CALGARY, AB, July 27, 2020
/PRNewswire/ - 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, 2020.
The unaudited interim financial statements and management
discussion and analysis for the three and six months
ended June 30, 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
- Fund flows from operations ("FFO") in Q2 2020 was $82 million ($0.52/basic share(1)), a decrease of
52% from the prior quarter. The decrease is primarily due to
significantly lower commodity prices as a result of the impact of
the COVID-19 pandemic combined with the OPEC+ oil price war that
ensued in early March. Lower commodity price impacts were partially
offset by higher production and hedging gains, including a
$25 million gain from unwinding our
USD-to-EUR cross currency interest rate swap.
- Q2 2020 production averaged 100,366 boe/d, representing a 3%
increase from the prior quarter. The increase was driven by
production growth in Canada,
the United States and Australia, partially offset by lower
production in France due to
COVID-19-related curtailments.
- Production from our European business units averaged 25,173
boe/d in Q2 2020, a decrease of 13% or approximately 3,700 boe/d
from the prior quarter. The decrease was primarily due to the
curtailment of approximately 3,000 bbl/d of oil production in
France due to the temporary
shutdown of the Total-operated Grandpuits refinery during the
COVID-19 confinement period.
- Production from our North American business units averaged
69,895 boe/d in Q2 2020, an increase of 9% or approximately 5,700
boe/d from the prior quarter. The increase was driven by new well
contributions from our active Q1 2020 drilling programs in
Canada and the United States. Both our Canadian and
United States business units
achieved record quarterly production during Q2 2020. Despite highly
volatile North American oil pricing in Q2 2020, we did not
experience any material shut-ins due to uneconomic production.
- In Australia, production
averaged 5,299 bbl/d in Q2 2020, an increase of 31%
quarter-over-quarter as production was fully restored on two wells
that were temporarily offline in the prior quarter to install
electric submersible pumps.
- On May 25, 2020, Vermilion's
Board of Directors appointed Lorenzo
Donadeo as Executive Chairman and Curtis Hicks as President
following the departure of Anthony
Marino as President and Chief Executive Officer. Mr. Donadeo
is one of the co-founders of Vermilion and has served as Chairman
of the Board since March 1, 2016.
Prior to this Mr. Donadeo was the Chief Executive Officer of
Vermilion from 2003 to 2016. Mr. Hicks was previously the CFO of
Vermilion from 2003 to 2018.
- In lieu of filling the role of Chief Executive Officer,
Vermilion re-established an Executive Committee consisting of a
minimum of five senior executives from within the Company with a
mandate to review and approve key organizational, financial,
operational and strategic decisions.
- In June 2020, Vermilion received
a rating of "AA" on a scale of AAA (leader) to CCC (laggard) in the
MSCI ESG Ratings(2) assessment, which reflects exposure
to industry-specific ESG risks and the ability to manage those
risks. This consistent rating from 2019 continues to reflect
Vermilion's commitment to improving company ESG performance and
enhanced disclosure on topics relevant to MSCI's detailed
assessment process.
(1)
|
Non-GAAP Financial
Measure. Please see the "Non-GAAP Financial Measures" section of
the accompanying Management's Discussion and Analysis.
|
|
|
(2)
|
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.
