Vermilion Energy Q4 2025 Earnings Report

Vermilion Energy EPS Results

• Actual EPS: $0.63
• Consensus EPS: $0.30
• Beat/Miss: Beat by +$0.33
• One Year Ago EPS: N/A

Vermilion Energy Revenue Results

• Actual Revenue: $334.64 million
• Expected Revenue: $384.74 million
• Beat/Miss: Missed by -$50.10 million
• YoY Revenue Growth: N/A

Vermilion Energy Announcement Details

• Quarter: Q4 2025
• Date: 3/4/2026
• Time: After Market Closes
• Conference Call Date: Thursday, March 5, 2026
• Conference Call Time: 10:00AM ET

Vermilion Energy (NYSE:VET) is a Canadian-based international oil and gas producer headquartered in Calgary, Alberta. Established in 1994, the company focuses on the exploration, development and production of crude oil and natural gas reserves through its wholly owned and joint venture assets. Vermilion’s upstream operations target a balance of oil and gas projects across various regions, with an emphasis on high-quality resource plays that can deliver stable cash flow and long-term reserves replacement.

Vermilion’s product portfolio includes light and medium crude oil, heavy oil, natural gas and natural gas liquids (NGLs). The company’s upstream teams employ both conventional and enhanced recovery techniques to optimize production rates and recoverable reserves. This approach allows Vermilion to adapt to market conditions and maintain operational flexibility throughout the commodity price cycle.

The company maintains a broadly diversified asset portfolio spanning North America, Europe and Australia. In Canada, Vermilion operates primarily in the provinces of Alberta and Saskatchewan with a mix of conventional and heavy oil assets. Its U.S. presence is concentrated in the Illinois Basin and other onshore plays. In Europe, Vermilion holds gas and oil interests in France, the Netherlands and Germany, while its Australian operations focus on offshore gas concessions that supply regional markets.

Since its inception, Vermilion has grown through a combination of organic development and strategic acquisitions. The company is overseen by an experienced management team and board of directors that prioritize operational efficiency, environmental stewardship and disciplined capital allocation. Vermilion continues to seek opportunities to enhance its asset base and maintain a balanced portfolio capable of delivering long-term value to stakeholders.

Vermilion Energy Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Vermilion refocused into liquids‑rich Canadian gas and premium European gas and delivered record production of 121,308 BOE/d in Q4, led by Deep Basin and Montney outperformance and the Osterheide uplift.
• Positive Sentiment: Realized gas pricing was strong at ~C$5.50/Mcf (about double AECO) driven by direct European exposure (TTF strength) and an active hedging program with roughly half of 2026 volumes hedged and flexible participating structures on some oil hedges.
• Positive Sentiment: 2P reserves increased 36% to 592 million BOE, with management reporting a 2P NPV10 per share of C$23 after net debt—stated as materially above the current share price, implying potential per‑share upside.
• Positive Sentiment: European growth catalysts include the Wisselshorst discovery (Vermilion ~43 Bcf in 2P) expected online mid‑2026, additional planned wells on Bommelsen, and continued strong performance from Osterheide (≈C$8m free cash flow in Q4).
• Neutral Sentiment: Q4 FFO was C$241m with C$49m free cash flow after C$192m capex and accelerated debt reduction (C$42m) from a Selakanth sale; however, Australian cyclone downtime depressed near‑term volumes so Q1 guidance is conservative with a planned full ramp by Q2.

Presentation

[Operator]

Morning, ladies and gentlemen, welcome to the Vermilion Q4 2025 conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, March 5th, 2026. I would now like to turn the conference over to Dion Hatcher, President and CEO. Please go ahead.

[Dion Hatcher, President and CEO at Vermilion Energy]

Thank you. Good morning, ladies and gentlemen. I'm Dion Hatcher, President and CEO of Vermilion Energy. With me today are Lars Glemser, Vice President, CFO, Darcy Kerwin, Vice President, International & HSE, Randy McQuaig, Vice President, North America, Laura Conrad, Vice President, Business Development, and Travis Thorgeirson, Director of Investor Relations & Corporate Planning. Please refer to our advisory on forward-looking statements in our Q4 release. It describes forward-looking information, non-GAAP measures, and oil and gas terms used today, and it relies on risk factors and assumptions relevant to this discussion. Vermilion had an impactful year, positioning herself as a global gas producer with top decile realized gas prices, lower cost structure, and a long duration asset base capable of delivering sustainable Free Cash Flow for decades to come.

