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October 2015 Investor Presentation – Vermilion Energy Inc.

Vermilion Energy Inc. · Oct 6, 2015 · 67 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 1
    DEFINED PRODUCTION GROWTH RELIABLE AND GROWING DIVIDENDS OCTOBER 2015
  2. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 2
    VERMILIONS KEY ATTRIBUTES Leading positions in high netback businesses in Europe, North America and Australia Long-term dividend growth model supported by high margins, low decline rates and strong capital efficiencies Defensive…
  3. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 3
    CAPITAL MARKETS SUMMARY Market Summary Trading Price (September 28, 2015) 41.41 (TSX), 30.95 (NYSE) Ticker Symbol (TSX & NYSE) VET Shares Outstanding 110.5 million Monthly Dividend 0.215/share Dividend Yield 6.2% Director and…
  4. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 4
    PRODUCTION GROWTH 2015 GUIDANCE - 55,000 TO 57,000 BOE/D 70,000 60,000 16% CAGR Year Production (boe/d) Y/Y Growth 50,000 2011 35,202 10% 40,000 2012 37,803 7% 6% CAGR BOE/D 2013 41,005 8% 30,000 2014 49,573 21%…
  5. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 5
    FFO GROWTH 1,000 800 Fund Flows from Fund Flows Year Operations, MM per Share Y/Y Growth 2011 474 5.22 33% 600 FFO (MM) 2012 558 5.69 18% 400 2013 668 6.61 20% 2014 805 7.63 21% 200 2015E* 503 4.59 (38%) 0…
  6. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 6
    FFO SENSITIVITY 2015 FFO 8.50/MMBTU EUROPEAN GAS (MM) FFO sensitivity to European Gas (TTF) = BRENT (US) 0.25MM for every 0.25/mmbtu change in TTF pricing 35 40 45 50 55 60 65 FFO sensitivity to AECO = 30 473 478 484 490 495 501…
  7. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 7
    RELIABLE AND GROWING DIVIDENDS CUMULATIVE DIVIDENDS PAID PER SHARE (2003 THRU Q3 2015) = 28.365 0.25 0.215 0.20 MONTHLY DIVIDENDS 0.20 0.19 0.17 0.15 0.10 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013…
  8. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 8
    SUSTAINABILITY RATIO 91% AVERAGE PRE-CORRIB CORRIB DEVELOPMENT PHASE CORRIB CASH FLOW 175% 164% 150% 140% 125% 125% TOTAL EXPENDITURES / FFO* 119% 116% 115% 111% 109% 111% 100% 87% 80% 76% 75% 66% 50%…
  9. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 9
    RESERVES / RESOURCES
  10. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 10
    RESERVES GROWTH 250 225 Excluding FDC Including FDC 200 2014 F&D / FD&A Costs* 10% CAGR (/boe) (/boe) 175 F&D (E&D CAPEX) 18.28 17.37 150 MMBOE FD&A (total CAPEX, 125 19.42 22.38 including acquisitions) 100 FD&A…
  11. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 11
    2014 TOTAL P+P RESERVES 2014 Year End P+P Reserves (mmboe) Canada France Netherlands Germany Ireland Australia United States Total At December 31, 2013 86.1 55.2 13.7 - 24.1 19.5 - 198.6 Additions from E&D 26.0 6.8 2.8 1.1 - 0.9…
  12. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 12
    RESERVES / RESOURCE BASE 2014 YEAR END WORKING INTEREST RESERVES, CONTINGENT RESOURCE AND PROSPECTIVE RESOURCE* Proved plus Probable (mmboe) Contingent Resource Prospective Resource WI Reserves* Low Best Estimate High Low Best…
  13. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 13
    BALANCE SHEET / RISK MANAGEMENT
  14. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 14
    CONSERVATIVE BALANCE SHEET CREDIT CAPACITY 2.25 BILLION* NET DEBT TO FFO RATIO** 5.0 225 PEER AVERAGE 2015 = 4.0x 4.0 800 PEER AVERAGE 2016 = 3.1x 3.0 VET 2015 = 2.6x 1,200 2.0 VET 2016 = 1.9x 1.0 REVOLVING CREDIT…
  15. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 15
    CREDIT METRICS YE 2012 YE 2013 YE 2014 Q2 2015 Credit Facility ( millions) Approved credit facility 950 1,200 1,750 2,000 Bank line undrawn* 481 425 727 773 Total debt to EBITDA** 0.83 1.06 1.21 1.85 Total debt to FFO** 1.2 1.5…
  16. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 16
    HEDGING PHILOSOPHY Vermilion hedges for the purpose of risk mitigation only Targeting up to 50% of net of royalty volumes through a portfolio of collars and swaps Control commodity, currency and cost exposures Typically hedge 12…
  17. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 17
