CALGARY, April 28, 2017 /PRNewswire/ - Vermilion
Energy Inc. ("Vermilion", "We", "Our", "Us" or the "Company") (TSX,
NYSE: VET) is pleased to report operating and unaudited financial
results for the three months ended March 31, 2017.
The unaudited financial statements and management discussion and
analysis for the three months ended March 31, 2017, will be
available on the System for Electronic Document Analysis and
Retrieval ("SEDAR") at www.sedar.com, on EDGAR at
www.sec.gov/edgar.shtml, and on Vermilion's website at
www.vermilionenergy.com.
HIGHLIGHTS
- Average production increased by 6% in Q1 2017 to 64,537 boe/d
as compared to 60,863 boe/d in the prior quarter. This increase was
primarily attributable to higher volumes in Canada from the resumption of voluntarily
curtailed natural gas production and organic growth from
development activities, as well as incremental volumes from our
German acquisition which closed on December
19, 2016. We expect production volumes to continue
increasing throughout 2017 to achieve our full year production
guidance of between 69,000 to 70,000 boe/d.
- Fund flows from operations ("FFO") for Q1 2017 was $143.4 million ($1.21/basic share(1)) as compared to
$149.6 million ($1.27/basic share) in Q4 2016. This 4% decrease
in FFO quarter-over-quarter is primarily attributable to a
significant inventory build in France and Australia related to shipment timing. The
pre-tax FFO impact of the quarter-over-quarter change in inventory
levels was approximately $15.5
million. Based on anticipated shipment schedules, we expect
that this inventory build will reverse over the course of the year,
unwinding the FFO impact. Year-over-year, FFO increased by 53% as
compared to Q1 2016 as a result of significantly higher commodity
prices.
- Production from Corrib averaged 64.8 mmcf/d (10,803 boe/d) in
Q1 2017, representing 100% of rated plant capacity. The project has
continued to outperform expectations relating to well
deliverability and downtime. Due to expected higher recovery
efficiency resulting from better well communication, we have
adjusted our field and well performance estimates and now expect to
maintain peak production plateau through Q1 2018, and potentially
into Q2 2018.
- During the first quarter we drilled 22 (18.4 net) wells in
Canada and placed 21 (16.1 net)
wells on production. Individual well results from our Q1 2017
Mannville program exceeded our expectations with the majority
displaying test productivity significantly above our average well
performance to-date. Lower Mannville wells tested during the
quarter(2) include one well that tested at 8.0 mmcf/d
with 190 bbls/d of free liquids, and a second well at 2.8 mmcf/d
with 535 bbls/d of free liquids. Based on early stage production
results, oil rates from our Cardium and Midale wells are in-line with expectations
while cost efficiencies have continued to improve.
- We drilled and completed our first wells in the Neocomian
fields in France during Q1 2017.
Two wells are on production at a combined initial rate of 300
bbls/d, which exceeded expectations. During the first quarter, we
also completed and placed on production the four (4.0 net)
Champotran wells we drilled in France in Q4 2016. All wells are productive,
with two exceeding expectations, and two below. The combined IP30
oil rate from the four Champotran wells was 550 bbls/d.
- We drilled three (3.0 net) wells in the United States in our early stage
Turner Sand play during the quarter.
Two of the three wells were completed and placed on production in
late March. The two wells have been produced intermittently, with
initial production performance comparable to the better wells
drilled thus far in our East Finn project area.
- As noted in our year-end 2016 release, permitting delays in
the Netherlands have resulted in a
reallocation of capital and a change in our production mix in favor
of other business units. Due to project approval delays, a modest
amount of capital has been moved from the
Netherlands to Canada. As a
result of production permit delays in the
Netherlands, we are employing under-utilized well
deliverability in Canada, and to a
lesser extent, Australia to meet
corporate targets. Our revised production plan by business unit is
shown in our May 2017 investor
presentation on our website.
- During Q1 2017, we issued US$300
million of eight-year senior unsecured notes at a coupon of
5.625% per annum. This issuance was completed by way of a private
offering and represented Vermilion's first issuance in the US debt
markets. Subsequent to the quarter, we negotiated an extension of
our credit facility with our banking syndicate to May 2021. As a result of our projected liquidity
requirements and the proceeds from this debt issuance, we elected
to reduce our bank facility to $1.4
billion from $2.0 billion.
