Vermilion Energy Inc. Announces Results for the Year Ended December 31, 2024 and Significant European Gas Discovery
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 atDecember 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 inGermany , 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 inEurope 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) ofDeep 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 forecastedmid-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
$0.13 per common share, payable onApril 15, 2025 to shareholders of record onMarch 31, 2025 . This represents an 8% increase over the Q4 2024 dividend, marking the fourth increase to Vermilion's quarterly dividend since 2021.
($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. |
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(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. |
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(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. |
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(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. |
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|
(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. |
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(8) |
Please refer to Supplemental Table 4 "Production" of the accompanying Management's Discussion and Analysis for disclosure by product type. |
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(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. |
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(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. |
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(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. |
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|
(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. |
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(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. |
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(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 |
|
|
(16) |
Estimated gross proved, developed and producing, total proved, and total proved plus probable reserves as evaluated by |
|
|
(17) |
Estimated 2025 Westbrick production based on Company estimates as of |
|
|
(18) |
Based on Company 2025 estimates and 2025 full year average reference prices as at |
|
|
(19) |
At |
Message to Shareholders
Vermilion delivered strong operational and financial results in 2024, achieving annual production above the mid-point of guidance while executing a
The Company executed its largest ever exploration drilling campaign in
In aggregate, the Osterheide and Wisselshorst wells tested at a combined rate of 56 mmcf/d(2,3), or equivalent to 50% of Vermilion's current European natural gas production. In
In
Vermilion has made significant progress in its asset high grading strategy over the past few years, including the consolidation of working interest in the Corrib natural gas project in
In conjunction with the closing of the Westbrick acquisition, and as part of the Company's broader asset high-grading initiative, Vermilion recently launched a formal sales process for its southeast
Q4 2024 Operations Review
Production from Vermilion's North American operations averaged 52,293 boe/d(1) in Q4 2024, a decrease of 3% from the previous quarter due to planned third-party turnaround activity in
In Q4 2024, Vermilion drilled six (6.0 net)
Vermillion continues to demonstrate success with its open hole multilateral drilling program in
International
Production from Vermilion's International operations averaged 31,243 boe/d(1) in Q4 2024, an increase of 3% from the previous quarter primarily due to a full quarter of production in
In
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
In
2024 Reserves Update
Total proved plus probable ("2P") reserves increased by 1% from the prior year to 435.1 mmboe(6), primarily due to extensions and improved recovery on the Mica Montney asset. Vermilion added 26.2 mmboe of proved developed producing ("PDP") reserves and 36.2 mmboe of 2P reserves at an average finding, development and acquisition ("FD&A")(8) cost, including future development costs, of
The PDP and 2P reserve life index at
The following table provides a summary of company interest reserves by reserve category and region on an oil equivalent basis. Please refer to Vermilion's 2024 Annual Information Form for the year ended
BOE (mboe) |
Proved Developed Producing |
Proved Developed Non-Producing |
Proved Undeveloped |
Proved |
Probable |
Proved Plus Probable |
|
114,376 |
4,785 |
91,509 |
210,670 |
119,942 |
330,612 |
International |
53,600 |
6,037 |
8,815 |
68,453 |
36,043 |
104,496 |
Vermilion |
167,976 |
10,822 |
100,324 |
279,123 |
155,986 |
435,109 |
The following table provides a reconciliation of changes in company interest reserves by reserve category and region. Please refer to Vermilion's 2024 Annual Information Form for detailed information by country and product type and for an explanation concerning the reserve change categories. The following tables may not total due to rounding.
