Vermilion Energy Inc. · TSX:VET
Vermilion Energy — Investor Presentation (June 2016)
83 slides from Vermilion Energy's investor presentation, June 2016
Slide 1: Sustainable Growth and Income
SUSTAINABLE GROWTH AND INCOME JUNE 2016
Slide 2: 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
Slide 3: Advisory (Continued)
ADVISORY (Continued) Reserves & Resource Definitions All reserves and resources estimates in this presentation are derived from evaluation reports (dated February 8, 2016 with an effective date of December 31, 2015) prepared by GLJ Petroleum Consultants Ltd. (“GLJ”), an independent qualified reserve
Slide 4: Vermilion Overview
VERMILION OVERVIEW
Slide 5: Vermilion's Key Attributes
VERMILION’S KEY ATTRIBUTES ► Global independent with leading positions in high netback businesses in Europe, North America and Australia ► Self-funded growth and income model supported by high margins, low decline rates and strong capital efficiencies ► Defensive issue with multiple risk-reducing at
Slide 6: Capital Markets Summary
CAPITAL MARKETS SUMMARY Market Summary Trading Price (May 31, 2016) $43.39 (TSX), $33.08 (NYSE) Ticker Symbol (TSX & NYSE) VET Shares Outstanding 115.3 million Monthly Dividend $0.215/share Dividend Yield 5.9% Director and Officer Ownership 6% Capital Structure Market Capitalization $5.0 billion Ent
Slide 7: Production Growth and Capex
PRODUCTION GROWTH AND CAPEX 2016 GUIDANCE – 62,500 TO 63,500 BOE/D 70,000 Y/Y E&D Capital 60,000 Production Y/Y PPS Capex Intensity 15% CAGR Year (boe/d) Growth Growth ($MM) ($/boe/d)* 50,000 2011 35,202 10% 6% 491 13,900 40,000 2012 37,803 7% 0% 453 12,000 BOE/D 6% CAGR 2013 41,005 8% 5% 543 13,200
Slide 8: E&D Capital Budget
E&D CAPITAL BUDGET 2014 Actuals 2015 Actuals 2016 Budget* 2016 vs 2015 2016 vs 2014 Capital Expenditures by Country ($MM) ($MM) ($MM) % Change % Change Canada 336 202 54 (73%) (84%) France 148 92 59 (36%) (60%) Netherlands 62 47 28 (40%) (55%) Germany 3 5 8 60% 167% Australia 44 62 66 6% 50% USA 1 1
Slide 9: Funds Flows from Operations (FFO)
FUNDS FLOWS FROM OPERATIONS (FFO) $1,000 Fund Flows from Fund Flows Y/Y $800 Year Operations ($MM) per Share Growth 2011 $474 $5.22 33% $600 FFO ($MM) 2012 $558 $5.69 18% 2013 $668 $6.61 20% $400 2014 $805 $7.63 21% 2015 $516 $4.71 (36%) $200 2016E* $465 $4.01 (10%) $0 2003 2004 2005 2006 2007 2008
Slide 10: FFO Sensitivity
FFO SENSITIVITY 2016 FFO @ C$5.00/MMBTU EUROPEAN GAS 2016 FFO @ C$6.00/MMBTU EUROPEAN GAS BRENT (US$) BRENT (US$) OIL OIL PRICE 35 40 45 50 55 60 65 421 PRICE 35 40 45 50 55 60 65 Forecast FFO (C$MM) Forecast FFO (C$MM) 35 360 385 405 420 438 454 471 35 369 394 414 431 448 464 480 WTI (US$) WTI (US$
Slide 11: Reliable and Growing Dividends
RELIABLE AND GROWING DIVIDENDS CUMULATIVE DIVIDENDS PAID PER SHARE (2003 THRU Q1 2016) = $29.66 $0.25 $0.215 MONTHLY DIVIDENDS $0.20 $0.20 $0.19 $0.17 $0.15 $0.10 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016 VERMILION HAS NEVER CUT ITS DIVIDEND 11
Slide 12: Total Expenditures / FFO
SUSTAINABILITY RATIO 86% AVERAGE PRE-CORRIB CORRIB DEVELOPMENT PHASE CORRIB CASH FLOW 175% 162% 150% 140% TOTAL EXPENDITURES / FFO* 121% 125% 121% 117% 108% 111% 109% 111% 100% 81% 74% 73% 71% 75% 59% 50% 25% 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E Net Dividend Base
Slide 13: Reserves / Resources
RESERVES / RESOURCES
Slide 14: Reserves
RESERVES 2015 Year End P+P Reserves* (mmboe) Canada France Netherlands Germany Ireland Australia United States Total At December 31, 2014 120.2 58.0 14.2 10.3 24.1 18.0 2.1 246.9 Additions from E&D 8.7 10.2 4.9 (1.1) 1.4 1.8 4.6 30.5 Additions from A&D 2.1 - - - - - 1.3 3.5 2015 Production (9.3) (4.