[Dion Hatcher, President and CEO at Vermilion Energy]

In 2025, we delivered record production and marked a pivotal year in our company's history through strategic M&A activity, particularly the acquisition of the high-quality assets in our core Deep Basin area and the disposition of non-core assets in Saskatchewan and the United States. Our portfolio is now focused on liquids-rich gas assets in Canada and premium priced gas assets in Europe. Building one of the largest land footprints in the Deep Basin, along with our growing liquids-rich gas business in the Montney, has sharpened our operational focus. This allows us to improve our cost structure and more importantly, higher profitability in our Canadian portfolio.

[Dion Hatcher, President and CEO at Vermilion Energy]

Germany, during Q1, we brought online the first well of the deep gas exploration program, Osterheide, and progressed the build-up of infrastructure to facilitate the production from one of our largest European gas discoveries, Wisselshorst, which we expect to bring online by mid 2026. In the Netherlands, we successfully drilled two wells with multiple prospective zones and brought them on production in Q4. The long runway of future prospects we've identified in Europe with finding and development costs of approximately $1.50 CAD per Mcf represents an opportunity for profitable organic growth in our domestic European gas business. These core assets drove another strong quarter in Q4, both operationally and financially. Production of 121,308 BOEs per day was ahead of guidance.

[Dion Hatcher, President and CEO at Vermilion Energy]

This was partially driven by highly productive wells in the Deep Basin, where three of the most productive gas wells in December were Vermilion-owned and operated. Production also benefit from record volumes in the Montney, as well as outperformance from the Osterheide well in Germany, which had 40% higher production compared to the third quarter and generated approximately $8 million of Free Cash Flow in Q4 alone. Strong realized gas pricing of $5.50 per Mcf or double the AECO benchmark was driven by our direct European gas exposure where TTF prices averaged $15 per MMBtu in the quarter. Our realized gas prices also benefit from enhanced market diversification in Canada and a sophisticated hedging program. On the operational side, we apply a continuous improvement mindset to the areas within our control, safety, production, and cost management.

[Dion Hatcher, President and CEO at Vermilion Energy]

I'm excited about the progress by each team across the business. In Canada, due to the improved operational scale, high-quality assets, our unit operating costs are now the lowest in over a decade, which improves our corporate unit costs, now the lowest since 2020. Investments in infrastructure such as the Mica facility and development initiatives in Germany are expected to deliver an increase in excess free cash flow over the next few years. The long duration of our asset base and our commitment to disciplined capital allocation, when combined with only 153 million shares outstanding, positions Vermilion to add meaningful per share value. Moving to reserves, Vermilion's total proved plus probable or 2P reserves increased by 36% from the prior year, reaching 592 million BOEs.

[Dion Hatcher, President and CEO at Vermilion Energy]

This growth was driven by a combination of organic development and the Deep Basin acquisition, which closed in February 2025, partially offset by the divestment of the United States and Saskatchewan assets in mid-2025. We added 86 million BOEs of proved developed producing or PDP reserves and 201 million BOEs of 2P reserves in 2025. Our average funding development and acquisition costs, including future development costs, were $14.91 per BOE for PDP and $7.71 per BOE for 2P. That's a recycle ratio of 1.8x-3.5x, respectively. These recycle ratios highlight the capital efficiency and strong returns of our reserve additions.

[Dion Hatcher, President and CEO at Vermilion Energy]

It's also worth noting that PDP reserves do not include any volumes or present value associated with the Wisselshorst discovery well on the Bommelsen license, whereas 2P reserves include approximately 7 million BOE or 43 Bcf related to our 64% working interest in the initial discovery. We have identified up to six additional drilling locations on the Bommelsen license that currently have no 2P reserves assigned, representing significant further upside for European reserves. We remain on track to spud the first two of these locations in early 2027, with long lead equipment ordered, the drilling rig secured, and permitting progressing as expected. Applying the learnings from the previous program, we anticipate lower costs and faster cycle times resulting in these wells being on production in the H2 of 2028. The 2P Reserve Life Index was 14 years, in line with our historical averages.