PDP (mboe) |
|
International |
Vermilion |
|
112,204 |
60,502 |
172,706 |
Discoveries |
— |
— |
— |
Extensions & Improved Recovery |
3,994 |
100 |
4,095 |
Technical Revisions |
18,563 |
4,162 |
22,726 |
Acquisitions |
— |
— |
— |
Dispositions |
(36) |
— |
(36) |
Economic Factors |
(754) |
182 |
(572) |
Production |
(19,596) |
(11,347) |
(30,943) |
|
114,376 |
53,600 |
167,976 |
1P (mboe) |
|
International |
Vermilion |
|
195,685 |
72,700 |
268,385 |
Discoveries |
— |
2,782 |
2,782 |
Extensions & Improved Recovery |
31,271 |
2,568 |
33,839 |
Technical Revisions |
4,064 |
334 |
4,398 |
Acquisitions |
1,782 |
1,161 |
2,943 |
Dispositions |
(1,473) |
— |
(1,473) |
Economic Factors |
(1,063) |
254 |
(809) |
Production |
(19,596) |
(11,347) |
(30,943) |
|
210,670 |
68,453 |
279,123 |
2P (mboe) |
|
International |
Vermilion |
|
316,040 |
113,798 |
429,838 |
Discoveries |
— |
4,861 |
4,861 |
Extensions & Improved Recovery |
35,273 |
1,327 |
36,600 |
Technical Revisions |
1,366 |
(6,100) |
(4,734) |
Acquisitions |
2,302 |
1,825 |
4,128 |
Dispositions |
(3,317) |
— |
(3,317) |
Economic Factors |
(1,455) |
133 |
(1,323) |
Production |
(19,596) |
(11,347) |
(30,943) |
|
330,612 |
104,496 |
435,109 |
Additional information about the McDaniel Reserves Report can be found in our Annual Information Form on our website at www.vermilionenergy.com and on SEDAR+ at www.sedarplus.ca.
Outlook and Guidance Update
Subsequent to year-end, Vermilion announced the closing of the Westbrick acquisition, adding approximately 50,000 boe/d(4) of
The 2025 capital budget and production guidance have been revised to incorporate the closing of the Westbrick acquisition. Annual production is now expected to range between 125,000 to 130,000 boe/d(5) (62% natural gas including 14% European gas)(5) with E&D capital expenditures of
Based on forward commodity prices, Vermilion forecasts 2025 FCF of approximately
Vermilion's updated 2025 capital expenditure and production guidance following the closing of the Westbrick acquisition is:
Category |
2025 Prior(7) |
2025 Current(7) |
Production (boe/d) |
84,000 - 88,000 |
125,000 - 130,000 |
E&D capital expenditures ($MM) |
|
|
Royalty rate (% of sales) |
8 - 10% |
9 - 11% |
Operating ($/boe) |
|
|
Transportation ($/boe) |
|
|
General and administration ($/boe) |
|
|
Cash taxes (% of pre-tax FFO) |
7 - 9% |
6 - 10% |
Asset retirement obligations settled ($MM) |
|
|
Payments on lease obligations ($MM)(2) |
|
|
Based on the closing date of the Westbrick acquisition, Q1 2025 production is expected to be approximately 100,000 boe/d(5).
Commodity Hedging
Vermilion hedges to manage commodity price exposures and increase the stability of our cash flows. In aggregate, we have 38% of our expected net-of-royalty production hedged for 2025. With respect to individual commodity products, we have hedged 54% of our European natural gas production, 34% of our crude oil production, and 35% of our North American natural gas volumes, respectively. Please refer to the Hedging section of our website under Invest With Us for further details using the following link:
https://www.vermilionenergy.com/invest-with-us/hedging.