Slide 15: Reserves / Resource Base
RESERVES / RESOURCE BASE 2015 YEAR END WORKING INTEREST RESERVES AND RISKED CONTINGENT RESOURCE (DEVELOPMENT PENDING)* Proved plus Probable WI (mmboe) Risked Contingent Resource (Development Pending) Reserves Low Best Estimate High Canada 121.7 67.8 110.1 177.2 France 63.6 12.8 25.8 41.7 Netherlands
Slide 16: Reserves Growth
RESERVES GROWTH 2015 F&D / FD&A Costs* Including FDC ($/boe) 275 F&D (E&D CAPEX) $8.98 250 FD&A (Total CAPEX, including acquisitions) $10.03 225 FD&A Operating Recycle Ratio 3.2x 200 10% CAGR ► 11.7 year P+P reserve life index** 175 MMBOE ► 6% year over year reserve growth 150 125 40 35 100 30 75 25
Slide 17: PDP Recycle Ratio
PDP RECYCLE RATIO 2015 PDP FD&A RECYCLE RATIOS* 4.0x 3.5x 3.0x 2.5x 2.0x 1.5x 1.0x 0.5x 0.0x VET CR ERF RRX PEY BNE CPG WCP BNP NVA PPY VII BTE KEL LTS INCREASING RECYCLE RATIOS DESPITE COMMODITY PRICE WEAKNESS * AltaCorp Capital research, May 2016. Proved Developed Producing (PDP) FD&A recycle rati
Slide 18: Balance Sheet
BALANCE SHEET
Slide 19: Conservative Balance Sheet
CONSERVATIVE BALANCE SHEET CREDIT CAPACITY $2.0 BILLION NET DEBT TO FFO RATIO* 5.0 PEER AVERAGE 2016 = 4.6x PEER AVERAGE 2017 = 4.0x 4.0 VET 2016 = 3.2x 520 3.0 1,480 2.0 VET 2017 = 2.0x 1.0 0.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E2017E REVOLVING CREDIT FACILITY Sou
Slide 20: Relative Leverage
RELATIVE LEVERAGE DEBT TO CASH FLOW 16.0x 14.0x 12.0x 10.0x US AVERAGE 8.0x 6.0x CANADA AVERAGE 4.0x 2.0x 0.0x BNP BNE WTI MRD WCP DNR AAV PDCE RRX TPLM BTE BBG EPE PGF FRU POU SGY BIR LPI VET ERF CRZO PE SPE PSK RSPP ECR BXE WPX KOS FANG TET OAS JONE CR NVA TOG US CANADA VET RELATIVELY LOW LEVERAGE
Slide 21: Credit Metrics
CREDIT METRICS YE 2012 YE 2013 YE 2014 YE 2015 Q1 2016 Credit Facility ($ millions) Approved credit facility 950 1,200 1,750 2,000 2,000 Bank line undrawn* 481 425 727 812 545 Total debt to EBITDA** 0.8 1.1 1.2 2.2 2.5 Total debt to FFO** 1.2 1.5 1.5 2.7 2.9 Debt to Reserves ($/boe) Proved 6.10 7.68
Slide 22: Risk Management
RISK MANAGEMENT
Slide 23: Risk Management
RISK MANAGEMENT ► Vermilion employs a systematic process to identify and manage risk across our business Financial Risk Market Risk Operational Risk Target low financial leverage to Hedging program reduces risk Integrated, corporate-wide safety impart stability during challenging associated with Ver
Slide 24: Hedging Philosophy
HEDGING PHILOSOPHY ► Targeting up to 50% of net of royalty volumes through a portfolio of collars and swaps ► Control commodity, currency and cost exposures ► Typically hedge 12 - 18 months forward; however, we have European gas contracts up to 36 months forward ► Increases stability of revenues, fu
Slide 25: Commodity Hedging
COMMODITY HEDGING Full Year 2016 Full Year 2017 Full Year 2018 WTI Percent of Production Hedged 15% - - Average Floor / Ceiling / Swap ($/bbl) $57.31 / $70.54 / - -/-/- -/-/- Brent Percent of Production Hedged 13% - - Average Floor / Ceiling / Swap ($/bbl) $69.32 / $87.02 / - -/-/- -/-/- Total Oil –
