CALGARY, AB, March 8, 2021 /CNW/ - Vermilion Energy Inc.
("Vermilion", "We", "Our", "Us" or the "Company") (TSX: VET) (NYSE:
VET) is pleased to report operating and financial results for the
year ended December 31, 2020 along with our 2020 reserves
information.
The audited financial statements, management discussion and
analysis and annual information form for the year
ended December 31, 2020 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
- In 2020, we generated $502
million of fund flows from operations ("FFO")(1)
and $135 million of free cash flow
("FCF")(1) after investing $367
million on exploration and development ("E&D") capital
expenditures. This resulted in a payout ratio of 92% including
reclamation and abandonment expenditures and dividends paid earlier
in the year.
- In Q4 2020, we generated $135
million of FFO and invested $60
million of E&D capital, resulting in FCF of $75 million which went toward debt reduction.
After funding reclamation and abandonment expenditures and minor
acquisitions, we reduced the amount outstanding under our revolving
credit facility by approximately $175
million over the second half of 2020, leaving us with over
$500 million of liquidity available
at year-end.
- Achieved 2020 average production of 95,190 boe/d(2),
slightly above the midpoint of our guidance range of 94,000 to
96,000 boe/d. Q4 2020 production averaged 87,848
boe/d(2), reflecting the impact from a capital program
executed predominately during the first part of 2020 with limited
drilling activity over the second half of the year.
- Production from our North American assets averaged 58,774
boe/d(2) in Q4 2020, a decrease of 10% from the prior
quarter primarily due to natural decline. The majority of our 2020
North American drilling program was executed during the first half
of the year with limited new production added during the second
half of the year.
- Production from our International assets averaged 29,073
boe/d(2) in Q4 2020, a decrease of 5% from the prior
quarter primarily due to a planned turnaround in Australia and natural decline.
- Total proved plus probable reserves decreased 7% from the prior
year to 467 mmboe, as evaluated by GLJ as at December 31, 2020(3). The decrease is
primarily due lower capital activity levels and economic
impacts.
- Proved plus probable reserve life index remains in excess of
13.
- During Q4 2020, we announced several management changes
including the appointments of Mr. Dion
Hatcher and Mr. Darcy Kerwin
to the newly created roles of Vice President, North America and Vice President,
International and HSE, respectively. In lieu of filling the role of
COO, Mr. Hatcher and Mr. Kerwin will jointly fulfill the duties and
continue to emphasize our focus on cost-control and safe,
efficient, profitable operations.
- Vermilion was ranked at the top of our peer group in 2020 in
the SAM Corporate Sustainability Assessment ("CSA"). We were also
selected for The Sustainability Yearbook 2021, which reflects that
our CSA sustainability performance is within the top 15% of our
industry (SAM's Upstream Oil & Gas and Integrated category).
Vermilion's 2020 Sustainability Report can be found on our website
using the following link:
http://sustainability.vermilionenergy.com/.
- Subsequent to the end of the year we announced a disciplined
and balanced E&D capital budget of $300
million for 2021, along with production guidance of 83,000
to 85,000 boe/d. The budget is focused on maximizing returns and
FCF in order to facilitate debt reduction and preserve liquidity.
Based on the mid-point of our 2021 production and capital
expenditure guidance and assuming US$60/bbl WTI oil prices for the balance of the
year, we expect to generate over $350
million of FCF in 2021, which will be used to reduce our
debt.
(1)
|
Non-GAAP Financial
Measure. Please see the "Non-GAAP Financial Measures" section of
the accompanying Management's Discussion and Analysis.
|
|
|
(2)
|
Please refer to
Supplemental Table 4 "Production" of the accompanying Management's
Discussion and Analysis for disclosure by product type.
|
|
|
(3)
|
Estimated gross
proved, developed and producing, total proved, and total proved
plus probable reserves as evaluated by GLJ Petroleum Consultants
Ltd. ("GLJ") in a report dated February 12, 2021 with an effective
date of December 31, 2020 (the "2020 GLJ Reserves
Report").
