UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
6-K
REPORT
OF FOREIGN PRIVATE ISSUER
Pursuant
to Rule 13a-16 or 15d-16
Under
the Securities Exchange Act of 1934
For
the month of November 2023
Commission
File Number: 001-35829
Vermilion
Energy Inc.
(Exact
name of registrant as specified in its charter)
3500,
520 – 3rd Avenue S.W., Calgary, Alberta T2P 0R3
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Exhibit
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
VERMILION
ENERGY INC.
| |
|
|
| By: |
|
/s/ Lars Glemser |
| Title: |
|
Lars Glemser, VP and Chief Financial Officer |
Date: November 1, 2023
Exhibit 99.1
Disclaimer
Certain statements included or incorporated
by reference in this document may constitute forward-looking statements or information under applicable securities legislation. Such forward-looking
statements or information typically contain statements with words such as "anticipate", "believe", "expect",
"plan", "intend", "estimate", "propose", or similar words suggesting future outcomes or statements
regarding an outlook. Forward looking statements or information in this document may include, but are not limited to: capital expenditures
and Vermilion’s ability to fund such expenditures; Vermilion’s additional debt capacity providing it with additional working
capital; statements regarding the return of capital; the flexibility of Vermilion’s capital program and operations; business strategies
and objectives; operational and financial performance; petroleum and natural gas sales; future production levels and the timing thereof,
including Vermilion’s 2023 guidance, and rates of average annual production growth; the effect of changes in crude oil and natural
gas prices, changes in exchange and inflation rates; significant declines in production or sales volumes due to unforeseen circumstances;
the effect of possible changes in critical accounting estimates; statements regarding the growth and size of Vermilion’s future
project inventory, wells expected to be drilled in 2023; exploration and development plans and the timing thereof; Vermilion’s ability
to reduce its debt; statements regarding Vermilion’s hedging program, its plans to add to its hedging positions, and the anticipated
impact of Vermilion’s hedging program on project economics and free cash flows; the potential financial impact of climate-related
risks; acquisition and disposition plans and the timing thereof; operating and other expenses, including the payment and amount of future
dividends; royalty and income tax rates and Vermilion’s expectations regarding future taxes and taxability; and the timing of regulatory
proceedings and approvals.
Such forward looking statements or information
are based on a number of assumptions, all or any of which may prove to be incorrect. In addition to any other assumptions identified in
this document, assumptions have been made regarding, among other things: the ability of Vermilion to obtain equipment, services and supplies
in a timely manner to carry out its activities in Canada and internationally; the ability of Vermilion to market crude oil, natural gas
liquids, and natural gas successfully to current and new customers; the timing and costs of pipeline and storage facility construction
and expansion and the ability to secure adequate product transportation; the timely receipt of required regulatory approvals; the ability
of Vermilion to obtain financing on acceptable terms; foreign currency exchange rates and interest rates; future crude oil, natural gas
liquids, and natural gas prices; and management’s expectations relating to the timing and results of exploration and development
activities.
Although Vermilion believes that the expectations
reflected in such forward looking statements or information are reasonable, undue reliance should not be placed on forward looking statements
because Vermilion can give no assurance that such expectations will prove to be correct. Financial outlooks are provided for the purpose
of understanding Vermilion’s financial position and business objectives, and the information may not be appropriate for other purposes.
Forward looking statements or information are based on current expectations, estimates, and projections that involve a number of risks
and uncertainties which could cause actual results to differ materially from those anticipated by Vermilion and described in the forward
looking statements or information. These risks and uncertainties include, but are not limited to: the ability of management to execute
its business plan; the risks of the oil and gas industry, both domestically and internationally, such as operational risks in exploring
for, developing and producing crude oil, natural gas liquids, and natural gas; risks and uncertainties involving geology of crude oil,
natural gas liquids, and natural gas deposits; risks inherent in Vermilion's marketing operations, including credit risk; the uncertainty
of reserves estimates and reserves life and estimates of resources and associated expenditures; the uncertainty of estimates and projections
relating to production and associated expenditures; potential delays or changes in plans with respect to exploration or development projects;
Vermilion's ability to enter into or renew leases on acceptable terms; fluctuations in crude oil, natural gas liquids, and natural gas
prices, foreign currency exchange rates, interest rates and inflation; health, safety, and environmental risks; uncertainties as to the
availability and cost of financing; the ability of Vermilion to add production and reserves through exploration and development activities;
the possibility that government policies or laws may change or governmental approvals may be delayed or withheld; uncertainty in amounts
and timing of royalty payments; risks associated with existing and potential future law suits and regulatory actions against or involving
Vermilion; and other risks and uncertainties described elsewhere in this document or in Vermilion's other filings with Canadian securities
regulatory authorities.
This document contains references to sustainability/ESG
data and performance that reflect metrics and concepts that are commonly used in such frameworks as the Global Reporting Initiative, the
Task Force on Climate-related Financial Disclosures, and the Sustainability Accounting Standards Board. Vermilion has used best efforts
to align with the most commonly accepted methodologies for ESG reporting, including with respect to climate data and information on potential
future risks and opportunities, in order to provide a fuller context for our current and future operations. However, these methodologies
are not yet standardized, are frequently based on calculation factors that change over time, and continue to evolve rapidly. Readers are
particularly cautioned to evaluate the underlying definitions and measures used by other companies, as these may not be comparable to
Vermilion’s. While Vermilion will continue to monitor and adapt its reporting accordingly, the Company is not under any duty to
update or revise the related sustainability/ESG data or statements except as required by applicable securities laws.
The forward looking statements or information
contained in this document are made as of the date hereof and Vermilion undertakes no obligation to update publicly or revise any forward
looking statements or information, whether as a result of new information, future events, or otherwise, unless required by applicable
securities laws.
| | Vermilion Energy Inc. ■ Page 1 ■ 2023 Third Quarter Report | |
This document contains metrics commonly
used in the oil and gas industry. These oil and gas metrics do not have any standardized meaning or standard methods of calculation and
therefore may not be comparable to similar measures presented by other companies where similar terminology is used and should therefore
not be used to make comparisons. Natural gas volumes have been converted on the basis of six thousand cubic feet of natural gas to one
barrel of oil equivalent. Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio
of six thousand cubic feet to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead.
Financial data contained within this document
are reported in Canadian dollars, unless otherwise stated.
| | Vermilion Energy Inc. ■ Page 2 ■ 2023 Third Quarter Report | |
Abbreviations
| $M |
thousand dollars |
| $MM |
million dollars |
| AECO |
the daily average benchmark price for natural gas at the AECO ‘C’ hub in Alberta |
| bbl(s) |
barrel(s) |
| bbls/d |
barrels per day |
| boe |
barrel of oil equivalent, including: crude oil, condensate, natural gas liquids, and natural gas (converted on the basis of one boe for six mcf of natural gas) |
| boe/d |
barrel of oil equivalent per day |
| GJ |
gigajoules |
| LSB |
light sour blend crude oil reference price |
| mbbls |
thousand barrels |
| mcf |
thousand cubic feet |
| mmcf/d |
million cubic feet per day |
| NBP |
the reference price paid for natural gas in the United Kingdom at the National Balancing Point Virtual Trading Point |
| NCIB |
normal-course issuer bid |
| NGLs |
natural gas liquids, which includes butane, propane, and ethane |
| PRRT |
Petroleum Resource Rent Tax, a profit based tax levied on petroleum projects in Australia |
| tCO2e |
tonnes of carbon dioxide equivalent |
| THE |
the price for natural gas in Germany, quoted in megawatt hours of natural gas, at the Trading Hub Europe |
| TTF |
the price for natural gas in the Netherlands, quoted in megawatt hours of natural gas, at the Title Transfer Facility Virtual Trading Point |
| WTI |
West Texas Intermediate, the reference price paid for crude oil of standard grade in US dollars at Cushing, Oklahoma |
| | Vermilion Energy Inc. ■ Page 3 ■ 2023 Third Quarter Report | |
Highlights
| • | Q3 2023 fund flows from operations (“FFO”)(1)
was $270 million ($1.65/basic share)(2) and exploration and development (“E&D”) capital expenditures(3)
were $126 million, resulting in free cash flow (“FCF”)(4) of $144 million ($0.88/basic share)(5). |
| • | Year-to-date net earnings of $566 million ($3.45/basic share) driven
by strong price realization and acquisition and disposition activity. |
| • | The TTF natural gas benchmark price in
Europe averaged $14.11 per mcf in Q3 2023, which was over five times higher than the average AECO benchmark index price for the quarter.
Approximately 35% of Vermilion’s Q3 2023 gas production had direct exposure to European gas pricing. |
| • | Net debt(6) decreased to $1.2
billion, representing a trailing net debt-to-FFO ratio(7) of 1.2 times. |
| • | In conjunction with our Q3 2023 release,
we announced a quarterly cash dividend of $0.10 per share, payable on January 15, 2024 to shareholders of record on December 29, 2023. |
| • | Given the improving FCF profile of the
business, we are now targeting to return 30% of FCF to shareholders in 2023, compared to the prior range of 25 to 30%, until we achieve
our net debt target of $1 billion. Under current strip pricing, we anticipate achieving this debt target in Q1 2024 at which time we intend
to increase the amount of capital returned to shareholders via the base dividend and share repurchases. We plan to communicate an update
to our return of capital framework with our 2024 budget release. |
| • | Production during the third quarter of
2023 averaged 82,727 boe/d(8), which was at the top end of our Q3 2023 guidance range, primarily due to the successful restart
of the Wandoo facility in Australia in early September 2023 and the accelerated maintenance turnaround at Corrib, which was completed
five days ahead of schedule. |
| • | In Australia, our wells continue to produce
at strong rates following the restart of the Wandoo facility, and the business is forecasted to contribute approximately 4,000 bbls/d
in Q4 2023. |
| • | In Ireland, Corrib is forecasted to produce
approximately 10,000 boe/d (net to Vermilion) of premium-priced European gas in Q4 2023. |
| • | As a result of strong operational execution
and performance across our portfolio, we are maintaining our 2023 annual production guidance of 82,000 to 86,000 boe/d. |
| • | We have completed the site preparation
and awarded all major contracts for the 16,000 boe/d Mica Montney battery. The majority of construction is scheduled to occur in the first
half of 2024 with the battery expected to be operational by mid-2024. |
| • | We continued to advance our deep gas exploration
and development plans in Germany, and commenced drilling on the first well of our two well winter drilling program in October 2023. In
addition, we have started site preparation for the gas plant in Croatia, which is scheduled for start-up in mid-2024, subject to ongoing
regulatory approvals processes, and will facilitate production from the SA-10 block where we have previous gas discoveries. |
| | Vermilion Energy Inc. ■ Page 4 ■ 2023 Third Quarter Report | |
| ($M except as indicated) |
Q3 2023 |
Q2 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| Financial |
|
|
|
|
|
| Petroleum and natural gas sales |
475,532 |
471,356 |
964,678 |
1,499,586 |
2,633,701 |
| Cash flows from operating activities |
118,436 |
173,632 |
447,608 |
680,697 |
1,319,025 |
| Fund flows from operations (1) |
270,218 |
247,109 |
507,876 |
770,494 |
1,350,645 |
| Fund flows from operations ($/basic share) (2) |
1.65 |
1.51 |
3.10 |
4.70 |
8.25 |
| Fund flows from operations ($/diluted share) (2) |
1.62 |
1.48 |
3.01 |
4.61 |
8.01 |
| Net earnings |
57,309 |
127,908 |
271,079 |
565,549 |
917,654 |
| Net earnings ($/basic share) |
0.35 |
0.78 |
1.65 |
3.45 |
5.61 |
| Cash flows used in investing activities |
170,404 |
164,404 |
168,275 |
443,503 |
891,239 |
| Capital expenditures (3) |
125,639 |
166,845 |
184,015 |
447,304 |
382,512 |
| Acquisitions (14) |
5,238 |
(9,716) |
6,220 |
247,294 |
535,155 |
| Dispositions |
- |
- |
- |
182,152 |
- |
| Asset retirement obligations settled |
13,582 |
11,893 |
10,386 |
28,029 |
21,006 |
| Repurchase of shares |
11,645 |
24,316 |
71,659 |
66,102 |
71,659 |
| Cash dividends ($/share) |
0.10 |
0.10 |
0.08 |
0.30 |
0.20 |
| Dividends declared |
16,367 |
16,430 |
13,031 |
49,023 |
32,711 |
| % of fund flows from operations (9) |
6 % |
7 % |
3 % |
6 % |
2 % |
| Payout (10) |
155,588 |
195,168 |
207,432 |
524,356 |
436,229 |
| % of fund flows from operations (10) |
58 % |
79 % |
41 % |
68 % |
32 % |
| Free cash flow (4) |
144,579 |
80,264 |
323,861 |
323,190 |
968,133 |
| Long-term debt |
966,505 |
913,785 |
1,409,507 |
966,505 |
1,409,507 |
| Net debt (6) |
1,242,522 |
1,321,100 |
1,412,052 |
1,242,522 |
1,412,052 |
| Net debt to four quarter trailing fund flows from operations (7) |
1.2 |
1.0 |
0.8 |
1.2 |
0.8 |
| Operational |
| Production (8) |
|
|
|
|
|
| Crude oil and condensate (bbls/d) |
31,417 |
29,342 |
37,315 |
31,407 |
37,064 |
| NGLs (bbls/d) |
7,344 |
6,538 |
7,901 |
7,261 |
8,117 |
| Natural gas (mmcf/d) |
263.80 |
283.63 |
234.12 |
265.09 |
239.51 |
| Total (boe/d) |
82,727 |
83,152 |
84,237 |
82,849 |
85,099 |
| Average realized prices |
|
|
|
|
|
| Crude oil and condensate ($/bbl) |
106.94 |
96.64 |
123.02 |
100.64 |
127.34 |
| NGLs ($/bbl) |
27.77 |
28.11 |
44.64 |
30.89 |
47.82 |
| Natural gas ($/mcf) |
6.32 |
7.37 |
24.68 |
8.08 |
19.50 |
| Production mix (% of production) |
|
|
|
|
|
| % priced with reference to WTI |
34 % |
32 % |
38 % |
35 % |
38 % |
| % priced with reference to Dated Brent |
13 % |
12 % |
17 % |
12 % |
17 % |
| % priced with reference to AECO |
34 % |
33 % |
30 % |
34 % |
29 % |
| % priced with reference to TTF and NBP |
19 % |
23 % |
15 % |
19 % |
16 % |
| Netbacks ($/boe) |
|
|
|
|
|
| Operating netback (11) |
49.30 |
43.66 |
78.42 |
46.42 |
70.20 |
| Fund flows from operations ($/boe) (12) |
35.76 |
32.35 |
67.07 |
34.19 |
58.86 |
| Operating expenses |
16.26 |
17.91 |
16.64 |
17.60 |
15.37 |
| General and administration expenses |
2.77 |
2.63 |
1.90 |
2.70 |
1.93 |
| Average reference prices |
|
|
|
|
|
| WTI (US $/bbl) |
82.26 |
73.80 |
91.56 |
77.40 |
98.09 |
| Dated Brent (US $/bbl) |
86.76 |
78.39 |
100.85 |
82.14 |
105.35 |
| AECO ($/mcf) |
2.61 |
2.45 |
4.16 |
2.76 |
5.38 |
| TTF ($/mcf) |
14.11 |
15.04 |
75.56 |
17.39 |
51.64 |
| Share information ('000s) |
| Shares outstanding - basic |
163,666 |
164,294 |
162,883 |
163,666 |
162,883 |
| Shares outstanding - diluted (13) |
167,904 |
168,530 |
168,574 |
167,904 |
168,574 |
| Weighted average shares outstanding - basic |
163,946 |
164,997 |
163,947 |
163,848 |
163,619 |
| Weighted average shares outstanding - diluted (13) |
166,392 |
167,364 |
168,494 |
167,167 |
168,658 |
| | Vermilion Energy Inc. ■ Page 5 ■ 2023 Third Quarter Report | |
| (1) | Fund flows from operations (FFO) is a total of segments measure comparable to net earnings that is comprised
of sales less royalties, transportation, operating, G&A, corporate income tax, PRRT, windfall taxes, interest expense, realized gain
(loss) on derivatives, realized foreign exchange gain (loss), and realized other income (expense). The measure is used to assess the contribution
of each business unit to Vermilion's ability to generate income necessary to pay dividends, repay debt, fund asset retirement obligations,
and make capital investments. FFO does not have a standardized meaning under IFRS and therefore may not be comparable to similar measures
provided by other issuers. More information and a reconciliation to primary financial statement measures can be found in the “Non-GAAP
and Other Specified Financial Measures” section of this document. |
| (2) | Fund flows from operations per share (basic and diluted) are supplementary financial measures and are
not a standardized financial measures under IFRS, and therefore may not be comparable to similar measures disclosed by other issuers.
They are calculated using FFO (a total of segments measure) and basic/diluted shares outstanding. The measure is used to assess the contribution
per share of each business unit. More information and a reconciliation to primary financial statement measures can be found in the “Non-GAAP
and Other Specified Financial Measures” section of this document. |
| (3) | Capital expenditures is a non-GAAP financial measure that is the sum of drilling and development costs
and exploration and evaluation costs from the Consolidated Statements of Cash Flows. More information and a reconciliation to primary
financial statement measures can be found in the “Non-GAAP and Other Specified Financial Measures” section of this document. |
| (4) | Free cash flow (FCF) is a non-GAAP financial measure comparable to cash flows from operating activities
and is comprised of FFO less drilling and development and exploration and evaluation expenditures. More information and a reconciliation
to primary financial statement measures can be found in the “Non-GAAP and Other Specified Financial Measures” section of this
document. |
| (5) | Free cash flow per basic share is a non-GAAP supplementary financial measure and is not a standardized
financial measure under IFRS and may not be comparable to similar measures disclosed by other issuers. It is calculated using FCF and
basic shares outstanding. |
| (6) | Net debt is a capital management measure comparable to long-term debt and is comprised of long-term debt
(excluding unrealized foreign exchange on swapped USD borrowings) plus adjusted working capital (defined as current assets less current
liabilities, excluding current derivatives and current lease liabilities). More information and a reconciliation to primary financial
statement measures can be found in the “Non-GAAP and Other Specified Financial Measures” section of this document. |
| (7) | Net debt to trailing FFO is a supplementary financial measure and is not a standardized financial measure
under IFRS. It may not be comparable to similar measures disclosed by other issuers and is calculated using net debt (capital management
measure) and FFO (total of segment measure). The measure is used to assess the ability to repay debt. Information in this document is
included by reference; refer to the "Non-GAAP and Other Specified Financial Measures" section of this document. |
| (8) | Please refer to Supplemental Table 4 "Production" of the accompanying Management's Discussion
and Analysis for disclosure by product type. |
| (9) | Dividends % of FFO is a supplementary financial measure that is not standardized under IFRS and may not
be comparable to similar measures disclosed by other issuers, calculated as dividends divided by FFO. The ratio is used by management
as a metric to assess the cash distributed to shareholders. Reconciliation to primary financial statement measures can be found in the
“Non-GAAP and Other Specified Financial Measures” section of this document. |
| (10) | Payout and payout % of FFO are a non-GAAP financial measure and a non-GAAP ratio, respectively, that are
not standardized under IFRS and may not be comparable to similar measures disclosed by other issuers. Payout is comparable to dividends
declared and is comprised of dividends declared plus drilling and development costs, exploration and evaluation costs, and asset retirement
obligations settled, while the ratio is calculated as payout divided by FFO. More information and a reconciliation to primary financial
statement measures can be found in the “Non-GAAP and Other Specified Financial Measures” section of this document. |
| (11) | Operating netback is a non-GAAP financial measure comparable to net earnings
and is comprised of sales less royalties, operating expense, transportation costs, PRRT, and realized hedging gains and losses. More information
and a reconciliation to primary financial statement measures can be found in the “Non-GAAP and Other Specified Financial Measures”
section of this document. |
| (12) | Fund flows from operations per boe is a supplementary financial measure that is not standardized under
IFRS and may not be comparable to similar measures disclosed by other issuers, calculated as FFO by boe production. Fund flows from operations
per boe is used by management to assess the profitability of our business units and Vermilion as a whole. More information and a reconciliation
to primary financial statement measures can be found in the “Non-GAAP and Other Specified Financial Measures” section of this
document. |
| (13) | Diluted shares outstanding represent the sum of shares outstanding at the period end plus outstanding
awards under the Long-term Incentive Plan (“LTIP”), based on current estimates of future performance factors and forfeiture
rates. |
| (14) | Acquisitions is a non-GAAP financial measure that is calculated as the sum of acquisitions and acquisitions
of securities from the Consolidated Statements of Cash Flows, Vermilion common shares issued as consideration, the estimated value of
contingent consideration, the amount of acquiree's outstanding long-term debt assumed, and net acquired working capital deficit or surplus.
More information and a reconciliation to primary financial statement measures can be found in the “Non-GAAP and Other Specified
Financial Measures” section of this document. |
| | Vermilion Energy Inc. ■ Page 6 ■ 2023 Third Quarter Report | |
Message to Shareholders
Production during the third quarter of
2023 averaged 82,727 boe/d(1), which was at the top end of our Q3 2023 guidance range, primarily due to the successful restart
of the Wandoo facility in Australia in early September 2023 and the accelerated maintenance turnaround at Corrib, which was completed
five days ahead of schedule. We would like to thank all of our staff in Australia and Ireland for the safe and efficient execution of
these large scale maintenance programs. Health, Safety and the Environment is our number one priority and we take great pride in these
accomplishments. With all production back online, we remain on target to achieve our Q4 2023 guidance range of 86,000 to 89,000 boe/d
and full year guidance range of 82,000 to 86,000 boe/d.
We generated $270 million of fund flows
from operations ("FFO") in Q3 2023 and invested $126 million of E&D capital, resulting in $144 million of free cash flow
("FCF") - an 80% increase over the prior quarter. This level of FCF allowed us to fund our current asset retirement obligations,
lease payments and the base dividend, with the excess FCF allocated to debt reduction and share repurchases. Net debt at the end of Q3
2023 decreased 6% to $1.2 billion, representing a trailing net debt-to-FFO ratio of 1.2 times.
Our Q4 2023 capital program is well underway
as we embark on exciting new growth projects in North America and Europe. We broke ground on the Mica Montney BC battery construction
in August 2023 and will continue to progress this project over the next several months. This key piece of infrastructure will underpin
the future development and growth of our Mica Montney asset. In Germany, we recently commenced drilling on our first of two planned exploration
gas wells, which is a natural extension of the successful drilling campaigns we have executed over the past two decades in neighboring
Netherlands. With success from our Germany exploration drilling program, we believe our land base of approximately 700,000 net acres can
support a multi-year drilling campaign, providing Vermilion with years of organic production growth of high valued European gas. In Croatia,
we started site preparation for the gas plant, which is scheduled for start-up in 2024 and will facilitate production from the SA-10 block
where we have previous gas discoveries.
We continue to provide our investors with
a diversified commodity exposure, of which approximately 20% is European gas. Both prompt and forward European gas prices have stabilized
in recent months in the low-$20 per mmbtu range. This is well below the prices seen at this time last year, during the height of the Russian
invasion of Ukraine, which prompted the European Union to take the extraordinary measure of levying a windfall tax for 2022 and 2023.
To date, there has been no extension of the windfall tax by the EU into 2024, which is in line with the EU’s statement that the
measure was exceptional and strictly temporary. Given the stability of European gas prices and a more constructive outlook on European
regulatory policy, we have been actively hedging more European gas to support our future investment in this region. We have hedged 38%
of our 2024 European gas production at an average floor price of $33 per mmbtu and 20% of our 2025 European gas production at an average
floor price of $22 per mmbtu. These hedges enable us to lock in future FFO, providing greater certainty on achieving our near-term debt
targets while enhancing our future return of capital to shareholders.
It is an exciting time for Vermilion and
its shareholders. We are gaining operational momentum with Australia now back online, Mica BC battery and Croatia gas plant construction
underway and spudding of our first Germany gas exploration well. Second, we have direct exposure to premium priced European gas, which
remains in extremely tight supply. We are pleased with our current hedge levels and will continue to lock in these strong prices. Third,
we are seeing the benefits of the strategic asset high-grade and focus on debt reduction. Vermilion is well positioned to deliver a significant
increase in 2024 FCF. With this, we are on track to achieve our debt target in Q1 2024 and intend to increase our return of capital to
shareholders.
Q3 2023 Operations Review
North America
Production from our North American operations
averaged 56,758 boe/d(1) in Q3 2023, an increase of 5% from the prior quarter primarily due to the strong recovery following
fire-related downtime in the Deep Basin and new production from our recent drilling program in the United States.
In the Deep Basin, we drilled two (2.0
net) and completed one (1.0 net) Mannville liquids rich conventional natural gas wells. At Mica we brought on production four (4.0 net)
Montney liquids rich shale gas wells drilled on our Alberta lands earlier in the year. Production from these wells allows us to fill existing
throughput capacity in Alberta while we focus on expanding infrastructure on our British Columbia lands. In Saskatchewan, we drilled ten
(9.3 net), completed nine (8.3 net), and brought on production eight (7.3 net) light and medium crude oil wells.
In the United States, we brought on production
five (2.7 net) light and medium crude oil wells in Wyoming, driving a 21% increase in production relative to the prior quarter.
We continue to advance the build-out of
our Mica Montney BC asset. We have completed the site preparation and awarded all major contracts for the 16,000 boe/d battery, and the
facility modules are currently being fabricated. The majority of construction is scheduled to occur in the first half of 2024 with the
battery expected to be operational by mid-2024. With the additional capacity provided by this battery, we are able to move forward with
the growth phase of our Mica Montney asset, and plan to drill 11 wells on or offsetting our recent 16-28 BC pad as part of our upcoming
winter drilling program.
| | Vermilion Energy Inc. ■ Page 7 ■ 2023 Third Quarter Report | |
International
Production from our International operations
averaged 25,969 boe/d(1) in Q3 2023, a decrease of 11% from the prior quarter, primarily due to a 30-day planned turnaround
at the Corrib facility in Ireland and natural declines, partially offset by the resumption of production in Australia following the restart
of the Wandoo facility.
In Australia, we successfully completed
the remaining inspection and repair work on our Wandoo facility and restarted production in early September 2023. The wells continue to
produce at strong rates with Australia forecasted to contribute approximately 4,000 bbls/d in Q4 2023. In Ireland, we successfully completed
the planned major turnaround at Corrib five days ahead of schedule in August 2023. Corrib is forecasted to produce approximately 10,000
boe/d (net to Vermilion) of premium-priced European gas in Q4 2023.
We continued to advance our deep gas exploration
and development plans in Germany, and commenced drilling on the first well of our two well winter drilling program in October 2023. In
addition, we have started site preparation for the gas plant in Croatia, which is scheduled for start-up in mid-2024 and will facilitate
production from the SA-10 block where we have previous gas discoveries.
Outlook and Guidance Update
With the resumption of production at the
Wandoo platform in Australia, as well as the successful completion of the planned turnaround at the Corrib facility in Ireland, Q4 2023
volumes are expected to be in the range of 86,000 to 89,000 boe/d. We are maintaining our 2023 annual production guidance of 82,000 to
86,000 boe/d, and expect to maintain similar production levels in 2024 as we focus on building out our Mica Montney infrastructure to
support future growth. We increased our 2023 capital expenditure guidance by $20 million to $590 million to accommodate accelerated BC
Montney drilling into Q4. This ensures we secure a high performing rig and drill some of the wells before winter which helps reduce costs.
In addition, it also gives us production behind pipe to be ready for a potential early start-up of the new BC battery should construction
go better than planned. We will provide formal 2024 production and capital expenditure guidance as part of our upcoming budget release.
Commodity Hedging
Vermilion hedges to manage commodity price
exposures and increase the stability of our cash flows. In aggregate, as of November 1, 2023, we have 33% of our expected net-of-royalty
production hedged for the remainder of 2023. With respect to individual commodity products, we have hedged 45% of our European natural
gas production, 38% of our crude oil production, and 16% of our North American natural gas volumes for the remainder of 2023, respectively.
