Vermilion Energy Inc. · TSX:VET
Vermilion Energy — Shareholder Meeting (2013)
57 slides from Vermilion Energy's shareholder meeting presentation, 2013
Slide 1: 1
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Slide 2: Advisory
ADVISORY This presentation is for information purposes only ond is not intended to, and should not be construed fo constitute, an offer to sell or the solicitation of an offer to buy, securities of Vermilion. This presentation ond its contents should not be construed, under any circumstances, as inv
Slide 3: Advisory (Continued)
ADVISORY (Continued) Reserves & Resource Definitions All reserves estimates in this presentation have been estimated using the definitions in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") as prescribed by National Instrument 51-101 - Standards of Disclosure for Oil end Gos Aces
Slide 4: 2012 Key Accomplishments: Portfolio and Future Growth
VERMILION ENERGY 2012 KEY ACCOMPLISHMENTS ————— ——_ —= —— a PORTFOLIO AND FUTURE GROWTH — Achieved 7% growth in average production and 18% growth in fund flows from operations per share — Completed two acquisitions in France adding approximately 2,850 bbls/d of Brent priced crude — Identified contin
Slide 5: 2012 Key Accomplishments: Shareholder Returns and Financial Stability
VERMILION ENERGY 2012 KEY ACCOMPLISHMENTS ————— ——_ ——— —— a SHAREHOLDER RETURNS AND FINANCIAL STABILITY — Generated strong relative total return for Vermilion shareholders — VET Total Return: 19.6% — Peers Total Return: -21.5% — S&P 500 Energy: 2.3% — S&P 500 Composite: 13.4% — TSX Composite Total
Slide 6: 2012 Key Accomplishments: Operating Excellence
VERMILION ENERGY 2012 KEY ACCOMPLISHMENTS ————— ——_ —= —— a OPERATING EXCELLENCE — Doubled production in Cardium light oil play to more than 7,500 boe/d — Achieved record consolidated annual production driven by record production levels in France and Netherlands — Increased total proved plus probabl
Slide 7: 2012 Key Accomplishments: Health, Safety and Environment
VERMILION ENERGY 2012 KEY ACCOMPLISHMENTS ————— ——_ —= —— a HEALTH, SAFETY AND ENVIRONMENT - EVERYWHERE. EVERYDAY. EVERYONE. — No LTl incidents in Canada, France, Netherlands or Australia — Further strengthened our positive HSE culture throughout the organization — Over 60 emergency response exercis
Slide 8: 2012 Key Accomplishments: Governance
VERMILION ENERGY 2012 KEY ACCOMPLISHMENTS ————— ——_ ——— —— a GOVERNANCE — Recognized in The Globe and Mail’s 2012 Board Games report as ranking 3rd among oil and gas companies and 17th among over 200 Canadian corporations — The report ranks companies based on: — Disclosure — Board composition — Insi
Slide 9: 2012 Key Accomplishments: A Great Place to Work
VERMILION ENERGY 2012 KEY ACCOMPLISHMENTS ————— ——_ ——— —— a A GREAT PLACE TO WORK — Ranked among the Best Workplaces in Canada (Top 22) and in France (Top 27) GREAT [eee Illustrates strong corporate culture EAT] Workplaces 2013 | Wels Canada ! — Highly engaged and motivated staff —$ jor pce 5 Workp
Slide 10: First Quarter 2013 Highlights
FIRST QUARTER 2013 HIGHLIGHTS QI 2013 Actual Versus Q4 2012 Increase/(decrease) Average Production (boe/d) 38,707 7% Fund Flows from Operations ($MM) 163.6 15% Capital Expenditures ($MM) 180.5 15% Average Crude & NGL Selling Price ($/bbl) 103.98 7% Average Natural Gas Selling Price ($/mef) 6.77 (5%)
Slide 11: First Quarter 2013 Highlights
