CALGARY,
July 26, 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 and six months
ended June 30, 2017.
The unaudited financial statements and management discussion and
analysis for the three and six months ended June 30, 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 4% in Q2 2017 to 67,240 boe/d
as compared to 64,537 boe/d in the prior quarter. The increase was
primarily attributable to higher volumes in Canada, France and the US.
- Fund flows from operations ("FFO") for Q2 2017 was $147.1 million ($1.22/basic share(1)), an increase of
3% as compared to $143.4 million
($1.21/basic share) in Q1 2017.
Higher FFO was primarily due to higher sales volumes, which more
than offset the impact of lower commodity prices. Year-over-year,
FFO increased by 16% as compared to Q2 2016 as a result of higher
commodity prices and production growth.
- We placed an additional 13 (11.5 net) wells on production in
Canada during the second quarter,
resulting in quarterly production growth of 14% for the Canadian
business unit. Our drilling programs in the Mannville, Cardium and Midale projects continue to deliver
predictable growth and improving cost efficiencies.
- In the United States, the
three (3.0 net) Turner Sand wells
drilled in the first quarter were put on production during the
second quarter. After a period of intermittent production testing,
the three wells are now producing at a combined rate of 760 boe/d,
with two of the wells performing above our type curve.
- In France, we drilled and
completed our first four (4.0 net) wells in the Neocomian fields,
with all four wells on production during the second quarter. The
combined IP30 oil rate from the four Neocomian wells was 600
bbls/d, which exceeded our expectations. We believe the 100%
success rate and better-than-expected production results on this
inaugural drilling program validate the long-term development
potential of the Neocomian fields.
- We received the required permits to execute our two-well (1.0
net) exploration drilling program and 220 square kilometre 3D
seismic survey in the Netherlands.
The new wells will be drilled during the third quarter. Subsequent
to the quarter, we received ministry authorization to increase
production on a key well, pending a public comment period on the
ministry's authorization. With the receipt of these permits, we
expect to resume production growth from our Netherlands business unit in the second half
of this year and through 2018, while we continue to pursue
additional permits to support our long-term growth plans.
- In Ireland, Corrib continues
to outperform our expectations with production averaging 63.8
mmcf/d (10,634 boe/d) in Q2 2017 and 64.3 mmcf/d (10,718 boe/d)
through the first half of 2017, representing approximately 98% of
rated plant capacity.
- On July 12, Vermilion and Canada
Pension Plan Investment Board ("CPPIB") announced a strategic
partnership in Corrib, whereby CPPIB will acquire Shell Exploration
Company B.V.'s 45% interest in Corrib for total cash consideration
of €830 million, subject to customary closing adjustments and
future contingent value payments based on performance and realized
pricing. The acquisition has an effective date of January 1, 2017 and is anticipated to close in
the first half of 2018. At closing, Vermilion expects to assume
operatorship of Corrib, and CPPIB plans to transfer the operating
entity and a 1.5% working interest to Vermilion for €19.4 million,
before closing adjustments.
- We have elected to accelerate additional Canadian drilling and
completion activity in the fourth quarter of 2017 that was
originally planned for 2018. This will allow us to lock-in current
services costs and avoid the pre-breakup service constraints we
experienced in Q1 2017. Consequently, we are increasing our 2017
capital budget to $315 million, from
$295 million previously, to reflect
this acceleration. The incremental activity will include additional
Cardium and Mannville drilling,
completion and well tie-in activities, and some pre-drill
expenditures for our 2018 program. Because the increased capital
investment will occur late in 2017, our production guidance for
2017 is unaffected at 69,000 boe/d to 70,000 boe/d. However, we
expect that the additional capital investment in 2017 will
positively impact 2018, either by reducing capital investment or
increasing production rates as compared to our previously-announced
targets.
- Effective with the July 2017
dividend payment, we have fully discontinued the Premium
DividendTM Component of our Premium
DividendTM and Dividend Reinvestment Plan.
- Vermilion's MSCI ESG (Environment, Social and Governance)
rating increased from BBB to A for 2017, and our Governance Metrics
score ranked in the 90th percentile globally. This
follows our 13th-place ranking in the 2017 Corporate
Knights Future 40 Responsible Corporate Leaders in Canada List. These recognitions reflect
Vermilion's continued focus on combining financial results with
exemplary environmental, social and governance performance.
