INTERNATIONALLY DIVERSIFIED SUSTAINABLE GROWTH AND INCOME ESG LEADERSHIP SEPTEMBER 2019
VERMILIONS KEY ATTRIBUTES International E&P with leading positions in Europe, North America and Australia Self-funded growth-and-income model Supported by business units that deliver high margins, low decline rates and strong…
CAPITAL MARKETS SUMMARY Market Summary Trading Price (August 28, 2019) 19.57 (TSX), 14.74 (NYSE) Ticker Symbol (TSX & NYSE) VET Shares Outstanding (June 30, 2019) 155.0 million Average Daily Trading Volume (shares) 1.8 million…
CORE OPERATING AREAS 2019E PRODUCTION* EUR 33% N.A. 62% AUS 5% EUR FFO* 39% N.A. 51% AUS 10% EUR N.A. FCF* 47% 41% AUS 12% VERMILION IS FOCUSED IN THREE STABLE REGIONS * Company 2019 estimates as…
VERMILION HISTORY Launched as an Alberta-based oil & gas exploration and production company Converted to Vermilion Energy Trust Issued senior IPO in April 1994 at 0.30 per share unsecured notes in US Converted from an income…
STRATEGY Self-funded production and dividend growth model Targeting free cash flow and dividend yield compression through per-share growth and risk reduction (low financial and Capital Markets Model operating leverage, consistent…
ENVIRONMENTAL SUSTAINABILITY We recognize the energy transition is occurring, and we are playing a meaningful role in the transition At the same time, we are realistic that oil and gas consumption will continue during the transition,…
PRODUCTION GROWTH AND CAPEX ANNUAL PRODUCTION VS E&D CAPITAL EXPENDITURES 120 800 105 15% CAGR 700 90 600 MBOE / D 75 500 MM 60 400 45 6% CAGR 300 30 200 15 100 0 0 2003 2004 2005 2006 2007 2008…
PRODUCTION AND RESERVES PER SHARE PRODUCTION PER SHARE RESERVES PER SHARE 250 3.5 8% CAGR 3.0 2P RESERVES (BOE) PER SHARE 200 11% CAGR BOE PER THOUSAND SHARES 2.5 150 2.0 1.5 100 1.0 50 0.5 0 0.0 2003 2004…
PRODUCTION GROWTH PER SHARE DEBT-AND-DIVIDEND-ADJUSTED INDEXED PRODUCTION PER SHARE (BASE VALUE = 100)* COMPANY 250 (% OF PRODUCTION FROM N.A. GAS)** VII* (41%) 200 PXT (0%)* TOU (82%) VET (25%) PEY (90%) 150 ARX (72%) BIR…
E&D CAPITAL BUDGET Capital Expenditures by Country 2014 Actuals 2015 Actuals 2016 Actuals 2017 Actuals 2018 Actuals 2019 Budget* (MM) (MM) (MM) (MM) (MM) (MM) Canada 336 202 62 149 278 302 France 148 92 69 73 80 74 Netherlands 62…
COMPARISON TO CANADIAN SENIORS DIVIDEND YIELD 2018 CAPITAL RETURNED TO SHAREHOLDERS 16% 10% 2018 CAPITAL RETURNED 14% Buy Backs 8% DIVIDEND YIELD * 12% Dividends 10% 6% 8% 6% 4% 4% 2% 2% 0% 0% VET HSE CNQ SU IMO…
SUSTAINABLE GROWTH AND INCOME MODEL 16
RELIABLE AND GROWING DIVIDENDS CUMULATIVE DIVIDENDS PAID OF 3.6B (38.25 PER SHARE) FROM 2003 THROUGH Q2 2019 0.25 16% 0.23 14% 0.215 12% MONTHLY DIVIDENDS 0.20 0.20 DIVIDEND YIELD* 0.19 10% 0.17 8% 6% 0.15 4%…
TOTAL CAPITAL RETURNED TO SHAREHOLDERS 2018 TOTAL CAPITAL RETURNED PER BOE* (DIVIDENDS & SHARE BUYBACKS) 25.00 20.00 VET RETURNED 13.40 / BOE (ALL DIVIDENDS) 15.00 C / NTI BOE 10.00 5.00 0.00 RRC XEC VII SWN…
