[Company Overview and Q1 2025 Highlights](index=6&type=section&id=Company%20Overview%20and%20Q1%202025%20Highlights) [Q1 2025 Performance Highlights](index=6&type=section&id=Q1%202025%20Performance%20Highlights) Vermilion generated **$256 million** FFO and **$74 million** FCF in Q1 2025, with production averaging **103,115 boe/d**, boosted by the Westbrick acquisition and successful German deep gas exploration | Financial Metric | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | Fund Flows from Operations (FFO) | $256 million | $263 million | | Free Cash Flow (FCF) | $74 million | $62 million | | Production | 103,115 boe/d | 83,536 boe/d | | Net Debt | $2,063 million | $967 million | - Closed the Westbrick acquisition, adding approximately **50,000 boe/d** and establishing a dominant position in the Deep Basin of Alberta, with identified operational and development synergies of approximately **$100 million (NPV10)**[18](index=18&type=chunk)[40](index=40&type=chunk)[47](index=47&type=chunk) - Successfully tested the Wisselshorst deep gas exploration well in Germany, with a combined test flow rate of **41 mmcf/d** from two zones, and the Osterheide well was brought online, producing at a restricted rate of approximately **7 mmcf/d**[18](index=18&type=chunk)[49](index=49&type=chunk)[51](index=51&type=chunk) - Reduced drilling, completion, equipment, and tie-in (DCET) costs at the Mica Montney to approximately **$9 million per well**, improving development economics and representing a significant reduction in future development costs[18](index=18&type=chunk) [2025 Outlook and Guidance](index=6&type=section&id=2025%20Outlook%20and%20Guidance) Vermilion's 2025 capital budget and guidance remain unchanged, prioritizing free cash flow and debt reduction, with Q2 production forecasted at **134,000-136,000 boe/d** | Category | 2025 Current Guidance | | :--- | :--- | | Production (boe/d) | 125,000 - 130,000 | | E&D capital expenditures ($MM) | $730 - 760 | - Q2 2025 production is anticipated to average between **134,000 to 136,000 boe/d** (**62% natural gas**), reflecting the full contribution from the Westbrick acquisition[18](index=18&type=chunk)[54](index=54&type=chunk) - The company is prepared to adjust its capital program if necessary due to market volatility, supported by approximately **$1 billion of liquidity** and no near-term debt maturities[18](index=18&type=chunk)[42](index=42&type=chunk) - A quarterly cash dividend of **$0.13 per common share** was declared, payable on July 15, 2025[18](index=18&type=chunk) [Message to Shareholders](index=11&type=section&id=Message%20to%20Shareholders) Management emphasized the strategic Westbrick acquisition and European gas exploration, while actively managing market volatility and initiating asset divestitures for debt reduction - The combination of the Westbrick acquisition, European gas exploration success, and Mica Montney development enhances Vermilion's profile as a **global gas producer**[40](index=40&type=chunk) - The company is managing market volatility with over **50% of net-of-royalty production hedged** for the remainder of 2025, approximately **$1 billion in liquidity**, and no near-term debt maturities[42](index=42&type=chunk) - A formal sales process for oil-weighted assets in Saskatchewan and Wyoming (approx. **15,000 boe/d** in Q1) was initiated to accelerate debt reduction and reallocate capital to growth assets[41](index=41&type=chunk) [Financial Performance](index=25&type=section&id=Financial%20Performance) [Consolidated Financial Results (Q1 2025)](index=25&type=section&id=Consolidated%20Financial%20Results%20(Q1%202025)) Q1 2025 FFO decreased **41%** to **$256 million** due to lower derivative gains, while net earnings increased significantly to **$15 million**, and sales grew **12%** to **$568.8 million** | ($M except per share) | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Petroleum and natural gas sales | 568,846 | 508,035 | +12% | | Fund flows from operations (FFO) | 256,029 | 431,358 | -41% | | FFO per share | $1.66 | $2.68 | -38% | | Net earnings | 14,953 | 2,305 | +549% | | Capital expenditures | 182,119 | 190,442 | -4% | - The decrease in FFO was primarily driven by lower realized gains on derivative contracts, which fell by **$209.5 million** compared to the prior-year period[107](index=107&type=chunk) - The significant increase in net earnings was mainly due to a **$175.1 million** positive change in unrealized derivative losses compared to Q1 2024[103](index=103&type=chunk) [Production Analysis](index=27&type=section&id=Production%20Analysis) Q1 2025 total production increased **21%** year-over-year to **103,115 boe/d**, driven by the Westbrick acquisition and growth in natural gas and NGLs | Production | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Crude oil and condensate (bbls/d) | 32,386 | 32,695 | -1% | | NGLs (bbls/d) | 9,167 | 7,046 | +30% | | Natural gas (mmcf/d) | 369.36 | 274.59 | +35% | | **Total (boe/d)** | **103,115** | **85,505** | **+21%** | - The increase in consolidated production was primarily the result of the Westbrick acquisition, which closed at the end of February 2025[108](index=108&type=chunk) - North American production averaged **73,760 boe/d**, a **41% increase** from Q4 2024, while International production averaged **29,355 boe/d**, a **6% decrease** from Q4 2024[44](index=44&type=chunk)[123](index=123&type=chunk)[132](index=132&type=chunk) [Segment Performance](index=31&type=section&id=Segment%20Performance) North American operations generated **$115.5 million** FFO on **73,760 boe/d**, while International operations generated **$174.4 million** FFO on **29,355 boe/d**, benefiting from premium European gas prices [North America](index=31&type=section&id=North%20America) North American operations saw a **41%** production increase, driven by the Westbrick acquisition and active drilling programs across multiple basins | North America (Q1 2025) | $M | $/boe | | :--- | :--- | :--- | | Sales | 266,417 | 40.13 | | Fund flows from operations | 115,506 | 17.39 | | Drilling and development | (130,810) | - | - Production increased **41%** from the previous quarter, primarily due to the Westbrick acquisition and resumption of production following prior quarter downtime[123](index=123&type=chunk) - Key activities included drilling **5 Montney wells**, **4 Deep Basin wells** (including Westbrick), **2 Saskatchewan wells**, and participating in **2 non-operated US wells**[111](index=111&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) [International](index=33&type=section&id=International) International operations generated higher FFO despite lower volumes, benefiting from premium European natural gas prices and new production from Croatia | International (Q1 2025) | $M | $/boe | | :--- | :--- | :--- | | Sales | 302,429 | 117.22 | | Fund flows from operations | 174,350 | 67.58 | | Capital Expenditures (D&D + E&E) | (51,309) | - | - Sales increased year-over-year despite lower volumes, driven by higher realized European natural gas prices and new production from Croatia[136](index=136&type=chunk) - Key activity was in Germany, with the drilling of two wells, including the Weissenmoor South deep gas exploration well, and bringing the Osterheide well online[133](index=133&type=chunk) [Commodity Prices and Realizations](index=29&type=section&id=Commodity%20Prices%20and%20Realizations) Mixed commodity prices influenced results, with European natural gas (TTF) surging **77%** and Vermilion's realized gas price at **$7.80/mcf**, significantly above AECO | Benchmark Prices (Q1 2025) | Price | YoY Change | | :--- | :--- | :--- | | WTI (US $/bbl) | $71.42 | -7% | | Dated Brent (US $/bbl) | $75.66 | -9% | | AECO ($/mcf) | $2.17 | -13% | | TTF ($/mcf) | $20.81 | +77% | - Vermilion's average realized natural gas price was **$7.80/mcf**, benefiting from a premium on European pricing, with approximately **28%** of its gas production exposed to this premium[18](index=18&type=chunk)[121](index=121&type=chunk) - European natural gas prices increased significantly due to higher global LNG demand, the termination of Russian gas exports through Ukraine, and below-average storage levels[121](index=121&type=chunk) [Financial Position and Capital Management](index=39&type=section&id=Financial%20Position%20and%20Capital%20Management) [Debt