Vermilion Energy Inc. · TSX:VET

Vermilion Energy — Vermilion Energy Trust — Investor Presentation (October 2006)

36 slides from Vermilion Energy's investor presentation, October 2006

1. Slide 1: Investor Presentation October 2006

   Investor Presentation October 2006

2. Slide 2: Legal Disclaimer

   Legal Disclaimer This presentation contains forward-looking financial and operational information including earnings, cash flow, unitholder distributions, debt levels, production and capital expenditure projections. These projections are based on the Trust’s expectations and are subject to a number

3. Slide 3: Statistics

   Statistics Listed on Toronto Stock Exchange VET.UN Trading price (October 3, 2006) $31.86 Monthly distribution (Since February 2003) $0.17 Current yield 6.4% Units outstanding (Including 4.5mm exchangeable shares) 70.0 mm Management ownership 10% Market capitalization $2.2 bn Average trading volume

4. Slide 4: Performance Highlights

   Performance Highlights Since Inception 6 mo 06 2005 2004 Production (boe/d) 25,843 25,166 22,990 Cash flow ($mm) $159.5 $277.2 $169.8 Distributions ($mm) $64.9 $126.2 $122.6 Distributions as % of CF 41% 46% 72% Total Return ≈ 300% 19.6% 58% 44.5% Reserves Proven + Probable (P50) (mmboe) 110.85 93.01

5. Slide 5: Strategy

   Strategy ƒ Expand asset base through strategic acquisitions, farm- ins, asset optimization and exploitation activities ƒ Focus growth in three regions: Canada, Western Europe & Australia ƒ Control costs by operating its properties - be recognized as a premier operator on and offshore ƒ Expose unitho

6. Slide 6: Balanced Approach

   Balanced Approach Australia Western 2006E Production 13% Europe 27,500 – 28,500 boe/d 51% Oil 53% Canada 36% NGL’s 3% Oil Based Gas 18% Gas 26%

7. Slide 7: Quality Assets

   Quality Assets ƒ New acquisitions target under- capitalized properties, rich with low risk opportunities ƒ Strong inventory of investment prospects within each country ƒ Reserve Life Index at Dec 31, 2005 of 11.4 years (proved + probable) ƒ Ability to increase production and reserves from the curren

8. Slide 8: Sound Financial Position

   Sound Financial Position ƒ Conservative financial management ƒ June 30, 2006 net debt of C$212 million on borrowing base of C$500 mm ƒ Target debt to cash flow ratio of 1.0 times or lower ƒ 0.6 x at March 31, 2006 ƒ 1.0 x upon closing of France acquisition ƒ Debt repayment plan over the balance of 2

9. Slide 9: Reclamation Funding

   Reclamation Funding $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 VET Reclamation Fund ($mm) PV of Asset Retirement Obligation ($mm)

10. Slide 10: 2006 First Half Highlights

    2006 First Half Highlights ƒ Closed the acquisition of 100% in Esso Rep for US$145 mm (closings occurred on July 10 and July 12) ƒ Invested $63.8 mm in development capital ƒ Drilled 4 new La Torche wells in France ƒ Drilled 36 additional Horseshoe Canyon wells in Alberta ƒ Launched 12 well infill an

11. Slide 11: 2006 Expanded Capital Program - $140 mm

    2006 Expanded Capital Program - $140 mm Canada $76 mm Drayton Valley Infills, recompletions Coalbed Methane (up to 60 wells - $33 mm) France $39 mm Paris Basin Dev. drilling (4 wells) Workovers and optimization Aquitaine Basin Production maintenance & workovers Reservoir evaluation potential drill N

12. Slide 12: Canadian Focus

    Canadian Focus ALBERTA Slave Lake Athabasca Coalbed Methane Drayton EDMONTON Valley ƒ Canada’s emerging resource play ƒ Successfully drilled over 130 wells since July 2004 Central AB ƒ Current target is Horseshoe Canyon CBM CALGARY ƒ Future potential for Mannville, Ardley CBM on VET lands held by pr

