CALGARY,
AB, Sept. 11, 2023 /PRNewswire/ - Vermilion
Energy Inc. ("Vermilion", "We", "Our", or the "Company") (TSX: VET)
(NYSE: VET) is pleased to provide an update on our Australia and Ireland operations and European gas hedge
program.
We are pleased to report that we now expect Q3 2023 production
to come in at the upper end of our quarterly guidance range of
80,000 to 83,000 boe/d due to positive developments in
Australia and Ireland.
In Australia, we successfully
completed the remaining inspection and repair work on our Wandoo
facility and restarted production in early September without
incident. Initial production rates are strong and Australia is forecasted to produce
approximately 4,000 bbl/d in Q4 2023. The Wandoo asset has been in
our portfolio since 2004 and has generated a significant amount of
free cash flow ("FCF")(1) over this time frame. In 2022,
Wandoo crude sold at a US$14 premium
to Brent, which drives very strong netbacks. Under current strip
pricing we are forecasting over $100 million of FCF from
Australia in 2024.
In Ireland, we successfully
completed the planned major turnaround at Corrib approximately five
days ahead of schedule in August. Corrib is forecasted to produce
approximately 10,000 boe/d of premium-priced European gas net
to Vermilion in Q4 2023.
European gas prices remain strong due to continued supply
concerns as winter approaches. The 2024 and 2025 forward prices of
$22 and $21 per mmbtu, respectively, generate robust free
cash flow. As a result, we continue to add more European gas hedges
over this period, and currently have 51% of our 2H 2023
European gas hedged at an average floor price of $32 per mmbtu, 31% of our 2024 European gas
production hedged at an average floor price of $33 per mmbtu and 14% of our 2025 European gas
production hedged at an average floor price of $21 per mmbtu. Hedging at these price levels
enables us to lock in future fund flows from operations
("FFO")(2) and provides greater certainty on achieving
our near-term debt targets while enhancing our future return of
capital to shareholders.
Our Q4 2023 production forecast of 86,000 to 89,000 boe/d
and full year guidance range of 82,000 to 86,000 boe/d remains
unchanged. We plan to release our Q3 2023 results on
November 1, 2023 after the close of
North American markets.
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(1)
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Free cash flow ("FCF")
is a non-GAAP financial measure comparable to cash flows from
operating activities and is comprised of fund flows from operations
("FFO")less drilling and development and exploration and evaluation
expenditures. The measure is used to determine the funding
available for investing and financing activities including payment
of dividends, repayment of long-term debt, reallocation into
existing business units and deployment into new
ventures.
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(2)
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Fund flows from
operations ("FFO") is a total of segments measure comparable to net
earnings that is comprised of sales less royalties, transportation,
operating, G&A, corporate income tax, PRRT, windfall taxes,
interest expense, realized gain on derivatives, realized foreign
exchange gain (loss), and realized other income. The measure is
used to assess the contribution of each business unit to
Vermilion's ability to generate income necessary to pay dividends,
repay debt, fund asset retirement obligations, and make capital
investments. FFO does not have a standardized meaning under IFRS
and therefore may not be comparable to similar measures provided by
other issuers.
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About Vermilion
Vermilion is an international energy producer that seeks to
create value through the acquisition, exploration, development and
optimization of producing assets in North
America, Europe and
Australia. Our business model
emphasizes free cash flow generation and returning capital to
investors when economically warranted, augmented by value-adding
acquisitions. Vermilion's operations are focused on the
exploitation of light oil and liquids-rich natural gas conventional
and unconventional resource plays in North America and the exploration and
development of conventional natural gas and oil opportunities in
Europe and Australia.
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 by leading ESG rating agencies for our transparency on
and management of key environmental, social and governance issues.
In addition, we emphasize strategic community investment in each of
our operating areas.
Vermilion trades on the Toronto Stock Exchange and the New York
Stock Exchange under the symbol VET.
www.vermilionenergy.com
Disclaimer
Certain statements included or incorporated by reference in this
document may constitute forward-looking statements or information
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 and Vermilion's ability to fund such
expenditures; Vermilion's additional debt capacity providing it
with additional working capital; statements regarding the return of
capital; the flexibility of Vermilion's capital program and
operations; business strategies and objectives; operational and
financial performance; petroleum and natural gas sales; future
production levels and the timing thereof, including Vermilion's
2023 guidance, and rates of average annual production growth; the
effect of changes in crude oil and natural gas prices, changes in
exchange and inflation rates; significant declines in production or
sales volumes due to unforeseen circumstances; the effect of
possible changes in critical accounting estimates; statements
regarding the growth and size of Vermilion's future project
inventory, wells expected to be drilled in 2023; exploration and
development plans and the timing thereof; Vermilion's ability to
reduce its debt; statements regarding Vermilion's hedging program,
its plans to add to its hedging positions, and the anticipated
impact of Vermilion's hedging program on project economics and free
cash flows; the potential financial impact of climate-related
risks; 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 Vermilion's
expectations regarding future taxes and taxability; 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,
interest rates and inflation; 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 or involving
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.
This document contains metrics commonly used in the oil and gas
industry. These oil and gas metrics do not have any standardized
meaning or standard methods of calculation and therefore may not be
comparable to similar measures presented by other companies where
similar terminology is used and should therefore not be used to
make comparisons. 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.