Slide 26: International Diversification
INTERNATIONAL DIVERSIFICATION
Slide 27: Core Operating Areas
CORE OPERATING AREAS NORTH AMERICA EUROPE AUSTRALIA VERMILION IS FOCUSED IN THREE CORE AREAS 27
Slide 28: Vermilion's International Advantage
VERMILION’S INTERNATIONAL ADVANTAGE ► Focused in three core areas (Europe, North America and Australia) with stable, well-developed fiscal and regulatory regimes ► Global asset portfolio provides commodity diversification and premium pricing ► Diversified product portfolio reduces price correlation,
Slide 29: Commodity Mix
COMMODITY MIX PRODUCTION (2016)* 2P RESERVES (YE 2015)** ESTIMATED FFO CONTRIBUTION (2016)* Australia France Australia France Australia 24% 11% United 15% United 19% United 7% States States Germany States 1% Canada 0% France 4% 3% Germany 22% 28% OIL (BRENT) OIL (BRENT) 3% 30% 30% OIL (BRENT) 43% OI
Slide 30: Global Pricing Advantage
GLOBAL PRICING ADVANTAGE CRUDE OIL* NATURAL GAS** VET BRENT US$50 Differential ($3) $12 2016 Euro Gas 2016 Euro Gas Differential ($15) Swap C$9.06 Collar Ceiling $10 C$9.32 GAS PRICE ($/MMBTU) VET BRENT 2016 Euro Gas PRODUCTION Collar Floor EDMONTON $8 C$7.98 INDEX European gas $6 price approximatel
Slide 31: Commodity Price Diversification
COMMODITY PRICE DIVERSIFICATION Commodity North American European WTI Brent PORTFOLIO MIX STANDARD DEVIATION* 100% ANNUALIZED STANDARD DEVIATION Exposures Natural Gas Natural Gas Crude Oil Crude Oil 90% Vermilion ü ü ü ü 80% North American Peers ü ü 70% International Peers ü ü 60% 50% 40% ► Diversif
Slide 32: European Natural Gas Outlook – Summary
EUROPEAN NATURAL GAS OUTLOOK – SUMMARY ► Vermilion expects European gas prices to remain significantly above North American gas prices ► Recent price decline reflects impact of several near-term factors, including: ► Consecutive abnormally warm winters reduced weather-driven demand and left unseason
Slide 33: European Natural Gas Outlook – LNG Supply/Demand
EUROPEAN NATURAL GAS OUTLOOK – LNG SUPPLY/DEMAND GLOBAL LNG SUPPLY/DEMAND ► Global nameplate liquefaction capacity to grow by a net 16 – 17 Bcf/d 50 through 2020, however: 40 ► Historic utilization has averaged only 80%-85% of nameplate capacity, which is 30 not reflected in most supply forecasts Bc
Slide 34: European Natural Gas Outlook – Domestic Supply/Demand
EUROPEAN NATURAL GAS OUTLOOK – DOMESTIC SUPPLY/DEMAND European Supply & Demand (Bcf/d) 2012 2015E 2017E 2020E EUROPEAN SUPPLY European Domestic Production 26.5 22.5 21.5 20.0 Russia 9.9 13.8 14.5 14.8 ► European domestic production continues to decline Other Pipeline Supply 3.8 4.0 5.0 5.2 ► Expect
Slide 35: European Natural Gas Outlook – Domestic Supply/Demand
