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March 2016 Investor Presentation – Vermilion Energy Inc.

Vermilion Energy Inc. · Mar 18, 2016 · 57 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. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 1
    DEFINED PRODUCTION GROWTH RELIABLE AND GROWING DIVIDENDS MARCH 2016
  2. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 2
    CAPITAL MARKETS SUMMARY Market Summary Trading Price (March 17, 2016) 42.04 (TSX), 32.40 (NYSE) Ticker Symbol (TSX & NYSE) VET Shares Outstanding 112.0 million Monthly Dividend 0.215/share Dividend Yield 6.1% Director and Officer…
  3. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 3
    PRODUCTION GROWTH AND CAPEX 2016 GUIDANCE 62,500 TO 63,500 BOE/D 70,000 Y/Y E&D Capital 60,000 Production Y/Y PPS Capex Intensity 15% CAGR Year (boe/d) Growth Growth (MM) (/boe/d)* 50,000 2011 35,202 10% 6% 491 13,900…
  4. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 4
    E&D CAPITAL BUDGET 2014 Actuals 2015 Actuals 2016 Budget* 2016 vs 2015 2016 vs 2014 Capital Expenditures by Country (MM) (MM) (MM) % Change % Change Canada 336 202 54 (73%) (84%) France 148 92 59 (36%) (60%) Netherlands 62 47 23…
  5. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 5
    FFO GROWTH 1,000 Fund Flows from Fund Flows Y/Y 800 Year Operations (MM) per Share Growth 2011 474 5.22 33% 600 FFO (MM) 2012 558 5.69 18% 2013 668 6.61 20% 400 2014 805 7.63 21% 2015 516 4.71 (36%) 200 2016E* 390…
  6. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 6
    FFO SENSITIVITY 2016 FFO C5.25/MMBTU EUROPEAN GAS 2016 FFO C6.25/MMBTU EUROPEAN GAS BRENT (US) BRENT (US) OIL OIL 35 40 45 50 55 60 65 35 40 45 50 55 60 65 PRICE PRICE Forecast FFO (CMM) Forecast FFO (CMM) 35 315 349 379 400 420…
  7. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 7
    SUSTAINABILITY RATIO 86% AVERAGE PRE-CORRIB CORRIB DEVELOPMENT PHASE CORRIB CASH FLOW 175% 162% 150% 140% 121% 121% 125% TOTAL EXPENDITURES / FFO* 117% 108% 111% 109% 111% 100% 88% 81% 74% 73% 75% 59% 50%…
  8. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 8
    RESERVES GROWTH 2015 F&D / FD&A Costs* Including FDC (/boe) 275 F&D (E&D CAPEX) 8.98 250 FD&A (Total CAPEX, including acquisitions) 10.03 225 FD&A Operating Recycle Ratio 3.2x 200 10% CAGR 11.7 year P+P reserve life index**…
  9. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 9
    2015 TOTAL P+P RESERVES 2015 Year End P+P Reserves* (mmboe) Canada France Netherlands Germany Ireland Australia United States Total At December 31, 2014 120.2 58.0 14.2 10.3 24.1 18.0 2.1 246.9 Additions from E&D 8.7 10.2 4.9…
  10. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 10
    RESERVES / RESOURCE BASE 2015 YEAR END WORKING INTEREST RESERVES AND RISKED CONTINGENT RESOURCE ( DEVELOPMENT PENDING)* Proved plus Probable (mmboe) Risked Contingent Resource (Development Pending) WI Reserves Low Best Estimate…
  11. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 11
    CONSERVATIVE BALANCE SHEET CREDIT CAPACITY 2.0 BILLION* NET DEBT TO FFO RATIO** 5.0 PEER AVERAGE 2017 = 4.6x PEER AVERAGE 2016 = 4.2x 4.0 3.0 VET 2016 = 2.9x 612 VET 2017 = 2.7x 1,388 2.0 1.0 0.0 2003 2004 2005 2006…
  12. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 12
    CREDIT METRICS YE 2012 YE 2013 YE 2014 YE 2015 Credit Facility ( millions) Approved credit facility 950 1,200 1,750 2,000 Bank line undrawn* 481 425 727 812 Total debt to EBITDA** 0.8 1.1 1.2 2.2 Total debt to FFO** 1.2 1.5 1.5…
  13. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 13
    RISK MANAGEMENT Vermilion employs a systematic process to identify and manage risk across our business Financial Risk Market Risk Operational Risk Target low financial leverage to Hedging program reduces risk Integrated,…
  14. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 14
    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…
  15. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 15
    COMMODITY HEDGING Full Year 2016 Full Year 2017 Full Year 2018 WTI Percent of Production Hedged 8% - - Average Floor / Ceiling / Swap (/bbl) 61.27 / 73.30 / - -/-/- -/-/- Brent Percent of Production Hedged 6% - - Average Floor /…
  16. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 16
    CORE OPERATING AREAS NORTH AMERICA EUROPE AUSTRALIA VERMILION IS FOCUSED IN THREE CORE AREAS 25
  17. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 17
    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…
  18. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 18