- Effective with the April 2017
dividend payment, the allowable participation in the Premium
DividendTM Component of our Premium
DividendTM and Dividend Reinvestment Plan is now being
prorated by 75%. We plan to discontinue the Premium
DividendTM Component of our Premium
DividendTM and Dividend Reinvestment Plan beginning with
the July 2017 dividend payment, such
that there would be no further equity issuance under this program.
In addition, we reduced the discount associated with the
traditional component of our Premium DividendTM and
Dividend Reinvestment Plan from 3% to 2% beginning with the
January 2017 dividend.
- Vermilion was recently ranked 13th by Corporate Knights on the
Future 40 Responsible Corporate Leaders in Canada list. This marks the fourth year in a
row that Vermilion has been recognized by Corporate Knights as one
of Canada's top sustainability
performers. Vermilion continues to be the highest rated oil and gas
company on the list. This recognition reflects our strong focus on
sustainability, transparency and performance on environmental,
social and governance issues.
(1)
|
Non-GAAP Financial
Measure. Please see the "Non-GAAP Financial Measures" section
of Management's Discussion and Analysis.
|
(2)
|
Well A (Ellerslie)
production test was performed over a 2-day period. The
maximum choke size during the production test was 24.7mm.
Well A achieved a peak burnable gas production rate of 9.1 mmcf/d
with a stabilized rate of 8.0 mmcf/d. Well A also achieved a
peak liquids production rate of 375 bbls/d with a stabilized rate
of 190 bbls/d. Well B (Ellerslie) production test was
performed over a 2-day period. The maximum choke size during
the production test was 21.3mm. Well B achieved a peak
burnable gas production rate of 3.3 mmcf/d with a stabilized rate
of 2.8 mmcf/d. Well B also achieved a peak liquids production
rate of 690 bbls/d with a stabilized rate of 535 bbls/d.
These test results are not necessarily indicative of long-term
performance or of ultimate recovery.
|
TM
|
Denotes trademark of
Canaccord Genuity Capital Corporation
|
HIGHLIGHTS
|
|
|
|
|
|
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Three Months
Ended
|
|
($M except as
indicated)
|
Mar
31,
|
Dec
31,
|
Mar
31,
|
|
Financial
|
2017
|
2016
|
2016
|
|
Petroleum and natural
gas sales
|
261,601
|
259,891
|
177,385
|
|
Fund flows from
operations
|
143,434
|
149,582
|
93,667
|
|
|
Fund flows from
operations ($/basic share) (1)
|
1.21
|
1.27
|
0.83
|
|
|
Fund flows from
operations ($/diluted share) (1)
|
1.19
|
1.25
|
0.82
|
|
Net earnings
(loss)
|
44,540
|
(4,032)
|
(85,848)
|
|
|
Net earnings (loss)
($/basic share)
|
0.38
|
(0.03)
|
(0.76)
|
|
Capital
expenditures
|
95,889
|
66,882
|
62,773
|
|
Acquisitions
|
2,620
|
78,713
|
870
|
|
Asset retirement
obligations settled
|
2,249
|
3,327
|
2,024
|
|
Cash dividends
($/share)
|
0.645
|
0.645
|
0.645
|
|
Dividends
declared
|
76,593
|
76,096
|
72,847
|
|
|
% of fund flows from
operations
|
53%
|
51%
|
78%
|
|
Net dividends
(1)
|
41,087
|
32,516
|
24,857
|
|
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% of fund flows from
operations
|
29%
|
22%
|
27%
|
|
Payout
(1)
|
139,225
|
102,725
|
89,654
|
|
|
% of fund flows from
operations
|
97%
|
69%
|
96%
|
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Net debt
|
1,377,636
|
1,427,148
|
1,367,063
|
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Ratio of net debt to
annualized fund flows from operations
|
2.4
|
2.4
|
3.6
|
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Operational
|
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Production
|
|
|
|
|
|
Crude oil and
condensate (bbls/d)
|
26,832
|
25,972
|
29,199
|
|
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NGLs
(bbls/d)
|
2,694
|
2,467
|
2,672
|
|
|
Natural gas
(mmcf/d)
|