EUROPEAN NATURAL GAS OUTLOOK – DOMESTIC SUPPLY/DEMAND 2.0 FUEL SWITCHING CAPACITY Total unconstrained fuel switching capacity = 7.7 Bcf/d DEMAND 1.5 Additional infrastructure in Italy could add 1.1 Bcf/d of capacity ► Europe’s large consumer base and infrastructure allow for LNG to be Bcf/d 1.0 abso
Slide 36: Sustainable Model
SUSTAINABLE MODEL
Slide 37: Elements of Sustainable Model
ELEMENTS OF SUSTAINABLE MODEL ► Vermilion's asset base delivers the three key elements necessary to support a sustainable, long-term dividend growth model: ► High margins (represented as $/boe) ► Low base production decline rates ► Strong capital efficiencies (represented as $/boe/d) ► All major bus
Slide 38: Cost Reduction
COST REDUCTION 20.00 18.00 48% Reduction 16.00 14.00 19% Reduction 12.00 $ / BOE 10.00 8.00 6.00 4.00 29% Reduction 26% Reduction 2.00 61% Reduction 0.00 2P F&D (incl. FDC) Opex Transportation G&A ARO 2014 2015 2016E VERMILION’S ONGOING FOCUS ON EFFICIENCY HAS RESULTED IN SIGNIFICANT PER UNIT COST R
Slide 39: Netbacks
NETBACKS United Total Q1 2016 Netbacks by Country ($/boe*) Canada France Netherlands Germany Ireland Australia States Company Revenue $21.16 $43.16 $33.26 $31.78 $33.07 $46.93 $30.10 $30.53 Royalties (2.07) (6.07) (0.56) (3.58) - - (9.03) (2.40) Operating Cost (8.05) (12.84) (7.28) (10.71) (7.05) (1
Slide 40: Relative Netbacks
RELATIVE NETBACKS 2015 OPERATING NETBACK EXCL. HEDGING* 2015 AFTER TAX CASH NETBACK EXCL. HEDGING* $35 $30 $30 $25 $25 $20 $/BOE $/BOE $20 $15 $15 $10 $10 $5 $5 $0 $0 VET PXT PSK PEY MEG CR GTE CPG BNE TOG VII NVA ARX TOU ERF SGY BNP WCP PWT BTE BIR POU PGF VET PSK CR PXT PEY MEG CPG NVA ERF BNE GTE
Slide 41: Base Production Decline Rates
BASE PRODUCTION DECLINE RATES Effective Natural 50% Country Decline Rate* Decline Rate* France 11% 11% 40% VET VET CANADA CORPORATE Netherlands** 0% 22% ONLY DECLINE NATURAL DECLINE 30% VET Germany 11% 11% CORPORATE EFFECTIVE DECLINE Ireland 3% 3% 20% Australia** 0% 20% 10% Canada 28% 28% United Sta
Slide 42: Capital Efficiency
CAPITAL EFFICIENCY ATAX Payout Prod. Efficiency Investment Well Cost (C$M) IP365 (boe/d) ATAX ROR % Recycle Ratio (Years) (IP365 $/boed) European Gas Netherlands E&D $12.0 1,260 75% 3.3 x 1.9 $9,500 EUROPE Brent Crude Champotran Development (France) $4.3 210 71% 2.1 x 2.3 $20,500 Neocomian Developme
Slide 43: European Assets
EUROPEAN ASSETS
Slide 44: European Core Area
EUROPEAN CORE AREA DEVELOPING LEADING-TO-DOMINANT BUSINESSES IN EACH JURISDICTION IRELAND FRANCE #1 oil producer, with ¾ share of domestic industry NETHERLANDS #2 onshore gas producer NETHERLANDS GERMANY Entry into the significant German E&P Industry GERMANY IRELAND Corrib field will constitute 95%
Slide 45: European Production
EUROPEAN PRODUCTION 35,000 30,000 25,000 20,000 BOE/D 15,000 10,000 5,000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E France Netherlands Germany Ireland BUILDING OUR EUROPEAN FRANCHISE FOR TWO DECADES * 2016E: Company estimates as of May 26, 2016
