Vermilion Energy Inc. Sells Saskatchewan Assets to Enhance Financial Strength and Focus

Vermilion Energy Inc. Takes Major Steps in Financial Repositioning

Vermilion Energy Inc., a key player in the gas production sector, has recently announced a significant shift in its operational strategy. The company, based in Calgary, Alberta, has entered into a definitive agreement to sell its assets located in Saskatchewan and Manitoba. This transaction is valued at $415 million and represents a substantial effort to strengthen Vermilion's financial credibility by focusing on debt repayment.

The assets in question are currently yielding approximately 10,500 barrels of oil equivalent per day (boe/d), with 86% of this output derived from oil and liquids. By directing the net proceeds from this sale towards reducing its debt load, Vermilion aims to enhance its balance sheet significantly. With projections indicating that the company would reduce its net debt to around $1.5 billion by the end of 2025, planned moves could push its trailing net debt to fund flows from operations (FFO) ratio down to approximately 1.4 times.

The transaction has an effective date set for May 1, 2025, and is expected to close in the third quarter of the same year, pending necessary regulatory approvals and other standard closing conditions. This sale aligns with Vermilion's ongoing strategy to high-grade its asset portfolio, a process that began three years ago, focusing on scalable assets that provide high returns on capital investments.

In light of this sale, Vermilion anticipates that its full-year production for 2025 will average between 120,000 and 125,000 boe/d. The reduction in capital expenditures expected to be between $680 and $710 million reflects a decrease of about $50 million post-closing as a result of divesting these assets. During this period of change, Vermilion intends to carefully evaluate its capital investment strategy to prioritize free cash flow rather than mere production growth.

Vermilion's journey has included acquiring strategic opportunities across Europe and achieving notable success with gas exploration in Germany. This repositioning process supports the company's goal of restructuring its global gas franchise to ensure sustained shareholder value well into the future. The aforementioned funds from the recent transaction will enable further capital allocation flexibility, particularly focusing on core markets in Canada and Europe.

The company has publicly expressed gratitude toward its dedicated field teams in Saskatchewan, which have upheld standards of safety and operational efficiency for over a decade. In addition, Vermilion appreciates the support of its technical teams based in Calgary for their contributions throughout this period.

The financial advisory landscape for this transaction includes National Bank Financial Inc. as the exclusive financial advisor, with Scotiabank acting as a strategic advisor. Legal services are being provided by Torys LLP. These partnerships have been essential for Vermilion as it navigates through significant financial transitions and operational reconfigurations.

In conclusion, Vermilion Energy's decisive actions regarding the sale of its Saskatchewan assets embody a strategic movement towards financial stability and operational excellence. As the company prepares for the next chapter, stakeholders and investors are keen to observe how these changes will enhance Vermilion's longstanding reputation in the energy sector.

For more information about Vermilion Energy Inc. and ongoing updates, visit their official website at Vermilion Energy.