    COMMODITY HEDGING 1st Half 2nd Half Full Year 2015 WTI Percent of Production Hedged 10% 20% 15% Average Floor / Ceiling / Swap (/bbl) 80.13 / 95.51 / - 76.18 / 86.02 / 75.10 77.62 / 89.47 / 75.10 Brent Percent of Production Hedged…
  18. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 18
    INTERNATIONAL DIVERSIFICATION
  19. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 19
    VERMILIONS INTERNATIONAL ADVANTAGE Focused in three core areas (Europe, North America and Australia) with stable, well-developed fiscal and regulatory regimes Global asset portfolio provides commodity diversification and premium…
  20. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 20
    GLOBAL COMMODITY MIX PRODUCTION (2015)* 2P RESERVES (YE 2014)** ESTIMATED FFO (2015)* France Australia Australia France Australia 18% 12% 23% United 22% United 7% United States States States 0% 0% France 1% Germany Germany OIL…
  21. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 21
    GLOBAL PRICING ADVANTAGE CRUDE OIL* NATURAL GAS** 12 (20) (5) VET BRENT US48 DATED BRENT US47 WTI US46 VET 10 BRENT GAS PRICE (/MMBTU) PRODUCTION EDMONTON 8 INDEX European gas price approximately 6 3x North American…
  22. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 22
    RELATIVE NETBACKS Q2 YTD 2015 OPERATING NETBACK EXCL. HEDGING* Q2 YTD 2015 AFTER TAX CASH NETBACK EXCL. HEDGING* 35 35 30 30 25 25 /BOE /BOE 20 20 15 15 10 10 5 5 0 0 VET BNE CPG PRE WCP COS ARX BTE PEY PWT PGF…
  23. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 23
    ASSET OVERVIEW
  24. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 24
    CORE OPERATING AREAS NORTH AMERICA EUROPE AUSTRALIA VERMILION IS FOCUSED IN THREE CORE AREAS 26
  25. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 25
    2015 E&D CAPITAL BUDGET 2015 Revised E&D CAPEX Budget (MM) Canada France Netherlands Australia Ireland Germany United States Total % Drilling, completions, new well equipment and 140 60 25 50 27 7 6 315 65 tie-in, workovers and…
  26. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 26
    BASE PRODUCTION DECLINE RATES Effective Natural 50% Country Decline Rate* Decline Rate* VET CANADA Canada 34% 34% 40% ONLY DECLINE France 11% 11% VET CORPORATE NATURAL DECLINE 30% Netherlands** 0% 22% VET CORPORATE EFFECTIVE…
  27. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 27
    EUROPEAN ASSETS
  28. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 28
    EUROPEAN CORE AREA DEVELOPING LEADING-TO-DOMINANT BUSINESSES IN EACH JURISDICTION IRELAND FRANCE 1 oil producer, with share of domestic industry NETHERLANDS 2 onshore gas producer NETHERLANDS GERMANY Entry into the…
  29. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 29
    EUROPEAN PRODUCTION 35,000 30,000 25,000 20,000 BOE/D 15,000 10,000 5,000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E France Netherlands Germany Ireland…
  30. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 30
    FRANCE Entered France in 1997 Record production level in 2015 PARIS Assets characterized by large OOIP conventional fields with high PARIS BASIN working interest (OOIP in 5 largest fields 1.7 billion barrels of oil) FRANCE…
  31. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 31
    FRANCE PRODUCTION 14,000 12,000 10,000 BOE/D 8,000 6,000 4,000 2,000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E E&D CAPEX AS A % OF FFO* n/a 43% 51% 101%…
  32. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 32
    FRANCE ACTIVITY 2014 CAPITAL ACTIVITIES 8-well drilling program in the Champotran, Cazaux, Tamaris and Parentis fields 18-well workover program PARIS Acquired 160 km2 of 3-D seismic across Champotran field PARIS BASIN 2015…
  33. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 33
    CHAMPOTRAN WELL PERFORMANCE FRANCE actual per well economics 2013-2015 DCET Well Cost ( million) 4.8 IP30 Rate (boe/d) 260 EUR per well (mboe) 345 550 After Tax ROR (%) 72% After Tax Payout (years) 2.2 500 After Tax NPV10 (…
  34. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 34
    NETHERLANDS Entered Netherlands in 2004 High impact natural gas drilling and development HARLINGEN Strong gas price, favorable fiscal regime, and low OPEX enhance netbacks Six consecutive years of production growth Undeveloped land…
  35. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 35