Slide 46: France
FRANCE ► Entered France in 1997 ► Record production level in 2015 PARIS ► Assets characterized by large OOIP conventional fields with high PARIS BASIN working interest (OOIP in 5 largest fields >1.7 billion barrels of oil) FRANCE ► Workover, infill drilling and secondary recovery opportunities BORDE
Slide 47: France Production
FRANCE PRODUCTION 14,000 12,000 10,000 8,000 BOE/D 6,000 4,000 2,000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E E&D CAPEX AS A % OF FFO* n/a 43% 51% 101% 45% 73% 111% 82% 30% 43% 30% 57% 41% 37% 21% 43% 63% 48% 39% Crude Oil Gas LONG-TERM OIL PR
Slide 48: France Activity
FRANCE ACTIVITY CHAMPOTRAN FIELD 2015 CAPITAL ACTIVITIES ► Resumption of solution gas sales PARIS PARIS BASIN ► 4-well drilling program in Champotran ► Well workovers and waterflood program FRANCE BORDEAUX 2016 CAPITAL ACTIVITIES AQUITAINE BASIN Producing wells ► Well workovers and optimization acti
Slide 49: Champotran Development
CHAMPOTRAN DEVELOPMENT ► 14 wells drilled from 2013 to 2015 at 100% success rate CHAMPOTRAN PRODUCTION 6,000 ► Reduced DCET costs by 23% since 2013 ► 30 identified future net drilling locations in 5,000 reserves and resources* ► Successful waterflood program expansion 4,000 BOE/D in progress 3,000 F
Slide 50: Neocomian Development
NEOCOMIAN DEVELOPMENT NEOCOMIAN – GROWTH POTENTIAL – 10 WELLS PER YEAR ► Part of Paris Basin light oil assets (Neocomian field) acquired 3,500 Vermilion 10 Wells per Year from ZaZa Energy France in December 2012 3,000 Pre-acquisition Workovers / Optimizations Drilling Program ► 45% production growth
Slide 51: Netherlands
NETHERLANDS ► Entered Netherlands in 2004 ► High impact natural gas drilling and development HARLINGEN ► Strong gas price, favorable fiscal regime, and low OPEX enhance netbacks ► Seven consecutive years of organic production growth ► Undeveloped land base of ~800,000 net acres Key Wells to Date Yea
Slide 52: Netherlands Production
NETHERLANDS PRODUCTION NETHERLANDS - Expected per well risked economics (based on recent drilling) DCET Well Cost ($ million) $12.0 Expected IP30 Rate (boe/d) 1,690 10,000 Expected EUR per well (mboe) 1,350 After Tax ROR (%) 75% After Tax Payout (years) 1.9 After Tax NPV10 ($ million) $9.2 8,000 Rec
Slide 53: Netherlands Activity
NETHERLANDS ACTIVITY ► Vermilion has tripled its undeveloped land base since the beginning of 2012 2015 CAPITAL ACTIVITIES ► Two-well development drilling program ► Equip and tie-in four previous discovery wells 2016 CAPITAL ACTIVITIES ► Drill two wells ► Permitting and optimization activities HIGH
Slide 54: German Producing Assets
GERMAN PRODUCING ASSETS OVERVIEW ► Acquired a 25% non-operated interest in a four-partner consortium in February 2014 ► Assets include 4 gas producing fields across 11 production licenses ► 204,000 gross acres (85% in the exploration license) GAS PRODUCING ► Awarded two additional exploration licens
