Vermilion Energy Inc. · TSX:VET
Vermilion Energy — Investor Presentation (November 2021)
32 slides from Vermilion Energy's investor presentation, November 2021
Slide 1: Vermilion Energy Investor Presentation
NOVEMBER 2021 VERMILION ENERGY INVESTOR PRESENTATION INTERNATIONALLY DIVERSIFIED | FREE CASH FLOW FOCUSED | ESG LEADERSHIP
Slide 2: Vermilion's Key Attributes
VERMILION’S KEY ATTRIBUTES PRODUCTION (2021E)*** ► Compelling investment opportunity o Currently trading at one of the highest free cash flow yields (over 35%)* and one of the largest discounts to OIL (BRENT) historical valuation multiples compared to peers** 16% EUROPEAN o 2021E / 2022E FCF in exce
Slide 3: Capital Markets Summary
CAPITAL MARKETS SUMMARY Market Summary Trading Price (November 8, 2021) $14.81 (TSX), $11.91 (NYSE) Ticker Symbol (TSX & NYSE) VET Shares Outstanding (September 30, 2021) 162.0 million Average Daily Trading Volume (shares) 2.1 million (TSX), 2.3 million (NYSE) Monthly Dividend Currently Suspended Di
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: Three Core Operating Areas
THREE CORE OPERATING AREAS 2021E PRODUCTION* E&D CAPEX* INT INT 33% 41% NA N.A. 67% 59% FFO* FCF* INT INT 45% 47% N.A. N.A. 55% 53% VERMILION FOCUSED IN THREE CORE AREAS – NORTH AMERICA, EUROPE AND AUSTRALIA * 2021 production and FFO based on November 1, 2021 strip and company estimates. 2021 strip
Slide 7: Global Crude Oil Pricing Advantage
GLOBAL CRUDE OIL PRICING ADVANTAGE OIL PRICES ► In aggregate, Vermilion’s global crude oil portfolio has $90 sold at an average $5.00/bbl premium to the Canadian light oil benchmark (MSW) over the past 7 years $80 ► Approximately 35% of Vermilion’s crude oil production is $70 priced with reference t
Slide 8: European Natural Gas Pricing
EUROPEAN NATURAL GAS PRICING ► Vermilion average realized natural gas price is over 2 GLOBAL NATURAL GAS PRICES >C$30/ times the Canadian benchmark (AECO) mmbtu $25 ► European natural gas forward prices are currently trading over C$19.00/mmbtu for 2022 as a result of: $20 C$/MMBTU* o Declining Europ
Slide 9: 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% VET** CPG BTE WCP TVE ATH ERF ARX POU NVA KEL TOU BIR PEY AAV OPERATING NETBACK LI
Slide 10: Focus on Free Cash Flow & Profitability
FOCUS ON FREE CASH FLOW & PROFITABILITY 10
Slide 11: Fund Flows from Operations
FUND FLOWS FROM OPERATIONS $1,200 ANNUALIZED FFO ($MM)** $1,000 $800 $600 $400 $200 $0 2018 2019 2020 2021E* 2022E** E&D CAPEX FCF OUR HIGH MARGIN, LOW DECLINE ASSETS HAVE THE ABILITY TO GENERATE SIGNIFICANT FREE CASH FLOW * 2021E FFO estimate based on 2021 guidance and November 1, 2021 strip pricin
Slide 12: Free Cash Flow Yield
FREE CASH FLOW YIELD 2022E FCF YIELD* 40% 35% AVERAGE = 27% 30% 25% 20% 15% 10% 5% 0% VET NVA PEY ERF CPG MEG BTE ARX BIR AAV WCP POU CVE SU TOU CNQ IMO VERMILION TRADES AT ONE OF THE HIGHEST FCF YIELDS AMONGST CANADIAN PEERS *Source: Peters & Co. estimates as of October 25, 2021, using Peters & Co.
