Q1 2024 Vermilion Energy Inc Earnings Call and Annual Shareholders Meeting
Meeting shareholders.
We will complete the formal part of this meeting first and afterwards, John Hatcher, the President Chief Executive Officer of the company, will provide you an overview of the business and a strategy moving forward.
So ladies gentlemen, the meeting will now come to order. My name is Robert Mikaleski and as chair of the board of directors of Vermilion Energy is my responsibility and privilege to chair this annual general meeting of the shareholders of Vermilion.
Jamie Gagne of Lawson, Lendell LLP will act as secretary of the meeting, and Nassim Nassu of Odyssey Trust Company will act as a scrutineer.
In addition to the register to holders, I would like to welcome to the meeting all others present here today.
At this point, I would like to introduce the other independent directors of Vermilion who are present at the meeting today.
James Klechner, Jr.,
Karen Nicol.
Stephen Lark.
Timothy Orsson.
Angie Sharma?
Myron Stadnik and Judy Steele. William Robey is on the board but he is traveling to another meeting today so unable to be here for this meeting. I would also like to introduce the principal members of our executive committee here today. Dion Hatcher, President Chief Executive Officer.
Lars Glemsor, Vice President and Chief Financial Officer. Randy McKig, Vice President North America. And Darcy Kerwin, Vice President International Health and Safety and Environment.
The notice calling this annual meeting of shareholders along with the information circular and former proxy were mailed on March 28, 2024 to all shareholders as of the record date for this meeting being to close the business on March 13th of 2024.
As a part of an ongoing stewardship of the environment and a cost-saving measure for the six consecutive a year, beneficial shareholders received a voting instruction form and
And I notice
and access notification, which includes a link to the meeting materials consisting of the proxy statement, information circular, and the 2003 annual report.
This procedure for the electronic delivery of meeting materials is known as notice and access and as mentioned is environmentally friendly alternative that is now used by a number of companies.
As in past years, registered shareholders and those beneficial shareholders that previously requested to receive paper copies continue to receive a printed copy of the meeting materials and a form of proxy. I would ask that copies, all such documents, be filed with the minutes of this meeting.
A quorum for the transaction of business at today's meeting is at least two people present who hold or represent by proxy at least 25% of our outstanding common chairs.
I am advised by the scrutinier that there is a quorum present. The scrutinier's report is available for inspection and I ask that to be filed with the minutes of this meeting.
I hereby declare that this annual general meeting of shareholders of Vermilion Energy Inc. be properly convened and regularly constituted to conduct business.
Now, there are very matters to be dealt with today. A description of each matter is provided in the information circular, a copy of which is available on our website, under the heading Invest With Us and Subheading, Annual General Meeting.
In the interest of time, I do not propose to make a detailed presentation on each item.
For the purpose of moving, the meeting along, shareholders who are representatives of Vermilion have been asked to move and second the motions to be brought before the meeting.
All of the matters of business to be covered today will be voted on by ballot.
Registered shareholders, meaning their shareholders who do not hold their shares who are broker, who have not previously submitted a form of proxy and duly appointed proxy holders, should have received ballots upon registering for the meeting.
If you have already voted, whether by telephone, through the internet, or by completing and returning a proxy card mail to you with the information circular, your shares will be voted in accordance with your instructions, and you're not permitted to vote again by way of ballot.
If there is any shareholder or proxy holder who has not received a ballot, please identify yourself to us.
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The first item of business is fixing the number of directors of Vermilion energy to be elected at 10.
May I have a motion to fix the number of directors to be elected at 10.
As for this matter of business.
My name is Yvonne Gepheri and I am a representative of Vermilion and a shareholder. I move that the number of directors of Vermilion Energy Inc. to be elected be fixed at 10. Thanks, Yvonne. May you have the motion seconded.
If you are not have not yet received one please raise your hand.
If you have already completed.
If you have not already completed your ballot and deposited with the scrutineer. Please complete the ballot now and sign your name clearly at the bottom of the ballot.
My name is Terry Hergot. I'm a representative of a million and a shareholder.
Please raise your hand, if you have a dollar to be collected and the scrutineer will collect the ballots.
Second the motion. Thanks, Terry.
Is there any discussion?
Speaker Change: Thank you based on preliminary voting results for this matter. It is expected that this resolution will be carried.
Voting on the election of directors will be conducted by a way of ballot. The blue ballot is to be used for this matter of business. If you have not yet received, one please raise your hand.
Speaker Change: Continue with the remainder of this meetings business, while the scrutineer tabulate. The results were developed voting advise us as to the final results prior to the termination of this meeting.
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If you have already completed, if you have not already completed your ballot and deposited with a scrutinyer, please complete the ballot now and sign your name clearly at the bottom
Speaker Change: The next item of business is the election of the directors of Vermilion for the ensuing year or until their successors are elected or appointed.
Please raise your hand if you have a ballot to be collected, and the scoot near will collect the ballots.
Speaker Change: As we have done in previous years, we will be nominating and approving individual directors and not a slate of directors.
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Thank you. Based on preliminary voting results for this matter, it is expected that this resolution will be carried.
Speaker Change: The board of Directors has adopted a policy stipulate that if a director nominee.
Speaker Change: <unk> has a greater number of votes withheld from the election of that director than votes for the election, the nominee will offer to resign.
We will continue with the remainder of this meeting's business, while the scrutiny tabulates the results of the ballot voting, and values us as to the final results prior to the termination of this meeting.
Speaker Change: The governance and human Resources Committee will then review the matter and recommend to the board whether to accept the resignation.
The next item of business is the election of the directives of a million for the ensuing year, or until the successors are elected or appointed.
Speaker Change: And the board's decision to accept or reject the resignation will be publicly announced with 90 days of the meeting.
As we have done in previous years, we will be nominating and approving individual directors and not a slate of directors.
Speaker Change: It is expected that resignations will be accepted.
Speaker Change: Except in situations, where exceptional circumstances would warrant that the applicable director continue to serve as a board member.
The Board of Directors has adopted policies tipping that if a director nominee receives a greater number of votes withheld from the election of that director than votes for the election, the nominee will offer to resign.
Speaker Change: The board of Directors has also adopted bylaw number two providing for advance notice of director nominations.
Speaker Change: I've been advised that no director nominations were received by the company.
The Governance and Human Resources Committee will then review the matter and recommend to the Board whether to accept the resignation.
Speaker Change: And accordingly, the nominees for election as a director are the nominees set forth in the information circular for this meeting.
And the board's decision to accept or reject the resignation will be publicly announced within 90 days of the meeting.
Speaker Change: The number of directors to be elected at the meeting has been fixed at 10.
Speaker Change: Information with respect to each of the nominees were set forth in the information circular for this meeting.
It is expected that resignations will be accepted, except in situations where exceptional circumstances would warrant that the applicable director continue to serve as a board member.
Speaker Change: May I have a motion to nominate each of the nominees as a director of Vermilion Energy Inc.
The Board of Directors has also adopted bylaw number two, providing for advance notice of director nominations.
<unk>: My name is <unk> and I'm, a representative of Vermilion and a shareholder.
Speaker Change: I nominate each of the following to act as a director for the ensuing year.
I have been advised that no director nominations were received by the company, and accordingly, the nominees for election as a director are the nominees set forth in the information circular for this meeting.
Speaker Change: Sure Robert Mitchel Laskey, Jim Kleckner Junior.
Speaker Change: Erin nickel.
Speaker Change: Larry.
The number of directors to be elected at the meeting has been fixed at 10. Information with respect to each of the nominees was set forth in the information of the circular for this meeting.
Speaker Change: Timothy Marchant.
Speaker Change: William Roby Manley.
Matt: Sure Matt.
Matt: Dhiren dot net and Judy Steele.
Speaker Change: Thanks April.
May I have a motion to nominate each of the nominees as a director of Iper million energy.
Speaker Change: I will ask I'll ask to move the resolution electing those individuals nominated as directors of Vermilion energy to serve as directors until the close of the next annual meeting of the shareholders or until their successors are duly appointed.
My name is Avril Shraven and I'm a representative of Vermillion and a shareholder. I nominate each of the following to act as a director for the ensuing year. Dion Hatcher, Robert Mikaleski.
Jeff McDonald: My name is Jeff Mcdonald, and I'm, a representative of Vermilion and a shareholder I move that each of the 10 persons nominated be elected as a director of Vermilion Energy, Inc. To hold office until the close of the next annual meeting of shareholders or until a successor is duly elected or appointed ACF.
James Cletner, Jr.
Karen Nicol Steve Lark
Timothy Marchand.
William Robey, Manjit Sharma, Myron Stadnik, and Judy Steele. Thanks, several.
Speaker Change: The motion seconded.
Kyle Preston: My name is Kyle Preston and I'm, a representative of Vermilion and a shareholder and I second the motion. Thanks Carl.
I will ask to move the resolution like those individuals nominated as directors of Bermillion Energy to serve as directors until the close the next annual meeting of the shareholders or until their successors are duly appointed.
Kyle Preston: As previously stated the directors will be like <unk> individually and not as a slate for a nominee to be elected as a director of Vermilion Energy, Inc. The votes cast in favor of the election of the director nominee should represent no less than a majority of the votes cast by shareholders represented in person or by proxy at this meeting.
