Vermilion Energy Inc. · TSX:VET
Vermilion Energy — Investor Presentation (September 2021)
34 slides from Vermilion Energy's investor presentation, September 2021
Slide 1: Vermilion Energy Investor Presentation
SEPTEMBER 2021 VERMILION ENERGY INVESTOR PRESENTATION INTERNATIONALLY DIVERSIFIED | FREE CASH FLOW FOCUSED | ESG LEADERSHIP
Slide 2: Vermilion's Key Attributes
VERMILION’S KEY ATTRIBUTES ► Compelling investment opportunity o Currently trading at one of the highest free cash flow yields amongst our peers (over 30%)* ► Unique portfolio of internationally diversified assets o Exposure to global commodity price benchmarks reduces cash flow volatility o Will su
Slide 3: Capital Markets Summary
CAPITAL MARKETS SUMMARY Market Summary Trading Price (August 31, 2021) $8.42 (TSX), $6.66 (NYSE) Ticker Symbol (TSX & NYSE) VET Shares Outstanding (June 30, 2021) 161.9 million Average Daily Trading Volume (shares) 2.0 million (TSX), 2.1 million (NYSE) Monthly Dividend Currently Suspended Director a
Slide 4: ESG Leadership
ESG LEADERSHIP Environmental Vermilion is committed to reducing the environmental impact of traditional energy production, enriching and caring for the communities in which we live and work, and maintaining our strong corporate governance ► CDP Leadership Level rating of “A-” since 2017; A in 2016 ►
Slide 5: International Diversification
INTERNATIONAL DIVERSIFICATION 5
Slide 6: Core Operating Areas
CORE OPERATING AREAS 2021E PRODUCTION* E&D CAPEX* INT 33% INT N.A. N.A. 45% 67% 55% FFO* FCF* INT INT N.A. N.A. 49% 50% 51% 50% VERMILION IS FOCUSED IN STABLE CORE AREAS * 2021 production and FFO based on August 30, 2021 strip and company estimates. 2021 strip at August 30, 2021: Brent (US$/bbl) $68
Slide 7: Global Commodity Diversification
GLOBAL COMMODITY DIVERSIFICATION PRODUCTION (2021E)* ESTIMATED FFO CONTRIBUTION (2021E)* OIL (BRENT) OIL (BRENT) 16% 26% EUROPEAN GAS 17% OIL / OIL / CONDENSATE / CONDENSATE / EUROPEAN GAS NGL NGL NORTH AMERICAN 24% (WTI) (WTI) GAS 38% 38% 29% NORTH AMERICAN GAS 12% EXPOSURE TO GLOBAL COMMODITY PRIC
Slide 8: Global Crude Oil Pricing Advantage
GLOBAL CRUDE OIL PRICING ADVANTAGE OIL PRICES ► Vermilion has significant leverage to oil prices $80 o An increase of US$1/bbl generates approximately $70 $17MM of incremental FCF on an unhedged basis $60 ► Approximately 35% of Vermilion’s crude oil production is $50 priced with reference to Dated B
Slide 9: European Natural Gas Pricing
EUROPEAN NATURAL GAS PRICING GLOBAL NATURAL GAS PRICES ► Vermilion has significant leverage to European natural gas $25 prices (+$1/mmbtu = +$28MM incremental FCF) ► European natural gas forward annualized prices are $20 currently trading in the $10 to $15/mmbtu range C$/MMBTU* $15 ► Strengthening E
Slide 10: Operating Netbacks
OPERATING NETBACKS 2021E OPERATING NETBACKS $45.00 100% $40.00 90% 2021E OPERATING NETBACK ($/BOE)* 2021E LIQUIDS WEIGHTING (%)* $35.00 80% 70% $30.00 60% $25.00 50% $20.00 40% $15.00 30% $10.00 20% $5.00 10% $0.00 0% CPG VET** BTE TVE WCP ATH ERF ARX POU NVA KEL PEY TOU BIR AAV OPERATING NETBACK LI
Slide 11: Focus on Free Cash Flow & Profitability
FOCUS ON FREE CASH FLOW & PROFITABILITY 11
Slide 12: Free Cash Flow Generation