(1)
|
Non-GAAP Financial
Measure. Please see the "Non-GAAP Financial Measures" section
of Management's Discussion and Analysis.
|
TM
|
Denotes trademark of
Canaccord Genuity Capital Corporation
|
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
($M except as
indicated)
|
Jun
30,
|
Mar
31,
|
Jun
30,
|
|
|
Jun
30,
|
Jun
30,
|
Financial
|
2017
|
2017
|
2016
|
|
|
2017
|
2016
|
Petroleum and natural
gas sales
|
271,391
|
261,601
|
212,855
|
|
|
532,992
|
390,240
|
Fund flows from
operations
|
147,123
|
143,434
|
126,568
|
|
|
290,557
|
220,235
|
|
Fund flows from
operations ($/basic share) (1)
|
1.22
|
1.21
|
1.10
|
|
|
2.43
|
1.93
|
|
Fund flows from
operations ($/diluted share) (1)
|
1.20
|
1.19
|
1.09
|
|
|
2.39
|
1.91
|
Net earnings
(loss)
|
48,264
|
44,540
|
(55,696)
|
|
|
92,804
|
(141,544)
|
|
Net earnings (loss)
($/basic share)
|
0.40
|
0.38
|
(0.48)
|
|
|
0.78
|
(1.24)
|
Capital
expenditures
|
58,875
|
95,889
|
71,714
|
|
|
154,764
|
134,487
|
Acquisitions
|
993
|
2,620
|
8,550
|
|
|
3,613
|
9,420
|
Asset retirement
obligations settled
|
2,120
|
2,249
|
2,200
|
|
|
4,369
|
4,224
|
Cash dividends
($/share)
|
0.645
|
0.645
|
0.645
|
|
|
1.290
|
1.290
|
Dividends
declared
|
77,858
|
76,593
|
74,662
|
|
|
154,451
|
147,509
|
|
% of fund flows from
operations
|
53%
|
53%
|
59%
|
|
|
53%
|
67%
|
Net dividends
(1)
|
48,617
|
41,087
|
24,146
|
|
|
89,704
|
49,003
|
|
% of fund flows from
operations
|
33%
|
29%
|
19%
|
|
|
31%
|
22%
|
Payout
(1)
|
109,612
|
139,225
|
98,060
|
|
|
248,837
|
187,714
|
|
% of fund flows from
operations
|
75%
|
97%
|
78%
|
|
|
86%
|
85%
|
Net debt
|
1,314,766
|
1,377,636
|
1,398,950
|
|
|
1,314,766
|
1,398,950
|
Ratio of net debt to
annualized fund flows from operations
|
2.2
|
2.4
|
2.8
|
|
|
2.3
|
3.2
|
Operational
|
Production
|
|
|
|
|
|
|
|
|
Crude oil and
condensate (bbls/d)
|
28,525
|
26,832
|
28,416
|
|
|
27,683
|
28,808
|
|
NGLs
(bbls/d)
|
3,821
|
2,694
|
2,713
|
|
|
3,260
|
2,693
|
|
Natural gas
(mmcf/d)
|
209.36
|
210.07
|
198.93
|
|
|
209.71
|
200.02
|
|
Total
(boe/d)
|
67,240
|
64,537
|
64,285
|
|
|
65,896
|
64,837
|
Average realized
prices
|
|
|
|
|
|
|
|
|
Crude oil, condensate
and NGLs ($/bbl)
|
59.40
|
64.14
|
53.90
|
|
|
61.50
|
46.63
|
|
Natural gas
($/mcf)
|
4.75
|
5.62
|
3.53
|
|
|
5.18
|
3.65
|
Production mix (% of
production)
|
|
|
|
|
|
|
|
|
% priced with
reference to WTI
|
20%
|
17%
|
20%
|
|
|
19%
|
20%
|
|
% priced with
reference to AECO
|
24%
|
22%
|
22%
|
|
|
23%
|
24%
|
|
% priced with
reference to TTF and NBP
|
28%
|
32%
|
29%
|
|
|
30%
|
28%
|
|
% priced with
reference to Dated Brent
|
28%
|
29%
|
29%
|
|
|
28%
|
28%
|
Netbacks
($/boe)
|
|
|
|
|
|
|
|
|
Operating netback
(1)
|
28.72
|
31.62
|
27.66
|
|
|
30.08
|
24.64
|
|
Fund flows from
operations netback
|
23.66
|
25.75
|
21.90
|
|
|
24.63
|
19.00
|
|
Operating
expenses
|
10.14
|
9.35
|
9.02
|
|
|
9.77
|
9.30
|
Average reference
prices
|
|
|
|
|
|
|
|
|
WTI (US
$/bbl)
|
48.28
|
51.92
|
45.59
|
|
|
50.10
|
39.52
|
|
Edmonton Sweet index
(US $/bbl)
|
46.03
|
48.37
|
42.51
|
|
|
47.20
|
36.13
|
|
Dated Brent (US
$/bbl)
|
49.83
|
53.78
|
45.57
|
|
|
51.81
|
39.73
|
|
AECO
($/mmbtu)
|
2.78
|
2.69
|
1.40
|
|
|
2.74
|
1.61
|
|
NBP
($/mmbtu)
|
6.52
|
7.96
|
5.78
|
|
|
7.26
|
5.88
|
|
TTF
($/mmbtu)
|
6.74
|
7.65
|
5.61
|
|
|
7.21
|
5.66
|
Average foreign
currency exchange rates
|
|
|
|
|
|
|
|
|
CDN $/US $
|
1.34
|
1.32
|
1.29
|
|
|
1.33
|
1.33
|
|
CDN $/Euro
|
1.48
|
1.41
|
1.46
|
|
|
1.44
|
1.49
|
Share information
('000s)
|
Shares outstanding -
basic
|
120,947
|
119,046
|
116,173
|
|
|
120,947
|
116,173
|
Shares outstanding -
diluted (1)
|
123,794
|
122,135
