Vermilion Energy Inc. Reports Strong Q3 2025 Results, Lowers 2025 Cost Guidance, Releases 2026 Budget and Announces Planned 4% Dividend Increase

2025-11-05

TSX - Toronto Stock Exchange · Canada

Canada NewsWire

CALGARY, AB, Nov. 5, 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 nine months ended September 30, 2025.

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

Q3 2025 Results

Generated $254 million($1.65/basic share)(2)of fund flows from operations ("FFO")(1). Exploration and development ("E&D") capital expenditures(3)were $146 million, resulting in free cash flow ("FCF")(5)of $108 million. Reduced net debt(6)by over $650 millionsince Q1 2025, bringing net debt to $1.38 billionas at September 30, 2025. This resulted in a net debt to four quarter trailing FFO(7)ratio of 1.4 times, reflecting continued progress toward strengthening Vermilion's balance sheet. Vermilion reported comprehensive income of $35 million($0.23/basic share). Driven by the successful asset repositioning, including realized Deep Basin synergies in the second half of 2025, Vermilion reduced the upper end of annual E&D capital expenditure guidance by $20 million, from $660 millionto $640 million, and reduced annual operating cost guidance by over $10 million. Vermilion realized an average natural gas price of $4.36/mcf before hedging and $5.62/mcf after hedging in Q3 2025 – approximately seven and nine times the AECO 5A benchmark, respectively. To optimize margins, the Company elected to shut in a portion of our gas production and deferred the start-up of several wells, which resulted in approximately 3,000 boe/d of production impact in the quarter, with production expected to resume in Q4 2025 amid stronger pricing. Vermilion returned $26 millionto shareholders through dividends and share buybacks, comprising $20 millionin dividends and $6 millionof share buybacks. During the quarter, the Company repurchased and cancelled 0.6 million shares through the NCIB for a total of 2.5 million shares repurchased year-to-date. Production averaged 119,062 boe/d(9) (67% natural gas and 33% crude oil and liquids), comprising 88,763 boe/d(9)from the North American assets and 30,299 boe/d(9)from the International assets. Drilled 13 (12.4 net) wells in the Deep Basin, demonstrating strong results across our significant land base. Our Q3 2025 drilling program delivered well in excess of our expectations, demonstrating the quality of our land base and reinforcing our confidence in the development potential of these assets. Executed a successful two-well (1.2 net) drilling program in the Netherlandsin Q3 2025, discovering commercial gas in both the Rotliegend and Zechstein formations, with both wells expected to be completed, tied in and brought on production in Q4 2025. These wells build on our two-decade track record of exploration success in the Netherlands, and, combined with recent discoveries in Germany, underscore Vermilion's broader European gas exploration expertise.

2026 Budget

Vermilion's Board of Directors has approved an E&D capital budget of $600to $630 millionfor 2026. This capital budget prioritizes our global gas assets, with approximately 85% of capital invested in this part of Vermilion's portfolio. The Company expects to deliver annual average production of 118,000 to 122,000 boe/d (70% natural gas)(12), focusing on financial discipline and free cash flow generation. The 2026 budget reflects the Company's lower overall cost structure of the enhanced portfolio, with 30% improvements in capital efficiencies and unit operating costs driven by increased operational scale in our core areas. Vermilion plans to invest approximately $415 millionof E&D capital into liquids-rich gas assets in the Montney and Deep Basin in 2026, including drilling a total of 49 (44.8 net) wells and investing in key infrastructure. Vermilion will run a three-rig drilling program in the Deep Basin, drilling 43 (38.8 net) wells with minimal infrastructure requirements. In the Montney, we plan to drill six (6.0 net) wells, while completing and bringing on production ten (10.0 net) wells and investing to expand existing infrastructure. Vermilion plans to invest approximately $200 millionacross its International assets in 2026, with a continued emphasis on European natural gas exploration and development. In Germany, the Company plans to build out key infrastructure and prepare for two (1.3 net) follow-up wells at the Wisselshorst discovery in early 2027, while bringing on production from the first Wisselshorst discovery in mid-2026. We plan to drill one (0.5 net) well in the Netherlands, while continuing to fund economic workover and optimization projects throughout the International portfolio. Plan to increase the quarterly cash dividend by 4% to $0.135CAD per share, effective with the Q1 2026 dividend payable on March 31, 2026, subject to approval by the Company's Board of Directors in March 2026.

Outlook

Vermilion expects Q4 2025 production to average 119,000 to 121,000 boe/d (69% natural gas)(12), with full-year production of approximately 119,500 boe/d (65% natural gas)(12)on E&D capital expenditures of $630to $640 million. Declared a quarterly cash dividend of $0.13per common share, payable on December 31, 2025, to shareholders of record on December 15, 2025.