FREE CASH FLOW FREE CASH FLOW GENERATION $2,000 $1,000 $1,800 $900 $1,600 $800 CUMULATIVE FCF ($MM)** $1,400 $700 ANNUALIZED FCF ($MM*) $1,200 $600 $1,000 $500 $800 $400 $600 $300 $400 $200 $200 $100 $0 $0 2016 2017 2018 2019 2020 2021E* E&D CAPEX FCF E&D CAPEX GUIDANCE FCF FORECAST CUMULATIVE FCF F
Slide 13: Free Cash Flow Yield
FREE CASH FLOW YIELD 2021E FCF YIELD* 2022E FCF YIELD** 40% 60% 35% 50% 30% AVERAGE = 30% AVERAGE = 20% 40% 25% 20% 30% 15% 20% 10% 10% 5% 0% 0% BTE VET CPG ERF CVE ARX MEG CNQ WCP IMO SU BIR TOU POU PEY NVA BTE MEG VET CVE CPG ERF SU CNQ WCP ARX IMO NVA BIR TOU PEY POU -5% VERMILION TRADES AT ONE O
Slide 14: FFO Sensitivity
FFO SENSITIVITY ANNUAL 2021 UNHEDGED FFO SENSITIVITY (C$MM)* COMMODITY PRICES** 2021E Change FFO Impact (C$) Brent (US$/bbl) $68.24 WTI (US$/bbl) $65.43 WTI & Brent US$1/bbl $17.0MM LSB = WTI less (US$/bbl) $4.25 MSW = WTI less (US$/bbl) $4.22 LSB / WTI Differential US$1/bbl $6.2MM TTF ($/mmbtu) $14
Slide 15: Balance Sheet
BALANCE SHEET 15
Slide 16: Balance Sheet Composition
BALANCE SHEET COMPOSITION CURRENT CREDIT CAPACITY $2.5B ► No near-term maturities AS AT JUNE 30, 2021 $2,250 o Covenant-based credit facility termed out to May 2024 $2,000 o US$ Senior Notes termed out to March 2025 $1,750 $1,500 ► Vermilion’s US$ Senior Notes have no financial covenants $1,250 and
Slide 17: Debt Reduction
DEBT REDUCTION LONG-TERM DEBT AS AT JUNE 30, 2021 $2,250 $2,000 $1,750 $MM $1,500 $1,250 $1,000 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Revolving Credit Facility Balance Senior Unsecured Notes (US$300MM) LONG-TERM DEBT REDUCED BY $366MM FROM Q2 2020 TO Q2 2021 17
Slide 18: Financial Leverage
FINANCIAL LEVERAGE LEVERAGE RATIOS 4.5x 4.0x 3.5x 3.0x 2.5x 2.0x VERMILION TARGETED LEVERAGE RANGE 1.5x 1.0x 0.5x 0.0x 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E* NET DEBT TO FFO** NET DEBT TO EBITDA*** FOCUSED ON REDUCING LEVERAGE TO OUR TARGETED
Slide 19: Commodity Hedge Position
COMMODITY HEDGE POSITION 2021 2022 100% 100% PERCENTAGE OF PRODUCTION HEDGED (%)** PERCENTAGE OF PRODUCTION HEDGED (%)** 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% WTI Brent European N.A. Corporate WTI Brent European N.A. Corporate Natural Gas Natural Gas Total Nat
Slide 20: Summary
SUMMARY ► Compelling investment opportunity, providing exposure to an early-stage recovery story with significant leverage to rising commodity prices ► Unique and defensive portfolio of internationally diversified assets with exposure to global commodity price benchmarks ► Long history of strong pro
Slide 21: Asset Overview
ASSET OVERVIEW 21
Slide 22: Vermilion Production
VERMILION PRODUCTION 105,000 90,000 75,000 60,000 BOE/D 45,000 30,000 15,000 0 2003 2004 2005 2006 2007 2008 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016 2017 2018 2019 2020 2021E E&D CAPEX 53% 37% 41% 40% 46% 33% 61% 119% 103% 81% 81% 85% 94% 47% 53% 62% 58% 73% 34% AS % OF FFO** North America In
Slide 23: Europe
EUROPE NETHERLANDS GERMANY IRELAND ► #2 onshore gas producer ► Established production operations ► 20% operated interest in the Corrib ► Large and growing inventory of drilling opportunities and substantial exploratory land Natural Gas Project position in the North German Basin ► Corrib field consti
Slide 24: CEE Exploration Potential