210.07
|
194.54
|
201.11
|
|
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Total
(boe/d)
|
64,537
|
60,863
|
65,389
|
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Average realized
prices
|
|
|
|
|
|
Crude oil, condensate
and NGLs ($/bbl)
|
64.14
|
60.58
|
39.35
|
|
|
Natural gas
($/mcf)
|
5.62
|
5.47
|
3.76
|
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Production mix (% of
production)
|
|
|
|
|
|
% priced with
reference to WTI
|
17%
|
18%
|
20%
|
|
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% priced with
reference to AECO
|
22%
|
20%
|
25%
|
|
|
% priced with
reference to TTF and NBP
|
32%
|
33%
|
26%
|
|
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% priced with
reference to Dated Brent
|
29%
|
29%
|
29%
|
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Netbacks
($/boe)
|
|
|
|
|
|
Operating netback
(1)
|
31.62
|
31.11
|
21.63
|
|
|
Fund flows from
operations netback
|
25.75
|
26.43
|
16.12
|
|
|
Operating
expenses
|
9.35
|
10.54
|
9.58
|
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Average reference
prices
|
|
|
|
|
|
WTI (US
$/bbl)
|
51.92
|
49.29
|
33.45
|
|
|
Edmonton Sweet index
(US $/bbl)
|
48.37
|
46.18
|
29.76
|
|
|
Dated Brent (US
$/bbl)
|
53.78
|
49.46
|
33.89
|
|
|
AECO
($/mmbtu)
|
2.69
|
3.09
|
1.83
|
|
|
NBP
($/mmbtu)
|
7.96
|
7.51
|
5.97
|
|
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TTF
($/mmbtu)
|
7.65
|
7.21
|
5.70
|
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Average foreign
currency exchange rates
|
|
|
|
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CDN $/US $
|
1.32
|
1.33
|
1.37
|
|
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CDN $/Euro
|
1.41
|
1.44
|
1.52
|
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Share information
('000s)
|
|
Shares outstanding -
basic
|
119,046
|
118,263
|
113,451
|
|
Shares outstanding -
diluted (1)
|
122,135
|
121,353
|
116,491
|
|
Weighted average
shares outstanding - basic
|
118,632
|
117,840
|
112,725
|
|
Weighted average
shares outstanding - diluted (1)
|
120,722
|
119,677
|
114,110
|
|
(1)
|
The above table
includes non-GAAP financial measures which may not be comparable to
other companies. Please see the "NON-GAAP FINANCIAL MEASURES"
section of Management's Discussion and Analysis.
|
MESSAGE TO SHAREHOLDERS
In early April, Vermilion held an investor day in Paris, France to provide investors and
analysts with an opportunity to learn more about our company's
strategy and global asset portfolio. The event featured
presentations from members of our executive team and senior leaders
from each of Vermilion's business units. Our Investor Day was
designed to achieve three main objectives: provide a more detailed
description of our assets and projects; demonstrate the technical
and management capabilities of Vermilion's global operations
leadership team; and emphasize the similarity of our overseas
operations to North American operations through a field tour of our
Paris Basin assets. A copy
of the Investor Day presentation and a replay of the webcast is
available on our website at
http://www.vermilionenergy.com/ir/eventspresentations.cfm.
It was fitting that Vermilion's first Investor Day event in
nearly seven years coincided with the 20th anniversary
of our first international acquisition. It was in 1997 that
Vermilion took the innovative step of expanding internationally by
acquiring producing properties in France. Since then, we have
continued to strengthen and diversify our global asset portfolio,
maintaining a disciplined focus on our three core regions of
North America, Europe and Australia. As was
demonstrated throughout our Investor Day event, Vermilion's
diversification has played a key role in our historical success and
remains instrumental to our growth-and-income model in the
future.
