40-F
VERMILION ENERGY INC. (VET)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 40-F
◻ Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934; or
þ Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended: December 31, 2024
Commission file number: No. 001-35829
Vermilion Energy Inc.
(Exact name of registrant as specified in its charter)
Alberta
(Province or other jurisdiction of incorporation or organization)
1311
(Primary standard industrial classification code number)
N/A
(I.R.S. employer identification number)
3500, 520 - 3rd Avenue S.W.
Calgary , Alberta **** T2P 0R3 Canada
( 403 ) 269-4884
(Address and telephone number of registrant’s principal executive office)
National Corporate Research, Ltd .
225 West 34th Street, Suite 910
New York , New York **** 10122 U.S.A.
( 212 ) 947-7200
(Name, address and telephone number of agent for service in the United States)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | Trading Symbol: | Name of each exchange on which registered: |
|---|---|---|
| | | |
| Common Shares | VET | New York Stock Exchange |
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
For annual reports, indicate by check mark the information filed with this form:
| þ | Annual Information Form | þ | Audited Annual Financial Statements |
|---|
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report: **** 154,344,353 shares
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.
| Yes | þ | No | ◻ |
|---|
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
| Yes | þ | No | ◻ |
|---|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.
Emerging growth company ◻
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ◻
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. þ
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ◻
DOCUMENTS FILED PURSUANT TO GENERAL INSTRUCTIONS
In accordance with General Instruction B.(3) of Form 40-F, the Registrant has filed the following documents as part of this Annual Report on Form 40-F, as set forth in the Exhibit Index attached hereto:
Exhibit 99.1 - Annual Information Form for the fiscal year ended December 31, 2024
Exhibit 99.2 - Management’s Discussion and Analysis for the fiscal year ended December 31, 2024; and
Exhibit 99.3 - Audited Annual Financial Statements for the fiscal year ended December 31, 2024
In accordance with General Instruction D.(9) of Form 40-F, the Registrant has filed the written consent of certain experts named in the foregoing Exhibits as Exhibit 99.5 and the written consent of its Independent Registered Public Accounting Firm as Exhibit 99.4, as set forth in the Exhibit Index attached hereto.
DISCLOSURE CONTROLS AND PROCEDURES
A. Evaluation of Disclosure Controls and Procedures
Vermilion Energy Inc. (the "Registrant") maintains disclosure controls and procedures designed to ensure that information required to be disclosed in the Registrant's filings under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized and reported within the time period specified in the rules and forms of the Securities and Exchange Commission (the "Commission"). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Registrant in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Registrant's Chief Executive Officer, and Chief Financial Officer, after having evaluated the effectiveness of the Registrant's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report have concluded that, as of such date, the Registrant's disclosure controls and procedures are effective.
It should be noted that while the Registrant’s Chief Executive Officer and the Chief Financial Officer believe that the Registrant’s disclosure controls and procedures provide a reasonable level of assurance that they are effective, they do not expect that the Registrant’s disclosure controls and procedures will prevent all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
B. Management’s Annual Report on Internal Control Over Financial Reporting
See page 1 of the 2024 Audited Consolidated Financial Statements included as Exhibit 99.3 to this report.
C. Auditor Attestation
See page 3 of the 2024 Audited Consolidated Financial Statements included as Exhibit 99.3 to this report.
D. Changes in Internal Control Over Financial Reporting
There was no change in the Registrant's internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
NOTICES REQUIRED BY RULE 104 OF REGULATION BTR
None
AUDIT COMMITTEE FINANCIAL EXPERT
The Registrant's Board of Directors has determined that it has at least one audit committee financial expert (as such term is defined in the rules and regulations of the Commission) serving on its Audit Committee. Manjit Sharma has been determined to be such audit committee financial expert and is independent (as such term is defined by the New York Stock Exchange's corporate governance standards).
The Commission has indicated that the designation of Manjit Sharma as an audit committee financial expert does not make him an "expert" for any purpose, impose on his any duties, obligations or liability that are greater than the duties, obligations or liability imposed on him as a member of the
Audit Committee and the Board of Directors in absence of such designation, or affect the duties, obligations or liability of any other member of the Audit Committee or Board of Directors.
CODE OF ETHICS
The Registrant has adopted a written “code of ethics” (as that term is defined in Form 40-F) that applies to its directors, officers and employees, including its principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. A copy of such code of ethics is available upon request or on the Registrant’s website at https://www.vermilionenergy.com/about-us/governance/. In 2024, there were no amendments to the code of ethics or waivers, including implicit waivers, from any provisions of the code of ethics.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information about aggregate fees billed to us by our principal accountant, Deloitte LLP (PCAOB ID No. 1208) will be presented under the caption “Audit Committee Matters - External audit service fees” on page 60 of the Annual Information Form for the year ended December 31, 2024 included as Exhibit 99.1 to this report.
The Audit Committee pre-approves all audit related fees. The auditors present the estimate for the annual audit related services to the Audit Committee for approval prior to undertaking the annual audit of the financial statements.
All non-audit fees were pre-approved by the Audit Committee and none were approved on the basis of the de minimis exemption set forth in Rule 2-01(c)(7)(i)(C) of Regulation S-X.
RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION
The Registrant has adopted a compensation recovery policy (referred to as the “Executive Compensation Clawback Policy”) as required by NYSE listing standards and pursuant to Rule 10D-1 of the Exchange Act. The Executive Compensation Clawback Policy is filed as Exhibit 97 to this Form 40-F. At no time during or after the fiscal year ended December 31, 2024 (as of the date of this Annual Report), was the Registrant required to prepare an accounting restatement that required recovery of erroneously awarded compensation pursuant to the Executive Compensation Clawback Policy and, as of December 31, 2024, there was no outstanding balance of erroneously awarded compensation to be recovered from the application of the Executive Compensation Clawback Policy to a prior restatement.
OFF-BALANCE SHEET ARRANGEMENTS
The Registrant does not have any commitments or obligations, including contingent obligations, arising from arrangements with unconsolidated entities or persons (which are not otherwise discussed in the Registrant's Management’s Discussion and Analysis for the fiscal year ended December 31, 2024, filed as Exhibit 99.2 to this annual report on Form 40-F), that have or are reasonably likely to have a material current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources.
DISCLOSURE OF CONTRACTUAL OBLIGATIONS
The required disclosure is included under the heading “Contractual Obligations and Commitments” in the Registrant’s Management’s Discussion and Analysis for the fiscal year ended December 31, 2024, filed as Exhibit 99.2 to this annual report on Form 40-F.
IDENTIFICATION OF THE AUDIT COMMITTEE
The Registrant’s Board of Directors has a separately designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act which satisfies the requirements of Exchange Act Rule 10A-3. The Registrant’s Audit Committee is comprised of Manjit Sharma (Chair), Robert Michaleski, Stephen Larke, and Judy Steele, all of whom, in the opinion of the Registrant’s Board of Directors are independent (as determined under Rule 10A-3 of the Exchange Act and the corporate governance standards of the NYSE) and are financially literate. Please refer to the Registrant's Annual Information Form attached as Exhibit 99.1 to this annual report on Form 40-F for details in connection with each of these members and their qualifications.
The members of the Audit Committee do not have fixed terms and are appointed from time to time by resolution of the directors.
The Audit Committee meets with the Registrant's Chief Executive Officer, Chief Financial Officer and the Registrant's independent auditors to review and inquire into matters affecting financial reporting, the system of internal accounting and financial controls, as well as audit procedures and audit plans. The Audit Committee also recommends to the Board of Directors which independent registered public auditing firm should be appointed by the
Registrant, and reviews and recommends to the Board of Directors for approval the Registrant’s audited annual financial statements and accompanying management’s discussion and analysis.
The full text of the Audit Committee Terms of Reference is disclosed in the Registrant's Annual Information Form, attached hereto as Exhibit 99.1, and is incorporated by reference in this annual report on Form 40-F.
NYSE STATEMENT OF GOVERNANCE DIFFERENCES
As a Canadian corporation with securities listed on the Toronto Stock Exchange (“TSX”) and the New York Stock Exchange (“NYSE”), the Registrant is required to comply with all applicable Canadian requirements adopted by the Canadian Securities Administrators and the TSX, and applicable rules for foreign private issuers adopted by the Commission which give effect to the provisions of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”).
The Registrant’s corporate governance practices meet or exceed all applicable Canadian and Sarbanes-Oxley requirements and also incorporate many “best practices” derived from those required to be followed by U.S. domestic companies under the NYSE listing standards. In accordance with Section 303A.11 of the NYSE Listed Company Manual, the Registrant has prepared a summary of the significant ways in which its corporate governance practices differ from those required to be followed by U.S. domestic companies under the NYSE’s corporate governance standards, which is accessible on the Registrant’s website at https://www.vermilionenergy.com/about-us/governance/.
DISCLOSURE PURSUANT TO SECTION 13(r) OF THE EXCHANGE ACT
In accordance with Section 13(r) of the Exchange Act, the Registrant is required to include certain disclosures in its periodic reports if it or any of its affiliates knowingly engaged in certain specified activities during the period covered by the report. Neither the Registrant nor its affiliates have knowingly engaged in any transaction or dealing reportable under Section 13(r) of the Exchange Act during the year ended December 31, 2024.
UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
A. Undertaking
The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.
B. Consent to Service of Process
The Registrant has previously filed with the Commission a Form F-X in connection with the class of securities in relation to which the obligation to file this report arises.
Any change to the name or address of the Registrant’s agent for service shall be communicated promptly to the Commission by amendment to Form F-X referencing the file number of the Registrant.
SIGNATURES
Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.
| | | | |
|---|---|---|---|
| | VERMILION ENERGY INC (the Registrant) | ||
| | | | |
| Date: March 5, 2025 | | By: | /s/ (“Lars Glemser”) |
| | | Lars Glemser | |
| | | Vice President and Chief Financial Officer |
EXHIBIT INDEX
The following exhibits have been filed as part of this annual report:
Exhibit 97
Recovery Policy
Scope
This Recovery Policy (this “Policy”) applies to any individual who is or was an Executive Officer (as defined below) of Vermilion Energy Inc. (the “Company”) at the relevant time. Should the Company be required to prepare an Accounting Restatement (as defined below), certain excess Incentive-Based Compensation (as defined below) received by its Executive Officers will be clawed back, on and subject to the terms provided for in this Policy.
Definitions
For the purposes of this Policy, the following terms will have the meanings set forth below:
| | | |
|---|---|---|
| “Accounting Restatement” | means any accounting restatement of the Company’s financial statements due to material noncompliance with any financial reporting requirement under United States federal securities laws, including any required accounting restatement to correct a material error in the Company’s previously-issued financial statements, or to avoid a material misstatement if the error were corrected in the current period or left uncorrected in the current period. | |
| “Board” | | means the Board of Directors of the Company. |
| “Erroneously Awarded Compensation” | | means, in connection with an Accounting Restatement, the amount of Incentive-Based Compensation received by Executive Officers that exceeds the amount of Incentive-Based Compensation that otherwise would have been received by such Executive Officers had such Incentive-Based Compensation been determined based on the restated amounts after giving effect to such Accounting Restatement, without regard to any taxes paid by such Executive Officers. |
| “Exchange Act” | | means the United States Securities Exchange Act of 1934, as amended. |
| “Executive Officer” | | means the Company’s president, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice-president of the Company in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a significant policy-making function or any other person who performs similar significant policy-making functions for the Company, as identified in the Company’s most recently filed annual report on Form 40-F. Executive officers of the Company’s parent(s) or subsidiaries are deemed “Executive Officers” if they perform such policy making functions for the Company. |
| “Financial Reporting Measures” | | means measures that are determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measures that are derived wholly or in part from such measures. |
| “Incentive-Based Compensation” | | means any compensation to any Executive Officer that is granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure. |
| “Restatement Date” | | means the date on which the Company is required to prepare an Accounting Restatement (such date as determined by Rule 10D-1(b)(1)(ii) under the Exchange Act and the applicable U.S. Stock Exchange Rules). |
| “SEC” | | means the United States Securities and Exchange Commission. |
| “U.S. Stock Exchange” | | means the [New York Stock Exchange] [National Association of Securities Dealers Automated Quotations (NASDAQ)] and/or any other U.S. national securities exchange(s) on which the Company’s securities are listed. |
| “U.S. Stock Exchange Rules” | | means Section 303A.14 of the New York Stock Exchange Listed Company Manual and/or the listing standards of any other U.S. national securities exchange(s) on which the Company’s securities are listed to implement Rule 10D-1 under the Exchange Act. |
Accounting Restatements
In the event the Company is required to prepare an Accounting Restatement, the Board will review all Incentive-Based Compensation received by Executive Officers (a) after beginning service as an Executive Officer, (b) who served as an Executive Officer at any time during the performance period for such Incentive-Based Compensation, (c) during the three completed fiscal years immediately preceding the applicable Restatement Date (as well as during any transition period specified in Rule 10D-1(b)(1)(i)(D) under the Exchange Act and the applicable U.S. Stock Exchange Rules), (d) while the Company had a class of securities listed on a U.S. Stock Exchange, and (e) after the U.S. Stock Exchange Rules became effective. Incentive-Based Compensation is deemed “received” in the fiscal period during which the Financial Reporting Measure specified in the Incentive-Based Compensation is attained, even if the payment or grant of Incentive-Based Compensation occurs after the end of that period. If the Board
determines that one or more Executive Officers have received any Erroneously Awarded Compensation in connection with such Accounting Restatement, the Company shall, reasonably promptly after the Restatement Date, seek recoupment from all such Executive Officers of all such Erroneously Awarded Compensation, subject to the exceptions set forth below under “—Recoupment Exceptions”. Any appropriate method may be used for recouping Erroneously Awarded Compensation hereunder.
Calculation of Erroneously Awarded Compensation
For Incentive-Based Compensation based on stock price or total shareholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in an Accounting Restatement: (i) the amount of Erroneously Awarded Compensation must be based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return upon which the Incentive-Based Compensation was received; and (ii) the Company must maintain documentation of the determination of that reasonable estimate and provide such documentation to the applicable U.S. Stock Exchange. Reference is further made to Rule 10D-1(b)(1)(iii) under the Exchange Act and the applicable U.S. Stock Exchange Rules for calculation of Erroneously Awarded Compensation.
Recoupment Exceptions
Any Erroneously Awarded Compensation must be recovered as provided in this Policy unless a committee of independent directors responsible for executive compensation decisions (or in the absence of such a committee, a majority of the independent directors serving on the Board) determines that any of the impracticality exceptions set forth in Rule 10D-1(b)(1)(iv) under the Exchange Act and/or the applicable U.S. Stock Exchange Rules are available, as set forth below:
| (a) | The direct expense paid to a third party to assist in enforcing this Policy would exceed the amount of Erroneously Awarded Compensation to be recovered. Before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation pursuant to this clause (a), the Company must make a reasonable attempt to recover such Erroneously Awarded Compensation, document such reasonable attempt(s) to recover and provide that documentation to the applicable U.S. Stock Exchange. |
|---|
| (b) | Recovery would violate home country law where that law was adopted prior to November 28, 2022. Before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation pursuant to this clause (b), the Company must obtain an opinion of home country counsel, acceptable to the applicable U.S. Stock Exchange, that recovery would result in such a violation, and must provide such opinion to the applicable U.S. Stock Exchange. |
|---|
| (c) | Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder. |
|---|
The obligation to recover Erroneously Awarded Compensation is not dependent on if or when the restated financial statements in connection with the Accounting Restatement have been filed.
Recoupment of Erroneously Awarded Compensation due to an Accounting Restatement will be made on a “no fault” basis, without regard to whether any Executive Officer is responsible for the noncompliance that resulted in the Accounting Restatement.
No Indemnification of Executive Officers
The Company shall not indemnify any Executive Officer against the loss of any Erroneously Awarded Compensation.
Indemnification of the Board
Any members of the Board who assist in the administration of this Policy will not be personally liable for any action, determination or interpretation made with respect to this Policy and will be fully indemnified by the Company to the fullest extent under applicable law and Company policy with respect to any such action, determination or interpretation. The foregoing sentence will not limit any other rights to indemnification of the members of the Board under applicable law or Company policy.
Further Reference to Applicable SEC and U.S. Stock Exchange Rules
This Policy shall be qualified by reference to, is designed to comply with, and will be interpreted consistent with applicable SEC rules (including, without limitation, Section 10D of the Exchange Act and Rule 10D-1 under the Exchange Act) and the applicable U.S. Stock Exchange Rules.
Applicability
Each document setting forth the terms and conditions of any Incentive-Based Compensation granted or paid to an Executive Officer will include a provision incorporating this Policy or the requirements of this Policy. The remedies specified in this Policy shall not be exclusive and shall be in addition to every other right or remedy at law or in equity that may be available to the Company.
Other Recovery Obligations
To the extent that the application of this Policy would provide for recovery of Incentive-Based Compensation that the Company already recovered pursuant to Section 304 of the Sarbanes-Oxley Act or other recovery obligations, the amount already recovered from the relevant Executive Officer will be credited to the required recovery under this Policy.
Filing with the SEC
This Policy and any amendments thereto shall be filed with the SEC as an exhibit to the Company’s annual report on Form 40-F (or other applicable form) beginning with the first report as specified under applicable U.S. Stock Exchange Rules.
Interpretation
The Board shall have full and final authority to make all determinations under this Policy with respect to any Erroneously Awarded Compensation, including, without limitation, whether this Policy applies and if so, the amount of compensation to be repaid or forfeited by an Executive Officer. All determinations and decisions made by the Board pursuant to the provisions of this Policy shall be final, conclusive and binding on all parties.
The Board may amend this Policy from time to time in its sole and absolute discretion and shall amend this Policy as it deems necessary to comply with the U.S. Stock Exchange Rules.
Severability
The provisions in this Policy are intended to be applied to the fullest extent of the law. To the extent that any provision of this Policy is found to be unenforceable or invalid under any applicable law, such provision shall be applied to the maximum extent permitted, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable law.
Successors
This Policy is binding and enforceable against all Executive Officers and their beneficiaries, heirs, executors, administrators or other legal representatives.
ADOPTED by the Board of Directors of the Company on November 30, 2023.
Exhibit 99.1
Table of Contents
| Glossary, Conventions, Abbreviations, and Conversions | 2 |
|---|---|
| Special Note Regarding Forward-Looking Statements | 4 |
| Presentation of Oil and Gas Information | 6 |
| Non-GAAP and Other Specified Financial Measures | 7 |
| Vermilion's Organizational Structure | 7 |
| Description of the Business | 8 |
| General Development of the Business | 13 |
| Statement of Reserves Data and Other Oil and Gas Information | 16 |
| Directors and Officers | 54 |
| Cease Trade Orders, Bankruptcies, Penalties or Sanction | 57 |
| Description of Capital Structure | 58 |
| Market for Securities | 61 |
| Audit Committee Matters | 62 |
| Conflicts of Interest | 63 |
| Interest of Management and Others in Material Transactions | 63 |
| Legal Proceedings and Regulatory Actions | 63 |
| Material Contracts | 63 |
| Interests of Experts | 63 |
| Transfer Agent and Registrar | 64 |
| Risk Factors | 64 |
| Additional Information | 72 |
| Appendix A | |
| Report on reserves data by Independent Qualified Reserves Evaluator or Auditor (Form 51-101F2) | 73 |
| Appendix B | |
| Report of Management and Directors on Oil and Gas Disclosure (Form 51-101F3) | 74 |
| Appendix C | |
| Audit Committee Mandate | 75 |
Glossary
In addition to terms defined elsewhere in this annual information form, the following are defined terms used in this Annual Information Form:
“ABCA” means the Business Corporations Act(Alberta), R.S.A. 2000, c. B-9, as amended, including the regulations promulgated thereunder.
“AIF” means this Annual Information Form and the appendices attached hereto.
“Common Shares” means a common share in the capital of the Company.
“Conversion Arrangement” means the plan of arrangement effected on September 1, 2010 under section 193 of the ABCA pursuant to which the Trust converted from an income trust to a corporate structure, and Unitholders exchanged their Trust Units for common shares of the Company on a one-for-one basis and holders of exchangeable shares of Vermilion Resources Ltd., previously a subsidiary of the company, received 1.89344 common shares for each exchangeable share held.
“Dividend” means a dividend paid by Vermilion in respect of the common shares, expressed as an amount per common share.
“McDaniel & Associates” means McDaniel & Associates Consultants Ltd., independent petroleum engineering consultants of Calgary, Alberta.
“McDaniel & Associates Report” means the independent engineering reserves evaluation of certain oil, NGL and natural gas interests of the Company prepared by McDaniel & Associates dated March 4, 2025 and effective December 31, 2024.
“NCIB” means the normal course issuer bid approved by the Toronto Stock Exchange allowing Vermilion to repurchase its common shares.
“Shareholders” means holders from time to time of the common shares.
“Subsidiary” means, in relation to any person, any corporate, partnership, joint venture, association or other entity of which more than 50% of the total voting power of common shares or units of ownership or beneficial interest entitled to vote in the election of directors (or members of a comparable governing body) is owned or controlled, directly or indirectly, by such person.
“Trust” means Vermilion Energy Trust, an unincorporated open-ended investment trust governed by the laws of the Province of Alberta that was dissolved and ceased to exist pursuant to the Conversion Arrangement.
“Trust Unit” means units in the capital of the Trust.
“Unitholders” means former unitholders of the Trust.
“Vermilion”, the “Company”, “us”, “our” or “we” means Vermilion Energy Inc. and where context allows, its consolidated business enterprise, except that a reference to “Vermilion” prior to the date of the Conversion Arrangement means the consolidated business enterprise of the Trust, unless otherwise indicated.
Vermilion Energy Inc. ■ Page 2 ■ 2024 Annual Information Form
Conventions
Unless otherwise indicated, references herein to “$” or “dollars” are to Canadian dollars. References herein to “US$” or “USD” are to United States dollars.
Production numbers stated refer to Vermilion's working interest share before deduction of crown, freehold, and other royalties. Reserve amounts are gross reserves, stated before deduction of royalties and without including any royalty interest of the company, as at December 31, 2024, based on forecast costs and price assumptions as evaluated in the McDaniel & Associates Report.
Abbreviations
| | |
|---|---|
| $M | thousand dollars |
| $MM | million dollars |
| °API | an indication of the specific gravity of crude oil measured on the API (American Petroleum Institute) gravity scale |
| AECO | the daily average benchmark price for natural gas at the AECO ‘C’ hub in southeast Alberta |
| bbl(s) | barrel(s) |
| bbl(s)/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) |
| mbbl | thousand barrels |
| mboe | thousand barrels of oil equivalent |
| mcf | thousand cubic feet |
| mcf/d | thousand cubic feet per day |
| mmboe | million barrels of oil equivalent |
| mmbtu | million British Thermal Units |
| mmcf | million cubic feet |
| mmcf/d | million cubic feet per day |
| NGL | natural gas liquids |
| PRRT | Petroleum Resource Rent Tax, a profit based tax levied on petroleum projects in Australia |
| NBP | the reference price paid for natural gas in the United Kingdom at the National Balancing Point Virtual Trading Point operated by National Grid |
| NCIB | normal course issuer bid |
| TTF | the day-ahead price for natural gas at the Title Transfer Facility Virtual Trading Point operated by Dutch TSO Gas Transport Services |
| US | The United States of America |
| WTI | West Texas Intermediate, the reference price paid in US dollars at Cushing, Oklahoma for crude oil of standard grade |
Conversions
The following table sets forth certain standard conversions from Standard Imperial Units to the International System of Units (or metric units):
| **** To Convert From | To | Multiply By |
|---|---|---|
| mcf | Cubic metres | 28.174 |
| Cubic metres | Cubic feet | 35.494 |
| bbls | Cubic metres | 0.159 |
| Cubic metres | bbls oil | 6.290 |
| Feet | Metres | 0.305 |
| Metres | Feet | 3.281 |
| Miles | Kilometres | 1.609 |
| Kilometres | Miles | 0.621 |
| Acres | Hectares | 0.405 |
| Hectares | Acres | 2.471 |
Vermilion Energy Inc. ■ Page 3 ■ 2024 Annual Information Form
Special Note Regarding Forward-Looking Statements
Certain statements included or incorporated by reference in this AIF may constitute “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian securities laws and the United States Private Securities Litigation Reform Act of 1995, respectively (collectively referred to herein as “forward-looking statements or information”). 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 AIF may include, but are not limited to:
| ● | capital expenditures; |
|---|---|
| ● | return of capital, including targeted payouts and source of funds; |
| --- | --- |
| ● | business strategies, objectives and priorities; |
| --- | --- |
| ● | targeted products and formations; |
| --- | --- |
| ● | growth capacity and opportunities; |
| --- | --- |
| ● | future capacity of facilities; |
| --- | --- |
| ● | drilling plans and anticipated new wells; |
| --- | --- |
| ● | sales processes of Vermilion’s southeast Saskatchewan and United States assets; |
| --- | --- |
| ● | planned workovers and well optimizations; |
| --- | --- |
| ● | capital allocation; |
| --- | --- |
| ● | the closing of the Westbrick Energy Ltd. acquisition and its anticipated effects; |
| --- | --- |
| ● | future dividends, including anticipated increases; |
| --- | --- |
| ● | Vermilion’s budget; |
| --- | --- |
| ● | expected payment and settlement of the 2025 Notes (defined below) and timing thereof; |
| --- | --- |
| ● | estimated reserve quantities and the discounted present value of future net cash flows from such reserves; |
| --- | --- |
| ● | duration and expiration of rights to explore, develop and exploit; |
| --- | --- |
| ● | work commitments; |
| --- | --- |
| ● | abandonment and reclamation costs; |
| --- | --- |
| ● | marketing; |
| --- | --- |
| ● | effect of future changes of credit ratings; |
| --- | --- |
| ● | debt commitments; |
| --- | --- |
| ● | petroleum and natural gas sales; |
| --- | --- |
| ● | future production levels (including the timing thereof) and rates of average annual production growth; |
| --- | --- |
| ● | exploration and development plans and the anticipated effects thereof; |
| --- | --- |
| ● | acquisition and disposition plans and the timing thereof; |
| --- | --- |
| ● | operating and other expenses; |
| --- | --- |
| ● | royalty, income tax and inflation rates; and |
| --- | --- |
| ● | the timing of regulatory proceedings and approvals. |
| --- | --- |
Such forward-looking statements or information are based on a number of assumptions of which all or any 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 the Company to obtain equipment, services and supplies in a timely manner to carry out its activities in Canada and internationally; |
|---|---|
| ● | the ability of the Company 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 the Company to obtain financing on acceptable terms; |
| --- | --- |
| ● | foreign currency exchange rates and interest and inflation rates; |
| --- | --- |
| ● | the success of the sales processes of Vermilion’s southeast Saskatchewan and United States assets; |
| --- | --- |
| ● | the accuracy of the McDaniel & Associates Report; |
| --- | --- |
| ● | the ability of the Company to identify attractive mergers and acquisitions opportunities; |
| --- | --- |
| ● | the ability of the Company to conduct operations in a safe manner; |
| --- | --- |
| ● | political stability of the areas in which the Company operates; |
| --- | --- |
| ● | the effects of changes to international trade policies; |
| --- | --- |
Vermilion Energy Inc. ■ Page 4 ■ 2024 Annual Information Form
| ● | the accuracy of the Company’s 2025 budget; |
|---|---|
| ● | the ability of the Company to retain key employees; |
| --- | --- |
| ● | production and decline rates; |
| --- | --- |
| ● | the regulatory framework regarding royalties, taxes and environmental matters; |
| --- | --- |
| ● | the states of the capital markets; |
| --- | --- |
| ● | global economic conditions; |
| --- | --- |
| ● | the ability of the Company to execute plans, including exploration and development plans; |
| --- | --- |
| ● | the success of present and future wells; |
| --- | --- |
| ● | future crude oil, natural gas liquids and natural gas prices; and |
| --- | --- |
| ● | management’s expectations relating to the timing and results of development activities. |
| --- | --- |
Although the Company believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements or information because the Company can give no assurance that such expectations will prove to be correct. Financial outlooks are provided for the purpose of understanding the Company’s financial strength 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 the Company and described in the forward-looking statements or information. These risks and uncertainties include but are not limited to:
| ● | volatility of oil and gas prices; |
|---|---|
| ● | constraints at processing facilities and/or on transportation; |
| --- | --- |
| ● | volatility of foreign exchange rates; |
| --- | --- |
| ● | volatility of market price of Common Shares; |
| --- | --- |
| ● | hedging arrangements; |
| --- | --- |
| ● | inflationary pressures; |
| --- | --- |
| ● | increase in operating costs or a decline in production level; |
| --- | --- |
| ● | operator performance and payment delays; |
| --- | --- |
| ● | weather conditions; |
| --- | --- |
| ● | cost of new technology; |
| --- | --- |
| ● | tax, royalty, and other government legislation; |
| --- | --- |
| ● | government regulations; |
| --- | --- |
| ● | policy and legal risks; |
| --- | --- |
| ● | political events and terrorist attacks; |
| --- | --- |
| ● | discretionary nature of dividends and share buybacks; |
| --- | --- |
| ● | additional financing; |
| --- | --- |
| ● | debt service; |
| --- | --- |
| ● | variations in interest rates and foreign exchange rates; |
| --- | --- |
| ● | environmental legislation; |
| --- | --- |
| ● | hydraulic fracturing regulations; |
| --- | --- |
| ● | climate change; |
| --- | --- |
| ● | competition; |
| --- | --- |
| ● | international operations and future geographical/industry expansion; |
| --- | --- |
| ● | acquisition assumptions; |
| --- | --- |
| ● | failure to realize anticipated benefits of prior acquisitions; |
| --- | --- |
| ● | reserves estimates; |
| --- | --- |
| ● | cyber security; |
| --- | --- |
| ● | accounting adjustments; |
| --- | --- |
| ● | ineffective internal controls; |
| --- | --- |
Vermilion Energy Inc. ■ Page 5 ■ 2024 Annual Information Form
| ● | reliance on key personnel, management, and labour; |
|---|---|
| ● | potential conflicts of interest; |
| --- | --- |
| ● | the potential for new and increased US tariffs and protectionist trade measures on Canadian oil and gas imports; |
| --- | --- |
| ● | geopolitical tensions and trade policy; and |
| --- | --- |
| ● | other risks and uncertainties described elsewhere in this AIF or in the Company’s other filings with Canadian securities authorities. |
| --- | --- |
Many factors could cause Vermilion’s or any particular business unit’s actual results, performance, or achievements to vary from those described in this AIF, including, without limitation, those listed above and the assumptions upon which they are based proving incorrect. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this AIF as intended, planned, anticipated, believed, sought, proposed, estimated, forecasted, expected, projected, or targeted and such forward-looking statements included in this AIF should not be unduly relied upon. The impact of any one assumption, risk, uncertainty, or other factor on a particular forward-looking statement cannot be determined with certainty because they are interdependent and Vermilion’s future decisions and actions will depend on management’s assessment of all information at the relevant time. Such statements speak only as of the date of this AIF. The forward-looking statements or information contained in this AIF are made as of the date hereof and the Company 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. The forward-looking statements contained in this AIF are expressly qualified by these cautionary statements.
Presentation of Oil and Gas Information
Oil and gas reserves and production
All oil and natural gas reserve information contained in this AIF is derived from the McDaniel & Associates Report and has been prepared and presented in accordance with the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). In this AIF: (A) the net present value of future net revenues attributable to reserves do not represent the fair market value of reserves; (B) the recovery and reserve estimates of crude oil, NGL and natural gas reserves provided in this AIF are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and NGL reserves may be greater than or less than the estimates provided in this AIF; and (C) the estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation.
Under NI 51-01, disclosure of production volumes should include segmentation by product type as defined in the instrument. In this AIF, 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".
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 of natural gas 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.
Initial production rates and short-term test rates
This AIF discloses test rates of production for certain wells over short periods of time (i.e., five, eight or 24 hours, IP30, IP60, IP90, etc.), which are preliminary and not determinative of the rates at which those or any other wells will commence production and thereafter decline. Short-term test rates are not necessarily indicative of long-term well or reservoir performance or of ultimate recovery. Although such rates are useful in confirming the presence of hydrocarbons, they are preliminary in nature, are subject to a high degree of predictive uncertainty as a result of limited data availability and may not be representative of stabilized on-stream production rates. A pressure transient analysis or well-test interpretation has not been carried out in respect of all wells. Production over a longer period will also experience natural decline rates, which can be high in certain plays in which the Company operates, and may not be consistent over the longer term with the decline experienced over an initial production period. Initial production or test rates may also include recovered “load” fluids used in well completion stimulation operations. Actual results will differ from those realized during an initial production period or short-term test period, and the difference may be material.
Vermilion Energy Inc. ■ Page 6 ■ 2024 Annual Information Form
Non-GAAP and Other Specified Financial Measures
This AIF includes references to certain financial and performance measures which do not have standardized meanings prescribed by International Financial Reporting Standards (“IFRS®” or “IFRS Accounting Standards”) and therefore may not be comparable to similar measures disclosed by other issuer. These measures include:
| ● | Operating netback: Operating netback is a non-GAAP financial measure and is calculated as sales less royalties, operating expense, transportation expense, PRRT expense, and realized hedging (gain) loss, and when presented on a per unit basis is a non-GAAP ratio. Management assesses operating netback as a measure of the profitability and efficiency of our field operations. More information and a reconciliation to net (loss) earnings, the most directly comparable primary financial statement measures can be found the “Non-GAAP and Other Specified Financial Measures” section of the Annual MD&A available on SEDAR+ at www.sedarplus.ca and on the website of the United States Securities and Exchange Commission (the “SEC”) at www.sec.gov. |
|---|---|
| ● | Capital expenditures: Capital expenditures is a non-GAAP financial measure and is calculated as the sum of drilling and development costs and exploration and evaluation costs from the Consolidated Statements of Cash Flows. Management considers capital expenditures to be a useful measure of our investment in our existing asset base. More information and a reconciliation to cash flows used in investing activities, the most directly comparable primary financial statement measure can be found within the “Non-GAAP and Other Specified Financial Measures” section of the Annual MD&A available on SEDAR+ at www.sedarplus.ca and on the SEC’s website at www.sec.gov. |
| --- | --- |
In addition, this AIF includes references to certain financial measures which are not specified, defined, or determined under IFRS Accounting Standards and are therefore considered non-GAAP and other specified financial measures. These financial measures are unlikely to be comparable to similar financial measures presented by other issuers.
Vermilion's Organizational Structure
Vermilion Energy Inc. is the successor to the Trust, following the completion of the Conversion Arrangement whereby the Trust converted from an income trust to a corporate structure by way of a court approved plan of arrangement under the ABCA on September 1, 2010.
As at December 31, 2024, Vermilion had 743 full time employees of which 242 employees were located in its Calgary head office, 97 employees in its Canadian field offices,122 employees in France, 73 employees in the Netherlands, 37 employees in Australia, 30 employees in the United States, 46 employees in Germany, 6 employees in Hungary, 11 employees in Croatia and 79 employees in Ireland.
Vermilion was incorporated on July 21, 2010 pursuant to the provisions of the ABCA for the purpose of facilitating the Conversion Arrangement. The registered and head office of Vermilion Energy Inc. is located at Suite 3500, 520 – 3rd Avenue S.W., Calgary, Alberta, T2P 0R3.
The following is a list of the Company's material subsidiaries and where each material subsidiary was incorporated or formed. The Company holds 100% of the votes attaching to all voting securities of each material subsidiary beneficially owned directly or indirectly by Vermilion.
| ● | Vermilion Oil & Gas Australia Pty Ltd. (Australia) |
|---|---|
| ● | Vermilion Energy Corrib Ireland Limited (Ireland) |
| --- | --- |
| ● | Vermilion Energy Germany GmbH & Co. KG (Germany) |
| --- | --- |
| ● | Vermilion Energy Ireland Limited (Ireland) |
| --- | --- |
| ● | Vermilion Energy Netherlands B.V. (Netherlands) |
| --- | --- |
| ● | Vermilion Energy USA LLC (United States) |
| --- | --- |
| ● | Vermilion Exploration and Production Ireland Limited (Ireland) |
| --- | --- |
| ● | Vermilion Exploration SAS (France) |
| --- | --- |
| ● | Vermilion Hungary Southern Battonya Concession Kft. (Hungary) |
| --- | --- |
| ● | Vermilion Moraine SAS (France) |
| --- | --- |
| ● | Vermilion Pyrénées SAS (France) |
| --- | --- |
| ● | Vermilion Rep SAS (France) |
| --- | --- |
| ● | Vermilion Resources (Alberta) |
| --- | --- |
| ● | Vermilion Slovakia Exploration s.r.o. (Slovakia) |
| --- | --- |
| ● | Vermilion Zagreb Exploration d.o.o. (Croatia) |
| --- | --- |
Vermilion Energy Inc. ■ Page 7 ■ 2024 Annual Information Form
Description of the Business
Vermilion is a global gas producer that seeks to create value through the acquisition, exploration, development and optimization of producing assets in North America, Europe and Australia. Our business model emphasizes free cash flow generation and returning capital to investors when economically warranted, augmented by value-adding acquisitions. Vermilion's operations are focused on the exploitation of light oil and liquids-rich natural gas conventional and unconventional resource plays in North America and the exploration and development of conventional natural gas and oil opportunities in Europe and Australia.
Vermilion understands our stakeholders’ expectations that we deliver strong financial results in a responsible and ethical way. As a result, we align our strategic priorities in the following order:
| ● | the safety and health of our staff and those involved directly or indirectly in our operations; |
|---|---|
| ● | our responsibility to protect the environment. We follow the Precautionary Principle introduced in 1992 by the United Nations “Rio Declaration on Environment and Development” by using environmental risk as part of our development decision criteria, and by continually seeking improved environmental performance in our operations; and |
| --- | --- |
| ● | economic success through a focus on operational excellence across our business, which includes technical and process excellence, efficiency, expertise, stakeholder relations, and respectful and fair treatment of staff, contractors, partners and suppliers. |
| --- | --- |
Vermilion has operations in two geographic regions: North America and International. Vermilion's business within these regions is managed at the country level through business units which form the basis of the Company's operating segments.
The following table summarizes production, sales, proved reserves, and proved plus probable reserves for each of Vermilion's business units as at and for the year ended December 31, 2024:
| | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | | **** | | **** | | **** | | **** | | **** | | **** | Gross Proved |
| | | | | | | | | | | | | Gross Proved | | Plus Probable |
| | | Production | | Oil sales | | NGL sales | | Natural gas sales | | Sales | | Reserves | | Reserves |
| Business Unit | | (boe/d) | | ($ millions) | | ($ millions) | | ($ millions) | | ($ millions) | | (mboe)^(1)^ | | (mboe)^(1)^ |
| Canada | | 48,175 | | 556,375 | | 64,934 | | 89,981 | | 711,290 | | 187,123 | | 293,107 |
| France | | 7,188 | | 314,232 | | — | | — | | 314,232 | | 23,023 | | 28,676 |
| Netherlands | 4,536 | 2,515 | — | 136,795 | 139,310 | 4,014 | 10,284 | |||||||
| Germany | 5,170 | 48,275 | — | 101,450 | 149,725 | 18,630 | 31,132 | |||||||
| Ireland | 9,683 | — | — | 311,325 | 311,325 | 12,777 | 19,700 | |||||||
| Australia | 3,446 | 182,847 | — | — | 182,847 | 7,878 | 11,417 | |||||||
| United States | 5,367 | 118,198 | 14,622 | 4,743 | 137,563 | 23,547 | 37,505 | |||||||
| Central and Eastern Europe | 978 | 37 | — | 35,078 | 35,115 | 2,131 | 3,287 | |||||||
| Total | 84,543 | 1,222,479 | 79,556 | 679,372 | 1,981,407 | 279,123 | 435,109 | |||||||
| North America | 53,542 | 674,573 | 79,556 | 94,724 | 848,853 | 210,670 | 330,612 | |||||||
| International | 31,001 | 547,906 | — | 584,648 | 1,132,554 | 68,453 | 104,496 | |||||||
| (1) | "Gross Reserves" are Vermilion's working interest (operating or non-operating) share before deduction of royalty obligations and without including any royalty interests of Vermilion. | |||||||||||||
| --- | --- |
Canada Business Unit
Vermilion’s Canadian operations are primarily focused on the Deep Basin trend in the West Pembina region of West Central Alberta, in southeast Saskatchewan and Manitoba, and in the Mica property straddling the Alberta and British Columbia borders. In the Deep Basin, the Company targets condensate-rich natural gas and light oil across numerous stacked formations, while in southeast Saskatchewan and Manitoba the Company targets light oil in the Mississippian Midale, Frobisher/Alida and Ratcliffe formations. At Mica, the Company targets tight oil and shale gas in the Montney formation.
Vermilion holds an average 79% working interest in 713,833 (563,212 net) acres of developed land, and an average 80% working interest in 326,441 (262,320 net) acres of undeveloped land in Canada. Vermilion had 634 (480.8 net) producing conventional natural gas and shale gas wells and 2,032 (1,196.6 net) producing light and medium crude oil wells in Canada as at December 31, 2024.
Vermilion Energy Inc. ■ Page 8 ■ 2024 Annual Information Form
Vermilion has access to ample facilities and processing capacity across the major plays in its Canadian portfolio. In the Deep Basin, Vermilion's operations are concentrated in core areas where the Company owns and operates the large majority of associated key infrastructure including pipelines, compressor stations, oil batteries and gas plants, many of which have surplus capacity for future production. Furthermore, the Company is interconnected in several locations with third party midstream infrastructure that provides significant capacity for growth. In Saskatchewan, where operations are focused on light crude oil, Vermilion owns and operates an extensive network of pipelines and oil batteries that also have surplus capacity for future production. At Mica, the Company has infrastructure in place for current operations, with short-term growth plans currently underway and a long-term development plan in place targeting production of 28,000 boe/d. The Company's high degree of operating control and access to key infrastructure across our Canadian properties allows Vermilion to drive operating efficiencies in the field while supporting future growth opportunities.
Subsequent to December 31, 2024, the Company closed the acquisition of Westbrick Energy Ltd. (“Westbrick”), a privately held oil and gas company operating in the Deep Basin, that was announced in December 2024. The Westbrick acquisition adds approximately 1.1 million (770,000 net) acres of land and four operated gas plants with total capacity of 102 mmcf/d in the southeast portion of the Deep Basin trend in Alberta.
During 2024, Vermilion drilled or participated in 41 (40.2 net) crude oil and natural gas wells across our Canadian assets. In 2025, the Company plans to drill a total of 45 (41.2 net) wells in Canada, including six (6.0 net) Montney wells in BC, 28 (24.9 net) Deep Basin wells in Alberta, and 11 (10.3 net) wells in southeast Saskatchewan. In conjunction with the closing of the Westbrick acquisition, and as part of our broader asset high-grading initiative, Vermilion recently launched a formal sales process for its southeast Saskatchewan assets.
United States Business Unit
Vermilion entered the United States in 2014 through the acquisition of land and producing assets in the East Finn crude oil field in the Powder River Basin of northeastern Wyoming and expanded its position through acquisitions of mineral land and producing assets in the Hilight crude oil field, located approximately 40 miles northwest of the East Finn assets, in 2018 and 2021. In December 2023, the Company divested of non-core assets in East Finn. The Company's assets include 113,449 (84,896 net) acres of land in the Powder River basin, of which 45% is undeveloped. Vermilion had 172 (138.4 net) producing light and medium crude oil wells in the United States as at December 31, 2024. The majority of our working interest ownership in Wyoming is Company operated.
Vermilion Energy Inc. ■ Page 9 ■ 2024 Annual Information Form
During 2024, Vermilion participated in ten (0.8 net) non-operated wells. In 2025, Vermilion plans to drill four (4.0 net) wells in the United States. In conjunction with the closing of the Westbrick acquisition, and as part of our broader asset high-grading initiative, Vermilion recently launched a formal sales process for its United States assets.
France Business Unit
Vermilion entered France in 1997 and completed three additional acquisitions in subsequent years. Vermilion is the largest oil producer in the country with approximately two-thirds of the domestic market share. Vermilion's oil production in France is priced with reference to Dated Brent.
Vermilion's main producing areas in France are located in the Aquitaine Basin which is located southwest of Bordeaux, France and in the Paris Basin, located just east of Paris. The two major fields in the Paris Basin area are Champotran and Chaunoy and the two major fields in the Aquitaine Basin are Parentis and Cazaux. Vermilion operates several oil batteries in the country and, given the legacy nature of these assets, the throughput capability of these batteries exceeds any projected future requirements. Vermilion holds an average 96% working interest in 257,394 (248,142 net) acres of developed land. Vermilion had 293 (289.0 net) producing light and medium crude oil wells in France as at December 31, 2024.
In 2025, we intend to continue our ongoing program of workovers and well optimizations to maintain production by mitigating declines.
Netherlands Business Unit
Vermilion entered the Netherlands in 2004 and is the second largest onshore operator in the country. Vermilion's natural gas production in the Netherlands is priced off of the TTF index.
Vermilion's Netherlands assets consist of 26 onshore concessions (100% operated) and 16 offshore concessions (non-operated). Production consists primarily of natural gas with a small amount of associated NGLs. Vermilion’s total land position in the Netherlands covers 1,436,198 (743,951 net) acres at an average 52% working interest, of which 89% is undeveloped. Vermilion had 78 (32.8 net) producing conventional natural gas wells as at December 31, 2024.
In 2025, we plan to drill two (1.2 net) conventional natural gas wells in the Netherlands. In addition, capital will be allocated to a high-return infrastructure optimization project which is expected to drive operating cost savings while reducing production downtime and extending production capacity in the region. Vermilion expects that its inventory of potentially high-impact exploration and development opportunities in the Netherlands will maintain or moderately grow the Company's production base in the country.
Germany Business Unit
Vermilion entered Germany in 2014 through the acquisition of a 25% non-operated interest in natural gas producing assets. In December 2016, Vermilion completed an acquisition of crude oil and natural gas producing properties that provided Vermilion with its first operated position in the country. Vermilion holds a significant undeveloped land base in Germany as a result of an extensive farm-in agreement the Company entered into in 2015. In 2021, Vermilion completed two minor acquisitions, increasing the Company’s non-operated working interest in certain assets to 50%. Vermilion's natural gas production in Germany is priced off the Trading Hub Europe (THE) index, which is highly correlated to the TTF benchmark, and Vermilion's light and medium crude oil in Germany production is priced with reference to Dated Brent.
Vermilion’s producing assets in Germany consist of operated and non-operated interests in 11 natural gas fields and nine light and medium crude oil fields with extensive infrastructure in place. Vermilion had 67 (55.5 net) producing light and medium crude oil wells and 24 (13.4 net) producing conventional natural gas wells as at December 31, 2024.
Vermilion's land position in northwest Germany is comprised of 108,676 (55,964 net) developed acres and 1,456,573 (672,124 net) undeveloped acres. In addition, the Company holds a 50% equity interest in Hannoversche Erdölleitung GmbH, a joint venture company established in 1959 that collects and transports crude oil through a 185 km network of infrastructure from the Hannover region to rail loading facilities in Hannover.
During 2024, Vermilion drilled two (1.6 net) conventional natural gas wells as part of the Company's deep gas exploration and development program. In 2025, Vermilion plans to complete drilling operations on one (1.0 net) deep gas exploration conventional natural gas well that spud in October 2024. In addition, the Company plans to drill one (1.0 net) conventional natural gas well and three (3.0 net) light and medium crude oil wells.
Vermilion Energy Inc. ■ Page 10 ■ 2024 Annual Information Form
The first deep gas exploration well, Osterheide Z2-2 (1.0 net), tested at a rate of 17.3 mmcf/d^(1)^ during an eight-hour flow period with flowing wellhead pressure of 4,600 psi in September 2024. The second deep gas exploration well, Wisselshorst Z1a (0.6 net), tested at a peak rate of 21.2 mmcf/d^(2)^ with flowing wellhead pressure of 6,200 psi and a rate of 20.1mmcf/d^(2)^ over a five-hour flow period with a flowing wellhead pressure 6,300 psi in December 2024. The positive results from the Company's first two wells of the deep gas exploration and development program have validated the technical work performed to date, and continue to provide valuable information in assessing the future potential on the approximate 700,000 net acres of undeveloped land we have in Germany.
^(1)^ Osterheide Z2-2 well (100% working interest) tested at a rate of 17.3 mmcf/d during an eight-hour flow period with flowing wellhead pressure of 4,625 psi during initial well cleanup on an adjustable choke. The completion fluid was recovered during the clean-up flow period. A final shut-in wellhead pressure of 5,757 psi and bottom hole pressure of 7,235 psi were recorded following the well test. The tested zone is the Rotliegend Wustrow formation which was encountered at 5,757m measured depth ("MD") and a 42.0m gas column was logged with 13.8m of net reservoir and average effective porosity of 8.3%. Test results are not necessarily indicative of long-term performance or ultimate recovery.
^(2)^ Wisselshorst Z1a well (64% working interest) was tested in December 2024. Flow rates, during the initial clean-up phase, of up to 21.2 mmcf/d with a flowing wellhead pressure of 6,150 psi on an adjustable choke were achieved. The completion fluid was recovered during the clean-up flow period. During the main flow period the well tested at a rate of 20.1mmcf/d over a five-hour flow period with a flowing wellhead pressure 6,250 psi on a 24/64” fixed choke. A final shut-in pressure of 7,020 psi and a bottom hole pressure of 8,679 psi were recorded following the well test of this zone. The zone being tested is the Rotliegend Havel formation, which was encountered at 5,054m MD and a 124.4m gas column was logged with 50.8m of net reservoir and average effective porosity of 9.3%. Test results are not necessarily indicative of production performance or ultimate recovery.
Vermilion Energy Inc. ■ Page 11 ■ 2024 Annual Information Form
Ireland Business Unit
Vermilion has a 56.5% operated interest in the offshore Corrib natural gas field and related processing facilities located off the northwest coast of Ireland. Vermilion initially acquired an 18.5% non-operated interest in 2009. In 2018, Vermilion entered into a strategic partnership with the Canadian Pension Plan Investment Board ("CPPIB"), as a result of which Vermilion acquired an additional 1.5% working interest and assumed operatorship of Corrib. In 2023, Vermilion purchased all of the outstanding shares of Equinor Energy Ireland Limited ("EEIL") from Equinor ASA, adding an incremental 36.5% interest in the Corrib Natural Gas Project.
Corrib first began natural gas production in late December 2015. Production volumes reached full plant capacity of approximately 350 mmcf/d (gross) at the end of 2016. Production plateaued at this level until decline started at the beginning of 2018. The Corrib field constitutes 100% of Ireland's domestic natural gas production.
In 2024, the Corrib facility achieved strong run time, with a planned turnaround completed under budget and in fewer days than expected. The Company will continue to invest maintenance capital on the facility to optimize operational uptime.
Central and Eastern Europe ("CEE") Business Unit
Vermilion established its CEE business unit in 2014 with a head office in Budapest, Hungary. The CEE business unit is responsible for business development in the CEE, including managing the exploration and development opportunities associated with the Company's land holdings in Hungary, Slovakia and Croatia.
Vermilion's land position in the CEE consists of 387,747 (237,115 net) acres in Croatia, 310,638 (310,638 net) acres in Hungary and 97,960 (48,980 net) acres in Slovakia. Currently, 99% of Vermilion's land position in the CEE is undeveloped.
During 2024, Vermilion drilled three (1.8 net) conventional gas wells and one (0.6 net) light and medium crude oil well on the SA-7 block in Croatia. The Company also started up the gas plant on the SA-10 block in Croatia to facilitate production from two previously drilled conventional natural gas wells. In 2025, Vermilion plans to drill one (1.0 net) well on the SA-10 block in Croatia to keep the gas plant fully utilized, while also drilling two (1.0 net) exploration wells in Slovakia. The Company will continue to evaluate the successful discoveries on the SA-7 block in Croatia to determine the ultimate development potential.
Australia Business Unit
Vermilion holds a 100% operated working interest in the Wandoo offshore crude oil field and related production facilities, located on Western Australia's northwest shelf. Vermilion acquired its interest over two acquisitions completed in 2005 and 2007. Production is sourced from 23 producing well-bores including five dual laterals that are tied into two platforms, Wandoo 'A' and Wandoo 'B'. Wandoo 'B' is permanently manned, houses the required production facilities and incorporates 400,000 bbls of crude oil storage within the platform's concrete gravity structure. The Wandoo 'B' facilities are capable of processing 208,000 bbl/d of total fluid to separate crude oil from produced water. Vermilion's land position in the Wandoo field is comprised of 59,552 acres (gross and net).
In 2024, Vermilion did not drill any wells, and the Company does not expect to drill additional Australian wells in 2025. The Company intends to manage its Australian production and related capital investment programs to achieve corporate targets while meeting long-term supply requirements of our customers.
Vermilion Energy Inc. ■ Page 12 ■ 2024 Annual Information Form
General Development of the Business
Three Year History
The following describes the development of Vermilion's business over the last three completed financial years.
2022
Vermilion achieved annual production of 85,187 boe/d on total E&D capital expenditures of $552 million. During the second quarter of 2022, the Company acquired all of the issued and outstanding securities of Leucrotta Exploration Inc. ("Leucrotta") for total consideration of $500 million. The primary asset acquired pursuant to the Leucrotta acquisition was the Mica property, comprised of 81,000 gross (77,000 net) contiguous acres of Montney mineral rights in the Peace River Arch straddling the Alberta and British Columbia borders. At the time of the Leucrotta acquisition, we conservatively identified 275 multi-zone, extended reach, drilling prospects, representing an expected two decades or more of low-risk, self-funding, high-deliverability drilling inventory with strong rates of return.
In March 2022, Vermilion reinstated a quarterly dividend of $0.06 per share, which was subsequently increased to $0.08 per common share in August 2022. In July 2022, Vermilion received Toronto Stock Exchange (“TSX”) approval for the NCIB, allowing the Company to purchase up to 16,076,666 common shares, representing approximately 10% of its public float as at June 22, 2022, over a twelve month period commencing on July 6, 2022. In 2022, Vermilion declared $46 million in dividends and repurchased 2.3 million common shares pursuant to the NCIB for a total of $72 million.
In April 2022, Vermilion issued US$400 million aggregate principal amount of eight-year senior unsecured notes bearing interest at a rate of 6.875% per annum (the “2030 Notes”), extended the maturity date of the Company's revolving credit facility (the "Revolving Credit Facility") to May 29, 2026 (from May 31, 2024), and reduced the total facility amount to Vermilion's targeted level of $1.6 billion (from $2.1 billion).
2023
Vermilion achieved annual production of 83,994 boe/d on total E&D capital expenditures of $590 million. On March 31, 2023, Vermilion completed the purchase of all of the outstanding shares of EEIL from Equinor ASA for $192 million, net of cash and working capital deficit acquired. The acquisition added an incremental 36.5% interest in the Corrib Natural Gas Project, increasing Vermilion's operated interest to 56.5%, and making Vermilion the largest provider of domestic natural gas in Ireland.
In January 2023, Vermilion increased the quarterly dividend to $0.10 per common share, effective with the Q1 2023 dividend payable in April 2023. In July 2023, Vermilion received TSX approval for renewal of the Company's NCIB, allowing the Company to purchase up to 16,308,587 common shares, representing approximately 10% of its public float as at June 28, 2023, over a twelve month period commencing on July 12, 2023. In total in 2023, Vermilion declared $65 million in dividends and repurchased 5.4 million common shares pursuant to the NCIB for a total of $96 million.
In March 2023, Vermilion closed the sale of non-core assets in southeast Saskatchewan for net proceeds of $182 million. The assets were comprised of approximately 5,500 boe/d of non - core light oil production spread across the greater Arcola and Queensdale areas of southeast Saskatchewan. The divestment was part of our strategy to re-position Vermilion for long term success by high-grading our North American inventory, reducing unit cost and accelerating the timeline of achieving our debt reduction targets.
In May 2023, the Company's operations in West Central Alberta were impacted by forest fires. In response, the Company temporarily shut-in approximately 30,000 boe/d of production while we assessed the risk to our operations. Once the immediate risk from the forest fires had eased, we inspected all of our key assets and confirmed that there was no major damage to our facilities or well sites, which allowed remaining production to be brought back online as soon as it was safe to do so.
In September 2023, the Company successfully completed the remaining inspection and repair work on our Wandoo facility and restarted production on the Wandoo platform in Australia following extended maintenance downtime.
2024
Vermilion achieved annual production of 84,543 boe/d on total E&D capital expenditures of $623 million. Included in E&D capital expenditures were several early stage investments that will contribute to future production growth, including successful exploration programs in Germany and Croatia.
In December 2023, Vermilion increased the quarterly dividend to $0.12 per common share, effective with the Q1 2024 dividend payable in April 2024. In March 2024, the Company announced an increase to its return of capital target to 50% of excess free cash flow on a full-year basis for 2024, from 30% of excess free cash flow previously, with a corresponding increase in share buybacks commencing immediately. Vermilion Energy Inc. ■ Page 13 ■ 2024 Annual Information Form
In July 2024, Vermilion received TSX approval for renewal of the NCIB, allowing the Company to purchase up to 15,689,839 common shares, representing approximately 10% of its public float as at June 28, 2024, over a twelve month period commencing on July 12, 2024. In total in 2024, Vermilion declared $75 million in dividends and repurchased 9.3 million shares pursuant to the NCIB for a total of $140 million.
In December 2024, the Company announced the strategic acquisition of Westbrick for total consideration of $1.075 billion. The Westbrick acquisition adds 50,000 boe/d of stable production, and enhances depth and quality of Vermilion’s Deep Basin inventory, adding approximately 1.1 million (770,000 net) acres of land and over 700 drilling locations. The Westbrick acquisition also includes four operated gas plants with total capacity of 102 mmcf/d, and provides significant operational and financial synergies given the contiguous and complementary asset base. In conjunction with the Westbrick acquisition, Vermilion announced a revised return of capital target of 40% of excess free cash flow until net debt reaches an appropriate level, at which time the payout will be increased back to 50%. The absolute amount of capital returned to Shareholders at the revised target is expected to be equivalent to our base business with a 50% return of capital target. Over the long-term, the Westbrick acquisition is expected to increase the amount of capital available for Shareholder returns. In connection with the acquisition, Vermilion entered into a new fully underwritten $250 million term loan (the “Term Loan”) maturing May 2028 through a debt commitment letter with TD Securities Inc. (acting as underwriter) and a new fully underwritten US$300 million bridge facility (the “Bridge Facility”) through a debt commitment letter with Royal Bank of Canada and TD Securities Inc. Availability of the Term Loan was contingent on closing of the Westbrick acquisition.
In July 2024, Vermilion released its 2024 Sustainability Report. Vermilion’s reporting aligned with the Task Force on Climate-related Financial Disclosure relating to Governance (located in our management proxy circular for our annual meeting of Shareholders), and relating to Strategy, Risk Management, and Metrics and Targets (located in the Annual MD&A). This information is also located in the TCFD Report section of our 2024 Sustainability Report, available online at www.vermilionenergy.com/sustainability.
Recent Developments
On January 28, 2025, Vermilion announced an increase of the Term Loan from $250 million to $450 million.
On February 11, 2025, Vermilion announced the closing of a private offering of US$400 million aggregate principal amount of eight-year senior unsecured notes (the “2033 Notes”). The 2033 Notes mature on February 15, 2033 and have a fixed coupon of 7.250% per annum. In connection with the closing of the 2033 Notes, the Bridge Facility was expired undrawn.
The Westbrick acquisition closed on February 26, 2025 and was funded through cash on hand, Vermilion's new $450 million Term Loan, and Vermilion's undrawn $1.35 billion revolving credit facility.
Vermilion Energy Inc. ■ Page 14 ■ 2024 Annual Information Form
Outlook
In December 2024, Vermilion announced an E&D capital expenditure budget for 2025 of $600 to $625 million, with corresponding production guidance of 84,000 to 88,000 boe/d. In conjunction with the 2025 budget release, the Company also announced its plan to increase the quarterly dividend by 8% to $0.13 per common share in Q1 2025. Following the close of the Westbrick acquisition on February 26, 2025, the Company provided an updated 2025 capital expenditure budget and corresponding production guidance, with E&D capital expenditures of $730 to $760 million and production of 125,000 to 130,000 boe/d.
Vermilion will target a return of capital payout of 40% of excess free cash flow until net debt reaches an appropriate level, at which time we will expect to increase the payout back to 50%. The Company intends to fund its return of capital and E&D capital expenditures from internally generated cash flow from operating activities.
Vermilion expects to pay the principal and remaining interest outstanding on the senior unsecured notes issued on March 13, 2017 with a maturity date of March 15, 2025 and a fixed coupon of 5.625% per annum via existing and new financing in conjunction with the Westbrick acquisition.
Vermilion Energy Inc. ■ Page 15 ■ 2024 Annual Information Form
Statement of Reserves Data and Other Oil and Gas Information
Reserves and future net revenue
The following is a summary of the crude oil and natural gas reserves and the value of future net revenue of Vermilion as evaluated by McDaniel & Associates in the McDaniel & Associates report dated March 4, 2025 with an effective date of December 31, 2024. Pricing used in the forecast price evaluations is set forth in the notes to the tables.
Reserves and other oil and gas information contained in this section is effective December 31, 2024 unless otherwise stated.
All evaluations of future net revenue set forth in the tables below are stated after overriding and lessor royalties, Crown royalties, freehold royalties, mineral taxes, direct lifting costs, normal allocated overhead and future capital investments, including abandonment and reclamation obligations. Future net revenues estimated by the McDaniel & Associates Report do not represent the fair market value of the reserves. Other assumptions relating to the costs, prices for future production and other matters are included in the McDaniel & Associates Report. There is no assurance that the future price and cost assumptions used in the McDaniel & Associates Report will prove accurate and variances could be material.
Reserves are established using deterministic methodology. Total proved reserves target at least a 90 percent probability (P90) level. There is a 90 percent probability that the actual reserves recovered will be equal to or greater than the P90 reserves. Total proved plus probable reserves target at least a 50 percent probability (P50) level. There is a 50 percent probability that the actual reserves recovered will be equal to or greater than the P50 reserves.
The Report on Reserves Data by Independent Qualified Reserves Evaluator or Auditor in Form 51-101F2 and the Report of Management and Directors on Oil and Gas Disclosure in Form 51-101F3 are contained in Appendices "A" and "B", respectively.
The following tables provide reserves data and a breakdown of future net revenue by component and product type using forecast prices and costs. For Canada, the tables following include Alberta Gas Cost Allowance.
Vermilion Energy Inc. ■ Page 16 ■ 2024 Annual Information Form
The following tables may not total due to rounding.
