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December 2015 Corporate Presentation – Vermilion Energy Inc.

Vermilion Energy Inc. · Dec 27, 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. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 1
    DEFINED PRODUCTION GROWTH RELIABLE AND GROWING DIVIDENDS DECEMBER 2015
  2. December 2015 Corporate 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. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 3
    CAPITAL MARKETS SUMMARY Market Summary Trading Price (November 30, 2015) 39.99 (TSX), 29.93(NYSE) Ticker Symbol (TSX & NYSE) VET Shares Outstanding 110.8 million Monthly Dividend 0.215/share Dividend Yield 6.5% Director and…
  4. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 4
    PRODUCTION GROWTH AND E&D CAPEX 2015 GUIDANCE - 55,000 TO 57,000 BOE/D 70,000 60,000 16% CAGR Year Production (boe/d) Y/Y Growth E&D Capex (MM) 50,000 2011 35,202 10% 491 40,000 2012 37,803 7% 453 6% CAGR BOE/D 2013…
  5. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 5
    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…
  6. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 6
    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* 504 4.59 (37%) 0…
  7. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 7
    FFO SENSITIVITY 2015 FFO C8.00/MMBTU EUROPEAN GAS BRENT (US) FFO sensitivity to European Gas (TTF) = OIL 35 40 45 50 55 60 65 0.2MM for every 0.25/mmbtu change in TTF pricing PRICE Forecast FFO (CMM) FFO sensitivity to AECO = 30…
  8. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 8
    RELIABLE AND GROWING DIVIDENDS CUMULATIVE DIVIDENDS PAID PER SHARE (2003 THRU Q4 2015) = 29.01 0.25 0.215 MONTHLY DIVIDENDS 0.20 0.20 0.19 0.17 0.15 0.10 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013…
  9. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 9
    SUSTAINABILITY RATIO 86% AVERAGE PRE-CORRIB CORRIB DEVELOPMENT PHASE CORRIB CASH FLOW 175% 162% 150% 140% 121% 125% 125% TOTAL EXPENDITURES / FFO* 117% 108% 111% 109% 111% 100% 81% 74% 73% 75% 59% 50% 25%…
  10. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 10
    RESERVES / RESOURCES
  11. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 11
    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…
  12. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 12
    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…
  13. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 13
    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…
  14. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 14
    BALANCE SHEET / RISK MANAGEMENT
  15. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 15
    CONSERVATIVE BALANCE SHEET CREDIT CAPACITY 2.25 BILLION* NET DEBT TO FFO RATIO** 5.0 225 PEER AVERAGE 2015 = 4.2x 4.0 730 PEER AVERAGE 2016 = 3.3x 3.0 VET 2015 = 2.8x 1,270 2.0 VET 2016 = 1.8x 1.0 REVOLVING CREDIT…
  16. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 16
    CREDIT METRICS YE 2012 YE 2013 YE 2014 Q3 2015 Credit Facility ( millions) Approved credit facility 950 1,200 1,750 2,000 Bank line undrawn* 481 425 727 701 Total debt to EBITDA** 0.83 1.06 1.21 2.16 Total debt to FFO** 1.2 1.5…
  17. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 17
    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…
  18. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 18
    COMMODITY HEDGING Q4 2015 Full Year 2015 Full Year 2016 WTI Percent of Production Hedged 20% 16% 3% Average Floor / Ceiling / Swap (/bbl) 73.47 / 82.89 / - 78.52 / 90.48 / 75.10 75.40 / 85.05 / - Brent Percent of Production Hedged…
  19. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 19
    INTERNATIONAL DIVERSIFICATION
  20. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 20
    CORE OPERATING AREAS NORTH AMERICA EUROPE AUSTRALIA VERMILION IS FOCUSED IN THREE CORE AREAS 22
  21. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 21
    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…
  22. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 22
    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…
  23. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 23
    GLOBAL PRICING ADVANTAGE CRUDE OIL* NATURAL GAS** (21) (4) VET BRENT US44 DATED BRENT US43 12 WTI US42 2016 Euro Gas Swap C9.34 10 2016 Euro Gas VET Collar Floor BRENT C8.30 GAS PRICE (/MMBTU) PRODUCTION EDMONTON 8…
  24. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 24
    SUSTAINABLE MODEL
  25. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 25
    ELEMENTS OF SUSTAINABLE MODEL Vermilion's global asset base delivers the three key elements necessary to support a sustainable, long-term dividend growth model: High margins Low base production decline rates Strong capital…
  26. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 26
    TOP QUARTILE CASH NETBACKS Q3 YTD 2015 Netbacks by Country (/boe*) Canada France Netherlands Germany Australia United States Total Company Revenue 36.34 65.66 48.70 44.30 76.46 52.95 49.48 Royalties (3.09) (5.95) (1.52) (7.46) -…
  27. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 27
    RELATIVE NETBACKS Q3 YTD 2015 OPERATING NETBACK EXCL. HEDGING* Q3 YTD 2015 AFTER TAX CASH NETBACK EXCL. HEDGING* 35 30 30 25 25 20 /BOE /BOE 20 15 15 10 10 5 5 0 0 VET BNE CPG WCP PRE COS ARX BTE PEY PWT PGF…
  28. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 28
    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…
  29. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 29
    CAPITAL EFFICIENCIES Investment Well Cost (CM) IP365 (boe/d) ATAX ROR % Recycle Ratio Prod. Eff. (IP365) European Gas Netherlands E&D 13.6 1,260 100% 4.5 x 10,800/boed Europe German Development 3.8 250 33% 1.9 x 15,200/boed…
  30. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 30
    EUROPEAN ASSETS
  31. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 31
    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…