(Signed "Dion Hatcher")
President & Chief Executive Officer
(1) |
Please refer to Supplemental Table 4 "Production" of the accompanying Management's Discussion and Analysis for disclosure by product type. |
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(2) |
Osterheide Z2-2 well (100% working interest) tested at a rate of 17.3 mmcf/d during an eight-hour flow period with flowing wellhead pressure of 4,625 psi during initial well cleanup on an adjustable choke. The completion fluid was recovered during the clean-up flow period. A final shut-in wellhead pressure of 5,757 psi and bottom hole pressure of 7,235 psi were recorded following the well test. The tested zone is the Rotliegend Wustrow formation which was encountered at 5,757m measured depth ("MD") and a 42.0m gas column was logged with 13.8m of net reservoir and average effective porosity of 8.3%. Test results are not necessarily indicative of long-term performance or ultimate recovery. |
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|
(3) |
Wisselshorst Z1a well (64% working interest) was tested in |
|
|
(4) |
Estimated full year 2025 Westbrick production based on Company estimates as of |
|
|
(5) |
Based on Company 2025 estimates and 2025 full year average reference prices as at |
|
|
(6) |
Estimated gross proved, developed and producing, total proved, and total proved plus probable reserves as evaluated by McDaniel in the McDaniel Reserves Report. See the Annual Information Form for additional information, including reserve pricing assumptions. Per share metrics calculated using basic shares outstanding at |
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(7) |
Current 2025 guidance reflects foreign exchange assumptions of CAD/ |
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|
(8) |
F&D (finding and development) and FD&A (finding, development and acquisition) costs are calculated by dividing the applicable capital expenditures for the period, including the change in undiscounted FDC (future development capital), by the change in the reserves, incorporating revisions and production, for the same period. More information can be found in the "Non-GAAP Financial Measures and Other Specified Financial Measures" section of this document. |
|
|
(9) |
Operating Recycle Ratio is a non-GAAP ratio that is calculated by dividing the Operating Netback by the cost of adding reserves (F&D and FD&A cost). For the purposes of calculating 2024 Operating Recycle Ratio, this netback number was |
|
|
(10) |
At |
Non-GAAP and Other Specified Financial Measures
This report and other materials released by Vermilion includes financial measures that are not standardized, specified, defined, or determined under IFRS Accounting Standards and are therefore considered non-GAAP or other specified financial measures and may not be comparable to similar measures presented by other issuers. These financial measures include:
Total of Segments Measures
Fund flows from operations (FFO): Most directly comparable to net loss, FFO is a non-GAAP financial measure and total of segments measure comprised of sales less royalties, transportation, operating, G&A, corporate income tax, PRRT, 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. Reconciliation to the most directly comparable primary financial statement measures can be found below.
|
Q4 2024 |
Q4 2023 |
2024 |
2023 |
||||
|
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
Sales |
504,352 |
66.54 |
522,969 |
68.64 |
1,981,407 |
63.58 |
2,022,555 |
67.10 |
Royalties |
(40,049) |
(5.28) |
(45,148) |
(5.93) |
(177,950) |
(5.71) |
(191,694) |
(6.36) |
Transportation |
(23,961) |
(3.16) |
(22,441) |
(2.95) |
(98,933) |
(3.17) |
(88,856) |
(2.95) |
Operating |
(139,566) |
(18.41) |
(116,937) |
(15.35) |
(567,913) |
(18.22) |
(513,381) |
(17.03) |
General and administration |
(27,460) |
(3.62) |
(19,810) |
(2.60) |
(99,503) |
(3.19) |
(80,716) |
(2.68) |
Corporate income tax expense |
(15,997) |
(2.11) |
(19,623) |
(2.57) |
(66,442) |
(2.13) |
(170,358) |
(5.65) |
Petroleum resource rent tax |
3,226 |
0.43 |
20,860 |
2.74 |