Slide 13: Valuation Discount
VALUATION DISCOUNT E&P FORWARD CONSENSUS EV/DACF PREMIUM/DISCOUNT TO 3Y & 5Y HISTORICAL* 2.0x 1.0x 0.0x -1.0x -2.0x -3.0x -4.0x MEG VET ARX CPG POU ERF BTE NVA WCP PEY BIR TOU AAV Disc/Prem to 5Y Historical Disc/Prem to 3Y Historical Median 3Y Disc/Prem Median 5Y Disc/Prem VERMILION TRADES AT ONE OF
Slide 14: Balance Sheet
BALANCE SHEET 14
Slide 15: Balance Sheet Composition
BALANCE SHEET COMPOSITION CURRENT CREDIT CAPACITY $2.5B ► No near-term maturities AS AT SEPTEMBER 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
Slide 16: Debt Reduction
DEBT REDUCTION NET DEBT AND NET DEBT TO TRAILING FFO RATIO $2,500 5.0x $2,000 4.0x $1,500 3.0x $MM $1,000 2.0x $500 1.0x $0 0.0x Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021E** 2022E*** Revolving Credit Facility Balance* Senior Unsecured Notes (US$300MM) Net Debt to Trailing FFO**** WE AR
Slide 17: 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* 2022E** NET DEBT TO FFO** NET DEBT TO EBITDA*** FOCUSED ON REDUCING LEVERAGE TO OUR
Slide 18: 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 19: Summary
SUMMARY ► Compelling investment opportunity currently trading at one of the highest FCF yields and one of the largest discounts to historical valuation multiples compared to peers ► Unique and defensive portfolio of internationally diversified assets that provide exposure to premium global commodity
Slide 20: Asset Overview
ASSET OVERVIEW 20
Slide 21: 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% 38% AS % OF FFO** North America In
Slide 22: 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 23: CEE Exploration Potential
CEE EXPLORATION POTENTIAL VERMILION HAS BUILT A HIGHLY PROSPECTIVE EXPLORATION PORTFOLIO ACROSS CEE ► Approximately 2.0 million net acres of undeveloped land in the Pannonian basin across three countries ► Focused on under-invested basins prospective for both oil and gas that can benefit from new te
Slide 24: 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 25: 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 26: Appendix
APPENDIX 26
Slide 27: FFO Sensitivity
FFO SENSITIVITY COMMODITY PRICES** 2021E 2022E ANNUAL UNHEDGED FFO SENSITIVITY (C$MM)* Brent (US$/bbl) $71.81 $78.06 Change FFO Impact (C$) WTI (US$/bbl) $69.25 $74.74 LSB = WTI less (US$/bbl) $3.92 $4.93 WTI & Brent US$1/bbl $17.0MM MSW = WTI less (US$/bbl) $3.81 $4.45 LSB / WTI Differential US$1/b
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 emission reduction targets o We deploy energy and emissions ef
Slide 29: Emissions Reduction Targets
EMISSIONS REDUCTION TARGETS ► In April 2021, Vermilion introduced near-term and long-term emission reduction targets o Aspirational target of net zero emissions in our operations, including Scope 1 and Scope 2 emissions, by 2050 o Reducing Scope 1 emissions intensity from our operations by 15 to 20%
Slide 30: Sustainability Projects
SUSTAINABILITY PROJECTS ► Vermilion is committed to advancing environmental sustainability, economic inclusivity and creating partnerships within the communities in which we live and work PARENTIS SUSTAINABILITY PARTNERSHIP LA TESTE ECO-NEIGHBOURHOOD ► Our recycled geothermal energy tomato greenhous
Slide 31: Building a Sustainable Future
BUILDING A SUSTAINABLE FUTURE VERMILION HAS BEEN RECOGNIZED BY BMO AS AN INDUSTRY LEADER IN ESG ► Vermilion continues to rank in the top quartile in emissions intensity ► Relative to its peers, Vermilion ranks well on total fresh water use per barrel of oil ► Vermilion has strong ESG governance with
Slide 32: 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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