My name is Jeff McDonald and I'm a representative of Vermillion and a shareholder. I move that each of the 10 persons nominated be elected as a director of Vermillion Energy Inc.
to hold office until the close of the next annual meeting of shareholders or until a successor is duly elected or appointed. Thanks, Jeff. May you have the motion seconded.
Speaker Change: Is there any discussion.
Speaker Change: Voting on the election of directors will be conducted by way about the white ballot is to be used for this matter of business. If you have not yet received one please raise your hand.
My name is Kyle Preston and I'm a representative of Vermillion and a shareholder and I second the motion. Thanks Kyle.
As previously stated, the directors will be elected individually and not as a slate.
Speaker Change: If you have not already completed your ballot and deposited with the scrutineer. Please complete the ballot now and sign your name clearly at the bottom of the ballot.
For a nominee to be elected as a director of Vermilion Energy Inc., the vote cast in favor of the election of the director nominee should represent no less than a majority of the votes cast by shareholders represented in person or by proxy at this meeting.
Speaker Change: These raise your hand, if you have a ballot to be collected and the scrutineer will collect the ballots.
Is there any discussion?
Speaker Change: Based on preliminary voting results for this matter. It is expected that this resolution will be carried if.
Voting on the election of directors will be conducted by way of ballot. The white ballot is to be used for this matter of business. If you have not yet received one, please raise your hand.
Speaker Change: We will continue with the remainder of the meetings business, while the scrutineer tabulate that provides the results of the ballots prior to the termination of the meeting.
Speaker Change: The next item of business is the appointment of the auditors of Vermilion.
If you have not already completed your ballot and deposited with the scrutiny, please complete the ballot now and sign your name clearly at the bottom of the ballot.
Speaker Change: Deloitte LLP are millions current auditors and have agreed to act upon hacked as auditors of Vermilion disappointed.
Please raise your hand if you have a ballot to be collected and a scrutinyer will collect the ballots.
Speaker Change: May I have a motion for the appointment of auditors.
Speaker Change: I move that Deloitte LLP be appointed as the auditors of Vermilion to hold office until the next annual meeting of shareholders.
Based on preliminary voting results for this matter, it is expected that this resolution will be carried. We will continue with the remainder of the meeting's business, while the scrutinier tabulates and provides the results of the ballots prior to the termination of the meeting.
Speaker Change: Thanks, Kyle may have emotions.
Speaker Change: Second the motion.
Speaker Change: Second the motion thanks, everyone.
Speaker Change: Is there any discussion.
Speaker Change: Voting on the.
The next item of business is the appointment of the auditors of Vermilion.
Speaker Change: Excuse me voting on the election of the directors will be conducted by way of ballot.
Deloitte LLP or Vermilion's current auditors and have agreed to act as auditors of Rameleon if appointed.
Speaker Change: Pink ballot will be used for this matter of business. If you have not yet received one please raise your hand.
May I have a motion for the appointment of auditors?
Speaker Change: If you have not already completed your ballot and positive as scrutineer. Please complete your ballot now and sign your name clearly at the bottom of the ballot. Please raise your hand, if you have a ballot to be collected in the scrutiny over collect the ballots.
I move that Deloitte LLP be appointed as the auditors of Vermilion to hold office until the next annual meeting of shareholders.
Thanks, Carl. May I have a motion? A second motion.
Speaker Change: Based on preliminary voting results for this matter. It is expected that this resolution will be carried we will continue with the remainder of this meetings business, while the scrutineer tabulate and provides the results of the ballot voting prior to the termination of the knee.
Second the motion. Thanks, everyone.
Is there any discussion?
Voting on the election of the direction will be conducted by way of ballot. The pink ballot will be used for this matter of business. If you not yet received one, please raise your hand.
Speaker Change: The next item of business is the confirmation and approval of bylaw number two which as previously mentioned requires advance notice director nominations.
If you have not already completed your ballot and the positive of Scrutonier, please complete your ballot now and sign your name clearly at the bottom of the ballot. Please raise your hand if you have a ballot to be collected and the Scudanier will collect the ballots.
Speaker Change: And I am too was adopted as part of her millions commitment to facilitating an orderly and efficient process for shareholders' meetings and Sherry as shareholders receive adequate notice and sufficient information regarding director nominees.
Based on preliminary voting results, for this matter, it is expected that this resolution will be carried. We will continue with the remainder of this meeting's business while the scrutiny tabulates and provides the results of the ballot voting prior to the termination of the meeting.
Speaker Change: It allows <unk> shareholders to register informed vote.
Speaker Change: Further information with respect to bylaw number two was set forth in the information circular for this meeting.
Speaker Change: May I have a motion for the confirmation approval of bylaw number two.
The next item of business is a confirmation approval of bylaw number two, which as previously mentioned requires advance notice of director nominations.
Speaker Change: I move that the ordinary resolution to confirm an approved bylaw number two as a biologic company. The full text of which is set out on page 22 of the information circular accompanying the notice of this meeting be approved thanks, Jeff.
Bylaw and M2 was adopted as part of a million's commitment to facilitating an orderly and efficient process for shareholders' meetings and as shareholders receive adequate notice and sufficient information regarding director nominees.
Speaker Change: I have the motion seconded.
Jeff McDonald: I second the motion.
Speaker Change: In April.
Speaker Change: Is there any discussion.
and allowing shareholders to register and form vote. Further information with respect to bylaw number two was set forth in the information of the Secretary for this meeting.
Speaker Change: Voting on confirmation approval by.
Speaker Change: Two will be conducted by way of ballot. The green ballot is to be used with a matter this matter of business.
Speaker Change: If you have not received yet received our please raise your hand.
May I have a motion for the confirmation approval of bylaw number two?
I move that the ordinary resolution to confirm and approve bylaw number two as a bylaw of the company, the full text of which is set out on page 22 of the information circular accompanying notice of this meeting be approved. Thanks, Jeff. May you have the motion seconded.
Speaker Change: If you have not already completed your ballot deposit with the Scrutineer. Please complete now and sign your name clearly at the bottom of the ballot.
Speaker Change: Please raise your hand, if you have developed to be collected.
Speaker Change: Based on preliminary preliminary voting results for this matter. It is expected that this resolution will be carried.
I second the motion. Thanks, April . Is there any discussion?
Speaker Change: We will continue with the remainder of this <unk> business, while the scrutineer tabulate. So it provides a results of the ballot voting prior to termination of the meeting.
Voting on confirmation approval by number two will be conducted by way of ballot. The green ballot is to be used for this matter of business. If you have not received yet received one, please raise your hand.
Speaker Change: The next item of business is the advisory advisory vote on executive compensation.
Speaker Change: As part of a millions ongoing commitment to strong corporate governance practices. We continue to hold a nonbinding advisory vote vote on the approach to executive compensation, commonly referred to as <unk>.
If you have not already completed at your ballot deposit with the scrutiny, please complete file out now and sign your name clearly at the bottom of the ballot.
Please raise your hand if you have a ballot to be collected.
Speaker Change: Hey on PE.
Speaker Change: In 2023, 90, 325% of shareholder supported our say on pay vote.
Based on preliminary voting results for this matter, it is expected that this resolution will be carried. We will continue with the remainder of this meeting's business while the student retabulates and provides the results of the ballot voting prior to termination of the meeting.
Speaker Change: In respect to this meeting two leading independent third party proxy advisory firms.
Speaker Change: And glass Lewis both recommended that shareholders vote for the approval of the proposed say on pay vote at this meeting.
Thank you.
The next item of business is the advisory vote on executive compensation.
Speaker Change: Hey, I have a motion for the say on pay Advisory Board.
As part of a million's ongoing commitment to strong corporate government practices, we continue to hold a non-binding advisory vote on the approach to executive compensation commonly referred to as say on pay.
Speaker Change: I move that on an advisory basis, and not to diminish the role and responsibilities of the board of directors that the shareholders accept the approach to executive compensation disclosed in the information circular accompanying the notice of this meeting.
In 2023, 93, 93.25% of shareholders supported our say-on-pay vote.
Speaker Change: May I have the motion seconded.
In respect to this meeting, two leading independent third-party proxy advisory firms, I.S.S. and Glass Lewis, have both recommended that shareholders vote for the approval of the proposed say-on-pay vote at this meeting.
Speaker Change: And second the motion.
Speaker Change: It.
Speaker Change: Is there any discussion.
Speaker Change: <unk> crowd.
Speaker Change:
Speaker Change: Oh pardon me voting on the say on pay advisory vote will be conducted by way of pallet yellow ballot to be used for this matter of business. If you have not received one please raise your hand.
May I have a motion for the C on P, advisory book?
I move that on an advisory basis and not to diminish the roles and responsibilities of the Board of Directors that the shareholders accept for millions approach to executive compensation disclosed in the information circular accompanying the notice of this meeting.
Speaker Change: If you are not have not already completed your ballot to positive with the scrutineer. Please complete the ballot now and sign your name clearly at the bottom of the ballot.
Speaker Change: Please raise your hand, if you have to do.
Speaker Change: Have a ballot to be collected and the scrutineer will collect the ballots.
May I have the motion seconded? I second the motion. Thanks, Yvonne. Is there any discussion?
Speaker Change: Based on preliminary voting results for this matter. It is expected that this resolution will be carried.
