Vermilion Energy Inc. Announces Results for the Three and Six Months Ended June 30, 2023
- Vermilion Energy Inc. reports strong Q2 2023 financial results with FFO of $247 million, indicating a positive outlook for the company. Q2 production increased by 1%, demonstrating growth potential. The company's share repurchase and dividend payments show a commitment to returning value to shareholders. The decrease in net debt to $1.3 billion is a positive sign of improved financial health.
- None.
The unaudited interim financial statements and management discussion and analysis for the three and six months ended June 30, 2023 will be available on the System for Electronic Document Analysis and Retrieval Plus ("SEDAR+") at www.sedarplus.ca, on EDGAR at www.sec.gov/edgar.shtml, and on Vermilion's website at www.vermilionenergy.com.
- Q2 2023 fund flows from operations ("FFO")(1) was
($247 million /basic share)(2) and exploration and development ("E&D") capital expenditures(3) were$1.51 , resulting in free cash flow ("FCF")(4) of$167 million ($80 million /basic share)(5).$0.49 - Net earnings were
($128 million /basic share) for Q2 2023, primarily driven by strong price realization.$0.78 - The TTF natural gas benchmark price in
Europe averaged per mcf in Q2 2023, which was six times higher than the average AECO benchmark index price for the quarter. Approximately$15.04 41% of Vermilion's Q2 2023 gas production had direct exposure to European gas pricing. - Repurchased 1.5 million common shares for
and paid cash dividends of$24 million , for a total of$16 million returned to shareholders in the quarter. In conjunction with our Q2 2023 release, we announced a quarterly cash dividend of$40 million per share, payable on October 16, 2023 to shareholders of record on September 29, 2023.$0.10 - In early July 2023, we announced the renewal of our normal course issuer bid ("NCIB") with approval to purchase of up to 16,308,587 common shares, representing approximately
10% of Vermilion's public float as at June 28, 2023. - Net debt(6) decreased to
, representing a trailing net debt-to-FFO ratio(7) of 1.0 times. We were undrawn on our$1.3 billion covenant-based revolving credit facility at the end of Q2 2023 and extended the maturity date of this facility to May 2027 during the quarter.$1.6 billion - Q2 2023 production averaged 83,152 boe/d(8) an increase of
1% from the previous quarter due to the acquisition of additional working interest in the Corrib Natural Gas Project ("Corrib") inIreland and new production from our Mica Montney,United States , and southeastSaskatchewan assets, partially offset by the disposition of higher-cost assets in southeastSaskatchewan and fire-related downtime in West Central Alberta. - All production that was temporarily shut-in as a result of the wildfires in West Central Alberta has been restored thanks to the hard work of our employees, and we confirm there was no major damage to our facilities or well sites.
- As a result of strong operational execution and performance across our portfolio, we are maintaining our 2023 annual production guidance of 82,000 to 86,000 boe/d.
- Late in the second quarter we received the final permit required to proceed with the construction of the 16,000 boe/d battery on our Montney Mica lands in
British Columbia , which will facilitate the long-term development of our high-quality lands offsetting the strong BC well results. - We released the annual update to our online sustainability report in July 2023, marking our 10th year of ESG reporting. One notable highlight is the decrease in our 2022 Scope 1 emission intensity to 0.017 tCO2e per throughput operated boe, in line with our target to reduce our 2019 baseline of 0.019 tCO2e per throughput operated boe by
15% to20% by 2025. The full report is available at https://www.vermilionenergy.com/sustainability.
