Vermilion Energy Inc. · TSX:VET
Vermilion Energy — Investor Presentation (April 2021)
35 slides from Vermilion Energy's investor presentation, April 2021
Slide 1: Vermilion Energy Investor Presentation
APRIL 2021 VERMILION ENERGY INVESTOR PRESENTATION INTERNATIONALLY DIVERSIFIED | FREE CASH FLOW FOCUSED | ESG LEADERSHIP
Slide 2: Vermilion's Key Attributes
VERMILION’S KEY ATTRIBUTES ► Unique portfolio of internationally diversified assets o Exposure to global commodity price benchmarks reduces cash flow volatility o Will support the return to a dividend capital markets model (over $40/share of dividends from 2003 to early 2020) ► Long history of stron
Slide 3: Capital Markets Summary
CAPITAL MARKETS SUMMARY Market Summary Trading Price (March 31, 2021) $9.13 (TSX), $7.28 (NYSE) Ticker Symbol (TSX & NYSE) VET Shares Outstanding (December 31, 2020) 158.7 million Average Daily Trading Volume (shares) 2.5 million (TSX), 1.9 million (NYSE) Monthly Dividend Currently Suspended Directo
Slide 4: ESG Leadership
ESG LEADERSHIP Environmental Vermilion is committed to reducing the environmental impact of traditional energy production, the enrichment and care of the communities in which we live and work, and maintaining our strong corporate governance ► CDP Leadership Level rating of “A-” o Top 10% of oil and
Slide 5: International Diversification
INTERNATIONAL DIVERSIFICATION 5
Slide 6: Core Operating Areas
CORE OPERATING AREAS 2021E PRODUCTION* INT 33% N.A. 67% N.A. INT FFO* 55% 45% INT FCF* N.A. 46% 54% VERMILION IS FOCUSED IN STABLE CORE AREAS * 2021 production and FFO based on March 15, 2021 strip and company estimates. 2021 strip at March 15, 2021: Brent (US$/bbl) $64.30; WTI US$61.35/bbl; LSB = W
Slide 7: Global Commodity Diversification
GLOBAL COMMODITY DIVERSIFICATION PRODUCTION (2021E)* ESTIMATED FFO CONTRIBUTION (2021E)* OIL (BRENT) OIL (BRENT) 16% 23% EUROPEAN GAS 17% OIL / OIL / EUROPEAN GAS CONDENSATE / CONDENSATE / 22% NGL NGL NORTH AMERICAN (WTI) (WTI) GAS 45% 38% 29% NORTH AMERICAN GAS 10% EXPOSURE TO GLOBAL COMMODITY PRIC
Slide 8: Global Crude Oil Pricing Advantage
GLOBAL CRUDE OIL PRICING ADVANTAGE OIL BENCHMARKS ► Vermilion has significant leverage to oil prices 2021E VET Premium / 2021E VET An increase of US$1/bbl generates approximately (Discount) to WTI o Crude Oil Mix (US$/bbl)* $17MM of incremental FCF on an unhedged basis Brent** 35% $5.00 ► Approximat
Slide 9: European Natural Gas Pricing
EUROPEAN NATURAL GAS PRICING ► Vermilion has significant leverage to European natural gas GLOBAL NATURAL GAS PRICES prices (+$1/mmbtu = +$28MM incremental FCF) $14 ► European natural gas forward prices are currently in the $6 $12 to $10/mmbtu range $10 C$/MMBTU* ► Strengthening European carbon prici
Slide 10: Focus on Free Cash Flow & Profitability
FOCUS ON FREE CASH FLOW & PROFITABILITY 10
Slide 11: Free Cash Flow Generation
FREE CASH FLOW FREE CASH FLOW GENERATION $1,000 $2,000 $900 $1,800 $800 $1,600 CUMULATIVE FCF ($MM)** $700 $1,400 $600 $1,200 $MM* $500 $1,000 $400 $800 $300 $600 $200 $400 $100 $200 $0 $0 2016 2017 2018 2019 2020 2021E* E&D CAPEX FCF E&D CAPEX GUIDANCE FCF FORECAST CUMULATIVE FCF FROM 2016 THROUGH
Slide 12: Free Cash Flow Yield
FREE CASH FLOW YIELD 2021E FCF YIELD 40% 35% 30% 2021E FCF YIELD (%)* 25% 20% 15% 10% 5% 0% BTE MEG CPG VET ERF BIR CNQ CVE WCP TOU IMO SU PEY POU NVA VERMILION TRADES AT ONE OF THE HIGHEST FCF YIELDS AMONGST CANADIAN PEERS * Source: RBC estimates as of March 25, 2021, using RBC 2021 base price deck
Slide 13: Operating Netbacks
OPERATING NETBACKS 2021E OPERATING NETBACKS $35.00 100% 90% 2021E OPERATING NETBACK ($/BOE)* $30.00 2021E LIQUIDS WEIGHTING (%)* 80% $25.00 70% 60% $20.00 50% $15.00 40% $10.00 30% 20% $5.00 10% $0.00 0% CPG VET BTE WCP ERF ATH POU PEY NVA KEL BIR TOU AAV OPERATING NETBACK LIQUIDS WEIGHTING VERMILIO
Slide 14: Cost Reduction
COST REDUCTION OPERATING EFFICIENCY ORGANIC CAPITAL EFFICIENCY 14.00 20.00 7% Reduction 12.00 40% Reduction 16.00 10.00 12.00 8.00 $ / BOE $ / BOE 49% Reduction 6.00 8.00 4.00 49% Reduction 17% Reduction 4.00 2.00 0.00 0.00 OPEX* Transportation Royalties G&A Trailing 3-Yr Avg 2P F&D (Including FDC)
Slide 15: FFO Sensitivity
FFO SENSITIVITY ANNUAL 2021 UNHEDGED FFO SENSITIVITY (C$MM)* COMMODITY PRICES** 2021E Change FFO Impact (C$) Brent (US$/bbl) $64.30 WTI (US$/bbl) $61.35 WTI & Brent US$1/bbl $17.0MM LSB = WTI less (US$/bbl) $4.40 MSW = WTI less (US$/bbl) $4.27 LSB / WTI Differential US$1/bbl $6.2MM TTF ($/mmbtu) $8.