and Liquidity](index=39&type=section&id=Debt%20and%20Liquidity) Net debt more than doubled to **$2.1 billion** by March 31, 2025, primarily for the Westbrick acquisition, increasing the net debt to FFO ratio to **1.7x**, while maintaining over **$1 billion** in liquidity | Metric | Mar 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Long-term debt | $1,874.0 M | $963.5 M | | Net debt | $2,062.8 M | $966.9 M | | Net debt to four quarter trailing FFO | 1.7x | 0.8x | - The increase in long-term debt was driven by the Westbrick acquisition, funded by a new **$450 million term loan** and a **US$400 million (2033) senior notes issuance**, partially offset by the repayment of **US$300 million (2025) notes**[114](index=114&type=chunk)[175](index=175&type=chunk)[182](index=182&type=chunk) - As of March 31, 2025, Vermilion had **$1,020.6 million** in unutilized capacity on its revolving credit facility[172](index=172&type=chunk)[274](index=274&type=chunk) [Capital Expenditures](index=27&type=section&id=Capital%20Expenditures) Q1 2025 capital expenditures totaled **$182.1 million**, a **4% decrease** year-over-year, with spending primarily in North America and Germany's deep gas exploration program | Capital Expenditures by Country ($M) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Canada | 125,643 | 124,282 | | United States | 5,167 | 12,227 | | Germany | 25,235 | 24,028 | | Other International | 25,074 | 29,905 | | **Total** | **182,119** | **190,442** | - North American capital of **$130.8 million** was focused on drilling and completion activities in the Montney and Deep Basin[111](index=111&type=chunk) - International capital of **$51.3 million** was primarily directed towards drilling in Germany (**$25.2M**), facilities work in Australia (**$9.7M**), and a gas field interconnector project in the Netherlands (**$7.7M**)[111](index=111&type=chunk) [Shareholder Returns](index=43&type=section&id=Shareholder%20Returns) Vermilion returned **$37 million** to shareholders in Q1 2025, comprising **$20 million** in dividends (increased to **$0.13/share**) and **$17 million** in share buybacks - Declared a quarterly dividend of **$0.13 per share**, an increase from the previous **$0.12 per share**[18](index=18&type=chunk)[188](index=188&type=chunk) - Repurchased and cancelled **1.3 million common shares** for a total of **$16.6 million** under the NCIB program during Q1 2025[18](index=18&type=chunk)[190](index=190&type=chunk) - Total dividends declared in Q1 2025 amounted to **$20.0 million**[19](index=19&type=chunk)[288](index=288&type=chunk) [Business and Strategy](index=11&type=section&id=Business%20and%20Strategy) [Westbrick Energy Acquisition](index=11&type=section&id=Westbrick%20Energy%20Acquisition) Vermilion acquired Westbrick Energy for **$1.1 billion**, adding **50,000 boe/d** and establishing a dominant Deep Basin position, with integration progressing ahead of schedule and **$100 million (NPV10)** synergies identified - Acquired Westbrick Energy for total consideration of **$1.1 billion**, paid with cash and **1.1 million Vermilion shares**[259](index=259&type=chunk) - The acquisition adds a production base of over **75,000 boe/d** in the Deep Basin and over **1.1 million net acres of land**[41](index=41&type=chunk) - Identified operational and development synergies, including longer laterals, improved gas marketing, and infrastructure optimization, valued at approximately **$100 million (NPV10)**[18](index=18&type=chunk)[47](index=47&type=chunk) [European Exploration Program](index=13&type=section&id=European%20Exploration%20Program) Germany's deep gas exploration program proved **85 Bcf (60 Bcf net)** reserves, with the Wisselshorst well testing at **41 mmcf/d**, and an estimated after-tax NPV of **$150 million** for three wells - The three-well deep gas program in Germany has proven up **85 Bcf (60 Bcf net)** from the first two wells and identified a structure supporting up to six follow-up drilling locations[52](index=52&type=chunk) - The Wisselshorst well tested at a combined restricted rate of **41 mmcf/d** from two zones and is expected to come on