CALGARY, Aug. 8, 2016 /CNW/ - Vermilion Energy Inc.
("Vermilion", "We", "Our", "Us" or the "Company") (TSX, NYSE: VET)
is pleased to report operating and unaudited financial results for
the three and six months ended June 30, 2016.
The unaudited financial statements and management discussion and
analysis for the three and six months ended June 30, 2016,
will be available on the System for Electronic Document Analysis
and Retrieval ("SEDAR") at www.sedar.com, on EDGAR at
www.sec.gov/edgar.shtml, and on Vermilion's website at
www.vermilionenergy.com.
HIGHLIGHTS
- Achieved average production of 64,285 boe/d during Q2 2016, a
decrease of 2% as compared to 65,389 boe/d in the prior quarter.
Production increased 24% from 51,831 boe/d in Q2 2015, with higher
volumes from our Irish, Netherlands, Australian, Canadian and US
business units.
- Fund flows from operations ("FFO") for Q2 2016 was $126.6 million ($1.10/basic share(1)), an increase of
35% quarter-over-quarter and a 2% decrease year-over-year. The
quarter-over-quarter increase in FFO was attributable to higher
commodity prices and lower operating expenses from our ongoing
focus on cost reduction initiatives.
- Irish production continued to ramp up during the quarter, with
better than expected well deliverability and minimal downtime at
Corrib since start up on December 30,
2015. With five of the six wells currently online,
production averaged 47 mmcf/d (7,877 boe/d) net to Vermilion during
Q2 2016, an increase of 39% versus the prior quarter. Following
recertification activities associated with the third party gas
distribution pipeline network during the quarter, production
volumes at Corrib reached full plant capacity of approximately 65
mmcf/d (10,900 boe/d), net to Vermilion at the end of Q2 2016.
- Completed our two-well sidetrack drilling program in
Australia during the quarter. Both
wells were drilled from the Wandoo B platform. The first well was
placed on production at the end of June at an average rate of 2,000
bbls/d for the first month of production, with the second well
placed on production during the last week of July at an average
rate of 2,700 bbls/d.
- On June 28, Vermilion entered
into a definitive purchase and sale agreement for operated and
non-operated interests in five oil and three gas producing fields
in Germany from Engie E&P
Deutschland GmbH, for total consideration of €33 million
($47.9 million), with an expected
closing date in Q4 2016. Vermilion will assume operatorship of six
of the eight producing fields. The assets are expected to produce
approximately 2,000 boe/d (50% oil) in 2016. Proved plus probable
reserves are estimated at 9.2 million boe(2) (74% proved
developed producing(2)) based on an independent
evaluation by GLJ Petroleum Consultants Ltd. with an effective date
of December 31, 2015. Transaction
metrics are estimated at approximately $24,000 per boe per day, $5.86 per boe of proved plus probable
reserves(2) including future development capital
(generating a 2P recycle ratio of 3.5 times based on projected 2016
netbacks), and 3.1 times estimated 2016 operating cash
flow(1). The acquisition is expected to be accretive for
all pertinent per share metrics including production, fund flows
from operations(2), reserves and net asset value. The
acquisition adds another low decline rate (approximately 10%) asset
to our portfolio, and provides us with our first operated producing
properties in Germany, further
strengthening our presence in the country.
- Our Profitability Enhancement Program ("PEP") initiative
continues to generate tangible results, further strengthening our
balance sheet and enhancing the long-term profitability of our
business. PEP cost savings related to capital spending, operating
expenses and G&A expenditures reached nearly $90 million for full-year 2015, and we expect to
deliver a further $40 to $50 million
of cost reductions for 2016. Year to date, we have reduced unit
operating costs by 18% versus the prior year. Looking forward, we
anticipate full-year unit operating expense to be lower than 2015,
which would result in four consecutive years of improvement in unit
operating costs, reflecting both increased volumes and our reduced
cost structure.
- Cost reductions in our project portfolio have allowed us to
reinstate several projects to our capital program during the latter
part of 2016 with only a modest change to our 2016 capital budget.