    NETHERLANDS PRODUCTION NETHERLANDS - Expected per well risked economics of average drilling prospect DCET Well Cost ( million) 10.4 Expected IP30 Rate (boe/d) 1,000 10,000 Expected EUR per well (mboe) 1,280 After Tax ROR (%) 100%…
  36. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 36
    NETHERLANDS ACTIVITY Recently added significant exploration concession at Ijsselmuiden (110,000 acres) Vermilion has tripled its undeveloped land base since the beginning of 2012 2014 CAPITAL ACTIVITIES Seven-well development…
  37. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 37
    GERMAN PRODUCING ASSETS OVERVIEW Acquired a 25% (non-operated) contractual participation interest in a four-partner consortium in February 2014 Assets include 4 gas producing fields across 11 production licenses 204,000 gross acres…
  38. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 38
    GERMANY PRODUCTION GERMANY Deblinghausen Z7A (Based on Vermilions 25% working interest) 6,000 DCET Well Cost ( million) 6.6 IP30 Rate (boe/d) 360 EUR per well (mboe) 1,000 After Tax ROR (%) 26% After Tax Payout (years) 3.0 After…
  39. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 39
    NORTH GERMAN BASIN FARM-IN OVERVIEW Entered into a significant farm-in agreement in July 2015 11 of 19 licenses under farm-in will be Vermilion operated Provides participating interest in 850,000 net undeveloped onshore acres in…
  40. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 40
    IRELAND BELLANABOY GAS PLANT IRISH GAS MARKET Over 90% of supply currently imported CORRIB GAS FIELD PIPELINE (83km Offshore) Corrib (Irelands only new planned supply) anticipated to deliver 60% to 65% of Irelands gas NORTHERN FROM…
  41. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 41
    HUNGARY AND CROATIA EXTENSION OF EUROPEAN GROWTH STRATEGY BUDAPEST EBES Modest back-loaded capital commitments HUNGARY Expect to provide production growth by 2020 SOUTH BATTONYA HUNGARY Awarded the Ebes and South Battonya…
  42. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 42
    NORTH AMERICAN ASSETS
  43. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 43
    CANADA Production and assets focused in West Pembina near Drayton Valley and Northgate in SE Saskatchewan In West Pembina, potential for three significant ALBERTA SASKATCHEWAN development projects sharing the same surface…
  44. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 44
    CANADA PRODUCTION 30,000 25,000 20,000 BOE/D 15,000 10,000 5,000 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E E&D CAPEX AS A % OF FFO* 22% 38% 77% 72% 34% 93% 286% 272% 197% 119% 99% 192%…
  45. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 45
    WEST PEMBINA CARDIUM Dominant land position in West Pembina Cardium resource play Control key infrastructure 15,000 bbl per day oil battery VET Oil Battery Two owned and operated gas plants Lifting…
  46. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 46
    CARDIUM WELL COST REDUCTION Successfully reduced Cardium well costs from AVERAGE COST PER SECTION 5 million in early 2010 to current costs of (INCLUDES DRILLING, COMPLETION, EQUIPMENT / FACILITIES & TIE-IN) 3 million, on a per…
  47. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 47
    CARDIUM DEVELOPMENT PLAN NET CARDIUM PROSPECT INVENTORY 12,000 AS AT JUNE 30, 2015 10,000 Wells 8,000 Drilled Contingent 245 BOE/D 6,000 Inventory 120 4,000 Remaining Drillable Inventory 169 2,000 0 Note:…
  48. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 48
    MANNVILLE LIQUIDS-RICH GAS 327 net sections (210,000 acres) of Mannville rights, VET Land Mannville Fairway largely held by production VET Natural Gas Pipelines VET Mannville HZ Average 6 month production rate per well over first…
  49. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 49
    MANNVILLE WELL PERFORMANCE MANNVILLE Expected per well economics - Ellerslie Hz. in Drayton Valley DCET Well Cost ( million) 3.9 IP30 Rate (boe/d) 670 1,800 EUR per well (mboe) 740 After Tax ROR (%) 100% 1,600 After Tax Payout…
  50. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 50
    MANNVILLE DEVELOPMENT PLAN NET MANNVILLE PROSPECT INVENTORY* 8,000 Contingent 6,000 (Best Estimate) Drilled to Date 195 17 BOE/D 4,000 Booked 2P 41 Prospective (Best Estimate) Notikewin 2,000 164 Ellerslie 143…
  51. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 51
