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NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc.

Vermilion Energy Inc. · Nov 5, 2010 · 39 slides

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Slides

  1. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 1
    Vermilion Energy Inc. Steady Growth Stable Dividends A World of Energy 1
  2. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 2
    Market Profile VET Toronto Stock Exchange (November 4, 2010) 40.30 Monthly dividend 0.19 Current yield 5.7% Market capitalization (88.8 mm shares outstanding) C3.6 billion Management ownership and control position 9% Net debt…
  3. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 3
    Vermilion Global Operations Netherlands FOCUS: Q3 Production High impact natural 5,099 BOE/D gas exploration & Ireland (Royalty free development drilling natural gas priced to oil) Canada Q3 Production 11,233 BOE/D (37%Oil)…
  4. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 4
    Diversified Leverage to Oil Prices Geographic Split Australia France 22% 75% production priced relative to oil 27% 30% of 2011 production hedged with an average floor of US77.87/bbl and ceiling of US100.01/bbl Netherlands…
  5. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 5
    Relative Performance Total Return Performance by Period Vermilion Energy S&P/TSX Composite Index 50.0% S&P 500 Composite Index S&P 500 Energy Index MSCI World Index 30.0% 10.0% -10.0% Total Period Return Performance to…
  6. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 6
    Sustainable Growth Model 7
  7. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 7
    Keys to Sustainability Inventory to support disciplined visible growth Robust oil rich portfolio to support growth beyond 2017 Could add more than 180% of current P50 booked reserves Meaningful resource based development exposure…
  8. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 8
    Visible Growth Anticipate production growth to between 45,000 to 50,000 boe/d by 2015 50 Projected Production Growth (mboe/d) 10+% CAGR* Key contributors of near term growth Cardium Oil Netherlands Gas Corrib (Ireland) 30…
  9. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 9
    Prospect Summary Robust prospect inventory to drive growth beyond 2017 Over 415 net unbooked Cardium locations Over 110 net unbooked liquids-rich tight gas locations Over 20 net unbooked Netherlands gas prospects Ongoing Corrib…
  10. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 10
    2010 / 2011 Development Capital Key 2011 Capital Activities 2010 2011 (mm) (mm) Canada 30-35 Cardium Oil, 6 deep/tight gas, Battery/ 247 225 infrastructure, workovers/recompletions, land France Active workover/recompletions, 2 LIAS…
  11. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 11
    Strategic Focus - Canada Develop conventional and unconventional resource plays Cardium oil Liquids-rich gas Grow significant resource based drilling inventory and supporting infrastructure Expand large contiguous land base…
  12. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 12
    Cardium Play Characteristics East Pembina Cardium Garrington Cardium Siltstone/shale play with minor Sandstone play sandstone Much thinner (1-6m) than W. Pembina Variable gas oil ratio Very thin net pay (1-3m) Thick but poor…
  13. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 13
    Cardium Overview Cardium Vermilion has a dominant position Productive Trend in the best quality Cardium D Cardium D Zero Edge North extension of Pembina pool Large contiguous land block C A C C C A Very low legacy land…
  14. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 14
    Vermilion Cardium Position Significant development opportunity in best quality Cardium reservoir OOIP/ EUR / Reserves / Net Sec IP30* Wells / Total Geology Sec* RF % Sec Well boepd Q2 2010 Sec Wells mmboe mboe mboe A Thick Sand…
  15. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 15
    Vermilion Cardium Results 600 30 Average Well (to Sept 5) IP30* Calendar Days (Boe/d) since IP1* production optimization Well 1 537 197 from wells 1-5 500 Well 2 414 190 25 Well 3 366 185 Well 4 379 99 Well 5 407 87 400 20…
  16. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 16
    Cardium Near Term Development 2010 Budget 13 op, 6+ non-op 10 drilled YTD 2010 (A Quality) 3-6 drills planned 4Q 2010 6+ net non-op wells in 2010 Testing water based frac in Q4 2011 Budget 30-35 net wells 17 operated wells (A…
  17. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 17
    Liquids-Rich Gas Overview West Pembina & Ferrier Underexploited stacked Mannville sands Conventional Notikewin Ellerslie Resource Notikewin Resource Multi-zone, liquids-rich gas 40 to 60 bbls/mmcf West Pembina 120 identified…
  18. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 18
    Strategic Focus - Netherlands Second largest onshore gas operations in the Netherlands Optimize operation of 57 wells on 7 production concessions and 3 gas treatment centres with combined capacity of more than 100 mmcf/d…
  19. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 19