Additions include the reinstatement of a four-well drilling program
in the Champotran field in France,
three (3.0 net) Cardium wells, and seven (4.0 net) Mannville wells in Canada. As a result of these additions, we
expect to invest $240 million on
exploration and development ("E&D") capital during 2016, as
compared to our previous guidance of $235
million. Because the additions will occur in the latter part
of the year, they will have little impact on 2016 production.
Consequently, our full year production guidance of 62,500 to 63,500
boe/d, representing 10% per share production growth year-over-year,
remains unchanged. We expect to produce at the upper end of this
production guidance range.
- As part of an ongoing effort to better define and disclose our
future growth profile, we have accelerated certain parts of our
annual budgeting process and expanded our efforts to look at the
next two years instead of just 2017. While we will not disclose our
formal budget guidance until late 2016, we are able to set
approximate targets now for the next two years based on current
forward commodity prices. At present, subject to unexpected changes
in the commodity price outlook, we anticipate investing E&D
capital of approximately $295 million
in 2017 and $335 million in 2018.
With these projected investment levels, we expect to deliver
production of 69,000 to 70,000 boe/d in 2017 and 75,000 to 76,000
boe/d in 2018, representing year-over-year increases of
approximately 9% for both years. A summary of our drilling
locations by region and major play type can be found in our updated
August 2016 investor presentation,
located on the company website.
- We plan to start prorating the Premium DividendTM
component of our Dividend Reinvestment Plan by 25% in Q4 2016,
beginning with our October dividend. Eligible shareholders who have
elected to participate in the Premium DividendTM
component will continue to receive a 1.5% premium on 75% of their
shares, and will receive the regular cash dividend on the remaining
25% of their shares. Subject to unexpected changes in the commodity
price outlook, it is our intent to continue increasing the
proration during 2017, at the end of which there would be no
further equity issuance under the Premium DividendTM
component of our Dividend Reinvestment Plan.
- On June 9, 2016, the four
exploration blocks conditionally granted to Vermilion were ratified
by the Republic of Croatia. The
exploration blocks consist of approximately 2.35 million gross
acres (100% working interest), with a substantial portion of the
acreage located near existing crude oil and natural gas fields in
northeast Croatia. Work
obligations include typical exploration and appraisal activity with
modest, back-loaded capital commitments. The initial five-year
exploration period consists of two phases with an option to
relinquish the blocks following the initial three-year phase.
- Vermilion's MSCI ESG (Environment, Social and Governance)
rating increased from BB to BBB for 2016, and our Governance
Metrics score ranked in the 90th percentile globally. This follows
our 9th-place ranking in the 2016 Corporate Knights Future 40
Responsible Corporate Leaders in Canada list (the highest ranking for an oil
and gas company). These recognitions reflect Vermilion's continued
focus on combining financial results with exemplary environmental,
social and governance performance. Please refer to our
Sustainability Report at http://sustainability.vermilionenergy.com/
for more information about our environmental and social
stewardship. We expect to release our next Sustainability Report in
August 2016.
(1)
|
Non-GAAP Financial Measure.
Please see the "Non-GAAP Financial Measures" section of
Management's Discussion and
Analysis.
|
(2)
|
Estimated proved plus
probable and proved developed producing reserves attributable to
the assets as evaluated by GLJ Petroleum Consultants Ltd. in a
report dated June 27, 2016 with an effective date of December 31,
2015.
|
TMdenotes
trademark of Canaccord Genuity Capital
Corporation.