Slide 55: Germany Production
GERMANY PRODUCTION GERMANY – Burgmoor Z3 Sidetrack (Based on Vermilion’s 25% W.I.) DCET Well Cost ($ million) $3.9 5,000 IP30 Rate (boe/d) 350 EUR per well (mboe) 780 After Tax ROR (%) 22% After Tax Payout (years) 4.0 4,000 After Tax NPV10 ($ million) $2.3 Recycle Ratio 1.7x F&D ($/boe) $5.00 3,000
Slide 56: North German Basin Farm-In
NORTH GERMAN BASIN FARM-IN OVERVIEW ► Entered into a significant farm-in agreement in July 2015 ► 11 of 18 licenses under farm-in will be Vermilion operated ► Provides participating interest in 850,000 net undeveloped onshore acres in exchange for carrying 50% of the costs associated with 6 net expl
Slide 57: Ireland
IRELAND BELLANABOY GAS PLANT OVERVIEW ► Vermilion holds 18.5% non-operated interest in the Corrib gas field, offshore Ireland CORRIB GAS FIELD PIPELINE (83km Offshore) NORTHERN FROM UK ► Over 90% of supply imported prior to Corrib startup IRELAND ► Corrib is anticipated to deliver 60% to 65% of Irel
Slide 58: Ireland Production
IRELAND PRODUCTION 10,000 8,000 6,000 BOE/D 4,000 2,000 0 2015 2016E E&D CAPEX AS A % OF FFO* NM 9% Gas EFFICIENT TRANSLATION OF REVENUE è FUND FLOWS FROM OPERATIONS è FREE CASH FLOW * 2016E: Company estimates as of May 26, 2016 with four months of actual prices and remainder of year at May 25, 2016
Slide 59: Central and Eastern Europe (CEE)
CENTRAL AND EASTERN EUROPE (CEE) EXTENSION OF EUROPEAN GROWTH STRATEGY BUDAPEST EBES ► Modest back-loaded capital commitments ► Prospective for both oil and gas HUNGARY SOUTH BATTONYA HUNGARY ► Awarded Ebes and South Battonya concessions covering more than ZAGREB DR-04 320,000 acres (100% working in
Slide 60: North American Assets
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Slide 61: Canada
CANADA ► Production and assets focused in West Pembina near Drayton Valley and Northgate in SE Saskatchewan ► In West Pembina, potential for three significant ALBERTA SASKATCHEWAN development projects sharing the same surface infrastructure SLAVE LAKE ► Cardium light oil development (1,800 m depth)
Slide 62: Canada Production
CANADA PRODUCTION 30,000 25,000 20,000 BOE/D 15,000 10,000 5,000 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E E&D CAPEX AS A % OF FFO * 21% 36% 67% 58% 31% 76% 247% 225% 165% 101% 86% 104% 50% Crude Oil & NGL Gas 2016 CAPEX PROGRAM PROVIDES FCF + STABLE PRODUCTION * 2016E: Com
Slide 63: West Pembina Cardium
WEST PEMBINA CARDIUM ► Dominant land position in West Pembina Cardium resource play ► Control key infrastructure ► 15,000 bbl per day oil battery and two owned and operated gas plants ► Lifting costs <$6 per boe (operated) ► Per section DCET costs reduced to $3 million from $5 million since 2010 VET
Slide 64: Cardium Development