VERMILION ENERGY FIRST QUARTER 2013 HIGHLIGHTS ————— ——_ —= —— a FIRST QUARTER 2013 — Listed on the New York Stock Exchange on March 12, 2013 — Increased the monthly dividend by 5% to $0.20 per share from $0.19 per share effective January — Drilled 20.1 net cardium wells, 1.3 net liquids-rich gas we
Slide 12: Vermilion's Key Attributes
VERMILION’S KEY ATTRIBUTES — International oil-levered producer in Canada, Western Europe and Australia with leading businesses in each jurisdiction — Project diversification, global commodity exposure and high margins reduce risk — Fully-funded production and cash flow growth profile from well-defi
Slide 13: Market Summary
Market Summary Trading Price $51.70 (TSX), $51.25 (NYSE) (! Ticker Symbol TSX/NYSE: VET Shares Outstanding 99.5 million Monthly Dividend $0.20/share Dividend Yield 4.6% Management Ownership ~8% Market Capitalization $5.2 billion Enterprise Value $5.8 billion $950 MM Revolving Credit Facility (3-year
Slide 14: Production Growth
PRODUCTION GROWTH 2013 GUIDANCE - 39,500 TO 40,500 BOE/D 45,000 PRODUCTION GROWTH 40,000 6% CAGR Production (boe/d) Y/Y Growth 35.000 2011 35,202 10% 30,000 2012 37,803 7% B00 2013* 39,500 - 40,500 4% - 8% 20,000 ) 15,000 2015E* 50,000 10,000 5,000 0 Pel 8 S & = iE 2006 2007 2011 2013E 2014E 2015E T
Slide 15: Reserves Growth
RESERVES GROWTH 2012 YEAR END RESERVES* (mmboe) Proved % P+P % 8% CAGR Brent-based crude 42.8 4l 63.9 39 150 WIl-based crude 18.1 17 32.2 20 a Natural gas liquids 36 3 57 3 European gas 217 21 33.1 20 100 Canadian gas 19.0 18 (29.9 18 75 Total 105.3 1649 50 12.5 year P+P reserve life index** se 13%
Slide 16: Reserves
RESERVES 2012 YEAR END PROVED + PROBABLE RESERVES* (mmboe) Canada France Netherlands Ireland Australia Total Company At December 31, 2011 64.2 36.0 11.0 17.5 17.5 146.2 Additions from E&D 9.1 1.8 PIT, 37 2.0 19.2 Additions from Acquisitions = 13.1 0.2 2 = 13.2 2012 Production (5.5) (3.9) (2.1) 2 (2.
Slide 17: 2012 Year End Reserves, Contingent Resource and Prospective Resource
2012 YEAR END RESERVES, CONTINGENT RESOURCE AND PROSPECTIVE RESOURCE* (mmboe) ial Contingent Resource (gross) Prospective Resource (gross) Low Best Estimate High Low Best Estimate High Canada 67.8 72.4 135-3 187.0 96 249.4 541.0 France 47.0 Teo, 18.9 27.9 Netherlands 11.8 Ireland 21:2 09 eg, 6.1 Aus
Slide 18: Cash Flow Growth
CASH FLOW GROWTH 2003 8 ot 2005 2013 GUIDANCE - $614 MM TO $643 MM 700 FFO GROWTH 600 Fund Flows from Fund Flows per Operations, $MM. Share* Growth 500 2011 $474 $5.22 33% 2012 $558 $5.69 18% 400 2013E* $614 - $643 $6.08 - $6.37 10% - 15% I 300 2015E** $750 - $800 $7.25 - $7.75 0 | 1 t) g R R TARGET
Slide 19: Vermilion Monthly Dividend History
$0.25 VERMILION MONTHLY DIVIDEND HISTORY $0.20 / SHARE $0.20 $0.19 / SHARE $0.17 / SHARE $0.15 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 EXPECTED GROWTH IN FUND FLOWS HAS POTENTIAL TO SUPPORT FUTURE DIVIDEND GROWTH Dividend increase became effective for the January 2013 dividend paid on
Slide 20: Risk Management / Balance Sheet
RISK MANAGEMENT / BALANCE SHEET
Slide 21: Hedging Philosophy
VERMILION ENERGY HEDGING PHILOSOPHY ————— ——_ ——— —— a — Vermilion hedges for the purpose of risk mitigation only — Targeting 50% of net of royalty volumes through a portfolio of collars and swaps — Currently 38% of 2013 oil volume hedged — Hedge WTI crude, Brent crude, natural gas and purchased pow
Slide 22: Corrib Development Phase
CORRIB DEVELOPMENT PHASE ———— || 111% 113% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E** 2014E 2015E W NETDIVIDEND mi CAPEX (INCL. ABAND./RECLAIM, EXCL. CORRIB) mi CORRIB CAPEX 175% 150% 125% i >» Q ez 50% TOTAL EXPENDITURES / FFO* 25% 0% POTENTIAL FOR FREE CASH FLOW* IN 2015 FOLLOWING C
