Vermilion Energy Inc 6-K, filed Jan 2, 2025

Vermilion Energy Inc. (VET)

6-K 2025-01-02 For: 2025-01-02

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Added on April 12, 2026

About this 6-K

Vermilion Energy Inc filed this 6-K on January 2, 2025.


By:		/s/ Lars Glemser
Title:		Lars Glemser, VP and Chief Financial Officer

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Exhibit		Description

99.1		Material Change Report
99.2		Arrangement Agreement

(1)	Net debt is a capital management measure most directly comparable to long-term debt and is comprised of long-term debt (excluding unrealized foreign exchange on swapped USD borrowings) plus adjusted working capital (defined as current assets less current liabilities, excluding current derivatives and current lease liabilities).
(2)	Net debt to four quarter trailing fund flows from operations is a supplementary financial measure and is not a standardized financial measure under IFRS. It may not be comparable to similar measures disclosed by other issuers and is calculated using net debt (capital management measure) and FFO (total of segment measure). The measure is used to assess the ability to repay debt.
(3)	Anticipated 2025 production and financial results from acquired assets, based on company estimates and full year average reference prices as at November 21, 2024 (see below). Results reflect full year production and cash flow estimates and may not align with Company guidance following the close of the Transaction, which will reflect post-close production and cash flow contributions.
(4)	Free cash flow (FCF) and excess free cash flow (EFCF) are non-GAAP financial measures comparable to cash flows from operating activities. FCF is comprised of FFO less drilling and development and exploration and evaluation expenditures and EFCF is FCF less payments on lease obligations and asset retirement obligations settled. FCF and EFCF per basic share are non-GAAP supplementary financial measures and are not standardized financial measures under IFRS and may not be comparable to similar measures disclosed by other issuers. They are calculated using FCF or EFCF and weighted average basic shares outstanding.
(5)	2025 forward strip pricing as at November 21, 2024: Brent US$72.31/bbl; WTI US$68.49/bbl; LSB = WTI less US$4.96/bbl; TTF $19.90/mmbtu; NBP $20.04/mmbtu; AECO $2.34/mcf; CAD/USD 1.40; CAD/EUR 1.48 and CAD/AUD 0.91. 2026 forward strip pricing as at November 21, 2024: Brent US$70.26/bbl; WTI US$66.25/bbl; LSB = WTI less US$6.18/bbl; TTF $15.83/mmbtu; NBP $15.92/mmbtu; AECO $3.16/mcf; CAD/USD 1.39; CAD/EUR 1.50 and CAD/AUD 0.90.
(6)	Estimated gross proved, developed and producing, total proved, and total proved plus probable reserves as evaluated by McDaniel in a report dated December 17, 2024, with an effective date of November 30, 2024 (the “McDaniel Reserves Report”). Net present value of discounted cash flows as provided in the McDaniel Reserves Report. Three consultant average October 1, 2024 pricing assumptions used in reserve estimates as follows: 2025 WTI US$72.00/bbl, AECO C$2.50/mmbtu, CAD/USD FX rate 0.747; 2026 WTI US$74.98/bbl, AECO C$3.36/mmbtu, CAD/USD FX rate 0.753; 2027 WTI US$76.65/bbl, AECO C$3.62/mmbtu, CAD/USD FX rate 0.753.

	TABLE OF CONTENTS

		Page

	ARTICLE 1
	DEFINITIONS AND INTERPRETATION

1.1	Definitions.	2
1.2	Interpretation	30
1.3	Schedules	31
1.4	Interpretation if Closing Does Not Occur	31
1.5	Knowledge	31
1.6	Construction	32

	ARTICLE 2
	ARRANGEMENT

2.1	Plan of Arrangement and Westbrick Board Recommendation	32
2.2	Arrangement Resolution	32
2.3	Interim and Final Order.	33
2.4	Notice of Written Resolution	34
2.5	Court Proceedings.	35
2.6	Initial Arrangement Transactions	36
2.7	Closing	38
2.8	Determination of Aggregate Adjusted Consideration	38
2.9	Payment of Consideration	41
2.10	Purchaser’s Right to Withhold	41
2.11	Applicable U.S. Securities Laws	42

	ARTICLE 3
	REPRESENTATIONS AND WARRANTIES OF [NAME OF PARTY REDACTED]

