Vermilion Energy Inc. Announces Results for the Three and Nine Months Ended September 30, 2024

Canada NewsWire

CALGARY, AB, Nov. 6, 2024

CALGARY, AB, Nov. 6, 2024 /CNW/ - Vermilion Energy Inc. ("Vermilion", "We", "Our", "Us" or the "Company") (TSX: VET) $(VET)$ is pleased to report operating and condensed financial results for the three and nine months ended September 30, 2024.

The unaudited interim financial statements and management discussion and analysis for the three and nine months ended September 30, 2024 will be available on the System for Electronic Document Analysis and Retrieval Plus ("SEDAR+") at www.sedarplus.ca, on EDGAR at www.sec.gov/edgar.shtml, and on Vermilion's website at www.vermilionenergy.com.

Highlights

   -- Q3 2024 fund flows from operations ("FFO")(1) was $275 million 
      ($1.76/basic share)(2), representing a 16% increase over the prior 
      quarter, primarily due to stronger European gas prices. Benchmark TTF Day 
      Ahead pricing increased 14% over the prior quarter, averaging 
      $15.52/mmbtu in Q3 2024, and European gas was the only commodity in our 
      portfolio that increased quarter-over-quarter and year-over-year. As a 
      result of strong European gas prices, our corporate average realized 
      natural gas price in Q3 2024 was $6.57/mcf, compared to $0.69/mcf for the 
      AECO 5A benchmark. 
 
   -- Net earnings for Q3 2024 was $52 million ($0.33/basic share), an increase 
      of $134 million over the prior quarter primarily due to a more normalized 
      mark-to-market adjustment on our hedge book. 
 
   -- We invested $121 million in exploration and development ("E&D") capital 
      expenditures(3), resulting in free cash flow ("FCF")(4) of $154 million 
      ($0.98/basic share)(5), of which $59 million was returned to shareholders, 
      including $19 million in dividends and $40 million of share buybacks, 
      representing 45% of excess FCF ("EFCF")(4). 
 
   -- Year-to-date, we have returned $180 million ($1.13/basic share) to 
      shareholders through dividends and share buybacks, representing 38% of 
      EFCF, including the repurchase and cancellation of 8.0 million shares 
      which has reduced our outstanding common shares to 155.3 million as at 
      September 30, 2024. We continue to repurchase shares in Q4 2024 and are 
      on track to return 10% of our market capitalization to shareholders in 
      2024 between our fixed dividend and variable share repurchase program, 
      and expect to continue providing ratable dividend increases and 
      repurchasing shares in future periods. 
 
   -- Net debt(6) decreased by $73 million in Q3 2024 to $833 million, 
      representing a net debt to trailing FFO ratio(7) of 0.6 times, the lowest 
      in 15 years. 
 
   -- Production during Q3 2024 averaged 84,173 boe/d(8) (56% natural gas and 
      44% crude oil and liquids), comprised of 53,936 boe/d(8) from our North 
      American assets and 30,237 boe/d(8) from our International assets, and 
      includes the impact from a planned turnaround in Australia and the 
      partial shut-in of some Canadian gas production due to weak AECO pricing. 
      Our Q3 2024 production represents an increase of 2% year-over-year, or 7% 
      on a per share basis, reflecting the positive impact from our share 
      repurchase program. Notably, production from our International assets has 
      increased 16% over the prior year, including a 26% increase in natural 
      gas production driven by new production from our SA-10 block in Croatia 
      and higher runtime in Ireland. 
 
   -- In Germany, we successfully completed testing operations for our first 
      deep gas exploration well drilled earlier this year. The well flow tested 
      at a restricted rate of 17 mmcf/d(15) of natural gas with a wellhead 
      pressure of 4,625 psi, which supports our expectation that deliverability 
      would have been higher without testing equipment limitations. Tie-in 
      operations are progressing to bring the well on production in the first 
      half of 2025. 
 
   -- We commenced drilling on our second deep gas exploration well (0.3 net) 
      in August 2024 and successfully completed drilling operations at the end 
      of October 2024. We are pleased to report that we discovered gas within 
      the reservoir and are now proceeding with completion and testing 
      operations. Subsequent to the quarter, we commenced drilling on our third 
      German deep gas exploration well (1.0 net) in October 2024. We anticipate 
      results from the second well test and third well drilling operations in 
      the first half of 2025. 
 
   -- In Croatia, we successfully increased production on the SA-10 block after 
      commissioning the gas plant in late June 2024. Production in Q3 2024 
      averaged 1,855 boe/d (100% European natural gas) and currently exceeds 
      2,000 boe/d. On the SA-7 block, we completed testing on the third well of 
      our four-well program, at a reservoir depth of 885 metres, which flow 
      tested at 5.6 mmcf/d(16) of natural gas. 
 
