CALGARY, July 30, 2018
/CNW/ - Vermilion Energy Inc. ("Vermilion", "We", "Our", "Us" or
the "Company") (TSX, NYSE: VET) is pleased to report operating and
condensed financial results for the three and six months
ended June 30, 2018.
The unaudited financial statements and management discussion and
analysis for the three and six months ended June 30,
2018, 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
- On May 28, 2018, Vermilion
acquired all of the issued and outstanding common shares of Spartan
Energy Corp. ("Spartan"), a publicly traded southeast Saskatchewan oil producer. Total consideration
for the acquisition was $1.4 billion
consisting of the issuance of 27.9 million Vermilion common shares
valued at approximately $1.2 billion
(based on the closing price per Vermilion common share of
$44.30 on the Toronto Stock Exchange
on May 28, 2018) and the assumption
of approximately $175 million of
Spartan's outstanding debt at the time the transaction closed.
- Q2 2018 production increased by 15% from the prior quarter to
80,625 boe/d. The increase was primarily due to the Spartan
acquisition and production added from our Q1 2018 drilling
program.
- Fund flows from operations ("FFO") for Q2 2018 was $193 million ($1.43/basic share(1)), an increase of
23% from the prior quarter driven by higher production volumes and
higher commodity prices, partially offset by hedging losses.
Year-over-year, FFO increased 31% as compared to Q2 2017 on higher
production and commodity prices.
- In Canada, production averaged
43,817 boe/d in Q2 2018, representing a 37% increase from the
previous quarter primarily due to the Spartan acquisition.
Production also benefited from our successful Q1 drilling program
and less weather-related downtime and planned maintenance on third
party infrastructure as compared to Q1 2018.
- In France, Q2 2018 production
averaged 11,683 boe/d, an increase of 6% from the prior quarter.
The increase was primarily due to production additions following
the completion of our Q1 2018 drilling program in the Neocomian and
Champotran fields and several workovers performed during the first
half of the year.
- In the Netherlands, production
averaged 7,335 boe/d in Q2 2018, which was down 3% from the prior
quarter. Subsequent to the end of the second quarter, we received
approval for the production permit on the Eesveen-02 well. The well
is expected to come on production in mid-August 2018.
- In Ireland, production
averaged 57 mmcf/d (9,426 boe/d) in Q2 2018, a 7% decrease from the
prior quarter due to natural declines and minor plant downtime
related to external electricity supply issues. We continue to work
closely with Canada Pension Plan Investment Board ("CPPIB") and
Shell on the transition of ownership and operations of Corrib from
Shell to CPPIB and Vermilion. Transition has progressed well with
all technical aspects being ready. We now anticipate receiving
final approvals from the necessary authorities and closing of the
transaction in the second half of 2018. Although this closing date
is later than our original expectation, and will have a modest
impact on our booked production, Vermilion will still benefit from
all interim period cash flows between January 1, 2017 and closing as a reduction of
purchase price.
- We have elected to accelerate our originally planned 2019
Australia two-well drilling campaign into Q4 2018. Although this
will not contribute production in 2018, it will save approximately
$12 million in capital compared to
drilling in 2019 and guard against a potential rebound in offshore
service costs.
- As a result of the accelerated Australia drilling program, combined with
minor capital increases driven by changes in foreign exchange rates
as compared to our original budget, we are increasing our 2018
capital budget by $70 million to
$500 million. Based on the forward
commodity strip, we expect to fully fund this revised capital
program and our dividend with internally generated FFO, resulting
in a total payout ratio of 90%, even after accounting for the
increased Australian capital investment in 2018.
- Vermilion's MSCI ESG rating was recently re-affirmed as "A" for
2018 and our Governance Metrics score ranked in the top decile
globally marking the second consecutive year Vermilion has scored
an "A" rating. Vermilion also scored 82 out of 100 on the annual
ratings conducted by Sustainalytics, ranking at the top of our peer
group.