production in H1 2026[18](index=18&type=chunk)[49](index=49&type=chunk) - The after-tax net present value of the three wells drilled to date is estimated at approximately **$150 million ($1.00/basic share)**, with positive cash flow beginning in Q2 2025[52](index=52&type=chunk) [Asset Portfolio Management](index=11&type=section&id=Asset%20Portfolio%20Management) Vermilion initiated a formal sales process for Saskatchewan and Wyoming oil assets (**15,000 boe/d**) to accelerate debt reduction and began relinquishing its Kadarkut license in Hungary - Initiated a formal sales process for oil-weighted assets in Saskatchewan and Wyoming, which produced approximately **15,000 boe/d** in Q1 2025[41](index=41&type=chunk) - Proceeds from potential divestments will be used to accelerate debt reduction and free up capital for long-term growth assets[41](index=41&type=chunk) - The company has initiated the process to relinquish the Kadarkut license in Hungary with an expected minimal economic impact[53](index=53&type=chunk) [Supplementary Information](index=2&type=section&id=Supplementary%20Information) [Hedging Strategy](index=15&type=section&id=Hedging%20Strategy) Vermilion hedged **52%** of its expected net-of-royalty production for the remainder of 2025 to manage commodity price volatility and stabilize cash flows - In aggregate, **52%** of expected net-of-royalty production is hedged for the remainder of 2025[57](index=57&type=chunk) | Commodity | % Hedged (Remainder of 2025) | | :--- | :--- | | European Natural Gas | 55% | | Crude Oil | 42% | | North American Natural Gas | 55% | [Non-GAAP and Other Specified Financial Measures](index=16&type=section&id=Non-GAAP%20and%20Other%20Specified%20Financial%20Measures) The report utilizes non-GAAP measures like FFO, FCF, and Net Debt to provide additional insight into performance, with reconciliations to IFRS measures provided - Fund flows from operations (FFO) is used to assess the ability to generate income for dividends, debt repayment, and capital investments[20](index=20&type=chunk)[63](index=63&type=chunk) - Free cash flow (FCF) is defined as FFO less capital expenditures and is used to determine funding available for investing and financing activities[24](index=24&type=chunk)[67](index=67&type=chunk) - Net debt is a capital management measure calculated as long-term debt plus adjusted working capital deficit, representing net financing obligations[26](index=26&type=chunk)[78](index=78&type=chunk) [Key Disclosures and Risks](index=2&type=section&id=Key%20Disclosures%20and%20Risks) The report contains forward-looking statements subject to risks like operational hazards, commodity price volatility, and regulatory changes, with financial statements prepared under IFRS - The document contains forward-looking statements concerning capital expenditures, production guidance, business strategies, and other future outcomes, which are subject to numerous risks and assumptions[5](index=5&type=chunk)[6](index=6&type=chunk)[7](index=7&type=chunk) - Key risks include operational hazards, geological uncertainties, commodity price volatility, foreign exchange fluctuations, and regulatory changes[7](index=7&type=chunk)[195](index=195&type=chunk) - The scope of internal controls over financial reporting for Q1 2025 excludes the recently acquired Westbrick Energy, as permitted by regulations[198](index=198&type=chunk)

Group 1 - Vermilion Energy (NYSE: VET) is a gas company that is trading near its 52-week low, despite the fact that gas companies are trading near their 52-week highs [1] - Two-thirds of Vermilion's funds from operations (FFO) come from gas, indicating a significant reliance on this segment [1] Group 2 - The article highlights the disparity in trading performance between Vermilion Energy and other gas companies, suggesting potential undervaluation [1]