    GLOBAL COMMODITY MIX PRODUCTION (2016)* 2P RESERVES (YE 2015)** ESTIMATED FFO CONTRIBUTION (2016)* France Australia Australia France Australia 24% United 17% United 11% 19% United 7% States States 1% Germany States Canada 0%…
  19. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 19
    GLOBAL PRICING ADVANTAGE CRUDE OIL* NATURAL GAS** VET BRENT US37 12 Differential (6) 2016 Euro Gas 2016 Euro Gas Swap C9.35 Collar Ceiling 10 C9.50 GAS PRICE (/MMBTU) Differential (16) VET BRENT 2016 Euro Gas PRODUCTION…
  20. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 20
    COMMODITY PRICE DIVERSIFICATION Commodity North American European WTI Brent PORTFOLIO MIX STANDARD DEVIATION* Exposures Natural Gas Natural Gas Crude Oil Crude Oil 100% ANNUALIZED STANDARD DEVIATION Vermilion 90% North…
  21. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 21
    EUROPEAN NATURAL GAS OUTLOOK GLOBAL LIQUEFACTION CAPACITY & UTILIZATION Vermilion expects that European natural gas prices will remain significantly higher than North American gas prices Current European gas strip reflects floor…
  22. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 22
    EUROPEAN NATURAL GAS OUTLOOK (Continued) European Supply & Demand (Bcf/d) 2012 2015E 2017E 2020E DOMESTIC AND PIPELINE SUPPLY European Domestic Production 26.5 23.4 22.7 21.9 European domestic production continues to decline Russia…
  23. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 23
    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 (represented as /boe) Low base production decline…
  24. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 24
    TOP QUARTILE CASH NETBACKS 2015 Netbacks by Country (/boe*) Canada France Netherlands Germany Australia United States Total Company Revenue 34.32 62.67 46.77 43.10 70.22 47.53 47.07 Royalties (3.01) (6.00) (1.12) (6.75) - (13.93)…
  25. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 25
    RELATIVE NETBACKS 2015 OPERATING NETBACK EXCL. HEDGING* 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 PXT PSK PEY MEG CR GTE CPG…
  26. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 26
    BASE PRODUCTION DECLINE RATES Effective Natural 50% Country Decline Rate* Decline Rate* France 11% 11% 40% VET VET CANADA CORPORATE Netherlands** 0% 22% ONLY DECLINE NATURAL DECLINE 30% VET Germany 11% 11% CORPORATE…
  27. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 27
    CAPITAL EFFICIENCY Investment Well Cost (CM) IP365 (boe/d) ATAX ROR % Recycle Ratio Prod. Eff. (IP365) Payout (Years) European Gas Netherlands E&D 13.9 1,260 100% 4.2 x 11,000/boed 1.3 EUROPE German Development 3.9 250 29% 1.8…
  28. March 2016 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. March 2016 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 2015 2016E France Netherlands Germany Ireland…
  30. March 2016 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. March 2016 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 2015 2016E E&D CAPEX AS A % OF FFO* n/a 43% 51% 101% 45%…
  32. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 32
    FRANCE ACTIVITY CHAMPOTRAN FIELD 2015 CAPITAL ACTIVITIES Resumption of solution gas sales PARIS PARIS BASIN 4-well drilling program in Champotran Well workovers and waterflood program FRANCE BORDEAUX 2016 CAPITAL ACTIVITIES…
  33. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 33
    CHAMPOTRAN DEVELOPMENT 14 wells drilled from 2013 to 2015 at 100% success rate CHAMPOTRAN PRODUCTION 6,000 Reduced DCET costs by 23% since 2013 30 identified future net drilling locations in 5,000 reserves and resources*…
  34. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 34
    ZAZA DEVELOPMENT NEOCOMIAN GROWTH POTENTIAL 10 WELLS PER YEAR Part of Paris Basin light oil assets (Neocomian field) acquired 3,500 Vermilion 10 Wells per Year from ZaZa Energy France in December 2012 3,000 Pre-acquisition…
  35. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 35
    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…
  36. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 36
    NETHERLANDS PRODUCTION NETHERLANDS - Expected per well risked economics (based on recent drilling) DCET Well Cost ( million) 13.9 Expected IP30 Rate (boe/d) 1,690 10,000 Expected EUR per well (mboe) 1,350 After Tax ROR (%) 100%…
  37. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 37
    NETHERLANDS ACTIVITY Vermilion has tripled its undeveloped land base since the beginning of 2012 2015 CAPITAL ACTIVITIES Two-well development drilling program Equip and tie-in four previous discovery wells 2016 CAPITAL…
  38. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 38
