Q4 2025 Vermilion Energy Inc Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the Vermilion Q4 2025 Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, 5 March 2026. I would now like to turn the conference over to Dion Hatcher, President and CEO. Please go ahead.

Speaker #2: If at any time during this call you require my assistance, please press *0 for the operator. This call is being recorded on Thursday, March 5th, 2026.

Speaker #2: I would now like to turn the conference over to Dion Hatcher, President and CEO. Please go ahead. Thank you. Good morning, ladies and gentlemen.

Dion Hatcher: Thank you. Good morning, ladies and gentlemen. I'm Dion Hatcher, President and CEO of Vermilion Energy. With me today are Lars Glemser, Vice President and CFO, Darcy Kerwin, Vice President, International & HSE, Randy McQuaig, Vice President, North America, Lara Conrad, Vice President, Business Development, and Travis Thorgeirson, Director of Investor Relations & Corporate Planning. Please refer to our advisory on forward-looking statements in our Q4 release. It describes forward-looking information, non-GAAP measures, and oil and gas terms used today, and it relies on risk factors and assumptions relevant to this discussion. Vermilion had an impactful year, positioning herself as a global gas producer with top decile realized gas prices, a lower cost structure, and a long duration asset base capable of delivering sustainable free cash flow for decades to come.

Speaker #2: I'm Dion Hatcher, President and CEO of Vermilion Energy. With me today are Lars Glemser, Vice President and CFO; Darcy Curwin, Vice President and International HSC; Randy McQuade, Vice President, North America; Lara Conrad, Vice President, Business Development; and Travis Thorgersen, Director of Investor Relations. We will also be discussing forward-looking statements in our Q4 release.

Speaker #2: It describes forward-looking information, non-GAAP measures, and oil and gas terms used today. It also aligns the risk factors and assumptions relevant to this discussion.

Speaker #2: Vermilion had an impactful year. Positioning ourselves as a global gas producer with top diesel-realized gas prices, a lower cost structure, and a long-duration asset base capable of delivering sustainable, free cash flow for decades to come.

Dion Hatcher: In 2025, we delivered record production and marked a pivotal year in our company's history through strategic M&A activity, particularly the acquisition of the high-quality assets in our core Deep Basin area and the disposition of non-core assets in Saskatchewan and the United States. Our portfolio is now focused on liquids-rich gas assets in Canada and premium priced gas assets in Europe. Building one of the largest land footprints in the Deep Basin, along with our growing liquids-rich gas business in the Montney, has sharpened our operational focus. This allows us to improve our cost structure and, more importantly, higher profitability in our Canadian portfolio.

Speaker #2: In 2025, we delivered record production and marked a pivotal year in our company's history. Through strategic A&D activity, particularly the acquisition of high-quality assets in our core Deep Basin area, and the disposition of non-core assets in Saskatchewan and the United States, our portfolio is now focused on liquids-rich gas assets in Canada and premium-priced gas assets in Europe.

Speaker #2: Building one of the largest land footprints in the deep basin, along with our growing liquids-rich gas business in the mommy, has sharpened our operational focus.

Speaker #2: This allows us to improve our cost structure and, more importantly, hire profitability in our Canadian portfolio. In Germany, during Q1, we of the deep gas exploration program, Osterheid, and progressed the buildup of infrastructure to facilitate the production from one of our largest European gas discoveries, Visselhorst, which we expect to bring online by mid-2026.

Dion Hatcher: In Germany, during Q1, we brought online the first well of the deep gas exploration program, Osterheide, and progressed the build-up of infrastructure to facilitate the production from one of our largest European gas discoveries, Wisselshorst, which we expect to bring online by mid-2026. In the Netherlands, we successfully drilled two wells with multiple prospective zones and brought them on production in Q4. The long runway of future prospects we've identified in Europe, with finding and development costs of approximately CAD 1.50 per Mcf, represents an opportunity for profitable organic growth in our domestic European gas business. These core assets drove another strong quarter in Q4, both operationally and financially. Production of 121,308 BOEs per day was ahead of guidance.

Speaker #2: In the Netherlands, we successfully drilled two wells with multiple prospective zones and brought them on production in Q4. The long runway of future prospects we've identified in Europe with finding and development costs of approximately $1.50 Canadian per MCF represents an opportunity for profitable organic growth in our domestic European gas business.

Speaker #2: These core assets drove another strong quarter in Q4, both operationally and financially. Production of 121,308 BOE per day was ahead of guidance. This was partially driven by highly productive wells in the Deep Basin, where three of the most productive gas wells in December were Vermilion-owned and operated.

Dion Hatcher: This was partially driven by highly productive wells in a deep basin, where 3 of the most productive gas wells in December were Vermilion-owned and operated. Production also benefit from record volumes in the Montney, as well as outperformance from the Osterheide well in Germany, which had 40% higher production compared to Q3 and generated approximately $8 million of free cash flow in Q4 alone. Strong realized gas pricing of $5.50 per Mcf, or double the AECO benchmark, was driven by our direct European gas exposure, where TTF prices averaged $15 per MMBtu in the quarter. Our realized gas prices also benefit from enhanced market diversification in Canada and a sophisticated hedging program. On the operational side, We apply a continuous improvement mindset to the areas within our control: safety, production, and cost management.

Speaker #2: Production also benefited from record volumes in the mommy. As well as outperformance from the Osterheid well in Germany, which had 40% higher production compared to the third quarter and generated approximately $8 million of free cash flow in Q4 alone.

Speaker #2: Strong realized gas pricing of $5.50 per MCF or double the equal benchmark was driven by our direct European gas exposure, where TTF prices averaged $15 per MMBTU in the quarter.

Speaker #2: Our realized gas prices also benefited from enhanced market diversification in Canada and a sophisticated hedging program. On the operational side, we apply a continuous improvement mindset to the areas within our control.

Speaker #2: Safety, production, and cost management. I am excited about the progress by each team across the business. In Canada, due to the improved operational scale and high-quality assets, our unit operating costs are now the lowest in over a decade.

Dion Hatcher: I'm excited about the progress by each team across the business. In Canada, due to the improved operational scale, high-quality assets, our unit operating costs are now the lowest in over a decade, which improves our corporate unit costs, now the lowest since 2020. Investments in infrastructure such as the Mica facility and development initiatives in Germany are expected to deliver an increase in excess free cash flow over the next few years. The long duration of our asset base and our commitment to disciplined capital allocation, when combined with only 153 million shares outstanding, positions Vermilion to add meaningful per share value. Moving to reserves, Vermilion's total proved plus probable or 2P reserves increased by 36% from the prior year, reaching 592 million BOEs.

Speaker #2: This improves our corporate unit costs, now the lowest since 2020. Investments in infrastructure, such as the MICA facility, and development initiatives in Germany are expected to deliver an increase in excess free cash flow over the next few years.

Speaker #2: The long duration of our asset base and our commitment to disciplined capital allocation, when combined with only 153 million shares outstanding, positions Vermilion to add meaningful per-share value.

Speaker #2: Moving to reserves, Vermilion's total approved plus probable, or 2P, reserves increased by 36% from the prior year, reaching 592 million VOEs. This growth was driven by a combination of organic development and the Deep Basin acquisition, which closed in February 2025, partially offset by the divestment of the United States and Saskatchewan assets in mid-2025.