CEE EXPLORATION POTENTIAL VERMILION HAS BUILT A HIGHLY PROSPECTIVE EXPLORATION PORTFOLIO ACROSS CEE ► Approximately 2 million net acres of undeveloped land in the Pannonian basin across three countries (Hungary, Croatia and Slovakia) ► Focused on under-invested basins prospective for both oil and ga
Slide 25: Australia
AUSTRALIA ► 100% operated interest in Wandoo, an offshore oil field approximately 80 km N.W. of Australia (55m water depth) ► Horizontal well development with 20 producing wellbores and five dual lateral sidetracks tied into two platforms ► Two well-program planned for 1H 2022 ► Contracted Wandoo cr
Slide 26: North America
NORTH AMERICA CANADA ► Targeting light oil and condensate-rich natural gas in West Central Alberta and light oil in SE Saskatchewan ► Approximately 400,000 net acres in West Pembina targeting the Mannville (2,400 – 2,700m depth) and Cardium (1,800m) formations with shared surface infrastructure ► Ap
Slide 27: ESG Performance
ESG PERFORMANCE 27
Slide 28: Environmental Sustainability
ENVIRONMENTAL SUSTAINABILITY ► We are playing a meaningful role in the energy transition by reducing the environmental impact of our traditional energy production and developing renewable energy projects o We have near-term and long-term emissions reduction targets o We deploy energy and emissions e
Slide 29: Emissions Reduction Targets
EMISSIONS REDUCTION TARGETS ► We are progressing the development of our comprehensive, long-term ESG strategy, based on the leadership position we have established in sustainability for more than a decade ► This progress is reflected in our two emission reduction targets o Targeting net zero emissio
Slide 30: Emissions Reduction Targets
EMISSIONS REDUCTION TARGETS ► Our emissions reduction targets are supported by our track record o Achieving flaring reduction targets set after acquisitions in southeast Saskatchewan in 2014 and 2018 o Innovative use of geothermal energy from produced water at 2 projects in France EMISSION INTENSITY
Slide 31: Social Performance
SOCIAL PERFORMANCE ► Give back through strategic community investment o Since 2015, Vermilion has invested more than $9.8 million and 11,700 hours of volunteer time in our communities ► Demonstrate excellent results in annual employee survey provided by the Great Place to Work Institute to evaluate
Slide 32: Parentis Sustainability Partnership
PARENTIS SUSTAINABILITY PARTNERSHIP ► Vermilion received France’s Circular Economy Award, recognizing economically successful enterprises that operate within a “circular economy,” in which businesses and processes conserve, reuse and recycle resources, for our project to supply geothermal heat from
Slide 33: La Teste Eco-Neighbourhood
LA TESTE ECO-NEIGHBOURHOOD ► Our operations in La Teste, France now support an eco-neighborhood heated the same way as the tomato greenhouses, using recycled geothermal energy from our oil operation ► 30-year partnership to provide 80% of the energy required for 550 homes ► Provides 1 MW of renewabl
Slide 34: Advisory
ADVISORY This presentation is for information purposes only and is not intended to, and should not be construed to constitute, an offer to sell or the solicitation of an offer to buy, securities of Vermilion. This presentation and its contents should not be construed, under any circumstances, as inv
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