CARDIUM DEVELOPMENT NET CARDIUM PROSPECT INVENTORY* 12,000 AS AT MARCH 31, 2015 10,000 Wells 8,000 Drilled 245 BOE/D Risked 6,000 Contingent Development 4,000 Pending 171 Remaining 2P Locations 2,000 116 0 Note: Reflects current prospect inventory converted to net 2009 2010 2011 2012 2013 2014 2015
Slide 65: Mannville Liquids-Rich Gas
MANNVILLE LIQUIDS-RICH GAS VET Land ► 309 net sections (197,500 acres) of Mannville rights, Mannville Fairway largely held by production VET Natural Gas Pipelines VET Oil Battery VET Mannville HZ ► Average 6 month production rate (op & non-op) per well NG Processing Plants over first six months of p
Slide 66: Mannville Well Performance
MANNVILLE WELL PERFORMANCE MANNVILLE – Expected per well economics - Ellerslie Hz. in Drayton Valley DCET Well Cost ($ million) $3.7 1,600 IP30 Rate (boe/d) 680 EUR per well (mboe) 760 After Tax ROR (%) 96% 1,400 After Tax Payout (years) 1.8 After Tax NPV10 ($ million) $3.1 1,200 Recycle Ratio 2.6x
Slide 67: Mannville Development
MANNVILLE DEVELOPMENT NET MANNVILLE PROSPECT INVENTORY* AS AT MARCH 31, 2016 12,000 10,000 Drilled to Date 38 8,000 Risked Contingent Development BOE/D 6,000 Pending 147 Booked 2P 52 4,000 Notikewin 84 2,000 Ellerslie 0 103 2012 2013 2014 2015 2016E NET WELLS DRILLED 0 5 10 18 4 DRAMATIC PRODUCTION
Slide 68: Southeast Saskatchewan
SOUTHEAST SASKATCHEWAN Elkhorn Lands New Land Existing HZ Wells VET Identified Locations SE SASKATCHEWAN STRATIGRAPHIC CHART ► Entered area through acquisition of Elkhorn Resources Inc. in April 2014, with further land added subsequent to acquisition ► 2P reserves totaling 18.0 mmboe* ► Land base co
Slide 69: United States - Wyoming Development
UNITED STATES - WYOMING DEVELOPMENT TURNER SAND WELL PERFORMANCE 400 ► Entered U.S. in September 2014 350 Large, operated contiguous land position (83,000 net 300 ► 250 acres at 100% working interest) in promising BOPD 200 horizontal tight oil Turner Sand development project 150 (99% undeveloped) 10
Slide 70: United States Production
UNITED STATES PRODUCTION 600 500 400 300 BOE/D 200 100 0 2014 2015 2016E E&D CAPEX AS A % OF ATAX NOI* 64% 535% 173% Crude Oil & NGL Gas EARLY-STAGE LIGHT OIL GROWTH PROJECT * ATAX NOI is defined as FFO before G&A expense. 2016E: Company estimates as of May 26, 2016 with four months of actual prices
Slide 71: Australian Assets
a AUSTRALIAN ASSETS
Slide 72: Australia
AUSTRALIA ► Entered Australia in 2005 ► Offshore oil field ~80 km N.W. of Australia (55 m water depth) ► Horizontal well development with 21 producing wellbores ► Wells 600m below sea bed with 500 - 3,000+ m horizontal lengths ► Contracted oil production receives a premium to Dated Brent index WANDO
Slide 73: Australia Production
AUSTRALIA PRODUCTION AUSTRALIA - per well economics* based on performance of 2013 drilling program DCET Well Cost ($ million) $34.8 IP30 Rate (boe/d) 4,000 12,000 EUR per well (mboe) 1,400 After Tax ROR (%) 18% After Tax Payout (years) 2.9 10,000 After Tax NPV10 ($ million) $5.5 Recycle Ratio* 3.2x