[Dion Hatcher, President and CEO at Vermilion Energy]

Our internal estimate is that we have 1,700 drilling locations across our 1.3 million net acres of land that's in the Deep Basin and Montney. Only 23% of these are included in our year-end reserves. Also of note, internal estimates of Initial Gas In Place related to exploration and development prospects in Europe are minimally included in our year-end reserves. We believe there's significant upside to our European gas reserves given our 1.4 million net acres land across Germany and Netherlands, combined with our track record of exploration success. Across our portfolio, the combination of both reserves and additional internally estimated locations provide long-term visibility for future production and cash flow.

[Dion Hatcher, President and CEO at Vermilion Energy]

Our tax Net Present Value of our 2P reserves discounted at 10% using the three consultant average pricing as of January 1, 2026 and deducting year-end net debt is $23 per basic share, well in excess of our current share price. I will now pass it to Lars to discuss the Q4 results and more in depth.

[Lars Glemser, VP and CEO at Vermilion Energy]

Thank you, Dion. Vermilion generated $241 million of Funds From Operations in the fourth quarter. An active quarter of drilling saw $192 million invested in exploration and development capital expenditures, resulting in Free Cash Flow of $49 million. Production averaged 121,308 boe/d, with a 69% weighting to natural gas. In Canada, we executed a three-rig drilling program in the Deep Basin, drilling 16 and bringing on production 17 liquids-rich gas wells. We made the deliberate decision to defer the startup of several highly productive wells that were drilled and completed in the third quarter into mid-Q4, allowing us to capture stronger realized gas prices and maximize returns. As Dion noted, these were some of the most prolific wells in Alberta.

[Lars Glemser, VP and CEO at Vermilion Energy]

In the Montney, we drilled four gross and net liquids-rich gas wells, which are scheduled for completion and startup in Q2 2026. Combination of strong Deep Basin well results, the return of previously shut-in production, and record Montney performance drove a significant increase in production in Canada. Normalized for disposition activity, our Q4 production was more than 5,000 BOE per day higher than in Q3, with a lower unit cost structure, improving cash flow net backs, and overall profitability of our Canadian operations. International operations averaged 30,137 BOE per day in the fourth quarter, consistent with Q3. New production in the Netherlands and increased gas output in Germany largely offset natural declines in Ireland, Australia, and Croatia. Vermilion completed and brought online two gross or 1.2 net natural gas wells in the Netherlands during the fourth quarter.

[Lars Glemser, VP and CEO at Vermilion Energy]

We also advanced permitting and technical work in the Netherlands to facilitate the drilling of one gross or 0.5 net wells in 2026. Our approach to European development remains disciplined, leveraging our long-standing operating experience and strong regulatory relationships. In Germany, infrastructure development for the first Wisselshorst well, which is a 0.6 net ownership to Vermilion, continued during the quarter, with first production expected mid-2026. The Osterheide well, brought on earlier in the year, saw an increase in production averaging 10 million a day or 1,600 boe/d for the quarter. Germany continues to be a key region for Vermilion, providing direct exposure to premium European gas markets and development upside.

[Lars Glemser, VP and CEO at Vermilion Energy]

On the balance sheet, we accelerated our debt reduction during the fourth quarter by selling a portion of our ownership in Coelacanth Energy, which resulted in $42 million of incremental debt reduction and a realized gain on disposition of $12 million. We continue to hold a 10% ownership in Coelacanth. Returning capital to shareholders remains a core priority. Our strong Free Cash Flow generation and disciplined capital allocation provide the foundation for sustainable dividends and opportunistic share buybacks. Our debt reduction trajectory has been accelerated with the sale of the Coelacanth shares and an increasing commodity price environment. This allows us to continue to be opportunistic in our balance of further debt reduction and returning capital to shareholders. As we continue to grow our asset base and improve profitability, we are confident in our ability to deliver attractive shareholder returns over the long term.

[Lars Glemser, VP and CEO at Vermilion Energy]

I will now pass it back to Dion.