Company Performance - Vermilion Energy reported quarterly earnings of $0.07 per share, missing the Zacks Consensus Estimate of $0.17 per share, and showing an earnings surprise of -58.82% [1] - The company posted revenues of $396.23 million for the quarter ended March 2025, which was 3.54% below the Zacks Consensus Estimate and an increase from $376.85 million year-over-year [2] - Over the last four quarters, Vermilion has not surpassed consensus EPS estimates and has topped revenue estimates only once [2] Stock Outlook - Vermilion shares have declined approximately 33.8% since the beginning of the year, contrasting with the S&P 500's decline of -4.7% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.07 on revenues of $446.64 million, and for the current fiscal year, it is $0.04 on revenues of $1.8 billion [7] Industry Context - The Oil and Gas - Exploration and Production - International industry, to which Vermilion belongs, is currently ranked in the bottom 15% of over 250 Zacks industries, indicating a challenging environment [8] - Empirical research suggests that the performance of stocks in this industry can be significantly influenced by the overall industry outlook [8]

Core Viewpoint - Vermilion Energy Inc. reported its Q1 2025 operating and financial results, highlighting strong performance driven by the Westbrick acquisition and robust European gas prices, while maintaining a focus on free cash flow and debt reduction. Financial Performance - Fund flows from operations (FFO) for Q1 2025 were $256 million ($1.66 per basic share), a slight decrease from $263 million ($1.70 per basic share) in Q4 2024 [4][21] - Exploration and development (E&D) capital expenditures totaled $182 million, resulting in free cash flow (FCF) of $74 million, up from $62 million in the prior quarter [4][21] - Net debt increased to $2,063 million, with a net debt to trailing FFO ratio of 1.7 times [4][21] Production and Operations - Average production for Q1 2025 was 103,115 boe/d, a 23% increase from the previous quarter, primarily due to the Westbrick acquisition [22][4] - Production from North American assets averaged 73,760 boe/d, a 41% increase, while international production averaged 29,355 boe/d, a 6% decrease [22][4] - The company successfully tested the Wisselshorst deep gas exploration well in Germany, achieving a combined test flow rate of 41 mmcf/d [4][26] Strategic Acquisitions and Synergies - The Westbrick acquisition added approximately 50,000 boe/d of liquids-rich gas and identified operational synergies of about $100 million on a net present value (NPV10) basis [4][25] - The integration of Westbrick assets is progressing ahead of schedule, with ongoing identification of additional synergies [19][4] Market Position and Outlook - Vermilion's capital budget and guidance for 2025 remain unchanged, focusing on free cash flow and debt reduction while returning capital to shareholders [9][33] - The company anticipates Q2 2025 production to average between 134,000 to 136,000 boe/d, including full contributions from Westbrick assets [9][31] - Over 50% of net-of-royalty production is hedged for the remainder of 2025, providing stability amid market volatility [20][35]

Core Viewpoint - Vermilion Energy Inc. has announced a cash dividend of $0.13 CDN per common share, payable on July 15, 2025, to shareholders of record on June 30, 2025, indicating a commitment to returning capital to investors [1][2]. Group 1: Company Overview - Vermilion Energy Inc. is a global gas producer focused on creating value through the acquisition, exploration, development, and optimization of producing assets in North America, Europe, and Australia [2]. - The company's business model emphasizes free cash flow generation and returning capital to investors when economically warranted, supplemented by value-adding acquisitions [2]. - Vermilion's operations target the exploitation of light oil and liquids-rich natural gas in both conventional and unconventional resource plays in North America, as well as conventional natural gas and oil opportunities in Europe and Australia [2]. Group 2: Company Priorities - The company's priorities are health and safety, environmental protection, and profitability, in that order [3]. - Vermilion places a strong emphasis on the safety of the public and its workforce, as well as the protection of natural surroundings [3]. - The company also focuses on strategic community investment in each of its operating areas [3].