    Netherlands 2011 Activity Complete tie-in of 1,500 to 2,000 boe/d from Vinkega Middelburen 2 and Dehoeve wells drilled in 2009 (Apr/ June 2011) Legend Complete 4 new drills Vermilion Concessions during 2H of 2011 Producing Gas…
  20. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 20
    Strategic Focus - Australia Wandoo Field acquired initial 60% interest in March 2005 and balance in June 2007 18 producing wells, 2 offshore oil production platforms with fluid processing capacity of 150,000+ bpd Maintain or…
  21. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 21
    Wandoo Activity 2010 / 2011 Three new legs drilled in 2H 2010 with strong productive capability 2008 Wells 2010 Wells New wells used deviated sidetracks off existing well bores Brought on production at restricted rate of 1,500 to…
  22. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 22
    Strategic Focus - France Maintain stable production through workover and recompletion program Achieve best-in-class performance for large waterfloods Reduce drill/completion/well servicing costs Evaluate and position for…
  23. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 23
    LIAS Shale Oil Play Area of greatest LIAS shale oil potential Toreadors LIAS acreage: 300,000 Vermilions LIAS acreage: 175,962 Vermilion CHN 29D Additional acreage targeted: 636,721 LIAS test 24
  24. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 24
    LIAS Shale Oil Formations Domerian Limestones Banc de Roc ck U pp n Sou rce Ro er L Toarcia ias ck urce Ro So bachian s Plien Lo we rL Shale Source Rocks ia s SHALE OIL RESOURCE PLAY Toarcian Domerian Limestone Margin…
  25. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 25
    LIAS Shale Oil Activity 2010 Planned Activities Key Findings to date Frac CHN 29D in Lias (completed) Porosity up to 12% 2nd frac of shale interval (completed) TOC 0 to 12%, Oil gravity (32o - 38o API) Produced oil 2011/12…
  26. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 26
    Strategic Focus - Ireland Advance the development of the Corrib gas field New pipeline route proposed Secure regulatory approvals Oral hearings completed Oct 2010 Expect response by year end 2010 Initiate construction of…
  27. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 27
    Corrib Field 12W 10W 8W 6W 4W 83 km offshore 8 9 10 11 12 13 14 Atlantic Ocean Water depth 350 metres 16 17 18 19 20 21 Northern Belfast Ireland Discovered 1996 CORRIB 54N 54N 25 26 27 28 33 Estimated…
  28. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 28
    Corrib Schematic 29
  29. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 29
    Potential Resource Upside Resource Related Upside* Country Reported 2009 Average Net Reserves IP/Well NET 2P Reserves Working Unbooked Per Well (boe/d) Unbooked (Country Total) Interest Drilling (mboe) Resource Potential (mmboe)…
  30. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 30
    Balance Sheet Strength 31
  31. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 31
    Total Payout 200% Corrib Capex CAPEX (incl. Aband. / Reclam.) Net Dividends (Total Expenditures / Cashflow) 150% TOTAL PAYOUT 100% 50% 0% 2003 2004 2005 2006 2007 2008 2009 2010E Cash Flow 2.47 2.57 4.07 4.86…
  32. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 32
    Total Payout Historically total payout has averaged < 100% Development of Corrib will cause payout to exceed 100% until development is complete Will revert towards target 100% payout when Corrib comes on stream Balance sheet…
  33. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 33
    Balance Sheet Strength 675 MM revolving credit facility 238 MM net debt (Q3 2010) 0.6 times debt to cash flow (Q3 2010) YTD 2003 2004 2005 2006 2007 2008 2009 2010 Fund flows from ops 144.8 169.8 277.2 342.5 385.9 574.0 317.2…
  34. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 34
    Focus on Profitability 35
  35. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 35
    Vermilion Netbacks 2010 Est CDN/boe1 Canada France Netherlands Australia TOTAL Revenue 43.41 77.87 42.57 80.01 60.57 Royalties 6.83 5.41 - 13.32 6.91 OP Cost 10.21 13.36 11.25 15.71 12.43 Transportation 1.45 3.48 - - 2.28 Operating…
  36. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 36
    Value Creation, Annual ROE Average ROE since inception of current business model = 25% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2003 2004 2005 2006 2007 2008 2009 EPS 0.80 0.79 2.57 2.30 2.48 3.30 2.56 Div/Share 1.87 2.04…
  37. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 37
    Value Creation 1994 Q3 2010 5,000 Total Value Creation to date = 4,047 4,000 3,578 3,000 millions 2,000 1,000 468 0 599 (1,000) Equity issued since 1994 Dividends (1,066 mm) Current market 2003 - Q3 2010…
  38. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 38
    Why Invest in Vermilion Proven track record of top quartile performance Disciplined visible growth of 10% per year through 2015 Stable, reliable dividends Balance sheet strength to fund growth Significant unbooked resource…
  39. NOVEMBER 2010 CORPORATE PRESENTATION – Vermilion Energy Inc. – slide 39
    Vermilion Energy Inc. Steady Growth Stable Dividends www.vermilionenergy.com 40

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