|
($M except as
indicated)
|
Q2
2020
|
Q1
2020
|
Q2
2019
|
YTD
2020
|
YTD
2019
|
Financial
|
|
|
|
|
|
Petroleum and natural
gas sales
|
193,013
|
|
328,314
|
|
428,043
|
|
521,327
|
|
909,126
|
Fund flows from
operations
|
81,852
|
|
170,225
|
|
222,738
|
|
252,077
|
|
476,310
|
Fund flows from operations ($/basic share) (1)
|
0.52
|
|
1.09
|
|
1.44
|
|
1.60
|
|
3.10
|
Fund flows from operations ($/diluted share) (1)
|
0.52
|
|
1.09
|
|
1.42
|
|
1.60
|
|
3.07
|
Net earnings
(loss)
|
(71,290)
|
|
(1,318,504)
|
|
2,004
|
|
(1,389,794)
|
|
41,551
|
Net earnings (loss) ($/basic share)
|
(0.45)
|
|
(8.42)
|
|
0.01
|
|
(8.83)
|
|
0.27
|
Capital
expenditures
|
42,274
|
|
233,704
|
|
92,607
|
|
275,978
|
|
294,660
|
Acquisitions
|
2,932
|
|
11,337
|
|
8,623
|
|
14,269
|
|
24,650
|
Asset retirement
obligations settled
|
970
|
|
3,732
|
|
4,907
|
|
4,702
|
|
8,504
|
Cash dividends
($/share)
|
—
|
|
0.575
|
|
0.690
|
|
0.575
|
|
1.380
|
Dividends
declared
|
—
|
|
90,067
|
|
106,884
|
|
90,067
|
|
212,433
|
%
of fund flows from operations
|
—%
|
|
53%
|
|
48%
|
|
36%
|
|
45%
|
Net dividends
(1)
|
—
|
|
82,422
|
|
98,111
|
|
81,790
|
|
196,556
|
%
of fund flows from operations
|
—%
|
|
48%
|
|
44%
|
|
32%
|
|
41%
|
Payout
(1)
|
42,612
|
|
319,858
|
|
195,625
|
|
362,470
|
|
499,720
|
%
of fund flows from operations
|
52%
|
|
188%
|
|
88%
|
|
144%
|
|
105%
|
Net debt
|
2,161,442
|
|
2,155,623
|
|
1,950,509
|
|
2,161,442
|
|
1,950,509
|
Net debt to four
quarter trailing fund flows from operations
|
3.16
|
|
2.61
|
|
1.91
|
|
3.16
|
|
1.91
|
Operational
|
Production
|
|
|
|
|
|
Crude oil and condensate (bbls/d)
|
45,041
|
|
44,881
|
|
48,964
|
|
44,961
|
|
49,072
|
NGLs (bbls/d)
|
9,588
|
|
8,022
|
|
8,107
|
|
8,805
|
|
8,002
|
Natural gas (mmcf/d)
|
274.42
|
|
265.51
|
|
275.60
|
|
269.96
|
|
276.77
|
Total (boe/d)
|
100,366
|
|
97,154
|
|
103,003
|
|
98,760
|
|
103,203
|
Average realized
prices
|
|
|
|
|
|
Crude oil and condensate ($/bbl)
|
34.90
|
|
58.66
|
|
79.46
|
|
47.20
|
|
76.36
|
NGLs ($/bbl)
|
8.94
|
|
8.92
|
|
11.25
|
|
8.94
|
|
16.76
|
Natural gas ($/mcf)
|
1.85
|
|
2.94
|
|
3.09
|
|
2.39
|
|
4.09
|
Production mix (% of
production)
|
|
|
|
|
|
%
priced with reference to WTI
|
41%
|
|
39%
|
|
38%
|
|
40%
|
|
37%
|
%
priced with reference to Dated Brent
|
14%
|
|
17%
|
|
18%
|
|
16%
|
|
19%
|
%
priced with reference to AECO
|
29%
|
|
27%
|
|
26%
|
|
28%
|
|
26%
|
%
priced with reference to TTF and NBP
|
16%
|
|
17%
|
|
18%
|
|
16%
|
|
18%
|
Netbacks
($/boe)
|
|
|
|
|
|
Operating netback (1)
|
12.49
|
|
22.02
|
|
29.62
|
|
17.25
|
|
30.57
|
Fund flows from operations netback
|
9.08
|
|
18.85
|
|
24.15
|
|
13.96
|
|
25.46
|
Operating expenses
|
11.00
|
|
13.41
|
|
11.04
|
|
12.21
|
|
11.99
|
General and administration expenses
|
1.88
|
|
1.47
|
|
1.70
|
|
1.67
|
|
1.54
|
Average reference
prices
|
|
|
|
|
|
WTI (US $/bbl)
|
27.85
|
|
46.17
|
|
59.81
|
|
37.01
|
|
57.36
|
Edmonton Sweet index (US $/bbl)
|
21.71
|
|
38.59
|
|
55.19
|
|
30.15
|
|
52.62
|
Saskatchewan LSB index (US $/bbl)
|
21.60
|
|
38.41
|
|
55.54
|
|
30.01
|
|
53.19
|
Dated Brent (US $/bbl)
|
29.20
|
|
50.26
|
|
68.82
|
|
39.73
|
|
66.01
|
AECO ($/mcf)
|
1.99
|
|
2.03
|
|
1.03
|
|
2.01
|
|
1.83
|
NBP ($/mcf)
|
2.26
|
|
4.32
|
|
5.44
|
|
3.31
|
|
6.89
|
TTF ($/mcf)
|
2.39
|
|
4.23
|
|
5.75
|
|
3.32
|
|
6.94
|
Average foreign
currency exchange rates
|
|
|
|
|
|
CDN $/US $
|
1.39
|
|
1.34
|
|
1.34
|
|
1.37
|
|
1.33
|
CDN $/Euro
|
1.53
|
|
1.48
|
|
1.50
|
|
1.50
|
|
1.51
|
Share information
('000s)
|
Shares outstanding -
basic
|
158,307
|
|
157,020
|
|
155,032
|
|
158,307
|
|
155,032
|
Shares outstanding -
diluted (1)
|
164,090