Dion Hatcher: This growth was driven by a combination of organic development and the Deep Basin acquisition, which closed in February 2025, partially offset by the divestment of the United States and Saskatchewan assets in mid-2025. We added 86 million BOEs of proved, developed, producing, or PDP reserves and 201 million BOEs of 2P reserves in 2025. Our average finding development and acquisition costs, including future development costs, were CAD 14.91 per BOE for PDP and CAD 7.71 per BOE for 2P. That's a recycle ratio of 1.8 to 3.5 times, respectively. These recycle ratios highlight the capital efficiency and strong returns of our reserve additions.

Speaker #2: We added $86 million VOEs approved developed producing or PDP reserves and $201 million VOEs of 2P reserves in 2025. Our average finding development and acquisition costs including future development costs were $14.91 per VOE for PDP and $7.71 per VOE for 2P.

Speaker #2: That's a recycle ratio of 1.8 and 3.5 times, respectively. These recycle ratios highlight the capital efficiency and strong returns of our reserve additions. This is also worth noting that PDP reserves do not include any volumes or present value associated with the Visselhorst discovery well on the Bombeson license.

Dion Hatcher: It's also worth noting that PDP reserves do not include any volumes or present value associated with the Wisselshorst discovery well on the Burgmoor license, whereas 2P reserves include approximately 7 million BOE or 43 Bcf related to our 64% working interest in the initial discovery. We have identified up to 6 additional drilling locations on the Burgmoor license that currently have no 2P reserves assigned, representing significant further upside for European reserves. We remain on track to spot the first 2 of these locations in early 2027, with long lead equipment ordered, the drilling rig secured, and permitting progressing as expected. By applying the learnings from the previous program, we anticipate lower costs and faster cycle times, resulting in these wells being on production in the second half of 2028. The 2P reserve life index was 14 years, in line with our historical averages.

Speaker #2: Whereas 2P reserves include approximately $7 million VOE, or 43 Bcf, related to our 64% working interest in the initial discovery. We have identified up to six additional drilling locations on the Bombeson license that currently have no 2P reserves assigned.

Speaker #2: Representing significant further upside for European reserves. We remain on track to spot the first two of these locations in early 2027 with long lead equipment and permitting progressing as expected.

Speaker #2: By applying the learnings from the previous program, we anticipate lower costs and faster cycle times resulting in these wells being on production in the second half of 2028.

Speaker #2: The 2P reserve life index was 14 years, in line with our historical averages. Our internal estimate is we have 1,700 drilling locations across our 1.3 million net acres of land that's in the deep basin and mommy.

Dion Hatcher: Our internal estimate is we have 1,700 drilling locations across our 1.3 million net acres of land that's in the Deep Basin and Montney, and only 23% of these are included in our year-end reserves. Also of note, internal estimates of initial gas in place related to exploration and development prospects in Europe are minimally included in our year-end reserves. We believe there's significant upside to our European gas reserves, given our 1.4 million net acres land across Germany and Netherlands, combined with our track record of exploration success. Across our portfolio, the combination of both reserves and additional internally estimated locations provide long-term visibility for future production and cash flow.

Speaker #2: And only 23% of these are included in our year-end reserves. Also of note, internal estimates of initial gas in place related to exploration and development prospects in Europe are minimally included in our year-end reserves.

Speaker #2: We believe there's significant upside to our European gas reserves, given our 1.4 million net acres land across Germany and Netherlands combined with our track record of exploration success.

Speaker #2: Across our portfolio, the combination of book reserves and additional internally estimated locations provide long-term visibility for future production and cash flow. Before tax net present value of our 2P reserves discounted at 10% using the three consultant average pricing as of Jan 1, 2026, and deducting year-end net debt is $23 per basic share, well in excess of our current share price.

Dion Hatcher: The before-tax net present value of our 2P reserves, discounted at 10% using the three consultant average pricing as of 1 January 2026, and deducting year-end net debt, is CAD 23 per basic share, well in excess of our current share price. I will now pass it to Lars to discuss the Q4 results in more depth.

Speaker #2: We'll now pass it to the letters to discuss the Q4 results and more depth.

Lars Glemser: Thank you, Dion. Vermilion generated CAD 241 million of funds flow from operations in Q4. An active quarter of drilling saw CAD 192 million invested in exploration and development capital expenditures, resulting in free cash flow of CAD 49 million. Production averaged 121,308 boe/d, with a 69% weighting to natural gas. In Canada, we executed a three-rig drilling program in the Deep Basin, drilling 16 and bringing on production 17 liquids-rich gas wells. We made the deliberate decision to defer the startup of several highly productive wells that were drilled and completed in Q3 into mid Q4, allowing us to capture stronger realized gas prices and maximize returns. As Dion noted, these were some of the most prolific wells in Alberta.

Speaker #1: Thank you, Dion. Vermilion generated $241 million of funds flow from operations in the fourth quarter. An active quarter of drilling saw $192 million invested in exploration and development capital expenditures.

Speaker #1: Resulting in free cash flow of $49 million. Production averaged 121,308 BOE a day, with a 69% weighting to natural gas. In Canada, we executed a three-rig drilling program in the Deep Basin.

Speaker #1: Drilling 16 and bringing on production 17 liquids-rich gas wells. We made the deliberate decision to defer the startup of several highly productive wells that were drilled and completed in the third quarter into mid-Q4.

Speaker #1: Allowing us to capture stronger realized gas prices and maximize returns. As Dion noted, these were some of the most prolific wells in Alberta. In the Montney, we drilled four gross and net liquids-rich gas wells, which are scheduled for completion and startup in Q2 2026.

Lars Glemser: In the Montney, we drilled 4 gross and net liquids-rich gas wells, which are scheduled for completion and startup in Q2 2026. The combination of strong deep basin well results, the return of previously shut-in production and record multi-performance drove a significant increase in production in Canada. Normalized for disposition activity, our Q4 production was more than 5,000 boe/d higher than in Q3, with a lower unit cost structure, improving cash flow net backs and overall profitability of our Canadian operations. International operations averaged 30,137 boe/d in Q4, consistent with Q3. New production in the Netherlands and increased gas output in Germany largely offset natural declines in Ireland, Australia, and Croatia. Vermilion completed and brought online 2 gross or 1.2 net natural gas wells in the Netherlands during Q4.

Speaker #1: The combination of strong deep basin well results, the return of previously shut-in production, and record mommy performance drove a significant increase in production in Canada.

Speaker #1: Normalized for disposition activity are Q4 production was more than 5,000 VOE per day higher than in Q3, with a lower unit cost structure improving cash flow netbacks and overall profitability of our Canadian operations.

Speaker #1: International operations averaged 30,137 VOE per day in the fourth quarter, consistent with Q3. New production in the Netherlands and increased gas output in Germany largely offset natural declines in Ireland, Australia, and Croatia.

Speaker #1: Vermilion completed and brought online two gross or 1.2 net natural gas wells in the Netherlands during the fourth quarter. We also advanced permitting and technical work in the Netherlands to facilitate the drilling of one gross or 0.5 net wells in 2026.

