CALGARY, AB, Aug. 16, 2021 /CNW/ - Vermilion Energy Inc.
("Vermilion", "We", "Our", "Us" or the "Company") (TSX: VET) (NYSE:
VET) is pleased to report operating and condensed financial results
for the three and six months ended June 30, 2021.
The unaudited interim financial statements and management
discussion and analysis for the three and six months
ended June 30, 2021 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
- Fund flows from operations ("FFO")(1) was
$173 million in Q2 2021, an increase
of 7% from the prior quarter. The increase was primarily due to
higher commodity prices.
- We generated $94 million of free
cash flow ("FCF")(1) in Q2 2021 after investing
$79 million in exploration and
development ("E&D") capital expenditures, resulting in a payout
ratio of 48% including reclamation and abandonment expenditures.
During the first half of 2021, we have generated $173 million of FCF compared to negative
$24 million in the first half of
2020. With the continued strength in commodity prices, as reflected
under current strip pricing, we expect to generate significantly
higher FFO during the second half of 2021 and now forecast annual
FCF in excess of $400 million, or
over $2.50 per share, for 2021.
- Net debt at the end of Q2 2021 was $2.0
billion, representing a 5% decrease compared to year-end
2020. We have reduced the amount outstanding under our revolving
credit facility by over $327 million
or 19% since Q2 2020. With the excess FCF we expect to generate
over the balance of the year, we will continue to reduce net debt,
with our ultimate goal of having leverage reduced to 1.5 times debt
to cash flow or less.
- Production in Q2 2021 averaged 86,335 boe/d(2),
relatively consistent with first quarter production of 86,276 boe/d
as new production adds in Canada
from our Q1 2021 drilling program offset declines in other
operating regions.
- Production from our North American assets averaged 58,354 in Q2
2021, an increase of 3% from the prior quarter primarily as a
result of new production added from our Q1 2021 Canadian drilling
program.
- Production from our International assets averaged 27,981 in Q2
2021, a decrease of 5% from the prior quarter primarily due to
natural declines and downtime in Australia and Ireland.
- In Canada, during the second
quarter we drilled one (0.2 net) well and brought on two (1.7 net)
condensate-rich Mannville natural
gas wells and initiated our drilling campaign in south-east
Saskatchewan, where we drilled
eight (6.9 net) wells and completed six (5.4 net) wells. Five (4.4
net) of these wells were brought on production during the quarter
with the remaining wells to be brought on production in Q3
2021.
- In the United States we
commenced our four (4.0 net) well drilling program centered on
Turner horizontal wells in the Powder River basin. Two of the wells
were completed and brought on production in the quarter, and are
performing as expected. The remaining two wells are expected to be
completed and brought on production in Q3 2021. Drilling costs on
this program were reduced by 20% compared to budget.
- In the Netherlands, we
successfully drilled one (1.0 net) natural gas well which
encountered a 16 meter gas column in the Rotliegend Slochteren
formation and multiple thin sands with reservoir potential in the
Rotliegend Ten Boer formation. The well was completed at the end of
June and we expect to bring it on production in Q3 2021. Subsequent
to Q2 2021, we began inline testing of the Rotliegend formation on
the Blesdijke natural gas well (0.5 net) drilled in Q1 2021 and
achieved initial rates up to 7.0 mmcf/d. We plan on conducting
further testing in Q3 2021 and expect to bring the well onstream
later in the year.
- Furthering our focus on the energy transition, we established a
third geothermal application from our produced water in
France. Our Vic Bilh facility will
provide geothermal heat to a nearby Fleur de Vie facility that
produces high quality spirulina, a microalgae with a wide variety
of uses. The facility is expected to be completed in autumn
2021.
- We published our 2021 Sustainability Report, Value Matters,
which includes 2020 ESG-related data updates.
(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.