ELEMENTS OF SUSTAINABLE MODEL SELF-FUNDED GROWTH-AND-INCOME MODEL 1. High Margins 2. Low Base Production Decline Rates 3. Strong Capital Efficiencies Profitability on a per boe basis Required production replacement before growth…
NETBACKS YTD 2019 Netbacks by Country Total Canada France Netherlands Germany Ireland Australia United States (/BOE*) Company Sales 38.95 85.68 43.28 52.57 43.19 94.21 45.52 48.61 Royalties (4.14) (11.35) (0.67) (5.68) - -…
RELATIVE EFFICIENCY METRICS 2020E FIELD NETBACKS* (EXCLUDING HEDGING)** 2018 CAPITAL EFFICIENCIES (ALL-IN) EXCLUDING A&D* 40 40,000 2019E Sustaining Capital Efficiencies 30 30,000 20 20,000 10 10,000 0 0 OBE VII…
RELATIVE CAPITAL EFFICIENCIES 2019E SUSTAINING CAPEX BREAK-EVENS* 2019E SUSTAINING CAPEX AS A % OF CASH FLOW* 80 150% 70 60 100% 50 WTI (US/BBL) 40 30 50% 20 10 0 0% VET BTE CNQ BNE ATH…
DRILLING PROJECTS Economics at US55 WTI DCET Well IP365 EUR Prod. Efficiency Net Well 2019E Net Investment Cost (CM) (BOE/D) (MBOE) (IP365 /BOED) ATAX Recycle ATAX Payout Inventory* Wells Planned ROR Ratio (Years) European Gas…
COST REDUCTION OPERATING EFFICIENCY CAPITAL EFFICIENCY 14.00 14% Reduction 40.00 (36% in USD) 12.00 35.00 76% Reduction 30.00 (82% in USD) 10.00 19% Reduction 25.00 8.00 from 2014 Peak / BOE / BOE (31% in USD) 20.00…
RELATIVE PDP RECYCLE RATIO 3-YEAR PROVED DEVELOPED PRODUCING (PDP) FD&A RECYCLE RATIOS* 2.5x 2.0x 1.5x 1.0x 0.5x 0.0x YGR VET ARX ERF BIR PEY PONY WCP CR NVA TOG BNP CPG TOU VII BTE GXE KEL TVE DEE PNE OBE POU TOP…
RECYCLE RATIO Including FDC RECYCLE RATIO (F&D incl. FDC) 2018 F&D / FD&A Costs* (/BOE) 6.0x 2016-2018 F&D (E&D CAPEX) 8.32 3 Yr Avg 3.7x 5.0x FD&A (Total CAPEX, 15.19 including acquisitions) 4.0x F&D Operating Recycle Ratio…
INTERNATIONAL DIVERSIFICATION 30
ORGANIZATIONAL MODEL Vermilion uses a decentralized business unit structure to manage our diverse global portfolio Country-based business units are grouped into three regions: Vermilion Energy Inc. Europe, North America and…
COMMODITY MIX PRODUCTION (2019E)* ESTIMATED FFO CONTRIBUTION (2019E)* ESTIMATED FCF CONTRIBUTION (2019E)** France Australia Germany United Australia 11% 10% Australia France 4% Ireland States France 5% United 12% 18% 8% 5% 18%…
COMMODITY PRICE DIVERSIFICATION PORTFOLIO MIX STANDARD DEVIATION* 60% ANNUALIZED STANDARD 50% DEVIATION (%) 40% 30% 20% 10% 0% VET ERF TVE OBE BNE KEL NVA BTE WCP ARX BNP CPG BIR TOU PEY Diversified commodity…
GLOBAL CRUDE OIL PRICING ADVANTAGE Approximately 36% of Vermilions crude oil production is priced with reference to Dated Brent* October 2019 VET Vermilions Australian crude was sold at an average premium of Oil Price 2019E VET…
EUROPEAN NATURAL GAS PRICING SUMMARY NATURAL GAS* 12 Futures markets continue to reflect a significant premium for European natural gas versus AECO and Henry Hub 10 GAS PRICE (C/MMBTU) 8 Realized prices are influenced by a…
EUROPEAN NATURAL GAS LNG SUPPLY US/mmbtu FULL CYCLE US GULF COAST NETBACKS Europes large consumer base and infrastructure is capable of absorbing available LNG, 1.00 particularly in the power sector where gas-fired power generation…
