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EnerCom The Oil and Gas Conference – Vermilion Energy Inc.

Vermilion Energy Inc. · Aug 17, 2016 · 64 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. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 1
    INTERNATIONALLY DIVERSIFIED SUSTAINABLE GROWTH AND INCOME AUGUST 15, 2016
  2. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 2
    VERMILION OVERVIEW
  3. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 3
    VERMILIONS KEY ATTRIBUTES Global independent with leading positions in high netback businesses in Europe, North America and Australia Self-funded growth and income model supported by high margins, low decline rates and strong…
  4. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 4
    CAPITAL MARKETS SUMMARY Market Summary Trading Price (July 31, 2016) 43.50 (TSX), 32.41 (NYSE) Ticker Symbol (TSX & NYSE) VET Shares Outstanding 116.2 million Average Daily Trading Volume (shares) 0.8 million Monthly Dividend…
  5. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 5
    PRODUCTION GROWTH AND CAPEX 2016 GUIDANCE 62,500 TO 63,500 BOE/D 80,000 Y/Y E&D Capital Production Y/Y PPS Capex Intensity 70,000 13% CAGR Year (boe/d) Growth* Growth* (MM) (/boe/d)** 60,000 2011 35,202 10% 6% 491 13,900 2012…
  6. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 6
    PER SHARE GROWTH 650 3,000 600 2,750 MBOE PER MILLION SHARES BOE/D PER MILLION SHARES 550 2,500 500 2,250 450 2,000 400 1,750 350 1,500 300 1,250 250 1,000 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E…
  7. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 7
    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 58 (71%) (83%) France 148 92 66 (28%) (55%) Netherlands 62 47 27…
  8. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 8
    FUND FLOWS FROM OPERATIONS (FFO) 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%)…
  9. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 9
    RELIABLE AND GROWING DIVIDENDS CUMULATIVE DIVIDENDS PAID PER SHARE (2003 THRU Q2 2016) = 30.30 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…
  10. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 10
    DIVIDEND YIELD HISTORY 8 AVERAGE DIVIDEND YIELD SINCE CONVERSION TO A CORPORATION = 4.7% 6 Current Yield = 5.9% DIVIDEND YIELD (%) 4 2 0 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Sep-10…
  11. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 11
    SUSTAINABILITY RATIO 175% 162% 150% 140% TOTAL EXPENDITURES / FFO* 121% 125% 121% 117% 108% 111% 109% 111% 100% 81% 80% 74% 73% 75% 59% 50% 25% 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014…
  12. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 12
    SUSTAINABLE MODEL
  13. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 13
    ELEMENTS OF SUSTAINABLE MODEL Vermilion's 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 rates…
  14. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 14
    COST REDUCTION CAPITAL EFFICIENCY OPERATIONAL EFFICIENCY 40.00 14.00 22% Reduction 35.00 12.00 30.00 10.00 74% Reduction 25.00 / BOE / BOE 8.00 20.00 6.00 15.00 23% Reduction 4.00 10.00 4% Reduction 5.00 2.00…
  15. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 15
    NETBACKS United Total Q2 2016 Netbacks by Country (/boe*) Canada France Netherlands Germany Ireland Australia States Company Revenue 25.39 57.82 31.77 28.94 32.59 61.53 46.80 36.83 Royalties (1.55) (6.16) (0.52) (4.44) - - (14.02)…
  16. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 16
    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 CR VET BNE PXT PSK TOG ARX MEG PEY NVA…
  17. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 17
    BASE PRODUCTION DECLINE RATES Effective Natural 50% Country Decline Rate* Decline Rate* VET France 11% 11% 40% CORPORATE NATURAL VET CANADA DECLINE Netherlands** 0% 19% ONLY DECLINE 30% Germany 14% 14% VET CORPORATE…
  18. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 18
    CAPITAL EFFICIENCY Well Cost IP365 ATAX Recycle ATAX Payout Prod. Efficiency Net Well 2016E Net Investment (CM) (boe/d) ROR Ratio (Years) (IP365 /boed) Inventory* Wells Planned European Gas Netherlands E&D 8.8 1,260 100% 4.5 x 1.3…
  19. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 19
    RESERVES / RESOURCES
  20. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 20
    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**…
  21. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 21
    PDP RECYCLE RATIO 2015 PDP FD&A RECYCLE RATIOS* 4.0x 3.5x 3.0x 2.5x 2.0x 1.5x 1.0x 0.5x 0.0x VET CR ERF RRX PEY BNE CPG WCP BNP NVA PPY VII BTE KEL LTS INCREASING RECYCLE RATIOS DESPITE COMMODITY PRICE WEAKNESS *…