Please refer to the Hedging section of our website under Invest With Us for further details using the following link:
https://www.vermilionenergy.com/invest-with-us/hedging.
| (Signed “Dion Hatcher”) |
|
| |
|
| Dion Hatcher |
|
| President & Chief Executive Officer |
|
| November 1, 2023 |
|
| (1) | Please refer to Supplemental Table 4 "Production" of the accompanying Management's Discussion
and Analysis for disclosure by product type. |
| | Vermilion Energy Inc. ■ Page 8 ■ 2023 Third Quarter Report | |
Non-GAAP and Other Specified
Financial Measures
This report and other materials released
by Vermilion includes financial measures that are not standardized, specified, defined, or determined under IFRS and are therefore considered
non-GAAP or other specified financial measures and may not be comparable to similar measures presented by other issuers. These financial
measures include:
Total of Segments Measures
Fund flows from operations (FFO):
Most directly comparable to net earnings, FFO is comprised of sales less royalties, transportation, operating, G&A, corporate income
tax, PRRT, windfall taxes, interest expense, realized gain (loss) on derivatives, realized foreign exchange gain (loss), and realized
other income (expense). The measure is used to assess the contribution of each business unit to Vermilion's ability to generate income
necessary to pay dividends, repay debt, fund asset retirement obligations and make capital investments.
| |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
| Sales |
475,532 |
62.92 |
964,678 |
127.39 |
1,499,586 |
66.57 |
2,633,701 |
114.76 |
| Royalties |
(32,209) |
(4.26) |
(82,854) |
(10.94) |
(146,546) |
(6.51) |
(237,714) |
(10.36) |
| Transportation |
(21,460) |
(2.84) |
(19,498) |
(2.57) |
(66,415) |
(2.95) |
(56,920) |
(2.48) |
| Operating |
(122,870) |
(16.26) |
(125,987) |
(16.64) |
(396,444) |
(17.60) |
(352,787) |
(15.37) |
| General and administration |
(20,959) |
(2.77) |
(14,422) |
(1.90) |
(60,906) |
(2.70) |
(44,333) |
(1.93) |
| Corporate income tax expense |
(31,368) |
(4.15) |
(51,022) |
(6.74) |
(72,558) |
(3.22) |
(166,195) |
(7.24) |
| Windfall taxes |
(21,953) |
(2.90) |
- |
- |
(78,177) |
(3.47) |
- |
- |
| PRRT |
- |
- |
(4,545) |
(0.60) |
- |
- |
(13,273) |
(0.58) |
| Interest expense |
(20,218) |
(2.68) |
(24,455) |
(3.23) |
(62,303) |
(2.77) |
(60,352) |
(2.63) |
| Realized gain (loss) on derivatives |
73,625 |
9.74 |
(137,953) |
(18.22) |
155,628 |
6.91 |
(361,954) |
(15.77) |
| Realized foreign exchange gain (loss) |
2,089 |
0.28 |
(2,103) |
(0.28) |
997 |
0.04 |
(3,650) |
(0.16) |
| Realized other (expense) income |
(9,991) |
(1.32) |
6,037 |
0.80 |
(2,368) |
(0.11) |
14,122 |
0.62 |
| Fund flows from operations |
270,218 |
35.76 |
507,876 |
67.07 |
770,494 |
34.19 |
1,350,645 |
58.86 |
| Equity based compensation |
(6,362) |
|
(6,145) |
|
(34,885) |
|
(39,013) |
|
| Unrealized (loss) gain on derivative instruments (1) |
(65,294) |
|
43,844 |
|
38,581 |
|
(8,892) |
|
| Unrealized foreign exchange (loss) gain (1) |
(12,042) |
|
(44,929) |
|
7,604 |
|
(37,059) |
|
| Accretion |
(20,068) |
|
(14,285) |
|
(58,718) |
|
(41,669) |
|
| Depletion and depreciation |
(151,087) |
|
(130,205) |
|
(453,607) |
|
(405,208) |
|
| Deferred tax recovery (expense) |
42,489 |
|
(84,570) |
|
79,435 |
|
(91,974) |
|
| Gain on business combination |
- |
|
- |
|
445,094 |
|
- |
|
| Loss on disposition |
- |
|
- |
|
(226,828) |
|
- |
|
| Impairment reversal |
- |
|
- |
|
- |
|
192,094 |
|
| Unrealized other expense |
(545) |
|
(507) |
|
(1,621) |
|
(1,270) |
|
| Net earnings |
57,309 |
|
271,079 |
|
565,549 |
|
917,654 |
|
| (1) | Unrealized (loss) gain on derivative instruments, Unrealized foreign exchange (loss) gain, and Unrealized
other expense are line items from the respective Consolidated Statements of Cash Flows. |
Non-GAAP Financial Measures and Non-GAAP Ratios
Free cash flow (FCF): Most directly
comparable to cash flows from operating activities, FCF is comprised of fund flows from operations less drilling and development costs
and exploration and evaluation costs. The measure is used to determine the funding available for investing and financing activities including
payment of dividends, repayment of long-term debt, reallocation into existing business units and deployment into new ventures.
| | Vermilion Energy Inc. ■ Page 9 ■ 2023 Third Quarter Report | |
| ($M) |
Q3 2023 |
Q3 2022 |
2023 |
2022 |
| Cash flows from operating activities |
118,436 |
447,608 |
680,697 |
1,319,025 |
| Changes in non-cash operating working capital |
138,200 |
49,882 |
61,768 |
10,614 |
| Asset retirement obligations settled |
13,582 |
10,386 |
28,029 |
21,006 |
| Fund flows from operations |
270,218 |
507,876 |
770,494 |
1,350,645 |
| Drilling and development |
(119,404) |
(177,878) |
(436,802) |
(370,207) |
| Exploration and evaluation |
(6,235) |
(6,137) |
(10,502) |
(12,305) |
| Free cash flow |
144,579 |
323,861 |
323,190 |
968,133 |
Adjusted working capital: Defined
as current assets less current liabilities, excluding current derivatives and current lease liabilities. The measure is used to calculate
net debt, a capital measure disclosed above.
| |
As at |
| ($M) |
Sep 30, 2023 |
Dec 31, 2022 |
| Current assets |
657,251 |
714,446 |
| Current derivative asset |
(265,048) |
(162,843) |
| Current liabilities |
(733,430) |
(892,045) |
| Current lease liability |
21,214 |
19,486 |
| Current derivative liability |
43,996 |
55,845 |
| Adjusted working capital |
(276,017) |
(265,111) |
Capital expenditures: Calculated
as the sum of drilling and development costs and exploration and evaluation costs from the Consolidated Statements of Cash Flows and most
directly comparable to cash flows used in investing activities. We consider capital expenditures to be a useful measure of our investment
in our existing asset base. Capital expenditures are also referred to as E&D capital.
| ($M) |
Q3 2023 |
Q3 2022 |
2023 |
2022 |
| Drilling and development |
119,404 |
177,878 |
436,802 |
370,207 |
| Exploration and evaluation |
6,235 |
6,137 |
10,502 |
12,305 |
| Capital expenditures |
125,639 |
184,015 |
447,304 |
382,512 |
Operating netback: Most directly
comparable to net earnings and is calculated as sales less royalties, operating expense, transportation costs, PRRT, and realized hedging
gains and losses presented on a per unit basis. Management assesses operating netback as a measure of the profitability and efficiency
of our field operations.
Payout and payout % of FFO: A non-GAAP
financial measure and non-GAAP ratio respectively most directly comparable to dividends declared. Payout is comprised of dividends declared
plus drilling and development costs, exploration and evaluation costs, and asset retirement obligations settled. The measure is used to
assess the amount of cash distributed back to shareholders and reinvested in the business for maintaining production and organic growth.
The reconciliation of the measure to primary financial statement measure can be found below. Management uses payout and payout as a percentage
of FFO (also referred to as the payout or sustainability ratio).
| ($M) |
Q3 2023 |
Q3 2022 |
2023 |
2022 |
| Dividends Declared |
16,367 |
13,031 |
49,023 |
32,711 |
| Drilling and development |
119,404 |
177,878 |
436,802 |
370,207 |
| Exploration and evaluation |
6,235 |
6,137 |
10,502 |
12,305 |
| Asset retirement obligations settled |
13,582 |
10,386 |
28,029 |
21,006 |
| Payout |
155,588 |
207,432 |
524,356 |
436,229 |
| % of fund flows from operations |
58 % |
41 % |
68 % |
32 % |
Acquisitions: The sum of acquisitions
and acquisitions of securities from the Consolidated Statements of Cash Flows, Vermilion common shares issued as consideration, the estimated
value of contingent consideration, the amount of acquiree's outstanding long-term debt assumed, and net acquired working capital deficit
or surplus. We believe that including these components provides a useful measure of the economic investment associated with our acquisition
activity and is most directly comparable to cash flows used in investing activities. A reconciliation to the acquisitions line items in
the Consolidated Statements of Cash Flows can be found below.
| | Vermilion Energy Inc. ■ Page 10 ■ 2023 Third Quarter Report | |
| ($M) |
Q3 2023 |
Q3 2022 |
2023 |
2022 |
| Acquisitions, net of cash acquired |
3,191 |
2,203 |
139,612 |
506,715 |
| Acquisition of securities |
2,047 |
4,017 |
4,155 |
22,318 |
| Acquired working capital deficit |
- |
- |
103,527 |
6,122 |
| Acquisitions |
5,238 |
6,220 |
247,294 |
535,155 |
Capital Management Measure
Net debt: Is in accordance with
IAS 1 "Presentation of Financial Statements" and is most directly comparable to long-term debt. Net debt is comprised of long-term
debt (excluding unrealized foreign exchange on swapped USD borrowings) plus adjusted working capital and represents Vermilion's net financing
obligations after adjusting for the timing of working capital fluctuations.
| |
As at |
| ($M) |
Sep 30, 2023 |
Dec 31, 2022 |
| Long-term debt |
966,505 |
1,081,351 |
| Adjusted working capital |
276,017 |
265,111 |
| Unrealized FX on swapped USD borrowings |
- |
(1,876) |
| Net debt |
1,242,522 |
1,344,586 |
| |
|
|
| Ratio of net debt to four quarter trailing fund flows from operations |
1.2 |
0.8 |
Supplementary Financial Measures
Net debt to four quarter trailing fund
flows from operations: Calculated as net debt (capital management measure) over the FFO (total of segments measure) from the preceding
four quarters. The measure is used to assess the ability to repay debt.
Dividends % of FFO: Calculated as
dividends declared divided by FFO (total of segments measure). The measure is used by management as a metric to assess the cash distributed
to shareholders.
Fund flows from operations per boe:
Calculated as FFO (total of segments measure) by boe production. Fund flows from operations per boe is used by management to assess the
profitability of our business units and Vermilion as a whole.
| | Vermilion Energy Inc. ■ Page 11 ■ 2023 Third Quarter Report | |
Management's Discussion and Analysis
The following is Management’s Discussion
and Analysis (“MD&A”), dated November 1, 2023, of Vermilion Energy Inc.’s (“Vermilion”, “we”,
“our”, “us” or the “Company”) operating and financial results as at and for the three and nine months
ended September 30, 2023 compared with the corresponding periods in the prior year.
This discussion should be read in conjunction
with the unaudited condensed consolidated interim financial statements for the three and nine months ended September 30, 2023 and
the audited consolidated financial statements for the years ended December 31, 2022 and 2021, together with the accompanying notes.
Additional information relating to Vermilion, including its Annual Information Form, is available on SEDAR+ at www.sedarplus.ca or
on Vermilion’s website at www.vermilionenergy.com.
The unaudited condensed consolidated interim
financial statements for the three and nine months ended September 30, 2023 and comparative information have been prepared in Canadian
dollars, except where another currency has been indicated, and in accordance with IAS 34, "Interim Financial Reporting", as
issued by the International Accounting Standards Board ("IASB").
This MD&A includes references to certain
financial and performance measures which do not have standardized meanings prescribed by International Financial Reporting Standards ("IFRS").
These measures include:
| • | Fund flows from operations: Fund flows from operations (FFO) is a total
of segments measure most directly comparable to net earnings and is comprised of sales less royalties, transportation, operating, G&A,
corporate income tax, PRRT, EU solidarity contribution (referred to throughout this report as "windfall taxes" or "windfall
royalties"), interest expense, realized gain (loss) on derivatives, realized foreign exchange gain (loss), and realized other income
(expense). The measure is used to assess the contribution of each business unit to Vermilion's ability to generate income necessary to
pay dividends, repay debt, fund asset retirement obligations and make capital investments. A reconciliation to Net Earnings can be found
within the "Non-GAAP and Other Specified Financial Measures" section of this MD&A. |
| • | Free cash flow: Free cash flow (FCF) is
a non-GAAP financial measure most directly comparable to Cash flows used in investing activities and is comprised of FFO less drilling
and development costs and exploration and evaluation costs. The measure is used to determine the funding available for investing and financing
activities including payment of dividends, repayment of long-term debt, reallocation into existing business units and deployment into
new ventures. A reconciliation to Cash flows used in investing activities can be found within the "Non-GAAP and Other Specified Financial
Measures" section of this MD&A. |
| • | Net debt: Net debt is a capital management
measure in accordance with IAS 1 "Presentation of Financial Statements" and is most directly comparable to long-term debt. Net
debt is comprised of long-term debt (excluding unrealized foreign exchange on swapped USD borrowings) plus adjusted working capital (defined
as current assets less current liabilities, excluding current derivatives and current lease liabilities), and represents Vermilion's net
financing obligations after adjusting for the timing of working capital fluctuations. Net debt excludes lease obligations which are secured
by a corresponding right-of-use asset. A reconciliation to long-term debt can be found within the "Financial Position Review"
section of this MD&A. |
| • | Operating Netbacks: Operating Netbacks
is a non-GAAP financial measure most directly comparable to net earnings and is calculated as sales less royalties, operating expense,
transportation costs, PRRT, and realized hedging gains and losses presented on a per unit basis. Management assesses operating netback
as a measure of the profitability and efficiency of our field operations. A reconciliation to the primary financial statement measures
can be found within "Supplemental Table 1: Netbacks" of this MD&A. |
| • | Fund flows from operations per boe: Fund
flows from operations per boe includes general and administration expense. Fund flows from operations netback is used by management to
assess the profitability of our business units and Vermilion as a whole. A reconciliation to the primary financial statement measures
can be found within "Supplemental Table 1: Netbacks" of this MD&A. |
In addition, this MD&A includes references
to certain financial measures which are not specified, defined, or determined under IFRS and are therefore considered non-GAAP financial
measures. These non-GAAP financial measures may not be comparable to similar financial measures presented by other issuers. For a full
description of these non-GAAP financial measures and a reconciliation of these measures to their most directly comparable GAAP measures,
please refer to the “Non-GAAP and Other Specified Financial Measures” section of this MD&A.
Product Type Disclosure
Under National Instrument 51-101 "Standards
of Disclosure for Oil and Gas Activities", disclosure of production volumes should include segmentation by product type as defined
in the instrument. In this report, references to "crude oil" and "light and medium crude oil" mean "light crude
oil and medium crude oil" and references to "natural gas" mean "conventional natural gas".
In addition, in Supplemental Table 4 "Production",
Vermilion provides a reconciliation from total production volumes to product type and also a reconciliation of "crude oil and condensate"
and "NGLs" to the product types "light crude oil and medium crude oil" and "natural gas liquids".
Production volumes reported are based on
quantities as measured at the first point of sale.
| | Vermilion Energy Inc. ■ Page 12 ■ 2023 Third Quarter Report | |
Guidance
On January 6, 2023, we released our
2023 capital budget and associated production guidance, which incorporated the March 31, 2023 close date of the acquisition of an incremental
36.5% interest in the Corrib Natural Gas Project (“Corrib”) in Ireland. On March 8, 2023, we decreased annual production guidance
to 82,000 to 86,000 boe/d to reflect the southeast Saskatchewan asset sale and unplanned downtime in Australia, and decreased operating
expense guidance to reflect the southeast Saskatchewan asset sale and lower European gas prices. On May 3, 2023, we updated royalty rate
guidance to include Netherlands windfall royalties, which were previously included in windfall tax guidance, and provided revisions to
2023 guidance items to reflect the assumptions used in management's most recent forecast. On November 1, 2023, we increased capital expenditure
guidance by $20 million primarily due to the acceleration of some Montney development as a result of the timely receipt of permits, and
revised other 2023 guidance items to reflect the assumptions used in management's most recent forecast. The Company’s guidance for
2023 is as follows:
| Category |
Prior (1) |
Current (1) |
| Production (boe/d) |
82,000 - 86,000 |
82,000 - 86,000 |
| E&D capital expenditures ($MM) |
570 |
590 |
| Royalty rate, including windfall royalties (% of sales) (2) |
12 - 14% |
10 - 12% |
| Operating ($/boe) |
$16.50 - 17.50 |
$16.50 - 17.50 |
| Transportation ($/boe) |
$2.75 - 3.25 |
$2.75 - 3.25 |
| General and administration ($/boe) |
$2.00 - 2.50 |
$2.00 - 2.50 |
| Cash taxes (% of pre-tax FFO) |
6 - 8% |
6 - 8% |
| Windfall tax, excluding windfall royalties (% of pre-tax FFO) (3) |
9 - 11% |
8 - 10% |
| (1) | Current 2023 guidance reflects foreign exchange assumptions of CAD/USD 1.35, CAD/EUR 1.46, and CAD/AUD
0.89. Prior 2023 guidance reflects foreign exchange assumptions of CAD/USD 1.33, CAD/EUR 1.46, and CAD/AUD 0.90. |
| (2) | Royalty rate guidance includes the temporary windfall royalty that was enacted by the Netherlands in the
fourth quarter of 2022. This royalty applies to 2023 and 2024 and, for natural gas sales, is calculated as 65% of the excess of the realized
price for a subject year versus the threshold price of #eu#0.50/Nm3 (#eu#13.40/mcf). This royalty is deductible against current income
taxes. |
| (3) | Windfall tax guidance is based on forward prices as at October 23, 2023, and incorporates windfall taxes
as legislated in EU member states in which Vermilion does business. Windfall royalties in the Netherlands are excluded from windfall tax
guidance, and have been included in royalty rate guidance, above. |
| | Vermilion Energy Inc. ■ Page 13 ■ 2023 Third Quarter Report | |
Vermilion's Business
Vermilion is a Calgary, Alberta-based international
oil and gas producer focused on the acquisition, exploration, development, and optimization of producing properties in North America,
Europe, and Australia. We manage our business through our Calgary head office and our international business unit offices.
| | Vermilion Energy Inc. ■ Page 14 ■ 2023 Third Quarter Report | |
Consolidated Results Overview
| |
Q3 2023 |
Q3 2022 |
Q3/23 vs. Q3/22 |
YTD 2023 |
YTD 2022 |
2023 vs. 2022 |
| Production (1) |
|
|
|
|
|
|
| Crude oil and condensate (bbls/d) |
31,417 |
37,315 |
(16)% |
31,407 |
37,064 |
(15)% |
| NGLs (bbls/d) |
7,344 |
7,901 |
(7)% |
7,261 |
8,117 |
(11)% |
| Natural gas (mmcf/d) |
263.80 |
234.12 |
13% |
265.09 |
239.51 |
11% |
| Total (boe/d) |
82,727 |
84,237 |
(2)% |
82,849 |
85,099 |
(3)% |
| Build in inventory (mbbls) |
52 |
176 |
|
73 |
282 |
|
| Financial metrics |
|
|
|
|
|
|
| Fund flows from operations ($M) (2) |
270,218 |
507,876 |
(47)% |
770,494 |
1,350,645 |
(43)% |
| Per share ($/basic share) |
1.65 |
3.10 |
(47)% |
4.70 |
8.25 |
(43)% |
| Net earnings ($M) |
57,309 |
271,079 |
(79)% |
565,549 |
917,654 |
(38)% |
| Per share ($/basic share) |
0.35 |
1.65 |
(79)% |
3.45 |
5.61 |
(39)% |
| Cash flows from operating activities ($M) |
118,436 |
447,608 |
(74)% |
680,697 |
1,319,025 |
(48)% |
| Free cash flow ($M) (3) |
144,579 |
323,861 |
(55)% |
323,190 |
968,133 |
(67)% |
| Long-term debt ($M) |
966,505 |
1,409,507 |
(31)% |
966,505 |
1,409,507 |
(31)% |
| Net debt ($M) (4) |
1,242,522 |
1,412,052 |
(12)% |
1,242,522 |
1,412,052 |
(12)% |
| Activity |
|
|
|
|
|
|
| Capital expenditures ($M) (5) |
125,639 |
184,015 |
(32)% |
447,304 |
382,512 |
17% |
| Acquisitions ($M) (6) |
5,238 |
6,220 |
|
247,294 |
535,155 |
|
| Dispositions ($M) |
- |
- |
|
182,152 |
- |
|
| (1) | Please refer to Supplemental Table 4 "Production" for disclosure by product type. |
| (2) | Fund flows from operations (FFO) and FFO per share are a total of segments measure and supplementary financial
measure respectively most directly comparable to net earnings and net earnings per share, respectively. The measures do not have a standardized
meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. FFO is comprised of sales less
royalties, transportation, operating, G&A, corporate income tax, PRRT, windfall taxes, interest expense, and realized loss (gain)
on derivatives, plus realized gain (loss) on foreign exchange and realized other income (expense). The measure is used to assess the contribution
of each business unit to Vermilion's ability to generate income necessary to pay dividends, repay debt, fund asset retirement obligations
and make capital investments. A reconciliation to the primary financial statement measures can be found within the "Non-GAAP and
Other Specified Financial Measures" section of this MD&A. |
| (3) | Free cash flow (FCF) is a non-GAAP financial measure most directly comparable to cash flows from operating
activities; it does not have a standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other
issuers. FCF is comprised of fund flows from operations less drilling and development costs and exploration and evaluation costs. The
measure is used to determine the funding available for investing and financing activities including payment of dividends, repayment of
long-term debt, reallocation into existing business units and deployment into new ventures. A reconciliation to primary financial statement
measures can be found within the "Non-GAAP and Other Specified Financial Measures" section of this MD&A. |
| (4) | Net debt is a capital management measure in accordance with IAS 1 "Presentation of Financial Statements"
and is most directly comparable to long-term debt. Net debt is comprised of long-term debt (excluding unrealized foreign exchange on swapped
USD borrowings) plus adjusted working capital (defined as current assets less current liabilities, excluding current derivatives and current
lease liabilities), and represents Vermilion's net financing obligations after adjusting for the timing of working capital fluctuations.
Net debt excludes lease obligations which are secured by a corresponding right-of-use asset. A reconciliation to the primary financial
statement measures can be found within the "Financial Position Review" section of this MD&A. |
| (5) | Capital expenditures is a non-GAAP financial measure that does not have a standardized meaning under IFRS
and therefore may not be comparable to similar measures presented by other issuers. The measure is calculated as the sum of drilling and
development costs and exploration and evaluation costs from the Consolidated Statements of Cash Flows. We consider capital expenditures
to be a useful measure of our investment in our existing asset base. Capital expenditures are also referred to as E&D capital. A reconciliation
to the primary financial statement measures can be found within the "Non-GAAP and Other Specified Financial Measures" section
of this MD&A. |
| (6) | Acquisitions is a non-GAAP financial measure that does not have a standardized meaning under IFRS and
therefore may not be comparable to similar measures presented by other issuers. The measure is calculated as the sum of acquisitions,
net of cash and acquisitions of securities from the Consolidated Statements of Cash Flows, Vermilion common shares issued as consideration,
the estimated value of contingent consideration, the amount of acquiree's outstanding long-term debt assumed, and net acquired working
capital deficit or surplus. We believe that including these components provides a useful measure of the economic investment associated
with our acquisition activity. A reconciliation to the acquisitions line item in the Consolidated Statements of Cash Flows can be found
in "Supplemental Table 3: Capital Expenditures and Acquisitions" section of this MD&A. |
| | Vermilion Energy Inc. ■ Page 15 ■ 2023 Third Quarter Report | |
| Financial performance review |
Q3 2023 vs. Q3 2022
| • | We recorded net earnings of $57.3 million
($0.35/basic share) for Q3 2023 compared to $271.1 million ($1.65/basic share) in Q3 2022. The decrease in net earnings was primarily
due to lower fund flows from operations primarily driven by a 51% decrease in realized commodity prices coupled with decreased production
due to downtime in Australia, and a change in the position of unrealized derivatives. This was partially offset by lower deferred income
taxes due to lower taxable income in the current period. |
| | Vermilion Energy Inc. ■ Page 16 ■ 2023 Third Quarter Report | |
| • | We generated cash flows from operating
activities of $118.4 million in Q3 2023 compared to $447.6 million in Q3 2022 and fund flows from operations of $270.2 million in Q3 2023
compared to $507.9 million in Q3 2022. The decreases in cash flows from operating activities and fund flows from operations were primarily
driven by lower commodity prices, and lower production primarily due to downtime in Australia. This was partially offset by lower royalties
driven by lower commodity prices and a true-up of prior period royalties in Netherlands. |
2023 vs. 2022
| | Vermilion Energy Inc. ■ Page 17 ■ 2023 Third Quarter Report | |
| • | For the nine months ended September 30,
2023, we recorded net earnings of $565.5 million compared to $917.7 million for the comparable period in 2022. The decrease in net earnings
was primarily due to a decrease in FFO driven by lower commodity prices and lower production, the loss recognized on the sale of our southeast
Saskatchewan assets in Q1 2023, and non-recurring impairment reversals recorded in 2022 of $144.4 million (net of $47.7 million deferred
income tax expense). This was partially offset by the gain recognized on the Corrib acquisition. |
| • | For the nine months ended September 30,
2023 as compared to 2022, cash flows from operating activities decreased by $638.3 million to $680.7 million and fund flows from operations
decreased by $580.2 million to $770.5 million. The decrease in fund flows from operations was primarily driven by a 42% decrease in our
consolidated realized price from $114.76/boe to $66.58/boe, and a decrease in sales volumes primarily driven by the Australian Wandoo
platform being shut down for maintenance. Tax expenses decreased due to the aforementioned change in funds flow from operations, while
windfall tax increases were the result of 2022 full year estimates being recognized in Q4 2022. |
Q3 2023 vs. Q3 2022
| • | Consolidated average production of 82,727
boe/d in Q3 2023 decreased slightly compared to Q3 2022 production of 84,237 boe/d. Production decreased primarily due to the Q1 2023
sale of non-core assets in southeast Saskatchewan, and extended maintenance downtime in Australia. This was partially offset by increased
production in Ireland due to the acquisition of an additional 36.5% interest in the Corrib Natural Gas Project and in the United States
due to our recent drilling program. |
YTD 2023 vs.
YTD 2022
| • | Consolidated average production of 82,849
boe/d in the nine months ended September 30, 2023 decreased compared to the prior year comparative period production of 85,099 boe/d.
Production decreased primarily due to unplanned downtime in Australia partially offset by increased production in Ireland due to the acquisition
of an additional 36.5% interest in the Corrib Natural Gas Project. Production in Canada was relatively flat as growth in the Mica Montney
assets offset unplanned downtime due to wildfires in the Deep Basin and the sale of non-core assets in southeast Saskatchewan. |
| | Vermilion Energy Inc. ■ Page 18 ■ 2023 Third Quarter Report | |
| • | For the three months ended September 30,
2023, capital expenditures of $125.6 million were invested. |
| • | In our North America core region, we invested
capital expenditures of $69.7 million. In Canada, capital expenditures totaled $59.1 million as we drilled two (2.0 net) in the Deep Basin
and completed one (1.0 net) Mannville liquids rich conventional natural gas well. At Mica we brought on production four (4.0 net) Montney
liquids rich shale gas wells drilled on our Alberta lands earlier in the year. In Saskatchewan, we drilled ten (9.3 net), completed nine
(8.3 net), and brought on production eight (7.3 net) light and medium crude oil wells. In the United States, $10.6 million was incurred
as we brought on production five (2.7 net) light and medium crude oil wells in Wyoming. |
| • | In our International core region, capital
expenditures of $55.9 million were invested during Q3 2023. In the Netherlands and France, we invested $17.2 million and $14.1 million,
respectively, primarily on facilities and subsurface maintenance activities. In Germany, we invested $10.6 million as we advanced
our deep gas exploration and development plans and commenced drilling activities. In Ireland, $7.0 million was invested on the completion
of the planned major turnaround at Corrib. In Australia, $6.1 million was invested as we completed the remaining inspection and repair
work on our Wandoo facility and restarted production in early September 2023. |
| Financial sustainability review |
Free cash flow
| • | Free cash flow of $323.2 million decreased
by $644.9 million for the nine months ended September 30, 2023 compared to the prior year period which was primarily driven by decreased
fund flows from operations on lower pricing, lower production, the retroactive introduction of windfall taxes in late 2022, and higher
expenditures on drilling and development activities. |
Long-term debt and net debt
| • | Long-term debt decreased to $1.0 billion
as at September 30, 2023 from $1.1 billion as at December 31, 2022 primarily as a result of revolving credit facility repayments
of $113.7 million. |
| • | As at September 30, 2023, net debt
remained relatively flat at $1.2 billion (December 31, 2022 - $1.3 billion), primarily as a result of acquisition activities driven
by the purchase of an additional 36.5% working interest in our operated Corrib project for $192.4 million (net of cash and working capital
deficit acquired) and offset by revolving credit facility repayments of $113.7 million, funded by the disposition of our southeast Saskatchewan
assets for $182.2 million, and $323.2 million of free cash flow generated during the year. |
| • | The ratio of net debt to four quarter trailing
fund flows from operations(1) increased to 1.2 as at September 30, 2023 (December 31, 2022 - 0.8) primarily due to
lower four quarter trailing fund flows from operations on lower prices. |
| (1) | Net debt to four quarter trailing fund flows from operations is a supplementary
financial measure that does not have a standardized meaning under IFRS and therefore may not be comparable to similar measures presented
by other issuers. It is calculated as net debt (capital measure) over the FFO from the preceding four quarters (total of segments measure).