Lars Glemser: We also advanced permitting and technical work in the Netherlands to facilitate the drilling of 1 gross or 0.5 net wells in 2026. Our approach to European development remains disciplined, leveraging our long-standing operating experience and strong regulatory relationships. In Germany, infrastructure development for the first Wisselshorst well, which is a 0.6 net ownership to Vermilion, continued during the quarter, with first production expected mid-2026. The Osterheide well, brought on earlier in the year, saw an increase in production, averaging 10 million a day or 1,600 BOE a day for the quarter. Germany continues to be a key region for Vermilion, providing direct exposure to premium European gas markets and development upside.

Speaker #1: Our approach to European development remains disciplined. Leveraging our longstanding operating experience and strong regulatory relationships. In Germany, infrastructure development for the first Visselhorst well which is a 0.6 net ownership to Vermilion continued during the quarter.

Speaker #1: With first production expected mid-2026. The Osterheide well brought on earlier in the year saw an increase in production averaging $10 million a day or $1,600 VOE a day for the quarter.

Speaker #1: Germany continues to be a key region for Vermilion, providing direct exposure to premium European gas markets and development upside. On the balance sheet, we accelerated our debt reduction during the fourth quarter by selling a portion of our ownership in Silicanth Energy, which resulted in $42 million of incremental debt reduction and a realized gain on disposition of $12 million.

Lars Glemser: On the balance sheet, we accelerated our debt reduction during the Q4 by selling a portion of our ownership in Coelacanth Energy, which resulted in CAD 42 million of incremental debt reduction and a realized gain on disposition of CAD 12 million. We continue to hold a 10% ownership in Coelacanth. Returning capital to shareholders remains a core priority. Our strong free cash flow generation and disciplined capital allocation provide the foundation for sustainable dividends and opportunistic share buybacks. Our debt reduction trajectory has been accelerated with the sale of the Coelacanth shares and an increasing commodity price environment. This allows us to continue to be opportunistic in our balance of further debt reduction and returning capital to shareholders. As we continue to grow our asset base and improve profitability, we are confident in our ability to deliver attractive shareholder returns over the long term.

Speaker #1: We continue to hold a 10% ownership in Silicanth. Returning capital to shareholders remains a core priority. Our strong free cash flow generation and disciplined capital allocation provide the foundation for sustainable dividends and opportunistic share buybacks.

Speaker #1: Our debt reduction trajectory has been accelerated with the sale of the Silicanth shares and an increasing commodity price environment. This allows us to continue to be opportunistic in our balance of further debt reduction and returning capital to shareholders.

Speaker #1: As we continue to grow our asset base and improve profitability, we are confident in our ability to deliver attractive shareholder returns over the long term.

Lars Glemser: I will now pass it back to Dion.

Dion Hatcher: Thank you, Lars. Prior to my closing remarks, I want to take a moment and thank our staff in Australia. In Q1, our Wandoo platform was impacted by a Category 3 cyclone, which resulted in minor damage and a delay of the planned crude export lifting. We do budget for cyclone downtime each year. Unfortunately, it's been more than five years since we've had an experience of a direct storm event. Again, thank you to our staff for their hard work and commitment to safety in the lead up, during, and after the cyclone event. In addition, our team has worked very closely with the regulator on the integrity of our asset, including planned maintenance of the export system, which is already included in our budgets.

Speaker #1: I will now pass it back to Dion.

Speaker #2: Thank you, Lars. Prior to my closing remarks, I want to take a moment and thank our staff in Australia. In Q1, our Wandu platform was impacted by a category three cycle, which resulted in minor damage and a delay of the planned crude export lifting.

Speaker #2: We do budget for cyclone downtime each year and fortunately it has been more than five years since we've had an experience of a direct storm event.

Speaker #2: Again, thank you to our staff for their hard work and commitment to safety in the lead-up, during, and after the cyclone event. In addition, our team has worked very closely with the regulator on the integrity of our asset, including planned maintenance of the export system, which is already included in our budgets.

Dion Hatcher: In late February, we exported over 300,000 barrels of crude following the cyclone-related delay, and we're in the process of restoring production on the Wandoo B platform. On the back of the record 2025 annual production and strong Q4, while factoring in Australia cyclone-related downtime, we are providing a Q1 outlook of 122,000 to 124,000 BOEs per day. We expect production in the first half of 2026 to be in line with recent levels, with lower Q3 production reflective of the planned maintenance as outlined with our budget release. The recent run-up in global gas prices offers a reminder that in a commodity-based business, being able to sell your product for more offers a substantial advantage.

Speaker #2: In late February, we exported over 300,000 barrels of crude following the cyclone-related delay and we're in the process of restoring production on the Wandu B platform.

Speaker #2: So, on the back of the record 2025 annual production and strong Q4, while factoring in Australia’s cyclone-related downtime, we are providing a Q1 outlook of 122,400 BOEs per day.

Speaker #2: We expect production in the first half of 2026 to be in line with recent levels with lower Q3 production reflective of the planned maintenance as outlined with our budget release.

Speaker #2: The recent run-up in global gas prices offers a reminder that in a commodity-based business, being able to sell your product for more offers a substantial advantage.

Dion Hatcher: Our unique portfolio offers direct exposure to European gas, where inventories are well below the five-year averages and the current price is over $20 per MMBtu, as well as Brent Crude, both of which have been impacted by recent geopolitical events. In closing, it has been a very active year, migrating our portfolio and advancing major projects. Through this busy time, we have outperformed on the operational side. That comes down to the exceptional work of our employees and contractors. This is an exciting time at Vermilion. With a strategic roadmap to 2030 as outlined in our recent Investor Day. This multi-year plan reflects a disciplined approach to long-term profitability designed to generate meaningful per share excess free cash flow growth even under a flat commodity price environment. The higher free cash flow growth will support debt reduction and increased shareholder returns.

Speaker #2: Our unique portfolio offers direct exposure to European gas. We're inventories are well below the five-year averages and the current price is over $20 per MMBTU.

Speaker #2: As well as Brent crude, both of which have been impacted by recent geopolitical events. In closing, it has been a very active year. Migrating our portfolio and advancing major projects.

Speaker #2: Through this busy time, we have outperformed on the operational side. And that comes down to the exceptional work of our employees and contractors. This is an exciting time at Vermilion.

Speaker #2: With a strategic roadmap to 2030 as outlined in our recent investor day. This multi-year plan reflects a disciplined approach to long-term profitability designed to generate meaningful per-share excess free cash flow growth even under a flat commodity price environment.

Speaker #2: The higher free cash flow growth will support debt reduction and increase shareholder returns. Our asset base offers longevity, capital allocation flexibility, our top DESO realized gas price along with significant upside driven both by our operational excellence and our large resource position.

Dion Hatcher: Our asset base offers longevity, capital allocation flexibility, our top decile realized gas price, along with significant upside driven by our operational excellence and our large resource position. We remain committed to operating with discipline, maintaining a strong balance sheet, and investing in high return projects that drive value for our shareholders. With that, we'll now open the line for questions.

Speaker #2: We remain committed to operating with discipline, maintaining a strong balance sheet, and investing in high-return projects that drive value for our shareholders. With that, we'll now open the line for questions.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Menno Hulshof with TD Cowen. Your line is now open.

Speaker #3: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchstone phone.

Speaker #3: You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two.

Speaker #3: If you are using the speakerphone, please lift the handset before pressing any keys. Your first question comes from Menno Holzhoff with TD Cowen. Your line is now open.

