Vermilion Energy Inc. · TSX:VET
Vermilion Energy — Vermilion Energy Trust — Investor Presentation (October 2007)
46 slides from Vermilion Energy's investor presentation, October 2007
Slide 1: Legal Disclaimer
Legal Disclaimer This presentation contains forward-looking financial and operational information including earnings, cash flow, unitholder distributions, debt levels, production and capital expenditure projections. These projections are based on the Trust’s expectations and are subject to a number
Slide 2: Trust Profile
Trust Profile VET.UN – Toronto Stock Exchange (10/10/2007) $35.49 Monthly distribution $0.17 Current yield 5.7% Units outstanding 73 mm Market capitalization C$2.5 billion Management ownership 9% Net debt (06/30/2007) $446 mm Debt to cash flow (Q2 annualized) 1.1 x Reserve Life Index (12/31/2006) 11
Slide 3: Vermilion Advantage
Vermilion Advantage Strong leverage to oil Sustainable business model Attractive financial position Minimal impact of trust taxation Ability to respond to Alberta royalty changes Positive momentum Option value exposure Broad market support
Slide 4: Balanced Assets - Leveraged to Oil Prices
Balanced Assets - Leveraged to Oil Prices Australia Western 14% Europe 46% 2007E Production 31,000 – 32,000 boe/d Canada 40% 2007 Hedges: Oil - 22% Oil 54% Gas 1 - 49% Boe - 34% NGL’s 4% Oil Based Canadian Gas 28% 1 Gas includes Netherlands natural hedge of 27% Gas 14%
Slide 5: Sustainable Business Model
Sustainable Business Model 200% 175% 150% 125% 100% 75% 50% 25% 0% VET Distribution as % of CF Dev. Capex as % of CF Source: CIBC
Slide 6: Financial Strength
Financial Strength 2007 EST 3.5 3.0 2.5 Average = 2.0 2.0 1.5 1.0 0.5 0.0 VET Source: CIBC
Slide 7: Ability to Respond to CDN Politicians
Ability to Respond to CDN Politicians Ability to respond to the Trust tax – Low payout ratio – Dividend income from foreign jurisdictions – Ability to manage Canadian tax basis Ability to respond to Alberta royalty changes – Alberta production represents only 35% of total (2008) – Ability to rea
Slide 8: Projected Capital Program 2007
Projected Capital Program 2007 Canada $71 mm Drayton Valley Infills, recompletions Coalbed Methane 20 to 30 wells in 2007 France $58 mm Paris Basin Dev. Drilling (2 wells) Aquitaine Basin Production maintenance & workovers Aquitaine Maritime Offshore exploration drilling (1 well) Netherlands Dev. Dr
Slide 9: Operations
Operations VERMILION a . _- ——EE ——— ~~ ——
Slide 10: Vermilion in France
Vermilion in France Production - 9,000 BOE/D
Slide 11: France Opportunities
France Opportunities Over 90 potential drilling locations and 50 workover opportunities identified in the Paris and Aquitaine Basins Large oil pool optimization at Chaunoy, Cazaux and Parentis New exploration licenses, Aquila & Carret
Slide 12: Chaunoy (EREP)
Chaunoy (EREP) Potential capture of additional 3 mmbbls 1 Infill drilling to chase unswept oil within field boundaries and increase recovery by 1.3%, multi-layered prize Targeted seismic program to better define faults OOIP 235 mmboe 2 1 Internal Estimate 2 Infill locations GLJ Petroleum Con
Slide 13: Champotran / LaTorche Drills
Champotran / LaTorche Drills Champotran Conquillie Champotran Acquisition Saint Just en Brie 2003-07 Drills Potential Offsets Infill/Step-out Potential
Slide 14: Cazaux Infill / Step-out (EREP)
Cazaux Infill / Step-out (EREP) Potential capture of additional 4.5 mmbbls 1 Infill and step-out drilling to increase recovery by 1.9% Planning 3D program over entire field to better define OOIP, infill and step-out locations OOIP 243 mmboe 2 1 Internal Estimate 2 GLJ Petroleum Consultants I
Slide 15: Parentis Infills
Parentis Infills Potential capture of additional 1.8 mmbbls in West Parentis 1 Infill drilling focused where well density and watercut remain low in comparison to the rest of the field Infill Locations 1 Internal Estimate Existing Injectors
Slide 16: Vermilion in Australia
Vermilion in Australia Production - 8,000 BOE/D
Slide 17: Australian Opportunities
Australian Opportunities Wandoo pool optimization – Completed facility upgrades – Workover and recompletions – Attic oil drilling potential
Slide 18: Asset Optimization: Wandoo Production Increases
Asset Optimization Wandoo Production Increases Phase 1 debottle- 10000 necking project Workover additional completed Oct/06 9000 production: 600 bopd average 8000 B5 & B9 workovers Oil Rate (bopd) completed Aprl/07 7000 6000 Debottlenecking Debottleneck Ph.1 additional resulted in an 5000 prod
Slide 19: Trapped Oil Above Existing Wells
Trapped Oil Above Existing Wells -560 -565 As the water enters Attic Oil -570 the pool, both the oil- -575 -580 A9 B8 B7 water and gas-oil B5 B9 -585 contacts move up -590 -595 -600 Oil will be trapped -605 above the existing -610 wells, creating an -615 opportunity to drill above the existing w
Slide 20: Vermilion in Netherlands
Vermilion in Netherlands Production - 4,200 BOE/D
Slide 21: Netherlands Opportunities
Netherlands Opportunities Streamlining of processing facilities Harlingen infill drilling 2007 De Blesse pool delineation 2007