The measure is used to assess our ability to repay debt. |
| | Vermilion Energy Inc. ■ Page 19 ■ 2023 Third Quarter Report | |
Benchmark Commodity Prices
| |
Q3 2023 |
Q3 2022 |
Q3/23 vs. Q3/22 |
YTD 2023 |
YTD 2022 |
2023 vs. 2022 |
| Crude oil |
|
|
|
|
|
|
| WTI ($/bbl) |
110.33 |
119.59 |
(8)% |
104.15 |
125.83 |
(17)% |
| WTI (US $/bbl) |
82.26 |
91.56 |
(10)% |
77.40 |
98.09 |
(21)% |
| Edmonton Sweet index ($/bbl) |
107.84 |
116.92 |
(8)% |
100.62 |
123.47 |
(19)% |
| Edmonton Sweet index (US $/bbl) |
80.41 |
89.52 |
(10)% |
74.77 |
96.25 |
(22)% |
| Saskatchewan LSB index ($/bbl) |
106.65 |
115.02 |
(7)% |
98.25 |
122.01 |
(19)% |
| Saskatchewan LSB index (US $/bbl) |
79.52 |
88.06 |
(10)% |
73.02 |
95.11 |
(23)% |
| Canadian C5+ Condensate index ($/bbl) |
104.56 |
113.75 |
(8)% |
103.23 |
124.65 |
(17)% |
| Canadian C5+ Condensate index (US $/bbl) |
77.96 |
87.09 |
(10)% |
76.72 |
97.17 |
(21)% |
| Dated Brent ($/bbl) |
116.35 |
131.72 |
(12)% |
110.53 |
135.14 |
(18)% |
| Dated Brent (US $/bbl) |
86.76 |
100.85 |
(14)% |
82.14 |
105.35 |
(22)% |
| Natural gas |
|
|
|
|
|
|
| North America |
|
|
|
|
|
|
| AECO 5A ($/mcf) |
2.61 |
4.16 |
(37)% |
2.76 |
5.38 |
(49)% |
| Henry Hub ($/mcf) |
3.42 |
10.72 |
(68)% |
3.62 |
8.72 |
(58)% |
| Henry Hub (US $/mcf) |
2.55 |
8.21 |
(69)% |
2.69 |
6.80 |
(60)% |
| Europe(1) |
|
|
|
|
|
|
| NBP Day Ahead ($/mmbtu) |
13.88 |
42.28 |
(67)% |
16.61 |
33.65 |
(51)% |
| NBP Month Ahead ($/mmbtu) |
13.54 |
53.91 |
(75)% |
20.36 |
40.76 |
(50)% |
| NBP Day Ahead (#eu#/mmbtu) |
9.51 |
32.18 |
(70)% |
11.40 |
24.67 |
(54)% |
| NBP Month Ahead (#eu#/mmbtu) |
9.28 |
41.02 |
(77)% |
13.97 |
29.88 |
(53)% |
| TTF Day Ahead ($/mmbtu) |
14.11 |
75.56 |
(81)% |
17.39 |
51.64 |
(66)% |
| TTF Month Ahead ($/mmbtu) |
13.74 |
77.79 |
(82)% |
21.19 |
53.46 |
(60)% |
| TTF Day Ahead (#eu#/mmbtu) |
9.67 |
57.50 |
(83)% |
11.93 |
37.85 |
(68)% |
| TTF Month Ahead (#eu#/mmbtu) |
9.42 |
59.20 |
(84)% |
14.54 |
39.18 |
(63)% |
| Average exchange rates |
|
|
|
|
|
|
| CDN $/US $ |
1.34 |
1.31 |
2% |
1.35 |
1.28 |
5% |
| CDN $/Euro |
1.46 |
1.31 |
11% |
1.46 |
1.36 |
7% |
| Realized prices |
|
|
|
|
|
|
| Crude oil and condensate ($/bbl) |
106.94 |
123.02 |
(13)% |
100.64 |
127.34 |
(21)% |
| NGLs ($/bbl) |
27.77 |
44.64 |
(38)% |
30.89 |
47.82 |
(35)% |
| Natural gas ($/mcf) |
6.32 |
24.68 |
(74)% |
8.08 |
19.50 |
(59)% |
| Total ($/boe) |
62.92 |
127.39 |
(51)% |
66.58 |
114.76 |
(42)% |
| (1) | NBP and TTF pricing can occur on a day-ahead ("DA") or month-ahead ("MA") basis. DA
prices in a period reflect the average current day settled price on the next days' delivery and MA prices in a period represent daily
one month futures contract prices which are determined at the end of each month. In a rising price environment, the DA price will tend
to be greater than the MA price and vice versa. Natural gas in the Netherlands and Germany is benchmarked to the TTF and production is
generally equally split between DA and MA contracts. Natural gas in Ireland is benchmarked to the NBP and is sold on DA contracts. |
As an internationally diversified producer,
we are exposed to a range of commodity prices. In our North America core region, our crude oil is sold at benchmarks linked to WTI (including
the Edmonton Sweet index, the Saskatchewan LSB index, and the Canadian C5+ index) and our natural gas is sold at benchmarks linked to
the AECO index (in Canada) or the Henry Hub ("HH") index (in the United States). In our International core region, our crude
oil is sold with reference to Dated Brent and our natural gas is sold with reference to NBP, TTF, or indices highly correlated to TTF.
| | Vermilion Energy Inc. ■ Page 20 ■ 2023 Third Quarter Report | |
| • | Crude oil prices decreased in Q3 2023 relative
to Q3 2022, although seasonal demand improved prices for the current year, overall supply loss risks and elevated geopolitical concerns
moderated compared to 2022. Canadian dollar WTI and Brent prices decreased by 8% and 12% respectively in Q3 2023 relative to Q3 2022. |
| • | In Canadian dollar terms, year-over-year,
the Edmonton Sweet differential narrowed by $0.18/bbl to a discount of $2.49/bbl against WTI, and the Saskatchewan LSB differential narrowed
by $0.89/bbl to a discount of $3.68/bbl against WTI. |
| • | Approximately 33% of Vermilion’s
Q3 2023 crude oil and condensate production was priced at the Dated Brent index, which averaged a premium to WTI of US$4.50/bbl, while
the remainder of our crude oil and condensate production was priced at the Saskatchewan LSB, Canadian C5+, Edmonton Sweet, and WTI indices. |
| • | In Canadian dollar terms, year-over-year,
prices for European natural gas linked to NBP and TTF decreased by 67% and 81% respectively on a day-ahead basis. On a month ahead basis,
NBP and TTF decreased by 75% and 82% respectively. Prices declined in response to lower demand in Europe, higher LNG import volumes and
high storage levels. While prices are off their Q3 2022 highs, they remained elevated compared to historical trends due to lost Russian
pipeline supply, global LNG imports competitiveness, and weather related risk premiums. |
| • | Year-over-year natural gas prices in Canadian
dollar terms at NYMEX HH, and AECO decreased by 68% and 37% respectively. NYMEX HH prices decreased from last year’s historically
high levels but still traded at relatively strong levels due to record heat in parts of the US this past summer. AECO basis narrowed on
a year-over-year basis. |
| • | For Q3 2023, average European natural gas
prices represented a $11.21/mcf premium to AECO. Approximately 35% of our natural gas production in Q3 2023 benefited from this premium
European pricing. |
| | Vermilion Energy Inc. ■ Page 21 ■ 2023 Third Quarter Report | |
| • | For the three months ended September 30,
2023, the Canadian Dollar weakened 11% against the Euro compared to Q3 2022. |
| • | For the three months ended September 30, 2023, the Canadian Dollar
weakened 2% against the US Dollar compared to Q3 2022. |
| | Vermilion Energy Inc. ■ Page 22 ■ 2023 Third Quarter Report | |
North America
| |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| Production (1) |
|
|
|
|
|
|
|
|
| Crude oil and condensate (bbls/d) |
20,883 |
|
23,898 |
|
21,619 |
|
24,091 |
|
| NGLs (bbls/d) |
7,344 |
|
7,901 |
|
7,261 |
|
8,117 |
|
| Natural gas (mmcf/d) |
171.19 |
|
152.07 |
|
168.42 |
|
150.30 |
|
| Total production volume (boe/d) |
56,758 |
|
57,142 |
|
56,951 |
|
57,259 |
|
| (1) | Please refer to Supplemental Table 4 "Production" for disclosure by product type. |
| |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
| Sales |
257,248 |
49.26 |
374,533 |
71.24 |
775,580 |
49.88 |
1,150,222 |
73.58 |
| Royalties |
(40,489) |
(7.75) |
(66,149) |
(12.58) |
(108,812) |
(7.00) |
(189,487) |
(12.12) |
| Transportation |
(10,878) |
(2.08) |
(11,372) |
(2.16) |
(31,763) |
(2.04) |
(32,453) |
(2.08) |
| Operating |
(63,138) |
(12.09) |
(73,583) |
(14.00) |
(199,473) |
(12.83) |
(195,577) |
(12.51) |
| General and administration (1) |
(3,748) |
(0.72) |
(6,696) |
(1.27) |
(8,605) |
(0.55) |
(21,164) |
(1.35) |
| Corporate income tax expense (1) |
(35) |
(0.01) |
(154) |
(0.03) |
(1,184) |
(0.08) |
(299) |
(0.02) |
| Fund flows from operations |
138,960 |
26.61 |
216,579 |
41.20 |
425,743 |
27.38 |
711,242 |
45.50 |
| Drilling and development |
(69,703) |
|
(112,238) |
|
(321,496) |
|
(224,664) |
|
| Free cash flow |
69,257 |
|
104,341 |
|
104,247 |
|
486,578 |
|
| (1) | Includes amounts from Corporate segment. |
Production from our North American operations
averaged 56,758 boe/d in Q3 2023, an increase of 5% from the prior quarter primarily due to the strong recovery following fire-related
downtime in the Deep Basin and new production from our recent drilling program in the United States.
In the Deep Basin, we drilled two (2.0
net) and completed one (1.0 net) Mannville liquids rich conventional natural gas wells. At Mica we brought on production four (4.0 net)
Montney liquids rich shale gas wells drilled on our Alberta lands earlier in the year. Production from these wells allows us to fill existing
throughput capacity in Alberta while we focus on expanding infrastructure on our British Columbia lands. In Saskatchewan, we drilled ten
(9.3 net), completed nine (8.3 net), and brought on production eight (7.3 net) light and medium crude oil wells.
In the United States, we brought on production
five (2.7 net) light and medium crude oil wells in Wyoming, driving a 21% increase in production relative to the prior quarter.
| |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
| Canada |
209,403 |
45.52 |
332,918 |
69.48 |
661,289 |
47.36 |
1,028,387 |
72.10 |
| United States |
47,845 |
77.03 |
41,615 |
89.36 |
114,291 |
72.07 |
121,835 |
89.00 |
| North America |
257,248 |
49.26 |
374,533 |
71.24 |
775,580 |
49.88 |
1,150,222 |
73.58 |
Sales in North America decreased
for the three and nine months ended September 30, 2023 versus the comparable prior year periods due to lower realized prices and
a decrease in production.
| | Vermilion Energy Inc. ■ Page 23 ■ 2023 Third Quarter Report | |
| |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
| Canada |
(26,856) |
(5.84) |
(54,919) |
(11.46) |
(77,752) |
(5.57) |
(157,258) |
(11.03) |
| United States |
(13,633) |
(21.95) |
(11,230) |
(24.11) |
(31,060) |
(19.59) |
(32,229) |
(23.54) |
| North America |
(40,489) |
(7.75) |
(66,149) |
(12.58) |
(108,812) |
(7.00) |
(189,487) |
(12.12) |
Royalties in North America decreased
on a dollar and per unit basis for the three and nine months ended September 30, 2023 versus the comparable prior year periods primarily
due to decreased sliding scale royalties on lower commodity prices. Royalties as a percentage of sales for the three and nine months ended
September 30, 2023 were 15.7% and 14.0% respectively, compared to the prior year comparative period of 17.7%. and 16.5% respectively
and was the result of decreased sliding scale royalties.
| |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
| Canada |
(10,709) |
(2.33) |
(11,299) |
(2.36) |
(31,462) |
(2.25) |
(31,930) |
(2.24) |
| United States |
(169) |
(0.27) |
(73) |
(0.16) |
(301) |
(0.19) |
(523) |
(0.38) |
| North America |
(10,878) |
(2.08) |
(11,372) |
(2.16) |
(31,763) |
(2.04) |
(32,453) |
(2.08) |
Transportation expense in North America
remained relatively flat on a dollar and per boe basis for the three and nine months ended September 30, 2023 versus the comparable
prior periods.
| |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
| Canada |
(59,191) |
(12.87) |
(66,245) |
(13.83) |
(182,288) |
(13.06) |
(177,594) |
(12.45) |
| United States |
(3,947) |
(6.35) |
(7,338) |
(15.76) |
(17,185) |
(10.84) |
(17,983) |
(13.14) |
| North America |
(63,138) |
(12.09) |
(73,583) |
(14.00) |
(199,473) |
(12.83) |
(195,577) |
(12.51) |
Operating expenses in North America
decreased on a dollar and per boe basis for the three months ended September 30, 2023 compared to the prior year period primarily
due to a decrease in maintenance, lower fuel and electricity costs, and lower headcount following the disposition of assets in Saskatchewan
in Q1 2023. For the nine months ended September 30, 2023 operating expenses increased on a dollar and per boe basis versus the comparable
prior year period primarily as a result of an increase in maintenance activities and inflationary pressures, partially offset by lower
fuel and electricity prices.
| | Vermilion Energy Inc. ■ Page 24 ■ 2023 Third Quarter Report | |
International
| |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| Production (1) |
|
|
|
|
|
|
|
|
| Crude oil and condensate (bbls/d) |
10,534 |
|
13,419 |
|
9,787 |
|
12,973 |
|
| Natural gas (mmcf/d) |
92.61 |
|
82.05 |
|
96.67 |
|
89.21 |
|
| Total production volume (boe/d) |
25,969 |
|
27,095 |
|
25,899 |
|
27,840 |
|
| Total sales volume (boe/d) |
25,386 |
|
25,169 |
|
25,565 |
|
26,807 |
|
| (1) | Please refer to Supplemental Table 4 "Production" for disclosure by product type. |
| |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
| Sales |
218,284 |
93.46 |
590,145 |
254.86 |
724,006 |
103.74 |
1,483,479 |
202.71 |
| Royalties |
8,280 |
3.55 |
(16,705) |
(7.21) |
(37,734) |
(5.41) |
(48,227) |
(6.59) |
| Transportation |
(10,582) |
(4.53) |
(8,126) |
(3.51) |
(34,652) |
(4.96) |
(24,467) |
(3.34) |
| Operating |
(59,732) |
(25.58) |
(52,404) |
(22.63) |
(196,971) |
(28.22) |
(157,210) |
(21.48) |
| General and administration |
(17,211) |
(7.37) |
(7,726) |
(3.34) |
(52,301) |
(7.49) |
(23,169) |
(3.17) |
| Corporate income tax expense |
(31,333) |
(13.42) |
(50,868) |
(21.97) |
(71,374) |
(10.23) |
(165,896) |
(22.67) |
| PRRT |
- |
- |
(4,545) |
(1.96) |
- |
- |
(13,273) |
(1.81) |
| Fund flows from operations |
107,706 |
46.11 |
449,771 |
194.24 |
330,974 |
47.43 |
1,051,237 |
143.65 |
| Drilling and development |
(49,701) |
|
(65,640) |
|
(115,306) |
|
(145,543) |
|
| Exploration and evaluation |
(6,235) |
|
(6,137) |
|
(10,502) |
|
(12,305) |
|
| Free cash flow |
51,770 |
|
377,994 |
|
205,166 |
|
893,389 |
|
Production from our International operations
averaged 25,969 boe/d in Q3 2023, a decrease of 11% from the prior quarter, primarily due to a 30-day planned turnaround at the Corrib
facility in Ireland and natural declines, partially offset by the resumption of production in Australia following the restart of the Wandoo
facility.
In Australia, we successfully completed
the remaining inspection and repair work on our Wandoo facility and restarted production in early September 2023. The wells continue to
produce at strong rates and Australia is forecasted to produce approximately 4,000 bbls/d in Q4 2023. In Ireland, we successfully completed
the planned major turnaround at Corrib five days ahead of schedule in August 2023. Corrib is forecasted to produce approximately 10,000
boe/d (net to Vermilion) of premium-priced European gas in Q4 2023.
We continued to advance our deep gas exploration
and development plans in Germany, and commenced drilling on the first well of our two well winter drilling program in October 2023. In
addition, we have started site preparation for the gas plant in Croatia, which is scheduled for start-up in mid-2024.
| |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
| Australia |
- |
- |
39,220 |
155.29 |
- |
- |
125,767 |
155.05 |
| France |
88,970 |
115.36 |
90,825 |
135.49 |
233,154 |
107.18 |
287,521 |
137.00 |
| Netherlands |
27,856 |
74.00 |
185,296 |
408.30 |
135,193 |
109.30 |
443,189 |
279.36 |
| Germany |
37,606 |
83.24 |
168,812 |
315.78 |
151,331 |
106.29 |
360,249 |
236.15 |
| Ireland |
63,798 |
86.76 |
102,286 |
259.18 |
201,974 |
94.92 |
259,592 |
204.06 |
| Central and Eastern Europe |
54 |
73.37 |
3,706 |
387.33 |
2,354 |
156.78 |
7,161 |
294.73 |
| International |
218,284 |
93.46 |
590,145 |
254.86 |
724,006 |
103.74 |
1,483,479 |
202.71 |
As a result of changes in inventory
levels, our sales volumes for crude oil in Australia, France, and Germany may differ from our production volumes in those business units.
The following table provides the crude oil sales volumes (consisting entirely of "light crude oil and medium crude oil") for
those jurisdictions.
| | Vermilion Energy Inc. ■ Page 25 ■ 2023 Third Quarter Report | |
| Crude oil sales volumes (bbls/d) |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| Australia |
- |
|
2,745 |
|
- |
|
2,971 |
|
| France |
8,383 |
|
7,286 |
|
7,968 |
|
7,688 |
|
| Germany |
1,528 |
|
1,388 |
|
1,429 |
|
1,208 |
|
| International |
9,911 |
|
11,419 |
|
9,397 |
|
11,867 |
|
Sales decreased on a dollar and per
unit basis for the three and nine months ended September 30, 2023 versus the prior year comparable periods due to lower realized
prices across all business units combined with lower sales volumes.
| |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
| France |
(12,351) |
(16.01) |
(10,402) |
(15.52) |
(30,275) |
(13.92) |
(31,059) |
(14.80) |
| Netherlands |
20,607 |
54.75 |
- |
- |
(875) |
(0.71) |
- |
- |
| Germany |
142 |
0.32 |
(4,713) |
(8.82) |
(5,257) |
(3.69) |
(14,829) |
(9.72) |
| Central and Eastern Europe |
(118) |
(160.33) |
(1,590) |
(166.18) |
(1,327) |
(88.38) |
(2,339) |
(96.27) |
| International |
8,280 |
3.55 |
(16,705) |
(7.21) |
(37,734) |
(5.41) |
(48,227) |
(6.59) |
Royalties in our International core
region are primarily incurred in France, Germany and the Netherlands, where royalties include charges based on a percentage of sales and
fixed per boe charges. Our production in Australia and Ireland is not subject to royalties.
Royalties decreased on a dollar and
per unit basis for the three months ended September 30, 2023 versus the comparable prior period primarily due to adjustments for
prior period royalties in Netherlands and Germany. Royalties decreased on dollar and per unit basis for the nine months ended September 30,
2023 versus the comparable prior period primarily due to adjustments for prior period royalties in Germany.
| |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
| France |
(4,351) |
(5.64) |
(4,877) |
(7.28) |
(18,766) |
(8.63) |
(15,511) |
(7.39) |
| Germany |
(3,674) |
(8.13) |
(2,342) |
(4.38) |
(9,847) |
(6.92) |
(6,130) |
(4.02) |
| Ireland |
(2,557) |
(3.48) |
(907) |
(2.30) |
(6,039) |
(2.84) |
(2,826) |
(2.22) |
| International |
(10,582) |
(4.53) |
(8,126) |
(3.51) |
(34,652) |
(4.96) |
(24,467) |
(3.34) |
Transportation expense increased
on a dollar and per unit basis for the three and nine months ended September 30, 2023 versus the comparable prior periods primarily
due to tariff adjustments in Germany, increased volumes in Ireland on acquisition production, and higher vessel costs in France.
Our production in Australia, Netherlands
and Central and Eastern Europe is not subject to transportation expense.
| | Vermilion Energy Inc. ■ Page 26 ■ 2023 Third Quarter Report | |
| |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
| Australia |
(9,937) |
- |
(10,349) |
(40.98) |
(41,683) |
- |
(36,187) |
(44.61) |
| France |
(21,810) |
(28.28) |
(14,461) |
(21.57) |
(63,113) |
(29.01) |
(44,950) |
(21.42) |
| Netherlands |
(3,411) |
(9.06) |
(13,200) |
(29.09) |
(30,014) |
(24.26) |
(34,674) |
(21.86) |
| Germany |
(14,008) |
(31.01) |
(9,188) |
(17.19) |
(35,624) |
(25.02) |
(28,231) |
(18.51) |
| Ireland |
(10,372) |
(14.10) |
(4,715) |
(11.95) |
(25,516) |
(11.99) |
(11,893) |
(9.35) |
| Central and Eastern Europe |
(194) |
(263.59) |
(491) |
(51.32) |
(1,021) |
(68.00) |
(1,275) |
(52.48) |
| International |
(59,732) |
(25.58) |
(52,404) |
(22.63) |
(196,971) |
(28.22) |
(157,210) |
(21.48) |
For the three and nine months ended
September 30, 2023 versus the prior comparable periods, operating expense increased on a dollar and per unit basis. On a dollar basis,
increases were primarily due to the increased working interest acquired in Ireland, increased maintenance in Australia and Germany, increased
processing fees in Germany, and higher electricity costs in France. On a per unit basis, the increase was primarily attributable to the
shut-in of our Wandoo platform in Australia for maintenance, resulting in limited production as the platform resumed operations in early
September.
| | Vermilion Energy Inc. ■ Page 27 ■ 2023 Third Quarter Report | |
Consolidated Financial Performance Review
| |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
| Sales |
475,532 |
62.92 |
964,678 |
127.39 |
1,499,586 |
66.57 |
2,633,701 |
114.76 |
| Royalties |
(32,209) |
(4.26) |
(82,854) |
(10.94) |
(146,546) |
(6.51) |
(237,714) |
(10.36) |
| Transportation |
(21,460) |
(2.84) |
(19,498) |
(2.57) |
(66,415) |
(2.95) |
(56,920) |
(2.48) |
| Operating |
(122,870) |
(16.26) |
(125,987) |
(16.64) |
(396,444) |
(17.60) |
(352,787) |
(15.37) |
| General and administration |
(20,959) |
(2.77) |
(14,422) |
(1.90) |
(60,906) |
(2.70) |
(44,333) |
(1.93) |
| Corporate income tax expense |
(31,368) |
(4.15) |
(51,022) |
(6.74) |
(72,558) |
(3.22) |
(166,195) |
(7.24) |
| Windfall taxes |
(21,953) |
(2.90) |
- |
- |
(78,177) |
(3.47) |
- |
- |
| PRRT |
- |
- |
(4,545) |
(0.60) |
- |
- |
(13,273) |
(0.58) |
| Interest expense |
(20,218) |
(2.68) |
(24,455) |
(3.23) |
(62,303) |
(2.77) |
(60,352) |
(2.63) |
| Realized gain (loss) on derivatives |
73,625 |
9.74 |
(137,953) |
(18.22) |
155,628 |
6.91 |
(361,954) |
(15.77) |
| Realized foreign exchange gain (loss) |
2,089 |
0.28 |
(2,103) |
(0.28) |
997 |
0.04 |
(3,650) |
(0.16) |
| Realized other (expense) income |
(9,991) |
(1.32) |
6,037 |
0.80 |
(2,368) |
(0.11) |
14,122 |
0.62 |
| Fund flows from operations |
270,218 |
35.76 |
507,876 |
67.07 |
770,494 |
34.19 |
1,350,645 |
58.86 |
| Equity based compensation |
(6,362) |
|
(6,145) |
|
(34,885) |
|
(39,013) |
|
| Unrealized (loss) gain on derivative instruments (1) |
(65,294) |
|
43,844 |
|
38,581 |
|
(8,892) |
|
| Unrealized foreign exchange (loss) gain (1) |
(12,042) |
|
(44,929) |
|
7,604 |
|
(37,059) |
|
| Accretion |
(20,068) |
|
(14,285) |
|
(58,718) |
|
(41,669) |
|
| Depletion and depreciation |
(151,087) |
|
(130,205) |
|
(453,607) |
|
(405,208) |
|
| Deferred tax recovery (expense) |
42,489 |
|
(84,570) |
|
79,435 |
|
(91,974) |
|
| Gain on business combination |
- |
|
- |
|
445,094 |
|
- |
|
| Loss on disposition |
- |
|
- |
|
(226,828) |
|
- |
|
| Impairment reversal |
- |
|
- |
|
- |
|
192,094 |
|
| Unrealized other expense (1) |
(545) |
|
(507) |
|
(1,621) |
|
(1,270) |
|
| Net earnings |
57,309 |
|
271,079 |
|
565,549 |
|
917,654 |
|
| (1) | Unrealized (loss) gain on derivative instruments, Unrealized foreign exchange (loss) gain, and Unrealized
other expense are line items from the respective Consolidated Statements of Cash Flows. |
Fluctuations in fund flows from operations
may occur as a result of changes in production levels, commodity prices, and costs to produce petroleum and natural gas. In addition,
fund flows from operations may be affected by the timing of crude oil shipments in Australia and France. When crude oil inventory is built
up, the related operating expense, royalties, and depletion expense are deferred and carried as inventory on the consolidated balance
sheet. When the crude oil inventory is subsequently drawn down, the related expenses are recognized within profit or loss.
General and administration
| • | General and administration expense increased
for the three and nine months ended September 30, 2023 versus the prior year comparable periods primarily due to increased activity
and expected cash settlement of previously share-based settled expenses. |
PRRT and corporate income taxes
| • | PRRT decreased for the three and nine months
ended September 30, 2023 versus the comparable prior periods due to downtime in Australia resulting in no taxable income in the current
period. |
| • | Corporate income taxes for the three and
nine months ended September 30, 2023 decreased versus the comparable prior periods primarily due to lower taxable income as a result
of decreased commodity prices in 2023. |
Windfall taxes
| • | Windfall taxes are the temporary taxes levied pursuant to the European
Union’s temporary solidarity contribution. The contribution set out minimum amounts to be calculated on taxable profits starting
in 2022 and/or 2023, which are above a 20% increase of the average yearly taxable profits for 2018 to 2021. For the three and nine months
ended September 30, 2023, windfall tax expense was $22.0 million and $78.2 million, respectively, compared to nil recorded in the
comparable prior year period due to full year 2022 amounts not being recognized until legislation was substantively enacted during Q4
2022. |
| | Vermilion Energy Inc. ■ Page 28 ■ 2023 Third Quarter Report | |
Interest expense
| • | Interest expense decreased for the three
months ended September 30, 2023 versus the comparable prior period due to lower debt levels. |
| • | Interest expense increased for the nine
months ended September 30, 2023 versus the comparable prior period primarily due to an increase in the percentage of our debt with
fixed interest rates following the issuance of the 2030 senior unsecured notes, combined with the impact of a weaker Canadian Dollar on
US Dollar interest payments. |
Realized gain or loss on derivatives
| • | For the three and nine months ended September 30,
2023, we recorded realized gains on our natural gas hedges due to lower commodity pricing compared to the strike prices. |
| • | A listing of derivative positions as at September 30, 2023 is
included in “Supplemental Table 2” of this MD&A. |
Realized other income or expense
| • | In the 2022 periods, realized other income related to amounts for the
funding under Saskatchewan Accelerated Site Closure program. In the 2023 periods, realized other expense included insurance proceeds received
related to the Cazaux fire in France in 2022, offset by miscellaneous transaction costs and other provisional charges. |
Fluctuations in net earnings from period-to-period
are caused by changes in both cash and non-cash based income and charges. Cash based items are reflected in fund flows from operations.