[Dion Hatcher, President and CEO at Vermilion Energy]

Thank you, Lars. Prior to my closing remarks, I want to take a moment and thank our staff in Australia. In Q1, our Wandoo platform was impacted by a Category three cyclone, which resulted in minor damage and a delay of the planned crude export lifting. We do budget for cyclone downtime each year, and fortunately, it's been more than five years since we've had an experience of a direct storm event. Again, thank you to our staff for their hard work and commitment to safety in the lead up, during, and after the cyclone event. In addition, our team has worked very closely with the regulator on the integrity of our asset, including planned maintenance of the export system, which was already included in our budgets.

[Dion Hatcher, President and CEO at Vermilion Energy]

In late February, we exported over 300,000 barrels of crude following the cyclone-related delay, and we're in the process of restoring production on the Wandoo B platform. On the back of the record 2025 annual production and strong Q4, while factoring in Australian cyclone-related downtime, we are providing a Q1 outlook of 122,000-124,000 BOEs per day. We expect production in the H1 of 2026 to be in line with recent levels, with lower Q3 production reflective of the planned maintenance as outlined with our budget release. The recent run-up in global gas prices offers a reminder that in a commodity-based business, being able to sell your product for more offers a substantial advantage.

[Dion Hatcher, President and CEO at Vermilion Energy]

Our unique portfolio offers direct exposure to European gas, where inventories are well below the five-year averages and the current price is over $20 per MMBtu, as well as Brent Crude, both of which have been impacted by recent geopolitical events. In closing, it has been a very active year, migrating our portfolio and advancing major projects. Through this busy time, we have outperformed on the operational side, and that comes down to the exceptional work of our employees and contractors. This is an exciting time at Vermilion. The strategic roadmap to 2030 as outlined in our recent Investor Day. Multi-year plan reflects a disciplined approach to long-term profitability designed to generate meaningful per-share excess Free Cash Flow growth even under a flat commodity price environment. The higher Free Cash Flow growth will support debt reduction and increased shareholder returns.

[Dion Hatcher, President and CEO at Vermilion Energy]

Our asset base offers longevity, capital allocation flexibility, our top decile realized gas price, along with significant upside driven both by our operational excellence and our large resource position. We remain committed to operating with discipline, maintaining a strong balance sheet, and investing in high return projects that drive value for our shareholders. With that, we'll now open the line for questions.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using the speakerphone, please lift the handset before pressing any keys. Your first question comes from Menno Holthuis with TD Cowen. Your line is now open.

[Menno Hulshof, Managing Director of Institutional Equity Research at TD Cowen]

Good morning, and thanks for taking my questions. At your Investor Day in December, you talked about material Free Cash Flow inflection starting in 2028. At that time, I believe you were anchoring to something close to strip gas prices and oil prices that were generally north of $70, which could now prove conservative. With that in mind, how would you frame Free Cash Flow inflection in 2028 relative to what you were talking about in December?

[Dion Hatcher, President and CEO at Vermilion Energy]

Thank you, Menno. I appreciate the question. You're right. When we went through the Investor Day, we used 70 WTI, CAD 3.50 AECO, and 13 CAD for TTF. Using those numbers, and to your point, the inflection is driven by the ramp up in Germany volumes with the gas that we see coming online there, but also of course, the Montney, where we've nearly built out the kit, and we'll get our production up to 28,000 BOEs a day. With that, we'll see the higher production, lower capital. We were running at about $2.70 per share of excess Free Cash Flow at that time, which, was again, based on that price deck.

[Dion Hatcher, President and CEO at Vermilion Energy]

Maybe I'll pass it over to Lars if you wanna kinda tie that price deck to potential upside from where we are today.

[Lars Glemser, VP and CEO at Vermilion Energy]

Yeah, no, it's a good observation, Menno, in terms of the run-up here that we've seen recently. We've updated the slide in our slide deck. This would be slide 13, to show what the impact of the run-up in commodity pricing is here. We're showing FFO for 2026, around $950 million. That's a 40% increase to our excess Free Cash Flow. Some of these near-term price moves haven't necessarily rippled through the curve yet, so that's something that we'll monitor. We stress the business as well as look at upside to the business on multiple price decks. We are capturing a pretty decent portion of what we've seen here the last week or so in terms of the commodity price run-up.

