Vermilion Energy(US:VET)2025-11-07 15:34Financial 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].