|
|
|
|
|
|
|
|
|
|
|
($M except as
indicated)
|
Q4
2020
|
|
Q3
2020
|
|
Q4
2019
|
|
2020
|
|
2019
|
Financial
|
|
|
|
|
|
Petroleum and natural
gas sales
|
316,198
|
|
282,020
|
|
388,802
|
|
1,119,545
|
|
1,689,863
|
Fund flows from
operations
|
135,212
|
|
114,776
|
|
215,592
|
|
502,065
|
|
908,055
|
Fund flows from operations ($/basic share)
(1)
|
0.85
|
|
0.73
|
|
1.38
|
|
3.18
|
|
5.87
|
Fund flows from operations ($/diluted share)
(1)
|
0.85
|
|
0.73
|
|
1.38
|
|
3.18
|
|
5.82
|
Net (loss)
earnings
|
(57,707)
|
|
(69,926)
|
|
1,477
|
|
(1,517,427)
|
|
32,799
|
Net (loss) earnings ($/basic share)
|
(0.36)
|
|
(0.44)
|
|
0.01
|
|
(9.61)
|
|
0.21
|
Capital
expenditures
|
59,894
|
|
31,330
|
|
100,625
|
|
367,202
|
|
523,164
|
Acquisitions
|
4,821
|
|
6,720
|
|
9,165
|
|
25,810
|
|
38,472
|
Asset retirement
obligations settled
|
7,271
|
|
2,305
|
|
7,352
|
|
14,278
|
|
19,442
|
Cash dividends
($/share)
|
—
|
|
—
|
|
0.690
|
|
0.575
|
|
2.760
|
Dividends
declared
|
—
|
|
—
|
|
107,702
|
|
90,067
|
|
427,311
|
%
of fund flows from operations
|
— %
|
|
—%
|
|
50%
|
|
18%
|
|
47%
|
Net dividends
(1)
|
—
|
|
—
|
|
97,502
|
|
81,790
|
|
392,374
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%
of fund flows from operations
|
— %
|
|
—%
|
|
45%
|
|
16%
|
|
43%
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Payout
(1)
|
67,165
|
|
33,635
|
|
205,479
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|
463,270
|
|
934,980
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%
of fund flows from operations
|
50
%
|
|
29%
|
|
95%
|
|
92%
|
|
103%
|
Net debt
|
2,105,983
|
|
2,136,219
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|
1,993,194
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|
2,105,983
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|
1,993,194
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Net debt to four
quarter trailing fund flows from operations
|
4.19
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|
3.67
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|
2.20
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|
4.19
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|
2.20
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Operational
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Production
(2)
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|
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Crude oil and condensate (bbls/d)
|
40,555
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|
43,240
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|
46,261
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|
43,421
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|
47,902
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NGLs (bbls/d)
|
8,627
|
|
9,509
|
|
8,160
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|
8,937
|
|
7,984
|
Natural gas (mmcf/d)
|
232.00
|
|
256.34
|
|
260.72
|
|
256.99
|
|
266.82
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Total (boe/d)
|
87,848
|
|
95,471
|
|
97,875
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|
95,190
|
|
100,357
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Average realized
prices
|
|
|
|
|
|
Crude oil and condensate ($/bbl)
|
55.31
|
|
52.77
|
|
71.25
|
|
50.53
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|
74.42
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NGLs ($/bbl)
|
19.20
|
|
15.04
|
|
14.63
|
|
13.06
|
|
13.61
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Natural gas ($/mcf)
|
4.13
|
|
2.34
|
|
3.61
|
|
2.77
|
|
3.58
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Production mix (% of
production)
|
|
|
|
|
|
%
priced with reference to WTI
|
40%
|
|
40%
|
|
40%
|
|
40%
|
|
39%
|
%
priced with reference to Dated Brent
|
17%
|
|
17%
|
|
17%
|
|
16%
|
|
18%
|
%
priced with reference to AECO
|
27
%
|
|
28%
|
|
26%
|
|
28%
|
|
25%
|
%
priced with reference to TTF and NBP
|
16%
|
|
15%
|
|
17%
|
|
16%
|
|
18%
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Netbacks
($/boe)
|
|
|
|
|
|
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Operating netback (1)
|
19.67
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|
16.29
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|
27.53
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|
17.58
|
|
29.25
|
Fund flows from operations netback
|
16.50
|
|
12.95
|
|
24.40
|
|
14.32
|
|
24.77
|
Operating expenses
|
13.00
|
|
10.21
|
|
12.52
|
|
11.89
|
|
12.01
|
General and administration expenses
|
2.27
|
|
1.35
|
|
1.88
|
|
1.73
|
|
1.61
|
Average reference
prices and foreign exchange rates
|
|
|
|
|
|
WTI (US $/bbl)
|
42.66
|
|
40.93