|
118,948
|
|
|
123,794
|
118,948
|
Weighted average
shares outstanding - basic
|
120,514
|
118,632
|
115,366
|
|
|
119,578
|
114,046
|
Weighted average
shares outstanding - diluted (1)
|
122,660
|
120,722
|
116,587
|
|
|
121,488
|
115,090
|
|
|
(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
Oil prices were lower in the second quarter as the market
remains focused on US supply growth and relatively high
inventories. OPEC's decision in late May to extend its
production cuts until March 2018 did
little to ease concerns about the current global supply glut.
These industry conditions, and the resulting oil price retracement,
have led the financial markets once again to a focus on
sustainability in a "lower-for-longer" environment. At
Vermilion, sustainability is central to our business model as we
remained focused on self-funded growth and income. Despite
the recent weakness in oil prices, we continue to operate our
business with a sustainability ratio(1) under 100% based
on the current forward strip. Our diversified global asset
portfolio provides many inherent defensive characteristics that
support this business model, including both commodity and project
diversification. Our commodity diversification reduces the
volatility of our revenue stream, while our project diversification
allows us to allocate capital to the highest return projects
depending on relative commodity prices.
All of our major business units remain free cash
flow(1) positive under current strip pricing, as we
continue to operate our business with a prudent focus on costs and
profitability. Our Canadian business unit in particular has
demonstrated the most dramatic improvement across our portfolio in
recent years. As a result of having to compete for capital
with our highly profitable and sustainable business units in
Europe and Australia, the Canadian business unit has
successfully transitioned into a free cash flow business over the
past two years, and is on track to deliver double digit production
growth this year while generating approximately 30% free cash flow,
based on current strip pricing. Our Canadian business unit
delivered 14% quarter-over-quarter production growth in Q2 2017,
and in recent weeks has achieved a notable milestone with
production exceeding 30,000 boe/d for the first time. Our
Canadian assets are concentrated in two core areas, in west-central
Alberta where we have a dominant
position in the Mannville
condensate play and the Cardium light oil play, and in the down-dip
Midale light oil play in southeast
Saskatchewan. With a deep inventory of high return,
liquids-focused drilling locations, we project sustained production
and free cash flow growth from our Canadian business unit.
We achieved another milestone during the second quarter,
celebrating our 20-year anniversary in France. France remains a profitable and economically
sustainable business unit. In addition, we are proud of our
record of environmental and carbon sustainability in our French
business. Consistent with President Macron's
previously-announced campaign platform, the newly elected French
government announced its intention to not grant new exploration
permits beyond those already in progress. We do not expect
this new legislation, if passed, to have a material impact on
Vermilion as our operations are focused on development activities
such as well workovers, infill drilling and waterflood
optimization. We look forward to the next twenty years of
development activities in France,
and to continue demonstrating that oil and gas production can be a
sustainable part of the long-term energy transition.
