Table of Contents
Message to Shareholders
10
Management’s Discussion and Analysis
19
Consolidated Financial Statements
71
Notes to the Consolidated Financial Statements
80
Corporate Information
105
Annual General Meeting
May 7, 2025
3:00 PM MT
Our annual general meeting will be held as a virtual shareholder meeting with electronic participation, details of the meeting will be included in the
Information Circular, which will be available in March 2025, and will be posted on our website at https://www.vermilionenergy.com/invest-with-us/
annual-general-meeting when available.
Vermilion Energy Inc. ■ Page 1 ■ 2024 Annual Report
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.
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-
Vermilion Energy Inc. ■ Page 2 ■ 2024 Annual Report
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 3 ■ 2024 Annual Report
Abbreviations
$M
thousand dollars
$MM
million dollars
AECO
the daily average benchmark price for natural gas at the AECO ‘C’ hub in Alberta
bbl(s)
barrel(s)
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 4 ■ 2024 Annual Report
Highlights
Year End 2024 Results
•
Fund flows from operations (“FFO”)(1) was $1,206 million ($7.63/basic share)(2), representing a 6% increase over the prior year, or 9% on a per
basic share basis, reflecting the positive impact from our share repurchase program. Free cash flow ("FCF")(4) of $583 million increased 9% on
a per basic share basis relative to 2023.
•
Net loss was $47 million ($0.30/basic share) compared to $238 million net loss ($1.45/basic share) in the prior year. The current year net loss
was impacted by unrealized losses on derivative instruments and unrealized foreign exchange losses due to a weakening Canadian dollar.
•
Net debt(5) decreased by over $110 million to $967 million, representing a net debt to four quarter trailing FFO ratio(6) of 0.8 times. The Company
fully repaid the $79 million lease obligation associated with the Montney Battery construction completed in 2024, implying approximately $190
million of effective debt reduction.
•
Vermilion returned $216 million ($1.37/basic share) to shareholders through dividends and share buybacks, representing 52% of excess free
cash flow ("EFCF")(4), including the repurchase and cancellation of 9.3 million shares which reduced the outstanding common shares by 5% to
154.3 million as at December 31, 2024.
•
Production averaged 84,543 boe/d(7) (54% natural gas and 46% crude oil and liquids), comprised of 53,542 boe/d(7) from the North American
assets and 31,001 boe/d(7) from the International assets. Production increased by 1% over the prior year, or 4% on a per share basis.
•
Year end proved developed producing ("PDP") reserves were 168 mmboe(16) and total proved plus probable ("2P") reserves were 435
mmboe(16), reflecting a reserve life index of 5.4 years and 14.1 years, respectively.
•
The after-tax net present value of PDP reserves, discounted at 10%, is $2.8 billion(16) and the after-tax net present value of 2P reserves,
discounted at 10%, is $5.2 billion(16), or $27.62 per basic share(16) after deducting year-end net debt.
Q4 2024 Results
•
Generated $263 million ($1.70/basic share)(2) of FFO(1) and $62 million of FCF(4), compared to $372 million and $229 million, respectively, in the
prior year.
•
As a result of strong European gas prices, Vermilion’s corporate average realized natural gas price in Q4 2024 was $8.47/mcf, compared to
$1.48/mcf for the AECO 5A benchmark.
•
Returned $36 million to shareholders, including $18 million in share repurchases and $18 million in dividends.
•
Net loss was $18 million compared to an $803 million net loss in the prior year.
•
Exploration and development (“E&D”) capital expenditures(3) were $201 million and include capital associated with drilling the Weissenmoor Sud
deep gas exploration well in Germany, which was accelerated from Q1 2025.
•
Production averaged 83,536 boe/d(7) (56% natural gas and 44% crude oil and liquids), comprised of 52,293 boe/d(7) from the North American
assets and 31,243 boe/d(7) from the International assets.
•
In Germany, Vermilion successfully tested the Wisselshorst deep gas exploration well (0.6 net) at a restricted rate of 21 mmcf/d(14) 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 at a restricted rate of
20 mmcf/d(14) of natural gas with a flowing wellhead pressure of 6,200 psi. Based on these initial test results and evaluation performed, this well
is estimated to contain 68 Bcf of recoverable natural gas(19), representing Vermilion’s largest discovery in Europe over the past decade.
•
Subsequent to year-end, Vermilion completed drilling operations on the Weissenmoor Sud deep gas exploration well (1.0 net) and discovered
hydrocarbons, marking a third discovery in Germany. The well is currently being tested.
Outlook
•
Subsequent to year-end, closed the acquisition of Westbrick Energy Ltd. ("Westbrick"), adding approximately 50,000 boe/d(16) of Deep Basin
liquids-rich natural gas. The integration of the Westbrick assets and employees is underway and progressing as planned, including the
continuation of the two-rig Q1 2025 drilling program initiated by Westbrick prior to the deal announcement.
•
2025 capital budget and production guidance have been revised to incorporate the closing of the Westbrick acquisition for an end of February
2025 close date versus the previously forecasted mid-February 2025 close. Production is expected to range between 125,000 to 130,000 boe/
d(17) (62% natural gas including 14% European gas)(17) with E&D capital expenditures(3) of $730 to $760 million (68% North America, 32%
International, with over 70% of total capital expenditures to be invested in its global gas franchise)(17).
Vermilion Energy Inc. ■ Page 5 ■ 2024 Annual Report
•
In aggregate, 38% of expected net-of-royalty production is hedged for 2025. In particular, western Canadian gas hedges in 2025 and 2026 have
been undertaken at pricing that exceeds the pricing assumed in acquiring Westbrick and locks in strong economics for the ensuing capital
program.
•
Based on forward commodity prices, Vermilion forecasts 2025 FCF(4) of approximately $400 million. Approximately 60% of EFCF(4) will be
allocated to debt reduction with 40% of EFCF allocated to shareholder returns, inclusive of the $0.13 per share quarterly base dividend. The
variable component of shareholder returns will continue to be allocated towards share buybacks.
•
Declared a quarterly cash dividend of $0.13 per common share, payable on April 15, 2025 to shareholders of record on March 31, 2025. This
represents an 8% increase over the Q4 2024 dividend, marking the fourth increase to Vermilion’s quarterly dividend since 2021.
Vermilion Energy Inc. ■ Page 6 ■ 2024 Annual Report
($M except as indicated)
Q4 2024
Q3 2024
Q4 2023
2024
2023
Financial
Petroleum and natural gas sales
504,352
490,095
522,969
1,981,407
2,022,555
Cash flows from operating activities
212,587
134,547
343,831
967,751
1,024,528
Fund flows from operations (1)
262,698
275,024
372,117
1,205,783
1,142,611
Fund flows from operations ($/basic share) (2)
1.70
1.76
2.27
7.63
6.98
Fund flows from operations ($/diluted share) (2)
1.68
1.75
2.27
7.55
6.98
Net earnings (loss)
(18,316)
51,697
(803,136)
(46,739)
(237,587)
Net (loss) earnings ($/basic share)
(0.12)
0.33
(4.91)
(0.30)
(1.45)
Cash flows used in investing activities
154,672
145,828
132,932
634,868
576,435
Capital expenditures (3)
200,659
121,269
142,887
622,980
590,191
Acquisitions (9)
5,257
1,642
25,724
22,101
273,018
Dispositions
—
—
14,855
—
197,007
Asset retirement obligations settled
23,282
15,332
28,937
55,334
56,966
Repurchase of shares
17,637
40,106
28,736
140,707
94,838
Cash dividends ($/share)
0.12
0.12
0.10
0.48
0.40
Dividends declared
18,521
18,642
16,227
75,327
65,248
% of fund flows from operations (10)
7 %
7 %
4 %
6 %
6 %
Payout (12)
242,462
155,243
188,051
753,641
712,405
% of fund flows from operations (11)
92 %
56 %
51 %
63 %
62 %
Free cash flow (4)
62,039
153,755
229,230
582,803
552,420
Long-term debt
963,456
903,354
914,015
963,456
914,015
Net debt (6)
966,882
833,331
1,078,567
966,882
1,078,567
Net debt to four quarter trailing fund flows from operations (7)
0.8
0.6
0.9
0.8
0.9
Operational
Production (8)
Crude oil and condensate (bbls/d)
30,327
29,837
32,866
31,427
31,727
NGLs (bbls/d)
6,612
7,547
7,412
7,100
7,296
Natural gas (mmcf/d)
279.59
280.73
283.91
276.10
269.83
Total (boe/d)
83,536
84,173
87,597
84,543
83,994
Average realized prices
Crude oil and condensate ($/bbl)
100.06
103.55
107.91
104.29
102.43
NGLs ($/bbl)
29.38
27.49
33.38
30.61
31.54
Natural gas ($/mcf)
8.47
6.57
8.48
6.72
8.17
Production mix (% of production)
% priced with reference to WTI
29 %
32 %
29 %
31 %
33 %
% priced with reference to Dated Brent
15 %
13 %
17 %
15 %
13 %
% priced with reference to AECO
33 %
33 %
31 %
32 %
33 %
% priced with reference to TTF and NBP
23 %
22 %
23 %
22 %
21 %
Netbacks
Operating netback ($/boe)(12)
43.92
41.89
57.48
47.18
49.22
Fund flows from operations ($/boe) (13)
34.67
34.78
48.83
38.71
37.90
Average reference prices
WTI (US $/bbl)
70.27
75.10
78.32
75.72
77.63
Dated Brent (US $/bbl)
74.67
80.18
84.05
80.76
82.62
AECO ($/mcf)
1.48
0.69
2.30
1.46
2.64
TTF ($/mcf)
18.73
15.52
17.45
14.89
17.40
Share information ('000s)
Shares outstanding - basic
154,344
155,348
162,271
154,344
162,271
Shares outstanding - diluted (14)
157,837
158,912
166,456
157,837
166,456
Weighted average shares outstanding - basic
154,954
156,624
163,335
158,068
163,719
Weighted average shares outstanding - diluted (14)
156,184
157,502
163,335
158,068
163,719
(1)
Fund flows from operations (FFO) is a total of segments and non-GAAP financial measure most directly comparable to net loss and is calculated as sales less
royalties, transportation expense, operating expense, G&A expense, corporate income tax expense (recovery), PRRT expense, 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. FFO does not have a standardized meaning under IFRS Accounting Standards and therefore may
not be comparable to similar measures provided by other issuers. More information and a reconciliation to net earnings (loss), the most directly comparable
primary financial statement measure, can be found in the “Non-GAAP and Other Specified Financial Measures” section of this document.