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|
|
|
|
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($M except as
indicated)
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Q2
2021
|
Q1
2021
|
Q2
2020
|
YTD
2021
|
YTD
2020
|
Financial
|
|
|
|
|
|
Petroleum and natural
gas sales
|
407,179
|
|
368,137
|
|
193,013
|
|
775,316
|
|
521,327
|
|
Fund flows from
operations
|
172,942
|
|
162,051
|
|
81,852
|
|
334,993
|
|
252,077
|
|
Fund flows from operations ($/basic share)
(1)
|
1.07
|
|
1.02
|
|
0.52
|
|
2.09
|
|
1.60
|
|
Fund flows from operations ($/diluted share)
(1)
|
1.05
|
|
1.00
|
|
0.52
|
|
2.06
|
|
1.60
|
|
Net earnings
(loss)
|
451,274
|
|
499,964
|
|
(71,290)
|
|
951,238
|
|
(1,389,794)
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|
Net (loss) earnings ($/basic share)
|
2.79
|
|
3.15
|
|
(0.45)
|
|
5.94
|
|
(8.83)
|
|
Capital
expenditures
|
79,176
|
|
83,363
|
|
42,274
|
|
162,539
|
|
275,978
|
|
Acquisitions
|
11,859
|
|
393
|
|
2,932
|
|
12,252
|
|
14,269
|
|
Asset retirement
obligations settled
|
3,321
|
|
7,023
|
|
970
|
|
10,344
|
|
4,702
|
|
Cash dividends
($/share)
|
—
|
|
—
|
|
—
|
|
—
|
|
0.575
|
|
Dividends
declared
|
—
|
|
—
|
|
—
|
|
—
|
|
90,067
|
|
%
of fund flows from operations
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
36
|
%
|
Payout
(1)
|
82,497
|
|
90,386
|
|
42,612
|
|
172,883
|
|
362,470
|
|
%
of fund flows from operations
|
48
|
%
|
56
|
%
|
52
|
%
|
52
|
%
|
144
|
%
|
Free Cash Flow
(1)
|
93,766
|
|
78,688
|
|
39,578
|
|
172,454
|
|
(23,901)
|
|
Net debt
|
2,005,272
|
|
1,996,675
|
|
2,161,442
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|
2,005,272
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|
2,161,442
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Net debt to four
quarter trailing fund flows from operations
|
3.43
|
|
4.04
|
|
3.16
|
|
3.43
|
|
3.16
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Operational
|
Production
(2)
|
|
|
|
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|
Crude oil and condensate (bbls/d)
|
38,354
|
|
39,204
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|
45,041
|
|
38,777
|
|
44,961
|
|
NGLs (bbls/d)
|
8,695
|
|
8,074
|
|
9,588
|
|
8,386
|
|
8,805
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|
Natural gas (mmcf/d)
|
235.72
|
|
233.98
|
|
274.42
|
|
234.86
|
|
269.96
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Total (boe/d)
|
86,335
|
|
86,276
|
|
100,366
|
|
86,306
|
|
98,760
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Average realized
prices
|
|
|
|
|
|
Crude oil and condensate ($/bbl)
|
79.06
|
|
71.09
|
|
34.90
|
|
75.21
|
|
47.20
|
|
NGLs ($/bbl)
|
25.43
|
|
29.39
|
|
8.94
|
|
27.32
|
|
8.94
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|
Natural gas ($/mcf)
|
5.24
|
|
5.51
|
|
1.85
|
|
5.37
|
|
2.39
|
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Production mix (% of
production)
|
|
|
|
|
|
%
priced with reference to WTI
|
38
|
%
|
38
|
%
|
41
|
%
|
38
|
%
|
40
|
%
|
%
priced with reference to Dated Brent
|
17
|
%
|
18
|
%
|
14
|
%
|
17
|
%
|
16
|
%
|
%
priced with reference to AECO
|
30
|
%
|
28
|
%
|
29
|
%
|
29
|
%
|
28
|
%
|
%
priced with reference to TTF and NBP
|
15
|
%
|
16
|
%
|
16
|
%
|
16
|
%
|
16
|
%
|
Netbacks
($/boe)
|
|
|
|
|
|
Operating netback (1)
|
25.90
|
|
25.58
|
|
12.49
|
|
25.74
|
|
17.25
|
|
Fund flows from operations netback
|
22.04
|
|
21.66
|
|
9.08
|
|
21.85
|
|
13.96
|
|
Operating expenses
|
12.72
|
|
12.86
|
|
11.00
|
|
12.79
|
|
12.21
|
|
General and administration expenses
|
1.46
|
|
1.57
|
|
1.88
|
|
1.51
|
|
1.67
|
|
Average reference
prices and foreign exchange rates
|
|
|
|
|
|
WTI (US $/bbl)
|
66.07
|
|
57.84
|
|
27.85
|
|
61.96
|
|
37.01
|
|
Edmonton Sweet index (US $/bbl)
|
62.96
|
|
52.60
|
|
21.71
|
|
57.78
|
|
30.15
|
|
Saskatchewan LSB index (US $/bbl)
|
62.71
|
|
52.82
|
|
21.60
|
|
57.77
|
|
30.01
|
|
Dated Brent (US $/bbl)
|
68.83
|
|
60.90
|
|
29.20
|
|
64.86
|
|
39.73
|
|
AECO ($/mcf)
|
3.09
|
|
3.15
|
|
1.99
|
|
3.12
|
|
2.01
|
|
NBP ($/mcf)
|
10.92
|
|
8.70
|
|
2.26
|
|
9.83
|
|
3.31
|
|
TTF ($/mcf)