  32. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 32
    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…
  33. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 33
    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…
  34. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 34
    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%…
  35. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 35
    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…
  36. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 36
    CHAMPOTRAN DEVELOPMENT CHAMPOTRAN PRODUCTION 6,000 High rate of return development program 5,000 4,000 Significant production growth expected BOE/D 3,000 2,000 14 wells drilled from 2013 to 2015 at 100%…
  37. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 37
    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…
  38. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 38
    NETHERLANDS PRODUCTION NETHERLANDS - Expected per well risked economics of average drilling prospect DCET Well Cost ( million) 13.6 Expected IP30 Rate (boe/d) 1,690 10,000 Expected EUR per well (mboe) 1,350 After Tax ROR (%) 100%…
  39. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 39
    NETHERLANDS ACTIVITY Vermilion has tripled its undeveloped land base since the beginning of 2012 2014 CAPITAL ACTIVITIES Seven-well development and exploratory program 2014 drilling included one well on lands acquired from…
  40. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 40
    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…
  41. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 41
    GERMANY PRODUCTION GERMANY Burgmoor Z3 Sidetrack (Based on Vermilions 25% W.I.) 6,000 DCET Well Cost ( million) 3.8 IP30 Rate (boe/d) 350 EUR per well (mboe) 550 After Tax ROR (%) 33% After Tax Payout (years) 3.0 After Tax NPV10…
  42. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 42
    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…
  43. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 43
    IRELAND BELLANABOY GAS PLANT IRISH GAS MARKET CORRIB GAS FIELD Over 90% of supply currently imported (83km Offshore) NORTHERN PIPELINE FROM UK IRELAND Corrib (Irelands only new planned supply) anticipated to deliver 60% to 65%…
  44. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 44
    CENTRAL AND EASTERN EUROPE (CEE) 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…
  45. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 45
    NORTH AMERICAN ASSETS
  46. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 46
    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…
  47. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 47
    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% 172%…
  48. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 48
    WEST PEMBINA CARDIUM Dominant land position in West Pembina Cardium resource play Control key infrastructure 15,000 bbl per day oil battery and two owned and operated gas plants Lifting…
  49. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 49
    CARDIUM DEVELOPMENT NET CARDIUM PROSPECT INVENTORY 12,000 AS AT SEPTEMBER 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:…
  50. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 50
    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…
  51. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 51
    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…
  52. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 52
    MANNVILLE DEVELOPMENT NET MANNVILLE PROSPECT INVENTORY* 8,000 Contingent 6,000 (Best Estimate) Drilled to Date 195 32 Booked 2P BOE/D 4,000 28 Prospective (Best Estimate) Notikewin 164 140 2,000 Ellerslie 114…
  53. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 53
    DUVERNAY LIQUIDS-RICH RESOURCE PLAY LAND POSITIONS SORTED ON NET SECTIONS IN LIQUIDS-RICH WINDOW* 800 700 600 NET SECTIONS 500 Liquids-Rich Window Oil Window Dry Gas Window 400 300 200 100 0 Petrochina…
  54. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 54
    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…
  55. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 55
    UNITED STATES - WYOMING DEVELOPMENT LATEST TURNER SAND HORIZONTAL WELL 300 Entered U.S. in September 2014 250 200 Q3 2015 production of 226 bbls/d 150 Large, operated contiguous land position (76,600 net acres 100 at…
  56. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 56
    AUSTRALIAN ASSETS
  57. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 57
    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…
  58. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 58
    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…
  59. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 59
    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…
  60. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 60
    GOVERNANCE / CULTURE
  61. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 61
    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 Named to the 2015 Canada…
  62. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 62
    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…
  63. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 63
    RECORD OF VALUE CREATION
  64. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 64
    VALUE CREATION 1994 2015 8,000 6,000 5,303 4,476 TOTAL VALUE 4,000 CREATION MARKET MILLIONS CAPITALIZATION(2) 2,347 2,000 DIVIDENDS PAID(2) 0 EQUITY ISSUED(1) -2,000 (1,521) MORE THAN 20-YEAR RECORD OF…
  65. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 65
    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 =…
  66. December 2015 Corporate Presentation – Vermilion Energy Inc. – slide 66
    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…
  67. December 2015 Corporate 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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