(1)
|
Non-GAAP Financial
Measure. Please see the "Non-GAAP Financial Measures" section
of Management's Discussion and Analysis.
|
|
|
|
|
|
|
($M except as
indicated)
|
Q2
2018
|
Q1
2018
|
Q2
2017
|
YTD
2018
|
YTD
2017
|
Financial
|
|
|
|
|
|
Petroleum and natural
gas sales
|
394,498
|
318,269
|
271,391
|
712,767
|
532,992
|
Fund flows from
operations
|
192,990
|
157,480
|
147,123
|
350,470
|
290,557
|
|
Fund flows from
operations ($/basic share) (1)
|
1.43
|
1.29
|
1.22
|
2.73
|
2.43
|
|
Fund flows from
operations ($/diluted share) (1)
|
1.41
|
1.27
|
1.20
|
2.69
|
2.39
|
Net (loss)
earnings
|
(60,224)
|
25,139
|
48,264
|
(35,085)
|
92,804
|
|
Net (loss) earnings
($/basic share)
|
(0.45)
|
0.21
|
0.40
|
(0.27)
|
0.78
|
Capital
expenditures
|
80,129
|
128,618
|
58,875
|
208,747
|
154,764
|
Acquisitions
|
1,468,645
|
93,078
|
993
|
1,561,723
|
3,613
|
Asset retirement
obligations settled
|
2,626
|
3,591
|
2,120
|
6,217
|
4,369
|
Cash dividends
($/share)
|
0.690
|
0.645
|
0.645
|
1.290
|
1.335
|
Dividends
declared
|
98,604
|
79,005
|
77,858
|
154,451
|
177,609
|
|
% of fund flows from
operations
|
51%
|
50%
|
53%
|
51%
|
53%
|
Net dividends
(1)
|
78,629
|
59,364
|
48,617
|
89,704
|
137,993
|
|
% of fund flows from
operations
|
41%
|
38%
|
33%
|
39%
|
31%
|
Payout
(1)
|
161,384
|
191,573
|
109,612
|
248,837
|
352,957
|
|
% of fund flows from
operations
|
84%
|
122%
|
75%
|
101%
|
86%
|
Net debt
|
1,787,603
|
1,514,645
|
1,314,766
|
1,787,603
|
1,314,766
|
Ratio of net debt to
annualized fund flows from operations
|
2.3
|
2.4
|
2.2
|
2.6
|
2.3
|
Operational
|
|
|
|
|
|
Production
|
|
|
|
|
|
Crude oil and
condensate (bbls/d)
|
34,574
|
27,008
|
28,525
|
30,812
|
27,683
|
|
NGLs
(bbls/d)
|
5,651
|
5,126
|
3,821
|
5,390
|
3,260
|
|
Natural gas
(mmcf/d)
|
242.40
|
228.20
|
209.36
|
235.34
|
209.71
|
|
Total
(boe/d)
|
80,625
|
70,167
|
67,240
|
75.425
|
65.896
|
Average realized
prices
|
|
|
|
|
|
Crude oil and
condensate ($/bbl)
|
87.50
|
80.03
|
64.35
|
84.32
|
66.25
|
|
NGLs
($/bbl)
|
26.06
|
25.37
|
20.98
|
25.73
|
22.28
|
|
Natural gas
($/mcf)
|
4.77
|
5.81
|
4.75
|
5.27
|
5.18
|
Production mix (% of
production)
|
|
|
|
|
|
% priced with
reference to WTI
|
29%
|
21%
|
20%
|
25%
|
19%
|
|
% priced with
reference to AECO
|
26%
|
26%
|
24%
|
26%
|
23%
|
|
% priced with
reference to TTF and NBP
|
24%
|
29%
|
28%
|
26%
|
30%
|
|
% priced with
reference to Dated Brent
|
21%
|
24%
|
28%
|
23%
|
28%
|
Netbacks
($/boe)
|
|
|
|
|
|
Operating netback
(1)
|
32.85
|
31.05
|
28.72
|
32.01
|
30.08
|
|
Fund flows from
operations netback
|
26.29
|
25.29
|
23.66
|
25.81
|
24.63
|
|
Operating
expenses
|
10.82
|
10.99
|
10.14
|
0.01
|
0.01
|
Average reference
prices
|
|
|
|
|
|
WTI (US
$/bbl)
|
67.88
|
62.87
|
48.28
|
65.37
|
50.10
|
|
Edmonton Sweet index
(US $/bbl)
|
62.43
|
56.98
|
46.03
|
59.70
|
47.20
|
|
Dated Brent (US
$/bbl)
|
74.35
|
66.76
|
49.83
|
70.55
|
51.81
|
|
AECO
($/mmbtu)
|
1.18
|
2.08
|
2.78
|
1.63
|
2.74
|
|
NBP
($/mmbtu)
|
9.42
|
9.96
|
6.52
|
9.69
|
7.26
|
|
TTF
($/mmbtu)
|
9.50
|
9.59
|
6.74
|
9.54
|
7.21
|
Average foreign
currency exchange rates
|
|
|
|
|
|
CDN $/US $
|
1.29
|
1.26
|
1.34
|
1.28
|
1.33
|
|
CDN $/Euro
|
1.54
|
1.55
|
1.48
|
1.55
|
1.44
|
Share information
('000s)
|
|
|
|
|
|
Shares outstanding -
basic
|
152,363
|
122,769
|
120,947
|
152,363
|
120,947
|
Shares outstanding -
diluted (1)
|
155,355
|
125,794
|
123,794
|
155,355
|
123.794
|
Weighted average
shares outstanding - basic
|
134,603
|
122,390
|
120,514
|
128,531
|
119,578
|
Weighted average