EUROPEAN NATURAL GAS COAL-TO-GAS SWITCHING /mwh TTF vs COAL-TO-GAS SWITCHING POINT 30.00 The coal-to-gas switching point has historically provided a floor for European gas TTF DA 27.50 prices, although this floor has sometimes been…
EUROPEAN NATURAL GAS LONG TERM OUTLOOK Declining European domestic production results in higher dependence on Global Gas Trade to 2040: European Import Dependence Grows imports Net imports (bcf/d) As % share of demand Groningen…
RISK MANAGEMENT / BALANCE SHEET 39
ANNUAL COMMODITY HEDGE POSITION Full Year 2019 Full Year 2020 WTI Percent of Production Hedged 24% 11% Average Floor / Ceiling / Swap (/bbl) 70.84 / 81.53 / 79.07 70.53 / 80.21 / 78.69 Brent Percent of Production Hedged 49% 3%…
QUARTERLY COMMODITY HEDGE POSITION OIL HEDGES NATURAL GAS HEDGES (/bbl) (/mmbtu) Q1 2019 71.38- 89.26- 74.75 82.63 European Gas North American Gas 99.08 92.40 Q1 2019 8.50 7.58-10.42 Q1 2019 5.21 Swaps 71.27- 88.98- Q2 2019…
CONSERVATIVE BALANCE SHEET CREDIT CAPACITY C2.5 BILLION LEVERAGE RATIOS* AS AT JUNE 30, 2019 4.0 0.6 B 3.0 0.4 B 2.0 1.5 B 1.0 REVOLVING CREDIT FACILITY US Senior Notes 0.0 2003 2004 2005 2006 2007 2008 2009…
CREDIT METRICS YE 2014 YE 2015 YE 2016 YE 2017 YE 2018 Q2 2019 Credit Facility ( millions) 1,750 2,000 2,000 1,400 1,800 2,100 Drawn 1,014 1,163 1,362 900 1,392 1,505 Undrawn 736 837 638 500 408 595 Subordinated Debt ( millions) 225…
USD NOTES HIGH YIELD NOTES PERFORMANCE 11% US HY E&P Energy Index 10% Current Yield-to-Worst: 9.80% Volatility: 0.27 Beta (VET Sr. Notes): 0.26 YIELD-TO-WORST (%) 9% US HY BMI Index 8% Current Yield-to-Worst: 6.01%…
DEBT TO CASH FLOW RATIO 6.0x 5.0x 4.0x 2020E D/CF 3.0x AVERAGE 2.7x 2.0x 1.0x 0.0x ERF TOU ARX ADV WCP VII KEL PEY VET CNQ CPG BIR POU BTE ECA NVA ATH MEG PPY BNP VERMILIONS D/CF RATIO IS BELOW THE CANADIAN…
EUROPEAN ASSETS 46
EUROPEAN CORE AREA NETHERLANDS GERMANY 2 onshore gas producer Establishing production operations and IRELAND Large and growing inventory of drilling opportunities substantial exploratory land position in Corrib field constitutes 95%…
FRANCE Entered France in 1997 PARIS PARIS BASIN Assets characterized by large OOIP conventional fields with high working interest (OOIP in 5 largest fields 1.7 billion barrels of oil) FRANCE Brent indexed production base with…
PARENTIS SUSTAINABILITY PARTNERSHIP Vermilion was the recipient of Frances Circular Economy Award for our project to supply geothermal heat from our oil operation to local greenhouses The award recognizes economically successful…
LA TESTE ECO-NEIGHBOURHOOD Our operations in La Teste, France now support an eco-neighborhood of 550 homes that are heated the same way as the tomato greenhouses, using recycled geothermal energy from our oil operation 30-year…
NETHERLANDS Entered Netherlands in 2004 HARLINGEN 2 onshore gas producer Strong gas price, favorable fiscal regime, and low OPEX enhance netbacks AMSTERDAM High impact natural gas drilling and development NETHERLANDS Doubled…