White crowd.
Speaker Change: We will continue with the remainder of the meetings business for the Scrutineer Tabulate and provides the results of the ballot voting prior to termination of the meeting.
Pardon me, voting on the same pay advisory vote will be conducted by way of ballot. The yellow ballot is to be used for this matter of business. If you had not, you have received room, please raise your hand.
Speaker Change: The next item of business is to table the consolidated audited financial statements of Vermilion for the year ended December 31, 2023, and the report of the auditors thereon.
If you not have not already completed your ballot and deposited with the scrutiny, please complete the ballot now and sign your name clearly at the bottom of the ballot. Please raise your hand if you have to have a ballot to be collected and the scrutinyer will collect the ballots.
Speaker Change: These financial statements were included in the in Vermilions Annual report, which was mailed to those shareholders, who requested the financial statements along with the notice of meeting and the information circular.
Based on preliminary voting results for this matter, it is expected that this resolution will be carried. We will continue with the remainder of the meetings business while the scrutiny tabulates and provides the results of the ballot voting prior to the termination of the meeting.
Speaker Change: For your ease of reference links to Vermilions annual report, which includes the financial statements are available on our website under the heading invest with us sub headings reports and filings.
The next item of business is to table the consolidated audited financial statements of Vermillion for the year end of December 31st, 2023 and the report of the auditors thereon.
Speaker Change: Are there any questions regarding the financial statements.
Speaker Change: Okay.
These financial statements were included in Vermilion's annual report, which is mailed to those shareholders who requested the financial statements along with the notice meeting and the information circular.
Speaker Change: I have the results of the voting on the balance.
Speaker Change: On the matter of fixing the number of directors of Vermilion Energy, Inc. Tim I'm advised by the Scrutineer.
For your ease of reference, links to Vermilion's annual report, which includes the financial statements, are available on our website under the heading, Invest with us, subheadings, reports, and filings.
Speaker Change: Greater than a majority of the votes.
Speaker Change: Cast have been voted in favor of this resolution therefore, I declare that this.
Speaker Change: Ocean has carried.
Are there any questions regarding the financial statements?
Speaker Change: On the matter of electing directors of Vermilion Energy, Inc. I advised by the scrutineer that.
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Speaker Change: For each of the director nominees greater than a majority of the votes cast have been voted in favor of the election of each director.
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Speaker Change: Therefore, I declare that this motion just carried and each of the nominees for election as director has been elected.
I have the results of the voting on the balance.
On the matter of fixing the number of directors of Vermilion of 10, Energy at 10, I'm advised by the scrutinyer that greater than a majority of the votes that cast have been voted in favor of this resolution. Therefore, I declare that this motion is carried.
Speaker Change: On the matter of appointing Deloitte LLP as auditors of Vermilion to hold office until the next annual meeting of shareholders I'm advised by the scrutineer that greater than a majority of the votes cast have been voted in favor of the resolution.
Speaker Change: Therefore, I declare that this motion is carried.
On the matter of electing directors of Million Energy Inc., I advise by the scrutinier that for each of the director nominees, greater than a majority of the votes cast, have been voted in favor of the election of each director.
Speaker Change: On the matter of approving the confirmation and approval of bylaw number two I'm advised by the scrutineer that greater than a majority of the votes cast have been voted in favor of this resolution.
Therefore, I declare that this motion is carried and each of the nominees for election as director has been elected.
Speaker Change: Therefore, I declare that this motion is carried.
Speaker Change: On the matter of the approval of the say on pay advisory vote I am advised by the scrutineer and greater than a majority of the votes cast have been voted in favor of this resolution.
On the matter of appointing to Lloyd LLP as auditors of a million to hold office into the next annual meeting of shareholders, I'm advised by the scrutiny that greater than a majority of the votes cast have been voted in favor of the resolution.
Speaker Change: Therefore, I declare that this motion is carried.
Speaker Change: Is there any further business.
Therefore, I declare that this motion is carried.
On the matter of approving the confirmation approval of bylaw number two, I'm advised by the scrutinyer that greater than a majority of the votes cast have been voted in favor of this resolution.
Speaker Change: As there's no further business to be brought before before this meeting the meeting is concluded.
Speaker Change: I will now turn it over to Dion Hatcher, President and Chief Executive Officer of Vermillion to provide you with an update on our business strategy moving forward.
Therefore, I declare that this motion is carried.
On the matter of the approval of the Seon-Pay advisory vote, I'm advised by the scrutinier than greater than a majority of the votes cast have been voted in favor of this resolution. Therefore, I declare that this motion is carried.
Anthony Hatcher: If you have any questions at the end of the presentation a microphone will made.
Anthony Hatcher: Available to you.
Anthony Hatcher: We would like to also welcome the people who have just joined US by webcast questions can also be addressed through our webcast audience. After the presentation is complete.
Now, is there any further business?
Speaker Change: British steel.
Speaker Change: Excuse me.
As there's no further business to be fought before this meeting, the meeting is concluded.
Speaker Change: Thanks, Bob.
Speaker Change: Good afternoon, everyone on this snowy feels like winter day.
I will now turn it over to Dion Hatcher, President and Chief Executive Officer of Bermillion, to provide you an update on our business and strategy moving forward. If you have any questions at the end of the presentation, a microphone will be available to you.
Speaker Change: We'll start with the informal part of the presentation I will just take a few minutes to talk about our Q1 results and the outlook for 'twenty four and beyond.
Speaker Change: Before we do that I'll, just remind you we will be referencing a presentation that can be found on our website under invest with us and events and presentations.
We would like to also welcome the people who have just joined us by webcast. Questions can also be addressed from a webcast audience after the presentation is complete.
Speaker Change: As well on the disclaimer the advisory information are forward looking statements as at the end of the presentation describes forward looking information non-GAAP measures and oil and gas terms use today and they were lines of risk factors and assumptions relevant to this discussion.
Thank you, Tia.
Thanks, Tom.
Speaker Change: So 2024 is actually a key milestone year for the company. It was in 1994 that we were a small junior oil and gas company.
Well, good afternoon, everyone. This snowy feels like winter day. We'll start with the informal part of the presentation. And we'll just take a few minutes to talk about our Q1 results and the outlook for 24 and beyond.
Speaker Change: The vision of our founders Lorenzo audio and Jeff.
Speaker Change: We started this company they had a differentiated strategy to be an E&P company that won that grew globally through a series of acquisitions.
Before we do that, just remind you, we will be referencing a presentation that we found on our website, and invest with us and events and presentations.
As well, the disclaimer, the advisory information of forward-looking statements is at the end of the presentation, describes the forward-looking information, non-gat measures, and oil and gas terms use today, and it aligns the risk factors and assumptions relevant to this discussion.
Speaker Change: The acquisition started at 97 with France that was our first international acquisition.
Speaker Change: After that we followed up with other acquisitions in Europe, and France, as well as which was key in 97.
Speaker Change: But then in Australia as well as the U S.
So, 2024 is actually a key milestone year for the company. It was in 1994 that we were a small junior oil gas company through the vision of our founders, Lorenzo, Claudio, and Jeff.
Speaker Change: This global diversification has several strategic advantages it provides vermilion with exposure to premium price global products, which helps to provide that outsides netback.
Speaker Change: It provides us opportunity for capital efficient often underexploited conventional assets and it provides access to high return international acquisition opportunities.
But they started this company, they had a differentiated strategy to be an EMP company that won that grew globally through a series of acquisitions.
Those acquisitions started in 97 with France. That was our first international acquisition. After that we followed up with other acquisitions in Europe , in France, as well as, which was key in 97, but then in Australia as well as the US.
Speaker Change: <unk> is unique in this strategy because of this advantaged business model, we've been able to return a significant portion of our capital to the investors over the years.
Speaker Change: Over $40 a share in dividends.
Speaker Change: As for years had been similar challenging years in our company's history.
This global diversification has several strategic advantages. It provides for a million amounts exposure to premium price global products, which helps to provide that outsize netback.
Speaker Change: <unk> taken a relentless effort on reducing debt and high grading the asset base. We have made significant progress on these measures as we'll talk today, but we do recognize there's still more work to do I.
It provides us opportunity for capital efficient, often under-exploited conventional assets, and it provides access to high return international acquisition opportunities.
Speaker Change: I do believe the company is much much better position today with a stronger balance sheet and a stronger asset base, we are much more resilient.
3 million is unique in this strategy. Because of this advantage business model, we've been able to return a significant portion of our capital to the investors over the years, over $40 a share in dividends.
Speaker Change: Extremely proud of all the hard work our team has done through achieving these goals and repositioning the company for the next 30 years.
Speaker Change: While the first quarter 'twenty four was another strong quarter for Vermilion, we delivered strong operational results, which was above the upper end of our production guidance that was really driven by Germany and the U S.
The past four years have been some more challenging years in the company's history.
if we've taken a relentless effort on reducing debt and high rating the asset base. We have made significant progress on these measures, as we'll talk today, but we do recognize there's still more work to do.
Speaker Change: We generated 431 millions of fund flows we invested $190 million of A&D capital, we generated $241 million of free cash flow for the quarter.
I do believe the company is much, much better positioned today with a stronger balance sheet and the stronger asset base, and we are much more resilient.