In the Netherlands, we received
the required permits to execute our drilling and seismic programs
for 2017. In addition, we recently received ministry
authorization to increase production on a key well, pending a
public comment period on the ministry's authorization. With
the receipt of these permits, we expect to resume production growth
from our Netherlands business unit
in the second half of this year and through 2018, while we continue
to advance various permits to support our longer-term growth
plans. Permitting in the
Netherlands has always been a time-consuming and challenging
process, but we believe the new permitting framework will
ultimately improve the process for both communities and
operators. We have a strong track record of profitable growth
in the Netherlands, delivering
seven years of consecutive growth at a 13% CAGR prior to
2017. While we were disappointed to break this string of
production increases during 2017 due to the permitting delays, we
remain committed to the
Netherlands and are confident in the longer-term growth
opportunities there.
We recently announced a strategic partnership with Canada
Pension Plan Investment Board ("CPPIB") in the Corrib Natural Gas
Field in Ireland, whereby CPPIB
will acquire Shell Exploration Company B.V.'s ("Shell") 45%
interest in the project. At closing, Vermilion expects to
assume operatorship, and CPPIB plans to transfer the operating
entity (SEPIL) along with the 1.5% working interest to Vermilion
for €19.4 million ($28.4 million at
current exchange rates) before closing adjustments, increasing our
stake to 20%. We expect the acquisition to be accretive for
all pertinent per share metrics including production, fund flows
from operations, reserves and net asset value. We view the
acquisition and assumption of operatorship of Corrib as a strategic
milestone for Vermilion, and one that will add value over the
long-term. Following the assumption of operatorship of
Corrib, we estimate that we will operate 87% of our production base
as compared to 72% currently.
We have elected to accelerate additional Canadian drilling and
completion activity in the fourth quarter of 2017 that was
originally planned for 2018. This will allow us to lock-in
current services costs and avoid the pre-breakup service
constraints we experienced in Q1 2017. Consequently, we are
increasing our 2017 capital budget to $315
million, from $295 million
previously, to reflect this accelerated activity. The
incremental activity will include the drilling of two (2.0 net)
Cardium wells, two (1.4 net) Mannville wells, additional completion and
well tie-in activities, and other pre-drill expenditures for our
2018 program. Because the increased capital investment will
occur late in 2017, our production guidance for 2017 is unaffected
at 69,000 boe/d to 70,000 boe/d. However, we expect that the
additional capital investment in 2017 will positively impact 2018,
either by reducing capital investment or increasing production
rates as compared to our previously-announced targets.
Q2 2017 Review
Vermilion's second quarter production increased by 4% to 67,240
boe/d from 64,537 boe/d in the prior quarter. The increase
was primarily attributable to higher volumes in Canada, France and the US, where new production from
our Q1 2017 drilling program more than offset lower volumes in
the Netherlands and
Australia. This increase was consistent with our expectation
of sequential quarterly production growth throughout 2017 to
achieve our full year production guidance of between 69,000 to
70,000 boe/d.
Fund flows from operations ("FFO") for Q2 2017 was $147.1 million ($1.22/basic share(1)) as compared to
$143.4 million ($1.21/basic share) in Q1 2017. FFO
increased 3% quarter-over-quarter, primarily due to higher sales
volumes which more than offset the impact of lower commodity
prices. Year-over-year, FFO increased by 16% as compared to
Q2 2016 as a result of higher commodity prices and production
growth. Vermilion generated net earnings of $48.2 million ($0.40/basic share) during the second quarter,
representing our second consecutive quarter of positive net
income.
Despite commodity price volatility, we continue to deliver
profitable production growth with a strict focus on cost
management, maintaining a payout ratio of less than 100%.
Effective with the July 2017
dividend payment, we have fully discontinued the Premium
DividendTM Component of our Premium
DividendTM and Dividend Reinvestment
Plan.
