Core Insights - AEGIS Financial Corp increased its stake in Vermilion Energy by purchasing 350,000 shares, raising its total holdings to 870,492 shares valued at approximately $6.80 million as of the end of Q3 2025 [2][7][8] - The total U.S. equity positions of AEGIS Financial Corp amounted to $261.32 million across 26 holdings at the quarter's close [2] - Vermilion Energy's stock price was $9.08 as of November 11, 2025, reflecting a 2.05% decline over the past year, underperforming the S&P 500 by 17.91 percentage points [8] Company Overview - Vermilion Energy Inc. is a Calgary-based energy producer focused on upstream oil and gas operations, with a diversified asset base across North America, Europe, and Australia [6][11] - The company reported a total revenue of $1.48 billion for the trailing twelve months (TTM) and has a market capitalization of $1.40 billion [4] - The dividend yield for Vermilion Energy was 4.02% at the end of Q3 2025, indicating a stable income potential for investors [4][12] Investment Context - AEGIS Financial Corp's increased investment in Vermilion Energy represents 2.6% of its total assets under management (AUM), indicating a strategic belief in the company's growth potential [7][8] - The acquisition of additional shares has moved Vermilion Energy from the lower 50% of AEGIS's investments to the upper half, suggesting increased confidence in the company's trajectory and leadership [10] - Vermilion Energy has shown resilience in volatile commodity markets, positioning itself to capitalize on energy demand across various geographies [6]

Core Viewpoint - Vermilion Energy Inc. has sold 26 million common shares of Coelacanth Energy Inc. for $19.76 million, reducing its ownership from approximately 15.0% to 10.2% of Coelacanth's outstanding shares, as part of its strategy to reduce debt and enhance business resiliency [1][2][3]. Group 1: Share Transactions - On December 17, 2025, Vermilion sold 26,000,000 common shares of Coelacanth at a price of $0.76 per share, totaling $19,760,000 [1]. - Prior to the sale, Vermilion held 80,179,104 common shares, representing about 15.0% of Coelacanth's issued shares [2]. - After the transaction, Vermilion's holdings decreased to 54,179,104 common shares, which is approximately 10.2% of the total [2]. Group 2: Strategic Intent - The sale of common shares aligns with Vermilion's priority of reducing debt to improve business resilience [3]. - The company will continue to assess its investment in Coelacanth and may adjust its holdings based on market and economic conditions [3]. - Following the sale, Vermilion is restricted from selling more than 4,000,000 common shares without Coelacanth's consent [3]. Group 3: Company Overview - Vermilion is a global gas producer focused on acquiring, exploring, and developing liquids-rich natural gas in Canada and conventional natural gas in Europe [5]. - The company aims to optimize low-decline oil assets to generate significant free cash flow [5]. - Vermilion prioritizes health and safety, environmental protection, and profitability in its operations [6].

Core Viewpoint - The Zacks Oil and Gas - Exploration and Production - International industry is currently facing challenges due to volatile commodity prices, rising geopolitical risks, and weaker earnings expectations, which cloud near-term prospects [1][2] Industry Overview - The industry consists of companies primarily operating outside the United States, focusing on the exploration and production of oil and natural gas [3] - Cash flow for producers is heavily influenced by realized commodity prices, making them vulnerable to price volatility [4] Key Investing Trends - Geopolitical risks and operational disruptions remain high, introducing volatility that is difficult to hedge [5][6] - Operators are increasingly prioritizing cash flow stability over aggressive growth, emphasizing disciplined capital spending and focusing on lower-decline assets [7][8] - Delayed project timelines can push cash flow inflection points further out, testing investor patience [10][11] Industry Performance - The Zacks Oil and Gas - International E&P industry has underperformed compared to the broader energy sector and the S&P 500, declining 32% over the past year while the broader sector increased by 7.5% and the S&P 500 gained 14.3% [16] Current Valuation - The industry is currently trading at an EV/EBITDA ratio of 6.33X, significantly lower than the S&P 500's 18.58X but above the sector's 5.46X [18] Stocks to Watch - **Vermilion Energy**: A globally diversified producer with a focus on steady production and sustainable free cash flow, expecting 13.4% revenue growth in 2025 [19][22] - **VAALCO Energy**: An independent oil and gas company with a strong emphasis on African and Canadian markets, with a market cap of approximately $366 million and a 50% increase in earnings estimates for 2025 [22][23] - **Genel Energy**: Focused on the Kurdistan Region of Iraq, aiming for stable production and long-term value creation, with a projected 78.6% growth in earnings for 2025 [24][26]