  22. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 22
    BALANCE SHEET
  23. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 23
    CONSERVATIVE BALANCE SHEET CREDIT CAPACITY 2.0 BILLION NET DEBT TO FFO RATIO* AS AT JUNE 30, 2016 5.0 4.0 PEER AVERAGE 2017 = 3.3x PEER AVERAGE 2016 = 3.4x 627 VET 2016 = 3.0x 3.0 VET 2017 = 2.3x 1,373 2.0 1.0 0.0…
  24. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 24
    RELATIVE LEVERAGE DEBT TO CASH FLOW 16.0x 14.0x 12.0x 10.0x US AVERAGE 8.0x 6.0x CANADA AVERAGE 4.0x 2.0x 0.0x POU TET PGF ECR EPE FRU WPX CRZO RSPP CR TOG WCP JONE DNR BIR…
  25. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 25
    RISK MANAGEMENT
  26. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 26
    HEDGING PHILOSOPHY 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 months forward; however, we have European gas…
  27. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 27
    COMMODITY HEDGE POSITION Full Year 2016 Full Year 2017 Full Year 2018 WTI Percent of Production Hedged 14% - - Average Floor / Ceiling / Swap (/bbl) 57.31 / 70.54 / - -/-/- -/-/- Brent Percent of Production Hedged 16% - - Average…
  28. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 28
    INTERNATIONAL DIVERSIFICATION
  29. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 29
    CORE OPERATING AREAS NORTH AMERICA EUROPE AUSTRALIA VERMILION IS FOCUSED IN THREE CORE AREAS 31
  30. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 30
    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…
  31. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 31
    COMMODITY MIX PRODUCTION (2016)* 2P RESERVES (YE 2015)** ESTIMATED FFO CONTRIBUTION (2016)* Australia France Australia France Australia 24% 10% United 13% United 19% United 7% States States Germany States 1% Canada 0% France 4%…
  32. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 32
    GLOBAL PRICING ADVANTAGE CRUDE OIL* NATURAL GAS** VET BRENT US41 Differential (4) 12 2016 Euro Gas 2016 Euro Gas Swap C8.76 Collar Ceiling Differential (14) 10 C8.99 GAS PRICE (/MMBTU) VET BRENT 2016 Euro Gas PRODUCTION…
  33. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 33
    EUROPEAN NATURAL GAS OUTLOOK SUMMARY Recent price decline reflects previous warm winter/high storage, oil-linked contracts, threat of surplus LNG and tepid European demand due to weak economy Longer-term European gas demand growth…
  34. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 34
    EUROPEAN NATURAL GAS OUTLOOK LNG SUPPLY GLOBAL LNG SUPPLY/DEMAND 50 Global nameplate liquefaction capacity to grow by a net 16 17 Bcf/d through 2020, however: 40 30 Historic utilization has averaged only 80%-85% of nameplate…
  35. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 35
    EUROPEAN ASSETS
  36. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 36
    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 Establishing production…
  37. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 37
    EUROPEAN PRODUCTION 35,000 30,000 25,000 BOE/D 20,000 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…
  38. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 38
    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…
  39. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 39
    FRANCE PRODUCTION 14,000 12,000 10,000 8,000 BOE/D 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%…
  40. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 40
    FRANCE OPERATING PERFORMANCE Value Creation (2P Reserves) mmboe Acquired Reserves 14,000 Initial acquisition (1997) 22.6 2006 Acquisition 15.0 2012 Acquisition 1 6.7 2006 Acquisition 12,000 2012 Acquisition 2 6.3 15.0 mmboe (2P)…
  41. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 41
    NETHERLANDS Entered Netherlands in 2004 HARLINGEN High impact natural gas drilling and development Strong gas price, favorable fiscal regime, and low OPEX enhance netbacks AMSTERDAM Seven consecutive years of organic production…
  42. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 42
    NETHERLANDS PRODUCTION NETHERLANDS - Expected per well risked economics (based on recent drilling) DCET Well Cost ( million) 8.8 Expected IP30 Rate (boe/d) 1,690 10,000 Expected EUR per well (mboe) 1,350 After Tax ROR (%) 100%…
  43. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 43
    NETHERLANDS OPERATING PERFORMANCE Value Creation (2P Reserves) mmboe Acquired Reserves Initial acquisition (2004) 16.5 14,000 2013 Acquisition 2.3 Total Acquired Reserves 18.8 12,000 Production to YE 2015 23.8 Initial…
  44. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 44
