Vermilion Energy Inc. · TSX:VET
Vermilion Energy — Investor Presentation (October 2021)
31 slides from Vermilion Energy's investor presentation, October 2021
Slide 1: Vermilion Energy Investor Presentation
OCTOBER 2021 VERMILION ENERGY INVESTOR PRESENTATION INTERNATIONALLY DIVERSIFIED | FREE CASH FLOW FOCUSED | ESG LEADERSHIP
Slide 2: Vermilion's Key Attributes
VERMILION’S KEY ATTRIBUTES ► Compelling investment opportunity PRODUCTION (2021E)** o Currently trading at one of the highest free cash flow yields (over 40%)* and one of the largest discounts to historical valuation multiples compared to peers** OIL (BRENT) 16% EUROPEAN o 2021E FCF in excess of $50
Slide 3: Capital Markets Summary
CAPITAL MARKETS SUMMARY Market Summary Trading Price (October 1, 2021) $12.94 (TSX), $10.24 (NYSE) Ticker Symbol (TSX & NYSE) VET Shares Outstanding (June 30, 2021) 161.9 million Average Daily Trading Volume (shares) 2.1 million (TSX), 2.2 million (NYSE) Monthly Dividend Currently Suspended Director
Slide 4: ESG Leadership
ESG LEADERSHIP Environmental Vermilion is committed to reducing the environmental impact of traditional energy production, enriching and caring for the communities in which we live and work, and maintaining our strong corporate governance ► CDP Leadership Level rating of “A-” since 2017; A in 2016 ►
Slide 5: International Diversification
INTERNATIONAL DIVERSIFICATION 5
Slide 6: Core Operating Areas
CORE OPERATING AREAS 2021E PRODUCTION* E&D CAPEX* INT 33% INT N.A. N.A. 45% 67% 55% FFO* FCF* INT INT N.A. N.A. 45% 45% 55% 55% VERMILION IS FOCUSED IN STABLE CORE AREAS * 2021 production and FFO based on September 27, 2021 strip and company estimates. 2021 strip at September 27, 2021: Brent (US$/bb
Slide 7: Global Crude Oil Pricing Advantage
GLOBAL CRUDE OIL PRICING ADVANTAGE OIL PRICES ► In aggregate, Vermilion’s global crude oil portfolio has $85 sold at an average $5.00/bbl premium to the Canadian light oil benchmark (MSW) over the past 7 years $75 ► Approximately 35% of Vermilion’s crude oil production is $65 priced with reference t
Slide 8: European Natural Gas Pricing
EUROPEAN NATURAL GAS PRICING ► Vermilion average realized natural gas price is over 2 GLOBAL NATURAL GAS PRICES >C$30/ mmbtu times the Canadian benchmark (AECO) $25 ► European natural gas prices are currently trading over C$20.00/mmbtu for 2022 as a result of: $20 C$/MMBTU* o Declining European dome
Slide 9: Operating Netbacks
OPERATING NETBACKS 2021E OPERATING NETBACKS $45.00 100% $40.00 90% 2021E OPERATING NETBACK ($/BOE)* 2021E LIQUIDS WEIGHTING (%)* $35.00 80% 70% $30.00 60% $25.00 50% $20.00 40% $15.00 30% $10.00 20% $5.00 10% $0.00 0% VET** CPG BTE TVE WCP ATH ERF ARX POU NVA KEL PEY TOU BIR AAV OPERATING NETBACK LI
Slide 10: Focus on Free Cash Flow & Profitability
FOCUS ON FREE CASH FLOW & PROFITABILITY 10
Slide 11: Free Cash Flow Generation
FREE CASH FLOW FREE CASH FLOW GENERATION $2,000 $1,000 $1,800 $900 $1,600 $800 CUMULATIVE FCF ($MM)** $1,400 $700 ANNUALIZED FFO ($MM*) $1,200 $600 $1,000 $500 $800 $400 $600 $300 $400 $200 $200 $100 $0 $0 2016 2017 2018 2019 2020 2021E* E&D CAPEX FCF E&D CAPEX GUIDANCE FCF FORECAST CUMULATIVE FCF F
Slide 12: Free Cash Flow Yield
FREE CASH FLOW YIELD 2022E FCF YIELD* 50% 45% 40% 35% AVERAGE = 28% 30% 25% 20% 15% 10% 5% 0% VET NVA ERF MEG BTE CPG PEY ARX AAV WCP BIR POU CVE SU CNQ TOU IMO VERMILION TRADES AT ONE OF THE HIGHEST FCF YIELDS AMONGST CANADIAN PEERS *Source: Peters & Co. estimates as of September 27, 2021, using Pe
Slide 13: Valuation Discount
VALUATION DISCOUNT E&P FORWARD CONSENSUS EV/DACF PREMIUM/DISCOUNT TO 3Y & 5Y HISTORICAL* 2.0x 1.0x 0.0x -1.0x -2.0x -3.0x -4.0x MEG VET ARX CPG POU ERF BTE NVA WCP PEY BIR TOU AAV Disc/Prem to 5Y Historical Disc/Prem to 3Y Historical Median 3Y Disc/Prem Median 5Y Disc/Prem VERMILION TRADES AT ONE OF
Slide 14: Balance Sheet
BALANCE SHEET 14
Slide 15: Balance Sheet Composition
BALANCE SHEET COMPOSITION CURRENT CREDIT CAPACITY $2.5B ► No near-term maturities AS AT JUNE 30, 2021 $2,250 o Covenant-based credit facility termed out to May 2024 $2,000 o US$ Senior Notes termed out to March 2025 $1,750 $1,500 ► Vermilion’s US$ Senior Notes have no financial covenants $1,250 and
Slide 16: Debt Reduction