shares outstanding - diluted (1)
|
136,559
|
124,304
|
122,660
|
130,224
|
121,488
|
(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
During the second quarter, we completed the $1.4 billion acquisition of Spartan Energy Corp.,
a publicly traded southeast Saskatchewan oil producer. This was the
largest acquisition in the history of our company. We are
extremely pleased to bring the former Spartan employees and assets
into the Vermilion family. The integration of both the assets
and employees has progressed very well, and we have no doubt that
each new employee will make a meaningful contribution to our future
success. The transaction significantly increases our presence
in the desirable operating jurisdiction of southeast Saskatchewan, while increasing our exposure to
high netback light oil in a highly advantaged product marketing
setting. While the development plans for the balance of the
year will largely align with the capital program Spartan previously
had in place, we have already identified additional future
development and production optimization opportunities across the
asset base, along with a number of cost savings
opportunities. Following the full integration of the Spartan
assets, Vermilion will have an established production base of
approximately 100,000 boe/d with the capability of generating over
$1.2 billion of FFO based on an
annualized estimate for Q4 2018 at the strip. We expect the
Spartan acquisition to enhance our ability to execute our
self-funded growth and income business model, while increasing our
capital markets market scale.
We achieved quarter-over-quarter production growth of 15%, or 5%
on a per share basis, largely driven by the Spartan acquisition and
organic growth in Canada,
France and the US following our
first quarter 2018 drilling programs in these countries.
Production was down slightly in our other business units primarily
due to a combination of natural decline, maintenance and
third-party facility downtime. For the remainder of the year,
we expect production to increase in most business units due to
lower downtime and, in some cases, regulatory approvals.
Oil prices strengthened by over 10% in Canadian dollar terms
during the second quarter of 2018, contributing to a 23% increase
in FFO relative to the prior quarter. The combination of higher oil
prices and a weaker Canadian dollar provides significant leverage
to our FFO and free cash flow(1) ("FCF") as the majority
of our costs, capital investments and dividends are paid in
Canadian dollars.
We have increased our 2018 capital budget by $70 million to $500
million to take advantage of cost savings associated with
accelerating our Australia
drilling program, and to account for minor capital increases in
other business units mainly due to changes in foreign exchange
rates as compared to our original budget. We had originally
planned to drill two wells in Australia in 2019, but have identified an
opportunity to save approximately $12
million by drilling them in Q4 2018. In addition, we
have also reallocated some capital and revised the production mix
between business units to account for permitting delays in the
Netherlands. Our 2018 corporate production guidance remains
unchanged at 86,000 to 90,000 boe/d, as we remain on track to
achieve this target with an anticipated exit rate in excess of
100,000 boe/d. The change in capital allocation and production
split across business units can be found in our updated corporate
presentation located on our website.