13. Slide 13: CBM Activity - Morningside

    CBM Activity - Morningside ƒ Current areas of focus include Morningside and Mikwan ƒ Increased focus on areas with Proposed pipeline processing and pipeline capacity ƒ Control 100,000 acres with over 400 infill locations identified ƒ 2006 program includes up to 60 wells, facilities and pipeline expa

14. Slide 14: France – Esso Rep Acquisition

    France – Esso Rep Acquisition ƒ Closed in July, 2006 ƒ Acquired 100% of shares of Esso Rep Paris Basin PARIS ƒ Price US$145 mm (net of adjustments) Aquitaine Maritime ƒ Production of approximately BORDEAUX 3,900 boe/d at acquisition date Aquitaine Basin

15. Slide 15: France Acquisition – Asset Detail

    France Acquisition – Asset Detail ƒ Complementary assets in core Paris areas Paris Basin Assets MALNOUE CHAMPOTRAN ƒ Light sweet oil CHAUNOY VULAINE VERT-LE-GRAND ƒ 10 Fields (3 Paris Basin, 7 Aquitaine Basin) ST JUST EN BRIE DONNEMARIE ITTEVILLE BREMONDERIE ƒ 2006E production of 3,850 bopd COURBEY

16. Slide 16: France - La Torche Drilling 2006

    France - La Torche Drilling 2006 ƒ 2-D seismic acquired in 2005 2006 Wells Producing Oil Wells in processing Injectors ƒ Expansion and infill opportunities ƒ Full field development CONQUILLIE 1 ƒ 40-60 additional wells ƒ Conquillie – low risk re-entry 4 km east – tested ≈ 150 bo/d ƒ Well targets Pro

17. Slide 17: Energy Trust Acquisitions 2004 – 2006

    Energy Trust Acquisitions 2004 – 2006 Production Value ($/boed) $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 2004 2005 2006 Source: Canaccord/Adams

18. Slide 18: Netherlands Program

    Netherlands Program ƒ Infill drilling opportunities, 2-3 Harlingen tight gas infills waiting regulatory approval ƒ Step-out exploration opportunities Amsterdam ƒ Continue installation of velocity strings to increase NETHERLANDS recoveries and stabilize production ƒ Integrate surface facilities at Ha

19. Slide 19: Australian Program

    Australian Program ƒ Well workovers planned for 2006 targeting recovery of bypassed pay and reduction in water production ƒ Opportunities to reposition AUSTRALIA horizontal well placements to increase recoveries ƒ Phase 1 of facility debottle- necking to be completed in 2006, increasing process capa

20. Slide 20: Vermilion Netbacks – 3mo ended June 30, 2006

    Vermilion Netbacks – 3mo ended June 30, 2006 (C$/boe) Canada France Netherlands Australia Revenue $52.88 $79.06 $51.27 $85.58 Royalties (9.20) (5.59) (0.00) (27.26) OP Cost (9.28) (5.84) (12.09) (11.00) Transportation Expense (0.58) (3.48) (0.00) (0.00) Operating Netback* $33.82 $64.15 $39.18 $47.32

21. Slide 21: Creating Option Value

    CREATING OPTION VALUE

22. Slide 22: Creating Low-Risk Option Value

    Creating Low-Risk Option Value ƒ Optimize value of assets through creation of joint venture and partnership entities ƒ Provide exposure to high impact opportunities while minimizing risk capital ƒ Verenex Energy Inc. ƒ Aquitaine Maritime prospect ƒ Potential recovery of unbooked oil Seismic operatio

23. Slide 23: Verenex Energy Inc.

    Verenex Energy Inc. ƒ Trades on Toronto Stock Exchange – VNX ƒ Strong independent management team and board of directors ƒ Vermilion owns approximately 49% (15.2 million shares) ƒ Total cash invested = $15mm ƒ $75 million of option value ($1.05 per VET unit) ƒ Libya 2006/2007 – US$48mm work program