Project Inventory Diversity
Vermilion's diversified inventory of conventional and
semi-conventional projects provides several competitive advantages
for our company. Diversification in commodity and price
exposures allows us to select and invest in those projects that
will generate the highest return for a given commodity price
environment. In addition, our focus on conventional and
semi-conventional projects results in lower production decline
rates as compared to our North American competitors that focus on
shales or other ultra-tight reservoirs. These lower decline
rates significantly reduce our ongoing capital requirements and
directly support the sustainability of our growth-and-income
model. At the same time, we continue to apply the best
worldwide drilling and completion technologies to our conventional
and semi-conventional assets to further enhance our rates of
return. While we are focused on conventional and
semi-conventional projects, our inventory depth is more typical of
an unconventional producer. We have greatly expanded our
project inventory over the past five years and it is stronger now
than at any point in Vermilion's history.
After more than two years of depressed industry activity, we are
starting to see a modest recovery in activity levels as global oil
markets begin to rebalance. While this increased activity
will lead to service cost reflation, we expect this to have less
impact on Vermillion than our competitors. A majority of our
capital is directed to assets outside of North America where the services sector has
not been exposed to severe boom-and-bust cycles. As such,
cost escalation pressures on our international operations are
expected to be less significant. Further, our
semi-conventional asset base in North
America requires significantly less sand, water and
horsepower intensity in completions as compared to our shale and
ultra-tight focused competitors. As a result, we have
relatively less exposure to the pressure pumping services segment,
where services price reflation is expected to be most
significant.
Capital Investment and Production Source Flexibility
Our diversification provides significant flexibility to
reallocate capital and production amongst business units as
required to meet corporate targets. This flexibility was
recently demonstrated through the reallocation of 2017 capital and
production targets due to the permitting delays in the Netherlands noted in our year-end 2016
release and Investor Day materials. As discussed in the
European Review section below, we now project that these permitting
delays will result in the deferral of nearly 3,000 boe/d of
Netherlands production for 2017
versus our original plan. In response, we have reallocated a
modest amount of additional capital from the Netherlands to Canada and intend to offset this current-year
permitting-related production shortfall through increased
production in other jurisdictions, primarily Canada and Australia. Our expectation to
maintain our 2017 production guidance of 69,000 – 70,000 boe/d
despite the impact of these permitting delays, and without
increasing consolidated exploration and development ("E&D")
capital, demonstrates a key advantage of our diversification as
well as the operational strength of our company.
Risk Reduction and Premium Pricing
Our global asset portfolio provides commodity diversification
and premium pricing. Commodity diversification reduces risk
for our shareholders by increasing the stability of our cash flows
and providing additional hedging options. Approximately 55%
of our oil-equivalent 2017 estimated production is priced with
reference to Dated Brent and European natural gas benchmarks.
These commodities continue to trade at significant premiums as
compared to their North American counterparts, improving our
margins. Our commodity exposure advantages, coupled with our
focus on cost management, have allowed Vermilion to consistently
deliver top quartile netbacks within our peer group.
Summary
Vermilion's diversification has been a key element of our
historical success and consistent record of market
outperformance. Our global asset portfolio generates
significant free cash flow(1), while at the same time
delivering consistent production growth, allowing us to sustainably
deliver our growth-and-income model for our shareholders. Our
focus on three core regions, managed within a decentralized
business unit structure with a highly capable leadership team,
allows us to focus our efforts and effectively manage our global
asset base. In each region, we are a very technically-focused
company that continues to add real value through high quality
technical work and careful execution of our
projects.
Q1 2017 Review
Vermilion's first quarter production increased by 6% to 64,537
boe/d from 60,863 boe/d in the prior quarter. This increase
was primarily attributable to higher volumes in Canada related to the resumption of
voluntarily curtailed production and organic growth from
development activities, as well as incremental volumes from our
German acquisition which closed near the end of last year. We
expect production volumes to continue increasing throughout 2017
with production volumes averaging between 69,000 to 70,000 boe/d
for the year.
Fund flows from operations ("FFO") for Q1 2017 was $143.4 million ($1.21/basic share(1)) as compared to
$149.6 million ($1.27/basic share) in Q4 2016. This 4%
decrease in FFO quarter-over-quarter is primarily attributable to a
significant inventory build in France and Australia related to shipment timing.
The pre-tax FFO impact of the quarter-over-quarter change in
inventory levels was approximately $15.5
million. Based on anticipated shipment schedules, we
expect that this inventory build will reverse over the course of
the year, unwinding the FFO impact. Year-over-year, FFO increased
by 53% as compared to Q1 2016 as a result of significantly higher
commodity prices. Vermilion generated net earnings of
$44.5 million ($0.38/basic share) during the first quarter,
representing a return to positive net income for the first time
since Q2 2015.