NETHERLANDS PRODUCTION NETHERLANDS - Expected per well risked economics (based on recent drilling) DCET Well Cost ( million) 9.2 Expected IP30 Rate (boe/d)** 1,690 Expected EUR per well (mboe) ** 1,350 10,000 After Tax ROR (%) 100%…
NETHERLANDS ACTIVITY Vermilion has tripled its undeveloped land base since the beginning of 2012 We have drilled 14 high-rate extension and discovery gas wells since 2009, with an average success rate of approximately 70% over this…
NETHERLANDS 3D SEISMIC Legacy 2D Line Q4 2017 SEISMIC ACQUISITION 310 km2 of new 3D seismic acquired in late 2017 in two concessions near Vermilions core operating area in the Netherlands This new survey has been merged with older…
ROLE OF DOMESTIC GAS IN THE NETHERLANDS Production induced seismicity in the Groningen field, including 3.6/3.4 magnitude earthquakes NETHERLANDS SUPPLY AND DEMAND* in 2012/2018, has raised public concern regarding overall gas…
MIDDENMEER GEOTHERMAL PROJECT Vermilion is planning to convert the Middenmeer gas field to a geothermal project as part of a newly created partnership with local groups The project will be our flagship renewable project in the…
GERMANY COUNTRY OVERVIEW Largest gas market in Europe, with a long history of oil and natural gas development Country-wide production is approximately 48 kbbl/d of oil and 0.75 Bcf/d of natural gas (170k boe/d) Consistent fiscal…
GERMAN EXPLORATION OPPORTUNITIES WE HOLD 26% OF NET LICENSED ACREAGE IN THE NORTH GERMAN BASIN Initial Non-Operated Integrated geoscience/engineering/permitting effort began in 2016 Acquisition Our emphasis is on permeable…
GERMANY PRODUCTION GERMANY Burgmoor Z3 Sidetrack (Non-op gas assets, reflects 25% W.I.) ENGIE ACQUISITION DCET Well Cost ( million) 4.0 (CLOSED DECEMBER IP30 Rate (boe/d)** 350 5,000 EUR per well (mboe)** 780 19, 2016) ADDED…
GERMANY OPERATING PERFORMANCE GERMANY OPERATED OIL ASSETS Operated oil fields acquired by Vermilion at 1,200 the end of 2016 ENGIE ACQUISITION (CLOSED Vermilion has grown production by 30% 1,000 DECEMBER 19, 2016) 680 since the…
IRELAND OVERVIEW Vermilion holds a 20% operated interest in the Corrib gas field, offshore Ireland On July 12, 2017 Vermilion and Canada Pension Plan Investment Board (CPPIB) announced a strategic partnership, whereby CPPIB will…
IRELAND PRODUCTION 12,000 10,000 8,000 6,000 BOE/D 4,000 2,000 0 2015 2016 2017 2018 2019E E&D CAPEX AS % OF FFO* NM 9% 1% 1% 1% Gas EFFICIENT TRANSLATION OF REVENUE FUND FLOWS FROM OPERATIONS FREE CASH FLOW *…
IRELAND FUTURE DEVELOPMENT OPPORTUNITIES Future development opportunities include: Reperforation of bypassed pay in existing well bores (mean estimate of 7 bcf of recoverable gas with P10 upside to 12 bcf) Side-track of existing…
CENTRAL AND EASTERN EUROPE (CEE) EXTENSION OF EUROPEAN GROWTH STRATEGY Modest back-loaded capital commitments Prospective for both oil and gas Under-invested basin that can benefit from new technology HUNGARY Awarded South…
