• Average Production: 84,543 BOEs per day for 2024, with a 4% annual production per share growth.
• International Production Increase: 12% year over year.
• North American Production Decrease: 5% year over year.
• Fund Flow: $1.2 billion or $7.63 per share, a 9% increase over 2023.
• Free Cash Flow: $583 million or $3.69 per share, a 9% increase over 2023.
• E&D Capital Program: $623 million executed within budget.
• Shareholder Returns: $216 million returned, including $75 million in dividends and $141 million in share buybacks.
• Net Debt: Decreased by 10% to $967 million, with a net debt to trailing funds flow ratio of 0.8 times.
• Proved Plus Probable Reserves: Increased by 1% to 435 million BOEs.
• Fourth Quarter Production: 83,536 BOEs per day.
• Fourth Quarter Fund Flows: $263 million or $1.70 per share.
• Fourth Quarter Free Cash Flow: $62 million, with $36 million returned to shareholders.
• Net Present Value of Reserves: $2.8 billion for PDP reserves and $5.2 billion for 2P reserves, discounted at 10%.
• 2025 Production Guidance: Expected between 125,000 to 130,000 BOEs per day.
• 2025 Capital Expenditures: $730 million to $760 million.
• 2025 Free Cash Flow Forecast: $400 million.
• Unhedged FFO Per Share Forecast: Increase from $5.61 in 2024 to approximately $7.50 in 2025.

• Warning! GuruFocus has detected 4 Warning Sign with VET.

Release Date: March 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Vermilion Energy Inc (NYSE:VET) delivered strong operational and financial results in 2024, with production averaging 84,543 BOEs per day, exceeding the midpoint of their original guidance.
• The company achieved a 9% increase in fund flow and free cash flow on a per-share basis compared to 2023.
• Vermilion Energy Inc (NYSE:VET) successfully executed a $623 million E&D capital program within budget, investing in growth projects in Germany, Croatia, and the BC Montney.
• The company announced an 8% increase in their quarterly dividend, marking the fourth consecutive increase since reinstating the dividend.
• Vermilion Energy Inc (NYSE:VET) reduced net debt by 10% in 2024, achieving the lowest net debt to trailing funds flow ratio in over a decade.

Negative Points

• North American production decreased by 5% year over year, primarily due to the divestment in Southeast Saskatchewan.
• Net debt increased slightly in Q4 due to the stronger US dollar and the full repayment of the Montney battery lease.
• The company faces downstream capacity constraints and seasonality constraints in their German gas exploration program, which may limit initial production rates.
• Vermilion Energy Inc (NYSE:VET) is in the process of divesting non-core assets in Southeast Saskatchewan and Wyoming, which could impact future production levels.
• The company is exposed to potential impacts from US tariffs on Canadian energy exports, although they do not expect a material impact at this time.

Q & A Highlights

Q: Can you provide details on the German gas exploration program and expected flow rates? A: Darcy Kerwin, Vice President - International & HSE, explained that the first discovery at Osterheide is expected to begin production in Q2 2025, initially rate-restricted due to capacity constraints. The second well at Wisselshorst, tested at over 40 million cubic feet per day, is expected to tie in by early 2026, with debottlenecking activities planned to increase capacity by early 2027.

Q: What is the status of the sales process for the Saskatchewan and Wyoming assets? A: Anthony Hatcher, President and CEO, stated that the formal sales process is well advanced, with management presentations ongoing. The assets are high-quality with strong retention values, and Vermilion is excited to see how potential bidders respond.

Q: How has the success in Germany affected your exploration plans? A: Anthony Hatcher noted that the success has increased confidence in the exploration program. Vermilion plans to drill two wells per year, with the potential to allocate more capital to Germany due to the success. Darcy Kerwin added that the program now includes both exploration and development wells, reducing overall risk.

Q: What are the operating cost expectations for the Westbrick assets compared to Vermilion's existing Deep Basin assets? A: Anthony Hatcher explained that Westbrick assets have operating costs around $6.50 per BOE, while Vermilion's assets are around $7.50 per BOE due to oilier developments. The integration of assets is expected to provide synergies and potential cost reductions.

Q: How does Vermilion plan to manage the impact of US tariffs on Canadian energy? A: Lars Glemser, CFO, stated that over half of Vermilion's revenue comes from outside Canada, providing insulation from tariffs. The company is also hedged at about 40% for 2025, which helps mitigate potential impacts.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.