Core Viewpoint - Vermilion Energy (VET) is identified as a strong value stock, currently holding a Zacks Rank of 2 (Buy) and an A grade for Value, indicating its attractiveness to value investors [2]. Valuation Metrics - VET has a Price-to-Book (P/B) ratio of 0.48, which is significantly lower than the industry average of 0.81, suggesting it may be undervalued [3]. - The P/B ratio for VET has fluctuated between a high of 0.91 and a low of 0.41 over the past 12 months, with a median of 0.74 [3]. - The Price-to-Sales (P/S) ratio for VET stands at 0.64, which is also below the industry average of 0.68, reinforcing the notion of undervaluation [4]. Investment Outlook - The combination of VET's attractive valuation metrics and a strong earnings outlook positions it as a compelling investment opportunity for value investors [5].

Core Viewpoint - Vermilion Energy (VET) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which have a strong correlation with near-term stock price movements [4][6]. - For the fiscal year ending December 2025, Vermilion is expected to earn $0.31 per share, reflecting a 240.9% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for Vermilion has increased by 335.7%, indicating a positive trend in earnings expectations [8]. Institutional Investor Influence - Institutional investors utilize earnings estimates to determine the fair value of stocks, and their investment actions based on these estimates can lead to significant price movements [4][5]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade of Vermilion to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Core Viewpoint - The article emphasizes the importance of value investing and highlights Vermilion Energy (VET) as a strong candidate for value investors due to its attractive valuation metrics and earnings outlook [2][3][6]. Valuation Metrics - Vermilion Energy has a Price-to-Book (P/B) ratio of 0.46, which is significantly lower than the industry average of 0.82, indicating that the stock may be undervalued [4]. - The P/B ratio for VET has fluctuated between a high of 0.91 and a low of 0.41 over the past 12 months, with a median of 0.75 [4]. - The Price-to-Sales (P/S) ratio for VET stands at 0.67, which is slightly below the industry average of 0.70, further suggesting potential undervaluation [5]. Investment Outlook - With a Zacks Rank of 2 (Buy) and an "A" grade for Value, Vermilion Energy is positioned as one of the highest-quality value stocks currently available [3][6]. - The combination of strong valuation metrics and a positive earnings outlook makes VET an appealing option for value investors [6].

Group 1 - Vermilion Energy shares increased by 21.2% to close at $6.58, following a significant trading volume compared to typical sessions, despite a 29.9% loss over the past four weeks [1] - The stock price surge is linked to a broader energy sector boost due to President Trump's decision to pause tariff hikes and implement a lower 10% tariff rate, alleviating trade tension concerns and driving up oil and natural gas prices [2] - The company is expected to report quarterly earnings of $0.23 per share, reflecting a year-over-year increase of 2200%, with revenues projected at $404.3 million, a 7.3% increase from the previous year [3] Group 2 - The consensus EPS estimate for Vermilion has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [4] - Vermilion Energy is part of the Zacks Oil and Gas - Exploration and Production - International industry, with a current Zacks Rank of 3 (Hold) [4] - Vaalco Energy, another company in the same industry, saw a 10.7% increase in its stock price, closing at $3.43, but has returned -20.7% over the past month [4]

CALGARY, AB, April 7, 2025 /PRNewswire/ - Vermilion Energy Inc. ("Vermilion" or the "Company") (TSX: VET) (NYSE: VET) will release its 2025 first quarter operating and condensed financial results on Wednesday, May 7, 2025 after the close of North American markets. The unaudited interim financial statements and management discussion and analysis for the three months ended March 31, 2025 will be available on the System for Electronic Document Analysis and Retrieval ("SEDAR+") at www.sedarplus.ca, on EDGAR at ...