|
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
($M except as
indicated)
Financial
|
Jun 30,
2016
|
Mar 31,
2016
|
Jun 30,
2015
|
|
|
Jun 30,
2016
|
Jun 30,
2015
|
Petroleum and natural gas
sales
|
212,855
|
177,385
|
264,331
|
|
|
390,240
|
460,216
|
Fund flows from
operations
|
126,568
|
93,667
|
129,496
|
|
|
220,235
|
250,291
|
|
Fund flows from operations ($/basic share)
(1)
|
1.10
|
0.83
|
1.18
|
|
|
1.93
|
2.31
|
|
Fund flows from operations ($/diluted share)
(1)
|
1.09
|
0.82
|
1.17
|
|
|
1.91
|
2.28
|
Net (loss)
earnings
|
(55,696)
|
(85,848)
|
6,813
|
|
|
(141,544)
|
8,088
|
|
Net (loss) earnings ($/basic
share)
|
(0.48)
|
(0.76)
|
0.06
|
|
|
(1.24)
|
0.07
|
Capital
expenditures
|
71,714
|
62,773
|
90,173
|
|
|
134,487
|
264,484
|
Acquisitions
|
8,550
|
870
|
480
|
|
|
9,420
|
515
|
Asset retirement obligations
settled
|
2,200
|
2,024
|
1,218
|
|
|
4,224
|
4,325
|
Cash dividends
($/share)
|
0.645
|
0.645
|
0.645
|
|
|
1.290
|
1.290
|
Dividends
declared
|
74,662
|
72,847
|
70,976
|
|
|
147,509
|
140,366
|
|
%
of fund flows from
operations
|
59%
|
78%
|
55%
|
|
|
67%
|
56%
|
Net dividends
(1)
|
24,146
|
24,857
|
28,675
|
|
|
49,003
|
76,687
|
|
%
of fund flows from
operations
|
19%
|
27%
|
22%
|
|
|
22%
|
31%
|
Payout
(1)
|
98,060
|
89,654
|
120,066
|
|
|
187,714
|
345,496
|
|
%
of fund flows from
operations
|
78%
|
96%
|
93%
|
|
|
85%
|
138%
|
|
%
of fund flows from operations (excluding the Corrib project)
(1)
|
N/A
|
N/A
|
76%
|
|
|
N/A
|
123%
|
Net
debt
|
1,398,950
|
1,367,063
|
1,377,902
|
|
|
1,398,950
|
1,377,902
|
Ratio of net debt to annualized fund flows from
operations
|
2.8
|
3.6
|
2.7
|
|
|
3.2
|
2.8
|
Operational
|
Production
|
|
|
|
|
|
|
|
|
Crude oil and condensate
(bbls/d)
|
28,416
|
29,199
|
30,689
|
|
|
28,808
|
30,104
|
|
NGLs
(bbls/d)
|
2,713
|
2,672
|
2,094
|
|
|
2,693
|
1,901
|
|
Natural gas
(mmcf/d)
|
198.93
|
201.11
|
114.29
|
|
|
200.02
|
114.64
|
|
Total
(boe/d)
|
64,285
|
65,389
|
51,831
|
|
|
64,837
|
51,113
|
Average realized
prices
|
|
|
|
|
|
|
|
|
Crude oil, condensate and NGLs
($/bbl)
|
53.90
|
39.35
|
68.90
|
|
|
46.63
|
64.23
|
|
Natural gas
($/mcf)
|
3.53
|
3.76
|
4.86
|
|
|
3.65
|
5.06
|
Production mix (% of
production)
|
|
|
|
|
|
|
|
|
%
priced with reference to
WTI
|
20%
|
20%
|
27%
|
|
|
20%
|
27%
|
|
%
priced with reference to
AECO
|
22%
|
25%
|
21%
|
|
|
24%
|
21%
|
|
%
priced with reference to TTF and
NBP
|
29%
|
26%
|
16%
|
|
|
28%
|
17%
|
|
%
priced with reference to Dated
Brent
|
29%
|
29%
|
36%
|
|
|
28%
|
35%
|
Netbacks
($/boe)
|
|
|
|
|
|
|
|
|
Operating
netback
|
27.66
|
21.63
|
36.89
|
|
|
24.64
|
34.30
|
|
Fund flows from operations
netback
|
21.90
|
16.12
|
26.76
|
|
|
19.00
|
27.83
|
|
Operating
expenses
|
9.02
|
9.58
|
12.12
|
|
|
9.30
|
11.40
|
Average reference
prices
|
|
|
|
|
|
|
|
|
WTI (US
$/bbl)
|
45.59
|
33.45
|
57.94
|
|
|
39.52
|
53.29
|
|
Edmonton Sweet index (US
$/bbl)
|
42.51
|
29.76
|
55.08
|
|
|
36.13
|
48.46
|
|
Dated Brent (US
$/bbl)
|
45.57
|
33.89
|
61.92
|
|
|
39.73
|
57.95
|
|
AECO
($/mmbtu)
|
1.40
|
1.83
|
2.65
|
|
|
1.61
|
2.70
|
|
NBP
($/mmbtu)
|
5.78
|
5.97
|
8.42
|
|
|
5.88
|
8.71
|
|
TTF
($/mmbtu)
|
5.61
|
5.70
|
8.38
|
|
|
5.66
|
8.54
|
Average foreign currency exchange
rates
|
|
|
|
|
|
|
|
|
CDN $/US
$
|
1.29
|
1.37
|
1.23
|
|
|
1.33
|
1.24
|
|
CDN
$/Euro
|
1.46
|
1.52
|
1.36
|
|
|
1.49
|
1.38
|
Share information
('000s)
|
Shares outstanding -
basic
|
116,173
|
113,451
|
109,806
|
|
|
116,173
|
109,806
|
Shares outstanding - diluted
(1)
|
118,948
|
116,491
|
112,626
|
|
|
118,948
|
112,626
|
Weighted average shares outstanding -
basic
|
115,366
|
112,725
|
109,319
|
|
|
114,046
|
108,421
|
Weighted average shares outstanding - diluted
(1)
|
116,587
|
114,110
|
110,746
|
|
|
115,090
|
109,792
|
(1)
|
The above table includes
non-GAAP financial measures which may not be comparable to other