Oil and gas reserves - Gross and net interest^(2)^, based on forecast prices and costs^(1)^
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Light Crude Oil & Medium Crude Oil (mbbl) | | Heavy Crude Oil (mbbl) | | Tight Oil (mbbl) | | Conventional Natural Gas (mmcf) | ||||||||
| Proved Developed Producing ^(3) (5) (6)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ |
| Australia | | 6,804 | | 6,804 | | — | | — | | — | | — | | — | | — |
| Canada | 29,009 | 25,744 | 18 | 15 | 2,892 | 2,142 | 229,668 | 213,961 | ||||||||
| CEE | — | — | — | — | — | — | 5,559 | 4,490 | ||||||||
| France | 19,748 | 17,079 | — | — | — | — | — | — | ||||||||
| Germany | 4,350 | 4,255 | — | — | — | — | 35,483 | 33,581 | ||||||||
| Ireland | — | — | — | — | — | — | 76,614 | 76,614 | ||||||||
| Netherlands | — | — | — | — | — | — | 18,175 | 17,920 | ||||||||
| United States | 4,865 | 4,004 | — | — | — | — | 15,664 | 12,948 | ||||||||
| Total Proved Developed Producing | **** | 64,777 | **** | 57,885 | **** | 18 | **** | 15 | **** | 2,892 | **** | 2,142 | **** | 381,162 | **** | 359,514 |
| North America | 33,874 | 29,748 | 18 | 15 | 2,892 | 2,142 | 245,332 | 226,909 | ||||||||
| International | 30,902 | 28,137 | — | — | — | — | 135,830 | 132,605 |
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Shale Gas (mmcf) | | Coal Bed Methane (mmcf) | | Natural Gas Liquids (mbbl) | | BOE (mboe) | ||||||||
| Proved Developed Producing ^(3) (5) (6)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ |
| Australia | | — | | — | | — | | — | | — | | — | | 6,804 | | 6,804 |
| Canada | 81,824 | 73,928 | 833 | 773 | 20,632 | 17,596 | 104,605 | 93,607 | ||||||||
| CEE | — | — | — | — | — | — | 926 | 748 | ||||||||
| France | — | — | — | — | — | — | 19,748 | 17,079 | ||||||||
| Germany | — | — | — | — | — | — | 10,264 | 9,851 | ||||||||
| Ireland | — | — | — | — | 8 | 8 | 12,777 | 12,777 | ||||||||
| Netherlands | — | — | — | — | 52 | 51 | 3,081 | 3,038 | ||||||||
| United States | — | — | — | — | 2,295 | 1,897 | 9,770 | 8,059 | ||||||||
| Total Proved Developed Producing | **** | 81,824 | **** | 73,928 | **** | 833 | **** | 773 | **** | 22,987 | **** | 19,551 | **** | 167,976 | **** | 151,963 |
| North America | 81,824 | 73,928 | 833 | 773 | 22,927 | 19,492 | 114,376 | 101,666 | ||||||||
| International | — | — | — | — | 60 | 59 | 53,600 | 50,297 |
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Light Crude Oil & Medium Crude Oil (mbbl) | | Heavy Crude Oil (mbbl) | | Tight Oil (mbbl) | | Conventional Natural Gas (mmcf) | ||||||||
| Proved Developed Non-Producing ^(3) (5) (7)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ |
| Australia | | — | | — | | — | | — | | — | | — | | — | | — |
| Canada | 1,587 | 1,409 | — | — | 20 | 19 | 9,544 | 8,598 | ||||||||
| CEE | — | — | — | — | — | — | — | — | ||||||||
| France | 758 | 645 | — | — | — | — | — | — | ||||||||
| Germany | 1,233 | 1,212 | — | — | — | — | 18,681 | 16,878 | ||||||||
| Ireland | — | — | — | — | — | — | — | — | ||||||||
| Netherlands | — | — | — | — | — | — | 5,499 | 5,499 | ||||||||
| United States | — | — | — | — | — | — | — | — | ||||||||
| Total Proved Developed Non-Producing | **** | 3,578 | **** | 3,266 | **** | — | **** | — | **** | 20 | **** | 19 | **** | 33,724 | **** | 30,976 |
| North America | 1,587 | 1,409 | — | — | 20 | 19 | 9,544 | 8,598 | ||||||||
| International | 1,991 | 1,857 | — | — | — | — | 24,180 | 22,378 |
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | Shale Gas (mmcf) | **** | Coal Bed Methane (mmcf) | **** | Natural Gas Liquids (mbbl) | **** | BOE (mboe) | ||||||||
| Proved Developed Non-Producing ^(3) (5) (7)^ | | Gross ^(2)^ | **** | Net ^(2)^ | | Gross ^(2)^ | **** | Net ^(2)^ | | Gross ^(2)^ | **** | Net ^(2)^ | | Gross ^(2)^ | **** | Net ^(2)^ |
| Australia | | — | | — | | — | | — | | — | | — | | — | | — |
| Canada | 2,727 | 2,563 | 884 | 832 | 986 | 874 | 4,785 | 4,301 | ||||||||
| CEE | — | — | — | — | — | — | — | — | ||||||||
| France | — | — | — | — | — | — | 758 | 645 | ||||||||
| Germany | — | — | — | — | — | — | 4,346 | 4,026 | ||||||||
| Ireland | — | — | — | — | — | — | — | — | ||||||||
| Netherlands | — | — | — | — | 16 | 16 | 933 | 933 | ||||||||
| United States | — | — | — | — | — | — | — | — | ||||||||
| Total Proved Developed Non-Producing | **** | 2,727 | **** | 2,563 | **** | 884 | **** | 832 | **** | 1,002 | **** | 891 | **** | 10,822 | **** | 9,905 |
| North America | 2,727 | 2,563 | 884 | 832 | 986 | 874 | 4,785 | 4,301 | ||||||||
| International | — | — | — | — | 16 | 16 | 6,037 | 5,603 |
Vermilion Energy Inc. ■ Page 17 ■ 2024 Annual Information Form
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Light Crude Oil & Medium Crude Oil (mbbl) | | Heavy Crude Oil (mbbl) | | Tight Oil (mbbl) | | Conventional Natural Gas (mmcf) | ||||||||
| Proved Undeveloped ^(3) (8)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ |
| Australia | | 1,074 | | 1,074 | | — | | — | | — | | — | | — | | — |
| Canada | 16,562 | 13,435 | 83 | 69 | 6,485 | 5,319 | 82,200 | 75,824 | ||||||||
| CEE | 210 | 164 | — | — | — | — | 5,968 | 4,269 | ||||||||
| France | 2,517 | 2,141 | — | — | — | — | — | — | ||||||||
| Germany | 1,375 | 1,368 | — | — | — | — | 15,863 | 13,940 | ||||||||
| Ireland | — | — | — | — | — | — | — | — | ||||||||
| Netherlands | — | — | — | — | — | — | — | — | ||||||||
| United States | 9,930 | 8,118 | — | — | — | — | 12,283 | 10,018 | ||||||||
| Total Proved Undeveloped | **** | 31,669 | **** | 26,300 | **** | 83 | **** | 69 | **** | 6,485 | **** | 5,319 | **** | 116,315 | **** | 104,052 |
| North America | 26,492 | 21,553 | 83 | 69 | 6,485 | 5,319 | 94,484 | 85,843 | ||||||||
| International | 5,177 | 4,747 | — | — | — | — | 21,831 | 18,209 |
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | Shale Gas (mmcf) | **** | Coal Bed Methane (mmcf) | Natural Gas Liquids (mbbl) | BOE (mboe) | ||||||||||
| Proved Undeveloped ^(3) (8)^ | | Gross ^(2)^ | **** | Net ^(2)^ | | Gross ^(2)^ | **** | Net ^(2)^ | | Gross ^(2)^ | **** | Net ^(2)^ | | Gross ^(2)^ | **** | Net ^(2)^ |
| Australia | | — | | — | | — | | — | | — | | — | | 1,074 | | 1,074 |
| Canada | 158,456 | 143,174 | — | — | 14,493 | 12,627 | 77,733 | 67,950 | ||||||||
| CEE | — | — | — | — | — | — | 1,205 | 876 | ||||||||
| France | — | — | — | — | — | — | 2,517 | 2,141 | ||||||||
| Germany | — | — | — | — | — | — | 4,019 | 3,691 | ||||||||
| Ireland | — | — | — | — | — | — | — | — | ||||||||
| Netherlands | — | — | — | — | — | — | — | — | ||||||||
| United States | — | — | — | — | 1,799 | 1,468 | 13,777 | 11,255 | ||||||||
| Total Proved Undeveloped | **** | 158,456 | **** | 143,174 | **** | — | **** | — | **** | 16,293 | **** | 14,095 | **** | 100,324 | **** | 86,987 |
| North America | 158,456 | 143,174 | — | — | 16,293 | 14,095 | 91,509 | 79,205 | ||||||||
| International | — | — | — | — | — | — | 8,815 | 7,782 |
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Light Crude Oil & Medium Crude Oil (mbbl) | | Heavy Crude Oil (mbbl) | | Tight Oil (mbbl) | | Conventional Natural Gas (mmcf) | ||||||||
| Proved ^(3)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ |
| Australia | | 7,878 | | 7,878 | | — | | — | | — | | — | | — | | — |
| Canada | 47,159 | 40,588 | 101 | 84 | 9,396 | 7,480 | 321,413 | 298,383 | ||||||||
| CEE | 210 | 164 | — | — | — | — | 11,527 | 8,759 | ||||||||
| France | 23,023 | 19,865 | — | — | — | — | — | — | ||||||||
| Germany | 6,959 | 6,835 | — | — | — | — | 70,027 | 64,400 | ||||||||
| Ireland | — | — | — | — | — | — | 76,614 | 76,614 | ||||||||
| Netherlands | — | — | — | — | — | — | 23,674 | 23,419 | ||||||||
| United States | 14,795 | 12,122 | — | — | — | — | 27,947 | 22,966 | ||||||||
| Total Proved | **** | 100,023 | **** | 87,452 | **** | 101 | **** | 84 | **** | 9,396 | **** | 7,480 | **** | 531,202 | **** | 494,541 |
| North America | 61,954 | 52,710 | 101 | 84 | 9,396 | 7,480 | 349,360 | 321,349 | ||||||||
| International | 38,070 | 34,742 | — | — | — | — | 181,842 | 173,192 |
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | Shale Gas (mmcf) | **** | Coal Bed Methane (mmcf) | **** | Natural Gas Liquids (mbbl) | **** | BOE (mboe) | ||||||||
| Proved ^(3)^ | | Gross ^(2)^ | **** | Net ^(2)^ | | Gross ^(2)^ | **** | Net ^(2)^ | | Gross ^(2)^ | **** | Net ^(2)^ | | Gross ^(2)^ | **** | Net ^(2)^ |
| Australia | | — | | — | | — | | — | | — | | — | | 7,878 | | 7,878 |
| Canada | 243,007 | 219,665 | 1,717 | 1,605 | 36,112 | 31,098 | 187,123 | 165,858 | ||||||||
| CEE | — | — | — | — | — | — | 2,131 | 1,624 | ||||||||
| France | — | — | — | — | — | — | 23,023 | 19,865 | ||||||||
| Germany | — | — | — | — | — | — | 18,630 | 17,568 | ||||||||
| Ireland | — | — | — | — | 8 | 8 | 12,777 | 12,777 | ||||||||
| Netherlands | — | — | — | — | 68 | 67 | 4,014 | 3,971 | ||||||||
| United States | — | — | — | — | 4,094 | 3,365 | 23,547 | 19,314 | ||||||||
| Total Proved | **** | 243,007 | **** | 219,665 | **** | 1,717 | **** | 1,605 | **** | 40,282 | **** | 34,537 | **** | 279,123 | **** | 248,855 |
| North America | 243,007 | 219,665 | 1,717 | 1,605 | 40,206 | 34,462 | 210,670 | 185,172 | ||||||||
| International | — | — | — | — | 76 | 75 | 68,453 | 63,682 |
Vermilion Energy Inc. ■ Page 18 ■ 2024 Annual Information Form
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Light Crude Oil & Medium Crude Oil (mbbl) | | Heavy Crude Oil (mbbl) | | Tight Oil (mbbl) | | Conventional Natural Gas (mmcf) | ||||||||
| Probable ^(4)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ |
| Australia | | 3,539 | | 3,539 | | — | | — | | — | | — | | — | | — |
| Canada | 16,145 | 13,889 | 95 | 79 | 7,760 | 5,935 | 161,604 | 146,645 | ||||||||
| CEE | 192 | 128 | — | — | — | — | 5,789 | 3,384 | ||||||||
| France | 5,653 | 4,855 | — | — | — | — | — | — | ||||||||
| Germany | 3,630 | 3,580 | — | — | — | — | 53,231 | 48,602 | ||||||||
| Ireland | — | — | — | — | — | — | 41,513 | 41,513 | ||||||||
| Netherlands | — | — | — | — | — | — | 36,967 | 33,580 | ||||||||
| United States | 8,830 | 7,244 | — | — | — | — | 16,376 | 13,449 | ||||||||
| Total Probable | **** | 37,988 | **** | 33,236 | **** | 95 | **** | 79 | **** | 7,760 | **** | 5,935 | **** | 315,480 | **** | 287,173 |
| North America | 24,975 | 21,133 | 95 | 79 | 7,760 | 5,935 | 177,980 | 160,094 | ||||||||
| International | 13,014 | 12,103 | — | — | — | — | 137,500 | 127,079 |
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Shale Gas (mmcf) | | Coal Bed Methane (mmcf) | | Natural Gas Liquids (mbbl) | | BOE (mboe) | ||||||||
| Probable ^(4)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ |
| Australia | | — | | — | | — | | — | | — | | — | | 3,539 | | 3,539 |
| Canada | 194,586 | 171,211 | 759 | 713 | 22,493 | 18,598 | 105,984 | 91,595 | ||||||||
| CEE | — | — | — | — | — | — | 1,156 | 692 | ||||||||
| France | — | — | — | — | — | — | 5,653 | 4,855 | ||||||||
| Germany | — | — | — | — | — | — | 12,502 | 11,681 | ||||||||
| Ireland | — | — | — | — | 4 | 4 | 6,923 | 6,923 | ||||||||
| Netherlands | — | — | — | — | 109 | 99 | 6,270 | 5,695 | ||||||||
| United States | — | — | — | — | 2,399 | 1,970 | 13,959 | 11,456 | ||||||||
| Total Probable | **** | 194,586 | **** | 171,211 | **** | 759 | **** | 713 | **** | 25,006 | **** | 20,671 | **** | 155,986 | **** | 136,437 |
| North America | 194,586 | 171,211 | 759 | 713 | 24,892 | 20,568 | 119,942 | 103,051 | ||||||||
| International | — | — | — | — | 113 | 103 | 36,043 | 33,385 |
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Light Crude Oil & Medium Crude Oil (mbbl) | | Heavy Crude Oil (mbbl) | | Tight Oil (mbbl) | | Conventional Natural Gas (mmcf) | ||||||||
| Proved Plus Probable ^(3) (4)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ |
| Australia | | 11,417 | | 11,417 | | — | | — | | — | | — | | — | | — |
| Canada | 63,303 | 54,477 | 195 | 163 | 17,155 | 13,414 | 483,017 | 445,028 | ||||||||
| CEE | 402 | 293 | — | — | — | — | 17,315 | 12,143 | ||||||||
| France | 28,676 | 24,719 | — | — | — | — | — | — | ||||||||
| Germany | 10,589 | 10,415 | — | — | — | — | 123,258 | 113,001 | ||||||||
| Ireland | — | — | — | — | — | — | 118,127 | 118,127 | ||||||||
| Netherlands | — | — | — | — | — | — | 60,642 | 56,999 | ||||||||
| United States | 23,625 | 19,366 | — | — | — | — | 44,323 | 36,415 | ||||||||
| Total Proved Plus Probable | **** | 138,012 | **** | 120,688 | **** | 195 | **** | 163 | **** | 17,155 | **** | 13,414 | **** | 846,682 | **** | 781,714 |
| North America | 86,928 | 73,843 | 195 | 163 | 17,155 | 13,414 | 527,340 | 481,443 | ||||||||
| International | 51,083 | 46,844 | — | — | — | — | 319,342 | 300,271 |
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Shale Gas (mmcf) | | Coal Bed Methane (mmcf) | | Natural Gas Liquids (mbbl) | | BOE (mboe) | ||||||||
| Proved Plus Probable ^(3) (4)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ | **** | Gross ^(2)^ | **** | Net ^(2)^ |
| Australia | — | — | — | — | — | — | 11,417 | 11,417 | ||||||||
| Canada | 437,593 | 390,876 | 2,476 | 2,318 | 58,605 | 49,695 | 293,107 | 257,453 | ||||||||
| CEE | — | — | — | — | — | — | 3,287 | 2,317 | ||||||||
| France | — | — | — | — | — | — | 28,676 | 24,719 | ||||||||
| Germany | — | — | — | — | — | — | 31,132 | 29,249 | ||||||||
| Ireland | — | — | — | — | 12 | 12 | 19,700 | 19,700 | ||||||||
| Netherlands | — | — | — | — | 177 | 166 | 10,284 | 9,666 | ||||||||
| United States | — | — | — | — | 6,493 | 5,335 | 37,505 | 30,770 | ||||||||
| Total Proved Plus Probable | **** | 437,593 | **** | 390,876 | **** | 2,476 | **** | 2,318 | **** | 65,288 | **** | 55,208 | **** | 435,109 | **** | 385,291 |
| North America | 437,593 | 390,876 | 2,476 | 2,318 | 65,099 | 55,030 | 330,612 | 288,223 | ||||||||
| International | — | — | — | — | 189 | 178 | 104,496 | 97,068 |
Vermilion Energy Inc. ■ Page 19 ■ 2024 Annual Information Form
Notes:
| (1) | The pricing assumptions used in the McDaniel & Associates Report with respect to net present value of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth in “Forecast Prices used in Estimates”. McDaniel & Associates is an independent qualified reserves evaluator appointed pursuant to NI 51-101. |
|---|---|
| (2) | "Gross Reserves" are Vermilion's working interest (operating or non-operating) share before deduction of royalty obligations and without including any royalty interests of Vermilion. "Net Reserves" are Vermilion's working interest (operating or non-operating) share after deduction of royalty obligations, plus Vermilion's royalty interests in reserves. |
| --- | --- |
| (3) | "Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. |
| --- | --- |
| (4) | "Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. |
| --- | --- |
| (5) | "Developed" reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production. |
| --- | --- |
| (6) | "Developed Producing" reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty. |
| --- | --- |
| (7) | "Developed Non-Producing" reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown. |
| --- | --- |
| (8) | "Undeveloped" reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned. |
| --- | --- |
Vermilion Energy Inc. ■ Page 20 ■ 2024 Annual Information Form
Net present value of future net revenue - Based on forecast prices and costs^(1)^
| | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Before Deducting Future Income Taxes Discounted At | | After Deducting Future Income Taxes Discounted At | ||||||||||||||||
| (M) | 0% | **** | 5% | **** | 10% | **** | 15% | **** | 20% | **** | 0% | **** | 5% | **** | 10% | **** | 15% | **** | 20% |
| Proved Developed Producing (2) (4) (5) | | | | | | | | | | | | | | | | | | | |
| Australia | 54,149 | 135,689 | 169,337 | 180,620 | 181,431 | 79,806 | 120,988 | 135,637 | 138,291 | 135,622 | |||||||||
| Canada | 1,938,336 | 1,491,983 | 1,220,604 | 1,040,390 | 911,826 | 1,938,336 | 1,491,983 | 1,220,604 | 1,040,390 | 911,826 | |||||||||
| CEE | 58,562 | 55,929 | 53,401 | 51,083 | 48,990 | 58,562 | 55,929 | 53,401 | 51,083 | 48,990 | |||||||||
| France | 10,078 | 351,344 | 388,378 | 364,694 | 331,968 | 9,197 | 350,875 | 388,119 | 364,547 | 331,882 | |||||||||
| Germany | 151,088 | 261,953 | 266,440 | 250,527 | 232,274 | 145,511 | 256,515 | 261,132 | 245,341 | 227,201 | |||||||||
| Ireland | 625,574 | 625,074 | 603,055 | 573,201 | 541,784 | 625,574 | 625,074 | 603,055 | 573,201 | 541,784 | |||||||||
| Netherlands | (229,929) | (51,983) | 23,061 | 57,173 | 73,350 | (229,929) | (51,983) | 23,061 | 57,173 | 73,350 | |||||||||
| United States | 217,918 | 181,315 | 152,507 | 131,699 | 116,428 | 217,918 | 181,315 | 152,507 | 131,699 | 116,428 | |||||||||
| Total Proved Developed Producing | 2,825,775 | **** | 3,051,304 | **** | 2,876,783 | **** | 2,649,388 | **** | 2,438,050 | **** | 2,844,975 | **** | 3,030,695 | **** | 2,837,517 | **** | 2,601,725 | **** | 2,387,082 |
| North America | 2,156,254 | 1,673,298 | 1,373,111 | 1,172,089 | 1,028,254 | 2,156,254 | 1,673,298 | 1,373,111 | 1,172,089 | 1,028,254 | |||||||||
| International | 669,522 | 1,378,006 | 1,503,672 | 1,477,299 | 1,409,796 | 688,721 | 1,357,397 | 1,464,406 | 1,429,636 | 1,358,829 | |||||||||
| Proved Developed Non-Producing (2) (4) (6) | | | | | | | | | | | | | | | | | | | |
| Australia | — | — | — | — | — | — | — | — | — | — | |||||||||
| Canada | 115,859 | 83,792 | 65,414 | 53,548 | 45,303 | 115,859 | 83,792 | 65,414 | 53,548 | 45,303 | |||||||||
| CEE | — | — | — | — | — | — | — | — | — | — | |||||||||
| France | 23,232 | 20,737 | 17,648 | 14,825 | 12,445 | 22,625 | 20,399 | 17,451 | 14,704 | 12,367 | |||||||||
| Germany | 112,190 | 142,207 | 125,138 | 110,129 | 98,413 | 86,231 | 118,122 | 102,654 | 89,026 | 78,512 | |||||||||
| Ireland | — | — | — | — | — | — | — | — | — | — | |||||||||
| Netherlands | 33,136 | 32,404 | 30,182 | 27,548 | 24,949 | 28,046 | 27,441 | 25,338 | 22,814 | 20,320 | |||||||||
| United States | — | — | — | — | — | — | — | — | — | — | |||||||||
| Total Proved Developed Non-Producing | 284,418 | **** | 279,140 | **** | 238,383 | **** | 206,050 | **** | 181,110 | **** | 252,762 | **** | 249,754 | **** | 210,857 | **** | 180,092 | **** | 156,501 |
| North America | 115,859 | 83,792 | 65,414 | 53,548 | 45,303 | 115,859 | 83,792 | 65,414 | 53,548 | 45,303 | |||||||||
| International | 168,559 | 195,348 | 172,968 | 152,502 | 135,807 | 136,902 | 165,962 | 145,443 | 126,545 | 111,199 | |||||||||
| Proved Undeveloped (2) (7) | | | | | | | | | | | |||||||||
| Australia | 87,130 | 70,917 | 58,273 | 48,290 | 40,315 | 52,278 | 42,558 | 34,963 | 28,958 | 24,155 | |||||||||
| Canada | 1,087,024 | 475,087 | 216,436 | 80,648 | 238 | 1,078,591 | 474,096 | 216,307 | 80,630 | 236 | |||||||||
| CEE | 43,316 | 34,635 | 28,086 | 23,074 | 19,178 | 40,706 | 32,114 | 25,645 | 20,707 | 16,880 | |||||||||
| France | 86,647 | 64,708 | 47,984 | 35,528 | 26,259 | 62,779 | 44,894 | 31,173 | 21,019 | 13,565 | |||||||||
| Germany | 210,790 | 167,990 | 125,040 | 93,002 | 69,239 | 151,340 | 118,704 | 83,479 | 57,432 | 38,399 | |||||||||
| Ireland | — | — | — | — | — | — | — | — | — | — | |||||||||
| Netherlands | — | — | — | — | — | — | — | — | — | — | |||||||||
| United States | 259,658 | 142,904 | 78,019 | 39,215 | 14,589 | 259,658 | 142,904 | 78,019 | 39,215 | 14,589 | |||||||||
| Total Proved Undeveloped | 1,774,566 | **** | 956,242 | **** | 553,838 | **** | 319,756 | **** | 169,818 | **** | 1,645,352 | **** | 855,271 | **** | 469,586 | **** | 247,960 | **** | 107,824 |
| North America | 1,346,682 | 617,991 | 294,455 | 119,863 | 14,827 | 1,338,249 | 617,001 | 294,326 | 119,844 | 14,824 | |||||||||
| International | 427,884 | 338,251 | 259,383 | 199,893 | 154,991 | 307,103 | 238,270 | 175,260 | 128,116 | 92,999 | |||||||||
| Proved (2) | | | | | | | | | | | |||||||||
| Australia | 141,279 | 206,607 | 227,610 | 228,910 | 221,746 | 132,085 | 163,545 | 170,600 | 167,249 | 159,778 | |||||||||
| Canada | 3,141,219 | 2,050,862 | 1,502,455 | 1,174,586 | 957,367 | 3,132,787 | 2,049,872 | 1,502,325 | 1,174,567 | 957,364 | |||||||||
| CEE | 101,878 | 90,564 | 81,487 | 74,156 | 68,168 | 99,268 | 88,043 | 79,046 | 71,790 | 65,870 | |||||||||
| France | 119,958 | 436,790 | 454,010 | 415,048 | 370,672 | 94,601 | 416,169 | 436,743 | 400,270 | 357,814 | |||||||||
| Germany | 474,068 | 572,149 | 516,618 | 453,658 | 399,925 | 383,082 | 493,341 | 447,266 | 391,799 | 344,112 | |||||||||
| Ireland | 625,574 | 625,074 | 603,055 | 573,201 | 541,784 | 625,574 | 625,074 | 603,055 | 573,201 | 541,784 | |||||||||
| Netherlands | (196,793) | (19,579) | 53,242 | 84,721 | 98,299 | (201,883) | (24,542) | 48,398 | 79,988 | 93,669 | |||||||||
| United States | 477,576 | 324,219 | 230,526 | 170,913 | 131,017 | 477,576 | 324,219 | 230,526 | 170,913 | 131,017 | |||||||||
| Total Proved | 4,884,759 | **** | 4,286,686 | **** | 3,669,004 | **** | 3,175,194 | **** | 2,788,977 | **** | 4,743,089 | **** | 4,135,720 | **** | 3,517,960 | **** | 3,029,778 | **** | 2,651,407 |
| North America | 3,618,795 | 2,375,081 | 1,732,981 | 1,345,499 | 1,088,384 | 3,610,362 | 2,374,091 | 1,732,852 | 1,345,481 | 1,088,381 | |||||||||
| International | 1,265,965 | 1,911,605 | 1,936,023 | 1,829,695 | 1,700,594 | 1,132,726 | 1,761,630 | 1,785,108 | 1,684,297 | 1,563,026 |
All values are in US Dollars.
Vermilion Energy Inc. ■ Page 21 ■ 2024 Annual Information Form
| | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Before Deducting Future Income Taxes Discounted At | | After Deducting Future Income Taxes Discounted At | ||||||||||||||||
| (M) | 0% | **** | 5% | **** | 10% | **** | 15% | **** | 20% | **** | 0% | **** | 5% | **** | 10% | **** | 15% | **** | 20% |
| Probable (3) | |||||||||||||||||||
| Australia | 207,714 | 180,611 | 150,803 | 124,915 | 103,948 | 123,147 | 107,376 | 89,481 | 73,879 | 61,270 | |||||||||
| Canada | 2,331,637 | 1,307,132 | 855,659 | 611,472 | 462,607 | 1,760,956 | 1,048,775 | 717,462 | 530,011 | 411,478 | |||||||||
| CEE | 51,214 | 41,668 | 34,699 | 29,503 | 25,542 | 44,313 | 35,553 | 29,209 | 24,520 | 20,977 | |||||||||
| France | 331,224 | 226,736 | 160,919 | 118,164 | 89,504 | 244,938 | 164,297 | 113,600 | 80,911 | 59,244 | |||||||||
| Germany | 774,225 | 524,117 | 368,252 | 270,937 | 207,154 | 546,591 | 363,602 | 247,307 | 175,585 | 129,410 | |||||||||
| Ireland | 377,074 | 294,388 | 222,653 | 168,307 | 128,873 | 377,074 | 294,388 | 222,653 | 168,307 | 128,873 | |||||||||
| Netherlands | 271,107 | 215,213 | 170,360 | 135,735 | 109,212 | 184,519 | 141,622 | 106,710 | 79,834 | 59,456 | |||||||||
| United States | 481,124 | 283,902 | 187,511 | 133,967 | 101,148 | 471,141 | 278,835 | 184,720 | 132,334 | 100,147 | |||||||||
| Total Probable | 4,825,320 | **** | 3,073,767 | **** | 2,150,856 | **** | 1,593,000 | **** | 1,227,990 | **** | 3,752,680 | **** | 2,434,448 | **** | 1,711,142 | **** | 1,265,382 | **** | 970,856 |
| North America | 2,812,761 | 1,591,034 | 1,043,169 | 745,440 | 563,756 | 2,232,097 | 1,327,610 | 902,182 | 662,345 | 511,625 | |||||||||
| International | 2,012,558 | 1,482,732 | 1,107,687 | 847,560 | 664,235 | 1,520,582 | 1,106,838 | 808,960 | 603,036 | 459,231 | |||||||||
| Proved Plus Probable (2) (3) | | | | | | | | | | | |||||||||
| Australia | 348,993 | 387,217 | 378,413 | 353,825 | 325,694 | 255,232 | 270,921 | 260,081 | 241,128 | 221,048 | |||||||||
| Canada | 5,472,856 | 3,357,994 | 2,358,113 | 1,786,058 | 1,419,974 | 4,893,743 | 3,098,646 | 2,219,787 | 1,704,578 | 1,368,842 | |||||||||
| CEE | 153,092 | 132,232 | 116,186 | 103,659 | 93,710 | 143,581 | 123,595 | 108,256 | 96,310 | 86,847 | |||||||||
| France | 451,183 | 663,526 | 614,929 | 533,211 | 460,177 | 339,539 | 580,465 | 550,343 | 481,182 | 417,058 | |||||||||
| Germany | 1,248,294 | 1,096,266 | 884,871 | 724,595 | 607,079 | 929,673 | 856,944 | 694,573 | 567,384 | 473,522 | |||||||||
| Ireland | 1,002,648 | 919,462 | 825,708 | 741,508 | 670,657 | 1,002,648 | 919,462 | 825,708 | 741,508 | 670,657 | |||||||||
| Netherlands | 74,314 | 195,633 | 223,603 | 220,456 | 207,511 | (17,364) | 117,080 | 155,108 | 159,822 | 153,125 | |||||||||
| United States | 958,700 | 608,121 | 418,037 | 304,881 | 232,165 | 948,717 | 603,054 | 415,246 | 303,248 | 231,164 | |||||||||
| Total Proved Plus Probable | 9,710,079 | **** | 7,360,452 | **** | 5,819,860 | **** | 4,768,193 | **** | 4,016,968 | **** | 8,495,768 | **** | 6,570,168 | **** | 5,229,102 | **** | 4,295,159 | **** | 3,622,263 |
| North America | 6,431,556 | 3,966,115 | 2,776,150 | 2,090,939 | 1,652,139 | 5,842,460 | 3,701,700 | 2,635,033 | 2,007,826 | 1,600,006 | |||||||||
| International | 3,278,523 | 3,394,337 | 3,043,710 | 2,677,255 | 2,364,828 | 2,653,309 | 2,868,467 | 2,594,069 | 2,287,333 | 2,022,257 |
All values are in US Dollars.
Notes:
| (1) | The pricing assumptions used in the McDaniel & Associates Report with respect to net present value of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth in “Forecast Prices used in Estimates”. McDaniel & Associates is an independent qualified reserves evaluator appointed pursuant to NI 51-101. |
|---|---|
| (2) | "Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. |
| --- | --- |
| (3) | "Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. |
| --- | --- |
| (4) | "Developed" reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production. |
| --- | --- |
| (5) | "Developed Producing" reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty. |
| --- | --- |
| (6) | "Developed Non-Producing" reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown. |
| --- | --- |
| (7) | "Undeveloped" reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned. |
| --- | --- |
Vermilion Energy Inc. ■ Page 22 ■ 2024 Annual Information Form
Total future net revenue (undiscounted) - Based on forecast prices and costs^(1)^
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | Abandonment | | Future Net | | | | Future Net |
| | | | | | | | | Capital | | and | | Revenue | | | | Revenue |
| | | | | | | Operating | | Development | | Reclamation | | Before Future | | Future | | After Future |
| ($M) | | Revenue | | Royalties | | Costs ^(5)^ | | Costs | | Costs ^(6)^ | | Income Taxes | | Income Taxes ^(4)^ | | Income Taxes |
| Proved ^(2)^ | **** | | **** | | **** | | **** | | **** | | **** | | **** | | **** | |
| Australia | | 994,469 | | — | | 579,446 | | 39,082 | | 234,662 | | 141,279 | | 9,194 | | 132,085 |
| Canada | | 10,345,968 | | 1,631,295 | | 3,955,388 | | 1,150,722 | | 467,345 | | 3,141,219 | | 8,432 | | 3,132,787 |
| CEE | | 195,600 | | 45,909 | | 22,415 | | 20,948 | | 4,450 | | 101,878 | | 2,610 | | 99,268 |
| France | | 2,414,301 | | 329,763 | | 1,078,241 | | 93,044 | | 793,295 | | 119,958 | | 25,357 | | 94,601 |
| Germany | 1,730,593 | 110,691 | 669,233 | 100,314 | 376,287 | 474,068 | 90,986 | 383,082 | ||||||||
| Ireland | 1,183,784 | — | 311,805 | 31,131 | 215,274 | 625,574 | — | 625,574 | ||||||||
| Netherlands | 370,212 | 4,049 | 178,538 | 8,029 | 376,388 | (196,793) | 5,090 | (201,883) | ||||||||
| United States | 1,888,293 | 532,433 | 449,048 | 385,710 | 43,526 | 477,576 | — | 477,576 | ||||||||
| Total Proved | **** | 19,123,220 | **** | 2,654,140 | **** | 7,244,115 | **** | 1,828,979 | **** | 2,511,227 | **** | 4,884,759 | **** | 141,671 | **** | 4,743,089 |
| North America | 12,234,262 | 2,163,728 | 4,404,436 | 1,536,432 | 510,871 | 3,618,795 | 8,432 | 3,610,362 | ||||||||
| International | 6,888,958 | 490,412 | 2,839,678 | 292,547 | 2,000,356 | 1,265,965 | 133,238 | 1,132,726 | ||||||||
| Proved Plus Probable ^(2) (3)^ | | | | | | | | | | | | | | | | |
| Australia | 1,463,148 | — | 790,199 | 78,165 | 245,791 | 348,993 | 93,762 | 255,232 | ||||||||
| Canada | 15,930,982 | 2,576,082 | 5,748,685 | 1,630,144 | 503,215 | 5,472,856 | 579,113 | 4,893,743 | ||||||||
| CEE | 301,976 | 88,123 | 30,966 | 25,068 | 4,727 | 153,092 | 9,511 | 143,581 | ||||||||
| France | 3,029,015 | 416,073 | 1,219,982 | 142,508 | 799,269 | 451,183 | 111,643 | 339,539 | ||||||||
| Germany | 2,997,897 | 198,751 | 1,005,796 | 132,112 | 412,944 | 1,248,294 | 318,620 | 929,673 | ||||||||
| Ireland | 1,820,692 | — | 547,382 | 31,131 | 239,532 | 1,002,648 | — | 1,002,648 | ||||||||
| Netherlands | 959,534 | 55,916 | 356,161 | 83,977 | 389,166 | 74,314 | 91,678 | (17,364) | ||||||||
| United States | 3,104,106 | 874,560 | 676,972 | 545,247 | 48,627 | 958,700 | 9,983 | 948,717 | ||||||||
| Total Proved Plus Probable | **** | 29,607,350 | **** | 4,209,505 | **** | 10,376,143 | **** | 2,668,352 | **** | 2,643,271 | **** | 9,710,079 | **** | 1,214,311 | **** | 8,495,768 |
| North America | 19,035,088 | 3,450,642 | 6,425,657 | 2,175,391 | 551,842 | 6,431,556 | 589,097 | 5,842,460 | ||||||||
| International | 10,572,262 | 758,863 | 3,950,486 | 492,961 | 2,091,429 | 3,278,523 | 625,214 | 2,653,309 |
Notes:
| (1) | The pricing assumptions used in the McDaniel & Associates Report with respect to net present value of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth in “Forecast Prices used in Estimates”. McDaniel & Associates is an independent qualified reserves evaluator appointed pursuant to NI 51-101. |
|---|---|
| (2) | "Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. |
| --- | --- |
| (3) | "Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. |
| --- | --- |
| (4) | "Future Income Taxes" are calculated using future net revenue before income taxes as shown, after incorporating Vermilion's existing tax pools, corporate charge-outs, and related expenditures. This calculation applies the year-end statutory rate, taking into account future tax rates already legislated. |
| --- | --- |
| (5) | Capital Development Costs include the costs for the drilling, completion, and tie-in of wells, the construction of production and processing facilities, major facilities projects and well workovers. For the purposes of determining Future Net Revenue, costs related to the replacement of certain downhole and facilities equipment as well as facility turnarounds are included in Operating Costs. |
| --- | --- |
| (6) | Abandonment and Reclamation Costs include all entities with associated reserves included in the McDaniel & Associates Report. Further information on Abandonment and reclamation costs can be found in the Annual MD&A on our website at www.vermilionenergy.com, www.sedarplus.ca, or www.sec.gov. |
| --- | --- |
Vermilion Energy Inc. ■ Page 23 ■ 2024 Annual Information Form
Future net revenue by product type - Based on forecast prices and costs^(1)^
| | | | | |
|---|---|---|---|---|
| | **** | Future Net Revenue | **** | |
| | | Before Income Taxes^(2)^ | | |
| | | (Discounted at 10% Per Year) | | Unit Value ($/mcf or |
| | | ($M) | | $/boe) |
| Proved Developed Producing | ||||
| Light Crude Oil & Medium Crude Oil ^(3)^ | 1,334,037 | | 23.19 | |
| Heavy Oil ^(3)^ | | 582 | | 39.34 |
| Tight Oil ^(3)^ | 141,049 | | 71.12 | |
| Conventional Natural Gas ^(4)^ | 1,386,391 | | 4.29 | |
| Shale Gas | 16,264 | | 2.32 | |
| Coal Bed Methane | (1,539) | | (1.99) | |
| Total Proved Developed Producing | **** | 2,876,783 | | |
| Proved Developed Non-Producing | | | | |
| Light Crude Oil & Medium Crude Oil ^(3)^ | 84,082 | | 25.74 | |
| Heavy Oil ^(3)^ | — | | — | |
| Tight Oil ^(3)^ | | 4,150 | | 220.74 |
| Conventional Natural Gas ^(4)^ | 147,542 | | 5.18 | |
| Shale Gas | 2,107 | | 1.68 | |
| Coal Bed Methane | 502 | | 0.60 | |
| Total Proved Developed Non-Producing | **** | 238,383 | | |
| Proved Undeveloped | | | | |
| Light Crude Oil & Medium Crude Oil ^(3)^ | 308,705 | | 11.74 | |
| Heavy Oil ^(3)^ | 1,105 | | 16.04 | |
| Tight Oil ^(3)^ | 69,971 | | 15.03 | |
| Conventional Natural Gas ^(4)^ | 171,013 | | 2.00 | |
| Shale Gas | 3,093 | | 0.17 | |
| Coal Bed Methane | (48) | | — | |
| Total Proved Undeveloped | **** | 553,838 | | |
| Proved | | | | |
| Light Crude Oil & Medium Crude Oil ^(3)^ | 1,726,823 | | 19.83 | |
| Heavy Oil ^(3)^ | 1,688 | | 20.16 | |
| Tight Oil ^(3)^ | | 215,169 | | 32.32 |
| Conventional Natural Gas ^(4)^ | | 1,704,945 | | 3.90 |
| Shale Gas | 21,464 | | 0.80 | |
| Coal Bed Methane | | (1,085) | | (0.68) |
| Total Proved | **** | 3,669,004 | | |
| Probable | | | | |
| Light Crude Oil & Medium Crude Oil ^(3)^ | 883,995 | | 26.66 | |
| Heavy Oil ^(3)^ | 2,112 | | 26.63 | |
| Tight Oil ^(3)^ | 311,979 | | 60.46 | |
| Conventional Natural Gas ^(4)^ | 927,171 | | 3.56 | |
| Shale Gas | 25,069 | | 1.15 | |
| Coal Bed Methane | 531 | | 0.74 | |
| Total Probable | **** | 2,150,856 | | |
| Proved Plus Probable | | | | |
| Light Crude Oil & Medium Crude Oil ^(3)^ | 2,610,818 | | 21.71 | |
| Heavy Oil ^(3)^ | 3,800 | | 23.31 | |
| Tight Oil ^(3)^ | | 527,149 | | 44.61 |
| Conventional Natural Gas ^(4)^ | 2,632,116 | | 3.77 | |
| Shale Gas | 46,533 | | 0.96 | |
| Coal Bed Methane | (555) | | (0.24) | |
| Total Proved Plus Probable | **** | 5,819,860 | | |
Vermilion Energy Inc. ■ Page 24 ■ 2024 Annual Information Form
Notes:
| (1) | The pricing assumptions used in the McDaniel & Associates Report with respect to net present value of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth in “Forecast Prices used in Estimates”. McDaniel & Associates is an independent qualified reserves evaluator appointed pursuant to NI 51-101. |
|---|---|
| (2) | Other Company revenue and costs not related to a specific product type have been allocated proportionately to the specified product types. Unit values are based on Company net reserves. Net present value of reserves categories are an approximation based on major products. |
| --- | --- |
| (3) | Including solution gas and other by-products. |
| --- | --- |
| (4) | Including by-products but excluding solution gas. |
| --- | --- |
Vermilion Energy Inc. ■ Page 25 ■ 2024 Annual Information Form
Forecast prices used in estimates^(1)(2)^
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Light Crude Oil & Medium | | Conventional Natural Gas | | | | | | | | | ||||
| | | Crude Oil | Crude Oil | Canada | Europe | Natural Gas Liquids | Inflation Rate | | Exchange Rate | |||||||
| | | WTI | | Edmonton | Cromer | Brent Blend | | UK National | | | | | | | | |
| | **** | Cushing | **** | Par Price | Light | FOB | AECO | Balancing | Edmonton | Edmonton | Edmonton | | | | | |
| | | Oklahoma | | 40˚ API | 35˚ API | North Sea | Gas Price | Point | Ethane | Propane | Butane | Edmonton C5+ | | | | |
| Year | | ($US/bbl) | | (Cdn/bbl) | (Cdn/bbl) | (US/bbl) | (Cdn/mmbtu) | (US/mmbtu) | (Cdn/bbl) | (Cdn/bbl) | (Cdn/bbl) | (Cdn/bbl) | Percent Per Year | **** | /CAD | CAD/EUR |
| 2024 | 76.55 | 97.50 | 93.20 | 80.50 | 1.45 | 10.65 | 8.70 | 30.50 | 48.50 | 99.80 | 2.40 | % | 0.73 | 1.48 | ||
| Forecast | | | | | | | | | | | | | | | ||
| 2025 | 71.58 | 94.79 | 91.15 | 75.58 | 2.36 | 12.67 | 7.54 | 33.56 | 51.15 | 100.14 | — | % | 0.71 | 1.54 | ||
| 2026 | 74.48 | 97.04 | 93.35 | 78.51 | 3.33 | 11.08 | 10.76 | 32.78 | 49.99 | 100.72 | 2.00 | % | 0.73 | 1.52 | ||
| 2027 | 75.81 | 97.37 | 93.62 | 79.89 | 3.48 | 10.80 | 11.32 | 32.81 | 50.16 | 100.24 | 2.00 | % | 0.74 | 1.50 | ||
| 2028 | 77.66 | 99.80 | 95.96 | 81.82 | 3.69 | 11.13 | 12.02 | 33.63 | 51.41 | 102.73 | 2.00 | % | 0.74 | 1.51 | ||
| 2029 | 79.22 | 101.79 | 97.88 | 83.46 | 3.76 | 11.35 | 12.26 | 34.30 | 52.44 | 104.79 | 2.00 | % | 0.74 | 1.52 | ||
| 2030 | 80.80 | 103.83 | 99.83 | 85.13 | 3.83 | 11.58 | 12.51 | 34.99 | 53.49 | 106.86 | 2.00 | % | 0.74 | 1.52 | ||
| 2031 | 82.42 | 105.91 | 101.83 | 86.84 | 3.91 | 11.81 | 12.77 | 35.69 | 54.56 | 109.01 | 2.00 | % | 0.74 | 1.52 | ||
| 2032 | 84.06 | 108.03 | 103.87 | 88.57 | 3.99 | 12.05 | 13.03 | 36.40 | 55.65 | 111.19 | 2.00 | % | 0.74 | 1.52 | ||
| 2033 | 85.74 | 110.19 | 105.95 | 90.31 | 4.07 | 12.28 | 13.30 | 37.13 | 56.76 | 113.42 | 2.00 | % | 0.74 | 1.52 | ||
| 2034 | 87.46 | 112.39 | 108.06 | 92.09 | 4.15 | 12.53 | 13.57 | 37.87 | 57.90 | 115.69 | 2.00 | % | 0.74 | 1.52 | ||
| Thereafter | +2.0%/yr | +2.0%/yr | +2.0%/yr | +2.0%/yr | +2.0%/yr | +2.0%/yr | +2.0%/yr | +2.0%/yr | +2.0%/yr | +2.0%/yr | +2.0%/yr | 0.74 | 1.52 |
All values are in US Dollars.
Notes:
| (1) | The pricing assumptions used in the McDaniel & Associates Report with respect to net present value of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above. The pricing assumptions above are the January 2025 3 Consultants' Average pricing which were provided by McDaniel & Associates, an independent qualified reserves evaluator appointed pursuant to NI 51-101. The consultants price forecasts being averaged are McDaniel & Associates, Sproule and GLJ Ltd., all independent qualified reserves evaluators. |
|---|---|
| (2) | For light crude oil and medium crude oil, the pricing assumptions used are WTI, Edmonton Par Price, Cromer Medium, and Brent Blend. For conventional natural gas in Canada, the pricing assumptions used are AECO and for conventional natural gas in Europe, the pricing assumptions used are National Balancing Point. |
| --- | --- |
For 2024, average realized prices before hedging were:
| | | | | | |
|---|---|---|---|---|---|
| | **** | Crude oil | **** | NGLs | Natural gas |
| Country | | ($/bbl) | | (/bbl) | ($/mcf) |
| Australia | | 128.92 | | — | — |
| Canada | | 95.75 | | 29.06 | 1.56 |
| CEE | 58.18 | | — | 16.36 | |
| France | 110.89 | | — | — | |
| Germany | 103.86 | | — | 13.13 | |
| Ireland | — | | — | 14.64 | |
| Netherlands | 92.06 | | — | 13.96 | |
| United States | 101.32 | | 40.18 | 1.82 |
All values are in US Dollars.
Vermilion Energy Inc. ■ Page 26 ■ 2024 Annual Information Form
Reconciliations of changes in reserves
The following tables set forth a reconciliation of the changes by product type (light crude oil and medium crude oil, heavy crude oil, tight oil, conventional natural gas, coal bed methane, shale gas and NGLs) in Vermilion's gross reserves as at December 31, 2024 compared to such reserves as at December 31, 2023 based on the forecast price and costs.
Reconciliation of Company Gross Reserves by Principal Product Type - Based on Forecast Prices and Costs ^(3)^
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Australia | | Total Oil^(4)^ | | Light & Medium Crude Oil | | Heavy Crude Oil | | Tight Oil | ||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | **** | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P |
| Factors | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) |
| At December 31, 2023 | 7,563 | 4,358 | 11,921 | 7,563 | 4,358 | 11,921 | — | — | — | — | — | — | ||||||||||||
| Discoveries | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | 1,074 | (1,074) | — | 1,074 | (1,074) | — | — | — | — | — | — | — | ||||||||||||
| Technical Revisions^(6)^ | 503 | 255 | 758 | 503 | 255 | 758 | — | — | — | — | — | — | ||||||||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Dispositions | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Production | (1,261) | — | (1,261) | (1,261) | — | (1,261) | — | — | — | — | — | — | ||||||||||||
| At December 31, 2024 | **** | 7,878 | **** | 3,539 | **** | 11,417 | **** | 7,878 | **** | 3,539 | **** | 11,417 | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — |
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Australia | **** | Total Gas^(4)^ | **** | Conventional Natural Gas | **** | Coal Bed Methane | Shale Gas | |||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P |
| Factors | | (mmcf) | **** | (mmcf) | **** | (mmcf) | | (mmcf) | **** | (mmcf) | **** | (mmcf) | | (mmcf) | **** | (mmcf) | **** | (mmcf) | | (mmcf) | **** | (mmcf) | **** | (mmcf) |
| At December 31, 2023 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Discoveries | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Technical Revisions^(6)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Dispositions | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Production | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| At December 31, 2024 | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Australia | **** | Natural Gas Liquids | BOE | |||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P |
| Factors | | (mbbl) | | (mbbl) | | (mbbl) | | (mboe) | | (mboe) | | (mboe) |
| At December 31, 2023 | — | — | — | 7,563 | 4,358 | 11,921 | ||||||
| Discoveries | — | — | — | — | — | — | ||||||
| Extensions & Improved Recovery^(5)^ | — | — | — | 1,074 | (1,074) | — | ||||||
| Technical Revisions^(6)^ | — | — | — | 503 | 255 | 758 | ||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | ||||||
| Dispositions | — | — | — | — | — | — | ||||||
| Economic Factors^(8)^ | — | — | — | — | — | — | ||||||
| Production | — | — | — | (1,261) | — | (1,261) | ||||||
| At December 31, 2024 | **** | — | **** | — | **** | — | **** | 7,878 | **** | 3,539 | **** | 11,417 |
Vermilion Energy Inc. ■ Page 27 ■ 2024 Annual Information Form
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Canada | **** | Total Oil^(4)^ | **** | Light & Medium Crude Oil | Heavy Crude Oil | Tight Oil | ||||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P |
| Factors | | (mbbl) | **** | (mbbl) | **** | (mbbl) | | (mbbl) | **** | (mbbl) | **** | (mbbl) | | (mbbl) | **** | (mbbl) | **** | (mbbl) | | (mbbl) | **** | (mbbl) | **** | (mbbl) |
| At December 31, 2023 | 57,366 | 25,341 | 82,707 | 50,353 | 17,072 | 67,425 | 103 | 95 | 198 | 6,910 | 8,174 | 15,084 | ||||||||||||
| Discoveries | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | 4,224 | 642 | 4,866 | 1,256 | 305 | 1,560 | — | — | — | 2,968 | 338 | 3,306 | ||||||||||||
| Technical Revisions^(6)^ | 23 | (1,447) | (1,424) | (437) | (725) | (1,163) | 4 | (1) | 3 | 456 | (721) | (264) | ||||||||||||
| Acquisitions^(7)^ | 60 | 176 | 236 | 60 | 176 | 236 | — | — | — | — | — | — | ||||||||||||
| Dispositions | (563) | (696) | (1,259) | (563) | (696) | (1,259) | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | (39) | (18) | (57) | 12 | 13 | 25 | — | 1 | 1 | (51) | (31) | (83) | ||||||||||||
| Production | (4,415) | — | (4,415) | (3,521) | — | (3,521) | (7) | — | (7) | (887) | — | (887) | ||||||||||||
| At December 31, 2024 | **** | 56,655 | **** | 23,999 | **** | 80,654 | **** | 47,159 | **** | 16,145 | **** | 63,303 | **** | 101 | **** | 95 | **** | 195 | **** | 9,396 | **** | 7,760 | **** | 17,155 |
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Canada | **** | Total Gas^(4)^ | **** | Conventional Natural Gas | Coal Bed Methane | Shale Gas | ||||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P |
| Factors | | (mmcf) | **** | (mmcf) | **** | (mmcf) | | (mmcf) | **** | (mmcf) | **** | (mmcf) | | (mmcf) | **** | (mmcf) | **** | (mmcf) | | (mmcf) | **** | (mmcf) | **** | (mmcf) |
| At December 31, 2023 | 509,601 | 385,806 | 895,407 | 323,908 | 167,001 | 490,909 | 2,505 | 814 | 3,319 | 183,188 | 217,991 | 401,179 | ||||||||||||
| Discoveries | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | 106,468 | 17,346 | 123,814 | 32,393 | 7,016 | 39,410 | — | — | — | 74,074 | 10,330 | 84,404 | ||||||||||||
| Technical Revisions^(6)^ | 7,820 | (41,493) | (33,673) | 4,538 | (8,835) | (4,297) | (487) | (12) | (500) | 3,769 | (32,646) | (28,876) | ||||||||||||
| Acquisitions^(7)^ | 7,864 | 1,572 | 9,436 | 7,864 | 1,572 | 9,436 | — | — | — | — | — | — | ||||||||||||
| Dispositions | (3,852) | (4,909) | (8,761) | (3,852) | (4,909) | (8,761) | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | (4,246) | (1,372) | (5,618) | (2,435) | (240) | (2,675) | (115) | (43) | (158) | (1,696) | (1,089) | (2,785) | ||||||||||||
| Production | (57,518) | — | (57,518) | (41,005) | — | (41,005) | (185) | — | (185) | (16,328) | — | (16,328) | ||||||||||||
| At December 31, 2024 | **** | 566,136 | **** | 356,950 | **** | 923,086 | **** | 321,413 | **** | 161,604 | **** | 483,017 | **** | 1,717 | **** | 759 | **** | 2,476 | **** | 243,007 | **** | 194,586 | **** | 437,593 |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Canada | **** | Natural Gas Liquids | BOE | |||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | **** | Probable | **** | P+P | | Proved | **** | Probable | **** | P+P |
| Factors | | (mbbl) | | (mbbl) | | (mbbl) | | (mboe) | | (mboe) | | (mboe) |
| At December 31, 2023 | 30,416 | 16,118 | 46,533 | 172,715 | 105,760 | 278,475 | ||||||
| Discoveries | — | — | — | — | — | — | ||||||
| Extensions & Improved Recovery^(5)^ | 6,231 | 891 | 7,122 | 28,200 | 4,424 | 32,624 | ||||||
| Technical Revisions^(6)^ | 3,242 | 5,868 | 9,110 | 4,568 | (2,495) | 2,074 | ||||||
| Acquisitions^(7)^ | 411 | 82 | 494 | 1,782 | 520 | 2,302 | ||||||
| Dispositions | (268) | (330) | (598) | (1,473) | (1,845) | (3,317) | ||||||
| Economic Factors^(8)^ | (290) | (135) | (426) | (1,037) | (382) | (1,419) | ||||||
| Production | (3,630) | — | (3,630) | (17,632) | — | (17,632) | ||||||
| At December 31, 2024 | **** | 36,112 | **** | 22,493 | **** | 58,605 | **** | 187,123 | **** | 105,984 | **** | 293,107 |
Vermilion Energy Inc. ■ Page 28 ■ 2024 Annual Information Form
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CEE | **** | Total Oil^(4)^ | **** | Light & Medium Crude Oil | Heavy Crude Oil | Tight Oil | ||||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | **** | Probable | **** | P+P | | Proved | **** | Probable | **** | P+P | | Proved | **** | Probable | **** | P+P | | Proved | **** | Probable | **** | P+P |
| Factors | | (mbbl) | **** | (mbbl) | **** | (mbbl) | | (mbbl) | **** | (mbbl) | **** | (mbbl) | | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) |
| At December 31, 2023 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Discoveries | 210 | 192 | 402 | 210 | 192 | 402 | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Technical Revisions^(6)^ | 1 | — | 1 | 1 | — | 1 | — | — | — | — | — | — | ||||||||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Dispositions | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Production | (1) | — | (1) | (1) | — | (1) | — | — | — | — | — | — | ||||||||||||
| At December 31, 2024 | **** | 210 | **** | 192 | **** | 402 | **** | 210 | **** | 192 | **** | 402 | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — |
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CEE | **** | Total Gas^(4)^ | **** | Conventional Natural Gas | Coal Bed Methane | Shale Gas | ||||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P | | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P |
| Factors | | (mmcf) | | (mmcf) | | (mmcf) | | (mmcf) | | (mmcf) | | (mmcf) | | (mmcf) | | (mmcf) | | (mmcf) | | (mmcf) | | (mmcf) | | (mmcf) |
| At December 31, 2023 | 10,020 | 3,790 | 13,810 | 10,020 | 3,790 | 13,810 | — | — | — | — | — | — | ||||||||||||
| Discoveries | 3,371 | 2,272 | 5,644 | 3,371 | 2,272 | 5,644 | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | 2,597 | 1,253 | 3,850 | 2,597 | 1,253 | 3,850 | — | — | — | — | — | — | ||||||||||||
| Technical Revisions^(6)^ | (2,282) | (1,295) | (3,577) | (2,282) | (1,295) | (3,577) | — | — | — | — | — | — | ||||||||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Dispositions | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | (36) | (232) | (268) | (36) | (232) | (268) | — | — | — | — | — | — | ||||||||||||
| Production | (2,144) | — | (2,144) | (2,144) | — | (2,144) | — | — | — | — | — | — | ||||||||||||
| At December 31, 2024 | **** | 11,527 | **** | 5,789 | **** | 17,315 | **** | 11,527 | **** | 5,789 | **** | 17,315 | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CEE | **** | Natural Gas Liquids | BOE | |||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P |
| Factors | | (mbbl) | | (mbbl) | | (mbbl) | | (mboe) | | (mboe) | | (mboe) |
| At December 31, 2023 | — | — | — | 1,670 | 632 | 2,302 | ||||||
| Discoveries | — | — | — | 772 | 570 | 1,342 | ||||||
| Extensions & Improved Recovery^(5)^ | — | — | — | 433 | 209 | 642 | ||||||
| Technical Revisions^(6)^ | — | — | — | (380) | (216) | (596) | ||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | ||||||
| Dispositions | — | — | — | — | — | — | ||||||
| Economic Factors^(8)^ | — | — | — | (6) | (39) | (45) | ||||||
| Production | — | — | — | (358) | — | (358) | ||||||
| At December 31, 2024 | **** | — | **** | — | **** | — | **** | 2,131 | **** | 1,156 | **** | 3,287 |
Vermilion Energy Inc. ■ Page 29 ■ 2024 Annual Information Form
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| France | | Total Oil ^(4)^ | **** | Light & Medium Crude Oil | **** | Heavy Crude Oil | **** | Tight Oil | ||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | **** | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | P+P | |
| Factors | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) |
| At December 31, 2023 | 26,015 | 9,831 | 35,846 | 26,015 | 9,831 | 35,846 | — | — | — | — | — | — | ||||||||||||
| Discoveries | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Technical Revisions^(6)^ | (650) | (4,239) | (4,889) | (650) | (4,239) | (4,889) | — | — | — | — | — | — | ||||||||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Dispositions | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | 289 | 61 | 350 | 289 | 61 | 350 | — | — | — | — | — | — | ||||||||||||
| Production | (2,631) | — | (2,631) | (2,631) | — | (2,631) | — | — | — | — | — | — | ||||||||||||
| At December 31, 2024 | **** | 23,023 | **** | 5,653 | **** | 28,676 | **** | 23,023 | **** | 5,653 | **** | 28,676 | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — |
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| France | **** | Total Gas^(4)^ | **** | Conventional Natural Gas | **** | Coal Bed Methane | **** | Shale Gas | ||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P |
| Factors | | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) |
| At December 31, 2023 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Discoveries | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Technical Revisions^(6)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Dispositions | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Production | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| At December 31, 2024 | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| France | **** | Natural Gas Liquids | **** | BOE | ||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P |
| Factors | | (mbbl) | **** | (mbbl) | **** | (mbbl) | | (mboe) | **** | (mboe) | **** | (mboe) |
| At December 31, 2023 | — | — | — | 26,015 | 9,831 | 35,846 | ||||||
| Discoveries | — | — | — | — | — | — | ||||||
| Extensions & Improved Recovery^(5)^ | — | — | — | — | — | — | ||||||
| Technical Revisions^(6)^ | — | — | — | (650) | (4,239) | (4,889) | ||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | ||||||
| Dispositions | — | — | — | — | — | — | ||||||
| Economic Factors^(8)^ | — | — | — | 289 | 61 | 350 | ||||||
| Production | — | — | — | (2,631) | — | (2,631) | ||||||
| At December 31, 2024 | **** | — | **** | — | **** | — | **** | 23,023 | **** | 5,653 | **** | 28,676 |
Vermilion Energy Inc. ■ Page 30 ■ 2024 Annual Information Form
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Germany | **** | Total Oil^(4)^ | **** | Light & Medium Crude Oil | **** | Heavy Crude Oil | **** | Tight Oil | ||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | **** | Probable | **** | P+P | | Proved | **** | Probable | **** | P+P | | Proved | **** | Probable | **** | P+P | | Proved | **** | Probable | **** | P+P |
| Factors | | (mbbl) | **** | (mbbl) | **** | (mbbl) | | (mbbl) | **** | (mbbl) | **** | (mbbl) | | (mbbl) | **** | (mbbl) | **** | (mbbl) | | (mbbl) | **** | (mbbl) | **** | (mbbl) |
| At December 31, 2023 | 7,659 | 3,593 | 11,252 | 7,659 | 3,593 | 11,252 | — | — | — | — | — | — | ||||||||||||
| Discoveries | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | 301 | 110 | 410 | 301 | 110 | 410 | — | — | — | — | — | — | ||||||||||||
| Technical Revisions^(6)^ | (456) | (59) | (515) | (456) | (59) | (515) | — | — | — | — | — | — | ||||||||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Dispositions | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | 60 | (13) | 46 | 60 | (13) | 46 | — | — | — | — | — | — | ||||||||||||
| Production | (605) | — | (605) | (605) | — | (605) | — | — | — | — | — | — | ||||||||||||
| At December 31, 2024 | **** | 6,959 | **** | 3,630 | **** | 10,589 | **** | 6,959 | **** | 3,630 | **** | 10,589 | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — |
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Germany | **** | Total Gas^(4)^ | **** | Conventional Natural Gas | **** | Coal Bed Methane | **** | Shale Gas | ||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | **** | Probable | **** | P+P | | Proved | **** | Probable | **** | P+P | | Proved | **** | Probable | **** | P+P | | Proved | **** | Probable | **** | P+P |
| Factors | | (mmcf) | **** | (mmcf) | **** | (mmcf) | | (mmcf) | **** | (mmcf) | **** | (mmcf) | | (mmcf) | **** | (mmcf) | **** | (mmcf) | | (mmcf) | **** | (mmcf) | **** | (mmcf) |
| At December 31, 2023 | 53,328 | 53,350 | 106,678 | 53,328 | 53,350 | 106,678 | — | — | — | — | — | — | ||||||||||||
| Discoveries | 12,063 | 9,047 | 21,110 | 12,063 | 9,047 | 21,110 | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | 3,479 | (3,479) | — | 3,479 | (3,479) | — | — | — | — | — | — | — | ||||||||||||
| Technical Revisions^(6)^ | 2,179 | (9,083) | (6,904) | 2,179 | (9,083) | (6,904) | — | — | — | — | — | — | ||||||||||||
| Acquisitions^(7)^ | 6,968 | 3,982 | 10,950 | 6,968 | 3,982 | 10,950 | — | — | — | — | — | — | ||||||||||||
| Dispositions | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | (267) | (586) | (853) | (267) | (586) | (853) | — | — | — | — | — | — | ||||||||||||
| Production | (7,724) | — | (7,724) | (7,724) | — | (7,724) | — | — | — | — | — | — | ||||||||||||
| At December 31, 2024 | **** | 70,027 | **** | 53,231 | **** | 123,258 | **** | 70,027 | **** | 53,231 | **** | 123,258 | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Germany | **** | Natural Gas Liquids | BOE | |||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P |
| Factors | | (mbbl) | | (mbbl) | | (mbbl) | | (mboe) | | (mboe) | | (mboe) |
| At December 31, 2023 | — | — | — | 16,547 | 12,485 | 29,032 | ||||||
| Discoveries | — | — | — | 2,011 | 1,508 | 3,518 | ||||||
| Extensions & Improved Recovery^(5)^ | — | — | — | 881 | (470) | 410 | ||||||
| Technical Revisions^(6)^ | — | — | — | (93) | (1,573) | (1,666) | ||||||
| Acquisitions^(7)^ | — | — | — | 1,161 | 664 | 1,825 | ||||||
| Dispositions | — | — | — | — | — | — | ||||||
| Economic Factors^(8)^ | — | — | — | 15 | (111) | (96) | ||||||
| Production | — | — | — | (1,892) | — | (1,892) | ||||||
| At December 31, 2024 | **** | — | **** | — | **** | — | **** | 18,630 | **** | 12,502 | **** | 31,132 |
Vermilion Energy Inc. ■ Page 31 ■ 2024 Annual Information Form
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Ireland | **** | Total Oil ^(4)^ | **** | Light & Medium Crude Oil | Heavy Crude Oil | Tight Oil | ||||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | **** | Probable | **** | P+P | | Proved | **** | Probable | **** | P+P | | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | | P+P |
| Factors | | (mbbl) | **** | (mbbl) | **** | (mbbl) | | (mbbl) | **** | (mbbl) | | (mbbl) | | (mbbl) | **** | (mbbl) | **** | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) |
| At December 31, 2023 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Discoveries | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Technical Revisions^(6)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Dispositions | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Production | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| At December 31, 2024 | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — |
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Ireland | **** | Total Gas ^(4)^ | **** | Conventional Natural Gas | Coal Bed Methane | Shale Gas | ||||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | **** | Probable | **** | P+P | | Proved | **** | Probable | **** | P+P | | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | | P+P |
| Factors | | (mmcf) | | (mmcf) | | (mmcf) | | (mmcf) | | (mmcf) | | (mmcf) | | (mmcf) | | (mmcf) | | (mmcf) | | (mmcf) | | (mmcf) | | (mmcf) |
| At December 31, 2023 | 97,491 | 42,650 | 140,141 | 97,491 | 42,650 | 140,141 | — | — | — | — | — | — | ||||||||||||
| Discoveries | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Technical Revisions^(6)^ | 388 | (1,138) | (749) | 388 | (1,138) | (749) | — | — | — | — | — | — | ||||||||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Dispositions | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Production | (21,265) | — | (21,265) | (21,265) | — | (21,265) | — | — | — | — | — | — | ||||||||||||
| At December 31, 2024 | **** | 76,614 | **** | 41,513 | **** | 118,127 | **** | 76,614 | **** | 41,513 | **** | 118,127 | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Ireland | **** | Natural Gas Liquids | BOE | |||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | **** | Probable | **** | P+P | | Proved | **** | Probable | **** | P+P |
| Factors | | (mbbl) | | (mbbl) | | (mbbl) | | (mboe) | | (mboe) | | (mboe) |
| At December 31, 2023 | 10 | 4 | 14 | 16,258 | 7,113 | 23,371 | ||||||
| Discoveries | — | — | — | — | — | — | ||||||
| Extensions & Improved Recovery^(5)^ | — | — | — | — | — | — | ||||||
| Technical Revisions^(6)^ | (2) | — | (2) | 63 | (190) | (127) | ||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | ||||||
| Dispositions | — | — | — | — | — | — | ||||||
| Economic Factors^(8)^ | — | — | — | — | — | — | ||||||
| Production | — | — | — | (3,544) | — | (3,544) | ||||||
| At December 31, 2024 | **** | 8 | **** | 4 | **** | 12 | **** | 12,777 | **** | 6,923 | **** | 19,700 |
Vermilion Energy Inc. ■ Page 32 ■ 2024 Annual Information Form
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Netherlands | **** | Total Oil ^(4)^ | **** | Light & Medium Crude Oil | Heavy Crude Oil | Tight Oil | ||||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | **** | Probable | **** | P+P | | Proved | **** | Probable | **** | P+P | | Proved | **** | Probable | **** | P+P | **** | Proved | **** | Probable | **** | P+P |
| Factors | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) | | (mbbl) |
| At December 31, 2023 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Discoveries | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Technical Revisions^(6)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Dispositions | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Production | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| At December 31, 2024 | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — |
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Netherlands | | Total Gas^(4)^ | | Conventional Natural Gas | | Coal Bed Methane | | Shale Gas | ||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P |
| Factors | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) |
| At December 31, 2023 | 27,628 | 39,731 | 67,359 | 27,628 | 39,731 | 67,359 | — | — | — | — | — | — | ||||||||||||
| Discoveries | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | 1,065 | 555 | 1,620 | 1,065 | 555 | 1,620 | — | — | — | — | — | — | ||||||||||||
| Technical Revisions^(6)^ | 5,039 | (3,127) | 1,912 | 5,039 | (3,127) | 1,912 | — | — | — | — | — | — | ||||||||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Dispositions | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | (260) | (192) | (452) | (260) | (192) | (452) | — | — | — | — | — | — | ||||||||||||
| Production | (9,798) | — | (9,798) | (9,798) | — | (9,798) | — | — | — | — | — | — | ||||||||||||
| At December 31, 2024 | **** | 23,674 | **** | 36,967 | **** | 60,642 | **** | 23,674 | **** | 36,967 | **** | 60,642 | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Netherlands | | Natural Gas Liquids | | BOE | ||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P |
| Factors | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mboe) | **** | (mboe) | **** | (mboe) |
| At December 31, 2023 | 41 | 59 | 100 | 4,646 | 6,681 | 11,327 | ||||||
| Discoveries | — | — | — | — | — | — | ||||||
| Extensions & Improved Recovery^(5)^ | 3 | 2 | 5 | 181 | 94 | 275 | ||||||
| Technical Revisions^(6)^ | 52 | 49 | 101 | 892 | (472) | 420 | ||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | ||||||
| Dispositions | — | — | — | — | — | — | ||||||
| Economic Factors^(8)^ | (1) | (1) | (1) | (44) | (32) | (77) | ||||||
| Production | (27) | — | (27) | (1,660) | — | (1,660) | ||||||
| At December 31, 2024 | **** | 68 | **** | 109 | **** | 177 | **** | 4,014 | **** | 6,270 | **** | 10,284 |
Vermilion Energy Inc. ■ Page 33 ■ 2024 Annual Information Form
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| United States | | Total Oil^(4)^ | | Light & Medium Crude Oil | | Heavy Crude Oil | | Tight Oil | ||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P |
| Factors | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) |
| At December 31, 2023 | 13,428 | 9,167 | 22,596 | 13,428 | 9,167 | 22,596 | — | — | — | — | — | — | ||||||||||||
| Discoveries | | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||
| Extensions & Improved Recovery^(5)^ | 2,748 | (384) | 2,364 | 2,748 | (384) | 2,364 | — | — | — | — | — | — | ||||||||||||
| Technical Revisions^(6)^ | (217) | 51 | (165) | (217) | 51 | (165) | — | — | — | — | — | — | ||||||||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Dispositions | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | (8) | (4) | (12) | (8) | (4) | (12) | — | — | — | — | — | — | ||||||||||||
| Production | (1,157) | — | (1,157) | (1,157) | — | (1,157) | — | — | — | — | — | — | ||||||||||||
| At December 31, 2024 | **** | 14,795 | **** | 8,830 | **** | 23,625 | **** | 14,795 | **** | 8,830 | **** | 23,625 | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — |
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| United States | | Total Gas^(4)^ | | Conventional Natural Gas | | Coal Bed Methane^(5)^ | | Shale Gas | ||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P |
| Factors | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) |
| At December 31, 2023 | 30,132 | 17,140 | 47,272 | 30,132 | 17,140 | 47,272 | — | — | — | — | — | — | ||||||||||||
| Discoveries | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | 1,031 | (121) | 909 | 1,031 | (121) | 909 | — | — | — | — | — | — | ||||||||||||
| Technical Revisions^(6)^ | (557) | (621) | (1,178) | (557) | (621) | (1,178) | — | — | — | — | — | — | ||||||||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Dispositions | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | (56) | (22) | (78) | (56) | (22) | (78) | — | — | — | — | — | — | ||||||||||||
| Production | (2,603) | — | (2,603) | (2,603) | — | (2,603) | — | — | — | — | — | — | ||||||||||||
| At December 31, 2024 | **** | 27,947 | **** | 16,376 | **** | 44,323 | **** | 27,947 | **** | 16,376 | **** | 44,323 | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| United States | | Natural Gas Liquids | | BOE | ||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P |
| Factors | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mboe) | **** | (mboe) | **** | (mboe) |
| At December 31, 2023 | 4,520 | 2,571 | 7,091 | 22,970 | 14,595 | 37,565 | ||||||
| Discoveries | — | — | — | — | — | — | ||||||
| Extensions & Improved Recovery^(5)^ | 151 | (18) | 133 | 3,071 | (422) | 2,649 | ||||||
| Technical Revisions^(6)^ | (195) | (151) | (346) | (505) | (203) | (708) | ||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | ||||||
| Dispositions | — | — | — | — | — | — | ||||||
| Economic Factors^(8)^ | (8) | (3) | (11) | (25) | (11) | (36) | ||||||
| Production | (373) | — | (373) | (1,964) | — | (1,964) | ||||||
| At December 31, 2024 | **** | 4,094 | **** | 2,399 | **** | 6,493 | **** | 23,547 | **** | 13,959 | **** | 37,505 |
Vermilion Energy Inc. ■ Page 34 ■ 2024 Annual Information Form
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total Company | | Total Oil^(4)^ | | Light & Medium Crude Oil | | Heavy Crude Oil | | Tight Oil | ||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P |
| Factors | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) |
| At December 31, 2023 | 112,032 | 52,290 | 164,321 | 105,019 | 44,021 | 149,040 | 103 | 95 | 198 | 6,910 | 8,174 | 15,084 | ||||||||||||
| Discoveries | 210 | 192 | 402 | 210 | 192 | 402 | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | 8,347 | (707) | 7,640 | 5,379 | (1,044) | 4,334 | — | — | — | 2,968 | 338 | 3,306 | ||||||||||||
| Technical Revisions^(6)^ | (796) | (5,439) | (6,235) | (1,257) | (4,717) | (5,974) | 4 | (1) | 3 | 456 | (721) | (264) | ||||||||||||
| Acquisitions^(7)^ | 60 | 176 | 236 | 60 | 176 | 236 | — | — | — | — | — | — | ||||||||||||
| Dispositions ^(9)^ | (563) | (696) | (1,259) | (563) | (696) | (1,259) | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | 301 | 26 | 327 | 352 | 57 | 409 | — | 1 | 1 | (51) | (31) | (83) | ||||||||||||
| Production | (10,070) | — | (10,070) | (9,176) | — | (9,176) | (7) | — | (7) | (887) | — | (887) | ||||||||||||
| At December 31, 2024 | **** | 109,520 | **** | 45,843 | **** | 155,362 | **** | 100,023 | **** | 37,988 | **** | 138,012 | **** | 101 | **** | 95 | **** | 195 | **** | 9,396 | **** | 7,760 | **** | 17,155 |
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total Company | | Total Gas^(4)^ | | Conventional Natural Gas | | Coal Bed Methane^(5)^ | | Shale Gas | ||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P |
| Factors | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) | **** | (mmcf) |
| At December 31, 2023 | 728,200 | 542,468 | 1,270,668 | 542,507 | 323,662 | 866,169 | 2,505 | 814 | 3,319 | 183,188 | 217,991 | 401,179 | ||||||||||||
| Discoveries | 15,434 | 11,320 | 26,754 | 15,434 | 11,320 | 26,754 | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | 114,640 | 15,554 | 130,193 | 40,565 | 5,224 | 45,789 | — | — | — | 74,074 | 10,330 | 84,404 | ||||||||||||
| Technical Revisions^(6)^ | 12,588 | (56,757) | (44,169) | 9,306 | (24,099) | (14,793) | (487) | (12) | (500) | 3,769 | (32,646) | (28,876) | ||||||||||||
| Acquisitions^(7)^ | 14,832 | 5,554 | 20,387 | 14,832 | 5,554 | 20,387 | — | — | — | — | — | — | ||||||||||||
| Dispositions | (3,852) | (4,909) | (8,761) | (3,852) | (4,909) | (8,761) | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | (4,865) | (2,404) | (7,269) | (3,054) | (1,272) | (4,325) | (115) | (43) | (158) | (1,696) | (1,089) | (2,785) | ||||||||||||
| Production | (101,052) | — | (101,052) | (84,538) | — | (84,538) | (185) | — | (185) | (16,328) | — | (16,328) | ||||||||||||
| At December 31, 2024 | **** | 775,925 | **** | 510,826 | **** | 1,286,751 | **** | 531,202 | **** | 315,480 | **** | 846,682 | **** | 1,717 | **** | 759 | **** | 2,476 | **** | 243,007 | **** | 194,586 | **** | 437,593 |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total Company | | Natural Gas Liquids | | BOE | ||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P |
| Factors | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mboe) | **** | (mboe) | **** | (mboe) |
| At December 31, 2023 | 34,986 | 18,752 | 53,739 | 268,385 | 161,453 | 429,838 | ||||||
| Discoveries | — | — | — | 2,782 | 2,078 | 4,861 | ||||||
| Extensions & Improved Recovery^(5)^ | 6,386 | 875 | 7,260 | 33,839 | 2,761 | 36,600 | ||||||
| Technical Revisions^(6)^ | 3,096 | 5,766 | 8,862 | 4,398 | (9,132) | (4,734) | ||||||
| Acquisitions^(7)^ | 411 | 82 | 494 | 2,943 | 1,184 | 4,128 | ||||||
| Dispositions | (268) | (330) | (598) | (1,473) | (1,845) | (3,317) | ||||||
| Economic Factors^(8)^ | (299) | (139) | (438) | (809) | (514) | (1,323) | ||||||
| Production | (4,031) | — | (4,031) | (30,943) | — | (30,943) | ||||||
| At December 31, 2024 | **** | 40,282 | **** | 25,006 | **** | 65,288 | **** | 279,123 | **** | 155,986 | **** | 435,109 |
Vermilion Energy Inc. ■ Page 35 ■ 2024 Annual Information Form
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| North America | | Total Oil^(4)^ | | Light & Medium Crude Oil | | Heavy Crude Oil | | Tight Oil | ||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P |
| Factors | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) |
| At December 31, 2023 | 70,794 | 34,508 | 105,303 | 63,781 | 26,239 | 90,021 | 103 | 95 | 198 | 6,910 | 8,174 | 15,084 | ||||||||||||
| Discoveries | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | 6,972 | 258 | 7,230 | 4,004 | (80) | 3,924 | — | — | — | 2,968 | 338 | 3,306 | ||||||||||||
| Technical Revisions^(6)^ | (193) | (1,396) | (1,589) | (654) | (674) | (1,328) | 4 | (1) | 3 | 456 | (721) | (264) | ||||||||||||
| Acquisitions^(7)^ | 60 | 176 | 236 | 60 | 176 | 236 | — | — | — | — | — | — | ||||||||||||
| Dispositions | (563) | (696) | (1,259) | (563) | (696) | (1,259) | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | (47) | (21) | (69) | 4 | 9 | 13 | — | 1 | 1 | (51) | (31) | (83) | ||||||||||||
| Production | (5,573) | — | (5,573) | (4,679) | — | (4,679) | (7) | — | (7) | (887) | — | (887) | ||||||||||||
| At December 31, 2024 | **** | 71,450 | **** | 32,829 | **** | 104,279 | **** | 61,954 | **** | 24,975 | **** | 86,928 | **** | 101 | **** | 95 | **** | 195 | **** | 9,396 | **** | 7,760 | **** | 17,155 |
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Total Gas^(4)^ | | Conventional Natural Gas | | Coal Bed Methane^(5)^ | | Shale Gas | ||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P |
| Factors | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) |
| At December 31, 2023 | 539,732 | 402,946 | 942,679 | 354,040 | 184,141 | 538,181 | 2,505 | 814 | 3,319 | 183,188 | 217,991 | 401,179 | ||||||||||||
| Discoveries | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | 107,499 | 17,224 | 124,723 | 33,424 | 6,895 | 40,319 | — | — | — | 74,074 | 10,330 | 84,404 | ||||||||||||
| Technical Revisions^(6)^ | 7,263 | (42,114) | (34,851) | 3,981 | (9,456) | (5,475) | (487) | (12) | (500) | 3,769 | (32,646) | (28,876) | ||||||||||||
| Acquisitions^(7)^ | 7,864 | 1,572 | 9,436 | 7,864 | 1,572 | 9,436 | — | — | — | — | — | — | ||||||||||||
| Dispositions | (3,852) | (4,909) | (8,761) | (3,852) | (4,909) | (8,761) | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | (4,302) | (1,394) | (5,696) | (2,490) | (262) | (2,753) | (115) | (43) | (158) | (1,696) | (1,089) | (2,785) | ||||||||||||
| Production | (60,121) | — | (60,121) | (43,607) | — | (43,607) | (185) | — | (185) | (16,328) | — | (16,328) | ||||||||||||
| At December 31, 2024 | **** | 594,083 | **** | 373,326 | **** | 967,409 | **** | 349,360 | **** | 177,980 | **** | 527,340 | **** | 1,717 | **** | 759 | **** | 2,476 | **** | 243,007 | **** | 194,586 | **** | 437,593 |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Natural Gas Liquids | | BOE | ||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P |
| Factors | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) |
| At December 31, 2023 | 34,935 | 18,689 | 53,624 | 195,685 | 120,355 | 316,040 | ||||||
| Discoveries | — | — | — | — | — | — | ||||||
| Extensions & Improved Recovery^(5)^ | 6,382 | 873 | 7,256 | 31,271 | 4,002 | 35,273 | ||||||
| Technical Revisions^(6)^ | 3,046 | 5,717 | 8,763 | 4,064 | (2,698) | 1,366 | ||||||
| Acquisitions^(7)^ | 411 | 82 | 494 | 1,782 | 520 | 2,302 | ||||||
| Dispositions | (268) | (330) | (598) | (1,473) | (1,845) | (3,317) | ||||||
| Economic Factors^(8)^ | (298) | (139) | (437) | (1,063) | (392) | (1,455) | ||||||
| Production | (4,003) | — | (4,003) | (19,596) | — | (19,596) | ||||||
| At December 31, 2024 | **** | 40,206 | **** | 24,892 | **** | 65,099 | **** | 210,670 | **** | 119,942 | **** | 330,612 |
Vermilion Energy Inc. ■ Page 36 ■ 2024 Annual Information Form
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Total Oil^(4)^ | | Light & Medium Crude Oil | | Heavy Crude Oil | | Tight Oil | ||||||||||||||||
| International | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P |
| Factors | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) |
| At December 31, 2023 | 41,237 | 17,782 | 59,019 | 41,237 | 17,782 | 59,019 | — | — | — | — | — | — | ||||||||||||
| Discoveries | 210 | 192 | 402 | 210 | 192 | 402 | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | 1,375 | (964) | 410 | 1,375 | (964) | 410 | — | — | — | — | — | — | ||||||||||||
| Technical Revisions^(6)^ | (603) | (4,043) | (4,646) | (603) | (4,043) | (4,646) | — | — | — | — | — | — | ||||||||||||
| Acquisitions^(7)^ | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Dispositions | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | 348 | 48 | 396 | 348 | 48 | 396 | — | — | — | — | — | — | ||||||||||||
| Production | (4,498) | — | (4,498) | (4,498) | — | (4,498) | — | — | — | — | — | — | ||||||||||||
| At December 31, 2024 | **** | 38,070 | **** | 13,014 | **** | 51,083 | **** | 38,070 | **** | 13,014 | **** | 51,083 | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — |
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Total Gas^(4)^ | | Conventional Natural Gas | | Coal Bed Methane^(5)^ | | Shale Gas | ||||||||||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P |
| Factors | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) |
| At December 31, 2023 | 188,467 | 139,521 | 327,989 | 188,467 | 139,521 | 327,989 | — | — | — | — | — | — | ||||||||||||
| Discoveries | 15,434 | 11,320 | 26,754 | 15,434 | 11,320 | 26,754 | — | — | — | — | — | — | ||||||||||||
| Extensions & Improved Recovery^(5)^ | 7,141 | (1,671) | 5,470 | 7,141 | (1,671) | 5,470 | — | — | — | — | — | — | ||||||||||||
| Technical Revisions^(6)^ | 5,325 | (14,643) | (9,318) | 5,325 | (14,643) | (9,318) | — | — | — | — | — | — | ||||||||||||
| Acquisitions^(7)^ | 6,968 | 3,982 | 10,950 | 6,968 | 3,982 | 10,950 | — | — | — | — | — | — | ||||||||||||
| Dispositions | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||
| Economic Factors^(8)^ | (563) | (1,009) | (1,573) | (563) | (1,009) | (1,573) | — | — | — | — | — | — | ||||||||||||
| Production | (40,931) | — | (40,931) | (40,931) | — | (40,931) | — | — | — | — | — | — | ||||||||||||
| At December 31, 2024 | **** | 181,842 | **** | 137,500 | **** | 319,342 | **** | 181,842 | **** | 137,500 | **** | 319,342 | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Natural Gas Liquids | | BOE | ||||||||
| Proved Probable P+P ^(1) (2)^ | | Proved | | Probable | | P+P | | Proved | | Probable | | P+P |
| Factors | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) | **** | (mbbl) |
| At December 31, 2023 | 51 | 63 | 114 | 72,700 | 41,098 | 113,798 | ||||||
| Discoveries^(10)^ | — | — | — | 2,782 | 2,078 | 4,861 | ||||||
| Extensions & Improved Recovery^(5)^ | 3 | 2 | 5 | 2,568 | (1,241) | 1,327 | ||||||
| Technical Revisions^(6)^ | 50 | 49 | 99 | 334 | (6,434) | (6,100) | ||||||
| Acquisitions^(7)^ | — | — | — | 1,161 | 664 | 1,825 | ||||||
| Dispositions | — | — | — | — | — | — | ||||||
| Economic Factors^(8)^ | (1) | (1) | (1) | 254 | (121) | 133 | ||||||
| Production | (27) | — | (27) | (11,347) | — | (11,347) | ||||||
| At December 31, 2024 | **** | 76 | **** | 113 | **** | 189 | **** | 68,453 | **** | 36,043 | **** | 104,496 |
Notes:
| (1) | "Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. |
|---|---|
| (2) | "Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. |
| --- | --- |
| (3) | The pricing assumptions used in the McDaniel & Associates Report with respect to net present value of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth in “Forecast Prices used in Estimates”. McDaniel & Associates is an independent qualified reserves evaluator appointed pursuant to NI 51-101. |
| --- | --- |
| (4) | For reporting purposes, “Total Oil” is the sum of Light Crude Oil and Medium Crude Oil, Heavy Crude Oil and Tight Oil and "Total Gas" is the sum of Conventional Natural Gas, Coal Bed Methane and Shale Gas. |
| --- | --- |
| (5) | “Extensions & Improved Recovery" are additions to booked volumes resulting from a capital expenditure in previously discovered reservoirs. |
| --- | --- |
| • | Canada – Extensions can be primarily attributed to adding a sixth booking year in Mica, and additions in within Alberta |
| --- | --- |
| • | United States - Extensions driven by additional locations added in Parkman and Turner |
| --- | --- |
| (6) | “Technical Revisions" are positive or negative revisions to an estimate resulting from new technical data or revised interpretations on previously assigned volumes, performance, development schedule and operating costs. |
| --- | --- |
| • | Canada – Positive technical revisions are primarily attributed to a newly signed contract in Mica for 2028+ future volumes that results in increased liquid yields |
| --- | --- |
| • | France – Negative technical revisions primarily driven by changes to the development plan which re-allocated capital to our growing Mica asset |
| --- | --- |
Vermilion Energy Inc. ■ Page 37 ■ 2024 Annual Information Form
| ^(7)^ | "Acquisitions" are positive additions to volume estimates because of purchasing interests in oil and gas properties. |
|---|---|
| • | Canada – Acquisition volumes are primarily associated with added Mannville locations from minor swaps |
| --- | --- |
| • | Germany – Acquisition volumes are associated with the increased working interest in Osterheide (Osth Z2-2) well |
| --- | --- |
| ^(8)^ | "Economic factors" are positive or negative revisions resulting from changes in market price outlook, inflation, or regulatory changes. |
| --- | --- |
| ^(9)^ | "Dispositions" are negative changes to volume estimates because of divesting of interests in oil and gas properties. |
| --- | --- |
| • | Canada – Disposition volumes are mainly associated with the sale of select non-core Cardium assets and minor swaps |
| --- | --- |
| ^(10)^ | “Discoveries” are reserves in newly discovered reservoirs which have had their existence confirmed and are an accumulation of a significant quantity of potentially recoverable petroleum. |
| --- | --- |
| • | Germany – Wisselshorst (WSSH Z1a) well Havel zone was booked |
| --- | --- |
| • | CEE – Bookings added in the SA-7 block in Croatia |
| --- | --- |
Vermilion Energy Inc. ■ Page 38 ■ 2024 Annual Information Form
Undeveloped reserves
Proved undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. These reserves have a 90% probability of being recovered. Vermilion's current plan is to develop these reserves in the following five years. The pace of development of these reserves is influenced by many factors, including but not limited to, the outcomes of yearly drilling and reservoir evaluations, changes in commodity pricing, changes in capital allocations, changing technical conditions, regulatory changes and impact of future acquisitions and dispositions. As new information becomes available these reserves are reviewed and development plans are revised accordingly.