    DUVERNAY LIQUIDS-RICH PLAY LAND HOLDINGS LAND POSITIONS SORTED ON NET SECTIONS IN LIQUIDS-RICH WINDOW* 800 700 600 299 NET SECTIONS (191,000 ACRES) ASSEMBLED AT AN AVERAGE COST OF 375/ACRE 500 NET SECTIONS 400 300…
  52. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 52
    DUVERNAY - DEVELOPMENT OPPORTUNITY 40,000 2014 CAPITAL ACTIVITIES Drilled and completed Pembina appraisal well (34.8% WI) in Q3 2014 PRODUCTION (BOE/D) 30,000 1,280 m horizontal leg with IP30 raw gas rate of 1.8 mmcf/d (sales…
  53. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 53
    SOUTHEAST SASKATCHEWAN Elkhorn Lands New Land Existing HZ Wells VET Identified Locations SE SASKATCHEWAN STRATIGRAPHIC CHART Entered area through acquisition of Elkhorn Resources Inc. in April 2014, with further land added…
  54. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 54
    UNITED STATES - WYOMING DEVELOPMENT LATEST TURNER SAND HORIZONTAL WELL 300 Entered U.S. in September 2014 250 200 Current production of approximately 125 bbls/d (100% oil) 150 Large, operated contiguous land position…
  55. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 55
    AUSTRALIAN ASSETS
  56. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 56
    AUSTRALIA Entered Australia in 2005 Offshore oil field 80 km N.W. of Australia (55 m water depth) Horizontal well development with 21 producing wellbores Wells 600m below sea bed with 500 - 3,000+ m horizontal lengths Contracted…
  57. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 57
    AUSTRALIA PRODUCTION AUSTRALIA - per well economics based on performance of 2013 drilling program DCET Well Cost ( million) 34.8 IP30 Rate (boe/d) 4,000 12,000 EUR per well (mboe) 1,400 After Tax ROR (%) 22% After Tax Payout…
  58. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 58
    AUSTRALIA ACTIVITY 2013 Wells New wells are sidetracks from existing wellbores Future Sidetrack Locations Oil is trapped above the existing wells, creating opportunity to sidetrack to a higher structural elevation to capture attic…
  59. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 59
    GOVERNANCE / CULTURE
  60. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 60
    GOVERNANCE / SUSTAINABILITY GLOBE & MAIL BOARD GAMES GOVERNANCE REPORT CARBON DISCLOSURE PROJECT (CDP) EXPLORERS & PRODUCERS ASSOCIATION OF CANADA In 2014, Vermilion was ranked 3rd within the energy sector and Ranked 2nd out of 13 in…
  61. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 61
    CORPORATE CULTURE GREAT PLACE TO WORK INSTITUTES ANNUAL RANKING Since 2010 Vermilion has been ranked among the Top 25 Best Workplaces in Canada and France Demonstrates strong corporate culture Reflects highly engaged and motivated…
  62. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 62
    RECORD OF VALUE CREATION
  63. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 63
    VALUE CREATION 1994 Q2 2015 8,000 6,698 5,924 6,000 TOTAL MARKET 4,000 VALUE CAPITALIZATION(2) MILLIONS CREATION 2,204 2,000 DIVIDENDS PAID(2) 0 EQUITY ISSUED(1) -2,000 (1,430) MORE THAN 20-YEAR RECORD…
  64. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 64
    RETURN ON CAPITAL EMPLOYED 25 20 15 ROCE (%) 10 5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 3 Year Average Peer Average Vermilion STRONG CAPITAL EFFICIENCY IN A CAPITAL INTENSIVE BUSINESS * ROCE =…
  65. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 65
    RELATIVE MARKET PERFORMANCE Since Inception Indices 1 Year 3 Year 5 Year 10 Year 15 Year (21 Years) BROAD INDICES MSCI World Index 2.9% 13.1% 7.9% 3.9% 1.2% 5.0% S&P 500 Composite Index 11.4% 17.9% 13.0% 5.4% 2.3% 7.6% S&P…
  66. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 66
    SUMMARY Long-term, low-risk dividend growth model supported by High margins Diversified product mix Low base decline rate Diversified and well defined project slate Low financial leverage Focused on consistent growth in…
  67. October 2015 Investor Presentation – Vermilion Energy Inc. – slide 67
    ANALYST COVERAGE FIRM ANALYST PHONE EMAIL AltaCorp Capital Patrick J. ORourke, CFA 403-539-8615 porourkealtacorpcapital.com Bank of America Merrill Lynch Peter K. Ogden, CFA 403-231-2030 peter.ogdenbaml.com Barclays Capital Grant Hofer,…

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