Vermilion Energy Inc. Announces Results for the Three and Nine Months Ended September 30, 2024
Canada NewsWire
CALGARY, AB, Nov. 6, 2024
CALGARY, AB, Nov. 6, 2024 /CNW/ - Vermilion Energy Inc. ("Vermilion", "We", "Our", "Us" or the "Company") (TSX: VET) $(VET)$ is pleased to report operating and condensed financial results for the three and nine months ended September 30, 2024.
The unaudited interim financial statements and management discussion and analysis for the three and nine months ended September 30, 2024 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.
Highlights
-- Q3 2024 fund flows from operations ("FFO")(1) was $275 million
($1.76/basic share)(2), representing a 16% increase over the prior
quarter, primarily due to stronger European gas prices. Benchmark TTF Day
Ahead pricing increased 14% over the prior quarter, averaging
$15.52/mmbtu in Q3 2024, and European gas was the only commodity in our
portfolio that increased quarter-over-quarter and year-over-year. As a
result of strong European gas prices, our corporate average realized
natural gas price in Q3 2024 was $6.57/mcf, compared to $0.69/mcf for the
AECO 5A benchmark.
-- Net earnings for Q3 2024 was $52 million ($0.33/basic share), an increase
of $134 million over the prior quarter primarily due to a more normalized
mark-to-market adjustment on our hedge book.
-- We invested $121 million in exploration and development ("E&D") capital
expenditures(3), resulting in free cash flow ("FCF")(4) of $154 million
($0.98/basic share)(5), of which $59 million was returned to shareholders,
including $19 million in dividends and $40 million of share buybacks,
representing 45% of excess FCF ("EFCF")(4).
-- Year-to-date, we have returned $180 million ($1.13/basic share) to
shareholders through dividends and share buybacks, representing 38% of
EFCF, including the repurchase and cancellation of 8.0 million shares
which has reduced our outstanding common shares to 155.3 million as at
September 30, 2024. We continue to repurchase shares in Q4 2024 and are
on track to return 10% of our market capitalization to shareholders in
2024 between our fixed dividend and variable share repurchase program,
and expect to continue providing ratable dividend increases and
repurchasing shares in future periods.
-- Net debt(6) decreased by $73 million in Q3 2024 to $833 million,
representing a net debt to trailing FFO ratio(7) of 0.6 times, the lowest
in 15 years.
-- Production during Q3 2024 averaged 84,173 boe/d(8) (56% natural gas and
44% crude oil and liquids), comprised of 53,936 boe/d(8) from our North
American assets and 30,237 boe/d(8) from our International assets, and
includes the impact from a planned turnaround in Australia and the
partial shut-in of some Canadian gas production due to weak AECO pricing.
Our Q3 2024 production represents an increase of 2% year-over-year, or 7%
on a per share basis, reflecting the positive impact from our share
repurchase program. Notably, production from our International assets has
increased 16% over the prior year, including a 26% increase in natural
gas production driven by new production from our SA-10 block in Croatia
and higher runtime in Ireland.
-- In Germany, we successfully completed testing operations for our first
deep gas exploration well drilled earlier this year. The well flow tested
at a restricted rate of 17 mmcf/d(15) of natural gas with a wellhead
pressure of 4,625 psi, which supports our expectation that deliverability
would have been higher without testing equipment limitations. Tie-in
operations are progressing to bring the well on production in the first
half of 2025.
-- We commenced drilling on our second deep gas exploration well (0.3 net)
in August 2024 and successfully completed drilling operations at the end
of October 2024. We are pleased to report that we discovered gas within
the reservoir and are now proceeding with completion and testing
operations. Subsequent to the quarter, we commenced drilling on our third
German deep gas exploration well (1.0 net) in October 2024. We anticipate
results from the second well test and third well drilling operations in
the first half of 2025.
-- In Croatia, we successfully increased production on the SA-10 block after
commissioning the gas plant in late June 2024. Production in Q3 2024
averaged 1,855 boe/d (100% European natural gas) and currently exceeds
2,000 boe/d. On the SA-7 block, we completed testing on the third well of
our four-well program, at a reservoir depth of 885 metres, which flow
tested at 5.6 mmcf/d(16) of natural gas.