With Vermilion's extensive portfolio of opportunities, which also include resource plays and longer term projects, it would be impracticable to fully develop the entire portfolio of booked opportunities within two years. The development of these reserves has been based on planned and prioritized capital activity levels. The majority of the proved reserves are planned to be on stream within a three-year time frame, which represents approximately 64% of the net undeveloped location count, as well as 71% of the net total future development capital. All development is estimated to be completed within five years.
Probable undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. These reserves have a 50% probability of being recovered. Vermilion's current plan is to develop these reserves over the next eight years. In general, development of these reserves requires additional evaluation data to increase the probability of success to a level that favorably ranks the project against other projects in Vermilion's inventory. This increases the timeline for the development of these reserves. This timetable may be altered depending on outside market forces, changes in capital allocations and impact of future acquisitions and dispositions.
The Proved Plus Probable development is scheduled beyond two years with a balanced development plan to have the majority of locations on stream within five years, representing 75% of the net Probable locations, and 87% of the net future development capital spend.
Timing of initial undeveloped reserves assignment
Undeveloped Reserves Attributed in Current Year
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Light Crude Oil & Medium Crude Oil | | Heavy Crude Oil | | Tight Oil | | Conventional Natural Gas | ||||||||
| | | First | | | | First | | | | First | | | | First | | |
| | Attributed ^(1)^ | Booked (mbbl) | Attributed ^(1)^ | Booked (mbbl) | Attributed ^(1)^ | Booked (mbbl) | Attributed ^(1)^ | Booked (mbbl) | ||||||||
| Proved | | | | | | | | | | | | | ||||
| 2022 | | 3,212 | | 54,984 | | — | | 84 | | 3,623 | | 3,623 | | 13,303 | | 117,067 |
| 2023 | | 3,509 | | 30,573 | | — | | 83 | | 2,042 | | 4,995 | | 14,844 | | 92,475 |
| 2024 | | 4,944 | | 31,669 | | — | | 83 | | 2,968 | | 6,485 | | 43,774 | | 116,315 |
| Probable | | | | | | | | | | | | | | | | |
| 2022 | | 5,564 | | 52,006 | | — | | 25 | | 6,060 | | 6,060 | | 18,380 | | 213,689 |
| 2023 | | 871 | | 24,452 | | — | | 90 | | 1,087 | | 7,568 | | 8,435 | | 153,055 |
| 2024 | | — | | 20,428 | | — | | 88 | | 338 | | 6,835 | | 26,273 | | 149,103 |
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Shale Gas | **** | Coal Bed Methane | **** | Natural Gas Liquids | **** | Total Oil Equivalent | ||||||||
| | | First | | Booked | | First | | Booked | | First | | Booked | | First | | Booked |
| | **** | Attributed^(1)^ | **** | (mmcf) | **** | Attributed^(1)^ | **** | (mmcf) | **** | Attributed^(1)^ | **** | (mmcf) | **** | Attributed^(1)^ | **** | (mboe) |
| Proved | ||||||||||||||||
| 2022 | 100,205 | 100,205 | — | 428 | 3,652 | 15,437 | 29,405 | 110,411 | ||||||||
| 2023 | 49,979 | 128,467 | — | 391 | 1,847 | 10,796 | 18,203 | 83,336 | ||||||||
| 2024 | 74,074 | 158,456 | — | — | 5,506 | 16,293 | 33,060 | 100,324 | ||||||||
| Probable | | | | | | | ||||||||||
| 2022 | 179,177 | 179,177 | — | 120 | 6,384 | 19,451 | 50,934 | 143,041 | ||||||||
| 2023 | 23,722 | 200,070 | — | 111 | 1,041 | 11,174 | 8,358 | 102,157 | ||||||||
| 2024 | 10,330 | 168,475 | — | — | 1,223 | 17,413 | 7,661 | 97,693 |
Note:
| (1) | “First Attributed” refers to reserves first attributed at year-end of the corresponding fiscal year. |
|---|
Vermilion Energy Inc. ■ Page 39 ■ 2024 Annual Information Form
Future development costs
The table below sets out the future development costs deducted in the estimation of future net revenue attributable to total proved reserves and total proved plus probable reserves (using forecast prices and costs). The future development cost estimates disclosed below are associated with reserves as evaluated by McDaniel & Associates. The future development cost estimates will differ from the costs ultimately incurred by Vermilion due to a number of factors, including costs incurred for properties that do not have associated reserves as evaluated by McDaniel & Associates and economic factors that may alter development pace and project selection.
Vermilion expects to source its capital expenditure requirements from internally generated cash flow and, as appropriate, from the Revolving Credit Facility or equity or debt financing. It is anticipated that costs of funding the future development costs will not impact development of its properties or Vermilion’s reserves or future net revenue.
| | | | | |
|---|---|---|---|---|
| | **** | Total Proved | **** | Total Proved Plus Probable |
| ($M) | | Estimated Using Forecast Prices and Costs^(1)^ | | Estimated Using Forecast Prices and Costs ^(1)^ |
| Australia | | | ||
| 2025 | 5,725 | 11,450 | ||
| 2026 | 33,357 | 66,715 | ||
| 2027 | — | — | ||
| 2028 | — | — | ||
| 2029 | — | — | ||
| Remainder | — | — | ||
| Australia total for all years undiscounted | **** | 39,082 | **** | 78,165 |
| Canada | | | ||
| 2025 | 246,925 | 262,059 | ||
| 2026 | 232,590 | 249,599 | ||
| 2027 | 326,904 | 336,191 | ||
| 2028 | 122,336 | 223,009 | ||
| 2029 | 145,703 | 316,246 | ||
| Remainder | 76,263 | 243,041 | ||
| Canada total for all years undiscounted | **** | 1,150,722 | **** | 1,630,144 |
| CEE | | | ||
| 2025 | 7,252 | 7,252 | ||
| 2026 | 7,813 | 7,813 | ||
| 2027 | 5,697 | 9,491 | ||
| 2028 | — | 181 | ||
| 2029 | 186 | 186 | ||
| Remainder | — | 145 | ||
| CEE total for all years undiscounted | **** | 20,948 | **** | 25,068 |
| France | | | ||
| 2025 | 6,589 | 6,589 | ||
| 2026 | 17,493 | 17,493 | ||
| 2027 | 34,634 | 40,370 | ||
| 2028 | 28,983 | 42,470 | ||
| 2029 | 5,345 | 35,587 | ||
| Remainder | — | — | ||
| France total for all years undiscounted | **** | 93,044 | **** | 142,508 |
| Germany | | | ||
| 2025 | 49,069 | 54,273 | ||
| 2026 | 10,705 | 30,739 | ||
| 2027 | 33,683 | 40,303 | ||
| 2028 | 4,811 | 5,433 | ||
| 2029 | 2,046 | 1,364 | ||
| Remainder | — | — | ||
| Germany for all years undiscounted | **** | 100,314 | **** | 132,112 |
Vermilion Energy Inc. ■ Page 40 ■ 2024 Annual Information Form
| | | | | |
|---|---|---|---|---|
| | **** | Total Proved | **** | Total Proved Plus Probable |
| ($M) | | Estimated Using Forecast Prices and Costs^(1)^ | | Estimated Using Forecast Prices and Costs ^(1)^ |
| Ireland | | | | |
| 2025 | | 2,295 | 2,295 | |
| 2026 | | 8,032 | 8,032 | |
| 2027 | | 14,551 | 14,551 | |
| 2028 | | 6,253 | 6,253 | |
| 2029 | | — | — | |
| Remainder | | — | — | |
| Ireland total for all years undiscounted | | 31,131 | 31,131 | |
| Netherlands | | | | |
| 2025 | | 7,240 | 21,759 | |
| 2026 | | 243 | 14,853 | |
| 2027 | | 315 | 19,258 | |
| 2028 | | 230 | 28,106 | |
| 2029 | | — | — | |
| Remainder | | — | — | |
| Netherlands total for all years undiscounted | | 8,029 | 83,977 | |
| United States | | | | |
| 2025 | | 56,272 | 69,146 | |
| 2026 | | 80,730 | 97,448 | |
| 2027 | | 104,916 | 104,916 | |
| 2028 | | 93,541 | 93,541 | |
| 2029 | | 48,918 | 75,505 | |
| Remainder | | 1,334 | 104,692 | |
| United States total for all years undiscounted | | 385,710 | 545,247 | |
| Total Company | | | | |
| 2025 | | 381,367 | 434,823 | |
| 2026 | | 390,963 | 492,691 | |
| 2027 | | 520,700 | 565,080 | |
| 2028 | | 256,154 | 398,993 | |
| 2029 | | 202,197 | 428,887 | |
| Remainder | | 77,598 | 347,879 | |
| Total for all years undiscounted | | 1,828,979 | 2,668,352 | |
| North America | | | | |
| 2025 | | 303,197 | 331,205 | |
| 2026 | | 313,320 | 347,047 | |
| 2027 | | 431,820 | 441,106 | |
| 2028 | | 215,877 | 316,549 | |
| 2029 | | 194,620 | 391,750 | |
| Remainder | | 77,598 | 347,733 | |
| North America total for all years undiscounted | | 1,536,432 | 2,175,391 | |
| International | | | | |
| 2025 | | 78,171 | 103,619 | |
| 2026 | | 77,643 | 145,644 | |
| 2027 | | 88,880 | 123,973 | |
| 2028 | | 40,277 | 82,443 | |
| 2029 | | 7,577 | 37,137 | |
| Remainder | | — | 145 | |
| International total for all years undiscounted | | 292,547 | 492,961 |
Note:
| (1) | The pricing assumptions used in the McDaniel & Associates Report with respect to net present value of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are detailed in “Forecast Prices used in Estimates”. |
|---|
Vermilion Energy Inc. ■ Page 41 ■ 2024 Annual Information Form
Crude oil and natural gas properties and wells
The following table sets forth the number of wells (based on wellbores) in which Vermilion held a working interest as at December 31, 2024:
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Crude Oil | | Natural Gas | ||||||||||||
| | | Producing | | Non-Producing^(4)^ | | Producing | | Non-Producing^(4)^ | ||||||||
| | **** | Gross Wells^(2)^ | **** | Net Wells^(3)^ | **** | Gross Wells^(2)^ | **** | Net Wells^(3)^ | **** | Gross Wells^(2)^ | **** | Net Wells^(3)^ | **** | Gross Wells^(2)^ | **** | Net Wells^(3)^ |
| Canada | | | | | | | | | | | | | ||||
| Alberta | 415 | 290 | 138 | 87 | 631 | 478 | | 356 | 252 | |||||||
| Saskatchewan | 1,592 | 883 | 1,000 | 603 | — | — | 2 | 1 | ||||||||
| British Columbia | 25 | 24 | 1 | 1 | 3 | 3 | | 3 | 1 | |||||||
| Total Canada | 2,032 | 1,197 | 1,139 | 691 | 634 | 481 | 361 | 255 | ||||||||
| Australia^(1)^ | 22 | 22 | 1 | 1 | 1 | 1 | | — | — | |||||||
| Croatia | — | — | — | — | 2 | 2 | — | — | ||||||||
| France | 293 | 289 | 134 | 132 | 1 | 1 | | 2 | 2 | |||||||
| Germany | 67 | 56 | 90 | 74 | 24 | 13 | 6 | 3 | ||||||||
| Ireland ^(1)^ | — | — | — | — | 6 | 3 | | — | — | |||||||
| Netherlands | — | — | — | — | 78 | 33 | | 135 | 78 | |||||||
| Hungary | — | — | — | — | — | — | | 1 | 1 | |||||||
| United States | 172 | 138 | 83 | 79 | — | — | — | — | ||||||||
| Total Vermilion | 2,586 | 1,702 | 1,447 | 977 | 746 | 534 | 505 | 339 | ||||||||
| North America | 2,204 | 1,335 | 1,222 | 770 | 634 | 481 | 361 | 255 | ||||||||
| International | 382 | 367 | 225 | 207 | 112 | 54 | | 144 | 84 |
Notes:
| (1) | Wells for Australia and Ireland are located offshore. |
|---|---|
| (2) | "Gross" refers to the total wells in which Vermilion has an interest, directly or indirectly. |
| --- | --- |
| (3) | "Net" refers to the total wells in which Vermilion has an interest, directly or indirectly, multiplied by the percentage working interest owned by Vermilion, directly or indirectly, therein. |
| --- | --- |
| (4) | Non-producing wells include wells which are capable of producing, but which are currently not producing, and are re-evaluated with respect to future commodity prices, proximity to facility infrastructure, design of future exploration and development programs, and access to capital. |
| --- | --- |
Vermilion Energy Inc. ■ Page 42 ■ 2024 Annual Information Form
Costs incurred
The following table summarizes the capital expenditures made by Vermilion on oil and gas properties for the year ended December 31, 2024:
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | Acquisition Costs for Proved | | Acquisition Costs for Unproved | | Exploration | | Development | | Total |
| (M) | Properties | **** | Properties | **** | Costs | **** | Costs | **** | Costs |
| Australia | — | | — | | — | | 29,284 | | 29,284 |
| Canada | 11,520 | | 1,208 | | — | | 374,892 | | 387,620 |
| Croatia | — | — | 7,213 | 4,838 | 12,051 | ||||
| France | — | — | — | 45,671 | 45,671 | ||||
| Germany | — | — | 28,043 | 66,545 | 94,588 | ||||
| Hungary | — | — | 335 | — | 335 | ||||
| Ireland | — | — | — | 4,355 | 4,355 | ||||
| Netherlands | — | | — | | — | | 25,905 | | 25,905 |
| Slovakia | — | — | 427 | — | 427 | ||||
| United States | — | — | — | 35,472 | 35,472 | ||||
| Total | 11,520 | 1,208 | 36,018 | 586,962 | 635,708 | ||||
| North America | 11,520 | 1,208 | — | 410,364 | 423,092 | ||||
| International | — | — | 36,018 | 176,598 | 212,616 |
All values are in US Dollars.
Acreage
The following table summarizes the acreage for the year ended December 31, 2024:
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Developed ^(1)^ | | Undeveloped | | Total | ||||||
| | **** | Gross ^(2)^ | **** | Net ^(3)^ | **** | Gross ^(2)^ | **** | Net ^(3)^ | **** | Gross ^(2)(4)^ | **** | Net ^(3)(4)^ |
| Australia | 20,164 | 20,164 | 39,389 | 39,389 | 59,552 | 59,552 | ||||||
| Canada | 713,833 | 563,212 | 326,441 | 262,320 | 1,040,274 | 825,532 | ||||||
| Croatia | 11,166 | 11,166 | 376,580 | 225,948 | 387,747 | 237,115 | ||||||
| France | 257,394 | 248,142 | — | — | 257,394 | 248,142 | ||||||
| Germany | 108,676 | 55,964 | 1,456,573 | 672,124 | 1,565,249 | 728,088 | ||||||
| Hungary | 1,225 | 1,225 | 309,413 | 309,413 | 310,638 | 310,638 | ||||||
| Ireland | 7,326 | 4,148 | — | — | 7,326 | 4,148 | ||||||
| Netherlands | 160,118 | 64,426 | 1,276,080 | 679,525 | 1,436,198 | 743,951 | ||||||
| Slovakia | — | — | 97,960 | 48,980 | 97,960 | 48,980 | ||||||
| United States | 62,397 | 46,693 | 51,052 | 38,203 | 113,449 | 84,896 | ||||||
| Total | 1,342,299 | 1,015,140 | 3,933,488 | 2,275,902 | 5,275,787 | 3,291,042 | ||||||
| North America | 776,230 | 609,905 | 377,493 | 300,523 | 1,153,723 | 910,428 | ||||||
| International | 566,069 | 405,235 | 3,555,995 | 1,975,379 | 4,122,064 | 2,380,614 |
Notes:
| (1) | “Developed” means the acreage assigned to productive wells based on applicable regulations. |
|---|---|
| (2) | “Gross” means the total acreage in which Vermilion has a working interest, directly or indirectly. |
| --- | --- |
| (3) | “Net” means the total acreage in which Vermilion has a working interest, directly or indirectly, multiplied by the percentage working interest of Vermilion. |
| --- | --- |
| (4) | When determining gross and net acreage for two or more leases covering the same lands but different rights, the acreage is reported for each lease. Where there are multiple discontinuous rights in a single lease, the acreage is reported only once. |
| --- | --- |
Vermilion Energy Inc. ■ Page 43 ■ 2024 Annual Information Form
Exploration and development activities
The following table sets forth the number of development and exploration wells which Vermilion drilled during its 2024 financial year:
| | | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| | | Exploration Wells | | Development Wells | ||||
| | **** | Gross^(1)^ | **** | Net^(2)^ | **** | Gross^(1)^ | **** | Net^(2)^ |
| Australia | | | | | | | ||
| Oil | — | — | — | — | ||||
| Gas | — | — | — | — | ||||
| Dry Holes | — | — | — | — | ||||
| Total Australia | — | — | — | — | ||||
| Canada | | | | | | | | |
| Oil | — | — | 29.0 | 28.9 | ||||
| Gas | — | — | 12.0 | 11.3 | ||||
| Service | | — | | — | | 1.0 | | 1.0 |
| Dry Holes | — | — | — | — | ||||
| Total Canada | — | — | 42.0 | 41.2 | ||||
| Croatia | | | | | | | | |
| Oil | 1.0 | 0.6 | — | — | ||||
| Gas | 3.0 | 1.8 | — | — | ||||
| Dry holes | — | — | — | — | ||||
| Total Croatia | 4.0 | 2.4 | — | — | ||||
| France | | | | | | | | |
| Oil | — | — | — | — | ||||
| Gas | — | — | — | — | ||||
| Dry Holes | — | — | — | — | ||||
| Total France | — | — | — | — | ||||
| Germany | | | | | | | | |
| Oil | — | — | — | — | ||||
| Gas | — | — | 2.0 | 1.6 | ||||
| Dry Holes | — | — | — | — | ||||
| Total Germany | — | — | 2.0 | 1.6 | ||||
| Hungary | | | | | | | | |
| Oil | — | — | — | — | ||||
| Gas | — | — | — | — | ||||
| Dry Holes | — | — | — | — | ||||
| Total Hungary | — | — | — | — | ||||
| Ireland | | | | | | | | |
| Oil | — | — | — | — | ||||
| Gas | — | — | — | — | ||||
| Dry Holes | — | — | — | — | ||||
| Total Ireland | — | — | — | — | ||||
| Netherlands | | | | | | | | |
| Oil | — | — | — | — | ||||
| Gas | — | — | — | — | ||||
| Dry Holes | — | — | — | — | ||||
| Total Netherlands | — | — | — | — | ||||
| United States | | | | | | | | |
| Oil | — | — | 10.0 | 0.8 | ||||
| Gas | — | — | — | — | ||||
| Dry Holes | — | — | — | — | ||||
| Total United States | — | — | 10.0 | 0.8 |
Vermilion Energy Inc. ■ Page 44 ■ 2024 Annual Information Form
| | | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| | | Exploration Wells | | Development Wells | ||||
| | **** | Gross^(1)^ | **** | Net^(2)^ | **** | Gross^(1)^ | **** | Net^(2)^ |
| Total Company | **** | | **** | | **** | | **** | |
| Oil | | 1.0 | 0.6 | 39.0 | 29.7 | |||
| Gas | | 3.0 | 1.8 | 14.0 | 12.9 | |||
| Service | | — | | — | | 1.0 | | 1.0 |
| Dry Holes | | — | — | — | — | |||
| Total Company | | 4.0 | 2.4 | 54.0 | 43.6 | |||
| North America | | | | | | | | |
| Oil | | — | — | 39.0 | 29.7 | |||
| Gas | | — | — | 12.0 | 11.3 | |||
| Service | | — | | — | | 1.0 | | 1.0 |
| Dry Holes | | — | — | — | — | |||
| Total North America | | — | — | 52.0 | 42.0 | |||
| International | | | | | | | | |
| Oil | | 1.0 | 0.6 | — | — | |||
| Gas | | 3.0 | 1.8 | 2.0 | 1.6 | |||
| Dry Holes | | — | — | — | — | |||
| Total International | | 4.0 | 2.4 | 2.0 | 1.6 |
Notes:
| (1) | "Gross" refers to the total wells in which Vermilion has an interest, directly or indirectly. |
|---|---|
| (2) | "Net" refers to the total wells in which Vermilion has an interest, directly or indirectly, multiplied by the percentage working interest owned by Vermilion, directly or indirectly therein. |
| --- | --- |
Vermilion Energy Inc. ■ Page 45 ■ 2024 Annual Information Form
Properties with no attributed reserves
The following table sets out Vermilion's properties with no attributed reserves as at December 31, 2024:
| | | | | |
|---|---|---|---|---|
| Country | **** | Gross Acres^(1)^ | **** | Net Acres^(2)^ |
| Australia | 39,389 | 39,389 | ||
| Canada | 326,441 | 262,320 | ||
| Croatia | 376,580 | 225,948 | ||
| Germany | 1,456,573 | 672,124 | ||
| Hungary | 309,413 | 309,413 | ||
| Netherlands | 1,276,080 | 679,525 | ||
| Slovakia | 97,960 | 48,980 | ||
| United States | 51,052 | 38,203 | ||
| Total | **** | 3,933,488 | **** | 2,275,902 |
| North America | 377,493 | 300,523 | ||
| International | 3,555,995 | 1,975,379 |
Notes:
| (1) | "Gross" refers to the total acres in which Vermilion has an interest, directly or indirectly. |
|---|---|
| (2) | "Net" refers to the total acres in which Vermilion has an interest, directly or indirectly, multiplied by the percentage working interest owned by Vermilion, directly or indirectly therein. |
| --- | --- |
Vermilion expects its rights to explore, develop, and exploit approximately 50,089 (34,814 net) acres in Canada and 366,260 (219,756 net) acres in the Netherlands to expire within one year, unless the Company initiates the capital activity necessary to retain the rights. Work commitments on these lands are categorized as seismic acquisition, geophysical studies, or well commitments. No such rights are expected to expire within one year for Australia, Croatia, Germany, Hungary, Slovakia, and the United States. Vermilion currently has no material work commitments in Australia, Canada, France, Ireland, the Netherlands and the United States. Vermilion's work commitments with respect to its European lands held are estimated to be $46.6 million in the next year.
Vermilion’s properties with no attributed reserves do not have any significant abandonment and reclamation costs. All properties with no attributed reserves do not have high expected development or operating costs or contractual sales obligations to produce and sell at substantially lower prices than could be realized.
Vermilion Energy Inc. ■ Page 46 ■ 2024 Annual Information Form
Production estimates
The following table sets forth the volume of production estimated for the year ended December 31, 2025 as reflected in the estimates of gross proved reserves and gross proved plus probable reserves in the McDaniel & Associates Report:
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Light Crude Oil & | | | | | | Conventional | | Coal Bed | | Shale | | Natural **** Gas | | |
| | | Medium Crude Oil | | Heavy Crude Oil | | Tight Oil | | Natural Gas | | Methane | | Natural Gas | | Liquids | | BOE |
| | **** | (bbl/d) | **** | (bbl/d) | **** | (bbl/d) | **** | (mcf/d) | **** | (mcf/d) | **** | (mcf/d) | **** | (bbl/d) | **** | (boe/d) |
| Australia | ||||||||||||||||
| Proved | 3,975 | — | — | — | — | — | — | 3,975 | ||||||||
| Probable | 104 | — | — | — | — | — | — | 104 | ||||||||
| Proved Plus Probable | **** | 4,080 | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | 4,080 |
| Canada | | | | | | | | | ||||||||
| Proved | 8,956 | 14 | 2,718 | 118,245 | 439 | 60,076 | 10,247 | 51,727 | ||||||||
| Probable | 392 | 1 | 441 | 13,743 | 12 | 6,777 | 1,280 | 5,537 | ||||||||
| Proved Plus Probable | **** | 9,348 | **** | 15 | **** | 3,159 | **** | 131,988 | **** | 451 | **** | 66,852 | **** | 11,527 | **** | 57,264 |
| CEE | | | | | | | | | ||||||||
| Proved | 36 | — | — | 8,309 | — | — | — | 1,420 | ||||||||
| Probable | 4 | — | — | 1,533 | — | — | — | 259 | ||||||||
| Proved Plus Probable | **** | 39 | **** | — | **** | — | **** | 9,842 | **** | — | **** | — | **** | — | **** | 1,680 |
| France | | | | | | | | | ||||||||
| Proved | 6,758 | — | — | — | — | — | — | 6,758 | ||||||||
| Probable | 164 | — | — | — | — | — | — | 164 | ||||||||
| Proved Plus Probable | **** | 6,923 | **** | — | **** | — | **** | — | **** | — | **** | — | **** | — | **** | 6,923 |
| Germany | | | | | | | | | ||||||||
| Proved | 1,911 | — | — | 27,357 | — | — | — | 6,470 | ||||||||
| Probable | 160 | — | — | 1,613 | — | — | — | 429 | ||||||||
| Proved Plus Probable | **** | 2,071 | **** | — | **** | — | **** | 28,970 | **** | — | **** | — | **** | — | **** | 6,899 |
| Ireland | | | | | | | | | ||||||||
| Proved | — | — | — | 49,005 | — | — | 5 | 8,173 | ||||||||
| Probable | — | — | — | 1,255 | — | — | — | 209 | ||||||||
| Proved Plus Probable | **** | — | **** | — | **** | — | **** | 50,260 | **** | — | **** | — | **** | 5 | **** | 8,382 |
| Netherlands | | | | | | | | | ||||||||
| Proved | — | — | — | 21,038 | — | — | 61 | 3,567 | ||||||||
| Probable | — | — | — | 2,157 | — | — | 6 | 366 | ||||||||
| Proved Plus Probable | **** | — | **** | — | **** | — | **** | 23,195 | **** | — | **** | — | **** | 68 | **** | 3,933 |
| United States | | | | | | | | | ||||||||
| Proved | 2,956 | — | — | 6,393 | — | — | 937 | 4,958 | ||||||||
| Probable | 595 | — | — | 786 | — | — | 115 | 841 | ||||||||
| Proved Plus Probable | **** | 3,551 | **** | — | **** | — | **** | 7,179 | **** | — | **** | — | **** | 1,052 | **** | 5,799 |
| Corporate | | | | | | | | | ||||||||
| Proved | 24,591 | 14 | 2,718 | 230,347 | 439 | 60,076 | 11,249 | 87,049 | ||||||||
| Probable | 1,420 | 1 | 441 | 21,087 | 12 | 6,777 | 1,402 | 7,910 | ||||||||
| Proved Plus Probable | **** | 26,011 | **** | 15 | **** | 3,159 | **** | 251,434 | **** | 451 | **** | 66,852 | **** | 12,652 | **** | 94,959 |
| North America | | | | | | | | | ||||||||
| Proved | 11,911 | 14 | 2,718 | 124,638 | 439 | 60,076 | 11,183 | 56,685 | ||||||||
| Probable | 987 | 1 | 441 | 14,529 | 12 | 6,777 | 1,396 | 6,378 | ||||||||
| Proved Plus Probable | **** | 12,898 | **** | 15 | **** | 3,159 | **** | 139,167 | **** | 451 | **** | 66,852 | **** | 12,579 | **** | 63,063 |
| International | | | | | | | | | ||||||||
| Proved | 12,680 | — | — | 105,709 | — | — | 66 | 30,364 | ||||||||
| Probable | 432 | — | — | 6,558 | — | — | 7 | 1,532 | ||||||||
| Proved Plus Probable | **** | 13,112 | **** | — | **** | — | **** | 112,267 | **** | — | **** | — | **** | 73 | **** | 31,896 |
Vermilion Energy Inc. ■ Page 47 ■ 2024 Annual Information Form
Production history
The following table sets forth certain information in respect of production, product prices received, royalties paid, production costs, realized hedging gains and losses, and operating netback received by Vermilion for each quarter of its most recently completed financial year:
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| | Three Months Ended March 31, 2024 | **** | Three Months Ended June 30, 2024 | **** | Three Months Ended September 30, 2024 | **** | Three Months Ended December 31, 2024 |
| Australia | | | | | | | |
| Average Daily Production | | | | | | | |
| Light Crude Oil and Medium Crude Oil (bbl/d) | 4,264 | 3,713 | 2,040 | 3,778 | |||
| Conventional Natural Gas (mmcf/d) | — | — | — | — | |||
| Natural Gas Liquids (bbl/d) | — | — | — | — | |||
| Average Net Prices Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 131.10 | 131.06 | 128.84 | 121.24 | |||
| Conventional Natural Gas (/mcf) | — | — | — | — | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Royalties | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | — | — | — | — | |||
| Conventional Natural Gas (/mcf) | — | — | — | — | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Production Costs | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 65.82 | 71.20 | 78.47 | 33.59 | |||
| Conventional Natural Gas (/mcf) | — | — | — | — | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Operating Netback Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 65.28 | 59.86 | 50.37 | 87.65 | |||
| Conventional Natural Gas (/mcf) | — | — | — | — | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Canada | | | | | |||
| Average Daily Production | | | | | |||
| Light Crude Oil and Medium Crude Oil (bbl/d) | 15,724 | 16,321 | 16,124 | 15,342 | |||
| Conventional Natural Gas (mmcf/d) | 151.84 | 158.48 | 156.99 | 161.27 | |||
| Natural Gas Liquids (bbl/d) | 5,968 | 6,208 | 6,483 | 5,764 | |||
| Average Net Prices Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 89.80 | 104.06 | 96.03 | 92.73 | |||
| Conventional Natural Gas (/mcf) | 2.12 | 1.29 | 0.88 | 1.98 | |||
| Natural Gas Liquids (/bbl) | 31.92 | 29.09 | 26.10 | 29.43 | |||
| Royalties | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 8.83 | 11.76 | 10.66 | 5.24 | |||
| Conventional Natural Gas (/mcf) | (0.04) | (0.04) | 0.01 | 0.23 | |||
| Natural Gas Liquids (/bbl) | 19.36 | 9.26 | 10.39 | 12.48 | |||
| Transportation | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 3.59 | 4.14 | 4.14 | 4.48 | |||
| Conventional Natural Gas (/mcf) | 0.14 | 0.31 | 0.33 | 0.35 | |||
| Natural Gas Liquids (/bbl) | 7.05 | 5.26 | 6.93 | 5.59 | |||
| Production Costs | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 30.85 | 35.21 | 29.43 | 33.50 | |||
| Conventional Natural Gas (/mcf) | 0.74 | 0.40 | 0.27 | 0.73 | |||
| Natural Gas Liquids (/bbl) | 11.13 | 8.94 | 8.86 | 10.85 | |||
| Operating Netback Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 46.53 | 52.95 | 51.80 | 49.51 | |||
| Conventional Natural Gas (/mcf) | 1.28 | 0.62 | 0.27 | 0.67 | |||
| Natural Gas Liquids (/bbl) | (5.62) | 5.63 | (0.08) | 0.51 |
All values are in US Dollars.
Vermilion Energy Inc. ■ Page 48 ■ 2024 Annual Information Form
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| | Three Months Ended | **** | Three Months Ended | **** | Three Months Ended | **** | Three Months Ended |
| | March 31, 2024 | | June 30, 2024 | | September 30, 2024 | | December 31, 2024 |
| France | |||||||
| Average Daily Production | |||||||
| Light Crude Oil and Medium Crude Oil (bbl/d) | 7,308 | 7,246 | 7,115 | 7,083 | |||
| Conventional Natural Gas (mmcf/d) | — | — | — | — | |||
| Natural Gas Liquids (bbl/d) | — | — | — | — | |||
| Average Net Prices Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 113.24 | 112.22 | 108.26 | 109.14 | |||
| Conventional Natural Gas (/mcf) | — | — | — | — | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Royalties | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 16.61 | 13.79 | 13.62 | 14.38 | |||
| Conventional Natural Gas (/mcf) | — | — | — | — | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Transportation | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 6.82 | 8.59 | 9.11 | 8.34 | |||
| Conventional Natural Gas (/mcf) | — | — | — | — | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Production Costs | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 27.28 | 19.59 | 23.49 | 27.54 | |||
| Conventional Natural Gas (/mcf) | — | — | — | — | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Operating Netback Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 62.53 | 70.25 | 62.04 | 58.88 | |||
| Conventional Natural Gas (/mcf) | — | — | — | — | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Germany | | | | | |||
| Average Daily Production | | | | | |||
| Light Crude Oil and Medium Crude Oil (bbl/d) | 1,722 | 1,698 | 1,598 | 1,596 | |||
| Conventional Natural Gas (mmcf/d) | 22.87 | 18.41 | 21.41 | 21.71 | |||
| Natural Gas Liquids (bbl/d) | — | — | — | — | |||
| Average Net Prices Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 107.69 | 109.38 | 103.32 | 98.59 | |||
| Conventional Natural Gas (/mcf) | 10.91 | 11.46 | 13.64 | 16.36 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Royalties | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | — | (0.31) | 4.55 | 3.42 | |||
| Conventional Natural Gas (/mcf) | 0.56 | 0.87 | 0.32 | 0.55 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Transportation | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 26.59 | 17.74 | 15.19 | 14.70 | |||
| Conventional Natural Gas (/mcf) | 0.53 | 0.46 | 0.42 | 0.52 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Production Costs | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 36.91 | 53.89 | 33.51 | 28.38 | |||
| Conventional Natural Gas (/mcf) | 3.77 | 5.69 | 4.64 | 4.81 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Operating Netback Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 44.19 | 38.06 | 50.07 | 52.09 | |||
| Conventional Natural Gas (/mcf) | 6.05 | 4.44 | 8.26 | 10.48 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — |
All values are in US Dollars.
Vermilion Energy Inc. ■ Page 49 ■ 2024 Annual Information Form
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| | Three Months Ended March 31, 2024 | **** | Three Months Ended June 30, 2024 | **** | Three Months Ended September 30, 2024 | **** | Three Months Ended December 31, 2024 |
| Croatia | |||||||
| Average Daily Production | |||||||
| Light Crude Oil and Medium Crude Oil (bbl/d) | — | 6 | — | 1 | |||
| Conventional Natural Gas (mmcf/d) | 0.29 | 0.69 | 11.13 | 11.21 | |||
| Natural Gas Liquids (bbl/d) | — | — | — | — | |||
| Average Net Prices Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | — | 62.27 | — | 56.60 | |||
| Conventional Natural Gas (/mcf) | 13.00 | 14.44 | 15.76 | 17.15 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Royalties | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | — | 5.49 | — | — | |||
| Conventional Natural Gas (/mcf) | 1.86 | 3.81 | 2.30 | 3.47 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Production Costs | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | — | 38.46 | — | — | |||
| Conventional Natural Gas (/mcf) | 16.60 | 5.92 | 0.69 | 0.99 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Operating Netback Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | — | 18.32 | — | 56.60 | |||
| Conventional Natural Gas (/mcf) | (5.46) | 4.71 | 12.77 | 12.69 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Ireland | | | | | |||
| Average Daily Production | | | | | |||
| Light Crude Oil and Medium Crude Oil (bbl/d) | — | — | — | — | |||
| Conventional Natural Gas (mmcf/d) | 60.34 | 57.70 | 59.06 | 55.32 | |||
| Natural Gas Liquids (bbl/d) | — | — | — | — | |||
| Average Net Prices Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | — | — | — | — | |||
| Conventional Natural Gas (/mcf) | 11.74 | 13.29 | 14.60 | 19.20 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Royalties | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | — | — | — | — | |||
| Conventional Natural Gas (/mcf) | — | — | — | — | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Transportation | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | — | — | — | — | |||
| Conventional Natural Gas (/mcf) | 0.56 | 0.46 | 0.42 | 0.13 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Production Costs | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | — | — | — | — | |||
| Conventional Natural Gas (/mcf) | 1.93 | 3.13 | 2.51 | 2.65 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Operating Netback Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | — | — | — | — | |||
| Conventional Natural Gas (/mcf) | 9.25 | 9.70 | 11.67 | 16.42 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — |
All values are in US Dollars.
Vermilion Energy Inc. ■ Page 50 ■ 2024 Annual Information Form
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| | Three Months Ended March 31, 2024 | **** | Three Months Ended June 30, 2024 | **** | Three Months Ended September 30, 2024 | **** | Three Months Ended December 31, 2024 |
| Netherlands | |||||||
| Average Daily Production | |||||||
| Light Crude Oil and Medium Crude Oil (bbl/d) | 165 | 51 | 39 | 44 | |||
| Conventional Natural Gas (mmcf/d) | 31.02 | 26.84 | 25.06 | 24.20 | |||
| Natural Gas Liquids (bbl/d) | — | — | — | — | |||
| Average Net Prices Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 84.85 | 103.64 | 106.74 | 92.36 | |||
| Conventional Natural Gas (/mcf) | 11.94 | 12.31 | 14.67 | 17.61 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Royalties | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | — | — | — | — | |||
| Conventional Natural Gas (/mcf) | 0.08 | — | — | 0.01 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Production Costs | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 28.24 | 46.54 | (15.61) | 29.15 | |||
| Conventional Natural Gas (/mcf) | 3.61 | 4.30 | 3.45 | 5.30 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Operating Netback Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 56.61 | 57.10 | 122.35 | 63.21 | |||
| Conventional Natural Gas (/mcf) | 8.25 | 8.01 | 11.22 | 12.30 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| United States | | | | | |||
| Average Daily Production | | | | | |||
| Light Crude Oil and Medium Crude Oil (bbl/d) | 3,512 | 3,844 | 2,921 | 2,483 | |||
| Conventional Natural Gas (mmcf/d) | 8.23 | 7.27 | 7.08 | 5.88 | |||
| Natural Gas Liquids (bbl/d) | 1,078 | 988 | 1,064 | 848 | |||
| Average Net Prices Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 99.08 | 106.74 | 99.39 | 98.48 | |||
| Conventional Natural Gas (/mcf) | 2.64 | 1.22 | 1.24 | 2.13 | |||
| Natural Gas Liquids (/bbl) | 46.59 | 47.48 | 35.95 | 29.03 | |||
| Royalties | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 29.59 | 31.81 | 26.17 | 28.47 | |||
| Conventional Natural Gas (/mcf) | 0.92 | 0.31 | 0.40 | 0.91 | |||
| Natural Gas Liquids (/bbl) | 12.04 | 12.84 | 10.09 | 9.78 | |||
| Transportation | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 1.16 | 1.57 | 1.46 | 0.60 | |||
| Conventional Natural Gas (/mcf) | — | — | — | — | |||
| Natural Gas Liquids (/bbl) | 0.09 | 0.02 | 0.02 | 0.03 | |||
| Production Costs | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 21.33 | 15.96 | 19.53 | 23.71 | |||
| Conventional Natural Gas (/mcf) | 0.55 | 0.04 | 0.28 | 0.46 | |||
| Natural Gas Liquids (/bbl) | 10.04 | 8.19 | 6.85 | 7.19 | |||
| Operating Netback Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 47.00 | 57.40 | 52.23 | 45.70 | |||
| Conventional Natural Gas (/mcf) | 1.17 | 0.87 | 0.56 | 0.76 | |||
| Natural Gas Liquids (/bbl) | 24.42 | 26.43 | 18.99 | 12.03 |
All values are in US Dollars.
Vermilion Energy Inc. ■ Page 51 ■ 2024 Annual Information Form
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| | Three Months Ended March 31, 2024 | **** | Three Months Ended June 30, 2024 | **** | Three Months Ended September 30, 2024 | **** | Three Months Ended December 31, 2024 |
| Total Company | |||||||
| Average Daily Production | |||||||
| Light Crude Oil and Medium Crude Oil (bbl/d) | 32,695 | 32,879 | 29,837 | 30,327 | |||
| Conventional Natural Gas (mmcf/d) | 274.59 | 269.39 | 280.73 | 279.59 | |||
| Natural Gas Liquids (bbl/d) | 7,046 | 7,196 | 7,547 | 6,612 | |||
| Average Net Prices Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 104.26 | 108.93 | 103.55 | 100.06 | |||
| Conventional Natural Gas (/mcf) | 6.10 | 5.69 | 6.57 | 8.47 | |||
| Natural Gas Liquids (/bbl) | 34.16 | 31.61 | 27.49 | 29.38 | |||
| Royalties | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 11.04 | 12.26 | 8.15 | 8.97 | |||
| Conventional Natural Gas (/mcf) | 0.06 | 0.18 | 0.46 | 0.33 | |||
| Natural Gas Liquids (/bbl) | 18.24 | 9.75 | 10.35 | 12.14 | |||
| Transportation Costs | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 4.20 | 5.19 | 5.11 | 5.32 | |||
| Conventional Natural Gas (/mcf) | 0.23 | 0.29 | 0.30 | 0.26 | |||
| Natural Gas Liquids (/bbl) | 5.99 | 4.54 | 5.96 | 4.87 | |||
| Production Costs | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 30.79 | 32.10 | 29.10 | 27.55 | |||
| Conventional Natural Gas (/mcf) | 1.79 | 1.72 | 1.78 | 2.33 | |||
| Natural Gas Liquids (/bbl) | 9.32 | 6.42 | 11.82 | 9.18 | |||
| Realized Hedging | | | | | | | |
| Light Crude Oil and Medium Crude Oil (/bbl) | (1.20) | | 0.16 | | (2.23) | | (4.11) |
| Conventional Natural Gas (/mcf) | (8.64) | | (1.90) | | (1.62) | | (0.59) |
| Operating Netback Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 56.62 | 58.20 | 63.28 | 63.31 | |||
| Conventional Natural Gas (/mcf) | 12.66 | 5.40 | 5.65 | 6.14 | |||
| Natural Gas Liquids (/bbl) | 0.61 | 10.90 | (0.64) | 3.19 | |||
| North America | | | | | |||
| Average Daily Production | | | | | |||
| Light Crude Oil and Medium Crude Oil (bbl/d) | 19,236 | 20,165 | 19,045 | 17,825 | |||
| Conventional Natural Gas (mmcf/d) | 160.07 | 165.75 | 164.07 | 167.15 | |||
| Natural Gas Liquids (bbl/d) | 7,046 | 7,196 | 7,547 | 6,612 | |||
| Average Net Prices Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 91.49 | 104.57 | 96.54 | 93.53 | |||
| Conventional Natural Gas (/mcf) | 2.14 | 1.29 | 0.90 | 1.98 | |||
| Natural Gas Liquids (/bbl) | 34.16 | 31.61 | 27.49 | 29.38 | |||
| Royalties | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 12.62 | 15.58 | 13.04 | 8.48 | |||
| Conventional Natural Gas (/mcf) | 0.01 | (0.02) | 0.03 | 0.25 | |||
| Natural Gas Liquids (/bbl) | 18.24 | 9.75 | 10.35 | 12.14 | |||
| Transportation Costs | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 3.14 | 3.65 | 3.73 | 3.94 | |||
| Conventional Natural Gas (/mcf) | 0.14 | 0.30 | 0.32 | 0.34 | |||
| Natural Gas Liquids (/bbl) | 5.99 | 4.54 | 5.96 | 4.87 | |||
| Production Costs | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 29.11 | 31.54 | 27.91 | 32.14 | |||
| Conventional Natural Gas (/mcf) | 0.73 | 0.39 | 0.27 | 0.72 | |||
| Natural Gas Liquids (/bbl) | 10.97 | 8.84 | 8.58 | 10.38 | |||
| Operating Netback Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 46.62 | 53.80 | 51.86 | 48.97 | |||
| Conventional Natural Gas (/mcf) | 1.26 | 0.62 | 0.28 | 0.67 | |||
| Natural Gas Liquids (/bbl) | (1.04) | 8.48 | 2.60 | 1.99 |
All values are in US Dollars.
Vermilion Energy Inc. ■ Page 52 ■ 2024 Annual Information Form
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| | Three Months Ended March 31, 2024 | **** | Three Months Ended June 30, 2024 | **** | Three Months Ended September 30, 2024 | **** | Three Months Ended December 31, 2024 |
| International | |||||||
| Average Daily Production | |||||||
| Light Crude Oil and Medium Crude Oil (bbl/d) | 13,459 | 12,714 | 10,792 | 12,502 | |||
| Conventional Natural Gas (mmcf/d) | 114.52 | 103.64 | 116.66 | 112.44 | |||
| Natural Gas Liquids (bbl/d) | — | — | — | — | |||
| Average Net Prices Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 119.67 | 116.25 | 114.16 | 110.31 | |||
| Conventional Natural Gas (/mcf) | 11.63 | 12.72 | 14.55 | 18.11 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Royalties | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 9.13 | 9.39 | 7.99 | 9.75 | |||
| Conventional Natural Gas (/mcf) | 0.13 | 0.16 | 0.28 | 0.45 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Transportation Costs | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 5.14 | 7.34 | 6.99 | 7.33 | |||
| Conventional Natural Gas (/mcf) | 0.40 | 0.34 | 0.29 | 0.16 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Production Costs | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 35.54 | 31.05 | 41.86 | 32.06 | |||
| Conventional Natural Gas (/mcf) | 2.75 | 3.87 | 2.93 | 3.47 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — | |||
| Operating Netback Received | | | | | |||
| Light Crude Oil and Medium Crude Oil (/bbl) | 69.86 | 68.47 | 57.32 | 61.17 | |||
| Conventional Natural Gas (/mcf) | 8.35 | 8.35 | 11.05 | 14.03 | |||
| Natural Gas Liquids (/bbl) | — | — | — | — |
All values are in US Dollars.
Marketing
The nature of Vermilion’s operations results in exposure to fluctuations in commodity prices, interest rates, and foreign currency exchange rates. Vermilion monitors and, when appropriate, uses derivative financial instruments to manage its exposure to these fluctuations. All transactions of this nature entered into by Vermilion are related to an underlying financial position or to future crude oil and natural gas production. Vermilion does not use derivative financial instruments for speculative purposes. Vermilion has not obtained collateral or other security to support its financial derivatives as management reviews the creditworthiness of its counterparties prior to entering into derivative contracts.
During the normal course of business, Vermilion may also enter into fixed price arrangements to sell a portion of its production or purchase commodities for operational use.
Vermilion’s outstanding risk management positions as at December 31, 2024 are summarized in Supplemental Table 2: Hedges, included in the Annual MD&A, available on SEDAR+ at www.sedarplus.ca and on the SEC's website at www.sec.gov.
Vermilion Energy Inc. ■ Page 53 ■ 2024 Annual Information Form
Directors and Officers
As at January 31, 2025, the directors and officers of Vermilion beneficially owned, or controlled or directed, directly or indirectly, 1,357,896 common shares representing approximately 0.9% of the outstanding common shares.
Board of Directors
Vermilion’s Board of Directors currently consists of ten directors. The directors are nominated by the Company and elected annually by Shareholders and hold office until the next annual meeting of Shareholders, or until their successors are elected or appointed.
| | | | | | | Year First | | |
|---|---|---|---|---|---|---|---|---|
| Name and | | | | | | Elected or | | |
| Municipality of | | | | | | Appointed | | |
| Residence | **** | Committee(s) | **** | Office Held | **** | as Director | **** | Principal Occupation During the Past Five Years |
| Myron Stadnyk<br>Calgary, Alberta Canada | | (1) | | Director | | 2022 | | Since 2020, Director of Veren Inc., formerly Crescent Point Energy Corp. |
| Dion Hatcher<br>Calgary, Alberta<br>Canada | | | | President &<br>Chief<br>Executive<br>Officer and<br>Director | | 2023 | | Since March 2023, President, Chief Executive Officer and Director of Vermilion<br><br><br><br>January 2022 to March 2023, President of Vermilion<br><br><br><br>November 2020 to December 2021 Vice President North America of Vermilion<br><br><br><br>March 2016 to November 2020, Vice President Canada Business Unit of Vermilion |
| James J. Kleckner Jr.<br>Edwards, Colorado<br>USA | | (7) (9) | | Director | | 2021 | | 2021 to 2024, Director of Great Western Petroleum<br><br><br><br>2019 to 2021, Director of Parsley Energy<br><br><br><br>2018 to 2020, President, Chief Executive Officer and Director of Jagged Peak Energy Inc.<br><br><br><br>2016 to 2019, Director of Delonex Energy Ltd. |
| Carin S. Knickel<br>Golden, Colorado<br>USA | | (4) (7) (11) | | Director | | 2018 | | Since 2015, Director of Hudbay Minerals, Inc.<br><br><br><br>2015 to 2020, Director of Whiting Petroleum<br><br><br><br>2014 to 2019, Director of National MS Society (Colorado/Wyoming Chapter) |
| Stephen Larke<br>Calgary, Alberta<br>Canada | | (3) (5) (10) | | Director | | 2017 | | Since 2024, Director Winterspark Capital<br><br><br><br>Since 2020, Director of Headwater Exploration Inc.<br><br><br><br>Since 2019, Director of Topaz Energy Corp. |
| Timothy R. Marchant<br>Calgary, Alberta<br>Canada | | (6) (9) (11) | | Director | | 2010 | | Since 2015, Director, Valeura Energy Inc.<br><br><br><br>Since 2009, Adjunct Professor of Strategy and Energy Geopolitics, Haskayne School of Business<br><br><br><br>2022 to 2023, Director of Vaalco Energy Inc.<br><br><br><br>2020 to 2022, Director of TransGlobe Energy Corporation<br><br><br><br>2013 to 2022, Director of Cub Energy Inc. |
| Robert Michaleski<br>Calgary, Alberta<br>Canada | | (3) (5) | | Director | | 2016 | | 2003 to 2024, Director of Coril Holdings Ltd.<br><br><br><br>2012 to 2023, Director of Essential Energy Services Ltd.<br><br><br><br>2000 to 2020, Director of Pembina Pipeline Corporation |
| William Roby<br>Houston, Texas<br>USA | | (7) (8) (11) | | Director | | 2017 | | Since 2020, Director of California Resources Corp.<br><br><br><br>Since 2015, Chief Executive Officer of Shepherd Energy, LLC |
Vermilion Energy Inc. ■ Page 54 ■ 2024 Annual Information Form
| | | | | | | Year First | | |
|---|---|---|---|---|---|---|---|---|
| Name and | | | | | | Elected or | | |
| Municipality of | | | | | | Appointed | | |
| Residence | **** | Committee(s) | **** | Office Held | **** | as Director | **** | Principal Occupation During the Past Five Years |
| Manjit Sharma<br>Toronto, Ontario<br>Canada | | (2) (5) | | Director | | 2021 | | Since 2023, Director of TransAlta Corporation<br><br><br><br>Since 2022, Director of Finning International Inc.<br><br><br><br>Since 2020, Director of Export Development Canada<br><br><br><br>2020 to 2023, Investment Committee of GE Canada Pension Trust<br><br><br><br>2020 to 2021, Chief Financial Officer of WSP Canada<br><br><br><br>2019 to 2021, Audit Committee of Ontario Chamber of Commerce<br><br><br><br>2013 to 2020, Audit and Investment Committee YMCA Greater Toronto |
| Judy Steele<br>Halifax, Nova Scotia<br>Canada | | (3) (5) (11) | | Director | | 2021 | | Since 2017, Director of Canadian Blood Services<br><br><br><br>Since 2012, President and Chief Operating Officer of Emera Energy |
Committees:
| ^(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)^ | Technical Committee Chair (Independent) |
| --- | --- |
| ^(9)^ | Technical Committee Member (Independent) |
| --- | --- |
| ^(10)^ | Sustainability Committee Chair (Independent) |
| --- | --- |
| ^(11)^ | Sustainability Committee Member (Independent) |
| --- | --- |
Vermilion Energy Inc. ■ Page 55 ■ 2024 Annual Information Form
Officers
| Name and | | Office Held | | Principal Occupation During the Past Five Years |
|---|---|---|---|---|
| Municipality of | | | | |
| Residence | **** | | **** | |
| Dion Hatcher<br>Calgary, Alberta<br>Canada | | President<br>& Chief Executive Officer | | Since March 2023, President, Chief Executive Officer and Director of Vermilion<br><br><br><br>January 2022 to March 2023, President of Vermilion<br><br><br><br>November 2020 to December 2021, Vice President North America of Vermilion<br><br><br><br>March 2016 to November 2020, Vice President Canada Business Unit of Vermilion |
| Lars Glemser<br>Calgary, Alberta<br>Canada | | Vice President<br>& Chief Financial Officer | | Since April 2018, Vice President and Chief Financial Officer of Vermilion |
| Tamar Epstein<br><br>Calgary, Alberta<br><br>Canada | | General Counsel | | Since August 2023, General Counsel of Vermilion<br><br><br><br>Since 2022, Board of Calgary Economic Development<br><br><br><br>2021 to 2023, General Counsel & VP ESG of Validere Technologies<br><br>2018 to 2021, General Counsel, Corporate Secretary & Director ESG of IPC Canada Ltd. |
| Terry Hergott<br>Calgary, Alberta<br>Canada | | Vice President <br>Marketing | | Since April 2012, Vice President, Marketing of Vermilion |
| Yvonne Jeffery<br>Calgary, Alberta<br>Canada | | Vice President<br>Sustainability | | May 2021, Vice President, Sustainability of Vermilion<br><br><br><br>August 2020 to May 2021, Director, Sustainability of Vermilion<br><br><br><br>April 2018 to August 2020, Manager Communications, Community Investment and Sustainability of Vermilion |
| Darcy Kerwin<br>Calgary, Alberta<br>Canada | | Vice President<br>International & HSE | | Since November 2020, Vice President, International & HSE of Vermilion<br><br><br><br>September 2020 to November 2020, Vice President, Strategic Planning of Vermilion<br><br><br><br>February 2018 to September 2020, Managing Director, Ireland Business Unit of Vermilion |
| Geoff MacDonald<br>Calgary, Alberta<br>Canada | | Vice President<br>Geosciences | | Since November 2021, Vice President, Geosciences of Vermilion<br><br><br><br>March 2019 to November 2021, Chief Geoscientist of Vermilion |
| Randy McQuaig<br>Calgary, Alberta<br>Canada | | Vice President<br>North America | | Since February 2024, Vice President, North America<br><br><br><br>May 2023 to February 2024, Director, Alberta and Saskatchewan Assets at Vermilion<br><br><br><br>November 2021 to May 2023, Director, Canadian Business Unit Assets at Vermilion<br><br><br><br>May 2018 to November 2021, Manager, Saskatchewan and Manitoba at Vermilion |
| Kyle Preston<br>Calgary, Alberta<br>Canada | | Vice President<br>Investor Relations | | Since July 2019, Vice President, Investor Relations of Vermilion |
| Averyl Schraven<br>Calgary, Alberta<br>Canada | | Vice President<br><br>People and Culture | | Since November 2021, Vice President, People & Culture of Vermilion<br><br><br><br>December 2020 to November 2021, Director, People and Culture of Vermilion<br><br><br><br>February 2014 to December 2020, Manager, Global Human Resources Services of Vermilion |
| Gerard Schut<br><br>Den Haag<br><br>The Netherlands | | Vice President<br><br>European Operations | | Since July 2012, Vice President, European Operations of Vermilion |
Vermilion Energy Inc. ■ Page 56 ■ 2024 Annual Information Form
Cease Trade Orders, Bankruptcies, Penalties or Sanctions
Bankrup tcies
To the knowledge of Vermilion, except as described below, no director or officer of Vermilion (nor any personal holding company of any such persons) or shareholder holding a sufficient number of securities of Vermilion to affect materially the control of Vermilion: (a) is, as of the date of this AIF, or has been within the ten years before the date of this AIF, a director or executive officer of any company (including Vermilion) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or (b) has, within the ten years before the date of this AIF, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.
Ms. Knickel was a Board member of Whiting Petroleum Corporation, from 2015 to 2020, which declared bankruptcy in April 2020 and emerged from bankruptcy in September 2020.
Cease trade orders
To the knowledge of Vermilion, no director or executive officer of Vermilion (nor any personal holding company of any of such persons) is, as of the date of this AIF, or was within ten years before the date of this AIF, a director, chief executive officer or chief financial officer of any company (including Vermilion), that: (a) was subject to a cease trade order (including a management cease trade order), an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, in each case that was in effect for a period of more than 30 consecutive days (collectively, an “Order”), that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or (b) was subject to an Order that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.
Penalties or sanctions
To the knowledge of Vermilion, no director or executive officer of Vermilion (nor any personal holding company of any of such persons), or shareholder holding a sufficient number of securities of Vermilion to affect materially the control of Vermilion, has been subject to: (a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.
Vermilion Energy Inc. ■ Page 57 ■ 2024 Annual Information Form
Description of Capital Structure
Credit ratings
Credit ratings affect the Company's ability to obtain short-term and long-term financing and the cost of such financing. A reduction in the credit rating of the Company or the Company's debt or a negative change in the Company's ratings outlook could adversely affect the Company's cost of financing and its access to sources of liquidity and capital. In addition, changes in credit ratings may affect the Company's ability to enter into ordinary course hedging arrangements or contracts with customers and suppliers.
Credit ratings are intended to provide investors with an independent measure of the credit quality of an issuer of securities. The credit ratings accorded to the Senior Unsecured Notes and the Company are not recommendations to purchase, hold or sell such securities and are not a comment upon the market price of the Company's securities or their suitability for a particular investor. There is no assurance that any rating will remain in effect for any given period of time or that any rating will not be revised or withdrawn entirely by a rating agency in the future if, in its judgment, circumstances so warrant. A revision or withdrawal of a credit rating could have a material adverse effect on the pricing or liquidity of the Senior Unsecured Notes or the common shares in any secondary markets. Vermilion does not undertake any obligation to maintain the ratings or to advise holders of the Senior Unsecured Notes or the common shares of any change in ratings. Each agency's rating should be evaluated independently of any other agency's rating.
Vermilion provides an annual fee to S&P Global Ratings (“S&P”), Moody’s Investors Service (“Moody’s”), and Fitch Ratings (“Fitch”) for credit rating services. Vermilion has paid each of S&P, Moody’s, and Fitch its respective fees in connection with the provision of the below ratings. Over the past two years, in addition to the aforementioned fees, Vermilion has made payments in respect of certain other services provided to the Company by S&P, Moody’s, and Fitch.
As at March 5, 2025, Vermilion had the following credit ratings from S&P, Moody’s, and Fitch:
| Rating Agency | **** | Company Rating | **** | Outlook | **** | Senior Unsecured Notes |
|---|---|---|---|---|---|---|
| S&P ^(1)^ | | B+ ^(1)^ | | Stable | | BB- ^(4)^ |
| Moody's ^(2)^ | | B1 ^(2)^ | | Positive | | B3 ^(5)^ |
| Fitch ^(3)^ | | BB- ^(3)^ | | Negative | | BB- ^(6)^ |
Notes:
| ^(1)^ | S&P rates long-term corporate credit ratings by rating categories ranging from a high of "AAA" to a low of "D". Ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories. In addition, S&P may add a rating outlook of “positive”, “negative” or “stable” which assesses the potential direction of a long-term credit rating over the intermediate term (typically six months to two years). An obligor rated “B+” is within the sixth highest of the ten categories, and is characterized by S&P as more vulnerable in the near term than obligors rated "BB", but has the capacity to meet its financial commitments on the obligation. However, it faces major ongoing uncertainties and exposure to adverse business, financial or economic conditions, which could lead to the obligor’s inadequate capacity to meet its financial commitments. |
|---|---|
| ^(2)^ | Moody's corporate family ratings are on a rating scale that ranges from Aaa to C, which represents the highest to lowest opinions of creditworthiness. Moody’s appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa, with 3 indicating a ranking in the lower end of the generic rating category. A rating of B1 by Moody’s is within the sixth highest of nine categories. An obliger rated B1 is considered non-investment grade speculative and is subject to high credit risk. |
| --- | --- |
| ^(3)^ | Fitch’s corporate credit rating categories range from “investment grade“ for those with ratings of “AAA” to “BBB”, and “speculative grade” for those with “BB” to “D” ratings. Modifiers may be used by Fitch within these rating categories, either (+) or (-), appended to a rating to indicate relative status within the major rating categories. Rating outlooks may be provided to direct where a rating may potentially move within the next year or two, and fall under four outlooks: “positive”, “stable”, “negative”, or “evolving”. A “BB-” rating for an obliger denotes an increased vulnerability to default risk, especially if experiencing adverse changes in economic or business conditions over time; conversely, there remains a financial or business flexibility that sustains the servicing of financial obligations. |
| --- | --- |
| ^(4)^ | S&P rates long-term debt instruments by rating categories ranging from a high of "AAA" to a low of "D". The ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories. An obligation rated "BB-" is characterized as less vulnerable to nonpayment than other speculative issues. However, an obligation rated "BB-" faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions, which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation. The "BB" category is the fifth highest of the ten available categories. |
| --- | --- |
| ^(5)^ | Moody’s long-term obligations ratings are on a rating scale that ranges from Aaa to C, which represents the highest to lowest opinions of creditworthiness. Moody’s appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa, with 3 indicating a ranking in the lower end of the generic rating category. A rating of B3 by Moody’s is within the sixth highest of nine categories. Obligations rated B3 are considered non-investment grade speculative and are subject to high credit risk. |
| --- | --- |
| ^(6)^ | Fitch’s long-term debt instrument ratings are categorized from “investment grade“ for those with ratings of “AAA” to “BBB”, and “speculative grade” for those with “BB” to “D” ratings. Modifiers may be used by Fitch within these rating categories, either (+) or (-), appended to a rating to indicate relative status within the major rating categories. A “BB-” rating for an obliger denotes an increased vulnerability to default risk, especially if experiencing adverse changes in economic or business conditions over time; conversely, there remains a financial or business flexibility that sustains the servicing of financial obligations. |
| --- | --- |
Vermilion Energy Inc. ■ Page 58 ■ 2024 Annual Information Form
Common shares
The Company is authorized to issue an unlimited number of common shares. Each common share entitles the holder to receive notice of and to attend all meetings of Shareholders and to one vote at any such meeting. The holders of common shares are, at the discretion of the Board of Directors and subject to applicable legal restrictions, entitled to receive any dividends declared by the Board of Directors on the common shares. The holders of common shares are entitled to share equally in any distribution of the assets of the Company upon the liquidation, dissolution, bankruptcy or winding-up of the Company or other distribution of its assets among the Shareholders for the purpose of winding-up the Company’s affairs.
Awards pursuant to which a holder may receive Common Shares have been issued under certain Vermilion compensation arrangements. See Vermilion's annual financial statements (the "Annual Financial Statements") as at and for the year ended December 31, 2024 (a copy of which is available on SEDAR+ at www.sedarplus.ca and on the SEC's website at www.sec.gov under Vermilion’s profile) for further details regarding the amount and value of such awards.
Dividend history
The Company paid a monthly dividend from January 2003 through March 2020. The dividend was suspended in April 2020 in response to the deterioration in near-term commodity prices and worsening outlook for global oil demand as a result of the COVID-19 pandemic and OPEC+ oil price war. Vermilion has a long history of paying dividends and we remain strong proponents of returning capital to Shareholders and as a result of our focus on financial strength we reinstated the dividend in the first quarter of 2022 and subsequently increased the per common share amounts in the second quarter of 2022, the first quarter of 2023, the first quarter of 2024, and the first quarter of 2025.
Solvency tests imposed by the ABCA on corporations for the declaration and payment of dividends must be satisfied prior to the declaration of a dividend. In addition, decisions with respect to the declaration of dividends on the common shares are made by the Board of Directors on the basis of the Company's net earnings, financial requirements, and other conditions.
The following table sets forth the history of Vermilion's dividend per unit or common share:
| | | | | | |
|---|---|---|---|---|---|
| Date | | Frequency | **** | Dividend per unit or common 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 to March 2024 | | Quarterly | | $ | 0.100 |
| April 2024 to March 2025 | | Quarterly | | $ | 0.120 |
| April 2025 onwards | | Quarterly | | $ | 0.130 |
The following table outlines dividends declared per common share for each of the three most recently completed financial years:
| | | | |
|---|---|---|---|
| Date | **** | Dividends per common share | |
| 2022 | | $ | 0.28 |
| 2023 | | $ | 0.40 |
| 2024 | | $ | 0.48 |
In conjunction with the release of our 2025 budget in December 2024, we increased the quarterly dividend by 8% to $0.13 per common share, effective with the Q1 2025 dividend payable April 15, 2025. Vermilion intends to generate strong compounded returns for investors through a combination of ratable dividend increases, continued share repurchases, and modest production growth. The dividend of $0.13 per common share for Q1 2025 was declared on March 5, 2025.
Vermilion Energy Inc. ■ Page 59 ■ 2024 Annual Information Form
Debt
As at December 31, 2024, Vermilion’s total debt is primarily comprised of the outstanding Senior Unsecured Notes and the Revolving Credit Facility. Subsequent to December 31, 2024 Vermilion issued the 2033 Notes and closed the Westbrick acquisition which added the Term Loan to its debt structure.
The Senior Unsecured Notes
On March 13, 2017, Vermilion issued US$300 million aggregate principal amount of senior unsecured notes with a maturity date of March 15, 2025 and a fixed coupon of 5.625% per annum.
On April 26, 2022, Vermilion issued US$400 million aggregate principal amount of senior unsecured notes with a maturity date of May 1, 2030 and a fixed coupon of 6.875% per annum.
On February 11, 2025, Vermilion issued US$400 million aggregate principal amount of senior unsecured notes with a maturity date of February 13, 2033 and a fixed coupon of 7.250% per annum.
For additional information, including the amounts outstanding under the Senior Unsecured Notes, see Note 13 of the Annual Financial Statements (a copy of which is available on SEDAR+ at www.sedarplus.ca and on the SEC’s website at www.sec.gov).
The Revolving Credit Facility
As at December 31, 2024, Vermilion had in place a bank revolving credit facility maturing May 26, 2028 which 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 17, 2024, the maturity date of the facility was extended to May 26, 2028 (previously May 28, 2027) and the total facility amount of $1.6 billion was reduced to $1.35 billion, with an accordion feature to increase the aggregate amount available under the facility to $1.6 billion. As at December 31, 2024, the revolving credit facility was undrawn. The Revolving Credit Facility includes certain financial covenants for which Vermilion was in compliance with at December 31, 2024. For additional information, including the financial covenants of the Revolving Credit Facility, see Note 13 of the Annual Financial Statements (a copy of which is available on SEDAR+ at www.sedarplus.ca and on the SEC’s website at www.sec.gov.).
The Term Loan
In December 2024, in connection with the Westbrick acquisition, Vermilion entered into the fully underwritten $250 million term loan maturing May 2028 through a debt commitment letter with TD Securities Inc. (acting as underwriter). On January 28, 2025, the Term Loan was subsequently increased to $450 million.
Vermilion Energy Inc. ■ Page 60 ■ 2024 Annual Information Form
Market for Securities
Trading price and volume
The Common Shares of the listed and posted for trading on the TSX and the New York Stock Exchange (“NYSE”) under the symbol VET. The following table sets forth the closing price range and trading volume of the Common Shares on the TSX for the periods indicated:
| | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | **** | High | **** | Low | **** | Close | **** | Volume | |||
| January | | $ | 16.67 | | $ | 14.03 | | $ | 14.45 | 15,499,533 | |
| February | | $ | 15.25 | | $ | 13.30 | | $ | 15.08 | 13,101,312 | |
| March | | $ | 16.99 | | $ | 14.60 | | $ | 16.84 | 21,074,116 | |
| April | | $ | 17.56 | | $ | 15.86 | | $ | 15.86 | 14,114,797 | |
| May | | $ | 17.15 | | $ | 15.26 | | $ | 16.86 | 16,588,607 | |
| June | | $ | 16.97 | | $ | 14.73 | | $ | 15.06 | 15,604,754 | |
| July | | $ | 15.70 | | $ | 13.95 | | $ | 14.85 | 16,088,016 | |
| August | | $ | 14.60 | | $ | 12.82 | | $ | 13.87 | 18,105,519 | |
| September | | $ | 13.69 | | $ | 11.87 | | $ | 13.20 | 16,882,594 | |
| October | | $ | 14.35 | | $ | 12.79 | | $ | 12.98 | 15,498,343 | |
| November | | $ | 15.17 | | $ | 12.86 | | $ | 14.37 | 18,272,873 | |
| December | | $ | 14.43 | | $ | 11.84 | | $ | 13.53 | 17,554,807 |
Vermilion Energy Inc. ■ Page 61 ■ 2024 Annual Information Form
Audit Committee Matters
Audit committee charter
Vermilion has established an audit committee (the “Audit Committee”) to assist the Board of Directors in carrying out its oversight responsibilities with respect to, among other things, financial reporting, internal controls, and the external audit process of the Company. The Audit Committee Mandate is set out in Appendix “C” to this AIF.
Composition of the Audit Committee
The following table sets forth the name of each current member of the Audit Committee, whether pursuant to applicable securities legislation, such member is considered independent, whether pursuant to applicable securities legislation, such member is considered financially literate and the relevant education and experience of such member.
| Name | **** | Independent | **** | Financially<br><br>Literate | **** | Relevant Education and Experience |
|---|---|---|---|---|---|---|
| Manjit Sharma<br>(Chair) | | Yes | | Yes | | Manjit K. Sharma is a Corporate Director. Ms. Sharma served most recently as Interim Chief Financial Officer of WSP Canada Inc., a leading professional services consulting firm, from 2020 to 2021. Prior to WSP Canada, she was on the National Executive Team of General Electric Canada (GE Canada), serving as Chief Financial Officer from 2016 to 2019. From 1999 to 2016, she held various senior positions with GE Canada, with responsibilities that spanned strategic planning and analysis, mergers and acquisitions, tax oversight, risk, governance, and diversity and inclusion. Ms. Sharma currently serves as a board member of each of Vermilion Energy Inc., TransAlta Corporation and Export Development Canada. Ms. Sharma holds a Bachelor of Commerce degree (with Honours) from the University of Toronto, is a Fellow Chartered Accountant and holds the ICD.D Directors designation and the GCB.D Global Competent Board designation. In 2019, Ms. Sharma was recognized as one of Canada’s Top 100 Most Powerful Women by the Women’s Executive Network. |
| Robert Michaleski | | Yes | | Yes | | Mr. Michaleski holds a Bachelor of Commerce (Honours) degree from the University of Manitoba and is a Chartered Accountant. He has over 40 years of experience in various senior management and executive capacities at Pembina Pipeline Corporation. He was Chief Executive Officer from 2000 to 2013 and also President from 2000 to 2012. He was Vice President and Chief Financial Officer from 1997 to 2000, Vice President of Finance from 1992 to 1997, Controller from 1980 to 1992, and Manager of Internal Audit from 1978 to 1980. He was a Director of Pembina from 2000 to 2020, a Director of Essential Energy Services Ltd. since 2012, and a Director of Coril Holdings Ltd. since 2003. He is a member of the Institute of Corporate Directors. Mr. Michaleski has also held various leadership roles with the United Way of Calgary and Area, including Co-Chair of the General Oil and Gas Division and Chair of the Board of Directors |
| Stephen Larke | | Yes | | Yes | | Mr. Larke holds a Bachelor of Commerce (Distinction) degree from the University of Calgary and is a Chartered Financial Analyst. He brings over 25 years of experience in energy capital markets, including research, sales, trading, and equity finance. Mr. Larke also currently serves as a Director for Headwater Exploration Inc., Topaz Energy Corp., and Winterspark Capital, a private equity company. From 2017 to 2018, he was Operating Partner and Advisory Board member with Azimuth Capital Management, an energy-focused private equity fund based in Calgary, Alberta. From 2005 to 2015, Mr. Larke was Managing Director and Executive Committee member with Peters & Co., an independent energy investment firm based in Calgary. From 1997 to 2005, he was Vice-President and Director with TD Newcrest. |
| Judy Steele | | Yes | | Yes | | Ms. Steele has more than 25 years of experience in various energy businesses including natural gas and power trading and marketing; and wind, biomass and natural gas fired electricity generation. Currently, Ms. Steele is the President and Chief Operating Officer of Emera Energy, the Energy Marketing and Trading subsidiary of Emera Inc, where she is responsible for commercial performance, operations, business growth and development, risk management and team leadership and development. She is a member of the Emera Inc. Corporate Leadership Team, and Emera’s Sustainability Management Committee and Leadership Safety Advisory Council. Prior to her current role Ms. Steele held a variety of Executive and Senior Management positions within Emera Inc. including Chief Financial Officer. Ms. Steele is currently a Board member of Canadian Blood Services, and Chair of its Finance and Audit Committee. She previously served as Director, and Chair of the Audit Committee for The Halifax Port Authority; and was National Chair of the Canadian Breast Cancer Foundation and a Governor of St. Francis Xavier University. Ms. Steele is a Fellow Chartered Professional Accountant. |
External audit service fees
Prior to the commencement of any work, fees for all audit and non-audit services provided by the Company’s auditors must be approved by the Audit Committee.