|
|
160,425
|
|
158,633
|
|
164,090
|
|
158,633
|
Weighted average
shares outstanding - basic
|
158,189
|
|
156,562
|
|
154,795
|
|
157,375
|
|
153,855
|
Weighted average
shares outstanding - diluted (1)
|
158,189
|
|
156,562
|
|
156,844
|
|
157,375
|
|
155,335
|
(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.
|
Message to Shareholders
The second quarter of 2020 was an extremely challenging period
for the oil and gas sector. Demand destruction caused by the
COVID-19 pandemic resulted in unprecedented negative oil prices for
the WTI benchmark as global inventories swelled. Despite these
challenges, we were able to manage our business effectively through
this cycle, with relatively little operational impact from
COVID-19. We successfully adapted our work procedures to ensure
operational safety and business continuity in all of our operating
regions, and to-date we have not had any confirmed cases of
COVID-19 amongst our staff, with only minor production impacts
related to the pandemic. We believe this is a reflection of the
commitment to Vermilion of our skilled and dedicated staff.
We delivered strong operational results in Q2 2020. Production
averaged 100,366 boe/d representing a 3% increase from the prior
quarter. Most of this increase came from our North American
business units where we benefited from new production coming online
following an active and successful Q1 2020 drilling program. Both
our Canadian and United States
business units achieved record quarterly production during Q2 2020.
This growth in North American production volumes more than offset
approximately 3,000 bbl/d of curtailed oil production in
France that was temporarily
shut-in due to a local refinery being offline during the COVID-19
confinement period. The refinery has recently restarted and we are
in the process of restoring our production in France.
As a result of the lower commodity prices during Q2 2020, FFO
decreased 52% quarter-over-quarter to $82
million ($0.52/basic
share(1)). However, with minimal capital investment of
$42 million, we generated
approximately $40 million of free
cash flow and achieved a total payout ratio of 52%, including
reclamation and abandonment spending. We ended the second quarter
with net debt of $2.2 billion and
approximately $350 million of
liquidity on our covenant-based credit facility. Our facility is
termed out until May 2024 and we
remain in compliance on all debt covenants. Capital activity for
the balance of the year will be minimal and focused predominantly
on maintenance activity.
During the quarter, we also made several leadership changes in
an effort to realign the Company with Vermilion's long-standing
core business principles, which are based on a conservative,
long-term focus on balance sheet strength and capital discipline to
generate strong returns. The five core principles include:
maintaining a strong balance sheet with low leverage; managing a
total payout ratio of less than 100%; consistently delivering
results that meet or exceed expectations, protecting equity to
minimize dilution; and maintaining a strong corporate culture.
These principles were implemented when Vermilion started paying a
distribution as an energy trust in 2003 and have served the Company
well over its history.
Along with the change in leadership we have also re-established
an Executive Committee, which is a management structure that was
successfully utilized by Vermilion in the past. This management
structure has proved to be a highly collaborative decision-making
model that draws upon the collective knowledge, experience,
business acumen and skills of the senior management team.