($M except as indicated) | Q2 2023 | Q1 2023 | Q2 2022 | YTD 2023 | YTD 2022 |
Financial | |||||
Petroleum and natural gas sales | 471,356 | 552,698 | 858,844 | 1,024,054 | 1,669,023 |
Cash flows from operating activities | 173,632 | 388,629 | 530,364 | 562,261 | 871,417 |
Fund flows from operations (1) | 247,109 | 253,167 | 452,901 | 500,276 | 842,769 |
Fund flows from operations ($/basic share) (2) | 1.51 | 1.56 | 2.75 | 3.05 | 5.16 |
Fund flows from operations ($/diluted share) (2) | 1.48 | 1.51 | 2.68 | 2.99 | 5.00 |
Net earnings | 127,908 | 380,332 | 362,621 | 508,240 | 646,575 |
Net earnings ($/basic share) | 0.78 | 2.34 | 2.20 | 3.10 | 3.96 |
Cash flows used in investing activities | 164,404 | 108,695 | 612,634 | 273,099 | 722,964 |
Capital expenditures (3) | 166,845 | 154,820 | 113,153 | 321,665 | 198,497 |
Acquisitions (14) | (9,716) | 251,772 | 522,223 | 242,056 | 528,935 |
Dispositions | — | 182,152 | — | 182,152 | — |
Asset retirement obligations settled | 11,893 | 2,554 | 4,300 | 14,447 | 10,620 |
Repurchase of shares | 24,316 | 30,141 | — | 54,457 | — |
Cash dividends ($/share) | 0.10 | 0.10 | 0.06 | 0.20 | 0.12 |
Dividends declared | 16,430 | 16,226 | 9,913 | 32,656 | 19,680 |
% of fund flows from operations (9) | 7 % | 6 % | 2 % | 7 % | 2 % |
Payout (10) | 195,168 | 173,600 | 127,366 | 368,768 | 228,797 |
% of fund flows from operations (10) | 79 % | 69 % | 28 % | 74 % | 27 % |
Free cash flow (4) | 80,264 | 98,347 | 339,748 | 178,611 | 644,272 |
Long-term debt | 913,785 | 933,463 | 1,527,217 | 913,785 | 1,527,217 |
Net debt (6) | 1,321,100 | 1,368,029 | 1,588,668 | 1,321,100 | 1,588,668 |
Net debt to four quarter trailing fund flows from operations (7) | 1.0 | 0.9 | 1.1 | 1.0 | 1.1 |
Operational | |||||
Production (8) | |||||
Crude oil and condensate (bbls/d) | 29,342 | 33,291 | 36,783 | 31,305 | 36,936 |
NGLs (bbls/d) | 6,538 | 7,896 | 8,113 | 7,213 | 8,227 |
Natural gas (mmcf/d) | 283.63 | 247.61 | 239.83 | 265.72 | 242.25 |
Total (boe/d) | 83,152 | 82,455 | 84,868 | 82,805 | 85,537 |
Average realized prices | |||||
Crude oil and condensate ($/bbl) | 96.64 | 98.62 | 138.55 | 97.66 | 129.48 |
NGLs ($/bbl) | 28.11 | 36.23 | 51.86 | 32.53 | 49.38 |
Natural gas ($/mcf) | 7.37 | 10.77 | 16.50 | 8.94 | 16.96 |
Production mix (% of production) | |||||
% priced with reference to WTI | 32 % | 39 % | 39 % | 35 % | 38 % |
% priced with reference to Dated Brent | 12 % | 12 % | 16 % | 11 % | 16 % |
% priced with reference to AECO | 33 % | 34 % | 29 % | 34 % | 29 % |
% priced with reference to TTF and NBP | 23 % | 15 % | 16 % | 20 % | 17 % |
Netbacks ($/boe) | |||||
Operating netback (11) | 43.66 | 46.33 | 72.57 | 44.98 | 66.15 |
Fund flows from operations ($/boe) (12) | 32.35 | 34.52 | 58.82 | 33.43 | 54.81 |
Operating expenses | 17.91 | 18.66 | 14.89 | 18.28 | 14.75 |
General and administration expenses | 2.63 | 2.71 | 2.04 | 2.67 | 1.95 |
Average reference prices | |||||
WTI (US $/bbl) | 73.80 | 76.13 | 108.41 | 74.97 | 101.35 |
Dated Brent (US $/bbl) | 78.39 | 81.27 | 113.78 | 79.83 | 107.59 |
AECO ($/mcf) | 2.45 | 3.22 | 7.24 | 2.84 | 5.99 |
TTF ($/mcf) | 15.04 | 22.99 | 38.08 | 19.03 | 38.93 |
Share information ('000s) | |||||
Shares outstanding - basic | 164,294 | 162,261 | 165,222 | 164,294 | 165,222 |
Shares outstanding - diluted (13) | 168,530 | 168,874 | 170,969 | 168,530 | 170,969 |
Weighted average shares outstanding - basic | 164,997 | 162,585 | 164,518 | 163,798 | 163,452 |
Weighted average shares outstanding - diluted (13) | 167,364 | 167,857 | 169,169 | 167,343 | 168,517 |
(1) | Fund flows from operations (FFO) is a total of segments measure comparable to net earnings that is comprised of sales less royalties, transportation, operating, G&A, corporate income tax, PRRT, windfall taxes, interest expense, realized gain on derivatives, realized foreign exchange gain (loss), and realized other income. The measure is used to assess the contribution of each business unit to Vermilion's ability to generate income necessary to pay dividends, repay debt, fund asset retirement obligations, and make capital investments. FFO does not have a standardized meaning under IFRS and therefore may not be comparable to similar measures provided by other issuers. More information and a reconciliation to primary financial statement measures can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. |