During the years ended December 31, 2024 and 2023, Deloitte LLP (PCAOB ID No. 1208), the auditors of the Company, received the following fees from the Company:
| | | | | | | |
|---|---|---|---|---|---|---|
| Item | **** | 2024 | **** | 2023 | ||
| Audit fees ^(1)^ | | $ | 2,703,868 | | $ | 2,794,556 |
| Audit-related fees ^(2)^ | | $ | 93,954 | | $ | 42,203 |
| Tax fees ^(3)^ | | $ | 63,068 | | $ | 64,164 |
| Total | | $ | 2,860,890 | | $ | 2,900,923 |
Vermilion Energy Inc. ■ Page 62 ■ 2024 Annual Information Form
Notes:
| ^(1)^ | Audit fees consisted of professional services rendered by Deloitte LLP for the audit of the Company's financial statements for the years ended December 31, 2024 and 2023. |
|---|---|
| ^(2)^ | Audit-related fees billed by Deloitte LLP for other assurance engagements required by management or regulation. |
| --- | --- |
| ^(3)^ | Tax fees consist of fees for tax compliance services in various jurisdictions. |
| --- | --- |
Conflicts of Interest
The directors and officers of Vermilion are engaged in and will continue to engage in other activities in the oil and natural gas industry and, as a result of these and other activities, the directors and officers of Vermilion may become subject to conflicts of interest. The ABCA provides that in the event that a director has an interest in a contract or proposed contract or agreement, the director shall disclose his interest in such contract or agreement and shall refrain from voting on any matter in respect of such contract or agreement unless otherwise provided under the ABCA. To the extent that conflicts of interest arise, such conflicts will be resolved in accordance with the provisions of the ABCA.
As at the date hereof, Vermilion is not aware of any existing or potential material conflicts of interest between Vermilion and a director or officer of Vermilion.
Interest of Management and Others in Material Transactions
No director or officer of the Company, nor any other insider of the Company, nor their associates or affiliates has or has had, at any time within the three most recently completed financial years ending December 31, 2024, any material interest, direct or indirect, in any transaction or proposed transaction that has materially affected or would materially affect the Company.
Legal Proceedings and Regulatory Actions
The Company is not party to any material legal proceedings as of March 5, 2025 and was not party to any material legal proceedings during its most recently completed financial year. There are no: (a) penalties or sanctions imposed against the Company by a court relating to securities legislation or by a securities regulatory authority during its most recently completed financial year; (b) other penalties or sanctions imposed by a court or regulatory body against the Company that would likely be considered important to a reasonable investor in making an investment decision; or (c) settlement agreements the Company entered into before a court relating to securities legislation or with a securities regulatory authority during its most recently completed financial year.
Material Contracts
Except for contracts entered into in the ordinary course of business, the Company has not entered into any material contracts within the most recently completed financial year, or before the most recently completed financial year which are still in effect.
Interests of Experts
As at the date hereof, principals of McDaniel & Associates, the independent engineers for the Company, personally disclosed in certificates of qualification that they neither had nor expect to receive any common shares. The principals of McDaniel & Associates and their employees (as a group) beneficially own less than one percent of any of the Company’s securities.
Deloitte LLP is the auditor of the Company and is independent within the meaning of the Rules of Professional Conduct of the Chartered Professional Accountants of Alberta.
Vermilion Energy Inc. ■ Page 63 ■ 2024 Annual Information Form
Transfer Agent and Registrar
The transfer agent and registrar for the Company’s common shares is Odyssey Trust Company at its principal offices in Calgary, Alberta and Toronto, Ontario and Vancouver, British Columbia.
Risk Factors
The following is a summary of certain risk factors relating to the business of the Company. The following information is a summary only of certain risk factors and is qualified in its entirety by reference to, and must be read in conjunction with, the detailed information appearing elsewhere in this AIF. Additional risks and uncertainties not currently known to Vermilion that it currently views as immaterial may also materially and adversely affect its business, financial condition and/or results of operations. Shareholders and potential investors should carefully consider the information contained herein and, in particular, the following risk factors.
Market risks
Volatility of oil and gas prices
The Company's reserves, financial performance, financial position, and cash flows are dependent on the prices received for oil and natural gas production. Oil and natural gas prices have fluctuated materially during recent years and are determined by supply and demand factors. Supply factors can include availability (or lack thereof) of transportation capacity and production curtailments by independent producers or by OPEC members. Demand factors can be impacted by general economic conditions, supply chain requirements, environmental and other factors. Environmental and other factors include changes in weather, weather patterns, fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to oil and gas, and technology advances in fuel economy and energy generation devices. Shifts in supply and demand for certain commodities, products, and services may occur as climate-related risks are increasingly taken into account.
Constraints at processing facilities and/or on transportation
The Company delivers its products via gathering and processing facilities, pipeline systems, trucks, rail, and tanker. The amount of crude oil, natural gas, and NGLs that the Company can produce and sell is subject to the availability, proximity, and capacity of these systems and related infrastructure. Unexpected shutdowns or curtailment of capacity of gathering and processing facilities, and pipeline systems, or an inability to secure trucks, rail, or tankers could affect the Company's production, operations, and financial results. The Company's production may flow through third party facilities which the Company does not control and these facilities may discontinue or decrease operations as result of normal course service requirements, unexpected events or otherwise. A discontinuation or decrease of operation of these third party facilities could have a material adverse effect on the Company's ability to process it's production and deliver to market. Midstream and pipeline companies may take actions to maximize their return on investment, which may in turn adversely affect producers and shippers.
Volatility of foreign exchange rates
The Company's reserves, financial performance, financial position, and cash flows are affected by prevailing foreign exchange rates. An increase in the exchange rate for the Canadian dollar versus the US dollar and Euro would reduce the Canadian equivalent cash receipts for Vermilion's production. Conversely, a decrease in the exchange rate for the Canadian dollar versus the US dollar and Euro would increase the Canadian equivalent cash outflows for Vermilion's operating and capital expenditures.
Volatility of market price of Common Shares
The market price of the common shares may be volatile and this volatility may affect the ability of Shareholders to sell common shares at an advantageous price. Market price fluctuations in the common shares may be due to: the Company’s operating results or financial performance failing to meet the expectations of securities analysts or investors in any quarter; downward revision in securities analysts’ estimates; governmental regulatory action; adverse change in general market conditions or economic trends; acquisitions, dispositions or other material public announcements by the Company or its competitors. In addition, the market price for securities in stock markets including Common Shares may experience significant price and trading fluctuations. These fluctuations may result in volatility in the market prices of securities that may be unrelated or disproportionate to changes in the Company's operating and financial performance.
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Hedging arrangements
Vermilion may enter into agreements to fix commodity prices, interest rates, and foreign exchange rates to offset the risks affecting the business. To the extent that Vermilion engages in price risk management activities to protect the Company from unfavourable fluctuations in prices and rates, the Company may also be prevented from realizing the full benefits of favourable fluctuations in prices and rates.
To the extent that risk management activities and hedging strategies are employed to address these risks, the Company would also be exposed to risks associated with such activities and strategies, including: counterparty risk, settlement risk, basis risk, liquidity risk and market risk. These risks could impact or negate any benefits of risk management activities and hedging strategies.
In addition, commodity hedging arrangements could expose the Company to the risk of financial loss if: production falls short of the hedged volumes; there is a widening of price-basis differentials between delivery points for production and the delivery point assumed in the hedge arrangements; or a sudden unexpected event materially impacts oil and natural gas prices.
Inflationary pressures
The Company’s financial position, financial performance, and cash flows are impacted by global inflation. An increase in inflation could impact the costs of to operate our business, including future capital expenditures, recurring costs to operate, and commodity prices.
Operational risks
Increase in operating costs or a decline in production level
The Company's financial performance, financial position, and cash flows are affected by the Company's operating costs and production levels. Operating costs may increase and production levels may decline at rates greater than anticipated due to unforeseen circumstances, many of which are beyond Vermilion's control.
Production levels may decline due to an inability for Vermilion to market oil and natural gas production. This could result from the availability, proximity and capacity of gathering systems, pipelines and processing facilities that Vermilion depends on in the jurisdictions in which it operates.
Operating costs could increase as a result of blowouts, environmental damage, unforeseen circumstances related to climate-change, and other unexpected and dangerous conditions which could result from a number of operating and natural hazards associated with Vermilion's operations. In addition to higher costs, Vermilion may have a potential liability to regulators and third parties as a result. Vermilion maintains liability insurance, where available, in amounts consistent with industry standards. Business interruption insurance may also be purchased for selected operations, to the extent that such insurance is commercially viable. Vermilion may become liable for damages arising from such events against which it cannot insure or against which it may elect not to insure because of high premium costs or other reasons.
Operator performance and payment delays
Continuing production from a property are dependent upon the ability of the operator of the property, and the operator may fail to perform these functions properly. Payments from production generally flow through the operator and there is a risk of delay and additional expense in receiving such revenues if the operator becomes insolvent. Although satisfactory title reviews are generally conducted in accordance with industry standards, such reviews do not guarantee or certify that a defect in the chain of title may not arise to defeat the claim of Vermilion or its subsidiaries to certain properties.
In addition to the usual delays in payment by purchasers of oil and natural gas to the operators of the properties, and by the operator to Vermilion, payments between any of such parties may also be delayed by restrictions imposed by lenders, delays in the sale or delivery of products, delays in the connection of wells to a gathering system, blowouts or other accidents, recovery by the operator of expenses incurred in the operation of the properties or the establishment by the operator of reserves for such expenses.
Weather conditions
Vermilion's operations may be impacted by changing weather conditions, which may include: changes in temperature extremes, changes in precipitation patterns (including drought and flooding), rising sea levels, and increased severity of extreme weather events such as cyclones, wildfires or floods. These events can impact Vermilion's operations, causing shutdowns and increased costs. In the Netherlands, rising water levels could impact facilities below sea level and in Australia a severe cyclonic event could cause damage to the Company's Wandoo platform. In North America, wildfires may restrict or could interfere with the Company's operations, increasing its costs and otherwise negatively impact its operations.
Vermilion Energy Inc. ■ Page 65 ■ 2024 Annual Information Form
Cost of new technology
The oil and natural gas industry is characterized by rapid and significant technological advancements and introductions of new products and services utilizing new technologies. Other oil and natural gas companies may have greater financial, technical and personnel resources that provide them with technological advantages and may in the future allow them to implement new technologies before Vermilion does. There can be no assurance that Vermilion will be able to respond to such competitive pressures and implement such technologies on a timely basis or at an acceptable cost. One or more of the technologies currently utilized by the Company or implemented in the future may become obsolete.
Regulatory and political risks
Tax, royalty, and other government legislation
Income tax laws, royalty and other government legislation relating to the oil and gas industry in the jurisdictions in which the Company operates may change in a manner that adversely affects Vermilion.
Vermilion is exposed to increased taxation and royalties due to windfall taxes on profits. Windfall taxes have been substantively enacted within the European Union for oil and gas companies for 2022 and/or 2023 at a minimum rate of 33% calculated on taxable profits above a 20% increase in the average yearly taxable profits as compared to 2018 to 2021. The windfall tax does not apply to 2024 or later years. There is risk that windfall taxes or similar mechanisms will be re-enacted or similar legislation could be enacted in other jurisdictions that Vermilion operates in periods of extraordinary commodity prices.
Government regulations
Vermilion's operations are governed by many levels of governments in which jurisdiction the Company operates. Vermilion is subject to laws and regulations regarding environment, health and safety issues, lease interests, taxes and royalties, among others. Failure to comply with the applicable laws can result in significant increases in costs, penalties and even losses of operating licenses. The regulatory process involved in each of the countries in which Vermilion operates is not uniform and regulatory regimes vary as to complexity, timeliness of access to, and response from, regulatory bodies and other matters specific to each jurisdiction. If regulatory approvals or permits are delayed, not obtained, or revoked, there can also be delays or abandonment of projects, decreases in production and increases in costs, and Vermilion may not be able to fully execute its strategy. Governments may also amend or create new legislation and regulatory bodies may also amend regulations or impose additional requirements which could result in reduced production and increased capital, operating and compliance costs.
Policy and legal risks
Policy actions that attempt to constrain actions that contribute to the adverse effects of climate change or policy actions that seek to promote adaptation to climate change continue to evolve. Policy changes could include implementing carbon-pricing mechanisms to reduce GHG emissions, shifting energy-efficient solutions, and promoting more sustainable land-use practices. The risks and financial impact of policy changes depend on the nature and timing of the policy change.
Vermilion may be exposed to increased litigation risk relating to climate change. The oil and gas industry has seen an increase in climate-related litigation claims being brought before the courts by property owners, municipalities, and public interest organizations. Some of these claims include the failure of organizations to mitigate the impacts of climate change, failure to adapt to climate change, and the insufficiency of disclosure around material financial risks. As the value of loss and damage arising from climate change increases, litigation risk will also grow.
Political events and terrorist attacks
Political events throughout the world that cause disruptions in the supply of oil affect the marketability and price of oil and natural gas acquired or discovered by Vermilion. Political developments arising in the countries in which Vermilion operates have a significant impact on the price of oil and natural gas.
Vermilion’s oil and natural gas properties, wells and facilities could be subject to a terrorist attack. If any of Vermilion’s properties, wells or facilities or any infrastructure on which the Company relies are the subject of a terrorist attack, such attack may have a material adverse effect on Vermilion’s financial performance, financial position, and cash flows.
Vermilion Energy Inc. ■ Page 66 ■ 2024 Annual Information Form
Financing risks
Discretionary nature of dividends and share buybacks
The declaration and payment (including the amount thereof) of future cash dividends and the amount of share buybacks under the NCIB, if any, is subject to the discretion of the Board of Directors and may vary depending on a variety of factors and conditions, including the satisfaction of the liquidity and solvency tests under the ABCA for the declaration and payment of dividends and the amount of the Company's cash flows. The Company's cash flows may be impacted by risks affecting the Company's business including: fluctuations in commodity prices, foreign exchange and interest rates; production and sales volume levels; production costs; capital expenditure requirements; royalty and tax burdens; external financing availability, and debt service requirements.
Depending on these and other factors considered relevant to the declaration and payment of dividends and the authorization of share buybacks by the Board of Directors and management of the Company, the Company may change its dividend policy and (or) approach to the share buybacks from time to time. Any reduction of dividends and/or share buybacks may adversely affect the market price or value of Common Shares.
Additional financing
The Revolving Credit Facility and any replacement credit facility may not provide sufficient liquidity. The amounts available under the Revolving Credit Facility may not be sufficient for future operations, or Vermilion may not be able to obtain additional financing on attractive economic terms, if at all.
To the extent that external sources of capital, including the issuance of additional Common Shares, become limited or unavailable, Vermilion's ability to make the necessary capital investments to maintain or expand its oil and natural gas reserves may be impaired. To the extent the Company is required to use cash flow to finance capital expenditures or property acquisitions, the level of cash available that may be declared payable as dividends will be reduced.
Debt service
Vermilion may finance a significant portion of its operations through debt. Amounts paid in respect of interest and principal on debt incurred by Vermilion may impair Vermilion's ability to satisfy its other obligations. Variations in interest rates and scheduled principal repayments could result in significant changes in the amount required to be applied to debt service before payment by Vermilion of its debt obligations.
Lenders may be provided with security over substantially all of the assets of Vermilion and its subsidiaries. If Vermilion becomes unable to pay its debt service charges or otherwise commits an event of default such as bankruptcy, a lender may be able to foreclose on or sell the assets of Vermilion and/or its Subsidiaries.
Variations in interest rates and foreign exchange rates
An increase in interest rates could result in a significant increase in the amount the Company pays to service debt. A decrease in the exchange rate of the Canadian dollar versus the US dollar would result in higher interest and ultimate principle payment on the Senior Unsecured Notes.
Environmental risks
Environmental legislation
The oil and natural gas industry is subject to environmental regulation pursuant to local, provincial, state and federal legislation. A breach of such legislation may result in the imposition of fines, the issuance of clean up orders in respect of Vermilion or its assets, or the loss or suspension of regulatory approvals. Such legislation may include carbon taxes, enhanced emissions reporting obligations, mandates on the equipment specifications, and emissions regulations. Such legislation may be changed to impose higher standards and potentially more costly obligations on Vermilion. In addition, such legislation may inhibit Vermilion's ability to operate the Company's assets and may make it more difficult for Vermilion to compete in the acquisition of new property rights. Presently, the Company does not believe the financial impact of these regulations on capital expenditures and earnings will be material. However, the Company actively monitors and assesses its exposure to this legislation.
Vermilion expects to incur abandonment and reclamation costs in the ordinary course of business as existing oil and gas properties are abandoned and reclaimed. These costs may materially differ from the Company's estimates due to changes in environmental regulations.
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Vermilion's exploration and production facilities and other operations and activities emit some amount of greenhouse gases, which may be subject to legislation regulating emissions of greenhouse gases. This may result in a requirement to reduce emissions or emissions intensity from Vermilion's operations and facilities. It is possible that future regulations may require further reductions of emissions or emissions intensity.
Hydraulic fracturing regulations
Hydraulic fracturing involves the injection of water, sand and small amounts of additives under pressure into rock formations to stimulate oil and natural gas production. Hydraulic fracturing is used to produce commercial quantities of oil and natural gas from reservoirs that were previously unproductive. Hydraulic fracturing has featured prominently in recent political, media and activist commentary on the subject of water usage and environmental damage. Any new laws, regulations or permitting requirements regarding hydraulic fracturing could lead to operational delays, increased operating costs, third party or governmental claims, and could increase Vermilion's costs of compliance and doing business as well as delay the development of oil and natural gas resources from shale formations, which are not commercial without the use of hydraulic fracturing. Restrictions on hydraulic fracturing could also reduce the amount of oil and natural gas that the Company is ultimately able to produce from its reserves, as well as increase costs.
With activist groups expressing concern about the impact of hydraulic fracturing on the environment and water supplies, Vermilion's corporate reputation may be negatively affected by the negative public perception and public protests against hydraulic fracturing. In addition, concerns regarding hydraulic fracturing may result in changes in regulations that delay the development of oil and natural gas resources and adversely affect Vermilion's costs of compliance and reputation. Changes in government may result in new or enhanced regulatory burdens in respect of hydraulic fracturing which could affect Vermilion's business.
Climate change
In addition to other climate-related risks discussed elsewhere in this AIF, Vermilion faces transition risks and physical risks, which are described in detail in the Annual MD&A available on SEDAR+ at www.sedarplus.ca and on the SEC's website at www.sec.gov.
Transition risks are risks that relate to the transition to a lower-carbon economy. Transition risks impact the volatility of oil and gas prices (as consumer demand for oil and gas may decrease); environmental legislation and hydraulic fracturing regulations (which may delay or restrict the development of oil and gas); the ability to obtain additional financing (as sources of financing for oil and gas development may become more restricted); and the reliance on key personnel, management, and labour (as the workforce may transition to other sources of energy development). Practices and disclosures relating to environmental matters, including climate change, are attracting increasing scrutiny by stakeholders. Vermilion’s response to addressing environmental matters can impact the Company’s reputation and affect the Company's ability to hire and retain employees; to compete for reserve acquisitions, exploration leases, licenses and concessions; and to receive regulatory approvals required to execute operating programs.
Physical risks relate to the physical impact of climate change, which can be event driven (acute) or longer-term shifts (chronic) in climate patterns. Physical risks can have financial implications for the Company, such as direct damage to assets and indirect impacts from production disruptions. Physical risks may also increase Vermilion's operating costs.
Acquisition and expansion risks
Competition
Vermilion actively competes for reserve acquisitions, exploration leases, licenses, concessions and skilled industry personnel with a substantial number of other oil and gas companies, some of which have significantly greater financial resources than Vermilion. Vermilion's competitors include major integrated oil and natural gas companies and numerous other independent oil and natural gas companies and individual producers and operators.
Vermilion's ability to successfully bid on and acquire additional property rights, to discover reserves, to participate in drilling opportunities and to identify and enter into commercial arrangements with customers will be dependent upon developing and maintaining close working relationships with its future industry partners and joint operators and its ability to select and evaluate suitable properties and to consummate transactions in a highly competitive environment.
Vermilion Energy Inc. ■ Page 68 ■ 2024 Annual Information Form
International operations and future geographical/industry expansion
The operations and expertise of Vermilion's management are currently focused primarily on oil and natural gas production, exploration and development in three geographical regions, North America, Europe and Australia. In the future Vermilion may acquire or move into new industry related activities, enter into new geographical areas, or acquire different energy related assets. These actions may result in unexpected risks or alternatively, significantly increase the Company's exposure to one or more existing risk factors.
Acquisition assumptions
When making acquisitions, Vermilion estimates the future performance of the assets to be acquired. These estimates are subject to inherent risks associated with predicting the future performance of those assets. These estimates may not be realized over time. As such, assets acquired may not possess the value Vermilion attributed to them.
Failure to realize anticipated benefits of prior acquisitions
Vermilion may complete one or more acquisitions for various strategic reasons including to strengthen its position in the oil and natural gas industry and to create the opportunity to realize certain benefits. In order to achieve the benefits of any future acquisitions, Vermilion will be dependent upon its ability to successfully consolidate functions and integrate operations, procedures and personnel in a timely and efficient manner and to realize the anticipated growth opportunities and synergies from combining the acquired assets and operations with those of the Company. The integration of acquired assets and operations requires the dedication of management effort, time and resources, which may divert management's focus and resources from other strategic opportunities and from operational matters during the process. The integration process may result in the disruption of ongoing business and customer relationships that may adversely affect Vermilion's ability to achieve the anticipated benefits of such prior acquisitions.
Reserve estimates
Reserves and estimated future net revenue to be derived from reserves are estimates and have been independently evaluated by McDaniel & Associates. The estimation of reserves is a complex process and requires significant judgment. Actual production and ultimate reserves will vary from those estimates and these variations may be material.
Assumptions incorporated into the estimation of reserves are based on information available when the estimate was prepared. These assumptions are subject to change and many are beyond the Company's control. These assumptions include: initial production rates; production decline rates; ultimate recovery of reserves; timing and amount of capital expenditures; marketability of production; future prices of crude oil and natural gas; operating costs; well abandonment costs; royalties, taxes, and other government levies that may be imposed over the producing life of the reserves.
In addition, estimates of reserves that may be developed and produced in the future are often based on methods other than actual production history, including: volumetric calculations, probabilistic methods, and upon analogy to similar types of reserves. Estimates based on these methods are generally less reliable than those based on actual production history. Subsequent evaluation of the same reserves based upon production history will result in variations, which may be material, in the estimated reserves. As such, reserve estimates may require revision based on actual production experience.
The present value of estimated future net revenue referred to in this annual information form should not be construed as the fair market value of estimated crude oil and natural gas reserves attributable to the Company's properties. The estimated discounted future revenue from reserves are based upon price and cost estimates which may vary from actual prices and costs and such variance could be material. Actual future net revenue will also be affected by factors such as the amount and timing of actual production, supply and demand for crude oil and natural gas, curtailments or increases in consumption by purchasers and changes in governmental regulations and taxation.
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Other risks
Cyber security
Vermilion manages cyber security risk by ensuring appropriate technologies, processes and practices are effectively designed and implemented to help prevent, detect and respond to threats as they emerge and evolve. The primary risks to Vermilion include, loss of data, destruction or corruption of data, compromising of confidential customer or employee information, leaked information, disruption of business, theft or extortion of funds, regulatory infractions, loss of competitive advantage and damage to the Company's reputation. Vermilion relies upon a variety of advanced controls as protection from such attacks including:
| a) | Enterprise class firewall infrastructure, secure network architecture and anti-malware defense systems to protect against network intrusion, malware infection and data loss. |
|---|---|
| b) | Regularly conducted comprehensive third party reviews and vulnerability assessments to ensure that information technology systems are up-to-date and properly configured, to reduce security risks arising from outdated or misconfigured systems and software. |
| --- | --- |
| c) | Disaster recovery planning, ongoing monitoring of network traffic patterns to identify potential malicious activities or attacks. |
| --- | --- |
Incident response processes are in place to isolate and control potential attacks. Data backup and recovery processes are in place to minimize risk of data loss and resulting disruption of business. Through ongoing vigilance and regular employee awareness, Vermilion has not experienced a cyber security event of a material nature in the last three years. As it is difficult to quantify the significance of such events, cyber attacks such as, security breaches of company, customer, employee, and vendor information, as well as hardware or software corruption, failure or error, telecommunications system failure, service provider error, intentional or unintentional personnel actions, malicious software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and the corruption of data, may in certain circumstances be material and could have an adverse effect on Vermilion’s business, financial condition and results of operations. As result of the unpredictability of the timing, nature and scope of disruptions from such attacks, Vermilion could potentially be subject to production downtimes, operational delays, the compromising of confidential or otherwise protected information, destruction or corruption of data, security breaches, other manipulation or improper use of its systems and networks or financial losses, any of which could have a material adverse effect on Vermilion’s competitive position, financial condition or results of operations.
Accounting adjustments
The presentation of financial information in accordance with IFRS Accounting Standards requires that management apply certain accounting policies and make certain estimates and assumptions which affect reported amounts in Vermilion’s consolidated financial statements. The accounting policies may result in non-cash charges to net income and write-downs of net assets in the consolidated financial statements and such adjustments may be viewed unfavourably by the market and may result in an inability to borrow funds or a decline in price of Common Shares.
Ineffective internal controls
Effective internal controls are necessary for Vermilion to provide reliable financial reports and to help prevent fraud. Although the Company has undertaken and will undertake a number of procedures in order to help ensure the reliability of its financial reports, including those that may be imposed on Vermilion under Canadian securities laws and applicable US federal and state securities laws, Vermilion cannot be certain that such measures will ensure that the Company will maintain adequate control over financial processes and reporting. Failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm Vermilion's results of operations or cause the Company to fail to meet its reporting obligations. Additionally, implementing and monitoring effective internal controls can be costly. If Vermilion or its independent auditors discover a material weakness, the disclosure of that fact, even if quickly remedied, could reduce the market's confidence in Vermilion's consolidated financial statements and may result in a decline in the price of Common Shares.
Reliance on key personnel, management, and labour
Vermilion's success depends in large measure on certain key personnel. The loss of the services of such key personnel may have a material adverse effect on the Company's business, financial condition, results of operations and prospects. Vermilion does not have any key person insurance in effect. The contributions of Vermilion's existing management team to immediate and near term operations are likely to be of central importance. In addition, the labour force in certain areas in which the Company operates is limited and the competition for qualified personnel in the oil and natural gas industry is intense. Vermilion expects that similar projects or expansions will proceed in the same area during the same time frame as the Company's projects. Vermilion's projects require experienced employees, and such competition may result in increases in compensation paid to such personnel or in a lack of qualified personnel. There can be no assurance that the Company will be able to continue to attract and retain all personnel necessary for the development and operation of the business.
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Potential conflicts of interest
Circumstances may arise where members of the Board of Directors or officers of Vermilion are directors or officers of companies which compete with Vermilion. No assurances can be given that opportunities identified by such persons will be provided to Vermilion.
Geopolitical tensions and trade policy
As a global gas producer, Vermilion's profitability is impacted by economic factors, including geopolitical tensions and trade policy decisions in the countries in which it operates, as well as countries that impact global gas supply and demand.
Ongoing global geopolitical tensions, including the war in Ukraine and conflicts in the Middle East, may have significant economic implications. Russia’s invasion of Ukraine in 2022 has disrupted regional oil and gas supplies, leading to widespread sanctions against Russia, which in turn have caused macroeconomic instability, meanwhile instability in the Middle East may continue to further threaten the global economies.
The global geopolitical landscape is also being significantly shaped by the policies of the Trump administration, particularly in relation to trade and tariffs. The potential imposition of tariffs, especially on Canadian goods, including crude oil, may create economic challenges for the oil and gas sector. These trade barriers if fully enacted may disrupt supply chains, raise costs, and impact the competitiveness of Canadian exports.
The other risks disclosed in this Risk Factors section may be exacerbated as a result of these geopolitical tensions and trade policy decisions, which may impact market risks including volatility of current and expected oil and gas prices, foreign exchange rates, market prices of common shares; regulatory and political risks including tax, royalty, and other government legislation; financing risks including additional financing, debt service, variations in interest rates; acquisition and expansion risks including international operations and future geographical/industry expansion, acquisition assumptions, failure to realize anticipated benefits of prior acquisitions.
Vermilion Energy Inc. ■ Page 71 ■ 2024 Annual Information Form
Additional Information
Additional information relating to the Company may be found on SEDAR+ at www.sedarplus.ca and on the SEC's website at www.sec.gov under Vermilion’s profile. Additional information related to the remuneration and indebtedness of the directors and officers of the Company, and the principal holders of common shares and securities authorized for issuance under the Company's equity compensation plans, where applicable, are contained in the information circular of the Company in respect of its most recent annual meeting of Shareholders involving the election of directors. Additional financial information is provided in the Annual Financial Statements and Annual MD&A for the year ended December 31, 2024.
Vermilion Energy Inc. ■ Page 72 ■ 2024 Annual Information Form
Appendix A
REPORT ON RESERVES DATA BY INDEPENDENT QUALIFIED RESERVES EVALUATOR OR AUDITOR (FORM 51-101F2)
Terms to which a meaning is ascribed in NI 51-101 have the same meaning herein.
To the Board of Directors of Vermilion Energy Inc. (the "Company"):
| 1. | We have evaluated the Company’s reserves data as at December 31, 2024. The reserves data are estimates of proved reserves and probable reserves and related future net revenue as at December 31, 2024, estimated using forecast prices and costs. |
|---|---|
| 2. | The reserves data are the responsibility of the Company’s management. Our responsibility is to express an opinion on the reserves data based on our evaluation. |
| --- | --- |
| 3. | We carried out our evaluation in accordance with standards set out in the Canadian Oil and Gas Evaluation Handbook as amended from time to time (the "COGE Handbook") maintained by the Society of Petroleum Evaluation Engineers (Calgary Chapter). |
| --- | --- |
| 4. | Those standards require that we plan and perform an evaluation to obtain reasonable assurance as to whether the reserves data are free of material misstatement. An evaluation also includes assessing whether the reserves data are in accordance with principles and definitions presented in the COGE Handbook. |
| --- | --- |
| 5. | The following table shows the net present value of future net revenue (before deduction of income taxes) attributed to proved plus probable reserves, estimated using forecast prices and costs and calculated using a discount rate of 10 percent, included in the reserves data of the Company evaluated for the year ended December 31, 2024, and identifies the respective portions thereof that we have evaluated and reported on to the Company's Board of Directors: |
| --- | --- |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | Location of Reserves | | | | Net Present Value of Future Net Revenue | |||
| Independent Qualified Reserves | | Effective Date of | | (Country or Foreign | | | | (before income taxes, 10% discount rate - M) | ||||
| Evaluator | **** | Evaluation Report | **** | Geographic Area) | **** | Audited | **** | Evaluated | Reviewed | **** | Total | |
| McDaniel & Associates Consultants Ltd | | | December 31, 2024 | | Australia | | — | | 378,413 | — | | 378,413 |
| McDaniel & Associates Consultants Ltd | | | December 31, 2024 | Canada | — | 2,358,113 | — | 2,358,113 | ||||
| McDaniel & Associates Consultants Ltd | | | December 31, 2024 | CEE | — | 116,186 | — | 116,186 | ||||
| McDaniel & Associates Consultants Ltd | | | December 31, 2024 | France | — | 614,929 | — | 614,929 | ||||
| McDaniel & Associates Consultants Ltd | | | December 31, 2024 | Germany | — | 884,871 | — | 884,871 | ||||
| McDaniel & Associates Consultants Ltd | | | December 31, 2024 | Ireland | — | 825,708 | — | 825,708 | ||||
| McDaniel & Associates Consultants Ltd | | | December 31, 2024 | Netherlands | — | 223,603 | — | 223,603 | ||||
| McDaniel & Associates Consultants Ltd | | | December 31, 2024 | United States | — | 418,037 | — | 418,037 | ||||
| Total | | **** | **** | **** | **** | **** | — | **** | 5,819,860 | — | **** | 5,819,860 |
All values are in US Dollars.
| 6. | In our opinion, the reserves data respectively evaluated by us have, in all material respects, been determined and are in accordance with the COGE Handbook, consistently applied. We express no opinion on the reserves data that we reviewed but did not audit or evaluate. |
|---|---|
| 7. | We have no responsibility to update our reports referred to in paragraph 5 for events and circumstances occurring after the effective date of our reports. |
| --- | --- |
| 8. | Because the reserves data are based on judgments regarding future events, actual results will vary and the variations may be material. |
| --- | --- |
EXECUTED as to our reports referred to above:
McDaniel & Associates Consultants Ltd., Calgary, Alberta, Canada, March 4, 2025
| "Michael J. Verney" |
|---|
| Michael J. Verney, P.Eng. |
| Executive Vice President |
Vermilion Energy Inc. ■ Page 73 ■ 2024 Annual Information Form
Appendix B
REPORT OF MANAGEMENT AND DIRECTORS ON OIL AND GAS DISCLOSURE (FORM 51-101F3)
Terms to which a meaning is ascribed in National Instrument 51-101 have the same meaning herein.
Management of Vermilion Energy Inc. (the "Company") are responsible for the preparation and disclosure of information with respect to the Company's oil and gas activities in accordance with securities regulatory requirements. This information includes reserves data and related future net revenue as at December 31, 2024, estimated using forecast prices and costs.
An independent qualified reserves evaluator has evaluated the Company's reserves data. The report of the independent qualified reserves evaluator is presented in Appendix A to the Annual Information Form of the Company for the year ended December 31, 2024.
The Independent Reserves Committee of the Board of Directors of the Company has:
| (a) | reviewed the Company's procedures for providing information to the independent qualified reserves evaluator; |
|---|---|
| (b) | met with the independent qualified reserves evaluator to determine whether any restrictions affected the ability of the independent qualified reserves evaluator to report without reservation; and |
| --- | --- |
| (c) | reviewed the reserves data with management and the independent qualified reserves evaluator. |
| --- | --- |
The Independent Reserves Committee of the Board of Directors has reviewed the Company's procedures for assembling and reporting other information associated with oil and gas activities and has reviewed that information with management. The Board of Directors has, on the recommendation of the Audit and Independent Reserves Committees, approved:
| (a) | the content and filing with securities regulatory authorities of Form 51-101F1 containing reserves data and other oil and gas information; |
|---|---|
| (b) | the filing of Form 51-101F2 which is the report of the independent qualified reserves evaluator on the reserves data; and |
| --- | --- |
| (c) | the content and filing of this report. |
| --- | --- |
Because the reserves data is based on judgments regarding future events, actual results will vary and the variations may be material.
| | |
|---|---|
| “Dion Hatcher” | |
| Dion Hatcher, President and Chief Executive Officer | |
| | |
| "Lars Glemser" | |
| Lars Glemser, Vice President and Chief Financial Officer | |
| | |
| “Myron Stadnyk” | |
| Myron Stadnyk, Director and Chairman of the Board | |
| | |
| “William Roby” | |
| William Roby, Director | |
| | |
| March 5, 2025 | |
Vermilion Energy Inc. ■ Page 74 ■ 2024 Annual Information Form
Appendix C
Audit Committee Mandate
The primary function of the Audit Committee (the "Committee") is to assist the Board of Directors (the "Board") of Vermilion Energy Inc. (the "Corporation") in its oversight role with respect to matters including:
| i. | the Corporation’s accounting and financing reporting processes and the audit of the Corporation’s financial statements; |
|---|---|
| ii. | the quality and integrity of financial information; |
| --- | --- |
| iii. | the Corporations’ compliance with legal and regulatory requirements; |
| --- | --- |
| iv. | the effectiveness of the Corporation’s systems of disclosure controls and internal controls regarding finance, accounting, legal, regulatory compliance and ethics; |
| --- | --- |
| v. | the effectiveness or risk management and compliance practices; |
| --- | --- |
| vi. | recommend the independent external auditors’ appointment (the “auditor”) performance, qualifications and independence; |
| --- | --- |
| vii. | related party transactions; and |
| --- | --- |
| viii. | the preparation of a report of the Committee to be included in the annual management proxy circular of the Corporation, |
| --- | --- |
with management of the Corporation responsible for the Corporation's financial reporting, information systems, risk management, disclosure controls, internal controls and compliance.
| 1. | Committee Structure and Operations |
|---|
| 1.1 | The Committee shall consist of not less than three directors and not more than five directors. |
|---|---|
| 1.2 | Each member of the Committee shall satisfy the applicable independence^(1)^ and experience requirements of the laws governing the Corporation and the applicable rules of any stock exchange on which the Corporation’s securities are listed. |
| --- | --- |
| 1.3 | All Committee members shall be "financially literate"^(2)^, and at least one member shall have "accounting or related financial expertise" as such terms are interpreted by the Board in its business judgment in light of, and in accordance with, the requirements or guidelines for audit committee service under applicable securities laws and rules of any stock exchange on which the Corporation’s securities are listed. |
| --- | --- |
| 1.4 | No Committee member shall serve on the audit committees of more than two other public issuers without prior determination by the Board that such simultaneous service would not impair the member's independence or the ability of such member to serve effectively on the Committee. |
| --- | --- |
| 1.5 | The Committee shall meet at least four times each year. |
| --- | --- |
| 1.6 | The Committee shall meet in-camera without management present with: (i) the external auditor, (ii) the internal auditor; and (iii) the members of the Committee. |
| --- | --- |
| 2. | Financial Information and Reporting |
|---|
| 2.1 | The Committee will review and recommend for approval to the Board financial information that will be made publicly available. This includes the responsibility to: |
|---|
| i. | Review and recommend approval of the Corporation's annual financial statements and related MD&A and earnings press releases. |
|---|---|
| ii. | Review and recommend approval of the Corporation's quarterly financial statements and related MD&A and earnings press releases. |
| --- | --- |
| iii. | Ensure adequate procedures are in place for the review of the public disclosure of financial information extracted or derived from the Corporation's filed financial reporting, other than the public disclosure referred to in items (i) and (ii) above, and periodically assess the adequacy of those procedures. |
| --- | --- |
| iv. | Review and recommend approval by the Board of the Corporation's Annual Information Form and any financing disclosure documents (as required). |
| --- | --- |
| 1 | Committee members must be “independent”, as defined in Sections 1.4 and 1.5 of National Instrument 52-110 and ‘‘independent’’ under the requirements of Rule 10A-3 of the Securities Exchange Act of 1934, as amended, and Section 303A.06 of the NYSE Listed Company Manual. |
|---|---|
| 2 | The Board has adopted the NI 52-110 definition of "financial literacy", which is an individual is financially literate if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the issuer's financial statements. |
| --- | --- |
Vermilion Energy Inc. ■ Page 75 ■ 2024 Annual Information Form
| 2.2 | Review and consider: |
|---|
| i. | The critical accounting policies and financial reporting practices used by the Corporation (including the appropriateness thereof). |
|---|---|
| ii. | Issues regarding accounting principles and financial statement presentations, including any significant proposed changes in financial reporting and accounting principles, policies and practices to be adopted by the Corporation. |
| --- | --- |
| iii. | Financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative International Financial Reporting Standards (“IFRS Accounting Standards”) methods on the financial statements of the Corporation and any other opinions sought by management from an independent or other audit firm or advisor with respect to the accounting treatment of a particular item. |
| --- | --- |
| iv. | Any management letter or schedule of unadjusted differences provided by the auditor and the Corporation’s response to that letter and other material written communication between auditor and management. |
| --- | --- |
| v. | Any problems, difficulties or differences encountered in the course of the audit work including any disagreements with management or restrictions on the scope of the auditor’s activities or on access to requested information and management’s response thereto. |
| --- | --- |
| vi. | Any new or pending developments in accounting and reporting standards that may affect the Corporation. |
| --- | --- |
| vii. | The effect of regulatory and accounting initiatives, as well as any off-balance sheet structures on the financial statements of the Corporation and other financial disclosures. |
| --- | --- |
| viii. | Any reserves, accruals, provisions or estimates that may have a material effect upon the financial statements of the Corporation. |
| --- | --- |
| ix. | The use of special purpose entities and the business purpose and economic effect of off-balance sheet transactions, arrangements, obligations, guarantees and other relationships of Corporation and their impact on the reported financial results of the Corporation. |
| --- | --- |
| x. | The use of any “pro forma” or “adjusted” information not in accordance with generally accepted accounting principles. |
| --- | --- |
| xi. | Any litigation, claim or contingency, including tax assessments, that could have a material effect upon the financial position of the Corporation, and the manner in which these matters may be, or have been, disclosed in the financial statements; and |
| --- | --- |
| xii. | Any other accounting, tax and financial aspects of the operations of the Corporation as the Committee considers appropriate. |
| --- | --- |
**3.**Oversight of Independent External Auditor
| 3.1 | Recommend to the Board for approval the auditor to be appointed auditor of the Corporation or successor auditor of the Corporation in the event of the termination, resignation or removal of the auditor. |
|---|---|
| 3.2 | Recommend to the Board the remuneration of the auditor. |
| --- | --- |
| 3.3 | Review and approve the scope and terms of all audit engagements. |
| --- | --- |
| 3.4 | Satisfy itself that the audit plan proposed by the auditor is risk-based and addresses all the relevant activities. |
| --- | --- |
| 3.5 | Pre-approve all audit services and permitted non-audit services (including fees terms and conditions for the performance of such services) to be provided by the auditor. |
| --- | --- |
| 3.6 | Oversee the performance by the auditor of its engagement and report to the Board on relevant matters, including but not limited to: |
| --- | --- |
| i. | The Corporation’s quarterly and annual financial statements and the auditor’s reporting in respect thereof including the appropriateness of policies and underlying estimates. |
| --- | --- |
| ii. | Any significant accounting or financial reporting issues. |
| --- | --- |
| iii. | Any material issues or potentially material issues, either specific to the Corporation or to the financial reporting environment in general, identified by the auditor. |
| --- | --- |
| iv. | The resolution of any disagreements between management and the auditor regarding financial reporting. |
| --- | --- |
| 3.7 | Evaluate the qualifications, performance and independence of the auditor, including: |
| --- | --- |
| i. | Review and evaluate the proposed lead audit partner. |
| --- | --- |
| ii. | Ensure the rotation of the lead audit partner occurs in accordance with applicable requirements. |
| --- | --- |
| iii. | Receive on periodic basis a written statement from the auditors confirming its independence, including a list of relationships between the auditor and the Corporation that may reasonably be expected to impact the independence of the auditor. |
| --- | --- |
| iv. | Discuss with the auditor any relationships or services that the auditor reasonably believes may affect the objectivity and independence of the auditors, and recommend to the Board appropriate action in response thereto. |
| --- | --- |
| v. | Annually request and review a report from the auditor regarding: |
| --- | --- |
| a) | the auditor’s quality-control procedures; |
| --- | --- |
| b) | any material issues raised by the most recent quality-control review, or peer review, of the auditor, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm; and |
| --- | --- |
| c) | any steps taken in respect of any such issues. |
| --- | --- |
| 3.8 | Ensure the auditor receives, during its term of office, notice of every meeting of the Committee and, if so requested by the Chair of the Committee, attends such meetings. |
| --- | --- |
| 3.9 | Meet with auditor in camera without management present. |
| --- | --- |
Vermilion Energy Inc. ■ Page 76 ■ 2024 Annual Information Form
**4.**Risk Management Oversight
| 4.1 | The Committee is responsible for the oversight of management’s identification, and evaluation, of the Corporation’s principal risks, and the implementation of appropriate policies, processes and systems to manage or mitigate the risks within the Corporation’s risk framework. |
|---|---|
| 4.2 | The Committee shall: |
| --- | --- |
| i. | Oversee, and ensure management reports annually to Board in respect of: |
| --- | --- |
| a) | the Corporation's principal risks and overall risk profile; |
| --- | --- |
| b) | the Corporation's strategies in addressing its risk profile; |
| --- | --- |
| c) | the processes, policies, procedures and controls in place to manage or mitigate the Corporation's principal risks; and |
| --- | --- |
| d) | the overall effectiveness of the enterprise risk management process and program. |
| --- | --- |
| ii. | Oversee the Corporation's credit and counterparty, market and financial, political and strategic, and repatriation risks. |
| --- | --- |
| iii. | Receive and review managements' annual risk register update including an update on residual risks. |
| --- | --- |
| iv. | Review the Corporation's annual insurance program, including the risk retention philosophy, potential exposure and corporate liability protection programs and ensure management reports to the Board in respect thereof. |
| --- | --- |
**5.**Internal Controls
| 5.1 | Oversee, and review and approve as required: |
|---|---|
| i. | Processes adopted by management for establishing effective internal control over financial reporting (the "ICFR") and disclosure controls and procedures (the "DC&P"). |
| --- | --- |
| ii. | The adequacy and effectiveness of the Corporation’s accounting, ICFR and DC&P policies and procedures and management information systems. |
| --- | --- |
| iii. | Changes to the Corporation's ICFR, DC&P and management information systems. |
| --- | --- |
| iv. | Oversee management's certification of ICFR and DC&P. |
| --- | --- |
| v. | Spending authority and approval limits. |
| --- | --- |
**6.**Information Technology – Cyber Security
| 6.1 | Receive annually (or more frequently as the Committee may request) a system status update with respect to the Corporation's core IT operating systems. |
|---|---|
| 6.2 | Review annually (or more frequently as the Committee may request) the Corporation's cyber security programs and their effectiveness. |
| --- | --- |
| 6.3 | Receive as frequently as the Committee may request an update on the Corporation's compliance program for cyber threats and security. |
| --- | --- |
| 6.4 | Ensure significant breaches are reported in accordance with best governance practices. |
| --- | --- |
**7.**Environment, Social and Governance (“ESG”)
| 7.1 | In collaboration with the Sustainability Committee, review and assess ESG-related risks to the Corporation |
|---|---|
| 7.2 | Regularly review the Corporations’ risk management policies and processes for, and approach to, addressing ESG-related risks. |
| --- | --- |
| 7.3 | Review ESG disclosure. |
| --- | --- |
**8.**General Compliance
8.1Oversee, and periodically review, procedures for:
| i. | The confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters or other matters that could negatively affect the Corporation, such as violations of the Code of Business Conduct and Ethics. |
|---|---|
| ii. | Treatment of complaints regarding accounting, internal accounting controls, or auditing matters. |
| --- | --- |
| iii. | The review and approval of the President and Chairman’s expenses and perquisites. |
| --- | --- |
| iv. | The review of any transactions involving the Corporation in which directors or officers of the Corporation have a material interest. |
| --- | --- |
Vermilion Energy Inc. ■ Page 77 ■ 2024 Annual Information Form
| | ||||
|---|---|---|---|---|
| Duties and Responsibilities | Meeting | |||
| | | |||
| | Q1 | Q2 | Q3 | Q4 |
| 2. Financial Information and Reporting | | | | |
| 2.1 Responsibilities include: | | | | |
| i. Review and recommend approval of the Corporation's annual financial statements, and related MD&A and earnings press releases. | ✓ | | | |
| ii. Review and recommend Board approval of quarterly financial statements, MD&A and press release. | | ✓ | ✓ | ✓ |
| iii. Ensure adequate procedures are in place for the review of the public disclosure of financial information extracted or derived from the Corporation's filed financial reporting, other than the public disclosure referred to in items (i) and (ii) above, and periodically assess the adequacy of those procedures. | ✓ | ✓ | ✓ | ✓ |
| iv. Review Annual Information Form | ✓ | | | |
| 2.2 Review and consider: | | | | |
| i. The critical accounting policies and financial reporting practices used by the Corporation, including the appropriateness thereof. | As needed. | |||
| iIi. Issues regarding accounting principles and financial statement presentations, including any significant proposed changes in financial reporting and accounting principles, policies and practices to be adopted by the Corporation. | As needed. | |||
| iii. Financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative IFRS Accounting Standards methods on the financial statements of the Corporation and any other opinions sought by management from an independent or other audit firm or advisor with respect to the accounting treatment of a particular item. | As needed. | |||
| iv. Any management letter or schedule of unadjusted differences provided by the external auditor and the Corporation’s response to that letter and other material written communication between the external auditor and management. | As needed. | |||
| v. Any problems, difficulties or differences encountered in the course of the audit work including any disagreements with management or restrictions on the scope of the external auditor’s activities or on access to requested information and management’s response thereto. | As needed. | |||
| vi. Any new or pending developments in accounting and reporting standards that may affect the Corporation. | As needed. | |||
| vii. The effect of regulatory and accounting initiatives, as well as any off-balance sheet structures on the financial statements of the Corporation and other financial disclosures. | As needed. | |||
| viii. Any reserves, accruals, provisions or estimates that may have a material effect upon the financial statements of the Corporation. | As needed. | |||
| ix. The use of special purpose entities and the business purpose and economic effect of off balance sheet transactions, arrangements, obligations, guarantees and other relationships of Corporation and their impact on the reported financial results of the Corporation. | As needed. | |||
| x. The use of any “pro forma” or “adjusted” information not in accordance with generally accepted accounting principles. | As needed. | |||
| xi. Any litigation, claim or contingency, including tax assessments, that could have a material effect upon the financial position of the Corporation, and the manner in which these matters may be, or have been, disclosed in the financial statements. | As needed. | |||
| xii. Any other accounting, tax and financial aspects of the operations of the Corporation as the Committee considers appropriate. | As needed. | |||
| | | |||
| 3. Independent External Auditor | | | | |
| 3.1 Recommend to the Board for approval the independent auditor to be appointed as auditor of the Corporation or successor auditor of the Corporation in the event of the termination, resignation or removal of the auditor. | ✓ | | | |
| 3.2 Recommend to the Board the remuneration of the independent auditor. | ✓ | | | |
| 3.3 Review and approve the scope and terms of all audit engagements. | ✓ | | | |
| 3.4 Satisfy itself that the audit plan proposed by the auditor is risk-based and addresses all the relevant activities. | As needed. | |||
| 3.5 Pre-approve all audit services and permitted non-audit services (including fees terms and conditions for the performance of such services) to be provided by the independent auditor. | As needed. | |||
| 3.6 Oversee the performance of independent external auditor and report to the Board on the relevant items. | ✓ | ✓ | ✓ | ✓ |
| i. The Corporation’s quarterly and annual financial statements and the auditor’s reporting in respect thereof including the appropriateness of policies and underlying estimates. | ✓ | ✓ | ✓ | ✓ |
| ii. Any significant accounting or financial reporting issues. | ✓ | ✓ | ✓ | ✓ |
| iii. Any material issues or potentially material issues, either specific to the Corporation or to the financial reporting environment in general identified by the auditor. | ✓ | ✓ | ✓ | ✓ |
| iv. The resolution of any disagreements between management and external auditor regarding financial reporting. | ✓ | ✓ | ✓ | ✓ |
| 3.7 Evaluate the qualifications, performance and independence of the auditor | | | | |
| i.Review and evaluate the proposed lead audit partner. | ✓ | ✓ | ✓ | ✓ |
| ii. Ensure the rotation of the lead audit partner occurs in accordance with applicable requirements. | ✓ | ✓ | ✓ | ✓ |
| iii. Receive on periodic basis a written statement from the external auditors confirming its independence, including a list of relationships between the external auditor and the Corporation that may reasonably be expected to impact the independence of the external auditor. | ✓ | ✓ | ✓ | ✓ |
| iv. Discuss with the external auditor any relationships or services that the external auditor reasonably believes may affect the objectivity and independence of the external auditors, and recommend to the Board appropriate action in response thereto. | ✓ | ✓ | ✓ | ✓ |
| v. Annually request and review a report from the external auditor regarding:<br><br>-Auditor’s quality control procedures.<br><br>-Any material issues raised by the most recent quality-control review.<br><br>-Steps taken in respect of any such issues. | ✓ | | | |
| 3.8 Ensure the external independent auditor receives, during its term of office, notice of every meeting of the Committee and, if so requested by the Chair of the Committee, attends such meetings. | | | | ✓ |
| 3.9 Meet with auditor in camera without management present. | ✓ | ✓ | ✓ | ✓ |
| | |
Vermilion Energy Inc. ■ Page 78 ■ 2024 Annual Information Form
| Duties and Responsibilities | Meeting | |||
|---|---|---|---|---|
| | | | | |
| | Q1 | Q2 | Q3 | Q4 |
| 4. Risk Management | | | | |
| 4.2 The Committee shall: | ✓ | ✓ | ✓ | ✓ |
| i.Oversee, and ensure management reports and reviews annually to the Board in respect of:<br><br>- the Corporation's principal risks and overall risk profile;<br><br>- the Corporation's strategies in addressing its risk profile;<br><br>- the processes, policies, procedures and controls in place to manage or mitigate the Corporation’s principal risks; and<br><br>- the overall effectiveness of the enterprise risk management process and program. | | | | |
| ii. Oversee the Corporation's credit and counterparty, market and financial, political and strategic, and repatriation risks. | ✓ | ✓ | ✓ | ✓ |
| iii. Receive and review managements' annual risk register update including an update on residual risks. | | | ✓ | |
| iv. Review the Corporation's annual insurance program, including the risk retention philosophy, potential exposure and corporate liability protection programs and ensure management reports to the Board in respect thereof. | | | | |
| | | |||
| 5. Internal Controls | | | | |
| 5.1 The Committee shall review and approve as required: | | | | |
| i.Processes adopted by management for establishing effective internal control over financial reporting ICFR and DC&P. | ✓ | ✓ | ✓ | ✓ |
| ii. The adequacy and effectiveness of the Corporation’s accounting, ICFR and DC&P policies and procedures and management information systems. | ✓ | ✓ | ✓ | ✓ |
| iii. Changes to the Corporation's ICFR, DC&P and management information systems. | ✓ | ✓ | ✓ | ✓ |
| iv. Oversee management's certification of ICFR and DC&P. | ✓ | ✓ | ✓ | ✓ |
| v. Spending authority and approval of limits. | ✓ | ✓ | ✓ | ✓ |
| | | |||
| 6. Information Technology – Cyber Security | | | | |
| 6.1 Receive annually (or more frequently as the Committee may request) a system status update with respect to the Corporation's core IT operating systems. | | | | ✓ |
| 6.2 Review annually (or more frequently as the Committee may request) the Corporation's cyber security programs and their effectiveness. | | | | ✓ |
| 6.3 Receive as frequently as the Committee may request an update on the Corporation's compliance program for cyber threats and security. | As needed. | |||
| 6.4 Ensure significant breaches are reported in accordance with best governance practices. | As needed. | |||
| | | |||
| 7. Environment, Social and Governance (“ESG”) | | | | |
| 7.1 In collaboration with the Sustainability Committee, review and assess ESG-related risks to the Corporation. | ✓ | ✓ | ✓ | ✓ |
| 7.2 Regularly review the Corporations’ risk management policies and processes for, and approach to, addressing ESG-related risks. | ✓ | ✓ | ✓ | ✓ |
| 7.3 Review ESG disclosure. | ✓ | ✓ | ✓ | ✓ |
| | | |||
| 8. General Compliance | | | | |
| 8.1 Oversee, and periodically review procedures for: | As needed. | |||
| i.The confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters or other matters that could negatively affect the Corporation, such as violations of the Code of Business Conduct and Ethics. | As needed. | |||
| ii.Treatment of complaints regarding accounting, internal accounting controls, or auditing matters. | As needed. | |||
| iii.The review and approval of the President and Chairman’s expenses and perquisites. | As needed. | |||
| iv.The review of any transactions involving the Corporation in which directors or officers of the Corporation have a material interest. | As needed. | |||
| 8.2 Review this mandate and make recommendations to the Board as appropriate. | | | | ✓ |
Vermilion Energy Inc. ■ Page 79 ■ 2024 Annual Information Form
Exhibit 99.2
Disclaimer
Certain statements included or incorporated by reference in this document may constitute “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian securities laws and the United States Private Securities Litigation Reform Act of 1995, respectively (collectively referred to herein as “forward-looking statements or information”). 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; future fund flows from operations and free cash flows; shareholder returns; Vermilion’s anticipated future debt capacity and levels; Vermilion’s budget; the closing of the Westbrick Energy Ltd. acquisition and its anticipated effects, including integration of assets and employees; expected payment and settlement of the 2025 Notes (defined below) and timing thereof; cost saving measures; sales processes of Vermilion’s southeast Saskatchewan and United States assets; statements regarding the return of capital, the flexibility of Vermilion’s capital program and operations; business strategies, objectives and priorities; operational and financial performance; estimated volumes of reserves and the discounted present value of future net cash flows from such reserves; petroleum and natural gas sales; future production levels and the timing thereof, including Vermilion’s 2025 guidance, and rates of average annual production growth; the effect of changes in crude oil and natural gas prices, changes in exchange and interest rates 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, number and production of Vermilion’s future wells expected to be drilled; exploration and development plans and the timing thereof; Vermilion’s aim and 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; use of proceeds from the 2033 Notes (defined below); ongoing contractual commitments; asset retirement obligations; emissions, targets, including reductions; sustainability and environmental, social and governance (ESG) and sustainability plans; and the timing of regulatory proceedings and approvals.
Such forward-looking statements or information are based on a number of assumptions of which all or any 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 and inflation rates; the success of the sales processes of Vermilion’s southeast Saskatchewan and United States assets; the accuracy of the McDaniel Reserves Report (defined below); the ability of the Company to identify attractive mergers and acquisitions opportunities; the ability of the Company to conduct operations in a safe manner; political stability of the areas in which the Company operates; the effects of changes to international trade policies; the accuracy of the Company’s 2025 budget; the ability of the Company to retain key employees; production and decline rates; the regulatory framework regarding royalties, taxes and environmental matters; the states of the capital markets; global economic conditions; the ability of the Company to execute plans, including exploration and development plans; the success of present and future wells; 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 or information 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: commodity prices; exchange rates; production and sales volumes; interest rates; geopolitical tensions; North American tariffs; volatility of oil and gas prices; constraints at processing facilities and/or on transportation; volatility of foreign exchange rates; volatility of market price of Common Shares (defined below); hedging arrangements; inflationary pressures; increase in operating costs or a decline in production level; operator performance and payment delays; weather conditions; cost of new technology; tax, royalty, and other government legislation; government regulations; policy and legal risks; political events and terrorist attacks; discretionary nature of dividends and share buybacks; additional financing; debt service; variations in interest rates and foreign exchange rates; environmental legislation; hydraulic fracturing regulations; climate change; competition; international operations and future geographical/industry expansion; acquisition assumptions; failure to realize anticipated benefits of prior acquisitions; reserves estimates; cyber security; accounting adjustments; ineffective internal controls; the potential for new and increased U.S. tariffs and protectionist trade measures on Canadian oil and gas imports; and other risks and uncertainties described elsewhere in this document or in Vermilion’s other filings with Canadian securities regulatory authorities.
Vermilion Energy Inc. ■ Page 1 ■ 2024 Management’s Discussion and Analysis
Many factors could cause Vermilion’s or any particular business unit’s actual results, performance, or achievements to vary from those described in this document, including, without limitation, those listed above and the assumptions upon which they are based proving incorrect. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this document as intended, planned, anticipated, believed, sought, proposed, estimated, forecasted, expected, projected, or targeted and such forward-looking statements included in this document should not be unduly relied upon. The impact of any one assumption, risk, uncertainty, or other factor on a particular forward-looking statement cannot be determined with certainty because they are interdependent and Vermilion’s future decisions and actions will depend on management’s assessment of all information at the relevant time. Such statements speak only as of the date of this document. The forward-looking statements or information contained in this document are made as of the date hereof and the Company 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. The forward-looking statements contained in this document are expressly qualified by these cautionary statements.
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.
All oil and natural gas reserve information contained in this document is derived from the McDaniel Reserves Report (as defined below) and has been prepared and presented in accordance with the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). In this document: (A) the net present value of future net revenues attributable to reserves do not represent the fair market value of reserves; (B) the recovery and reserve estimates of crude oil, NGL and natural gas reserves provided in this document are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and NGL reserves may be greater than or less than the estimates provided in this document; and (C) the estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation.
Under NI 51-01, disclosure of production volumes should include segmentation by product type as defined in the instrument. In this document, 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”.
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.
This document discloses test rates of production for certain wells over short periods of time (i.e., 5, 8 or 24 hours, IP30, IP60, IP90, etc.), which are preliminary and not determinative of the rates at which those or any other wells will commence production and thereafter decline. Short-term test rates are not necessarily indicative of long-term well or reservoir performance or of ultimate recovery. Although such rates are useful in confirming the presence of hydrocarbons, they are preliminary in nature, are subject to a high degree of predictive uncertainty as a result of limited data availability and may not be representative of stabilized on-stream production rates. A pressure transient analysis or well-test interpretation has not been carried out in respect of all wells. Production over a longer period will also experience natural decline rates, which can be high in certain plays in which the Company operates, and may not be consistent over the longer term with the decline experienced over an initial production period. Initial production or test rates may also include recovered “load” fluids used in well completion stimulation operations. Actual results will differ from those realized during an initial production period or short-term test period, and the difference may be material.
This document discloses certain oil and gas metrics, including reserve life index, finding, development and acquisition (“FD&A”) costs, future development (“FD”) costs, which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included in this document to provide readers with additional measures to evaluate the Company's performance; however, such measures are not reliable indicators of the Company's future performance and future performance may not compare to the Company's performance in previous periods and therefore such metrics should not be unduly relied up-on.
Financial data contained within this document are reported in Canadian dollars unless otherwise stated. References herein to “US$” or “USD” are to United States dollars.
Vermilion Energy Inc. ■ Page 2 ■ 2024 Management’s Discussion and Analysis
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) |
| bbl(s)/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 |
| CO2 | carbon dioxide |
| CO2e | carbon dioxide equivalent |
| GHG | greenhouse gas |
| GJ | gigajoules |
| LSB | light sour blend crude oil reference price |
| mbbls | thousand barrels |
| mmboe | thousand barrels of oil equivalent |
| mmbtu | million British Thermal Units |
| mcf | thousand cubic feet |
| mmcf/d | million cubic feet per day |
| MD | measured depth |
| 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 |
| psi | pounds per square inch |
| tCO2e | tonne 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 |
| US | the United States of America |
| 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 ■ 2024 Management’s Discussion and Analysis
Management's Discussion and Analysis
The following is Management’s Discussion and Analysis (“MD&A”), dated March 5, 2025, of Vermilion Energy Inc.’s (“Vermilion”, “we”, “our”, “us” or the “Company”) operating and financial results as at and for the three months and year ended December 31, 2024 compared with the corresponding periods in the prior year.
This discussion should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2024 and 2023, together with the accompanying notes (the "Consolidated Financial Statements"). Additional information relating to Vermilion, including its Annual Information Form for the year ended December 31, 2024 ("Annual Information Form"), is available on SEDAR+ at www.sedarplus.ca or on Vermilion’s website at www.vermilionenergy.com.
The Consolidated Financial Statements and comparative information have been prepared in Canadian dollars and in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards").
Prior period amounts have been restated to conform with current period presentation as a result of the voluntary and retroactively applied change in the presentation of windfall taxes, as combined with current income taxes.
This MD&A includes references to certain financial measures which are not specified, defined, or determined under IFRS Accounting Standards and are therefore considered non-GAAP and other specified financial measures. These financial measures are unlikely to be comparable to similar financial measures presented by other issuers. For a full description of these non-GAAP and other specified financial measures and a reconciliation of these measures to their most directly comparable GAAP financial measures, please refer to “Non-GAAP and Other Specified Financial Measures”.
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.
Guidance
On December 12, 2023, Vermilion released the 2024 capital budget and associated production guidance, which assumed a mid-year startup of the new BC Montney battery and Croatia gas plant. On May 1, 2024, the Company increased 2024 guidance for royalty rate and cash taxes to reflect the impact of higher forward pricing for crude oil on these items. On July 31, 2024, the Company increased 2024 production guidance to reflect consistently strong operational performance across the asset base over the first half of 2024. On November 6, 2024, the Company tightened the 2024 production guidance range to reflect increased certainty on annual production levels.
The Company’s guidance and results for 2024 are as follows:
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| Category | 2024 Guidance ^(1)^ | **** | 2024 Actual ^(1)^ | **** | ||
| Production (boe/d) | | 84,000 - 85,000 | | 84,543 | | |
| E&D capital expenditures (MM) | $ | 600 - 625 | $ | 623 | | |
| Royalty rate (% of sales) | | 9 - 11 | % | | 9.0 | % |
| Operating (/boe) | $ | 17.00 - 18.00 | | $ | 18.22 | |
| Transportation (/boe) | $ | 3.00 - 3.50 | | $ | 3.17 | |
| General and administration (/boe) | $ | 2.50 - 3.00 | | $ | 3.19 | |
| Cash taxes (% of pre-tax FFO) | 7 - 9 | % | 6.1 | % | ||
| Asset retirement obligations settled (MM) | $ | 60 | | $ | 55 | |
| Payments on lease obligations (MM)(2) | $ | 30 - 60 | | $ | 113 | |
All values are in US Dollars.
Vermilion Energy Inc. ■ Page 4 ■ 2024 Management’s Discussion and Analysis
On December 19, 2024, Vermilion released the 2025 capital budget and associated production guidance. On March 5, 2025, the Company updated the 2025 capital budget and associated production guidance following the close of the acquisition of Westbrick Energy Ltd. ("Westbrick"), with incremental capital expenditures and production from the acquired assets reflected in guidance for the remainder of the year. The Company’s guidance for 2025 is as follows:
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| Category | **** | 2025 Prior^(1)^ | **** | **** | 2025 Current^(1)^ | **** | ||
| Production (boe/d) | | 84,000 - 88,000 | | | 125,000 - 130,000 | | ||
| E&D capital expenditures ($MM) | | $ | 600 - 625 | | | $ | 730 - 760 | |
| Royalty rate (% of sales) | | 8 - 10 | % | | 9 - 11 | % | ||
| Operating ($/boe) | | $ | 17.00 - 18.00 | | | $ | 13.50 - 14.50 | |
| Transportation ($/boe) | | $ | 3.50 - 4.00 | | | $ | 3.00 - 3.50 | |
| General and administration ($/boe) | | $ | 2.75 - 3.25 | | | $ | 2.25 - 2.75 | |
| Cash taxes (% of pre-tax FFO) | | 7 - 9 | % | | 6 - 10 | % | ||
| Asset retirement obligations settled ($MM) | | $ | 60 | | | $ | 60 | |
| Payments on lease obligations ($MM) ^(2)^ | | $ | 20 | | | $ | 20 | |
| (1) | Final 2024 guidance reflects foreign exchange assumptions of CAD/USD 1.37, CAD/EUR 1.49, and CAD/AUD 0.91. Actual 2024 results reflect foreign exchange rates of CAD/USD 1.37, CAD/EUR 1.48, and CAD/AUD 0.90. Current 2025 guidance reflects foreign exchange assumptions of CAD/USD 1.43, CAD/EUR 1.51, and CAD/AUD 0.90. Prior 2025 guidance reflects foreign exchange assumptions of CAD/USD 1.40, CAD/EUR 1.48, and CAD/AUD 0.91. | |||||||
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| (2) | Final 2024 guidance for payments on lease obligations includes contractual amounts owing on leases, as well as up to $30 million to account for accelerated principal payments that may be made in 2024. Actual 2024 payments on lease obligations includes contractual amounts owing on leases, and reflects the repayment of the entire lease obligation associated with the Montney Battery in December 2024. Current 2025 guidance reflects contractual amounts owing on leases. | |||||||
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Vermilion Energy Inc. ■ Page 5 ■ 2024 Management’s Discussion and Analysis
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.
| 2024 production of 84,543 boe/d | 2024 capital expenditures of $623.0MM |
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| 2024 fund flows from operations of $1,205.8MM ^(1)^ |
| ^(1)^ | The fund flows from operations attributable to North America and International business units above excludes $246.8M of pre-tax fund flows from operations attributable to the Corporate segment. North America includes $1.4MM of corporate income tax recorded in the Corporate segment. |
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Vermilion Energy Inc. ■ Page 6 ■ 2024 Management’s Discussion and Analysis
Consolidated Results Overview
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| | | | | | Q4/24 vs. | | | | | | 2024 vs. | |
| | Q4 2024 | **** | Q4 2023 | **** | Q4/23 | **** | 2024 | **** | 2023 | **** | 2023 | **** |
| Production (1) | | | | | | | | | | | | |
| Crude oil and condensate (bbls/d) | 30,327 | 32,866 | | (8) | % | 31,427 | 31,727 | (1) | % | |||
| NGLs (bbls/d) | 6,612 | 7,412 | | (11) | % | 7,100 | 7,296 | (3) | % | |||
| Natural gas (mmcf/d) | 279.59 | 283.91 | | (2) | % | 276.10 | 269.83 | 2 | % | |||
| Total (boe/d) | 83,536 | 87,597 | | (5) | % | 84,543 | 83,994 | 1 | % | |||
| Build (draw) in inventory (mbbls) | 107 | 442 | | | (220) | 513 | | | ||||
| Financial metrics | | | | | | | ||||||
| Fund flows from operations (M) (2) | 262,698 | 372,117 | | (29) | % | 1,205,783 | 1,142,611 | 6 | % | |||
| Per share (/basic share) | 1.70 | 2.27 | | (25) | % | 7.63 | 6.98 | 9 | % | |||
| Net loss (M) | (18,316) | (803,136) | | (98) | % | (46,739) | (237,587) | (80) | % | |||
| Per share (/basic share) | (0.12) | (4.91) | | (98) | % | (0.30) | (1.45) | (79) | % | |||
| Cash flows from operating activities (M) | 212,587 | | 343,831 | | (38) | % | 967,751 | | 1,024,528 | | (6) | % |
| Free cash flow (M) (3) | 62,039 | | 229,230 | | (73) | % | 582,803 | | 552,420 | | 6 | % |
| Long-term debt (M) | 963,456 | 914,015 | | 5 | % | 963,456 | 914,015 | 5 | % | |||
| Net debt (M) (4) | 966,882 | 1,078,567 | | (10) | % | 966,882 | 1,078,567 | (10) | % | |||
| Activity | | | | | | | ||||||
| Capital expenditures (M) (5) | 200,659 | 142,887 | | 40 | % | 622,980 | 590,191 | 6 | % | |||
| Acquisitions (M) (6) | 5,257 | 25,724 | | (80) | % | 22,101 | 273,018 | (92) | % | |||
| Dispositions (M) | — | 14,855 | | | — | 197,007 | | |
All values are in US Dollars.
| ^(1)^ | Please refer to Supplemental Table 4 "Production" for disclosure by product type. |
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| ^(2)^ | Fund flows from operations (FFO) and FFO per share are a total of segments measure and supplementary financial measure most directly comparable to net loss and net loss per share, respectively. The measures do not have a standardized meaning under IFRS Accounting Standards 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, interest expense, equity based compensation settled in cash, realized gain (loss) 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. |
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| ^(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 Accounting Standards 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. |
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| ^(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. |
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| ^(5)^ | Capital expenditures is a non-GAAP financial measure that does not have a standardized meaning under IFRS Accounting Standards 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. |
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| ^(6)^ | Acquisitions is a non-GAAP financial measure that does not have a standardized meaning under IFRS Accounting Standards 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. |
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Vermilion Energy Inc. ■ Page 7 ■ 2024 Management’s Discussion and Analysis
Financial performance review
Q4 2024 vs. Q4 2023
·We recorded net loss of $18.3 million ($0.12/basic share) for Q4 2024 compared to net loss of $803.1 million ($4.91/basic share) in Q4 2023. The decrease in net loss was primarily due to prior year impairment and lower depletion and depreciation on decreased depletable base, partially offset by changes in our unrealized derivative (loss) gain of $278.4 million due to unfavourable changes in our mark-to-market position.
| ● | We generated cash flows from operating activities of $212.6 million in Q4 2024 compared to $343.8 million in Q4 2023 and fund flows from operations of $262.7 million in Q4 2024 compared to $372.1 million in Q4 2023. The decrease in fund flows from operations and cash flows from operating activities were primarily driven by lower realized gains on European gas derivative contracts, higher PRRT expense on Wandoo production and increased operating costs on gas processing costs in Canada, partially offset by lower windfall taxes. |
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Vermilion Energy Inc. ■ Page 8 ■ 2024 Management’s Discussion and Analysis
2024 vs. 2023
·For the year ended December 31, 2024, we recorded a net loss of $46.7 million compared to $237.6 million for the comparable period in 2023. The decrease in net loss was primarily attributable to impairment recorded in 2023, partially offset by unfavourable changes in our mark-to-market position on derivative contracts and the net gain recognized on acquisition and disposition activity in 2023.
