Vermilion Energy Inc. Delivers Record Annual Production and Strong Reserve Recycle Ratios, Q4 2025 Production Exceeds Guidance with Robust Fund Flows from Operations

Executive Summary

• Vermilion Energy reported full-year 2025 results, generating $1.01 billion in Fund Flows from Operations (FFO) and $375 million in Free Cash Flow (FCF), while reducing net debt by over $700 million since Q1 2025.
• The company achieved record annual production of 119,919 boe/d (65% natural gas), with Q4 2025 production averaging 121,308 boe/d, exceeding guidance. Total proved plus probable (2P) reserves increased 36% year-over-year to 592 mmboe.
• The company declared a quarterly cash dividend of $0.135 per share (a 4% increase) and returned $116 million to shareholders in 2025 through dividends and share buybacks.

Key Details

• Financial Performance (Full Year 2025):
  • Fund Flows from Operations (FFO): $1,010 million ($6.58/basic share).
  • Free Cash Flow (FCF): $375 million.
  • Net Loss: $654 million ($4.25/basic share), driven by discontinued operations (sale of Saskatchewan and U.S. assets) and non-cash price-related impairments on mature legacy assets in Australia, France, and Ireland.
  • E&D Capital Expenditures: $635 million, fully funded by operating cash flows.
  • Net Debt: Reduced to $1.34 billion (down >$700 million since Q1 2025); Net debt to four-quarter trailing FFO ratio is 1.4x.
• Financial Performance (Q4 2025):
  • FFO: $241 million ($1.57/basic share).
  • FCF: $49 million.
  • Net Loss from Continuing Operations: $438 million ($2.86/basic share), driven by non-cash impairments on legacy assets.
  • Dividends and Buybacks: Returned $26 million ($20M dividends, $6M buybacks of 0.6M shares).
• Production Metrics:
  • 2025 Annual: 119,919 boe/d (65% natural gas). Breakdown: 90,062 boe/d from North America, 29,857 boe/d from International.
  • Q4 2025: 121,308 boe/d (69% natural gas). Breakdown: 91,171 boe/d from North America, 30,137 boe/d from International.
  • Product Mix (Q4 2025): Crude oil/condensate 25,401 bbls/d; NGLs 12,140 bbls/d; Natural gas 502.60 mmcf/d.
  • Realized Prices (2025): Average natural gas $6.01/mcf (after hedging); Average crude oil $89.98/bbl.
  • Realized Prices (Q4 2025): Average natural gas $5.50/mcf (after hedging); Average crude oil $83.21/bbl.
• Reserves and Valuation:
  • 2P Reserves: 592 mmboe (up 36% YoY).
  • PDP Reserves: 210 mmboe (up 25% YoY).
  • Reserve Life Index: 14 years.
  • Reserves Replacement: Over 450% for 2P.
  • FD&A Costs: $14.91/boe for PDP; $7.71/boe for 2P.
  • Operating Recycle Ratio: 1.8x (PDP basis); 3.5x (2P basis).
  • NPV of 2P Reserves: $4.8 billion (before-tax, 10% discount), or $23 per share after net debt.
• Operational Updates:
  • Canada: Drilled 16.0 net wells in Deep Basin; brought 17.0 net wells online. Mica Montney asset generated record production of >16,000 boe/d in Q4. Corporate unit operating costs reached $11.86/boe (lowest since 2020).
  • Netherlands: Brought two (1.2 net) conventional gas wells online; advanced permitting for one well in 2026.
  • Germany: Advanced infrastructure for Wisselshorst well (first production mid-2026); Osterheide well produced ~10 mmcf/d (up 45% QoQ).
  • Australia: Managed safe shutdown/export of ~300,000 barrels due to cyclone in Q1 2026; repair work underway.
• Capital Allocation & Shareholder Returns:
  • Returned $116 million in 2025 ($80M dividends, $36M in buybacks/NCIB).
  • Repurchased and cancelled 3.1 million shares in 2025.
  • Sold portion of Coelacanth Energy ownership in Dec 2025 for $42M incremental debt reduction and $12M realized gain.
• Outlook:
  • Q1 2026 Production: 122,000 to 124,000 boe/d (70% natural gas).
  • Full-Year 2026 Production: 118,000 to 122,000 boe/d (70% natural gas).
  • 2026 E&D Capital: $600 to $630 million.
  • Hedging: 48% of expected net-of-royalty production hedged for 2026 (50% European gas, 53% crude oil, 45% NA gas).

Notable Quotes

• "It was an impactful year for Vermilion, repositioning the Company as a Global Gas Producer with long-duration assets, improving profitability and growing free cash flow ("FCF") per share." — Dion Hatcher, President & CEO
• "Our repositioned global gas portfolio is characterized by higher production per share and a lower cost structure, the combination of which delivers growing FCF - all underpinned by high-quality, long-life assets." — Dion Hatcher, President & CEO