Slide 23: Conservative Balance Sheet
CONSERVATIVE BALANCE SHEET CREDIT CAPACITY $1.2 BILLION* NET DEBT TO FUND FLOWS FROM OPERATIONS 3.0 2013 PEER AVERAGE = 2.5 @ 2.0 1.0 ee o 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E* @ NET DEBT (INCLUDING NET WORKING CAPITAL DEFICIT) @ AVAILABLE Source: CIBC, April 28, 2013 BALANCE SHEE
Slide 24: International Diversification
INTERNATIONAL DIVERSIFICATION
Slide 25: Vermilion's International Advantage
VERMILION ENERGY VERMILION’S INTERNATIONAL ADVANTAGE ————— ——_ —= —— a — Focused in three core areas (Western Canada, Europe, Australia) with stable, well developed fiscal and regulatory regimes — Global commodity exposure provides premium pricing, while commodity diversification dampens volatility
Slide 26: Global Commodity Exposure
GLOBAL COMMODITY EXPOSURE > 80% levered to oil, liquids and high ANTICIPATED 20 a COMMODITY MIX netback European gas — Moderates impact of regional price fluctuations Ol RENN — Improves stability of cash flow — High margins and diversification of revenues support lower risk dividend EUROPEAN GAS 16%
Slide 27: Brent Futures Forecast Premium to Remain Longer Term
$30 US$17.37/BOE US$16,15/BOE AVERAGE DIFFERENTIAL (2013E-2015E) > US$9.00/BOE Jan-11 Jul-12 Oct-12 Jon-13 Apr-13 Jul-13 Apr-12 Jul-11 Oct-11 Jan-12 Jul-14 Oct-14 Apr-14 Oct-13 Jan-14 BRENT FUTURES FORECAST PREMIUM TO REMAIN LONGER TERM Source: Bloomberg. Actual differential for 2011 to April 2013.
Slide 28: Full Year 2012 Pricing / Year to Date 2013 Pricing
FULL YEAR 2012 PRICING YEAR TO DATE 2013 PRICING* VET BRENT USS$115 = = oo = ne 3 VET BRENT US$114. = = DATED BRENT US$112 5 DATED BRENT US$110 WTI US$94 nee . WTI US$94 PREMIUM BRENT PRICING * Forecast pricing based on May differentials, where applicable. Dated Brent and WTI trading prices as at cl
Slide 29: Premium Gas Pricing in Europe
VERMILION ENERGY PREMIUM GAS PRICING IN EUROPE ————— ——_ ——— —— a GAS PRICE ($/MCF) & $2 — NetherlandsGas — AECO 004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2012 PREMIUM > $7.00/MCF 2004-2012: AECO and NIP actual prices 2013-2016: AECO forward curve, Netherlands aas TIF forward c
Slide 30: Netbacks by Country - Q1 2013
NETBACKS BY COUNTRY - Q1 2013 $/boe * RTILE CASH NETBACKS Total Company Revenue Royalties Operating cost PRRT Transportation Operating Netback After-Tax Cash Flow Netback Canada France Netherlands Australia $57.61 $107.17 $61.21 $120.76 (6.19) (6.00) (9.53) (17.58) (7.06) (25.61) (19.27) (1.56) (2.4
Slide 31: Relative Netbacks
RELATIVE NETBACKS 2013* OPERATING NETBACK - $/BOE 2013* AFTER TAX CASH NETBACK - $/BOE $60 $60 $50 $50 $40 $40 $30 $30 $20 $20 u 8° VET PBN CPG TET BTE PWT ARX ERF PGF PEY BNP PMT 8° CoG VET PBN TET BTE ERF ARX PWT PEY PGF BNP PMT TOP QUARTILE OPERATING AND CASH FLOW NETBACKS AMONGST PEER GROUP *Sou
Slide 32: Assets
ASSETS
Slide 33: European Region
EUROPEAN REGION <eere> ae ee nk N\¢ Lite Sta | oo : » ate" se VERMILION IS FOCUSED IN THREE CORE REGIONS
Slide 34: 2013 Capital Budget
2013 CAPITAL BUDGET Canada France Netherlands Austra Drilling, completions, workovers & recompletions 160 32 24 39 > 255 54 Production equipment, facilities, new well equipment & tie-in 55 19 5 26 85 190 40 Seismic, studies, land & other 15 14 1 = > 30 ) Subtotal 230 65 30 65 85 475 100 ZaZa Assets
Slide 35: Canada
CANADA — Production and assets focused in Drayton Valley area — Potential for three significant development projects sharing the same surface infrastructure = Cardium light oil development (1,800 m depth) — Mannville liquids-rich gas inventory (2,400-2,700 m depth) ke Taare — Extensive position in D