Vermilion Energy Inc. ■ Page 7 ■ 2024 Annual Report
(2)
Fund flows from operations per basic share and diluted share is calculated by dividing fund flows from operations (total of segments and non-GAAP financial
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. 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.
More information and a reconciliation to cash flows used in investing activities, the most directly comparable primary financial statement measure, can be found
in the “Non-GAAP and Other Specified Financial Measures” section of this document. Capital expenditures is also referred to as E&D capital expenditures.
(3)
Capital expenditures is a non-GAAP financial measure most directly comparable to cash flows used in investing activities and is calculated as the sum of drilling
and development costs and exploration and evaluation costs. Management considers capital expenditures to be a useful measure of our investment in our
existing asset base. Capital expenditures does not have a standardized meaning under IFRS Accounting Standards and therefore may not be comparable to
similar measures provided by other issuers. More information and a reconciliation to cash flows used in investing activities, the most directly comparable primary
financial statement measure, can be found in the “Non-GAAP and Other Specified Financial Measures” section of this document. Capital expenditures is also
referred to as E&D capital expenditures.
(4)
Free cash flow (FCF) and excess free cash flow (EFCF) are non-GAAP financial measures most directly comparable to cash flows from operating activities.
FCF is calculated as FFO less drilling and development costs and exploration and evaluation costs and EFCF is calculated as FCF less payments on lease
obligations and asset retirement obligations settled. 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. EFCF is used by
management to determine the funding available to return to shareholders after costs attributable to normal business operations. FCF and EFCF do not have
standardized meanings under IFRS Accounting Standards and therefore may not be comparable to similar measures provided by other issuers. More
information and a reconciliation to cash flows from operating activities, the most directly comparable primary financial statement measure, can be found in the
“Non-GAAP and Other Specified Financial Measures” section of this document.
(5)
Free cash flow per basic share is a non-GAAP financial measure and is not a standardized financial measure under IFRS Accounting Standards and may not
be comparable to similar measures disclosed by other issuers. It is calculated using FCF and basic shares outstanding.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.
(6)
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
and is calculated as long-term debt (excluding unrealized foreign exchange on swapped USD borrowings) plus adjusted working deficit (capital), a non-GAAP
financial measure described in the “Non-GAAP and Other Specified Financial Measures” section of this document. Management considers this a helpful
representation of Vermilion’s net financing obligations after adjusting for the timing of working capital fluctuations. More information and a reconciliation to long-
term debt, the most directly comparable primary financial statement measure, can be found in the “Non-GAAP and Other Specified Financial Measures” section
of this document.
(7)
Net debt to four quarter trailing fund flows from operations is a non-GAAP ratio and is not a standardized financial measure under IFRS Accounting Standards
and therefore may not be comparable to similar measures disclosed by other issuers. Net debt to four quarter FFO is calculated as net debt divided by FFO
from the preceding four quarters. Management uses this measure to assess the Company’s ability to repay debt. More information can be found in the “Non-
GAAP and Other Specified Financial Measures” section of this document.
(8)
Please refer to Supplemental Table 4 “Production” of the accompanying Management’s Discussion and Analysis for disclosure by product type.
(9)
Acquisitions is a non-GAAP financial measure and is not a standardized financial measure under IFRS Accounting Standards and therefore may not be
comparable to similar measures disclosed by other issuers. Acquisitions is calculated as the sum of acquisitions, net of cash acquired, acquisitions of securities
and net acquired working capital (deficit). 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. More information and a reconciliation to
acquisitions, net of cash acquired and acquisition of securities, the most directly comparable primary financial statement measure, can be found in the “Non-
GAAP and Other Specified Financial Measures” section of this document.
(10)
Dividends % of FFO is a non-GAAP ratio that is not standardized under IFRS Accounting Standards and may not be comparable to similar measures disclosed
by other issuers. Dividends % of FFO is calculated as dividends declared divided by FFO. The ratio is used by management as a metric to assess the cash
distributed to shareholders. More information can be found in the “Non-GAAP and Other Specified Financial Measures” section of this document.
(11)
Payout and payout % of FFO are a non-GAAP financial measure and a non-GAAP ratio, respectively, that are not standardized under IFRS Accounting
Standards and may not be comparable to similar measures disclosed by other issuers. Payout is most directly comparable to dividends declared. Payout is
calculated as 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. More information and a reconciliation to dividends declared, the most directly comparable primary financial
statement measure, can be found in the “Non-GAAP and Other Specified Financial Measures” section of this document.
(12)
Operating netback 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. Operating netback is most directly comparable to net (loss) earnings 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,
Vermilion Energy Inc. ■ Page 8 ■ 2024 Annual Report
the most directly comparable primary financial statement measure, can be found in the “Non-GAAP and Other Specified Financial Measures” section of this
document.
(13)
Fund flows from operations per boe is a non-GAAP ratio that is not standardized under IFRS Accounting Standards and may not be comparable to similar
measures disclosed by other issuers. FFO per boe is calculated as FFO divided by boe production. FFO per boe is used by management to assess the
profitability of Vermilion’s business units and Vermilion as a whole. More information can be found in the “Non-GAAP and Other Specified Financial Measures”
section of this document.
(14)
Diluted shares outstanding represents the sum of shares outstanding at the period end plus outstanding awards under the Long-term Incentive Plan, based on
current estimates of future performance factors and forfeiture rates.
(15)
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 measured depth ("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.
(16)
Estimated gross proved, developed and producing, total proved, and total proved plus probable reserves as evaluated by McDaniel & Associates Consultants
Ltd. (“McDaniel”) in a report dated March 4, 2025 with an effective date of December 31, 2024 (the “McDaniel Reserves Report”). See Vermilion’s annual
information form for the year ended December 31, 2024 for additional information, including reserve pricing assumptions. Per share metrics calculated using
basic shares outstanding at December 31, 2024.
(17)
Estimated 2025 Westbrick production based on Company estimates as of March 5, 2025.
(18)
Based on Company 2025 estimates and 2025 full year average reference prices as at March 3, 2025: Brent US$71.29/bbl; WTI US$67.56/bbl; LSB = WTI less
US$6.83/bbl; TTF $20.49/mmbtu; NBP $20.36/mmbtu; AECO $2.21/mcf; CAD/USD 1.43; CAD/EUR 1.51 and CAD/AUD 0.90.
(19)
At March 5, 2025, Wisselshorst Z1a well has been assigned 68.3 Bcf Property Gross total proved plus probable conventional natural gas reserves, as evaluated
by McDaniel & Associated Consultants Ltd. (“McDaniel”), a qualified reserves evaluator, in the Rotliegend Havel zone and recently tested Dethlingen zone. This
represents a significant increase in the reserves assigned by McDaniel effective December 31, 2024, of 32.9 Bcf Property Gross total proved plus probable
conventional natural gas reserves, due to the strong test results in existing Rotliegend Havel and Dethlingen zones. Vermilion has recorded 21.1 Bcf of Gross
proved plus probable reserves as of December 31, 2024 based on its 64.165% working interest. The evaluation was prepared in accordance with National
Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and the Canadian Oil and Gas Evaluations Handbook (“COGEH”). “Property
Gross” reserves are total reserves before working interest has been applied. “Gross” means in relation to Vermilion's interest in production or reserves,
Vermilion’s working interest (operating or non-operating) share before deduction of royalty obligations and without including any royalty interests of Vermilion.
Vermilion Energy Inc. ■ Page 9 ■ 2024 Annual Report
Message to Shareholders
Vermilion delivered strong operational and financial results in 2024, achieving annual production above the mid-point of guidance while executing a
$623 million E&D capital expenditures program, including several early-stage investments that will contribute to future production growth. Production
for the year averaged 84,543 boe/d(1), representing annual production per share growth of 4%. The Company generated $1.2 billion, or $7.63 per
basic share of fund flows from operations ("FFO") in 2024, representing a 9% increase over 2023 on a per basic share basis. Free cash flow ("FCF")
of $583 million increased 9% on a per basic share basis relative to 2023. This FCF provided funding for asset retirement obligations and lease
obligations, including the full repayment of the $79 million lease associated with the Montney Battery construction completed in 2024, which will
result in immediate interest cost savings. Approximately $216 million, or 52% of excess FCF, was returned to shareholders in 2024 including $75
million in dividends and $141 million of share repurchases, resulting in a 5% reduction in outstanding common shares which further enhanced per
share metrics. Late in the year, Vermilion announced an 8% increase to the quarterly dividend for 2025, marking the fourth increase to the
Company's quarterly dividend since 2021. Net debt decreased by 10% in 2024 to $967 million at the end of the year, representing a net debt to four
quarter trailing FFO ratio of 0.8 times.
The Company executed its largest ever exploration drilling campaign in Europe in 2024, achieving 100% success on six exploration wells. Most
notable were the two (1.6 net) deep gas exploration wells drilled in Germany, Osterheide and Wisselshorst, which tested at restricted rates of 17
mmcf/d(2) and 21 mmcf/d(3), respectively. Subsequent to year-end 2024, Vermilion tested an additional zone on the Wisselshorst well at a restricted
rate of 20 mmcf/d(3) with 6,200 psi of flowing wellhead pressure, resulting in a combined test rate of over 40 mmcf/d. Based on the initial test data
and evaluation performed, this well is estimated to contain 68 Bcf of recoverable natural gas(10), representing Vermilion’s largest discovery in Europe
over the past decade. Based on Vermilion’s assessment, the Wisselshorst structure is large enough to support an additional 4 to 6 follow-up drilling
locations as part of our future development plans In addition, the Company completed drilling operations on the Weissenmoor Sud deep gas
exploration well in Germany in early 2025 which encountered multiple hydrocarbon-bearing zones.
In aggregate, the Osterheide and Wisselshorst wells tested at a combined rate of 56 mmcf/d(2,3), or equivalent to 50% of Vermilion’s current
European natural gas production. In Croatia, Vermilion drilled four successful exploration wells (2.4 net) on the SA-7 block and tested three of these
wells in 2024. The discoveries in Germany and Croatia have proven up multiple producing zones and de-risked future exploration and development
targets to support future organic development within the Company’s most profitable operating region. The Company is moving forward with
production tie-in operations and evaluating de-bottlenecking options to enhance future production capacity from these new discoveries, which are
expected to generate significant FCF in the years ahead. Vermilion has operated in Europe for nearly 30 years and continues to view the region as a
key strategic asset within the portfolio and one that offers significant organic and inorganic growth opportunities. European natural gas prices
averaged $18.73/mmbtu in Q4 2024 and have remained strong in recent months with forward prices over $19/mmbtu for the remainder of 2025.
