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April 2016 Investor Presentation – Vermilion Energy Inc.

Vermilion Energy Inc. · Apr 18, 2016 · 73 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. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 1
    DEFINED PRODUCTION GROWTH RELIABLE AND GROWING DIVIDENDS APRIL 2016
  2. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 2
    VERMILION OVERVIEW
  3. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 3
    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…
  4. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 4
    CAPITAL MARKETS SUMMARY Market Summary Trading Price (April 2, 2016) 36.86 (TSX), 28.30 (NYSE) Ticker Symbol (TSX & NYSE) VET Shares Outstanding 113.4 million Monthly Dividend 0.215/share Dividend Yield 7.0% Director and Officer…
  5. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 5
    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…
  6. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 6
    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…
  7. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 7
    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…
  8. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 8
    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…
  9. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 9
    RELIABLE AND GROWING DIVIDENDS CUMULATIVE DIVIDENDS PAID PER SHARE (2003 THRU 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 2014…
  10. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 10
    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%…
  11. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 11
    RESERVES / RESOURCES
  12. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 12
    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**…
  13. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 13
    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…
  14. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 14
    RESERVES / RESOURCE BASE 2015 YEAR END WORKING INTEREST RESERVES AND RISKED CONTINGENT RESOURCE (DEVELOPMENT PENDING)* Proved plus Probable WI (mmboe) Risked Contingent Resource (Development Pending) Reserves Low Best Estimate High…
  15. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 15
    BALANCE SHEET
  16. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 16
    CONSERVATIVE BALANCE SHEET CREDIT CAPACITY 2.0 BILLION NET DEBT TO FFO RATIO* 5.0 PEER AVERAGE 2016 & 2017 = 4.7x 4.0 VET 2016 = 3.0x 3.0 612 VET 2017 = 2.8x 1,388 2.0 1.0 0.0 2003 2004 2005 2006 2007 2008 2009 2010…
  17. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 17
    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…
  18. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 18
    RISK MANAGEMENT
  19. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 19
    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,…
  20. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 20
    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…
  21. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 21
    COMMODITY HEDGING Full Year 2016 Full Year 2017 Full Year 2018 WTI Percent of Production Hedged 9% - - Average Floor / Ceiling / Swap (/bbl) 60.42 / 72.57 / - -/-/- -/-/- Brent Percent of Production Hedged 6% - - Average Floor /…
  22. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 22
    INTERNATIONAL DIVERSIFICATION
  23. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 23
    CORE OPERATING AREAS NORTH AMERICA EUROPE AUSTRALIA VERMILION IS FOCUSED IN THREE CORE AREAS 25
  24. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 24
    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…
  25. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 25
    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%…
  26. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 26
    GLOBAL PRICING ADVANTAGE CRUDE OIL* NATURAL GAS** VET BRENT US38 Differential (3) 12 2016 Euro Gas 2016 Euro Gas Swap C9.53 Collar Ceiling 10 C9.55 GAS PRICE (/MMBTU) Differential (18) VET BRENT 2016 Euro Gas PRODUCTION…
  27. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 27
    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…
  28. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 28
    EUROPEAN NATURAL GAS OUTLOOK GLOBAL LIQUEFACTION CAPACITY & UTILIZATION Vermilion expects European gas prices will remain significantly above North American gas prices Recent price decrease reflects impact of temporary factors that…
  29. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 29
    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…
  30. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 30
    SUSTAINABLE MODEL
  31. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 31
    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…
  32. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 32
    COST MANAGEMENT COST PER UNIT 20.00 18.00 48% Reduction 16.00 14.00 14% Reduction 12.00 / BOE 10.00 8.00 6.00 4.00 28% Reduction 25% Reduction 2.00 60% Reduction 0.00 2P F&D (incl. FDC) Opex Transportation G&A…
  33. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 33
    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)…
  34. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 34
    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…
  35. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 35
    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…
  36. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 36
    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…
  37. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 37
    EUROPEAN ASSETS
  38. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 38
    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…
  39. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 39
    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…
  40. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 40
    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…
  41. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 41
    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%…
  42. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 42
    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…
  43. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 43
    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*…
  44. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 44
    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…
  45. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 45
    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…
  46. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 46
    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%…
  47. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 47
    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…
  48. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 48
    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…
  49. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 49
    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…
  50. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 50
    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…
  51. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 51
    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…
  52. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 52
    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…
  53. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 53
    NORTH AMERICAN ASSETS
  54. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 54
    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…
  55. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 55
    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%…
  56. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 56
    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…
  57. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 57
    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…
  58. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 58
    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…
  59. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 59
    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…
  60. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 60
    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…
  61. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 61
    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…
  62. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 62
    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…
  63. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 63
    AUSTRALIAN ASSETS
  64. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 64
    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…
  65. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 65
    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…
  66. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 66
    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…
  67. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 67
    GOVERNANCE / CULTURE
  68. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 68
    GOVERNANCE / SUSTAINABILITY GLOBE & MAIL BOARD GAMES GOVERNANCE REPORT CARBON DISCLOSURE PROJECT (CDP) EXPLORERS & PRODUCERS ASSOCIATION OF CANADA In 2015, Vermilion was ranked 2nd within the energy sector and Named to the 2015 Canada…
  69. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 69
    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, creating a high-performance…
  70. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 70
    RECORD OF VALUE CREATION
  71. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 71
    VALUE CREATION 1994 2015 6,000 5,037 4,212 TOTAL VALUE CREATION 4,000 MARKET CAPITALIZATION(2) MILLIONS 2,347 2,000 DIVIDENDS PAID(2) 0 EQUITY ISSUED(1) (1,522) -2,000 MORE THAN 20-YEAR RECORD OF STRONG…
  72. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 72
    RETURN ON CAPITAL EMPLOYED 14 12 10 8 6 ROCE (%) 4 2 0 -2 -4 -6 3 Year Average 5 Year Average 10 Year Average Vermilion Peer Average STRONG CAPITAL EFFICIENCY IN A CAPITAL INTENSIVE BUSINESS * Source:…
  73. April 2016 Investor Presentation – Vermilion Energy Inc. – slide 73
    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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