Menno Hulshof: Good morning and thanks for taking my questions. At your Investor Day in December, you talked about material free cash flow inflection starting in 2028. At that time, I believe you were anchoring to something close to strip gas prices and oil prices that were generally north of $70, which could now prove conservative. With that in mind, how would you frame free cash flow inflection in 2028 relative to what you were talking about in December?

Speaker #4: Good morning and thanks for taking my questions. At your investor day in December, you talked about material free cash flow inflection starting in 2028.

Speaker #4: And at that time, I believe you were anchoring to something close to strip gas prices and oil prices that were generally north of $70, which could now prove conservative.

Speaker #4: So, with that in mind, how would you frame free cash flow inflection in 2028 relative to what you were talking about in December?

Dion Hatcher: Thank you, Menno. I appreciate the question. You're right. When we went through the investor day, we used 70 WTI, 3.50 AECO, and CAD 13 for TTF. You know, using those numbers, and to your point, the inflection is driven by the ramp-up in Germany volumes with the gas that we see coming online there, but also of course the Montney, where we've nearly built out the kit, and we'll get our production up to 28,000 boe/d. With that, we'll see the higher production, lower capital. We were running at about CAD 2.70 per share of excess free cash flow at that time, which was again, based on that price deck.

Speaker #2: Thank you, Menno. Appreciate the question. You're right. When we went through the investor day, we used 70 WTI, 350 ACO, and 13 CAD for TTF.

Speaker #2: And using those numbers and to your point, the inflection is driven by the ramp-up in Germany volumes with the gas that we see coming online there.

Speaker #2: But also, of course, the Montney, where we've nearly built out the kit, and we'll get our production up to 28,000 BOE a day. And with that, we'll see the higher production and lower capital.

Speaker #2: So we were running at about 270 per share of excess free cash flow at that time, which was again based on that price type, but maybe I'll pass over to Lars if you want to kind of tie that price deck to potential upside from where we are today.

Dion Hatcher: Maybe I'll pass it over to Lars if you wanna kinda tie that price deck to potential upside from where we are today.

Lars Glemser: Yeah, no, it's a good observation, Mano, in terms of the run-up here that we've seen recently. We've updated the slide in our slide deck. This would be slide 13, to show what the impact of the run-up in commodity pricing is here. We're showing FFO for 2026, around CAD 950 million. That's a 40% increase to our excess free cash flow. Some of these near-term price moves haven't necessarily rippled through the curve yet, that's something that we'll monitor. We stress the business as well as look at upside to the business on multiple price decks. We are capturing a pretty decent portion of what we've seen here the last week or so in terms of the commodity price run-up.

Speaker #5: Yeah, no, and it's a good observation, Menno, in terms of the run-up here that we've seen recently. And so we've updated the slide in our slide deck.

Speaker #5: This would be slide 13 to show what the impact of the run-up in commodity pricing is here. So we're showing FFO for 2026 around 950 million.

Speaker #5: That's a 40% increase to our excess free cash flow. Some of these near-term price moves haven't necessarily rippled through the curve yet, so that's something that we'll monitor.

Speaker #5: We stress the business as well as look at upside to the business on multiple price decks. But we are capturing a pretty decent portion of what we've seen here the last week or so in terms of the commodity price run-up.

Menno Hulshof: Yeah, thanks for that.

Dion Hatcher: Thanks, Lars. Yeah.

Menno Hulshof: Oh, sorry.

Speaker #4: Yeah, thanks for that. Oh, sorry.

Dion Hatcher: Oh, go ahead.

Speaker #2: Oh, go ahead.

Menno Hulshof: Yeah, I mean, I guess my second question ties in exactly into what you were just describing, it's a standard hedging question. Like, there's a lot of backwardation, there's limited liquidity the further out you go. Are you getting anything done today? Are you looking to capitalize on that? Capitalize the wrong word, it's a horrible situation. Are there opportunities to hedge further, and is there a scenario where you hedge more aggressively than you have in the past?

Speaker #4: Yeah, I mean, I was just, I guess my second question ties in exactly into what you were just describing. And it's the standard hedging question.

Speaker #4: There's a lot of backwardation. There's limited liquidity the further out you go. Are you getting anything done today? Are you looking to capitalize on that, capitalize the wrong word is a horrible situation, but are there opportunities to hedge further and is there a scenario where you hedge more aggressively than you have in the past?

Lars Glemser: Yeah. Menno Hulshof, Lars Glemser here again. We're about 50% hedged on European gas for 2026, 53% on oil, and then 45% on North American gas. Some of the recent hedges that we've put in place, specifically on oil, have had participating structures. You know, calls that allow us to participate in this rally. On European gas specifically, we have been active hedging this past week, locking in some of the price increases here. In the past, and not saying that this will be the playbook here, but in the past, we have taken our hedge percentage on a commodity up to 70% if you see an opportunity to lock in revenue as a result of significant price increases. That is something that we'll continue to look at as a team.

Speaker #2: Yeah, Menno, Lars here again. So we're about 50% hedged on European gas for 2026, 53% on oil, and then 45% on North American gas.

Speaker #2: Some of the recent hedges that we've put in place, specifically on oil, have had participating structures. So calls that are allow us to participate in this rally.

Speaker #2: On European gas specifically, we have been active hedging this past week, locking in some of the price increases here. In the past, and not saying that this will be the playbook here, but in the past, we have taken our hedge percentage on a commodity up to 70%.

Speaker #2: If you see an opportunity to lock in revenue, as a result of significant price increases. So that is something that we'll continue to look at as a team.

Lars Glemser: We will also continue to monitor periods like 2027, 2028 as well to see if some of these moves are going to be structural throughout the curve and take advantage if there is something to take advantage of.

Speaker #2: We will also continue to monitor periods like 2027, 2028 as well, to see if some of these moves are going to be structural throughout the curve.

Speaker #2: And take advantage if there is something to take advantage of.

Menno Hulshof: Thanks to you both. I'll turn it back.

Speaker #4: Thanks to you both. I'll turn it back.

Dion Hatcher: Thank you, Menno.

Operator: Your next question comes from Amir Arif with ATB Capital. Your line is now open.

Speaker #2: Thank you, Menno.

Speaker #3: Your next question comes from Amir Arif with ATB Capital. Your line is now open.

[Analyst] (Era): Okay, thanks. Good morning, guys. Just a few quick questions. Just first on the Deep Basin well outperformance. Just curious, are you targeting more Tier one locations or specific zones, or do you feel that this recent well outperformance relative to your budget or your type curve can continue through the rest of 2026?

Speaker #4: Okay, thanks. Good morning, guys. Just a few quick questions. First, on the Deep Basin well outperformance—just curious, are you targeting more Tier 1 locations or specific zones?

Speaker #4: Or do you feel that this recent well-out performance relative to your budget or your type curve can continue through the rest of '26?

Dion Hatcher: Oh, thanks, Amir. I'll pass over to Randy. He can't wait to answer this question.

Speaker #2: Oh, thanks, Amir. I'll pass over to Randy. He can't wait to answer this question. Yeah, thanks. So, yeah, this really is kind of a continuation of the positive results that we showed in the Investor Day.

Randy McQuaig: Yeah. Thanks. This, this really is kind of continuation of the positive results that we showed in the Investor Day, where we had the strong kind of IP30 rates from the second half of 2025 drill program. That's continued to perform. When you take the results from our current three-rig program that we're currently drilling, we've brought on an additional 14 wells, they've also exceeded expectations. You know, it's worth noting that in that well mix, we have quite a wide range of well types and production areas. That really does speak to our depth of inventory. You know, we're not, as you mentioned, it's not all Tier 1 locations. We are also drilling proof of concept wells.