While commodity prices have increased from the lows experienced
in 2016, we continue to maintain our strict focus on cost
management. Per-unit operating expense of $9.35 per boe decreased by 11% during Q1 2017 as
compared to the prior quarter and by 2% as compared to the
year-earlier quarter.
During the quarter, we issued US$300
million of eight-year senior unsecured notes at a coupon of
5.625% per annum. This issuance was completed by way of a
private offering and represented Vermilion's first issuance in the
US debt markets. Despite Vermilion's first-time issuer
status, we were able to secure a very attractive interest rate,
reflecting our track record of prudent fiscal management. The
issuance of US dollar denominated debt provides a natural hedge
against our largely US dollar denominated revenue streams.
Subsequent to the quarter, we negotiated an extension of our credit
facility with our banking syndicate to May 2021. As a result
of our projected liquidity requirements and the proceeds from this
debt issuance, we elected to reduce our bank facility to
$1.4 billion from $2.0 billion.
Effective with the April 2017
dividend payment, the allowable participation in the Premium
DividendTM Component of our Premium
DividendTM and Dividend Reinvestment Plan is now being
prorated by 75%. As such, eligible shareholders who have
elected to participate in the Premium DividendTM
Component now receive a 1.5% premium on 25% of their participating
shares, and the regular cash dividend on the remaining 75% of their
shares. We plan to discontinue the Premium
DividendTM Component of our Premium
DividendTM and Dividend Reinvestment Plan beginning with
the July 2017 dividend payment, such
that there would be no further equity issuance under this
program. We also reduced the discount associated with the
traditional component of our Premium DividendTM and
Dividend Reinvestment Plan from 3% to 2% beginning with the
January 2017 dividend.
Europe
Production from Corrib averaged 64.8 mmcf/d (10,803 boe/d) in Q1
2017, representing 100% of rated plant capacity. The project
has continued to outperform expectations for well deliverability
and downtime. Due to expected higher recovery efficiency
resulting from better well-to-well communication, we have adjusted
our field and well performance estimates, and now expect to
maintain peak production plateau through Q1 2018 and potentially
into Q2 2018. Corrib is a highly efficient generator of free
cash flow as a result of its highly-valued European gas product,
absence of royalties, low operating expense, and low maintenance
capital requirements.
In France, we drilled and
completed our first wells in the Neocomian fields during Q1
2017. Initial results from this four (4.0 net) horizontal
well program are highly encouraging. The first well was
placed on production in early March and delivered an IP30 rate of
250 bbls/d versus our type curve expectations of 110 bbls/d.
The second well, which only has a completed horizontal section of
40% of the anticipated length due to drilling problems, was placed
on production in late March at a rate of approximately 50 bbls/d at
low drawdown during the initial production phase. The
production rate from this well is expected to increase as pump
displacement and drawdown are turned up over time. The
remaining two wells have now been successfully drilled and cased
with slotted liner through the full horizontal section
targeted. Reservoir quality indications from these two wells
were positive, and we expect to have them on production during the
second quarter. During the first quarter, we also completed
and placed on production the four (4.0 net) Champotran wells we
drilled in France in Q4
2016. All wells are productive, with two exceeding
expectations, and two below. The combined IP30 oil rate from
the four wells was 550 bbls/d. Lastly, we drilled and placed
a Vulaines horizontal sidetrack well on production during the
quarter. The well delivered an IP30 rate of 90 bbls/d prior
to finishing the completion by acidizing the horizontal
lateral. Our ability to successfully execute a sidetracked
horizontal lateral in Vulaines creates the opportunity for higher
productivity multi-lateral horizontal development from existing
wellbores.