Non-cash items include: equity based compensation expense, unrealized gains and losses on derivative instruments, unrealized foreign exchange
gains and losses, accretion, depletion and depreciation expense, and deferred taxes. In addition, non-cash items may also include gains
resulting from business combinations or charges resulting from impairment or impairment reversals.
Equity based compensation
Equity based compensation expense relates
primarily to non-cash compensation expense attributable to long-term incentives granted to directors, officers, and employees under security-based
arrangements. Equity based compensation expense decreased for the nine months ended September 30, 2023 versus the comparable prior
period primarily due to the lower value of LTIP awards outstanding in the current period and lower bonuses under the employee bonus plan
in the current period.
Unrealized gain or loss on derivative
instruments
Unrealized gain or loss on derivative instruments
arises as a result of changes in forecasts for future prices and rates. As Vermilion uses derivative instruments to manage the commodity
price exposure of our future crude oil and natural gas production, we will normally recognize unrealized gains on derivative instruments
when future commodity price forecasts decline and vice-versa. As derivative instruments are settled, the unrealized gain or loss previously
recognized is reversed, and the settlement results in a realized gain or loss on derivative instruments.
For the three months ended September 30,
2023, we recognized a net unrealized loss on derivative instruments of $65.3 million. This consists of unrealized losses of $55.9 million
on our European natural gas commodity derivative instruments and $22.0 million on our North American crude oil derivative instruments,
partially offset by gains of $12.6 million on our equity swaps.
For the nine months ended September 30,
2023, we recognized a net unrealized gain on derivative instruments of $38.6 million. This consists of unrealized gains of $80.7 million
on our European natural gas commodity derivative instruments which were partially offset by losses of $23.6 million on our North American
crude oil derivative instruments, $15.3 million on our equity swaps, $1.9 million on our USD-to-CAD foreign exchange swaps and $1.3 million
on our North American natural gas commodity derivative instruments.
Unrealized foreign exchange gains
or losses
As a result of Vermilion’s international
operations, Vermilion has monetary assets and liabilities denominated in currencies other than the Canadian dollar. These monetary assets
and liabilities include cash, receivables, payables, long-term debt, derivative instruments and intercompany loans. Unrealized foreign
exchange gains and losses result from translating these monetary assets and liabilities from their underlying currency to the Canadian
dollar.
In 2023, unrealized foreign exchange gains
and losses primarily resulted from:
| • | The translation of Euro denominated intercompany
loans from our international subsidiaries to Vermilion Energy Inc. An appreciation in the Euro against the Canadian dollar will result
in an unrealized foreign exchange loss (and vice-versa). Under IFRS, the offsetting foreign exchange loss or gain is recorded as a currency
translation adjustment within other comprehensive income. As a result, consolidated comprehensive income reflects the offsetting of these
translation adjustments while net earnings reflects only the parent company's side of the translation. |
| • | The translation of our USD denominated
2025 senior unsecured notes and USD denominated 2030 senior unsecured notes. |
| | Vermilion Energy Inc. ■ Page 29 ■ 2023 Third Quarter Report | |
For the three months ended September 30,
2023, we recognized a net unrealized foreign exchange loss of $12.0 million, primarily driven by an the effects of the Euro strengthening
1% against the Canadian dollar in Q3 2023 on our intercompany loans. For the nine months ended September 30, 2023, we recognized
a net unrealized foreign exchange gain of $7.6 million, primarily driven by an unrealized gain on our USD senior notes.
Accretion
Accretion expense is recognized to update
the present value of the asset retirement obligation balance. For the three months and nine months ended September 30, 2023, accretion
expense increased versus the comparable prior periods primarily due to the impact of a higher asset retirement obligation balance at September 30,
2023 and the strengthening of the Euro against the Canadian dollar.
Depletion and depreciation
Depletion and depreciation expense is recognized
to allocate the cost of capital assets over the useful life of the respective assets. Depletion and depreciation expense per unit of production
is determined for each depletion unit (which are groups of assets within a specific production area that have similar economic lives)
by dividing the sum of the net book value of capital assets and future development costs by total proved plus probable reserves.
Fluctuations in depletion and depreciation
expense are primarily the result of changes in produced crude oil and natural gas volumes, and changes in depletion and depreciation per
unit. Fluctuations in depletion and depreciation per unit are the result of changes in reserves, depletable base (net book value of capital
assets and future development costs), and relative production mix.
Depletion and depreciation on a per boe
basis for the three months ended September 30, 2023 of $19.99 increased from $17.19 in the comparable prior period primarily due
to acquisitions completed in 2022 and early 2023 increasing the depletable base and the strengthening of the Euro against the Canadian
dollar, partially offset by the Southeast Saskatchewan disposition completed at the end of Q1 2023 decreasing the depletable base.
Depletion and depreciation on a per boe
basis for the nine months ended September 30, 2023 of $20.14 increased from $17.66 in the comparable prior period primarily due to
acquisitions completed in 2022 and early 2023 increasing 2023 depletable base, changes in reserves and strengthening of the Euro against
the Canadian dollar.
Deferred tax
Deferred tax assets arise when the tax
basis of an asset exceeds its accounting basis (known as a deductible temporary difference). Conversely, deferred tax liabilities arise
when the tax basis of an asset is less than its accounting basis (known as a taxable temporary difference). Deferred tax assets are recognized
only to the extent that it is probable that there are future taxable profits against which the deductible temporary difference can be
utilized. Deferred tax assets and liabilities are measured at the enacted or substantively enacted tax rate that is expected to apply
when the asset is realized, or the liability is settled.
As such, fluctuations in deferred tax expenses
and recoveries primarily arise as a result of: changes in the accounting basis of an asset or liability without a corresponding tax basis
change (e.g. when derivative assets and liabilities are marked-to-market or when accounting depletion differs from tax depletion), changes
in available tax losses (e.g. if they are utilized to offset taxable income), changes in estimated future taxable profits resulting in
a derecognition or recognition of deferred tax assets, and changes in enacted or substantively enacted tax rates.
For the nine months ended September 30, 2023, the Company
recorded a deferred tax recovery of $79.4 million compared to a deferred tax expense of $92.0 million in the prior year period.
The recovery recorded in the current year is primarily attributable to the Q1 2023 disposition of assets in southeast Saskatchewan and
the scheduled unwind of a deferred tax liability, predominately related to windfall taxes, that was recognized as part of the Corrib acquisition.
Gain on business combination
On March 31, 2023, Vermilion purchased
Equinor Energy Ireland Limited ("EEIL") from Equinor ASA. The acquisition adds an incremental 36.5% interest in the Corrib Natural
Gas Project, increasing Vermilion's operated interest to 56.5%. The acquisition makes Vermilion the largest provider of domestic natural
gas in Ireland.
The gain on the business combination primarily
resulted from increases in working capital and the fair value of capital assets from when the purchase and sale agreement was entered
into in November 2021 and when the acquisition closed in March 2023.
Loss on disposition
In March 2023, Vermilion sold non-core
assets in southeast Saskatchewan for net proceeds of $182.2 million. The book value of the net assets disposed of was $409.0 million resulting
in a loss on disposition of $226.8 million.
| | Vermilion Energy Inc. ■ Page 30 ■ 2023 Third Quarter Report | |
Financial Position Review
We regularly review whether our forecast
of fund flows from operations is sufficient to finance planned capital expenditures, dividends, share buy-backs, and abandonment and reclamation
expenditures. To the extent that fund flows from operations forecasts are not expected to be sufficient to fulfill such expenditures,
we will evaluate our ability to finance any shortfall by reducing some or all categories of expenditures, with issuances of equity, and/or
with debt (including borrowing using the unutilized capacity of our existing revolving credit facility). We have a long-term goal of maintaining
a ratio of net debt to four quarter trailing fund flows from operations of approximately 1.0.
As at September 30, 2023, we have
a ratio of net debt to four quarter trailing fund flows from operations of 1.2. We will continue to monitor for changes in forecasted
fund flows from operations and, as appropriate, will adjust our exploration, development capital plans (and associated production targets),
and return of capital plans to target optimal debt levels.
Maintaining a strong balance sheet
is a core principle of Vermilion and will remain a focus going forward. As debt reduction continues, we will plan to increase the amount
of free cash flow that is available for the return of capital, while taking into account other capital requirements.
Net debt is reconciled to long-term
debt, as follows:
| |
As at |
| ($M) |
Sep 30, 2023 |
Dec 31, 2022 |
| Long-term debt |
966,505 |
1,081,351 |
| Adjusted working capital deficit (1) |
276,017 |
265,111 |
| Unrealized FX on swapped USD borrowings |
- |
(1,876) |
| Net debt |
1,242,522 |
1,344,586 |
| |
|
|
| Ratio of net debt to four quarter trailing fund flows from operations |
1.2 |
0.8 |
| (1) | Adjusted working capital is a non-GAAP financial measure that is not standardized under IFRS and may not
be comparable to similar measures disclosed by other issuers. It is defined as current assets less current liabilities, excluding current
derivatives and current lease liabilities. The measure is used to calculate net debt, a capital measure disclosed above. Reconciliation
to the primary financial statement measures can be found in the “Non-GAAP and Other Specified Financial Measures” section
of this document. |
As at September 30, 2023, net
debt remained flat at $1.2 billion (December 31, 2022 - $1.3 billion), primarily as a result of acquisition activities driven by
the purchase of an additional 36.5% working interest in our operated Corrib project for $192.4 million (net of cash and working capital
deficit acquired) and offset by debt repayments of $113.7 million, funded by the disposition of our southeast Saskatchewan assets for
$182.2 million and $323.2 million of free cash flow generated during the year. The ratio of net debt to four quarter trailing fund flows
from operations as at September 30, 2023 increased to 1.2 (December 31, 2022 - 0.8) due to lower four quarter trailing fund
flows from operations, driven primarily by decreased commodity prices.
The balances recognized on our balance
sheet are as follows:
| |
As at |
| |
Sep 30, 2023 |
Dec 31, 2022 |
| Revolving credit facility |
32,858 |
147,666 |
| 2025 senior unsecured notes |
404,371 |
404,463 |
| 2030 senior unsecured notes |
529,276 |
529,222 |
| Long-term debt |
966,505 |
1,081,351 |
| | Vermilion Energy Inc. ■ Page 31 ■ 2023 Third Quarter Report | |
Revolving Credit Facility
As at September 30, 2023, Vermilion
had in place a bank revolving credit facility maturing May 29, 2027 with terms and outstanding positions as follows:
| |
As at |
| ($M) |
Sep 30, 2023 |
Dec 31, 2022 |
| Total facility amount |
1,600,000 |
1,600,000 |
| Amount drawn |
(32,858) |
(147,666) |
| Letters of credit outstanding |
(25,992) |
(13,527) |
| Unutilized capacity |
1,541,150 |
1,438,807 |
During the year, the maturity date of the
facility was extended to May 28, 2027 (previously May 29, 2026) and the total facility amount of $1.6 billion was unchanged. As at September
30, 2023, $32.9 million was drawn on the facility.
As at September 30, 2023, the
revolving credit facility was subject to the following financial covenants:
| |
|
As at |
| Financial covenant |
Limit |
Sep 30, 2023 |
Dec 31, 2022 |
| Consolidated total debt to consolidated EBITDA |
Less than 4.0 |
0.58 |
0.51 |
| Consolidated total senior debt to consolidated EBITDA |
Less than 3.5 |
0.02 |
0.07 |
| Consolidated EBITDA to consolidated interest expense |
Greater than 2.5 |
20.60 |
27.10 |
Our financial covenants include financial
measures defined within our revolving credit facility agreement that are not defined under IFRS. These financial measures are defined
by our revolving credit facility agreement as follows:
| • | Consolidated total debt: Includes all amounts
classified as “Long-term debt”, “Current portion of long-term debt”, and “Lease obligations” (including
the current portion included within "Accounts payable and accrued liabilities" but excluding operating leases as defined under
IAS 17) on our consolidated balance sheet. |
| • | Consolidated total senior debt: Consolidated
total debt excluding unsecured and subordinated debt. |
| • | Consolidated EBITDA: Consolidated net earnings
before interest, income taxes, depreciation, accretion and certain other non-cash items, adjusted for the impact of the acquisition of
a material subsidiary. |
| • | Total interest expense: Includes all amounts
classified as "Interest expense", but excludes interest on operating leases as defined under IAS 17. |
In addition, our revolving credit facility
has provisions relating to our liability management ratings in Alberta and Saskatchewan whereby if our security adjusted liability management
ratings fall below specified limits in a province, a portion of the asset retirement obligations are included in the definitions of consolidated
total debt and consolidated total senior debt. An event of default occurs if our security adjusted liability management ratings breach
additional lower limits for a period greater than 90 days. As of September 30, 2023, Vermilion's liability management ratings were
higher than the specified levels, and as such, no amounts relating to asset retirement obligations were included in the calculation of
consolidated total debt and consolidated total senior debt.
As at September 30, 2023 and December 31,
2022, Vermilion was in compliance with the above covenants.
2025 senior unsecured notes
On March 13, 2017, Vermilion issued US
$300.0 million of senior unsecured notes at par. The notes bear interest at a rate of 5.625% per annum, paid semi-annually on March 15
and September 15, and mature on March 15, 2025. As direct senior unsecured obligations of Vermilion, the notes rank equally in right of
payment with existing and future senior indebtedness of the Company.
The senior unsecured notes were recognized
at amortized cost and include the transaction costs directly related to the issuance.
Subsequent to March 15, 2023, Vermilion
may redeem some or all of the senior unsecured notes at a 100.000% redemption price plus any accrued and unpaid interest.
| | Vermilion Energy Inc. ■ Page 32 ■ 2023 Third Quarter Report | |
2030 senior unsecured notes
On April 26, 2022, Vermilion closed a private
offering of US $400.0 million 8-year senior unsecured notes. The notes were priced at 99.241% of par, mature on May 1, 2030, and bear
interest at a rate of 6.875% per annum. Interest is paid semi-annually on May 1 and November 1, commencing on November 1, 2022. The notes
are senior unsecured obligations of Vermilion and rank equally with existing and future senior unsecured indebtedness.
The senior unsecured notes were recognized
at amortized cost and include the transaction costs directly related to the issuance.
Vermilion may, at its option, redeem the
notes prior to maturity as follows:
| • | On or after May 1, 2025, Vermilion may
redeem some or all of the senior unsecured notes at the redemption prices set forth below, together with accrued and unpaid interest. |
| • | Prior to May 1, 2025, Vermilion may redeem
up to 35% of the original principal amount of the notes with an amount of cash not greater than the net cash proceeds of certain equity
offerings at a redemption price of 106.875% of the principal amount of the notes, together with accrued and unpaid interest. |
| • | Prior to May 1, 2025, Vermilion may also
redeem some or all of the notes at a price equal to 100% of the principal amount of the notes, plus a “make-whole premium,”
together with applicable premium, accrued and unpaid interest. |
| Year |
Redemption price |
| 2025 |
103.438 % |
| 2026 |
102.292 % |
| 2027 |
101.146 % |
| 2028 and thereafter |
100.000 % |
The following table outlines our
dividend payment history:
| Date |
Frequency |
Dividend per unit or share |
| January 2003 to December 2007 |
Monthly |
$0.170 |
| January 2008 to December 2012 |
Monthly |
$0.190 |
| January 2013 to December 2013 |
Monthly |
$0.200 |
| January 2014 to March 2018 |
Monthly |
$0.215 |
| April 2018 to February 2020 |
Monthly |
$0.230 |
| March 2020 |
Monthly |
$0.115 |
| April 2022 to July 2022 |
Quarterly |
$0.060 |
| August 2022 to March 2023 |
Quarterly |
$0.080 |
| April 2023 onwards |
Quarterly |
$0.100 |
In January 2023, we announced our plan
to increase the quarterly dividend by 25% to $0.10 per share effective for the planned Q1 2023 distribution.
The following table reconciles the
change in shareholders’ capital:
| Shareholders’ Capital |
Shares ('000s) |
Amount |
| Balance at January 1 |
163,227 |
4,243,794 |
| Vesting of equity based awards |
3,428 |
21,175 |
| Shares issued for equity based compensation |
600 |
10,280 |
| Share-settled dividends on vested equity based awards |
57 |
1,051 |
| Repurchase of shares |
(3,646) |
(94,190) |
| Balance at September 30 |
163,666 |
4,182,110 |
As at September 30, 2023, there were
approximately 4.6 million equity based compensation awards outstanding. As at November 1, 2023, there were approximately 163.7 million
common shares issued and outstanding.
On July 10, 2023, the Toronto Stock
Exchange approved our notice of intention to renew our normal course issuer bid ("the NCIB"). The NCIB renewal allows Vermilion
to purchase up to 16,308,587 common shares (representing approximately 10% of outstanding common shares) beginning July 12, 2023 and ending
July 11, 2024. Common shares purchased under the NCIB will be cancelled.
| | Vermilion Energy Inc. ■ Page 33 ■ 2023 Third Quarter Report | |
In the third quarter of 2023, Vermilion
purchased 0.6 million common shares under the NCIB for total consideration of $11.6 million. The common shares purchased under the NCIB
were cancelled.
Asset Retirement Obligations
As at September 30, 2023, asset retirement
obligations were $1,123.8 million compared to $1,087.8 million as at December 31, 2022. The increase in asset retirement obligations
is primarily attributable to the Company's lower credit spread at September 30, 2023 compared to December 31, 2022 and the acquisition
of an additional 36.5% working interest in our Corrib project, partially offset by the disposition of our southeast Saskatchewan assets.
The credit spread decreased to 3.2% at September 30, 2023 compared to 4.5% at December 31, 2022 due to higher yields on long-term
bonds and a lower expected cost of borrowing.
The present value of the obligation is
calculated using a credit-adjusted risk-free rate, calculated using a credit spread added to risk-free rates based on long-term, risk-free
government bonds. Vermilion's credit spread is determined using the Company's expected cost of borrowing at the end of the reporting period.
The risk-free rates and credit spread
used as inputs to discount the obligations were as follows:
| |
9/30/2023 |
12/31/2022 |
Change |
| Credit spread added to below noted risk-free rates |
3.2 % |
4.5 % |
(1.3) % |
| Country specific risk-free rate |
|
|
|
| Canada |
3.9 % |
3.3 % |
0.6 % |
| United States |
4.9 % |
4.1 % |
0.8 % |
| France |
3.8 % |
3.4 % |
0.4 % |
| Netherlands |
3.0 % |
2.7 % |
0.3 % |
| Germany |
3.0 % |
2.5 % |
0.5 % |
| Ireland |
3.6 % |
3.2 % |
0.4 % |
| Australia |
4.4 % |
4.2 % |
0.2 % |
Current cost estimates are inflated to
the estimated time of abandonment using inflation rates of between 1.6% and 4.2% (as at December 31, 2022 - between 1.6% and 4.2%).
| | Vermilion Energy Inc. ■ Page 34 ■ 2023 Third Quarter Report | |
Risks and Uncertainties
Vermilion is exposed to various market
and operational risks. For a discussion of these risks, please see Vermilion's MD&A and Annual Information Form, each for the year
ended December 31, 2022 available on SEDAR+ at www.sedarplus.ca or on Vermilion’s website at www.vermilionenergy.com.
Critical Accounting Estimates
The preparation of financial statements
in accordance with IFRS requires management to make estimates, judgments and assumptions that affect reported assets, liabilities, revenues
and expenses, gains and losses, and disclosures of any possible contingencies. These estimates and assumptions are developed based on
the best available information which management believed to be reasonable at the time such estimates and assumptions were made. As such,
these assumptions are uncertain at the time estimates are made and could change, resulting in a material impact on Vermilion’s consolidated
financial statements. Estimates are reviewed by management on an ongoing basis and as a result may change from period to period due to
the availability of new information or changes in circumstances. Additionally, as a result of the unique circumstances of each jurisdiction
that Vermilion operates in, the critical accounting estimates may affect one or more jurisdictions. There have been no material changes
to our critical accounting estimates used in applying accounting policies for the nine months ended September 30, 2023. Further information,
including a discussion of critical accounting estimates, can be found in the notes to the Consolidated Financial Statements and annual
MD&A for the year ended December 31, 2022, available on SEDAR+ at www.sedarplus.ca or on Vermilion’s website at www.vermilionenergy.com.
Off Balance Sheet Arrangements
We have not entered into any guarantee
or off balance sheet arrangements that would materially impact our financial position or results of operations.
Internal Control Over Financial Reporting
There has been no change in Vermilion’s
internal control over financial reporting ("ICFR") during the period covered by this MD&A that materially affected, or is
reasonably likely to materially affect, our internal control over financial reporting.
Vermilion has limited the scope of design
controls and procedures ("DC&P") and internal controls over financial reporting to exclude controls, policies
and procedures of Equinor Energy Ireland
Limited, which was acquired on March 31, 2023. The scope limitation is in accordance with section 3.3(1)(b) of NI 52-109 which allows
an issuer to limit the design of DC&P and ICFR to exclude controls, policies, and procedures of a business that the issuer acquired
not more than 365 days before the end of the fiscal period.
The tables below present the summary financial
information of Equinor Energy Ireland Limited included in Vermilion's financial statements as at and for the nine months ended September
30, 2023:
Equinor Energy Ireland Limited:
| ($M) |
As at Sep 30, 2023 |
| Non-current assets |
722,845 |
| Non-current liabilities |
86,057 |
| Net assets |
614,023 |
| ($M) |
Nine Months Ended Sep 30, 2023 |
| Revenue net of royalties |
95,456 |
| Net earnings |
30,981 |
Recently Adopted Accounting Pronouncements
Vermilion did not adopt any new accounting
pronouncements as at September 30, 2023.
| | Vermilion Energy Inc. ■ Page 35 ■ 2023 Third Quarter Report | |
Regulatory Pronouncements Not Yet Adopted
Issuance of IFRS Sustainability Standards
- IFRS S1 "General Requirements for Disclosure of Sustainability-related Financial Information" and IFRS S2 "Climate-related
Disclosures"
In June 2023 the International Sustainability
Standards Board (ISSB) issued its inaugural standards - IFRS S1 and IFRS S2. The ISSB was formed as a new standard-setting board within
the IFRS Foundation to issue standards that deliver a comprehensive global baseline of sustainability-related financial disclosures, operating
alongside the International Accounting Standards Board.
IFRS S1 and IFRS S2 are effective for annual
reporting periods beginning on or after January 1, 2024, with earlier application permitted, as long as both standards are applied. IFRS
S1 provides a set of disclosure requirements designed to enable companies to communicate to investors about the sustainability-related
risks and opportunities, while IFRS S2 sets out specific climate-related disclosures and is designed to be used in conjunction with IFRS
S1. Canadian regulators have not yet mandated these standards; however, Vermilion is currently reviewing the impact of the standards on
its financial reporting.
Disclosure Controls and Procedures
Our officers have established and maintained
disclosure controls and procedures and evaluated the effectiveness of these controls in conjunction with our filings.
As of September 30, 2023, we have
evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief
Executive Officer and the Chief Financial Officer have concluded and certified that our disclosure controls and procedures are effective.
| | Vermilion Energy Inc. ■ Page 36 ■ 2023 Third Quarter Report | |
Supplemental Table 1: Netbacks
The following table includes financial
statement information on a per unit basis by business unit. Liquids includes crude oil, condensate, and NGLs. Natural gas sales volumes
have been converted on a basis of six thousand cubic feet of natural gas to one barrel of oil equivalent.