·For the year ended December 31, 2024 as compared to 2023, cash flows from operating activities decreased by $56.8 million to $967.8 million and fund flows from operations increased by $63.2 million to $1,205.8 million. The increase in fund flows from operations was primarily driven by higher sales volumes in Australia and the absence of windfall taxes. This was partially offset by higher operating costs primarily on processing fees in Canada and Germany and turnaround costs in Ireland, and higher general and administration costs on cash settled equity based compensation and headcount costs. Variances between cash flows from operating activities and fund flows from operations are primarily driven by working capital timing differences.
Vermilion Energy Inc. ■ Page 9 ■ 2024 Management’s Discussion and Analysis
Production review
Q4 2024 vs. Q4 2023
| ● | Consolidated average production of 83,536 boe/d in Q4 2024 decreased compared to Q4 2023 production of 87,597 boe/d. Production decreased primarily due to planned maintenance in the United States and Ireland and natural field decline in the Netherlands, partially offset by production starting on the SA-10 block in Croatia. |
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2024 vs. 2023
| ● | Consolidated average production of 84,543 boe/d in the year ended December 31, 2024 increased compared to the prior year comparative period production of 83,994 boe/d. Production increased primarily due to lower downtime in Australia in 2024, increased production in Ireland due to the acquisition of an additional 36.5% interest in the Corrib Natural Gas Project at the end of Q1 2023 and production starting on the SA-10 block in Croatia in 2024. This was partially offset by dispositions completed in 2023. |
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Activity review
For the three months ended December 31, 2024, capital expenditures were $200.7 million.
| ● | In our North America core region we invested capital expenditures of $134.2 million, comprised of $114.6 million of capital expenditure in Canada and $19.6 million in the United States: |
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| o | At Mica, we drilled six (6.0 net) BC Montney liquids-rich shale gas wells; |
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| o | In the Deep Basin, we drilled five (5.0 net), completed five (4.5 net), and brought on production five (3.8 net) liquids-rich conventional natural gas wells; |
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| o | In Saskatchewan, we drilled and completed, six (5.9 net) and brought on production seven (6.9 net) light and medium crude oil wells; |
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| o | In the United States, five (0.6 net) non-operated light and medium crude oil wells were drilled and completed. |
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| ● | In our International core region, capital expenditures of $66.5 million were invested: |
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| o | In Germany, we invested $33.2 million as we continued drilling and testing of our second deep gas exploration well and made progress on completion of our successful first deep gas exploration well, which is planned to come on production first half 2025, and advanced drilling of our third deep gas exploration well, which was accelerated from the first quarter of 2025; |
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| o | In the Netherlands, we invested $12.0 million, primarily on facilities and workover activities; |
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| o | In France, we invested $11.9 million primarily on facilities activities and well optimization activities; |
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| o | In Australia, $5.6 million was invested as we performed routine facilities maintenance; |
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| o | In Central and Eastern Europe, $3.2 million was invested as we continued planning and permitting of the third well of the SA-10 block and initiated testing on the fourth well of our four-well program on the SA-07 block; |
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| o | In Ireland, $0.6 million was invested on facilities. |
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2024 Financial sustainability review
Free cash flow
| ● | Free cash flow increased by $30.4 million to $582.8 million for the year ended December 31, 2024 compared to 2023 due to increased fund flows from operations primarily driven by non-recurring windfall taxes incurred in 2023, increased sales volumes, and increased realized hedge gains. These increases were partially offset by higher operating and general and administration expenses and higher capital expenditures. |
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Long-term debt and net debt
| ● | Long- term debt increased to $963.5 million as at December 31, 2024 (December 31, 2023 - $914.0 million) due to strengthening of the US dollar, partially offset by repurchases made on the 2025 senior notes. The revolving credit facility remained undrawn. |
|---|---|
| ● | As at December 31, 2024, net debt decreased by $112 million to $966.9 million (December 31, 2023 - $1,078.6 million) as a result of strong free cash flow generation. |
| --- | --- |
| ● | The ratio of net debt to four quarter trailing fund flows from operations^(1)^ decreased to 0.8 as at December 31, 2024 (December 31, 2023 - 0.9) primarily due to lower net debt and higher four quarter trailing fund flows from operations on lower windfall taxes, increased sales volume, and increased realized hedge gains. |
| --- | --- |
| (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 Accounting Standards 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 10 ■ 2024 Management’s Discussion and Analysis
Benchmark Commodity Prices
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | **** | | **** | Q4/24 vs. | **** | | **** | | **** | 2024 vs. | **** |
| | Q4 2024 | | Q4 2023 | | Q4/23 | | 2024 | | 2023 | | 2023 | **** |
| Crude oil | | | | | | | | | | | | |
| WTI (/bbl) | 98.31 | 106.67 | (8) | % | 103.72 | 104.77 | (1) | % | ||||
| WTI (US /bbl) | 70.27 | 78.32 | (10) | % | 75.72 | 77.63 | (2) | % | ||||
| Edmonton Sweet index (/bbl) | 94.92 | 99.60 | (5) | % | 97.54 | 100.37 | (3) | % | ||||
| Edmonton Sweet index (US /bbl) | 67.85 | 73.13 | (7) | % | 71.21 | 74.36 | (4) | % | ||||
| Saskatchewan LSB index (/bbl) | 92.56 | 97.12 | (5) | % | 95.54 | 97.97 | (2) | % | ||||
| Saskatchewan LSB index (US /bbl) | 66.16 | 71.31 | (7) | % | 69.75 | 72.59 | (4) | % | ||||
| Canadian C5+ Condensate index (/bbl) | 98.85 | 103.83 | (5) | % | 99.93 | 103.38 | (3) | % | ||||
| Canadian C5+ Condensate index (US /bbl) | 70.66 | 76.24 | (7) | % | 72.95 | 76.60 | (5) | % | ||||
| Dated Brent (/bbl) | 104.46 | 114.46 | (9) | % | 110.63 | 111.51 | (1) | % | ||||
| Dated Brent (US /bbl) | 74.67 | 84.05 | (11) | % | 80.76 | 82.62 | (2) | % | ||||
| Natural gas | | | | | | |||||||
| North America | | | | | | | | | | | | |
| AECO 5A (/mcf) | 1.48 | 2.30 | (36) | % | 1.46 | 2.64 | (45) | % | ||||
| AECO 7A (/mcf) | 1.46 | | 2.66 | | (45) | % | 1.44 | | 2.93 | | (51) | % |
| Henry Hub (/mcf) | 3.90 | 3.92 | (1) | % | 3.11 | 4.00 | (22) | % | ||||
| Henry Hub (US /mcf) | 2.79 | 2.88 | (3) | % | 2.27 | 2.74 | (17) | % | ||||
| Europe(1) | | | | | | | | | | | | |
| NBP Day Ahead (/mmbtu) | 19.10 | | 16.69 | | 14 | % | 14.62 | | 16.63 | | (12) | % |
| NBP Month Ahead (/mmbtu) | 17.95 | | 18.32 | | (2) | % | 14.53 | | 19.85 | | (27) | % |
| NBP Day Ahead (/mmbtu) | 12.81 | | 11.38 | | 13 | % | 9.87 | | 11.39 | | (13) | % |
| NBP Month Ahead (/mmbtu) | 12.03 | | 12.50 | | (4) | % | 9.81 | | 13.60 | | (28) | % |
| TTF Day Ahead (/mmbtu) | 18.73 | | 17.45 | | 7 | % | 14.89 | | 17.40 | | (14) | % |
| TTF Month Ahead (/mmbtu) | 17.65 | 18.51 | (5) | % | 14.68 | 20.52 | (28) | % | ||||
| TTF Day Ahead (/mmbtu) | 12.56 | 11.90 | 6 | % | 10.05 | 11.92 | (16) | % | ||||
| TTF Month Ahead (/mmbtu) | 11.83 | 12.63 | (6) | % | 9.91 | 14.06 | (30) | % | ||||
| Average exchange rates | | | | | | |||||||
| CDN /US | 1.40 | 1.36 | 3 | % | 1.37 | 1.35 | | 1 | % | |||
| CDN /Euro | 1.49 | 1.47 | 1 | % | 1.48 | 1.46 | 1 | % | ||||
| Realized prices | | | | | | |||||||
| Crude oil and condensate (/bbl) | 100.06 | 107.91 | (7) | % | 104.29 | 102.43 | 2 | % | ||||
| NGLs (/bbl) | 29.38 | 33.38 | (12) | % | 30.61 | 31.54 | (3) | % | ||||
| Natural gas (/mcf) | 8.47 | 8.48 | — | % | 6.72 | 8.17 | (18) | % | ||||
| Total (/boe) | 66.54 | 68.64 | (3) | % | 63.58 | 67.10 | (5) | % |
All values are in US Dollars.
| ^(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. |
|---|
Vermilion Energy Inc. ■ Page 11 ■ 2024 Management’s Discussion and Analysis
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.
| ● | Crude oil prices decreased in Q4 2024 relative to Q4 2023 on weaker supply-demand fundamentals and macroeconomic uncertainty. Canadian dollar WTI decreased by 8% and Dated Brent decreased by 9% in Q4 2024 relative to Q4 2023. |
|---|---|
| ● | In Canadian dollar terms, year-over-year, the Edmonton Sweet differential tightened by $3.66/bbl to a discount of $3.41/bbl against WTI, and the Saskatchewan LSB differential tightened by $3.75/bbl to a discount of $5.79/bbl against WTI. |
| --- | --- |
| ● | Approximately 39% of Vermilion’s Q4 2024 crude oil and condensate production was priced at the Dated Brent index, which averaged a premium to WTI of US$4.40/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 at NBP and TTF increased by 14% and 7% respectively on a day-ahead basis. On a month ahead basis, NBP and TTF decreased by 2% and 5% respectively. Prices increased in response to greater competition in the global LNG market, higher demand and the risk of losing Russian gas flows transiting Ukraine. |
|---|---|
| ● | Year-over-year natural gas prices in Canadian dollar terms at NYMEX HH stayed relatively flat and AECO 7A decreased by 45%. AECO prices declined due to strong production growth and historically high storage levels, whereas NYMEX HH performed relatively better due to stronger US natural gas demand and moderate supply growth. |
| --- | --- |
Vermilion Energy Inc. ■ Page 12 ■ 2024 Management’s Discussion and Analysis
| ● | For Q4 2024, average European natural gas prices represented an $16.88/mcf premium to AECO. Approximately 40% of our natural gas production in Q4 2024 benefited from this premium European pricing. |
|---|
North America
| | | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| | **** | Q4 2024 | **** | Q4 2023 | **** | 2024 | **** | 2023 |
| Production ^(1)^ | ||||||||
| Crude oil and condensate (bbls/d) | **** | 17,825 | 18,862 | **** | 19,065 | 20,925 | ||
| NGLs (bbls/d) | **** | 6,612 | 7,412 | **** | 7,100 | 7,296 | ||
| Natural gas (mmcf/d) | **** | 167.15 | 167.65 | **** | 164.27 | 168.22 | ||
| Total production volume (boe/d) | **** | 52,293 | 54,216 | **** | 53,542 | 56,257 | ||
| ^(1)^ | Please refer to Supplemental Table 4 "Production" for disclosure by product type. | |||||||
| --- | --- |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | Q4 2024 | **** | Q4 2023 | 2024 | 2023 | ||||||
| | | M | $/boe | | M | $/boe | | M | $/boe | | M | $/boe |
| Sales | **** | 201,743 | 41.93 | | 236,969 | 47.51 | **** | 848,853 | 43.32 | 1,012,549 | 49.31 | |
| Royalties | **** | (25,161) | (5.23) | (36,186) | (7.25) | **** | (124,186) | (6.34) | (144,998) | (7.06) | ||
| Transportation | **** | (14,625) | (3.04) | (12,151) | (2.44) | **** | (55,556) | (2.83) | (43,914) | (2.14) | ||
| Operating | **** | (70,125) | (14.58) | (57,368) | (11.50) | **** | (267,220) | (13.64) | (256,841) | (12.51) | ||
| General and administration ^(1)^ | **** | (10,250) | (2.13) | 4,338 | 0.87 | **** | (36,573) | (1.87) | (4,267) | (0.21) | ||
| Corporate income tax recovery (expense) ^(1)^ | | 2,080 | 0.43 | | 1,164 | 0.23 | | 1,351 | 0.07 | | (20) | — |
| Fund flows from operations | **** | 83,662 | 17.38 | 136,766 | 27.42 | **** | 366,669 | 18.71 | 562,509 | 27.39 | ||
| Drilling and development | **** | (134,164) | | **** | (58,704) | | (410,364) | | (380,200) | | ||
| Free cash flow | **** | (50,502) | | **** | 78,062 | | (43,695) | | 182,309 | |
All values are in US Dollars.
| ^(1)^ | General and administration includes amounts from our Corporate segment. Corporate income tax expense primarily relates to income taxes on Corporate segment activities. |
|---|
Production from Vermilion's North American operations averaged 52,293 boe/d in Q4 2024, a decrease of 3% from Q3 2024 due to planned third-party turnaround activity in Alberta, partial shut-in of some Canadian gas production in response to weak AECO prices, and natural declines in the United States, partially offset by increased production at Mica. Production from Mica increased due to a full quarter contribution from the five-well 9-21 pad which started up in Q3 2024 and strong throughput on the 8-33 British Columbia Montney battery.
In Q4 2024, Vermilion drilled six (6.0 net) Montney liquids-rich shale gas wells, including five (5.0 net) wells on the new 8-4 pad in British Columbia and one land retention well in Alberta. In the Deep Basin, we drilled five (5.0 net), completed five (4.5 net), and brought on production five (3.8 net) liquids-rich conventional natural gas wells. In Saskatchewan, we drilled six (5.9 net), completed six (5.9 net), and brought on production seven (6.9 net) light and medium crude oil wells, while in the United States, we participated in the drilling and completion of five (0.6 net) non-operated light and medium crude oil wells.
Sales
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | Q4 2024 | **** | Q4 2023 | 2024 | 2023 | ||||||
| | | M | $/boe | | M | $/boe | | M | $/boe | | M | $/boe |
| Canada | **** | 175,830 | 39.83 | 200,102 | 44.73 | **** | 711,290 | 40.34 | 861,391 | 46.73 | ||
| United States | **** | 25,913 | 65.34 | 36,867 | 71.65 | **** | 137,563 | 70.03 | 151,158 | 71.97 | ||
| North America | **** | 201,743 | 41.93 | 236,969 | 47.51 | **** | 848,853 | 43.32 | 1,012,549 | 49.31 |
All values are in US Dollars.
Sales in North America decreased for the three months and year ended December 31, 2024 compared to the prior year primarily due to lower realized pricing combined with lower production volumes following the sale of non-core assets in southeast Saskatchewan and Wyoming in 2023.
Vermilion Energy Inc. ■ Page 13 ■ 2024 Management’s Discussion and Analysis
Royalties
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | Q4 2024 | **** | Q4 2023 | 2024 | 2023 | ||||||
| | | M | $/boe | | M | $/boe | | M | $/boe | | M | $/boe |
| Canada | **** | (17,402) | (3.94) | (25,759) | (5.76) | **** | (84,337) | (4.78) | (103,511) | (5.62) | ||
| United States | **** | (7,759) | (19.56) | (10,427) | (20.27) | **** | (39,849) | (20.29) | (41,487) | (19.75) | ||
| North America | **** | (25,161) | (5.23) | (36,186) | (7.25) | **** | (124,186) | (6.34) | (144,998) | (7.06) | ||
| Royalty rate (% of sales) | | 12.5 | | | 15.3 | | | 14.6 | | | 14.3 | |
All values are in US Dollars.
Royalties in North America decreased on a dollar and per unit basis for the three months and year ended December 31, 2024 compared to the prior year primarily due to lower realized pricing. The decrease in royalties was partially offset for the year ended December 31, 2024 by new wells drilled in Mica and the United States with higher royalty rates.
Transportation
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | Q4 2024 | **** | Q4 2023 | 2024 | 2023 | ||||||
| | | M | $/boe | | M | $/boe | | M | $/boe | | M | $/boe |
| Canada | **** | (14,485) | (3.28) | (11,701) | (2.62) | **** | (54,091) | (3.07) | (43,163) | (2.34) | ||
| United States | **** | (140) | (0.35) | **** | (450) | (0.87) | **** | (1,465) | (0.75) | (751) | (0.36) | |
| North America | **** | (14,625) | (3.04) | (12,151) | (2.44) | **** | (55,556) | (2.83) | (43,914) | (2.14) |
All values are in US Dollars.
Transportation expense in North America increased on a dollar and per boe basis for the three months and year ended December 31, 2024 compared to the prior year comparable periods primarily due to increased trucking expenses related to new activity on our Mica assets and higher pipeline fees.
Operating expense
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | Q4 2024 | **** | Q4 2023 | 2024 | 2023 | ||||||
| | | M | $/boe | | M | $/boe | | M | $/boe | | M | $/boe |
| Canada | **** | (63,898) | (14.48) | (51,129) | (11.43) | **** | (240,333) | (13.63) | (233,417) | (12.66) | ||
| United States | **** | (6,227) | (15.70) | (6,239) | (12.13) | **** | (26,887) | (13.69) | (23,424) | (11.15) | ||
| North America | **** | (70,125) | (14.58) | (57,368) | (11.50) | **** | (267,220) | (13.64) | (256,841) | (12.51) |
All values are in US Dollars.
Operating expense in North America increased on a dollar and per boe basis for the three months December 31, 2024 compared to the prior year comparable period primarily due to gas processing fees in Mica. For the year ended December 31, 2024, operating expense increased on a dollar and per boe basis primarily due to gas processing fees in Mica, partially offset by lower electricity costs in Canada.
International
| | | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| | **** | Q4 2024 | **** | Q4 2023 | **** | 2024 | **** | 2023 |
| Production ^(1)^ | **** | **** | **** | **** | ||||
| Crude oil and condensate (bbls/d) | **** | 12,502 | 14,004 | **** | 12,362 | 10,802 | ||
| Natural gas (mmcf/d) | **** | 112.44 | 116.27 | **** | 111.83 | 101.61 | ||
| Total production volume (boe/d) | **** | 31,243 | 33,381 | **** | 31,001 | 27,737 | ||
| Total sales volume (boe/d) | **** | 30,101 | 28,598 | **** | 31,601 | 26,330 | ||
| (1) | Please refer to Supplemental Table 4 "Production" for disclosure by product type. | |||||||
| --- | --- |
Vermilion Energy Inc. ■ Page 14 ■ 2024 Management’s Discussion and Analysis
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | Q4 2024 | Q4 2023 | 2024 | 2023 | ||||
| | **** | M | /boe | M | /boe | M | /boe | M | $/boe |
| Sales | **** | 302,609 | 109.27 | 286,000 | 108.70 | 1,132,554 | 97.92 | 1,010,006 | 105.09 |
| Royalties | **** | (14,888) | (5.38) | (8,962) | (3.41) | (53,764) | (4.65) | (46,696) | (4.86) |
| Transportation | **** | (9,336) | (3.37) | (10,290) | (3.91) | (43,377) | (3.75) | (44,942) | (4.68) |
| Operating | **** | (69,441) | (25.08) | (59,569) | (22.64) | (300,693) | (26.00) | (256,540) | (26.69) |
| General and administration | **** | (17,210) | (6.21) | (24,148) | (9.18) | (62,930) | (5.44) | (76,449) | (7.95) |
| Corporate income tax expense | **** | (18,077) | (6.53) | (20,538) | (7.81) | (67,793) | (5.86) | (91,912) | (9.56) |
| PRRT | **** | 3,226 | 1.16 | 20,860 | 7.93 | (11,702) | (1.01) | 20,860 | 2.17 |
| Fund flows from operations | **** | 176,883 | 63.86 | 183,353 | 69.68 | 592,295 | 51.21 | 514,327 | 53.52 |
| Drilling and development | **** | (42,341) | | (73,604) | | (176,598) | | (188,910) | |
| Exploration and evaluation | | (24,154) | | (10,579) | | (36,018) | | (21,081) | |
| Free cash flow | **** | 110,388 | | 99,170 | | 379,679 | | 304,336 |
All values are in US Dollars.
Production from Vermilion's International operations averaged 31,243 boe/d in Q4 2024, an increase of 3% from the previous quarter primarily due to a full quarter of production in Australia following planned maintenance in Q3 2024, partially offset by natural decline across other international jurisdictions due to limited capital activity.
In Germany, Vermilion successfully tested the Wisselshorst deep gas exploration well (0.6 net) in December 2024. The well flow tested at a restricted rate of 21 mmcf/d^(2)^ of natural gas with a flowing wellhead pressure of 6,200 psi. Subsequent to year-end, the Company tested a second zone in this well which flow tested at a restricted rate of 20 mmcf/d^(2)^ of natural gas with a flowing wellhead pressure of 6,200 psi. Both tests were restricted due to limitations of the testing equipment. Vermilion's operated working interest in this well increased from 30% to 64% during the fourth quarter of 2024.
In Croatia, production averaged 1,869 boe/d, up slightly from the previous quarter following start up of the gas plant on the SA-10 block in June 2024. Planning and permitting activities continued during the fourth quarter for the third well to be drilled in the SA-10 block later this year to offset anticipated declines from the initial two wells. Testing operations on the fourth discovery well (0.6 net) in the SA-7 block were initiated in the fourth quarter and are continuing.
| ^(2)^ | Wisselshorst Z1a well (64% working interest) was tested in December 2024. Flow rates, during the initial clean-up phase, of up to 21.2 mmcf/d with a flowing wellhead pressure of 6,150 psi on an adjustable choke were achieved. The completion fluid was recovered during the clean-up flow period. During the main flow period the well tested at a rate of 20.1mmcf/d over a five-hour flow period with a flowing wellhead pressure 6,250 psi on a 24/64” fixed choke. A final shut-in pressure of 7,020 psi and a bottom hole pressure of 8,679 psi were recorded following the well test of this zone. The zone being tested is the Rotliegend Havel formation, which was encountered at 5,054m MD and a 124.4m gas column was logged with 50.8m of net reservoir and average effective porosity of 9.3%. A second zone in the well was tested in January 2025 where peak rates of 20.3 mmcf/d at a flowing well head pressure of 6,189 psi were recorded. During the main flow period rates of 18.8 mmcf/d over a five-hour flow period with a flowing wellhead pressure of 6,334 psi were achieved on a 24/64” fixed choke. A final shut-in pressure of 7,001 psi and a bottom hole pressure of 8,756 psi were recorded following the well test of this zone. The second zone in the well is the Rotliegend Dethlingen formation, which was encountered at 5,000m MD and a 38.2m gas column was logged with 25.5m of net reservoir and average effective porosity of 9.9%. Test results are not necessarily indicative of production performance or ultimate recovery. |
|---|
Sales
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | Q4 2024 | Q4 2023 | 2024 | 2023 | ||||
| | **** | M | /boe | M | /boe | M | /boe | M | $/boe |
| Australia | **** | 27,573 | 121.24 | 36,381 | 143.69 | 182,847 | 128.92 | 36,381 | 143.69 |
| France | **** | 73,692 | 109.14 | 52,472 | 116.92 | 314,232 | 110.89 | 285,626 | 109.47 |
| Netherlands | **** | 39,599 | 105.54 | 51,661 | 102.80 | 139,310 | 83.91 | 186,854 | 107.38 |
| Germany | **** | 46,321 | 98.28 | 44,150 | 101.18 | 149,725 | 85.45 | 195,481 | 104.26 |
| Ireland | **** | 97,735 | 115.22 | 100,430 | 102.28 | 311,325 | 87.84 | 302,404 | 97.24 |
| Central and Eastern Europe | **** | 17,689 | 102.86 | 906 | 109.42 | 35,115 | 98.08 | 3,260 | 141.77 |
| International | **** | 302,609 | 109.27 | 286,000 | 108.70 | 1,132,554 | 97.92 | 1,010,006 | 105.09 |
All values are in US Dollars.
Vermilion Energy Inc. ■ Page 15 ■ 2024 Management’s Discussion and Analysis
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.
| | | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| Crude oil sales volumes (bbls/d) | **** | Q4 2024 | **** | Q4 2023 | **** | 2024 | **** | 2023 |
| Australia | **** | 2,472 | 2,752 | **** | 3,875 | 694 | ||
| France | **** | 7,339 | 4,878 | **** | 7,742 | 7,149 | ||
| Germany | **** | 1,504 | 1,472 | **** | 1,270 | 1,481 | ||
| International | | 11,315 | | 9,102 | | 12,887 | | 9,324 |
Sales increased on a dollar basis for the three months ended December 31, 2024 compared to the prior year primarily due to production starting on the SA-10 block in Croatia and timing of transportation in France and Australia.
Sales increased on a dollar basis for the year ended December 31, 2024 compared to the prior year primarily due to sales in Australia after downtime in 2023, production starting on the SA-10 block in Croatia, and timing of transportation in France, partially offset by decrease in sales prices in Germany and the Netherlands.
Royalties
| | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|
| | | Q4 2024 | **** | Q4 2023 | 2024 | 2023 | ||||
| | **** | M | $/boe | | M | /boe | M | /boe | M | $/boe |
| France | **** | (9,712) | (14.38) | (7,150) | (15.93) | (41,585) | (14.68) | (37,425) | (14.34) | |
| Netherlands | **** | (27) | (0.07) | (692) | (1.38) | (244) | (0.15) | (1,567) | (0.90) | |
| Germany | **** | (1,565) | (3.32) | (736) | (1.69) | (5,703) | (3.25) | (5,993) | (3.20) | |
| Central and Eastern Europe | **** | (3,584) | (20.84) | (384) | (46.38) | (6,232) | (17.41) | (1,711) | (74.41) | |
| International | **** | (14,888) | (5.38) | (8,962) | (3.41) | (53,764) | (4.65) | (46,696) | (4.86) | |
| Royalty rate (% of sales) | **** | 4.9 | | | 3.1 | | 4.7 | | 4.6 | |
All values are in US Dollars.
Royalties in our International core region are primarily incurred in France, Germany, the Netherlands and Croatia, where royalties, depending on jurisdiction, 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 increased on a dollar basis for the three months and year ended December 31, 2024 compared to the prior year primarily due to the SA-10 block coming online in Croatia and an increase in France crude royalties on higher sales volumes. Royalties decreased on a per unit basis for the three months and the year ended December 31, 2024 primarily on lower gas commodity prices and lower royalty rates on Croatian production.
Transportation
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | Q4 2024 | Q4 2023 | 2024 | 2023 | ||||
| | **** | M | /boe | M | /boe | M | /boe | M | $/boe |
| France | **** | (5,630) | (8.34) | (5,745) | (12.80) | (23,106) | (8.15) | (24,511) | (9.39) |
| Germany | **** | (3,065) | (6.50) | (3,486) | (7.99) | (11,853) | (6.76) | (13,333) | (7.11) |
| Ireland | **** | (641) | (0.76) | (1,059) | (1.08) | (8,418) | (2.38) | (7,098) | (2.28) |
| International | **** | (9,336) | (3.37) | (10,290) | (3.91) | (43,377) | (3.75) | (44,942) | (4.68) |
All values are in US Dollars.
Transportation expense decreased on a per boe basis for the three months and year ended December 31, 2024 compared to the prior year primarily due to decreased vessel costs in France and prior year transportation tariffs in Germany partially offset by incremental transportation costs in Ireland on the acquired interest in Corrib.
Our production in Australia, Netherlands and Central and Eastern Europe is not subject to transportation expense.
Vermilion Energy Inc. ■ Page 16 ■ 2024 Management’s Discussion and Analysis
Operating expense
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Q4 2024 | Q4 2023 | 2024 | 2023 | ||||||||
| | **** | $M | | /boe | $M | | /boe | $M | | /boe | $M | | $/boe |
| Australia | **** | (10,866) | **** | (47.78) | (10,677) | (42.17) | (80,347) | **** | (56.65) | (52,360) | (206.80) | ||
| France | **** | (18,597) | **** | (27.54) | (17,021) | (37.93) | (69,376) | **** | (24.48) | (80,134) | (30.71) | ||
| Netherlands | **** | (11,921) | **** | (31.77) | (9,143) | (18.19) | (41,127) | **** | (24.77) | (39,157) | (22.50) | ||
| Germany | **** | (13,544) | **** | (28.74) | (8,233) | (18.87) | (53,129) | **** | (30.32) | (43,857) | (23.39) | ||
| Ireland | **** | (13,488) | **** | (15.90) | (13,948) | (14.20) | (54,177) | **** | (15.29) | (39,464) | (12.69) | ||
| Central and Eastern Europe | **** | (1,025) | **** | (5.96) | (547) | (66.06) | (2,537) | **** | (7.09) | (1,568) | (68.19) | ||
| International | **** | (69,441) | **** | (25.08) | (59,569) | (22.64) | (300,693) | **** | (26.00) | (256,540) | (26.69) |
All values are in US Dollars.
Operating expenses increased on a dollar and per boe basis for the three months ended December 31, 2024 primarily due to gas processing tariff adjustments in Germany and the resumption of production in Australia, partially offset by decreased fuel and electricity costs in France.
For the year ended December 31, 2024, operating expenses increased on a dollar basis primarily due to the resumption of production in Australia, an increased working interest acquired in Ireland at Q1 2023 (from 20% to 56.5)%, and higher facility maintenance and turnaround costs during Ireland planned downtime in Q2 2024, and gas processing tariff adjustments in Germany. This increase was partially offset by decreased fuel and electricity costs in France.
Operating expenses were relatively flat on a per boe basis for the year ended December 31, 2024 compared to the prior year primarily attributable to maintenance during shut-in of our Wandoo platform in Australia in the prior year offset by lower fuel and electricity costs in France and the Netherlands.
Vermilion Energy Inc. ■ Page 17 ■ 2024 Management’s Discussion and Analysis
Consolidated Financial Performance Review
| | | | | | |
|---|---|---|---|---|---|
| (M except per share) | Dec 31, 2024 | **** | Dec 31, 2023 | **** | Dec 31, 2022 |
| Total assets | 6,115,576 | | 6,235,821 | | 6,991,058 |
| Long-term debt | 963,456 | 914,015 | 1,081,351 | ||
| Petroleum and natural gas sales | 1,981,407 | 2,022,555 | 3,476,394 | ||
| Net (loss) earnings | (46,739) | (237,587) | 1,313,062 | ||
| Net (loss) earnings per share | | | | ||
| Basic | (0.30) | (1.45) | 8.03 | ||
| Diluted | (0.30) | (1.45) | 7.80 | ||
| Cash dividends (/share) | 0.48 | 0.40 | 0.28 |
All values are in US Dollars.
Financial performance
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | Q4 2024 | Q4 2023 | 2024 | 2023 | ||||
| | **** | M | /boe | M | /boe | M | /boe | M | $/boe |
| Sales | **** | 504,352 | 66.54 | 522,969 | 68.64 | 1,981,407 | 63.58 | 2,022,555 | 67.10 |
| Royalties | **** | (40,049) | (5.28) | (45,148) | (5.93) | (177,950) | (5.71) | (191,694) | (6.36) |
| Transportation | **** | (23,961) | (3.16) | (22,441) | (2.95) | (98,933) | (3.17) | (88,856) | (2.95) |
| Operating | **** | (139,566) | (18.41) | (116,937) | (15.35) | (567,913) | (18.22) | (513,381) | (17.03) |
| General and administration | **** | (27,460) | (3.62) | (19,810) | (2.60) | (99,503) | (3.19) | (80,716) | (2.68) |
| Corporate income tax expense | **** | (15,997) | (2.11) | (19,623) | (2.57) | (66,442) | (2.13) | (170,358) | (5.65) |
| Petroleum resource rent tax | | 3,226 | 0.43 | 20,860 | 2.74 | (11,702) | (0.38) | 20,860 | 0.69 |
| Interest expense | **** | (23,965) | (3.16) | (22,909) | (3.01) | (84,606) | (2.71) | (85,212) | (2.83) |
| Equity based compensation | **** | — | — | — | — | (14,361) | (0.46) | — | — |
| Realized gain on derivatives | **** | 28,795 | 3.80 | 78,737 | 10.33 | 345,318 | 11.08 | 234,365 | 7.77 |
| Realized foreign exchange gain (loss) | **** | 2,442 | 0.32 | (5,529) | (0.73) | 7,735 | 0.25 | (4,532) | (0.15) |
| Realized other (expense) income | **** | (5,119) | (0.68) | 1,948 | 0.26 | (7,267) | (0.23) | (420) | (0.01) |
| Fund flows from operations | **** | 262,698 | 34.67 | 372,117 | 48.83 | 1,205,783 | 38.71 | 1,142,611 | 37.90 |
| Equity based compensation | | (7,499) | | (7,871) | | (15,569) | | (42,756) | |
| Unrealized (loss) gain on derivative instruments ^(1)^ | | (137,273) | | 141,126 | | (452,858) | | 179,707 | |
| Unrealized foreign exchange (loss) gain ^(1)^ | | (28,517) | | 4,834 | | (58,471) | | 12,438 | |
| Accretion | | (19,272) | | (19,469) | | (74,541) | | (78,187) | |
| Depletion and depreciation | | (163,458) | | (259,012) | | (683,240) | | (712,619) | |
| Deferred tax recovery | | 80,016 | | 110,758 | | 37,991 | | 190,193 | |
| Gain on business combination | | — | | (5,607) | | — | | 439,487 | |
| Loss on disposition | | — | | (125,539) | | — | | (352,367) | |
| Impairment expense | | — | | (1,016,094) | | — | | (1,016,094) | |
| Unrealized other (expense) income ^(1)^ | | (5,011) | | 1,621 | | (5,834) | | — | |
| Net loss | | (18,316) | | (803,136) | | (46,739) | | (237,587) | |
All values are in US Dollars.
| (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 months and year ended December 31, 2024 compared to the prior year primarily due to accounting for the cash settlement of previously issued equity based settled compensation (previously accounted for as a share-based settled expense) and headcount costs. |
|---|
Vermilion Energy Inc. ■ Page 18 ■ 2024 Management’s Discussion and Analysis
Equity based compensation
| ● | Equity based compensation included within fund flows from operations for the three months and year ended December 31, 2024 is a result of settling withholding taxes via cash which were previously settled through the issuance and sale of shares from treasury. |
|---|
PRRT and corporate income taxes
| ● | PRRT for the three months and year ended December 31, 2024 increased compared to the prior year due to downtime in Australia that resulted in no taxable income for the first nine months of the year ended December 31, 2023. |
|---|---|
| ● | Corporate income taxes for the three months and year ended December 31, 2024 decreased compared to the same periods in the prior year due to combined lower taxable income mainly as a result of decreased commodity prices. |
| --- | --- |
| ● | Windfall taxes were the temporary taxes levied in 2022 and 2023 pursuant to the European Union’s temporary solidarity contribution. During the three months and year ended December 31, 2024, a recovery was recorded related to favourable prior period adjustments related to provisions recognized. |
| --- | --- |
Interest expense
| ● | Interest expense for the three months and year ended December 31, 2024 remained relatively flat. |
|---|
Realized gain or loss on derivatives
| ● | For the three months and year ended December 31, 2024, we recorded realized gains on our natural gas and crude oil hedges due to lower commodity pricing compared to the strike prices. |
|---|---|
| ● | A listing of derivative positions as at December 31, 2024 is included in “Supplemental Table 2” of this MD&A. |
| --- | --- |
Realized other income or expense
| ● | In the three months and year ended December 31, 2023, realized income related to proceeds received from insurance claims in 2023, offset by miscellaneous transaction costs and other provisional charges. |
|---|---|
| ● | In the three months and year ended December 31, 2024, realized other expense was primarily related to a legal provision. |
| --- | --- |
Net earnings (loss)
Fluctuations in net loss 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 or losses resulting from acquisition or disposition activity 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 for the three months ended December 31, 2024 remained relatively flat compared to the same period in the prior year. Equity based compensation expense for 2024 decreased compared to 2023 due to the cash settlement of previously share-based settled expenses and lower value of LTIP awards settled in the current year and.
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 December 31, 2024, we recognized a net unrealized loss on derivative instruments of $137.3 million. This consists of unrealized losses of $109.0 million on our European natural gas commodity derivative instruments, $20.1 million on our crude oil commodity derivative instruments, $4.8 million on our USD-to-CAD foreign exchange swaps, and $4.7 million on our North American gas commodity derivative instruments, partially offset by an unrealized gain of $1.3 million on our equity swaps.
For the year ended December 31, 2024, we recognized a net unrealized loss on derivative instruments of $452.9 million. This consists of unrealized losses of $403.4 million on our European natural gas commodity derivative instruments, $29.8 million on our crude oil commodity derivative instruments, $9.0 million on our equity swaps, $8.4 million on our USD-to-CAD foreign exchange swaps, and $2.3 million on our North American gas commodity derivative instruments.
Vermilion Energy Inc. ■ Page 19 ■ 2024 Management’s Discussion and Analysis
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 2024, unrealized foreign exchange gains and losses primarily resulted from:
| ● | The translation of Euro and US dollar denominated intercompany loans to and from our international subsidiaries to Vermilion Energy Inc. An appreciation in the Euro and/or the US dollar against the Canadian dollar will result in an unrealized foreign exchange loss (and vice-versa). Under IFRS Accounting Standards, 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 loss 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. |
| --- | --- |
For the three months ended December 31, 2024, we recognized a net unrealized foreign exchange loss of $28.5 million, primarily driven by the effects of the US dollar strengthening 6.6% against the Canadian dollar on our USD senior notes, partially offset by the impact on US dollar denominated loans and the impact of the Euro weakening 1.0% on our Euro denominated loans. For the year ended December 31, 2024, we recognized an unrealized foreign exchange loss of $58.5 million, primarily driven by the effects of the US dollar strengthening 8.8% against the Canadian dollar on our USD senior notes combined with the impact of the Euro strengthening 2.1% against the Canadian dollar on our Euro denominated intercompany loans, partially offset by gains on our USD denominated intercompany loans.
Accretion
Accretion expense is recognized to update the present value of the asset retirement obligation balance. For the three months ended December 31, 2024, compared to the three months ended December 31, 2023, accretion remained relatively flat. For the year ended December 31, 2024, accretion expense decreased versus the prior year primarily due to a lower North American asset retirement balance related to dispositions completed in 2023 and changes in discount rates, partially offset by the Corrib acquisition completed in 2023.
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 and year ended December 31, 2024 of $21.56 and $21.92 decreased from $34.00 and $23.64 in the same periods of the prior year, respectively, primarily due to decreases to the depletable base from the impairments and dispositions recorded in 2023, lower future development costs, and increased reserve estimates. The decrease was partially offset by the 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 three months and year ended December 31, 2024, the Company recorded deferred tax recovery of $80.0 million and $38.0 million, respectively, compared to a deferred tax recovery of $110.8 million and $190.2 million, respectively, in the comparative periods in the prior year. The deferred tax
Vermilion Energy Inc. ■ Page 20 ■ 2024 Management’s Discussion and Analysis
recovery for both the three months and year ended December 31, 2024, was primarily driven by changes in our derivatives mark-to-market position, as well as, timing differences in the Netherlands with respects to tax and accounting depletion. The recoveries were partially offset by increases in taxable income which was sheltered by losses in Ireland.
Taxes
Current income tax rates
Vermilion typically pays corporate income taxes in France, Netherlands, Australia and Germany. In addition, Vermilion pays PRRT in Australia which is a profit based tax applied at a rate of 40% on sales less operating expenses, capital expenditures, and other eligible expenditures. PRRT is deductible in the calculation of taxable income in Australia.
For 2024 and 2023, taxable income was subject to corporate income tax at the following statutory rates:
| | | | | | |
|---|---|---|---|---|---|
| Jurisdiction | **** | 2024 | **** | 2023 | **** |
| Canada | 24.4 | % | 24.4 | % | |
| United States | 21.0 | % | 21.0 | % | |
| France | 25.8 | % | 25.8 | % | |
| Netherlands ^(1)^ | 50.0 | % | 50.0 | % | |
| Germany | 31.1 | % | 31.2 | % | |
| Ireland | 25.0 | % | 25.0 | % | |
| Australia | 30.0 | % | 30.0 | % | |
| ^(1)^ | In the Netherlands, an additional 10% uplift deduction is allowed against taxable income that is applied to operating expenses, eligible general and administration expenses, and tax deductions for depletion and abandonment retirement obligations. | ||||
| --- | --- |
Windfall Taxes
On October 6, 2022 the Council of the European Union adopted a regulation that implemented a temporary windfall tax on the profits of oil and gas producers resident in the European Union. This windfall tax was referred to as a temporary solidarity contribution and was calculated on the amount by which the taxable profits for the elected years exceeded the greater of zero and 120% of the average taxable profits for the 2018 to 2021 period. The regulation required Member States to implement the temporary solidarity contribution at a minimum rate of 33% while providing Member States with the option to apply the temporary solidarity contribution to fiscal years beginning on or after January 1, 2022, January 1, 2023, or both. The windfall tax does not apply to 2024 or later years.
The following table summarizes the manner of implementation of the temporary solidarity contribution by the Member States in which Vermilion operates:
| | | | | | | |
|---|---|---|---|---|---|---|
| Jurisdiction | **** | 2024 | **** | **** | 2023 | **** |
| France ^(1)^ | N/A | N/A | ||||
| Netherlands ^(2)^ | N/A | N/A | ||||
| Germany | N/A | | 33.0 | % | ||
| Ireland | N/A | | 75.0 | % | ||
| (1) | For 2022, France implemented a windfall tax; however, did not extend for 2023. | |||||
| --- | --- | |||||
| (2) | For 2023 and 2024, Netherlands has implemented a windfall royalty which, for natural gas sales, is calculated as 65% of the excess of the realized price for a subject year versus the threshold price of €0.50/Nm3 (€13.40/mcf). This royalty is deductible against current income taxes. | |||||
| --- | --- |
Tax legislation changes
In December 2021, the Organization for Economic Co-operation and Development (“OECD”) issued model rules for a new global minimum tax framework (“Pillar Two”). The objective of Pillar Two is to ensure that large multinational enterprises are subjected to a minimum 15% effective tax rate in each jurisdiction in which they operate.
Most of the countries where Vermilion operates have enacted tax legislation to comply with Pillar Two with effect from January 1, 2024. During the year-ended December 31, 2024, the Company recorded $6.5 million of income tax expense relating to Pillar Two.
Vermilion Energy Inc. ■ Page 21 ■ 2024 Management’s Discussion and Analysis
In May 2023, the International Accounting Standards Board (“IASB”) issued amendments to IAS 12, “Income Taxes” (“IAS 12”) to address the impacts and additional disclosure requirements related to Pillar Two. Vermilion has applied the mandatory exception required by IAS 12 and accordingly has not accounted for any related deferred income tax assets or liabilities.
Tax pools
As at December 31, 2024, we had the following tax pools:
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| (M) | Oil & Gas Assets | **** | Tax Losses | **** | Other | **** | Total |
| Canada | 1,636,161 | ^(1)^ | 1,286,472 | ^(4)^ | 23,735 | ^^ | 2,946,368 |
| United States | 255,914 | ^(2)^ | 235,355 | ^(6)^ | 137,777 | ^^ | 629,046 |
| France | 286,408 | ^(2)^ | 2,512 | ^(5)^ | — | ^^ | 288,920 |
| Netherlands | 55,082 | ^(3)^ | — | | — | ^^ | 55,082 |
| Germany | 285,069 | ^(3)^ | — | | 15,612 | ^^ | 300,681 |
| Ireland | — | | 1,230,530 | ^(4)^ | — | 1,230,530 | |
| Australia | 150,624 | ^(1)^ | 122,333 | ^(4)^ | — | 272,957 | |
| Croatia | 67,442 | ^(2)^ | 8,624 | ^(4)^ | — | | 76,066 |
| Total | 2,736,700 | | 2,885,826 | **** | 177,124 | **** | 5,799,650 |
All values are in US Dollars.
| (1) | Deduction calculated using various declining balance rates. |
|---|---|
| (2) | Deduction calculated using a combination of straight-line over the assets life and unit of production method. |
| --- | --- |
| (3) | Deduction calculated using a unit of production method. |
| --- | --- |
| (4) | Tax losses can be carried forward and applied at 100% against taxable income. |
| --- | --- |
| (5) | Tax losses can be carried forward and are available to offset the first €1 million of taxable income and 50% of taxable profits in excess each taxation year. |
| --- | --- |
| (6) | Tax losses of $53 million created prior to January 1, 2018 are carried forward and applied at 100% against taxable income, tax losses of $182 million created after January 1, 2018 are carried forward and applied to 80% of taxable income in each taxation year. |
| --- | --- |
Financial Position Review
Balance sheet strategy
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.
On December 23, 2024, Vermilion announced it entered into an arrangement agreement to acquire Westbrick Energy Ltd. ("Westbrick"), a private company with assets located adjacent to Vermilion's existing Alberta assets. On February 26, 2025, Vermilion completed the acquisition for total consideration of $1.075 billion.
On February 11, 2025, Vermilion closed a private offering of US $400.0 million of senior unsecured notes. The notes bear interest at a rate of 7.250% per annum, to be paid February 15 and August 15, commencing on August 15, 2025. The notes mature on February 15, 2033. As direct senior unsecured obligations of Vermilion, the notes rank equally with existing and future senior unsecured indebtedness of the Company.
Proceeds from the notes may be used at the Company's discretion to redeem or repay the outstanding 2025 senior notes, fund a portion of the Westbrick acquisition, or repay a portion of credit facility borrowings.
As at December 31, 2024, we have a ratio of net debt to four quarter trailing fund flows from operations of 0.8.
Vermilion Energy Inc. ■ Page 22 ■ 2024 Management’s Discussion and Analysis
Net debt
Net debt is reconciled to long-term debt, as follows:
| | | | |
|---|---|---|---|
| | As at | ||
| (M) | Dec 31,2024 | **** | Dec 31,2023 |
| Long-term debt | 963,456 | 914,015 | |
| Adjusted working capital (1) | 3,426 | 164,552 | |
| Net debt | 966,882 | 1,078,567 | |
| | | | |
| Ratio of net debt to four quarter trailing fund flows from operations | 0.8 | 0.9 |
All values are in US Dollars.
| ^(1)^ | Adjusted working capital is a non-GAAP financial measure that is not standardized under IFRS Accounting Standards 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 December 31, 2024, net debt decreased to $966.9 million (December 31, 2023 - $1.1 billion) primarily due to repurchases of senior notes and strong free cash flow generation. The ratio of net debt to four quarter trailing fund flows from operations as at December 31, 2024 decreased to 0.8 (December 31, 2023 - 0.9) due to lower net debt and higher four quarter trailing fund flows from operations.
Long-term debt
The balances recognized on our balance sheet are as follows:
| | | | | |
|---|---|---|---|---|
| | | As at | ||
| | **** | Dec 31,2024 | **** | Dec 31,2023 |
| 2025 senior unsecured notes | **** | 398,275 | 395,839 | |
| 2030 senior unsecured notes | | 565,181 | | 518,176 |
| Long-term debt | **** | 963,456 | 914,015 |
Revolving Credit Facility
As at December 31, 2024, Vermilion had in place a bank revolving credit facility maturing May 26, 2028 with terms and outstanding positions as follows:
| | | | |
|---|---|---|---|
| | As at | ||
| (M) | Dec 31,2024 | **** | Dec 31,2023 |
| Total facility amount | 1,350,000 | 1,600,000 | |
| Letters of credit outstanding | (22,731) | (18,116) | |
| Unutilized capacity | 1,327,269 | 1,581,884 |
All values are in US Dollars.
As at December 31, 2024 and December 31, 2023, the revolving credit facility was undrawn. On May 17, 2024, the maturity date of the facility was extended to May 26, 2028 (previously May 28, 2027) and the total facility amount of $1.6 billion was reduced to $1.35 billion, with an accordion feature to increase the aggregate amount available under the facility to $1.6 billion.
As at December 31, 2024, the revolving credit facility was subject to the following financial covenants:
| | | | | | | |
|---|---|---|---|---|---|---|
| | | | | As at | ||
| Financial covenant | **** | Limit | **** | Dec 31,2024 | **** | Dec 31,2023 |
| Consolidated total debt to consolidated EBITDA | Less than 4.0 | **** | 0.72 | 0.65 | ||
| Consolidated total senior debt to consolidated EBITDA | Less than 3.5 | **** | — | — | ||
| Consolidated EBITDA to consolidated interest expense | Greater than 2.5 | **** | 16.59 | 17.33 |
Vermilion Energy Inc. ■ Page 23 ■ 2024 Management’s Discussion and Analysis
Our financial covenants include financial measures defined within our revolving credit facility agreement that are not defined under IFRS Accounting Standards. 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 loss 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 December 31, 2024, 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 December 31, 2024 and December 31, 2023, 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 100.00% redemption price plus any accrued and unpaid interest.
During the year ended December 31, 2024, Vermilion purchased $31.6 million of senior unsecured notes on the open market which were subsequently cancelled.
The Company has the right to roll over the senior unsecured notes under the existing revolving credit facility which matures May 26, 2028 and thus has continued to classify the senior unsecured notes as non-current.
2030 senior unsecured notes
On April 26, 2022, Vermilion closed a private offering of US $400.0 million of senior unsecured notes, priced at 99.241% of par. The notes bear interest at a rate of 6.875% per annum, to be paid semi-annually on May 1 and November 1. The notes mature on May 1, 2030. 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.
Vermilion may, at its option, redeem the notes prior to maturity as follows:
| ● | 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. |
| --- | --- |
| ● | 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. |
| --- | --- |
Vermilion Energy Inc. ■ Page 24 ■ 2024 Management’s Discussion and Analysis
| | | | |
|---|---|---|---|
| Year | **** | Redemption price | **** |
| 2025 | 103.438 | % | |
| 2026 | 102.292 | % | |
| 2027 | 101.146 | % | |
| 2028 and thereafter | 100.000 | % |
Shareholders' capital
The following table outlines our dividend payment history:
| | | | | | |
|---|---|---|---|---|---|
| Date | **** | Frequency | **** | Dividend per unit or share | |
| April 2022 to July 2022 | | Quarterly | | $ | 0.06 |
| August 2022 to March 2023 | | Quarterly | | $ | 0.08 |
| April 2023 to March 2024 | | Quarterly | | $ | 0.10 |
| April 2024 onwards | | Quarterly | | $ | 0.12 |
In conjunction with the release of our 2025 budget in December 2024, we increased the quarterly dividend by 8% to $0.13 per share, effective with the Q1 2025 dividend payable April 15, 2025.
The following table reconciles the change in shareholders’ capital:
| | | | | |
|---|---|---|---|---|
| Shareholders’ Capital | **** | Shares ('000s) | **** | Amount ($M) |
| Balance at January 1 | **** | 162,271 | **** | 4,142,566 |
| Vesting of equity based awards | **** | 1,181 | **** | 12,707 |
| Shares issued for equity based compensation | **** | 72 | **** | 985 |
| Share-settled dividends on vested equity based awards | | 87 | | 1,382 |
| Repurchase of shares | **** | (9,267) | **** | (238,742) |
| Balance at December 31 | **** | 154,344 | 3,918,898 |
As at December 31, 2024, there were approximately 3.9 million equity based compensation awards outstanding. As at March 5, 2025, there were approximately 154.6 million common shares issued and outstanding.
On July 8, 2024, 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 15,689,839 common shares (representing approximately 10% of outstanding common shares) beginning July 12, 2024 and ending July 11, 2025. Common shares purchased under the NCIB will be cancelled.
In the fourth quarter of 2024, Vermilion purchased 1.3 million common shares under the NCIB for total consideration of $17.6 million. Year-to-date, Vermilion purchased 9.3 million common shares under the NCIB for total consideration of 140.7 million. The common shares purchased under the NCIB were cancelled.
Subsequent to December 31, 2024, Vermilion purchased and cancelled 0.9 million common shares under the NCIB for total consideration of $12.1 million.
Contractual Obligations and Commitments
As at December 31, 2024, we had the following contractual obligations and commitments:
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| (M) | Less than 1 year | **** | 1 - 3 years | **** | 3 - 5 years | **** | After 5 years | **** | Total |
| Long-term debt (1) | 448,303 | 79,140 | 79,140 | 595,345 | 1,201,928 | ||||
| Lease obligations (2) | 33,527 | 38,315 | 32,665 | 49,010 | 153,517 | ||||
| Processing and transportation agreements | 59,431 | 93,441 | 113,089 | 759,853 | 1,025,814 | ||||
| Purchase obligations | 29,318 | 16,391 | 369 | 418 | 46,496 | ||||
| Drilling and service agreements | 32,691 | 22,259 | — | — | 54,950 | ||||
| Total contractual obligations and commitments | 603,270 | 249,546 | 225,263 | 1,404,626 | 2,482,705 |
All values are in US Dollars.
| ^(1)^ | Includes interest on senior unsecured notes. |
|---|
Vermilion Energy Inc. ■ Page 25 ■ 2024 Management’s Discussion and Analysis
| ^(2)^ | Includes undiscounted IFRS 16 - Leases obligations of $89.9 million recognized in the financial statements as at December 31, 2024, surface lease rental commitments of $61.9 million and other of $1.6 million that are not considered leases under IFRS 16 and are not represented on the balance sheet. |
|---|---|
| ^(3)^ | Commitments denominated in foreign currencies have been translated using the related spot rates on December 31, 2024. |
| --- | --- |
Asset Retirement Obligations
As at December 31, 2024, asset retirement obligations were $1,224.7 million compared to $1,159.1 million as at December 31, 2023. The increase in asset retirement obligations is primarily attributable to accretion expense recognized and changes in rates. The credit spread decreased to 2.6% at December 31, 2024 compared to 3.6% at December 31, 2023 primarily due to 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:
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| | **** | Dec 31, 2024 | **** | Dec 31, 2023 | **** | Change | **** |
| Credit spread added to below noted risk-free rates | 2.6 | % | 3.6 | % | (1.0) | % | |
| Country specific risk-free rate | **** | | | | | | |
| Canada | **** | 3.2 | % | 3.0 | % | 0.2 | % |
| United States | **** | 4.8 | % | 4.2 | % | 0.6 | % |
| France | **** | 3.7 | % | 3.0 | % | 0.7 | % |
| Netherlands | **** | 2.7 | % | 2.1 | % | 0.6 | % |
| Germany | **** | 2.6 | % | 2.3 | % | 0.3 | % |
| Ireland | **** | 2.8 | % | 2.7 | % | 0.1 | % |
| Australia | **** | 4.6 | % | 4.0 | % | 0.6 | % |
| Central and Eastern Europe | **** | 4.7 | % | 4.4 | % | 0.3 | % |
Current cost estimates are inflated to the estimated time of abandonment using inflation rates of between 1.5% and 3.6% (as at 2023 - between 1.3% and 5.5%).
Risks and Uncertainties
Crude oil and natural gas exploration, production, acquisition and marketing operations involve a number of risks and uncertainties that have affected the financial statements and are reasonably likely to affect them in the future. Some of these risks and uncertainties are discussed further below. Many additional risks and uncertainties are outline in the Annual Information Form, which is available on our website at www.vermilionenergy.com and on SEDAR+ at www.sedarplus.ca. Additional risks and uncertainties, not discussed or that management may be unaware of, may become important factors which affect Vermilion.
Commodity prices
Crude oil and natural gas prices have fluctuated significantly in recent years due to supply and demand factors. Changes in crude oil and natural gas prices affect the level of revenue we generate, the amount of proceeds we receive and payments we make on our commodity derivative instruments, and the level of taxes that we pay. In addition, lower crude oil and natural gas prices would reduce the recoverable amount of our capital assets and could result in impairments or impairment reversals.
Exchange rates
Exchange rate changes impact the Canadian dollar equivalent revenue and costs that we recognize. The majority of our crude oil and condensate revenue stream is priced in US dollars and as such an increase in the strength of the Canadian dollar relative to the US dollar would result in the receipt of fewer Canadian dollars for our revenue. We also incur expenses and capital costs in US dollars, Euros and Australian dollars and thus a decrease in strength of the Canadian dollar relative to those currencies may result in the payment of more Canadian dollars for our expenditures.
In addition, exchange rate changes impact the Canadian equivalent carrying balances for our assets and liabilities. For foreign currency denominated monetary assets (such as cash and cash equivalents, long-term debt, and intercompany loans), the impact of changes in exchange rates is recorded in net loss as a foreign exchange gain or loss.
Vermilion Energy Inc. ■ Page 26 ■ 2024 Management’s Discussion and Analysis
Production and sales volumes
Our production and sales volumes affect the level of revenue we generate and correspondingly the royalties and taxes that we pay. In addition, significant declines in production or sales volumes due to unforeseen circumstances may also result in an indicator of impairment and potential impairment charges.
Interest rates
Changes in interest rates impact the amount of interest expense we pay on our variable rate debt and also our ability to obtain fixed rate financing in the future.
Tax and royalty rates
Changes in tax and royalty rates in the jurisdictions that we operate in would impact the amount of current taxes and royalties that we pay. In addition, changes to substantively enacted tax rates would impact the carrying balance of deferred tax assets and liabilities, potentially resulting in a deferred tax recovery or incremental deferred tax expense.
Vermilion was exposed to increased taxation and royalties due to windfall taxes on profits in 2022 and 2023. Windfall taxes were enacted within the European Union for oil and gas companies at a minimum rate of 33% calculated on taxable profits above a 20% increase in the average yearly taxable profits as compared to 2018 to 2021. There is risk that windfall taxes or similar mechanisms will be re-enacted or similar legislation could be enacted in other jurisdictions that Vermilion operates in periods of extraordinary commodity prices.
Geopolitical tensions
Ongoing global geopolitical tensions, including the war in Ukraine and conflicts in the Middle East, may have significant economic implications. Russia’s invasion of Ukraine in 2022 has disrupted regional oil and gas supplies, leading to widespread sanctions against Russia, which in turn have caused macroeconomic instability, meanwhile instability in the Middle East may continue to further threaten the global economies. The risks disclosed in our Annual Information Form for the year ended December 31, 2024 may be exacerbated as a result of these tensions, including: market risks including volatility of oil and gas prices, volatility of foreign exchange rates, volatility of market price of common shares, hedging arrangements; regulatory and political risks including tax, royalty, and other government legislation; financing risks including additional financing, debt service, variations in interest rates and foreign exchange rates; acquisition and expansion risks including international operations and future geographical/industry expansion, acquisition assumptions, failure to realize anticipated benefits of prior acquisitions.
North American tariffs
The global geopolitical landscape is being significantly shaped by the policies of the Trump administration, particularly in relation to trade and tariffs. The potential imposition of tariffs, especially on Canadian goods, including crude oil, may create economic challenges for the oil and gas sector. These trade barriers if fully enacted may disrupt supply chains, raise costs, and impact the competitiveness of Canadian exports. The risks disclosed in our Annual Information Form for the year ended December 31, 2024 may be exacerbated as a result of these tensions, including: market risks including volatility of oil and gas prices, volatility of foreign exchange rates, volatility of market price of common shares, hedging arrangements; regulatory and political risks including tax, royalty, and other government legislation; financing risks including additional financing, debt service, variations in interest rates and foreign exchange rates; acquisition and expansion risks including international operations and future geographical/industry expansion, acquisition assumptions, failure to realize anticipated benefits of prior acquisitions.
In addition to the above, we are exposed to risk factors that impact our company and business. For further information on these risk factors, please refer to our Annual Information Form, available on SEDAR+ at www.sedarplus.ca or on our website at www.vermilionenergy.com.
There has been no change in Vermilion’s internal control over financial reporting during the period covered by this MD&A that materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
Financial Risk Management
To mitigate the risks affecting our business whenever possible, we seek to hire personnel with experience in specific areas. In addition, we provide continued training and development to staff to further develop their skills. When appropriate, we use third party consultants with relevant experience to augment our internal capabilities with respect to certain risks.
We consider our commodity price risk management program as a form of insurance that protects our cash flow and rate of return. The primary objective of the risk management program is to support our return of capital and internal capital development programs. The level of commodity price risk management that occurs is dependent on the amount of debt that is carried. When debt levels are higher, we will be more active in protecting our cash flow stream through our commodity price risk management strategy.
Vermilion Energy Inc. ■ Page 27 ■ 2024 Management’s Discussion and Analysis
When executing our commodity price risk management programs, we use derivative financial instruments encompassing over-the-counter financial structures, as well as fixed and collar structures to economically hedge a part of our physical crude oil and natural gas production. We have strict controls and guidelines in relation to these activities and contract principally with counterparties that have investment grade credit ratings.
Critical Accounting Estimates
The preparation of financial statements in accordance with IFRS Accounting Standards requires us to make estimates. Critical accounting estimates are those accounting estimates that require us to make assumptions about matters that are highly uncertain at the time the estimate is made and a different estimate could have been made in the current period or the estimate could change period-to-period.
The carrying amount of asset retirement obligations
The carrying amount of asset retirement obligations ($1,224.7 million as at December 31, 2024) is the present value of estimated future costs, discounted from the estimated abandonment date using a credit-adjusted risk-free rate. Estimated future costs are based on our assessment of regulatory requirements and the present condition of our assets. The estimated abandonment date is based on the reserve life of the associated assets. The credit-adjusted risk-free rate is based on prevailing interest rates for the appropriate term, risk-free government bonds adjusted for our estimated credit spread (determined by reference to the trading prices for debt issued by similarly rated independent oil and gas producers, including our own senior unsecured notes). Changes in these estimates would result in a change in the carrying amount of asset retirement obligations and capital assets and, to a significantly lesser degree, future accretion and depletion expense.
The estimated abandonment date may change from period to period as the estimated abandonment date changes in response to new information, such as changes in reserve life assumptions or regulations. A one year increase or decrease in the estimated abandonment date would decrease or increase asset retirement obligations (with an offsetting increase to capital assets) by approximately $34.0 million.
The estimated credit-adjusted risk-free rate may change from period to period in response to market conditions in Canada and the international jurisdictions that we operate in. A 0.5% increase or decrease in the credit-adjusted risk-free rate would decrease or increase asset retirement obligations by approximately $85.1 million.
The fair value of capital assets acquired in business combinations
In preparing the purchase price allocation for the business combinations completed in 2023, we estimated the fair value of assets acquired. Assets acquired in an acquisition primarily relates to the crude oil and natural gas reserves. The estimated fair value of the crude oil and natural gas reserves acquired is based on the present value of proved plus probable reserves and forecast commodity prices. Changes in these assumptions, including the discount rate used, would change the amount of capital assets recognized and as a result may cause rise to goodwill or gains recognized on the acquisition and future depletion and depreciation expense.
The recognition of deferred tax assets
The extent to which deferred tax assets are recognized are based on estimates of future profitability. These estimates are based on estimated future commodity prices and estimates of reserves. As at December 31, 2024, the deferred tax asset balance of $197.7 million mainly relates to Canada for $162.1 million and Ireland for $33.8 million.
In Ireland, we have $379.7 million of non-expiring tax loss pools where $94.9 million of deferred tax assets has not been recognized as there is uncertainty on our ability to fully use these losses based on estimated future taxable profits. Estimated future taxable profits are calculated using proved and probable reserves and forecast pricing.
In Canada, we have $95.3 million of non-expiring oil and gas tax pools where $23.3 million of deferred tax assets has not been recognized as there is uncertainty on our ability to fully use these pools based on estimated future taxable profits. Estimated future taxable profits are calculated using proved and probable reserves and forecast pricing.
Depletion and depreciation
Capital assets are grouped into depletion units, which are groups of assets within a specific production area that have similar economic lives. Depletion units represent the lowest level of disaggregation for which costs are accumulated for the purposes of calculating depletion and depreciation.
The net carrying value of each depletion unit is depleted using the unit of production method by reference to the ratio of production in the period to the total proved and probable reserves, taking into account the future development costs necessary to bring the applicable reserves into production. Key judgments that are made to reserve estimates such as revisions in reserves, changes in forecast commodity prices, foreign exchange rates, capital or operating costs would impact the amount of depletion and depreciation recorded in a period.
Vermilion Energy Inc. ■ Page 28 ■ 2024 Management’s Discussion and Analysis
The estimated recoverable amount of cash generating units
Each reporting period, we assess our CGUs for indicators of impairment or impairment reversal. If an indicator of impairment or impairment reversal is identified, we estimate the recoverable amount of the CGU. Judgment is required when determining whether indicators of impairment or impairment reversal exist, as well as judgments made when determining the recoverable amount of a CGU. Changes in any of the key judgments, such as a revision in reserves, changes in forecast commodity prices, foreign exchange rates, capital or operating costs would impact the estimated recoverable amount.
In the fourth quarter of 2023, indicators of impairment were present in our France CGU due to changes in forecasted cost assumptions and in our Saskatchewan and United States CGUs due to negative technical revisions. As a result of the indicators of impairment, the Company performed impairment calculations on the identified CGUs and the recoverable amounts were determined using fair value less costs to sell, which considered future after-tax cash flows from proved plus probable reserves and an after-tax discount rate of 13.0% for Saskatchewan and 15.0% for France and United States. Based on the results of the impairment tests completed, the Company recognized non-cash impairment charges of $1,016.1 million. Inputs used in the measurement of capital assets are not based on observable market data and fall within level 3 of the fair value hierarchy. A 1% increase in the assumed after-tax discount rate would reduce the estimated recoverable amount of assets tested and result in a higher impairment of $80.1 million while a 5% decrease in revenues (due to a decrease in commodity price forecasts or reserve estimates) would reduce the estimated recoverable amount of assets tested and result in higher impairment of $187.8 million.
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.
Cybersecurity
Vermilion has an information security training and compliance program that is completed at least annually. We have not experienced a cybersecurity breach in the last three years.
Recently Adopted Accounting Pronouncements
Vermilion did not adopt any new accounting pronouncements as at December 31, 2024 that would have a material impact on the Consolidated Financial Statements.
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 — as a comprehensive global baseline of sustainability-related financial disclosures. In December 2024, the Canadian Sustainability Standards Board issued its inaugural standards — Canadian Sustainability Disclosure Standard 1 (CSDS 1) and CSDS 2 — based on the IFRS Standards with some additional transition relief.
CSDS 1 and CSDS 2 are effective for annual reporting periods beginning on or after January 1, 2025. CSDS 1 provides a set of disclosure requirements designed to enable companies to communicate to investors about financially material sustainability-related risks and opportunities, while CSDS 2 sets out specific climate-related disclosures and is designed to be used in conjunction with CSDS 1. Canadian regulators have not yet mandated these standards; however, Vermilion will continue to assess the impact of the standards on its financial reporting.
Issuance of IFRS 18 - Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued the new accounting standard, IFRS 18 ‘Presentation and Disclosure in Financial Statements’. IFRS 18 will replace IAS® 1 ‘Presentation of Financial Statements’ which is currently implemented. IFRS 18 provides a defined structure to the statement of comprehensive income and related disclosure requirements. The new standard is effective for annual reporting periods beginning on or after January 1, 2027 and is required to be adopted retrospectively. Vermilion is currently reviewing the impact the standard will have on the consolidated financial statements.
Vermilion Energy Inc. ■ Page 29 ■ 2024 Management’s Discussion and Analysis
Amendments to IFRS 9 - Financial Instruments and IFRS 7 Financial Instruments: Disclosure
In May 2024, the IASB issued amendments to IFRS 9 'Financial Instruments' and IFRS 7 ‘Financial Instruments: Disclosures’ relating to settling financial liabilities using an electronic payment system and assessing contractual cash flow characteristics of financial assets. The amendments will be effective for annual reporting periods beginning on January 1, 2026, but are not expected to have a material impact on the consolidated financial statements.
Health, Safety and Environment (HSE)
We are committed to ensuring we conduct our activities in a manner that protects the health and safety of our employees, our contractors and the public. Our HSE Vision is to consistently apply our core values of Excellence, Trust, Respect and Responsibility. Our goal is to create a workplace free of incidents by ensuring our proactive culture and behaviours create an organization where HSE is fully integrated into our business – it is our way of life. Our mantra is HSE: Everyone. Everywhere. Everyday.
Vermilion seeks to maintain health, safety and environmental practices and procedures that comply with or exceed regulatory requirements and industry standards. All of our personnel are expected to work safely and in accordance with established regulations and procedures, and we seek to reduce impacts to land, water and air. During 2024 we:
| ● | Maintained clear priorities around 5 key focus areas of HSE Culture, Communication and Knowledge Management, Management Systems, Environmental & Operational Stewardship, and Health; |
|---|---|
| ● | Completed ongoing HSE performance monitoring through key performance indicator development, analysis and reporting; |
| --- | --- |
| ● | Continued comprehensive investigations of our incidents and near misses to ensure root causes were identified and corrective actions effectively implemented; |
| --- | --- |
| ● | Worked towards fulfilling our updated 2030 HSE Strategy; |
| --- | --- |
| ● | Continued implementation of our Top Quartile HSE Performance Plan and launch of a Serious Injury & Fatality Prevention Program; |
| --- | --- |
| ● | Completed Business Unit implementation plans as part of our Process Safety Management System implementation; |
| --- | --- |
| ● | Continued reinforcement of the “Vermilion High 5”, an individual safety awareness initiative aimed at keeping front-line workers safe; |
| --- | --- |
| ● | Advanced our Energy Safety Canada and International Oil and Gas Producers Life-Saving Rules implementation and competency development; |
| --- | --- |
| ● | Submitted our CDP Climate and Water reports; |
| --- | --- |
| ● | Managed our waste products by reducing, recycling and recovering; |
| --- | --- |
| ● | Reduced long-term environmental liabilities through decommissioning, abandoning and reclaiming well leases and facilities; |
| --- | --- |
| ● | Continued the development of a robust hazard identification and risk mitigation program specific to environmentally sensitive areas; |
| --- | --- |
| ● | Performed auditing, management inspections and workforce observations to measure compliance and identify potential hazards and apply risk reduction measures; and |
| --- | --- |
| ● | Assessed the effectiveness of our performance management standards across multiple business units. |
| --- | --- |
We are a member of several organizations concerned with environment, health and safety, including numerous regional co-operatives and synergy groups. In the area of stakeholder relations, we work to build long-term relationships with environmental stakeholders and communities.
Vermilion Energy Inc. ■ Page 30 ■ 2024 Management’s Discussion and Analysis
Task Force on Climate-related Financial Disclosure (TCFD)
Environmental, Social and Governance (ESG)
As an international company, Vermilion's purpose is to responsibly produce essential energy while delivering long-term value to our stakeholders. We believe that integrating sustainability principles into our business increases shareholder returns, enhances development opportunities, reduces long-term risks, and supports the well-being of key stakeholders including the communities in which we operate.
Vermilion has reported on sustainability matters since 2014, originally aligned with the Global Reporting Initiative (GRI). We have since moved towards adopting recommendations from the Task Force on Climate-related Financial Disclosure (TCFD), the International Sustainability Standards Board (ISSB) (including the Sustainability Accounting Standards Board, SASB) and the Canadian Sustainability Standards Board (CSSB).