(2) | Fund flows from operations per share (basic and diluted) are supplementary financial measures and are not a standardized financial measures under IFRS, and therefore may not be comparable to similar measures disclosed by other issuers. They are calculated using FFO (a total of segments measure) and basic/diluted shares outstanding. The measure is used to assess the contribution per share of each business unit. More information and a reconciliation to primary financial statement measures can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. |
(3) | Capital expenditures is a non-GAAP financial measure that is the sum of drilling and development costs and exploration and evaluation costs from the Consolidated Statements of Cash Flows. More information and a reconciliation to primary financial statement measures can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. |
(4) | Free cash flow (FCF) is a non-GAAP financial measure comparable to cash flows from operating activities and is comprised of FFO less drilling and development and exploration and evaluation expenditures. More information and a reconciliation to primary financial statement measures can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. |
(5) | Free cash flow per basic share is a non-GAAP supplementary financial measure and is not a standardized financial measure under IFRS and may not be comparable to similar measures disclosed by other issuers. It is calculated using FCF and basic shares outstanding. |
(6) | Net debt is a capital management measure comparable to long-term debt and is comprised of long-term debt (excluding unrealized foreign exchange on swapped USD borrowings) plus adjusted working capital (defined as current assets less current liabilities, excluding current derivatives and current lease liabilities). More information and a reconciliation to primary financial statement measures can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. |
(7) | Net debt to trailing FFO is a supplementary financial measure and is not a standardized financial measure under IFRS. It may not be comparable to similar measures disclosed by other issuers and is calculated using net debt (capital management measure) and FFO (total of segment measure). The measure is used to assess the ability to repay debt. Information in this document is included by reference; refer to the "Non-GAAP and Other Specified Financial Measures" section of this document. |
(8) | Please refer to Supplemental Table 4 "Production" of the accompanying Management's Discussion and Analysis for disclosure by product type. |
(9) | Dividends % of FFO is a supplementary financial measure that is not standardized under IFRS and may not be comparable to similar measures disclosed by other issuers, calculated as dividends divided by FFO. The ratio is used by management as a metric to assess the cash distributed to shareholders. Reconciliation to primary financial statement measures can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. |
(10) | Payout and payout % of FFO are a non-GAAP financial measure and a non-GAAP ratio, respectively, that are not standardized under IFRS and may not be comparable to similar measures disclosed by other issuers. Payout is comparable to dividends declared and is comprised of dividends declared plus drilling and development costs, exploration and evaluation costs, and asset retirement obligations settled, while the ratio is calculated as payout divided by FFO. More information and a reconciliation to primary financial statement measures can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. |
(11) | Operating netback is a non-GAAP financial measure comparable to net earnings and is comprised of sales less royalties, operating expense, transportation costs, PRRT, and realized hedging gains and losses. More information and a reconciliation to primary financial statement measures can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. |