   -- During Q3 2024 we achieved a major safety milestone in Ireland, where we 
      celebrated two years and one million man-hours without a lost time 
      incident, a testament to Vermilion's high standard for safety in our 
      operations. 
 
   -- In Canada, we completed and brought on production five (5.0 net) Montney 
      liquids-rich shale gas wells during the third quarter. These wells have 
      produced at an average IP90 rate of over 1,000 boe/d(17) per well (43% 
      liquids)(17), which is in line with expectations. The total drill, 
      complete, equip and tie-in ("DCET") cost for the 9-21 pad was 
      approximately $9.6 million per well as we continue to make progress 
      towards our normalized targeted cost range of $9.0 to $9.5 million per 
      well. The new battery and water infrastructure have achieved 99% run time 
      since starting up and are contributing to these cost savings. 
 
   -- In conjunction with our Q3 2024 release, we announced a quarterly cash 
      dividend of $0.12 per common share, payable on January 15, 2025 to 
      shareholders of record on December 31, 2024. 
 
   -- We have tightened our 2024 production guidance range to 84,000 to 85,000 
      boe/d to reflect increased certainty on annual production levels, and our 
      capital budget of $600 to $625 million remains unchanged. We are in the 
      process of finalizing our 2025 budget which will target modest production 
      growth on a similar capital spending level as 2024, while maintaining our 
      return of capital payout target at 50% of EFCF. 
 
($M except as indicated)    Q3 2024  Q2 2024   Q3 2023    YTD 2024   YTD 2023 
Financial 
Petroleum and natural gas 
 sales                      490,095   478,925    475,532  1,477,055  1,499,586 
Cash flows from operating 
 activities                 134,547   266,322    118,436    755,164    680,697 
Fund flows from operations 
 (1)                        275,024   236,703    270,218    943,085    770,494 
   Fund flows from 
    operations ($/basic 
    share) (2)                 1.76      1.48       1.65       5.93       4.70 
   Fund flows from 
    operations ($/diluted 
    share) (2)                 1.75      1.47       1.62       5.87       4.61 
Net earnings (loss)          51,697  (82,425)     57,309   (28,423)    565,549 
   Net earnings (loss) 
    ($/basic share)            0.33    (0.52)       0.35     (0.18)       3.45 
Cash flows used in 
 investing activities       145,828   153,025    170,404    480,196    443,503 
Capital expenditures (3)    121,269   110,610    125,639    422,321    447,304 
Acquisitions (9)              1,642     5,450      5,238     16,844    247,294 
Dispositions                     --        --         --         --    182,152 
Asset retirement 
 obligations settled         15,332    11,745     13,582     32,052     28,029 
Repurchase of shares         40,106    46,555     11,645    123,070     66,102 
Cash dividends ($/share)       0.12      0.12       0.10       0.36       0.30 
Dividends declared           18,642    18,981     16,367     56,806     49,023 
   % of fund flows from 
    operations (10)             7 %       8 %        6 %        6 %        6 % 
Payout (12)                 155,243   141,336    155,588    511,179    524,356 
   % of fund flows from 
    operations (11)            56 %      60 %       58 %       54 %       68 % 
Free cash flow (4)          153,755   126,093    144,579    520,764    323,190 
Long-term debt              903,354   915,364    966,505    903,354    966,505 
Net debt (6)                833,331   906,715  1,242,522    833,331  1,242,522 
Net debt to four quarter 
 trailing fund flows from 
 operations (7)                 0.6       0.7        1.2        0.6        1.2 
Operational 
Production (8) 
   Crude oil and 
    condensate (bbls/d)      29,837    32,879     31,417     31,797     31,407 
   NGLs (bbls/d)              7,547     7,196      7,344      7,264      7,261 
   Natural gas (mmcf/d)      280.73    269.39     263.80     274.93     265.09 
   Total (boe/d)             84,173    84,974     82,727     84,881     82,849 
Average realized prices 
   Crude oil and 
    condensate ($/bbl)       103.55    108.93     106.94     105.54     100.64 
   NGLs ($/bbl)               27.49     31.61      27.77      30.99      30.89 
   Natural gas ($/mcf)         6.57      5.69       6.32       6.13       8.08 
Production mix (% of 
production) 
   % priced with reference 
    to WTI                     32 %      32 %       34 %       32 %       35 % 
   % priced with reference 
    to Dated Brent             13 %      15 %       13 %       14 %       12 % 
   % priced with reference 
    to AECO                    33 %      33 %       34 %       33 %       34 % 
   % priced with reference 
    to TTF and NBP             22 %      20 %       19 %       21 %       19 % 
Netbacks ($/boe) 
   Operating netback (12)     41.89     40.32      49.30      48.23      46.42 

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