In particular, we have applied the TCFD framework in the management of climate- and other sustainability-related risks and opportunities. This recognizes the importance of climate-specific disclosure while reflecting its intersection with other environment-related risks and opportunities, social factors such as safety and community engagement, and governance issues. Our Index follows:
| ●<br><br>Governance | Information Circular |
|---|---|
| ●<br><br>Strategy | Annual Report MD&A |
| ●<br><br>Risk Management | Annual Report MD&A |
| ●<br><br>Metrics and Targets | Annual Report MD&A |
| ●<br><br>Consolidated Climate (TCFD) Report | www.vermilionenergy.com/our-sustainability/sustainability-report/ |
Sustainability and Climate-Related Strategy
Vermilion understands our stakeholders’ expectations that we deliver strong financial results in a responsible and ethical way. As a result, we align our strategic priorities in the following order:
| ● | the safety and health of our staff and those involved directly or indirectly in our operations; |
|---|---|
| ● | our responsibility to protect the environment. We follow the Precautionary Principle introduced in 1992 by the United Nations "Rio Declaration on Environment and Development" by using environmental risk as part of our development decision criteria, and by continually seeking improved environmental performance in our operations; and |
| --- | --- |
| ● | economic success through a focus on operational excellence across our business, which includes technical and process excellence, efficiency, expertise, stakeholder relations, and respectful and fair treatment of staff, contractors, partners and suppliers. |
| --- | --- |
Vermilion Energy Inc. ■ Page 31 ■ 2024 Management’s Discussion and Analysis
Description of Sustainability- and Climate-related Risks and Opportunities, and Impacts
We have identified climate-related risks and opportunities within short-term (0-3 years), medium-term (3-6 years) and long-term (6-50 years) horizons. These are described below, along with their potential impacts (assessed using processes such as scenario analysis, cost projections and our Emissions Long-Range Planning tool), and our resulting management approach. In 2024, we used the CSDS 1 definition of financially material to identify the risks to be disclosed in this document, setting the threshold at $30MM. This has resulted in the removal of the following risks compared to previous disclosure, as they do not reach the level of financial materiality:
| ● | increased pricing of GHG emissions (e.g. carbon taxes) |
|---|---|
| ● | enhanced emissions and other ESG reporting obligations |
| --- | --- |
| ● | changes in regulations with respect to products (e.g. methane reduction) |
| --- | --- |
Risks related to shareholder divestment and increased costs related to capital and financing were also removed, due to the withdrawal of key institutional investment and finance institutions from alliances focused on climate and sustainability matters such as net zero targets. While we expect these entities to continue monitoring and engaging companies for related risk management, the risks of financially material divestment or increased financing costs are believed to have decreased significantly.
| Category / <br>Issue | Description of Impacts | Potential Financial Impact | Management Approach |
|---|---|---|---|
| Short-term Transition Risks (0-3 Years) | |||
| Reputation: Changes in Customer Behaviour and Legal Challenges | Government and community relationships are strongly linked to both social and regulatory license to operate. Communities where we operate also bear potential impacts, including noise, dust, lights, traffic, etc. Legal challenges against the oil and gas industry are increasing, while adoption of electric vehicles and opposition to fossil fuels reflects customer sentiment in some areas. Windfall tax/solidarity contributions are possible during times of extraordinary commodity prices. | The impact of delays to permits or shutdowns to production would be measured in terms of production per day, impacting revenues, and varies depending on location. Windfall taxes were substantively enacted within the European Union for oil and gas companies for 2022 and/or 2023 at a minimum rate of 33% calculated on taxable profits above a 20% increase in the average yearly taxable profits as compared to 2018 to 2021. | Our Non-technical Risk Management Policy and framework provide guidelines for proactive community relations and social impact assessments, and includes our strategic community investment program, Ways of Caring. Our Lobbying Policy guides our engagement with governments, including on specific issues such as windfall tax. |
| | |||
| Medium-term Transition Risks (3-6 Years) | |||
| Technology | Our emission reduction projects and climate strategy rely on technologies that are rapidly evolving, but in many cases unproven at larger scales and uneconomic for dispersed assets that are not, for example, near an electrical grid or pipeline gathering system. Assumptions by those outside the industry that broad generalizations on methane reduction are economical for all assets may be proven false. Some technology projects will fail; others will prove uneconomic. | The financial impact of a technology that proves uneconomic or unworkable varies widely depending on the project involved. A short to medium-term emission reduction project at a single site would not be financially material. A more significant, longer term project, such as hydrogen development, may be financially material if these projects proceed; however the risk is mitigated through our management approach. | We are mitigating this risk through a careful and deliberate approach to new technology adoption. We have established sustainability project criteria that need to be met in order to move into the Vermilion Opportunity Development Process, which provides various stage gates and off-ramps. In addition, for larger projects such as hydrogen development, risk management includes partnering with other entities, providing infrastructure, for example, rather than investing in the technology itself. |
| | |||
| Medium-term Physical Risks (3-6 Years) | |||
| Acute:<br><br>Increased Severity of Extreme Weather Events such as Cyclones and Floods | Vermilion's Wandoo field off northwestern Australia, Corrib project off the Irish coast and oil fields in the coastal area of SW France can be impacted by extreme weather events such as cyclones, resulting in down time or damage to infrastructure. Such events can also impact the downstream handling capacity of our partners, resulting in a limitation to the distribution and sale of our products. | Based on the value of the Wandoo Platform and a 1-in-10,000-year cyclonic event, the financial implications associated with damage due to a severe weather event is estimated at $242MM (total impact before insurance). | Vermilion maintains insurance to reduce the financial impact associated with damage to our assets due to severe weather events. We also have a robust asset integrity program that maintains our offshore facilities to their original design specifications of CAT 5 hurricane force. We have protocols for monitoring and preparing for cyclones, and have invested in our emergency response capabilities in the event of damage to our assets due to severe weather. |
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Vermilion Energy Inc. ■ Page 32 ■ 2024 Management’s Discussion and Analysis
| | Category / <br>Issue | Description of Impacts | Potential Financial Impact | Management Approach |
|---|---|---|---|---|
| Long-term Transition Risks (6-50 Years) | ||||
| Technology:<br><br>Substitution of existing products and services with lower emissions options, including market supply and demand | Although we see demand for oil and natural gas remaining robust in the short- to mid-term, it is likely that demand for oil and, to a lesser degree, natural gas will eventually fall as the energy transition evolves and various alternatives for renewable energy options become technologically and economically available. This could impact the need for our products in the longer term, post 2030 for oil and even further out for natural gas. As the past several years have demonstrated, it will be critical to maintain adequate supplies of both oil and natural gas during the energy transition, to provide both accessibility and affordability. | Given the uncertain timeline and progression of the energy transition, and supply-demand dynamics, we are not using a financial forecast for impact. We are, however, using our scenario analysis to identify potential opportunities that would mitigate the risk to our products. | Based on our scenario analysis, we identified the need to explore new and evolving technologies and processes to identify synergistic fits for our business in both traditional and renewable energy production. We are pursuing this via our established track record in geothermal energy from produced water, for which our internal expertise in engineering, geoscience and drilling is particularly well suited. We are also participating in partnerships in other areas close to our core competencies or infrastructure, such as biogas and the conversion of traditional oil and gas assets to geothermal and hydrogen production, to better understand the long-term potential. | |
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| Long-term Physical Risks (6-50 Years) | ||||
| Chronic:<br><br>Rising Sea Levels | Chronic Physical: Potential rising sea levels could impact our Netherlands assets and operations due to issues such as flooding, transportation difficulties, supply chain interruptions and salinization of groundwater. | In 2024, we updated the financial impact estimate for a rise in sea level at our main gas processing facility Garijp (GTC) in the Netherlands, caused by an extreme 1-in-10000-years tide/extreme wind event, to be $103MM prior to mitigation or insurance. | Physical measures such as conventional berms may not provide complete protection. Based on Vermilion's assessment of less than 0.05% probability over the next 5 years we have accepted this level of risk, reviewing it annually. | |
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| Chronic:<br><br>Changes in Temperature Extremes, Including Rising Mean Temperatures; Changes In Precipitation Patterns and Extreme Variability in Weather Patterns | Chronic Physical: Based on RCP4.5, which limits warming to 3°C (overshooting 1.5-2°C), our assets and operations could experience climate changes between 2041 and 2070 such as: North America: 2-3°C increase, 12-14% increased precipitation, 7-8% increased aridity, >10 fewer frost days and <25% decrease in number of dry spells. Europe: 1-2°C increase, 0-5% increased precipitation, 4-12% increased aridity, generally decreased frost days, with several areas seeing <25% increase in number of dry spells. Australia: 1C increase; 8% increased precipitation (SMHI, Climate Information, https://climateinformation.org/, accessed: 9 July 2023). Overall warming temperatures, greater precipitation and generally drier conditions (due to increased evaporation) may increase capital costs for drilling, completion and workover operations due to increased timelines, equipment breakdown and restricted access in North America (fewer frost days). They may also impact the health and safety of workers, and create variability and potentially more severe weather events such as flooding, drought and wild fires. Flooding could result in limited access to locations; droughts could impact the availability of surface and / or groundwater required for drilling and completion. This could negatively impact growth by increasing timelines and capital costs to bring on new production. | The financial implications of a single time event (i.e. wildfire) have been assessed on a case-specific basis. Vermilion maintains insurance to mitigate the potential impact of precipitation-related extreme events (i.e. wildfire, flooding) | Each of our assets is assessed for potential risks and hazards, including those associated with weather events, from lightning to flooding to wild fires. These risks are reviewed at least annually on a case-by-case basis as part of our Enterprise Risk Management system. Mitigation approaches such as clearance of vegetation around facilities, and physical barriers to flooding, are implemented as per our HSE Management System, to protect the health and safety of our workers, contractors and the public, and to protect the environment. |
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| Category / <br>Issue | Description of Impacts | Potential Financial Impact | Management Approach |
|---|---|---|---|
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| Short-term Opportunities (0-3 Years) | |||
| Products and Services:<br><br>Access to New Markets | More stringent global measures to reduce emissions from individual ships by 30% by 2030, established through amendments to MARPOL Annex VI, limit the sulphur content of bunker fuel to a maximum of 0.5%. Vermilion’s Australian Wandoo field produces low sulphur crude oil that meets the needs of refineries to meet IMO regulations. | Vermilion conservatively foresees achieving a premium of US$10/bbl for its Wandoo production over the next three years for cumulative incremental revenue of CAD$61.3MM based on an estimated production of 4000 bbl/d. | Vermilion continues to access local markets for our low sulphur production, while exploring regions to expand our operations. Our marketing group ensures that Vermilion meets its contractual obligation with our buyers in terms of volumes, delivery dates and crude quality. |
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| Medium-term Opportunities (3-6 Years) | |||
| Products and Services:<br><br>Ability to Diversify Business Activities; Shift in Consumer Preferences | As consumers become more aware of and involved in the selection of their energy sources and associated carbon intensity, we believe that responsibly produced energy may offer access to premium pricing or new markets. Our sustainability performance has supported Vermilion's entry into markets such as Germany, Hungary, Croatia and Slovakia, for example. | The financial impact of changing consumer preferences in difficult to quantify, as it depends on a variety of factors, including commodity pricing that is impacted by geopolitical impacts on supply and demand. | Based on stakeholder engagement, Vermilion believes that independent assessments of our operations by third parties can help to demonstrate our responsible approach to operations. As a result, we have achieved Equitable Origin responsible gas producer certification for our Deep Basin and Mica assets in Canada, the AFNOR CSR Committed label in France, and the Business Working Responsibly Mark in Ireland. |
| | | | |
| Products and Services, and<br><br>Resilience:<br><br>Development of New Products and Services ; participation in renewable energy programs | Directly related to the long-term transitional risk associated with the substitution of low-carbon products, we have the opportunity to participate in the development of those products: for example, reusing our current infrastructure to provide alternative products, such as biogas or hydrogen, or to develop new products such as geothermal energy, creating new revenue streams. | As this opportunity is in the early stage of assessment, it is difficult to quantify the financial impact associated with this revenue; however, potential also exists for cost reduction, as assets slated for abandonment could be repurposed to enable them to continue to generate energy. | We are leveraging our technical expertise and external partnerships to provide input into, and potentially partner in, alternative energy projects. E.g. our France-based industry partnership with Avenia to expand the use of geothermal energy production in oil production. We have also developed criteria for approving the move of these ideas into our Vermilion Opportunity Development Process, which provides clear decision gates and criteria for considering and implementing such projects. |
| | | | |
| Long-term Opportunities (6-50 Years) | |||
| Products and Services:<br><br>Shift in Consumer Preferences, including domestically produced energy | As we move further into the energy transition, natural gas is expected to continue playing an impactful role as a less carbon intense fuel than options such as coal. At the same time, demand for affordable energy, including natural gas, may increase based on increased electrification (e.g. vehicles, home heating, data centres). The carbon intensity of energy is directly related to where it was produced; thus, domestically produced energy can result in a lower intensity than imported energy, due to the reduced transportation energy required and potentially to the original energy source. | As a global gas producer, Vermilion would benefit from an increase in marketable prices for natural gas in our Canadian operations that may result if demand increased for domestically produced natural gas. We believe the financial impact is not predictable at this time. | Vermilion continues to focus on the identification of resources and assets where we have the opportunity to apply our industry leading expertise to optimize production while reducing emissions. An example of our strategy to realize this opportunity is our acquisition of Westbrick Energy in the liquids rich gas Deep Basin play in Alberta, and our entry into the Montney in northeast British Columbia. |
Vermilion Energy Inc. ■ Page 34 ■ 2024 Management’s Discussion and Analysis
Resilience of the Company’s Strategy
The Board of Directors and Executive Committee have responded to our risk and opportunity identification using the following scenario analyses. It should be noted that these analyses are neither predictions nor forecasts; while they rely on the work of credible third-party organizations, they are constructions based on circumstances and assumptions that are highly vulnerable to macroeconomic and geopolitical changes. We have used them to inform our discussions on business strategy and risk identification and management.
Vermilion initially examined two energy transition scenarios from the World Economic Forum. These compared a Gradual versus Rapid low-carbon transition based on inputs that included the International Energy Agency’s New Policies Scenario (Gradual) and Sustainable Development Scenario (Rapid), which meets the Paris Agreement’s goal to limit global temperature increases to 1.5 to 2ºC. Vermilion examined key factors impacting the speed of the transition – including the influence of new energy technologies; potential speed of their adoption; anticipated changes in policy and regulation; and emerging market pathways such as India – and resulting factors that could impact the company, including economics (demand, supply, consumer behaviour, and costs of energy); technological advancement; capital availability; government policy; and Company reputation. Among these, government policy was seen as most influential in the short- to mid-term, as countries in many of our operating regions have implemented policies aimed at creating a low-carbon future, consistent with limiting global warming to 1.5-2°C or lower. As a global energy producer, we believe we can contribute to the supply of safe, reliable and affordable energy during this transition.
We applied these findings to Vermilion’s strategy by announcing in 2021: an aspirational vision for net zero emissions in our own operations, including Scope 1 and Scope 2 emissions, by 2050, and a near-term target to reduce Scope 1 emissions intensity from our operations by 15 to 20% by 2025, using a baseline year of 2019. See Sustainability and Climate-Related Metrics and Targets, below, for more information.
In 2023, we augmented this work with a new scenario analysis, in which our Executive Committee and Board of Directors reviewed an internally developed comparison of a diverse range of climate-related transition scenarios. This focused on changes in demand for oil and for natural gas based on a Reference case (business as usual) and a Climate Policy case (government support for reduced greenhouse gas emissions) for Global, Advanced Economy and Emerging Economy sectors. Specific scenarios included the International Energy Agency (Stated Policy, Announced Pledges and Net Zero), Equinor (Walls, Bridges), and BP (New Momentum, Accelerated), with reference cases from Exxon, OPEC and the Energy Information Administration. The analysis showed the potential for energy demand declining over a 5- to 15-year horizon, but also showed greater impacts on specific assets based on government policies, location and logistics (landlocked vs waterborne), and proximity to petrochemical or carbon capture and sequestration capacities.
For example, the Reference case in advanced economies points to strong policy uptake in Europe and Industrialized Asia, as well as energy efficiency improvements in the residential and commercial sectors. Oil demand may decline as energy transition policy momentum pushes road transport towards electrification, with further displacement by biofuels after 2030. Efficiency gains reduce consumption, while demographic trends work against oil demand. Climate Policy scenarios see advanced economies driving a rapid uptake of renewables to a near full phase-out of combustible natural gas use, leading to a finale in the role of natural gas as a transition fuel. Natural gas use in 2050 is mostly consumed by the petrochemical sector and hydrogen production. Both scenarios rely on assumptions such as a continued improvement in advanced technology development for renewables (for example, battery improvement; economic hydrogen production at scale); and the addressing of supply chain human rights and environmental issues for critical minerals.
We also assessed the physical climate-related risks in our major operating regions using the International Panel on Climate Change’s Representative Concentration Pathway (RCP) 4.5 scenario. We selected RCP 4.5 because it reflects the physical risks our operations would face if CO2 emissions do not start declining until approximately 2045, reaching approximately half of 2050 levels by the end of the century. This is more likely than not to result in rising global temperatures above 2C; specific geographic scenarios are summarized above in the Risks table.
Using RCP 4.5 enabled us to identify impacts to operations such as rising temperatures, aridity and dry spells in many areas, rising precipitation in some areas, and rising sea levels. Since climate volatility would also increase, RCP 4.5 highlights the need to consider adaptation and mitigation tactics such as changing work schedules for daily heat cycles, along with greater wind, storm and wildfire protection for our assets. We note that RCP 2.6 (which requires CO2 emissions to have started declining by 2020) relies on reducing emissions and removing significant amounts of greenhouse gases from the atmosphere, and reflects similar physical risks as 4.5 in the next 10-15 years, with lesser effects from 2050 to 2100.
We incorporated the results of the discussions around these scenarios into our business strategy work in 2023 and 2024. Overall, our strategy to ensure our resilience under various scenarios continues to rest on three strategic activities:
| ● | Focusing on efficient and responsible production of oil and natural gas, viewing emissions as potential energy sources: |
|---|---|
| o | Lower carbon fuels. Since 2012, we have shifted our production mix towards natural gas as a cleaner burning fuel than other fossil fuels. We also sell our fuels within the country of production wherever possible, reducing the carbon footprint associated with transportation of the fuel to consumers while increasing national energy security. |
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Vermilion Energy Inc. ■ Page 35 ■ 2024 Management’s Discussion and Analysis
| o | Socially responsible fuels. We are committed to ensuring that our products are produced in an environmentally and socially responsible manner, respecting worker rights and community engagement. We seek to operate in regions noted for their stable, well-developed fiscal and regulatory policies related to oil and gas exploration and development, and for their robust health, safety, environmental and human rights legislation. |
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| o | Transparency and reporting. We have a strong record of reporting on greenhouse gas emissions, energy usage and other key environmental metrics, which has supported our emission reduction targets. |
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| ● | Implementing technically and economically feasible options for emission reduction, covering combustion, flaring, venting and fugitive emissions: |
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| o | Greater energy efficiency. Many energy and operational efficiency initiatives go hand-in-hand, which in turn helps us minimize our carbon footprint and reduce greenhouse gas emissions. |
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| o | Lower greenhouse gas emission intensity. We are committed to reducing the greenhouse gas emissions associated with our production, with particular focus on methane. |
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| ● | Exploring new and evolving technologies and processes to identify synergistic fits for our business in both traditional and renewable energy production: |
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| o | Alternative energy. We are continuing to develop our knowledge and use of alternative energy sources, including geothermal energy, for which our internal expertise in engineering, geoscience and drilling is particularly well suited. This work has begun with the geothermal potential of our produced water, supporting a circular economy model that conserves, reuses and recycles resources to better protect our environment. It is also expanding into areas such as biogas and the conversion of traditional oil and gas assets to geothermal and hydrogen production. |
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Climate Strategy
In 2023-2024, we furthered this strategy by developing the next step towards our aspirational vision for net zero Scope 1 and 2 emissions by 2050. Our base assumptions included:
| ● | The definition of net zero emissions used by the Intergovernmental Panel on Climate Change (IPCC) as being achieved when human-caused greenhouse gas emissions to the atmosphere are balanced by human-created removals from the atmosphere^1^ |
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| ● | The continuation of our current business model, in which our purpose is the responsible production of oil and natural gas, while we also develop economic energy alternatives that fit our infrastructure and expertise, using a low-risk approach that emphasizes partnerships |
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| ● | The plan is a product of our current understanding of transition issues and will evolve over time; we expect to update underlying data annually with a larger plan review every three to five years as economic, technological, legal and regulatory landscapes evolve |
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Our strategy evolved as we:
| ● | Assessed Scope 1 and 2 emission sources, identifying major sources of methane |
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| ● | Reviewed the accuracy and completeness of measurement and reporting |
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| ● | Developed a high-level project list for potential emission reductions based on a cost/tonne of CO2e |
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Through this work, it became clear that, given uncertainties around government policy, regulations, carbon taxation, technology development, geopolitics, methane reduction alternatives and costs, and carbon accounting changes, our focus should be on the period to 2030. We therefore prioritized emission intensity reduction and emissions considerations in acquisitions and divestments in this period, while establishing research and development partnerships to provide a foundation for greater adoption of energy alternatives beginning in the late 2020s and continuing in the 2030s.
Our next steps include:
| ● | Validating our high-level capital cost and carbon abatement costs/tCO2e in key business units for emission reduction projects, including potential cost increases |
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| ● | Monitoring government and regulatory support for energy alternatives with higher economic risks, such as carbon capture and storage, and hydrogen production |
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| ● | Implementation of centralized emissions quantification to allow more efficient tracking and forecasting towards our climate strategy objective |
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The four pillars of our climate strategy can be found on the following page.
^1^ IPCC, 2018: Annex I: Glossary [Matthews, J.B.R. (ed.)]. In: Global Warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty [Masson-Delmotte, V., P. Zhai, H.-O. Pörtner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. Péan, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X. Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T. Waterfield (eds.)]. Cambridge University Press, Cambridge, UK and New York, NY, USA, pp. 541-562, doi:10.1017/9781009157940.008.
Vermilion Energy Inc. ■ Page 36 ■ 2024 Management’s Discussion and Analysis
| Pillar | Focus | Estimated Contribution | 2024-2030 Approach |
|---|---|---|---|
| Reduce | Reduce emissions^(1)^ with methane a priority, by<br><br>●<br><br>Reducing flaring, venting and fugitive emissions<br><br>●<br><br>Driving operational and energy efficiencies<br><br>●<br><br>Electrifying operations if economical where grids are low-intensity<br><br>●<br><br>Assessing new technologies as they become feasible | 35-40% by 2040 | Achieve our emission-related targets compared to our baseline of 2019:<br><br>●<br><br>2025: Scope 1 emissions intensity reduction by 15-20%<br><br>●<br><br>2030: Scope 1+2 emissions intensity reduction by 25-30% |
| Calibrate | Calibrate our portfolio by considering emission intensity impact in acquisition and divestment decisions, including planning for field end-of-life | 10-20% by 2040 | Use acquisitions and divestments to impact achieving our targets, not our 2019 baseline. If we divest higher emitting assets or acquire lower emitting assets, this will reduce our intensity. If we divest lower emitting assets or acquire higher emitting assets, this will increase our intensity, and we will need to consider projected costs of emissions reductions in our financial decisions. |
| Adapt | Adapt our portfolio to new energy, considering carbon capture and storage, renewable energy associated with our core operations such as biogas, hydrogen and geothermal production, and other new technologies | 35-45% by 2050 | Evaluate early-stage alternative projects through partnerships, including:<br><br>●<br><br>Four existing geothermal energy from produced water projects in France<br><br>●<br><br>Biogas production at our Harlingen Treatment Centre site in Netherlands<br><br>●<br><br>Evaluating hydrogen production potential in France and Ireland, with potential for associated carbon capture and storage in France |
| Offset | Offset as a solution for the emissions that cannot be eliminated | 10-15% by 2050 | Consider in 2030-2050, when carbon markets are less volatile |
| ^(1)^ | Emissions calculated in general accordance with the GHG Protocol and IPCC guidance; reported intensities are based on operated throughput; Scope 1, 2 and 3 emissions externally verified (limited assurance) in accordance with the ISO 14064-3 standard; see also Targets and Metrics section for methodologies and dependencies in target setting. | ||
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In addition to our focus on carbon, or emissions, our sustainability strategy includes two other areas that are integral to managing sustainability- and climate-related issues:
Conservation
We are committed to reducing the impact our operations have, beginning with regulatory compliance. Our conservation efforts are further focused in three areas:
| ● | Water: We recognize water as a basic human right, and as a vital resource that is shared among many stakeholders in our communities. We are therefore committed to protecting both the supply and the quality of water sources in our areas of operation by: |
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| o | Proactively preventing harm and supporting healthy surface and groundwater bodies |
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| o | Reducing potable and freshwater usage to the lowest level practical, and |
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| o | Taking a lifecycle and circular economy approach to water, exploring opportunities to reuse and recycle products such as produced water |
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| ● | Asset Retirement Obligations: We have adapted our long-term asset retirement obligation management to include revitalizing or reusing assets to benefit our environment and our communities. |
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| ● | Biodiversity: We are focusing on protecting the species and habitats around us by proactively identifying biodiversity risks and opportunities, and implementing associated plans. |
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Community
Our communities care deeply about the safety, environmental stewardship and corporate citizenship that we bring to our local operations. In addition, our people care deeply about their communities — whether we work there or live there, these are the places we call home. We therefore steward our operations and relationships to demonstrate our commitment to being a responsible producer and a valued and trusted neighbor and business partner, including:
| ● | Transparency with respect to safe and environmentally responsible operations, including our potential impacts on local communities |
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| ● | Maintaining strong, genuine relationships with our communities, with engagement based on respect, listening and openness, and |
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| ● | Creating a shared value focused on local economic and social development |
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Vermilion Energy Inc. ■ Page 37 ■ 2024 Management’s Discussion and Analysis
Sustainability and Climate-Related Risk Management
Process for Identifying, Assessing and Managing Sustainability- and Climate-related Risks, and
Integration into the Company’s Enterprise Risk Management (ERM) System
Sustainability-related risks and opportunities, including those related to climate, are integrated into multi-disciplinary Company-wide risk identification, assessment, and management processes as part of our ERM system, based on the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework. This provides an integrated approach to managing risk as it impacts strategy and performance, and includes Operational, Market & Financial, Credit, Organizational, Political, Regulatory Compliance, Strategic and Reputational, and Sustainability categories.
Risk management is the responsibility of the Board and the Executive Committee based on a Top-Down, Bottom-Up approach to engage all staff. Top-Down begins with our Board and its committees with clear terms of reference, including oversight for identification and management of specific allocations of risk type. This is translated into action by our Executive Committee, which reviews and manages the ERM process through implementation of associated policies and procedures. Within our Executive Committee, the Vice President International and HSE and the Vice President North America have risk management responsibility on an operational level, while the Chief Financial Officer is responsible for overseeing risk management performance. Our staff help develop systems, standards and procedures. Bottom-Up is how staff implement, maintain and improve risk management processes, applying the hazard-risk-mitigation process in every part of our business.
Risks are identified by key staff across our Company, including our Operations, Finance, Health, Safety and Environment, Economics, Government and Public Relations, and Sustainability teams at corporate, business unit and asset levels. These employees have significant experience, and use a wide array of inputs, including operational and facility assessments, technical and research reports, external stakeholder organizations, government policy and regulation changes, industry initiatives, communities and landowners, and non-governmental entities.
The results are incorporated into our Corporate Risk Register, which provides a consistent framework to ensure the effective tracking and communication of our material risks. Using our Risk Matrix as a prioritization tool, teams assess severity, likelihood, speed of onset, and vulnerability using scales from 1 to 5 for each factor, described in terms of human, environment, financial, social license and cybersecurity impacts. In addition, risks such as commodity pricing, production and carbon taxes are stress-tested to identify the impact of changes over time. Our sustainability materiality analysis, which assesses issues with impact for both the Company and our key stakeholders, is integrated into our ERM system using the Corporate Risk Register through a collaboration between Finance, HSE, Operations and Sustainability teams. Every risk case includes whether climate-related risk is a contributing factor.
The results are reviewed annually at minimum by the responsible teams, and provided to the Executive Committee and the Board and its Committees as appropriate, who further review and assess the risks including interdependencies based on the company’s risk tolerance.
Our risk management approach focuses on reducing the risk to a level as low as reasonably practicable, accepting the risk, and/or controlling it (such as insuring it). For example, if direct mitigation is not possible (e.g. changes in temperature extremes), we would adapt our business processes to reduce the potential impact (e.g. changing work hours to avoid extreme mid-day heat). In other situations (e.g. increasing risk of flood), we may take measures to protect against the risk (e.g. flood controls) while also insuring our operations. Financial impact is deemed substantive if it could cause a business loss of more than $30 million CAD (unrisked and before mitigation/recovery instruments).
To support climate risk identification and management, we use our internally developed Emissions Long-Range Planning Tool. This is based on our long-range planning tool for production, and allows us to forecast emissions, carbon taxes and the impact of various emission reduction projects. This supports our decision-making on production, capital allocation, budgeting, target setting, and merger, acquisition and divestment decisions.
Vermilion Energy Inc. ■ Page 38 ■ 2024 Management’s Discussion and Analysis
Sustainability and Climate-Related Metrics and Targets
Metrics Used to Assess Sustainability- and Climate-Related Risks and Opportunities
Our sustainability reporting (www.vermilionenergy.com/sustainability) describes significant economic, environmental, social and governance measures, which are reported with reference to TCFD, SASB and GRI. These include but are not limited to:
| ● | Climate: energy consumption and intensity; investment in and generation of renewable energy; greenhouse gas emission and intensity, including flaring and venting, and avoided emissions; and water withdrawal, including from areas of high baseline water stress, and discharge. |
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| ● | Environment: Waste generation and management; Asset integrity and spills; and Environmental investment |
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| ● | Social: Health and Safety; People; and Community investment |
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| ● | Governance: Ethics |
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These metrics contribute to a sustainability contribution of 10% for the Corporate Performance Scorecard for our Long-term Incentive Plan, comprised of progress towards our 2025 emission intensity reduction target (5%) and 2027 ARO liability reduction target (3%), along with select ESG rating agency scores (2%). In 2025, this Scorecard eliminates ESG ratings, with the 10% split evenly between emissions intensity and ARO liability.
We also track carbon pricing, and have identified actual and likely pricing scenarios based on current government policies and related published research. For example, the carbon tax per tCO2e in 2024 in Canada was $80, and in Ireland, €56.
Scope 1, 2 and 3 GHG Emissions Disclosure
We report Scopes 1, 2 and 3 emissions, calculated in general accordance with the GHG Protocol and IPCC guidance and externally verified (limited assurance) in accordance with ISO 14064-3; reported intensities are based on operated throughput. Historical, corporate and business unit data can be found in the Energy and Emissions Performance Metric document available at www.vermilionenergy.com/our-sustainability/.
We have adopted the definitions of Scope 1, 2 and 3 emissions as developed by the GHG Protocol, an international standard for corporate accounting and reporting emissions from the World Resources Institute and the World Business Council for Sustainable Development:
| ● | Scope 1 refers to direct GHG emissions from sources that are owned or controlled by a company |
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| ● | Scope 2 refers to indirect GHG emissions from the generation of purchased electricity consumed by a company |
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| ● | Scope 3 refers to other indirect emissions related to a company's activities, but from sources not owned or controlled by that company. |
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Our Scope 1 and 2 emissions intensity and methane emissions intensity decreased in 2020, primarily related to our first full year of operatorship for the Corrib gas asset in Ireland, and our focus on reducing post-acquisition emissions over time in Saskatchewan. This was achieved through a variety of gas conservation and recovery initiatives including construction of new infrastructure, operational changes and increased infrastructure runtimes. Additional decreases have been achieved through improved measurement and methodologies, projects such as replacing diesel or propane with compressed natural gas for boilers and water heating for the drilling program in Alberta, converting pneumatic devices from high- to low-bleed, installing solar-powered chemical injection pumps, and the purchase of renewable energy certificates for electricity use in Netherlands and Ireland. Emissions intensity flattened and methane intensity increased in 2022 as a result of lower production; however, our Scope 1 emissions intensity decreased in 2023, to from 0.0173 to 0.0170 tCO2e/boe, reflecting a 12% decrease from our 2019 baseline of 0.019 tCO2e/boe and on track to our 2025 target (see below).
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Vermilion Energy Inc. ■ Page 39 ■ 2024 Management’s Discussion and Analysis
Related Targets and Performance
Vermilion has an aspirational vision for net zero emissions in our own operations, including Scope 1 and Scope 2 emissions, by 2050, which we are working towards using our climate strategy. This includes setting new interim targets every five years. At the current time, we do not intend to set a Scope 3 reduction target.
| ● | In 2021, we set a target to reduce Scope 1 emissions intensity by 15 to 20% by 2025, using a baseline year of 2019. |
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| ● | In 2024, we set a target to reduce Scope 1+2 emissions intensity by 25 to 30% by 2030, using a baseline year of 2019. |
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These were developed, and approved by the Board, following our climate scenario analysis and extensive internal assessment. There are significant inherent uncertainties in how the energy transition will evolve over the next three decades. Our intention is to manage these by focusing on responsible production of essential oil and natural gas for as long as these forms of energy are needed, while developing opportunities in other areas that are an economic and synergistic fit for our business. To set both our 2025 and 2030 targets, we looked at our own operations – from how we manage emissions data to options for emission reduction and their economics –- and at how our peers and the majors are approaching this. From this, we identified emissions intensities and opportunities for reduction within our business units. This is being achieved, starting with our business units with higher emissions intensities, with an initial focus on efficiency, including process changes, venting reductions, instrumentation upgrades from gas to air, and power efficiency options, along with improved metering and field measurements.
Corporate Governance
We are committed to a high standard of corporate governance practices, a dedication that begins at the Board level and extends throughout the Company. We believe good corporate governance is in the best interest of our shareholders, and that successful companies are those that deliver growth and a competitive return along with a commitment to the environment, to the communities where they operate, and to their employees.
We comply with the objectives and guidelines relating to corporate governance adopted by the Canadian Securities Administrators and the Toronto Stock Exchange ("TSX"). In addition, the Board monitors and considers the implementation of corporate governance standards proposed by various regulatory and non-regulatory authorities in Canada. A discussion of corporate governance policies is included each year in our proxy materials for our annual general meeting of shareholders, copies of which are available on SEDAR+ (www.sedarplus.ca).
As a Canadian reporting issuer with securities listed on the TSX and the New York Stock Exchange (“NYSE”), Vermilion is required to comply with all applicable Canadian requirements adopted by the Canadian Securities Administrators and the TSX, and applicable rules for foreign private issuers adopted by the U.S. Securities and Exchange Commission that give effect to the provisions of the Sarbanes-Oxley Act of 2002.
Our corporate governance practices also incorporate many “best practices” derived from those required to be followed by US domestic companies under the NYSE listing standards. We are required by Section 303A.11 of the NYSE Listed Company Manual to identify any significant ways in which our corporate governance practices differ from those required to be followed by US domestic companies under NYSE listing standards. We believe that there are no such significant differences in our corporate governance practices, except as follows:
| ● | Shareholder Approval of Equity Compensation Plans. Section 303A.8 of the NYSE Listed Company Manual requires shareholder approval of all “equity compensation plans” and material revisions to those plans. The definition of “equity compensation plans” covers plans that provide for the delivery of newly issued securities, and also plans which rely on securities reacquired on the market by the issuing company for the purpose of redistribution to employees and directors. The TSX rules provide that equity compensation plans and material amendments thereto require shareholder approval only if they involve newly issued securities and the amendments are not otherwise addressed in the plan’s amendment procedures. In addition, the TSX rules require that every three years after institution, all unallocated options, rights or other entitlements under equity compensation plans which do not have a fixed maximum aggregate of securities issuable must be approved by shareholders. Vermilion follows the TSX rules with respect to equity compensation plan shareholder approval requirements. |
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Vermilion Energy Inc. ■ Page 40 ■ 2024 Management’s Discussion and Analysis
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 December 31, 2024, 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.
Internal Control Over Financial Reporting
A company's internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
The Chief Executive Officer and the Chief Financial Officer of Vermilion have assessed the effectiveness of Vermilion’s internal control over financial reporting as defined in Rule 13a-15 under the US Securities Exchange Act of 1934 and as defined in Canada by National Instrument 52-109, Certification of Disclosure in Issuers’ Annual and Interim Filings. The assessment was based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Chief Executive Officer and the Chief Financial Officer of Vermilion have concluded that Vermilion’s internal control over financial reporting was effective as of December 31, 2024. The effectiveness of Vermilion’s internal control over financial reporting as of December 31, 2024 has been audited by Deloitte LLP, as reflected in their report included in the 2024 audited annual financial statements filed with the US Securities and Exchange Commission. No changes were made to Vermilion’s internal control over financial reporting during the three months ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, the internal controls over financial reporting.
Vermilion Energy Inc. ■ Page 41 ■ 2024 Management’s Discussion and Analysis
Supplemental Table 1: Operating 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.
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | **** | Q4 2024 | **** | | **** | | 2024 | Q4 2023 | 2023 | |||||
| | Liquids | | Natural Gas | | Total | | Liquids | | Natural Gas | | Total | | Total | | Total |
| | $/bbl | | $/mcf | | $/boe | | $/bbl | | $/mcf | | $/boe | | $/boe | | $/boe |
| Canada | |||||||||||||||
| Sales | 75.44 | 1.98 | **** | 39.83 | 77.22 | 1.56 | **** | 40.34 | 44.73 | 46.73 | |||||
| Royalties | (7.22) | (0.23) | **** | (3.94) | (9.81) | (0.09) | **** | (4.78) | (5.76) | (5.62) | |||||
| Transportation | (4.77) | (0.35) | **** | (3.28) | (4.68) | (0.29) | **** | (3.07) | (2.62) | (2.34) | |||||
| Operating | (27.31) | (0.73) | **** | (14.48) | (25.99) | (0.54) | **** | (13.63) | (11.43) | (12.66) | |||||
| Operating netback | 36.14 | 0.67 | **** | 18.13 | 36.74 | 0.64 | **** | 18.86 | 24.92 | 26.11 | |||||
| General and administration | | **** | | (0.77) | | **** | | (1.31) | (5.65) | (5.22) | |||||
| Fund flows from operations (/boe) | **** | **** | | 17.36 | **** | **** | | 17.55 | 19.27 | 20.89 | |||||
| United States | |||||||||||||||
| Sales | 80.80 | 2.13 | **** | 65.34 | 86.78 | 1.82 | **** | 70.03 | 71.65 | 71.97 | |||||
| Royalties | (23.72) | (0.91) | **** | (19.56) | (24.96) | (0.63) | **** | (20.29) | (20.27) | (19.75) | |||||
| Transportation | (0.46) | — | **** | (0.35) | (0.96) | — | **** | (0.75) | (0.87) | (0.36) | |||||
| Operating | (19.51) | (0.46) | **** | (15.70) | (17.04) | (0.31) | **** | (13.69) | (12.13) | (11.15) | |||||
| Operating netback | 37.11 | 0.76 | **** | 29.73 | 43.82 | 0.88 | **** | 35.30 | 38.38 | 40.71 | |||||
| General and administration | | **** | | (9.62) | | **** | | (6.87) | (5.26) | (4.63) | |||||
| Fund flows from operations (/boe) | | **** | | 20.11 | | **** | | 28.43 | 33.12 | 36.08 | |||||
| France | |||||||||||||||
| Sales | 109.14 | — | **** | 109.14 | 110.89 | — | **** | 110.89 | 116.92 | 109.47 | |||||
| Royalties | (14.38) | — | **** | (14.38) | (14.68) | — | **** | (14.68) | (15.93) | (14.34) | |||||
| Transportation | (8.34) | — | **** | (8.34) | (8.15) | — | **** | (8.15) | (12.80) | (9.39) | |||||
| Operating | (27.54) | — | **** | (27.54) | (24.48) | — | **** | (24.48) | (37.93) | (30.71) | |||||
| Operating netback | 58.88 | — | **** | 58.88 | 63.58 | — | **** | 63.58 | 50.26 | 55.03 | |||||
| General and administration | | **** | | (6.88) | | **** | | (6.43) | (13.91) | (7.91) | |||||
| Current income taxes | | **** | | 2.77 | | **** | | (4.31) | (13.12) | (5.49) | |||||
| Fund flows from operations (/boe) | | **** | | 54.77 | | **** | | 52.84 | 23.23 | 41.63 | |||||
| Netherlands | |||||||||||||||
| Sales | 92.36 | 17.61 | **** | 105.54 | 92.06 | 13.96 | **** | 83.91 | 102.80 | 107.38 | |||||
| Royalties | — | (0.01) | **** | (0.07) | — | (0.02) | **** | (0.15) | (1.38) | (0.90) | |||||
| Transportation | — | | — | | — | | — | | — | | — | | — | | — |
| Operating | (29.15) | (5.30) | **** | (31.77) | (30.13) | (4.11) | **** | (24.77) | (18.19) | (22.50) | |||||
| Operating netback | 63.21 | 12.30 | **** | 73.70 | 61.93 | 9.83 | **** | 58.99 | 83.23 | 83.98 | |||||
| General and administration | | **** | | (6.88) | | **** | | (5.02) | (1.15) | (4.78) | |||||
| Current income taxes | | **** | | (23.26) | | **** | | (19.63) | (37.33) | (27.78) | |||||
| Fund flows from operations (/boe) | | **** | | 43.56 | | **** | | 34.34 | 44.75 | 51.42 | |||||
| Germany | |||||||||||||||
| Sales | 98.59 | 16.36 | **** | 98.28 | 103.86 | 13.13 | **** | 85.45 | 101.18 | 104.26 | |||||
| Royalties | (3.42) | (0.55) | **** | (3.32) | (2.90) | (0.56) | **** | (3.25) | (1.69) | (3.20) | |||||
| Transportation | (14.70) | (0.52) | **** | (6.50) | (17.48) | (0.48) | **** | (6.76) | (7.99) | (7.11) | |||||
| Operating | (28.38) | (4.81) | **** | (28.74) | (36.58) | (4.68) | **** | (30.32) | (18.87) | (23.39) | |||||
| Operating netback | 52.09 | 10.48 | **** | 59.72 | 46.90 | 7.41 | **** | 45.12 | 72.63 | 70.56 | |||||
| General and administration | | **** | | (9.33) | | **** | | (7.45) | (9.16) | (6.99) | |||||
| Current income taxes | | | | | (21.38) | | | | | | (10.59) | | 5.78 | | (15.22) |
| Fund flows from operations (/boe) | | **** | | 29.01 | | **** | | 27.08 | 69.25 | 48.35 | |||||
| Ireland | |||||||||||||||
| Sales | — | 19.20 | **** | 115.22 | — | 14.64 | **** | 87.84 | 102.28 | 97.24 | |||||
| Transportation | — | (0.13) | **** | (0.76) | — | (0.40) | **** | (2.38) | (1.08) | (2.28) | |||||
| Operating | — | (2.65) | **** | (15.90) | — | (2.55) | **** | (15.29) | (14.20) | (12.69) | |||||
| Operating netback | — | 16.42 | **** | 98.56 | — | 11.69 | **** | 70.17 | 87.00 | 82.27 | |||||
| General and administration | | **** | | (2.00) | | **** | | (2.27) | (9.25) | (6.13) | |||||
| Current income taxes | | | | | (0.54) | | | | | | (0.40) | | (0.33) | | (0.23) |
| Fund flows from operations (/boe) | | | | | 96.02 | | | | | | 67.50 | | 77.42 | | 75.91 |
All values are in US Dollars.
Vermilion Energy Inc. ■ Page 42 ■ 2024 Management’s Discussion and Analysis
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | Q4 2024 | | | | | | 2024 | | | Q4 2023 | 2023 | ||
| | **** | Liquids | **** | Natural Gas | **** | Total | **** | Liquids | **** | Natural Gas | **** | Total | **** | Total | **** | Total |
| | | $/bbl | | $/mcf | | $/boe | | $/bbl | | $/mcf | | $/boe | | $/boe | | $/boe |
| Australia | | | | | | | ||||||||||
| Sales | | 121.24 | — | | 121.24 | 128.92 | — | | 128.92 | | 143.69 | | 143.69 | |||
| Operating | | (47.78) | — | | (47.78) | (56.65) | — | | (56.65) | | (42.17) | | (206.80) | |||
| PRRT ^(1)^ | | 14.19 | — | | 14.19 | (8.25) | — | | (8.25) | | 82.39 | | 82.39 | |||
| Operating netback | | 87.65 | — | | 87.65 | 64.02 | — | | 64.02 | | 183.91 | | 19.28 | |||
| General and administration | | | **** | | | (10.01) | | **** | | | (5.70) | | (9.91) | | (32.32) | |
| Current income taxes | | | **** | | | (3.05) | | **** | | | (2.13) | | 7.60 | | 0.05 | |
| Fund flows from operations ($/boe) | | | **** | | | 74.59 | | **** | | | 56.19 | | 181.60 | | (12.99) | |
| | | | | | | | | | | | | | | | | |
| Central and Eastern Europe | | | | | | | | | | | | | | | | |
| Sales | | 56.60 | 17.15 | | 102.86 | 58.18 | 16.36 | | 98.08 | | 109.42 | | 141.77 | |||
| Royalties | | — | (3.47) | | (20.84) | (4.72) | (2.90) | | (17.41) | | (46.38) | | (74.41) | |||
| Operating | | — | (0.99) | | (5.96) | — | (1.18) | | (7.09) | | (66.06) | | (68.19) | |||
| Operating netback | | 56.60 | 12.69 | | 76.06 | 53.46 | 12.28 | | 73.58 | | (3.02) | | (0.83) | |||
| General and administration | | | **** | | | (9.39) | | **** | | | (20.17) | | (209.30) | | (310.94) | |
| Current income taxes | | | **** | | | 0.04 | | **** | | | 0.02 | | (1.81) | | (0.61) | |
| Fund flows from operations ($/boe) | | | **** | | | 66.71 | | **** | | | 53.43 | | (214.13) | | (312.38) | |
| | | | | | | | | | | | | | | | | |
| Total Company | | | | | | |||||||||||
| Sales | | 87.01 | 8.47 | | 66.54 | 90.92 | 6.72 | | 63.58 | | 68.64 | | 67.10 | |||
| Realized hedging gain (loss) | | 4.11 | 0.59 | | 3.80 | 1.79 | 3.16 | | 11.08 | | 10.33 | | 7.77 | |||
| Royalties | | (9.55) | (0.33) | | (5.28) | (11.18) | (0.18) | | (5.71) | | (5.93) | | (6.36) | |||
| Transportation | | (5.24) | (0.26) | | (3.16) | (5.01) | (0.27) | | (3.17) | | (2.95) | | (2.95) | |||
| Operating | | (24.16) | (2.33) | | (18.41) | (26.17) | (1.91) | | (18.22) | | (15.35) | | (17.03) | |||
| PRRT^(2)^ | | 0.98 | — | | 0.43 | (0.82) | — | | (0.38) | | 2.74 | | 0.69 | |||
| Operating netback | | 53.15 | 6.14 | | 43.92 | 49.53 | 7.52 | | 47.18 | | 57.48 | | 49.22 | |||
| General and administration | | | **** | | | (3.62) | | **** | | | (3.19) | | (2.60) | | (2.68) | |
| Interest expense | | | **** | | | (3.16) | | **** | | | (2.71) | | (3.01) | | (2.83) | |
| Equity based compensation | | | **** | | | — | | **** | | | (0.46) | | — | | — | |
| Realized foreign exchange gain | | | **** | | | 0.32 | | **** | | | 0.25 | | (0.73) | | (0.15) | |
| Other income | | | **** | | | (0.68) | | **** | | | (0.23) | | 0.26 | | (0.01) | |
| Corporate income taxes | | | | | | (2.11) | | | | | | (2.13) | | (2.57) | | (5.65) |
| Fund flows from operations ($/boe) | | | **** | | | 34.67 | | **** | | | 38.71 | | 48.83 | | 37.90 |
^(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 43 ■ 2024 Management’s Discussion and Analysis
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 December 31, 2024:
| | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | | | | | Weighted |
| | | Weighted | Weighted | Weighted | Weighted | Daily | Average | ||||||||||||||||
| | | | | | Daily | | Average | | Daily | | Average | | Daily | | Average | | Daily | | Average | | Bought | | Bought |
| | | | | | Bought Put | | Bought Put | | Sold Call | | Sold Call | | Sold Put | | Sold Put | | Sold Swap | | Sold Swap | | Swap | | Swap |
| | | Unit | | Currency | Volume | | Price | | Volume | | Price | | Volume | | Price | | Volume | | Price | | Volume | | Price |
| Dated Brent | |||||||||||||||||||||||
| Q1 2025 | bbl | — | — | — | — | — | — | 4,000 | 73.25 | — | — | ||||||||||||
| WTI | |||||||||||||||||||||||
| Q1 2025 | bbl | — | — | — | — | — | — | 8,000 | 73.11 | — | — | ||||||||||||
| Q2 2025 | bbl | — | — | — | — | — | — | 3,000 | 68.72 | — | — | ||||||||||||
| AECO | |||||||||||||||||||||||
| Q1 2025 | mcf | CAD | 4,739 | 3.17 | 4,739 | 4.22 | — | — | 23,695 | 3.89 | — | — | |||||||||||
| Q2 2025 | mcf | CAD | 4,739 | 3.17 | 4,739 | 4.22 | — | — | 23,695 | 3.89 | — | — | |||||||||||
| Q3 2025 | mcf | CAD | 4,739 | 3.17 | 4,739 | 4.22 | — | — | 23,695 | 3.89 | — | — | |||||||||||
| Q4 2025 | mcf | CAD | 4,739 | 3.17 | 4,739 | 4.22 | — | — | 39,407 | 3.55 | — | — | |||||||||||
| Q1 2026 | mcf | CAD | 4,739 | 3.17 | 4,739 | 4.22 | — | — | 47,391 | 3.46 | — | — | |||||||||||
| Q2 2026 | mcf | CAD | 4,739 | 3.17 | 4,739 | 4.22 | — | — | 47,391 | 3.46 | — | — | |||||||||||
| Q3 2026 | mcf | CAD | 4,739 | 3.17 | 4,739 | 4.22 | — | — | 47,391 | 3.46 | — | — | |||||||||||
| Q4 2026 | mcf | CAD | 4,739 | 3.17 | 4,739 | 4.22 | — | — | 47,391 | 3.46 | — | — | |||||||||||
| Q1 2027 | | mcf | | CAD | — | | — | | — | | — | | — | | — | | 23,695 | | 3.03 | | — | | — |
| Q2 2027 | | mcf | | CAD | — | | — | | — | | — | | — | | — | | 23,695 | | 3.03 | | — | | — |
| Q3 2027 | | mcf | | CAD | — | | — | | — | | — | | — | | — | | 23,695 | | 3.03 | | — | | — |
| Q4 2027 | | mcf | | CAD | — | | — | | — | | — | | — | | — | | 23,695 | | 3.03 | | — | | — |
| AECO Basis (AECO less NYMEX Henry Hub) | |||||||||||||||||||||||
| Q1 2025 | mcf | — | — | — | — | — | — | 10,000 | (1.15) | — | — | ||||||||||||
| Q2 2025 | mcf | — | — | — | — | — | — | 10,000 | (1.15) | — | — | ||||||||||||
| Q3 2025 | mcf | — | — | — | — | — | — | 10,000 | (1.15) | — | — | ||||||||||||
| Q4 2025 | mcf | — | — | — | — | — | — | 10,000 | (1.15) | — | — | ||||||||||||
| NYMEX Henry Hub | |||||||||||||||||||||||
| Q1 2025 | mcf | 24,000 | 3.50 | 24,000 | 4.49 | — | — | 10,000 | 3.20 | — | — | ||||||||||||
| Q2 2025 | mcf | 24,000 | 3.50 | 24,000 | 4.49 | — | — | 10,000 | 3.20 | — | — | ||||||||||||
| Q3 2025 | mcf | 24,000 | 3.50 | 24,000 | 4.49 | — | — | 10,000 | 3.20 | — | — | ||||||||||||
| Q4 2025 | mcf | 24,000 | 3.50 | 24,000 | 4.49 | — | — | 10,000 | 3.20 | — | — | ||||||||||||
| Q1 2026 | | mcf | | 24,000 | | 3.50 | | 24,000 | | 4.49 | | — | | — | | — | | — | | — | | — | |
| Q2 2026 | | mcf | | 24,000 | | 3.50 | | 24,000 | | 4.49 | | — | | — | | — | | — | | — | | — | |
| Q3 2026 | | mcf | | 24,000 | | 3.50 | | 24,000 | | 4.49 | | — | | — | | — | | — | | — | | — | |
| Q4 2026 | | mcf | | 24,000 | | 3.50 | | 24,000 | | 4.49 | | — | | — | | — | | — | | — | | — | |
| Q1 2027 | | mcf | | CAD | — | | — | | — | | — | | — | | — | | 24,000 | | 3.76 | | — | | — |
| Q2 2027 | | mcf | | CAD | — | | — | | — | | — | | — | | — | | 24,000 | | 3.76 | | — | | — |
| Q3 2027 | | mcf | | CAD | — | | — | | — | | — | | — | | — | | 24,000 | | 3.76 | | — | | — |
| Q4 2027 | | mcf | | CAD | — | | — | | — | | — | | — | | — | | 24,000 | | 3.76 | | — | | — |
All values are in US Dollars.
Vermilion Energy Inc. ■ Page 44 ■ 2024 Management’s Discussion and Analysis
| | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | | | | | Weighted |
| | **** | **** | **** | **** | Weighted | **** | Daily | **** | Weighted | Weighted | Weighted | Daily | Average | ||||||||||
| | | | | | Daily | | Average | | Sold | | Average | | Daily | | Average | | Daily | | Average | | Bought | | Bought |
| | | | | | Bought Put | | Bought Put | | Call | | Sold Call | | Sold Put | | Sold Put | | Sold Swap | | Sold Swap | | Swap | | Swap |
| | | Unit | | Currency | Volume | | Price | | Volume | | Price | | Volume | | Price | | Volume | | Price | | Volume | | Price |
| TTF | | | | ||||||||||||||||||||
| Q1 2025 | mcf | 19,654 | 10.21 | 19,654 | 14.93 | 13,512 | 4.69 | 39,308 | 14.52 | — | — | ||||||||||||
| Q2 2025 | mcf | 22,111 | 8.31 | 22,111 | 12.88 | 22,111 | 4.01 | 24,567 | 12.99 | — | — | ||||||||||||
| Q3 2025 | mcf | | 22,111 | | 8.31 | | 22,111 | | 12.88 | | 22,111 | | 4.01 | | 24,567 | | 12.99 | | — | | — | ||
| Q4 2025 | mcf | | 31,938 | | 8.05 | | 31,938 | | 12.50 | | 31,938 | | 3.67 | | 20,882 | | 11.87 | | — | | — | ||
| Q1 2026 | mcf | | 24,567 | | 7.39 | | 24,567 | | 11.66 | | 24,567 | | 3.02 | | 20,882 | | 11.87 | | — | | — | ||
| Q2 2026 | mcf | | 24,567 | | 7.39 | | 24,567 | | 11.66 | | 24,567 | | 3.02 | | 18,426 | | 9.60 | | — | | — | ||
| Q3 2026 | mcf | | 24,567 | | 7.39 | | 24,567 | | 11.66 | | 24,567 | | 3.02 | | 18,426 | | 9.60 | | — | | — | ||
| Q4 2026 | | mcf | | 28,253 | | 7.43 | | 28,253 | | 11.66 | | 28,253 | | 2.93 | | 4,913 | | 8.54 | | — | | — | |
| Q1 2027 | | mcf | | 28,253 | | 7.43 | | 28,253 | | 11.66 | | 28,253 | | 2.93 | | 4,913 | | 8.54 | | — | | — | |
| THE | | | | | | | | | | | | | | | | | | | | | | | |
| Q1 2025 | | mcf | | — | | — | | — | | — | | — | | — | | 2,457 | | 14.95 | | — | | — | |
| Q2 2025 | | mcf | | — | | — | | — | | — | | — | | — | | 2,457 | | 14.95 | | — | | — | |
| Q3 2025 | | mcf | | — | | — | | — | | — | | — | | — | | 2,457 | | 14.95 | | — | | — |
All values are in Euros.
| | | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| 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 |
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | Weighted | | Monthly Sold | Weighted | | Monthly Sold | | Weighted | |||
| Foreign | | | | | Monthly Bought | Average Bought | | Call | Average Sold | | Swap | | Average Sold | |||
| Exchange | | Period | Put Amount | Put Price | Amount | Call Price | | Amount | Swap Price | |||||||
| Collar | | Sell , Buy CAD | Jan 2025 - Jun 2025 | | 5,000,000 | 1.3740 | | 5,000,000 | 1.4551 | | — | | | — | ||
| Collar | Sell , Buy CAD | Jan 2025 - Dec 2025 | 12,500,000 | 1.3637 | 12,500,000 | 1.4133 | | — | | — |
All values are in US Dollars.
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:
| | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | Weighted | | | | Weighted | | | | Weighted | | | | Weighted |
| | | | | | | | | Daily | | Average | | | | Average | | | | Average | | Daily Sold | | Average |
| | | | | | | Option Expiration | | Bought Put | | Bought Put | | Daily Sold | | Sold Call | | Daily Sold | | Sold Put | | Swap | | Sold Swap |
| Period if Option Exercised | **** | Unit | **** | Currency | **** | Date | **** | Volume | **** | Price | **** | Call Volume | **** | Price | **** | Put Volume | **** | Price | **** | Volume | **** | Price |
| TTF | | | | | | | | | | | | | | | | | | | | | | |
| Apr 2025 - Mar 2027 | | mcf | | EUR | | 31-Mar-2025 | | — | | — | | — | | — | | — | | — | | 2,457 | | 10.99 |
Supplemental Table 3: Capital Expenditures and Acquisitions
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| By classification (M) | Q4 2024 | **** | Q4 2023 | **** | 2024 | **** | 2023 |
| Drilling and development | 176,505 | 132,308 | **** | 586,962 | 569,110 | ||
| Exploration and evaluation | 24,154 | 10,579 | **** | 36,018 | 21,081 | ||
| Capital expenditures | 200,659 | 142,887 | **** | 622,980 | 590,191 | ||
| | | | | | | | |
| | | | | | | | |
| Acquisitions (M) | Q4 2024 | **** | Q4 2023 | **** | 2024 | **** | 2023 |
| Acquisitions, net of cash acquired | 5,257 | 2,669 | **** | 12,728 | 142,281 | ||
| Acquisition of securities | — | | 17,448 | | 9,373 | | 21,603 |
| Acquired working capital | — | | 5,607 | | — | | 109,134 |
| Acquisitions | 5,257 | 25,724 | **** | 22,101 | 273,018 |
All values are in US Dollars.
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| Dispositions (M) | Q4 2024 | **** | Q4 2023 | **** | 2024 | **** | 2023 |
| Canada | — | — | — | 182,152 | |||
| United States | — | 14,855 | — | 14,855 | |||
| Dispositions | — | 14,855 | — | 197,007 |
All values are in US Dollars.
Vermilion Energy Inc. ■ Page 45 ■ 2024 Management’s Discussion and Analysis
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| By category (M) | Q4 2024 | **** | Q4 2023 | **** | 2024 | **** | 2023 |
| Drilling, completion, new well equip and tie-in, workovers and recompletions | 134,813 | 68,285 | **** | 392,986 | 373,304 | ||
| Production equipment and facilities | 56,747 | 76,937 | **** | 206,997 | 198,331 | ||
| Seismic, studies, land and other | 9,099 | (2,335) | **** | 22,997 | 18,556 | ||
| Capital expenditures | 200,659 | 142,887 | **** | 622,980 | 590,191 | ||
| Acquisitions | 5,257 | 25,724 | **** | 22,101 | 273,018 | ||
| Total capital expenditures and acquisitions | 205,916 | 168,611 | **** | 645,081 | 863,209 |
All values are in US Dollars.
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| Capital expenditures by country (M) | Q4 2024 | **** | Q4 2023 | **** | 2024 | **** | 2023 |
| Canada | 114,604 | 53,791 | **** | 374,892 | 288,223 | ||
| United States | 19,560 | 4,913 | **** | 35,472 | 91,977 | ||
| France | 11,901 | 11,217 | **** | 45,671 | 48,297 | ||
| Netherlands | 12,037 | 10,787 | **** | 25,905 | 44,147 | ||
| Germany | 33,191 | 33,046 | **** | 94,588 | 59,711 | ||
| Ireland | 561 | 11,850 | **** | 4,355 | 20,283 | ||
| Australia | 5,643 | 9,331 | **** | 29,284 | 26,005 | ||
| Central and Eastern Europe | 3,162 | 7,952 | **** | 12,813 | 11,548 | ||
| Capital expenditures | 200,659 | 142,887 | **** | 622,980 | 590,191 |
All values are in US Dollars.
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| Acquisitions by country (M) | Q4 2024 | **** | Q4 2023 | **** | 2024 | **** | 2023 |
| Canada | 5,257 | 20,117 | **** | 22,101 | 71,185 | ||
| United States | — | — | **** | — | 3,808 | ||
| Ireland | — | | 5,607 | | — | | 198,025 |
| Acquisitions | 5,257 | 25,724 | **** | 22,101 | 273,018 |
All values are in US Dollars.
Vermilion Energy Inc. ■ Page 46 ■ 2024 Management’s Discussion and Analysis
Supplemental Table 4: Production
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | Q4/24 | **** | Q3/24 | **** | Q2/24 | **** | Q1/24 | **** | Q4/23 | **** | Q3/23 | **** | Q2/23 | **** | Q1/23 | **** | Q4/22 | **** | Q3/22 | **** | Q2/22 | **** | Q1/22 |
| Canada | ||||||||||||||||||||||||
| Light and medium crude oil (bbls/d) | **** | 11,614 | 12,526 | 12,468 | 11,649 | **** | 11,614 | 12,054 | 12,901 | 16,674 | 17,448 | 16,835 | 17,042 | 15,980 | ||||||||||
| Condensate ^(1)^ (bbls/d) | **** | 3,728 | 3,598 | 3,853 | 4,075 | **** | 4,034 | 4,410 | 3,506 | 4,719 | 4,525 | 4,204 | 4,873 | 4,892 | ||||||||||
| Other NGLs ^(1)^ (bbls/d) | **** | 5,764 | 6,483 | 6,208 | 5,968 | **** | 6,281 | 6,219 | 5,513 | 6,875 | 6,279 | 6,870 | 7,155 | 7,286 | ||||||||||
| NGLs (bbls/d) | **** | 9,492 | 10,081 | 10,061 | 10,043 | **** | 10,315 | 10,629 | 9,019 | 11,594 | 10,804 | 11,074 | 12,028 | 12,178 | ||||||||||
| Conventional natural gas (mmcf/d) | **** | 161.27 | 156.99 | 158.48 | 151.84 | **** | 160.16 | 163.94 | 159.26 | 160.34 | 146.81 | 145.04 | 143.94 | 140.55 | ||||||||||
| Total (boe/d) | **** | 47,982 | 48,772 | 48,943 | 46,997 | **** | 48,623 | 50,007 | 48,464 | 54,991 | 52,720 | 52,080 | 53,060 | 51,584 | ||||||||||
| United States | | | | | | | | | | | | | ||||||||||||
| Light and medium crude oil (bbls/d) | **** | 2,449 | 2,909 | 3,817 | 3,483 | **** | 3,187 | 4,404 | 3,349 | 2,824 | 3,282 | 2,824 | 2,846 | 2,675 | ||||||||||
| Condensate ^(1)^ (bbls/d) | **** | 34 | 12 | 27 | 29 | **** | 27 | 15 | 22 | 20 | 36 | 35 | 40 | 24 | ||||||||||
| Other NGLs ^(1)^ (bbls/d) | **** | 848 | 1,064 | 988 | 1,078 | **** | 1,131 | 1,124 | 1,025 | 1,020 | 1,218 | 1,031 | 958 | 1,056 | ||||||||||
| NGLs (bbls/d) | **** | 882 | 1,076 | 1,015 | 1,107 | **** | 1,158 | 1,139 | 1,047 | 1,040 | 1,254 | 1,066 | 998 | 1,080 | ||||||||||
| Conventional natural gas (mmcf/d) | **** | 5.88 | 7.08 | 7.27 | 8.23 | **** | 7.49 | 7.25 | 7.23 | 7.14 | 7.45 | 7.03 | 6.74 | 7.56 | ||||||||||
| Total (boe/d) | **** | 4,311 | 5,164 | 6,044 | 5,962 | **** | 5,593 | 6,751 | 5,601 | 5,055 | 5,779 | 5,062 | 4,967 | 5,014 | ||||||||||
| France | | | | | | | | | | | | | ||||||||||||
| Light and medium crude oil (bbls/d) | **** | 7,083 | 7,115 | 7,246 | 7,308 | **** | 7,395 | 7,578 | 7,788 | 7,578 | 7,247 | 6,818 | 8,126 | 8,389 | ||||||||||
| Total (boe/d) | **** | 7,083 | 7,115 | 7,246 | 7,308 | **** | 7,395 | 7,578 | 7,788 | 7,578 | 7,247 | 6,818 | 8,126 | 8,389 | ||||||||||
| Netherlands | ||||||||||||||||||||||||
| Light and medium crude oil (bbls/d) | **** | — | — | — | — | **** | — | — | — | — | — | — | 1 | 1 | ||||||||||
| Condensate ^(1)^ (bbls/d) | **** | 44 | 39 | 51 | 165 | **** | 119 | 39 | 61 | 66 | 49 | 74 | 60 | 83 | ||||||||||
| NGLs (bbls/d) | **** | 44 | 39 | 51 | 165 | **** | 119 | 39 | 61 | 66 | 49 | 74 | 60 | 83 | ||||||||||
| Conventional natural gas (mmcf/d) | **** | 24.20 | 25.06 | 26.84 | 31.02 | **** | 32.06 | 24.32 | 27.28 | 29.07 | 27.41 | 29.15 | 35.22 | 39.03 | ||||||||||
| Total (boe/d) | **** | 4,078 | 4,216 | 4,524 | 5,336 | **** | 5,462 | 4,091 | 4,607 | 4,910 | 4,617 | 4,933 | 5,930 | 6,589 | ||||||||||
| Germany | | | | | | | | | | | | | ||||||||||||
| Light and medium crude oil (bbls/d) | **** | 1,596 | 1,598 | 1,698 | 1,722 | **** | 1,775 | 1,713 | 1,715 | 1,410 | 1,481 | 1,764 | 1,331 | 1,158 | ||||||||||
| Conventional natural gas (mmcf/d) | **** | 21.71 | 21.41 | 18.41 | 22.87 | **** | 19.62 | 20.29 | 22.05 | 25.85 | 25.86 | 26.54 | 25.36 | 26.95 | ||||||||||
| Total (boe/d) | **** | 5,215 | 5,167 | 4,766 | 5,533 | **** | 5,046 | 5,095 | 5,391 | 5,717 | 5,791 | 6,187 | 5,558 | 5,650 | ||||||||||
| Ireland | | | | | | | | | | | | | ||||||||||||
| Conventional natural gas (mmcf/d) | **** | 55.32 | 59.06 | 57.70 | 60.34 | **** | 64.04 | 47.96 | 67.51 | 24.58 | 26.04 | 25.74 | 27.93 | 30.26 | ||||||||||
| Total (boe/d) | **** | 9,220 | 9,844 | 9,616 | 10,057 | **** | 10,673 | 7,993 | 11,251 | 4,096 | 4,340 | 4,290 | 4,655 | 5,043 | ||||||||||
| Australia | | | | | | | | | | | | | ||||||||||||
| Light and medium crude oil (bbls/d) | **** | 3,778 | 2,040 | 3,713 | 4,264 | **** | 4,715 | 1,204 | — | — | 4,847 | 4,763 | 2,465 | 3,888 | ||||||||||
| Total (boe/d) | **** | 3,778 | 2,040 | 3,713 | 4,264 | **** | 4,715 | 1,204 | — | — | 4,847 | 4,763 | 2,465 | 3,888 | ||||||||||
| Central and Eastern Europe | ||||||||||||||||||||||||
| Conventional natural gas (mmcf/d) | **** | 11.21 | 11.13 | 0.69 | 0.29 | **** | 0.54 | 0.05 | 0.30 | 0.64 | 0.67 | 0.63 | 0.64 | 0.34 | ||||||||||
| Total (boe/d) | **** | 1,869 | 1,855 | 122 | 48 | **** | 90 | 8 | 50 | 107 | 111 | 104 | 106 | 57 | ||||||||||
| Consolidated | | | | | | | | | | | | | ||||||||||||
| Light and medium crude oil (bbls/d) | **** | 26,521 | 26,188 | 28,948 | 28,426 | **** | 28,685 | 26,952 | 25,753 | 28,485 | 34,305 | 33,003 | 31,811 | 32,091 | ||||||||||
| Condensate ^(1)^ (bbls/d) | **** | 3,806 | 3,649 | 3,931 | 4,269 | **** | 4,180 | 4,463 | 3,589 | 4,805 | 4,610 | 4,312 | 4,973 | 4,999 | ||||||||||
| Other NGLs ^(1)^ (bbls/d) | **** | 6,612 | 7,547 | 7,196 | 7,046 | **** | 7,412 | 7,344 | 6,538 | 7,896 | 7,497 | 7,901 | 8,113 | 8,342 | ||||||||||
| NGLs (bbls/d) | **** | 10,418 | 11,196 | 11,127 | 11,315 | **** | 11,592 | 11,807 | 10,127 | 12,701 | 12,107 | 12,213 | 13,086 | 13,341 | ||||||||||
| Conventional natural gas (mmcf/d) | **** | 279.59 | 280.73 | 269.39 | 274.59 | **** | 283.91 | 263.80 | 283.63 | 247.61 | 234.23 | 234.12 | 239.83 | 244.69 | ||||||||||
| Total (boe/d) | **** | 83,536 | 84,173 | 84,974 | 85,505 | **** | 87,597 | 82,727 | 83,152 | 82,455 | 85,450 | 84,237 | 84,868 | 86,213 |
Vermilion Energy Inc. ■ Page 47 ■ 2024 Management’s Discussion and Analysis
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | 2024 | **** | 2023 | **** | 2022 | **** | 2021 | **** | 2020 | **** | 2019 |
| Canada | | | | | ||||||||
| Light and medium crude oil (bbls/d) | 12,065 | | 13,293 | | 16,830 | 16,954 | 21,106 | 23,971 | ||||
| Condensate ^(1)^ (bbls/d) | 3,813 | | 4,166 | | 4,621 | 4,831 | 4,886 | 4,295 | ||||
| Other NGLs ^(1)^ (bbls/d) | 6,106 | | 6,220 | | 6,895 | 7,179 | 7,719 | 6,988 | ||||
| NGLs (bbls/d) | 9,919 | | 10,386 | | 11,516 | 12,010 | 12,605 | 11,283 | ||||
| Conventional natural gas (mmcf/d) | 157.16 | | 160.94 | | 144.10 | 138.03 | 151.38 | 148.35 | ||||
| Total (boe/d) | 48,175 | | 50,503 | | 52,364 | 51,968 | 58,942 | 59,979 | ||||
| United States | **** | | | | ||||||||
| Light and medium crude oil (bbls/d) | 3,162 | | 3,445 | | 2,908 | 2,597 | 3,046 | 2,514 | ||||
| Condensate ^(1)^ (bbls/d) | 25 | | 21 | | 34 | 8 | 5 | 18 | ||||
| Other NGLs ^(1)^ (bbls/d) | 994 | | 1,076 | | 1,066 | 1,146 | 1,218 | 996 | ||||
| NGLs (bbls/d) | 1,019 | | 1,097 | | 1,100 | 1,154 | 1,223 | 1,014 | ||||
| Conventional natural gas (mmcf/d) | 7.11 | | 7.28 | | 7.20 | 6.84 | 7.47 | 6.89 | ||||
| Total (boe/d) | 5,367 | | 5,754 | | 5,207 | 4,890 | 5,514 | 4,675 | ||||
| France | **** | | | | ||||||||
| Light and medium crude oil (bbls/d) | 7,188 | | 7,584 | | 7,639 | 8,799 | 8,903 | 10,435 | ||||
| Conventional natural gas (mmcf/d) | — | | — | | — | — | — | 0.19 | ||||
| Total (boe/d) | 7,188 | | 7,584 | | 7,639 | 8,799 | 8,903 | 10,467 | ||||
| Netherlands | **** | | | | ||||||||
| Light and medium crude oil (bbls/d) | — | | — | | — | 3 | 1 | 3 | ||||
| Condensate ^(1)^ (bbls/d) | 75 | | 71 | | 66 | 97 | 88 | 88 | ||||
| NGLs (bbls/d) | 75 | | 71 | | 66 | 97 | 88 | 88 | ||||
| Conventional natural gas (mmcf/d) | 26.77 | | 28.18 | | 32.66 | 43.40 | 46.16 | 49.10 | ||||
| Total (boe/d) | 4,536 | | 4,768 | | 5,510 | 7,334 | 7,782 | 8,274 | ||||
| Germany | | | | | | | | | ||||
| Light and medium crude oil (bbls/d) | 1,653 | | 1,654 | | 1,435 | 1,044 | 968 | 917 | ||||
| Conventional natural gas (mmcf/d) | 21.10 | | 21.93 | | 26.18 | 15.81 | 12.65 | 15.31 | ||||
| Total (boe/d) | 5,170 | | 5,310 | | 5,798 | 3,679 | 3,076 | 3,468 | ||||
| Ireland | **** | | | | ||||||||
| Conventional natural gas (mmcf/d) | 58.10 | | 51.12 | | 27.48 | 29.25 | 37.44 | 46.57 | ||||
| Total (boe/d) | 9,683 | | 8,520 | | 4,579 | 4,875 | 6,240 | 7,762 | ||||
| Australia | | | | | | | | | ||||
| Light and medium crude oil (bbls/d) | 3,446 | | 1,492 | | 3,995 | 3,810 | 4,416 | 5,662 | ||||
| Total (boe/d) | 3,446 | | 1,492 | | 3,995 | 3,810 | 4,416 | 5,662 | ||||
| Central and Eastern Europe | **** | | | | ||||||||
| Conventional natural gas (mmcf/d) | 5.86 | | 0.38 | | 0.57 | 0.31 | 1.90 | 0.42 | ||||
| Total (boe/d) | 978 | | 63 | | 95 | 51 | 317 | 70 | ||||
| Consolidated | | | | | | | | | ||||
| Light and medium crude oil (bbls/d) | 27,514 | | 27,469 | | 32,809 | 33,208 | 38,441 | 43,502 | ||||
| Condensate ^(1)^ (bbls/d) | 3,913 | | 4,258 | | 4,721 | 4,936 | 4,980 | 4,400 | ||||
| Other NGLs ^(1)^ (bbls/d) | 7,100 | | 7,296 | | 7,961 | 8,325 | 8,937 | 7,984 | ||||
| NGLs (bbls/d) | 11,013 | | 11,554 | | 12,682 | 13,261 | 13,917 | 12,384 | ||||
| Conventional natural gas (mmcf/d) | 276.10 | | 269.83 | | 238.18 | 233.64 | 256.99 | 266.82 | ||||
| Total (boe/d) | 84,543 | | 83,994 | | 85,187 | 85,408 | 95,190 | 100,357 |
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 48 ■ 2024 Management’s Discussion and Analysis
Supplemental Table 5: Segmented Financial Results
| | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | Three Months Ended December 31, 2024 | ||||||||||||||||||
| ($M) | | Canada | **** | USA | **** | France | **** | Netherlands | **** | Germany | **** | Ireland | **** | Australia | **** | CEE | **** | Corporate | **** | Total |
| Drilling and development | 114,604 | 19,560 | 11,901 | 12,037 | 11,336 | 561 | 5,643 | 863 | — | 176,505 | ||||||||||
| Exploration and evaluation | — | — | — | — | 21,855 | — | — | 2,299 | — | 24,154 | ||||||||||
| Crude oil and condensate sales | 130,878 | 22,494 | 73,692 | 377 | 13,646 | — | 27,573 | 3 | — | 268,663 | ||||||||||
| NGL sales | 15,605 | 2,264 | — | — | — | — | — | — | — | 17,869 | ||||||||||
| Natural gas sales | 29,347 | 1,155 | — | 39,222 | 32,675 | 97,735 | — | 17,686 | — | 217,820 | ||||||||||
| Sales of purchased commodities | — | — | — | — | — | — | — | — | 11,364 | 11,364 | ||||||||||
| Royalties | (17,402) | (7,759) | (9,712) | (27) | (1,565) | — | — | (3,584) | — | (40,049) | ||||||||||
| Revenue from external customers | 158,428 | 18,154 | 63,980 | 39,572 | 44,756 | 97,735 | 27,573 | 14,105 | 11,364 | 475,667 | ||||||||||
| Purchased commodities | — | — | — | — | — | — | — | — | (11,364) | (11,364) | ||||||||||
| Transportation | (14,485) | (140) | (5,630) | — | (3,065) | (641) | — | — | — | (23,961) | ||||||||||
| Operating | (63,898) | (6,227) | (18,597) | (11,921) | (13,544) | (13,488) | (10,866) | (1,025) | — | (139,566) | ||||||||||
| General and administration | (3,399) | (3,815) | (4,645) | (2,581) | (4,399) | (1,693) | (2,277) | (1,615) | (3,036) | (27,460) | ||||||||||
| Petroleum resource rent tax | — | — | — | — | — | — | 3,226 | — | — | 3,226 | ||||||||||
| Corporate income tax (expense) recovery | 23 | — | 1,870 | (8,726) | (10,075) | (460) | (693) | 7 | 2,057 | (15,997) | ||||||||||
| Interest expense | — | — | — | — | — | — | — | — | (23,965) | (23,965) | ||||||||||
| Realized gain on derivative instruments | | — | | — | | — | | — | | — | | — | | — | | — | | 28,795 | | 28,795 |
| Realized foreign exchange gain | — | — | — | — | — | — | — | — | 2,442 | 2,442 | ||||||||||
| Realized other expense | — | — | — | — | — | — | — | — | (5,119) | (5,119) | ||||||||||
| Fund flows from operations | **** | 76,669 | **** | 7,972 | **** | 36,978 | **** | 16,344 | **** | 13,673 | **** | 81,453 | **** | 16,963 | **** | 11,472 | **** | 1,174 | **** | 262,698 |
| | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | Year Ended December 31, 2024 | ||||||||||||||||||
| ($M) | | Canada | **** | USA | **** | France | **** | Netherlands | **** | Germany | **** | Ireland | **** | Australia | **** | CEE | **** | Corporate | **** | Total |
| Total assets | 2,075,273 | 269,686 | 630,120 | 190,023 | 469,295 | 921,331 | 283,880 | 95,908 | 1,180,060 | 6,115,576 | ||||||||||
| Drilling and development | 374,892 | 35,472 | 45,671 | 25,905 | 66,545 | 4,355 | 29,284 | 4,838 | — | 586,962 | ||||||||||
| Exploration and evaluation | — | — | — | — | 28,043 | — | — | 7,975 | — | 36,018 | ||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Crude oil and condensate sales | 556,375 | 118,198 | 314,232 | 2,515 | 48,275 | — | 182,847 | 37 | — | 1,222,479 | ||||||||||
| NGL sales | 64,934 | 14,622 | — | — | — | — | — | — | — | 79,556 | ||||||||||
| Natural gas sales | 89,981 | 4,743 | — | 136,795 | 101,450 | 311,325 | — | 35,078 | — | 679,372 | ||||||||||
| Sales of purchased commodities | — | — | — | — | — | — | — | — | 92,843 | 92,843 | ||||||||||
| Royalties | (84,337) | (39,849) | (41,585) | (244) | (5,703) | — | — | (6,232) | — | (177,950) | ||||||||||
| Revenue from external customers | 626,953 | 97,714 | 272,647 | 139,066 | 144,022 | 311,325 | 182,847 | 28,883 | 92,843 | 1,896,300 | ||||||||||
| Purchased commodities | — | — | — | — | — | — | — | — | (92,843) | (92,843) | ||||||||||
| Transportation | (54,091) | (1,465) | (23,106) | — | (11,853) | (8,418) | — | — | — | (98,933) | ||||||||||
| Operating | (240,333) | (26,887) | (69,376) | (41,127) | (53,129) | (54,177) | (80,347) | (2,537) | — | (567,913) | ||||||||||
| General and administration | (23,080) | (13,493) | (18,214) | (8,327) | (13,053) | (8,029) | (8,087) | (7,220) | — | (99,503) | ||||||||||
| Petroleum resource rent tax | — | — | — | — | — | — | (11,702) | — | — | (11,702) | ||||||||||
| Corporate income tax (expense) recovery | 19 | — | (12,225) | (32,592) | (18,558) | (1,403) | (3,022) | 7 | 1,332 | (66,442) | ||||||||||
| Interest expense | — | — | — | — | — | — | — | — | (84,606) | (84,606) | ||||||||||
| Equity based compensation | — | — | — | — | — | — | — | — | (14,361) | (14,361) | ||||||||||
| Realized gain on derivative instruments | | — | | — | | — | | — | | — | | — | | — | | — | | 345,318 | | 345,318 |
| Realized foreign exchange gain | | — | | — | | — | | — | | — | | — | | — | | — | | 7,735 | | 7,735 |
| Realized other expense | — | — | — | — | — | — | — | — | (7,267) | (7,267) | ||||||||||
| Fund flows from operations | **** | 309,468 | **** | 55,869 | **** | 149,726 | **** | 57,020 | **** | 47,429 | **** | 239,298 | **** | 79,689 | **** | 19,133 | **** | 248,151 | **** | 1,205,783 |
Vermilion Energy Inc. ■ Page 49 ■ 2024 Management’s Discussion and Analysis
Supplemental Table 6: Operational and Financial Data by Core Region
Production volumes ^(1)^
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | Q4/24 | **** | Q3/24 | **** | Q2/24 | **** | Q1/24 | **** | Q4/23 | **** | Q3/23 | **** | Q2/23 | **** | Q1/23 | **** | Q4/22 | **** | Q3/22 | **** | Q2/22 | **** | Q1/22 |
| North America | | | | | | | | | | | | | ||||||||||||
| Crude oil and condensate (bbls/d) | 17,825 | 19,045 | 20,165 | 19,236 | 18,862 | 20,883 | 19,778 | 24,237 | 25,291 | 23,898 | 24,801 | 23,571 | ||||||||||||
| NGLs (bbls/d) | 6,612 | 7,547 | 7,196 | 7,046 | 7,412 | 7,344 | 6,538 | 7,895 | 7,497 | 7,901 | 8,113 | 8,342 | ||||||||||||
| Natural gas (mmcf/d) | 167.15 | 164.07 | 165.75 | 160.07 | 167.65 | 171.19 | 166.49 | 167.48 | 154.26 | 152.07 | 150.68 | 148.11 | ||||||||||||
| Total (boe/d) | **** | 52,293 | **** | 53,936 | 54,987 | 52,959 | 54,216 | 56,758 | 54,065 | 60,046 | 58,499 | 57,142 | 58,027 | 56,598 | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| International | | | | | | | ||||||||||||||||||
| Crude oil and condensate (bbls/d) | 12,502 | 10,792 | 12,714 | 13,459 | 14,004 | 10,534 | 9,564 | 9,054 | 13,624 | 13,419 | 11,983 | 13,519 | ||||||||||||
| Natural gas (mmcf/d) | 112.44 | 116.66 | 103.64 | 114.52 | 116.27 | 92.61 | 117.14 | 80.13 | 79.97 | 82.05 | 89.15 | 96.58 | ||||||||||||
| Total (boe/d) | **** | 31,243 | **** | 30,237 | 29,987 | 32,546 | 33,381 | 25,969 | 29,087 | 22,408 | 26,953 | 27,095 | 26,840 | 29,616 | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Consolidated | | | | | | | | | ||||||||||||||||
| Crude oil and condensate (bbls/d) | 30,327 | 29,837 | 32,879 | 32,695 | 32,866 | 31,416 | 29,341 | 33,290 | 38,915 | 37,315 | 36,784 | 37,090 | ||||||||||||
| NGLs (bbls/d) | 6,612 | 7,547 | 7,196 | 7,046 | 7,412 | 7,344 | 6,538 | 7,896 | 7,497 | 7,901 | 8,113 | 8,342 | ||||||||||||
| Natural gas (mmcf/d) | 279.59 | 280.73 | 269.39 | 274.59 | 283.92 | 263.80 | 283.63 | 247.61 | 234.23 | 234.12 | 239.83 | 244.69 | ||||||||||||
| Total (boe/d) | **** | 83,536 | **** | 84,173 | 84,974 | 85,505 | 87,597 | 82,727 | 83,152 | 82,455 | 85,450 | 84,237 | 84,868 | 86,213 |
^(1)^Please refer to Supplemental Table 4 "Production" for disclosure by product type.