|
10.76
|
|
8.27
|
|
2.39
|
|
9.54
|
|
3.32
|
|
CDN $/US $
|
1.23
|
|
1.27
|
|
1.39
|
|
1.25
|
|
1.37
|
|
CDN $/Euro
|
1.48
|
|
1.53
|
|
1.53
|
|
1.50
|
|
1.50
|
|
Share information
('000s)
|
Shares outstanding -
basic
|
161,893
|
|
159,349
|
|
158,307
|
|
161,893
|
|
158,307
|
|
Shares outstanding -
diluted (1)
|
168,903
|
|
166,018
|
|
164,090
|
|
168,903
|
|
164,090
|
|
Weighted average
shares outstanding - basic
|
161,546
|
|
158,892
|
|
158,189
|
|
160,226
|
|
157,375
|
|
Weighted average
shares outstanding - diluted (1)
|
165,034
|
|
161,397
|
|
158,189
|
|
162,553
|
|
157,375
|
|
(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
Commodity prices continued to strengthen through the second
quarter as economies around the world began to reopen following the
year-long COVID-related lockdowns. Benchmark oil prices increased
approximately 14% in Q2 2021 compared to the previous quarter and
European natural gas prices increased approximately 30% from the
previous quarter, driving an 11% increase in our quarterly revenue
on production of 86,335 boe/d which was up slightly from the
previous quarter.
We generated $173 million of FFO
in Q2 2021, representing an increase of 7% over the previous
quarter. E&D capital expenditures were $79 million in the quarter, resulting in
$94 million of FCF(1) and
a payout ratio of 48% including reclamation and abandonment
expenditures. During the first half of 2021, we generated
$172 million of FCF compared to
negative $24 million in the first
half of 2020.
With the continued strength in commodity prices, as reflected
under current strip pricing, we expect to generate significantly
higher FFO during the second half of 2021 and now forecast annual
FCF in excess of $400 million, or
over $2.50 per share, for 2021. This
significant improvement in FCF is not only due to higher commodity
prices but is also the result of a more level-loaded capital
program compared to last year. We continue to believe a
level-loaded capital program delivers more efficient operations and
a more manageable production base. Some of the benefits from a
level-loaded capital program were evidenced during the second
quarter as we realized a 20% reduction in our US drilling costs
which is the result of a number of initiatives including executing
the program in the spring (versus winter) and using an experienced
drilling crew that worked on our Canadian winter drilling campaign
in Q1 2021.
The majority of FCF generated in the quarter was used to reduce
our revolving credit facility. Over the past year we have reduced
the amount outstanding under our revolving credit facility by
$326 million or 19%. Net debt at the
end of Q2 2021 was relatively unchanged from the previous quarter
at $2 billion mainly due to an
increase in derivative liabilities associated with higher commodity
prices; however, our net debt to four-quarter-trailing FFO ratio
improved to 3.4x from 4.0x in the previous quarter. While this is
still well above our comfort level, it is a step in the right
direction and moves us closer to our ultimate leverage target of
1.5x or lower.
We have made solid progress during the first half of 2021, with
our production and FCF results exceeding budget expectations. As we
move through the second half of 2021, we will remain disciplined in
our strategy with a continued focus on improving operational
efficiencies and reducing debt. Production levels averaged in
excess 86,300 boe/d in 1H 2021 but are expected to moderate in 2H
2021 due to planned maintenance across several of our operating
jurisdictions, including extended turnarounds in Ireland and Australia. Our 2021 production guidance of
83,000 to 85,000 boe/d remains intact and our E&D capital
budget remains unchanged at $300
million; however, we may still consider adding up to
$50 million of incremental capital in
Q4 2021 if commodity prices remain supportive. We have several
projects lined up and ready to execute should we decide to invest
incremental capital in Q4 2021; however, any new production
associated with these projects would not contribute to 2021
volumes.
