Vermilion Energy Inc. Q1 FY2026 earnings call

Macro environment had heightened geopolitical uncertainty impacting energy markets. Operationally, delivered strong quarter with production exceeding guidance. Canadian operations saw 10% increase due to deep basin performance and new wells. International operations affected by cyclone-related downtime and natural declines. Financially, generated $232 million of funds from operations, $135 million E&D capital expenditures, resulting in $98 million free cash flows. Net debt reduced by $50 million. Operationally, maintained three-rig drilling program in deep basin, drilled/completed/brought on production wells. Shifted to higher liquids rate wells. In Montney, drilled/completed/brought on wells at lower cost. In Europe, on track to bring first well online, plan follow-up wells, expect drilling in Netherlands. Australia operations impacted by cyclones but production resumed. Signed agreement to acquire producing assets in Germany, awarded new concessions in North German Basin, signed divestment agreement in Croatia.

Production volumes averaged 125,600 BWs per day, exceeding the upper end of guidance. Canadian operations contributed an average of 99,700 BWs per day, a 10% increase over prior quarter. International operations averaged 25,900 BWs per day. Production mix consisted of approximately 59% Canadian natural gas, 13% European natural gas, and 28% liquids. Nearly 80% of Q1 revenue was driven by European gas and liquids production.

Expect Q2 2026 production to average between 123,000 and 125,000 BOE a day. Liquids weighting expected to increase from 28% in Q1 to approximately 31% in Q2.

Geopolitical uncertainty impacting global energy markets. Australia cyclone-related downtime. European gas inventories at multi-year lows, storage levels low in Germany and Netherlands.

Q: Jeremy McRae asked about Germany growth plans, regulatory environment, M&A.

A: Dion and Darcy/Lara discussed Germany being core, new acreage, regulatory environment improving, potential M&A.

Q: Spencer Limming asked about regulatory environment fast-tracking permits, deep basin cost savings.

A: Dion and Randy discussed regulatory timelines, deep basin cost reduction and future efficiencies.