(12) | Fund flows from operations per boe is a supplementary financial measure that is not standardized under IFRS and may not be comparable to similar measures disclosed by other issuers, calculated as FFO by boe production. Fund flows from operations per boe is used by management to assess the profitability of our business units and Vermilion as a whole. More information and a reconciliation to primary financial statement measures can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. |
(13) | Diluted shares outstanding represent the sum of shares outstanding at the period end plus outstanding awards under the Long-term Incentive Plan ("LTIP"), based on current estimates of future performance factors and forfeiture rates. |
(14) | Acquisitions is a non-GAAP financial measure that is calculated as the sum of acquisitions and acquisitions of securities from the Consolidated Statements of Cash Flows, Vermilion common shares issued as consideration, the estimated value of contingent consideration, the amount of acquiree's outstanding long-term debt assumed, and net acquired working capital deficit or surplus. More information and a reconciliation to primary financial statement measures can be found in the "Non-GAAP and Other Specified Financial Measures" section of this document. |
Production during the second quarter of 2023 averaged 83,152 boe/d, which was at the top end of our Q2 2023 guidance range. We revised our Q2 2023 production guidance in mid-May to a range of 80,000 to 83,000 boe/d following the temporary shut-in of approximately 30,000 boe/d in West Central Alberta due to numerous fires in the region. There was no major damage to our facilities or well sites, and our team was able to safely restore all of the production within weeks of the initial shut-in thanks to the hard work of our employees. In addition, we achieved strong operational performance across many of our other assets which further mitigated the approximately 8,000 boe/d quarterly production impact from the fire-related shut-ins in West Central Alberta and downtime in
We generated
The downtime in
Late in the second quarter, we received the final permit required to proceed with the construction of the 16,000 boe/d battery on our Montney Mica lands in
Our disciplined approach towards debt reduction, combined with our asset high-grading initiatives over the past two years has made Vermilion a more resilient business today. By the end of this year we will have nearly cut our debt in half while significantly increasing our average annual FFO from pre-COVID levels. While strong commodity prices have contributed to this improvement, we believe the company is much better positioned. We believe our top decile netbacks, low base decline and capital efficient asset base, combined with our modest base dividend payout ratio, translates to a very resilient business that can be managed through low commodity cycles and is well positioned for increased return of capital to shareholders. With our leverage at a decade low and 2023 on track to deliver the second highest annual FFO in corporate history, we look forward to providing an update on returns to shareholders as we achieve our debt targets.
Production from our North American operations averaged 54,065 boe/d(1) in Q2 2023, a decrease of
Our recent
In West Central Alberta, we completed one (0.3 net) and brought on production five (2.0 net)
Across
International
Production from our International operations averaged 29,087 boe/d(1) in Q2 2023, an increase of
In
As a result of the increased scope of repair work on the Wandoo platform in
We released the annual update to our online sustainability report in July 2023, marking our 10th year of ESG reporting. One notable highlight is the decrease in our 2022 Scope 1 emission intensity to 0.017 tCO2e per throughput operated boe, in line with our target to reduce our 2019 baseline of 0.019 tCO2e per throughput operated boe by
Vermilion hedges to manage commodity price exposures and increase the stability of our cash flows. In aggregate, as of August 2, 2023, we have
https://www.vermilionenergy.com/invest-with-us/hedging.