Speaker #2: Where we had the strong kind of IP30 rates from the second half of the 2025 drill program. That's continued to perform. And then, when you take the results from our current three-rig program that we're currently drilling, we've brought on an additional 14 wells.

Speaker #2: And they've also exceeded expectations. So it's worth noting that in that well mix, we have quite a wide range of well types and production areas.

Speaker #2: So that really does speak to our depth of inventory. We're not, as you mentioned, it's not all tier one locations. We are also drilling proof of concept wells.

Randy McQuaig: It speaks to our depth of inventory and really the efforts of everybody on the Deep Basin teams to continue to achieve these strong results.

Speaker #2: So it speaks to our depth of inventory and really the efforts of everybody on the deep basin teams to continue to achieve these strong results.

[Analyst] (Era): Okay. It sounds like there's a good chance for these well, performance to continue above the type curve. Would that be a fair comment?

Speaker #4: Okay. So it sounds like there's a good chance for these wells' outperformance to continue, both to the type curve. Would that be a fair comment?

Randy McQuaig: Yeah. It's very... Yeah. Based on the results to date, yes.

Speaker #2: Yeah, it's very, yeah, based on the results to date, yes. Yeah, I mean, we think we've got 40, 45 wells, Amir, for the program.

[Analyst] (Era): Okay.

Dion Hatcher: Yeah. I mean, we think if we've got 40, 45 wells, Amir, for the program and, you know, we're Q1 into it, everything we're seeing in Q1 is encouraging. You know, we can provide more updates as we go. To Randy's point, I think the team's doing an excellent job with the locations they're selecting and the execution. You know, as we get more data, we can revisit where we are.

Speaker #2: And we're first quarter into it, but everything we're seeing in the first quarter is encouraging. So we can provide more updates as we go.

Speaker #2: But to Randy's point, I think the team's doing an excellent job with the locations that they are selecting and the execution. So, as we get more data, we can revisit where we are.

[Analyst] (Era): Okay. Yeah. Those great results. The second question, just on Australia, can you provide a little more granularity on when you expect Australian volumes to ramp back up to their to previous production levels?

Speaker #4: Okay, yeah, no, those are great results. The second question—just on Australia—can you provide a little more granularity on when you expect Australian volumes to ramp back up to their previous production levels?

Dion Hatcher: Thanks. I'll pass this to Darcy Kerwin, our VP International, and just talk with, on Australia, the kinda plan there to kinda watch maybe a little more color on what happened, but more importantly, the plan to restore production here.

Speaker #2: Nope. Thanks. I'll pass it to Darcy Kerwin, our VP International, and just talk about the on Australia, the kind of plan there to kind of what's maybe a little more color and what happened, but more importantly, the plan to restore production here.

Randy McQuaig: Yeah. Thanks for that, Amir.

Darcy Kerwin: I'll start by giving a bit of background on the issues that we've been having in Australia. In December of last year, while we're performing inspection and maintenance activities on our export system, we did have a small leak on one component of that system. At the time, the system was not exporting. We were isolated for maintenance, but nonetheless, we did have a release of residual crude oil from that part of the system. We liaised pretty closely with the regulator, both with our initial spill response and then subsequent repair plans for that system. That did require an approved diving campaign to address the issue that we had. That diving campaign was completed by mid-January. On 6 February, we did receive a notice from the regulator that limited the use of this export system.

Speaker #5: Yeah, thanks for that, Amir. I'll start by giving a bit of background on the issues that we've been having in Australia.

Speaker #5: So in December of last year, while we're performing inspection and maintenance activities on our export system, we did have a small leak on one component of that system.

Speaker #5: Now, at the time, the system was not exporting. We were isolated for maintenance. But nonetheless, we did have a release of residual crude oil from that part of the system.

Speaker #5: We liaised, pretty closely, with the regulator, both with our initial spill response and then subsequent repair plans for that system. That did require an approved diving campaign to address the issue that we had.

Speaker #5: That diving campaign was completed by mid-January. On February 6, we did receive a notice from the regulator that limited the use of this export system.

Darcy Kerwin: Kind of a standard regulator response in a situation like that. Later that same day, we did receive their approval to complete a planned loading after we formally responded to their issued notice. In parallel to all this, we had a tropical cyclone that had been building offshore Australia, and we did have a direct hit from a Category 3 tropical cyclone on the weekend of 7 February. That shut in both our production operations and our export systems, which did delay an export that we had planned. We've conducted the damage assessments and are completing necessary repairs at this point in order to restart production operations on One-Two-B. We did manage to successfully complete an export of over 300,000 barrels last Friday, 27 February.

Speaker #5: Kind of a standard regulator response and kind of in a situation like that. And then later that same day, we did receive their approval to complete a plan loading.

Speaker #5: After we formally responded to their issued notice. So in parallel to all this, we had a tropical cyclone that had been building offshore Australia.

Speaker #5: And we did have a direct hit from a Category 3 tropical cyclone on the weekend of February 7th. That shut in both our production operations and our export systems, which did delay an export that we had planned.

Speaker #5: We've conducted the damage assessments and are completing necessary repairs at this point in order to restart production operations on Wandu B. We did manage to successfully complete an export of over 300,000 barrels last Friday, so February 27th.

Darcy Kerwin: A little bit more longer term, we had already planned and budgeted for the replacement of portions of this export system. You know, we had to complete an engineering, receive bids in 2025. We've committed to fabrication starting this year and offshore installation in 2027, and that's kinda now a formal commitment we've made to the regulator to do that.

Speaker #5: A little bit more longer term, we had already planned and budgeted for the replacement of portions of this export system. And we have to complete engineering and receive bids in 2025.

Speaker #5: We've committed to fabrication starting this year and offshore installation in 2027. And that's kind of now a formal commitment we've made to the regulator to do that.

Dion Hatcher: Oh, thanks, Darcy. Nick, with respect to Q1, you know, we've assumed minimal volumes, Amir, post, you know, post the early Feb shutdown. You know, our Q1 was effectively, we just wanna diligently give the guys some time to restart, which we're in the process of doing. You know, going into Q2, we expect things to be back to normal. At this point, we wanna be conservative for Q1.

Speaker #2: Oh, thanks, Darcy. And then with respect to Q1, we've assumed minimal volumes. Amir post the fifth, early fifth shutdown. So our Q1, we've effectively we just want to diligently give the guys some time to restart what you're in the process of doing.

Speaker #2: So going into Q2, we expect things to be back to normal. But at this point, we want to be conservative for Q1.

[Analyst] (Era): Okay. by Q2, you should be fully ramped back up. By the end of Q2, for sure? Around there?

Speaker #4: Okay. So but by 2Q, you should be fully ramped back up by the end of 2Q for sure? Around there?

Dion Hatcher: That's our plan. Yep.

[Analyst] (Era): Okay. Okay. Sounds good. Just one final question. Just did notice some negative technical revisions on the 1P side on both North America and international. Could you just provide a little color behind that?

Speaker #2: That's our plan. Yeah.

Speaker #4: Okay, okay, sounds good. And then just one final question. I did notice some negative technical revisions on the 1P/2P side in both North America and International.