[Menno Hulshof, Managing Director of Institutional Equity Research at TD Cowen]

Yeah, thanks for that.

[Dion Hatcher, President and CEO at Vermilion Energy]

Thanks, Lars. Yeah.

[Menno Hulshof, Managing Director of Institutional Equity Research at TD Cowen]

Oh, sorry.

[Dion Hatcher, President and CEO at Vermilion Energy]

No, go ahead.

[Menno Hulshof, Managing Director of Institutional Equity Research at TD Cowen]

Yeah, I mean, I guess my second question ties in exactly into what you were just describing, and it's a standard hedging question. Like, there's a lot of backwardation, there's limited liquidity the further out you go. Are you getting anything done today? Are you looking to capitalize on that? Capitalize the wrong word. It's a horrible situation, but are there opportunities to hedge further? Is there a scenario where you hedge more aggressively than you have in the past?

[Lars Glemser, VP and CEO at Vermilion Energy]

Yeah. Menno, Lars here again. We're about 50% hedged on European gas for 2026, 53% on oil, and then 45% on North American gas. Some of the recent hedges that we've put in place, specifically on oil, have had participating structures. You know, calls that allow us to participate in this rally. On European gas specifically, we have been active hedging this past week, locking in some of the price increases here. In the past, and not saying that this will be the playbook here, but in the past, we have taken our hedge percentage on a commodity up to 70% if you see an opportunity to lock in revenue as a result of significant price increases. That is something that we'll continue to look at as a team.

[Lars Glemser, VP and CEO at Vermilion Energy]

We will also continue to monitor periods like 2027, 2028 as well to see if some of these moves are going to be structural throughout the curve and take advantage if there is something to take advantage of.

[Menno Hulshof, Managing Director of Institutional Equity Research at TD Cowen]

Thanks to you both. I'll turn it back.

[Dion Hatcher, President and CEO at Vermilion Energy]

Thank you, Menno.

[Operator]

Your next question comes from Amir Arif with ATB Capital. Your line is now open.

[Amir Arif, Managing Director of E&P Research at ATB Capital Markets]

Okay, thanks. Good morning, guys. Just a few quick questions. Just first on the Deep Basin well outperformance. Just curious, are you targeting more tier one locations or specific zones, or do you feel that this weakened well outperformance relative to your budget or your type curve can continue through the rest of 2026?

[Dion Hatcher, President and CEO at Vermilion Energy]

Oh, thanks, Amir. I'll pass over to Randy. He can't wait to answer those questions.

[Randy McQuaig, VP of North America at Vermilion Energy]

Yeah. Thanks. This, this really is kind of a continuation of the positive results that we showed in the investor day, where we had the strong kind of IP30 rates from the H2 of 2025 drill program. That's continued to perform. When you take the results from our current three-rig program that we're currently drilling, we've brought on an additional 14 wells, and they've also exceeded expectations. You know, it's worth noting that in that well mix, we have quite a wide range of well types and production areas. That really does speak to our depth of inventory. You know, as you mentioned, it's not all tier one locations. We are also drilling proof of concept wells.

[Randy McQuaig, VP of North America at Vermilion Energy]

It speaks to our depth of inventory and really the efforts of everybody on the Deep Basin teams to continue to achieve these strong results.

[Amir Arif, Managing Director of E&P Research at ATB Capital Markets]

Okay. It sounds like there's a good chance for these well outperformance to continue above the type curve. Would that be a fair comment?

[Randy McQuaig, VP of North America at Vermilion Energy]

Yeah. Based on the results to date, yes.

[Dion Hatcher, President and CEO at Vermilion Energy]

I mean, we think if we've got 40, 45 wells, Amir, for the program, then, you know, we're first quarter into it, but everything we're seeing in the first quarter is encouraging. You know, we can provide more updates as we go. To Randy's point, I think the team's doing an excellent job with the locations they're selecting and the execution. You know, as we get more data, we can revisit, where we are.

[Amir Arif, Managing Director of E&P Research at ATB Capital Markets]

Okay. Yeah. Those are great results. The second question, just on Australia, can you provide a little more granularity on when you expect Australian volumes to ramp back up to their to previous production levels?