Speaker Change: This free cash flow helped us to reduce debt by another $134 million and achieve our net debt target of $1 billion during the quarter.
I'm extremely proud of all the hard work for our team has done through achieving these goals and repositioning the company for the next 30 years.
Speaker Change: We finished the quarter with a net debt of $944 million, which is the lowest in over a decade.
Speaker Change: Reaching our net debt target was a key milestone and allowed us to accelerate our return of capital strategy and we increased our allocation to 50% of excess free cash flow.
Well, the first quarter of 24 was another strong quarter for Vermilion. We deliver strong operational results, which was above the upper end of our production guidance that was really driven by Germany and the U.S.
Speaker Change: This was announced in Q4 and immediately after this announcement, we significantly increased the pace of our shareholder buybacks, we repurchased 1 million shares in the month of March bringing the total for Q1 to two 4 million shares.
We generated 431 million of fund flows, we invested 190 million of A&D capital, and we generated $241 million of free cash flow for the quarter.
This free cash flow helped us reduce debt by another $134 million and achieve our net debt target of $1 billion during the quarter.
Speaker Change: We've continued this pace in April and we bought back another 1 million shares in the month of April as well in.
Speaker Change: In addition to delivering strong production and financial results. We have also advanced all of our key growth projects in particular in the Montney liquids rich gas development.
We finished the quarter with the net debt of $944 million, which is the lowest in over a decade.
Reaching our net debt target was a key milestone and allowed us to accelerate a return of capital strategy, and we increased our allocation to 50% of excess free cash flow.
Speaker Change: Gas project in Germany, and our creature gas development.
Speaker Change: Expand on each of these projects in the following slides.
This was announced in Q4 and immediately after this announcement we significantly increased the pace of our shareholder buybacks. We repurched a million shares in the month of March, bringing the total for Q1 to 2.4 million shares.
Speaker Change: So starting with our international operations production came in at 32546 Boe's per day in Germany were successfully drilled our first deep gas exploration well discovered gas in the targeted zone, we plan to commence drilling the second well in Q2.
We've continued this pace in April and we bought back another million shares in the month of April as well. In addition to delivering strong production and financial results, we've also advanced all of our key growth projects, in particular in the Montany, the Liquits Risk Gas Development,
Speaker Change: <unk> also made several discoveries in Croatia, where we encountered hydrocarbons in multiple zones in the first 343 of the four wells, we've drilled to date investor.
Speaker Change: Investments in these programs are quite key as Theyre intended to support the longer term free cash flow generation of the business and we're excited to test the results of these wells in Germany, and Croatia in the second quarter.
the gas project in Germany and our Croatia gas development. I will expand on each of these projects in the following slides.
So starting with our international operations, production came in at 32,546 beawe each per day. In Germany, we were successfully drilled our first deep gas exploration well and discovered gas in the targeted zone. We plan commenced drilling the second well in Q2.
Speaker Change: Also in Croatia construction of our gas plant on the SA 10 block is nearing completion and is on schedule for midyear startup. This will allow us to bring on 2000, and we use a day of gas that's behind pipe that will help to immediately increase our free cash flow.
We also made several discoveries in Croatia, where we encountered hydrogen in multiple zones in the first three of the four wells we drilled to date.
Speaker Change: Australia, we continue to see strong performance from that unit as well as strong pricing and on do we generate the highest netback of our asset base with a $65 netback.
Investments in these programs are quite key as they're intended to support the long-term free cash flow generation of the business, and we're excited to test the results of these wells in Germany and Croatia in the second quarter.
Speaker Change: As a reminder, we have over 700000 net acres of land in Germany.
Speaker Change: We're targeting these deep gas exploration projects.
Speaker Change: These prospects that we see they are on trend with Netherlands, we've been in the Netherlands for almost two decades, we've drilled wells during that period and we have an ex success rate of 70%. So we're quite excited to apply those skills as we work on Germany.
Also in Croatia, construction of our gas plant on the SA10 block is nearing completion and is on schedule for mid-year startup. This will allow us to bring on 2,000 be used a day of gas that's behind pipe that will help to immediately increase our free cash flow.
Speaker Change: The first well as noted was successful oster hide and with targeting that well was targeting the existing gas field that well was drilled to a total depth of 5000 meters, where we discovered gas in the targeted zone. This is the deepest well that we've ever drilled in Germany and in Europe for that fact, and it shows the strong operational team that we have in Europe.
In Australia, we continue to see strong performance from that unit as well as strong pricing in Mondeu. We generated the highest netback of our acid base with a $65 BUE netback.
As a reminder, we have over 700,000 net acres of land in Germany.
We're targeting these deep gas exploration projects and these prospects that we see, they're on trend with Netherlands. We've been in the Netherlands for almost two decades. We've drilled wells during that period. We have an success rate about 70 percent. So we're quite excited to apply those skills as we work on Germany.
Speaker Change: We're very pleased with these initial results we plan to test the well in the second quarter as we're preparing for tie in operations and getting that well on an early 'twenty five.
Speaker Change: I'll now start planning and drilling the second well, which is bissell horse.
Speaker Change: This well is a higher risk as we're targeting a large prospect that we see on seismic it's going to take three to four months to drill and we have a 60% working interest in the second well to help them manage the risk capital associated with exploration drilling.
The first well, as noted, was successful, Osterhide, and that well was targeting an existing gas field,
The wall was drilled to a total depth of 5,000 meters where we discovered gas in the targeted zone. This is the deepest well that we've ever drilled in
Speaker Change: We are in the early innings in Germany, we were quite excited about the outlook and the opportunity we have in front of US we've identified at least nine individual prospects in many of these prospects are large enough to have multiple follow up drilling.
Germany and in Europe for that fact, and it shows the strong operational team that we have in Europe . We're very pleased with these initial results and we plan to test the well in the second quarter as we're preparing for tie-in operations and getting that well on in early 25.
Speaker Change: Associated with them so with success, we see the ability to more than double our Germany business unit over time.
We'll now start planning and drilling the second well, which is Bissell horse,
Speaker Change: In Croatia construction of the gas plant on the SA 10 block is nearing completion and all the team is currently testing that facility and conducting the pre commissioning and startup activities in preparation for a mid year startup on.
Now this well is a higher risk as we're targeting a large prospect that we see on seismic. It's going to take three to four months to drill and we have a 60% working interest in the second will to help to manage the risk capital associated with exploration drilling.
Speaker Change: On startup this unit will add 2000 Boe's a day.
We are in the early innings in Germany. We were quite excited about the outlook and the opportunity we have in front of us.
Speaker Change: European gas, which again is exposed to premium pricing in Europe.
Speaker Change: Specced it to have a net back over $50 per Boe.
We have identified at least nine individual prospects, and many of these prospects are large enough to have multiple follow-up drilling associated with them. So with success, we see the ability to more than double or Germany business unit over time.
Speaker Change: Initial production as a reminder, as from the two successful exploration, we drilled wells, we drilled before these wells were tested at 15% and 17 million cubic feet per day previously.
Speaker Change: So we're very excited to be nearing the point, where we can get these wells on production also increased we drilled two of our four well program in Q1 and subsequent to the quarter, we drilled our third well.
In Croatia, construction of the gas plant on the S-A-10 block is nearing completion. The team is currently testing that facility and conducting the pre-commissioning startup activities in preparation for a mid-year startup.
Speaker Change: All three of these wells in discrete structures have discovered hydrocarbons in multiple zones, we've had both oil and gas shows in the zones and it looks very promising given the thickness of some of these zones.
On startup, this unit will add 2,000 bues a day of European gas, which again is exposed to premium pricing in Europe , expected to have a netback over $50 per B.OE.
Speaker Change: We don't know the full extent of the development. We're still early days as we will be testing. These wells in the next quarter, but having consecutive exploratory success is very exciting on this block.
Initial production as a reminder is from the two successful exploration wells we drilled before. These wells were tested at 15 and 17 million cubic feet per day previously.
Speaker Change: Waiting the test results will be <unk> as we move into the second quarter.
So we're very excited to be nearing the point where we can get these wells on production.
Speaker Change: Production from our North American operations averaged 52959 view today in Q1, most of that capital was allocated to the Montney development.
Also in Croatia, we drilled two of our four well program in Q1, and subsequent to the quarter, we drilled our third well. All three of these wells, indiscreet structures, have discovered 100-garbon in multiple zones. We've had both oil and gas shows in the zones, and it looks very promising given the thickness of some of these zones.
Speaker Change: We've drilled 13 and completed 13 wells and we brought nine wells on production.
Speaker Change: Well in the U S. Even though we didn't have operated wells. This quarter. We did participate in some non operated wells and a formation called the Parkman, that's an oil zone.
We don't know the full extent of the development. We're still early days as we'll be testing these wells in the next quarter. But having consecutive exploratory success is very exciting on this block and we're awaiting the test results of these wells as we move into the second quarter.
Speaker Change: Those wells came online in the quarter and help to grow production in our U S business unit quarter over quarter.
Speaker Change: Construction of the BC Montney battery is progressing as per plan as well as we tighten the six wells on the first pad in our Montney position.
Production from our North American operations, average 52,9 959 views today in Q1. Most of that capital was allocated to the Monteney development.
Speaker Change: Yeah.
Speaker Change: The slide on.