Core Insights - Uniper has signed a two-year contract with Vermilion's local subsidiary to procure all natural gas production from German operations, aiming to diversify its gas portfolio [1][3] - The agreement includes both low and high-calorific natural gas, which Uniper will distribute to its customers across Germany [1] - The contract is expected to enhance the reliability of the domestic energy supply and signal security and stability for the German energy market [2][3] Company Operations - Vermilion, based in Calgary, Canada, has been active in the German market since 2014 and holds the largest exploration acreage in Lower Saxony [4] - The company focuses on producing domestically sourced natural gas with lower carbon intensity [4] - Vermilion expects to produce approximately 2.4 billion kilowatt-hours of natural gas in Germany this year, sufficient to meet the annual gas needs of around 220,000 households [5] Environmental Impact - Supplying German-produced gas to Uniper is projected to reduce CO₂ emissions compared to natural gas imports and strengthen the resilience of the German energy system during the transition period [6] - Vermilion's operations adhere to robust safety and environmental standards, delivering a significantly lower carbon footprint than imported natural gas [6]

Core Insights - Vermilion Energy is positioning itself as a global gas producer with a focus on investing in its gas assets over the next five years, allocating approximately 85% of its capital expenditure to key regions including the Deep Basin, Montney, and onshore European Gas assets, particularly in Germany [3] Group 1: Corporate Overview - The company aims to highlight the depth, quality, and duration of its growth assets in Europe and Canada during the Investor Day presentation [1] - Portfolio management and near-term outlook will be discussed, along with the capital allocation principles guiding decision-making [2] Group 2: Financial Strategy - Vermilion Energy defines excess free cash flow (EFCF) as fund flows less capital expenditures and abandonment and lease obligations, indicating a focus on cash generation [4]

Summary of Vermilion Energy 2025 Investor Day Company Overview - **Company**: Vermilion Energy (NYSE: VET) - **Event**: 2025 Investor Day held on December 10, 2025 - **Focus**: Global gas production, particularly in Europe and Canada Key Industry Insights - **Strategic Focus**: Vermilion is prioritizing investments in global gas assets, with 85% of capital expenditures directed towards Deep Basin, Montney, and onshore European gas assets, especially in Germany [3][5][14] - **Excess Free Cash Flow (EFCF)**: The company projects to generate CAD 1.7 billion in EFCF over the next five years, equating to approximately 90% of its current market cap [5][14] - **Production Growth**: Expected production growth from 120,000 to 130,000 BOE per day, with a significant increase in EFCF starting in 2028 [14][41] Financial Performance - **EFCF Definition**: EFCF is defined as fund flows minus capital expenditures and abandonment and lease obligations [3] - **Dividend Policy**: The company has increased its dividend for five consecutive years, with a current payout ratio below 10% of fund flows [9][16] - **Share Buybacks**: Over 20 million shares have been repurchased in the last three years, with plans for further buybacks based on EFCF growth [8][16] Operational Highlights - **Germany Operations**: Significant discoveries in Germany, including a recent well campaign that added substantial reserves, with plans to double production by 2030 [7][25][41] - **Deep Basin and Montney Assets**: The Deep Basin has over 1.1 million acres with multiple liquid-rich opportunities, while Montney is expected to reach a production target of 28,000 barrels per day by 2028 [8][51] - **Cost Efficiency**: The company has improved its capital efficiency, with a 30% reduction in capital intensity and a focus on operational excellence [12][54] Market Positioning - **Gas Pricing**: Vermilion's global gas portfolio is positioned to benefit from top decile realized natural gas prices, with a significant portion of production in Europe [4][10] - **LNG Exposure**: The company avoids the risks associated with long-term LNG contracts by selling gas directly to the grid at premium prices [10][39] - **Future Outlook**: The company anticipates a structural increase in EFCF starting in 2028, driven by strategic investments and operational improvements [16][17] Strategic Initiatives - **Portfolio Management**: Vermilion is focused on high-quality assets and has streamlined its portfolio to enhance profitability and reduce capital exposure risks [56][58] - **Acquisition Strategy**: The company is open to pursuing acquisitions that align with its strategic goals and enhance its asset base [59][60] - **Long-term Growth**: The company has identified over 10 years of development prospects in Europe, with significant potential for reserve replacement and growth [34][36] Conclusion - **Investment Thesis**: Vermilion Energy is well-positioned for future growth with a strong focus on gas production in Europe and Canada, a disciplined approach to capital allocation, and a commitment to returning value to shareholders through dividends and share buybacks [5][16][41]