Slide 36: Vermilion West Pembina Cardium
VERMILION WEST PEMBINA CARDIUM ————— ——_ —= —— a — Dominant land position in West Pembina “i a = Cardium resource play Jee. =] — Control key infrastructure oo | en e — 15,000 bbl per day oil battery aa Pore i — Two owned and operated gas plants = th tad PLANNED 2013 CAPITAL ACTIVITIES ral — Drill ap
Slide 37: Cardium Production Profile / Economics
CARDIUM PRODUCTION PROFILE / ECONOMICS VERMILION OPERATED PRODUCTION RATES VS. PEER PRODUCTION RATES 400 Expected Economics @$80 - $100 Oil Price (Edmonton sweet index) After Tax ROR% 50% - 120% Expected F&D, $/boe $22.00 - $23.00 Recycle Ratio 2.2x- 2.6x 300 Oil price required for 8% return, $/bbl
Slide 38: Cardium - Average Cost per Section
CARDIUM - AVERAGE COST PER SECTION ($MM) (INCLUDES DRILLING, COMPLETION, EQUIPMENT / FACILITIES & TIE-IN) @ Facility/Other i Equip & Tie-in Completion 5 By Drilling _ | " = = t) Q2 2010 Q3 2010 Q4 2010 Ql 2011 Q2 2011 Q3 2011 Q4 2011 Ql 2012 Q2 2012 Q3 2012 Q4 2012 Ql 2013 AVERAGE COST PER SECTION D
Slide 39: Cardium Development Plan
CARDIUM DEVELOPMENT PLAN NET CARDIUM PROSPECT INVENTORY 12,000 AS AT MARCH 31, 2013 TARGETING 12-14,000 BOE/D IN 2015° 9,000 = 6,000 Drillable a Inventory 240 3,000 267 net locations booked at an average 156 mboe per well (135 booked undeveloped locations)** 0 2009 2010 2011 2012 20136 20146 2015E N
Slide 40: Mannville Liquids-Rich Gas
MANNVILLE LIQUIDS-RICH GAS 295 net sections (188,800 acres) of Mannville rights, largely held by production — Multi-zone, liquids-rich gas — Vermilion infrastructure in place — First 2013 Ellerslie horizontal well has initial production rate of 3.6 mmcf/d and 515 bbls/d of condensate (50% Vermilion
Slide 41: Duvernay Liquids-Rich Resource Play
DUVERNAY LIQUIDS-RICH RESOURCE PLAY 272 net sections (174,240 acres) of largely contiguous Duvernay lands assembled for $74 million (~$425/acre) = Captures full breadth of liquids-rich gas fairway in Edson area with little or no dry gas acreage — Expected condensate yields of 30 to 300 bbls/mmef* =
Slide 42: Duvernay Liquids-Rich Resource Play
DUVERNAY LIQUIDS-RICH RESOURCE PLAY VERMILION’S COMPETITIVE ADVANTAGES = Demonstrated experience in decreasing costs and optimizing productivity in Cardium resource play = Proximal to extensive Vermilion pipeline and gas plant infrastructure = Pre-existing 3D seismic coverage for much of the Duverna
Slide 43: European Core Region
EUROPEAN CORE REGION BELLANABOY GAS PLANT PIPELINE CORRIB GAS FIELD TOUK PARENTIS - EUROPEAN BORDEAUX CIT AQUITAINE BASIN CORRIB FIELD WILL #1 OIL PRODUCER fe Sua ead CONSTITUTE 95% OF IRELAND'S GAS PRODUCTION REGION EXPECTED TO DELIVER STABLE NEAR TERM PRODUCTION AND CASH FLOW WITH POTENTIAL FOR ME
Slide 44: France
Entered France in 1997 — Achieved record annual production level in 2012 — Assets characterized by large OOIP conventional fields with high working interest (OOIP in 4 largest fields >1.4 Bboe) — Workover, infill drilling and secondary recovery opportunities — Stable Brent indexed production base wi
Slide 45: France - 2012 Acquisitions
FRANCE - 2012 ACQUISITIONS ASSET SUMMARY Low decline conventional oil assets with reserve life index of 20 years ACQUISITION METRICS roxas ZoZa aiicn Ge Cost (millions) $106 $75 Waterflood optimization and development opportunities Tepes) 31,800 24,300 (not included in GU reserve estimate) Productio
Slide 46: Netherlands