Speaker Change: Side of the picture on Slide 20 shows as battery. It's a 16000 beauty battery that we're currently constructing it is nearing the completion and we're expected to start this unit up in late Q2.
We've drilled 13 and completed 13 wells, and we brought nine wells on production.
as well in the US, even though we didn't have operated wells this quarter, we did participate in some non-operated wells in a formation called the Parkman, that's an oil zone,
Speaker Change: This battery will more than double our infrastructure capacity in the Montney and we look to fill that capacity in the upcoming years.
Speaker Change: Other expansions will be required as we debottleneck this facility by adding compression.
Those wells came online in the quarter and helped to grow production in our U.S. business unit quarter quarter. Construction of the BC-Monti battery is progressing as per plan, as well as we tied in the six wells on the first pad in our Manti position.
Speaker Change: Ultimately, we are targeting a production rate of 28000 views per day on our Montney asset.
Speaker Change: We recently tied in the first six wells as noted and we're flowing the wells through our existing bottleneck infrastructure.
The picture on slide 20 shows this battery. It's a 16,000 BWED battery that we're currently constructing. It is nearing the completion, and we're expected to start this unit up in late Q2.
Speaker Change: But the early results of the wells are quite encouraging in line with the strong wells that we drilled in 2023, which you can see the results on this slide.
Speaker Change: We will be able to produce those wells at higher rates. Once we were able to get their battery up and running.
This battery will more than double our infrastructure capacity in the Montany, and we look to fill that capacity in the upcoming years. Further expansions will be required as we debonel-neck this facility by adding compression. Altly, we are targeting a production rate of 28,000 views per day on our Monti asset.
Speaker Change: In summary, these results are very positive and we can do to validate the quality of our BC acreage in the Montney. We've also drilled the next five wells are program I'll look to Frac those complete them in the next quarter and bring them online in Q3.
Speaker Change: On the cost side, we continue to optimize our drilling and completion activities, which should result in cost savings per well of 50%. This is compared to our 23 program. Our 24 program used 17% less water, which reduces cost but it also reviews reduces the environmental impact.
We recently tied in the first six wells as noted and we're flowing those wells through our existing bottleneck infrastructure.
But the early results of the wells are quite encouraging in line with the strong wells that we drilled in 2023, which you can see the results on this slide. We'll be able to produce those wells at higher rates once we were able to get our battery up and running.
Speaker Change: As well we are further optimizing our well design and our completion activities.
Speaker Change: In addition to this we are piloting different completion strategies and we're also piloting tighter well spacing. We think the combination of these learnings will allow us to improve the efficiency in which we operate and develop this asset for decades to come.
In summary, these results are very positive and we continue to validate the quality of our BC acreage in the Monty. We've also drilled the next five wells of our program will look to frack those, complete them in the next quarter and bring them online in Q3.
Speaker Change: In summary, it's a very key year for us in the Montney as we get the infrastructure in place to start up. This next pad and we're quite excited about the cash flow that this asset will generate for us for decades to come.
On the cost side, we continue to optimize our drilling and completion activities, which is resulting cost savings per well of 15%. This is compared to our 23 program. Our 24 program used 17% lot with less water, which reduces costs, but it also reduces the environmental impact.
Speaker Change: On the outlook side, we expect to see continued operational momentum as we go into Q2, we'll marine focused on these key growth projects that we've talked about earlier, that's completion and startup of the BC Montney battery completion and commissioning of the gas plant in Croatia as well as testing the successful wells that we drilled in.
As well, we're further optimizing our well design and our completion activities.
In addition to this, we are piloting different completion strategies and we're also piloting tighter well spacing. We think the combination of these learnings will allow us to improve the efficiency in which we operate and develop this asset for decades to come.
Speaker Change: Any and Croatia.
Speaker Change: For yoga audience may rains in Tac for production and we expect Q2 production to be in the 83 to 85000 BOE a day range commodity prices as well continue to be supportive.
In summary, it's a very key year for us in the Montany as we get the infrastructure in place, start up this next pad, and we're quite excited about the cash flow that this asset will generate for us for decades to come.
Speaker Change: And our financial outlook remains very strong.
Thank you.
Speaker Change: Looking at the financial forecast for 2024, we're currently forecasting approximately $1 3 billion of fund flow and free cash flow of approximately $700 million.
On the outlook side, we expect to see continued operational momentum as we go into Q2. We'll remain focused on these key growth projects that we've talked about earlier.
Speaker Change: We've also included our preliminary 25 outlook, which anticipates modest production growth and with fund flows based on backwardation of the strip pricing as well as adjusting for lower hedge gains relative to 'twenty four we're forecasting about $1 1 billion of funds flow for 2025.
That's completion of the B.C. Montany Battery, completioning of the SA10 gas plant in Croatia, as well as testing the successful wells that we drilled in Germany and Croatia.
We yield guidance may range intact for production, and we expect Q2 production to be in the 83 to 85,000 bewee range. Commodity prices as well continue to be supportive, and our financial outlook remains very strong.
Speaker Change: So as you can see as well those red bars, we will continue to reduce debt and continue to strengthen the balance sheet through 'twenty four and 'twenty five as we continued to reduce.
Looking at the financial forecast for 2024, we're currently forecasting approximately 1.3 billion of fund flow and free cash flow approximately 700 million.
Speaker Change: And reduce debt and returned 50% of our capital to our investors.
Speaker Change: With that accelerated return of capital payout target of 50% of our excess free cash flow.
We've also included our preliminary 25 outlook, which anticipates modest production growth and with fund flows based on backgradation and strip pricing, as well as adjusting for lower hedge gains relative to 24, we're forecasting about $1.1 billion of fund flow for 2025.
Speaker Change: We would expect to have a robust share buyback program for the balance of the year based on the current forecast we are projecting the return of approximately 10% of our market cap two.
Speaker Change: <unk> shareholders and that'll be through a combination of fixed base dividend and the share buybacks, which were currently undertaking.
As you can see as well, those red bars will continue to reduce debt and continue to strengthen the balance sheet through 24 and 25 as we continue to reduce debt and return 50% of our capital to our investors.
Speaker Change: Well, we've made a lot of progress over the past few years I'm actually very excited but they were looking at the company as we go forward. We've got a very strong balance sheet now we've got the lowest debt to cash flow in over a decade, we continue to build operational momentum with another strong quarter. In Q1, we've got strong run times on our legacy assets and we've talked about the Australia unit.
With that accelerated return of capital pay target at 50% of our excess free cash flow, we would expect to have a robust and sure buyback program for the balance of the year. Based on the current forecast, we're projecting the return approximately 10% of our market cap
Speaker Change: Which is back online performing quite well and we continue to progress our key growth projects in the Montney.
Speaker Change: In Croatia and in Germany.
Speaker Change: Our near term return on capital framework provides investors with a growing base dividend and meaningful share buybacks, which we look to augment with modest production growth and opportunistic international acquisitions.
to shareholders and that will be through a combination of fixed base dividend and the share buybacks which we're currently undertaking.
Well, we've made a lot of progress over the past few years. I'm actually very excited. I bet they were looking at the company as we go forward. We've got a very strong balance sheet now. We've got the lowest debt to cash flow in over a decade.
Speaker Change: We'll continue to focus.
Speaker Change: On operational excellence and executing our 24 plan, while maintaining financial discipline I.
Speaker Change: I believe this will set the future for profitable growth as we position the company for the next 30 years.
We continue to build operational momentum with another strong quarter in Q1. We've got strong run times in our legacy assets, and we've talked about the Australia unit, which is back on line performing quite well, and we continue to progress our key growth projects in the Monteney.
Speaker Change: We look forward to providing updates on these key growth projects in the months ahead. So in closing I would like to thank our shareholders for your continued confidence in Vermillion.
Speaker Change: Thank you to our board of directors. Thank you to our employees, our contractors and our service providers for helping us execute our strategy and for your contributions.
in Croatia and in Germany. Our near-term return of capital framework provides investors with a growing base dividend and meaningful share bybacks, which we look to augment with modest production growth and opportunistic international acquisitions. We will continue to focus
Speaker Change: Well that concludes the prepared remarks, and with that I'd like to open it up for questions.
in operational excellence in executing our 24 plan while maintaining financial discipline.
Speaker Change: Yeah.
We believe this will set the future for profitable growth as we position the company for the next 30 years. We look forward to providing updates on these key growth projects in the months ahead. So in closing, I would like to thank our shareholders for your continued confidence in Vermilion.
Speaker Change: Okay.
Speaker Change: Question in the back.
Thank you to our board of directors. Thank you to our employees, our contractors, and our server providers for helping us execute our strategy and for your contributions.
Speaker Change: Yes, I think just over here, Sir if you wouldn't mind.
Speaker Change: Okay.
Well, that concludes the prepared remarks, and with that I'd like to open it up for questions.
Speaker Change: Okay.
Speaker Change: I'm a shareholder.
Speaker Change: Right.
Speaker Change:
Speaker Change: Just a general question.
Speaker Change: As you see things going forward.
I'm gonnae.
Speaker Change: Political environment can be a little tricky in Europe.
Speaker Change: Your thoughts on that.
I'm gonnae.
Speaker Change: Especially in Germany at this point not predictable.
Question in the back.
Speaker Change: Yeah. So I'd appreciate some feedback on that.