    GERMAN PRODUCING ASSETS OVERVIEW Acquired a 25% non-operated interest in a four-partner consortium in February 2014 Assets include 4 gas producing fields across 11 production licenses 204,000 gross acres (85% in the exploration…
  39. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 39
    GERMANY PRODUCTION GERMANY Burgmoor Z3 Sidetrack (Based on Vermilions 25% W.I.) 6,000 DCET Well Cost ( million) 3.9 IP30 Rate (boe/d) 350 EUR per well (mboe) 550 After Tax ROR (%) 29% After Tax Payout (years) 3.0 After Tax NPV10…
  40. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 40
    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…
  41. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 41
    IRELAND BELLANABOY GAS PLANT OVERVIEW CORRIB GAS FIELD Vermilion holds 18.5% non-operated interest in the Corrib gas field, offshore Ireland (83km Offshore) PIPELINE NORTHERN FROM UK Over 90% of supply imported prior to Corrib…
  42. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 42
    CENTRAL AND EASTERN EUROPE (CEE) EXTENSION OF EUROPEAN GROWTH STRATEGY BUDAPEST EBES Modest back-loaded capital commitments Prospective for both oil and gas HUNGARY SOUTH BATTONYA HUNGARY Awarded Ebes and South Battonya…
  43. March 2016 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. March 2016 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 2015 2016E E&D CAPEX AS A % OF FFO EXCL. INTEREST* 21% 36% 67% 58% 31% 76% 247% 225% 165%…
  45. March 2016 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 and two owned and operated gas plants Lifting…
  46. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 46
    CARDIUM DEVELOPMENT NET CARDIUM PROSPECT INVENTORY* 12,000 AS AT DECEMBER 31, 2015 10,000 Wells 8,000 Drilled 245 Risked BOE/D 6,000 Contingent Development Pending 4,000 171 Remaining 2P Locations 2,000 116 0…
  47. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 47
    MANNVILLE LIQUIDS-RICH GAS 309 net sections (197,500 acres) of Mannville rights, VET Land largely held by production Mannville Fairway VET Natural Gas Pipelines VET Oil Battery VET Mannville HZ Average 6 month production rate (op…
  48. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 48
    MANNVILLE WELL PERFORMANCE MANNVILLE Expected per well economics - Ellerslie Hz. in Drayton Valley DCET Well Cost ( million) 3.9 1,800 IP30 Rate (boe/d) 670 EUR per well (mboe) 740 1,600 After Tax ROR (%) 100% After Tax Payout…
  49. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 49
    MANNVILLE DEVELOPMENT NET MANNVILLE PROSPECT INVENTORY* 12,000 AS AT DECEMBER 31, 2015 10,000 Drilled to Date 34 8,000 Risked Contingent Development BOE/D 6,000 Pending 147 Booked 2P 56 Notikewin 4,000 85 2,000…
  50. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 50
    DUVERNAY LIQUIDS-RICH RESOURCE PLAY LAND POSITIONS SORTED ON NET SECTIONS IN LIQUIDS-RICH WINDOW* 800 700 NET SECTIONS 600 EDSON 500 Liquids-Rich Window Oil Window Dry Gas Window 400 300 WEST PEMBINA 200 100 0…
  51. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 51
    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…
  52. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 52
    UNITED STATES - WYOMING DEVELOPMENT LATEST TURNER SAND HORIZONTAL WELL 300 Entered U.S. in September 2014 250 Large, operated contiguous land position (76,600 net 200 acres at 100% working interest) in the promising 150 horizontal…
  53. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 53
    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…
  54. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 54
    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 (%) 20% After Tax Payout…
  55. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 55
    AUSTRALIA ACTIVITY New wells are sidetracks from existing wellbores Oil is trapped above the existing wells, creating opportunity to sidetrack to a higher structural elevation to capture attic and flank oil 10 identified development…
  56. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 56
    RETURN ON CAPITAL EMPLOYED 25 20 15 ROCE (%) 10 5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 3 Year Peer Average Vermilion Average STRONG CAPITAL EFFICIENCY IN A CAPITAL INTENSIVE BUSINESS * ROCE =…
  57. March 2016 Investor Presentation – Vermilion Energy Inc. – slide 57
    RELATIVE MARKET PERFORMANCE Since Inception Indices 1 Year 3 Year 5 Year 10 Year 15 Year (22 Years) BROAD INDICES MSCI World Index (2.7%) 7.5% 5.4% 2.8% 2.1% 4.7% S&P 500 Composite Index (0.7%) 12.7% 10.2% 5.1% 3.0% 7.2% S&P…

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