In Canada, Vermilion executed a strategic expansion of its Montney asset with the completion and start-up of the new BC Mica Battery in 2024. This
allowed the Company to nearly double its Montney production capacity to approximately 14,000 boe/d while providing the platform for future
expansion to 28,000 boe/d. Vermilion has drilled a total of 32 wells in the Montney since acquiring the asset in 2022 and continues to see
improvements in well costs and productivity, with total well costs trending toward our targeted range of $9.0 to $9.5 million per well. As the Company
executes the remaining expansion phases over the next couple years, production from the Montney is expected to increase to approximately 28,000
boe/d which will translate to strong and sustainable FCF supported by over 15 years of drilling inventory.
Vermilion has made significant progress in its asset high grading strategy over the past few years, including the consolidation of working interest in
the Corrib natural gas project in Ireland, the acquisition of an early stage Montney growth asset in Canada and most recently the acquisition of
Westbrick Energy Ltd. ("Westbrick") in the Deep Basin of Canada. The Westbrick acquisition significantly advances Vermilion’s North American high-
grading initiative, adding approximately 50,000 boe/d(4) of liquids rich natural gas production and increasing the Company’s operational scale and
depth and quality of inventory in the Deep Basin. With the closing of this acquisition, approximately 80% of Vermilion's production now comes from
its global gas portfolio comprised of Canadian liquids-rich natural gas fairway in the Deep Basin and Montney and premium-priced natural gas in
Europe. Vermilion’s European gas production provide direct exposure to premium European gas prices and generate strong FCF today, while the
growing liquids-rich gas asset base in Canada generates strong full-cycle margins while providing exposure to an improving macro environment for
North American gas prices.
In conjunction with the closing of the Westbrick acquisition, and as part of the Company's broader asset high-grading initiative, Vermilion recently
launched a formal sales process for its southeast Saskatchewan and United States assets. These are high quality assets with strong retention
values that will be incorporated into the decision-making process on how to best maximize shareholder value. The potential sale of these assets
would help accelerate Vermilion’s deleveraging efforts as the Company remains committed to reducing its net debt to FFO ratio to a target range of
one times or less. Vermilion also recently issued US$400 million of eight-year senior unsecured notes which further enhances the Company’s
liquidity. Vermilion is in a very strong financial position today with over $1 billion of financial liquidity and over 35% of its 2025 production hedged(5),
which will contribute to Vermilion’s deleveraging efforts.
Vermilion Energy Inc. ■ Page 10 ■ 2024 Annual Report
Q4 2024 Operations Review
North America
Production from Vermilion's North American operations averaged 52,293 boe/d(1) in Q4 2024, a decrease of 3% from the previous quarter 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 the Mica Montney 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 BC 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 BC 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.
Vermilion continues to demonstrate success with its open hole multilateral drilling program in Saskatchewan, efficiently maintaining production of
over 10,000 boe/d in the quarter. The Company also had an active drilling program in the Deep Basin, where we have drilled over 300 wells over the
past three decades and continue to see success across numerous zones.
International
Production from Vermilion's International operations averaged 31,243 boe/d(1) 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.
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(3) 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(3) of natural gas with a flowing wellhead pressure of 6,200 psi. Both tests were
restricted due to limitations of the testing equipment. Vermilion expects to bring this well on production in the first half of 2026 and is currently
evaluating follow-up drilling locations and de-bottlenecking options to optimize production and future development plans. Vermilion's operated
working interest in this well increased from 30% to 64% during the fourth quarter of 2024, increasing the Company's exposure to this potentially large
gas resource.
Subsequent to year-end, Vermilion completed drilling operations on the Weissenmoor Sud deep gas exploration well (1.0 net) and discovered
hydrocarbons, marking a third discovery in Germany. The well is currently being tested. Tie-in operations on the Osterheide well (1.0 net) are
proceeding as planned with first production anticipated in the first half of 2025. The success of the Company's deep gas exploration program in
Germany is expected to add meaningful, long-life production and FCF in the years ahead as well as providing technical confidence on future drilling
locations.
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. This well encountered hydrocarbons across multiple prospective zones and will require additional testing to determine the
optimal producing zone and completion method for development. Vermilion continues to work with its partner in evaluating the results of the 2024
exploration program and is planning for the second drilling campaign which may include four to five additional wells in 2026.
2024 Reserves Update
Total proved plus probable (“2P”) reserves increased by 1% from the prior year to 435.1 mmboe(6), primarily due to extensions and improved
recovery on the Mica Montney asset. Vermilion added 26.2 mmboe of proved developed producing ("PDP") reserves and 36.2 mmboe of 2P
reserves at an average finding, development and acquisition ("FD&A")(8) cost, including future development costs, of $22.81 per boe and $15.77 per
boe, respectively, resulting in a recycle ratio(9) of 1.6x on a PDP basis and 2.3x on a 2P basis. The 2024 FD&A figures include upfront capital costs
associated with several early-stage growth projects, such as Montney infrastructure and Germany/Croatia exploration, from which minimal reserves
have been recognized to date.
The PDP and 2P reserve life index at December 31, 2024 is 5.4 years and 14.1 years, respectively, both of which are consistent with our long-term
average. The after-tax net present value of PDP reserves, discounted at 10%, is $2.8 billion(6) and the after-tax net present value of 2P reserves,
discounted at 10%, is $5.2 billion(6), or $27.62 per basic share(6) after deducting year-end net debt.
Vermilion Energy Inc. ■ Page 11 ■ 2024 Annual Report
The following table provides a summary of company interest reserves by reserve category and region on an oil equivalent basis. Please refer to
Vermilion's 2024 Annual Information Form for the year ended December 31, 2024 ("2024 Annual Information Form") for detailed information by
country and product type.
BOE (mboe)
Proved Developed
Producing
Proved Developed
Non-Producing
Proved
Undeveloped
Proved
Probable
Proved Plus
Probable
North America
114,376
4,785
91,509
210,670
119,942
330,612
International
53,600
6,037
8,815
68,453
36,043
104,496
Vermilion
167,976
10,822
100,324
279,123
155,986
435,109
The following table provides a reconciliation of changes in company interest reserves by reserve category and region. Please refer to Vermilion's
2024 Annual Information Form for detailed information by country and product type and for an explanation concerning the reserve change
categories. The following tables may not total due to rounding.
PDP (mboe)
North America
International
Vermilion
December 31, 2023
112,204
60,502
172,706
Discoveries
—
—
—
Extensions & Improved Recovery
3,994
100
4,095
Technical Revisions
18,563
4,162
22,726
Acquisitions
—
—
—
Dispositions
(36)
—
(36)
Economic Factors
(754)
182
(572)
Production
(19,596)
(11,347)
(30,943)
December 31, 2024
114,376
53,600
167,976
1P (mboe)
North America
International
Vermilion
December 31, 2023
195,685
72,700
268,385
Discoveries
—
2,782
2,782
Extensions & Improved Recovery
31,271
2,568
33,839
Technical Revisions
4,064
334
4,398
Acquisitions
1,782
1,161
2,943
Dispositions
(1,473)
—
(1,473)
Economic Factors
(1,063)
254
(809)
Production
(19,596)
(11,347)
(30,943)
December 31, 2024
210,670
68,453
279,123
2P (mboe)
North America
International
Vermilion
December 31, 2023
316,040
113,798
429,838
Discoveries
—
4,861
4,861
Extensions & Improved Recovery
35,273
1,327
36,600
Technical Revisions
1,366
(6,100)
(4,734)
Acquisitions
2,302
1,825
4,128
Dispositions
(3,317)
—
(3,317)
Economic Factors
(1,455)
133
(1,323)
Production
(19,596)
(11,347)
(30,943)
December 31, 2024
330,612
104,496
435,109
Additional information about the McDaniel Reserves Report can be found in our Annual Information Form on our website at
www.vermilionenergy.com and on SEDAR+ at www.sedarplus.ca.
Outlook and Guidance Update
Subsequent to year-end, Vermilion announced the closing of the Westbrick acquisition, adding approximately 50,000 boe/d(4) of Deep Basin liquids-
rich natural gas. The integration of the Westbrick assets and employees is underway and progressing as planned with numerous synergies already
identified. Vermilion plans to continue with the two-rig Q1 2025 drilling program initiated by Westbrick and expects to maintain this program on the
Vermilion Energy Inc. ■ Page 12 ■ 2024 Annual Report
acquired assets post break-up. During the first quarter of 2025, Vermilion launched a formal sales process for its Southeast Saskatchewan and
Wyoming assets. The Saskatchewan assets include approximately 10,000 boe/d (85% liquids) of production with moderate declines and multi-lateral
development upside. The Wyoming assets include approximately 5,000 boe/d (80% liquids) of production with multi-zone development potential,
including the Niobrara and the Parkman.
The 2025 capital budget and production guidance have been revised to incorporate the closing of the Westbrick acquisition. Annual production is
now expected to range between 125,000 to 130,000 boe/d(5) (62% natural gas including 14% European gas)(5) with E&D capital expenditures of $730
to $760 million (68% North America and 32% International, with over 70% of total capital to be invested in Vermilion's global gas franchise)(5). The
revised capital program includes an additional 13 (12.3 net) wells to be drilled on the Westbrick assets, bringing the total Deep Basin well count to 28
(24.9 net) wells for 2025.
Based on forward commodity prices, Vermilion forecasts 2025 FCF of approximately $400 million. Approximately 60% of excess FCF ("EFCF") will
be allocated to debt reduction with 40% of EFCF allocated to shareholder returns, inclusive of the $0.13 per share quarterly base dividend. The
variable component of shareholder returns will continue to be allocated towards share buybacks. Since initiating the share buyback program in July
2022, Vermilion has repurchased and retired 17.8 million shares.
Vermilion’s updated 2025 capital expenditure and production guidance following the closing of the Westbrick acquisition is:
Category
2025 Prior(7)
2025 Current(7)
Production (boe/d)
84,000 - 88,000
125,000 - 130,000
E&D capital expenditures ($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
Based on the closing date of the Westbrick acquisition, Q1 2025 production is expected to be approximately 100,000 boe/d(5).
The United States recently announced tariffs on all goods imported from Canada, including a 10% tariff on Canadian energy imports, effective March
4, 2025. Over half of Vermilion’s revenue is derived from assets located outside of Canada which provides a partial hedge against these tariffs.
