Earning Date, Transcript Summary & Report

Production Growth Achievement: Vermilion delivered strong operational and financial results in 2024, with production averaging 84,543 BOEs per day, above guidance and representing 4% annual production per share growth.

International Production Growth: International production increased by 12% year-over-year, driven by strong operational run times in Australia and the startup of the gas plant in Croatia.

Fund Flow and Free Cash Growth: Generated $1.2 billion or $7.63 per share of fund flow and $583 million or $3.69 per share of free cash flow, both up 9% over 2023 on a per share basis.

Capital Program Execution: Executed a $623 million E&D capital program within budget, with significant investments in growth projects in Germany, Croatia, and the BC Montney.

Shareholder Returns Overview: Returned $216 million or approximately 10% of market cap to shareholders in 2024, including $75 million in dividends and $141 million in share buybacks.

Quarterly Dividend Increase: Announced an 8% increase to the quarterly dividend effective Q1 2025, marking the fourth consecutive increase since reinstating the dividend.

Net Debt Reduction: Net debt decreased by 10% in 2024 to $967 million, with a net debt to trailing funds flow ratio of 0.8 times, the lowest in over a decade.

Reserves Increase Announcement: Total proved plus probable reserves increased by 1% to 435 million BOEs, with significant additions from the Mica Montney asset.

Efficient Capital Deployment: Achieved a recycle ratio of 1.6 times on a PDP basis and 2.3 times on a 2P basis, indicating efficient capital deployment.

Net Present Value Analysis: The after-tax net present value of PDP reserves is $2.8 billion, and $5.2 billion for 2P reserves, translating to over $27 per share after deducting net debt.

Deep Gas Exploration Success: Successful German deep gas exploration program with significant discoveries, including a well testing at a combined rate of 56 million per day, which is 50% of Vermilion’s current European gas production.

Acquisition Expansion and Production: Closed the Westbrick acquisition, adding 50,000 BOEs a day of production and over 770,000 net acres, with over 700 net future drilling locations identified.

Production Forecast and Cost Reduction: Forecasted 2025 production to range between 125,000 to 130,000 BOEs a day, with a substantial reduction in unit operating and G&A costs.

Projected Free Cash Flow: Forecasted free cash flow of $400 million for 2025, with unhedged FFO per share expected to increase over 30% from 2024.

Share Buyback Impact: Since initiating the share buyback program, repurchased and retired 17.8 million shares, reducing the outstanding share count to approximately 154 million.

North America Production Decline: Production in North America decreased by 5% year-over-year, primarily due to the divestment of 5,500 BOE per day in Southeast Saskatchewan, which negatively impacted overall production figures.

Production Impact Analysis: The fourth quarter production was affected by planned third-party turnaround activity and partial shut-ins of Canadian gas due to weak AECO prices, indicating vulnerability to market conditions.

Net Debt Increase Analysis: Net debt increased slightly in Q4 due to the stronger U.S. dollar and the full repayment of the Montney battery lease, which could suggest financial strain despite overall debt reduction efforts.

Production Growth Challenges: The company faced challenges in recognizing reserves from early-stage growth projects in Germany and Croatia, which may limit future production growth and cash flow generation.

Free Cash Flow Concerns: The forecasted free cash flow for 2025 is $400 million, which, while positive, may not be sufficient to address the company's significant debt levels and ongoing capital expenditures.

Tariff Risk Monitoring: The company is monitoring the tariff situation between the U.S. and Canada, which includes a 10% tariff on Canadian energy exports, indicating potential risks to revenue from Canadian assets.