| ($M except as indicated) | Q3 2025 | Q2 2025 | Q3 2024 | YTD 2025 | YTD 2024 | | Financial | | | | | | | Fund flows from operations (1) | 253,810 | 259,678 | 275,024 | 769,517 | 943,085 | | Fund flows from operations ($/basic share) (2) | 1.65 | 1.68 | 1.76 | 5.00 | 5.93 | | Fund flows from operations ($/diluted share) (2) | 1.64 | 1.67 | 1.75 | 4.96 | 5.87 | | Net earnings (loss) | | | | | | | Net earnings (loss) from continuing operations | (4,774) | 74,385 | 39,794 | 73,314 | (77,645) | | Net earnings (loss) from discontinued operations | 7,331 | (307,843) | 11,903 | (289,262) | 49,222 | | Net earnings (loss) | 2,557 | (233,458) | 51,697 | (215,948) | (28,423) | | Net earnings (loss) from continuing operations ($/basic share) | (0.03) | 0.48 | 0.25 | 0.48 | (0.49) | | Net earnings (loss) from discontinued operations ($/basic share) | 0.05 | (1.99) | 0.08 | (1.88) | 0.31 | | Net earnings (loss) ($/basic share) | 0.02 | (1.51) | 0.33 | (1.40) | (0.18) | | Cash flows from operating activities | 389,453 | 140,467 | 134,547 | 810,304 | 755,164 | | Cash flows (from) used in investing activities | (325,061) | 198,989 | 145,828 | 1,129,674 | 480,196 | | Capital expenditures(3) | 145,562 | 115,489 | 121,269 | 443,170 | 422,321 | | Acquisitions (4) | 1,068 | 1,591 | 1,642 | 1,123,657 | 16,844 | | Dispositions | 483,525 | — | — | 483,525 | — | | Repurchase of shares | 6,320 | 6,323 | 40,106 | 29,219 | 123,070 | | Cash dividends ($/share) | 0.13 | 0.13 | 0.12 | 0.39 | 0.36 | | Dividends declared | 19,947 | 20,022 | 18,642 | 60,012 | 56,806 | | Free cash flow (5) | 108,248 | 144,189 | 153,755 | 326,347 | 520,764 | | Long-term debt | 1,264,343 | 1,951,250 | 903,354 | 1,264,343 | 903,354 | | Net debt (6) | 1,384,753 | 1,413,321 | 833,331 | 1,384,753 | 833,331 | | Net debt to four quarter trailing fund flows from operations (7) | 1.4 | 1.4 | 0.6 | 1.4 | 0.6 | | Shares outstanding - basic ('000s) | 153,434 | 154,019 | 155,348 | 153,434 | 155,348 | | Weighted average shares outstanding - diluted ('000s) (8) | 154,921 | 155,778 | 157,502 | 154,080 | 160,743 | | Operational | | | | | | | Production (9) | | | | | | | Crude oil and condensate (bbls/d) | 28,197 | 37,449 | 29,837 | 32,662 | 31,797 | | NGLs (bbls/d) | 10,985 | 12,656 | 7,547 | 10,943 | 7,264 | | Natural gas (mmcf/d) | 479.28 | 515.38 | 280.73 | 455.08 | 274.93 | | Total (boe/d) | 119,062 | 136,002 | 84,173 | 119,451 | 84,881 | | Average realized prices | | | | | | | Crude oil and condensate ($/bbl) | 91.93 | 85.07 | 103.55 | 91.80 | 105.54 | | NGLs ($/bbl) | 22.99 | 24.68 | 27.49 | 26.01 | 30.99 | | Natural gas ($/mcf) | 4.36 | 4.88 | 6.57 | 5.48 | 6.13 | | Average realized price ($/boe) | 42.18 | 43.71 | 61.97 | 48.28 | 62.63 | | Production mix (% of production) | | | | | | | % priced with reference to AECO | 52 % | 50 % | 33 % | 49 % | 33 % | | % priced with reference to TTF and NBP | 15 % | 13 % | 22 % | 15 % | 21 % | | % priced with reference to WTI | 23 % | 28 % | 32 % | 26 % | 32 % | | % priced with reference to Dated Brent | 10 % | 9 % | 13 % | 10 % | 14 % | | Netbacks | | | | | | | Operating netback ($/boe) (10) | 28.54 | 28.60 | 41.89 | 31.37 | 48.23 | | Fund flows from operations ($/boe) (11) | 22.82 | 21.25 | 34.78 | 23.63 | 39.99 |

| (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. 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 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) | Based on Company estimates as at October 27, 2025. |

Message to Shareholders

Vermilion delivered a strong third quarter, both operationally and financially, with production at the upper end of our guidance range and robust fund flows from operations. Our continued focus on asset repositioning has led to repeatable improvements in capital and operating efficiencies, supported by longer-duration assets. As a result, we have reduced the upper end of our 2025 capital guidance by $20 millionand lowered full-year operating cost guidance by over $10 million. These improvements are structural in nature and have been embedded into our 2026 budget guidance, which is inclusive of realized Deep Basin synergies. Compared to 2024 – the most recent year prior to our asset high-grading – our 2026 operational guidance reflects an over 40% increase in production per share, as well as a 30% structural improvement in capital efficiency and operating costs. Following our repositioning, 85% of our production and capital is now concentrated in larger, core areas of our global gas portfolio. We believe this better positions Vermilion for long-term success.

Our ability to deliver strong Q3 2025 results despite pricing volatility underscores the strength of our differentiated portfolio. Vermilion's assets drove strong operational and financial results despite downward pressure on AECO pricing in response to imbalanced supply-demand dynamics. Vermilion's realized gas price, excluding realized hedging gain, was $4.36/mcf, and including realized hedging gain was $5.62/mcf, approximately seven and nine times the daily benchmark, respectively. This outperformance was driven by our exposure to premium-priced European gas, supplemented by a robust hedging program, and highlights the benefit of being a global gas producer. To optimize margins, the Company elected to shut in a portion of our gas production and deferred the start-up of several wells, which resulted in approximately 3,000 boe/d of production impact in the quarter. The Company expects to bring the shut-in production and new wells online in Q4 2025 into a more supportive pricing environment.