Vermilion will continue to monitor the situation as it relates to its Canadian production and operations, but at this time it does not expect the tariffs to
have a material financial impact on the Company.
Commodity Hedging
Vermilion hedges to manage commodity price exposures and increase the stability of our cash flows. In aggregate, we have 38% of our expected
net-of-royalty production hedged for 2025. With respect to individual commodity products, we have hedged 54% of our European natural gas
production, 34% of our crude oil production, and 35% of our North American natural gas volumes, respectively. Please refer to the Hedging section
of our website under Invest With Us for further details using the following link:
https://www.vermilionenergy.com/invest-with-us/hedging.
(Signed “Dion Hatcher”)
Dion Hatcher
President & Chief Executive Officer
March 5, 2025
(1)
Please refer to Supplemental Table 4 "Production" of the accompanying Management's Discussion and Analysis for disclosure by product type.
Vermilion Energy Inc. ■ Page 13 ■ 2024 Annual Report
(2)
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.
(3)
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.
(4)
Estimated full year 2025 Westbrick production based on Company estimates as of March 5, 2025.
(5)
Based on Company 2025 estimates and 2025 full year average reference prices as at March 3, 2025: Brent US$71.29/bbl; WTI US$67.56/bbl; LSB = WTI less
US$6.83/bbl; TTF $20.49/mmbtu; NBP $20.36/mmbtu; AECO $2.21/mcf; CAD/USD 1.43; CAD/EUR 1.51 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 the McDaniel Reserves
Report. See the Annual Information Form for additional information, including reserve pricing assumptions. Per share metrics calculated using basic shares
outstanding at December 31, 2024, refer to Highlights table for additional information.
(7)
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.
(8)
F&D (finding and development) and FD&A (finding, development and acquisition) costs are calculated by dividing the applicable capital expenditures for the
period, including the change in undiscounted FDC (future development capital), by the change in the reserves, incorporating revisions and production, for the
same period. More information can be found in the “Non-GAAP Financial Measures and Other Specified Financial Measures” section of this document.
(9)
Operating Recycle Ratio is a non-GAAP ratio that is calculated by dividing the Operating Netback by the cost of adding reserves (F&D and FD&A cost). For the
purposes of calculating 2024 Operating Recycle Ratio, this netback number was $36.48. More information can be found in the “Non-GAAP Financial Measures
and Other Specified Financial Measures” section of this document.
(10)
At March 5, 2025, Wisselshorst Z1a well has been assigned 68.3 Bcf Property Gross total proved plus probable conventional natural gas reserves, as evaluated
by McDaniel & Associated Consultants Ltd. (“McDaniel”), a qualified reserves evaluator, in the Rotliegend Havel zone and recently tested Dethlingen zone. This
represents a significant increase in the reserves assigned by McDaniel effective December 31, 2024, of 32.9 Bcf Property Gross total proved plus probable
conventional natural gas reserves, due to the strong test results in existing Rotliegend Havel and Dethlingen zones. Vermilion has recorded 21.1 Bcf of Gross
proved plus probable reserves as of December 31, 2024 based on its 64.165% working interest. The evaluation was prepared in accordance with National
Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and the Canadian Oil and Gas Evaluations Handbook (“COGEH”). “Property
Gross” reserves are total reserves before working interest has been applied. “Gross” means in relation to Vermilion's interest in production or reserves,
Vermilion’s working interest (operating or non-operating) share before deduction of royalty obligations and without including any royalty interests of Vermilion.
Vermilion Energy Inc. ■ Page 14 ■ 2024 Annual Report
Non-GAAP and Other Specified Financial Measures
This report and other materials released by Vermilion includes financial measures that are not standardized, specified, defined, or determined under
IFRS Accounting Standards and are therefore considered non-GAAP or other specified financial measures and may not be comparable to similar
measures presented by other issuers. These financial measures include:
Total of Segments Measures
Fund flows from operations (FFO): Most directly comparable to net 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
(5,011)
1,621
(5,834)
—
Net loss
(18,316)
(803,136)
(46,739)
(237,587)
(1)
Unrealized (loss) gain on derivative instruments, Unrealized foreign exchange (loss) gain, and Unrealized other expense are line items from the respective
Consolidated Statements of Cash Flows.
Non-GAAP Financial Measures and Non-GAAP Ratios
Fund flows from operations per basic and diluted share: FFO per basic 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.
Vermilion Energy Inc. ■ Page 15 ■ 2024 Annual Report
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) and excess free cash flow (EFCF): 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 and EFCF is
comprised of FCF less payments on lease obligations and asset retirement obligations settled. 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. EFCF is used by management to determine the funding available to return to shareholders after
costs attributable to normal business operations. 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
Payments on lease obligations
(82,060)
(3,977)
(101,539)
(17,094)
Asset retirement obligations settled
(23,282)
(28,937)
(55,334)
(56,966)
Excess free cash flow
(43,303)
196,316
425,930
478,360
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.
($M)
Q4 2024
Q4 2023
2024
2023
Drilling and development
176,505
132,308
586,962
569,110
Exploration and evaluation
24,154
10,579
36,018
21,081
Capital expenditures
200,659
142,887
622,980
590,191
Payout and payout % of FFO: Payout and payout % of FFO are, respectively, a non-GAAP financial measure and non-GAAP ratio. Payout is most
directly comparable to dividends declared. Payout is comprised of dividends declared plus drilling and development costs, exploration and evaluation
costs, and asset retirement obligations settled, and payout % of FFO is calculated as payout divided by FFO. The measure is used by management
to assess the amount of cash distributed back to shareholders and reinvested in the business for maintaining production and organic growth. Payout
as a percentage of FFO is also referred to as the payout ratio or sustainability ratio. The reconciliation of the measure to the primary financial
statement measure can be found below.
($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 %
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.
Vermilion Energy Inc. ■ Page 16 ■ 2024 Annual Report
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)
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.
($M)
Q4 2024
Q4 2023
Q4 2024
Q4 2023
Acquisitions, net of cash acquired
5,257
2,669
12,728
142,281
Acquisition of securities
—
17,448
9,373
21,603
Acquired working capital
—
5,607
—
109,134
Acquisitions
5,257
25,724
22,101
273,018
Operating netback: Operating netback is non-GAAP financial measure and is calculated as sales less royalties, operating expense, transportation
costs, PRRT, and realized hedging gains and losses, and when presented on a per unit basis is a non-GAAP ratio. Operating netback is most
directly comparable to net loss. Management assesses operating netback as a measure of the profitability and efficiency of our field operations.
Net debt to four quarter trailing fund flows from operations: Management uses net debt (a capital management measure, as defined below) to
four quarter trailing fund flows from operations to assess the Company's ability to repay debt. Net debt to four quarter trailing fund flows from
operations is a non-GAAP ratio calculated as net debt (capital management measure) divided by fund flows from operations (total of segments
measure) from the preceding four quarters.
Capital Management Measure
Net debt: Net debt is a capital management measure in accordance with IAS 1 "Presentation of Financial Statements" that is most directly
comparable to long-term debt. Net debt is comprised of long-term debt (excluding unrealized foreign exchange on swapped USD borrowings) plus
adjusted working capital (defined as current assets less current liabilities, excluding current derivatives and current lease liabilities), and represents
Vermilion's net financing obligations after adjusting for the timing of working capital fluctuations.
Vermilion Energy Inc. ■ Page 17 ■ 2024 Annual Report
As at
($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
Production per share growth: Calculated as the change in production determined on a per weighted average shares outstanding basis over a
predefined period of time, expressed as a compounded, annualized return percentage. Measuring production growth per share better reflects the
interests of our existing shareholders by reflecting the dilutive impact of equity issuances.
F&D (finding and development) and FD&A (finding, development and acquisition) costs: used as a measure of capital efficiency, calculated by
dividing the applicable capital expenditures for the period, including the change in undiscounted FDC (future development capital), by the change in
the reserves, incorporating revisions and production, for the same period.
Operating Recycle Ratio: A non-GAAP ratio that is calculated by dividing the Operating Netback, excluding realized gain (loss) on derivatives and
petroleum resource rent tax, by the cost of adding reserves (F&D and FD&A cost). Management assesses operating recycle ratio as a measure of
the reinvestment of earnings.
Vermilion Energy Inc. ■ Page 18 ■ 2024 Annual Report
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.
Vermilion Energy Inc. ■ Page 19 ■ 2024 Annual Report
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:
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
$113
On December 19, 2024, Vermilion released the 2025 capital budget and associated production guidance. On March 5, 2025, the Company updated
the 2025 capital budget and associated production guidance following the close of the acquisition of Westbrick Energy Ltd. ("Westbrick"), with
incremental capital expenditures and production from the acquired assets reflected in guidance for the remainder of the year. The Company’s
guidance for 2025 is as follows:
Category
2025 Prior(1)
2025 Current(1)
Production (boe/d)
84,000 - 88,000
125,000 - 130,000
E&D capital expenditures ($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.
(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.
Vermilion Energy Inc. ■ Page 20 ■ 2024 Annual Report
Vermilion's Business
Vermilion is a Calgary, Alberta-based international oil and gas producer focused on the acquisition, exploration, development, and optimization of
producing properties in North America, Europe, and Australia. We manage our business through our Calgary head office and our international
business unit offices.
2024 production of 84,543 boe/d
2024 capital expenditures of $623.0MM
North America: 63%
International: 37%
North America: 66%
International: 34%
2024 fund flows from operations of $1,205.8MM (1)
North America: 38%
International: 62%
(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 $1.4MM of corporate income tax recorded in the Corporate segment.
Vermilion Energy Inc. ■ Page 21 ■ 2024 Annual Report
Consolidated Results Overview
Q4 2024
Q4 2023
Q4/24 vs.
Q4/23
2024
2023
2024 vs.
2023
Production (1)
Crude oil and condensate (bbls/d)
30,327
32,866
(8)%
31,427
31,727
(1)%
NGLs (bbls/d)
6,612
7,412
(11)%
7,100
7,296
(3)%
Natural gas (mmcf/d)
279.59
283.91
(2)%
276.10
269.83
2%
Total (boe/d)
83,536
87,597
(5)%
84,543
83,994
1%
Build (draw) in inventory (mbbls)
107
442
(220)
513
Financial metrics
Fund flows from operations ($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
(1)
Please refer to Supplemental Table 4 "Production" for disclosure by product type.
(2)
Fund flows from operations (FFO) and FFO per share are a total of segments measure and supplementary financial measure 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.
(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.