|
|
56.96
|
|
39.40
|
|
57.03
|
Edmonton Sweet index (US $/bbl)
|
38.59
|
|
37.42
|
|
51.59
|
|
34.08
|
|
52.15
|
Saskatchewan LSB index (US $/bbl)
|
38.96
|
|
37.57
|
|
51.58
|
|
34.14
|
|
52.50
|
Dated Brent (US $/bbl)
|
44.23
|
|
43.00
|
|
63.25
|
|
41.67
|
|
64.30
|
AECO ($/mcf)
|
2.64
|
|
2.24
|
|
2.48
|
|
2.23
|
|
1.76
|
NBP ($/mcf)
|
6.99
|
|
3.67
|
|
5.38
|
|
4.30
|
|
5.90
|
TTF ($/mcf)
|
6.63
|
|
3.51
|
|
5.36
|
|
4.18
|
|
5.90
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CDN $/US $
|
1.30
|
|
1.33
|
|
1.32
|
|
1.34
|
|
1.33
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CDN $/Euro
|
1.55
|
|
1.56
|
|
1.46
|
|
1.53
|
|
1.49
|
Share information
('000s)
|
|
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|
|
|
|
|
|
|
Shares outstanding -
basic
|
158,724
|
|
158,308
|
|
156,290
|
|
158,724
|
|
156,290
|
Shares outstanding -
diluted (1)
|
165,396
|
|
163,800
|
|
159,912
|
|
165,396
|
|
159,912
|
Weighted average
shares outstanding - basic
|
158,561
|
|
158,307
|
|
155,950
|
|
157,908
|
|
154,736
|
Weighted average
shares outstanding - diluted (1)
|
158,561
|
|
158,307
|
|
156,180
|
|
157,908
|
|
156,094
|
(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 the accompanying Management's Discussion and
Analysis.
|
(2)
|
Please refer to
Supplemental Table 4 "Production" of the accompanying Management's
Discussion and Analysis for disclosure by product type.
|
Message to Shareholders
Vermilion started 2020 on a strong footing in what appeared to
be a constructive outlook for commodity prices. That all changed in
mid-February as the effects from the COVID-19 pandemic started to
take hold. As we are all too aware now, the pandemic had
devastating effects on the global economy and commodity prices. As
commodity prices collapsed, we took swift and decisive action,
making drastic changes to our business in order to protect the
balance sheet and preserve financial liquidity. We reduced our 2020
capital program in March, suspended our dividend in April and, with
other cost saving initiatives, reduced over $550 million combined of annualized cash
outflows. In the months following, we made several changes to our
executive leadership team and undertook a global organizational
review to improve profitability and long-term sustainability. While
these collective decisions were difficult to make, we can look back
now with confidence and know that they were in the best interests
of the Company. Not only did Vermilion successfully navigate this
downturn, we have made several structural changes to our business
that will improve our long-term sustainability and add value for
our shareholders over the coming years.
One of the themes emerging from the COVID-19 pandemic is an
increased awareness and focus on environmental, social and
governance ("ESG") matters and the energy transition. Vermilion has
been focused on ESG for well over a decade and we take great pride
in our ESG leadership within the mid-cap energy space.
Sustainability is fundamental to our business which is reflected in
our consistently strong results and rankings from external ESG
agencies, including Vermilion's recent inclusion in The
Sustainability Yearbook 2021 based on the SAM (now S&P Global)
Corporate Sustainability Assessment. We maintained our disciplined
focus on ESG through 2020 despite the challenges caused by
COVID-19, and we are committed to progressing our ESG initiatives
in the future as we see Vermilion being a key contributor to the
energy transition. As such, we are currently developing a
comprehensive, long-term ESG strategy that will be fully integrated
into our business with clear objectives, including further targets
for emissions reductions. This new ESG strategy and associated
targets are expected to be in place by mid-2021.
Despite all the challenges in 2020, we still managed to execute
a $367 million exploration and
development ("E&D") capital program and deliver annual average
production of 95,190 boe/d(2) which is slightly above
the midpoint of our guidance range of 94,000 to 96,000 boe/d. In
2020, we executed a front-end weighted capital program whereby
approximately 65% of our E&D capital was invested in Q1 2020,
resulting in peak production of over 100,000 boe/d in Q2 2020 and
declining to 87,848 boe/d in Q4 2020. Through our profitability
review, we have determined that this allocation of capital is not
the most efficient and increases the challenges of managing our
production base over time. We have incorporated these learnings
into our 2021 budget and are targeting a much more level-loaded
capital program in 2021, as was outlined in our budget announcement
in January.