(Signed "Dion Hatcher") | |
Dion Hatcher | |
President and Chief Executive Officer | |
August 2, 2023 |
(1) Please refer to Supplemental Table 4 "Production" of the accompanying Management's Discussion and Analysis for disclosure by product type. |
This report and other materials released by Vermilion includes financial measures that are not standardized, specified, defined, or determined under IFRS and are therefore considered non-GAAP or other specified financial measures and may not be comparable to similar measures presented by other issuers. These financial measures include:
Fund flows from operations (FFO): Most directly comparable to net earnings, FFO is comprised of sales excluding royalties, transportation, operating, G&A, corporate income tax, PRRT, windfall taxes, interest expense, realized loss on derivatives, realized foreign exchange gain (loss), and realized other income. The measure is used to assess the contribution of each business unit to Vermilion's ability to generate income necessary to pay dividends, repay debt, fund asset retirement obligations and make capital investments.
Q2 2023 | Q2 2022 | YTD 2023 | YTD 2022 | |||||
$M | $/boe | $M | $/boe | $M | $/boe | $M | $/boe | |
Sales | 471,356 | 61.74 | 858,844 | 111.55 | 1,024,054 | 68.42 | 1,669,023 | 108.54 |
Royalties | (46,993) | (6.16) | (83,553) | (10.85) | (114,337) | (7.64) | (154,860) | (10.07) |
Transportation | (21,905) | (2.87) | (20,153) | (2.62) | (44,955) | (3.00) | (37,422) | (2.43) |
Operating | (136,749) | (17.91) | (114,617) | (14.89) | (273,574) | (18.28) | (226,800) | (14.75) |
General and administration | (20,058) | (2.63) | (15,691) | (2.04) | (39,947) | (2.67) | (29,911) | (1.95) |
Corporate income tax expense | (18,928) | (2.48) | (69,501) | (9.03) | (41,190) | (2.75) | (115,173) | (7.49) |
Windfall taxes | (34,784) | (4.56) | — | — | (56,224) | (3.76) | — | — |
PRRT | — | — | (2,019) | (0.26) | — | — | (8,728) | (0.57) |
Interest expense | (20,210) | (2.65) | (21,074) | (2.74) | (42,085) | (2.81) | (35,897) | (2.33) |
Realized gain (loss) on derivatives | 67,673 | 8.86 | (79,778) | (10.36) | 82,003 | 5.48 | (224,001) | (14.57) |
Realized foreign exchange gain (loss) | 3,679 | 0.48 | (2,297) | (0.30) | (1,092) | (0.07) | (1,547) | (0.10) |
Realized other income | 4,028 | 0.53 | 2,740 | 0.36 | 7,623 | 0.51 | 8,085 | 0.53 |
Fund flows from operations | 247,109 | 32.35 | 452,901 | 58.82 | 500,276 | 33.43 | 842,769 | 54.81 |
Equity based compensation | (4,998) | (7,499) | (28,523) | (32,868) | ||||
Unrealized gain (loss) on derivative instruments (1) | 11,177 | 168,058 | 103,875 | (52,736) | ||||
Unrealized foreign exchange gain (loss) (1) | 35,124 | (32,267) | 19,646 | 7,870 | ||||
Accretion | (18,599) | (13,746) | (38,650) | (27,384) | ||||
Depletion and depreciation | (154,389) | (140,763) | (302,520) | (275,003) | ||||
Deferred tax recovery (expense) | 480 | (63,497) | 36,946 | (7,404) | ||||
Gain on business combination | 12,544 | — | 445,094 | — | ||||
Loss on disposition | — | — | (226,828) | — | ||||
Impairment reversal | — | — | — | 192,094 | ||||
Unrealized other expense | (540) | (566) | (1,076) | (763) | ||||
Net earnings | 127,908 | 362,621 | 508,240 | 646,575 |
(1) Unrealized gain (loss) on derivative instruments, Unrealized foreign exchange gain (loss), and Unrealized other expense are line items from the respective Consolidated Statements of Cash Flows. |
Free cash flow (FCF): Most directly comparable to cash flows from operating activities, FCF is comprised of fund flows from operations less drilling and development costs and exploration and evaluation costs. The measure is used to determine the funding available for investing and financing activities including payment of dividends, repayment of long-term debt, reallocation into existing business units and deployment into new ventures.