    GERMANY COUNTRY OVERVIEW Largest gas market in Europe, with a long history of oil and natural gas development Country-wide production is approximately 44 kbbl/d of oil and 0.7 bcf/d of natural gas (160 kboe/d) Consistent fiscal…
  45. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 45
    GERMANY LAND POSITION Largely contiguous land position of over 1.1 million net acres in the prolific North German LEGEND Basin, which has cumulative production of more than 2 Bbbls of oil and 34 Tcf of natural gas Initial…
  46. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 46
    GERMANY PRODUCTION GERMANY Burgmoor Z3 Sidetrack (Based on Vermilions 25% W.I.) DCET Well Cost ( million) 3.9 5,000 IP30 Rate (boe/d) 350 Engie acquisition (expected to close late EUR per well (mboe) 780 After Tax ROR (%) 22% Q4…
  47. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 47
    ENGIE ACQUISITION On June 28, 2016, Vermilion announced the acquisition of producing assets in northwest Germany from Engie E&P Deutschland GmbH for 33 million (47.9 million). Expected close Q4 2016 Acquisition provides Vermilions…
  48. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 48
    IRELAND BELLANABOY GAS PLANT OVERVIEW Vermilion holds 18.5% non-operated interest in the Corrib gas field, offshore Ireland CORRIB GAS FIELD PIPELINE (83km Offshore) NORTHERN FROM UK Over 90% of supply imported prior to Corrib…
  49. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 49
    IRELAND PRODUCTION 10,000 BOE/D 8,000 6,000 2015 2016E E&D CAPEX AS A % OF FFO* NM 9% Gas EFFICIENT TRANSLATION OF REVENUE FUND FLOWS FROM OPERATIONS FREE CASH FLOW * 2016E: Company estimates as of August 2, 2016 with…
  50. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 50
    CENTRAL AND EASTERN EUROPE (CEE) EXTENSION OF EUROPEAN GROWTH STRATEGY Modest back-loaded capital commitments BUDAPEST EBES Prospective for both oil and gas HUNGARY Under-invested basin that can benefit from new technology SOUTH…
  51. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 51
    NORTH AMERICAN ASSETS
  52. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 52
    CANADA Production and assets focused in West Pembina near Drayton Valley and Northgate in SE Saskatchewan In West Pembina, potential for three significant development projects sharing the same surface ALBERTA SASKATCHEWAN…
  53. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 53
    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 * 21% 36% 67% 58% 31% 76% 247% 225% 165% 101% 86% 104% 54%…
  54. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 54
    UNITED STATES - WYOMING DEVELOPMENT TURNER SAND WELL PERFORMANCE 400 350 Entered U.S. in September 2014 300 Large, operated contiguous land position (83,000 net 250 BOPD 200 acres at 100% working interest) in promising 150…
  55. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 55
    UNITED STATES PRODUCTION 600 500 400 BOE/D 300 200 100 0 2014 2015 2016E E&D CAPEX AS A % OF ATAX NOI* 64% 535% 233% Crude Oil & NGL Gas EARLY-STAGE LIGHT OIL GROWTH PROJECT * ATAX NOI is defined as FFO before G&A…
  56. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 56
    AUSTRALIAN ASSETS
  57. EnerCom The Oil and Gas Conference – 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. EnerCom The Oil and Gas Conference – 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 (%) 18% After Tax Payout…
  59. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 59
    AUSTRALIA OPERATING PERFORMANCE Value Creation (2P Reserves) mmboe (net) Acquisition Date Reserves 16,000 Reserves at initial acquisition (2005) 26.7 Total Acquisition Date Reserves 26.7 14,000 Production to YE 2015 28.2 Reserves…
  60. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 60
    RECORD OF VALUE CREATION
  61. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 61
    VALUE CREATION 1994 2016 6,000 5,654 4,779 TOTAL VALUE CREATION 4,000 MARKET MILLIONS CAPITALIZATION(2) 2,495 2,000 DIVIDENDS PAID(2) 0 EQUITY ISSUED(1) -2,000 (1,620) MORE THAN 20-YEAR RECORD OF STRONG VALUE…
  62. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 62
    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:…
  63. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 63
    RELATIVE MARKET PERFORMANCE Since Inception Indices 1 Year 3 Year 5 Year 10 Year 15 Year (22 Years) S&P TSX Oil & Gas E&P Index (34.6%) (18.6%) (18.1%) (9.2%) 1.6% 3.1% ENERGY INDICES S&P TSX Oil & Gas E&P Total Return Index…
  64. EnerCom The Oil and Gas Conference – Vermilion Energy Inc. – slide 64
    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…

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