(4)
Net debt is a capital management measure in accordance with IAS 1 "Presentation of Financial Statements" and is most directly comparable to long-term debt.
Net debt is comprised of long-term debt (excluding unrealized foreign exchange on swapped USD borrowings) plus adjusted working capital (defined as current
assets less current liabilities, excluding current derivatives and current lease liabilities), and represents Vermilion's net financing obligations after adjusting for
the timing of working capital fluctuations. Net debt excludes lease obligations which are secured by a corresponding right-of-use asset. A reconciliation to the
primary financial statement measures can be found within the "Financial Position Review" section of this MD&A.
(5)
Capital expenditures is a non-GAAP financial measure that does not have a standardized meaning under IFRS 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.
(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.
Vermilion Energy Inc. ■ Page 22 ■ 2024 Annual Report
Financial performance review
Q4 2024 vs. Q4 2023
"Other" contains equity based compensation, accretion, gain on business combination, loss on disposition, unrealized foreign exchange and
unrealized other.
$MM
Net loss of $18.3MM in Q4 2024 compared to $803.1MM in Q4 2023
$(803.1)
$1,016.1
$95.6
$91.6
$(278.4)
$(109.4)
$(30.7)
$(18.3)
Q4 2023
Impairment expense
Depletion and depreciation
Other
Unrealized derivatives
Fund flows
from operations
Deferred tax
Q4 2024
-800
-600
-400
-200
0
200
400
•
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.
"Pricing net of derivatives" contains pricing variance on sales volumes (WTI, AECO, Dated Brent & TTF and NBP) and realized derivatives.
"Sales volume" is the sum of sales volume variance in all regions. "Other" contains royalties, transportation, interest, realized foreign
exchange, and other realized income.
$MM
Decreased cash flows from operating activities and FFO driven by lower pricing
$372.1
$3.4
$(67.8)
$(22.6)
$(14.0)
$(7.7)
$(0.7)
$262.7
$343.8
$212.6
Cash flows from operating activities
Q4 2023 - FFO
Other
Pricing net
of derivatives
Operating
Taxes
General and administration
Sales volume
Q4 2024 - FFO
200
250
300
350
400
Vermilion Energy Inc. ■ Page 23 ■ 2024 Annual Report
•
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.
2024 vs. 2023
"Other" contains equity based compensation, accretion, depletion and depreciation, and unrealized other
$MM
Net loss of $46.7MM in 2024 compared to of $237.6MM in 2023
$(237.6)
$1,016.1
$352.4
$63.2
$54.4
$(703.5)
$(439.5)
$(152.2)
$(46.7)
2023
Impairment
Loss on sale of assets
Fund flows from operations
Other
Unrealized derivatives, foreign exchange
Gain on business combinations
Deferred tax
2024
-200
0
200
400
600
800
1,000
1,200
•
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.
Vermilion Energy Inc. ■ Page 24 ■ 2024 Annual Report
"Pricing net of derivatives" contains pricing variance on sales volumes (WTI, AECO, Dated Brent & TTF and NBP) and realized derivatives.
"Sales volume" is the sum of sales volume variance in all regions. "Other" contains, interest, royalties, transportation, realized foreign
exchange, pricing, net of derivatives and other realized income.
$MM
FFO increased on higher sales volumes on Australia liftings, absence of windfall taxes. Cash flows from
operating activities decreased on timing of working capital
$1,142.6
$73.4
$71.4
$6.1
$(54.5)
$(18.8)
$(14.4)
$1,205.8
$1,024.5
$967.8
Cash flows from operating activities
2023 - FFO
Sales volume
Current taxes
Other
Operating expense
General and administration
Cash-settled equity based compensation
2024 - FFO
900
1,000
1,100
1,200
1,300
•
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.
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.
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.
Vermilion Energy Inc. ■ Page 25 ■ 2024 Annual Report
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:
◦
At Mica, we drilled six (6.0 net) BC Montney liquids-rich shale gas wells;
◦
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 and completed, six (5.9 net) and brought on production seven (6.9 net) light and medium crude oil wells;
◦
In the United States, five (0.6 net) non-operated light and medium crude oil wells were drilled and completed.
•
In our International core region, capital expenditures of $66.5 million were invested:
◦
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;
◦
In the Netherlands, we invested $12.0 million, primarily on facilities and workover activities;
◦
In France, we invested $11.9 million primarily on facilities activities and well optimization activities;
◦
In Australia, $5.6 million was invested as we performed routine facilities maintenance;
◦
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;
◦
In Ireland, $0.6 million was invested on facilities.
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.
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 - $1,078.6 million) as a result of strong free
cash flow generation.
•
The ratio of net debt to four quarter trailing fund flows from operations(1) decreased to 0.8 as at December 31, 2024 (December 31, 2023 - 0.9)
primarily due to lower net debt and higher four quarter trailing fund flows from operations on lower windfall taxes, increased sales volume, and
increased realized hedge gains.
(1)
Net debt to four quarter trailing fund flows from operations is a supplementary financial measure that does not have a standardized meaning under IFRS
Accounting Standards and therefore may not be comparable to similar measures presented by other issuers. It is calculated as net debt (capital measure) over
the FFO from the preceding four quarters (total of segments measure). The measure is used to assess our ability to repay debt.
Vermilion Energy Inc. ■ Page 26 ■ 2024 Annual Report
Benchmark Commodity Prices
Q4 2024
Q4 2023
Q4/24 vs.
Q4/23
2024
2023
2024 vs.
2023
Crude oil
WTI ($/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)%
(1)
NBP and TTF pricing can occur on a day-ahead ("DA") or month-ahead ("MA") basis. DA prices in a period reflect the average current day settled price on the
next days' delivery and MA prices in a period represent daily one month futures contract prices which are determined at the end of each month. In a rising price
environment, the DA price will tend to be greater than the MA price and vice versa. Natural gas in the Netherlands and Germany is benchmarked to the TTF
and production is generally equally split between DA and MA contracts. Natural gas in Ireland is benchmarked to the NBP and is sold on DA contracts.
As an internationally diversified producer, we are exposed to a range of commodity prices. In our North America core region, our crude oil is sold at
benchmarks linked to WTI (including the Edmonton Sweet index, the Saskatchewan LSB index, and the Canadian C5+ index) and our natural gas is
sold at benchmarks linked to the AECO index (in Canada) or the Henry Hub ("HH") index (in the United States). In our International core region, our
crude oil is sold with reference to Dated Brent and our natural gas is sold with reference to NBP, TTF, or indices highly correlated to TTF.
Vermilion Energy Inc. ■ Page 27 ■ 2024 Annual Report
$/bbl
Q4 2024 realized crude oil and condensate price was a $5.14/bbl premium to Edmonton Sweet Index
Dated Brent (39% of Q4 2024
sales volumes)
WTI (9% of Q4 2024
sales volumes)
Canadian C5+ (12% of Q4 2024
sales volumes)
Crude oil and condensate
realized price
Saskatchewan LSB (26% of Q4 2024
sales volumes)
Edmonton Sweet index (14% of Q4 2024
sales volumes)
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Q4 2024
90.00
100.00
110.00
120.00
•
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.
$/mcf
Q4 2024 realized natural gas price was a $6.99/mcf premium to AECO 5A
NBP DA (20% of Q4 2024
sales volumes)
TTF DA (20% of Q4 2024
sales volumes)
Natural gas realized
price
Henry Hub (2% of Q4 2024
sales volumes)
AECO (5A) (58% of Q4 2024
sales volumes)
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Q4 2024
0.00
10.00
20.00
30.00
•
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.
•
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.
Vermilion Energy Inc. ■ Page 28 ■ 2024 Annual Report
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
(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
$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
Q4 2024
Q4 2023
2024
2023
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 29 ■ 2024 Annual Report
Royalties
$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 %
Q4 2024
Q4 2023
2024
2023
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
$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)
Q4 2024
Q4 2023
2024
2023
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
$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)
Q4 2024
Q4 2023
2024
2023
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.
Vermilion Energy Inc. ■ Page 30 ■ 2024 Annual Report
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.
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
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.
Vermilion Energy Inc. ■ Page 31 ■ 2024 Annual Report
Sales
$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
Q4 2024
Q4 2023
2024
2023
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 %
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.
Vermilion Energy Inc. ■ Page 32 ■ 2024 Annual Report
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)
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.
Operating expense
Q4 2024
Q4 2023
2024
2023
$M
$/boe
$M
$/boe
$M
$/boe
$M
$/boe
Australia
(10,866)
(47.78)
(10,677)
(42.17)
(80,347)
(56.65)
(52,360) (206.80)
France
(18,597)
(27.54)
(17,021)
(37.93)
(69,376)
(24.48)
(80,134)
(30.71)
Netherlands
(11,921)
(31.77)
(9,143)
(18.19)
(41,127)
(24.77)
(39,157)
(22.50)
Germany
(13,544)
(28.74)
(8,233)
(18.87)
(53,129)
(30.32)
(43,857)
(23.39)
Ireland
(13,488)
(15.90)
(13,948)
(14.20)
(54,177)
(15.29)
(39,464)
(12.69)
Central and Eastern Europe
(1,025)
(5.96)
(547)
(66.06)
(2,537)
(7.09)
(1,568)
(68.19)
International
(69,441)
(25.08)
(59,569)
(22.64)
(300,693)
(26.00)
(256,540)
(26.69)
Operating expenses increased on a dollar and per boe basis for the three months ended December 31, 2024 primarily due to gas processing tariff
adjustments in Germany and the resumption of production in Australia, partially offset by decreased fuel and electricity costs in France.
For the year ended December 31, 2024, operating expenses increased on a dollar basis primarily due to the resumption of production in Australia,
an increased working interest acquired in Ireland at Q1 2023 (from 20% to 56.5%), and higher facility maintenance and turnaround costs during
Ireland planned downtime in Q2 2024, and gas processing tariff adjustments in Germany. This increase was partially offset by decreased fuel and
electricity costs in France.
Operating expenses were relatively flat on a per boe basis for the year ended December 31, 2024 compared to the prior year primarily attributable to
maintenance during shut-in of our Wandoo platform in Australia in the prior year offset by lower fuel and electricity costs in France and the
Netherlands.
Vermilion Energy Inc. ■ Page 33 ■ 2024 Annual Report
Consolidated Financial Performance Review
($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
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)
(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 34 ■ 2024 Annual Report
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 35 ■ 2024 Annual Report
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 recovery for both the three months and year ended December 31, 2024, was primarily driven by changes in our derivatives mark-to-
Vermilion Energy Inc. ■ Page 36 ■ 2024 Annual Report
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 $6.5 million of income tax expense relating to Pillar Two.