companies. Please see the "NON-GAAP FINANCIAL MEASURES"
section of Management's Discussion and
Analysis.
|
MESSAGE TO SHAREHOLDERS
Over the past two years of significantly lower commodity prices,
Vermilion's course and priorities have remained consistent.
Our priorities are to maintain a strong balance sheet, protect our
dividend, and to provide for future production growth, in that
order. Despite the challenging pricing environment, we have
been able to achieve all of these objectives.
Following our disciplined approach to financial management, we
remain committed to running a sustainable growth-and-income
business model. We are managing our business based on the
current commodity strip price, and have structured our spending so
that fund flows from operations will match or exceed cash outflows
for net dividends and exploration and development ("E&D")
capital expenditures. Based on current strip prices, we
project a 2016 payout of approximately 80%, which provides cash
flow to fund our first priority, strengthening the balance sheet
through debt reduction.
Our Profitability Enhancement Program ("PEP") initiative
continues to generate tangible results, further strengthening our
balance sheet and enhancing the long-term profitability of our
business. PEP cost savings related to capital spending,
operating expenses and G&A expenditures reached nearly
$90 million for full-year 2015, and
we expect to deliver a further $40 to $50
million of cost reductions for 2016. Year-to-date, we
have reduced unit operating expenses by 18% versus the prior
year. Looking forward, we anticipate full-year unit operating
expense to be lower than 2015, which would result in four
consecutive years of unit operating cost improvement, reflecting
both increased volumes and our reduced cost structure.
Another initiative in response to low commodity prices is the
Premium DividendTM Component of our Dividend
Reinvestment Plan, which we implemented in early 2015 as a
short-term measure to preserve our financial flexibility and to
conservatively and inexpensively access equity capital. We
plan to start prorating the Premium DividendTM by 25% in
Q4 2016. Subject to unexpected changes in the commodity price
outlook, it is our intent to continue increasing the proration
during 2017, at the end of which there would be no further equity
issuance under the Premium DividendTM component of our
Dividend Reinvestment Plan.
Last quarter, we reiterated our intention to adhere closely to
our announced $235 million E&D
capital budget for 2016. This budget represents a decrease of
over 50% from 2015 and more than 65% from 2014 capital expenditure
levels. Despite this significant reduction in capital
investment and the voluntary reduction of over 2,000 boe/d of gas
production in Canada currently
(approximately 1,000 boe/d on an annual basis for 2016) with the
objective of achieving higher prices this winter, we still
anticipate achieving production of between 62,500 to 63,500 boe/d,
representing 15% year-over-year production growth, or nearly 10%
growth on a per share basis. Due to continuing improvements
in the cost efficiency of our capital projects, we have been able
to add additional capital activities to our 2016 capital plan with
only a $5 million increase to our
E&D capital budget, bringing it to $240
million for 2016. Additional activities include the
reinstatement of a four-well drilling program in the Champotran
field in France, three (3.0 net)
Cardium wells, and seven (4.0 net) Mannville wells in Canada. Vermilion's
international exposure and diversified project inventory provides
the flexibility to react to changing conditions and selectively
allocate capital to the highest rate of return projects. This
advantage is even more evident during times of restricted capital
availability.