(11,702) |
(0.38) |
20,860 |
0.69 |
Interest expense |
(23,965) |
(3.16) |
(22,909) |
(3.01) |
(84,606) |
(2.71) |
(85,212) |
(2.83) |
Equity based compensation |
— |
— |
— |
— |
(14,361) |
(0.46) |
— |
— |
Realized gain on derivatives |
28,795 |
3.80 |
78,737 |
10.33 |
345,318 |
11.08 |
234,365 |
7.77 |
Realized foreign exchange gain (loss) |
2,442 |
0.32 |
(5,529) |
(0.73) |
7,735 |
0.25 |
(4,532) |
(0.15) |
Realized other (expense) income |
(5,119) |
(0.68) |
1,948 |
0.26 |
(7,267) |
(0.23) |
(420) |
(0.01) |
Fund flows from operations |
262,698 |
34.67 |
372,117 |
48.83 |
1,205,783 |
38.71 |
1,142,611 |
37.90 |
Equity based compensation |
(7,499) |
|
(7,871) |
|
(15,569) |
|
(42,756) |
|
Unrealized (loss) gain on derivative instruments (1) |
(137,273) |
|
141,126 |
|
(452,858) |
|
179,707 |
|
Unrealized foreign exchange (loss) gain(1) |
(28,517) |
|
4,834 |
|
(58,471) |
|
12,438 |
|
Accretion |
(19,272) |
|
(19,469) |
|
(74,541) |
|
(78,187) |
|
Depletion and depreciation |
(163,458) |
|
(259,012) |
|
(683,240) |
|
(712,619) |
|
Deferred tax recovery |
80,016 |
|
110,758 |
|
37,991 |
|
190,193 |
|
Gain on business combination |
— |
|
(5,607) |
|
— |
|
439,487 |
|
Loss on disposition |
— |
|
(125,539) |
|
— |
|
(352,367) |
|
Impairment expense |
— |
|
(1,016,094) |
|
— |
|
(1,016,094) |
|
Unrealized other (expense) income |
(5,011) |
|
1,621 |
|
(5,834) |
|
— |
|
Net loss |
(18,316) |
|
(803,136) |
|
(46,739) |
|
(237,587) |
|
(1) |
Unrealized (loss) gain on derivative instruments, Unrealized foreign exchange (loss) gain, and Unrealized other expense are line items from the respective Consolidated Statements of Cash Flows. |
Non-GAAP Financial Measures and Non-GAAP Ratios
Fund flows from operations per basic and diluted share: FFO per basic share and diluted share are non-GAAP ratios. 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. Fund flows from operations per basic share is calculated by dividing fund flows from operations (total of segments 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.
Fund flows from operations per boe: Management uses fund flows from operations per boe to assess the profitability of our business units and Vermilion as a whole. Fund flows from operations per boe is calculated by dividing fund flows from operations (total of segments measure) by boe production.
Free cash flow (FCF) and excess free cash flow (EFCF): Most directly comparable to cash flows from operating activities, FCF is a non-GAAP financial measure calculated as fund flows from operations less drilling and development costs and exploration and evaluation costs and EFCF is comprised of 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. Reconciliation to the primary financial statement measures can be found in the following table.
($M) |
Q4 2024 |
Q4 2023 |
2024 |
2023 |
Cash flows from operating activities |
212,587 |
343,831 |
967,751 |
1,024,528 |
Changes in non-cash operating working capital |
26,829 |
(651) |
182,698 |
61,117 |
Asset retirement obligations settled |
23,282 |
28,937 |
55,334 |
56,966 |
Fund flows from operations |
262,698 |
372,117 |
1,205,783 |
1,142,611 |
Drilling and development |
(176,505) |
(132,308) |
(586,962) |
(569,110) |
Exploration and evaluation |
(24,154) |
(10,579) |
(36,018) |
(21,081) |
Free cash flow |
62,039 |
229,230 |
582,803 |
552,420 |
Payments on lease obligations |
(82,060) |
(3,977) |
(101,539) |
(17,094) |
Asset retirement obligations settled |
(23,282) |
(28,937) |
(55,334) |
(56,966) |
Excess free cash flow |
(43,303) |
196,316 |
425,930 |
478,360 |
Capital expenditures: Most directly comparable to cash flows used in investing activities, capital expenditures is a non-GAAP financial measure calculated as the sum of drilling and development costs and exploration and evaluation costs as derived from the Consolidated Statements of Cash Flows. We consider capital expenditures to be a useful measure of our investment in our existing asset base. Capital expenditures are also referred to as E&D capital. Reconciliation to the primary financial statement measures can be found below.