The volatile commodity environment in 2020 saw WTI oil prices
peak above US$60/bbl at the beginning
of the year and collapse to an unprecedented negative price in
April as global storage levels surged following the stay-at-home
measures put in place around the world. The WTI benchmark averaged
US$39.40/bbl for 2020, compared to
US$57.03/bbl in 2019. European
natural gas prices experienced similar volatility as a result of
the pandemic-induced demand destruction. The TTF benchmark traded
below C$2/mcf in May but recovered to
over C$8/mcf by December, averaging
$4.30/mcf for the full year, compared
to $5.90/mcf in 2019. Fortunately, we
had the majority of our European conventional natural gas
production hedged through the summer months at much higher prices,
which offset some of this price weakness.
We generated $502 million of fund
flows from operations ("FFO")(1) in 2020 and
$135 million of free cash flow
("FCF")(1), which more than covered the dividends paid
earlier in the year, along with reclamation and abandonment
expenditures and minor acquisitions. In Q4 2020, we generated
$135 million of FFO and invested
$60 million of E&D capital,
resulting in FCF of $75 million which
went toward debt reduction. After accounting for reclamation and
abandonment expenditures and minor acquisitions, we reduced the
amount outstanding under our revolving credit facility by
approximately $175 million during the
second half of 2020, leaving us with over $500 million of liquidity available at year-end.
Based on the mid-point of our 2021 production and capital
expenditure guidance and assuming US$60/bbl WTI oil prices for the balance of the
year, we expect to generate over $350
million of FCF in 2021, which will be used to further reduce
our debt.
It has been a challenging year for the oil and gas industry and
Vermilion; however, we are pleased with what our Company has
accomplished under the circumstances. While we still have lots of
work to do, we believe our Company is on a much stronger footing
today and is better positioned for long-term value creation.
Vermilion has a world class asset base comprised of highly
efficient, low decline conventional oil and natural gas producing
assets that generate strong free cash flow. These assets provide
risk reducing attributes owing to their global diversification and
global commodity exposure, and also provide significant leverage to
recovering global commodity prices. In the near-term, all of our
free cash flow will be allocated to debt reduction, but as we begin
to make more meaningful progress towards our debt targets, we will
review our long-term shareholder return policy to determine the
appropriate time to reinstate a dividend and/or share buyback
program. We would like to thank our shareholders for their ongoing
support and look forward to providing further updates on our 2021
program as the year progresses.
We would like to share with you the news that Larry MacDonald, our Lead Director, has recently
been awarded the Order of Canada.
This award is made to individuals who have demonstrated
"outstanding achievement and merit of the highest degree,
especially in service to Canada or
to humanity at large". This is absolutely a remarkable achievement
for Larry and is a reflection of the significant personal
contributions he has made for the disadvantaged, not only in
Canada but also globally, over his
lifetime. Larry has been a member of our Board of Directors since
2002 and we are proud to be associated with such an outstanding
individual.
Q4 2020 Operations Review
North America
Production from our North American assets averaged 58,774 boe/d
in Q4 2020, a decrease of 10% from the prior quarter primarily due
to natural decline. The majority of our 2020 North American
drilling program was executed during the first half of the year
with limited new production added during the second half of the
year. We resumed drilling activity in Alberta in the fourth quarter, drilling seven
(6.6 net) Mannville wells and
completing two (1.6 net) wells which were brought on production
prior to year-end. The remaining five (5.0 net) wells were
completed and brought on production in early 2021. No drilling or
completion activity occurred in southeast Saskatchewan or Wyoming during the fourth quarter, however we
expect to resume drilling in these areas in Q2 2021.
International
Production from our International assets averaged 29,073 in Q4
2020, a decrease of 5% from the prior quarter primarily due to a
planned turnaround in Australia
and natural decline. In Australia,
we successfully completed an 11-day planned maintenance turnaround,
which included the tie in of a new sediments management system
which is expected to improve facility operating efficiency.
Activity in our European operating areas was primarily focused
on maintenance, well work-over activities and planning for the 2021
drilling campaign in the
Netherlands, Hungary and
Croatia. All drilling permits have
been received for our 2021 European drilling campaign, along with
the production license for the Burgmoor Z5 well (46% working
interest) in Germany which is
scheduled to start-up in the second half of 2021. In France, we obtained the necessary
authorization for trucking our Paris Basin light crude oil in advance of the
Grandpuits refinery closure in Q1 2021. The refinery recently
ceased all oil refining operations and we have begun trucking our
light crude oil to other refineries in France without any disruption to our field
operations. We will continue to evaluate transportation options and
remain optimistic we can find a cost effective long-term
solution.