Speaker Change: Also.
Speaker Change: What do you think.
Speaker Change: And it would be the catalyst to improve sentiment for vermilion because.
and I'm gonnae.
Speaker Change: Hi, good out there right now yeah.
My name is Levi-Everly. I'm with Vermilion. I've been for quite a long time.
Speaker Change: Hi, good at all actually.
Just a general question as you see things going forward.
Speaker Change: A tremendous amount of sentiment in the way of.
Speaker Change: Actually the facts would say that it should be a much better.
political environment can be a little tricky in Europe . What are your thoughts on that, especially in Germany at this point? Not predictable really very much at all at the moment. So I appreciate some feedback on that.
Speaker Change: Forming company it's not.
Speaker Change: So.
Speaker Change: These are the two things that certain comments on it.
Speaker Change: Well, thank you for the questions.
Speaker Change: Let's start with the first question about Europe, and I think we would we'd been in Europe for most of our 30 years in business and so it's an area that we know quite well.
Also, what do you think?
Speaker Change: We continue to execute programs there in all the jurisdictions in Germany is a really interesting one I mean, Germany was the epicenter of the crisis when the 40% of the European gas was shut off so what we've seen and anything youre seeing this with our capital execution as Germany has been.
going to be the catalyst to improve sentiment for million because
I get out there right now. Yeah.
Not good at all, actually. There's a tremendous amount of sentiment that's in the way of
actually the facts would say that it should be a much better performing company it's not at this point so those are the two things I'd like some comments on
Speaker Change: Open to working with us to within the regulatory framework.
Speaker Change: Help us to accelerate permits and get these wells drilled and so we're quite excited with having this first of all drilled on these are more material targets and we'll move to the second well and we've got some runway here for multiple years for that.
Thank you. Well, thank you for the questions.
Let's start with the first question about Europe and I think we would, we've been in Europe for most of our 30 years in business and so it's an area that we know quite well.
Speaker Change: Interesting enough I think Germany is quite a.
We continue to execute programs there in all the jurisdictions, and Germany is a really interesting one. I mean, Germany was the epicenter of the crisis when the 40% of the European gas was shut off. So what we've seen, and I think you're seeing this with our capital execution, is Germany's been
Speaker Change: Pragmatic around their energy sources, 30% of their energy is still coal and lignite by the way and there.
Speaker Change: They are choosing not to continue to invest in nuclear and shut down the loss of that nuclear plants. So that's an economy that for.
Speaker Change: For quite a while has been used to consuming gas and I think a little pragmatic around the need for gas. So we're quite excited with you look in Germany on the second question around stock performance and I think you acknowledged in.
open to working with us to, you know, within the regulatory framework, help us to accelerate permits and get these wells drilled drilled. And so we're quite excited with
Speaker Change: The slide earlier that showed the list.
having this first wall drilled, these are more material targets.
Speaker Change: Called the fundamentals of the business, how we've been able to reduce debt by $1 2 billion over the last three years.
And we'll move to the second well. And we've got some runway here for multiple years for that. So interesting enough, I think Germany is quite
Speaker Change: We've been able to high grade our asset base and increase our fund flows and our free cash flow. Accordingly. So we're quite excited about that I mean, the business is fundamentally stronger and I think performing better than it has in recent years.
pragmatic around their energy sources, 30% of their energy is still coal and lignate, by the way, and they're choosing not to continue to invest in nuclear and shut down the last of that nuclear plan. So that's an economy that
Speaker Change: I believe that will translate into stock performance, but I do know the thing that I need to focus on the most is the.
for quite a while has been used to consuming gas and I think a little pragmatic around the need for gas. So we're quite excited with the outlook in Germany. On the second question around stock performance, and I think you acknowledged
Speaker Change: Is the business itself. So there's been some headwinds I think the overhang on the windfall tax in Europe is one of them all of that came out retroactively late in 'twenty three that's really in 'twenty, two and that was definitely an overhang in 'twenty three.
The slide earlier that showed the, you know, that's called the fundamentals of the business, how we've been able to reduce debt by $1.2 billion
Speaker Change: That is now behind US we are done with the windfall tax.
three years.
We've been able to hydrate our acid base and increase our fund flows and our free cash flow accordingly. So we're quite excited about that. I mean, the business is fundamentally stronger and I think performing better than it has in recent years.
Speaker Change: So hopefully we can future investor meetings, and that's not a topic of discussion, but clearly that did negatively impact the sentiment on the stock irregardless of the cash flows we were actually generating during those periods.
I believe that will translate into stock performance, but I do know the thing that I need to focus on the most is the
Speaker Change: What would be the Australia unit I mean that unit was down last year for about three quarters. That's never a good thing we are proud to say that that unit and you want to do is back up and running has been running quite smoothly for the last three quarters. It's the highest net back in the company. It will generate in the order of 80 to 100 million a year of free cash flow and.
is the business itself. So there's been some headwinds. I think the overhang on the windfall tax in Europe is one of them.
That came out retroactively late in 23. That's really late in 22 and that was definitely an overhang in 23. That is now behind us. We were done with the windfall tax.
Speaker Change: So we're quite excited with that and I think those were headwinds are now behind us and both of those are successful we look forward.
And so hopefully we can, you know, future investor meetings, that's not a topic of discussion, but clearly that did negatively impact the settlement on the stock, regardless of the cash flows we were actually generating during those periods.
Speaker Change: Return of capital is still fairly new we bumped it up twice here recently, I think returning 10% of our market cap.
Speaker Change: The share buybacks a million shares a month is quite attractive and I think we will see benefits of that over time. So.
The second would be the Australia unit. I mean, that unit was down last year for about three quarters. That's never a good thing. We are proud to say that that unit in Dwondo is back up and running. It's been running quite smoothly for the last three quarters. It's the highest net back in the company. It'll generate.
Speaker Change: There has been some headwinds and fully acknowledge I think the business to your point has improved significantly and we have nominally 300 meetings, a year with investors and build up to <unk>.
Speaker Change: Rampion and tell the story of how the business has gotten stronger and we would look to see that translate into the stock price at the appropriate time, but again. Thank you for your question.
in the order of 80 to 100 million a year of free cash flow. And so we're quite excited with that. And I think those, what were, headwinds are now behind us, and both of those are successfully looking forward. Return to capital is still fairly new. We bumped it up twice here recently. I think returning 10% of our market cap
by the share of buyback, a million shares a month is quite attractive and I think we'll see benefits of that over time. So there has been some headwinds and fully acknowledge. I think the business, to your point, has improved significantly and we have nominally 300 meetings a year with investors and we'll look to, you know,
Speaker Change: Okay.
Speaker Change: Yes, I think you were talking about the reserves, yes, yes, I can I can kick that off and there's more detail alerts can comment, but just quickly there is.
Speaker Change: With the asset high agree that we've talked about we're now allocating more capital to the Montney asset and we're quite excited as we talk today is how strong those wells are off that 16 to 20 pads. These wells come on at 600 800 barrels of oil.
Speaker Change: As we got the permits and the clarity on infrastructure, it's really last year, we get more certainty on the capital allocation to that asset. The good news that is or bad news I guess, depending on from a reserve point of view is there is other parts of our business that won't attract capital and that those particular units were in Alberta, and Saskatchewan. So as we chose to invest more on the mic.
I'm gonnae.
I'm gonnae.
Thank you.
Yeah, I think you're talking about the reserves. Yeah, yes, I can kick that off and there's more detail. Lars can comment, but just quickly there is, you know, with the asset high grade that we've talked about, we're now allocating more capital to the Monteney asset, and we're quite excited as we talked today is how strong those walls are off the 16 to 20 pad. Like these walls come on at...
Speaker Change: And Germany as well, we will be investing less in Saskatchewan in particular.
Speaker Change: We still own those lands, we still have those drilling prospects on our lands, but he get recognize separately and then as a result of all of that gets recognized there's an impact on the business. So.
600 barrels of oil. As we got the permits and the clarity on infrastructure through late last year, we get more certainty on the capital allocation to that asset. The good news then is,
Speaker Change: That's the back story of you probably know that but for sure. We're focused on investing in the Montney as well, Germany, where those two assets are very much under booked and given the early days.
Speaker Change: Thank you.
or bad news, I guess, depending on the reserve point of view, is there's other parts of our business that won't attract capital and that those particular units were in Alberta and Saskatchewan.
Speaker Change: Any other questions.
So as we chose to invest more in the mica, more in Germany as well, we'll be investing less in Saskatchewan in particular. We still own those lands. We still have those drilling prospects on our lands, but they get recognized separately, and then as a result of how that gets recognized, there's an impact on the business. So that's the back story. You probably know that, but for sure we're focused on investing in the Monteneas as well, Germany where those two assets are very much underbooked and given their early days.
Speaker Change: Yes, sorry.
Speaker Change: Yes, we do have a few questions on the webcast here first one on the windfall tax just wondering.
Speaker Change: A little bit more color on that and how we can be certain that this windfall tax doesn't return at some point in the future.
Speaker Change: Yes.
Speaker Change: The history of the windfall tax and it's I think.
Speaker Change: Helpful to think about why the windfall tax existed at the time.
Speaker Change: Prices in Europe, the gas prices went exponential and in Canada. We are used to paying two to $3 an mcf for our energy costs.