3.1	Organization and Corporate Power	42
3.2	Subsidiaries	42
3.3	Due Authorization and Enforceability of Obligations	42
3.4	Solvency	43
3.5	Legal Proceedings	43
3.6	No Contravention	43
3.7	Consents and Approvals	44
3.8	Capitalization; Right to Sell	44
3.9	[Name redacted] Holdco Indebtedness	45
3.10	No Material Contracts	45
3.11	Equity Monetization Plans	45
3.12	Corporate Records	45
3.13	Residence of [name of party redacted] and [name redacted] Holdco	45
3.14	No Conduct of Business	45
3.15	Tax Matters	46
3.16	Transaction Expenses	48

	TABLE OF CONTENTS
	(continued)
		Page

	ARTICLE 4
	REPRESENTATIONS AND WARRANTIES OF WESTBRICK

4.1	Incorporation, Corporate Power and Registration	48
4.2	Subsidiaries	48
4.3	Capitalization	48
4.4	Due Authorization and Enforceability of Obligations	49
4.5	No Contravention	49
4.6	Consents and Approvals	50
4.7	Solvency	50
4.8	Taxable Canadian Corporation - Westbrick	50
4.9	Title	50
4.10	Licences	50
4.11	No Defaults under Leases and Agreements	51
4.12	No Encumbrances	51
4.13	No Preferential Purchase Rights	52
4.14	No Reduction of Interests	52
4.15	Production Penalties	52
4.16	Operation of PNG Assets	52
4.17	Area of Mutual Interest	53
4.18	Off-Set Obligations	53
4.19	Royalties, Rentals and Taxes Paid	53
4.20	AFEs	53
4.21	Capex Projects	53
4.22	Reserves	53
4.23	Hedging Transactions	54
4.24	Financial Statements	54
4.25	No Undisclosed Liabilities	54
4.26	Absence of Changes	55
4.27	Government Incentives	55
4.28	Aboriginal Groups	55
4.29	Material Contracts	56
4.30	Equity Monetization Plans	56
4.31	Duvernay Spinco Transaction	56
4.32	Legal Proceedings	57
4.33	Compliance with Applicable Laws	57
4.34	Environmental Matters	58
4.35	Employee Matters	59
4.36	Employee Benefit Plans	61
4.37	Non Arm’s Length Transactions	62
4.38	Tax Matters	63
4.39	Insurance	65
4.40	Intellectual Property	65
4.41	Books and Records, Corporate Records	66
4.42	Anti-Corruption; Anti-Money Laundering	66

	TABLE OF CONTENTS
	(continued)

		Page

4.43	Directive 067	66
4.44	No Broker	67
4.45	Net Debt	67
4.46	Information Provided	67

	ARTICLE 5
	REPRESENTATIONS AND WARRANTIES OF PURCHASER

5.1	Organization and Corporate Power	67
5.2	Due Authorization and Enforceability of Obligations	67
5.3	No Contravention	68
5.4	Consents and Approvals	68
5.5	Solvency	68
5.6	AER Directive 067	68
5.7	Legal Proceedings	69
5.8	Investment Canada Act	69
5.9	Taxable Canadian Corporation - Purchaser	69
5.10	Sufficiency of Funds	69
5.11	Capitalization	70
5.12	Issuance of Purchaser Shares	70
5.13	Purchaser Financial Statements	71
5.14	No Undisclosed Liabilities	71
5.15	Absence of Changes	71
5.16	Compliance with Applicable Laws	71
5.17	Legal Proceedings	72
5.18	Anti-Corruption; Anti-Money Laundering	72
5.19	Reporting Issuer Status	72
5.20	No Broker	73
5.21	Principal	73
5.22	Independent Investigation	73

	ARTICLE 6
	COVENANTS

6.1	Access and Information, Integration	73
6.2	Financing Cooperation	76
6.3	Conduct of Business of Westbrick	77
6.4	Conduct of Business of Purchaser	82
6.5	Additional Covenants of Purchaser	83
6.6	Regulatory Approvals and Consents	85
6.7	Westbrick Employee Matters	88
6.8	Additional Shareholders, Options and Awards	88
6.9	Additional [name of party redacted] Covenants	88
6.10	Purchaser Financing	89
6.11	Pre-Closing Reorganization of [name of party redacted]	91