($M) | Q2 2023 | Q2 2022 | 2023 | 2022 |
Cash flows from operating activities | 173,632 | 530,364 | 562,261 | 871,417 |
Changes in non-cash operating working capital | 61,584 | (81,763) | (76,432) | (39,268) |
Asset retirement obligations settled | 11,893 | 4,300 | 14,447 | 10,620 |
Fund flows from operations | 247,109 | 452,901 | 500,276 | 842,769 |
Drilling and development | (164,070) | (109,488) | (317,398) | (192,329) |
Exploration and evaluation | (2,775) | (3,665) | (4,267) | (6,168) |
Free cash flow | 80,264 | 339,748 | 178,611 | 644,272 |
Adjusted working capital: Defined as current assets less current liabilities, excluding current derivatives and current lease liabilities. The measure is used to calculate net debt, a capital measure disclosed above.
As at | ||
($M) | Jun 30, 2023 | Dec 31, 2022 |
Current assets | 743,515 | 714,446 |
Current derivative asset | (326,143) | (162,843) |
Current liabilities | (870,758) | (892,045) |
Current lease liability | 21,059 | 19,486 |
Current derivative liability | 25,012 | 55,845 |
Adjusted working capital | (407,315) | (265,111) |
Capital expenditures: Calculated as the sum of drilling and development costs and exploration and evaluation costs from the Consolidated Statements of Cash Flows and most directly comparable to cash flows used in investing activities. We consider capital expenditures to be a useful measure of our investment in our existing asset base. Capital expenditures are also referred to as E&D capital.
($M) | Q2 2023 | Q2 2022 | 2023 | 2022 |
Drilling and development | 164,070 | 109,488 | 317,398 | 192,329 |
Exploration and evaluation | 2,775 | 3,665 | 4,267 | 6,168 |
Capital expenditures | 166,845 | 113,153 | 321,665 | 198,497 |
Operating netback: Most directly comparable to net earnings and is calculated as sales less royalties, operating expense, transportation costs, PRRT, and realized hedging gains and losses presented on a per unit basis. Management assesses operating netback as a measure of the profitability and efficiency of our field operations.
Payout and payout % of FFO: A non-GAAP financial measure and non-GAAP ratio respectively most directly comparable to dividends declared. Payout is comprised of dividends declared plus drilling and development costs, exploration and evaluation costs, and asset retirement obligations settled. The measure is used to assess the amount of cash distributed back to shareholders and reinvested in the business for maintaining production and organic growth. The reconciliation of the measure to primary financial statement measure can be found below. Management uses payout and payout as a percentage of FFO (also referred to as the payout or sustainability ratio).
($M) | Q2 2023 | Q2 2022 | 2023 | 2022 |
Dividends Declared | 16,430 | 9,913 | 32,656 | 19,680 |
% of fund flows from operations | 7 % | 2 % | 7 % | 2 % |
Drilling and development | 164,070 | 109,488 | 317,398 | 192,329 |
Exploration and evaluation | 2,775 | 3,665 | 4,267 | 6,168 |
Asset retirement obligations settled | 11,893 | 4,300 | 14,447 | 10,620 |
Payout | 195,168 | 127,366 | 368,768 | 228,797 |
% of fund flows from operations | 79 % | 28 % | 74 % | 27 % |
Acquisitions: The sum of acquisitions and acquisitions of securities from the Consolidated Statements of Cash Flows, Vermilion common shares issued as consideration, the estimated value of contingent consideration, the amount of acquiree's outstanding long-term debt assumed, and net acquired working capital deficit or surplus. We believe that including these components provides a useful measure of the economic investment associated with our acquisition activity and is most directly comparable to cash flows used in investing activities. A reconciliation to the acquisitions line items in the Consolidated Statements of Cash Flows can be found below.