In conjunction with the Spartan acquisition, we announced the
elimination of the discount associated with our dividend
reinvestment program ("DRIP") effective with the June 2018 dividend payable in July 2018.
The DRIP participation rate for the July dividend payment dropped
to 5%, compared to approximately 25% previously, resulting in
significantly less proceeds and equity issuance from this
program. We anticipate the participation rate to remain at
about 5% in the future. Based on the forward commodity strip,
we expect to fully fund our revised capital program and our
dividend with internally generated FFO, resulting in a total payout
ratio of 90%.
Q2 2018 Operations Review
Europe
In France, Q2 2018 production
averaged 11,683 boe/d, an increase of 6% from the prior quarter.
The increase was primarily due to production additions following
the completion of our Q1 2018 drilling program in the Neocomian and
Champotran fields. Production also benefited from less well
downtime compared to the previous quarter, in addition to the
successful execution of several workovers performed during the
first half of the year.
In the Netherlands, Q2 2018
production averaged 7,335 boe/d, which was down 3% from the prior
quarter. Activity during the second quarter was focused on
maintenance, well workovers, permitting and evaluation of 3D
seismic acquired last year. We have completed an initial
assessment of the 3D seismic data and have identified 15 future
drilling prospects, the majority of which can be reached from
existing wellsites. Subsequent to the end of the second
quarter, we received regulatory approval for the production plan
for the Eesveen-02 well. This well produced at approximately
10 mmcf/d net to Vermilion during its extended production test last
fall, and is expected to come on production in mid-August
2018. We continue to pursue permitting of our planned three
well (1.5 net) drilling program included in our original 2018
budget. However, we believe delays in the permitting process,
largely driven by regulatory bandwidth being consumed by the
response to seismicity in the Groningen field, will push these
wells out of this budget year. More broadly, the Ministry of
Economic Affairs recently published a policy letter reiterating its
support for Small Fields development in the Netherlands. We
have detailed in our corporate presentation a new drilling schedule
for the Netherlands, which takes
into account regulatory delays in the near term, as well as our
long-term plan for more time-efficient well proposals by utilizing
a greater proportion of long reach wells to access new pools.
This schedule anticipates increasing the pace of our permitting and
drilling activities in the
Netherlands over time and continuing to grow our production
base in this high-netback business unit.
In Ireland, production from
Corrib averaged 57 mmcf/d (9,426 boe/d) in Q2 2018, a 7% decrease
from the prior quarter due to natural declines and minor plant
downtime related to external electricity supply issues.
Production declines were consistent with our numerical simulation
of reservoir performance. We made significant progress on
activities associated with the transition of ownership and
operatorship from Shell to CPPIB and Vermilion. The
transition has progressed well with all technical aspects being
ready. We now anticipate receiving final approvals from the
necessary authorities and closing of the transaction in the second
half of 2018. Although this closing date is later than our
original expectation, and will have a modest impact on our booked
production from Ireland, Vermilion
will still benefit from all interim period cash flows between
January 1, 2017 and closing as a
reduction of purchase price.
In Germany, production in Q2
2018 averaged 3,447 boe/d, a decrease of 9% from the previous
quarter. The decrease was primarily due to downtime at a
non-operated gas processing facility resulting in 22 days of
downtime during the quarter. A portion of the volumes were
brought back on-line mid-June; however, approximately two-thirds of
the volumes affected by the downtime are not anticipated to come
back on-line until later in the third quarter of 2018. Our
capital activity in Germany
continues to focus on well workover and optimization projects on
our operated assets and planning activities related to the Burgmoor
Z5 well (46% working interest) to be drilled in early 2019.
