 bbls/d of condensate in the month of August. In addition, the Company drilled an Upper Mannville well to nearly 7,800 metres, representing the longest Upper Mannville well drilled by industry to-date.

In the Montney, the Company brought a four-well pad in Alberta on production, piloting a new completion approach to reduce sand and water recovery. These wells have been impacted by third-party downtime, which has extended into Q4 2026, but have produced in-line with expectations when capacity is available.

In Canada, unit operating expenses are down approximately 10% year-over-year, driven by realized synergies and Vermilion's continued focus on operational excellence. At a corporate level, Vermilion continues to see lower general and administration and interest expenses, down approximately 30% year-over-year.

2027 Budget

Vermilion's Board of Directors has approved an E&D capital budget of $675 to $725 million for 2027. The program builds on the Company's operational momentum and includes drilling and infrastructure investment in Germany and the Netherlands, continued development of the Montney and a steady three-rig program targeting high-return, liquids-rich gas opportunities in the Deep Basin.

The Company expects to deliver annual average production of 122,000 to 126,000 boe/d, approximately 71% natural gas, while maintaining its focus on capital efficiency and EFCF generation. This guidance range represents 2% absolute growth and 5% production per share growth from 2026. Of note, $150 million of the 2027 E&D investments are forecasted to add production starting 2028, consistent with our five-year plan presented in Q4 2025.

Vermilion plans to invest approximately $385 million of E&D capital in its liquids-rich gas assets in the Montney and Deep Basin in 2027. In the Deep Basin, the Company plans to drill 41 (36.3 net) wells, with minimal infrastructure requirements, while continuing strategic investments to further strengthen depth of inventory. In the Montney, the Company plans to drill 13 (13.0 net) wells and continue expanding owned infrastructure.

Vermilion plans to invest approximately $315 million across its International assets in 2027, an increase of over 50% compared to 2026, allocating capital to high-return drilling prospects and growth infrastructure. In Germany, the Company plans to drill two (1.3 net) follow-up wells at Wisselshorst, while also continuing to invest in the development of key infrastructure. In the Netherlands, the Company plans to drill two (1.0 net) wells, targeting larger structures than those pursued in recent drilling programs, while in Australia, Vermilion plans to commence a two-well (2.0 net) drilling program in the second half of 2027.

Targeting a 4% increase in the quarterly cash dividend to $0.14 per share, effective with the Q1 2027 dividend payable on March 31, 2027, subject to approval by the Company's Board of Directors in March 2027.

Outlook

Q4 2026 production is expected to average 121,000 boe/d, with full-year production of approximately 122,400 boe/d on E&D capital expenditures of approximately $620 million(12). In Canada, the Company has elected to defer several new well start-ups and restrict gas production to align with expected higher pricing later in Q4 2026. Vermilion's return of capital framework targeting 40% to 60% of EFCF to shareholders remains in place as it enables flexible capital allocation to maximize shareholder value during a time of high market volatility.

Declared a quarterly cash dividend of $0.135 per common share, payable on December 31, 2026, to shareholders of record on December 15, 2026.