Having focused on our long-term priorities of protecting our
balance sheet, defending our dividend, and continuing to invest in
long-term growth, Vermilion is positioned to excel when commodity
prices move off the lows recorded earlier this year. As part
of an ongoing effort to better define and disclose our future
growth profile, we have accelerated certain parts of our annual
budgeting process and expanded our efforts to look at our potential
budgets for the next two years, instead of just 2017. While
we will not disclose our formal budget guidance until late in 2016,
we are able to set approximate targets now for the next two years
based on current forward commodity prices. At present,
subject to unexpected changes in the commodity price outlook, we
anticipate investing E&D capital of approximately $295 million in 2017 and approximately
$335 million in 2018. With
these projected investment levels, we expect to deliver production
of 69,000 to 70,000 boe/d in 2017 and 75,000 to 76,000 boe/d in
2018, representing year-over-year increases of 9% for both
years. We believe that the depth and capital efficiency of
our portfolio of assets and projects has never been stronger.
Over the long-term, we continue to target consistent organic
production growth with only a modest increase in capital
investment. A summary of our drilling locations by region and
major play type can be found in our updated August 2016 investor presentation, located on the
company website.
OPERATIONS REVIEW
Europe
In France, we have reinstated a
four-well drilling program in Champotran. This program will
follow on three consecutive years of Champotran drilling campaigns,
where we have drilled 14 wells to date with a 100% success
rate. As with our other highly-economic workover and
waterflood activities in France,
Champotran drilling targets favourably priced Brent crude
production and generates strong capital efficiencies.
Subsequent to quarter end, we spudded the first well in our two
(0.9 net) well drilling program in the Netherlands. As we
announced last quarter, we were able to add this activity back into
our $235 million capital budget by
finding investment and cost reductions elsewhere in our
budget. The prolific nature of the wells and the premium
price received for our European gas, generate rates of return in
excess of 100% for drilling projects in the Netherlands at current prices. Our
plan is to drill the Langezwaag-03 (42% working interest) and
Andel-6ST (45% working interest) wells during Q3 2016. If
successful, we expect to bring the wells on-stream in the latter
part of 2016.
In Germany, we entered into a
definitive purchase and sale agreement for operated and
non-operated interests in five oil and three gas producing fields
from Engie E&P Deutschland GmbH, for total consideration of €33
million ($47.9 million). The
acquisition will be funded through existing credit facilities and
is expected to close in late 2016. Vermilion will assume
operatorship of six of the eight producing fields. The assets
are expected to produce approximately 2,000 boe/d (50% oil) in
2016. Proved plus probable reserves are estimated at 9.2
million boe(2) (74% proved developed
producing(2)) based on an independent evaluation by GLJ
Petroleum Consultants Ltd. with an effective date of December 31, 2015. Transaction metrics are
estimated at approximately $24,000
per boe per day, $5.86 per boe of
proved plus probable reserves(2) including future
development capital (generating a 2P recycle ratio of 3.5 times
based on projected 2016 netbacks), and 3.1 times estimated 2016
operating cash flow(1). The acquisition is
expected to be accretive for all pertinent per share metrics
including production, fund flows from operations(2),
reserves and net asset value.
The Engie acquisition adds another low decline rate
(approximately 10%) asset to our portfolio, and provides us with
our first operated producing properties in Germany. The
producing assets and lands to be acquired are natural extensions to
our steadily expanding land base in the North German Basin, which
is the dominant producing region in Germany. The development
opportunities and subsurface characteristics of the acquired assets
are similar to our existing European portfolio, including a number
of low-risk optimization and workover opportunities from which we
expect to maintain a flat-to-moderately growing production profile
while generating free cash flow(1). In addition,
we have identified development and exploration drilling
opportunities that are not included in our current reserves
estimate. Vermilion entered Germany in early 2014 through the acquisition
of a 25% non-operating interest in a four-partner consortium.