| |
Q3 2023 |
YTD 2023 |
Q3 2022 |
YTD 2022 |
| |
Liquids |
Natural Gas |
Total |
Liquids |
Natural Gas |
Total |
Total |
Total |
| |
$/bbl |
$/mcf |
$/boe |
$/bbl |
$/mcf |
$/boe |
$/boe |
$/boe |
| Canada |
|
|
|
|
|
|
|
|
| Sales |
81.92 |
2.55 |
45.52 |
79.92 |
2.99 |
47.36 |
69.48 |
72.10 |
| Royalties |
(12.85) |
- |
(5.84) |
(11.80) |
0.01 |
(5.57) |
(11.46) |
(11.03) |
| Transportation |
(4.09) |
(0.14) |
(2.33) |
(3.37) |
(0.21) |
(2.25) |
(2.36) |
(2.24) |
| Operating |
(22.59) |
(0.80) |
(12.87) |
(19.51) |
(1.20) |
(13.06) |
(13.83) |
(12.45) |
| Operating netback |
42.39 |
1.61 |
24.48 |
45.24 |
1.59 |
26.48 |
41.83 |
46.38 |
| General and administration |
|
|
(5.56) |
|
|
(5.09) |
(1.40) |
(1.54) |
| Fund flows from operations ($/boe) |
|
|
18.92 |
|
|
21.39 |
40.43 |
44.84 |
| United States |
|
|
|
|
|
|
|
|
| Sales |
91.29 |
1.93 |
77.03 |
87.10 |
2.41 |
72.07 |
89.36 |
89.00 |
| Royalties |
(25.53) |
(0.92) |
(21.95) |
(23.42) |
(0.82) |
(19.59) |
(24.11) |
(23.54) |
| Transportation |
(0.33) |
- |
(0.27) |
(0.24) |
- |
(0.19) |
(0.16) |
(0.38) |
| Operating |
(7.53) |
(0.16) |
(6.35) |
(13.10) |
(0.36) |
(10.84) |
(15.76) |
(13.14) |
| Operating netback |
57.90 |
0.85 |
48.46 |
50.34 |
1.23 |
41.45 |
49.33 |
51.94 |
| General and administration |
|
|
(5.21) |
|
|
(4.43) |
(2.49) |
(2.62) |
| Fund flows from operations ($/boe) |
|
|
43.25 |
|
|
37.02 |
46.84 |
49.32 |
| France |
|
|
|
|
|
|
|
|
| Sales |
115.36 |
- |
115.36 |
107.18 |
- |
107.18 |
135.49 |
137.00 |
| Royalties |
(16.01) |
- |
(16.01) |
(13.92) |
- |
(13.92) |
(15.52) |
(14.80) |
| Transportation |
(5.64) |
- |
(5.64) |
(8.63) |
- |
(8.63) |
(7.28) |
(7.39) |
| Operating |
(28.28) |
- |
(28.28) |
(29.01) |
- |
(29.01) |
(21.57) |
(21.42) |
| Operating netback |
65.43 |
- |
65.43 |
55.62 |
- |
55.62 |
91.12 |
93.39 |
| General and administration |
|
|
(2.22) |
|
|
(6.62) |
(5.72) |
(5.44) |
| Current income taxes |
|
|
(7.01) |
|
|
(3.87) |
(12.22) |
(11.86) |
| Fund flows from operations ($/boe) |
|
|
56.20 |
|
|
45.13 |
73.18 |
76.09 |
| Netherlands |
|
|
|
|
|
|
|
|
| Sales |
99.05 |
12.29 |
74.00 |
82.76 |
18.27 |
109.30 |
408.30 |
279.36 |
| Royalties |
- |
9.21 |
54.75 |
- |
(0.12) |
(0.71) |
- |
- |
| Transportation |
(0.08) |
- |
- |
(0.02) |
- |
- |
- |
- |
| Operating |
(12.13) |
(1.51) |
(9.06) |
(18.37) |
(4.06) |
(24.26) |
(29.09) |
(21.86) |
| Operating netback |
86.84 |
19.99 |
119.69 |
64.37 |
14.09 |
84.33 |
379.21 |
257.50 |
| General and administration |
|
|
(17.60) |
|
|
(6.26) |
(1.24) |
(1.41) |
| Current income taxes |
|
|
(45.38) |
|
|
(23.92) |
(59.27) |
(71.93) |
| Fund flows from operations ($/boe) |
|
|
56.71 |
|
|
54.15 |
318.70 |
184.16 |
| Germany |
|
|
|
|
|
|
|
|
| Sales |
108.54 |
11.97 |
83.24 |
108.74 |
17.56 |
106.29 |
315.78 |
236.15 |
| Royalties |
(7.64) |
0.65 |
0.32 |
(4.40) |
(0.57) |
(3.69) |
(8.82) |
(9.72) |
| Transportation |
(13.31) |
(0.97) |
(8.13) |
(14.88) |
(0.65) |
(6.92) |
(4.38) |
(4.02) |
| Operating |
(40.43) |
(4.46) |
(31.01) |
(25.60) |
(4.13) |
(25.02) |
(17.19) |
(18.51) |
| Operating netback |
47.16 |
7.19 |
44.42 |
63.86 |
12.21 |
70.66 |
285.39 |
203.90 |
| General and administration |
|
|
(3.81) |
|
|
(6.40) |
(2.59) |
(2.61) |
| Current income taxes |
|
|
(18.34) |
|
|
(21.81) |
(34.88) |
(19.37) |
| Fund flows from operations ($/boe) |
|
|
22.27 |
|
|
42.45 |
247.92 |
181.92 |
| | Vermilion Energy Inc. ■ Page 37 ■ 2023 Third Quarter Report | |
| |
Q3 2023 |
YTD 2023 |
Q3 2022 |
YTD 2022 |
| |
Liquids |
Natural Gas |
Total |
Liquids |
Natural Gas |
Total |
Total |
Total |
| |
$/bbl |
$/mcf |
$/boe |
$/bbl |
$/mcf |
$/boe |
$/boe |
$/boe |
| Ireland |
|
|
|
|
|
|
|
|
| Sales |
- |
14.46 |
86.76 |
- |
15.82 |
94.92 |
259.18 |
204.06 |
| Transportation |
- |
(0.58) |
(3.48) |
- |
(0.47) |
(2.84) |
(2.30) |
(2.22) |
| Operating |
- |
(2.35) |
(14.10) |
- |
(2.00) |
(11.99) |
(11.95) |
(9.35) |
| Operating netback |
- |
11.53 |
69.18 |
- |
13.35 |
80.09 |
244.93 |
192.49 |
| General and administration |
|
|
(5.34) |
|
|
(4.69) |
0.17 |
0.34 |
| Current income taxes |
- |
- |
(0.22) |
- |
- |
(0.18) |
- |
- |
| Fund flows from operations ($/boe) |
|
|
63.62 |
|
|
75.22 |
245.10 |
192.83 |
| Australia |
|
|
|
|
|
|
|
|
| Sales |
- |
- |
- |
- |
- |
- |
155.29 |
155.05 |
| Operating |
- |
- |
- |
- |
- |
- |
(40.98) |
(44.61) |
| PRRT (2) |
- |
- |
- |
- |
- |
- |
(18.00) |
(16.36) |
| Operating netback |
- |
- |
- |
- |
- |
- |
96.31 |
94.08 |
| General and administration |
|
|
- |
|
|
- |
(4.21) |
(3.65) |
| Current income taxes |
|
|
- |
|
|
- |
11.34 |
3.27 |
| Fund flows from operations ($/boe) |
|
|
- |
|
|
- |
103.44 |
93.70 |
| Total Company |
|
|
|
|
|
|
|
|
| Sales |
91.34 |
6.37 |
62.92 |
87.41 |
8.08 |
66.57 |
127.39 |
114.76 |
| Realized hedging gain (loss) |
0.66 |
2.94 |
9.74 |
0.38 |
2.09 |
6.91 |
(18.22) |
(15.77) |
| Royalties |
(15.16) |
0.87 |
(4.26) |
(13.34) |
(0.10) |
(6.51) |
(10.94) |
(10.36) |
| Transportation |
(4.48) |
(0.24) |
(2.84) |
(4.60) |
(0.25) |
(2.95) |
(2.57) |
(2.48) |
| Operating |
(23.60) |
(1.65) |
(16.26) |
(23.11) |
(2.14) |
(17.60) |
(16.64) |
(15.37) |
| PRRT (2) |
- |
- |
- |
- |
- |
- |
(0.60) |
(0.58) |
| Operating netback |
48.76 |
8.29 |
49.30 |
46.74 |
7.68 |
46.42 |
78.42 |
70.20 |
| General and administration |
|
|
(2.77) |
|
|
(2.70) |
(1.90) |
(1.93) |
| Interest expense |
|
|
(2.68) |
|
|
(2.77) |
(3.23) |
(2.63) |
| Realized foreign exchange gain (loss) |
|
|
0.28 |
|
|
0.04 |
(0.28) |
(0.16) |
| Other (expense) income |
|
|
(1.32) |
|
|
(0.11) |
0.80 |
0.62 |
| Corporate income taxes |
|
|
(4.15) |
|
|
(3.22) |
(6.74) |
(7.24) |
| Windfall taxes |
|
|
(2.90) |
|
|
(3.47) |
- |
- |
| Fund flows from operations ($/boe) |
|
|
35.76 |
|
|
34.19 |
67.07 |
58.86 |
| (1) | Vermilion considers Australian PRRT to be an operating item and, accordingly, has included PRRT in the
calculation of operating netbacks. Current income taxes presented above excludes PRRT. |
| | Vermilion Energy Inc. ■ Page 38 ■ 2023 Third Quarter Report | |
Supplemental Table 2: Hedges
The prices in these tables may represent
the weighted averages for several contracts with foreign currency amounts translated to the disclosure currency using forward rates as
at the month-end date. The weighted average price for the portfolio of options listed below may not have the same payoff profile as the
individual contracts. As such, the presentation of the weighted average prices is purely for indicative purposes.
The following tables outline Vermilion’s outstanding
risk management positions as at September 30, 2023:
| |
Unit |
Currency |
Daily Bought Put Volume |
Weighted Average Bought Put Price |
Daily Sold Call Volume |
Weighted Average Sold Call Price |
Daily Sold Put Volume |
Weighted Average Sold Put Price |
Daily Sold Swap Volume |
Weighted Average Sold Swap Price |
Daily Bought Swap Volume |
Weighted Average Bought Swap Price |
| WTI |
|
|
| Q4 2023 |
bbl |
USD |
- |
- |
- |
- |
- |
- |
12,500 |
79.00 |
- |
- |
| Q1 2024 |
bbl |
USD |
- |
- |
- |
- |
- |
- |
12,500 |
79.00 |
- |
- |
| Q2 2024 |
bbl |
USD |
- |
- |
- |
- |
- |
- |
9,500 |
80.11 |
- |
- |
| Q3 2024 |
bbl |
USD |
- |
- |
- |
- |
- |
- |
9,500 |
80.11 |
- |
- |
| AECO |
|
|
| Q4 2023 |
mcf |
CAD |
- |
- |
- |
- |
- |
- |
6,387 |
3.86 |
- |
- |
| Q1 2024 |
mcf |
CAD |
4,739 |
3.17 |
4,739 |
4.22 |
- |
- |
4,739 |
3.69 |
- |
- |
| Q2 2024 |
mcf |
CAD |
4,739 |
3.17 |
4,739 |
4.22 |
- |
- |
19,904 |
3.14 |
- |
- |
| Q3 2024 |
mcf |
CAD |
4,739 |
3.17 |
4,739 |
4.22 |
- |
- |
19,904 |
3.14 |
- |
- |
| Q4 2024 |
mcf |
CAD |
4,739 |
3.17 |
4,739 |
4.22 |
- |
- |
9,849 |
3.31 |
- |
- |
| Q1 2025 |
mcf |
CAD |
4,739 |
3.17 |
4,739 |
4.22 |
- |
- |
18,956 |
3.87 |
- |
- |
| Q2 2025 |
mcf |
CAD |
4,739 |
3.17 |
4,739 |
4.22 |
- |
- |
18,956 |
3.87 |
- |
- |
| Q3 2025 |
mcf |
CAD |
4,739 |
3.17 |
4,739 |
4.22 |
- |
- |
18,956 |
3.87 |
- |
- |
| Q4 2025 |
mcf |
CAD |
4,739 |
3.17 |
4,739 |
4.22 |
- |
- |
18,956 |
3.87 |
- |
- |
| Q1 2026 |
mcf |
CAD |
4,739 |
3.17 |
4,739 |
4.22 |
- |
- |
18,956 |
3.87 |
- |
- |
| Q2 2026 |
mcf |
CAD |
4,739 |
3.17 |
4,739 |
4.22 |
- |
- |
18,956 |
3.87 |
- |
- |
| Q3 2026 |
mcf |
CAD |
4,739 |
3.17 |
4,739 |
4.22 |
- |
- |
18,956 |
3.87 |
- |
- |
| Q4 2026 |
mcf |
CAD |
4,739 |
3.17 |
4,739 |
4.22 |
- |
- |
18,956 |
3.87 |
- |
- |
| AECO Basis (AECO less NYMEX Henry Hub) |
|
|
| Q4 2023 |
mcf |
USD |
- |
- |
- |
- |
- |
- |
14,489 |
(1.29) |
- |
- |
| NYMEX Henry Hub |
|
|
| Q4 2023 |
mcf |
USD |
1,685 |
4.00 |
1,685 |
8.75 |
- |
- |
- |
- |
- |
- |
| Q1 2024 |
mcf |
USD |
20,000 |
3.50 |
20,000 |
4.45 |
- |
- |
- |
- |
- |
- |
| Q2 2024 |
mcf |
USD |
20,000 |
3.50 |
20,000 |
4.45 |
- |
- |
- |
- |
- |
- |
| Q3 2024 |
mcf |
USD |
20,000 |
3.50 |
20,000 |
4.45 |
- |
- |
- |
- |
- |
- |
| Q4 2024 |
mcf |
USD |
20,000 |
3.50 |
20,000 |
4.45 |
- |
- |
- |
- |
- |
- |
| Q1 2025 |
mcf |
USD |
20,000 |
3.50 |
20,000 |
4.45 |
- |
- |
- |
- |
- |
- |
| Q2 2025 |
mcf |
USD |
20,000 |
3.50 |
20,000 |
4.45 |
- |
- |
- |
- |
- |
- |
| Q3 2025 |
mcf |
USD |
20,000 |
3.50 |
20,000 |
4.45 |
- |
- |
- |
- |
- |
- |
| Q4 2025 |
mcf |
USD |
20,000 |
3.50 |
20,000 |
4.45 |
- |
- |
- |
- |
- |
- |
| Q1 2026 |
mcf |
USD |
20,000 |
3.50 |
20,000 |
4.45 |
- |
- |
- |
- |
- |
- |
| Q2 2026 |
mcf |
USD |
20,000 |
3.50 |
20,000 |
4.45 |
- |
- |
- |
- |
- |
- |
| Q3 2026 |
mcf |
USD |
20,000 |
3.50 |
20,000 |
4.45 |
- |
- |
- |
- |
- |
- |
| Q4 2026 |
mcf |
USD |
20,000 |
3.50 |
20,000 |
4.45 |
- |
- |
- |
- |
- |
- |
| | Vermilion Energy Inc. ■ Page 39 ■ 2023 Third Quarter Report | |
| |
Unit |
Currency |
Daily Bought Put Volume |
Weighted Average Bought Put Price |
Daily Sold Call Volume |
Weighted Average Sold Call Price |
Daily Sold Put Volume |
Weighted Average Sold Put Price |
Daily Sold Swap Volume |
Weighted Average Sold Swap Price |
Daily Bought Swap Volume |
Weighted Average Bought Swap Price |
| NBP |
| Q4 2023 (1) |
mcf |
EUR |
4,913 |
8.79 |
4,913 |
21.98 |
- |
- |
28,209 |
10.51 |
- |
- |
| Q1 2024 |
mcf |
EUR |
4,913 |
41.03 |
4,913 |
84.26 |
- |
- |
- |
- |
- |
- |
| Q2 2024 |
mcf |
EUR |
- |
- |
- |
- |
- |
- |
2,457 |
14.65 |
- |
- |
| Q3 2024 |
mcf |
EUR |
- |
- |
- |
- |
- |
- |
2,457 |
14.65 |
- |
- |
| TTF |
| Q4 2023 |
mcf |
EUR |
12,284 |
44.84 |
12,284 |
84.99 |
- |
- |
3,685 |
67.41 |
- |
- |
| Q1 2024 |
mcf |
EUR |
35,623 |
37.85 |
35,623 |
71.90 |
- |
- |
7,370 |
41.19 |
- |
- |
| Q2 2024 |
mcf |
EUR |
3,593 |
37.56 |
3,593 |
74.66 |
- |
- |
27,024 |
14.00 |
- |
- |
| Q3 2024 |
mcf |
EUR |
3,593 |
37.56 |
3,593 |
74.66 |
- |
- |
27,024 |
14.00 |
- |
- |
| Q4 2024 |
mcf |
EUR |
- |
- |
- |
- |
- |
- |
34,394 |
15.13 |
- |
- |
| Q1 2025 |
mcf |
EUR |
- |
- |
- |
- |
- |
- |
34,394 |
15.13 |
- |
- |
| Q2 2025 |
mcf |
EUR |
- |
- |
- |
- |
- |
- |
17,197 |
14.40 |
- |
- |
| Q3 2025 |
mcf |
EUR |
- |
- |
- |
- |
- |
- |
17,197 |
14.40 |
- |
- |
| Q4 2025 |
mcf |
EUR |
- |
- |
- |
- |
- |
- |
7,370 |
13.68 |
- |
- |
| Q1 2026 |
mcf |
EUR |
- |
- |
- |
- |
- |
- |
7,370 |
13.68 |
- |
- |
| THE |
| Q4 2024 |
mcf |
EUR |
- |
- |
- |
- |
- |
- |
2,457 |
14.95 |
- |
- |
| Q1 2025 |
mcf |
EUR |
- |
- |
- |
- |
- |
- |
2,457 |
14.95 |
- |
- |
| Q2 2025 |
mcf |
EUR |
- |
- |
- |
- |
- |
- |
2,457 |
14.95 |
- |
- |
| Q3 2025 |
mcf |
EUR |
- |
- |
- |
- |
- |
- |
2,457 |
14.95 |
- |
- |
| (1) | NBP swaps were acquired as part of the Corrib acquisition on March 31, 2023. These swaps are contracted
as p/therm and have been converted to #eu#/mcf for the purposes of this disclosure. |
| VET Equity Swaps |
|
|
Initial Share Price |
Share Volume |
| Swap |
Jan 2020 - Apr 2025 |
|
|
|
20.9788 |
CAD |
2,250,000 |
| Swap |
Jan 2020 - Jul 2025 |
|
|
|
22.4587 |
CAD |
1,500,000 |
The following sold option instruments allow
the counterparties, at the specified date, to enter into a derivative instrument contract with Vermilion at the detailed terms:
| Period if Option Exercised |
Unit |
Currency |
Option Expiration Date |
Daily Sold Swap Volume |
Weighted Average Sold Swap Price |
| WTI |
| Apr 2024 - Sep 2024 |
bbl |
USD |
29-Dec-2023 |
2,500 |
80.00 |
| TTF |
| Apr 2024 - Mar 2026 |
mcf |
EUR |
29-Dec-2023 |
9,827 |
14.65 |
| | Vermilion Energy Inc. ■ Page 40 ■ 2023 Third Quarter Report | |
Supplemental Table 3: Capital Expenditures
and Acquisitions
| By classification ($M) |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| Drilling and development |
119,404 |
177,878 |
436,802 |
370,207 |
| Exploration and evaluation |
6,235 |
6,137 |
10,502 |
12,305 |
| Capital expenditures |
125,639 |
184,015 |
447,304 |
382,512 |
| |
|
|
|
|
| Acquisitions, net of cash acquired |
3,191 |
2,203 |
139,612 |
506,715 |
| Acquisition of securities |
2,047 |
4,017 |
4,155 |
22,318 |
| Acquired working capital deficit |
- |
- |
103,527 |
6,122 |
| Acquisitions |
5,238 |
6,220 |
247,294 |
535,155 |
| |
|
|
|
|
| Dispositions ($M) |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| Canada |
- |
- |
182,152 |
- |
| Total dispositions |
- |
- |
182,152 |
- |
| |
|
|
|
|
| By category ($M) |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| Drilling, completion, new well equip and tie-in, workovers and recompletions |
59,989 |
153,641 |
305,020 |
305,529 |
| Production equipment and facilities |
56,979 |
21,441 |
121,394 |
56,436 |
| Seismic, studies, land and other |
8,671 |
8,933 |
20,890 |
20,547 |
| Capital expenditures |
125,639 |
184,015 |
447,304 |
382,512 |
| Acquisitions |
5,238 |
6,220 |
247,294 |
535,155 |
| Total capital expenditures and acquisitions |
130,877 |
190,235 |
694,598 |
917,667 |
| |
|
|
|
|
| Capital expenditures by country ($M) |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| Canada |
59,111 |
83,343 |
234,432 |
163,720 |
| United States |
10,592 |
28,895 |
87,064 |
60,944 |
| France |
14,069 |
9,624 |
37,080 |
28,548 |
| Netherlands |
17,162 |
5,547 |
33,360 |
7,420 |
| Germany |
10,648 |
3,334 |
26,665 |
16,068 |
| Ireland |
6,994 |
735 |
8,433 |
1,707 |
| Australia |
6,072 |
44,068 |
16,674 |
89,420 |
| Central and Eastern Europe |
991 |
8,469 |
3,596 |
14,685 |
| Total capital expenditures |
125,639 |
184,015 |
447,304 |
382,512 |
| |
|
|
|
|
| Acquisitions by country ($M) |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| Canada |
5,238 |
4,304 |
51,068 |
529,363 |
| United States |
- |
- |
3,808 |
1,075 |
| Netherlands |
- |
707 |
- |
707 |
| Germany |
- |
1,209 |
- |
3,868 |
| Ireland |
- |
- |
192,418 |
142 |
| Acquisitions |
5,238 |
6,220 |
247,294 |
535,155 |
| | Vermilion Energy Inc. ■ Page 41 ■ 2023 Third Quarter Report | |
Supplemental Table 4: Production
| |
Q3/23 |
Q2/23 |
Q1/23 |
Q4/22 |
Q3/22 |
Q2/22 |
Q1/22 |
Q4/21 |
Q3/21 |
Q2/21 |
Q1/21 |
Q4/20 |
| Canada |
|
|
|
|
|
|
|
|
|
|
|
|
| Light and medium crude oil (bbls/d) |
12,054 |
12,901 |
16,674 |
17,448 |
16,835 |
17,042 |
15,980 |
16,388 |
16,809 |
16,868 |
17,767 |
19,301 |
| Condensate (1) (bbls/d) |
4,410 |
3,506 |
4,719 |
4,525 |
4,204 |
4,873 |
4,892 |
4,785 |
4,426 |
5,558 |
4,556 |
4,662 |
| Other NGLs (1) (bbls/d) |
6,219 |
5,513 |
6,875 |
6,279 |
6,870 |
7,155 |
7,286 |
7,073 |
6,862 |
7,767 |
7,016 |
7,334 |
| NGLs (bbls/d) |
10,629 |
9,019 |
11,594 |
10,804 |
11,074 |
12,028 |
12,178 |
11,858 |
11,288 |
13,325 |
11,572 |
11,996 |
| Conventional natural gas (mmcf/d) |
163.94 |
159.26 |
160.34 |
146.81 |
145.04 |
143.94 |
140.55 |
128.85 |
138.42 |
146.55 |
138.41 |
135.27 |
| Total (boe/d) |
50,007 |
48,464 |
54,991 |
52,720 |
52,080 |
53,060 |
51,584 |
49,720 |
51,168 |
54,618 |
52,407 |
53,840 |
| United States |
|
|
|
|
|
|
|
|
|
|
|
|
| Light and medium crude oil (bbls/d) |
4,404 |
3,349 |
2,824 |
3,282 |
2,824 |
2,846 |
2,675 |
2,647 |
3,520 |
1,888 |
2,322 |
2,495 |
| Condensate (1) (bbls/d) |
15 |
22 |
20 |
36 |
35 |
40 |
24 |
26 |
2 |
2 |
- |
1 |
| Other NGLs (1) (bbls/d) |
1,124 |
1,025 |
1,020 |
1,218 |
1,031 |
958 |
1,056 |
1,388 |
1,206 |
928 |
1,058 |
1,294 |
| NGLs (bbls/d) |
1,139 |
1,047 |
1,040 |
1,254 |
1,066 |
998 |
1,080 |
1,414 |
1,208 |
930 |
1,058 |
1,295 |
| Conventional natural gas (mmcf/d) |
7.25 |
7.23 |
7.14 |
7.45 |
7.03 |
6.74 |
7.56 |
9.09 |
6.75 |
5.51 |
5.95 |
6.87 |
| Total (boe/d) |
6,751 |
5,601 |
5,055 |
5,779 |
5,062 |
4,967 |
5,014 |
5,575 |
5,854 |
3,736 |
4,373 |
4,934 |
| France |
|
|
|
|
|
|
|
|
|
|
|
|
| Light and medium crude oil (bbls/d) |
7,578 |
7,788 |
7,578 |
7,247 |
6,818 |
8,126 |
8,389 |
8,453 |
8,677 |
9,013 |
9,062 |
9,255 |
| Total (boe/d) |
7,578 |
7,788 |
7,578 |
7,247 |
6,818 |
8,126 |
8,389 |
8,453 |
8,677 |
9,013 |
9,062 |
9,255 |
| Netherlands |
|
|
|
|
|
|
|
|
|
|
|
|
| Light and medium crude oil (bbls/d) |
- |
- |
- |
- |
- |
1 |
1 |
- |
6 |
1 |
6 |
1 |
| Condensate (1) (bbls/d) |
39 |
61 |
66 |
49 |
74 |
60 |
83 |
97 |
104 |
95 |
92 |
99 |
| NGLs (bbls/d) |
39 |
61 |
66 |
49 |
74 |
60 |
83 |
97 |
104 |
95 |
92 |
99 |
| Conventional natural gas (mmcf/d) |
24.32 |
27.28 |
29.07 |
27.41 |
29.15 |
35.22 |
39.03 |
51.98 |
42.48 |
37.59 |
41.45 |
42.95 |
| Total (boe/d) |
4,091 |
4,607 |
4,910 |
4,617 |
4,933 |
5,930 |
6,589 |
8,761 |
7,190 |
6,362 |
7,006 |
7,257 |
| Germany |
|
|
|
|
|
|
|
|
|
|
|
|
| Light and medium crude oil (bbls/d) |
1,713 |
1,715 |
1,410 |
1,481 |
1,764 |
1,331 |
1,158 |
1,127 |
1,043 |
1,093 |
911 |
960 |
| Conventional natural gas (mmcf/d) |
20.29 |
22.05 |
25.85 |
25.86 |
26.54 |
25.36 |
26.95 |
18.00 |
16.19 |
15.60 |
13.40 |
11.50 |
| Total (boe/d) |
5,095 |
5,391 |
5,717 |
5,791 |
6,187 |
5,558 |
5,650 |
4,127 |
3,741 |
3,694 |
3,144 |
2,876 |
| Ireland |
|
|
|
|
|
|
|
|
|
|
|
|
| Conventional natural gas (mmcf/d) |
47.96 |
67.51 |
24.58 |
26.04 |
25.74 |
27.93 |
30.26 |
30.12 |
22.67 |
30.19 |
34.14 |
34.76 |
| Total (boe/d) |
7,993 |
11,251 |
4,096 |
4,340 |
4,290 |
4,655 |
5,043 |
5,020 |
3,778 |
5,031 |
5,690 |
5,793 |
| Australia |
|
|
|
|
|
|
|
|
|
|
|
|
| Light and medium crude oil (bbls/d) |
1,204 |
- |
- |
4,847 |
4,763 |
2,465 |
3,888 |
2,742 |
4,190 |
3,835 |
4,489 |
3,781 |
| Total (boe/d) |
1,204 |
- |
- |
4,847 |
4,763 |
2,465 |
3,888 |
2,742 |
4,190 |
3,835 |
4,489 |
3,781 |
| Central and Eastern Europe |
|
|
|
|
|
|
|
|
|
|
|
|
| Conventional natural gas (mmcf/d) |
0.05 |
0.30 |
0.64 |
0.67 |
0.63 |
0.64 |
0.34 |
0.12 |
0.22 |
0.28 |
0.63 |
0.67 |
| Total (boe/d) |
8 |
50 |
107 |
111 |
104 |
106 |
57 |
20 |
36 |
46 |
104 |
111 |
| Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
| Light and medium crude oil (bbls/d) |
26,952 |
25,753 |
28,485 |
34,305 |
33,003 |
31,811 |
32,091 |
31,356 |
34,245 |
32,698 |
34,556 |
35,793 |
| Condensate (1) (bbls/d) |
4,463 |
3,589 |
4,805 |
4,610 |
4,312 |
4,973 |
4,999 |
4,908 |
4,532 |
5,656 |
4,648 |
4,762 |
| Other NGLs (1) (bbls/d) |
7,344 |
6,538 |
7,896 |
7,497 |
7,901 |
8,113 |
8,342 |
8,461 |
8,068 |
8,695 |
8,074 |
8,627 |
| NGLs (bbls/d) |
11,807 |
10,127 |
12,701 |
12,107 |
12,213 |
13,086 |
13,341 |
13,369 |
12,600 |
14,351 |
12,722 |
13,389 |
| Conventional natural gas (mmcf/d) |
263.80 |
283.63 |
247.61 |
234.23 |
234.12 |
239.83 |
244.69 |
238.16 |
226.73 |
235.72 |
233.98 |
232.00 |
| Total (boe/d) |
82,727 |
83,152 |
82,455 |
85,450 |
84,237 |
84,868 |
86,213 |
84,417 |
84,633 |
86,335 |
86,276 |
87,848 |
| | Vermilion Energy Inc. ■ Page 42 ■ 2023 Third Quarter Report | |
| |
|
|
|
|
|
YTD 2023 |
2022 |
2021 |
2020 |
2019 |
2018 |
| Canada |
|
|
|
|
|
|
|
|
|
|
|
|
| Light and medium crude oil (bbls/d) |
|
|
|
|
|
|
13,859 |
16,830 |
16,954 |
21,106 |
23,971 |
17,400 |
| Condensate (1) (bbls/d) |
|
|
|
|
|
|
4,210 |
4,621 |
4,831 |
4,886 |
4,295 |
3,754 |
| Other NGLs (1) (bbls/d) |
|
|
|
|
|
|
6,204 |
6,895 |
7,179 |
7,719 |
6,988 |
5,914 |
| NGLs (bbls/d) |
|
|
|
|
|
|
10,415 |
11,516 |
12,010 |
12,605 |
11,283 |
9,668 |
| Conventional natural gas (mmcf/d) |
|
|
|
|
|
|
161.21 |
144.10 |
138.03 |
151.38 |
148.35 |
129.37 |
| Total (boe/d) |
|
|
|
|
|
|
51,142 |
52,364 |
51,968 |
58,942 |
59,979 |
48,630 |
| United States |
|
|
|
|
|
|
|
|
|
|
|
|
| Light and medium crude oil (bbls/d) |
|
|
|
|
|
|
3,531 |
2,908 |
2,597 |
3,046 |
2,514 |
1,069 |
| Condensate (1) (bbls/d) |
|
|
|
|
|
|
19 |
34 |
8 |
5 |
18 |
8 |
| Other NGLs (1) (bbls/d) |
|
|
|
|
|
|
1,057 |
1,066 |
1,146 |
1,218 |
996 |
452 |
| NGLs (bbls/d) |
|
|
|
|
|
|
1,076 |
1,100 |
1,154 |
1,223 |
1,014 |
460 |
| Conventional natural gas (mmcf/d) |
|
|
|
|
|
|
7.21 |
7.20 |
6.84 |
7.47 |
6.89 |
2.78 |
| Total (boe/d) |
|
|
|
|
|
|
5,809 |
5,207 |
4,890 |
5,514 |
4,675 |
1,992 |
| France |
|
|
|
|
|
|
|
|
|
|
|
|
| Light and medium crude oil (bbls/d) |
|
|
|
|
|
|
7,702 |
7,639 |
8,799 |
8,903 |
10,435 |
11,362 |
| Conventional natural gas (mmcf/d) |
|
|
|
|
|
|
- |
- |
- |
- |
0.19 |
0.21 |
| Total (boe/d) |
|
|
|
|
|
|
7,702 |
7,639 |
8,799 |
8,903 |
10,467 |
11,396 |
| Netherlands |
|
|
|
|
|
|
|
|
|
|
|
|
| Light and medium crude oil (bbls/d) |
|
|
|
|
|
|
- |
- |
3 |
1 |
3 |
- |
| Condensate (1) (bbls/d) |
|
|
|
|
|
|
55 |
66 |
97 |
88 |
88 |
90 |
| NGLs (bbls/d) |
|
|
|
|
|
|
55 |
66 |
97 |
88 |
88 |
90 |
| Conventional natural gas (mmcf/d) |
|
|
|
|
|
|
26.86 |
32.66 |
43.40 |
46.16 |
49.10 |
46.13 |
| Total (boe/d) |
|
|
|
|
|
|
4,531 |
5,510 |
7,334 |
7,782 |
8,274 |
7,779 |
| Germany |
|
|
|
|
|
|
|
|
|
|
|
|
| Light and medium crude oil (bbls/d) |
|
|
|
|
|
|
1,624 |
1,435 |
1,044 |
968 |
917 |
1,004 |
| Conventional natural gas (mmcf/d) |
|
|
|
|
|
|
22.71 |
26.18 |
15.81 |
12.65 |
15.31 |
15.66 |
| Total (boe/d) |
|
|
|
|
|
|
5,410 |
5,798 |
3,679 |
3,076 |
3,468 |
3,614 |
| Ireland |
|
|
|
|
|
|
|
|
|
|
|
|
| Conventional natural gas (mmcf/d) |
|
|
|
|
|
|
46.77 |
27.48 |
29.25 |
37.44 |
46.57 |
55.17 |
| Total (boe/d) |
|
|
|
|
|
|
7,794 |
4,579 |
4,875 |
6,240 |
7,762 |
9,195 |
| Australia |
|
|
|
|
|
|
|
|
|
|
|
|
| Light and medium crude oil (bbls/d) |
|
|
|
|
|
|
406 |
3,995 |
3,810 |
4,416 |
5,662 |
4,494 |
| Total (boe/d) |
|
|
|
|
|
|
406 |
3,995 |
3,810 |
4,416 |
5,662 |
4,494 |
| Central and Eastern Europe |
|
|
|
|
|
|
|
|
|
|
|
|
| Conventional natural gas (mmcf/d) |
|
|
|
|
|
|
0.33 |
0.57 |
0.31 |
1.90 |
0.42 |
1.02 |
| Total (boe/d) |
|
|
|
|
|
|
55 |
95 |
51 |
317 |
70 |
169 |
| Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
| Light and medium crude oil (bbls/d) |
|
|
|
|
|
|
27,123 |
32,809 |
33,208 |
38,441 |
43,502 |
35,329 |
| Condensate (1) (bbls/d) |
|
|
|
|
|
|
4,284 |
4,721 |
4,936 |
4,980 |
4,400 |
3,853 |
| Other NGLs (1) (bbls/d) |
|
|
|
|
|
|
7,261 |
7,961 |
8,325 |
8,937 |
7,984 |
6,366 |
| NGLs (bbls/d) |
|
|
|
|
|
|
11,545 |
12,682 |
13,261 |
13,917 |
12,384 |
10,219 |
| Conventional natural gas (mmcf/d) |
|
|
|
|
|
|
265.10 |
238.18 |
233.64 |
256.99 |
266.82 |
250.33 |
| Total (boe/d) |
|
|
|
|
|
|
82,850 |
85,187 |
85,408 |
95,190 |
100,357 |
87,270 |
| (1) | Under National Instrument 51-101 "Standards of Disclosure for Oil and Gas Activities", disclosure
of production volumes should include segmentation by product type as defined in the instrument. This table provides a reconciliation from