Slide 16: Balance Sheet
BALANCE SHEET 16
Slide 17: Balance Sheet Composition
BALANCE SHEET COMPOSITION CURRENT CREDIT CAPACITY $2.5B ► No near-term maturities AS AT DECEMBER 31, 2020 $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
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: 2021 Leverage Sensitivity
2021 LEVERAGE SENSITIVITY 2021E DEBT-TO-CASH FLOW AT VARIOUS FORWARD OIL PRICES $800 4.0x $700 3.5x 2021E FREE CASH FLOW* ($MM) 2021E YEAR-END D/FFO* (x) $600 3.0x $500 2.5x $400 2.0x $300 1.5x $200 1.0x $100 0.5x $0 0.0x US$50/BBL US$60/BBL US$70/BBL US$80/BBL SIGNIFICANT TORQUE TO A CONTINUING OIL
Slide 20: 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 21: Summary
SUMMARY ► Unique portfolio of internationally diversified assets o Exposure to global commodity price benchmarks reduces cash flow volatility o Will support the return to a dividend capital markets model (over $40/share of dividends from 2003 to early 2020) ► Long history of strong profitability and
Slide 22: Asset Overview
ASSET OVERVIEW 22
Slide 23: 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 AS % OF FFO** 50% 36% 40% 38% 43% 32% 59% 115% 100% 77% 77% 80% 85% 43% 49% 57% 53% 64% 40% North America In
Slide 24: 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 25: CEE Exploration Potential
CEE EXPLORATION POTENTIAL VERMILION HAS BUILT A HIGHLY PROSPECTIVE EXPLORATION PORTFOLIO ACROSS CEE ► Approximately 3.4 million net acres of undeveloped land across three countries (Hungary, Croatia and Slovakia) ► Focused on under-invested basins prospective for both oil and gas that can benefit fr
Slide 26: 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 27: North America
NORTH AMERICA CANADA ► Targeting light oil and condensate-rich natural gas in West Central Alberta and light oil in SE Saskatchewan ► Over 400,000 net acres in West Pembina targeting the Mannville (2,400 – 2,700m depth) and Cardium (1,800m depth) formations with shared surface infrastructure ► Appro
Slide 28: ESG Performance
ESG PERFORMANCE 28
Slide 29: 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 deploy energy and emissions efficiency improvement projects throughout our operations o In
Slide 30: Environmental Performance
ENVIRONMENTAL PERFORMANCE CDP (FORMERLY CARBON DISCLOSURE PROJECT) ► CDP is a not-for-profit that provides a global disclosure system for investors and companies to manage their environmental impacts, including Climate (results at right) ► Submitted to CDP Water for the first time in 2020, achieving
Slide 31: Social Performance
SOCIAL PERFORMANCE ► Give back through strategic community investment o In the past five years, Vermilion has invested more than $9.2 million and 11,100 hours of volunteer time in our communities ► Demonstrate excellent results in annual employee survey provided by the Great Place to Work Institute
Slide 32: Parentis Sustainability Partnership
PARENTIS SUSTAINABILITY PARTNERSHIP ► Vermilion received France’s Circular Economy Award for our project to supply geothermal heat from our oil operation to local greenhouses ► The award recognizes economically successful enterprises that operate within a “circular economy,” in which businesses and
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: Analyst Coverage
ANALYST COVERAGE FIRM ANALYST ATB Capital Markets Patrick J. O’Rourke, CFA BMO Nesbitt Burns Ray Kwan, P.Eng. Canaccord Genuity Anthony Petrucci CIBC Capital Markets Dave Popowich Credit Suisse Manav Gupta Eight Capital Phil Skolnick J.P. Morgan Arun Jayaram National Bank of Canada Financial Markets
Slide 35: 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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