24. Slide 24: Verenex - Area 47, Libya

    Verenex - Area 47, Libya ƒ 2.7 billion BOE discovered in 54 fields in Ghadames Basin ƒ 1.4 mm acre block ƒ 3 drill ready prospects offsetting discoveries ƒ Area 47 ringed with oil discoveries ƒ Spud anticipated late in Q3 2006 Source: IHS Energy (2005) and Beicip Franlab Report (2004)

25. Slide 25: Aquitaine Maritime

    Aquitaine Maritime 3D Seismic Leads Paris Basin PARIS Aquitaine Maritime BORDEAUX Aquitaine Aquitaine Basin ƒ World-scale exploration leads identified through 2D Basin and 3D seismic completed in 2005 ƒ Offshore extension of geologic trend that includes Parentis Field ƒ Interpreted seismic with basi

26. Slide 26: Aquitaine Maritime – Regional Detail

    Aquitaine Maritime – Regional Detail Lower Cretaceous Play Trend Oil field Potential oil pool Prospect Cret Tert Show Aptian Reservoir/ Seal Fairway Cazaux – 244 mmboe OIP Parentis – 550-800 Antiares–300 mmboe OIP mmboe OIP Note: Each block on the grid is 13X18 km

27. Slide 27: Aquitaine Maritime – Seismic Imaging

    Aquitaine Maritime – Seismic Imaging The new 3D & 2D seismic has yielded 6 structures with 4 way closure at the base Upper Albian seal. The potential sizes range from 8 to 32 km2 with vertical closure ranging from 200 to 500 m. POPEYE ORCA LEGHORN TIN TIN ASTERIX FOGHORN 10 km Fig 5.9

28. Slide 28: Performance

    PERFORMANCE

29. Slide 29: Peer Group Production (2006E)

    Peer Group Production (2006E) Vermilion measures itself against the top 20 conventional energy trusts 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 PWT ERF CNE PGF HTE AET BNP PWI BTE PVE AVN VET SHN PEY TET PMT FET CPG NAE PGX Source: CIBC - Company Reports

30. Slide 30: Netback vs Peer Group (Q2 2006)

    Netback vs Peer Group (Q2 2006) Despite tax leakage from foreign operations, Vermilion’s after-tax netbacks are in the top quartile of the peer group $40.00 $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 VET Source: CIBC

31. Slide 31: 2005 FD&A Costs Per BOE (P+P)

    2005 FD&A Costs Per BOE (P+P) Vermilion continues to deliver top quartile FD&A costs $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 VET Source: CIBC (Excludes Future Development Costs)

32. Slide 32: Reserve Life Index – VET vs. Peers

    Reserve Life Index – VET vs. Peers Vermilion’s RLI (P50) at year-end 2005 increased to 11.4 years 20 18 16 14 12 10 8 6 4 2 0 VET Source: CIBC

33. Slide 33: Change In Reserves Per Debt Adjusted Unit (2003-2005)

    Change In Reserves Per Debt Adjusted Unit (2003-2005) VET’s Reserves per Debt Adjusted Unit have increased by 22.7% since conversion to a trust 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 VET Source: Company Reports

34. Slide 34: Sustainability – 2006E

    Sustainability – 2006E 200% 20.0% 175% 17.5% 150% 15.0% 125% 12.5% 100% 10.0% 75% 7.5% 50% 5.0% 25% 2.5% 0% 0.0% VET est. Distribution as % of CF Dev. Capex as % of CF Yield Source: CIBC - Company Reports Sept 2006

35. Slide 35: Valuation vs Peer Group (2006E EV/DACF)

    Valuation vs Peer Group (2006E EV/DACF) Vermilion trades below the average of its peer group based on debt-adjusted cash flow measures, without attributing any value to the ‘option value streams’ 12.0 10.0 Average 8.0 6.0 4.0 2.0 0.0 VET Source: CIBC

36. Slide 36: Building Sustainability

    Building Sustainability ƒ Conservative financial structure ƒ Strong operational expertise with high quality assets ƒ Value added international oil and gas focus ƒ Diverse growth prospects ƒ High impact option value designed to improve the long term sustainability of the Trust ƒ Strong management own

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