In May 2023, the International Accounting Standards Board ("IASB") issued amendments to IAS 12, “Income Taxes” (“IAS 12”) to address the
impacts and additional disclosure requirements related to Pillar Two. Vermilion has applied the mandatory exception required by IAS 12 and
accordingly has not accounted for any related deferred income tax assets or liabilities.
Vermilion Energy Inc. ■ Page 37 ■ 2024 Annual Report
Tax pools
As at December 31, 2024, we had the following tax pools:
($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
(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 $400.0 million of senior unsecured notes. The notes bear interest at a rate of
7.250% per annum, to be paid February 15 and August 15, commencing on August 15, 2025. The notes mature on February 15, 2033. As direct
senior unsecured obligations of Vermilion, the notes rank equally with existing and future senior unsecured indebtedness of the Company.
Proceeds from the notes may be used at the Company's discretion to redeem or repay the outstanding 2025 senior notes, fund a portion of the
Westbrick acquisition, or repay a portion of credit facility borrowings.
As at December 31, 2024, we have a ratio of net debt to four quarter trailing fund flows from operations of 0.8.
Vermilion Energy Inc. ■ Page 38 ■ 2024 Annual Report
Net debt
Net debt is reconciled to long-term debt, as follows:
As at
($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
(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
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
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:
Vermilion Energy Inc. ■ Page 39 ■ 2024 Annual Report
•
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.
Year
Redemption price
2025
103.438 %
2026
102.292 %
2027
101.146 %
2028 and thereafter
100.000 %
Vermilion Energy Inc. ■ Page 40 ■ 2024 Annual Report
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
(1)
Includes interest on senior unsecured notes.
(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.
Vermilion Energy Inc. ■ Page 41 ■ 2024 Annual Report
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.
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.
Vermilion Energy Inc. ■ Page 42 ■ 2024 Annual Report
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.
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.
Vermilion Energy Inc. ■ Page 43 ■ 2024 Annual Report
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 44 ■ 2024 Annual Report
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 45 ■ 2024 Annual Report
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.
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:
•
Governance
Information Circular
•
Strategy
Annual Report MD&A
•
Risk Management
Annual Report MD&A
Vermilion Energy Inc. ■ Page 46 ■ 2024 Annual Report
•
Metrics and Targets
Annual Report MD&A
•
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.
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.
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)
Category /
Issue
Description of Impacts
Potential Financial Impact
Management Approach
Vermilion Energy Inc. ■ Page 47 ■ 2024 Annual Report
Acute:
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.
Long-term Transition Risks (6-50 Years)
Technology:
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.
Long-term Physical Risks (6-50 Years)
Chronic:
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.
Chronic:
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.
Short-term Opportunities (0-3 Years)
Products and
Services:
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.
Category /
Issue
Description of Impacts
Potential Financial Impact
Management Approach
Vermilion Energy Inc. ■ Page 48 ■ 2024 Annual Report
Medium-term Opportunities (3-6 Years)
Products and
Services:
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
Resilience:
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
Long-term Opportunities (6-50 Years)
Products and
Services:
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.
Category /
Issue
Description of Impacts
Potential Financial Impact
Management Approach
Vermilion Energy Inc. ■ Page 49 ■ 2024 Annual Report
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.
Vermilion Energy Inc. ■ Page 50 ■ 2024 Annual Report
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:
◦
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.
◦
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.
◦
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.
•
Implementing technically and economically feasible options for emission reduction, covering combustion, flaring, venting and
fugitive emissions:
◦
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.
◦
Lower greenhouse gas emission intensity. We are committed to reducing the greenhouse gas emissions associated with our
production, with particular focus on methane.
•
Exploring new and evolving technologies and processes to identify synergistic fits for our business in both traditional and renewable
energy production:
◦
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.
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 atmosphere1
•
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
•
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
Our strategy evolved as we:
•
Assessed Scope 1 and 2 emission sources, identifying major sources of methane
•
Reviewed the accuracy and completeness of measurement and reporting
•
Developed a high-level project list for potential emission reductions based on a cost/tonne of CO2e
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
•
Monitoring government and regulatory support for energy alternatives with higher economic risks, such as carbon capture and storage, and
hydrogen production
•
Implementation of centralized emissions quantification to allow more efficient tracking and forecasting towards our climate strategy
objective
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 51 ■ 2024 Annual Report
Pillar
Focus
Estimated
Contribution
2024-2030 Approach
Reduce
Reduce emissions(1) with methane a priority, by
•
Reducing flaring, venting and fugitive emissions
•
Driving operational and energy efficiencies
•
Electrifying operations if economical where grids are
low-intensity
•
Assessing new technologies as they become feasible
35-40% by 2040
Achieve our emission-related targets compared to our baseline of 2019:
•
2025: Scope 1 emissions intensity reduction by 15-20%
•
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:
•
Four existing geothermal energy from produced water
projects in France
•
Biogas production at our Harlingen Treatment Centre site in
Netherlands
•
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.
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:
◦
Proactively preventing harm and supporting healthy surface and groundwater bodies
◦
Reducing potable and freshwater usage to the lowest level practical, and
◦
Taking a lifecycle and circular economy approach to water, exploring opportunities to reuse and recycle products such as
produced water
•
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.
•
Biodiversity: We are focusing on protecting the species and habitats around us by proactively identifying biodiversity risks and
opportunities, and implementing associated plans.
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
•
Maintaining strong, genuine relationships with our communities, with engagement based on respect, listening and openness, and
•
Creating a shared value focused on local economic and social development
Vermilion Energy Inc. ■ Page 52 ■ 2024 Annual Report
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.
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.
•
Environment: Waste generation and management; Asset integrity and spills; and Environmental investment
•
Social: Health and Safety; People; and Community investment
•
Governance: Ethics
Vermilion Energy Inc. ■ Page 53 ■ 2024 Annual Report
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
•
Scope 2 refers to indirect GHG emissions from the generation of purchased electricity consumed by a company
•
Scope 3 refers to other indirect emissions related to a company's activities, but from sources not owned or controlled by that company.
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).
tCO2e per BOE
Emissions Intensity
Scope 1&2 tCO2e per BOE
2019
2020
2021
2022
2023
0.015
0.020
0.025
0.030
tCO2e per BOE
Methane Intensity
tCO2e per BOE
2019
2020
2021
2022
2023
0.002
0.004
0.006
0.008
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.
•
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.
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.
Vermilion Energy Inc. ■ Page 54 ■ 2024 Annual Report
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.
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 55 ■ 2024 Annual Report
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.
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
Q4 2024
2024
Q4 2023
2023
Liquids
Natural
Gas
Total
Liquids
Natural
Gas
Total
Total
Total
$/bbl
$/mcf
$/boe
$/bbl
$/mcf
$/boe
$/boe
$/boe
Vermilion Energy Inc. ■ Page 56 ■ 2024 Annual Report
Ireland
Sales
—
19.20
115.22
—
14.64
87.84
102.28
97.24
Transportation
—
(0.13)
(0.76)
—
(0.40)
(2.38)
(1.08)
(2.28)
Operating
—
(2.65)
(15.90)
—
(2.55)
(15.29)
(14.20)
(12.69)
Operating netback
—
16.42
98.56
—
11.69
70.17
87.00
82.27
General and administration
(2.00)
(2.27)
(9.25)
(6.13)
Current income taxes
(0.54)
(0.40)
(0.33)
(0.23)
Fund flows from operations ($/boe)
96.02
67.50
77.42
75.91
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
Q4 2024
2024
Q4 2023
2023
Liquids
Natural
Gas
Total
Liquids
Natural
Gas
Total
Total
Total
$/bbl
$/mcf
$/boe
$/bbl
$/mcf
$/boe
$/boe
$/boe
(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 57 ■ 2024 Annual Report
Supplemental Table 2: Hedges
The prices in these tables may represent the weighted averages for several contracts with foreign currency amounts translated to the disclosure
currency using forward rates as at the month-end date. The weighted average price for the portfolio of options listed below may not have the same
payoff profile as the individual contracts. As such, the presentation of the weighted average prices is purely for indicative purposes.