As we look to 2022 and start working through our budgeting
process over the coming months, it is our intent to remain
financially disciplined and manage towards a similar production
range as 2021 with a continued focus on striking the right balance
between allocating FCF to the balance sheet and asset base. We aim
to achieve this through a combination of organic capital
development and strategic acquisitions if and when the right
opportunities become available. As we have stated previously, our
long-term goal is to return to a dividend paying capital markets
model and we believe this balanced approach is the most appropriate
way to achieve this. We will continue to focus on debt reduction in
the near-term, and once we are comfortable with our leverage ratio,
we will consider returning capital to our shareholders through the
re-instatement of a dividend as we believe the FCF capability of
our asset base is supportive of the dividend capital markets
model.
Q2 2021 Operations Review
North America
Production from our North American assets averaged 58,354 in Q2
2021, an increase of 3% from the prior quarter primarily as a
result of new production added from Q1 2021 Canadian drilling
program. During the second quarter, we drilled one (0.2 net) well
and brought two (1.7 net) condensate-rich Mannville natural gas wells on production in
west-central Alberta and initiated
our drilling campaign in south-east Saskatchewan, where we drilled eight (6.9 net)
wells and completed six (5.4 net) wells. Five (4.4 net) of these
wells were brought on production during the quarter with the
remaining wells to be brought on production in Q3 2021.
In the United States, we moved
one of our experienced drilling crews from our Canadian operations
to Wyoming and commenced our four
(4.0 net) well drilling program in April, centered on Turner
horizontal wells in the Powder River basin. Two of the wells were
completed and brought on production in the quarter, and are
performing as expected. The remaining two wells are expected to be
completed and brought on production in Q3 2021. Drilling costs on
this program were reduced by 20% compared to budget.
International
Production from our International assets averaged 27,981 in Q2
2021, a decrease of 5% from the prior quarter primarily due to
natural declines and downtime in Ireland and Australia. In Europe, we drilled one (1.0 net) natural gas
well in the Netherlands and
continued our workover programs in France, Netherlands and Germany.
In the Netherlands, we
successfully drilled the Nijega well (1.0 net), which encountered a
16 meter gas column in the Rotliegend Slochteren formation and
multiple thin sands with reservoir potential in the Rotliegend Ten
Boer formation. The well was completed at the end of June 2021 and we expect to bring it on production
in Q3 2021. Subsequent to Q2 2021, we began inline testing of the
Rotliegend formation on the Blesdijke natural gas well (0.5 net)
drilled in Q1 2021 and achieved initial rates up to 7.0 mmcf/d. We
plan on conducting further testing in Q3 2021 and expect to bring
the well onstream later in the year.
In Germany, we had strong
operational performance and runtime across our operated and
non-operated assets and we continued to prepare for the start-up of
the Burgmoor Z5 well (46% working interest) in Q3 2021.
In France, our trucking
operations in the Paris Basin
continue to run smoothly following the transition of our
Paris Basin oil production from
pipeline delivery to trucking after the Total Grandpuits refinery
ceased crude oil refining in Q1 2021. The majority of the
Paris Basin production is being
delivered to the Total Le Havre refinery in northwest France and to our Parentis facility which
delivers crude to various refineries in Europe through the Ambes terminal in southwest
France. Additionally, we started
trucking some volumes to a refinery in Germany and will continue to evaluate other
shipping options to further optimize operations and reduce
costs.
In Central and Eastern Europe
("CEE"), we successfully completed our 3-D seismic program in the
SA-10 block in Croatia, with an
additional seismic program planned for the SA-07 block later this
year, which will further enhance our knowledge of the region prior
to our next drilling program planned for 2022. Work is continuing
to progress on the Croatian gas plant on the SA-10 block in
preparation for the tie-in of the two successful gas wells drilled
previously.
In Ireland, one of the 6
producing sub-sea wells was offline for approximately 40 days
during Q2 2021 due to a stuck choke valve. The valve has been
replaced and the well was brought back on production at the end of
June 2021. We continued to make
preparations for the 21-day turnaround at Corrib scheduled in Q3
2021.
In Australia, we had a 4-day
shutdown in Q2 2021 due to a vessel cleanout, and we continue to
plan for a 20-day scheduled turnaround in the second half of
2021.