Thank you. Any other questions?
I'm gonnae.
Speaker Change: As a result of the tragic events in Ukraine, and the restriction of gas that market.
Yeah, sorry, that's his line. Yeah, we do have a few questions on the webcast here. First one on the windfall tax, just wondering
Speaker Change: Price literally went exponential and so gas went all the way to $100. Canadian So when you think about that I guess 50 times higher than what we've ever seen and in North America.
You know, a little bit more color around that and how we can be certain that this windfall tax doesn't return at some point in the future.
Speaker Change: Governments had to respond to that and their response was tax.
Yeah, the
The history of the windfall tax, and it's, I think, helpful to think about why the windfall tax existed at the time. Prices in Europe , the gas prices went exponential. And in Canada, you know, we're used to paying $2 to $3 an MCF for our energy costs.
Speaker Change: As you follow through of course, you know again, the sad events in Ukraine are still ongoing but I think the market. There has normalized gas prices in Europe today are 12% to $13 are forecast to be around $40 next year still very robust you know six to seven times higher than what we see in Canada, and so that's an attractive place for us to play capital <unk>.
As a result of the tragic events in Ukraine and the restriction of gas, that market, the gas price literally went exponential. And so gas went all the way to $100 Canadian. So when you think about that, like it's 50 times higher than what we've ever seen in North America.
Speaker Change: Rypien Union came out last late last year and they did their follow up analysis to respond to these extraordinary measures that were used to implement this type of retroactive tax and the outcome of that study was saying that you do not see the need for this policy go forward and so it has since expired.
Governments had to respond to that and their response was tax.
Speaker Change: Note that France actually did not implemented in 23, even though the add the option too.
As you follow through, of course, again, the sad events in Ukraine are still ongoing, but I think the market there has normalized gas prices in Europe today are $12 to $13, their forecast to be around $14 next year. Still very robust, six to seven times higher than what we see in Canada, so that's an attractive place for us.
Speaker Change: So at this point you know the windfall tax from the European Union is behind US what would bring it back what would be the next question I think it would be exponential prices right and we view that as the right way risk and we do not want to see and he tragic events anywhere in the world, but if prices were to go Super high that would be the risk and where that would be introduced to our business to remind it.
to play capital. The European Union came out late last year and they did their follow-up analysis to respond to these extraordinary measures.
Speaker Change: Investors, who was basically at 30%.
that were used to implement this type of retroactive tax. And the outcome of that study was saying that you do not see the need for this policy go forward, and so it's since expired.
Speaker Change: Scent of the gas was the incremental tax and so.
Speaker Change: We still were able to produce that gas and fill that gas or in around 20, plus dollars, which again you compare that back to Canada, where it's two to three bucks. So it's done and what would bring it back with extraordinary pricing, which we don't see.
It's worth note that France actually did not implement it in 23, even though they had the option two. So at this point, you know, the windfall tax from the European Union is behind us.
What would bring it back would be the next question. I think it would be existential prices, right? And we view that as right way risk. We do not want to see
Speaker Change: Okay. The next question, we have relates to our Germany business unit, a number of years ago, We signed a farm in agreement with Exxon do we still own that land or have we relinquished it don't we still own in Atlanta, Yes, Yes, yes, and as noted we've got 700000 net acres Atlanta in Germany.
any tragic events anywhere in the world, but if prices were to go super high, that would be the risk and where that would be introduced to our business. To remind investors was basically
Speaker Change: Lot seismic over that existing infrastructure in place that we're quite excited about the potential development in the German unit.
30% of the gas was the incremental tax. And so we still were able to produce that gas and sell that gas, we're in around $20 plus, which again, you compare that back to Canada where it's two to three bucks. So it's done, and what would bring it back with extraordinary pricing, which we don't see.
Speaker Change: Okay and the next question all lumped together, we've had a few of these around the dividend. Okay. Do we expect to increase the dividend this year and why don't we pay a higher dividend as opposed to buying back shares.
Okay, the next question we have relates to our Germany business unit. A number of years ago we signed a farm agreement with Exxon. Do we still own that land or have we relinquished it?
Speaker Change: Chris do you want to take this one or you want me to you can have an opportunity here.
Speaker Change: Okay.
Speaker Change: Yeah.
We still own that land. As noted, we've got 700,000 acres of land in Germany. Lot seismic over that, existing infrastructure in place. We're quite excited about the potential development in the German unit.
Chris: Yes. Thanks for the question over the webcast there. So as a reminder, we did increase the dividend by 20%.
Chris: For 2024 over the 2023 level and.
Okay, and the next question, I'll lump these together. We've had a few of these around the dividend. Okay. Do we expect to increase the dividend this year, and why don't we pay a higher dividend as opposed to buying back shares?
Chris: Our view is we want to maintain resilience financial flexibility within the system and so our approach is going to be to limit that fixed dividend ensure that it is sustainable and continually tested against a mid price deck, which would be $60 oil $2 50, North American gas.
Chris: And then $10 $12 50 European gas and so we want to make sure that that fixed dividend sustainable under that price environment.
Yeah, well, thanks for the question over the webcasts there. So as a reminder, we did increase the dividend by 20%.
Chris: We are committed to is targeting the 50% return of excess free cash flow to shareholders. Here in 2024, I think that shareholders within this industry have gotten a lot more comfortable with the variable mechanisms in terms of returning capital and our preference in terms of how to do that is through the share buybacks, we do still think that there.
for 224 over the 2023 level. And kind of our view is we want to maintain resilience, financial flexibility within the system. And so our approach is going to be to limit that fixed dividend
Chris: Room for increases in the dividend as we go forward. So what we would like to pair is ratable increases to the base dividend that are sustainable in a price environment much lower than we are at today and then couple that with that variable return of capital to top up to that target of 50%. So that's the approach that we're taking we think.
ensure that it is sustainable and continually tested against a mid-priced deck, which would be $60 oil, $250 North American gas, and then $10, $1250 European gas. And so we want to make sure that that fixed dividends is sustainable under that price environment.
What we are committed to is targeting the 50% return of excess free cash flow to shareholders here in 2024.
Chris: Nice nice mix of providing a 3% yield today.
Chris: Reducing the share count by a pretty significant.
I think that shareholders within this industry have gotten a lot more comfortable with the variable mechanisms in terms of returning capital. And our preference in terms of how to do that is through the share buybacks.
Speaker Change: Significant amount and being able to target that 10% of the market cap in terms of what we're returning.
Speaker Change: Yeah.
Speaker Change: Alright, we have one last question here related to our Canadian operations can you explain why the Canadian production was down quarter over quarter and year over year.
We do still think that there is room for increases in the dividend as we go forward. So what we would like to pair is
rateable increases to the base dividend that are sustainable in a price environment much lower than we are at today and then couple that with that variable return of capital to top up to that target of 50%.
Speaker Change: Yes, that's just timing of capital we've talked about with the Montney in particular, which is the bulk of the capital that we're investing in Canada. As noted the battery itself will be coming on late Q2, and so there's a period here, where we're drilling wells spending quite a bit of capital, but we will see the benefits of that production in the second half of this.
That's the approach that we're taking. We think it's a nice mix of providing a 3% yield today, reducing the share count by a pretty significant amount and being able to target that 10% of the market cap in terms of what we're returning.
Speaker Change: Year, so timing of capital and then you've got your natural declines that are that are kicking in or waiting to bring those new wells on which it will be very soon.
All right, we have one last question here related to our Canadian operations. Can you explain why the Canadian production was down quarter over quarter and year over year? Yeah, that's just timing of capital. We've talked about the Montany in particular, which is the bulk of the capital that we're investing in Canada. As noted, the battery itself will be coming on late Q2, and so there's a period here where we're drilling well, spending quite a bit of capital, but we'll see the benefits of that production in the second half of the year. So timing of capital and then you get your natural declines that
Speaker Change: Great. We did have one more question come through and again related to the dividend would we consider a special dividend to top off the base dividend.
Speaker Change: Yes, the answer is yes and no.
Speaker Change: But we at this point I mean, we think about capital allocation as a management team. That's that's what we're paid to do and keep everyone safe as we run our operations and so when we look at the valuation of the business today, and we talked about a desk lower casuals are higher and the running room. We have with these key growth projects, we're quite excited with the outlook, we compare that with the value.
Speaker Change: The company in the marketplace and so we think it's a great allocation of capital to reduce those shares and.
that are kicking in while we're waiting to bring those new wells on, which will be very soon.
We did have one more question come through and again related to the dividend. Would we consider a special dividend to top up the base dividend?
Speaker Change: And so that that you know right now is the clear priority. If we found ourself in a period of time down the road where the.
Speaker Change: Price of the stock was more aligned with what we see the intrinsic value of the company will then I think that would as.
The answer is yes, but at this point, I mean, we think about capital allocation as a management team, that's where we're paid to do and keep everyone safe as we run our operations. And so when we look at the valuation of the business today and we talked about how debts lower, cash flows are higher,
Speaker Change: As other management teams have done provide the option to look at other means of capital return at this point, we don't see that as a as an option on the table, but in the future would be a good problem to have.
Speaker Change: Okay. Thanks beyond that is all the questions. We have from the webcast I'll open it back up to the audience, if there's any more questions.
