Vermilion Energy Inc. · TSX:VET
Vermilion Energy — Vermilion Energy Trust — Scotia Capital Focus on Energy Trusts: Investing for Income Conference 2005
36 slides from Vermilion Energy's conference presentation, Oct 5, 2005
Slide 1: Scotia Capital Focus on Energy Trusts: Investing for Income Conference
Scotia Capital Focus on Energy Trusts: Investing for Income Conference October 5-6, 2005
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
Slide 3: Statistics
Statistics Listed on Toronto Stock Exchange VET.UN To be included in S&P/TSX Composite Index Trading price (Sept 28/2005) $28.87 Monthly distribution (since February 2003) $0.17 Current yield 7.1% Year-to-date return (Sept 28/2005) 51% Units Outstanding (including 4.7mm exchangeable sh
Slide 4: Unique Profile
Unique Profile Only Canadian based ‘international’ energy trust More than 10 years of successful operating results Strategy focuses on stable, long-term distributions Diversified, high-quality production base, operate >85% Long-life reserves – RLI greater than 10 years Experienced manage
Slide 5: Creative Strategy
Creative Strategy Expand asset base through low-cost acquisitions, property optimization and development activities Seek geographic diversification to provide a larger opportunity base Provide exposure to high impact projects while restricting capital commitments Create value through unique
Slide 6: Balanced Approach
Balanced Approach Australia Production Western 13% Europe 2005E - 25,000 boe/d 42% Current – 26,500 boe/d Oil 52% Canada 45% NGL’s 5% Gas 43%
Slide 7: Outstanding Performance
Outstanding Performance $28.00 Since converting to a trust in January 2003, VET has $24.00 generated a compounded annual rate of return of 55% Australia $20.00 $16.00 Netherlands $12.00 $8.00 France $4.00 VET.UN $0.00 Apr-94 Apr-95 Apr-96 Apr-97 Apr-98 Apr-99 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-0
Slide 8: Financial Overview
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Slide 9: 2005 Investment Summary
2005 Investment Summary % of C$, mm cash flow 2005E Cash Flow $256 100% Distribution (Net of Drip) $115 45% Set Aside for Reclamation Fund $24 9% 2005 Capital Program $99 39% Total Outlay as % of Cash Flow 93% Note: Drip program will generate $11.7 mm in 2005; gross distributions represent 50% of ca
Slide 10: Vermilion Netbacks – 2005E (C$ / boe)
Vermilion Netbacks – 2005E (C$ / boe) Canada France Netherlands Australia Revenue $57.73 $62.58 $43.66 $68.13 Royalties $(14.88) $(7.02) $(0.00) $(21.80) OP Cost $(7.01) $(7.55) $(9.18) $(8.70) Transportation Expense $(0.70) $(3.48) $(0.00) $(0.00) Operating Netback $35.14 $44.54 $34.48 $37.63 G&A $
Slide 11: Operations
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Slide 12: Canadian Assets
Canadian Assets ALBERTA Slave Lake Athabasca CBM Drayton EDMONTON Drill and complete over 60 wells in 2005 with Valley expected flow rates of 125-175 mcfd/well Drayton Valley Central AB Program focused on recompletions, development drilling CALGARY 6 well infill pilot commencing in Q4 Co
Slide 13: French Assets
French Assets Paris Paris Basin Basin PARIS Paris Basin Aquitaine Aquitaine 4 wells drilled and completed - Maritime Maritime indicate approx. 200 b/d per well BORDEAUX 2-D seismic program commencing in Aquitaine Aquitaine Basin Q4 to define extension of reservoir Basin Parentis Field Work
Slide 14: Netherlands Assets
Netherlands Assets Harlingen Amsterdam Optimization of facilities and producing wells NETHERLANDS Installed nine siphon strings to date with seven more scheduled in ‘05 Reviewing 3-6 drilling locations for 2006 program Current production – approx. 5,000 boe/d
Slide 15: Australian Assets
Australian Assets Submitted environmental and safety AUSTRALIA plan for Wandoo Field – target operatorship November ‘05 Facility de-bottlenecking in Q2 improved production by 200 b/d Field review in progress – opportunities include re-entries, recompletions and optimization of wells and facili
Slide 16: Option Value Streams
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Slide 17: Creating Option Value
Creating Option Value Optimize value of assets through creation of joint venture and partnership entities Provide exposure to high impact opportunities while minimizing risk capital Patterned after Aventura Energy model Aventura Energy realized 5-fold increase in value in less than 5 years
Slide 18: Verenex Energy Inc.
Verenex Energy Inc. Trades on TSX Exchange – VNX Raised $30 million at $2.50 per share Current market cap > $100 million Vermilion owns 53.3% (12.1 million shares) $56 million of option value ($0.82 per VET unit) Verenex is targeting France & North Africa as areas of future growth potent
Slide 19: Why Area 47?