2020 Reserve Report
Our 2020 total proved plus probable reserves decreased 7% from
the prior year to 467 mmboe(3). The decrease is
primarily due to lower commodity price assumptions and lower
capital activity levels in 2020. Despite these revisions our total
proved plus probable reserve life index remains greater than 13
years while our total proved plus probable 3-year
F&D operating recycle ratio remains over 2 times, owing to our
high netback production base. In an effort to reduce costs,
the Company did not complete a resource evaluation this year.
The following table provides a summary of company interest
reserves by reserve category and region on an oil equivalent basis.
Please refer to Vermilion's 2020 Annual Information Form for the
year ending December 31, 2020 ("2020
Annual Information Form") for detailed information by country and
product type.
|
|
|
|
|
|
|
BOE
(mboe)
|
Proved
Developed
Producing
|
Proved
Developed
Non-Producing
|
Proved
Undeveloped
|
Proved
|
Probable
|
Proved Plus
Probable
|
North
America
|
124,376
|
5,652
|
79,155
|
209,183
|
136,969
|
346,152
|
International
|
60,977
|
7,112
|
7,992
|
76,081
|
44,370
|
120,451
|
Vermilion
|
185,353
|
12,764
|
87,147
|
285,264
|
181,339
|
466,603
|
The following table summarizes the finding and development costs
and associated operating recycle ratios by reserve category for the
three-year period ending December 31,
2020:
|
|
|
3-Year
Average
|
|
PDP
|
1P
|
2P
|
Finding and
Development Costs, including FDC (F&D) ($/boe)
(4)
|
$14.83
|
$13.74
|
$11.79
|
Finding, Development
and Acquisition Costs, including FDC (FD&A) ($/boe)
(4)
|
$20.35
|
$19.82
|
$15.37
|
|
|
|
|
F&D Operating
Recycle Ratio * (5)
|
1.7
|
1.8
|
2.1
|
FD&A Operating
Recycle Ratio * (5)
|
1.2
|
1.3
|
1.6
|
The following table provides a reconciliation of changes in
company interest reserves by reserve category and region. Please
refer to Vermilion's 2020 Annual Information Form for detailed
information by country and product type.
|
|
|
|
|
|
1P
(mboe)
|
North
America
|
|
International
|
|
Vermilion
|
December 31,
2019
|
221,979
|
|
87,961
|
|
309,940
|
Discoveries
|
—
|
|
—
|
|
—
|
Extensions &
improved recovery
|
18,612
|
|
2,265
|
|
20,877
|
Technical
revisions
|
1,701
|
|
4,381
|
|
6,082
|
Acquisitions
|
2,159
|
|
—
|
|
2,159
|
Dispositions
|
(3,679)
|
|
—
|
|
(3,679)
|
Economic
factors
|
(7,998)
|
|
(7,277)
|
|
(15,275)
|
Production
|
(23,591)
|
|
(11,249)
|
|
(34,840)
|
December 31,
2020
|
209,183
|
|
76,081
|
|
285,264
|
|
|
|
|
|
|
2P
(mboe)
|
North
America
|
|
International
|
|
Vermilion
|
December 31,
2019
|
359,828
|
|
141,049
|
|
500,877
|
Discoveries
|
—
|
|
—
|
|
—
|
Extensions &
improved recovery
|
17,741
|
|
5,131
|
|
22,872
|
Technical
revisions
|
3,080
|
|
(1,558)
|
|
1,522
|
Acquisitions
|
4,302
|
|
—
|
|
4,302
|
Dispositions
|
(4,955)
|
|
—
|
|
(4,955)
|
Economic
factors
|
(10,254)
|
|
(12,923)
|
|
(23,177)
|
Production
|
(23,591)
|
|
(11,249)
|
|
(34,840)
|
December 31,
2020
|
346,151
|
|
120,450
|
|
466,601
|
Additional information about our 2020 GLJ Reserves Report can be
found in our 2020 Annual Information Form on our website at
www.vermilionenergy.com and on SEDAR at www.sedar.com.
Commodity Hedging
Vermilion hedges to manage commodity price exposures and
increase the stability of our cash flows. In aggregate, as of
March 1, 2021, we have 45% of our
expected net-of-royalty production hedged for the first half of
2021. With respect to individual commodity products, we have hedged
64% of our European natural gas production, 38% of our oil
production, and 46% of our North American natural gas volumes for
the first half of 2021, respectively. Please refer to the Hedging
section of our website under Invest With Us for further details
using the following link:
https://www.vermilionenergy.com/invest-with-us/hedging.cfm.
