#Canada #Calgary #Vermilion Energy #Westbrick Acquisition #Natural Gas Prices

Vermilion Energy Inc. Reports Q1 2025 Results

Vermilion Energy Inc. announced its operating and financial results for the three months ending on March 31, 2025, showcasing a robust financial performance despite market challenges. Over this quarter, the company generated approximately $256 million in fund flows from operations (FFO), yielding $1.66 per basic share, slightly down from $263 million in Q4 2024. Notably, capital expenditures for exploration and development reached $182 million, allowing for $74 million in free cash flow compared to the prior quarter's $62 million.

One of the significant highlights was Vermilion’s strategic acquisition of Westbrick Energy, finalized at the end of February 2025. This acquisition significantly enhanced Vermilion’s presence in Alberta's Deep Basin, contributing approximately 50,000 barrels of oil equivalent per day (boe/d) of liquids-rich gas production. The company has identified operational synergies with an estimated net present value (NPV) of $100 million, demonstrating the strategic planning behind this acquisition.

Production levels also saw a boost, averaging 103,115 boe/d, with a remarkable 60% consisting of natural gas. This increase in production was attributed to strong performance from North American assets, as well as a full month’s contribution from Westbrick. Vermilion has also reported excellent pricing for its natural gas products, achieving an average of $7.80 per thousand cubic feet (mcf) in Q1, which significantly surpasses the AECO benchmark of $2.17/mcf.

In terms of debt management, Vermilion’s net debt has increased to $2,063 million due to the acquisition, leading to a net debt to trailing FFO ratio of 1.7 times. Despite this, the company has maintained a strong cash position with $1 billion in liquidity and hedged over 50% of its production against price volatility, ensuring stability throughout 2025.

Operational Highlights

The company’s operational success included drilling milestones in Germany. The testing of deep gas exploration wells yielded promising results, including a restricted flow rate of 20 million cubic feet per day (mmcf/d) at one site, bolstering confidence in future productions. The total estimated gas reserves from the two wells drilled in Germany are around 85 billion cubic feet (Bcf), indicating potential for substantial long-term profitability.

At the Mica Montney site, drilling costs have been reduced, indicating enhanced economic viability for future development. The costs per well were reported at approximately $9 million, at the lower end of the cost spectrum, which could lead to an estimated $100 million savings in overall development costs.

Looking forward, Vermilion maintains its guidance for 2025 with anticipated production rates of 134,000 to 136,000 boe/d in Q2 2025, supported by the expanded asset base from the Westbrick acquisition. The company continues to prioritize free cash flow generation and shareholder returns through dividends and share buybacks.

Commitment to Shareholders

As part of its commitment to return capital to shareholders, Vermilion has declared a quarterly cash dividend of $0.13 per common share, with payments slated for July 15, 2025. Vermilion’s thoughtful management approach amid market fluctuations positions the company favorably to navigate challenges while creating value for its shareholders.

In conclusion, Vermilion Energy’s Q1 2025 results reflect its resilience and strategic positioning in a competitive market. With the successful integration of Westbrick Energy, coupled with a focus on operational efficiency and robust financial health, Vermilion is positioned for continuous growth as it adapts to the evolving energy landscape.