The following tables outline Vermilion’s outstanding risk management positions as at December 31, 2024:
Dated Brent
Q1 2025
bbl
USD
—
—
—
—
—
—
4,000
73.25
—
—
WTI
Q1 2025
bbl
USD
—
—
—
—
—
—
8,000
73.11
—
—
Q2 2025
bbl
USD
—
—
—
—
—
—
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
USD
—
—
—
—
—
—
10,000
(1.15)
—
—
Q2 2025
mcf
USD
—
—
—
—
—
—
10,000
(1.15)
—
—
Q3 2025
mcf
USD
—
—
—
—
—
—
10,000
(1.15)
—
—
Q4 2025
mcf
USD
—
—
—
—
—
—
10,000
(1.15)
—
—
NYMEX Henry Hub
Q1 2025
mcf
USD
24,000
3.50
24,000
4.49
—
—
10,000
3.20
—
—
Q2 2025
mcf
USD
24,000
3.50
24,000
4.49
—
—
10,000
3.20
—
—
Q3 2025
mcf
USD
24,000
3.50
24,000
4.49
—
—
10,000
3.20
—
—
Q4 2025
mcf
USD
24,000
3.50
24,000
4.49
—
—
10,000
3.20
—
—
Q1 2026
mcf
USD
24,000
3.50
24,000
4.49
—
—
—
—
—
—
Q2 2026
mcf
USD
24,000
3.50
24,000
4.49
—
—
—
—
—
—
Q3 2026
mcf
USD
24,000
3.50
24,000
4.49
—
—
—
—
—
—
Q4 2026
mcf
USD
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
—
—
Unit
Currency
Daily
Bought Put
Volume
Weighted
Average
Bought Put
Price
Daily Sold
Call
Volume
Weighted
Average
Sold Call
Price
Daily Sold
Put
Volume
Weighted
Average
Sold Put
Price
Daily Sold
Swap
Volume
Weighted
Average
Sold Swap
Price
Daily
Bought
Swap
Volume
Weighted
Average
Bought
Swap Price
Vermilion Energy Inc. ■ Page 58 ■ 2024 Annual Report
TTF
Q1 2025
mcf
EUR
19,654
10.21
19,654
14.93
13,512
4.69
39,308
14.52
—
—
Q2 2025
mcf
EUR
22,111
8.31
22,111
12.88
22,111
4.01
24,567
12.99
—
—
Q3 2025
mcf
EUR
22,111
8.31
22,111
12.88
22,111
4.01
24,567
12.99
—
—
Q4 2025
mcf
EUR
31,938
8.05
31,938
12.50
31,938
3.67
20,882
11.87
—
—
Q1 2026
mcf
EUR
24,567
7.39
24,567
11.66
24,567
3.02
20,882
11.87
—
—
Q2 2026
mcf
EUR
24,567
7.39
24,567
11.66
24,567
3.02
18,426
9.60
—
—
Q3 2026
mcf
EUR
24,567
7.39
24,567
11.66
24,567
3.02
18,426
9.60
—
—
Q4 2026
mcf
EUR
28,253
7.43
28,253
11.66
28,253
2.93
4,913
8.54
—
—
Q1 2027
mcf
EUR
28,253
7.43
28,253
11.66
28,253
2.93
4,913
8.54
—
—
THE
Q1 2025
mcf
EUR
—
—
—
—
—
—
2,457
14.95
—
—
Q2 2025
mcf
EUR
—
—
—
—
—
—
2,457
14.95
—
—
Q3 2025
mcf
EUR
—
—
—
—
—
—
2,457
14.95
—
—
Unit
Currency
Daily
Bought Put
Volume
Weighted
Average
Bought Put
Price
Daily Sold
Call
Volume
Weighted
Average
Sold Call
Price
Daily Sold
Put
Volume
Weighted
Average
Sold Put
Price
Daily Sold
Swap
Volume
Weighted
Average
Sold Swap
Price
Daily
Bought
Swap
Volume
Weighted
Average
Bought
Swap Price
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
Exchange
Period
Monthly Bought
Put Amount
Weighted
Average Bought
Put Price
Monthly Sold
Call Amount
Weighted
Average Sold
Call Price
Monthly Sold
Swap Amount
Weighted
Average 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:
Period if Option Exercised
Unit
Currency
Option Expiration
Date
Daily
Bought Put
Volume
Weighted
Average
Bought Put
Price
Daily Sold
Call
Volume
Weighted
Average
Sold Call
Price
Daily Sold
Put
Volume
Weighted
Average
Sold Put
Price
Daily Sold
Swap
Volume
Weighted
Average
Sold Swap
Price
TTF
Apr 2025 - Mar 2027
mcf
EUR
31-Mar-2025
—
—
—
—
—
—
2,457
10.99
Vermilion Energy Inc. ■ Page 59 ■ 2024 Annual Report
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 ($M)
Q4 2024
Q4 2023
2024
2023
Acquisitions, net of cash acquired
5,257
2,669
12,728
142,281
Acquisition of securities
—
17,448
9,373
21,603
Acquired working capital
—
5,607
—
109,134
Acquisitions
5,257
25,724
22,101
273,018
Dispositions ($M)
Q4 2024
Q4 2023
2024
2023
Canada
—
—
—
182,152
United States
—
14,855
—
14,855
Dispositions
—
14,855
—
197,007
By category ($M)
Q4 2024
Q4 2023
2024
2023
Drilling, completion, new well equip and tie-in, workovers and recompletions
134,813
68,285
392,986
373,304
Production equipment and facilities
56,747
76,937
206,997
198,331
Seismic, studies, land and other
9,099
(2,335)
22,997
18,556
Capital expenditures
200,659
142,887
622,980
590,191
Acquisitions
5,257
25,724
22,101
273,018
Total capital expenditures and acquisitions
205,916
168,611
645,081
863,209
Capital expenditures by country ($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
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
Vermilion Energy Inc. ■ Page 60 ■ 2024 Annual Report
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 61 ■ 2024 Annual Report
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 62 ■ 2024 Annual Report
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 63 ■ 2024 Annual Report
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 64 ■ 2024 Annual Report
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 ($/boe)
63.86
53.30
44.78
43.63
69.68
46.11
36.62
64.21
122.12
194.24
107.44
132.21
Fund flows from operations
176,883 157,048 119,310 139,054 183,353 107,704
99,377 123,893 332,377 449,771 259,840 341,626
Drilling and development
(42,341) (40,638) (47,830) (45,789) (73,604) (49,701) (28,347) (37,258) (43,957) (65,640) (54,575) (25,328)
Exploration and evaluation
(24,154)
(2,460)
(1,260)
(8,144) (10,579)
(6,235)
(2,775)
(1,492) (11,456)
(6,137)
(3,665)
(2,503)
Free cash flow
110,388 113,950
70,220
85,121
99,170
51,768
68,255
85,143 276,964 377,994 201,600 313,795
Vermilion Energy Inc. ■ Page 65 ■ 2024 Annual Report
Q4/24
Q3/24
Q2/24
Q1/24
Q4/23
Q3/23
Q2/23
Q1/23
Q4/22
Q3/22
Q2/22
Q1/22
Consolidated
Crude oil and condensate sales ($/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
Vermilion Energy Inc. ■ Page 66 ■ 2024 Annual Report
Non-GAAP and Other Specified Financial Measures
This MD&A includes references to certain financial measures which do not have standardized meanings and may not be comparable to similar
measures presented by other issuers. These financial measures include fund flows from operations, a total of segments measure of profit or loss in
accordance with IFRS 8 “Operating Segments” (please see Segmented Information in the Notes to the condensed Consolidated 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)
(1)
Unrealized (loss) gain on derivative instruments, Unrealized foreign exchange (loss) gain, and Unrealized other expense are line items from the respective
Consolidated Statements of Cash Flows.
Non-GAAP Financial Measures and Non-GAAP Ratios
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
Vermilion Energy Inc. ■ Page 67 ■ 2024 Annual Report
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
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.
($M)
Q4 2024
Q4 2023
2024
2023
Drilling and development
176,505
132,308
586,962
569,110
Exploration and evaluation
24,154
10,579
36,018
21,081
Capital expenditures
200,659
142,887
622,980
590,191
Payout and payout % of FFO: Payout and payout % of FFO are, respectively, a non-GAAP financial measure and non-GAAP ratio. Payout is most
directly comparable to dividends declared. Payout is comprised of dividends declared plus drilling and development costs, exploration and evaluation
costs, and asset retirement obligations settled, and payout % of FFO is calculated as payout divided by FFO. The measure is used by management
to assess the amount of cash distributed back to shareholders and reinvested in the business for maintaining production and organic growth. Payout
as a percentage of FFO is also referred to as the payout ratio or sustainability ratio. The reconciliation of the measure to the primary financial
statement measure can be found below.
($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 %
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.
Vermilion Energy Inc. ■ Page 68 ■ 2024 Annual Report
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)
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.
($M)
Q4 2024
Q4 2023
Q4 2024
Q4 2023
Acquisitions, net of cash acquired
5,257
2,669
12,728
142,281
Acquisition of securities
—
17,448
9,373
21,603
Acquired working capital
—
5,607
—
109,134
Acquisitions
5,257
25,724
22,101
273,018
Operating netback: Operating netback is non-GAAP financial measure and is calculated as sales less royalties, operating expense, transportation
costs, PRRT, and realized hedging gains and losses, and when presented on a per unit basis, is a non-GAAP ratio. Operating netback is most
directly comparable to net loss. Management assesses operating netback as a measure of the profitability and efficiency of our field operations.
Net debt to four quarter trailing fund flows from operations: Management uses net debt (a capital management measure, as defined below) to
four quarter trailing fund flows from operations to assess the Company's ability to repay debt. Net debt to four quarter trailing fund flows from
operations is a non-GAAP ratio and is calculated as net debt (capital management measure) divided by fund flows from operations (total of
segments measure) from the preceding four quarters.
Capital Management Measure
Net debt: Net debt is a capital management measure in accordance with IAS 1 "Presentation of Financial Statements" that is most directly
comparable to long-term debt. Net debt is comprised of long-term debt (excluding unrealized foreign exchange on swapped USD borrowings) plus
adjusted working capital (defined as current assets less current liabilities, excluding current derivatives and current lease liabilities), and represents
Vermilion's net financing obligations after adjusting for the timing of working capital fluctuations.
Vermilion Energy Inc. ■ Page 69 ■ 2024 Annual Report
As at
($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 70 ■ 2024 Annual Report
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 71 ■ 2024 Annual Report
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 72 ■ 2024 Annual Report
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.
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.
Vermilion Energy Inc. ■ Page 73 ■ 2024 Annual Report
•
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.
/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 74 ■ 2024 Annual Report
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 75 ■ 2024 Annual Report
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 76 ■ 2024 Annual Report
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 77 ■ 2024 Annual Report
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 78 ■ 2024 Annual Report
Description of equity reserves
Shareholders’ capital
Represents the recognized amount for common shares issued (net of equity issuance costs and deferred taxes) less the weighted-average carrying
value of shares repurchased. The price paid to repurchase common shares is compared to the carrying value of the shares and the difference is
recorded against deficit.
Contributed surplus
Represents the recognized value of unvested equity based awards that will be settled in shares. Once vested, the value of the awards are
transferred to shareholders’ capital.
Accumulated other comprehensive income
Represents currency translation adjustments, hedge accounting reserve and fair value adjustments on investments.
Currency translation adjustments result from translating the balance sheets of subsidiaries with a foreign functional currency to Canadian dollars at
period-end rates. These amounts may be reclassified to net 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 79 ■ 2024 Annual Report
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.
2. 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.
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.
Vermilion Energy Inc. ■ Page 80 ■ 2024 Annual Report
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.
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.
Vermilion Energy Inc. ■ Page 81 ■ 2024 Annual Report
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'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.
Vermilion Energy Inc. ■ Page 82 ■ 2024 Annual Report
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.
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.
Vermilion Energy Inc. ■ Page 83 ■ 2024 Annual Report
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).
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.
Vermilion Energy Inc. ■ Page 84 ■ 2024 Annual Report
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.
3. 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 85 ■ 2024 Annual Report
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 86 ■ 2024 Annual Report
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)
5. 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.
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
Vermilion Energy Inc. ■ Page 87 ■ 2024 Annual Report
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 88 ■ 2024 Annual Report
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.
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.
Vermilion Energy Inc. ■ Page 89 ■ 2024 Annual Report
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
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%.
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
Vermilion Energy Inc. ■ Page 90 ■ 2024 Annual Report
9. 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.
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.
Vermilion Energy Inc. ■ Page 91 ■ 2024 Annual Report
10. 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 92 ■ 2024 Annual Report
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
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%.
Vermilion Energy Inc. ■ Page 93 ■ 2024 Annual Report
12. 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
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”.