Sustainability
Vermilion continued to build on our track record of
industry-leading ESG performance based on rankings by third party
ratings agencies in 2020. Vermilion was ranked at the top of our
peer group in 2020 in the SAM Corporate Sustainability Assessment
("CSA"). We were also selected for The Sustainability Yearbook
2021, which recognizes that our CSA sustainability performance is
within the top 15% of our industry (SAM's Upstream Oil & Gas
and Integrated category). During Q4 2020, we also released our 2020
Corporate Sustainability Report, marking our 7th year of ESG
reporting. The 2020 report highlights our ongoing focus on reducing
emissions within our operations, along with a content index that
includes recommendations from the Task Force on Climate-related
Financial Disclosures and the Sustainability Accounting Standards
Board. The report can be found on our Sustainability micro-site
using the following link:
https://sustainability.vermilionenergy.com/.
(Signed "Lorenzo
Donadeo")
|
|
(Signed "Curtis
Hicks")
|
|
|
|
Lorenzo
Donadeo
|
|
Curtis
Hicks
|
Executive
Chairman
|
|
President
|
March 5,
2021
|
|
March 5,
2021
|
(1)
|
Non-GAAP Financial
Measure. Please see the "Non-GAAP Financial Measures" section of
the accompanying Management's Discussion and Analysis.
|
|
|
(2)
|
Please refer to
Supplemental Table 4 "Production" of the accompanying Management's
Discussion and Analysis for disclosure by product type.
|
|
|
(3)
|
Estimated gross
proved, developed and producing, total proved, and total proved
plus probable reserves as evaluated by GLJ Petroleum Consultants
Ltd. ("GLJ") in a report dated February 12, 2021 with an effective
date of December 31, 2020 (the "2020 GLJ Reserves
Report").
|
|
|
(4)
|
F&D (finding and
development) and FD&A (finding, development and acquisition)
costs are used as a measure of capital efficiency and are
calculated by dividing the applicable capital expenditures for the
period, including the change in undiscounted FDC (future
development capital), by the change in the reserves, incorporating
revisions and production, for the same period.
|
|
|
(5)
|
Operating Recycle
Ratio is a measure of capital efficiency calculated by dividing the
Operating Netback by the cost of adding reserves (F&D cost).
Operating Netback is calculated as sales less royalties, operating
expense, transportation costs, PRRT and realized hedging gains and
losses presented on a per unit basis.
|
Management's Discussion and Analysis, Consolidated Financial
Statements and Annual Information Form
To view Vermilion's Management's Discussion and Analysis and
Consolidated Financial Statements for the years ended December 31, 2020 and 2019, along with
Vermilion's 2020 Annual Information Form, please refer to SEDAR
(www.sedar.com) or Vermilion's website at
https://www.vermilionenergy.com/invest-with-us/reports-filings.cfm.
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 organic production growth augmented with value-adding
acquisitions, along with returning capital to investors when
economically warranted. Vermilion's operations are focused on the
exploitation of light oil and liquids-rich natural gas conventional
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 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 and are committed to delivering long-term value for
all stakeholders. 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 and
Vermilion's ability to fund such expenditures; Vermilion's
additional debt capacity providing it with additional working
capital; the flexibility of Vermilion's capital program and
operations; business strategies and objectives; operational and
financial performance; estimated volumes of reserves and resources;
petroleum and natural gas sales; future production levels and the
timing thereof, including Vermilion's 2021 guidance, and rates of
average annual production growth; the effect of changes in crude
oil and natural gas prices, changes in exchange rates and
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, and the wells
expected to be drilled in 2021; exploration and development plans
and the timing thereof; Vermilion's ability to reduce its debt,
including its ability to redeem senior unsecured notes prior to
maturity; 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
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.
All crude oil and natural gas reserve and resource information
contained in this document has been prepared and presented in
accordance with National Instrument 51-101 Standards of
Disclosure for Oil and Gas Activities and the Canadian
Oil and Gas Evaluation Handbook. Reserves estimates have been made
assuming that development of each property in respect of which the
estimate is made will occur, without regard to the likely
availability of funding required for such development. The actual
crude oil and natural gas reserves and future production will be
greater than or less than the estimates provided in this
document.
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.