Vermilion Energy Inc. · TSX:VET

Vermilion Energy — Vermilion Energy Trust — Scotia Capital Global Energy Summit 2006

22 slides from Vermilion Energy's conference presentation, Feb 15, 2006

  1. Slide 1: Scotia Capital – Global Energy Summit

    SCOTIA CAPITAL – GLOBAL ENERGY SUMMIT International O&G Opportunities; A Trust’s Perspective February 15, 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 ƒ Listed on Toronto Stock Exchange VET.UN ƒ Trading price (February 9, 2006) $29.00 ƒ Monthly distribution (Since February 2003) $0.17 ƒ Current yield 7.0% ƒ Units outstanding (Including 4.7mm exchangeable shares) 68.9 mm ƒ Market capitalization $2.0 bn ƒ Average trading volume (Units/day

  4. Slide 4: Unique Profile

    Unique Profile ƒ Only Canadian based “international” energy trust ƒ More than 11 years of successful operating results ƒ Strategy focuses on stable, long-term distributions ƒ Diversified, high-quality production base, operate > 85% ƒ Long-life reserves – RLI greater than 10 years ƒ Experienced manag

  5. Slide 5: International Strategy

    International Strategy ƒ Expand asset base through low- cost acquisitions, property optimization and development activities ƒ Focus on tail-end properties, recognizing abandonment liabilities ƒ Avoid high-risk countries ƒ Provide exposure to high impact projects while restricting capital commitments

  6. Slide 6: Beyond the WCSB – International Opportunity

    Beyond the WCSB – International Opportunity ƒ Canada ƒ Strong competition for remaining assets ƒ Most assets have traded hands more than once ƒ International ƒ Attractive acquisition metrics ƒ Tail-end reserves with development potential ƒ Vermilion advantage ƒ International operation experience ƒ S

  7. Slide 7: Energy Trust Acquisitions 2004-2005

    Energy Trust Acquisitions 2004-2005 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 RBC, Canaccord

  8. Slide 8: International E&P Approach – Big Fish? International Trust Approach – Fish!

    International E&P Approach – Big Fish? International Trust Approach – Fish! E&P Approach: Sizeable Potential Reward Offsets Risks Trust Approach: Optimizing Low Risk Production

  9. Slide 9: International Challenges

    International Challenges ƒ Requires strong understanding of international operations ƒ Financial ƒ Tax leakage ƒ Cash management ƒ Personnel ƒ Need to establish fully staffed regional offices ƒ Small expatriate staff supported by local nationals ƒ Geographical ƒ Cultural and language barriers ƒ Diff

  10. Slide 10: International Experience

    International Experience ƒ France 1997 ƒ Most active operator in France ƒ Operated 9 years with strong HS&E record ƒ Trinidad 1999 (Aventura Energy) ƒ Created significant value in < 5 years ƒ Sold to British Gas in 2004 – net proceeds of $165 mm to Vermilion ƒ Netherlands 2004 ƒ Acquired for < $15,0

  11. Slide 11: International Milestones 1994 - 2005

    International Milestones 1994 - 2005 $32.00 $28.00 AUSTRALIA $24.00 NETHERLANDS $20.00 $16.00 CREATED FRANCE VERENEX $12.00 VET CONVERSION $8.00 VINTAGE $4.00 (AVENTURA - TRINIDAD) $0.00 Apr-94 Apr-95 Apr-96 Apr-97 Apr-98 Apr-99 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05

  12. Slide 12: Maximizing Tail-End Reserves

    Maximizing Tail-End Reserves 8,000 Production history of Vermilion Rep SAS - total investment fully recovered - current NAV > $350 mm 7,000 6,000 5,000 boe/d 4,000 3,000 Acquired 22.6 mm boe 2,000 of reserves, 4,000 boe/d of production for C$45 mm Projected production at time of acquisition from ESS

  13. Slide 13: Potential Acquisition – Esso Properties

    Potential Acquisition – Esso Properties ƒ Complementary assets in core areas ƒ 10 Fields (3 Paris Basin, 7 Aquitaine Basin) ƒ Exit 2005 production of 4,000 bopd (net) Paris COURBEY LES PINS LES MIMOSAS LES ARBOUSIERS TAMARIS LAVERGNE MALNOUE CAZAUX LUGOS CHAMPOTRAN CHAUNOY MOTHES VULAINE PARENTIS VE

  14. Slide 14: Potential Acquisition – Esso Opportunities

    Potential Acquisition – Esso Opportunities ƒ Shut-in wells ƒ Opportunity to re-start between 15 and 30 wells ƒ Recompletions ƒ Opportunity to re-perforate 20-25 wells in existing and secondary producing zones ƒ Development drilling ƒ Identified 5 development drilling opportunities ƒ Exploration lead

  15. Slide 15: Vermilion Netbacks - 2005E (C$/boe)

    Vermilion Netbacks - 2005E (C$/boe) Canada France Netherlands Australia Revenue $60.00 $64.00 $41.30 $65.00 Royalties $(12.30) $(5.50) $(0.00) $(21.10) OP Cost $(7.30) $(6.90) $(9.60) $(9.10) Transportation Expense $(0.60) $(3.20) $(0.00) $(0.00) Operating Netback* $39.80 $48.40 $31.70 $34.80 G&A $(

  16. Slide 16: Managing International Risk

    Managing International Risk How a Trust Handles Big Fish

  17. Slide 17: 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 Patterned after Aventura Energy model ƒ Aventura Energy realized 5-fold increase in value in less than

  18. Slide 18: Verenex Energy Inc.

    Verenex Energy Inc. ƒ Trades on TSX Exchange – VNX ƒ Strong independent management team and board of directors ƒ Vermilion owns approximately 50% (15.2 million shares) ƒ Total cash invested = $15mm ƒ $60 million of option value ($0.88 per VET unit) ƒ Verenex is targeting France and North Africa as a

  19. Slide 19: Why Area 47?

    Why Area 47? ƒ 2.7 billion BOE discovered in 54 fields in Ghadames Basin1 - Oil 35-45o API - Lightly explored at 1 well/1,000 km2 ƒ 7 wells drilled in Area 47 ƒ Area 47 ringed with oil discoveries ƒ Gas & condensate pipelines traverse Area 47 and 3 oil lines 30 km east 1. Beicip-Franlab “Petroleum P

  20. Slide 20: Robust Inventory of Oil Prospects and Leads with Existing Seismic

    Robust Inventory of Oil Prospects and Leads with Existing Seismic ƒ 1.4 mm acre block ƒ Existing 2-D seismic coverage 50-60% ƒ 18 oil prospects and 12 leads (7,500 – 10,000' depth) ƒ 3 drill ready prospects offsetting discoveries ƒ Drilling program to commence in Q1 2006 Legend Prospects Leads Disco

  21. Slide 21: Aquitaine Maritime

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

  22. Slide 22: Building Sustainability

    Building Sustainability ƒ Strong operational and financial track record ƒ Breadth and depth of technical expertise ƒ Value added international oil and gas focus ƒ Diverse growth prospects ƒ Equity participation designed to improve the long term sustainability of the Trust

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