As noted previously, permitting delays in the Netherlands have resulted in a
reallocation of capital and production targets amongst business
units. Due to the delays in receiving final production
permits for three of our wells, two wells are now producing at
significantly restricted rates and a third well has been
shut-in. While we believe the final production permits for one
of the wells will be received in 2017, we do not currently expect
to receive the permits for the other two wells until 2018. As
such, we have reduced our full year 2017 average production
forecast for the Netherlands to
approximately 6,500 boe/d. This compares to our initial 2017
Netherlands production plan of 9,400 boe/d which reflected our
prior permitting timeline assumptions. We intend to offset
lower Netherlands volumes through
increased production in other jurisdictions, primarily Canada and Australia, and have made no changes to our
2017 guidance targets for consolidated production or E&D
capital. In the Netherlands,
two (1.0 net) wells that were in our original budget have been
postponed and we have deferred the completion activities for the
remaining two (1.0 net) exploration wells that we intend to drill
this year to 2018. In addition, we have reduced the scope of
our planned seismic program in the Akkrum exploration
concession. Further information on these changes is included
in our May 2017 investor presentation
available on our website. We expect the curtailed
Netherlands volumes to be
available for production during 2018.
In Germany, Vermilion assumed
operatorship of the assets acquired near the end of 2016 from Engie
E&P Deutschland GmbH. Production from the acquired assets
averaged approximately 2,000 boe/d during the quarter.
Vermilion commenced service rig operations on the acquired assets
in February, and we have developed a work plan to implement
identified optimization and workover projects. In
March 2017, we were awarded an
exploration license in Lower Saxony comprising 150,000 gross acres
(50,000 acres net to Vermilion) surrounding the acquired oil
fields. The Engie acquisition, our assumption of production
operatorship and the additional exploration acreage further advance
our objective of developing a material business unit in
Germany.
North America
In Canada, capital activity
increased significantly during the first quarter as compared to Q1
of the prior year. During Q1 2017, we drilled or participated
in seven (5.1 net) Mannville
wells, five (5.0 net) Cardium wells and 10 (8.3 net) Midale wells. Eleven (7.1 net)
Mannville wells, two (2.0 net)
Cardium wells and eight (7.0 net) Midale wells were brought on production.
Individual well results from our Q1 2017 Mannville program exceeded
our expectations with the majority displaying test productivity
significantly above our average well performance to-date.
Lower Mannville wells tested during the quarter(2)
include one well that tested at 8.0 mmcf/d with 190 bbls/d of free
liquids, and a second well at 2.8 mmcf/d with 535 bbls/d of free
liquids. Based on early stage production results, oil rates
from our Cardium and Midale wells
are in-line with expectations while cost efficiencies continue to
improve. Cardium Drill, Complete, Equip and Tie-in (DCET)
well costs averaged $2.3 million on a
per-section basis for Q1 2017 as compared to $3.2 million during our last program in
2014. Per well costs for our Midale play decreased to $1.7 million during Q1 2017 from $3.0 million in 2014. These improvements
largely resulted from an approximately 30% decrease in required
drilling days achieved during the quarter as compared to the start
in the Midale play in 2014.
The last five wells at the end of the Q1 2017 program achieved a
further 25% reduction in drilling days. During Q1, we also
continued to advance an infrastructure project supporting the
continued growth of our Upper Mannville development in the Ferrier
area. We plan to start the construction of a 14 mmcf/d
compressor station in Q4 2017 with start-up scheduled for Q2
2018.
In the United States, we
drilled three (3.0 net) wells in our early stage Turner Sand play during the quarter. The
Q1 2017 program was designed to establish consistent drilling and
completion procedures while reducing drilling times and overall
capital costs. Drilling times were reduced to 12 days from
the previous 18 day average despite an approximately 20% increase
in average lateral length. Based on currently available data,
while recognizing that some additional completion costs may still
be incurred on the new wells, we project that the per well drilling
and completion capital cost was reduced by approximately 25% from
the previous program. Two of the three wells have been
completed and were placed on production in late March, while the
third well is expected to be on production by late April. The
first two wells have been produced intermittently so far, with
initial production performance that is comparable to the better
wells drilled thus far in our East Finn project area. During
Q1 2017, we purchased overriding royalty interests on our lands
(ranging from 0.83% to 5%) for US$1.5
million, further consolidating our position and enhancing
our play economics.
Australia
Activities in Australia were
largely centered around our debottlenecking project to further
improve fluid handling capability on the Wandoo B platform.