In July 2015, we executed a
significant exploratory farm-in that provides us with participating
interest in over 850,000 net acres of undeveloped land, as well as
access to key technical data in the North German Basin. This
acquisition significantly advances our objective of developing a
material business unit in Germany, a country with a long
history of oil and natural gas development, a consistent fiscal
framework and low political risk.
The four exploration blocks conditionally granted to Vermilion
in 2015 were ratified by the Republic of
Croatia on June 9, 2016.
The blocks cover approximately 2.35 million gross acres, with a
substantial portion of the acreage located near existing crude oil
and natural gas fields in northeast Croatia near the Hungarian border.
Capital commitments are modest and back-loaded. The initial
5-year exploration period consists of two phases with an option to
relinquish the blocks following the initial 3-year phase. The
ratification makes Vermilion the largest onshore landholder in
Croatia. Like our concessions in Hungary, the assets in Croatia are located in the under-developed
Pannonian basin and are well-positioned to benefit from renewed
investment and new technology.
Since the initiation of first gas at Corrib in Ireland on December 30,
2015, project ramp up has exceeded our expectations in terms
of uptime and well deliverability. Net to Vermilion,
production averaged approximately 34 mmcf/d (5,650 boe/d) in Q1
2016, 47 mmcf/d (7,877 boe/d) in Q2 2016, and reached full plant
capacity of approximately 65 mmcf/d (10,900 boe/d) at the end of Q2
2016. During the quarter, planned recertification activities
associated with the third party gas distribution pipeline network
were completed, as well as some subsea inspections, maintenance and
repairs on the subsea systems. Currently, five of the six
wells are on production, with the final well to be brought online
in Q3 2016 following the conclusion of an offshore work program to
lay a pipeline to the sixth well.
Australia
Following our successful sidetrack well drilled in Q4 2015, we
executed a two-well drilling program in Q2 2016. The wells
drilled at Wandoo are extreme long-reach lateral wells. While
having true vertical depths of only 600 metres, the two most recent
sidetrack wells have measured depths of nearly 3,000 metres and
3,800 metres, respectively. We are pleased that our 2016
Australia drilling program came in under budget, while meeting all
operational and health, safety and environmental objectives.
The first well was placed on production at the end of June at an
average rate of 2,000 bbls/d for the first month of production,
with the second well placed on production in during the last week
of July at an average rate of 2,700 bbls/d. Both wells have
been produced at restricted rates to manage production levels and
limit early-stage well drawdown Although we do not
anticipate the need to drill another well until 2019, we may
consider drilling one additional sidetrack well in 2017 or 2018,
should rig availability on the northwest shelf and favourable day
rates make such an investment particularly attractive.
North America
Q2 2016 capital activities in Canada and the
United States were limited, as our 2016 capital plan focused
on drilling land expiries on our operated properties and
participating in wells proposed by our partners on non-operated
properties. We currently have approximately 12 mmcf/d (2,000
boe/d) of gas-weighted production voluntarily curtailed in response
to low AECO prices, with the intent of achieving greater value by
bringing this production back on when gas prices improve.
Similarly, we have deferred completion into 2017 for our four (4.0
net) operated Midale oil wells
drilled in southeast Saskatchewan
drilled earlier in 2016. While the wells are economic to
drill, complete, and tie in at current prices, we believe that net
present value will be enhanced by delaying completion and tie-in
until oil prices increase from their current level.
Sustainability, Governance and Culture
Vermilion's MSCI ESG (Environment, Social and Governance) rating
increased from BB to BBB and our Governance Metrics score for 2016
ranks in the 90th percentile globally. This follows our
9th-place ranking in the 2016 Corporate Knights Future 40
Responsible Corporate Leaders in Canada list (the highest ranking for an oil
and gas company). Recognition such as this reflects
Vermilion's continued focus on combining financial results with
exemplary environmental, social and governance performance.
Our next Sustainability Report is expected to be released in
August 2016, which will have further
information about our environmental and social stewardship.