($M) | Q2 2023 | Q2 2022 | 2023 | 2022 |
Acquisitions, net of cash acquired | 2,196 | 497,800 | 136,421 | 504,512 |
Acquisition of securities | 632 | 18,301 | 2,108 | 18,301 |
Acquired working capital (surplus) deficit | (12,544) | 6,122 | 103,527 | 6,122 |
Acquisitions | (9,716) | 522,223 | 242,056 | 528,935 |
Net debt: Is in accordance with IAS 1 "Presentation of Financial Statements" and is most directly comparable to long-term debt. Net debt is comprised of long-term debt (excluding unrealized foreign exchange on swapped USD borrowings) plus adjusted working capital and represents Vermilion's net financing obligations after adjusting for the timing of working capital fluctuations.
As at | ||
($M) | Jun 30, 2023 | Dec 31, 2022 |
Long-term debt | 913,785 | 1,081,351 |
Adjusted working capital | 407,315 | 265,111 |
Unrealized FX on swapped USD borrowings | — | (1,876) |
Net debt | 1,321,100 | 1,344,586 |
Ratio of net debt to four quarter trailing fund flows from operations | 1.0 | 0.8 |
Net debt to four quarter trailing fund flows from operations: Calculated as net debt (capital management measure) over the FFO (total of segments measure) from the preceding four quarters. The measure is used to assess the ability to repay debt.
Dividends % of FFO: Calculated as dividends declared divided by FFO (total of segments measure). The measure is used by management as a metric to assess the cash distributed to shareholders.
Fund flows from operations per boe: Calculated as FFO (total of segments measure) by boe production. Fund flows from operations per boe is used by management to assess the profitability of our business units and Vermilion as a whole.
To view Vermilion's Management's Discussion and Analysis and Interim Condensed Consolidated Financial Statements for the three and six months ended June 30, 2023 and 2022, please refer to SEDAR+ (www.sedarplus.ca) or Vermilion's website at www.vermilionenergy.com.
Vermilion is an international energy producer that seeks to create value through the acquisition, exploration, development and optimization of producing assets in
Vermilion's priorities are health and safety, the environment, and profitability, in that order. Nothing is more important to us than the safety of the public and those who work with us, and the protection of our natural surroundings. We have been recognized by leading ESG rating agencies for our transparency on and management of key environmental, social and governance issues. In addition, we emphasize strategic community investment in each of our operating areas.
Vermilion trades on the Toronto Stock Exchange and the New York Stock Exchange under the symbol VET.
Certain statements included or incorporated by reference in this document may constitute forward-looking statements or information 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 and Vermilion's ability to fund such expenditures; Vermilion's additional debt capacity providing it with additional working capital; statements regarding the return of capital; the flexibility of Vermilion's capital program and operations; business strategies and objectives; operational and financial performance; petroleum and natural gas sales; future production levels and the timing thereof, including Vermilion's 2023 guidance, and rates of average annual production growth; the effect of changes in crude oil and natural gas prices, changes in exchange and inflation rates; significant declines in production or sales volumes due to unforeseen circumstances; the effect of possible changes in critical accounting estimates; statements regarding the growth and size of Vermilion's future project inventory, wells expected to be drilled in 2023; exploration and development plans and the timing thereof; Vermilion's ability to reduce its debt; statements regarding Vermilion's hedging program, its plans to add to its hedging positions, and the anticipated impact of Vermilion's hedging program on project economics and free cash flows; the potential financial impact of climate-related risks; 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 Vermilion's expectations regarding future taxes and taxability; 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
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, interest rates and inflation; 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 or involving 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.
This document contains metrics commonly used in the oil and gas industry. These oil and gas metrics do not have any standardized meaning or standard methods of calculation and therefore may not be comparable to similar measures presented by other companies where similar terminology is used and should therefore not be used to make comparisons. 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.
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SOURCE Vermilion Energy Inc.
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