Once completed, we expect that this infrastructure enhancement will
allow us to increase oil production on the platform by 600 to 700
bbls/d later in 2017. The two sidetrack wells we drilled in
Q2 2016 continue to exhibit strong productive capability.
When utilized, combined oil production from these wells was
approximately 4,000 bbls/d during Q1 2017. These wells are
produced intermittently to achieve business unit targets and meet
oil sales contract commitments. We do not expect to drill
additional wells in Australia
until 2019.
Environmental, Social & Governance
Vermilion was recently ranked 13th by Corporate Knights on the
Future 40 Responsible Corporate Leaders in Canada list. This marks the fourth year
in a row that Vermilion has been recognized by Corporate Knights as
one of Canada's top sustainability
performers. Vermilion continues to be the highest rated oil
and gas company on the list. This recognition reflects our
strong focus on sustainability, transparency and performance
regarding environmental, social and governance issues.
Board of Directors
Vermilion recently announced that Mr. William Roby will be appointed to the Board of
Directors effective April 26,
2017. Mr. Roby brings 33 years of experience in various
senior management and executive positions primarily from a number
of US and international management positions with Occidental
Petroleum Corporation from 1997 to 2013, most recently as Senior
Vice President, Worldwide Operations and Production/Facility
Engineering. From 2013 to 2014, he acted as Chief Operating
Officer of Sheridan Production Company, LLC, a Houston based oil and gas company. Mr.
Roby holds a Bachelor of Mechanical Engineering degree from
Louisiana State University.
In addition, Mr. Claudio
Ghersinich has advised that he will not be standing for
re-election to Vermilion's Board in 2017. Mr. Ghersinich has
been a director of Vermilion since 1994. He was one of the
three co-founders of Vermilion and served most recently as
Executive Vice President, Business Development from 2005 to
2008. Mr. Ghersinich was a key contributor to Vermilion's
success, and on behalf of Vermilion's management and Board of
Directors, we wish to thank him for his contributions to Vermilion,
the Board, Audit and Independent Reserves Committees. We wish
Claudio the very best in his future endeavours.
(1)
|
Non-GAAP Financial
Measure. Please see the "Non-GAAP Financial Measures" section
of Management's Discussion and Analysis.
|
|
|
(2)
|
Well A (Ellerslie)
production test was performed over a 2-day period. The
maximum choke size during the production test was 24.7mm.
Well A achieved a peak burnable gas production rate of 9.1 mmcf/d
with a stabilized rate of 8.0 mmcf/d. Well A also achieved a
peak liquids production rate of 375 bbls/d with a stabilized rate
of 190 bbls/d. Well B (Ellerslie) production test was
performed over a 2-day period. The maximum choke size during
the production test was 21.3mm. Well B achieved a peak
burnable gas production rate of 3.3 mmcf/d with a stabilized rate
of 2.8 mmcf/d. Well B also achieved a peak liquids production
rate of 690 bbls/d with a stabilized rate of 535 bbls/d.
These test results are not necessarily indicative of long-term
performance or of ultimate recovery.
|
|
|
TM
|
Denotes trademark of
Canaccord Genuity Capital Corporation
|
2017 GUIDANCE
On October 31, 2016, we released
our 2017 capital expenditure guidance of $295 million and associated production guidance
of between 69,000-70,000 boe/d.
The following table summarizes our guidance:
|
Date
|
Capital
Expenditures ($MM)
|
Production
(boe/d)
|
2017
Guidance
|
|
|
|
2017
Guidance
|
October 31,
2016
|
295
|
69,000 to
70,000
|
ANNUAL GENERAL MEETING WEBCAST
As Vermilion's Annual General Shareholders Meeting is being held
today, April 28th, 2017 at
10:00 AM MST at the Metropolitan
Centre, 333 – 4th Avenue S.W., Calgary,
Alberta, there will not be a first quarter conference
call. In lieu of the conference call, a presentation will be
given by Mr. Anthony Marino,
President & Chief Executive Officer at the end of the
meeting. Questions from the public can be submitted via the
webcast.
Please visit
http://event.on24.com/r.htm?e=1408430&s=1&k=69B66BC77507314039EFD37F8972FC98
or Vermilion's website at
http://www.vermilionenergy.com/ir/eventspresentations.cfm and
click on webcast under the upcoming events to view the webcast
which will commence at approximately 10:15
AM MST.