"crude oil and condensate", "NGLs" and "natural gas" to the product types. In this report, references to
"crude oil" and "light and medium crude oil" mean "light crude oil and medium crude oil" and references
to "natural gas" mean "conventional natural gas". Production volumes reported are based on quantities as measured
at the first point of sale. |
| | Vermilion Energy Inc. ■ Page 43 ■ 2023 Third Quarter Report | |
Supplemental Table 5: Operational and Financial
Data by Core Region
Production volumes (1)
| |
Q3/23 |
Q2/23 |
Q1/23 |
Q4/22 |
Q3/22 |
Q2/22 |
Q1/22 |
Q4/21 |
Q3/21 |
Q2/21 |
Q1/21 |
Q4/20 |
| North America |
|
|
|
|
|
|
|
|
|
|
|
|
| Crude oil and condensate (bbls/d) |
20,883 |
19,778 |
24,237 |
25,291 |
23,898 |
24,801 |
23,571 |
23,846 |
24,757 |
24,316 |
24,645 |
26,459 |
| NGLs (bbls/d) |
7,344 |
6,538 |
7,895 |
7,497 |
7,901 |
8,113 |
8,342 |
8,461 |
8,068 |
8,695 |
8,074 |
8,628 |
| Natural gas (mmcf/d) |
171.19 |
166.49 |
167.48 |
154.26 |
152.07 |
150.68 |
148.11 |
137.93 |
145.18 |
152.06 |
144.36 |
142.13 |
| Total (boe/d) |
56,758 |
54,065 |
60,046 |
58,499 |
57,142 |
58,027 |
56,598 |
55,295 |
57,022 |
58,354 |
56,780 |
58,774 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| International |
|
|
|
|
|
|
|
|
|
|
|
|
| Crude oil and condensate (bbls/d) |
10,534 |
9,564 |
9,054 |
13,624 |
13,419 |
11,983 |
13,519 |
12,419 |
14,020 |
14,037 |
14,560 |
14,096 |
| Natural gas (mmcf/d) |
92.61 |
117.14 |
80.13 |
79.97 |
82.05 |
89.15 |
96.58 |
100.22 |
81.55 |
83.66 |
89.62 |
89.86 |
| Total (boe/d) |
25,969 |
29,087 |
22,408 |
26,953 |
27,095 |
26,840 |
29,616 |
29,123 |
27,612 |
27,981 |
29,495 |
29,073 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
| Crude oil and condensate (bbls/d) |
31,416 |
29,341 |
33,290 |
38,915 |
37,315 |
36,784 |
37,090 |
36,264 |
38,777 |
38,354 |
39,204 |
40,555 |
| NGLs (bbls/d) |
7,344 |
6,538 |
7,896 |
7,497 |
7,901 |
8,113 |
8,342 |
8,461 |
8,068 |
8,695 |
8,074 |
8,627 |
| Natural gas (mmcf/d) |
263.80 |
283.63 |
247.61 |
234.23 |
234.12 |
239.83 |
244.69 |
238.16 |
226.73 |
235.72 |
233.98 |
232.00 |
| Total (boe/d) |
82,727 |
83,152 |
82,455 |
85,450 |
84,237 |
84,868 |
86,213 |
84,417 |
84,633 |
86,335 |
86,276 |
87,848 |
| (1) | Please refer to Supplemental Table 4 "Production" for disclosure by product type. |
Sales volumes
| |
Q3/23 |
Q2/23 |
Q1/23 |
Q4/22 |
Q3/22 |
Q2/22 |
Q1/22 |
Q4/21 |
Q3/21 |
Q2/21 |
Q1/21 |
Q4/20 |
| North America |
|
|
|
|
|
|
|
|
|
|
|
|
| Crude oil and condensate (bbls/d) |
20,883 |
19,778 |
24,237 |
25,291 |
23,897 |
24,801 |
23,571 |
23,845 |
24,757 |
24,316 |
24,645 |
26,459 |
| NGLs (bbls/d) |
7,344 |
6,538 |
7,895 |
7,497 |
7,901 |
8,113 |
8,342 |
8,461 |
8,068 |
8,695 |
8,074 |
8,628 |
| Natural gas (mmcf/d) |
171.19 |
166.49 |
167.48 |
154.26 |
152.07 |
150.68 |
148.11 |
137.93 |
145.18 |
152.06 |
144.36 |
142.13 |
| Total (boe/d) |
56,758 |
54,065 |
60,046 |
58,499 |
57,142 |
58,027 |
56,598 |
55,295 |
57,022 |
58,354 |
56,780 |
58,774 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| International |
|
|
|
|
|
|
|
|
|
|
|
|
| Crude oil and condensate (bbls/d) |
9,950 |
10,302 |
8,087 |
16,257 |
11,493 |
11,720 |
12,615 |
13,985 |
15,227 |
13,859 |
11,421 |
15,359 |
| Natural gas (mmcf/d) |
92.61 |
117.14 |
80.13 |
79.97 |
82.05 |
89.15 |
96.58 |
100.22 |
81.55 |
83.66 |
89.62 |
89.86 |
| Total (boe/d) |
25,386 |
29,824 |
21,442 |
29,585 |
25,169 |
26,578 |
28,712 |
30,689 |
28,820 |
27,802 |
26,357 |
30,336 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
| Crude oil and condensate (bbls/d) |
30,833 |
30,080 |
32,324 |
41,547 |
35,391 |
36,522 |
36,186 |
37,830 |
39,985 |
38,174 |
36,066 |
41,818 |
| NGLs (bbls/d) |
7,344 |
6,538 |
7,896 |
7,497 |
7,901 |
8,113 |
8,342 |
8,461 |
8,068 |
8,695 |
8,074 |
8,627 |
| Natural gas (mmcf/d) |
263.80 |
283.63 |
247.61 |
234.23 |
234.12 |
239.83 |
244.69 |
238.16 |
226.73 |
235.72 |
233.98 |
232.00 |
| Total (boe/d) |
82,144 |
83,889 |
81,489 |
88,083 |
82,312 |
84,607 |
85,310 |
85,984 |
85,841 |
86,156 |
83,138 |
89,111 |
| | Vermilion Energy Inc. ■ Page 44 ■ 2023 Third Quarter Report | |
Financial results
| |
Q3/23 |
Q2/23 |
Q1/23 |
Q4/22 |
Q3/22 |
Q2/22 |
Q1/22 |
Q4/21 |
Q3/21 |
Q2/21 |
Q1/21 |
Q4/20 |
| North America |
|
|
|
|
|
|
|
|
|
|
|
|
| Crude oil and condensate sales ($/bbl) |
103.46 |
94.78 |
95.63 |
106.66 |
114.82 |
134.72 |
111.42 |
92.99 |
82.23 |
75.43 |
66.31 |
51.06 |
| NGL sales ($/bbl) |
27.77 |
28.11 |
36.24 |
39.93 |
44.64 |
51.86 |
46.94 |
47.26 |
35.55 |
25.43 |
29.39 |
19.20 |
| Natural gas sales ($/mcf) |
2.52 |
2.29 |
4.11 |
5.96 |
6.41 |
7.13 |
4.80 |
5.07 |
3.80 |
2.72 |
3.98 |
2.77 |
| Sales ($/boe) |
49.26 |
45.12 |
54.84 |
66.95 |
71.24 |
83.34 |
65.88 |
59.97 |
50.40 |
42.30 |
43.08 |
32.51 |
| Royalties ($/boe) |
(7.75) |
(5.45) |
(7.68) |
(9.47) |
(12.58) |
(12.51) |
(11.24) |
(9.26) |
(7.14) |
(5.98) |
(5.49) |
(3.64) |
| Transportation ($/boe) |
(2.08) |
(1.57) |
(2.44) |
(2.42) |
(2.16) |
(2.15) |
(1.91) |
(1.86) |
(1.92) |
(1.90) |
(2.05) |
(1.92) |
| Operating ($/boe) |
(12.09) |
(12.22) |
(14.10) |
(13.51) |
(14.00) |
(11.58) |
(11.95) |
(11.68) |
(11.02) |
(10.89) |
(11.21) |
(10.94) |
| General and administration ($/boe) |
(0.72) |
0.10 |
(0.99) |
0.10 |
(1.27) |
(1.52) |
(1.26) |
(2.01) |
(1.14) |
(0.91) |
(1.34) |
(1.94) |
| Corporate income taxes ($/boe) |
(0.01) |
(0.10) |
(0.12) |
(0.13) |
(0.03) |
- |
(0.02) |
0.42 |
(0.05) |
(0.04) |
(0.04) |
0.04 |
| Fund flows from operations ($/boe) |
26.61 |
25.88 |
29.51 |
41.52 |
41.20 |
55.58 |
39.50 |
35.58 |
29.13 |
22.58 |
22.95 |
14.11 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Fund flows from operations |
138,960 |
127,346 |
159,435 |
223,443 |
216,579 |
293,470 |
201,193 |
180,979 |
152,764 |
119,916 |
117,227 |
76,375 |
| Drilling and development |
(69,703) |
(135,723) |
(116,070) |
(113,892) |
(112,238) |
(54,913) |
(57,513) |
(89,643) |
(35,179) |
(38,847) |
(59,113) |
(33,781) |
| Free cash flow |
69,257 |
(8,377) |
43,365 |
109,551 |
104,341 |
238,557 |
143,680 |
91,336 |
117,585 |
81,069 |
58,114 |
42,594 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| International |
|
|
|
|
|
|
|
|
|
|
|
|
| Crude oil and condensate sales ($/bbl) |
114.26 |
100.23 |
107.57 |
128.02 |
140.09 |
146.67 |
136.69 |
103.53 |
94.91 |
85.41 |
81.40 |
62.65 |
| Natural gas sales ($/mcf) |
13.34 |
14.58 |
24.69 |
39.54 |
58.55 |
32.33 |
36.75 |
35.54 |
18.82 |
9.83 |
7.98 |
6.27 |
| Sales ($/boe) |
93.46 |
91.89 |
132.84 |
177.23 |
254.86 |
173.14 |
183.66 |
163.23 |
103.39 |
72.16 |
62.39 |
50.30 |
| Royalties ($/boe) |
3.55 |
(7.43) |
(13.39) |
(6.38) |
(7.21) |
(7.23) |
(5.43) |
(4.13) |
(4.52) |
(3.83) |
(3.53) |
(3.02) |
| Transportation ($/boe) |
(4.53) |
(5.23) |
(5.11) |
(3.29) |
(3.51) |
(3.64) |
(2.91) |
(3.40) |
(3.47) |
(4.64) |
(2.76) |
(2.40) |
| Operating ($/boe) |
(25.58) |
(28.24) |
(31.41) |
(23.35) |
(22.63) |
(22.11) |
(19.86) |
(18.86) |
(17.55) |
(16.56) |
(16.42) |
(16.99) |
| General and administration ($/boe) |
(7.37) |
(7.58) |
(7.52) |
(5.09) |
(3.34) |
(3.16) |
(3.02) |
(2.53) |
(2.40) |
(2.61) |
(2.06) |
(2.92) |
| Corporate income taxes ($/boe) |
(13.42) |
(6.79) |
(11.20) |
(15.15) |
(21.97) |
(28.73) |
(17.63) |
(12.17) |
0.64 |
(0.19) |
0.66 |
2.25 |
| PRRT ($/boe) |
- |
- |
- |
(1.85) |
(1.96) |
(0.83) |
(2.60) |
(1.96) |
(2.74) |
(0.58) |
(0.60) |
(1.45) |
| Fund flows from operations ($/boe) |
46.11 |
36.62 |
64.21 |
122.12 |
194.24 |
107.44 |
132.21 |
120.18 |
73.35 |
43.75 |
37.68 |
25.77 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Fund flows from operations |
107,706 |
99,377 |
123,893 |
332,377 |
449,771 |
259,840 |
341,626 |
339,286 |
194,505 |
110,654 |
89,403 |
71,934 |
| Drilling and development |
(49,701) |
(28,347) |
(37,258) |
(43,957) |
(65,640) |
(54,575) |
(25,328) |
(29,359) |
(27,994) |
(38,856) |
(20,399) |
(19,122) |
| Exploration and evaluation |
(6,235) |
(2,775) |
(1,492) |
(11,456) |
(6,137) |
(3,665) |
(2,503) |
(26,805) |
(3,277) |
(1,473) |
(3,851) |
(6,991) |
| Free cash flow |
51,770 |
68,255 |
85,143 |
276,964 |
377,994 |
201,600 |
313,795 |
283,122 |
163,234 |
70,325 |
65,153 |
45,821 |
| |
Q3/23 |
Q2/23 |
Q1/23 |
Q4/22 |
Q3/22 |
Q2/22 |
Q1/22 |
Q4/21 |
Q3/21 |
Q2/21 |
Q1/21 |
Q4/20 |
| Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
| Crude oil and condensate sales ($/bbl) |
106.94 |
96.64 |
98.62 |
115.02 |
123.02 |
138.55 |
120.23 |
96.88 |
87.05 |
79.06 |
71.09 |
55.31 |
| NGL sales ($/bbl) |
27.77 |
28.11 |
36.23 |
39.93 |
44.64 |
51.86 |
46.94 |
47.26 |
35.55 |
25.43 |
29.39 |
19.20 |
| Natural gas sales ($/mcf) |
6.32 |
7.37 |
10.77 |
17.43 |
24.68 |
16.50 |
17.41 |
17.89 |
9.20 |
5.24 |
5.51 |
4.13 |
| Sales ($/boe) |
62.92 |
61.74 |
75.36 |
103.99 |
127.39 |
111.55 |
105.52 |
96.82 |
68.19 |
51.93 |
49.20 |
38.57 |
| Royalties ($/boe) |
(4.26) |
(6.16) |
(9.18) |
(8.43) |
(10.94) |
(10.85) |
(9.29) |
(7.43) |
(6.26) |
(5.29) |
(4.87) |
(3.43) |
| Transportation ($/boe) |
(2.84) |
(2.87) |
(3.14) |
(2.71) |
(2.57) |
(2.62) |
(2.25) |
(2.41) |
(2.44) |
(2.78) |
(2.27) |
(2.08) |
| Operating ($/boe) |
(16.26) |
(17.91) |
(18.66) |
(16.81) |
(16.64) |
(14.89) |
(14.61) |
(14.24) |
(13.21) |
(12.72) |
(12.86) |
(13.00) |
| General and administration ($/boe) |
(2.77) |
(2.63) |
(2.71) |
(1.65) |
(1.90) |
(2.04) |
(1.85) |
(2.20) |
(1.56) |
(1.46) |
(1.57) |
(2.27) |
| Corporate income taxes ($/boe) |
(4.15) |
(2.48) |
(3.04) |
(5.18) |
(6.74) |
(9.03) |
(5.95) |
(4.07) |
0.18 |
(0.09) |
0.18 |
0.80 |
| Windfall taxes ($/boe) |
(2.90) |
(4.56) |
(2.92) |
(27.50) |
- |
- |
- |
- |
- |
- |
- |
- |
| PRRT ($/boe) |
- |
- |
- |
(0.62) |
(0.60) |
(0.26) |
(0.87) |
(0.70) |
(0.92) |
(0.19) |
(0.19) |
(0.49) |
| Interest ($/boe) |
(2.68) |
(2.65) |
(2.98) |
(2.78) |
(3.23) |
(2.74) |
(1.93) |
(2.06) |
(2.37) |
(2.41) |
(2.57) |
(2.42) |
| Realized derivatives ($/boe) |
9.74 |
8.86 |
1.95 |
(5.42) |
(18.22) |
(10.36) |
(18.78) |
(23.97) |
(9.19) |
(5.05) |
(3.43) |
0.10 |
| Realized foreign exchange ($/boe) |
0.28 |
0.48 |
(0.65) |
2.33 |
(0.28) |
(0.30) |
0.10 |
(0.30) |
0.37 |
(0.25) |
(0.69) |
0.16 |
| Realized other ($/boe) |
(1.32) |
0.53 |
0.49 |
(0.14) |
0.80 |
0.36 |
0.70 |
1.29 |
0.48 |
0.35 |
0.73 |
0.56 |
| Fund flows from operations ($/boe) |
35.76 |
32.35 |
34.52 |
35.08 |
67.07 |
58.82 |
50.79 |
40.73 |
33.27 |
22.04 |
21.66 |
16.50 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Fund flows from operations |
270,218 |
247,109 |
253,167 |
284,220 |
507,876 |
452,901 |
389,868 |
322,173 |
262,696 |
172,942 |
162,051 |
135,212 |
| Drilling and development |
(119,404) |
(164,070) |
(153,328) |
(157,849) |
(177,878) |
(109,488) |
(82,841) |
(119,002) |
(63,173) |
(77,703) |
(79,512) |
(52,903) |
| Exploration and evaluation |
(6,235) |
(2,775) |
(1,492) |
(11,456) |
(6,137) |
(3,665) |
(2,503) |
(26,805) |
(3,277) |
(1,473) |
(3,851) |
(6,991) |
| Free cash flow |
144,579 |
80,264 |
98,347 |
114,915 |
323,861 |
339,748 |
304,524 |
176,366 |
196,246 |
93,766 |
78,688 |
75,318 |
| | Vermilion Energy Inc. ■ Page 45 ■ 2023 Third Quarter Report | |
Non-GAAP and Other Specified Financial Measures
This MD&A includes references to certain
financial measures which do not have standardized meanings and may not be comparable to similar measures presented by other issuers. These
financial measures include fund flows from operations, a total of segments measure of profit or loss in accordance with IFRS 8 “Operating
Segments” (please see Segmented Information in the Notes to the condensed Consolidated Interim Financial Statements) and net debt,
a capital management measure in accordance with IAS 1 “Presentation of Financial Statements” (please see Capital Disclosures
in the Notes to the condensed Consolidated Interim Financial Statements).
In addition, this MD&A includes financial
measures which are not specified, defined, or determined under IFRS and are therefore considered non-GAAP financial measures and may not
be comparable to similar measures presented by other issuers. These non-GAAP financial measures include:
Total of Segments Measure
Fund flows from operations (FFO):
Most directly comparable to net earnings, FFO is comprised of sales less royalties, transportation, operating, G&A, corporate income
tax, PRRT, windfall taxes, interest expense, realized loss on derivatives, realized foreign exchange gain (loss), and realized other income.
The measure is used to assess the contribution of each business unit to Vermilion's ability to generate income necessary to pay dividends,
repay debt, fund asset retirement obligations and make capital investments. Reconciliation to the primary financial statement measures
can be found below.
| |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
$M |
$/boe |
| Sales |
475,532 |
62.92 |
964,678 |
127.39 |
1,499,586 |
66.57 |
2,633,701 |
114.76 |
| Royalties |
(32,209) |
(4.26) |
(82,854) |
(10.94) |
(146,546) |
(6.51) |
(237,714) |
(10.36) |
| Transportation |
(21,460) |
(2.84) |
(19,498) |
(2.57) |
(66,415) |
(2.95) |
(56,920) |
(2.48) |
| Operating |
(122,870) |
(16.26) |
(125,987) |
(16.64) |
(396,444) |
(17.60) |
(352,787) |
(15.37) |
| General and administration |
(20,959) |
(2.77) |
(14,422) |
(1.90) |
(60,906) |
(2.70) |
(44,333) |
(1.93) |
| Corporate income tax expense |
(31,368) |
(4.15) |
(51,022) |
(6.74) |
(72,558) |
(3.22) |
(166,195) |
(7.24) |
| Windfall taxes |
(21,953) |
(2.90) |
- |
- |
(78,177) |
(3.47) |
- |
- |
| PRRT |
- |
- |
(4,545) |
(0.60) |
- |
- |
(13,273) |
(0.58) |
| Interest expense |
(20,218) |
(2.68) |
(24,455) |
(3.23) |
(62,303) |
(2.77) |
(60,352) |
(2.63) |
| Realized gain (loss) on derivatives |
73,625 |
9.74 |
(137,953) |
(18.22) |
155,628 |
6.91 |
(361,954) |
(15.77) |
| Realized foreign exchange gain (loss) |
2,089 |
0.28 |
(2,103) |
(0.28) |
997 |
0.04 |
(3,650) |
(0.16) |
| Realized other (expense) income |
(9,991) |
(1.32) |
6,037 |
0.80 |
(2,368) |
(0.11) |
14,122 |
0.62 |
| Fund flows from operations |
270,218 |
35.76 |
507,876 |
67.07 |
770,494 |
34.19 |
1,350,645 |
58.86 |
| Equity based compensation |
(6,362) |
|
(6,145) |
|
(34,885) |
|
(39,013) |
|
| Unrealized (loss) gain on derivative instruments (1) |
(65,294) |
|
43,844 |
|
38,581 |
|
(8,892) |
|
| Unrealized foreign exchange (loss) gain (1) |
(12,042) |
|
(44,929) |
|
7,604 |
|
(37,059) |
|
| Accretion |
(20,068) |
|
(14,285) |
|
(58,718) |
|
(41,669) |
|
| Depletion and depreciation |
(151,087) |
|
(130,205) |
|
(453,607) |
|
(405,208) |
|
| Deferred tax recovery (expense) |
42,489 |
|
(84,570) |
|
79,435 |
|
(91,974) |
|
| Gain on business combination |
- |
|
- |
|
445,094 |
|
- |
|
| Loss on disposition |
- |
|
- |
|
(226,828) |
|
- |
|
| Impairment reversal |
- |
|
- |
|
- |
|
192,094 |
|
| Unrealized other expense (1) |
(545) |
|
(507) |
|
(1,621) |
|
(1,270) |
|
| Net earnings |
57,309 |
|
271,079 |
|
565,549 |
|
917,654 |
|
| (1) | Unrealized (loss) gain on derivative instruments, Unrealized foreign exchange (loss) gain, and Unrealized
other expense are line items from the respective Consolidated Statements of Cash Flows. |
Non-GAAP Financial Measures and Non-GAAP Ratios
Free cash flow: Most directly comparable
to cash flows from operating activities and is comprised of fund flows from operations less drilling and development costs and exploration
and evaluation costs. The measure is used to determine the funding available for investing and financing activities including payment
of dividends, repayment of long-term debt, reallocation into existing business units and deployment into new ventures. Reconciliation
to the primary financial statement measures can be found in the following table.
| | Vermilion Energy Inc. ■ Page 46 ■ 2023 Third Quarter Report | |
| ($M) |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| Cash flows from operating activities |
118,436 |
447,608 |
680,697 |
1,319,025 |
| Changes in non-cash operating working capital |
138,200 |
49,882 |
61,768 |
10,614 |
| Asset retirement obligations settled |
13,582 |
10,386 |
28,029 |
21,006 |
| Fund flows from operations |
270,218 |
507,876 |
770,494 |
1,350,645 |
| Drilling and development |
(119,404) |
(177,878) |
(436,802) |
(370,207) |
| Exploration and evaluation |
(6,235) |
(6,137) |
(10,502) |
(12,305) |
| Free cash flow |
144,579 |
323,861 |
323,190 |
968,133 |
Capital expenditures: Calculated
as the sum of drilling and development costs and exploration and evaluation costs from the Consolidated Statements of Cash Flows that
is most directly comparable to cash flows used in investing activities. We consider capital expenditures to be a useful measure of our
investment in our existing asset base. Capital expenditures are also referred to as E&D capital. Reconciliation to the primary financial
statement measures can be found below.
| ($M) |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| Drilling and development |
119,404 |
177,878 |
436,802 |
370,207 |
| Exploration and evaluation |
6,235 |
6,137 |
10,502 |
12,305 |
| Capital expenditures |
125,639 |
184,015 |
447,304 |
382,512 |
Payout and payout % of FFO: A non-GAAP
financial measure and non-GAAP ratio respectively, most directly comparable to dividends declared. Payout is comprised of dividends declared
plus drilling and development costs, exploration and evaluation costs, and asset retirement obligations settled, and payout % of FFO is
calculated as payout over FFO (total of segments measure). The measure is used to assess the amount of cash distributed back to shareholders
and reinvested in the business for maintaining production and organic growth. The reconciliation of the measure to the primary financial
statement measure can be found below.
| ($M) |
Q3 2023 |
Q3 2022 |
YTD 2023 |
YTD 2022 |
| Dividends declared |
16,367 |
13,031 |
49,023 |
32,711 |
| Drilling and development |
119,404 |
177,878 |
436,802 |
370,207 |
| Exploration and evaluation |
6,235 |
6,137 |
10,502 |
12,305 |
| Asset retirement obligations settled |
13,582 |
10,386 |
28,029 |
21,006 |
| Payout |
155,588 |
207,432 |
524,356 |
436,229 |
| % of fund flows from operations |
58 % |
41 % |
68 % |
32 % |
Return on capital employed (ROCE):
A non-GAAP ratio, ROCE is a measure that we use to analyze our profitability and the efficiency of our capital allocation process;
the comparable primary financial statement measure is earnings before income taxes. ROCE is calculated by dividing net earnings before
interest and taxes ("EBIT") by average capital employed over the preceding twelve months. Capital employed is calculated as
total assets less current liabilities while average capital employed is calculated using the balance sheets at the beginning and end of
the twelve-month period.
| |
Twelve Months Ended |
| ($M) |
Sep 30, 2023 |
Sep 30, 2022 |
| Net earnings |
960,957 |
1,262,242 |
| Taxes |
537,895 |
324,054 |
| Interest expense |
84,809 |
76,631 |
| EBIT |
1,583,661 |
1,662,927 |
| Average capital employed |
6,024,614 |
5,237,576 |
| Return on capital employed |
26 % |
32 % |
Adjusted working capital:
Defined as current assets less current liabilities, excluding current derivatives and current lease liabilities. The measure is used to
calculate net debt, a capital management measure disclosed below.
| | Vermilion Energy Inc. ■ Page 47 ■ 2023 Third Quarter Report | |
| |
As at |
| ($M) |
Sep 30, 2023 |
Dec 31, 2022 |
| Current assets |
657,251 |
714,446 |
| Current derivative asset |
(265,048) |
(162,843) |
| Current liabilities |
(733,430) |
(892,045) |
| Current lease liability |
21,214 |
19,486 |
| Current derivative liability |
43,996 |
55,845 |
| Adjusted working capital |
(276,017) |
(265,111) |
Acquisitions: The sum of acquisitions
and acquisitions of securities from the Consolidated Statements of Cash Flows, Vermilion common shares issued as consideration, the estimated
value of contingent consideration, the amount of acquiree's outstanding long-term debt assumed, and net acquired working capital deficit
or surplus. We believe that including these components provides a useful measure of the economic investment associated with our acquisition
activity and is most directly comparable to cash flows used in investing activities. A reconciliation to the acquisitions line items in
the Consolidated Statements of Cash Flows can be found below.
| ($M) |
Q3 2023 |
Q3 2022 |
Q3 2023 |
Q3 2022 |
| Acquisitions, net of cash acquired |
3,191 |
2,203 |
139,612 |
506,715 |
| Acquisition of securities |
2,047 |
4,017 |
4,155 |
22,318 |
| Acquired working capital deficit |
- |
- |
103,527 |
6,122 |
| Acquisitions |
5,238 |
6,220 |
247,294 |
535,155 |
Capital Management Measure
Net debt: Is in accordance with
IAS 1 "Presentation of Financial Statements" that is most directly comparable to long-term debt. Net debt is comprised of long-term
debt (excluding unrealized foreign exchange on swapped USD borrowings) plus adjusted working capital (defined as current assets less current
liabilities, excluding current derivatives and current lease liabilities), and represents Vermilion's net financing obligations after
adjusting for the timing of working capital fluctuations. Net debt excludes lease obligations which are secured by a corresponding right-of-use
asset.
| |
As at |
| ($M) |
Sep 30, 2023 |
Dec 31, 2022 |
| Long-term debt |
966,505 |
1,081,351 |
| Adjusted working capital |
276,017 |
265,111 |
| Unrealized FX on swapped USD borrowings |
- |
(1,876) |
| Net debt |
1,242,522 |
1,344,586 |
| |
|
|
| Ratio of net debt to four quarter trailing fund flows from operations |
1.2 |
0.8 |
Supplementary Financial Measures
Diluted shares outstanding: The
sum of shares outstanding at the period end plus outstanding awards under the LTIP, based on current estimates of future performance factors
and forfeiture rates.
| ('000s of shares) |
Q3 2023 |
Q3 2022 |
| Shares outstanding |
163,666 |
162,883 |
| Potential shares issuable pursuant to the LTIP |
4,238 |
5,691 |
| Diluted shares outstanding |
167,904 |
168,574 |
| | Vermilion Energy Inc. ■ Page 48 ■ 2023 Third Quarter Report | |
Fund flows from operations per basic
and diluted share: Management assesses fund flows from operations on a per share basis as we believe this provides a measure of our
operating performance after taking into account the issuance and potential future issuance of Vermilion common shares. Fund flows from
operations per basic share is calculated by dividing fund flows from operations (total of segments measure) by the basic weighted average
shares outstanding as defined under IFRS. Fund flows from operations per diluted share is calculated by dividing fund flows from operations
by the sum of basic weighted average shares outstanding and incremental shares issuable under the equity based compensation plans as determined
using the treasury stock method.