Speaker #4: Could you just provide a little color behind that?

Dion Hatcher: Just wanna make sure I heard you there, Amir. Negative technical regions on the international side?

Speaker #2: I just want to make sure I heard you there, Amir. Negative technical revisions on the international side?

[Analyst] (Era): Well, it was on both the international and the North American sides. There was some.

Speaker #4: It was on both the international and the North American side. There were some negative technical revisions on 1P and 2P. So, just some color around what was driving that.

Dion Hatcher: Gotcha. Gotcha.

[Analyst] (Era): ...technical revisions on 1P and 2P. Just some color around, what was driving that.

Dion Hatcher: Okay. I'll pass it over to Lara. She'll take that one. Thanks.

Speaker #2: Okay. I'll pass it over to Lara. She'll take that one. Thanks.

Lara Conrad: For sure. Thanks, Amir. Really when we look at the negative technicals, this is a result of us high grading our reserves book, really primarily as a result of the M&A activity. When we think about in Canada, you know, the team in Canada under Randy have done a great job of high grading locations, part of why we saw those great results in the Deep Basin. Now we've shifted our reserves book to reflect that. Really the negative technicals are because we've replaced locations with locations that we see as having better profitability. You can really see this because when you look at the numbers, you know, we've added 4 times as much volume through drilling extensions as we removed in our technical revisions in the Deep Basin.

Speaker #6: For sure. Thanks, Amir. So really, when we look at the negative technicals, this is a result of us high-grading our reserves book. Really, primarily as a result of the M&A activity.

Speaker #6: So, when we think about in Canada, the team in Canada under Randy have done a great job of high-grading locations, which is part of why we saw those great results in the Deep Basin.

Speaker #6: And so now we've shifted our reserves book to reflect that. So really, the negative technicals are because we've replaced locations with locations that we see as having better profitability.

Speaker #6: And you can really see this because when you look at the numbers, we've added four times as much volume through drilling extensions as we removed in our technical revisions in the Deep Basin.

Lara Conrad: A net positive overall, but negative from the ones that we've replaced. As far as the international side of the books, we did have some minor negative technicals in the Netherlands, Germany, and France. This is really to do with, again, shifting development plans between wells as well as our capital allocation decisions, prioritizing drilling in Canada, the Deep Basin, Montney, and in Germany over development opportunities in France. Just really making sure that our reserves book matches our long-term plans as a organization.

Speaker #6: So a net positive overall, but negative from the ones that we replaced. As far as the international side of the books, we did have some minor negative technicals in the Netherlands, Germany, and France.

Speaker #6: And this is really to do with, again, shifting development plans between wells as well as our capital allocation decisions. Prioritizing drilling in Canada and the deep basin in Malini and in Germany over development opportunities in France.

Speaker #6: So just really making sure that our reserves book matches our long-term plans as an organization.

[Analyst] (Era): Okay. No, that makes a lot of sense. It's mostly locations that have been taking out, not really production performance on existing wells. Is that fair?

Speaker #4: Okay. No, that makes a lot of sense. So it's mostly locations that have been taken out, not really production performance on existing wells? Is that fair?

Lara Conrad: That's correct. Yeah.

[Analyst] (Era): Okay. Okay. Sounds great. Thank you.

Speaker #6: That's correct. Yeah.

Speaker #4: Okay. Okay. Sounds great. Thank you.

Operator: Your next question comes from Jeremy McCrea with BMO Capital Markets. The line is now open.

Speaker #1: Your next question comes from Jeremy McCray with BMO Capital Markets. The line is now open.

Jeremy McCrea: Yeah. Hi, guys. Maybe this is probably back to Lara here. Can you give me a sense of what the M&A market looks like here now, just in terms of how many deals have you potentially looked at? Is there more deals potentially to come, you think? I got one more follow-up question here as well.

Speaker #7: Yeah. Hi, guys. Maybe this is probably back to Lara here. Can you give me a sense of what the M&A market looks like here now?

Speaker #7: Just in terms of how many deals have you potentially looked at, is there more deals potentially to come, you think? And then I got one more follow-up question here as well.

Dion Hatcher: Thanks, Jeremy. Just general M&A, where are we? Maybe, Lara, do you wanna provide a commentary there?

Speaker #2: Thanks, Jeremy. So just general M&A wherever, but maybe Lara, do you want to write a commentary there?

Lara Conrad: For sure. You know, we've got a really great portfolio when it comes to looking at M&A opportunities, especially on the back of the Westbrick acquisition. I think whenever you do a rejig of your portfolio, it opens up further opportunities. You know, I'll give the standard M&A response. We look at everything, and when we have something to talk to, we'll let you know. I do think there's gonna be some interesting opportunities both in Canada and in Europe. You know, you've seen us core up the portfolio. Vermilion has done some divests recently, which is, you know, a little bit different than historically, but we're really trying to create that focused portfolio. M&A will be part of that when we see the right opportunities.

Speaker #6: For sure. We've got a really great portfolio when it comes to looking at M&A opportunities, especially on the back of the Westbrook acquisition. I think whenever you do a rejig of your portfolio, it opens up further opportunities.

Speaker #6: So I'll give the standard M&A response. We look at everything. And when we have something to talk to, we'll let you know. But I do think there's going to be some interesting opportunities both in Canada and in Europe.

Speaker #6: You've seen us core up the portfolio. Vermilion has done some divests recently, which is a little bit different than historically. But we're really trying to create that focused portfolio.

Speaker #6: So M&A will be part of that when we see the right opportunities.

Jeremy McCrea: Okay. Okay. Maybe just a bit more follow-up with Amir's question here earlier. When these better wells were coming out of the Deep Basin, was there anything? I know you talked about, like, the geology looks good and you have a lot of two-one, but was there anything different that you did on the drill or completion design that led to the better results, or was it just almost 100% geology?

Speaker #7: Okay. Okay. And maybe just a bit more follow-up with Amir's question here earlier. When these better wells were coming out of the deep basin, was there anything I know you talked about the geology looks good and you have a lot of tier one, but was there anything different that you did on the drill or completion design that led to the better results?

Speaker #7: Or was it just almost 100% geology?

Dion Hatcher: Yeah. I'll just give the quick answer and pass it to Randy if he wants to elaborate. No, I think it's the rock, Jeremy. You know, as you know, the history is we've developed our legacy land position over the years, and I think teams did a great job of working that land base harder. In fact, now they've got a bunch of new inventory and high quality, and you put the, I would say, the high-performing teams of Vermilion and Westbrick together, and that brain trust has found a lot of opportunities, ability to extend wells and, again, just make things happen. You know, I think it's really the rock quality we're seeing. Randy, anything I missed there or?

Speaker #2: Yeah, I'll just give the quick answer and pass it over to Randy if he wants to elaborate. But no, I think it's the rock, Jeremy.

Speaker #2: We as you know, the history is we've developed our legacy land position over the years. And I think teams did a great job of working that land base harder.

Speaker #2: In fact, now they've got a bunch of new inventory and high quality. And you put the, I would say, the high-performing teams of Vermilion and Westbrook together, and that brain trust has found a lot of opportunities, ability to extend wells, and again, just make things happen.

Speaker #2: But I think it's really the rock quality we're seeing. But Randy, anything I missed there or?

