Vermilion Energy Inc. Announces Results for the Three and Six Months Ended June 30, 2025

Executive Summary

• Vermilion Energy Inc. reported Q2 2025 results, generating $260 million in Fund Flows from Operations (FFO) and $144 million in Free Cash Flow (FCF), driven by a full quarter of contribution from the Westbrick acquisition and strong operational performance.
• The company announced the subsequent closure of its Saskatchewan and United States asset divestments for $535 million in gross proceeds, which were used to reduce net debt to approximately $1.3 billion.
• Net loss for the quarter was $233 million ($1.51/basic share), primarily due to a $308 million non-cash impairment adjustment on assets held for sale; continuing operations generated $74 million in net earnings.

Key Details

• Financial Performance (Q2 2025):
  • Fund Flows from Operations (FFO): $259.7 million ($1.68/basic share).
  • Free Cash Flow (FCF): $144.2 million.
  • Net Loss: $233.5 million ($1.51/basic share), comprising $74.4 million from continuing operations and a $307.8 million loss from discontinued operations (non-cash book value adjustment).
  • Net Debt: Decreased to $1.41 billion at June 30, 2025 (from $2.06 billion at March 31, 2025).
  • Net Debt to Four-Quarter Trailing FFO: 1.4x.
• Capital Allocation & Shareholder Returns:
  • Returned $26 million to shareholders via dividends ($20 million) and share buybacks ($6 million).
  • Repurchased and cancelled 0.7 million shares through the NCIB.
  • Declared a quarterly cash dividend of $0.13 per common share, payable October 15, 2025.
• Operational Highlights:
  • Average Production: 136,002 boe/d (63% natural gas, 37% crude oil and liquids).
  • North American Assets: 106,379 boe/d (including 15,453 boe/d from assets held for sale).
  • International Assets: 29,623 boe/d.
  • Montney Production: ~15,000 boe/d (up ~2,500 boe/d from Q1) due to new wells and infrastructure expansion.
  • Deep Basin Production: ~76,000 boe/d (full quarter from Westbrick integration); identified over $200 million (NPV10) in post-acquisition synergies.
  • Germany Production: ~6,000 boe/d, including full quarter from Osterheide well.
• Cost Efficiency & Drilling:
  • Achieved a new DCET cost benchmark of $8.5 million per well for recent Mica pads, expected to reduce future development costs by $50 million (NPV10).
  • Drilled 5.0 net wells and completed 11.0 net wells in the Montney.
  • Drilled 3.4 net wells and completed 2.4 net wells in the Deep Basin.
  • Drilled, completed, and brought on production 2.0 net wells in Germany and 1.0 net well in Croatia.
• Strategic Divestments:
  • Closed Saskatchewan and United States asset divestments for $535 million gross proceeds.
  • Proceeds used to reduce debt, targeting year-end net debt of ~$1.3 billion.
• Outlook:
  • Q3 2025 Production Guidance: 117,000 to 120,000 boe/d (67% natural gas).
  • 2025 Capital Budget: Unchanged; focused on free cash flow and debt reduction.
  • Sustainability: Retired 2025 emissions target; focusing on 2030 target of 25-30% Scope 1 + Scope 2 reduction vs. 2019.
• Governance:
  • Appointed Mr. Corey Bieber to the Board of Directors, effective August 8, 2025.

Notable Quotes

• "Vermilion significantly advanced its North American high-grading initiative in Q2 2025, announcing the divestment of its Saskatchewan and United States assets... enabling us to enhance operational scale in long-duration assets and better position the company for sustainable, profitable growth."
• "We believe the $8.5 million [DCET cost] is repeatable and is now our go-forward cost estimate for an extended-reach Mica well, which reduces our future development cost by an incremental $50 million on a NPV10 basis."
• "The integration [of Westbrick] continues to exceed our initial expectations as we identified additional synergies in Q2 2025, bringing our total post-acquisition synergies to over $200 million (NPV10)."