($M) |
Q4 2024 |
Q4 2023 |
2024 |
2023 |
Drilling and development |
176,505 |
132,308 |
586,962 |
569,110 |
Exploration and evaluation |
24,154 |
10,579 |
36,018 |
21,081 |
Capital expenditures |
200,659 |
142,887 |
622,980 |
590,191 |
Payout and payout % of FFO: Payout and payout % of FFO are, respectively, a non-GAAP financial measure and non-GAAP ratio. Payout is most directly comparable to dividends declared. Payout is comprised of dividends declared plus drilling and development costs, exploration and evaluation costs, and asset retirement obligations settled, and payout % of FFO is calculated as payout divided by FFO. The measure is used by management to assess the amount of cash distributed back to shareholders and reinvested in the business for maintaining production and organic growth. Payout as a percentage of FFO is also referred to as the payout ratio or sustainability ratio. The reconciliation of the measure to the primary financial statement measure can be found below.
($M) |
Q4 2024 |
Q4 2023 |
2024 |
2023 |
Dividends declared |
18,521 |
16,227 |
75,327 |
65,248 |
Drilling and development |
176,505 |
132,308 |
586,962 |
569,110 |
Exploration and evaluation |
24,154 |
10,579 |
36,018 |
21,081 |
Asset retirement obligations settled |
23,282 |
28,937 |
55,334 |
56,966 |
Payout |
242,462 |
188,051 |
753,641 |
712,405 |
% of fund flows from operations |
92 % |
51 % |
63 % |
62 % |
Return on capital employed (ROCE): A non-GAAP ratio, ROCE is a measure that management uses to analyze our profitability and the efficiency of our capital allocation process; the comparable primary financial statement measure is earnings before income taxes. ROCE is calculated by dividing net loss before interest and taxes ("EBIT") by average capital employed over the preceding twelve months. Capital employed is calculated as total assets less current liabilities while average capital employed is calculated using the balance sheets at the beginning and end of the twelve-month period.
|
Twelve Months Ended |
|
($M) |
|
|
Net loss |
(46,739) |
(237,587) |
Taxes |
40,153 |
(40,695) |
Interest expense |
84,606 |
85,212 |
EBIT |
78,020 |
(193,070) |
Average capital employed |
5,522,367 |
5,819,380 |
Return on capital employed |
1 % |
(3) % |
Adjusted working capital (deficit): Adjusted working capital (deficit) is a non-GAAP financial measure calculated as current assets less current liabilities, excluding current derivatives and current lease liabilities. The measure is used by management to calculate net debt, a capital management measure disclosed below.
|
As at |
|
($M) |
|
|
Current assets |
582,326 |
823,514 |
Current derivative asset |
(40,312) |
(313,792) |
Current liabilities |
(610,590) |
(696,074) |
Current lease liability |
12,206 |
21,068 |
Current derivative liability |
52,944 |
732 |
Adjusted working capital |
(3,426) |
(164,552) |
Acquisitions: Acquisitions is a non-GAAP financial measure and is calculated as the sum of acquisitions, net of cash acquired and acquisitions of securities from the Consolidated Statements of Cash Flows, Vermilion common shares issued as consideration, the estimated value of contingent consideration, the amount of acquiree's outstanding long-term debt assumed, and net acquired working capital deficit or surplus. 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. A reconciliation to the acquisitions line items in the Consolidated Statements of Cash Flows can be found below.
($M) |
Q4 2024 |
Q4 2023 |
Q4 2024 |
Q4 2023 |
Acquisitions, net of cash acquired |
5,257 |
2,669 |
12,728 |
142,281 |
Acquisition of securities |
— |
17,448 |
9,373 |
21,603 |
Acquired working capital |
— |
5,607 |
— |
109,134 |
Acquisitions |
5,257 |
25,724 |
22,101 |
273,018 |
Operating netback: Operating netback is non-GAAP financial measure and is calculated as sales less royalties, operating expense, transportation costs, PRRT, and realized hedging gains and losses, and when presented on a per unit basis is a non-GAAP ratio. Operating netback is most directly comparable to net loss. Management assesses operating netback as a measure of the profitability and efficiency of our field operations.