In Hungary, activity during the
second quarter of 2018 was primarily focused on preparations to
bring our first exploratory well in the South Battonya concession,
the Mh-Ny-07 well (100% working interest), on production during Q3
2018. Work on pipeline and facility tie-in continues, and we
anticipate bringing the well on production during August
2018. Permitting activities have been initiated in
preparation for the drilling of our second commitment well in the
South Battonya concession in 2019. In Croatia, we completed the first phase of our
2D seismic data acquisition, which revealed positive results on the
150 km of data obtained to date. We have also begun
permitting and planning activities in Croatia and Slovakia in preparation for our 2019 drilling
campaigns.
North America
In Canada, production averaged
43,817 boe/d in Q2 2018, representing a 37% increase from the
previous quarter primarily due to the production contribution from
the Spartan acquisition. Production also benefited from our
successful Q1 drilling program and less weather-related downtime
and planned maintenance on third party infrastructure as compared
to Q1 2018. We drilled or participated in 18 (16.2 net) wells
and brought on production nine (7.9 net) wells in Q2 2018.
The majority of the drilling activity in the quarter occurred on
the acquired Spartan assets, with 17 (15.2 net) of the 18 wells
drilled in Canada coming from the
inventory we acquired from Spartan. We currently have 4 rigs
operating on the acquired Spartan assets and one rig operating on
our legacy southeast Saskatchewan
assets, along with one rig operating in Alberta.
In the United States, Q2 2018
production averaged 784 boe/d, an increase of 27% from the prior
quarter primarily due to the contribution from two (2.0 net) of the
five (5.0 net) wells drilled in Q1 2018 and resumption of gas sales
following the restart of a third-party gas facility in mid-Q1
2018. The two wells placed on production averaged peak 30-day
production rates of 280 boe/d per well (84% oil). Two (2.0
net) wells are in the process of being completed and one (1.0 net)
well was shut-in after initial testing due to uneconomic production
levels.
Australia
In Australia, production
averaged 4,132 bbl/d in Q2 2018, representing a 17% decrease from
the previous quarter primarily due to downtime associated with well
workover activity to optimize electrical submersible pump
completions. These maintenance activities have been completed
and we expect to recover this production during the second half of
the year. Other activity during the second quarter was
focused on preparing for our next drilling program. We have
elected to accelerate our originally planned 2019 Australia
drilling campaign into Q4 2018. There are several significant
advantages to conducting this activity ahead of our original
schedule. First, a suitable rig is now working for another
operator on the northwest shelf, while there is no assurance that
such a rig could be mobilized at reasonable cost in 2019.
Second, the presence of the rig generates economies in mobilization
and demobilization, support vessels and other services.
Third, offshore services are already tightening, and the potential
for higher services costs exists in 2019. Finally, engaging
the rig that is currently operating on the northwest shelf should
ensure that our wells are completed before the onset of cyclone
season in Q1 2019. Although the early drilling is not
expected to contribute production in 2018, it will save
approximately $12 million in capital
compared to drilling in 2019 (even assuming no rebound in offshore
services prices in 2019). The total estimated cost for the
two-well program is approximately $65
million.
Environmental, Social and Governance ("ESG")
Vermilion's MSCI ESG rating was recently re-affirmed as "A" for
2018, marking the second consecutive year Vermilion has scored at
this level, and our Governance Metrics score ranked in the top
decile globally. Vermilion also scored 82 out of 100 on the
annual ratings conducted by Sustainalytics, ranking at the top of
our peer group. Sustainalytics rates the sustainability of
participating companies based on their environmental, social and
governance performance. Both of these ratings are a product
of our commitment to maintaining leadership in sustainability and
ESG performance.
Commodity Hedging
Vermilion hedges to manage commodity price exposures and
increase the stability of cash flows, providing additional
certainty with regards to the execution of our dividend and capital
programs. In aggregate, we currently have 40% of our expected
net-of-royalty production hedged for 2018. These hedges
include both swaps and collars. Our diversified commodity
mix, including more than a one-third cash flow contribution from
relatively high-priced European natural gas, gives us unique
flexibility in managing our individual commodity exposures.