Darcy Kerwin: Yeah. The only other thing I would add is the ability that, you know, the combination of our two land bases plus all the deals we've done. We've done lots of swaps and crown land sales that have created a bit more of land, so we're able to drill optimal locations as opposed to previous where we weren't. I would say on the drilling completions, nothing different than what we've done. We've continued to perform. Costs come in where we expect them to come in, so that's all good. It really comes down to geology and optimal from the land position.

Speaker #3: Yeah. The only other thing I would add is the ability that the combination of our two land bases plus all the deals we've done.

Speaker #3: We've done lots of swaps and Crown land sales that have created a bit more land. So we're able to drill optimal locations as opposed to previously, where we weren't.

Speaker #3: So I would say on the drilling completions, nothing different than what we've done. We've continued to perform. Costs come in where we expect them to come in.

Speaker #3: So that's all good. It really comes down to geology and optimal from the land position.

Dion Hatcher: Thanks, Randy.

Jeremy McCrea: Okay. Thanks, guys.

Speaker #2: Thanks, Randy.

Speaker #7: Okay. Thanks, guys.

Dion Hatcher: Thanks, Jeremy.

Operator: Your next question comes from Dennis Fong with CIBC World Markets. The line is now open.

Speaker #2: Thanks, Jeremy.

Speaker #1: Yeah. Your next question comes from Dennis Fong with CIBC World Markets. The line is now open.

Dennis Fong: Hi, good morning, and thanks for taking my questions. My first one is just around Osterheide. Obviously, that's fantastic to see the incremental uplift in terms of the production. As I recall, there was, I think from your investor day, you highlighted a little bit about infrastructure and kinda local gathering constraints. Can you talk towards, we'll call it the durability of the higher throughput, and kinda what some of the considerations happen to be?

Speaker #7: Hi, good morning, and thanks for taking my question. My first one is just around Osterheyd. Obviously, that's fantastic to see the incremental uplift in terms of the production.

Speaker #7: As I recall, there was, I think, from your investor day, you highlighted a little bit about infrastructure and kind of local gathering constraints. Can you talk towards we'll call it the durability of the higher throughput?

Speaker #7: And kind of what some of the considerations happen to be?

Dion Hatcher: Oh, thanks, Dennis. I mean, I'll give the quick answer then pass it to Darcy to elaborate. I mean, I think the guys, you know, have positioned it well, where we've got the well set up to be able to deliver and we've seen higher demand, which again, probably no surprise with the situation in Europe, and it's been pretty steady here into the new year as well. Darcy, what am I missing there?

Speaker #2: Oh, thanks, Dennis. I mean, I'll give the quick answer and then pass it to Darcy to elaborate. But I mean, I think the guys have positioned it well where we've got the well set up to be able to deliver it.

Speaker #2: We've seen higher demand, which, again, probably no surprise with the situation in Europe. And it's been pretty steady here into the new year as well.

Darcy Kerwin: Yeah, I think that covers it. You know, I would add, Dennis, the kinda infrastructure constraints that we had assumed are probably not as negative as we assumed initially. We expect that the production rates that we have seen as of late will continue flat kinda through 2026. There is some day-to-day kinda market variation depending on who's buying and sending gas to different points. Overall, I think there is more capacity in that part of the system than we had assumed, and the market seems to have a desire for that gas. We expect that that will stay flat.

Speaker #2: But Darcy, what am I missing there?

Speaker #3: Yeah. I think that covers it. I would add, Dennis, the kind of infrastructure constraints that we had assumed are probably not as negative as we assumed initially.

Speaker #3: So we expect that the production rates that we have seen as of late will continue flat kind of through 2026. There is some day-to-day kind of market variation depending on who's buying and sending gas to different points.

Speaker #3: But overall, I think there is more capacity in that part of the system than we had assumed. And the market seems to have a desire for that gas.

Speaker #3: So we expect that that will stay flat.

Dennis Fong: Okay, great. Does that also bode well then for some of the opportunities you were discussing around Thistle Horse?

Speaker #2: Okay. Great. And then does that also bode well then for some of the opportunities you were discussing around Visselhorst?

Darcy Kerwin: Yeah, I think it does. It's not, it's not a direct, same kind of tie-in point, I think.

Speaker #3: Yeah. I think it does. Now, it's not a direct same kind of tie-in point, but I think we were again quite conservative on our assumptions on both the infrastructure and what the market in that area would take.

Dennis Fong: Mm-hmm

Darcy Kerwin: ... we were again, quite conservative on our assumptions on both the infrastructure and what the market in that area would take. I think directionally it's going in the right direction and, yeah, I think we hope to see the same results on kind of Thistle Horse takeaway as we've seen in Osterheide.

Speaker #3: But I think, directionally, it's going in the right direction. And yeah, I think we hope to see the same results on kind of Visselhorst takeaway as we've seen in Osterheyd.

Dennis Fong: Great. My second question, really, we're shifting focus to the Netherlands. It's obviously great to see that you received the permits there, helping kinda confirm the timing of your drilling in the region later this year. Maybe more broadly, and obviously understanding it's still incredibly early stage, can you talk to any shifts in terms of regulatory government discussions and discussions around kind of permitting timelines? I know that's been, we'll call it a not point of friction, but a bit of a bottleneck in terms of the pace of activity that you guys were looking to pursue in some of these regions. How has it been shifting? How has that been evolving through time? Has there been kind of an uptick even this past week?

Speaker #7: Great. My second question really shifting focus to the Netherlands. It's obviously great to see that you received the permits there, helping kind of confirm the timing of your drilling.

Speaker #7: In the region later this year, maybe more broadly, can you—and obviously understanding it's still incredibly early stage—can you talk to any shifts in terms of regulatory or government discussions, and discussions around kind of permitting timelines?

Speaker #7: I know that's been we'll call it a not point of friction, but a bit of a bottleneck in terms of the pace of activity that you guys were looking to pursue in some of these regions.

Speaker #7: How has it been shifting? How has that been evolving through time? And has there been kind of an uptick even this past week?

Dion Hatcher: Yeah. I'll pass it back to Darcy to walk you through.

Darcy Kerwin: Yeah. I think, Dennis, certainly the messages that we're constantly trying to send out about the benefits of domestic production in Europe is maybe falling on more open ears all of a sudden. That can only be good for us. You asked specifically about regulators sticking to timelines. You know, I think we have seen and heard commitments, especially from the Dutch regulator, about sticking to their own timelines. Just kind of, we've been quite successful lately in building up a nice pipeline of opportunities, both in the Netherlands and Germany. Just as a reminder, you know, we drilled two wells in the Netherlands, in Oppenheim in Q3 of last year. We discovered 16 Bcf of gas there at F&D cost less than CAD 1.50. We brought those wells on production in Q4, right?

Speaker #2: Yeah, I'll pass it back to Darcy to walk you through.

Speaker #3: Yeah. I think, Dennis, certainly the messages that we're constantly trying to send out about the benefits of domestic production in Europe is maybe falling on more open ears all of a sudden.

Speaker #3: So that can only be good for us. You asked specifically about regulators sticking to timelines. I think we have seen and heard commitments especially from the Dutch regulator about sticking to their own timelines.

Speaker #3: And just kind of we've had been quite successful lately in building up a nice pipeline of opportunities both in the Netherlands and Germany and just as a reminder, we drilled two wells in the Netherlands in Oppenhausen in Q3 of last year.