-- During Q3 2024 we achieved a major safety milestone in Ireland, where we
celebrated two years and one million man-hours without a lost time
incident, a testament to Vermilion's high standard for safety in our
operations.
-- In Canada, we completed and brought on production five (5.0 net) Montney
liquids-rich shale gas wells during the third quarter. These wells have
produced at an average IP90 rate of over 1,000 boe/d(17) per well (43%
liquids)(17), which is in line with expectations. The total drill,
complete, equip and tie-in ("DCET") cost for the 9-21 pad was
approximately $9.6 million per well as we continue to make progress
towards our normalized targeted cost range of $9.0 to $9.5 million per
well. The new battery and water infrastructure have achieved 99% run time
since starting up and are contributing to these cost savings.
-- In conjunction with our Q3 2024 release, we announced a quarterly cash
dividend of $0.12 per common share, payable on January 15, 2025 to
shareholders of record on December 31, 2024.
-- We have tightened our 2024 production guidance range to 84,000 to 85,000
boe/d to reflect increased certainty on annual production levels, and our
capital budget of $600 to $625 million remains unchanged. We are in the
process of finalizing our 2025 budget which will target modest production
growth on a similar capital spending level as 2024, while maintaining our
return of capital payout target at 50% of EFCF.
($M except as indicated) Q3 2024 Q2 2024 Q3 2023 YTD 2024 YTD 2023
Financial
Petroleum and natural gas
sales 490,095 478,925 475,532 1,477,055 1,499,586
Cash flows from operating
activities 134,547 266,322 118,436 755,164 680,697
Fund flows from operations
(1) 275,024 236,703 270,218 943,085 770,494
Fund flows from
operations ($/basic
share) (2) 1.76 1.48 1.65 5.93 4.70
Fund flows from
operations ($/diluted
share) (2) 1.75 1.47 1.62 5.87 4.61
Net earnings (loss) 51,697 (82,425) 57,309 (28,423) 565,549
Net earnings (loss)
($/basic share) 0.33 (0.52) 0.35 (0.18) 3.45
Cash flows used in
investing activities 145,828 153,025 170,404 480,196 443,503
Capital expenditures (3) 121,269 110,610 125,639 422,321 447,304
Acquisitions (9) 1,642 5,450 5,238 16,844 247,294
Dispositions -- -- -- -- 182,152
Asset retirement
obligations settled 15,332 11,745 13,582 32,052 28,029
Repurchase of shares 40,106 46,555 11,645 123,070 66,102
Cash dividends ($/share) 0.12 0.12 0.10 0.36 0.30
Dividends declared 18,642 18,981 16,367 56,806 49,023
% of fund flows from
operations (10) 7 % 8 % 6 % 6 % 6 %
Payout (12) 155,243 141,336 155,588 511,179 524,356
% of fund flows from
operations (11) 56 % 60 % 58 % 54 % 68 %
Free cash flow (4) 153,755 126,093 144,579 520,764 323,190
Long-term debt 903,354 915,364 966,505 903,354 966,505
Net debt (6) 833,331 906,715 1,242,522 833,331 1,242,522
Net debt to four quarter
trailing fund flows from
operations (7) 0.6 0.7 1.2 0.6 1.2
Operational
Production (8)
Crude oil and
condensate (bbls/d) 29,837 32,879 31,417 31,797 31,407
NGLs (bbls/d) 7,547 7,196 7,344 7,264 7,261
Natural gas (mmcf/d) 280.73 269.39 263.80 274.93 265.09
Total (boe/d) 84,173 84,974 82,727 84,881 82,849
Average realized prices
Crude oil and
condensate ($/bbl) 103.55 108.93 106.94 105.54 100.64
NGLs ($/bbl) 27.49 31.61 27.77 30.99 30.89
Natural gas ($/mcf) 6.57 5.69 6.32 6.13 8.08
Production mix (% of
production)
% priced with reference
to WTI 32 % 32 % 34 % 32 % 35 %
% priced with reference
to Dated Brent 13 % 15 % 13 % 14 % 12 %
% priced with reference
to AECO 33 % 33 % 34 % 33 % 34 %
% priced with reference
to TTF and NBP 22 % 20 % 19 % 21 % 19 %
Netbacks ($/boe)
Operating netback (12) 41.89 40.32 49.30 48.23 46.42
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