Net debt to four quarter trailing fund flows from operations: Management uses net debt (a capital management measure, as defined below) to four quarter trailing fund flows from operations to assess the Company's ability to repay debt. Net debt to four quarter trailing fund flows from operations is a non-GAAP ratio calculated as net debt (capital management measure) divided by fund flows from operations (total of segments measure) from the preceding four quarters.
Capital Management Measure
Net debt: Net debt is a capital management measure in accordance with IAS 1 "Presentation of Financial Statements" that is most directly comparable to long-term debt. Net debt is comprised of long-term debt (excluding unrealized foreign exchange on swapped USD borrowings) plus adjusted working capital (defined as current assets less current liabilities, excluding current derivatives and current lease liabilities), and represents Vermilion's net financing obligations after adjusting for the timing of working capital fluctuations.
|
As at |
|
($M) |
|
|
Long-term debt |
963,456 |
914,015 |
Adjusted working capital |
3,426 |
164,552 |
Net debt |
966,882 |
1,078,567 |
|
|
|
Ratio of net debt to four quarter trailing fund flows from operations |
0.8 |
0.9 |
Supplementary Financial Measures
Diluted shares outstanding: The sum of shares outstanding at the period end plus outstanding awards under the Long-term Incentive Plan ("LTIP"), based on current estimates of future performance factors and forfeiture rates.
('000s of shares) |
Q4 2024 |
Q4 2023 |
Shares outstanding |
154,344 |
162,271 |
Potential shares issuable pursuant to the LTIP |
3,493 |
4,185 |
Diluted shares outstanding |
157,837 |
166,456 |
Production per share growth: Calculated as the change in production determined on a per weighted average shares outstanding basis over a predefined period of time, expressed as a compounded, annualized return percentage. Measuring production growth per share better reflects the interests of our existing shareholders by reflecting the dilutive impact of equity issuances.
F&D (finding and development) and FD&A (finding, development and acquisition) costs: used as a measure of capital efficiency, calculated by dividing the applicable capital expenditures for the period, including the change in undiscounted FDC (future development capital), by the change in the reserves, incorporating revisions and production, for the same period.
Operating Recycle Ratio: A non-GAAP ratio that is calculated by dividing the Operating Netback, excluding realized gain (loss) on derivatives and petroleum resource rent tax, by the cost of adding reserves (F&D and FD&A cost). Management assesses operating recycle ratio as a measure of the reinvestment of earnings.
Management's Discussion and Analysis and Consolidated Financial Statements
To view Vermilion's Management's Discussion and Analysis and Consolidated Financial Statements for the year ended
About Vermilion
Vermilion is a global gas producer that seeks to create value through the acquisition, exploration, development and optimization of producing assets in
Vermilion's priorities are health and safety, the environment, and profitability, in that order. Nothing is more important than the safety of the public and those who work with Vermilion, and the protection of the natural surroundings. In addition, the Company emphasizes strategic community investment in each of its operating areas.