About Vermilion
Vermilion is an international energy producer that seeks to
create value through the acquisition, exploration, development and
optimization of producing properties in North America, Europe and Australia. Our business model targets
annual organic production growth, along with providing reliable and
increasing dividends to investors. Vermilion is targeting
growth in production primarily through the exploitation of light
oil and liquids-rich natural gas conventional resource plays in
Canada and the United States, the exploration and
development of high impact natural gas opportunities in
the Netherlands and Germany, and through oil drilling and workover
programs in France and
Australia. Vermilion also
holds an 18.5% working interest in the Corrib gas field in
Ireland. Vermilion pays a
monthly dividend of Canadian $0.215
per share, which provides a current yield of approximately
5%.
Vermilion's priorities are health and safety, the environment,
and profitability, in that order. Nothing is more important
to us than the safety of the public and those who work with us, and
the protection of our natural surroundings. We have been
recognized as a top decile performer amongst Canadian publicly
listed companies in governance practices, as a Climate "A" List
performer by the CDP, and a Best Workplace in the Great Place to
Work® Institute's annual rankings in Canada, France, the
Netherlands and Germany. In addition, Vermilion
emphasizes strategic community investment in each of our operating
areas.
Management and directors of Vermilion hold approximately 5% of
the outstanding shares, are committed to consistently delivering
superior rewards for all stakeholders, and have delivered over 20
years of market outperformance. Vermilion trades on the
Toronto Stock Exchange and the New York Stock Exchange under the
symbol VET.
DISCLAIMER
Certain statements included or incorporated by reference in this
document may constitute forward looking statements or financial
outlooks under applicable securities legislation. 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;
business strategies and objectives; operational and financial
performance; estimated reserve quantities and the discounted net
present value of future net revenue from such reserves; petroleum
and natural gas sales; future production levels (including the
timing thereof) and rates of average annual production growth;
exploration and development plans; acquisition and disposition
plans and the timing thereof; operating and other expenses,
including the payment and amount of future dividends; royalty and
income tax rates; and the timing of regulatory proceedings and
approvals.
Such forward looking statements or information are based on a
number of assumptions, all or any of which 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
Canada and internationally; the
ability of Vermilion to market crude oil, natural gas liquids, and
natural gas successfully to current and new customers; the timing
and costs of pipeline and storage facility construction and
expansion and the ability to secure adequate product
transportation; the timely receipt of required regulatory
approvals; the ability of Vermilion to obtain financing on
acceptable terms; foreign currency exchange rates and interest
rates; future crude oil, natural gas liquids, and natural gas
prices; and management's expectations relating to the timing and
results of exploration and development activities.
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
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: the ability of management to execute its business
plan; the risks of the oil and gas industry, both domestically and
internationally, such as operational risks in exploring for,
developing and producing crude oil, natural gas liquids, and
natural gas; risks and uncertainties involving geology of crude
oil, natural gas liquids, and natural gas deposits; risks inherent
in Vermilion's marketing operations, including credit risk; the
uncertainty of reserves estimates and reserves life and estimates
of resources and associated expenditures; the uncertainty of
estimates and projections relating to production and associated
expenditures; potential delays or changes in plans with respect to
exploration or development projects; Vermilion's ability to enter
into or renew leases on acceptable terms; fluctuations in crude
oil, natural gas liquids, and natural gas prices, foreign currency
exchange rates and interest rates; health, safety, and
environmental risks; uncertainties as to the availability and cost
of financing; the ability of Vermilion to add production and
reserves through exploration and development activities; the
possibility that government policies or laws may change or
governmental approvals may be delayed or withheld; uncertainty in
amounts and timing of royalty payments; risks associated with
existing and potential future law suits and regulatory actions
against Vermilion; and other risks and uncertainties described
elsewhere in this document or in Vermilion's other filings with
Canadian securities regulatory authorities.
The forward looking statements or information contained in this
document are made as of the date hereof and Vermilion 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.
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.
Financial data contained within this document are reported in
Canadian dollars, unless otherwise stated.
SOURCE Vermilion Energy Inc.