Why Area 47? 2.7 billion BOE discovered in 54 fields in Ghadames Basin1 Oil 35-45o API Lightly explored at 1 well/1,000 km2 7 wells drilled in Area 47: 2 oil discoveries, 5 oil shows Area 47 ringed with oil discoveries Gas & condensate pipelines traverse Area 47 and 3 oil lines 30 km eas
Slide 20: Robust Inventory of Oil Prospects and Leads with Existing Seismic
Robust Inventory of Oil Prospects and Leads with Existing Seismic 1.4 mm acre block Existing 2-D seismic coverage 50-60% 18 oil prospects & 12 leads (7,500 – 10,000' depth) 3 drill ready prospects offsetting discoveries Drilling program to commence in Q1 ‘06 Legend Prospects Leads Discover
Slide 21: Coalbed Methane Initiative
Coalbed Methane Initiative ALBERTA Slave Lake Athabasca Drayton EDMONTON Joint venture program to optimize value of CBM and Valley shallow gas assets – VET maintains 50% direct participation in operations and 33% equity interest (fully diluted) in Glacier Energy Limited Central AB Gross producti
Slide 22: Aquitaine Maritime
Aquitaine Maritime 3D Seismic Leads Paris Paris Basin Basin PARIS Aquitaine Aquitaine Maritime Maritime BORDEAUX World-scale exploration leads identified through 2-D seismic Aquitaine Aquitaine Basin Basin Offshore extension of geologic trend that includes Parentis Field 2-D and 3-D seismic pr
Slide 23: Aquitaine Maritime: 2005 Work Program
Aquitaine Maritime: 2005 Work Program Aquitaine Maritime Block 750 km2 3D Survey Leads Permit Boundary 414 km 2D Survey 3D Visualization: Lower Cretaceous Structure
Slide 24: Comparative Measures
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Slide 25: Peer Group Production – Q2 2005
Peer Group Production – Q2 2005 80,000 Vermilion measures itself against 70,000 15 other trusts with production of 20,000 boe/d or better and 60,000 history as ‘trust’ of more than two years 50,000 40,000 30,000 20,000 10,000 0 ERF PGF AET BNP PWI AE PTF PVE HTE BTE PMT VET PEY VKR AVN SHN
Slide 26: Reserve Life Index – VET vs. Peers
Reserve Life Index – VET vs. Peers 20.0 Vermilion has successfully 18.0 maintained an RLI greater than ten years 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Source: Vermilion
Slide 27: Netback vs Peer Group (Q2 2005)
Netback vs Peer Group (Q2 2005) (Before Hedging) Despite tax leakage from foreign $33.00 operations, Vermilion’s after-tax netbacks compare favourably with the peer group $30.00 $27.00 $24.00 $21.00 $18.00 $15.00 Source: Scotia Capital
Slide 28: FD&A vs Peer Group (2004)
FD&A vs Peer Group (2004) $50.00 Vermilion’s focus on value added $45.00 acquisitions helps maintain top quartile performance in FD&A costs $40.00 $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 Source: Scotia Capital
Slide 29: Recycle Ratio – vs Peer Group (2004)
Recycle Ratio – vs Peer Group (2004) 4.50 Strong netbacks and low FD&A 4.00 costs yield a high recycle ratio for Vermilion 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 Source: Vermilion
Slide 30: P50 Reserves / Debt Adjusted Unit (Normalized)
P50 Reserves/ Debt Adjusted Unit (Normalized) 1.80 VET’s Reserves/Unit have increased since 1.60 conversion to a trust 1.40 VET.UN 1.20 1.00 0.80 0.60 0.40 2002 2003 2004 2005 Source: Vermilion
Slide 31: Peer Group Reclamation Funding
Peer Group Reclamation Funding 100% 90% VET expects over 40% of its future reclamation obligations will be fully 80% funded by year-end 2005 70% 60% 50% 40% 30% 20% 10% Ten members of the peer group do not have an established reclamation fund 0% Source: Vermilion
Slide 32: VET Total Return vs S&P/TSX Capped Energy Trust Total Return Index
VET Total Return vs S&P/TSX Capped Energy Trust Total Return Index 350 325 Vermilion has consistently outperformed the Energy 300 Trust Index 275 250 225 VET.un 200 175 150 125 100 75 1/24/03 4/24/03 7/24/03 10/24/03 1/24/04 4/24/04 7/24/04 10/24/04 1/24/05 4/24/05 7/24/05
Slide 33: Conclusion
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Slide 34: Valuation vs Peer Group (2005 EV/DACF)
Valuation vs Peer Group (2005 EV/DACF) 13.0 Vermilion is valued near the average 12.0 of its peer group based on debt- adjusted cash flow measures, without according any value to the ‘option 11.0 value streams’ 10.0 9.0 8.0 7.0 6.0 5.0 Source: CIBC Sept 16
Slide 35: Vermilion is Building Sustainability
Vermilion is Building Sustainability Value driven international oil and gas focus Strong operational and financial track record Breadth and depth of technical expertise Diverse growth prospects Option value streams designed to improve the long term sustainability of the Trust Vermilion a
Slide 36: A World of Opportunity
VERMILION ENERGY TRUST