Vermilion trades on the
Disclaimer
Certain statements included or incorporated by reference in this document may constitute "forward-looking information" and "forward-looking statements" within the meaning of applicable Canadian securities laws and the United States Private Securities Litigation Reform Act of 1995, respectively (collectively referred to herein as "forward-looking statements or information"). Such forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements or information in this document may include, but are not limited to: capital expenditures and Vermilion's ability to fund such expenditures; future fund flows from operations and free cash flows; shareholder returns; Vermilion's anticipated future debt capacity and levels; Vermilion's budget; the closing of the
Such forward-looking statements or information are based on a number of assumptions of which all or any may prove to be incorrect. In addition to any other assumptions identified in this document, assumptions have been made regarding, among other things: the ability of Vermilion to obtain equipment, services and supplies in a timely manner to carry out its activities in
Although Vermilion believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements or information because Vermilion can give no assurance that such expectations will prove to be correct. Financial outlooks are provided for the purpose of understanding Vermilion's financial position and business objectives, and the information may not be appropriate for other purposes. Forward-looking statements or information are based on current expectations, estimates, and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Vermilion and described in the forward-looking statements or information. These risks and uncertainties include, but are not limited to: commodity prices; exchange rates; production and sales volumes; interest rates; geopolitical tensions; North American tariffs; volatility of oil and gas prices; constraints at processing facilities and/or on transportation; volatility of foreign exchange rates; volatility of market price of Common Shares (defined below); hedging arrangements; inflationary pressures; increase in operating costs or a decline in production level; operator performance and payment delays; weather conditions; cost of new technology; tax, royalty, and other government legislation; government regulations; policy and legal risks; political events and terrorist attacks; discretionary nature of dividends and share buybacks; additional financing; debt service; variations in interest rates and foreign exchange rates; environmental legislation; hydraulic fracturing regulations; climate change; competition; international operations and future geographical/industry expansion; acquisition assumptions; failure to realize anticipated benefits of prior acquisitions; reserves estimates; cyber security; accounting adjustments; ineffective internal controls; the potential for new and increased
Many factors could cause Vermilion's or any particular business unit's actual results, performance, or achievements to vary from those described in this document, including, without limitation, those listed above and the assumptions upon which they are based proving incorrect. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this document as intended, planned, anticipated, believed, sought, proposed, estimated, forecasted, expected, projected, or targeted and such forward-looking statements included in this document should not be unduly relied upon. The impact of any one assumption, risk, uncertainty, or other factor on a particular forward-looking statement cannot be determined with certainty because they are interdependent and Vermilion's future decisions and actions will depend on management's assessment of all information at the relevant time. Such statements speak only as of the date of this document. The forward-looking statements or information contained in this document are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward-looking statements contained in this document are expressly qualified by these cautionary statements.
This document contains references to sustainability/ESG data and performance that reflect metrics and concepts that are commonly used in such frameworks as the
All oil and natural gas reserve information contained in this document is derived from the McDaniel Reserves Report (as defined below) and has been prepared and presented in accordance with the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). In this document: (A) the net present value of future net revenues attributable to reserves do not represent the fair market value of reserves; (B) the recovery and reserve estimates of crude oil, NGL and natural gas reserves provided in this document are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and NGL reserves may be greater than or less than the estimates provided in this document; and (C) the estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation.
Under NI 51-01, disclosure of production volumes should include segmentation by product type as defined in the instrument. In this document, references to "crude oil" and "light and medium crude oil" mean "light crude oil and medium crude oil" and references to "natural gas" mean "conventional natural gas".
Natural gas volumes have been converted on the basis of six thousand cubic feet of natural gas to one barrel of oil equivalent. Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
This document discloses test rates of production for certain wells over short periods of time (i.e., 5, 8 or 24 hours, IP30, IP60, IP90, etc.), which are preliminary and not determinative of the rates at which those or any other wells will commence production and thereafter decline. Short-term test rates are not necessarily indicative of long-term well or reservoir performance or of ultimate recovery. Although such rates are useful in confirming the presence of hydrocarbons, they are preliminary in nature, are subject to a high degree of predictive uncertainty as a result of limited data availability and may not be representative of stabilized on-stream production rates. A pressure transient analysis or well-test interpretation has not been carried out in respect of all wells. Production over a longer period will also experience natural decline rates, which can be high in certain plays in which the Company operates, and may not be consistent over the longer term with the decline experienced over an initial production period. Initial production or test rates may also include recovered "load" fluids used in well completion stimulation operations. Actual results will differ from those realized during an initial production period or short-term test period, and the difference may be material.
This document discloses certain oil and gas metrics, including reserve life index, finding, development and acquisition ("FD&A") costs, future development ("FD") costs, which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included in this document to provide readers with additional measures to evaluate the Company's performance; however, such measures are not reliable indicators of the Company's future performance and future performance may not compare to the Company's performance in previous periods and therefore such metrics should not be unduly relied up-on.
Financial data contained within this document are reported in Canadian dollars unless otherwise stated. References herein to "US$" or "USD" are to
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