In the running room we have with these key growth projects, we're quite excited with the outlook. We compare that with the valuation of the company in the marketplace, and so we think it's a great allocation of capital.
Speaker Change: Okay.
Speaker Change: Okay.
to reduce those shares. And so that, you know, right now is the clear priority. If we found herself in a period of time down the road where the
Speaker Change: Okay.
Speaker Change: Okay.
price of the stock was more aligned with what we see the intrinsic value of the company, well then I think that would, as other management teams have done, provide the option to look at other means of capital return. At this point, we don't see that as an option on the table, but in the future it would be a good problem to have.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Sure.
Okay, thanks, Dion. That's all the questions we have from the webcast. I'll open up to the audience if there's any more questions.
Speaker Change: Nothing else.
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: Yeah.
The time is the
Speaker Change: Yes, maybe Larry you can come up and I can kick it off here and so just quickly on the windfall tax the total expenditure of the windfall tax over two years was $300 million.
You talk about the one off.
All of a
I'm gonnae.
Larry: You referenced earlier, our cash flow generation in those years.
Speaker Change: 1.6 billion and a 1.2 billion and that was after the tax so those years were very very.
I'm gonnae.
Speaker Change: Strong record years, frankly for cash flow generation and free cash flow generation.
there was something else was going on other than the task that really
Larry: For the company I think your question then is how relating those cash flows to earnings just to clarify so maybe ill Passover alert.
I'm gonnae.
Larry: Yes.
Yeah, maybe layers you can come up and I can kick it out here. And so just quickly on the windfall tax, the total expenditure of the windfall tax over two years was 300 million. Reference earlier our cash flow generation in those years.
Speaker Change: Yes, just to summarize sort of a two year period that you're referencing Sir so 2022.
Speaker Change: <unk> was kind of in that $1 $6 billion range as prices tempered in 2023 were at the $1. One level angle you are referencing too is we did have some noncash impairment charges go through the income statement in 2023 that did push us into a net loss position for the year Dion touched on it earlier, but what we did in 2010.
1.6 billion and 1.2 billion and that was after the tax. So those years were very, very I guess strong record years frankly for cash flow generation and free cash flow generation.
for the company. I think your question then is relating those cash flows to earnings, just to clarify, so maybe I'll pass over lawyers. Yeah, yeah.
Speaker Change: Three as we acknowledged the fact that now that we have sort of a runway on the PC side of our Montney asset we acknowledged within our reserve bookings, but that is where a large amount of our capital is going to go over the next five years.
Yeah, just to summarize sort of the two-year period that you're referencing, sir, so 2022, you know, FFO was kind of in that $1.6 billion range.
Speaker Change: The way our reserve book works is you really have to have line of sight to capital in the next five years to be able to book reserves and so what we did is we wanted to acknowledge kind of our per annum spend level here of call it $6 million to $700 million and so we de recognized reserves primarily in the U S business unit and.
As prices tempered in 2023, we're at the 1.1 level. The angle you're referencing to is we did have some non-cash impairment charges go through the income statement in 2023.
That did push us into a net loss position for the year. Dion touched on it earlier, but what we did in 2023 is we acknowledge the fact that now that we have sort of a runway on the BC side of Armani asset,
Speaker Change: The Saskatchewan cash generating unit and so what that resulted in is less reserves.
Speaker Change: Book value from a reserve perspective and triggered the write downs.
We acknowledged within our reserve bookings, but that is where a large amount of our capital is going to go over the next five years.
Speaker Change: Other thing to keep in mind is a good chunk of those reserves and those two cash generating units they were put on in 2018.
The way our reserve book works is you really have to have line a site to capital in the next five years to be able to book reserves. And so what we did is we wanted to acknowledge kind of our per annum spend level here of, call it, $6 to $700 million.
Speaker Change: Bit of a different backdrop than what we have here today and so a good chunk of those assets were recognized when we issued equity to do the Spartan acquisition with shares kind of in that $43 range. So kind of what you had there was.
And so we de-recognized reserves primarily in the U.S. business unit and the Saskatchewan cash generating unit.
Speaker Change: A recognition of capital for a number of years coming off the books kind of all within that single year of 2023. So that that was the primary driver of being in a loss position.
And so what that resulted in is less reserves,
less book value from a reserve perspective and trigger the write downs.
The other thing to keep in mind is a good chunk of those reserves and those two cash generating units. They were put on in 2018. A bit of a different backdrop than what we have here today and so a good chunk of those assets were recognized when we issued equity to do the Spartan acquisition.
with shares kind of in that $43 range. So kind of what you had there was a recognition of capital for a number of years coming off the books, kind of all within that single year of 2023. So that was the primary driver of being in a lost position.
Speaker Change: Hello.
Speaker Change: Yeah.
Speaker Change: Yeah.
I'm gonnae.
Speaker Change: I appreciate the comments the feedback and I think that's something that will take away just to make sure that we're providing the appropriate level of transparency in terms of the driver. So getting to appreciate that we will take that away. Thank you.
I'm gonnae.
Speaker Change: Thanks, Lars just to check I guess, Kyle Gano here gentlemen.
I'm gonnae.
Speaker Change: Yes.
Speaker Change: Yeah.
I'm gonnae.
Speaker Change: Yes.
How you would handle it.
I appreciate the comments, the feedback and I think that's something that we'll take away just to make sure that we're providing the appropriate level of transparency in terms of the driver. So do appreciate that. We will take that away. Thank you.
Kyle Gano: Yes. Thank you so you're right the <unk>.
Kyle Gano: <unk> unit, which we did that acquisition just a little while ago very attractive acquisition in excess of 40% to increase our.
Thanks, Lars. Just to check, I guess, Kyle, oh, one here, gentlemen.
Kyle Gano: <unk> exposure to that asset, which we've operated since late 2015.
Thank you.
Kyle Gano: 2018.
Kyle Gano: So it is a declining asset declines 12% to 14% per year generates a lot of free cash flow for us.
Yes.
I'm gonnae.
Kyle Gano: Without getting too technical we do look at ways to reduce the pressure in which that reservoir produces and so we've just finished a project in which we're.
I'm gonnae.
Kyle Gano: Implemented a refreshed client, which helps to reduce pressure and then we've got some other additional compression projects, which helps to reduce the pressure.
I'm gonnae.
Yes, thank you. So you're right. The Corb unit, which we did that acquisition just a little while ago, very attractive acquisition in excess of 40% to increase our exposure to that asset which we've operated since late 2015, sorry, 2018. So it is a declining asset. Declines 12 to 14% per year, generates a lot of free cash flow for us.
Kyle Gano: We see the ability that reservoir to produce out to mid 2000, <unk> and we'll continue to look for ways to extend that.
Kyle Gano: There are options to drill in that reservoir, but it is an offshore asset so the cost to drill those wells are expensive. So we do contrast that and that's the strength of Vermilion. We have these different business units to say are we better to drill another well in corp. Our drill an onshore well in Germany that we believe is quite attractive, but we do have opportunities at.
Without getting too technical, we do look at ways to reduce the pressure in which that reservoir produces. And so we've just finished a project in which we're
Kyle Gano: At this point, we're focusing on their onshore operations to drill in Germany, and Netherlands that we think are more attractive.
implemented a refridge plant which helps to reduce pressure, and then we've got some other additional compression projects which helps to reduce the pressure. We see the ability that reservoir to produce out to mid-2030s, and we'll continue to look for ways to extend that.
Kyle Gano: So that's our focus there and as that free cash flow comes out of.
Kyle Gano: That Iris unit again, we will look to redeploy a portion of that to our business to be able to grow our free cash flow for years to come it might not be core, but if the business were in as a management team is to redeploy.
There are options to drill in that reservoir, but it is an offshore asset, so the cost to drill those wells are expensive.
Kyle Gano: And then the other 50% of excess gets returned to our investors. So does that help address the question.
So we do contrast that, and that's the strength of Vermilion. We have these different business units to say, are we better to drill another well in Corb or drill an onshore well in Germany that we believe is quite attractive, but we do have opportunities at this point. We're focusing on our onshore operations to drill in Germany and Netherlands that we think are more attractive.
Speaker Change: Great. Thank you.
Speaker Change: Yes.
Speaker Change: Other questions.
Speaker Change: Okay, well I think the.
Speaker Change: Refreshments are opened in the back so I encourage you to.
Speaker Change: I have a refreshment and I just again want to thank everyone for attending we do appreciate your support and confidence in our management team and we will continue to work very hard to.
So that's our focus there and as that free cash flow comes out of
That Irish unit, again, we'll look to redeploy a portion of that to our business to be able to grow our free cash flow for years to come. It might not be core, but the business we're in as the management team is to redeploy, and then the other 50% of access gets returned to our investors. So does that help address the question?
Speaker Change: Better positioned the business and look forward to updating you again next year. So again thank you.
Speaker Change: [noise] [music].
Great. Thank you.
Thank you.
Other questions?
Okay, well I think the
Refreshments are open in the back, so I encourage you to
to have a refreshment and just again want to thank everyone for attending. We do appreciate your support and confidence in the management team and we'll continue to work very hard to better position the business and look forward to updating you again next year. So again, thank you.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Right.
Speaker Change: Okay.
Speaker Change: Yeah.
you you
Speaker Change: Yes.
you you