Speaker #3: We discovered 16 BCF of gas there at an F&D cost less than about 50. And then we brought those wells on production in Q4, right?

Darcy Kerwin: It was a pretty quick cycle time. You know, we brought Osterheide on as planned in 2025. As you mentioned, that continues to have strong production volumes and had record volumes for us in Q4. We're progressing well on Thistle Horse with gas plant installation and the pipeline tie-in. We're still on schedule to start up mid this year. You know, that's again, a significant discovery. Our net share is 43 Bcf there. On plan to drill 2 additional wells in the Netherlands in 2026. Plans to spot 2 more wells in Germany in early 2027. You know, probably one of the biggest differences, and you would have saw that in the investor day, is the opportunities that we're drilling. You know, they're more step-out exploration type opportunities. They're bigger.

Speaker #3: So it was a pretty quick cycle time. We brought Osterheyd on as planned in 2025. As you mentioned, that continues to have strong production volumes and had record volumes for us in Q4.

Speaker #3: We're progressing well on Visselhorst with the gas plant installation and the pipeline tie-in. We're still on schedule to start up mid this year. That's again a significant discovery, with our net share at 43 Bcf there.

Speaker #3: On plan to drill two additional wells in the Netherlands in 2026. Plans to spud two more wells in Germany in early 2027. And I think probably one of the biggest differences, and you would have saw that in the investor day, is the opportunities that were drilling.

Speaker #3: They're more step-out exploration-type opportunities. They're bigger if we look at, kind of, the last 30 wells that we drilled in Europe versus the next 30.

Darcy Kerwin: If we look at kind of the last 30 wells that we drilled in Europe versus the next 30, they're kind of 2.5 times to 3 times the size of what we've drilled over what was a pretty successful decade of exploration drilling there with a 70% success rate. We'll continue to work with the regulators and stakeholders to develop support for additional domestic gas production. We think it's a strong message. It has security supply implications that I think people are starting to listen more and more to.

Speaker #3: They're kind of two and a half times to three times the size of what we've drilled over what was a pretty successful decade of exploration drilling there, with a 70% success rate.

Speaker #3: We'll continue to work with the regulators and the stakeholders to develop support for additional domestic gas production. We think it's a strong message. It has security of supply implications that I think people are starting to listen more and more to.

Dion Hatcher: Thanks, Darcy.

Dennis Fong: Great. Really appreciate the color. I'll turn it back. Thanks.

Speaker #2: Thanks, Darcy.

Dion Hatcher: Thanks, Dennis.

Speaker #7: Great. Really appreciate the color. I'll turn it back. Thanks.

Operator: Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Joseph Shikader with Schachter Energy Research. Your line is now open.

Speaker #2: Thanks, Dennis.

Speaker #1: Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Joseph Shakater with Shakater Energy Research.

Joseph Shikader: Good morning, everyone, and thanks for taking my questions. Congratulations on Germany and Netherlands. I'm wondering about Ireland. Have you done any more work there? Is there much opportunity to maybe do some future drilling there? Maybe if you can give us some idea of Croatia, if there's any further work that you're doing that might open up some opportunities in, you know, late 2026 or 2027 for growth in those areas.

Speaker #1: Your line is now open.

Speaker #8: Good morning, everyone. And thanks for taking my questions. And congratulations on Germany and Netherlands. I'm wondering about Ireland. Have you done any more work there?

Speaker #8: And is there much opportunity to maybe do some future drilling there? And then maybe if you can give us some idea of Croatia, if there's any further work that you're doing that might open up some opportunities in late 2026 or 2027 for growth in those areas.

Dion Hatcher: Thanks, Joseph. I'll just give the high level on Ireland. Darcy, please fill in the blanks. Quick answers. You know, we don't see any drilling activity in Ireland. You know, Darcy just talked about, in particular, Germany. Those prospects that are 30 Bcf, they're onshore. It's about $1.50 an Mcf to drill those from a cap. What that means, Joseph, like when we look at it from a capital allocation, we really like Germany. It just screams so well. You know, Ireland's a great asset. The team's optimizing. It's super steady and generates strong free cash flow. You know, no plans internally to allocate capital to drilling in Ireland, just given the strong opportunities that we have in Germany. Yeah, there you go.

Speaker #2: Thanks, Joseph. I'll just give the high-level on Ireland, and Darcy, please fill in the blanks. But quick answers: we don't see any drilling activity in Ireland.

Speaker #2: Darcy just talked about in particular Germany. Those prospects that are 30 BCF, they're onshore. It's about about 50 in MCF to drill those from a calf.

Speaker #2: So what that means, Joseph, when we look at it from a calf allocation, we really like Germany. And it just screams so well. But Ireland's a great asset.

Speaker #2: The team's optimizing. It's super steady and generates strong, strong free cash flow. But no plans internally to allocate capital to drilling in Ireland just given the strong opportunities that we have in Germany.

Darcy Kerwin: Yeah. I'd say, Joseph, you know, our focus certainly in Ireland has been on the existing well stock that we have and making sure that that plant is as efficient as possible, and we have the highest recoveries we can out of those, the wells that are currently drilled.

Speaker #2: But yeah, there we go.

Speaker #3: Yeah, I think, Joseph, our focus certainly in Ireland has been on the existing well stock that we have and making sure that that plant is as efficient as possible.

Speaker #3: And then we have the highest recoveries you can out of those wells that are currently drilled.

Dion Hatcher: With our activity over the last couple years here and the coring up, you know, we are progressing the potential divestment of some of the assets in Croatia. I know we can't say a lot, Lara, any color to add to Croatia or CE?

Speaker #2: And then with our activity over the last couple of years here in the coring up, we are progressing the potential investment of some of the assets in Croatia.

Speaker #2: I know we can't say a lot, but Larry, any color to add to Croatia or CE?

Lara Conrad: Yeah, I think, I mean, we announced that we'll be exiting those areas. For Croatia in specific, there are nice drilling opportunities there. We just decided, as Dion just said, we really like Germany. You have to make tough decisions around where you're gonna focus your portfolio. From a Croatia perspective, I think there are some lovely opportunities, but they're not opportunities for us, and that's why we're divesting and focusing elsewhere.

Speaker #9: Yeah, I think—I mean, we announced that we'll be exiting those areas. And so, for Croatia in specific, there are nice drilling opportunities there.

Speaker #9: And we just decided as Dion just said, we really like Germany. And so you have to make tough decisions around where you're going to focus your portfolio.

Speaker #9: So from a Croatia perspective, I think there are some lovely opportunities, but they're not opportunities for us. And that's why we're divesting and focusing elsewhere.

Joseph Shikader: Okay.

Dion Hatcher: Thanks, Laura.

Joseph Shikader: Thanks for the color.

Dion Hatcher: Okay. Thanks, Joseph.

Speaker #8: Okay. Thanks for the color.

Operator: That are for the questions at this time. I will now turn the call over to Dion for closing remarks.

Speaker #2: Okay. Thanks, Joseph.

Speaker #1: Now, I don't have further questions at this time. I will now turn the call over to Dion for closing remarks.

Dion Hatcher: Well, with that, thank you again for participating in our Q4 call. Enjoy the rest of your day.

Speaker #2: Well, with that, thank you again for participating in our Q4 call. Enjoy the rest of your day.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.