Slide 22: Harlingen Drill Program - 2007
Harlingen Drill Program - 2007 Existing long life, large Possible 2008 gas accumulation (135 seismic BCF OGIP) 1 Areas not effectively drained 2 multi-lateral horizontal wells in north end 1 horizontal drill in south end 0 10 KM Future potential: East pool drilling program (additional seismi
Slide 23: DeBlesse Drill Program - 2007
DeBlesse Drill Program - 2007 De Blesse 2 well is an opportunity to increase resource potential and productivity by drilling a separate, poorly drained fault block De Blesse 2 will be drilled from the BLS1 De Blesse 1 well pad and deviated to the untapped fault block BLS2 0 4 km De Blesse is e
Slide 24: Vermilion in Canada
Vermilion in Canada Production - 11,500 BOE/D
Slide 25: Canadian Opportunities
Canadian Opportunities Drayton Valley – Multi-zone drilling potential – Downspacing – Recompletion Coalbed Methane – Over 350 infill locations identified Utikuma – Large oil pool optimization
Slide 26: Drayton Valley – Multi-zone Potential
Drayton Valley – Multi-zone Potential Strong Land Position Control over 160,000 net 250 sections net 355 gross acres of land, 70% working interest approximately 50% undeveloped Most areas completed at one well per section or less Multiple stacked play types Opportunities for – Workovers – Re
Slide 27: Creating Option Value
Creating Option Value VERMILION a . _- a ~~ ~———Ea— ————
Slide 28: High Impact Option Value
High Impact Option Value Provide exposure to high impact opportunities while minimizing risk capital Create additional growth and/or equity without impacting core operations France and Netherlands exploration opportunities Large oil pool development potential Verenex Energy Inc. Seismic op
Slide 29: Aquitaine Basin
Aquitaine Basin CARRET AQUITAINE AQUILA PERMIT MARITIME PERMIT COURBEY LES PINS LES MIMOSAS LES ARBOUSIERS LAVERGNE LES TAMARIS CAZAUX LUGOS MOTHES PARENTIS LUCATS-CABEIL
Slide 30: Netherlands - Significant Targets
Netherlands - Significant Targets The purchase of production in the Netherlands came with adjacent lands and abundant, close in, lower risk exploration prospects LEEUWARDEN These lands are held ZUIDWAL by production with no forced expiries Leeuwarden/Oosterend Gorredijk/Steenwijk GORREDIJK Sloot
Slide 31: Large Oil Pool Opportunities
Large Oil Pool Opportunities P50 P50 Original Reserves Oil in Place Dec 06 Field mmboe mmboe Development Opportunities Canada Utikuma VET (WI share) 1 134 8.2 Waterflood and tertiary potential France Chaunoy 3 235 6.4 Waterflood, tertiary and infill potential Cazaux 3 243 5.5 Recompletion and waterf
Slide 32: Verenex Energy Inc.
Verenex Energy Inc. Founded by Vermilion in 2004 – Trades on Toronto Stock Exchange – VNX Vermilion owns approximately 41.8% – 18.5 million shares – $200 million of option value ($2.75 / VET unit) Focused in Libya – 50% interest in 1.5 million acre permit
Slide 33: Verenex in Libya
Verenex in Libya ROBUST INVENTORY OF OIL PROSPECTS AND LEADS 45 oil prospects and leads First well tested 12,500 bbls/d of light oil Second and third well tested over 23,000 bbls/d each Fourth and fifth wells are currently testing Seven wells to be drilled in 2007 Continued exploration e
Slide 34: How Does Vermilion Stand Out?
How Does Vermilion Stand Out ?
Slide 35: #1 Canadian Energy Trust three year return
#1 Canadian Energy Trust 38.9% three year return
Slide 36: Peer Group Performance – 2004 to 2006
Peer Group Performance – 2004 to 2006 THREE YEAR COMPOUNDED AVERAGE RETURN 45% 40% 35% 30% 25% Average = 19.2% 20% 15% 10% 5% 0% VET
Slide 37: #1 Reserve Growth three year performance
#1 Reserve Growth 32% three year performance
Slide 38: Reserves Per Unit – 2004 to 2006
Reserves Per Unit – 2004 to 2006 THREE YEAR CHANGE (DEBT ADJUSTED) 140% 120% Average = minus 2% 100% 80% 60% 40% 20% 0% VET
Slide 39: #1 Production Growth three year performance
#1 Production Growth 24% three year performance
Slide 40: Production Per Unit – 2004 to 2006
Production Per Unit – 2004 to 2006 THREE YEAR CHANGE (DEBT ADJUSTED) 140% 120% 100% Average = minus 13.5% 80% 60% 40% 20% 0% VET
Slide 41: Top Quartile Recycle Ratio three year performance
Top Quartile Recycle Ratio 2.1 three year performance
Slide 42: Three Year Recycle Ratio
Three Year Recycle Ratio 3.0 2.5 2.0 Average = 1.5 1.5 1.0 0.5 0.0 VET Source: FirstEnergy
Slide 43: Best Reclamation Fund
Best Reclamation Fund 44% Funded
Slide 44: PV of Abandonment Obligations
PV of Abandonment Obligations YEAR END 2006 400 Vermilion 44% funded (reclamation funds to asset retirement 350 obligation) 300 250 $m m 200 150 100 50 0 VET Reclamation Fund PV of Asset Retirement Obligations
Slide 45: Building Sustainability
Building Sustainability Consistent top quartile performance Disciplined, value added strategy Best positioned to respond to new tax legislation Strong operational expertise with over 90% of production operated High quality asset base with multi-year drilling inventory High impact option
Slide 46: Vermilion is Standing OUT
VERMILION Vermilion is Standing OUT ~~ ~~ —
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