Vermilion Energy Inc. ■ Page 94 ■ 2024 Annual Report
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.
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.
13. 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
Vermilion Energy Inc. ■ Page 95 ■ 2024 Annual Report
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.
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.
Vermilion Energy Inc. ■ Page 96 ■ 2024 Annual Report
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 $400.0 million of senior unsecured notes, priced at 99.241% of par. The notes bear
interest at a rate of 6.875% per annum, to be paid semi-annually on May 1 and November 1. The notes mature on May 1, 2030. As direct senior
unsecured obligations of Vermilion, the notes rank equally with existing and future senior unsecured indebtedness of the Company.
The senior unsecured notes were recognized at amortized cost and include the transaction costs directly related to the issuance.
Vermilion may, at its option, redeem the notes prior to maturity as follows:
•
Prior to May 1, 2025, Vermilion may redeem up to 35% of the original principal amount of the notes with an amount of cash not greater
than the net cash proceeds of certain equity offerings at a redemption price of 106.875% of the principal amount of the notes, together with
accrued and unpaid interest.
•
Prior to May 1, 2025, Vermilion may also redeem some or all of the notes at a price equal to 100% of the principal amount of the notes,
plus a “make-whole premium,” together with applicable premium, accrued and unpaid interest.
•
On or after May 1, 2025, Vermilion may redeem some or all of the senior unsecured notes at the redemption prices set forth below,
together with accrued and unpaid interest.
Year
Redemption price
2025
103.438 %
2026
102.292 %
2027
101.146 %
2028 and thereafter
100.000 %
14. Shareholders' capital
The following table reconciles the change in Vermilion’s shareholders’ capital:
2024
2023
Shareholders' capital
Shares ('000s)
Amount ($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
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.
Vermilion Energy Inc. ■ Page 97 ■ 2024 Annual Report
Subsequent to December 31, 2024, Vermilion purchased and cancelled 0.9 million common shares under the NCIB for total consideration of $12.1
million.
15. 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 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).
16. 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 - $2.3 million) relating to the DSUs.
Vermilion Energy Inc. ■ Page 98 ■ 2024 Annual Report
17. Per share amounts
Basic and diluted net loss per share have been determined based on the following:
Year Ended
Dec 31, 2024
Dec 31, 2023
Net loss
(46,739)
(237,587)
Basic weighted average shares outstanding ('000s)
158,068
163,719
Diluted weighted average shares outstanding ('000s)
158,068
163,719
Basic loss per share
(0.30)
(1.45)
Diluted loss per share
(0.30)
(1.45)
18. Financial instruments
Classification of financial instruments
The following table summarizes the carrying value relating to Vermilion’s financial instruments:
As at Dec 31, 2024
As at Dec 31, 2023
($M)
FVTPL
FVTOCI
Amortized
Cost
Total
FVTPL
FVTOCI
Amortized
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)
(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.
Vermilion Energy Inc. ■ Page 99 ■ 2024 Annual Report
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.
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)
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 Energy Inc. ■ Page 100 ■ 2024 Annual Report
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.
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
19. 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
Vermilion Energy Inc. ■ Page 101 ■ 2024 Annual Report
20. 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)
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
(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 102 ■ 2024 Annual Report
The following tables summarize Vermilion's outstanding risk management positions as at December 31, 2024:
Dated Brent
Q1 2025
bbl
USD
—
—
—
—
—
—
4,000
73.25
—
—
WTI
Q1 2025
bbl
USD
—
—
—
—
—
—
8,000
73.11
—
—
Q2 2025
bbl
USD
—
—
—
—
—
—
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
USD
—
—
—
—
—
—
10,000
(1.15)
—
—
Q2 2025
mcf
USD
—
—
—
—
—
—
10,000
(1.15)
—
—
Q3 2025
mcf
USD
—
—
—
—
—
—
10,000
(1.15)
—
—
Q4 2025
mcf
USD
—
—
—
—
—
—
10,000
(1.15)
—
—
NYMEX Henry Hub
Q1 2025
mcf
USD
24,000
3.50
24,000
4.49
—
—
10,000
3.20
—
—
Q2 2025
mcf
USD
24,000
3.50
24,000
4.49
—
—
10,000
3.20
—
—
Q3 2025
mcf
USD
24,000
3.50
24,000
4.49
—
—
10,000
3.20
—
—
Q4 2025
mcf
USD
24,000
3.50
24,000
4.49
—
—
10,000
3.20
—
—
Q1 2026
mcf
USD
24,000
3.50
24,000
4.49
—
—
—
—
—
—
Q2 2026
mcf
USD
24,000
3.50
24,000
4.49
—
—
—
—
—
—
Q3 2026
mcf
USD
24,000
3.50
24,000
4.49
—
—
—
—
—
—
Q4 2026
mcf
USD
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
—
—
TTF
Q1 2025
mcf
EUR
19,654
10.21
19,654
14.93
13,512
4.69
39,308
14.52
—
—
Q2 2025
mcf
EUR
22,111
8.31
22,111
12.88
22,111
4.01
24,567
12.99
—
—
Q3 2025
mcf
EUR
22,111
8.31
22,111
12.88
22,111
4.01
24,567
12.99
—
—
Q4 2025
mcf
EUR
31,938
8.05
31,938
12.50
31,938
3.67
20,882
11.87
—
—
Q1 2026
mcf
EUR
24,567
7.39
24,567
11.66
24,567
3.02
20,882
11.87
—
—
Q2 2026
mcf
EUR
24,567
7.39
24,567
11.66
24,567
3.02
18,426
9.60
—
—
Q3 2026
mcf
EUR
24,567
7.39
24,567
11.66
24,567
3.02
18,426
9.60
—
—
Q4 2026
mcf
EUR
28,253
7.43
28,253
11.66
28,253
2.93
4,913
8.54
—
—
Q1 2027
mcf
EUR
28,253
7.43
28,253
11.66
28,253
2.93
4,913
8.54
—
—
THE
Q1 2025
mcf
EUR
—
—
—
—
—
—
2,457
14.95
—
—
Q2 2025
mcf
EUR
—
—
—
—
—
—
2,457
14.95
—
—
Q3 2025
mcf
EUR
—
—
—
—
—
—
2,457
14.95
—
—
Unit
Currency
Daily
Bought Put
Volume
Weighted
Average
Bought Put
Price
Daily Sold
Call
Volume
Weighted
Average
Sold Call
Price
Daily Sold
Put
Volume
Weighted
Average
Sold Put
Price
Daily Sold
Swap
Volume
Weighted
Average
Sold Swap
Price
Daily
Bought
Swap
Volume
Weighted
Average
Bought
Swap Price
Vermilion Energy Inc. ■ Page 103 ■ 2024 Annual Report
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
Exchange
Period
Monthly Bought
Put Amount
Weighted
Average Bought
Put Price
Monthly Sold
Call Amount
Weighted
Average Sold
Call Price
Monthly Sold
Swap Amount
Weighted
Average 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:
Period if Option Exercised
Unit
Currency
Option Expiration
Date
Daily
Bought Put
Volume
Weighted
Average
Bought Put
Price
Daily Sold
Call
Volume
Weighted
Average
Sold Call
Price
Daily Sold
Put
Volume
Weighted
Average
Sold Put
Price
Daily Sold
Swap
Volume
Weighted
Average
Sold Swap
Price
TTF
Apr 2025 - Mar 2027
mcf
EUR
31-Mar-2025
—
—
—
—
—
—
2,457
10.99
21. 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.
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 104 ■ 2024 Annual Report
DIRECTORS
Myron Stadnyk 1
Calgary, Alberta
Dion Hatcher
Calgary, Alberta
James J. Kleckner Jr. 7,9
Edwards, Colorado
Carin Knickel 4,7,11
Golden, Colorado
Stephen P. Larke 3,5,10
Calgary, Alberta
Timothy R. Marchant 6,9,11
Calgary, Alberta
Robert Michaleski 3,5
Calgary, Alberta
William Roby 7,8,11
Katy, Texas
Manjit Sharma 2,5
Toronto, Ontario
Judy Steele 3,5,11
Halifax, Nova Scotia
1 Chairman (Independent)
2 Audit Committee Chair (Independent)
3 Audit Committee Member (Independent)
4 Governance and Human Resources Committee Chair
__(Independent)
5 Governance and Human Resources Committee Member
__(Independent)
6 Health, Safety and Environment Committee Chair
__(Independent)
7 Health, Safety and Environment Committee Member
__(Independent)
8 Technical Committee Chair (Independent)
9 Technical Committee Member
__(Independent)
10 Sustainability Committee Chair (Independent)
11 Sustainability Committee Member (Independent)
OFFICERS / CORPORATE SECRETARY
Dion Hatcher *
President & Chief Executive Officer
Lars Glemser *
Vice President & Chief Financial Officer
Tamar Epstein
General Counsel & Corporate Secretary
Terry Hergott
Vice President Marketing
Yvonne Jeffery
Vice President Sustainability
Darcy Kerwin *
Vice President International & HSE
Geoff MacDonald
Vice President Geosciences
Randy McQuaig *
Vice President North America
Kyle Preston
Vice President Investor Relations
Averyl Schraven
Vice President People & Culture
Gerard Schut
Vice President European Operations
* Principal Executive Committee Member
AUDITORS
Deloitte LLP
Calgary, Alberta
BANKERS
The Toronto-Dominion Bank
The Bank of Nova Scotia
Canadian Imperial Bank of Commerce
National Bank of Canada
Royal Bank of Canada
Wells Fargo Bank N.A., Canadian Branch
ATB Financial
Bank of America N.A., Canada Branch
Export Development Canada
Fédération des caisses Desjardins du Québec
Citibank, N.A., Canadian Branch
Canadian Western Bank
JPMorgan Chase Bank, N.A., Toronto Branch
Goldman Sachs Lending Partners LLC
EVALUATION ENGINEERS
McDaniel & Associates
Calgary, Alberta
LEGAL COUNSEL
Norton Rose Fulbright Canada LLP
Calgary, Alberta
TRANSFER AGENT
Odyssey Trust Company
STOCK EXCHANGE LISTINGS
The Toronto Stock Exchange (“VET”)
The New York Stock Exchange (“VET”)
INVESTOR RELATIONS
Kyle Preston
Vice President Investor Relations
403-476-8431 TEL
403-476-8100 FAX
1-866-895-8101 IR TOLL FREE
investor_relations@vermilionenergy.com
Vermilion Energy Inc. ■ Page 105 ■ 2024 Annual Report