Slide 74: Australia Activity
AUSTRALIA ACTIVITY ► New wells are sidetracks from existing wellbores ► Oil is trapped above the existing wells, creating opportunity to sidetrack to a higher structural elevation to capture attic and flank oil ► 10 additional identified development drilling opportunities* ► Two sidetrack wells dril
Slide 75: Governance / Culture
Rougeline Vermilion Enersy Family Centre Rougeline GOVERNANCE / CULTURE
Slide 76: Governance / Sustainability
GOVERNANCE / SUSTAINABILITY GLOBE & MAIL BOARD GAMES GOVERNANCE REPORT CARBON DISCLOSURE PROJECT (CDP) EXPLORERS & PRODUCERS ASSOCIATION OF CANADA ► In 2015, Vermilion was ranked 2nd within the energy sector and ► Named to the 2015 Canada Climate Disclosure ► Named Top Canadian-Based International 2
Slide 77: Corporate Culture
CORPORATE CULTURE “GREAT PLACE TO WORK” INSTITUTE’S ANNUAL RANKING ► Since 2010 Vermilion has been ranked among the Top 30 Best Workplaces in Canada and France ► Demonstrates strong corporate culture, creating a high-performance organization ► Reflects highly engaged and motivated staff ► Aids in at
Slide 78: Record of Value Creation
RECORD OF VALUE CREATION
Slide 79: Value Creation 1994 – 2016
VALUE CREATION 1994 – 2016 $5,889 $6,000 $5,023 TOTAL VALUE CREATION $4,000 MARKET CAPITALIZATION(2) MILLIONS $2,470 $2,000 DIVIDENDS PAID(2) $0 EQUITY ISSUED(1) -$2,000 $(1,604) MORE THAN 20-YEAR RECORD OF STRONG VALUE CREATION (1) Equity issued for cash and acquisitions since 1994. (2) Dividends p
Slide 80: Return on Capital Employed
RETURN ON CAPITAL EMPLOYED 14 12 10 8 6 ROCE (%) 4 2 0 -2 -4 -6 3 Year Average 5 Year Average 10 Year Average Vermilion Peer Average STRONG CAPITAL EFFICIENCY IN A CAPITAL INTENSIVE BUSINESS * Source: Canoils. ROCE = EBIT/(total assets - current liabilities). Peers: ARX, BTE, BNP, BNE, BIR, CPG, CR,
Slide 81: Relative Market Performance
RELATIVE MARKET PERFORMANCE Since Inception Indices 1 Year 3 Year 5 Year 10 Year 15 Year (22 Years) BROAD INDICES MSCI World Index (2.7%) 7.5% 5.4% 2.8% 2.1% 4.7% S&P 500 Composite Index (0.7%) 12.7% 10.2% 5.1% 3.0% 7.2% S&P TSX Composite Index (11.1%) 1.5% (0.7%) 1.4% 2.5% 5.2% S&P TSX Total Return
Slide 82: Summary
SUMMARY ► Long-term, low-risk dividend growth model supported by ► High margins ► Diversified product mix ► Low base decline rate ► Diversified and well defined project slate ► Low financial leverage ► Focused on consistent growth in production, reserves, free cash flow and dividends per share ► Hig
Slide 83: Analyst Coverage
ANALYST COVERAGE FIRM ANALYST PHONE EMAIL AltaCorp Capital Patrick J. O’Rourke, CFA 403-539-8615 porourke@altacorpcapital.com Barclays Capital Grant Hofer, CFA 403-592-7460 grant.hofer@barclays.com BMO Nesbitt Burns Ray Kwan, P.Eng. 403-515-1501 ray.kwan@bmo.com Canaccord Genuity Corp. Dennis Fong 4