Europe
In France, we drilled and
completed our first wells in the Neocomian fields and have now
placed all four wells on production. The combined IP30 oil
rate from the four horizontal Neocomian wells was 600 bbls/d, which
exceeded our expectations. The 100% success rate and
better-than-expected production results on this inaugural drilling
program validate the long-term development potential of the
Neocomian fields. We believe the success of our Neocomian
drilling program provides further depth to our low-risk development
inventory in France.
In the Netherlands, as stated
earlier, we received the required permits to execute our two-well
(1.0 net) exploration drilling program in the Gorredjik and Drenthe
VI production licenses. The new wells will be drilled during
the third quarter. In addition, we received permits for a 220
square kilometre 3D seismic survey in the Akkrum and South
Friesland III exploration licenses, which will be shot in the
second half of this year. As previously mentioned, in
mid-July, the Ministry of Economic Affairs published its approval
for a production rate increase on a key well, which will become
effective following a six-week public comment period.
In Germany, Vermilion assumed
operatorship of the assets acquired in December 2016 from Engie E&P Deutschland
GmbH. We commenced workover and artificial lift optimization
operations on the acquired assets in February resulting in Q2
average production from the acquired assets of 2,200 boe/d, a 10%
increase from Q1 levels. In March
2017, we were awarded an exploration license in Lower Saxony
comprising 50,000 net acres surrounding the acquired oil
fields. The combination of our 2016 Engie acquisition,
assumption of production operatorship, and the additional
exploration acreage awarded in Lower Saxony further advance our
objective of developing a material business unit in
Germany.
Production from Corrib averaged 63.8 mmcf/d (10,634 boe/d) in Q2
2017 and has averaged 64.3 mmcf/d (10,718 boe/d) through the first
half of 2017, representing approximately 98% of rated plant
capacity. The project has continued to outperform
expectations for well deliverability and downtime.
On July 12, Vermilion and CPPIB
announced a strategic partnership in Corrib, whereby CPPIB will
acquire Shell Exploration Company B.V.'s 45% interest in Corrib for
total cash consideration of €830 million, subject to customary
closing adjustments and future contingent value payments based on
performance and realized pricing. The acquisition has an
effective date of January 1, 2017 and
is anticipated to close in the first half of 2018. At
closing, Vermilion expects to assume operatorship of Corrib, and
CPPIB plans to transfer the operating entity and a 1.5% working
interest to Vermilion for €19.4 million ($28.4 million at current exchange rates), before
closing adjustments. Vermilion's incremental 1.5% ownership
of Corrib would represent production rate capability of
approximately 850 boe/d based on 2017 production expectations, and
approximately 2.0 million boe(2) of 2P reserves based on
an independent evaluation by GLJ Petroleum Consultants Ltd. with an
effective date of December 31,
2016. Assuming a purchase price of €19.4 million
($28.4 million at current exchange
rates), before closing adjustments, the transaction metrics are
estimated at approximately $33,400
per boe per day, $15.40 per boe of
proved plus probable reserves(2) including future
development capital (generating a 2P recycle ratio of 1.9 times
based on projected 2017 netbacks), and 3.3 times estimated 2017
operating cash flow(1) using the forward commodity
strip. The acquisition is expected to be accretive for all
pertinent per share metrics including production, funds flow from
operations, reserves, and net asset value. The Corrib
acquisition significantly increases our degree of operating control
over our asset base. Following the assumption of operatorship
of Corrib, we estimate that we will operate 87% of our production
base as compared to 72% currently.
North America
In Canada, capital activity
decreased from the previous quarter due to spring break-up,
resulting in limited drilling activity. Following an active
drilling program in the first quarter, we brought 13 (11.5 net)
wells on production during the second quarter, for a total of 34
(27.6 net) wells placed on production in the first half of
2017. The new wells contributed to quarter-over-quarter
production growth of 14% for the Canadian business unit. The
Mannville program continues to
deliver predictable growth from the 15 (10.3 net) wells brought on
production so far this year, delivering an average IP60 of 470
boe/d. We have placed five (5.0 net) Cardium wells and 14
(12.3 net) Midale wells on
production during the first half of 2017, with production results
that are in line with expected performance. These results
were achieved while realizing significant cost reductions. In
the Cardium, Drill, Complete, Equip and Tie-in ("DCET") well costs
averaged $2.3 million on a
per-section basis for the 2017 program compared to $3.2 million during our last Cardium program in
2014. Cardium costs were reduced in part by utilizing smaller
pump jacks, which restrict production rates early in well life but
should achieve the same ultimate recovery. In the
Midale, per well costs decreased
to $1.7 million for the 2017 program
compared to $3.0 million in
2014. 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, the three
(3.0 net) Turner Sand wells drilled
in the first quarter were put on production during the second
quarter. After a period of intermittent production testing,
the three wells are now producing at a combined rate of 760 boe/d
in their third month of production. Two of the wells are
performing above our type curve for the southern part of this play
at current rates of approximately 330 boe/d and 325 boe/d
respectively, with production still gradually increasing. The
third well reached a peak IP30 of 140 boe/d, and is currently
producing approximately 110 boe/d. Average DCET well costs
decreased to US$3.5 million for the
2017 program, compared to US$4.2
million in 2016, even though average lateral length
increased to 5,300 feet as compared to 4,600 feet previously.