| ($M except as indicated) | Q3 2026 | Q2 2026 | Q3 2025 | YTD 2026 | YTD 2025 | | Financial | | | | | | | Fund flows from operations (1) | 236,919 | 231,222 | 253,810 | 700,418 | 769,517 | | Fund flows from operations ($/basic share) (2) | 1.55 | 1.51 | 1.65 | 4.59 | 5.00 | | Fund flows from operations ($/diluted share) (2) | 1.55 | 1.48 | 1.64 | 4.59 | 4.96 | | Net (loss) earnings | | | | | | | Net (loss) earnings from continuing operations | (35,499) | 134,599 | (4,552) | (42,106) | 74,094 | | Net earnings (loss) from discontinued operations | 859 | (361) | 7,109 | (3,834) | (290,042) | | Net (loss) earnings | (34,640) | 134,238 | 2,557 | (45,940) | (215,948) | | Net (loss) earnings from continuing operations ($/basic share) | (0.23) | 0.88 | (0.03) | (0.28) | 0.48 | | Net earnings (loss) from discontinued operations ($/basic share) | — | — | 0.05 | (0.03) | (1.88) | | Net (loss) earnings ($/basic share) | (0.23) | 0.88 | 0.02 | (0.30) | (1.40) | | Cash flows from operating activities | 273,429 | 170,751 | 389,453 | 671,578 | 810,304 | | Cash flows used in investing activities | 140,012 | 113,523 | (325,061) | 442,308 | 1,129,674 | | Capital expenditures(3) | 146,466 | 109,576 | 145,562 | 390,622 | 443,170 | | Acquisitions (4) | (22,780) | 338 | 1,068 | (16,407) | 1,123,657 | | Dispositions(5) | 26,533 | — | 483,525 | 26,533 | 483,525 | | Repurchase of shares | 19,687 | 5,465 | 6,320 | 29,844 | 29,219 | | Cash dividends ($/share) | 0.135 | 0.135 | 0.130 | 0.405 | 0.390 | | Dividends declared | 20,530 | 20,659 | 19,947 | 61,790 | 60,012 | | Free cash flow (6) | 90,453 | 121,646 | 108,248 | 309,796 | 326,347 | | Long-term debt | 1,181,468 | 1,308,333 | 1,264,343 | 1,181,468 | 1,264,343 | | Net debt (7) | 1,165,387 | 1,224,065 | 1,384,753 | 1,165,387 | 1,384,753 | | Net debt to four quarter trailing fund flows from operations (8) | 1.2 | 1.3 | 1.4 | 1.2 | 1.4 | | Shares outstanding - basic ('000s) | 151,822 | 152,948 | 153,434 | 151,822 | 153,434 | | Weighted average shares outstanding - diluted ('000s) | 152,526 | 155,940 | 154,921 | 152,785 | 154,080 | | Operational | | | | | | | Production (9) | | | | | | | Crude oil and condensate (bbls/d) | 21,524 | 24,753 | 28,197 | 23,315 | 32,662 | | NGLs (bbls/d) | 12,267 | 11,714 | 10,985 | 12,009 | 10,943 | | Natural gas (mmcf/d) | 501.35 | 535.93 | 479.28 | 525.38 | 455.08 | | Total (boe/d) | 117,349 | 125,789 | 119,062 | 122,888 | 119,451 | | Average realized prices | | | | | | | Crude oil and condensate ($/bbl) | 130.00 | 133.97 | 91.93 | 121.28 | 91.80 | | NGLs ($/bbl) | 30.99 | 27.70 | 22.99 | 27.28 | 26.01 | | Natural gas ($/mcf) | 5.60 | 5.08 | 4.36 | 5.36 | 5.48 | | Average realized price ($/boe) | 53.37 | 49.23 | 42.18 | 49.15 | 48.28 | | Production mix (% of production) | | | | | | | % priced with reference to AECO | 59 % | 58 % | 52 % | 58 % | 49 % | | % priced with reference to TTF and NBP | 12 % | 13 % | 15 % | 12 % | 15 % | | % priced with reference to WTI | 22 % | 21 % | 23 % | 22 % | 26 % | | % priced with reference to Dated Brent | 7 % | 8 % | 10 % | 8 % | 10 % | | Netbacks | | | | | | | Operating netback ($/boe) (10) | 27.13 | 26.23 | 28.54 | 26.27 | 31.37 | | Fund flows from operations ($/boe) (11) | 21.29 | 20.55 | 22.82 | 20.72 | 23.63 |

| (1) | Fund flows from operations (FFO) is a total of segments and non-GAAP financial measure most directly comparable to net (loss) earnings and is calculated as sales less royalties, transportation expense, operating expense, G&A expense, corporate income tax (recovery) expense, 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 (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. 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 (loss) earnings from continuing operations and net earnings (loss) discontinued operations, respectively. | | | | | (2) | Fund flows from operations per basic and diluted share are non-GAAP ratios calculated by dividing fund flows from operations (a total of segments measure and non-GAAP financial measure) by basic weighted average shares outstanding and diluted weighted average shares outstanding, respectively. Diluted weighted average shares outstanding includes incremental shares issuable under Vermilion's equity-based compensation plans, as determined using the treasury stock method. Management uses these measures to assess operating performance on a per-share basis, including the impact of issued and potentially issuable common shares. More information on FFO 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. Fund flows from continuing operations and discontinued operations per basic and diluted share are calculated on the same basis. | | | | | (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) | Dispositions 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. Dispositions is calculated as the sum of dispositions, and disposition of securities. Management believes that including these components provides a useful measure of the proceeds associated with our disposition activities and is most directly comparable to cash flows used in investing activities. More information and a reconciliation to dispositions and disposition of securities, the most directly comparable primary financial statement measures, can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. | | | | | (6) | 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. | | | | | (7) | 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. | | | | | (8) | 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 to reflect the Company's ability to repay debt on a pro forma basis. | | | | | (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) | FFO per boe is a non-GAAP ratio calculated as fund flows from operations divided by total sales volumes and is used by management to assess the profitability of Vermilion's business units and consolidated operations. The measure is not standardized under IFRS Accounting Standards and may not be comparable to similar measures disclosed by other issuers. Fund flows from continuing and discontinued operations per boe are calculated on the same basis. Refer to "Non-GAAP and Other Specified Financial Measures" for additional information. | | | | | (12) | Based on Company estimates as at October 26, 2026. |

Message to Shareholders

Vermilion is delivering on our plan to structurally improve excess free cash flow ("EFCF")(1), with operational momentum continuing to build as we progress the key milestones communicated during our Q4 2025 Investor Day. The rate of change in profitability is being reflected in operational results and outlook, with improvements to our capital efficiencies, base declines and controllable cost structure. Our internationally diversified portfolio is benefiting from elevated pricing for European gas, Canadian condensate and Dated Brent oil. The combination of delivering on production and cost targets while benefiting from higher prices has enabled both increased shareholder returns and debt reduction.