2019 YTD CEE DRILLING In Hungary, we have drilled four (3.3 net) exploration wells in 2019 Dombiratos-1 commitment well (1.0 net) was a dry hole Hajdubagos-1 well (1.0 net) encountered 15 feet of net gas pay and In Croatia, we…
UKRAINE Awarded two exploration licenses totaling approximately 500,000 gross acres in Ukraine, in a 50/50 partnership with Ukrgazvydobuvannya (UGV), a Ukrainian state owned gas producer Partnership includes access to technical…
NORTH AMERICAN ASSETS 71
NORTH AMERICAN PROJECT RANKING Mannville Ellerslie Condy PROJECT RANKING BY ATAX IRR 100% (2019E - 17 Net Wells) WY Turner Sand Unfracked Frobisher / Alida (2019E - 8 Net Wells) (2019E - 64 Net Wells) 80% SE Sask Bakken SE Sask…
NORTH AMERICAN PRODUCTION 70,000 60,000 50,000 40,000 BOE/D 30,000 20,000 10,000 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E E&D CAPEX AS % OF FFO* 21% 36% 67% 58% 31% 76%…
CANADA Production and assets are focused in West Central Alberta and SE Saskatchewan In West Pembina, potential for three significant development projects with a land position of over 410,000 net acres sharing surface…
ALBERTA NOTIKEWIN Industry Mannville Horizontals Key Oil Battery 375 net sections (240,000 acres) of Mannville rights, Key Gas Plant Key Compressor largely held by production VET Gas Pipeline 64 net West Pembina (Lower Mannville…
LOWER MANNVILLE (ELLERSLIE) / UPPER MANNVILLE (NOTIKEWIN / FALHER) LOWER MANNVILLE WELL PERFORMANCE* UPPER MANNVILLE WELL PERFORMANCE* 2,000 3,000 Lower Mannville (Ellerslie) 2,500 1,600 Type Curve 2,000 1,200 BOE/D…
SOUTHEAST SASKATCHEWAN Entered SE Saskatchewan through the acquisition of Elkhorn Resources Inc. in 2014, with further land added subsequent to acquisition Acquired Spartan Energy May 2018, adding over 400,000 net acres to our SE SK…
SE SASKATCHEWAN LAND POSITION Entered SE Saskatchewan through the acquisition of Elkhorn Resources Inc. in 2014, with further land added subsequent to acquisition Acquired Spartan Energy May 2018, adding over 400,000 net acres to…
FRAC MIDALE / OPEN HOLE FROBISHER FRAC MIDALE WELL PERFORMANCE OPEN HOLE FROBISHER WELL PERFORMANCE 500 400 400 300 Frac Midale Type Curve 300 Open Hole Frobisher Type Curve BBL/D BBL/D 200 200 100 100 0 0 1 2 3…
UNITED STATES PRODUCTION 6,000 5,000 4,000 BOE/D 3,000 2,000 1,000 0 2014 2015 2016 2017 2018 2019E E&D CAPEX AS % OF ATAX NOI* 64% 535% 353% 204% 186% 90% Crude Oil & NGL Gas POWDER RIVER BASIN PROVIDES…
UNITED STATES WYOMING DEVELOPMENT PRB STRAT COLUMN Entered U.S. in 2014 Lance Fm Fox Hills Fm Early stage light oil growth project in the Powder River Basin of Lewis Shale Teckla SS Mesaverde northeastern Wyoming Fm…
HILIGHT / EAST FINN HILIGHT TURNER HZ PRODUCTION PROFILES* EAST FINN TURNER SAND WELL PERFORMANCE 1,000 500 OIL PRODUCTION (BOPD) OIL PRODUCTION (BOPD) 800 400 Turner Hz 275 MBO Type Curve 600 300 400 200 200 100 0…
AUSTRALIAN ASSETS 84
AUSTRALIA Entered Australia in 2005 Offshore oil field 80 km N.W. of Australia (55 m water depth) Horizontal well development with 20 wellbores and five lateral sidetracks Wells 600m below sea bed with 1,500 - 3,700 m measured…