Commodity Hedging
Vermilion hedges to manage commodity
price exposures and increase the stability of our cash flows. In
aggregate, as of August 13, 2021, we
have 29% of our expected net-of-royalty production hedged for the
second half of 2021. With respect to individual commodity products,
we have hedged 69% of our European natural gas production, 5% of
our oil production, and 49% of our North American natural gas
volumes for the second 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
In August 2021, we published our
2021 Sustainability Report, Value Matters, which includes 2020 data
updates. This eighth annual report demonstrates our continued
commitment to environmental, social and governance ("ESG") matters
and the energy transition, including the release of our renewed
sustainability strategy. Created using input from staff across the
Company and from external stakeholders, including investors, our
strategy focuses on the key areas of carbon, conservation and
community. The report is available on our Sustainability micro-site
at the following link:
https://sustainability.vermilionenergy.com/, and includes a
climate-related Energy Transition section that can be read as a
standalone report. PDF versions of both reports are available at
the "download report" link on the micro-site, along with our 2021
CDP Climate Change and CDP Water Security submissions. In addition,
MSCI confirmed our "AA" ESG rating for 2021.(3)
As part of our progression towards achieving our recently
announced carbon emission reduction targets, we completed the
installation of nine solar powered chemical injection pumps at
various well sites in Alberta.
This project is expected to reduce Vermilion's Scope 1 emissions by 9,000 tCO2e/year.
Furthering our focus on energy transition, we also established a
third geothermal application from our produced water in
France. Our Vic Bilh facility will
provide geothermal heat to a nearby Fleur de Vie facility that
produces high quality spirulina, a microalgae with a wide variety
of uses. The facility is expected to be completed in autumn
2021.
Board of Directors
Vermilion recently announced the
appointments of Ms. Manjit Sharma
and Ms. Judy Steele to our Board of
Directors.
Ms. Sharma brings over 25 years' experience in a wide range of
operational matters in a variety of industries, most recently as
Chief Financial Officer of WSP Canada, and previously with GE
Canada for over 20 years, serving in various senior management
roles. Ms. Sharma serves as a member of the Board of Directors for
Export Development Canada, and is a member of the GE Canada Pension
Trust Committee. She holds a Bachelor of Commerce (Honours) from
the University of Toronto and the
Chartered Professional Accountant designation. She is an alumnus of
the Rotman School of Management's Judy Project for Executive Women
in Leadership and was recognized as one of Canada's Top 100 Most Powerful Women in
2019.
Since October 2012, Ms. Steele has
been the President & Chief Operating Officer of Emera Energy
Inc., where she is responsible for commercial performance,
operations, business growth and development, risk management, and
team leadership and development. She has been involved in
overseeing various energy businesses including hydro, wind, biomass
and natural gas fired electrical generating facilities. Prior to
her current role, Ms. Steele held a variety of executive and senior
management positions within Emera Inc. She is currently a Board
member of Canadian Blood Services and a Governor of St. Francis Xavier University. Ms. Steele holds the
designation Fellow Chartered Accountant, and a Bachelor of Public
Relations from Mount Saint Vincent
University. She is a recipient of the Chartered Accountant
of the Year Award, from the Institute of Chartered Accountants of
Nova Scotia, for outstanding
community leadership.
Ms. Cathy Williams is retiring
from Vermilion's Board of Directors.
Ms. Williams has been a Director of Vermilion since 2015 and was a member of
Vermilion's Audit Committee and
Governance and Human Resources Committee. We wish to thank Cathy
for her valuable contribution to Vermilion as a Board member and wish her all the
best in her retirement.
(Signed "Lorenzo
Donadeo")
|
|
(Signed "Curtis
Hicks")
|
|
|
|
Lorenzo
Donadeo
|
|
Curtis
Hicks
|
Executive
Chairman
|
|
President
|
August 13,
2021
|
|
August 13,
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)
|
* The use by
Vermilion Energy Inc of any MSCI ESG Research LLC or its affiliates
("MSCI") data, and the use of MSCI logos, trademarks, service marks
or index names herein, do not constitute a sponsorship,
endorsement, recommendation, or promotion of Vermilion by MSCI.
MSCI services and data are the property of MSCI or its information
providers, and are provided 'as-is' and without warranty. MSCI
names and logos are trademarks or service marks of MSCI.
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Management's Discussion and Analysis and Consolidated
Financial Statements
To view Vermilion's Management's
Discussion and Analysis and Interim Condensed Consolidated
Financial Statements for the three and six months ended
June 30, 2021 and 2020, 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,
a Climate Leadership level (A-) performer by CDP, and a Best
Workplace in the Great Place to Work® Institute's annual rankings
in Canada and Germany. In addition, Vermilion emphasizes strategic community investment
in each of our operating areas.
Employees and directors hold approximately 5% of our outstanding
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.