Our learning curve advancements in mechanical success and cost
reduction in the 2017 program set the stage for increased future
development in this project.
Australia
In Australia, progress
continues on 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.
Environmental, Social & Governance
Vermilion's MSCI ESG (Environment, Social and Governance) rating
increased from BBB to A for 2017 and our Governance Metrics score
ranked in the 90th percentile globally. This follows our
13th-place ranking in the 2017 Corporate Knights Future 40
Responsible Corporate Leaders in Canada List. These recognitions reflect
Vermilion's continued focus on combining financial results with
exemplary environmental, social and governance
performance.
Board of Directors
Vermilion recently announced the appointment of Mr. Stephen Larke to the Board of Directors.
Mr. Larke brings over 20 years of experience in energy capital
markets, including research, sales, trading and equity
finance. He is currently an Operating Partner and Advisory
Board member with Azimuth Capital Management, an energy-focused
private equity fund based in Calgary, Alberta. Prior to joining
Azimuth, Mr. Larke was Managing Director and Executive Committee
member with Peters & Co., an independent energy investment firm
based in Calgary. Before Peters & Co., he was
Vice-President and Director with TD Newcrest, serving in the role
of energy equity analyst. Both at Peters & Co. and TD
Newcrest, Mr. Larke received leading rankings in the Brendan Wood
International survey of institutional investors. He holds a
Bachelor of Commerce (Distinction) degree from the University of Calgary and the Chartered Financial
Analyst designation.
(signed "Anthony Marino")
Anthony Marino
President & Chief Executive Officer
July 25, 2017
|
|
(1)
|
Non-GAAP Financial
Measure. Please see the "Non-GAAP Financial Measures" section
of Management's Discussion and Analysis.
|
|
|
(2)
|
Estimated proved plus
probable reserves attributed to the assets as evaluated by GLJ
Petroleum Consultants Ltd. in a report dated February 27, 2017 with
an effective date of December 31, 2016.
|
|
|
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. On July 26, 2017 we announced an increase in our
capital expenditure guidance from $295
million to $315 million
following the acceleration of 2018 activities in our Canadian
business unit.
The following table summarizes our guidance:
|
|
Date
|
Capital
Expenditures ($MM)
|
Production
(boe/d)
|
2017
Guidance
|
|
|
|
2017
Guidance
|
October 31,
2016
|
295
|
69,000 to
70,000
|
2017
Guidance
|
July 26,
2017
|
315
|
69,000 to
70,000
|
CONFERENCE CALL AND AUDIO WEBCAST DETAILS
Vermilion will discuss these results in a conference call to be
held on Wednesday July 26, 2017 at
9:00 AM MST (11:00 AM EST). To participate, you may call
1-888-231-8191 (Canada and US Toll
Free) or 1-647-427-7450 (International and Toronto Area). The conference call will
also be available on replay by calling 1-855-859-2056 using
conference ID number 43164410. The replay will be available
until midnight mountain time on
August 9, 2017.
You may also listen to the audio webcast by clicking
http://event.on24.com/r.htm?e=1452682&s=1&k=5232C73BDCEDC708618C317B6583DE36
or visit Vermilion's website at
www.vermilionenergy.com/ir/eventspresentations.cfm.
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
emphasizes organic production growth augmented with value-adding
acquisitions, 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 currently 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
6.5%.
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 and the Netherlands. In addition,
Vermilion emphasizes strategic community investment in each of our
operating areas.
Employees and directors hold approximately 6.5% of our fully
diluted 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.