Vermilion Energy(US:VET)2025-08-08 13:31Financial Performance - Vermilion generated $260 million of fund flows from operations (FFO) in Q2 2025, with E&D capital expenditures of $115 million, resulting in increased free cash flow of $144 million[37]. - Q2 2025 sales reached $443.834 million, a 25.8% increase from $352.637 million in Q2 2024[51]. - Fund flows from operations for Q2 2025 were $259.678 million, compared to $236.703 million in Q2 2024, reflecting a 9.7% increase[56]. - Free cash flow for Q2 2025 was $144.189 million, up from $126.093 million in Q2 2024, indicating a 14.3% growth[56]. - The payout ratio as a percentage of fund flows from operations was 55% in Q2 2025, down from 60% in Q2 2024[58]. - Net earnings from continuing operations for Q2 2025 were $74.385 million, a significant recovery from a loss of $108.807 million in Q2 2024[51]. - The company reported a net loss of $233.458 million for Q2 2025, compared to a loss of $82.425 million in Q2 2024[52]. - Adjusted working capital improved to $540.502 million as of June 30, 2025, from a deficit of $3.426 million at the end of 2024[60]. - Return on capital employed (ROCE) for the twelve months ended June 30, 2025, was -2%, an improvement from -13% in the previous year[59]. - The company incurred an impairment expense of $372.386 million in Q2 2025, impacting overall financial performance[52]. Production and Operations - Production for Q2 2025 averaged 136,002 boe/d, a 32% increase over the prior quarter, with North American operations averaging 106,379 boe/d, up 44% from the previous quarter[38]. - The divestment of Saskatchewan and United States assets was completed in July 2025, allowing Vermilion to focus on a production base of approximately 120,000 boe/d, with 70% being natural gas[33]. - The company expects Q3 2025 production to average between 117,000 to 120,000 boe/d, factoring in the recent asset divestments and planned turnaround activity[43]. - In Germany, the Osterheide deep gas well produced approximately 1,100 boe/d in Q2 2025, exceeding original expectations[40]. - Total production volume reached 106,379 boe/d in Q2 2025, a 93% increase from 54,987 boe/d in Q2 2024[118]. - Total production for Q2 2025 was 90,926 boe/d, a significant increase from 59,104 boe/d in Q1 2025[215]. - The company completed five net Montney wells and brought eleven net wells on production in Q2 2025, contributing to increased production[121]. - Consolidated average production increased to 136,002 boe/d in Q2 2025, up from 84,974 boe/d in Q2 2024, attributed to the Westbrick acquisition and increased production in Germany and Central and Eastern Europe[103]. Capital Expenditures and Investments - Capital expenditures in Q2 2025 totaled $115.489 million, slightly higher than $110.610 million in Q2 2024[57]. - The average drilling and completion cost for the most recent Montney wells was $8.5 million, which is expected to reduce future development costs by an incremental $50 million on an NPV10 basis[39]. - Vermilion's capital program will continue to focus on global gas assets, particularly in the Montney, Deep Basin, and Germany gas programs[43]. - Acquisitions in Q2 2025 totaled $1.59 million, a significant decrease of 71% from $5.45 million in Q2 2024[83]. - The company plans to continue focusing on drilling and development, with $111.238 million allocated for these activities in Q2 2025[214]. Debt and Financial Obligations - Net debt as of June 30, 2025, was $1.41 billion, a 56% increase from $906.7 million at the end of 2024[65][83]. - The ratio of net debt to four-quarter trailing fund flows from operations increased to 1.4 in Q2 2025, up from 0.8 in Q2 2024[66]. - Long-term debt increased to $2.0 billion as of June 30, 2025, due to the Westbrick acquisition, including the issuance of $563.0 million in senior unsecured notes and a $450.0 million term loan[109]. - The company repaid $200 million of the term loan during the second quarter of 2025[178]. - The revolving credit facility had an amount drawn of $632.3 million as of June 30, 2025, with an unutilized capacity of $685.5 million[173]. Market and Pricing - Realized prices for crude oil and condensate decreased by 22% to $85.07 per barrel in Q2 2025 compared to $108.93 per barrel in Q2 2024[110]. - Natural gas prices in North America saw significant increases, with Henry Hub prices rising 84% to $4.76 per mcf in Q2 2025 compared to Q2 2024[110]. - Crude oil prices in Q2 2025 decreased by 20% for Canadian dollar WTI and 19% for Dated Brent compared to Q2 2024 due to macroeconomic uncertainties[115]. - The average sales price for crude oil and condensate internationally was $90.82 per barrel in Q2 2025, a decrease from $108.97 in Q1 2025[221]. - The average sales price for natural gas in North America was $2.25 per mcf in Q2 2025, down from $2.77 in Q1 2025[221]. Environmental and Sustainability Efforts - The company achieved a 16% reduction in Scope 1 emissions intensity compared to 2019, progressing towards its long-term sustainability goals[44]. - Vermilion identified over $200 million (NPV10) of synergies post-acquisition of Westbrick Energy Ltd., enhancing profitability through operational integration[34]. Miscellaneous - The company has not entered into any off-balance sheet arrangements that would materially impact its financial position[197]. - Vermilion's internal control over financial reporting remained effective with no material changes during the reporting period[198]. - The company is assessing the impact of newly issued IFRS Sustainability Standards on its financial reporting, with mandatory disclosure anticipated in 2027[202].