As we move forward, our first priority will be to ensure the
continued health and safety of our employees and business
continuity as we navigate through COVID-19. With the cost
reductions we have made to-date, our business is free cash flow
positive in the current commodity price environment. Our top
financial priority at this time is debt reduction with an ultimate
target of achieving a debt-to-cash flow ratio of less than 1.5x.
Achieving this target will not happen overnight, and we will take a
long-term, patient approach to managing the business and improving
the balance sheet.
We recently kicked-off our 2021 capital budget process with this
long-term view in the fore. Our plans for the rest of this year and
next will be guided by our core business principles, focusing on
free cash flow generation and debt reduction rather than top-line
production growth. In due course, we will review our shareholder
return policy to determine the appropriate time to reinstate a
dividend and/or buyback shares. We are proud to have delivered over
$40 per share in dividends to our
shareholders over the past 17 years and we believe returning
capital to shareholders is a key component in generating long-term
shareholder returns. Although we do not expect the road ahead to be
without challenges, we believe our renewed focus on these core
business principles will help guide Vermilion through these
difficult times and position the Company for long-term value
creation.
Q2 2020 Operations Review
Europe
Production from our European business units averaged 25,173
boe/d in Q2 2020, a decrease of 13% or approximately 3,700 boe/d
from the prior quarter. The decrease was primarily due to the
curtailment of approximately 3,000 bbl/d of oil production in
France due to the temporary
shutdown of the Total-operated Grandpuits refinery during the
COVID-19 confinement period. Natural decline and minor unplanned
downtime in Ireland accounted for
the balance of the decrease.
The Grandpuits refinery resumed operations in mid-June and we
are in the process of restoring our curtailed production in
France, along with resuming our
2020 workover program which was put on hold during the COVID-19
confinement period. In the
Netherlands, we recently received the final production
permit for the Weststellingwerf (0.5 net) well and expect to bring
this well on production during the second half of 2020. During the
second quarter we deferred a planned turnaround in Ireland due to the COVID-19 restrictions and
now plan to complete this turnaround in Q3 2020, which will result
in the Corrib project being offline for approximately three
weeks.
North America
Production from our North American business units averaged
69,895 boe/d in Q2 2020, an increase of 9% or approximately 5,700
boe/d from the prior quarter. The increase was due to new well
contributions from our active Q1 2020 drilling programs in
Canada and the United States. In Canada, we brought five (5.0 net) wells on
production in Alberta and eleven
(5.5 net) wells on production in Saskatchewan during the second quarter. In
the United States, we completed
and brought on production the remaining six (6.0 net) wells of our
nine (8.9 net) well program. Despite highly volatile North American
oil pricing in Q2 2020, we did not experience any material shut-ins
of uneconomic production.
During the quarter, we focused on various cost-saving
initiatives across the Canadian and United States business units and have
identified many capital, operating and general and administrative
efficiencies to-date. In the United
States, we were able to reduce completion costs of the final
six wells by approximately 15% from the first three (2.9 net) wells
due to increased operational efficiencies, as well as the
utilization of multi-well pads. We have completed our North
American drilling program for 2020 and will focus on maintenance
activities for the balance of the year. As a result, we expect
production from both business units to decline over the second half
of the year as no new well drilling activity is planned.
Australia
In Australia, production
averaged 5,299 bbl/d in Q2 2020, an increase of 31%
quarter-over-quarter as production was fully restored on two wells
that were temporarily offline in the prior quarter to install
electric submersible pumps. Production also benefited from the
absence of cyclone activity in the quarter, which caused several
days of unplanned downtime in Q1 2020. We continued to realize
strong pricing for our Wandoo crude due to its low sulphur content,
averaging a premium of C$21 per
barrel above Dated Brent during Q2 2020. The demand for this blend
of crude has increased under the new IMO 2020 regulations, which
require marine vessels to either install sulphur scrubbers or run
low sulphur fuel oil.
Commodity Hedging
Vermilion hedges to manage commodity price exposures and
increase the stability of our cash flows. In aggregate, as of
July 24, 2020, we have 50% of our
expected net-of-royalty production hedged for the second half of
2020. With respect to individual commodity products, we have hedged
87% of our European natural gas production, 27% of our oil
production, and 69% of our North American natural gas volumes for
the second half of 2020, respectively. Please refer to the Hedging
section of our website under Invest With Us for further
details.