Business Strategy and Portfolio Repositioning - Vermilion Energy is focused on growing excess free cash flow (EFCF) by allocating capital to global gas assets, with approximately 85% of the 2026-2030 exploration & development (E&D) capital expenditures planned for these assets[6] - The company is repositioning its portfolio towards global gas assets, expecting a greater than 40% increase in production (mboe/d) and a greater than 30% decrease in cost structure and capex/flowing boe from 2024 to 2026e[44] - Vermilion aims to increase production per share by approximately 40% over five years, driven by an 8-10% annual production per share growth rate[50] Asset Performance and Outlook - The company anticipates cumulative EFCF of approximately $1.7 billion over the next five years, with annual capital expenditures between $600-630 million[50] - Vermilion's European gas assets are expected to grow organically by approximately 5,000 boe/d from 2026 to 2030, offsetting a decline of approximately 2,000 boe/d in Ireland[124] - The Montney asset is projected to reach a target production rate of 28,000 boe/d in 2028, transitioning to EFCF generation with approximately 8 wells per year to maintain production[156, 158] Financial Position and Capital Allocation - Vermilion plans a quarterly dividend of $0.135/share in 2026[8] - The company is committed to reducing net debt to FFO ratio to less than 10x, allocating 60% of EFCF to debt repayment[233, 239] - Vermilion has $11 billion of undrawn credit capacity on its revolving credit facility[205]

Core Viewpoint - Vermilion Energy Inc. has sold 30 million common shares of Coelacanth Energy Inc. for $22.8 million, reducing its ownership from approximately 20.7% to 15.0% of Coelacanth's outstanding shares, as part of its strategy to reduce debt and enhance business resiliency [1][2][3]. Group 1: Transaction Details - Vermilion sold 30,000,000 common shares at a price of $0.76 per share, totaling $22,800,000 [1]. - The sale represents more than 2% of the issued and outstanding common shares of Coelacanth, necessitating the filing of an Early Warning Report [1]. Group 2: Ownership Changes - Prior to the transaction, Vermilion held 110,179,104 common shares, equating to approximately 20.7% of Coelacanth's shares [2]. - After the transaction, Vermilion's holdings decreased to 80,179,104 common shares, representing about 15.0% of the total [2]. Group 3: Strategic Intent - The sale aligns with Vermilion's priority of reducing debt to improve business resilience [3]. - Vermilion is restricted from selling more than 60,000,000 of its remaining shares until June 8, 2026, without Coelacanth's consent, but may adjust its holdings based on market and economic conditions [3]. Group 4: Company Overview - Vermilion is a global gas producer focused on acquiring, exploring, and developing liquids-rich natural gas in Canada and conventional natural gas in Europe, aiming to optimize low-decline oil assets [5]. - The company emphasizes health and safety, environmental protection, and profitability as its core priorities [6].

Core Insights - Vermilion Energy Inc. will host an Investor Day on December 10, 2025, featuring presentations by senior management regarding the company's global gas portfolio and future outlook [1][2]. Event Details - The Investor Day will take place virtually at 9:00 AM MT (11:00 AM ET) [2]. - A live webcast will be available, and participants can access it through the company's website [2]. - Dial-in options are provided for participants, including toll-free numbers for Canada and the US, as well as international options [3]. Company Overview - Vermilion is a global gas producer focused on creating value through the acquisition, exploration, and development of liquids-rich natural gas in Canada and conventional natural gas in Europe [4]. - The company aims to optimize low-decline oil assets, which contributes to significant free cash flow through exposure to global commodity prices [4]. - The company's priorities include health and safety, environmental protection, and profitability, emphasizing community investment in operational areas [5].