NETHERLANDS ~6,200 boe/d* Entered Netherlands in 2004 High impact natural gas drilling and development Royalty free natural gas Expect 2013 gas price to be ~$10/mef Increasing production while consistently reinvesting <50% of FFO Achieved record annual production in 2012 KEY WELLS TO DATE Well Year
Slide 47: Netherlands Activity
NETHERLANDS ACTIVITY = Completed tie-in of Eernewoude-2 well during Q4 2012 = Drilled 2 new wells in Q2/Q3 2012 — Production additions from 2011/2012 drilling anticipated in 2013 @ostefend = Added significant exploration concessions at Opmeer, Hemelum and Akkrum (222,000 acres) = Total undeveloped l
Slide 48: Ireland
IRELAND CORRIB PROJECT — Offshore natural gas field 83 km N.W. of Ireland (350 m water depth) leon ifrecane PIPELINE — Well total depth ~3,000 m below sea level eerie Cioran PPEUNE — Expected production of 55 mmef/d (9,000 boe/d) net to Vermilion in late 2014 or early 2015 with peak production in mi
Slide 49: Ireland Activity
IRELAND ACTIVITY ONSHORE PIPELINE IN PROGRESS — 4.9 km of 9 km pipeline to be tunneled under Sruwaddacon Bay = Initiated tunneling December 16, 2012 = Tunneling, construction and commissioning anticipated to take approximately 2 years to complete Corrid Wells drilled and tested Subsea manifold & off
Slide 50: Australia
ei! ~5,300 boe/d? |W — Entered Australia in 2005 — Offshore oil field ~80 km N.W. of Australia (55 m water depth) — Horizontal well development with 21 producing well bores — Wells 600m below sea bed with 500 - 3,000+ m horizontal lengths = Contracted oil production receives a premium of >US$7 to Da
Slide 51: Australia Activity
VERMILION ENERGY AUSTRALIA ACTIVITY ————— ——_ —= —— a — New wells use deviated sidetracks from existing well bores — Oil is trapped above the existing wells, creating opportunity to drill at a higher structural elevation to capture attic and flank oil — Extensional drilling opportunities also identi
Slide 52: International New Growth
INTERNATIONAL NEW GROWTH — Pursuing multiple low-cost, early entry opportunities via direct permit grants — Modest capital commitments with low up-front cash costs — Anchored by resource play potential with the additional upside of conventional traps — Initiative limited to jurisdictions with politi
Slide 53: Morocco
MOROCCO Initial 12-month onshore exploration izati ing 2.34 milli Chcon Fosse Loogeach = Si Min Liam £06 Tada authorization covering 2.34 million acres of a eee —- Haouz block, Morocco {Converional — Work to include reprocessing of 2D seismic data, geological and geophysical studies Kosmos Energy- L
Slide 54: Record of Value Creation
RECORD OF VALUE CREATION
Slide 55: Value Creation 1994 - Q1 2013
VERMILION ENERGY VALUE CREATION 1994 - Q1 2013 ————— ——_ —= —— a CREATION MILLIONS 18 YEAR TRACK RECORD OF STRONG VALUE CREATION (1) Equity issued for cash since 1994 12) Dividends paid 2003 to March 31, 2013
Slide 56: Relative Market Performance
RELATIVE MARKET PERFORMANCE Year 5Year 10Year 15 Year Since Inception (18 Years) S&P TSX Total Return Index 7.2% 4.8% 0.8% S&P TSX Composite Index 4.0% 1.9% -2.1% 6.5% 4.2% 5.8% S&P 500 Composite Index 13.4% 8.5% -0.6% 4.9% 2.6% 6.3% S&P 500 Energy Index 2.3% 74% -2.4% 11.3% 7.2% 9.1% MSCI World Ind
Slide 57: Summary
SUMMARY — Diversified asset base and product mix, providing premium pricing and risk mitigation — Low-risk, well-defined production and cash flow growth profile — Focus on per-share growth in production, reserves and dividends — Capital efficient, sustainable business model — Long-term market outper