(1)
|
Non-GAAP Financial
Measure. Please see the "Non-GAAP Financial Measures" section
of Management's Discussion and
Analysis.
|
(2)
|
Estimated proved plus
probable and proved developed producing reserves attributable to
the assets as evaluated by GLJ Petroleum Consultants Ltd. in a
report dated June 27, 2016 with an effective date of December 31,
2015.
|
TM denotes
trademark of Canaccord Genuity Capital
Corporation.
|
ORGANIZATIONAL UPDATE
John Donovan, formerly Executive
Vice President of Business Development, has retired from
Vermilion. We appreciate John's contributions to Vermilion,
and wish him the best in the future. Leadership of our
business development effort has been assumed by Jenson Tan, who has transitioned from his
previous role of Director of New Ventures to Director of Business
Development. Jenson joined Vermilion in 2010, and has played
a key role in acquisitions within our legacy European businesses
and our entries into Germany and
Central and Eastern Europe. He was previously with
ConocoPhillips Canada, where he was Asset Team Leader for fields in
Alberta and Saskatchewan, following earlier assignments
with ConocoPhillips in the US, China and Indonesia. Jenson received a
Bachelor of Science degree in Petroleum Engineering from the
University of Texas.
2016 GUIDANCE
On November 9, 2015 we announced
preliminary 2016 capital expenditure guidance of $350 million and production guidance of between
63,000-65,000 boe/d. On January 5,
2016, in response to the continued weakness in commodity
prices we reduced our 2016 capital expenditure guidance to
$285 million with corresponding
production guidance of 62,500-63,500 boe/d. On February 29, 2016, we further revised our 2016
capital expenditure guidance to $235
million as a result of continued commodity price
deterioration. We maintained our production guidance of
62,500-63,500 boe/d. The February 29,
2016 reduction primarily reflected lower expected
non-operated drilling activity in Canada, fewer workovers in France, and a deferral of our Netherlands pipeline twinning program.
On August 8, 2016, we modestly
increased our 2016 capital expenditure guidance to $240 million with the reinstatement of a
four-well drilling program in the Champotran field in France and added drilling activity in
Canada, partially offset by
capital cost savings achieved to date.
The following table summarizes our 2016 guidance:
|
|
Date
|
Capital Expenditures
($MM)
|
Production
(boe/d)
|
2016
Guidance
|
|
|
|
2016
Guidance
|
November 9,
2015
|
350
|
63,000 to
65,000
|
2016
Guidance
|
January 5,
2016
|
285
|
62,500 to
63,500
|
2016
Guidance
|
February 29,
2016
|
235
|
62,500 to
63,500
|
2016
Guidance
|
August 8,
2016
|
240
|
62,500 to
63,500
|
Conference Call and Audio Webcast Details
Vermilion will discuss these results in a conference call to be
held on Monday, August 8, 2016 at
9:00 AM MST (11:00 AM EST). To participate, you may call
1-888-231-8191 (Canada and US Toll
Free) or 1-647-427-7450 (International and Toronto Area). The conference call will
also be available on replay by calling 1-855-859-2056 using
conference ID number 46839068. The replay will be available
until midnight mountain time on
August 15, 2016.
You may also listen to the audio webcast by clicking
http://event.on24.com/r.htm?e=1222046&s=1&k=37804B2464A94546769FA13BF5CADFB8
or visit Vermilion's website at
www.vermilionenergy.com/ir/eventspresentations.cfm.
About Vermilion
Vermilion is an international energy producer that seeks to
create value through the acquisition, exploration, development and
optimization of producing properties in North America, Europe and Australia. Our business model targets annual
organic production growth, along with providing reliable and
increasing dividends to investors. Vermilion is targeting growth in
production primarily through the exploitation of light oil and
liquids-rich natural gas conventional resource plays in
Canada and the United States, the exploration and
development of high impact natural gas opportunities in
the Netherlands and Germany, and through oil drilling and workover
programs in France and
Australia. Vermilion also holds an
18.5% working interest in the Corrib gas field in Ireland. Vermilion pays a monthly dividend of
Canadian $0.215 per share, which
provides a current yield of approximately 6%. Management and
directors of Vermilion hold approximately 6% of the outstanding
shares, are committed to consistently delivering superior rewards
for all stakeholders, and have delivered a 20-year history of
market outperformance. Vermilion trades on the Toronto Stock
Exchange and the New York Stock Exchange under the symbol VET.
