Vermilion Energy, Inc. Q4 FY2024 earnings call

• Vermilion achieved production above guidance in 2024, with international production up 12% and North American production down 5% but partially offset by Montney asset growth.
• A $623 million E&D capital program was successfully executed within budget, with investments in new growth projects in Germany, Croatia, and the BC Montney.
• Net debt decreased by 10% in 2024 to $967 million, with a net debt to trailing funds flow ratio of 0.8 times.
• In Q4 2024, production averaged 83,536 BOEs per day, generating $263 million of fund flows and $62 million of free cash flow.
• German exploration was successful with significant gas discoveries at Wisselshorst and Weissenmoor, potentially doubling European 2P gas reserves.
• The Westbrick acquisition adds 50,000 BOEs per day of production and over 770,000 net acres of contiguous land, with over 700 net future drilling locations.

Vermilion Energy delivered strong operational and financial results in 2024. Production averaged 84,543 BOEs per day, above the midpoint of original guidance. International production increased 12% year-over-year, with strong operational run times in Australia and the midyear startup of the gas plant on the SA-10 block in Croatia. North American production was down 5% year-over-year due to the 2023 divestment in Southeast Saskatchewan, partially offset by growth from the Montney asset. The company generated $1.2 billion or $7.63 per share of fund flow and $583 million or $3.69 per share of free cash flow, both up 9% on a per share basis from 2023.

• 2025 production is expected to range between 125,000 to 130,000 BOEs per day.
• E&D capital expenditures are forecast to be $730 million to $760 million.
• FCF for 2025 is forecast at $400 million.
• A 8% increase to the quarterly dividend is effective Q1 2025, with a target of 40% of EFCF to shareholders and 60% to debt reduction.

• Tariffs between the U.S. and Canada, though expected to have minimal impact on Vermilion's cash flows.
• Risks associated with exploration and development projects, though success in Germany has increased confidence in the exploration program.

Q: On the German gas side, what is the timing of on production and unrestricted flow rates?

A: Darcy Kerwin stated Osterheide's first production is expected in Q2 2025, initially rate restricted to 3-5 million cubic feet, with debottlenecking to increase rates. Wisselshorst's initial tie-in is early 2026, with debottlenecking activities in early 2027 to increase rates.

Q: Update on the sales process for Saskatchewan and Wyoming assets?

A: The formal process is well-advanced, with teasers out and management presentations ongoing; these are high-quality assets with strong retention value.

Q: What is the impact of U.S. tariffs on Canadian energy?

A: Diversification and operational scale reduce material impact, with over half of revenue from outside Canada and hedging (under 40% hedged for 2025) also helping.