>	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. This footprint is contiguous and complementary to Vermilion’s legacy Deep Basin assets, providing operational and financial synergies, including capital efficiency improvements, infrastructure optimization, gas marketing opportunities, and other corporate synergies. The Transaction excludes undeveloped Duvernay rights on approximately 300,000 (290,000 net) acres of land pursuant to the Spinco Conveyance.
>	Stable annual production of 50,000 boe/d (75% gas and 25% liquids) expected in 2025⁽³⁾, based on Vermilion’s development plans. This production level represents 5% year-over-year growth and is forecast to generate more than $110 million of annual FCF^(3,4) based on forward commodity prices⁽⁵⁾. Revenue from the acquired assets will be derived approximately 50% from liquids and 50% from gas.
>	2025E annual net operating income of $275 million based on forward prices⁽⁵⁾, translating into a net operating income multiple of approximately 3.9x. The multiple compresses to 3.3x in 2026 as net operating income is forecast to increase to $330 million based on forward pricing⁽⁵⁾.

>	Significant, high-quality drilling inventory adds over 700 locations in the Ellerslie, Notikewin, Rock Creek, Falher, Cardium, Wilrich and Niton formations, with half-cycle IRRs ranging from 40% to over 100% based on estimates provided by McDaniel & Associates Consultants Ltd (“McDaniel”)⁽⁶⁾ and using three consultant average October 1, 2024 pricing assumptions⁽⁶⁾.
>	Proved developed producing (“PDP”) and proved plus probable (“2P”) reserves estimated at 92 million boe (75% gas) and 256 million boe (74% gas), respectively, based on McDaniel estimates⁽⁶⁾. The Transaction price per boe of PDP reserves is $11.70, which translates to an implied recycle ratio of 1.3 times based on the operating netback noted above. Approximately 30% of the over 700 identified drilling locations have been included in the reserves estimates.
>	Before-tax PDP reserve net present value at a 10% discount rate is estimated at $1.0 billion based on McDaniel estimates⁽⁶⁾ and using three consultant average October 1, 2024 pricing assumptions⁽⁶⁾. This value represents over 90% of the purchase price.

Schedule “A”	Plan of Arrangement
Schedule “B”	Arrangement Resolution
Schedule “C”	[Escrow Agreement redacted]

			WESTBRICK ENERGY LTD.
			By:	(signed) “Ken McCagherty”
				Name: Ken McCagherty Title: President and Chief Executive Officer
			[Name of party redacted]
			By:	(signed) “Paul Workman”
				Name: Paul Workman Title: Director A
			By:	(signed) “Marjolein Gorissen”
				Name: Marjolein Gorissen Title: Director B

	FORM 51-102F3

	MATERIAL CHANGE REPORT

	TABLE OF CONTENTS
	(continued)

		Page

	ARTICLE 7
	CONDITIONS TO CLOSING AND CLOSING DELIVERIES

7.1	Mutual Conditions Precedent	91
7.2	Conditions to the Obligations of Purchaser	92
7.3	Conditions to the Obligations of the Company and [name of party redacted].	93
7.4	Covenant to Satisfy Closing Conditions.	94
7.5	Deliveries by Purchaser.	94
7.6	Deliveries by [name of party redacted].	94
7.7	Deliveries by Westbrick	95

	ARTICLE 8
	TERMINATION

8.1	Termination by Mutual Consent.	95
8.2	Termination by Any Party.	95
8.3	Termination by Purchaser.	96
8.4	Termination by [name of party redacted] or the Company	96
8.5	Effect of Termination	97

	ARTICLE 9
	ADDITIONAL COVENANTS

9.1	Preservation of Records.	97
9.2	Stub Period Returns and Other Tax Matters.	98
9.3	Confidentiality and Public Announcements.	100
9.4	D&O Insurance and Continuance of Directors’ and Officers’ Indemnification	103
9.5	Environmental Matters.	104
9.6	Privacy Matters.	105
9.7	Insurance	106

	ARTICLE 10
	NO SHOP, NON-SOLICIT

10.1	No Shop	106

	TABLE OF CONTENTS
	(continued)

		Page

11.11	Expenses.	116
11.12	Governing Law; Submission to Jurisdiction; Selection of Forum.	116
11.13	Resolution of Disputes	117
11.14	Further Assurances.	117
11.15	Excluded Privileged Communications	117
11.16	Counterparts.	118
11.17	Time of the Essence	118
11.18	Severability.	118