Based on the current level and term structures in the oil, North
American gas and European gas forward curves, we have elected to
lock down a greater percentage of our gas exposures, particularly
for European gas. We have currently hedged 66% of anticipated
European natural gas volumes for 2018. In view of the
compelling longer-term forward market for European gas we have also
hedged 54% and 27% of our anticipated 2019 and 2020 volumes at
prices which should provide for strong project economics and free
cash flows. In addition, we have hedged 32% of anticipated
North American gas volumes for 2018. In view of backwardation
in the oil forward markets, we are keeping oil hedges shorter-term,
with 24% hedged for the second half of this year. At present,
our philosophy is to maintain greater torque to longer-term oil
prices, with only 7% of our expected oil production hedged for
2019. We will continue to add to our hedge positions in all
products as suitable opportunities arise.
Board of Directors
Vermilion is pleased to announce the appointment of Ms.
Carin Knickel to the Board of
Directors, effective August 1,
2018. Ms. Knickel brings over 39 years of experience in human
resources, business development and crude oil and natural gas
marketing. She currently serves on the boards of Hudbay
Minerals Inc, Whiting Petroleum Corporation and the National MS
Society (Colorado/Wyoming
Chapter). Prior to joining these boards, Ms. Knickel worked
at ConocoPhillips for 33 years, where she held a variety of
leadership positions globally across several business lines, most
recently as the Corporate Vice President of Global Human
Resources. She has a BSc - Business, Marketing from the
University of Colorado at Boulder and
an MSc - Sloan Fellowship, Management from the Massachusetts Institute of Technology.
(signed "Anthony Marino")
Anthony Marino
President & Chief Executive Officer
July 27, 2018
(1)
|
Non-GAAP Financial
Measure. Please see the "Non-GAAP Financial Measures" section
of Management's Discussion and Analysis
|
2018 Guidance
On October 30, 2017, we released
our 2018 capital expenditure guidance of $315 million and associated production guidance
of between 74,500 to 76,500 boe/d. On January 15, 2018, we increased our capital
expenditure guidance to $325 million
and production guidance to between 75,000 to 77,500 boe/d to
reflect the post-closing impact of the acquisition of a private
southeast Saskatchewan and
southwest Manitoba light oil
producer. On April 16, 2018, we
increased our capital expenditure guidance to $430 million and production guidance to between
86,000 to 90,000 boe/d to reflect the post-closing impact of the
acquisition of Spartan Energy Corp. On July 30, 2018, we increased our capital
expenditure guidance to $500 million
to reflect the acceleration of our Australia drilling campaign into Q4 2018, and
to a lesser extent to account for the impact of foreign exchange
fluctuations on our Canadian dollar capital levels.
The following table summarizes our guidance:
|
|
|
|
|
Date
|
Capital
Expenditures ($MM)
|
Production
(boe/d)
|
2018
Guidance
|
|
|
|
2018
Guidance
|
October 30,
2017
|
315
|
74,500 to
76,500
|
2018
Guidance
|
January 15,
2018
|
325
|
75,000 to
77,500
|
2018
Guidance
|
April 16,
2018
|
430
|
86,000 to
90,000
|
2018
Guidance
|
July 30,
2018
|
500
|
86,000 to
90,000
|
Conference Call and Audio Webcast Details
Vermilion will discuss these results in a conference call on
Monday, July 30, 2018 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). A recording of the conference call will be
available for replay by calling 1-855-859-2056 and using conference
ID 8229598 from July 30, 2018 at
12:00 PM MST to August 13, 2018 at 9:59 PM
MST.
You may also access the audio webcast at
https://event.on24.com/wcc/r/1782675/5DC6DC44C8A4F63A0B7186B3D7113224.
The webcast link can be found on Vermilion's website at
http://www.vermilionenergy.com/ir/eventspresentations.cfm under
Upcoming Events.
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 $0.23 per share, which
provides a current yield of approximately 5.5%.
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 Leadership level (A-)
performer by the CDP, and a Best Workplace in the Great Place to
Work® Institute's annual rankings in Canada, the
Netherlands and Germany. In
addition, Vermilion emphasizes strategic community investment in
each of our operating areas.
Employees and directors hold approximately 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.
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SOURCE Vermilion Energy Inc.