Operating netback: Most directly
comparable to net earnings that is calculated as sales less royalties, operating expense, transportation costs, PRRT, and realized hedging
gains and losses presented on a per unit basis. Management assesses operating netback as a measure of the profitability and efficiency
of our field operations.
Fund flows from operations per boe:
Calculated as FFO (total of segments measure) by boe production. Fund flows from operations netback is used by management to assess
the profitability of our business units and Vermilion as a whole.
Net debt to four quarter trailing fund
flows from operations: Calculated as net debt (capital management measure) over the FFO (total of segments measure) from the preceding
four quarters. The measure is used to assess the ability to repay debt.
Cash dividends per share: Represents
cash dividends declared per share that is a useful measure of the dividends a common shareholder was entitled to during the period.
Covenants: The financial covenants
on our revolving credit facility contain non-GAAP measures. The definitions for these financial covenants are included in Financial Position
Review.
| | Vermilion Energy Inc. ■ Page 49 ■ 2023 Third Quarter Report | |
Consolidated Interim Financial Statements
Consolidated Balance Sheet
thousands of Canadian dollars, unaudited
| |
Note |
September 30, 2023 |
December 31, 2022 |
| Assets |
|
|
|
| Current |
|
|
|
| Cash and cash equivalents |
|
- |
13,836 |
| Accounts receivable |
|
301,690 |
373,651 |
| Crude oil inventory |
|
26,943 |
19,657 |
| Derivative instruments |
|
265,048 |
162,843 |
| Prepaid expenses |
|
63,570 |
144,459 |
| Total current assets |
|
657,251 |
714,446 |
| |
|
|
|
| Derivative instruments |
|
16,884 |
132,598 |
| Investment in securities |
|
68,287 |
56,366 |
| Deferred taxes |
|
135,840 |
125,533 |
| Exploration and evaluation assets |
5 |
235,233 |
270,593 |
| Capital assets |
2, 4 |
6,047,666 |
5,691,522 |
| Total assets |
|
7,161,161 |
6,991,058 |
| |
|
|
|
| Liabilities |
|
|
|
| Current |
|
|
|
| Accounts payable and accrued liabilities |
|
368,671 |
481,444 |
| Dividends payable |
9 |
16,367 |
13,058 |
| Derivative instruments |
|
43,996 |
55,845 |
| Income taxes payable |
|
304,396 |
341,698 |
| Total current liabilities |
|
733,430 |
892,045 |
| |
|
|
|
| Derivative instruments |
|
10,944 |
- |
| Long-term debt |
8 |
966,505 |
1,081,351 |
| Lease obligations |
|
36,815 |
51,507 |
| Asset retirement obligations |
6 |
1,123,806 |
1,087,757 |
| Deferred taxes |
|
437,305 |
477,340 |
| Total liabilities |
|
3,308,805 |
3,590,000 |
| |
|
|
|
| Shareholders' Equity |
|
|
|
| Shareholders' capital |
9 |
4,182,110 |
4,243,794 |
| Contributed surplus |
|
38,839 |
35,409 |
| Accumulated other comprehensive income |
|
89,494 |
123,505 |
| Deficit |
|
(458,087) |
(1,001,650) |
| Total shareholders' equity |
|
3,852,356 |
3,401,058 |
| Total liabilities and shareholders' equity |
|
7,161,161 |
6,991,058 |
Approved by the Board
| (Signed “Manjit Sharma”) |
|
(Signed “Dion Hatcher”) |
| |
|
|
| Manjit Sharma, Director |
|
Dion Hatcher, Director |
| | Vermilion Energy Inc. ■ Page 50 ■ 2023 Third Quarter Report | |
Consolidated Statements of Net Earnings and
Comprehensive Income
thousands of Canadian dollars, except
share and per share amounts, unaudited
| |
|
Three Months Ended |
Nine Months Ended |
| |
Note |
Sep 30, 2023 |
Sep 30, 2022 |
Sep 30, 2023 |
Sep 30, 2022 |
| Revenue |
|
|
|
|
|
| Petroleum and natural gas sales |
|
475,532 |
964,678 |
1,499,586 |
2,633,701 |
| Royalties |
|
(32,209) |
(82,854) |
(146,546) |
(237,714) |
| Sales of purchased commodities |
|
51,252 |
83,460 |
138,542 |
194,619 |
| Petroleum and natural gas revenue |
|
494,575 |
965,284 |
1,491,582 |
2,590,606 |
| |
|
|
|
|
|
| Expenses |
|
|
|
|
|
| Purchased commodities |
|
51,252 |
83,460 |
138,542 |
194,619 |
| Operating |
|
122,870 |
125,987 |
396,444 |
352,787 |
| Transportation |
|
21,460 |
19,498 |
66,415 |
56,920 |
| Equity based compensation |
|
6,362 |
6,145 |
34,885 |
39,013 |
| (Gain) loss on derivative instruments |
|
(8,331) |
94,109 |
(194,209) |
370,846 |
| Interest expense |
|
20,218 |
24,455 |
62,303 |
60,352 |
| General and administration |
|
20,959 |
14,422 |
60,906 |
44,333 |
| Foreign exchange loss (gain) |
|
9,953 |
47,032 |
(8,601) |
40,709 |
| Other expense (income) |
|
10,536 |
(5,530) |
3,989 |
(12,852) |
| Accretion |
6 |
20,068 |
14,285 |
58,718 |
41,669 |
| Depletion and depreciation |
4, 5 |
151,087 |
130,205 |
453,607 |
405,208 |
| Impairment reversal |
4 |
- |
- |
- |
(192,094) |
| Gain on business combination |
3 |
- |
- |
(445,094) |
- |
| Loss on disposition |
4 |
- |
- |
226,828 |
- |
| |
|
426,434 |
554,068 |
854,733 |
1,401,510 |
| Earnings before income taxes |
|
68,141 |
411,216 |
636,849 |
1,189,096 |
| |
|
|
|
|
|
| Income tax (recovery) expense |
|
|
|
|
|
| Deferred |
|
(42,489) |
84,570 |
(79,435) |
91,974 |
| Current |
|
31,368 |
55,567 |
72,558 |
179,468 |
| Windfall taxes |
|
21,953 |
- |
78,177 |
- |
| |
|
10,832 |
140,137 |
71,300 |
271,442 |
| |
|
|
|
|
|
| Net earnings |
|
57,309 |
271,079 |
565,549 |
917,654 |
| |
|
|
|
|
|
| Other comprehensive income |
|
|
|
|
|
| Currency translation adjustments |
|
(15,584) |
10,896 |
(47,196) |
(55,723) |
| Hedge accounting reserve, net of tax |
|
1,631 |
1,633 |
5,420 |
4,897 |
| Fair value adjustment on investment in securities |
|
7,614 |
3,371 |
7,765 |
22,315 |
| Comprehensive income |
|
50,970 |
286,979 |
531,538 |
889,143 |
| |
|
|
|
|
|
| Net earnings per share |
|
|
|
|
|
| Basic |
|
0.35 |
1.65 |
3.45 |
5.61 |
| Diluted |
|
0.34 |
1.61 |
3.38 |
5.44 |
| |
|
|
|
|
|
| Weighted average shares outstanding ('000s) |
|
|
|
|
|
| Basic |
|
163,946 |
163,947 |
163,848 |
163,619 |
| Diluted |
|
166,392 |
168,494 |
167,167 |
168,658 |
| | Vermilion Energy Inc. ■ Page 51 ■ 2023 Third Quarter Report | |
Consolidated Statements of Cash Flows
thousands of Canadian dollars, unaudited
| |
|
Three Months Ended |
Nine Months Ended |
| |
Note |
Sep 30, 2023 |
Sep 30, 2022 |
Sep 30, 2023 |
Sep 30, 2022 |
| Operating |
|
|
|
|
|
| Net earnings |
|
57,309 |
271,079 |
565,549 |
917,654 |
| Adjustments: |
|
|
|
|
|
| Accretion |
6 |
20,068 |
14,285 |
58,718 |
41,669 |
| Depletion and depreciation |
5, 6 |
151,087 |
130,205 |
453,607 |
405,208 |
| Impairment reversal |
4 |
- |
- |
- |
(192,094) |
| Gain on business combination |
3 |
- |
- |
(445,094) |
- |
| Loss on disposition |
4 |
- |
- |
226,828 |
- |
| Unrealized loss (gain) on derivative instruments |
|
65,294 |
(43,844) |
(38,581) |
8,892 |
| Equity based compensation |
|
6,362 |
6,145 |
34,885 |
39,013 |
| Unrealized foreign exchange loss (gain) |
|
12,042 |
44,929 |
(7,604) |
37,059 |
| Unrealized other expense |
|
545 |
507 |
1,621 |
1,270 |
| Deferred tax (recovery) expense |
|
(42,489) |
84,570 |
(79,435) |
91,974 |
| Asset retirement obligations settled |
6 |
(13,582) |
(10,386) |
(28,029) |
(21,006) |
| Changes in non-cash operating working capital |
|
(138,200) |
(49,882) |
(61,768) |
(10,614) |
| Cash flows from operating activities |
|
118,436 |
447,608 |
680,697 |
1,319,025 |
| |
|
|
|
|
|
| Investing |
|
|
|
|
|
| Drilling and development |
4 |
(119,404) |
(177,878) |
(436,802) |
(370,207) |
| Exploration and evaluation |
5 |
(6,235) |
(6,137) |
(10,502) |
(12,305) |
| Acquisitions, net of cash acquired |
4 |
(3,191) |
(2,203) |
(139,612) |
(506,715) |
| Acquisition of securities |
|
(2,047) |
(4,017) |
(4,155) |
(22,318) |
| Dispositions |
4 |
- |
- |
182,152 |
- |
| Changes in non-cash investing working capital |
|
(39,527) |
21,960 |
(34,584) |
20,306 |
| Cash flows used in investing activities |
|
(170,404) |
(168,275) |
(443,503) |
(891,239) |
| |
|
|
|
|
|
| Financing |
|
|
|
|
|
| Net borrowings (repayments) on the revolving credit facility |
8 |
32,858 |
(186,822) |
(113,733) |
(819,922) |
| Issuance of senior unsecured notes |
8 |
- |
- |
- |
499,037 |
| Payments on lease obligations |
|
(4,053) |
(4,068) |
(13,117) |
(13,149) |
| Repurchase of shares |
9 |
(11,645) |
(71,659) |
(66,102) |
(71,659) |
| Cash dividends |
9 |
(16,429) |
(9,953) |
(45,713) |
(19,680) |
| Cash flows from (used in) financing activities |
|
731 |
(272,502) |
(238,665) |
(425,373) |
| Foreign exchange gain (loss) on cash held in foreign currencies |
|
537 |
307 |
(12,365) |
(628) |
| |
|
|
|
|
|
| Net change in cash and cash equivalents |
|
(50,700) |
7,138 |
(13,836) |
1,785 |
| Cash and cash equivalents, beginning of period |
|
50,700 |
675 |
13,836 |
6,028 |
| Cash and cash equivalents, end of period |
|
- |
7,813 |
- |
7,813 |
| |
|
|
|
|
|
| Supplementary information for cash flows from operating activities |
|
|
|
|
|
| Interest paid |
|
13,742 |
19,432 |
56,387 |
49,457 |
| Income taxes paid |
|
149,721 |
57,885 |
302,497 |
82,076 |
| | Vermilion Energy Inc. ■ Page 52 ■ 2023 Third Quarter Report | |
Consolidated Statements of Changes in Shareholders'
Equity
thousands of Canadian dollars, unaudited
| |
|
Nine Months Ended |
| |
Note |
September 30, 2023 |
September 30, 2022 |
| Shareholders' capital |
9 |
|
|
| Balance, beginning of period |
|
4,243,794 |
4,241,773 |
| Vesting of equity based awards |
|
21,175 |
41,193 |
| Equity based compensation |
|
10,280 |
13,123 |
| Share-settled dividends on vested equity based awards |
|
1,051 |
4,185 |
| Repurchase of shares |
|
(94,190) |
(60,866) |
| Balance, end of period |
|
4,182,110 |
4,239,408 |
| Contributed surplus |
9 |
|
|
| Balance, beginning of period |
|
35,409 |
49,529 |
| Equity based compensation |
|
24,605 |
25,890 |
| Vesting of equity based awards |
|
(21,175) |
(41,193) |
| Balance, end of period |
|
38,839 |
34,226 |
| Accumulated other comprehensive income |
|
|
|
| Balance, beginning of period |
|
123,505 |
28,467 |
| Currency translation adjustments |
|
(47,196) |
(55,723) |
| Hedge accounting reserve, net of tax |
|
5,420 |
4,897 |
| Fair value adjustment on investment in securities |
|
7,765 |
22,315 |
| Balance, end of period |
|
89,494 |
(44) |
| Deficit |
|
|
|
| Balance, beginning of period |
|
(1,001,650) |
(2,253,624) |
| Net earnings |
|
565,549 |
917,654 |
| Dividends declared |
|
(49,023) |
(32,711) |
| Share-settled dividends on vested equity based awards |
|
(1,051) |
(4,185) |
| Repurchase of shares |
9 |
28,088 |
(10,793) |
| Balance, end of period |
|
(458,087) |
(1,383,659) |
| |
|
|
|
| Total shareholders' equity |
|
3,852,356 |
2,889,931 |
| | Vermilion Energy Inc. ■ Page 53 ■ 2023 Third Quarter Report | |
Description of equity reserves
Shareholders’ capital
Represents the recognized amount for common
shares issued (net of equity issuance costs and deferred taxes) less the weighted-average carrying value of shares repurchased. The price
paid to repurchase common shares is compared to the carrying value of the shares and the difference is recorded against deficit.
Contributed surplus
Represents the recognized value of unvested
equity based awards that will be settled in shares. Once vested, the value of the awards are transferred to shareholders’ capital.
Accumulated other comprehensive income
Represents currency translation adjustments,
hedge accounting reserve and fair value adjustments on investments.
Currency translation adjustments result
from translating the balance sheets of subsidiaries with a foreign functional currency to Canadian dollars at period-end rates. These
amounts may be reclassified to net earnings if there is a disposal or partial disposal of a subsidiary.
The hedge accounting reserve represents
the effective portion of the change in fair value related to cash flow and net investment hedges recognized in other comprehensive income,
net of tax and reclassified to the consolidated statement of net earnings in the same period in which the transaction associated with
the hedged item occurs.
Fair value adjustment on investment in
securities, net of tax, are a result of changes in the fair value of investments that have been elected to be subsequently measured at
fair value through other comprehensive income.
Deficit
Represents the cumulative net earnings
less distributed earnings and surplus of the price paid to repurchase common shares of Vermilion Energy Inc. over the weighted-average
carrying value of the shares repurchased.
| | Vermilion Energy Inc. ■ Page 54 ■ 2023 Third Quarter Report | |
Notes to the Condensed Consolidated Interim
Financial Statements for the three and nine months ended September 30, 2023 and 2022
tabular amounts in thousands of Canadian
dollars, except share and per share amounts, unaudited
Vermilion Energy Inc. (the “Company”
or “Vermilion”) is a corporation governed by the laws of the Province of Alberta and is actively engaged in the business of
crude oil and natural gas exploration, development, acquisition, and production.
These condensed consolidated interim financial
statements are in compliance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting”.
These condensed consolidated interim financial statements have been prepared using the same accounting policies and methods of computation
as Vermilion’s consolidated financial statements for the year ended December 31, 2022.
These condensed consolidated interim financial
statements should be read in conjunction with Vermilion’s consolidated financial statements for the year ended December 31,
2022, which are contained within Vermilion’s Annual Report for the year ended December 31, 2022 and are available on SEDAR+
at www.sedarplus.ca or on Vermilion’s website at www.vermilionenergy.com.
These condensed consolidated interim financial
statements were approved and authorized for issuance by the Board of Directors of Vermilion on
November 1, 2023.
| | Vermilion Energy Inc. ■ Page 55 ■ 2023 Third Quarter Report | |
| |
Three Months Ended September 30, 2023 |
| |
Canada |
USA |
France |
Netherlands |
Germany |
Ireland |
Australia |
Corporate |
Total |
| Drilling and development |
59,111 |
10,592 |
14,069 |
17,162 |
5,509 |
6,994 |
6,072 |
(105) |
119,404 |
| Exploration and evaluation |
- |
- |
- |
- |
5,139 |
- |
- |
1,096 |
6,235 |
| |
|
|
|
|
|
|
|
|
|
| Crude oil and condensate sales |
155,251 |
43,510 |
88,970 |
351 |
15,275 |
- |
- |
- |
303,357 |
| NGL sales |
15,711 |
3,048 |
- |
- |
- |
- |
- |
- |
18,759 |
| Natural gas sales |
38,441 |
1,287 |
- |
27,505 |
22,331 |
63,798 |
- |
54 |
153,416 |
| Sales of purchased commodities |
- |
- |
- |
- |
- |
- |
- |
51,252 |
51,252 |
| Royalties |
(26,856) |
(13,633) |
(12,351) |
20,607 |
142 |
- |
- |
(118) |
(32,209) |
| Revenue from external customers |
182,547 |
34,212 |
76,619 |
48,463 |
37,748 |
63,798 |
- |
51,188 |
494,575 |
| Purchased commodities |
- |
- |
- |
- |
- |
- |
- |
(51,252) |
(51,252) |
| Transportation |
(10,709) |
(169) |
(4,351) |
- |
(3,674) |
(2,557) |
- |
- |
(21,460) |
| Operating |
(59,191) |
(3,947) |
(21,810) |
(3,411) |
(14,008) |
(10,372) |
(9,937) |
(194) |
(122,870) |
| General and administration |
(25,575) |
(3,239) |
(1,716) |
(6,624) |
(1,721) |
(3,929) |
(1,356) |
23,201 |
(20,959) |
| PRRT |
- |
- |
- |
- |
- |
- |
- |
- |
- |
| Corporate income taxes |
- |
- |
(5,410) |
(17,079) |
(8,284) |
(163) |
(397) |
(35) |
(31,368) |
| Windfall taxes |
- |
- |
- |
- |
- |
- |
- |
(21,953) |
(21,953) |
| Interest expense |
- |
- |
- |
- |
- |
- |
- |
(20,218) |
(20,218) |
| Realized gain on derivative instruments |
- |
- |
- |
- |
- |
- |
- |
73,625 |
73,625 |
| Realized foreign exchange gain |
- |
- |
- |
- |
- |
- |
- |
2,089 |
2,089 |
| Realized other expense |
- |
- |
- |
- |
- |
- |
- |
(9,991) |
(9,991) |
| Fund flows from operations |
87,072 |
26,857 |
43,332 |
21,349 |
10,061 |
46,777 |
(11,690) |
46,460 |
270,218 |
| |
|
|
|
|
|
|
|
|
|
| |
Three Months Ended September 30, 2022 |
| |
Canada |
USA |
France |
Netherlands |
Germany |
Ireland |
Australia |
Corporate |
Total |
| Drilling and development |
83,343 |
28,895 |
9,624 |
5,515 |
3,105 |
735 |
44,068 |
2,593 |
177,878 |
| Exploration and evaluation |
- |
- |
- |
32 |
229 |
- |
- |
5,876 |
6,137 |
| |
|
|
|
|
|
|
|
|
|
| Crude oil and condensate sales |
220,983 |
31,450 |
90,825 |
945 |
17,135 |
- |
39,220 |
- |
400,558 |
| NGL sales |
27,673 |
4,775 |
- |
- |
- |
- |
- |
- |
32,448 |
| Natural gas sales |
84,262 |
5,390 |
- |
184,351 |
151,677 |
102,286 |
- |
3,706 |
531,672 |
| Sales of purchased commodities |
- |
- |
- |
- |
- |
- |
- |
83,460 |
83,460 |
| Royalties |
(54,919) |
(11,230) |
(10,402) |
- |
(4,713) |
- |
- |
(1,590) |
(82,854) |
| Revenue from external customers |
277,999 |
30,385 |
80,423 |
185,296 |
164,099 |
102,286 |
39,220 |
85,576 |
965,284 |
| Purchased commodities |
- |
- |
- |
- |
- |
- |
- |
(83,460) |
(83,460) |
| Transportation |
(11,299) |
(73) |
(4,877) |
- |
(2,342) |
(907) |
- |
- |
(19,498) |
| Operating |
(66,245) |
(7,338) |
(14,461) |
(13,200) |
(9,188) |
(4,715) |
(10,349) |
(491) |
(125,987) |
| General and administration |
(6,719) |
(1,159) |
(3,837) |
(564) |
(1,386) |
68 |
(1,063) |
238 |
(14,422) |
| PRRT |
- |
- |
- |
- |
- |
- |
(4,545) |
- |
(4,545) |
| Corporate income taxes |
- |
- |
(8,190) |
(26,897) |
(18,646) |
- |
2,865 |
(154) |
(51,022) |
| Interest expense |
- |
- |
- |
- |
- |
- |
- |
(24,455) |
(24,455) |
| Realized loss on derivative instruments |
- |
- |
- |
- |
- |
- |
- |
(137,953) |
(137,953) |
| Realized foreign exchange loss |
- |
- |
- |
- |
- |
- |
- |
(2,103) |
(2,103) |
| Realized other income |
- |
- |
- |
- |
- |
- |
- |
6,037 |
6,037 |
| Fund flows from operations |
193,736 |
21,815 |
49,058 |
144,635 |
132,537 |
96,732 |
26,128 |
(156,765) |
507,876 |
| | Vermilion Energy Inc. ■ Page 56 ■ 2023 Third Quarter Report | |
| |
Nine Months Ended September 30, 2023 |
| |
Canada |
USA |
France |
Netherlands |
Germany |
Ireland |
Australia |
Corporate |
Total |
| Drilling and development |
234,432 |
87,064 |
37,080 |
33,359 |
18,445 |
8,433 |
16,674 |
1,315 |
436,802 |
| Exploration and evaluation |
- |
- |
- |
1 |
8,220 |
- |
- |
2,281 |
10,502 |
| |
|
|
|
|
|
|
|
|
|
| Crude oil and condensate sales |
479,061 |
98,883 |
233,154 |
1,233 |
42,436 |
32 |
- |
- |
854,799 |
| NGL sales |
50,557 |
10,673 |
- |
- |
- |
- |
- |
- |
61,230 |
| Natural gas sales |
131,671 |
4,735 |
- |
133,960 |
108,895 |
201,942 |
- |
2,354 |
583,557 |
| Sales of purchased commodities |
|
- |
- |
- |
- |
- |
- |
138,542 |
138,542 |
| Royalties |
(77,752) |
(31,060) |
(30,275) |
(875) |
(5,257) |
- |
- |
(1,327) |
(146,546) |
| Revenue from external customers |
583,537 |
83,231 |
202,879 |
134,318 |
146,074 |
201,974 |
- |
139,569 |
1,491,582 |
| Purchased commodities |
|
- |
- |
- |
- |
- |
- |
(138,542) |
(138,542) |
| Transportation |
(31,462) |
(301) |
(18,766) |
- |
(9,847) |
(6,039) |
- |
- |
(66,415) |
| Operating |
(182,288) |
(17,185) |
(63,113) |
(30,014) |
(35,624) |
(25,516) |
(41,683) |
(1,021) |
(396,444) |
| General and administration |
(71,037) |
(7,028) |
(14,397) |
(7,739) |
(9,105) |
(9,969) |
(5,674) |
64,043 |
(60,906) |
| Corporate income taxes |
- |
- |
(8,425) |
(29,591) |
(31,056) |
(390) |
(1,912) |
(1,184) |
(72,558) |
| Windfall taxes |
- |
- |
- |
- |
- |
- |
- |
(78,177) |
(78,177) |
| Interest expense |
- |
- |
- |
- |
- |
- |
- |
(62,303) |
(62,303) |
| Realized gain on derivative instruments |
- |
- |
- |
- |
- |
- |
- |
155,628 |
155,628 |
| Realized foreign exchange gain |
- |
- |
- |
- |
- |
- |
- |
997 |
997 |
| Realized other expense |
- |
- |
- |
- |
- |
- |
- |
(2,368) |
(2,368) |
| Fund flows from operations |
298,750 |
58,717 |
98,178 |
66,974 |
60,442 |
160,060 |
(49,269) |
76,642 |
770,494 |
| |
|
|
|
|
|
|
|
|
|
| |
Nine Months Ended September 30, 2022 |
| |
Canada |
USA |
France |
Netherlands |
Germany |
Ireland |
Australia |
Corporate |
Total |
| Drilling and development |
163,720 |
60,944 |
28,546 |
7,732 |
15,243 |
1,707 |
89,420 |
2,895 |
370,207 |
| Exploration and evaluation |
- |
- |
2 |
(312) |
825 |
- |
- |
11,790 |
12,305 |
| |
|
|
|
|
|
|
|
|
|
| Crude oil and condensate sales |
697,481 |
95,364 |
287,521 |
2,148 |
44,311 |
- |
125,767 |
- |
1,252,592 |
| NGL sales |
92,085 |
13,889 |
- |
- |
- |
- |
- |
- |
105,974 |
| Natural gas sales |
238,821 |
12,582 |
- |
441,041 |
315,938 |
259,592 |
- |
7,161 |
1,275,135 |
| Sales of purchased commodities |
- |
- |
- |
- |
- |
- |
- |
194,619 |
194,619 |
| Royalties |
(157,258) |
(32,229) |
(31,059) |
- |
(14,829) |
- |
- |
(2,339) |
(237,714) |
| Revenue from external customers |
871,129 |
89,606 |
256,462 |
443,189 |
345,420 |
259,592 |
125,767 |
199,441 |
2,590,606 |
| Purchased commodities |
- |
- |
- |
- |
- |
- |
- |
(194,619) |
(194,619) |
| Transportation |
(31,930) |
(523) |
(15,511) |
- |
(6,130) |
(2,826) |
- |
- |
(56,920) |
| Operating |
(177,594) |
(17,983) |
(44,950) |
(34,674) |
(28,231) |
(11,893) |
(36,187) |
(1,275) |
(352,787) |
| General and administration |
(21,982) |
(3,589) |
(11,411) |
(2,239) |
(3,977) |
435 |
(2,964) |
1,394 |
(44,333) |
| PRRT |
- |
- |
- |
- |
- |
- |
(13,273) |
- |
(13,273) |
| Corporate income taxes |
- |
- |
(24,881) |
(114,111) |
(29,554) |
- |
2,650 |
(299) |
(166,195) |
| Interest expense |
- |
- |
- |
- |
- |
- |
- |
(60,352) |
(60,352) |
| Realized loss on derivative instruments |
- |
- |
- |
- |
- |
- |
- |
(361,954) |
(361,954) |
| Realized foreign exchange loss |
- |
- |
- |
- |
- |
- |
- |
(3,650) |
(3,650) |
| Realized other income |
- |
- |
- |
- |
- |
- |
- |
14,122 |
14,122 |
| Fund flows from operations |
639,623 |
67,511 |
159,709 |
292,165 |
277,528 |
245,308 |
75,993 |
(407,192) |
1,350,645 |
| | Vermilion Energy Inc. ■ Page 57 ■ 2023 Third Quarter Report | |
Reconciliation of fund flows from operations to net
earnings:
| |
Three Months Ended |
Nine Months Ended |
| |
Sep 30, 2023 |
Sep 30, 2022 |
Sep 30, 2023 |
Sep 30, 2022 |
| Fund flows from operations |
270,218 |
507,876 |
770,494 |
1,350,645 |
| Equity based compensation |
(6,362) |
(6,145) |
(34,885) |
(39,013) |
| Unrealized (loss) gain on derivative instruments |
(65,294) |
43,844 |
38,581 |
(8,892) |
| Unrealized foreign exchange (loss) gain |
(12,042) |
(44,929) |
7,604 |
(37,059) |
| Accretion |
(20,068) |
(14,285) |
(58,718) |
(41,669) |
| Depletion and depreciation |
(151,087) |
(130,205) |
(453,607) |
(405,208) |
| Deferred tax recovery (expense) |
42,489 |
(84,570) |
79,435 |
(91,974) |
| Gain on business combination |
- |
- |
445,094 |
- |
| Loss on disposition |
- |
- |
(226,828) |
- |
| Impairment reversal |
- |
- |
- |
192,094 |
| Unrealized other expense |
(545) |
(507) |
(1,621) |
(1,270) |
| Net earnings |
57,309 |
271,079 |
565,549 |
917,654 |
Equinor Energy Ireland Limited
On March 31, 2023, Vermilion purchased
100% of the shares outstanding of Equinor Energy Ireland Limited ("EEIL") from Equinor ASA. The acquisition adds an incremental
36.5% interest in the Corrib Natural Gas Project, increasing Vermilion's operated interest to 56.5%. The acquisition makes Vermilion the
largest provider of domestic natural gas in Ireland.