DEBT REDUCTION LONG-TERM DEBT AS AT JUNE 30, 2021 $2,250 $2,000 $1,750 $MM $1,500 $1,250 $1,000 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Revolving Credit Facility Balance Senior Unsecured Notes (US$300MM) LONG-TERM DEBT REDUCED BY $366MM FROM Q2 2020 TO Q2 2021 16
Slide 17: Financial Leverage
FINANCIAL LEVERAGE LEVERAGE RATIOS 4.5x 4.0x 3.5x 3.0x 2.5x 2.0x VERMILION TARGETED LEVERAGE RANGE 1.5x 1.0x 0.5x 0.0x 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E* NET DEBT TO FFO** NET DEBT TO EBITDA*** FOCUSED ON REDUCING LEVERAGE TO OUR TARGETED
Slide 18: Commodity Hedge Position
COMMODITY HEDGE POSITION 2021 2022 100% 100% PERCENTAGE OF PRODUCTION HEDGED (%)** PERCENTAGE OF PRODUCTION HEDGED (%)** 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% WTI Brent European N.A. Corporate WTI Brent European N.A. Corporate Natural Gas Natural Gas Total Nat
Slide 19: Summary
SUMMARY ► Compelling investment opportunity currently trading at one of the highest FCF yields and one of the largest discounts to historical valuation multiples compared to peers ► Unique and defensive portfolio of internationally diversified assets that provide exposure to premium global commodity
Slide 20: Asset Overview
ASSET OVERVIEW 20
Slide 21: Vermilion Production
VERMILION PRODUCTION 105,000 90,000 75,000 60,000 BOE/D 45,000 30,000 15,000 0 2003 2004 2005 2006 2007 2008 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016 2017 2018 2019 2020 2021E E&D CAPEX 53% 37% 41% 40% 46% 33% 61% 119% 103% 81% 81% 85% 94% 47% 53% 62% 58% 73% 31% AS % OF FFO** North America In
Slide 22: Europe
EUROPE NETHERLANDS GERMANY IRELAND ► #2 onshore gas producer ► Established production operations ► 20% operated interest in the Corrib ► Large and growing inventory of drilling opportunities and substantial exploratory land Natural Gas Project position in the North German Basin ► Corrib field consti
Slide 23: CEE Exploration Potential
CEE EXPLORATION POTENTIAL VERMILION HAS BUILT A HIGHLY PROSPECTIVE EXPLORATION PORTFOLIO ACROSS CEE ► Approximately 2 million net acres of undeveloped land in the Pannonian basin across three countries (Hungary, Croatia and Slovakia) ► Focused on under-invested basins prospective for both oil and ga
Slide 24: Australia
AUSTRALIA ► 100% operated interest in Wandoo, an offshore oil field approximately 80 km N.W. of Australia (55m water depth) ► Horizontal well development with 20 producing wellbores and five dual lateral sidetracks tied into two platforms ► Two well-program planned for 1H 2022 ► Contracted Wandoo cr
Slide 25: North America
NORTH AMERICA CANADA ► Targeting light oil and condensate-rich natural gas in West Central Alberta and light oil in SE Saskatchewan ► Approximately 400,000 net acres in West Pembina targeting the Mannville (2,400 – 2,700m depth) and Cardium (1,800m) formations with shared surface infrastructure ► Ap
Slide 26: Appendix
APPENDIX 26
Slide 27: FFO Sensitivity
FFO SENSITIVITY COMMODITY PRICES** 2021E ANNUAL 2021 UNHEDGED FFO SENSITIVITY (C$MM)* Brent (US$/bbl) $70.28 Change FFO Impact (C$) WTI (US$/bbl) $67.27 LSB = WTI less (US$/bbl) $4.28 WTI & Brent US$1/bbl $17.0MM MSW = WTI less (US$/bbl) $4.15 LSB / WTI Differential US$1/bbl $6.2MM TTF ($/mmbtu) $17
Slide 28: Environmental Sustainability
ENVIRONMENTAL SUSTAINABILITY ► We are playing a meaningful role in the energy transition by reducing the environmental impact of our traditional energy production and developing renewable energy projects o We have near-term and long-term emission reduction targets o We deploy energy and emissions ef
Slide 29: Emissions Reduction Targets
EMISSIONS REDUCTION TARGETS ► In April 2021, Vermilion introduced near-term and long-term emission reduction targets o Aspirational target of net zero emissions in our operations, including Scope 1 and Scope 2 emissions, by 2050 o Reducing Scope 1 emissions intensity from our operations by 15 to 20%
Slide 30: Sustainability Projects
SUSTAINABILITY PROJECTS ► Vermilion is committed to advancing environmental sustainability, economic inclusivity and creating partnerships within the communities in which we live and work PARENTIS SUSTAINABILITY PARTNERSHIP LA TESTE ECO-NEIGHBOURHOOD ► Our recycled geothermal energy tomato greenhous
Slide 31: 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
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