DISCLAIMER
Certain statements included or incorporated by reference in this
document may constitute forward looking statements or financial
outlooks under applicable securities legislation. Such
forward looking statements or information typically contain
statements with words such as "anticipate", "believe", "expect",
"plan", "intend", "estimate", "propose", or similar words
suggesting future outcomes or statements regarding an
outlook. Forward looking statements or information in this
document may include, but are not limited to: capital expenditures;
business strategies and objectives; operational and financial
performance; estimated reserve quantities and the discounted net
present value of future net revenue from such reserves; petroleum
and natural gas sales; future production levels (including the
timing thereof) and rates of average annual production growth;
exploration and development plans; acquisition and disposition
plans and the timing thereof; operating and other expenses,
including the payment and amount of future dividends; royalty and
income tax rates; and the timing of regulatory proceedings and
approvals.
Such forward looking statements or information are based on a
number of assumptions, all or any of which may prove to be
incorrect. In addition to any other assumptions identified in
this document, assumptions have been made regarding, among other
things: the ability of Vermilion to obtain equipment, services and
supplies in a timely manner to carry out its activities in
Canada and internationally; the
ability of Vermilion to market crude oil, natural gas liquids, and
natural gas successfully to current and new customers; the timing
and costs of pipeline and storage facility construction and
expansion and the ability to secure adequate product
transportation; the timely receipt of required regulatory
approvals; the ability of Vermilion to obtain financing on
acceptable terms; foreign currency exchange rates and interest
rates; future crude oil, natural gas liquids, and natural gas
prices; and management's expectations relating to the timing and
results of exploration and development activities.
Although Vermilion believes that the expectations reflected in
such forward looking statements or information are reasonable,
undue reliance should not be placed on forward looking statements
because Vermilion can give no assurance that such expectations will
prove to be correct. Financial outlooks are provided for the
purpose of understanding Vermilion's financial position and
business objectives, and the information may not be appropriate for
other purposes. Forward looking statements or information are
based on current expectations, estimates, and projections that
involve a number of risks and uncertainties which could cause
actual results to differ materially from those anticipated by
Vermilion and described in the forward looking statements or
information. These risks and uncertainties include, but are
not limited to: the ability of management to execute its business
plan; the risks of the oil and gas industry, both domestically and
internationally, such as operational risks in exploring for,
developing and producing crude oil, natural gas liquids, and
natural gas; risks and uncertainties involving geology of crude
oil, natural gas liquids, and natural gas deposits; risks inherent
in Vermilion's marketing operations, including credit risk; the
uncertainty of reserves estimates and reserves life and estimates
of resources and associated expenditures; the uncertainty of
estimates and projections relating to production and associated
expenditures; potential delays or changes in plans with respect to
exploration or development projects; Vermilion's ability to enter
into or renew leases on acceptable terms; fluctuations in crude
oil, natural gas liquids, and natural gas prices, foreign currency
exchange rates and interest rates; health, safety, and
environmental risks; uncertainties as to the availability and cost
of financing; the ability of Vermilion to add production and
reserves through exploration and development activities; the
possibility that government policies or laws may change or
governmental approvals may be delayed or withheld; uncertainty in
amounts and timing of royalty payments; risks associated with
existing and potential future law suits and regulatory actions
against Vermilion; and other risks and uncertainties described
elsewhere in this document or in Vermilion's other filings with
Canadian securities regulatory authorities.
The forward looking statements or information contained in this
document are made as of the date hereof and Vermilion undertakes no
obligation to update publicly or revise any forward looking
statements or information, whether as a result of new information,
future events, or otherwise, unless required by applicable
securities laws.
Natural gas volumes have been converted on the basis of six
thousand cubic feet of natural gas to one barrel of oil
equivalent. Barrels of oil equivalent (boe) may be
misleading, particularly if used in isolation. A boe
conversion ratio of six thousand cubic feet to one barrel of oil is
based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the wellhead.
Financial data contained within this document are reported in
Canadian dollars, unless otherwise stated.
SOURCE Vermilion Energy Inc.