The total consideration paid and
the fair value of the assets acquired and liabilities assumed at the date of acquisition are detailed in the table below. The initial
accounting for the working capital deficit has been determined on a provisional basis as final working capital amounts related to accounts
receivable, accounts payable, and taxes payable are unavailable due to the timing of close.
| |
Consideration |
| Cash consideration paid |
488,893 |
| |
|
| |
Allocation of consideration |
| Cash acquired |
400,002 |
| Capital assets |
768,026 |
| Acquired working capital deficit |
(103,527) |
| Asset retirement obligations |
(42,277) |
| Derivative liability |
(51,789) |
| Deferred tax liability |
(36,448) |
| Net assets acquired |
933,987 |
| Gain on business combination |
(445,094) |
| Total net assets acquired, net of gain on business combination |
488,893 |
The gain on the business combination primarily
resulted from increases in working capital and the fair value of capital assets from when the purchase and sale agreement was entered
into in November 2021 and when the acquisition closed in March 2023.
The results of operations from the assets
acquired and liabilities assumed have been included in Vermilion's consolidated financial statements beginning March 31, 2023 and have
contributed revenues net of royalties of $95.5 million and net earnings of $31.0 million. Had the acquisition occurred on January 1, 2023,
revenues would have increased by $90.3 million and net earnings would have increased by $55.0 million for the nine months ended September 30,
2023.
| | Vermilion Energy Inc. ■ Page 58 ■ 2023 Third Quarter Report | |
The following table reconciles the
change in Vermilion's capital assets:
| |
2023 |
| Balance at January 1 |
5,691,522 |
| Acquisitions |
833,626 |
| Dispositions |
(534,016) |
| Additions |
436,802 |
| Increase in right-of-use assets |
1,376 |
| Depletion and depreciation |
(434,624) |
| Changes in asset retirement obligations |
99,167 |
| Foreign exchange |
(46,187) |
| Balance at September 30 |
6,047,666 |
Southeast Saskatchewan disposition
In March 2023, Vermilion sold non-core
assets in southeast Saskatchewan for net proceeds of $182.2 million and resulted in a loss on disposition of $226.8 million. The book
value of the net assets disposed of was $409.0 million and consisted of $534.0 million of capital assets, $25.9 million of exploration
and evaluation assets, and $150.9 million of asset retirement obligations.
Minor acquisition
In March 2023, Vermilion completed a minor
acquisition of Alberta assets for total consideration of $19.0 million where $33.9 million of capital assets and $14.9 million of asset
retirement obligations were recognized.
|
5. Exploration and evaluation assets
|
The following table reconciles the
change in Vermilion's exploration and evaluation assets:
| |
2023 |
| Balance at January 1 |
270,593 |
| Additions |
10,502 |
| Dispositions |
(25,862) |
| Changes in asset retirement obligations |
2 |
| Depreciation |
(18,983) |
| Foreign exchange |
(1,019) |
| Balance at September 30 |
235,233 |
| | Vermilion Energy Inc. ■ Page 59 ■ 2023 Third Quarter Report | |
| 6. Asset retirement obligations |
The following table reconciles the change in Vermilion’s
asset retirement obligations:
| |
2023 |
| Balance at January 1 |
1,087,757 |
| Additional obligations recognized |
59,589 |
| Dispositions |
(150,885) |
| Obligations settled |
(28,029) |
| Accretion |
58,718 |
| Changes in rates |
110,312 |
| Foreign exchange |
(13,656) |
| Balance at September 30 |
1,123,806 |
Vermilion calculated the present value
of the obligations using a credit-adjusted risk-free rate, calculated using a credit spread of 3.2% as at September 30, 2023 (December 31,
2022 - 4.5%) added to risk-free rates based on long-term, risk-free government bonds. Vermilion's credit spread is determined using the
Company's expected cost of borrowing at the end of the reporting period.
The country-specific risk-free rates
used as inputs to discount the obligations were as follows:
| |
Sep 30, 2023 |
Dec 31, 2022 |
| Canada |
3.9 % |
3.3 % |
| United States |
4.9 % |
4.1 % |
| France |
3.8 % |
3.4 % |
| Netherlands |
3.0 % |
2.7 % |
| Germany |
3.0 % |
2.5 % |
| Ireland |
3.6 % |
3.2 % |
| Australia |
4.4 % |
4.2 % |
Vermilion defines capital as net debt and
shareholders' capital. Net debt consists of long-term debt (excluding unrealized foreign exchange on swapped USD borrowings) plus adjusted
working capital (defined as current assets less current liabilities, excluding current derivatives and current lease liabilities). In
managing capital, Vermilion reviews whether fund flows from operations is sufficient to fund capital expenditures, dividends, and asset
retirement obligations.
The following table calculates Vermilion’s
ratio of net debt to four quarter trailing fund flows from operations:
| |
Sep 30, 2023 |
Dec 31, 2022 |
| Long-term debt |
966,505 |
1,081,351 |
| Adjusted working capital deficit (1) |
276,017 |
265,111 |
| Unrealized FX on swapped USD borrowings |
- |
(1,876) |
| Net debt |
1,242,522 |
1,344,586 |
| |
|
|
| Ratio of net debt to four quarter trailing fund flows from operations |
1.2 |
0.8 |
(1) Adjusted working capital
is defined as current assets (excluding current derivatives), less current liabilities (excluding current derivatives and current lease
liabilities).
| | Vermilion Energy Inc. ■ Page 60 ■ 2023 Third Quarter Report | |
The following table summarizes Vermilion’s outstanding
long-term debt:
| |
As at |
| |
Sep 30, 2023 |
Dec 31, 2022 |
| Revolving credit facility |
32,858 |
147,666 |
| 2025 senior unsecured notes |
404,371 |
404,463 |
| 2030 senior unsecured notes |
529,276 |
529,222 |
| Long-term debt |
966,505 |
1,081,351 |
The fair value of the revolving credit
facility is equal to its carrying value due to the use of short-term borrowing instruments at market rates of interest. The fair value
of the 2025 senior unsecured notes as at September 30, 2023 was $395.0 million (December 31, 2022 - $391.3 million). The
fair value of the 2030 senior unsecured notes as at September 30, 2023 was $513.1 million (December 31, 2022 - $496.8 million).
The following table reconciles the
change in Vermilion’s long-term debt:
| |
2023 |
| Balance at January 1 |
1,081,351 |
| Net repayments on the revolving credit facility |
(113,733) |
| Amortization of transaction costs |
1,621 |
| Foreign exchange |
(2,734) |
| Balance at September 30 |
966,505 |
Revolving credit facility
As at September 30, 2023, Vermilion
had in place a bank revolving credit facility maturing May 29, 2027 with the following terms:
| |
As at |
| |
Sep 30, 2023 |
Dec 31, 2022 |
| Total facility amount |
1,600,000 |
1,600,000 |
| Amount drawn |
(32,858) |
(147,666) |
| Letters of credit outstanding |
(25,992) |
(13,527) |
| Unutilized capacity |
1,541,150 |
1,438,807 |
The facility can be extended from time
to time at the option of the lenders and upon notice from Vermilion. If no extension is granted by the lenders, the amounts owing pursuant
to the facility are due at the maturity date. The facility is secured by various fixed and floating charges against the subsidiaries of
Vermilion.
On May 19, 2023, the maturity date of the
facility was extended to May 28, 2027 (previously May 29, 2026) and the total facility amount of $1.6 billion was unchanged. As at September 30,
2023, $32.9 million was drawn on the facility.
The facility bears interest at a rate applicable
to demand loans plus applicable margins.
As at September 30, 2023, the
revolving credit facility was subject to the following financial covenants:
| |
|
As at |
| Financial covenant |
Limit |
Sep 30, 2023 |
Dec 31, 2022 |
| Consolidated total debt to consolidated EBITDA |
Less than 4.0 |
0.58 |
0.51 |
| Consolidated total senior debt to consolidated EBITDA |
Less than 3.5 |
0.02 |
0.07 |
| Consolidated EBITDA to consolidated interest expense |
Greater than 2.5 |
20.60 |
27.10 |
The financial covenants include financial
measures defined within the revolving credit facility agreement that are not defined under IFRS. These financial measures are defined
by the revolving credit facility agreement as follows:
| | Vermilion Energy Inc. ■ Page 61 ■ 2023 Third Quarter Report | |
| • | Consolidated total debt: Includes all amounts
classified as “Long-term debt” and “Lease obligations” (including the current portion included within "Accounts
payable and accrued liabilities" but excluding operating leases as defined under IAS 17) on the consolidated balance sheet. |
| • | Consolidated total senior debt: Consolidated
total debt excluding unsecured and subordinated debt. |
| • | Consolidated EBITDA: Consolidated net earnings
before interest, income taxes, depreciation, accretion and certain other non-cash items, adjusted for the impact of the acquisition of
a material subsidiary. |
| • | Consolidated total interest expense: Includes
all amounts classified as "Interest expense", but excludes interest on operating leases as defined under IAS 17. |
In addition, our revolving credit facility
has provisions relating to our liability management ratings in Alberta and Saskatchewan whereby if our security adjusted liability management
ratings fall below specified limits in a province, a portion of the asset retirement obligations are included in the definitions of consolidated
total debt and consolidated total senior debt. An event of default occurs if our security adjusted liability management ratings breach
additional lower limits for a period greater than 90 days. As of September 30, 2023, Vermilion's liability management ratings were
higher than the specified levels, and as such, no amounts relating to asset retirement obligations were included in the calculation of
consolidated total debt and consolidated total senior debt.
As at September 30, 2023 and December 31,
2022, Vermilion was in compliance with the above covenants.
2025 senior unsecured notes
On March 13, 2017, Vermilion issued US
$300.0 million of senior unsecured notes at par. The notes bear interest at a rate of 5.625% per annum, to be paid semi-annually on March
15 and September 15. The notes mature on March 15, 2025. As direct senior unsecured obligations of Vermilion, the notes rank equally with
existing and future senior unsecured indebtedness of the Company.
The senior unsecured notes were recognized
at amortized cost and include the transaction costs directly related to the issuance.
Subsequent to March 15, 2023, Vermilion
may redeem some or all of the senior unsecured notes at a 100.000% redemption price plus any accrued and unpaid interest.
2030 senior unsecured notes
On April 26, 2022, Vermilion closed a private
offering of US $400.0 million 8-year senior unsecured notes. The notes were priced at 99.241% of par, mature on May 1, 2030, and bear
interest at a rate of 6.875% per annum. Interest is paid semi-annually on May 1 and November 1, commencing on November 1, 2022. The notes
are senior unsecured obligations of Vermilion and rank equally with existing and future senior unsecured indebtedness.
The senior unsecured notes were recognized
at amortized cost and include the transaction costs directly related to the issuance.
Vermilion may, at its option, redeem the
notes prior to maturity as follows:
| • | On or after May 1, 2025, Vermilion may
redeem some or all of the senior unsecured notes at the redemption prices set forth below, together with accrued and unpaid interest. |
| • | Prior to May 1, 2025, Vermilion may redeem
up to 35% of the original principal amount of the notes with an amount of cash not greater than the net cash proceeds of certain equity
offerings at a redemption price of 106.875% of the principal amount of the notes, together with accrued and unpaid interest. |
| • | Prior to May 1, 2025, Vermilion may also
redeem some or all of the notes at a price equal to 100% of the principal amount of the notes, plus a “make-whole premium,”
together with applicable premium, accrued and unpaid interest. |
| Year |
Redemption price |
| 2025 |
103.438 % |
| 2026 |
102.292 % |
| 2027 |
101.146 % |
| 2028 and thereafter |
100.000 % |
| | Vermilion Energy Inc. ■ Page 62 ■ 2023 Third Quarter Report | |
The following table reconciles the change in Vermilion’s
shareholders’ capital:
| |
2023 |
| Shareholders’ Capital |
Shares ('000s) |
Amount |
| Balance at January 1 |
163,227 |
4,243,794 |
| Vesting of equity based awards |
3,428 |
21,175 |
| Shares issued for equity based compensation |
600 |
10,280 |
| Share-settled dividends on vested equity based awards |
57 |
1,051 |
| Repurchase of shares |
(3,646) |
(94,190) |
| Balance at September 30 |
163,666 |
4,182,110 |
Dividends are approved by the Board
of Directors and are paid quarterly. Dividends declared to shareholders for the nine months ended September 30, 2023 were $49.0 million
or $0.30 per common share (nine months ended September 30, 2022 - $32.7 million or $0.20 per common share).
On July 10, 2023, the Toronto Stock
Exchange approved our notice of intention to renew our normal course issuer bid ("the NCIB"). The NCIB renewal allows Vermilion
to purchase up to 16,308,587 common shares (representing approximately 10% of outstanding common shares) beginning July 12, 2023 and ending
July 11, 2024. Common shares purchased under the NCIB will be cancelled.
In the third quarter of 2023, Vermilion purchased 0.6
million common shares under the NCIB for total consideration of $11.6 million. The common shares purchased under the NCIB were cancelled.
| 10. Financial instruments |
The following table summarizes the
increase (positive values) or decrease (negative values) to net earnings before tax due to a change in the value of Vermilion’s
financial instruments as a result of a change in the relevant market risk variable. This analysis does not attempt to reflect any interdependencies
between the relevant risk variables.
| |
Sep 30, 2023 |
| Currency risk - Euro to Canadian dollar |
|
| $0.01 increase in strength of the Canadian dollar against the Euro |
5,792 |
| $0.01 decrease in strength of the Canadian dollar against the Euro |
(5,792) |
| |
|
| Currency risk - US dollar to Canadian dollar |
|
| $0.01 increase in strength of the Canadian dollar against the US $ |
5,577 |
| $0.01 decrease in strength of the Canadian dollar against the US $ |
(5,577) |
| |
|
| Commodity price risk - Crude oil |
|
| US $5.00/bbl increase in crude oil price used to determine the fair value of derivatives |
(33,631) |
| US $5.00/bbl decrease in crude oil price used to determine the fair value of derivatives |
33,631 |
| |
|
| Commodity price risk - European natural gas |
|
| #eu#5.0/GJ increase in European natural gas price used to determine the fair value of derivatives |
(224,783) |
| #eu#5.0/GJ decrease in European natural gas price used to determine the fair value of derivatives |
250,034 |
| | Vermilion Energy Inc. ■ Page 63 ■ 2023 Third Quarter Report | |
|
DIRECTORS
Robert Michaleski 1,3,5
Calgary, Alberta
Dion Hatcher
Calgary, Alberta
James J. Kleckner Jr. 7,9
Edwards, Colorado
Carin Knickel 4,7,11
Golden, Colorado
Stephen P. Larke 3,5,10
Calgary, Alberta
Timothy R. Marchant 6,9,11
Calgary, Alberta
William Roby 7,8,11
Katy, Texas
Manjit Sharma 2,5
Toronto, Ontario
Myron Stadnyk 7,9
Calgary, Alberta
Judy Steele 3,5,11
Halifax, Nova Scotia
1 Chairman (Independent)
2 Audit Committee Chair (Independent)
3 Audit Committee Member (Independent)
4 Governance and Human Resources Committee Chair __(Independent)
5 Governance and Human Resources Committee Member
__(Independent)
6 Health, Safety and Environment Committee Chair __(Independent)
7 Health, Safety and Environment Committee Member
__(Independent)
8 Independent Reserves Committee Chair (Independent)
9 Independent Reserves Committee Member
__(Independent)
10 Sustainability Committee Chair (Independent)
11 Sustainability Committee Member (Independent)
|
OFFICERS / CORPORATE SECRETARY
Dion Hatcher *
President & Chief Executive Officer
Tamar Epstein
General Counsel
Lars Glemser *
Vice President & Chief Financial Officer
Terry Hergott
Vice President Marketing
Yvonne Jeffery
Vice President Sustainability
Darcy Kerwin *
Vice President International & HSE
Bryce Kremnica *
Vice President North America
Geoff MacDonald
Vice President Geosciences
Kyle Preston
Vice President Investor Relations
Averyl Schraven
Vice President People & Culture
Jenson Tan *
Vice President Business Development
Gerard Schut
Vice President European Operations
Jamie Gagner
Interim Corporate Secretary
* Executive Committee |
AUDITORS
Deloitte LLP
Calgary, Alberta
BANKERS
The Toronto-Dominion Bank
Alberta Treasury Branches
Bank of America N.A., Canada Branch
Canadian Imperial Bank of Commerce
Export Development Canada
National Bank of Canada
Royal Bank of Canada
The Bank of Nova Scotia
Wells Fargo Bank N.A., Canadian Branch
La Caisse Centrale Desjardins du Québec
Citibank N.A., Canadian Branch - Citibank Canada
Canadian Western Bank
JPMorgan Chase Bank, N.A., Toronto Branch
Goldman Sachs Lending Partners LLC
EVALUATION ENGINEERS
McDaniel & Associates
Calgary, Alberta
LEGAL COUNSEL
Norton Rose Fulbright Canada LLP
Calgary, Alberta
TRANSFER AGENT
Odyssey Trust Company
STOCK EXCHANGE LISTINGS
The Toronto Stock Exchange (“VET”)
The New York Stock Exchange (“VET”)
INVESTOR RELATIONS
Kyle Preston
Vice President Investor Relations
403-476-8431 TEL
403-476-8100 FAX
1-866-895-8101 IR TOLL FREE
investor_relations@vermilionenergy.com
|
| | Vermilion Energy Inc. ■ Page 64 ■ 2023 Third Quarter Report | |
Exhibit 99.2
FORM
52-109F2
CERTIFICATION OF INTERIM FILINGS
- FULL CERTIFICATE
I,
Dion Hatcher, President and Chief Executive Officer, of Vermilion Energy Inc., certify
the following:
| 1. | Review: I have
reviewed
the interim financial
report
and interim
MD&A (together,
the “interim
filings”)
of Vermilion Energy Inc. (the “issuer”) for the interim period ended September 30, 2023. |
| 2. | No misrepresentations:
Based
on my knowledge,
having exercised
reasonable
diligence,
the interim filings
do not contain any
untrue statement of a material
fact or omit
to state a material
fact required
to be stated or that is necessary
to make a statement
not misleading
in light of the circumstances
under which it was
made,
with respect
to the period
covered
by the interim filings. |
| 3. | Fair presentation:
Based
on my knowledge,
having exercised
reasonable diligence,
the interim financial
report together
with the other
financial information
included
in the interim
filings fairly
present
in all material
respects
the financial condition,
financial performance
and cash flows
of the issuer, as
of the date of and
for the periods presented
in the interim
filings. |
| 4. | Responsibility:
The issuer’s
other certifying
officer
and I are
responsible for establishing
and maintaining disclosure controls
and procedures
(DC&P)
and internal
control over financial
reporting
(ICFR),
as those terms
are defined
in National
Instrument
52-109 Certification
of Disclosure in Issuers’ Annual
and Interim Filings, for the issuer. |
| 5. | Design:
Subject to
the limitations
described
in paragraphs
5.2 and 5.3, the issuer’s
other certifying
officer
and I have,
as at the
end of the period covered
by the interim
filings |
| (a) | designed
DC&P, or caused
it to be designed
under our supervision, to
provide reasonable
assurance
that |
(i) material
information
relating
to the issuer
is made known to us by others, particularly
during the period
in which the interim filings
are being
prepared;
and
(ii) information
required to be
disclosed by
the issuer in its annual filings,
interim filings
or other reports filed
or submitted by it under securities
legislation
is recorded,
processed, summarized
and reported
within the time periods
specified in securities
legislation;
and
| (b) | designed
ICFR, or caused
it to be designed
under our supervision,
to provide reasonable
assurance
regarding the reliability
of financial
reporting and
the preparation
of financial
statements for external
purposes in accordance
with the issuer’s
GAAP. |
| 5.1 | Control
framework:
The control framework
the issuer’s
other certifying
officer
and I used to design the issuer’s
ICFR
is the Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). |
| 5.2 | ICFR – material
weakness
relating to design: NA |
| 5.3 | Limitation
on scope of design:
The issuer has disclosed in its interim MD&A |
| (a) | the fact that the issuer’s other certifying officer and I have limited the
scope of our design of DC&P and ICFR to exclude controls, policies and procedures of |
(i) a
proportionately consolidated entity in which the issuer has an interest;
(ii) a
special purpose entity in which the issuer has an interest; or
(iii) a
business that the issuer acquired not more than 365 days before the last day of the period covered by the interim filings; and
(b) summary financial
information about the businesses that the issuer acquired that has been consolidated in the issuer’s financial
statements.
| 6. | Reporting
changes
in ICFR: The issuer
has disclosed
in its interim
MD&A any
change
in the issuer’s
ICFR that occurred
during the period
beginning
on July 1, 2023 and ended on September 30, 2023 that has materially
affected,
or is reasonably
likely
to materially
affect,
the issuer’s
ICFR. |
Dated: November
1, 2023
(Signed:
“Dion Hatcher”)
___________________________
Dion Hatcher, President and Chief Executive Officer
Exhibit 99.3
FORM
52-109F2
CERTIFICATION OF INTERIM FILINGS
- FULL CERTIFICATE
I,
Lars Glemser, Vice President and Chief Financial Officer, of Vermilion Energy Inc.,
certify
the following:
| 1. | Review: I have
reviewed
the interim financial
report
and interim
MD&A (together,
the “interim
filings”)
of Vermilion Energy Inc. (the “issuer”) for the interim period ended September 30, 2023. |
| 2. | No misrepresentations:
Based
on my knowledge,
having exercised
reasonable
diligence,
the interim filings
do not contain any
untrue statement of a material
fact or omit
to state a material
fact required
to be stated or that is necessary
to make a statement
not misleading
in light of the circumstances
under which it was
made,
with respect
to the period
covered
by the interim filings. |
| 3. | Fair presentation:
Based
on my knowledge,
having exercised
reasonable diligence,
the interim financial
report together
with the other
financial information
included
in the interim
filings fairly
present
in all material
respects
the financial condition,
financial performance
and cash flows
of the issuer, as
of the date of and
for the periods presented
in the interim
filings. |
| 4. | Responsibility:
The issuer’s
other certifying
officer
and I are
responsible for establishing
and maintaining disclosure controls
and procedures
(DC&P)
and internal
control over financial
reporting
(ICFR),
as those terms
are defined
in National
Instrument
52-109 Certification
of Disclosure in Issuers’ Annual
and Interim Filings, for the issuer. |
| 5. | Design:
Subject to
the limitations
described
in paragraphs
5.2 and 5.3, the issuer’s
other certifying
officer
and I have,
as at the
end of the period covered
by the interim
filings |
| (a) | designed
DC&P, or caused
it to be designed
under our supervision, to
provide reasonable
assurance
that |
(i) material
information
relating
to the issuer
is made known to us by others, particularly
during the period
in which the interim filings
are being
prepared;
and
(ii) information
required to be
disclosed by
the issuer in its annual filings,
interim filings
or other reports filed
or submitted by it under securities
legislation
is recorded,
processed, summarized
and reported
within the time periods
specified in securities
legislation;
and
| (b) | designed
ICFR, or caused
it to be designed
under our supervision,
to provide reasonable
assurance
regarding the reliability
of financial
reporting and
the preparation
of financial
statements for external
purposes in accordance
with the issuer’s
GAAP. |
| 5.1 | Control
framework:
The control framework
the issuer’s
other certifying
officer
and I used to design the issuer’s
ICFR
is the Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). |
| 5.2 | ICFR – material
weakness
relating to design: NA |
| 5.3 | Limitation
on scope of design:
The issuer has disclosed in its interim MD&A |
| (a) | the fact that the issuer’s other certifying officer and I have limited the
scope of our design of DC&P and ICFR to exclude controls, policies and procedures of |
(i) a
proportionately consolidated entity in which the issuer has an interest;
(ii) a
special purpose entity in which the issuer has an interest; or
(iii) a
business that the issuer acquired not more than 365 days before the last day of the period covered by the interim filings; and
(b) summary financial
information about the businesses that the issuer acquired that has been consolidated in the issuer’s financial
statements.
| 6. | Reporting
changes
in ICFR: The issuer
has disclosed
in its interim
MD&A any
change
in the issuer’s
ICFR that occurred
during the period
beginning
on July 1, 2023 and ended on September 30, 2023 that has materially
affected,
or is reasonably
likely
to materially
affect,
the issuer’s
ICFR. |
Dated: November
1, 2023
(Signed:
“Lars Glemser”)
___________________________
Lars Glemser, Vice President and Chief Financial Officer
Vermilion Energy (NYSE:VET)
Graphique Historique de l'Action
De Avr 2024 à Mai 2024
Vermilion Energy (NYSE:VET)
Graphique Historique de l'Action
De Mai 2023 à Mai 2024