AUSTRALIA PRODUCTION AUSTRALIA - per well economics* based on performance of 2013-2016 drilling programs DCET Well Cost ( million) 25.6 IP30 Rate (boe/d) 4,400 EUR per well (mboe) 1,000 12,000 After Tax ROR (%) 100% After Tax…
AUSTRALIA OPERATING PERFORMANCE VALUE CREATION (2P RESERVES)* MMBOE Acquisition Date Reserves Reserves at initial acquisition (2005) 26.7 16,000 Total Acquisition Date Reserves 26.7 14,000 Production to YE 2018 34.3 Reserves at YE…
AUSTRALIA ACTIVITY Oil is trapped above and between existing wells, creating opportunity to drill to a higher structural elevation and between existing wells to capture attic, flank and undrained oil 10 additional drilling…
CORPORATE CITIZENSHIP 89
GOVERNANCE Vermilions external awards and recognition provide important benchmarks for our strong performance The Globe and Mail, Report on Business, Board Games In 2018, Vermilion ranked 2nd within the oil and gas sector, and among…
EMPLOYEE AND DIRECTOR OWNERSHIP Pay-for-performance is the foundation of our approach to compensation, both at the executive and employee level. All employees participate in Vermilions equity-based Long-Term Incentive Plan (LTIP),…
HEALTH, SAFETY AND ENVIRONMENT (HSE) PHILOSOPHY Safety, environmental protection, and regulatory compliance go hand-in-hand with VERMILIONS PRIORITIES maximizing profitability WE CONDUCT ALL ACTIVITIES TO: These priorities should…
EMISSIONS EFFICIENCY MEASURES CO2e VS REVENUE* CO2e VS PRODUCTION* 2,500 45 40 2,000 35 CO2e / PRODUCTION (t / MBOE / D) CO2e / REVENUE (t / M) 30 1,500 25 20 1,000 15 500 10 5 0 0 NVA PEY PEY…
CDP (CARBON DISCLOSURE PROJECT) CDP (formerly Carbon Disclosure Project) is CO2e EMISSIONS INTENSITY PER BOE an international environmental organization 0.04 that collects data about carbon emissions and tCO2e per BOE 0.03…
STRATEGIC COMMUNITY INVESTMENT Vermilion is committed to giving back Canada France Netherlands Australia Ireland to the communities in which we operate We assess the critical needs in each community, and determine where our…
CORPORATE CULTURE GREAT PLACE TO WORK INSTITUTES ANNUAL RANKING Great Place to Work Institute evaluates companies by analyzing results of a confidential Trust Index survey provided to employees and evaluating the workplace through a…
RECORD OF VALUE CREATION 97
VALUE CREATION 1994 2019 8,000 6,000 TOTAL VALUE 4,000 3,034 CREATION OF 3,460 MILLIONS 2,000 MARKET CAPITALIZATION(2) 3,551 0 EQUITY DIVIDENDS ISSUED(1) PAID(2) (2,000) (3,125) (4,000) MORE THAN 20-YEAR RECORD…
RETURN ON CAPITAL EMPLOYED 10 YEAR TOTAL RETURN VERSUS 10 YEAR AVERAGE ROCE 100% SU VET CNQ 50% FRU TOTAL RETURN (%) TVE PEY 0% POU IMO KEL TOU ERF PSK ARX BIR VII -50% NVA CVE CPG ECA TOG MEG BTE -100% -20% -15%…
ESG AND SHAREHOLDER RETURNS Sustainability performance is integral to our business and is positively correlated to our strong shareholder returns 5-Yr Total Return vs. Sustainalytics Rank 5-Yr Total Return vs CDP Score 5-Yr Total…
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