CALGARY, May 8, 2015 /PRNewswire/ - Vermilion Energy Inc. ("Vermilion", "We", "Our", "Us" or the "Company") (TSX, NYSE: VET) is pleased to report operating and unaudited financial results for the three months endedMarch 31, 2015.
HIGHLIGHTS
- Achieved average production of 50,386 boe/d during the first quarter of 2015, an increase of 2% as compared to 49,571 boe/d in the prior quarter, and 8% versus 46,677 boe/d during the first quarter of 2014. Production increased in Canada, France and the Netherlands from the previous quarter due to successful drilling, workover and tie-in activity, more than offsetting mid-stream restrictions in Canada and modest decreases in production in other business units. We continue to manage Australian production to maximize proceeds during this period of lower oil prices.
- Fund flows from operations ("FFO")(1) for Q1 2015 of $120.8 million($1.12/basic share) represented a decrease of 35% quarter-over-quarter and 41% year-over-year. The decrease in FFO was attributable to lower commodity prices and inventory builds (due to the timing of crude liftings in France and Australia), partially offset by lower operating expenses from our ongoing cost reduction program and a recovery of costs in France.
- Concluded the successful drilling of a four (4.0 net) well program inFrance at our Champotran field in the Paris Basin. Subsequent to Q1 2015, all four wells have been tied-in and are currently producing at a combined average production rate of approximately 980 bbls/d. This was our third successive drilling program since 2013, comprising a total of 13 wells at Champotran, with a 100% drilling success rate.
- Initiated production from our Langezwaag-02 well in the Netherlands at a facility-limited rate of 4.0 mmcf/d from the Zechstein formation. This discovery well on the Gorredijk concession was part of our 2014 drilling program. Subsequent to the end of the Q1 2015, we reached total depth and logged the first well in our 2015 Netherlands drilling program. Based on electric logs, the Slootdorp-06 well in the province of North Holland(93% working interest), is a field-extending discovery, logging 71 metres of gross gas column in the Rotliegend Sand. Production from the Slootdorp-06 well is expected to commence in the second half of 2015.
- Our Corrib project in Ireland has continued to progress as expected. Project operator Shell E&P Ireland Limited ("SEPIL") is systematically preparing gas compression and other systems at the Bellanaboy gas processing terminal for the processing of offshore gas production from the field. The Irish Environmental Protection Agency issued its Proposed Determination for the Corrib Industrial Emissions License ("IEL") in April. Based on remaining terminal activities and typical approval timelines for the final form of the IEL, we estimate that the most likely date for start-up is approximately mid-year, with a modest range of outcomes around that estimate. Production at Corrib is expected to increase over the first few months toward peak production levels estimated at approximately 58 mmcf/d (approximately 9,700 boe/d), net to Vermilion.
- Despite a 40% reduction in planned capital spending for 2015 as compared to 2014, we are maintaining our original production guidance of between 55,000 and 57,000 boe/d. There is also no change to our 2015 capital spending guidance of $415 million.
- To further enhance the long-term and sustainable profitability of our business in the current environment, we are also directing considerable focus to our Profitability Enhancement Program ("PEP") initiative. Prior installments of PEP achieved strong results in both the 1998 industry downturn and the financial crisis of 2008-2009. Based on savings identified to-date, our third installment of PEP will result in cost reductions estimated at between $50 and $60 million for full-year 2015 in capital spending, operating expense and G&A. This is reflected in unit operating expense for Q1 2015 that is down 15% quarter-over-quarter, and down 22% year-over-year.
- Subsequent to Q1 2015, we negotiated a further expansion and extension of our existing revolving credit facilities from $1.75 billion to $2 billion. In Q1 2015, we had previously increased our credit facility from $1.5 billionto $1.75 billion. After the most recent expansion to our credit facility, we have approximately $820 million of borrowing capacity available. The facility, which matures in May 2019, is fully revolving up to the date of maturity and is subject to standard form covenants. We are, and expect to continue to be, in compliance with all applicable debt covenants and maintain our current dividend of $0.215 per share per month ($2.58 per share per year).
- During Q1 2015, Vermilion was awarded a judgment in the amount of €25 million for the costs incurred as a result of an oil spill at the Ambès oil terminal in France that occurred in 2007. Vermilion expects to receive 50% of the judgment in Q2 2015, with the remainder due upon conclusion of the appeal process. Based on the recent court decision and the conclusions of the expert engaged by the French court, Vermilion is highly confident that the award will be upheld.
- Subsequent to Q1 2015, Vermilion was recognized by the Great Place to Work® Institute as a Best Workplace in Canada and France for the sixth consecutive year. Vermilion was also recognized for a second consecutive year as a Best Workplace in the Netherlands in 2015, after becoming eligible for ranking in 2014. Vermilion is the only energy company in the medium sized category to rank on the Best Workplaces lists in Canada and the Netherlands, and the highest scoring energy company on the Best Workplaces list in France. These Great Place to Work awards are a reflection of Vermilion's strong corporate culture which is a key driver of Vermilion's long-term strong corporate performance.
- In addition, Vermilion was recently ranked 15th by Corporate Knights on the Future 40 Responsible Corporate Leaders in Canada list (the highest ranking for an oil and gas company, and an increase over the Company's debut ranking of 32nd last year), as well as being named Top International Producer of the year by The Explorers and Producers Association ofCanada. This recognition reflects Vermilion's continued focus on financial results combined with exemplary environmental, social and governance performance. Strong workplace practices and a culture that respects both people and communities are key elements in our success. Please refer to our Sustainability Report at https://sustainability.vermilionenergy.com/for more information about our environmental and social stewardship.
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Additional GAAP Financial Measure. Please see the "Additional and Non-GAAP Financial Measures" section of Management's Discussion and Analysis. |
ANNUAL GENERAL MEETING WEBCAST
As Vermilion's Annual General Shareholders Meeting is being held today,May 8, 2015 at 10:00 AM MST at the Metropolitan Centre, 333 - 4th Avenue S.W., Calgary, Alberta, there will not be a first quarter conference call, however, a presentation will be given by Mr. Lorenzo Donadeo, Chief Executive Officer, concluding the formal business portion of the meeting.
Please visit https://event.on24.com/r.htm?e=975216&s=1&k=8EF642AF4951C1D3776D76241E30DC52 orVermilion's website athttps://www.vermilionenergy.com/ir/eventspresentations.cfm and click on webcast under the upcoming events to view the webcast which will commence at approximately 10:15 AM MST.