Sales volumes
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | Q4/24 | **** | Q3/24 | **** | Q2/24 | **** | Q1/24 | **** | Q4/23 | **** | Q3/23 | **** | Q2/23 | **** | Q1/23 | **** | Q4/22 | **** | Q3/22 | **** | Q2/22 | **** | Q1/22 |
| North America | | | | | | | | | | | | | | | | | | | | | | | | |
| Crude oil and condensate (bbls/d) | 17,825 | 19,044 | 20,166 | 19,235 | 18,862 | 20,883 | 19,778 | 24,237 | 25,291 | 23,897 | 24,801 | 23,571 | ||||||||||||
| NGLs (bbls/d) | 6,612 | 7,547 | 7,196 | 7,045 | 7,412 | 7,344 | 6,538 | 7,895 | 7,497 | 7,901 | 8,113 | 8,342 | ||||||||||||
| Natural gas (mmcf/d) | 167.13 | 164.07 | 165.75 | 160.07 | 167.65 | 171.19 | 166.49 | 167.48 | 154.26 | 152.07 | 150.68 | 148.11 | ||||||||||||
| Total (boe/d) | **** | 52,292 | **** | 53,936 | 54,987 | 52,960 | 54,216 | 56,758 | 54,065 | 60,046 | 58,499 | 57,142 | 58,027 | 56,598 | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| International | | | | | | | | | ||||||||||||||||
| Crude oil and condensate (bbls/d) | 11,360 | 12,580 | 11,998 | 15,938 | 9,221 | 9,950 | 10,302 | 8,087 | 16,257 | 11,493 | 11,720 | 12,615 | ||||||||||||
| Natural gas (mmcf/d) | 112.44 | 116.66 | 103.64 | 114.52 | 116.27 | 92.61 | 117.14 | 80.13 | 79.97 | 82.05 | 89.15 | 96.58 | ||||||||||||
| Total (boe/d) | **** | 30,101 | **** | 32,024 | 29,271 | 35,026 | 28,598 | 25,386 | 29,824 | 21,442 | 29,585 | 25,169 | 26,578 | 28,712 | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Consolidated | ||||||||||||||||||||||||
| Crude oil and condensate (bbls/d) | 29,185 | 31,624 | 32,163 | 35,174 | 28,083 | 30,833 | 30,080 | 32,324 | 41,547 | 35,391 | 36,522 | 36,186 | ||||||||||||
| NGLs (bbls/d) | 6,612 | 7,547 | 7,196 | 7,046 | 7,412 | 7,344 | 6,538 | 7,896 | 7,497 | 7,901 | 8,113 | 8,342 | ||||||||||||
| Natural gas (mmcf/d) | 279.59 | 280.73 | 269.39 | 274.59 | 283.92 | 263.80 | 283.63 | 247.61 | 234.23 | 234.12 | 239.83 | 244.69 | ||||||||||||
| Total (boe/d) | **** | 82,394 | **** | 85,960 | 84,258 | 87,985 | 82,814 | 82,144 | 83,889 | 81,489 | 88,083 | 82,312 | 84,607 | 85,310 |
Vermilion Energy Inc. ■ Page 50 ■ 2024 Management’s Discussion and Analysis
Financial results
| | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Q4/24 | **** | Q3/24 | **** | Q2/24 | **** | Q1/24 | **** | Q4/23 | **** | Q3/23 | **** | Q2/23 | **** | Q1/23 | **** | Q4/22 | **** | Q3/22 | **** | Q2/22 | **** | Q1/22 |
| North America | | | | | | | | | | | | | | | | | | | | | | | |
| Crude oil and condensate sales (/bbl) | 93.53 | 96.54 | 104.57 | 91.50 | 100.16 | 103.46 | 94.78 | 95.63 | 106.66 | 114.82 | 134.72 | 111.42 | |||||||||||
| NGL sales (/bbl) | 29.38 | 27.49 | 31.61 | 34.16 | 33.38 | 27.77 | 28.11 | 36.24 | 39.93 | 44.64 | 51.86 | 46.94 | |||||||||||
| Natural gas sales (/mcf) | 1.98 | 0.90 | 1.29 | 2.14 | 2.62 | 2.52 | 2.29 | 4.11 | 5.96 | 6.41 | 7.13 | 4.80 | |||||||||||
| Sales (/boe) | 41.93 | 40.67 | 46.37 | 44.25 | 47.51 | 49.26 | 45.12 | 54.84 | 66.95 | 71.24 | 83.34 | 65.88 | |||||||||||
| Royalties (/boe) | (5.23) | (6.14) | (6.93) | (7.03) | (7.25) | (7.75) | (5.45) | (7.68) | (9.47) | (12.58) | (12.51) | (11.24) | |||||||||||
| Transportation (/boe) | (3.04) | (3.12) | (2.82) | (2.35) | (2.44) | (2.08) | (1.57) | (2.44) | (2.42) | (2.16) | (2.15) | (1.91) | |||||||||||
| Operating (/boe) | (14.58) | (11.88) | (13.89) | (14.25) | (11.50) | (12.09) | (12.22) | (14.10) | (13.51) | (14.00) | (11.58) | (11.95) | |||||||||||
| General and administration (/boe) | (2.13) | (1.09) | (2.54) | (1.70) | 0.87 | (0.72) | 0.10 | (0.99) | 0.10 | (1.27) | (1.52) | (1.26) | |||||||||||
| Corporate income taxes (/boe) | 0.43 | (0.34) | 0.82 | (0.65) | 0.23 | (0.01) | (0.10) | (0.12) | (0.13) | (0.03) | — | (0.02) | |||||||||||
| Fund flows from operations (/boe) | 17.38 | **** | 18.10 | 21.01 | | 18.27 | 27.42 | 26.61 | 25.88 | 29.51 | 41.52 | 41.20 | 55.58 | 39.50 | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| Fund flows from operations | 83,662 | 89,793 | 105,187 | 88,027 | 136,766 | 138,960 | 127,346 | 159,435 | 223,443 | 216,579 | 293,470 | 201,193 | |||||||||||
| Drilling and development | (134,164) | | (78,171) | | (61,520) | | (136,509) | | (58,704) | | (69,703) | | (135,723) | | (116,070) | | (113,892) | | (112,238) | | (54,913) | | (57,513) |
| Free cash flow | (50,502) | **** | 11,622 | 43,667 | (48,482) | 78,062 | 69,257 | (8,377) | 43,365 | 109,551 | 104,341 | 238,557 | 143,680 | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| International | **** | ||||||||||||||||||||||
| Crude oil and condensate sales (/bbl) | 110.31 | 114.16 | 116.24 | 119.68 | 123.77 | 114.26 | 100.23 | 107.57 | 128.02 | 140.09 | 146.67 | 136.69 | |||||||||||
| Natural gas sales (/mcf) | 18.11 | 14.55 | 12.72 | 11.63 | 16.92 | 13.34 | 14.58 | 24.69 | 39.54 | 58.55 | 32.33 | 36.75 | |||||||||||
| Sales (/boe) | 109.27 | 97.85 | 92.68 | 92.48 | 108.70 | 93.46 | 91.89 | 132.84 | 177.23 | 254.86 | 173.14 | 183.66 | |||||||||||
| Royalties (/boe) | (5.38) | (4.16) | (4.49) | (4.60) | (3.41) | 3.55 | (7.43) | (13.39) | (6.38) | (7.21) | (7.23) | (5.43) | |||||||||||
| Transportation (/boe) | (3.37) | (3.81) | (4.20) | (3.65) | (3.91) | (4.53) | (5.23) | (5.11) | (3.29) | (3.51) | (3.64) | (2.91) | |||||||||||
| Operating (/boe) | (25.08) | (27.11) | (26.56) | (25.30) | (22.64) | (25.58) | (28.24) | (31.41) | (23.35) | (22.63) | (22.11) | (19.86) | |||||||||||
| General and administration (/boe) | (6.21) | (5.56) | (5.20) | (4.86) | (9.18) | (7.37) | (7.58) | (7.52) | (5.09) | (3.34) | (3.16) | (3.02) | |||||||||||
| Corporate income taxes (/boe) | (6.53) | (3.74) | (6.08) | (7.06) | (7.81) | (13.42) | (6.79) | (11.20) | (15.15) | (21.97) | (28.73) | (17.63) | |||||||||||
| PRRT (/boe) | 1.16 | (0.17) | (1.37) | (3.38) | 7.93 | — | — | — | (1.85) | (1.96) | (0.83) | (2.60) | |||||||||||
| Fund flows from operations (/boe) | 63.86 | **** | 53.30 | 44.78 | 43.63 | 69.68 | 46.11 | 36.62 | 64.21 | 122.12 | 194.24 | 107.44 | 132.21 | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| Fund flows from operations | 176,883 | 157,048 | 119,310 | 139,054 | 183,353 | 107,704 | 99,377 | 123,893 | 332,377 | 449,771 | 259,840 | 341,626 | |||||||||||
| Drilling and development | (42,341) | | (40,638) | | (47,830) | | (45,789) | | (73,604) | | (49,701) | | (28,347) | | (37,258) | | (43,957) | | (65,640) | | (54,575) | | (25,328) |
| Exploration and evaluation | (24,154) | | (2,460) | | (1,260) | | (8,144) | | (10,579) | | (6,235) | | (2,775) | | (1,492) | | (11,456) | | (6,137) | | (3,665) | | (2,503) |
| Free cash flow | 110,388 | **** | 113,950 | 70,220 | 85,121 | 99,170 | 51,768 | 68,255 | 85,143 | 276,964 | 377,994 | 201,600 | 313,795 | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Q4/24 | **** | Q3/24 | **** | Q2/24 | **** | Q1/24 | **** | Q4/23 | **** | Q3/23 | **** | Q2/23 | **** | Q1/23 | **** | Q4/22 | **** | Q3/22 | **** | Q2/22 | **** | Q1/22 |
| Consolidated | |||||||||||||||||||||||
| Crude oil and condensate sales (/bbl) | 100.06 | 103.55 | 108.93 | 104.26 | 107.91 | 106.94 | 96.64 | 98.62 | 115.02 | 123.02 | 138.55 | 120.23 | |||||||||||
| NGL sales (/bbl) | 29.38 | 27.49 | 31.61 | 34.16 | 33.38 | 27.77 | 28.11 | 36.23 | 39.93 | 44.64 | 51.86 | 46.94 | |||||||||||
| Natural gas sales (/mcf) | 8.47 | 6.57 | 5.69 | 6.10 | 8.48 | 6.32 | 7.37 | 10.77 | 17.43 | 24.68 | 16.50 | 17.41 | |||||||||||
| Sales (/boe) | 66.54 | 61.97 | 62.46 | 63.45 | 68.64 | 62.92 | 61.74 | 75.36 | 103.99 | 127.39 | 111.55 | 105.52 | |||||||||||
| Royalties (/boe) | (5.28) | (5.40) | (6.08) | (6.06) | (5.93) | (4.26) | (6.16) | (9.18) | (8.43) | (10.94) | (10.85) | (9.29) | |||||||||||
| Transportation (/boe) | (3.16) | (3.38) | (3.30) | (2.87) | (2.95) | (2.84) | (2.87) | (3.14) | (2.71) | (2.57) | (2.62) | (2.25) | |||||||||||
| Operating (/boe) | (18.41) | (17.55) | (18.29) | (18.65) | (15.35) | (16.26) | (17.91) | (18.66) | (16.81) | (16.64) | (14.89) | (14.61) | |||||||||||
| General and administration (/boe) | (3.62) | (2.76) | (3.46) | (2.96) | (2.60) | (2.77) | (2.63) | (2.71) | (1.65) | (1.90) | (2.04) | (1.85) | |||||||||||
| Corporate income taxes (/boe) | (2.11) | (1.61) | (1.58) | (3.20) | (2.57) | (7.05) | (7.04) | (5.96) | (32.68) | (6.74) | (9.03) | (5.95) | |||||||||||
| PRRT (/boe) | 0.43 | (0.06) | (0.47) | (1.35) | 2.74 | — | — | — | (0.62) | (0.60) | (0.26) | (0.87) | |||||||||||
| Interest (/boe) | (3.16) | (2.68) | (2.75) | (2.30) | (3.01) | (2.68) | (2.65) | (2.98) | (2.78) | (3.23) | (2.74) | (1.93) | |||||||||||
| Equity based compensation (/boe) | — | — | (1.87) | — | — | — | — | — | — | — | — | — | |||||||||||
| Realized derivatives (/boe) | 3.80 | 6.31 | 6.00 | 27.55 | 10.33 | 9.74 | 8.86 | 1.95 | (5.42) | (18.22) | (10.36) | (18.78) | |||||||||||
| Realized foreign exchange (/boe) | 0.32 | 0.15 | 0.30 | 0.23 | (0.73) | 0.28 | 0.48 | (0.65) | 2.33 | (0.28) | (0.30) | 0.10 | |||||||||||
| Realized other (/boe) | (0.68) | (0.21) | (0.09) | 0.02 | 0.26 | (1.32) | 0.53 | 0.49 | (0.14) | 0.80 | 0.36 | 0.70 | |||||||||||
| Fund flows from operations (/boe) | 34.67 | | 34.78 | | 30.87 | | 53.86 | | 48.83 | | 35.76 | | 32.35 | | 34.52 | | 35.08 | 67.07 | 58.82 | 50.79 | |||
| | | | | | | | | | | | | | | | | | | | | | | | |
| Fund flows from operations | 262,698 | 275,024 | 236,703 | 431,358 | 372,117 | 270,218 | 247,109 | 253,167 | 284,220 | 507,876 | 452,901 | 389,868 | |||||||||||
| Drilling and development | (176,505) | | (118,809) | | (109,350) | | (182,298) | | (132,308) | | (119,404) | | (164,070) | | (153,328) | | (157,849) | | (177,878) | | (109,488) | | (82,841) |
| Exploration and evaluation | (24,154) | | (2,460) | | (1,260) | | (8,144) | | (10,579) | | (6,235) | | (2,775) | | (1,492) | | (11,456) | | (6,137) | | (3,665) | | (2,503) |
| Free cash flow | 62,039 | **** | 153,755 | 126,093 | 240,916 | 229,230 | 144,579 | 80,264 | 98,347 | 114,915 | 323,861 | 339,748 | 304,524 |
All values are in US Dollars.
Vermilion Energy Inc. ■ Page 51 ■ 2024 Management’s Discussion and Analysis
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 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 Financial Statements).
In addition, this MD&A includes financial measures which are not specified, defined, or determined under IFRS Accounting Standards 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 loss, FFO is a non-GAAP financial measure and total of segments measure comprised of sales less royalties, transportation, operating, G&A, corporate income tax, PRRT, interest expense, equity based compensation settled in cash, realized gain (loss) on derivatives, realized foreign exchange gain (loss), and realized other income (expense). The measure is used by management 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 most directly comparable primary financial statement measures can be found below.
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | Q4 2024 | Q4 2023 | 2024 | 2023 | ||||
| | **** | M | /boe | M | /boe | M | /boe | M | $/boe |
| Sales | **** | 504,352 | 66.54 | 522,969 | 68.64 | 1,981,407 | 63.58 | 2,022,555 | 67.10 |
| Royalties | **** | (40,049) | (5.28) | (45,148) | (5.93) | (177,950) | (5.71) | (191,694) | (6.36) |
| Transportation | **** | (23,961) | (3.16) | (22,441) | (2.95) | (98,933) | (3.17) | (88,856) | (2.95) |
| Operating | **** | (139,566) | (18.41) | (116,937) | (15.35) | (567,913) | (18.22) | (513,381) | (17.03) |
| General and administration | **** | (27,460) | (3.62) | (19,810) | (2.60) | (99,503) | (3.19) | (80,716) | (2.68) |
| Corporate income tax expense | **** | (15,997) | (2.11) | (19,623) | (2.57) | (66,442) | (2.13) | (170,358) | (5.65) |
| Petroleum resource rent tax | | 3,226 | 0.43 | 20,860 | 2.74 | (11,702) | (0.38) | 20,860 | 0.69 |
| Interest expense | **** | (23,965) | (3.16) | (22,909) | (3.01) | (84,606) | (2.71) | (85,212) | (2.83) |
| Equity based compensation | **** | — | — | — | — | (14,361) | (0.46) | — | — |
| Realized gain on derivatives | **** | 28,795 | 3.80 | 78,737 | 10.33 | 345,318 | 11.08 | 234,365 | 7.77 |
| Realized foreign exchange gain (loss) | **** | 2,442 | 0.32 | (5,529) | (0.73) | 7,735 | 0.25 | (4,532) | (0.15) |
| Realized other (expense) income | **** | (5,119) | (0.68) | 1,948 | 0.26 | (7,267) | (0.23) | (420) | (0.01) |
| Fund flows from operations | **** | 262,698 | 34.67 | 372,117 | 48.83 | 1,205,783 | 38.71 | 1,142,611 | 37.90 |
| Equity based compensation | | (7,499) | | (7,871) | | (15,569) | | (42,756) | |
| Unrealized (loss) gain on derivative instruments ^(1)^ | | (137,273) | | 141,126 | | (452,858) | | 179,707 | |
| Unrealized foreign exchange (loss) gain ^(1)^ | | (28,517) | | 4,834 | | (58,471) | | 12,438 | |
| Accretion | | (19,272) | | (19,469) | | (74,541) | | (78,187) | |
| Depletion and depreciation | | (163,458) | | (259,012) | | (683,240) | | (712,619) | |
| Deferred tax recovery | | 80,016 | | 110,758 | | 37,991 | | 190,193 | |
| Gain on business combination | | — | | (5,607) | | — | | 439,487 | |
| Loss on disposition | | — | | (125,539) | | — | | (352,367) | |
| Impairment expense | | — | | (1,016,094) | | — | | (1,016,094) | |
| Unrealized other (expense) income ^(1)^ | | (5,011) | | 1,621 | | (5,834) | | — | |
| Net loss | | (18,316) | | (803,136) | | (46,739) | | (237,587) | |
All values are in US Dollars.
| ^(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. |
|---|
Vermilion Energy Inc. ■ Page 52 ■ 2024 Management’s Discussion and Analysis
Non-GAAP Financial Measures and Non-GAAP Ratios
Fund flows from operations per basic and diluted share: FFO per share and diluted share are non-GAAP ratios. 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 Accounting Standards. 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.
Fund flows from operations per boe: Management uses fund flows from operations per boe to assess the profitability of our business units and Vermilion as a whole. Fund flows from operations per boe is calculated by dividing fund flows from operations (total of segments measure) by boe production.
Free cash flow (FCF): Most directly comparable to cash flows from operating activities, FCF is a non-GAAP financial measure calculated as fund flows from operations less drilling and development costs and exploration and evaluation costs. FCF is used by management 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.
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| (M) | Q4 2024 | **** | Q4 2023 | **** | 2024 | **** | 2023 |
| Cash flows from operating activities | 212,587 | 343,831 | **** | 967,751 | 1,024,528 | ||
| Changes in non-cash operating working capital | 26,829 | (651) | **** | 182,698 | 61,117 | ||
| Asset retirement obligations settled | 23,282 | 28,937 | **** | 55,334 | 56,966 | ||
| Fund flows from operations | 262,698 | 372,117 | **** | 1,205,783 | 1,142,611 | ||
| Drilling and development | (176,505) | (132,308) | **** | (586,962) | (569,110) | ||
| Exploration and evaluation | (24,154) | (10,579) | **** | (36,018) | (21,081) | ||
| Free cash flow | 62,039 | 229,230 | **** | 582,803 | 552,420 |
All values are in US Dollars.
Capital expenditures: Most directly comparable to cash flows used in investing activities, capital expenditures is a non-GAAP financial measure calculated as the sum of drilling and development costs and exploration and evaluation costs as derived 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. Reconciliation to the primary financial statement measures can be found below.
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| (M) | Q4 2024 | **** | Q4 2023 | **** | 2024 | **** | 2023 |
| Drilling and development | 176,505 | 132,308 | **** | 586,962 | 569,110 | ||
| Exploration and evaluation | 24,154 | 10,579 | **** | 36,018 | 21,081 | ||
| Capital expenditures | 200,659 | 142,887 | **** | 622,980 | 590,191 |
All values are in US Dollars.
Payout and payout % of FFO: Payout and payout % of FFO are, respectively, a non-GAAP financial measure and non-GAAP ratio. Payout is 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 divided by FFO. The measure is used by management to assess the amount of cash distributed back to shareholders and reinvested in the business for maintaining production and organic growth. Payout as a percentage of FFO is also referred to as the payout ratio or sustainability ratio. The reconciliation of the measure to the primary financial statement measure can be found below.
| | | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| (M) | Q4 2024 | **** | Q4 2023 | **** | 2024 | **** | 2023 | **** |
| Dividends declared | 18,521 | 16,227 | **** | 75,327 | 65,248 | | ||
| Drilling and development | 176,505 | 132,308 | **** | 586,962 | 569,110 | | ||
| Exploration and evaluation | 24,154 | 10,579 | **** | 36,018 | 21,081 | | ||
| Asset retirement obligations settled | 23,282 | 28,937 | **** | 55,334 | 56,966 | | ||
| Payout | 242,462 | 188,051 | **** | 753,641 | 712,405 | | ||
| % of fund flows from operations | 92 | % | 51 | % | 63 | % | 62 | % |
All values are in US Dollars.
Vermilion Energy Inc. ■ Page 53 ■ 2024 Management’s Discussion and Analysis
Return on capital employed (ROCE): A non-GAAP ratio, ROCE is a measure that management uses 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 loss 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) | | Dec 31, 2024 | **** | Dec 31, 2023 | **** |
| Net loss | **** | (46,739) | (237,587) | | |
| Taxes | **** | 40,153 | (40,695) | | |
| Interest expense | **** | 84,606 | 85,212 | | |
| EBIT | **** | 78,020 | (193,070) | | |
| Average capital employed | **** | 5,522,367 | 5,819,380 | | |
| Return on capital employed | **** | 1 | % | (3) | % |
Adjusted working capital (deficit): Adjusted working capital (deficit) is a non - GAAP financial measure calculated as current assets less current liabilities, excluding current derivatives and current lease liabilities. The measure is used by management to calculate net debt, a capital management measure disclosed below.
| | | | |
|---|---|---|---|
| | As at | ||
| (M) | Dec 31, 2024 | **** | Dec 31, 2023 |
| Current assets | 582,326 | 823,514 | |
| Current derivative asset | (40,312) | (313,792) | |
| Current liabilities | (610,590) | (696,074) | |
| Current lease liability | 12,206 | 21,068 | |
| Current derivative liability | 52,944 | 732 | |
| Adjusted working capital | (3,426) | (164,552) |
All values are in US Dollars.
Acquisitions: Acquisitions is a non-GAAP financial measure and is calculated as the sum of acquisitions, net of cash acquired 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. Management believes 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) | Q4 2024 | **** | Q4 2023 | **** | Q4 2024 | **** | Q4 2023 |
| Acquisitions, net of cash acquired | 5,257 | 2,669 | **** | 12,728 | 142,281 | ||
| Acquisition of securities | — | 17,448 | **** | 9,373 | 21,603 | ||
| Acquired working capital | — | 5,607 | **** | — | 109,134 | ||
| Acquisitions | 5,257 | 25,724 | **** | 22,101 | 273,018 |
All values are in US Dollars.
Operating netback: Operating netback is non-GAAP financial measure and is calculated as sales less royalties, operating expense, transportation costs, PRRT, and realized hedging gains and losses, and when presented on a per unit basis, is a non-GAAP ratio. Operating netback is most directly comparable to net loss. Management assesses operating netback as a measure of the profitability and efficiency of our field operations.
Net debt to four quarter trailing fund flows from operations: Management uses net debt (a capital management measure, as defined below) to four quarter trailing fund flows from operations to assess the Company's ability to repay debt. Net debt to four quarter trailing fund flows from operations is a non-GAAP ratio and is calculated as net debt (capital management measure) divided by fund flows from operations (total of segments measure) from the preceding four quarters.
Vermilion Energy Inc. ■ Page 54 ■ 2024 Management’s Discussion and Analysis
Capital Management Measure
Net debt: Net debt is a capital management measure 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.
| | | | | |
|---|---|---|---|---|
| | **** | As at | ||
| ($M) | | Dec 31, 2024 | **** | Dec 31, 2023 |
| Long-term debt | **** | 963,456 | 914,015 | |
| Adjusted working capital | **** | 3,426 | 164,552 | |
| Net debt | **** | 966,882 | 1,078,567 | |
| | | | | |
| Ratio of net debt to four quarter trailing fund flows from operations | **** | 0.8 | 0.9 |
Supplementary Financial Measures
Diluted shares outstanding: 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.
| | | | | |
|---|---|---|---|---|
| ('000s of shares) | **** | Q4 2024 | **** | Q4 2023 |
| Shares outstanding | **** | 154,344 | 162,271 | |
| Potential shares issuable pursuant to the LTIP | **** | 3,493 | 4,185 | |
| Diluted shares outstanding | **** | 157,837 | 166,456 |
Vermilion Energy Inc. ■ Page 55 ■ 2024 Management’s Discussion and Analysis
| DIRECTORS<br><br><br><br>Myron Stadnyk ^1^<br><br>Calgary, Alberta<br><br><br><br>Dion Hatcher<br><br>Calgary, Alberta<br><br><br><br>James J. Kleckner Jr.^7,9^<br><br>Edwards, Colorado<br><br><br><br>Carin Knickel ^4,7,11^<br><br>Golden, Colorado<br><br><br><br>Stephen P. Larke^3,5,10^<br><br>Calgary, Alberta<br><br><br><br>Timothy R. Marchant ^6,9,11^<br><br>Calgary, Alberta<br><br><br><br>Robert Michaleski ^3,5^<br><br>Calgary, Alberta<br><br><br><br>William Roby ^7,8,11^<br><br>Katy, Texas<br><br><br><br>Manjit Sharma ^2,5^<br><br>Toronto, Ontario<br><br><br><br>Judy Steele ^3,5,11^<br><br>Halifax, Nova Scotia<br><br><br><br><br><br>^1^Chairman (Independent)<br><br>^2^Audit Committee Chair (Independent)<br><br>^3^Audit Committee Member (Independent)<br><br>^4^Governance and Human Resources Committee Chair (Independent)<br><br>^5^Governance and Human Resources Committee Member (Independent)<br><br>^6^Health, Safety and Environment Committee Chair (Independent)<br><br>^7^Health, Safety and Environment Committee Member (Independent)<br><br>^8^Technical Committee Chair (Independent)<br><br>^9^Technical Committee Member (Independent)<br><br>^10^ Sustainability Committee Chair (Independent)<br><br>^11^Sustainability Committee Member (Independent)<br><br> | OFFICERS / CORPORATE SECRETARY<br><br><br><br>Dion Hatcher *<br><br>President & Chief Executive Officer<br><br><br><br>Lars Glemser *<br><br>Vice President & Chief Financial Officer<br><br><br><br>Tamar Epstein<br><br>General Counsel & Corporate Secretary<br><br><br><br>Terry Hergott<br><br>Vice President Marketing<br><br><br><br>Yvonne Jeffery<br><br>Vice President Sustainability<br><br><br><br>Darcy Kerwin *<br><br>Vice President International & HSE<br><br><br><br>Geoff MacDonald<br><br>Vice President Geosciences<br><br><br><br>Randy McQuaig *<br><br>Vice President North America<br><br><br><br>Kyle Preston<br><br>Vice President Investor Relations<br><br><br><br>Averyl Schraven<br><br>Vice President People & Culture<br><br><br><br>Gerard Schut<br><br>Vice President European Operations<br><br><br><br>* Principal Executive Committee Member | AUDITORS<br><br><br><br>Deloitte LLP<br><br>Calgary, Alberta<br><br><br><br>BANKERS<br><br><br><br>The Toronto-Dominion Bank<br><br><br><br>The Bank of Nova Scotia<br><br><br><br>Canadian Imperial Bank of Commerce<br><br><br><br>National Bank of Canada<br><br><br><br>Royal Bank of Canada<br><br><br><br>Wells Fargo Bank N.A., Canadian Branch<br><br><br><br>ATB Financial<br><br><br><br>Bank of America N.A., Canada Branch<br><br><br><br>Export Development Canada<br><br><br><br>Fédération des caisses Desjardins du Québec<br><br><br><br>Citibank, N.A., Canadian Branch<br><br><br><br>Canadian Western Bank<br><br><br><br>JPMorgan Chase Bank, N.A., Toronto Branch<br><br><br><br>Goldman Sachs Lending Partners LLC<br><br><br><br><br><br>EVALUATION ENGINEERS<br><br><br><br>McDaniel & Associates<br><br>Calgary, Alberta<br><br><br><br>LEGAL COUNSEL<br><br><br><br>Norton Rose Fulbright Canada LLP<br><br>Calgary, Alberta<br><br><br><br>TRANSFER AGENT<br><br><br><br>Odyssey Trust Company<br><br><br><br>STOCK EXCHANGE LISTINGS<br><br><br><br>The Toronto Stock Exchange (“VET”)<br><br>The New York Stock Exchange (“VET”)<br><br><br><br>INVESTOR RELATIONS<br><br>Kyle Preston<br><br>Vice President Investor Relations<br><br>403-476-8431 TEL<br><br>403-476-8100 FAX<br><br>1-866-895-8101 IR TOLL FREE<br><br>investor_relations@vermilionenergy.com<br><br> |
|---|
h
Vermilion Energy Inc. ■ Page 56 ■ 2024 Management’s Discussion and Analysis
Vermilion Energy Inc._December 31, 2024
Exhibit 99.3
Management’s Report to Shareholders
Management’s Responsibility for Financial Statements
The accompanying consolidated financial statements of Vermilion Energy Inc. are the responsibility of management and have been approved by the Board of Directors of Vermilion Energy Inc. The consolidated financial statements have been prepared in accordance with the accounting policies detailed in the notes to the consolidated financial statements and are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. Where necessary, management has made informed judgments and estimates of transactions that were not yet completed at the balance sheet date. Financial information throughout the Annual Report is consistent with the consolidated financial statements.
Management ensures the integrity of the consolidated financial statements by maintaining high-quality systems of internal control. Procedures and policies are designed to provide reasonable assurance that assets are safeguarded and transactions are properly recorded, and that the financial records are reliable for preparation of the consolidated financial statements. Deloitte LLP, Vermilion’s Independent Registered Public Accounting Firm, have conducted an audit of the consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and have provided their report.
The Board of Directors is responsible for ensuring that management fulfills its responsibility for financial reporting and internal control. The Board of Directors carries out this responsibility principally through the Audit Committee, which is appointed by the Board of Directors and is comprised entirely of independent Directors. The Committee meets periodically with management and Deloitte LLP to satisfy itself that each party is properly discharging its responsibilities and to review the consolidated financial statements, Management’s Discussion and Analysis and the Report of the Independent Registered Public Accounting Firm before they are presented to the Board of Directors.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting. Management, under the supervision and with the participation of the principal executive officer and principle financial officer, conducted an evaluation of the effectiveness of the system of internal control over financial reporting based on the criteria established in “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management has assessed the effectiveness of Vermilion’s internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) under the US Securities Exchange Act of 1934 and as defined in Canada by National Instrument 52-109, Certification of Disclosure in Issuers’ Annual and Interim Filings. Management concluded that Vermilion’s internal control over financial reporting was effective as of December 31, 2024.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements and even those systems determined to be effective can provide only reasonable assurance with respect to the financial statement preparation and presentation.
The effectiveness of Vermilion’s internal control over financial reporting as of December 31, 2024 has been audited by Deloitte LLP, the Company’s Independent Registered Public Accounting Firm, who also audited the Company’s consolidated financial statements for the year ended December 31, 2024.
| (“Dion Hatcher”) | (“Lars Glemser”) |
|---|---|
| | |
| Dion Hatcher | Lars Glemser |
| President & Chief Executive Officer | Vice President & Chief Financial Officer |
| March 5, 2025 |
Vermilion Energy Inc. ∎ Page 1 ∎ 2024 Financial Statements
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Vermilion Energy Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Vermilion Energy Inc. and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2024, of the Company and our report dated March 5, 2025, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report to Shareholders. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
| /s/ Deloitte LLP |
|---|
| Chartered Professional Accountants |
| Calgary, Canada |
| March 5, 2025 |
Vermilion Energy Inc. ∎ Page 2 ∎ 2024 Financial Statements
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Vermilion Energy Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Vermilion Energy Inc. and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of net loss and comprehensive loss, cash flows and changes in shareholders' equity for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and its financial performance and its cash flows for each of the two years in the period ended December 31, 2024, in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 5 2025, expressed an unqualified opinion on the Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Capital Assets – Refer to Notes 2 and 7 to the financial statements
Critical Audit Matter Description
The Company’s capital assets includes oil and gas properties. Oil and gas properties are depleted using the unit of production method (“depletion”) by reference to the ratio of production in the period to the total proved and probable reserves, taking into account the future development costs necessary to bring the applicable reserves into production. The Company engages an independent reserve engineer to estimate reserves using estimates, assumptions and engineering data. The determination of the Company’s proved plus probable reserves used to determine depletion requires management to make significant estimates and assumptions related to future oil, natural gas liquids and natural gas prices (“future commodity prices”), reserves, and future operating and development costs.
Given the significant judgments made by management related to future commodity prices, reserves, and future operating and development costs, these estimates and assumptions are subject to a high degree of estimation uncertainty. This required a high degree of auditor judgment and resulted in an increased extent of audit effort.
Vermilion Energy Inc. ∎ Page 3 ∎ 2024 Financial Statements
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to future commodity prices, reserves, and future operating and development costs used to determine the depletion of all oil and gas properties included the following, among others:
| • | Evaluated the effectiveness of the relevant controls, including those over the determination of the future commodity prices, reserves, and future operating and development costs. |
|---|---|
| • | Evaluated the Company’s independent reserve evaluator by examining reports and assessing their scope of work and findings; and assessing the competence, capability, and objectivity by evaluating their relevant professional qualifications and experience. |
| --- | --- |
| • | Evaluated future commodity prices by independently developing a reasonable range of forecasts based on reputable third-party forecasts and market data and comparing those to the future commodity prices selected by management. |
| --- | --- |
| • | Evaluated the reasonableness of reserves by testing the source financial information underlying the reserves and comparing the reserve volumes to historical production volumes. |
| --- | --- |
| • | Evaluated the reasonableness of future operating and development costs by testing the source financial information underlying the estimate, comparing future operating and development costs to historical results, and evaluating whether they are consistent with evidence obtained in other areas of the audit. |
| --- | --- |
Valuation of Deferred Tax Assets - Refer to Notes 2 and 12 to the financial statements
Critical Audit Matter Description
The Company recognizes deferred income taxes for differences between the financial statement and tax basis of assets and liabilities at substantively enacted statutory tax rates in effect for the years in which the differences are expected to reverse. Deferred income tax assets are reduced to the amounts expected to be realized based on forecasts of future taxable income, specifically forecasts of future revenue (commodity price forecasts and forecasted reserves). The Company recorded deferred income tax assets for Canada and Ireland primarily arising from past taxable losses in these jurisdictions.
To determine whether it is probable that the deferred income tax assets in these jurisdictions will be realized, management makes assumptions related to the forecasts of future taxable income, specifically forecasts of future revenue (commodity price forecasts and forecasted reserves). Auditing the probability of the deferred income tax assets being realized and management’s commodity price forecasts and forecasted reserves involved a high degree of auditor judgement as the estimations made by management contain significant measurement uncertainty. This resulted in an increased extent of audit effort, which included the need to involve income tax specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to assessing the probability of the deferred income tax assets being realized and management’s forecasts of taxable income, specifically forecasts of future revenue (commodity price forecasts and forecasted reserves) to evaluate the deferred income tax assets in Canada and Ireland included the following, among others:
| • | Evaluated the effectiveness of relevant controls, including those over the determination of the forecasts of future revenue, specifically commodity price forecasts and forecasted reserves. |
|---|---|
| • | Evaluated management’s ability to accurately forecast future taxable income by comparing management’s assumptions to historical data and available market trends. |
| --- | --- |
| • | Evaluated the reasonableness of management’s forecasts of future revenue by: |
| --- | --- |
| • | Comparing the forecasts prepared by management’s expert to third party forecasts; and |
| --- | --- |
| • | Evaluating whether management’s estimates of commodity price forecasts and estimated reserves were consistent with the requirements of IAS 12 – Income taxes relating to the probability of forecasted future revenue and the length of the forecast period. |
| --- | --- |
Vermilion Energy Inc. ∎ Page 4 ∎ 2024 Financial Statements
| /s/ Deloitte LLP |
|---|
| Chartered Professional Accountants |
| Calgary, Canada |
| March 5, 2025 |
We have served as the Company’s auditor since 2000.
Vermilion Energy Inc. ∎ Page 5 ∎ 2024 Financial Statements
Consolidated Financial Statements
Consolidated Balance Sheet
thousands of Canadian dollars
| | | | | | | |
|---|---|---|---|---|---|---|
| | Note | December 31, 2024 | December 31, 2023 | |||
| Assets | | | | | | |
| Current | | | | | | |
| Cash and cash equivalents | 20 | 131,730 | 141,456 | |||
| Accounts receivable | | 20 | 298,493 | 242,926 | ||
| Crude oil inventory | | 20 | 40,694 | 57,333 | ||
| Derivative instruments | 10 | 40,312 | 313,792 | |||
| Prepaid expenses | | 20 | 71,097 | 68,007 | ||
| Total current assets | | | 582,326 | 823,514 | ||
| | | | | | | |
| Derivative instruments | 10 | 13,927 | 76,107 | |||
| Investments | | 6 | | 78,862 | | 73,261 |
| Deferred taxes | 12 | 197,714 | 182,051 | |||
| Exploration and evaluation assets | 8 | 224,286 | 198,379 | |||
| Capital assets | 7 | 5,018,461 | 4,882,509 | |||
| Total assets | | | 6,115,576 | 6,235,821 | ||
| | | | | | | |
| Liabilities | | | | | ||
| Current | | | | | ||
| Accounts payable and accrued liabilities | | 20 | 425,410 | 380,370 | ||
| Dividends payable | 14 | 18,521 | 16,227 | |||
| Derivative instruments | 10 | 52,944 | 732 | |||
| Income taxes payable | | 20 | 113,715 | 298,745 | ||
| Total current liabilities | | | 610,590 | 696,074 | ||
| | | | | | | |
| Derivative instruments | 10 | 86,036 | 21,050 | |||
| Long-term debt | 13 | 963,456 | 914,015 | |||
| Lease obligations | 11 | 54,991 | 33,001 | |||
| Asset retirement obligations | 9 | 1,224,718 | 1,159,063 | |||
| Deferred taxes | 12 | 364,796 | 380,970 | |||
| Total liabilities | | | 3,304,587 | 3,204,173 | ||
| | | | | | | |
| Shareholders’ Equity | | | | | ||
| Shareholders' capital | 14 | 3,918,898 | 4,142,566 | |||
| Contributed surplus | | | 45,225 | 43,348 | ||
| Accumulated other comprehensive income | | | 135,847 | 109,302 | ||
| Deficit | | | (1,288,981) | (1,263,568) | ||
| Total shareholders' equity | | | 2,810,989 | 3,031,648 | ||
| Total liabilities and shareholders' equity | | | 6,115,576 | 6,235,821 |
Approved by the Board
| (Signed “Manjit Sharma”) | (Signed “Dion Hatcher”) |
|---|---|
| Manjit Sharma, Director | Dion Hatcher, Director |
Vermilion Energy Inc. ∎ Page 6 ∎ 2024 Financial Statements
Consolidated Statements of Net Loss and Comprehensive Loss
thousands of Canadian dollars, except share and per share amounts
| | | | | | | |
|---|---|---|---|---|---|---|
| | | | | Year Ended | ||
| | Note | Dec 31, 2024 | Dec 31, 2023 | |||
| Revenue | | | | | | |
| Petroleum and natural gas sales | | | **** | 1,981,407 | 2,022,555 | |
| Royalties | | | **** | (177,950) | (191,694) | |
| Sales of purchased commodities | | | | 92,843 | | 177,000 |
| Petroleum and natural gas revenue | | | **** | 1,896,300 | 2,007,861 | |
| | | | | | ||
| Expenses | | | | | ||
| Purchased commodities | | | | 92,843 | | 177,000 |
| Operating | 20 | **** | 567,913 | 513,381 | ||
| Transportation | | | **** | 98,933 | 88,856 | |
| Equity based compensation | 16 | **** | 29,930 | 42,756 | ||
| Loss (gain) on derivative instruments | 10 | **** | 107,540 | (414,072) | ||
| Interest expense | | | **** | 84,606 | 85,212 | |
| General and administration | 20 | **** | 99,503 | 80,716 | ||
| Foreign exchange loss (gain) | | | **** | 50,736 | (7,906) | |
| Other expense | | | **** | 13,101 | 420 | |
| Accretion | 9 | **** | 74,541 | 78,187 | ||
| Depletion and depreciation | 6, 7 | **** | 683,240 | 712,619 | ||
| Impairment expense | | 7 | | — | | 1,016,094 |
| Gain on business combination | 5 | **** | — | (439,487) | ||
| Loss on disposition | | 6 | | — | | 352,367 |
| | | | **** | 1,902,886 | 2,286,143 | |
| Loss before income taxes | | | **** | (6,586) | (278,282) | |
| | | | ||||
| Income tax expense (recovery) | | |||||
| Deferred | | 12 | **** | (37,991) | (190,193) | |
| Current | | | **** | 78,144 | 149,498 | |
| | | | **** | 40,153 | (40,695) | |
| | | | **** | **** | ||
| Net loss | | | **** | (46,739) | (237,587) | |
| | | | ||||
| Other comprehensive loss | | | ||||
| Currency translation adjustments | | | **** | 23,004 | (16,468) | |
| Hedge accounting reserve, net of tax | | | | 5,284 | | 6,357 |
| Fair value adjustment on investment in securities, net of tax | | 6 | | (1,743) | | (4,092) |
| Comprehensive loss | | | **** | (20,194) | (251,790) | |
| | | | | | | |
| Net loss per share | 17 | |||||
| Basic | | | **** | (0.30) | (1.45) | |
| Diluted | | | **** | (0.30) | (1.45) | |
| | | | | | ||
| Weighted average shares outstanding ('000s) | 17 | | | |||
| Basic | | | **** | 158,068 | 163,719 | |
| Diluted | | | **** | 158,068 | 163,719 |
Vermilion Energy Inc. ∎ Page 7 ∎ 2024 Financial Statements
Consolidated Statements of Cash Flows
thousands of Canadian dollars
| | | | | | | |
|---|---|---|---|---|---|---|
| | | | | Year Ended | ||
| | Note | Dec 31, 2024 | Dec 31, 2023 | |||
| Operating | | | | | | |
| Net loss | | | (46,739) | (237,587) | ||
| Adjustments: | | | | | ||
| Accretion | 9 | 74,541 | 78,187 | |||
| Depletion and depreciation | 6, 7 | 683,240 | 712,619 | |||
| Impairment expense | | 7 | | — | | 1,016,094 |
| Gain on business combination | 5 | — | (439,487) | |||
| Loss on disposition | | 6 | | — | | 352,367 |
| Unrealized loss (gain) on derivative instruments | 10 | 452,858 | (179,707) | |||
| Equity based compensation | 16 | 15,569 | 42,756 | |||
| Unrealized foreign exchange loss (gain) | | | 58,471 | (12,438) | ||
| Unrealized other expense | | | 5,834 | — | ||
| Deferred tax recovery | 12 | (37,991) | (190,193) | |||
| Asset retirement obligations settled | 9 | (55,334) | (56,966) | |||
| Changes in non-cash operating working capital | 20 | (182,698) | (61,117) | |||
| Cash flows from operating activities | | | 967,751 | 1,024,528 | ||
| | | | | | | |
| Investing | | | | | ||
| Drilling and development | 7 | (586,962) | (569,110) | |||
| Exploration and evaluation | 8 | (36,018) | (21,081) | |||
| Acquisitions, net of cash acquired | 7 | (12,728) | (142,281) | |||
| Acquisition of securities | | 6 | | (9,373) | | (21,603) |
| Dispositions | | 7 | | — | | 197,007 |
| Changes in non-cash investing working capital | 20 | 10,213 | (19,367) | |||
| Cash flows used in investing activities | | | (634,868) | (576,435) | ||
| | | | | | | |
| Financing | | | **** | |||
| Net repayments on the revolving credit facility | 13 | — | (146,324) | |||
| Repurchases of senior unsecured notes | 13 | (31,561) | — | |||
| Payments on lease obligations | 11 | (101,539) | (17,094) | |||
| Repurchase of shares | | 14 | | (140,707) | | (94,838) |
| Cash dividends | 14 | (73,033) | (62,080) | |||
| Changes in non-cash financing working capital | | | | 2,756 | | — |
| Cash flows used in financing activities | | | (344,084) | (320,336) | ||
| Foreign exchange gain (loss) on cash held in foreign currencies | | | 1,475 | (137) | ||
| | | | | | | |
| Net change in cash and cash equivalents | | | (9,726) | 127,620 | ||
| Cash and cash equivalents, beginning of period | | | 141,456 | 13,836 | ||
| Cash and cash equivalents, end of period | 20 | 131,730 | 141,456 | |||
| | | | | | | |
| Supplementary information for cash flows from operating activities | | | ||||
| Interest paid | | | 85,649 | 84,471 | ||
| Income taxes paid | | | 263,048 | 306,911 |
Vermilion Energy Inc. ∎ Page 8 ∎ 2024 Financial Statements
Consolidated Statements of Changes in Shareholders’ Equity
thousands of Canadian dollars
| | | | | | | |
|---|---|---|---|---|---|---|
| | | | | Year Ended | ||
| | Note | December 31, 2024 | December 31, 2023 | |||
| Shareholders' capital | | 14 | | | | |
| Balance, beginning of year | **** | | | 4,142,566 | 4,243,794 | |
| Vesting of equity based awards | **** | | | 12,707 | 23,575 | |
| Equity based compensation | **** | | | 985 | 11,242 | |
| Share-settled dividends on vested equity based awards | **** | | | 1,382 | 1,179 | |
| Repurchase of shares | | | | (238,742) | | (137,224) |
| Balance, end of year | | | | 3,918,898 | 4,142,566 | |
| Contributed surplus | 14 | | | | ||
| Balance, beginning of year | **** | | | 43,348 | 35,409 | |
| Equity based compensation | **** | | | 14,584 | 31,514 | |
| Vesting of equity based awards | **** | | | (12,707) | (23,575) | |
| Balance, end of year | **** | | | 45,225 | 43,348 | |
| Accumulated other comprehensive income | | | | | ||
| Balance, beginning of year | **** | | | 109,302 | 123,505 | |
| Currency translation adjustments | **** | | | 23,004 | (16,468) | |
| Hedge accounting reserve | | | | 5,284 | | 6,357 |
| Fair value adjustment on investment in securities, net of tax | | 6 | | (1,743) | | (4,092) |
| Balance, end of year | **** | | | 135,847 | 109,302 | |
| Deficit | | | ||||
| Balance, beginning of year | **** | | | (1,263,568) | (1,001,650) | |
| Net loss | **** | | | (46,739) | (237,587) | |
| Dividends declared | **** | | | (75,327) | (65,248) | |
| Share-settled dividends on vested equity based awards | **** | | | (1,382) | (1,179) | |
| Repurchase of shares | | 14 | | 98,035 | | 42,096 |
| Balance, end of year | **** | | | (1,288,981) | (1,263,568) | |
| | | | | | | |
| Total shareholders' equity | **** | | | 2,810,989 | 3,031,648 |
Vermilion Energy Inc. ∎ Page 9 ∎ 2024 Financial Statements
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 loss 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 loss 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 loss 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 10 ∎ 2024 Financial Statements
Notes to the Consolidated Financial Statements for the year ended December 31, 2024 and 2023
tabular amounts in thousands of Canadian dollars, except share and per share amounts
| 1. | Basis of presentation |
|---|
Vermilion Energy Inc. and its subsidiaries (the “Company” or “Vermilion”) are engaged in the business of petroleum and natural gas exploration, development, acquisition, and production.
Vermilion was incorporated in Canada and the Company’s registered office and principal place of business is located at 3500, 520, 3rd Avenue SW, Calgary, Alberta, Canada.
These consolidated financial statements were approved and authorized for issuance by Vermilion’s Board of Directors on March 5, 2025.
Prior period amounts have been restated to conform with current period presentation as a result of the voluntary and retroactively applied change in the presentation of windfall taxes, as combined with current income taxes.
- Material accounting policies
Accounting framework
The consolidated financial statements are prepared in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”).
Principles of consolidation
The consolidated financial statements include the accounts of Vermilion Energy Inc. and its subsidiaries. Vermilion’s subsidiaries include entities in each of the jurisdictions that Vermilion operates as described in Note 4 (Segmented information) including: Canada, France, Netherlands, Germany, Ireland, Australia, the United States, and Central and Eastern Europe (Hungary, Slovakia, and Croatia). Vermilion Energy Inc. directly or indirectly through holding companies owns all of the voting securities of each material subsidiary. Transactions between Vermilion Energy Inc. and its subsidiaries have been eliminated.
Vermilion accounts for joint operations by recognizing the Company’s share of assets, liabilities, income, and expenses.
Investment in associate
Associates are entities for which the company has significant influence, but not control or joint control over the financial and operational decisions. Investments in associates are accounted for using the equity method of accounting and are initially recognized at cost and adjusted thereafter for the change in the company’s share of the associate’s net income and comprehensive income less distributions received until the date that significant influence ceases, within other expense on the consolidated statements of net earnings and comprehensive income. When the associate's financial information has not yet been made publicly available, management estimates the associate's financial information based on most recent and publicly available information, adjusted for market factors, including but not limited to market pricing.
Investments are tested for impairment when objective evidence of impairment is identified. Investments are reviewed for objective evidence of impairment at each reporting date. If a potential impairment exists, the investment's carrying value is compared to its recoverable amount. An investment’s recoverable amount is the higher of its fair value less costs of disposal and its value-in-use. If the carrying amount of an investment exceeds its recoverable amount, an impairment loss is recognized to reduce the carrying value of the investment to its recoverable amount.
If an impairment loss has been recognized in a prior period, an assessment is performed at each reporting date to determine if there are indicators that the circumstances which led to the impairment loss have reversed. If the change in circumstances results in the recoverable amount being higher than the carrying value after the impairment loss, then the impairment loss is reversed.
Vermilion Energy Inc. ∎ Page 11 ∎ 2024 Financial Statements
Exploration and evaluation assets
Vermilion classifies costs as exploration and evaluation (“E&E”) assets when they relate to exploring and evaluating an area for which the Company has the license or right to explore and extract resources. E&E costs may include: geological and geophysical costs; land and license acquisition costs; and costs for the drilling, completion, and testing of exploration wells.
E&E costs are reclassified to capital assets if the technical feasibility and commercial viability of the area can be determined. E&E assets are assessed for impairment prior to any reclassification. The technical feasibility and commercial viability of extracting the reserves is considered to be determinable when proved and probable reserves are identified.
Costs incurred prior to the acquisition of the legal rights to explore an area are expensed as incurred. If reserves are not found within the license area or the area is abandoned, the related E&E costs are depreciated over a period not greater than five years. If an exploration license expires prior to the commencement of exploration activities, the cost of the exploration license is written off through depreciation in the year of expiration.
Capital assets
Vermilion recognizes capital assets at cost less accumulated depletion, depreciation, and impairment losses. Costs include directly attributable costs incurred for the drilling, completion, and tie-in of wells and the construction of production and processing facilities.
When components of capital assets are replaced, disposed of, or no longer in use, they are derecognized. Gains and losses on disposal of capital assets are determined by comparing the proceeds of disposal compared to the carrying amount.
Depletion and depreciation
Capital assets are grouped into depletion units, which are groups of assets within a specific production area that have similar economic lives. Depletion units represent the lowest level of disaggregation for which costs are accumulated for the purposes of calculating depletion and depreciation.
The net carrying value of each depletion unit is depleted using the unit of production method by reference to the ratio of production in the period to the total proved and probable reserves, taking into account the future development costs necessary to bring the applicable reserves into production. For the purposes of the depletion calculations, oil and gas reserves are converted to a common unit of measure on the basis of their relative energy content based on a conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent.
Impairment of capital assets and exploration and evaluation assets
Depletion units are aggregated into cash generating units (“CGUs”) for impairment testing. CGUs are the lowest level for which there are identifiable cash inflows that are largely independent of cash inflows of other groups of assets. CGUs are reviewed for indicators of potential impairment at each reporting date.
E&E assets are tested for impairment when reclassified to capital assets or when indicators of potential impairment are identified. E&E assets are reviewed for indicators of potential impairment at each reporting date. If indicators of potential impairment are identified, E&E assets are tested for impairment as part of the CGU attributable to the jurisdiction in which the exploration area resides.
If an indicator of potential impairment exists, the CGU’s carrying value is compared to its recoverable amount. A CGU’s recoverable amount is the higher of its fair value less costs of disposal and its value-in-use. If the carrying amount of a CGU exceeds its recoverable amount, an impairment loss is recognized to reduce the carrying value of the CGU to its recoverable amount.
If an impairment loss has been recognized in a prior period, an assessment is performed at each reporting date to determine if there are indicators that the circumstances which led to the impairment loss have reversed. If the change in circumstances results in the recoverable amount being higher than the carrying value after the impairment loss, then the impairment loss (net of depletion that would otherwise have been recorded) is reversed.
Lease obligations and right-of-use assets
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. At the lease commencement date, a lease obligation is recognized at the present value of future lease payments, typically using the applicable incremental borrowing rate. A corresponding right-of-use asset is recognized at the amount of the lease obligation, adjusted for lease incentives received and initial direct costs. Vermilion does not recognize leases for short-term leases with a lease term of 12 months or less, or leases for low-value assets.
Vermilion Energy Inc. ∎ Page 12 ∎ 2024 Financial Statements
Payments are applied against the lease obligation and interest expense is recognized on the lease obligations using the effective interest rate method. Depreciation is recognized on the right-of-use asset over the lease term.
Cash and cash equivalents
Cash and cash equivalents include cash on deposit with financial institutions and guaranteed investment certificates.
Crude oil inventory
Crude oil inventory is valued at the lower of cost or net realizable value. The cost of crude oil inventory produced includes related operating expense, royalties, and depletion determined on a weighted-average basis.
Asset retirement obligations
Vermilion recognizes a provision for asset retirement obligations when an event occurs giving rise to an obligation of uncertain timing or amount. Asset retirement obligations are recognized on the consolidated balance sheet as a long-term liability with a corresponding increase to E&E or capital assets.
Asset retirement obligations reflect the present value of estimated future settlement costs. The discount rate used to calculate the present value is specific to the jurisdiction the obligation relates to and is reflective of current market assessment of the time value of money and risks specific to the liabilities that have not been reflected in the cash flow estimates.
Asset retirement obligations are remeasured at each reporting period to reflect changes in market rates and estimated future settlement costs. Asset retirement obligations are increased each reporting period to reflect the passage of time with a corresponding charge to accretion expense.
Revenue recognition
Revenue associated with the sale of crude oil and condensate, natural gas, and natural gas liquids is measured based on the consideration specified in contracts with customers.
Revenue from contracts with customers is recognized when or as Vermilion satisfies a performance obligation by transferring control of crude oil and condensate, natural gas, or natural gas liquids to a customer at contractually specified transfer points. This transfer coincides with title passing to the customer and the customer taking physical possession of the commodity. Vermilion principally satisfies its performance obligations at a point in time and the amounts of revenue recognized relating to performance obligations satisfied over time are not significant.
Vermilion invoices customers for delivered products monthly and payment occurs shortly thereafter. Vermilion does not have any contracts where the period between the transfer of control of the commodity to the customer and payment by the customer exceeds one year. As a result, Vermilion does not adjust its revenue transactions to reflect significant financing components.
Financial instruments
On initial recognition, financial instruments are measured at fair value. Measurement in subsequent periods depends on the classification of the financial instrument as described below:
| ● | Fair value through profit or loss ("FVTPL"): Financial instruments under this classification include cash and cash equivalents and derivative assets and liabilities. Transaction costs under this classification are expensed as incurred. |
|---|---|
| ● | Fair value through other comprehensive income ("FVTOCI"): Financial instruments under this classification include derivative assets, investment in securities, and liabilities where hedge accounting is applied. Transaction costs under this classification are expensed as incurred. |
| --- | --- |
| ● | Amortized cost: Financial instruments under this classification include accounts receivable, accounts payable and accrued liabilities, dividends payable, lease obligations, and long-term debt. Transaction costs under this classification are included in the measurement of the financial instrument. |
| --- | --- |
Accounts receivable are measured net of a loss allowance equal to the lifetime expected credit loss.
Equity based compensation
Equity based compensation expense results from equity-settled awards issued under Vermilion’s long-term share-based compensation plans as well as the grant date fair value of Vermilion common shares issued under the Company’s bonus and employee share savings plans.
Vermilion Energy Inc. ∎ Page 13 ∎ 2024 Financial Statements
Vermilion’s long-term share-based compensation plans consist of the Long-term Incentive Plan (“LTIP”) and the Deferred Share Unit Plan ("DSU"). Equity-settled awards issued under the LTIP vest over a period of one to three years and awards issued under the DSU vest immediately upon granting.
Equity based compensation expense for equity-settled plans is recognized over the vesting period with a corresponding adjustment to contributed surplus. The expense recognized is based on the grant date fair value of the awards, an estimate of the performance factor that will be achieved (if applicable), and an estimate of forfeiture rates based on historical vesting data. Dividends notionally accrue to the LTIP and are excluded in the determination of grant date fair values. When the awards are converted to Vermilion common shares, the amount recognized in contributed surplus is reclassified to shareholders’ capital.
The grant date fair value of awards or Vermilion common shares issued is determined as the closing price of Vermilion’s common shares on the Toronto Stock Exchange on the grant date.
Per share amounts
Basic net loss per share is calculated by dividing net loss by the weighted-average number of shares outstanding during the period.
Diluted net loss per share is calculated by dividing net loss by the diluted weighted-average number of shares outstanding during the period. The diluted weighted-average number of shares outstanding is the sum of the basic weighted-average number of shares outstanding and (to the extent inclusion reduces diluted net loss per share) the number of shares issuable for equity-settled awards determined using the treasury stock method. The treasury stock method assumes that the unrecognized equity based compensation expense are deemed proceeds used to repurchase Vermilion common shares at the average market price during the period.
Foreign currency translation
Vermilion Energy Inc.’s functional and presentation currency is the Canadian dollar. Vermilion has subsidiaries that transact and operate in countries other than Canada and have functional currencies other than the Canadian dollar.
Foreign currency translation includes the translation of foreign currency transactions and the translation of foreign operations.
Foreign currency transaction translation occurs when translating transactions and balances in foreign currencies to the applicable functional currency of Vermilion Energy Inc. and its subsidiaries. Gains and losses from foreign currency transactions are recorded as foreign exchange gains or losses in the statement of Net loss. Foreign currency transaction translation occurs as follows:
| ● | Income and expenses are translated at the prevailing rates on the date of the transaction. |
|---|---|
| ● | Non-monetary assets or liabilities are carried at the prevailing rates on the date of the transaction. |
| --- | --- |
| ● | Monetary items, including intercompany loans that are not deemed to represent net investments in a foreign subsidiary, are translated at the prevailing rates at the balance sheet date. |
| --- | --- |
Foreign operation translation occurs when translating the financial statements of non-Canadian functional currency subsidiaries to the Canadian dollar and when translating intercompany loans that are deemed to represent net investments in a foreign subsidiary. Gains and losses from foreign operation translations are recorded as currency translation adjustments in the statement of comprehensive income. Foreign operation translation occurs as follows:
| ● | Income and expenses are translated at the average exchange rates for the period. |
|---|---|
| ● | Assets and liabilities are translated at the prevailing rates on the balance sheet date. |
| --- | --- |
Income taxes
Deferred tax assets and liabilities are calculated using the balance sheet method. Deferred tax assets and liabilities are recognized for the estimated effect of any temporary differences between the amounts recognized on Vermilion’s consolidated balance sheet and the respective tax basis. This calculation uses enacted or substantively enacted tax rates that are expected to be in effect when the temporary differences are expected to reverse. The effect of a change in tax rates on deferred taxes is recognized in the period the related legislation is substantively enacted.
Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent it is no longer probable that the related tax benefit will be realized.
Vermilion Energy Inc. ∎ Page 14 ∎ 2024 Financial Statements
Business combinations
Acquisitions of corporations or groups of assets are accounted for as business combinations using the acquisition method if the acquired assets constitute a business. Under the acquisition method, assets acquired and liabilities assumed in a business combination (with the exception of deferred tax assets and liabilities) are measured at their fair values. Deferred tax assets or liabilities arising from the assets acquired and liabilities assumed are measured in accordance with the policies described in "Income taxes" above.
If applicable, the excess or deficiency of the fair value of net assets acquired compared to consideration paid is recognized as a gain on business combination or as goodwill on the consolidated balance sheet. Acquisition-related costs incurred to effect a business combination are expensed in the period incurred.
As part of the assessment to determine if the acquisition constitutes a business, Vermilion may elect to apply the concentration test on a transaction by transaction basis. The test is met if substantially all of the fair value related to the gross assets acquired is concentrated in a single identifiable asset (or group of similar assets) resulting in the acquisition not being deemed a business and recorded as an asset acquisition.
Segmented information
Vermilion has a decentralized business unit structure designed to manage assets in each country the Company operates. Each of Vermilion’s operating segments derives its revenues solely from the production and sale of petroleum and natural gas.
Vermilion’s chief operating decision maker regularly reviews fund flows from operations generated by each of Vermilion’s operating segments. Fund flows from operations is a measure of profit or loss that provides the chief operating decision maker with the ability to assess the profitability of each operating segment and, correspondingly, the ability of each operating segment to fund its share of dividends, asset retirement obligations, and capital investments.
Management judgments and estimation uncertainty
The preparation of the consolidated financial statements in accordance with IFRS Accounting Standards requires management to make judgments, estimates, and assumptions that affect the reported amount of assets, liabilities, income, and expenses. Actual results could differ significantly from these estimates. Key areas where management has made judgments, estimates, and assumptions are described below.
The determination of whether indicators of impairment or impairment reversals:
| ● | Determining whether there are indicators of impairment or impairment reversals are based on management's assessments of the changes in estimates for future commodity prices, costs, discount rates, or reserves. Changes in these estimates and assumptions can directly impact the calculated fair value of capital assets and therefore could be indicators of impairment or impairment reversals. In addition, change in the Vermilion's market capitalization relative to its book value could be an indicator of impairment. |
|---|
The measurement of the fair value of capital assets acquired in a business combination and the determination of the recoverable amount of cash generating units ("CGU"):
| ● | Calculating the fair value of capital assets acquired in a business combination and the recoverable amount of CGUs (in the assessment of impairments or reversals of previous impairments if indicators of impairment or impairment reversal are identified) are based on estimated future commodity prices, discount rates and estimated reserves. Reserve estimates are based on: engineering data, estimated future commodity prices, expected future rates of production, and assumptions regarding the timing and amount of future expenditures. Changes in these estimates and assumptions can directly impact the calculated fair value of capital assets acquired (and thus the resulting goodwill or gain on business combination) and the recoverable amount of a CGU (and thus the resulting impairment loss or recovery). |
|---|---|
| ● | In addition, the recoverable amount of a CGU is impacted by the composition of CGUs, which are subject to management’s judgment of the lowest level at which there are identifiable cash inflows that are largely independent of the cash inflows of other groups of assets. The factors used by Vermilion to determine CGUs vary by jurisdiction due to their unique operating and geographic conditions. In general, Vermilion will assess the following factors: geographic proximity of the assets within a group to one another, geographic proximity of the group of assets to other groups of assets, homogeneity of the production from the group of assets and the sharing of infrastructure used to process and/or transport production. Changes in these judgments can directly impact the calculated recoverable amount of a CGU (and thus the resulting impairment loss or recovery). |
| --- | --- |
Vermilion Energy Inc. ∎ Page 15 ∎ 2024 Financial Statements
The measurement of the carrying value of asset retirement obligations on the balance sheet, including the fair value and subsequent carrying value of asset retirement obligations assumed in a business combination:
| ● | Asset retirement obligations are based on judgments regarding regulatory requirements, estimates of future costs, assumptions on the expected timing of expenditures, and estimates of the underlying risk inherent to the obligation. The carrying balance of asset retirement obligations and accretion expense may differ due to changes in: laws and regulations, technology, the expected timing of expenditures, and market conditions affecting the discount rate applied. |
|---|
The recognition and measurement of deferred tax assets and liabilities:
| ● | Tax interpretations, regulations, and legislation in the various jurisdictions in which Vermilion and its subsidiaries operate are subject to change and interpretation. Changes in laws and interpretations can affect the timing of the reversal of temporary tax differences, the tax rates in effect when such differences reverse and Vermilion’s ability to use tax losses and other tax pools in the future. The Company’s income tax filings are subject to audit by taxation authorities in numerous jurisdictions and the results of such audits may increase or decrease the tax liability. The determination of tax amounts recognized in the consolidated financial statements are based on management’s assessment of the tax positions, which includes consideration of their technical merits, communications with tax authorities and management’s view of the most likely outcome. |
|---|---|
| ● | The extent to which deferred tax assets are recognized are based on estimates of future profitability. These estimates are based on estimated future commodity prices and estimates of reserves. Judgments, estimates, and assumptions inherent in reserve estimates are described above. |
| --- | --- |
The measurement of lease obligations and corresponding right-of-use assets:
| ● | The measurement of lease obligations are subject to management’s judgments of the applicable incremental borrowing rate and the expected lease term. The carrying balance of the right-of-use assets, lease obligations, and the resulting interest and depletion and depreciation expense, may differ due to changes in the market conditions and expected lease terms. Applicable incremental borrowing rates are based on judgments of the economic environment, term, currency, and the underlying risk inherent to the asset. Lease terms are based on assumptions regarding cancellation and extension terms that allow for operational flexibility based on future market conditions. |
|---|
- Changes in accounting pronouncements
Amendments to IAS 1 Presentation of Financial Statements
On January 1, 2024, Vermilion adopted the amendments to IAS 1 Presentation of Financial Statements, as issued by the International Accounting Standards Board (“IASB”) that clarify the requirements for the presentation of liabilities as current or non-current in the statement of financial position and specify the classification and disclosure of a liability with covenants. There was no impact to Vermilion's financial statements.
Issuance of IFRS 18 - Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued the new accounting standard, IFRS 18 ‘Presentation and Disclosure in Financial Statements’. IFRS 18 will replace IAS 1 'Presentation of Financial Statements' and provides a defined structure to the statement of comprehensive income and related disclosure requirements. The new standard is effective for annual reporting periods beginning on or after January 1, 2027 and is required to be adopted retrospectively. Vermilion is currently reviewing the impact the standard will have on the consolidated financial statements.