Financial Performance - Vermilion generated $254 million of fund flows from operations (FFO) in Q3 2025, with free cash flow (FCF) of $108 million reflecting E&D capital expenditures of $146 million[37]. - Fund flows from operations for Q3 2025 were $253,810 million, down from $275,024 million in Q3 2024, representing a decrease of 7.9%[60]. - Free cash flow for Q3 2025 was $108,248 million, compared to $153,755 million in Q3 2024, indicating a decline of 29.5%[60]. - The payout ratio as a percentage of fund flows from operations increased to 70% in Q3 2025 from 56% in Q3 2024[62]. - Net earnings for Q3 2025 were $2,557 million, a significant decrease from $51,697 million in Q3 2024[56]. - The company reported a net loss of $(234,264) million for the twelve months ended September 30, 2025, compared to a net loss of $(831,559) million in the prior year[63]. - The company reported a net loss of $2.56 million in Q3 2025, compared to a net earnings of $51.70 million in Q3 2024, reflecting a significant change in financial performance[86]. - The company recorded a net loss of $4.77 million from continuing operations in Q3 2025, compared to a profit of $39.79 million in Q3 2024[228]. Production and Operations - Production averaged 119,062 boe/d (67% gas) in Q3 2025, at the upper end of guidance, with North American operations averaging 88,763 boe/d and International operations averaging 30,299 boe/d, a 2% increase from the previous quarter[37]. - Vermilion expects Q4 2025 production to average 119,000 to 121,000 boe/d (69% natural gas), with full-year production of approximately 119,500 boe/d (65% natural gas)[47]. - In Q3 2025, total production increased by 41% year-over-year to 119,062 boe/d, with crude oil and condensate production decreasing by 6% to 28,197 bbls/d, while NGLs and natural gas production grew by 46% and 71%, respectively[86]. - Total production volume in Q3 2025 was 88,763 boe/d, a 17% decrease from Q2 2025, primarily due to asset divestitures in Saskatchewan and the United States[123]. - The total production in France for Q3 2025 was 6,811 boe/d, slightly down from 6,827 boe/d in Q2 2025, indicating a marginal decrease of 0.2%[217]. - Consolidated total production for Q3/25 was 120,833 boe/d, a 17.5% increase from 102,427 boe/d in Q1/25[222]. Capital Expenditures and Investments - The company reduced the upper end of its 2025 capital guidance by $20 million and lowered full-year operating cost guidance by over $10 million, reflecting structural improvements in capital and operating efficiencies[32]. - The 2026 budget is set at $600 to $630 million, with approximately 85% allocated to the global gas portfolio, expecting annual average production of 118,000 to 122,000 boe/d (70% natural gas)[41]. - In Canada, Vermilion plans to invest approximately $415 million in E&D capital, drilling a total of 49 wells and running a three-rig drilling program in the Deep Basin[43]. - The company plans to invest approximately $200 million across its International assets in 2026, focusing on European natural gas exploration and development[44]. - Capital expenditures for Q3 2025 totaled $145,562 million, up from $121,269 million in Q3 2024, reflecting a 20% increase[61]. - Year-to-date capital expenditures reached $443,170 million, up from $422,321 million in the same period last year, reflecting a growth of 4.0%[216]. Sales and Revenue - Q3 2025 sales reached $449,502 million, a 15.8% increase from $388,171 million in Q3 2024[55]. - The average sales price per boe in Q3 2025 was $24.10, a decrease from $40.67 in Q3 2024[125]. - Sales revenue for international operations was $272,040 million in Q3 2025, down from $288,291 million in Q3 2024, with a per boe price decrease from $97.85 to $92.21[135]. - Total sales volumes in North America reached 29,968 bbls/d in Q3/25, compared to 31,698 bbls/d in Q1/25, indicating a decrease of 5.5%[222]. Debt and Financial Ratios - Net debt rose by 66% year-over-year to $1.38 billion, with long-term debt increasing by 40% to $1.26 billion[86]. - The ratio of net debt to four-quarter trailing fund flows from operations increased to 1.4 as of September 30, 2025, compared to 0.8 at the end of 2024, reflecting higher net debt from acquisition activities[116]. - The company’s long-term debt as of September 30, 2025, was $1.26 billion, up from $963.5 million as of December 31, 2024[176]. - The company had a consolidated EBITDA to consolidated interest expense ratio of 9.23 as of September 30, 2025, compared to 16.59 in the prior year[178]. Dividends and Shareholder Returns - A planned 4% increase to the quarterly cash dividend to $0.135 CAD per share is expected, effective with the Q1 2026 dividend[45]. - The company purchased 0.6 million common shares for $6.3 million under its normal course issuer bid (NCIB) in Q3 2025, with an additional 0.3 million shares purchased for $2.7 million post-September 30, 2025[191]. - Vermilion's shareholders' capital decreased to approximately $3.88 billion as of September 30, 2025, down from $3.92 billion at the beginning of the year, with a total of 153.4 million common shares outstanding[189]. Risk Management and Hedging - The company has hedged 55% of its expected net-of-royalty production for the remainder of 2025, including 54% of European natural gas production and 59% of crude oil production[48]. - Realized gains on derivatives for Q3 2025 amounted to $61,793 million, up from $49,891 million in Q3 2024, reflecting improved commodity pricing[143]. - The company recorded a net unrealized gain on derivative instruments of $16.6 million for Q3 2025, including gains from various commodity derivatives[155]. Operational Efficiency - Cash flows from operating activities surged by 190% year-over-year to $389.45 million, indicating improved operational efficiency[86]. - Operating expenses in North America rose to $60,530 million in Q3 2025, compared to $58,937 million in Q3 2024, with a per boe cost decrease from $11.88 to $7.41[130]. - Transportation expenses in North America increased to $24,327 million in Q3 2025, up from $15,474 million in Q3 2024, with a per boe cost decrease from $3.12 to $2.98[127].