Sustainability
In June 2020, Vermilion received a
rating of "AA" on a scale of AAA (leader) to CCC (laggard) in the
MSCI ESG Ratings(2) assessment, which reflects exposure
to industry-specific ESG risks and the ability to manage those
risks. MSCI ESG Research provides in-depth research, ratings and
analysis of the ESG-related business practices of thousands of
companies worldwide. This consistent rating from 2019 continues to
reflect Vermilion's commitment to improving company ESG performance
and enhanced disclosure on topics relevant to MSCI's detailed
assessment process.
Organizational Update
On May 25, 2020, Vermilion
announced that Anthony Marino
stepped down as President and Chief Executive Officer and as a
director of the Company, effective immediately. In conjunction with
Mr. Marino's departure, the Board also announced the appointments
of Lorenzo Donadeo as Executive
Chairman and the Curtis Hicks as President.
Mr. Donadeo has 39 years of experience in the oil and gas
industry. He was a co-founder of Vermilion in 1994 and has served
as Chairman of the Board since March 1,
2016. From 2014 to 2016, Mr. Donadeo served as the Chief
Executive Officer. From 2003 to 2014, he served as President and
Chief Executive Officer and from 1996 to 2003 he served as
Vermilion's Executive Vice President and Chief Operating Officer.
Mr. Donadeo has a Bachelor of Science degree in Mechanical
Engineering (with distinction) from the University of Alberta.
Mr. Hicks has 37 years of experience in the oil and gas
industry. Most recently, he was Executive Vice-President and Chief
Financial Officer of Vermilion from 2003 to 2018 and was a key
contributor to Vermilion's success and culture during his tenure.
Mr. Hicks is a Chartered Professional Accountant and has a Bachelor
of Commerce degree (with distinction) from the University of Saskatchewan.
Vermilion has a philosophy of staff development and internal
promotion. In line with this approach, we are pleased to announce
that Darcy Kerwin, currently
Managing Director for our Ireland Business Unit (IBU), will be
returning to Canada to take the
role of Vice President, Strategic Planning, effective September 1, 2020. Mr. Kerwin has over 23 years
of industry experience, with a focus on engineering and production
operations in North America,
West Africa, Australia, and Europe. Prior to joining Vermilion, Mr. Kerwin
held a variety of engineering and project management roles with
Chevron in Canada, Houston and Nigeria. In 2005, Mr. Kerwin joined Vermilion
as the Interim General Manager of our Australia Business Unit
(ABU). After his assignment in Australia, he spent five years in the France
Business Unit (FBU), leading facilities engineering and asset
integrity functions before returning to Canada in 2011 as the Facilities Engineering
Manager. Mr. Kerwin returned to France in March
2014 as the Managing Director, FBU and for the last two and
a half years, he has been successfully leading the IBU as Managing
Director.
Ryan Carty, currently Operations
Manager, Australia Business Unit, has been promoted to the position
of Managing Director, IBU, also effective September 1, 2020. Mr. Carty has over 18 years of
engineering and operations experience, working in positions with
increasing leadership responsibility at BHP, ENI, Chevron and
Origin Energy, prior to joining Vermilion in 2014. As Operations
Manager in Australia, Mr. Carty
has been responsible for the management of the Wandoo operation,
including production, health, safety and environment, and
overseeing all aspects of capital and operating activity. We look
forward to Mr. Carty's leadership in further advancing Vermilion's
track record as a community partner and responsible operator of
essential domestic natural gas production in Ireland.
(Signed "Lorenzo Donadeo")
Lorenzo Donadeo
Executive Chairman
July 24, 2020
(Signed "Curtis Hicks")
Curtis Hicks
President
July 24, 2020
(1)
|
Non-GAAP Financial
Measure. Please see the "Non-GAAP Financial Measures" section of
the accompanying Management's Discussion and Analysis.
|
|
|
(2)
|
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.
|
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 periods
ended June 30, 2020 and 2019, 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 properties 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 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
holds a 20% working interest in the Corrib gas field
in Ireland.
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 2020 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 2020; 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.