Amendments to IFRS 9 - Financial Instruments and IFRS 7 Financial Instruments: Disclosure
In May 2024, the IASB issued amendments to IFRS 9 'Financial Instruments' and IFRS 7 'Financial Instruments: Disclosures' relating to settling financial liabilities using an electronic payment system and assessing contractual cash flow characteristics of financial assets. The amendments will be effective for annual reporting periods beginning on January 1, 2026, but are not expected to have a material impact on the consolidated financial statements.
Vermilion Energy Inc. ∎ Page 16 ∎ 2024 Financial Statements
4. Segmented information
Substantially all sales in the France operating segment for the years ended December 31, 2024 and December 31, 2023 were to one customer. In 2024 and 2023, France contributed more than 10% of Vermilion's consolidated revenues.
| | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Year Ended December 31, 2024 | ||||||||||||||||||
| | **** | Canada | | USA | **** | France | **** | Netherlands | **** | Germany | **** | Ireland | **** | Australia | **** | CEE | **** | Corporate | **** | Total |
| Total assets | 2,075,273 | | 269,686 | 630,120 | 190,023 | 469,295 | 921,331 | 283,880 | 95,908 | 1,180,060 | 6,115,576 | |||||||||
| Drilling and development | 374,892 | | 35,472 | 45,671 | 25,905 | 66,545 | 4,355 | 29,284 | 4,838 | — | 586,962 | |||||||||
| Exploration and evaluation | — | | — | — | — | 28,043 | — | — | 7,975 | — | 36,018 | |||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Crude oil and condensate sales | 556,375 | | 118,198 | 314,232 | 2,515 | 48,275 | — | 182,847 | 37 | — | 1,222,479 | |||||||||
| NGL sales | 64,934 | | 14,622 | — | — | — | — | — | — | — | 79,556 | |||||||||
| Natural gas sales | 89,981 | | 4,743 | — | 136,795 | 101,450 | 311,325 | — | 35,078 | — | 679,372 | |||||||||
| Sales of purchased commodities | | — | | — | | — | | — | | — | | — | | — | | — | | 92,843 | | 92,843 |
| Royalties | (84,337) | | (39,849) | (41,585) | (244) | (5,703) | — | — | (6,232) | — | (177,950) | |||||||||
| Revenue from external customers | 626,953 | | 97,714 | 272,647 | 139,066 | 144,022 | 311,325 | 182,847 | 28,883 | 92,843 | 1,896,300 | |||||||||
| Purchased commodities | — | | — | — | — | — | — | — | — | (92,843) | (92,843) | |||||||||
| Transportation | (54,091) | | (1,465) | (23,106) | — | (11,853) | (8,418) | — | — | — | (98,933) | |||||||||
| Operating | (240,333) | | (26,887) | (69,376) | (41,127) | (53,129) | (54,177) | (80,347) | (2,537) | — | (567,913) | |||||||||
| General and administration | | (23,080) | | (13,493) | | (18,214) | | (8,327) | | (13,053) | | (8,029) | | (8,087) | | (7,220) | | — | | (99,503) |
| Petroleum resource rent tax | — | | — | — | — | — | — | (11,702) | — | — | (11,702) | |||||||||
| Corporate income tax (expense) recovery | 19 | | — | (12,225) | (32,592) | (18,558) | (1,403) | (3,022) | 7 | 1,332 | (66,442) | |||||||||
| Interest expense | — | | — | — | — | — | — | — | — | (84,606) | (84,606) | |||||||||
| Equity based compensation | | — | | — | | — | | — | | — | | — | | — | | — | | (14,361) | | (14,361) |
| Realized gain on derivative instruments | — | | — | — | — | — | — | — | — | 345,318 | 345,318 | |||||||||
| Realized foreign exchange gain | — | | — | — | — | — | — | — | — | 7,735 | 7,735 | |||||||||
| Realized other expense | — | | — | — | — | — | — | — | — | (7,267) | (7,267) | |||||||||
| Fund flows from operations | **** | 309,468 | | 55,869 | **** | 149,726 | **** | 57,020 | **** | 47,429 | **** | 239,298 | **** | 79,689 | **** | 19,133 | **** | 248,151 | **** | 1,205,783 |
| | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Year Ended December 31, 2023 | ||||||||||||||||||
| | Canada | | USA | France | Netherlands | Germany | Ireland | Australia | CEE | Corporate^(1)^ | Total | |||||||||
| Total assets | 1,805,049 | | 254,884 | 587,824 | 237,326 | 425,532 | 1,137,648 | 280,532 | 80,388 | 1,426,638 | 6,235,821 | |||||||||
| Drilling and development | 288,223 | | 91,977 | 48,297 | 44,147 | 48,463 | 20,283 | 26,005 | 1,715 | — | 569,110 | |||||||||
| Exploration and evaluation | — | | — | — | — | 11,248 | — | — | 9,833 | — | 21,081 | |||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Crude oil and condensate sales | 621,985 | | 129,775 | 285,626 | 2,306 | 57,464 | 74 | 36,381 | — | — | 1,133,611 | |||||||||
| NGL sales | 68,753 | | 15,240 | — | — | — | — | — | — | — | 83,993 | |||||||||
| Natural gas sales | 170,653 | | 6,143 | — | 184,548 | 138,017 | 302,330 | — | 3,260 | — | 804,951 | |||||||||
| Sales of purchased commodities | | — | | — | | — | | — | | — | | — | | — | | — | | 177,000 | | 177,000 |
| Royalties | (103,511) | | (41,487) | (37,425) | (1,567) | (5,993) | — | — | (1,711) | — | (191,694) | |||||||||
| Revenue from external customers | 757,880 | | 109,671 | 248,201 | 185,287 | 189,488 | 302,404 | 36,381 | 1,549 | 177,000 | 2,007,861 | |||||||||
| Purchased commodities | | — | | — | — | — | — | — | — | — | (177,000) | (177,000) | ||||||||
| Transportation | (43,163) | | (751) | (24,511) | — | (13,333) | (7,098) | — | — | — | (88,856) | |||||||||
| Operating | (233,417) | | (23,424) | (80,134) | (39,157) | (43,857) | (39,464) | (52,360) | (1,568) | — | (513,381) | |||||||||
| General and administration | (96,296) | | (9,734) | | (20,642) | | (8,317) | | (13,104) | | (19,054) | | (8,182) | | (7,150) | | 101,763 | | (80,716) | |
| Petroleum resource rent tax | — | | — | — | — | — | — | 20,860 | — | — | 20,860 | |||||||||
| Corporate income tax (expense) recovery | (53) | | — | (14,313) | (48,349) | (28,533) | (715) | 13 | (14) | (78,394) | (170,358) | |||||||||
| Interest expense | — | | — | — | — | — | — | — | — | (85,212) | (85,212) | |||||||||
| Realized gain on derivative instruments | — | | — | — | — | — | — | — | — | 234,365 | 234,365 | |||||||||
| Realized foreign exchange loss | — | | — | — | — | — | — | — | — | (4,532) | (4,532) | |||||||||
| Realized other expense | — | | — | — | — | — | — | — | — | (420) | (420) | |||||||||
| Fund flows from operations | **** | 384,951 | | 75,762 | **** | 108,601 | **** | 89,464 | **** | 90,661 | **** | 236,073 | **** | (3,288) | **** | (7,183) | **** | 167,570 | **** | 1,142,611 |
^(1)^Central and Eastern Europe and Corporate have been presented separately in the prior year for comparability with current year presentation.
Vermilion Energy Inc. ∎ Page 17 ∎ 2024 Financial Statements
Reconciliation of fund flows from operations to net loss:
| | | | | |
|---|---|---|---|---|
| | | Year Ended | ||
| | Dec 31, 2024 | Dec 31, 2023 | ||
| Fund flows from operations | 1,205,783 | 1,142,611 | ||
| Equity based compensation | (15,569) | (42,756) | ||
| Unrealized (loss) gain on derivative instruments | (452,858) | 179,707 | ||
| Unrealized foreign exchange (loss) gain | (58,471) | 12,438 | ||
| Accretion | (74,541) | (78,187) | ||
| Depletion and depreciation | (683,240) | (712,619) | ||
| Deferred tax recovery | 37,991 | 190,193 | ||
| Gain on business combination | — | 439,487 | ||
| Loss on disposition | | — | | (352,367) |
| Impairment expense | | — | | (1,016,094) |
| Unrealized other expense | (5,834) | — | ||
| Net loss | **** | (46,739) | **** | (237,587) |
- Business combination
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 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.
| | | |
|---|---|---|
| | **** | Consideration |
| Cash consideration paid | **** | 488,893 |
| | | |
|---|---|---|
| | **** | Allocation of consideration |
| Cash acquired | 400,002 | |
| Capital assets | 768,026 | |
| Acquired working capital deficit | (109,134) | |
| Asset retirement obligations | (42,277) | |
| Derivative liability | (51,789) | |
| Deferred tax liability | (36,448) | |
| Net assets acquired | | 928,380 |
| Gain on business combination | (439,487) | |
| 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 due to significant increases in European natural gas prices throughout 2022 and Q1 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 $161.7 million and net earnings of $43.6 million. Had the acquisition occurred on January 1, 2023, consolidated petroleum and natural gas revenue would have been $2,098.2 million and consolidated net loss would have been 182.6 million for the year ended December 31, 2023.
Vermilion Energy Inc. ∎ Page 18 ∎ 2024 Financial Statements
6. Investments
Investments are comprised of Vermilion's ownership interest in Coelacanth Energy Inc. ("CEI"), an oil and natural gas company, actively engaged in the acquisition, development, exploration, and production of oil and natural gas reserves in northeastern British Columbia, Canada.
In February 2024, Vermilion acquired additional securities, increasing its ownership to approximately 21% of the issued and outstanding common shares of CEI. As such, Vermilion concluded it had acquired significant influence over the entity and should prospectively be accounted for using the equity method of accounting subsequently, recording Vermilion's share of CEI's profit or loss. Prior to acquiring significant influence, this investment was accounted for under IFRS 9 as an investment in securities using the fair value method of accounting. The transaction was treated as a disposal of the original investment at fair value and an acquisition of an investment in associate, with no resulting gain or loss recognized in the consolidated statement of net earnings.
The following table reconciles the change in Vermilion's investments:
| | | | | |
|---|---|---|---|---|
| | **** | 2024 | | 2023 |
| Balance at January 1 | **** | 73,261 | | 56,366 |
| Acquisition of securities | **** | 9,373 | | 21,603 |
| Fair value adjustment ^(1)^ | **** | (2,203) | | (4,708) |
| Investment in securities prior to reclassification to investment in associate | | 80,431 | | 73,261 |
| Vermilion's share of net loss ^(2)^ | | (1,569) | | — |
| Balance at December 31 | **** | 78,862 | | 73,261 |
| (1) | The investment was classified as a level 1 instrument on the fair value hierarchy and used observable inputs when making fair value adjustments and was recorded until the date of significant influence, on February 29, 2024. | |||
| --- | --- | |||
| (2) | Investment losses are recognized within other expense on the consolidated statements of net earnings and comprehensive income. | |||
| --- | --- |
The following table summarizes the net assets of CEI based on their most recent and publicly available financial statements as at September 30, 2024, and Vermilion's respective share:
| | | | |
|---|---|---|---|
| Current assets | **** | 49,905 | |
| Non-current assets | **** | 142,374 | |
| Current liabilities | **** | (14,235) | |
| Non-current liabilities | **** | (22,163) | |
| Net assets | **** | 155,881 | |
| Vermilion’s ownership | **** | 20.8 | % |
| Vermilion’s share of net assets | **** | 32,398 | |
For the ten months ended December 31, 2024, or the period the investment was accounted for under the equity method of accounting, Vermilion adjusted the value of the investment for its share of CEI's profit or loss. The following table summarizes CEI's estimated revenue and net loss and Vermilion's respective share, based on CEI's most recent and publicly available financial statements for the nine months ended September 30, 2024 and other market factors, including but not limited to, relevant market prices:
| | | | |
|---|---|---|---|
| | **** | Ten Months Ended | **** |
| | | December 31, 2024 | **** |
| Total revenue | **** | 9,248 | |
| Net loss | **** | (7,537) | |
| Vermilion’s ownership | **** | 20.8 | % |
| Vermilion’s share of net loss | **** | (1,569) | |
At December 31, 2024, the fair value of Vermilion's investment in CEI is $88.1 million or $0.80/share (December 31, 2023 - $73.3 million or $0.75/share).
Vermilion Energy Inc. ∎ Page 19 ∎ 2024 Financial Statements
7. Capital assets
The following table reconciles the change in Vermilion’s capital assets:
| | | | | |
|---|---|---|---|---|
| | 2024 | 2023 | ||
| Balance at January 1 | 4,882,509 | 5,691,522 | ||
| Acquisitions | 12,728 | 836,295 | ||
| Dispositions | | — | | (676,471) |
| Additions | 586,962 | 569,110 | ||
| Increase in right-of-use assets | 38,290 | 3,103 | ||
| Lease purchase | | 78,832 | | — |
| Transfers from exploration and evaluation assets | 14,110 | 40,521 | ||
| Impairment expense | | — | | (1,016,094) |
| Depletion and depreciation | (673,475) | (699,343) | ||
| Changes in asset retirement obligations | 27,906 | 138,239 | ||
| Foreign exchange | 50,599 | (4,373) | ||
| Balance at December 31 | 5,018,461 | | 4,882,509 | |
| | | | ||
| Cost | 13,760,503 | 12,966,256 | ||
| Accumulated depletion, depreciation, and impairment | (8,742,042) | (8,083,747) | ||
| Balance at December 31 | 5,018,461 | | 4,882,509 |
In May 2024, Vermilion recognized a seven-year lease for a processing facility, in December 2024, Vermilion exercised the right to purchase the processing facility for $78.8 million, extinguishing the lease obligation and resulting in the transfer from right-of-use assets to depletable assets.
Impairment
In the fourth quarter of 2023, indicators of impairment were present in our France CGU due to changes in forecasted cost assumptions and in our Saskatchewan and United States CGUs due to negative technical revisions. As a result of the indicators of impairment, the Company performed impairment calculations on the identified CGUs and the recoverable amounts were determined using fair value less costs to sell, which considered future after-tax cash flows from proved plus probable reserves and an after-tax discount rate of 13% for Saskatchewan and 15.0% for France and United States. Based on the results of the impairment tests completed, the Company recognized non-cash impairment charges of $1.0 billion. Inputs used in the measurement of capital assets are not based on observable market data and fall within level 3 of the fair value hierarchy.
The following benchmark price forecasts were used to calculate the recoverable amounts:
| | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | 2024 | **** | 2025 | **** | 2026 | **** | 2027 | **** | 2028 | **** | 2029 | **** | 2030 | **** | 2031 | **** | 2032 | **** | 2033^(2)^ |
| Brent Crude ($ US/bbl) ^(1)^ | | 78.00 | | 79.18 | | 80.36 | | 81.79 | | 83.41 | | 85.09 | | 86.79 | | 88.52 | | 90.29 | | 92.10 |
| WTI Crude ($ US/bbl) ^(1)^ | | 73.67 | | 74.98 | | 76.14 | | 77.66 | | 79.22 | | 80.80 | | 82.42 | | 84.06 | | 85.75 | | 87.46 |
| Light Sour Crude ($/bbl) ^(1)^ | | 93.35 | | 95.50 | | 96.53 | | 98.46 | | 100.43 | | 102.44 | | 104.49 | | 106.58 | | 108.71 | | 110.88 |
| SK Plant Gate Gas - Spot Gas ($/MMbtu) ^(1)^ | | 1.98 | | 3.15 | | 3.83 | | 3.91 | | 3.99 | | 4.08 | | 4.16 | | 4.25 | | 4.34 | | 4.43 |
| Henry Hub Gas ($ US/MMbtu) ^(1)^ | | 2.75 | | 3.64 | | 4.02 | | 4.10 | | 4.18 | | 4.27 | | 4.35 | | 4.44 | | 4.53 | | 4.62 |
| ^(1)^ | The forecast benchmark prices listed are adjusted for quality differentials, heat content, transportation and marketing costs and other factors specific to the Company’s operations when determining recoverable amounts. |
|---|---|
| ^(2)^ | In 2033 and beyond, commodity price forecasts are inflated at a rate of 2.0% per annum. |
| --- | --- |
Vermilion Energy Inc. ∎ Page 20 ∎ 2024 Financial Statements
The following are the results of tests completed, recoverable amounts, and sensitivity impacts which would increase the impairments taken:
| | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|
| Operating Segment | **** | CGU | **** | Impairment | **** | Recoverable Amount | **** | 1% increase in discount rate | **** | 5% decrease in pricing |
| Canada | Saskatchewan | 542,937 | 704,636 | | 42,657 | 79,452 | ||||
| France | France^(1)^ | 226,858 | 523,303 | | 24,653 | 70,035 | ||||
| United States | | United States | | 246,299 | | 239,179 | | 12,819 | | 38,290 |
| Total | **** | | **** | 1,016,094 | **** | 1,467,118 | | 80,129 | 187,777 | |
| ^(1)^ | During 2023, Vermilion finalized an evaluation of the management and organization of Vermilion’s assets in France resulting in a combination of its Neocomian, Chaunoy, Champotran, and Aquitaine Basin CGUs into the France CGU. If these CGUs were not combined, impairment recognized would have increased by $23.2 million. | |||||||||
| --- | --- |
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.
United States disposition
In December 2023, Vermilion sold non-core assets in Wyoming for net proceeds of $16.3 million and resulted in a loss on disposition of $125.5 million.
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.
Right-of-use assets
The following table discloses the carrying balance and depreciation charge relating to right-of-use assets by class of underlying asset as at and for the year ended December 31, 2024 and December 31, 2023:
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| | As at Dec 31, 2024 | | As at Dec 31, 2023 | ||||
| (M) | Depreciation | **** | Balance | **** | Depreciation | **** | Balance |
| Office space | 6,899 | **** | 49,340 | 8,115 | 25,893 | ||
| Processing facilities | 16,178 | **** | 3,367 | 7,691 | 6,326 | ||
| Oil storage facilities | 2,627 | **** | 4,385 | 2,667 | 7,037 | ||
| Vehicles and equipment | 1,685 | **** | 4,631 | 5,433 | 9,760 | ||
| Total | 27,389 | **** | 61,723 | 23,906 | 49,016 |
All values are in US Dollars.
In July 2024, Vermilion signed an extension of its existing head office lease from 2027 to 2035. The lease increased right-of-use assets by $30.9 million offset with changes to lease liabilities (current portion reduced by $3.4 million; non-current portion increased by $34.4 million). Vermilion's incremental borrowing rate at the time of signing the lease was 7.0%.
Vermilion Energy Inc. ∎ Page 21 ∎ 2024 Financial Statements
8. Exploration and evaluation assets
The following table reconciles the change in Vermilion’s exploration and evaluation assets:
| | | | | |
|---|---|---|---|---|
| | 2024 | 2023 | ||
| Balance at January 1 | 198,379 | 270,593 | ||
| Additions | 36,018 | 21,081 | ||
| Dispositions | | — | | (25,862) |
| Changes in asset retirement obligations | — | (980) | ||
| Transfers to capital assets | (14,110) | (40,521) | ||
| Depreciation | (335) | (27,386) | ||
| Foreign exchange | 4,334 | 1,454 | ||
| Balance at December 31 | 224,286 | 198,379 | ||
| | | | ||
| Cost | 460,331 | 432,345 | ||
| Accumulated depreciation | (236,045) | (233,966) | ||
| Carrying amount at December 31 | 224,286 | 198,379 |
- Asset retirement obligations
The following table reconciles the change in Vermilion’s asset retirement obligations:
| | | | | |
|---|---|---|---|---|
| | 2024 | 2023 | ||
| Balance at January 1 | 1,159,063 | 1,087,757 | ||
| Additional obligations recognized | 5,431 | 60,012 | ||
| Dispositions | | — | | (151,566) |
| Changes in estimated abandonment timing and costs | (32,606) | 1,159 | ||
| Obligations settled | (55,334) | (56,966) | ||
| Accretion | 74,541 | 78,187 | ||
| Changes in rates | 55,081 | 133,575 | ||
| Foreign exchange | 18,542 | 6,905 | ||
| Balance at December 31 | 1,224,718 | 1,159,063 |
Vermilion calculated the present value of the obligations using a credit-adjusted risk-free rate, calculated using a credit spread of 2.6% as at December 31, 2024 (December 31, 2023 – 3.6%) 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:
| | | | | | |
|---|---|---|---|---|---|
| | Dec 31, 2024 | Dec 31, 2023 | **** | ||
| Canada | 3.2 | % | 3.0 | % | |
| United States | | 4.8 | % | 4.2 | % |
| France | 3.7 | % | 3.0 | % | |
| Netherlands | 2.7 | % | 2.1 | % | |
| Germany | 2.6 | % | 2.3 | % | |
| Ireland | 2.8 | % | 2.7 | % | |
| Australia | 4.6 | % | 4.0 | % | |
| Central and Eastern Europe | 4.7 | % | 4.4 | % |
Vermilion has estimated the asset retirement obligations based on current cost estimates of $2.3 billion (2023 - $2.2 billion). Current cost estimates are inflated to the estimated time of abandonment using inflation rates of between 1.5% and 3.6% (2023 - between 1.3% and 5.5%), resulting in inflated cost estimates of $3.5 billion (2023 - $3.4 billion). These payments are expected to be made over the next 55 years, with the majority of the costs incurred in the first 35 years.
Vermilion Energy Inc. ∎ Page 22 ∎ 2024 Financial Statements
A 0.5% increase/decrease in the discount rate applied to asset retirement obligations would decrease/increase asset retirement obligations by approximately $85.1 million. A one-year increase/decrease in the expected timing of abandonment spend would decrease/increase asset retirement obligations by approximately $45.4 million.
- Derivative instruments
The following table reconciles the change in the fair value of Vermilion’s derivative instruments:
| | | | | |
|---|---|---|---|---|
| | | Year Ended | ||
| Dec 31, 2024 | Dec 31, 2023 | |||
| Fair value of contracts, beginning of year | 368,117 | 239,596 | ||
| Reversal of opening contracts settled during the year | (284,096) | (43,267) | ||
| Assumed in acquisitions | — | 51,866 | ||
| Realized gain on contracts settled during the year | 345,318 | 234,365 | ||
| Unrealized (loss) gain during the year on contracts outstanding at the end of the year | (168,762) | 171,448 | ||
| Unwinding of contracts assumed in acquisitions | — | (51,526) | ||
| Net receipt from counterparties on contract settlements during the year | | (345,318) | | (234,365) |
| Fair value of contracts, end of year | (84,741) | 368,117 | ||
| Comprised of: | ||||
| Current derivative asset | 40,312 | 313,792 | ||
| Current derivative liability | (52,944) | (732) | ||
| Non-current derivative asset | 13,927 | 76,107 | ||
| Non-current derivative liability | (86,036) | (21,050) | ||
| Fair value of contracts, end of year | (84,741) | 368,117 |
The loss (gain) on derivative instruments for 2024 and 2023 were comprised of the following:
| | | | | |
|---|---|---|---|---|
| | | Year Ended | ||
| Dec 31, 2024 | Dec 31, 2023 | |||
| Realized gain on contracts settled during the year | (345,318) | (234,365) | ||
| Reversal of opening contracts settled during the year | 284,096 | 43,267 | ||
| Unwinding of contracts assumed in acquisitions | | — | | (51,526) |
| Unrealized loss (gain) on contracts outstanding at the end of the year | 168,762 | (171,448) | ||
| Loss (gain) on derivative instruments | 107,540 | (414,072) |
Vermilion executes derivative instruments where there is an underlying exposure to offset the position. Consistent with the Company's accounting policy, Vermilion does not match unrealized gains or losses on these contracts with the underlying exposure. Please refer to Note 20 (Supplemental information) for a listing of Vermilion's outstanding derivative instruments as at December 31, 2024.
Vermilion Energy Inc. ∎ Page 23 ∎ 2024 Financial Statements
11. Leases
Vermilion had the following future commitments associated with its lease obligations:
| | | | |
|---|---|---|---|
| | As at | ||
| (M) | Dec 31, 2024 | Dec 31, 2023 | |
| Less than 1 year | 16,530 | 24,029 | |
| 1 - 3 years | 20,632 | 31,077 | |
| 3 - 5 years | 15,217 | 4,591 | |
| After 5 years | 37,551 | 2 | |
| Total lease payments | 89,930 | 59,699 | |
| Amounts representing interest | (22,733) | (5,630) | |
| Present value of net lease payments | 67,197 | 54,069 | |
| Current portion of lease obligations | (12,206) | (21,068) | |
| Non-current portion of lease obligations | 54,991 | 33,001 | |
| | | | |
| Total cash outflow | 112,977 | | 21,002 |
| Interest on lease liabilities | 11,438 | | 3,908 |
All values are in US Dollars.
In May 2024, Vermilion recognized a seven-year lease for a processing facility, in December 2024, Vermilion exercised the right to purchase the processing facility for $78.8 million, extinguishing the lease obligation and resulting in the transfer from right-of-use assets to depletable assets.
In July 2024, Vermilion signed an extension of its existing head office lease from 2027 to 2035. The lease increased right-of-use assets by $30.9 million offset with changes to lease liabilities (current portion reduced by $3.4 million; non-current portion increased by $34.4 million). Vermilion's incremental borrowing rate at the time of signing the lease was 7.0%.
- Taxes
The following table reconciles Vermilion’s deferred tax asset and liability:
| | | | | |
|---|---|---|---|---|
| | | As at | ||
| | Dec 31, 2024 | Dec 31, 2023 | ||
| Deferred tax assets: | | | | |
| Non-capital losses | 516,947 | | 632,870 | |
| Derivative contracts | 20,685 | | (89,619) | |
| Other | (30) | | (437) | |
| Stock based compensation | 7,018 | | 6,757 | |
| Asset retirement obligations | 90,941 | | 77,292 | |
| Capital assets | (448,180) | | (447,463) | |
| Unrealized foreign exchange | 10,333 | | 2,651 | |
| Deferred tax assets | **** | 197,714 | | 182,051 |
| Deferred tax liabilities: | | | | |
| Derivative contracts | | — | | — |
| Asset retirement obligations | 112,790 | | 105,147 | |
| Capital assets | 252,425 | | 279,889 | |
| Stock based compensation | | — | | — |
| Other | 230 | | 6,275 | |
| Unrealized foreign exchange | | — | | — |
| Non-capital losses | (649) | | (10,341) | |
| Deferred tax liabilities | **** | 364,796 | | 380,970 |
Vermilion Energy Inc. ∎ Page 24 ∎ 2024 Financial Statements
Income tax expense differs from the amount that would have been expected if the reported earnings had been subject only to the statutory Canadian income tax rate as follows:
| | | | | | |
|---|---|---|---|---|---|
| | | Year Ended | |||
| Dec 31, 2024 | Dec 31, 2023 | ||||
| Loss before income taxes | (6,586) | | (278,282) | ||
| Canadian corporate tax rate | 24.41 | % | 24.35 | % | |
| Expected tax recovery | (1,608) | | (67,762) | | |
| (Decrease) increase in taxes resulting from: | | | | | |
| Petroleum resource rent tax (PRRT) rate differential ^(1)^ | 5,468 | | (14,177) | | |
| Foreign tax rate differentials ^(2) (3)^ | 19,657 | | 33,404 | | |
| Equity based compensation expense | (3,542) | | (1,914) | | |
| Amended returns and changes to estimated tax pools and tax positions | 4,597 | | (7,664) | | |
| Statutory rate changes and the estimated reversal rates on temporary differences ^(3)^ | — | | (17,474) | | |
| Derecognition of deferred tax assets | 29,433 | | 202,216 | | |
| Non-taxable amounts related to business combination | — | (172,692) | | ||
| Windfall tax (recovery) expense ^(3)^ | (9,074) | 78,426 | | ||
| Other non-deductible items | (4,778) | | (73,058) | | |
| Provision for income tax expense (recovery) | 40,153 | | (40,695) | | |
| (1) | In Australia, current taxes include both corporate income tax rates and PRRT. For both 2024 and 2023, corporate income tax rates were applied at a rate of 30% and PRRT was applied at a rate of 40%. | ||||
| --- | --- | ||||
| (2) | The applicable tax rates for 2024 were: 25.8% in France, 50.0% in the Netherlands, 31.1% in Germany, 25.0% in Ireland, and 21.0% in the United States (2023: 25.8% in France, 50.0% in the Netherlands, 31.2% in Germany, 25.0% in Ireland, and 21.0% in the United States). | ||||
| --- | --- | ||||
| (3) | On October 6, 2022 the Council of the European Union adopted a regulation that implemented a temporary windfall tax on the profits of oil and gas producers resident in the European Union. This windfall tax was referred to as a temporary solidarity contribution and was calculated on the amount by which the taxable profits for the elected years exceeded the greater of zero and 120% of the average taxable profits for the 2018 to 2021 period. The regulation required Member States to implement the temporary solidarity contribution at a minimum rate of 33% while providing Member States with the option to apply the temporary solidarity contribution to fiscal years beginning on or after January 1, 2022, January 1, 2023, or both. The temporary solidarity contribution does not apply to 2024 or later years and is considered a tax pursuant to IAS 12 “Income Taxes”. | ||||
| --- | --- |
The following table summarizes the manner of implementation of the temporary solidarity contribution by the Member States in which Vermilion operates:
| | | | | | |
|---|---|---|---|---|---|
| Jurisdiction | 2024 | 2023 | | ||
| France | N/A | | N/A | | |
| Netherlands ^(1)^ | N/A | | N/A | | |
| Germany | N/A | | 33.0 | % | |
| Ireland | N/A | | 75.0 | % | |
| (1) | For 2023 and 2024, Netherlands has implemented a windfall royalty which, for natural gas sales, is calculated as 65% of the excess of the realized price for a subject year versus the threshold price of €0.50/Nm3 (€13.40/mcf). This royalty is deductible against current income taxes. | ||||
| --- | --- |
At December 31, 2024, Vermilion had $2.9 billion (December 31, 2023 - $3.2 billion) of unused tax losses of which $1.3 billion (December 31, 2023 - $1.4 billion) relates to Vermilion's Canada segment and expire between 2031 and 2043. The majority of the remaining unused tax losses relate to Vermilion's Ireland segment and do not expire.
At December 31, 2024, Vermilion derecognized $29.4 million (December 31, 2023 - derecognized $202.2 million) of deferred income tax assets relating to the Canada, USA, Ireland and Australia segments as there is uncertainty as to the Company's ability to fully utilize such losses based on the forecasted commodity prices in effect as at December 31, 2024.
The aggregate amount of temporary differences associated with investments in subsidiaries for which deferred tax liabilities have not been recognized as at December 31, 2024 is approximately $1.3 billion (December 31, 2023 – approximately $1.0 billion).
In December 2021, the Organization for Economic Co-operation and Development (“OECD”) issued model rules for a new global minimum tax framework (“Pillar Two”). The objective of Pillar Two is to ensure that large multinational enterprises are subjected to a minimum 15% effective tax rate in each jurisdiction in which they operate.
Vermilion Energy Inc. ∎ Page 25 ∎ 2024 Financial Statements
Most of the countries where Vermilion operates have enacted tax legislation to comply with Pillar Two with effect from January 1, 2024. During the year ended December 31, 2024, the Company recorded $6.5 million of income tax expense relating to Pillar Two.
In May 2023, the IASB issued amendments to IAS 12, “Income Taxes” (“IAS 12”) to address the impacts and additional disclosure requirements related to Pillar Two. Vermilion has applied the mandatory exception required by IAS 12 and accordingly has not accounted for any related deferred income tax assets or liabilities.
- Long-term debt
The following table summarizes Vermilion’s outstanding long-term debt:
| | | | | |
|---|---|---|---|---|
| | | As at | ||
| | Dec 31, 2024 | Dec 31, 2023 | ||
| 2025 senior unsecured notes | 398,275 | 395,839 | ||
| 2030 senior unsecured notes | | 565,181 | | 518,176 |
| Long-term debt | 963,456 | 914,015 |
The fair value of the 2025 senior unsecured notes as at December 31, 2024 was $397.8 million (December 31, 2023 - $392.7 million). The fair value of the 2030 senior unsecured notes as at December 31, 2024 was $571.2 million (December 31, 2023 - $511.7 million).
At December 31, 2024 Vermilion's revolving credit facility was undrawn.
The following table reconciles the change in Vermilion’s long-term debt:
| | | | | |
|---|---|---|---|---|
| 2024 | 2023 | |||
| Balance at January 1 | 914,015 | | 1,081,351 | |
| Net repayments on the revolving credit facility | — | | (146,324) | |
| Repurchases of senior unsecured notes | (31,561) | — | ||
| Amortization of transaction costs | 2,276 | 60,004 | ||
| Foreign exchange | 78,726 | (81,016) | ||
| Balance at December 31 | 963,456 | 914,015 |
Revolving credit facility
As at December 31, 2024, Vermilion had in place a bank revolving credit facility maturing May 26, 2028 with the following terms:
| | | | | |
|---|---|---|---|---|
| | | As at | ||
| | Dec 31, 2024 | Dec 31, 2023 | ||
| Total facility amount | 1,350,000 | 1,600,000 | ||
| Letters of credit outstanding | (22,731) | (18,116) | ||
| Unutilized capacity | 1,327,269 | 1,581,884 |
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 17, 2024, the maturity date of the facility was extended to May 26, 2028 (previously May 28, 2027) and the total facility amount of $1.6 billion was reduced to $1.35 billion, with an accordion feature to increase the aggregate amount available under the facility to $1.6 billion. As at December 31, 2024, the revolving credit facility was undrawn.
The facility bears interest at a rate applicable to demand loans plus applicable margins.
Vermilion Energy Inc. ∎ Page 26 ∎ 2024 Financial Statements
As at December 31, 2024, the revolving credit facility was subject to the following financial covenants:
| | | | | | | |
|---|---|---|---|---|---|---|
| | | | | As at | ||
| Financial covenant | Limit | Dec 31, 2024 | Dec 31, 2023 | |||
| Consolidated total debt to consolidated EBITDA | Less than 4.0 | 0.72 | 0.65 | |||
| Consolidated total senior debt to consolidated EBITDA | Less than 3.5 | — | — | |||
| Consolidated EBITDA to consolidated interest expense | Greater than 2.5 | | 16.59 | | 17.33 |
The financial covenants include financial measures defined within the revolving credit facility agreement that are not defined under IFRS Accounting Standards. These financial measures are defined by the revolving credit facility agreement as follows:
| ● | 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 loss 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, Vermilion's revolving credit facility has provisions relating to its liability management ratings in Alberta and Saskatchewan whereby if Vermilion's 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 Vermilion's security adjusted liability management ratings breach additional lower limits for a period greater than 90 days. As of December 31, 2024, 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 December 31, 2024 and December 31, 2023, 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 100.00% redemption price plus any accrued and unpaid interest.
During the year ended December 31, 2024, Vermilion purchased $31.6 million of senior unsecured notes on the open market which were subsequently cancelled.
The Company has the right to roll over the senior unsecured notes under the existing revolving credit facility which matures May 26, 2028 thus has continued to classify the senior unsecured notes as non-current.
2030 senior unsecured notes
On April 26, 2022, Vermilion closed a private offering of US $400.0 million of senior unsecured notes, priced at 99.241% of par. The notes bear interest at a rate of 6.875% per annum, to be paid semi-annually on May 1 and November 1. The notes mature on May 1, 2030. As direct senior unsecured obligations of Vermilion, the notes rank equally with existing and future senior unsecured indebtedness of the Company.
The senior unsecured notes were recognized at amortized cost and include the transaction costs directly related to the issuance.
Vermilion Energy Inc. ∎ Page 27 ∎ 2024 Financial Statements
Vermilion may, at its option, redeem the notes prior to maturity as follows:
| ● | Prior to May 1, 2025, Vermilion may redeem up to 35% of the original principal amount of the notes with an amount of cash not greater than the net cash proceeds of certain equity offerings at a redemption price of 106.875% of the principal amount of the notes, together with accrued and unpaid interest. |
|---|---|
| ● | Prior to May 1, 2025, Vermilion may also redeem some or all of the notes at a price equal to 100% of the principal amount of the notes, plus a “make-whole premium,” together with applicable premium, accrued and unpaid interest. |
| --- | --- |
| ● | On or after May 1, 2025, Vermilion may redeem some or all of the senior unsecured notes at the redemption prices set forth below, together with accrued and unpaid interest. |
| --- | --- |
| | | | |
|---|---|---|---|
| Year | **** | Redemption price | **** |
| 2025 | 103.438 | % | |
| 2026 | 102.292 | % | |
| 2027 | 101.146 | % | |
| 2028 and thereafter | 100.000 | % |
- Shareholders’ capital
The following table reconciles the change in Vermilion’s shareholders’ capital:
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| | | 2024 | 2023 | ||||
| Shareholders’ capital | Shares (‘000s) | Amount (M) | Shares (‘000s) | Amount ($M) | |||
| Balance at January 1 | | 162,271 | | 4,142,566 | 163,227 | | 4,243,794 |
| Vesting of equity based awards | 1,181 | | 12,707 | 3,657 | | 23,575 | |
| Shares issued for equity based compensation | 72 | | 985 | 655 | | 11,242 | |
| Share-settled dividends on vested equity based awards | 87 | | 1,382 | 64 | | 1,179 | |
| Repurchase of shares | (9,267) | | (238,742) | (5,332) | | (137,224) | |
| Balance at December 31 | 154,344 | | 3,918,898 | 162,271 | | 4,142,566 |
All values are in US Dollars.
Vermilion is authorized to issue an unlimited number of common shares with no par value.
Dividends declared to shareholders for the year ended December 31, 2024 were $75.3 million or $0.48 per common share (2023 - $65.2 million or $0.40 per share).
On July 8, 2024, the Toronto Stock Exchange approved the Company's notice of intention to renew its normal course issuer bid ("the NCIB"). The NCIB renewal allows Vermilion to purchase up to 15,689,839 common shares (representing approximately 10% of outstanding common shares) beginning July 12, 2024 and ending July 11, 2025. Common shares purchased under the NCIB will be cancelled.
In 2024, Vermilion purchased and cancelled 9.3 million common shares under the NCIB for total consideration of $140.7 million (2023 - 5.3 million common shares for total consideration of $94.8 million). The surplus between the total consideration and the carrying value of the shares repurchased was recorded as a decrease to deficit.
Subsequent to December 31, 2024, Vermilion purchased and cancelled 0.9 million common shares under the NCIB for total consideration of $12.1 million.
- Capital disclosures
Vermilion defines capital as net debt (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 shareholders’ capital. In managing capital, Vermilion reviews whether fund flows from operations is sufficient to fund capital expenditures, dividends, and asset retirement obligations.
Vermilion Energy Inc. ∎ Page 28 ∎ 2024 Financial Statements
Vermilion monitors the ratio of net debt to fund flows from operations. As at December 31, 2024, our ratio of net debt to trailing fund flows from operations is 0.8 (December 31, 2023 - 0.9). Vermilion manages the ratio of net debt to fund flows from operations (refer to Note 4 - Segmented information) by monitoring capital expenditures, dividends, and asset retirement obligations with expected fund flows from operations. Vermilion intends for the ratio of net debt to fund flows from operations to trend towards 1.0 over time.
The following table calculates Vermilion’s ratio of net debt to fund flows from operations:
| | | | | |
|---|---|---|---|---|
| | | Year Ended | ||
| | Dec 31, 2024 | Dec 31, 2023 | ||
| Long-term debt | 963,456 | 914,015 | ||
| Adjusted working capital ^(1)^ | | 3,426 | | 164,552 |
| Net debt | 966,882 | 1,078,567 | ||
| | | | ||
| Ratio of net debt to four quarter trailing fund flows from operations | 0.8 | 0.9 | ||
| ^(1)^ | Adjusted working capital is defined as current assets (excluding current derivatives), less current liabilities (excluding current derivatives and current lease liabilities). | |||
| --- | --- |
- Equity based compensation
The following table summarizes the number of awards outstanding under the LTIP:
| | | | | |
|---|---|---|---|---|
| Number of LTIP Awards (‘000s) | 2024 | 2023 | ||
| Opening balance | 4,478 | 5,503 | ||
| Granted | 1,917 | 1,694 | ||
| Vested | (2,061) | (2,476) | ||
| Forfeited | (408) | (243) | ||
| Closing balance | 3,926 | 4,478 |
For the year ended December 31, 2024, the awards had a weighted average grant date fair value of $16.62 (2023 - $18.19). Equity based compensation expense for the awards is calculated based on the number of awards outstanding multiplied by the estimated performance factor that will be realized upon vesting (2024 - 1.0; 2023 - 1.0) adjusted by an estimated annual forfeiture rate (2024 – 7.2%; 2023 – 5.3%). Equity based compensation expense of $27.5 million was recorded during the year ended December 31, 2024 (2023 - $29.2 million) relating to the awards.
As at December 31, 2024, there were 568,826 DSUs outstanding with a weighted average grant date fair value of $14.32. In 2023, there were 470,952 DSUs granted with a weighted average grant date fair value of $14.26. Equity based compensation expense of $1.4 million was recorded during the year ended December 31, 2024 (2023 - $2.3 million) relating to the DSUs.
- Per share amounts
Basic and diluted net loss per share have been determined based on the following:
| | | | | |
|---|---|---|---|---|
| | | Year Ended | ||
| | Dec 31, 2024 | Dec 31, 2023 | ||
| Net loss | (46,739) | (237,587) | ||
| | | | | |
| Basic weighted average shares outstanding (‘000s) | 158,068 | 163,719 | ||
| Diluted weighted average shares outstanding ('000s) | 158,068 | 163,719 | ||
| | | | ||
| Basic loss per share | (0.30) | (1.45) | ||
| Diluted loss per share | (0.30) | (1.45) |
Vermilion Energy Inc. ∎ Page 29 ∎ 2024 Financial Statements
18. Financial instruments
Classification of financial instruments
The following table summarizes the carrying value relating to Vermilion’s financial instruments:
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | As at Dec 31, 2024 | | As at Dec 31, 2023 | ||||||||||||
| | | | | | Amortized | | | | | | | | Amortized | | |
| (M) | FVTPL | FVTOCI | Cost | Total | FVTPL | FVTOCI | Cost | Total | |||||||
| Cash and cash equivalents | 131,730 | | — | **** | — | | 131,730 | 141,456 | | — | — | | 141,456 | ||
| Derivative assets | 54,239 | | — | **** | — | | 54,239 | 389,899 | | — | — | | 389,899 | ||
| Investments(1) | — | | — | **** | — | | — | — | | 73,261 | — | | 73,261 | ||
| Derivative liabilities | (138,980) | | — | | — | | (138,980) | (21,782) | | — | | — | | (21,782) | |
| Accounts receivable | — | | — | **** | 298,493 | | 298,493 | — | | — | 242,926 | | 242,926 | ||
| Accounts payable and accrued liabilities | — | | — | **** | (425,410) | | (425,410) | — | | — | (380,370) | | (380,370) | ||
| Dividends payable | — | | — | **** | (18,521) | | (18,521) | — | | — | (16,227) | | (16,227) | ||
| Lease obligations | — | | — | | (54,991) | | (54,991) | | — | | — | | (33,001) | | (33,001) |
| Long-term debt (2) | — | | — | **** | (963,456) | | (963,456) | — | | — | (914,015) | | (914,015) |
All values are in US Dollars.
| (1) | The investment was classified as a level 1 instrument on the fair value hierarchy and used observable inputs when making fair value adjustments and was recorded until significant influence was acquired, on February 29, 2024. The investment was subsequently accounted for under IAS 28. |
|---|---|
| (2) | The carrying value of the above equals fair value except for long-term debt. The fair value of long-term debt was $969,050 (2023 - $904,418). |
| --- | --- |
The carrying value of accounts receivable, accounts payable and accrued liabilities, dividends payable and lease obligations are a reasonable approximation of their fair value due to the short maturity of these financial instruments. The carrying value of long-term debt outstanding on the revolving credit facility approximates its fair value due to the use of short-term borrowing instruments at market rates of interest.
Fair value measurements are categorized into a fair value hierarchy based on the lowest level input that is significant to the fair value measurement:
| ● | Level 1 inputs are determined by reference to unadjusted quoted prices in active markets for identical assets or liabilities. Inputs used in fair value measurement of cash and cash equivalents , investment in securities, the revolving credit facility, and the senior unsecured notes are categorized as Level 1. |
|---|---|
| ● | Level 2 inputs are determined based on inputs other than unadjusted quoted prices that are observable, either directly or indirectly. The fair value of Vermilion’s derivative assets and liabilities are determined using pricing models that incorporate future price forecasts (supported by prices from observable market transactions) and credit risk adjustments. |
| --- | --- |
| ● | Level 3 inputs are not based on observable market data. Vermilion does not have any financial instruments classified as Level 3. |
| --- | --- |
There were no transfers between levels in the hierarchy in the years ended December 31, 2024 and 2023.
Nature and extent of risks associated with financial instruments
Vermilion is exposed to financial risks from its financial instruments. These financial risks include: market risk (includes commodity price risk, interest rate risk, and currency risk), credit risk, and liquidity risk.
Commodity price risk
Vermilion is exposed to commodity price risk on its derivative assets and liabilities which are used as part of the Company’s risk management program to mitigate the effects of changes in commodity prices on future cash flows. While transactions of this nature relate to future petroleum and natural gas production, Vermilion does not designate these derivative assets and liabilities as accounting hedges. As such, changes in commodity prices impact the fair value of derivative instruments and the corresponding gains or losses recognized on derivative instruments.
Currency risk
Vermilion is exposed to currency risk on its financial instruments denominated in foreign currencies. These financial instruments include cash and cash equivalents, accounts receivables, accounts payables, lease obligations, long-term debt, derivative assets and derivative liabilities. These financial instruments are primarily denominated in the US dollar and the Euro. Vermilion monitors its exposure to currency risk and reviews whether the use of derivative financial instruments is appropriate to manage potential fluctuations in foreign exchange rates.
Vermilion Energy Inc. ∎ Page 30 ∎ 2024 Financial Statements
Interest rate risk
Vermilion is exposed to interest rate risk on its revolving credit facility, which consists of short-term borrowing instruments that bear interest at market rates. Thus, changes in interest rates could result in an increase or decrease in the amount paid by Vermilion to service this debt.
The following table summarizes the increase (positive values) or decrease (negative values) to net loss 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.
| | | | |
|---|---|---|---|
| (M) | Dec 31, 2024 | Dec 31, 2023 | |
| Currency risk - Euro to Canadian dollar | |||
| 0.01 increase in strength of the Canadian dollar against the Euro | 4,893 | 5,855 | |
| 0.01 decrease in strength of the Canadian dollar against the Euro | (4,893) | (5,855) | |
| | | | |
| Currency risk - US dollar to Canadian dollar | | | |
| 0.01 increase in strength of the Canadian dollar against the US | 4,209 | 6,816 | |
| 0.01 decrease in strength of the Canadian dollar against the US | (4,209) | (6,816) | |
| | | | |
| Commodity price risk - Crude oil | | | |
| US 5.00/bbl increase in crude oil price used to determine the fair value of derivatives | (13,370) | (27,573) | |
| US 5.00/bbl decrease in crude oil price used to determine the fair value of derivatives | 13,370 | 27,573 | |
| | | | |
| Commodity price risk - European natural gas | | | |
| 5.0/GJ increase in European natural gas price used to determine the fair value of derivatives | (428,223) | (256,731) | |
| 5.0/GJ decrease in European natural gas price used to determine the fair value of derivatives | 310,629 | 262,862 | |
| | | | |
| Share price risk - Equity swaps | | | |
| 1.00 increase from initial share price of the equity swap | 3,750 | | 3,750 |
| 1.00 decrease from initial share price of the equity swap | (3,750) | (3,750) |
All values are in US Dollars.
Credit risk
Vermilion is exposed to credit risk on accounts receivable and derivative assets in the event that customers, joint operation partners, or counterparties fail to discharge their contractual obligations. As at December 31, 2024, Vermilion’s maximum exposure to receivable credit risk was $352.7 million (December 31, 2023 - $632.8 million) which is the value of accounts receivable and derivative assets on the balance sheet.
Vermilion’s accounts receivable primarily relates to customers and joint operations partners in the petroleum and natural gas industry. These amounts are subject to normal industry payment terms and credit risks. Vermilion manages these risks by monitoring the creditworthiness of customers and joint operations partners and, where appropriate, obtaining assurances such as parental guarantees and letters of credit. Vermilion determines the lifetime expected credit losses recognized on accounts receivable using a provision matrix. In preparing the provision matrix, the Company takes into account historical credit loss experience based on the aging of accounts receivable, adjusted as necessary for current and future petroleum and natural gas prices to the extent that changes in pricing may negatively impact the Company’s customers and joint operations partners. The lifetime expected credit losses on accounts receivable as at December 31, 2024 and 2023 is not material. As at the balance sheet date, approximately 1.1% (2023 –3.7%) of the accounts receivable balance was outstanding for more than 90 days. Vermilion considers the balance of accounts receivable to be collectible.
Vermilion’s derivative assets primarily relates to the fair value of financial instruments used as part of the Company’s risk management program to mitigate the effects of changes in commodity prices on future cash flows. Vermilion manages this risk by monitoring the creditworthiness of counterparties, transacting primarily with counterparties that have investment grade third party credit ratings, and by limiting the concentration of financial exposure to individual counterparties. As a result, Vermilion has not obtained collateral or other security to support its financial derivatives.
Vermilion’s cash deposited in financial institutions and guaranteed investment certificates are also subject to counterparty credit risk. Vermilion mitigates this risk by transacting with financial institutions with high third party credit ratings.
Vermilion Energy Inc. ∎ Page 31 ∎ 2024 Financial Statements
Liquidity risk
Liquidity risk is the risk that Vermilion will encounter difficulty in meeting obligations associated with its financial liabilities. Vermilion does not consider this to be a significant risk as its financial position and available committed borrowing facility provide significant financial flexibility and allow Vermilion to meet its obligations as they come due.
The following table summarizes Vermilion’s undiscounted non-derivative financial liabilities and their contractual maturities:
| | | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| | | 1 month to | 3 months to | 1 year to | ||||
| ($M) | | 1 month | | 3 months | | 1 year | | 5 years |
| December 31, 2024 | 155,444 | 639,211 | 28,120 | 35,624 | ||||
| December 31, 2023 | 134,381 | 235,396 | 26,820 | 430,993 |
- Related party disclosures
The compensation of directors and management is reviewed annually by the independent Governance and Human Resources Committee against industry practices for oil and gas companies of similar size and scope.
The following table summarizes the compensation of directors and other members of key management personnel during the years ended December 31, 2024 and 2023:
| | | | | |
|---|---|---|---|---|
| | | Year Ended | ||
| | Dec 31, 2024 | Dec 31, 2023 | ||
| Short-term benefits | 4,326 | 5,451 | ||
| Equity based compensation | 6,372 | | 8,015 | |
| Total compensation | 10,698 | | 13,466 | |
| Number of individuals included in the above amounts | 14 | | 15 |
- Supplemental information
Changes in non-cash working capital was comprised of the following:
| | | | | |
|---|---|---|---|---|
| | | Year Ended | ||
| Dec 31, 2024 | Dec 31, 2023 | |||
| Changes in: | ||||
| Accounts receivable | (55,567) | 130,725 | ||
| Crude oil inventory | 16,639 | (37,676) | ||
| Prepaid expenses | (3,090) | 76,452 | ||
| Accounts payable and accrued liabilities | 45,040 | (101,074) | ||
| Income taxes payable | (185,030) | (42,953) | ||
| Dividends payable | | 2,294 | | 3,169 |
| Working capital assumed in acquisitions | | — | | (109,134) |
| Foreign exchange | 9,985 | 7 | ||
| Changes in non-cash working capital | (169,729) | (80,484) | ||
| | | | | |
| Changes in non-cash operating working capital | (182,698) | (61,117) | ||
| Changes in non-cash investing working capital | 10,213 | (19,367) | ||
| Changes in non-cash financing working capital | 2,756 | — | ||
| Changes in non-cash working capital | (169,729) | (80,484) |
Vermilion Energy Inc. ∎ Page 32 ∎ 2024 Financial Statements
Cash and cash equivalents was comprised of the following:
| | | | | |
|---|---|---|---|---|
| | | As at | ||
| | Dec 31, 2024 | Dec 31, 2023 | ||
| Cash on deposit with financial institutions | 124,938 | 140,795 | ||
| Guaranteed investment certificates | 6,792 | 661 | ||
| Cash and cash equivalents | 131,730 | 141,456 |
Wages and benefits included in operating expenses and general and administration expenses were:
| | | | | |
|---|---|---|---|---|
| | | Year Ended | ||
| | Dec 31, 2024 | Dec 31, 2023 | ||
| Operating expense | 92,062 | 87,418 | ||
| General and administration expense | 73,817 | 61,550 | ||
| Wages and benefits | 165,879 | 148,968 |
As at December 31, 2024, Vermilion had the following contractual obligations and commitments:
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| (M) | Less than 1 year | **** | 1 - 3 years | **** | 3 - 5 years | **** | After 5 years | **** | Total |
| Long-term debt(1) | 448,303 | 79,140 | 79,140 | 595,345 | 1,201,928 | ||||
| Lease obligations(2) | 33,527 | 38,315 | 32,665 | 49,010 | 153,517 | ||||
| Processing and transportation agreements | 59,431 | 93,441 | 113,089 | 759,853 | 1,025,814 | ||||
| Purchase obligations | 29,318 | 16,391 | 369 | 418 | 46,496 | ||||
| Drilling and service agreements | 32,691 | 22,259 | — | — | 54,950 | ||||
| Total contractual obligations and commitments | 603,270 | **** | 249,546 | **** | 225,263 | **** | 1,404,626 | **** | 2,482,705 |
All values are in US Dollars.
| (1) | Includes interest on senior unsecured notes. |
|---|---|
| (2) | Includes undiscounted IFRS 16 - Leases obligations of $89.9 million as at December 31, 2024, surface lease rental commitments of $61.9 million and other of $1.6 million that are not considered leases under IFRS 16 and are not represented on the balance sheet. |
| --- | --- |
| (3) | Commitments denominated in foreign currencies have been translated using the related spot rates on December 31, 2024. |
| --- | --- |
Vermilion Energy Inc. ∎ Page 33 ∎ 2024 Financial Statements
The following tables summarize Vermilion’s outstanding risk management positions as at December 31, 2024:
| | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | | **** | | | **** | Weighted | **** | | **** | Weighted | **** | | **** | Weighted | **** | | **** | Weighted | **** | Daily | **** | Weighted |
| | | | | | Daily | | Average | | Daily | | Average | | Daily | | Average | | Daily | | Average | | Bought | | Average |
| | | | | | Bought Put | | Bought Put | | Sold Call | | Sold Call | | Sold Put | | Sold Put | | Sold Swap | | Sold Swap | | Swap | | Bought |
| | Unit | Currency | Volume | Price | Volume | Price | Volume | Price | Volume | Price | Volume | Swap **** Price | |||||||||||
| Dated Brent | | | | | | | | | | | | | | | | | | | | | | | |
| Q1 2025 | | bbl | | — | | — | | — | | — | | — | | — | | 4,000 | | 73.25 | | — | | — | |
| WTI | |||||||||||||||||||||||
| Q1 2025 | | bbl | | — | | — | | — | | — | | — | | — | | 8,000 | | 73.11 | | — | | — | |
| Q2 2025 | | bbl | | — | | — | | — | | — | | — | | — | | 3,000 | | 68.72 | | — | | — | |
| AECO | | | | | | | | | | | | | | | | | | | | | | | |
| Q1 2025 | | mcf | | CAD | 4,739 | | 3.17 | | 4,739 | | 4.22 | | — | | — | | 23,695 | | 3.89 | | — | | — |
| Q2 2025 | | mcf | | CAD | 4,739 | | 3.17 | | 4,739 | | 4.22 | | — | | — | | 23,695 | | 3.89 | | — | | — |
| Q3 2025 | | mcf | | CAD | 4,739 | | 3.17 | | 4,739 | | 4.22 | | — | | — | | 23,695 | | 3.89 | | — | | — |
| Q4 2025 | | mcf | | CAD | 4,739 | | 3.17 | | 4,739 | | 4.22 | | — | | — | | 39,407 | | 3.55 | | — | | — |
| Q1 2026 | | mcf | | CAD | 4,739 | | 3.17 | | 4,739 | | 4.22 | | — | | — | | 47,391 | | 3.46 | | — | | — |
| Q2 2026 | | mcf | | CAD | 4,739 | | 3.17 | | 4,739 | | 4.22 | | — | | — | | 47,391 | | 3.46 | | — | | — |
| Q3 2026 | | mcf | | CAD | 4,739 | | 3.17 | | 4,739 | | 4.22 | | — | | — | | 47,391 | | 3.46 | | — | | — |
| Q4 2026 | | mcf | | CAD | 4,739 | | 3.17 | | 4,739 | | 4.22 | | — | | — | | 47,391 | | 3.46 | | — | | — |
| Q1 2027 | | mcf | | CAD | — | | — | | — | | — | | — | | — | | 23,695 | | 3.03 | | — | | — |
| Q2 2027 | | mcf | | CAD | — | | — | | — | | — | | — | | — | | 23,695 | | 3.03 | | — | | — |
| Q3 2027 | | mcf | | CAD | — | | — | | — | | — | | — | | — | | 23,695 | | 3.03 | | — | | — |
| Q4 2027 | | mcf | | CAD | — | | — | | — | | — | | — | | — | | 23,695 | | 3.03 | | — | | — |
| AECO Basis (AECO less NYMEX Henry Hub) | |||||||||||||||||||||||
| Q1 2025 | | mcf | | — | | — | | — | | — | | — | | — | | 10,000 | | (1.15) | | — | | — | |
| Q2 2025 | | mcf | | — | | — | | — | | — | | — | | — | | 10,000 | | (1.15) | | — | | — | |
| Q3 2025 | | mcf | | — | | — | | — | | — | | — | | — | | 10,000 | | (1.15) | | — | | — | |
| Q4 2025 | | mcf | | — | | — | | — | | — | | — | | — | | 10,000 | | (1.15) | | — | | — | |
| NYMEX Henry Hub | | | | | | | | | | | | | | | | | | | | | | | |
| Q1 2025 | | mcf | | 24,000 | | 3.50 | | 24,000 | | 4.49 | | — | | — | | 10,000 | | 3.20 | | — | | — | |
| Q2 2025 | mcf | 24,000 | 3.50 | 24,000 | 4.49 | — | — | 10,000 | 3.20 | — | — | ||||||||||||
| Q3 2025 | mcf | 24,000 | 3.50 | 24,000 | 4.49 | — | — | 10,000 | 3.20 | — | — | ||||||||||||
| Q4 2025 | mcf | 24,000 | 3.50 | 24,000 | 4.49 | — | — | 10,000 | 3.20 | — | — | ||||||||||||
| Q1 2026 | | mcf | | 24,000 | | 3.50 | | 24,000 | | 4.49 | | — | | — | | — | | — | | — | | — | |
| Q2 2026 | | mcf | | 24,000 | | 3.50 | | 24,000 | | 4.49 | | — | | — | | — | | — | | — | | — | |
| Q3 2026 | | mcf | | 24,000 | | 3.50 | | 24,000 | | 4.49 | | — | | — | | — | | — | | — | | — | |
| Q4 2026 | | mcf | | 24,000 | | 3.50 | | 24,000 | | 4.49 | | — | | — | | — | | — | | — | | — | |
| Q1 2027 | | mcf | | CAD | — | | — | | — | | — | | — | | — | | 24,000 | | 3.76 | | — | | — |
| Q2 2027 | | mcf | | CAD | — | | — | | — | | — | | — | | — | | 24,000 | | 3.76 | | — | | — |
| Q3 2027 | | mcf | | CAD | — | | — | | — | | — | | — | | — | | 24,000 | | 3.76 | | — | | — |
| Q4 2027 | | mcf | | CAD | — | | — | | — | | — | | — | | — | | 24,000 | | 3.76 | | — | | — |
All values are in US Dollars.
Vermilion Energy Inc. ∎ Page 34 ∎ 2024 Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | | **** | | | **** | Weighted | **** | | **** | Weighted | **** | | **** | Weighted | **** | | **** | Weighted | **** | Daily | **** | Weighted |
| | | | | | Daily | | Average | | Daily | | Average | | Daily | | Average | | Daily | | Average | | Bought | | Average |
| | | | | | Bought Put | | Bought Put | | Sold Call | | Sold Call | | Sold Put | | Sold Put | | Sold Swap | | Sold Swap | | Swap | | Bought |
| | | Unit | | Currency | Volume | | Price | | Volume | | Price | | Volume | | Price | | Volume | | Price | | Volume | | Swap Price |
| TTF | |||||||||||||||||||||||
| Q1 2025 | mcf | 19,654 | 10.21 | 19,654 | 14.93 | 13,512 | 4.69 | 39,308 | 14.52 | — | — | ||||||||||||
| Q2 2025 | mcf | 22,111 | 8.31 | 22,111 | 12.88 | 22,111 | 4.01 | 24,567 | 12.99 | — | — | ||||||||||||
| Q3 2025 | mcf | 22,111 | 8.31 | 22,111 | 12.88 | 22,111 | 4.01 | 24,567 | 12.99 | — | — | ||||||||||||
| Q4 2025 | mcf | 31,938 | 8.05 | 31,938 | 12.50 | 31,938 | 3.67 | 20,882 | 11.87 | — | — | ||||||||||||
| Q1 2026 | mcf | 24,567 | 7.39 | 24,567 | 11.66 | 24,567 | 3.02 | 20,882 | 11.87 | — | — | ||||||||||||
| Q2 2026 | mcf | 24,567 | 7.39 | 24,567 | 11.66 | 24,567 | 3.02 | 18,426 | 9.60 | — | — | ||||||||||||
| Q3 2026 | | mcf | | 24,567 | | 7.39 | | 24,567 | | 11.66 | | 24,567 | | 3.02 | | 18,426 | | 9.60 | | — | — | ||
| Q4 2026 | mcf | 28,253 | 7.43 | 28,253 | 11.66 | 28,253 | 2.93 | 4,913 | 8.54 | — | — | ||||||||||||
| Q1 2027 | mcf | 28,253 | 7.43 | 28,253 | 11.66 | 28,253 | 2.93 | 4,913 | 8.54 | — | — | ||||||||||||
| THE | |||||||||||||||||||||||
| Q1 2025 | mcf | — | — | — | — | — | — | 2,457 | 14.95 | — | — | ||||||||||||
| Q2 2025 | mcf | — | — | — | — | — | — | 2,457 | 14.95 | — | — | ||||||||||||
| Q3 2025 | | mcf | | — | | — | | — | | — | | — | | — | | 2,457 | | 14.95 | | — | | — |
All values are in Euros.
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 | |
| | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Foreign | | | | | | Monthly Bought Put | | Weighted Average | | Monthly Sold Call | | Weighted Average | | Monthly Sold Swap | | Weighted Average | ||||||
| Exchange | **** | | **** | Period | **** | Amount | **** | Bought Put Price | **** | Amount | Sold Call Price | **** | Amount | Sold Swap Price | ||||||||
| Collar | | Sell USD, Buy CAD | | Jan 2025 - Jun 2025 | | 5,000,000 | | USD | | 1.3740 | | 5,000,000 | | USD | | 1.4551 | | — | | | | — |
| Collar | Sell USD, Buy CAD | | Jan 2025 - Dec 2025 | | 12,500,000 | USD | | 1.3637 | | 12,500,000 | | USD | | 1.4133 | | — | | | | — |
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:
| | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | | **** | | **** | | **** | | **** | Weighted | **** | | **** | Weighted | **** | | **** | Weighted | **** | **** | **** | Weighted |
| | | | | | | Option | | Daily | | Average | | Daily | | Average | | Daily | | Average | | Daily Sold | | Average |
| | | | | | | Expiration | | Bought Put | | Bought Put | | Sold Call | | Sold Call | | Sold Put | | Sold Put | | Swap | | Sold Swap |
| Period if Option Exercised | **** | Unit | Currency | Date | Volume | Price | Volume | Price | **** | Volume | **** | Price | **** | Volume | **** | Price | ||||||
| TTF | | | | | | | | | | | | | | | | | | | | | | |
| Apr 2025 - Mar 2027 | | mcf | | EUR | | 31-Mar-2025 | | — | | — | | — | | — | | — | | — | | 2,457 | | 10.99 |
- Subsequent events
Acquisition of Westbrick Energy Ltd.
On December 23, 2024, Vermilion announced it entered into an arrangement agreement to acquire Westbrick Energy Ltd. ("Westbrick"), a private company with assets located adjacent to Vermilion's existing Alberta assets. On February 26, 2025,Vermilion completed the acquisition for total consideration (before closing adjustments) of $1.075 billion in exchange for all the issued and outstanding Westbrick shares.
Concurrent with the completion of the Westbrick acquisition, Vermilion’s credit facility was amended to incorporate a new $450 million term loan (the "Term Loan") which was immediately drawn. The Term Loan does not require principal repayments prior to its May 26, 2028 maturity, is non-revolving, and is subject to the same financial covenants as Vermilion’s revolving credit facility. The Term Loan bears interest based on a reference rate plus an applicable margin.
Total consideration was comprised of $14.2 million of share consideration with the balance paid in cash.
As of the date of the financial statements, sufficient information was not yet available to calculate a preliminary purchase price allocation.
Vermilion Energy Inc. ∎ Page 35 ∎ 2024 Financial Statements
Issuance of 2033 senior unsecured notes
On February 11, 2025, Vermilion closed a private offering of US $400.0 million of senior unsecured notes. The notes bear interest at a rate of 7.250% per annum, to be paid February 15 and August 15, commencing on August 15, 2025. The notes mature on February 15, 2033. As direct senior unsecured obligations of Vermilion, the notes rank equally with existing and future senior unsecured indebtedness of the Company.
Proceeds from the notes may be used at the Company's discretion to redeem or repay the outstanding 2025 senior notes, fund a portion of the Westbrick acquisition, repay a portion of any credit facility borrowings, or a combination thereof.
Vermilion Energy Inc. ∎ Page 36 ∎ 2024 Financial Statements
| DIRECTORS<br><br><br><br>Myron Stadnyk ^1^<br><br>Calgary, Alberta<br><br><br><br>Dion Hatcher<br><br>Calgary, Alberta<br><br><br><br>James J. Kleckner Jr. ^7,9^<br><br>Edwards, Colorado<br><br><br><br>Carin Knickel ^4,7,11^<br><br>Golden, Colorado<br><br><br><br>Stephen P. Larke ^3,5,10^<br><br>Calgary, Alberta<br><br><br><br>Timothy R. Marchant ^6,9,11^<br><br>Calgary, Alberta<br><br><br><br>Robert Michaleski ^3,5^<br><br>Calgary, Alberta<br><br><br><br>William Roby ^7,8,11^<br><br>Katy, Texas<br><br><br><br>Manjit Sharma ^2,5^<br><br>Toronto, Ontario<br><br><br><br>Judy Steele ^3,5,11^<br><br>Halifax, Nova Scotia<br><br><br><br>1<br><br>Chairman (Independent)<br><br>2<br><br>Audit Committee Chair (Independent)<br><br>3<br><br>Audit Committee Member (Independent)<br><br>4<br><br>Governance and Human Resources Committee Chair (Independent)<br><br>5<br><br>Governance and Human Resources Committee Member (Independent)<br><br>6<br><br>Health, Safety and Environment Committee Chair (Independent)<br><br>7<br><br>Health, Safety and Environment Committee Member (Independent)<br><br>8<br><br>Technical Committee Chair (Independent)<br><br>9<br><br>Technical Committee Member (Independent)<br><br>10<br><br>Sustainability Committee Chair (Independent)<br><br>11<br><br>Sustainability Committee Member (Independent) | OFFICERS / CORPORATE SECRETARY<br><br><br><br>Dion Hatcher *<br><br>President & Chief Executive Officer<br><br><br><br>Lars Glemser *<br><br>Vice President & Chief Financial Officer<br><br><br><br>Tamar Epstein<br><br>General Counsel & Corporate Secretary<br><br><br><br>Terry Hergott<br><br>Vice President Marketing<br><br><br><br>Yvonne Jeffery<br><br>Vice President Sustainability<br><br><br><br>Darcy Kerwin *<br><br>Vice President International & HSE<br><br><br><br>Geoff MacDonald<br><br>Vice President Geosciences<br><br><br><br>Randy McQuaig *<br><br>Vice President North America<br><br><br><br>Kyle Preston<br><br>Vice President Investor Relations<br><br><br><br>Averyl Schraven<br><br>Vice President People & Culture<br><br><br><br>Gerard Schut<br><br>Vice President European Operations<br><br><br><br>* Principal Executive Committee Member<br><br><br><br> | AUDITORS<br><br><br><br>Deloitte LLP<br><br>Calgary, Alberta<br><br><br><br>BANKERS<br><br><br><br>The Toronto-Dominion Bank<br><br><br><br>The Bank of Nova Scotia<br><br><br><br>Canadian Imperial Bank of Commerce<br><br><br><br>National Bank of Canada<br><br><br><br>Royal Bank of Canada<br><br><br><br>Wells Fargo Bank N.A., Canadian Branch<br><br><br><br>ATB Financial<br><br><br><br>Bank of America N.A., Canada Branch<br><br><br><br>Export Development Canada<br><br><br><br>Fédération des caisses Desjardins du Québec<br><br><br><br>Citibank, N.A., Canadian Branch<br><br><br><br>Canadian Western Bank<br><br><br><br>JPMorgan Chase Bank, N.A., Toronto Branch<br><br><br><br>Goldman Sachs Lending Partners LLC<br><br><br><br>EVALUATION ENGINEERS<br><br><br><br>McDaniel & Associates<br><br>Calgary, Alberta<br><br><br><br>LEGAL COUNSEL<br><br><br><br>Norton Rose Fulbright Canada LLP<br><br>Calgary, Alberta<br><br><br><br>TRANSFER AGENT<br><br><br><br>Odyssey Trust Company<br><br><br><br>STOCK EXCHANGE LISTINGS<br><br><br><br>The Toronto Stock Exchange (“VET”)<br><br>The New York Stock Exchange (“VET”)<br><br><br><br>INVESTOR RELATIONS<br><br>Kyle Preston<br><br>Vice President Investor Relations<br><br>403-476-8431 TEL<br><br>403-476-8100 FAX<br><br>1-866-895-8101 IR TOLL FREE<br><br>investor_relations@vermilionenergy.com |
|---|
Vermilion Energy Inc. ∎ Page 37 ∎ 2024 Financial Statements
Exhibit 99.4
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-232837 on Form S-8 and to the use of our reports dated March 5, 2025 relating to the financial statements of Vermilion Energy Inc. and the effectiveness of Vermilion Energy Inc.'s internal control over financial reporting appearing in this Annual Report on Form 40-F for the year ended December 31, 2024.
/s/ Deloitte LLP
Chartered Professional Accountants Calgary, Canada
March 5, 2025
Exhibit 99.5
CONSENT
We hereby consent to the use of and reference to our name and our reports, and the inclusion of information derived from our reports, evaluating Vermilion Energy Inc.’s (the “Company”) petroleum and natural gas reserves as at December 31, 2024, in the Company’s Annual Information Form, news releases and investor presentations.
| Yours truly, | |
|---|---|
| | |
| MCDANIEL & ASSOCIATES CONSULTANTS LTD. | |
| | |
| | |
| /s/ Michael J. Verney | |
| | |
| Michael Verney, P.Eng. | |
| Executive Vice President | |
Calgary, Alberta
March 4, 2025 2000, Eighth Avenue Place, East Tower, 525 – 8 Avenue SW, Calgary, AB, T2P 1G1 Tel: (403) 262-5506 www.mcdan.com
EXHIBIT 99.6
VERMILION ENERGY INC.
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
I, Dion Hatcher, President and Chief Executive Officer, certify that:
1.I have reviewed this annual report on Form 40-F of Vermilion Energy Inc.;
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; |
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| 4. | The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have: |
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| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting 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 generally accepted accounting principles; |
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| c) | Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
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| d) | Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and |
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| 5. | The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions): |
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| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and |
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| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting. |
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Date: March 5, 2025
| /s/ Dion Hatcher | |
|---|---|
| | |
| [Signature] | |
| Dion Hatcher, President and Chief Executive Officer |
EXHIBIT 99.6
VERMILION ENERGY INC.
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
I, Lars Glemser, Vice President and Chief Financial Officer, certify that:
| 1. | I have reviewed this annual report on Form 40-F of Vermilion Energy Inc.; |
|---|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; |
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| 4. | The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have: |
|---|
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting 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 generally accepted accounting principles; |
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| c) | Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
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| d) | Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and |
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| 5. | The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions): |
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| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and |
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| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting. |
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Date: March 5, 2025
| /s/ Lars Glemser | ||
|---|---|---|
| | | |
| [Signature] | ||
| Lars Glemser, Vice President and Chief Financial Officer |
EXHIBIT 99.7
VERMILION ENERGY INC.
CERTIFICATE OF THE CHIEF EXECUTIVE OFFICER
Pursuant to Section 906(a) of the Sarbanes-Oxley Act of 2002
Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18 of the United States Code
In connection with the annual report of Vermilion Energy Inc. (the “Corporation”) on Form 40-F for the fiscal year ended December 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dion Hatcher, President and Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|---|
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. |
|---|
Dated at Calgary, Alberta, Canada this 5^th^ day of March 2025.
| | |
|---|---|
| | ("Dion Hatcher") |
| | |
| | [Signature] |
| | |
| | Dion Hatcher, President and Chief Executive Officer |
EXHIBIT 99.7
VERMILION ENERGY INC.
CERTIFICATE OF THE CHIEF FINANCIAL OFFICER
Pursuant to Section 906(a) of the Sarbanes-Oxley Act of 2002
Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18 of the United States Code
In connection with the annual report of Vermilion Energy Inc. (the “Corporation”) on Form 40-F for the fiscal year ended December 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lars Glemser, Vice President and Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|---|
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. |
|---|
Dated at Calgary, Alberta, Canada this 5^th^ day of March 2025.
| | |
|---|---|
| | (“Lars Glemser”) |
| | |
| | [Signature] |
| | |
| | Lars Glemser, Vice President and Chief Financial Officer |