[Dion Hatcher, President and CEO at Vermilion Energy]

Oh, thanks. I'll pass it to Darcy Kerwin, our VP International, and just talk with on Australia, the kinda plan there to kinda watch maybe a little more color on what happened, but more importantly, the plan to restore production here.

[Darcy Kerwin, VP of International & HSE at Vermilion Energy]

Thanks for that, Amir. I'll start by giving a bit of background on the issues that we've been having in Australia. In December of last year, while we're performing inspection and maintenance activities on our export system, we did have a small leak on one component of that system. Now, at the time, the system was not exporting. We were isolated for maintenance. Nonetheless, we did have a release of residual crude oil from that part of the system. We liaised pretty closely with the regulator, both with our initial spill response and then subsequent repair plans for that system. That did require an approved diving campaign to address the issue that we had. That diving campaign was completed by mid-January.

[Darcy Kerwin, VP of International & HSE at Vermilion Energy]

On February 6th, we did receive a notice from the regulator that limited the use of this export system. Kind of a standard regulator response in a situation like that. Later that same day, we did receive their approval to complete a planned loading after we formally responded to their issued notice. In parallel to all this, we had a tropical cyclone that had been building offshore Australia, and we did have a direct hit from a category three tropical cyclone on the weekend of February 7th. That shut in both our production operations and our export systems, which did delay an export that we had planned. We've conducted the damage assessments and are completing necessary repairs at this point in order to restart production operations on Wandoo.

[Darcy Kerwin, VP of International & HSE at Vermilion Energy]

We did manage to successfully complete an export of over 300,000 barrels last Friday, so February 27th. A little bit more longer term, we had already planned and budgeted for the replacement of portions of this export system. You know, we had to complete an engineering, receive bids in 2025. We've committed to fabrication starting this year and offshore installation in 2027, and that's kinda now a formal commitment we've made to the regulator to do that.

[Dion Hatcher, President and CEO at Vermilion Energy]

Oh, thanks, Darcy. Like, with respect to Q1, you know, we've assumed minimal volumes, Amir, post, you know, post the early Feb shutdown. You know, our Q1 was effectively... We just wanna diligently give the guys some time to restart, which they're in the process of doing. You know, going into Q2, we expect things to be back to normal, but at this point, we wanna be conservative for Q1.

[Amir Arif, Managing Director of E&P Research at ATB Capital Markets]

Okay. But by 2Q, you should be fully ramped back up. By the end of 2Q, for sure? Around there?

[Dion Hatcher, President and CEO at Vermilion Energy]

That's our plan. Yep.

[Amir Arif, Managing Director of E&P Research at ATB Capital Markets]

Okay. Okay. Sounds good. Just one final question. Just did notice some negative technical revisions on the 1P, 2P side on both North America and International. Could you just provide a little color behind that?

[Dion Hatcher, President and CEO at Vermilion Energy]

Just wanna make sure I heard you there, Amir. Negative technical revisions on the international side?

[Amir Arif, Managing Director of E&P Research at ATB Capital Markets]

It was on both the international and the North American side. There was some.

[Dion Hatcher, President and CEO at Vermilion Energy]

Gotcha. Gotcha.

[Amir Arif, Managing Director of E&P Research at ATB Capital Markets]

revisions on 1P and 2P. just some color around, what was driving that.

[Dion Hatcher, President and CEO at Vermilion Energy]

Okay. I'll pass it over to Lars. She'll take that one. Thanks.

[Laura Conrad, Vice President, Business Development at Vermilion Energy]

For sure. Thanks, Amir. Really when we look at the negative technicals, this is a result of us high-grading our reserves book, really primarily as a result of the M&A activity. When we think about in Canada, you know, the team in Canada under Randy have done a great job of high-grading locations, part of why we saw those great results in the Deep Basin. Now we've shifted our reserves book to reflect that. Really the negative technicals are because we've replaced locations with locations that we see as having better profitability. You can really see this because when you look at the numbers, you know, we've added 4x as much volume through drilling extensions as we removed in our technical revisions in the Deep Basin. A net positive overall, but negative from the ones that we replaced.

[Laura Conrad, Vice President, Business Development at Vermilion Energy]

As far as the international side of the books, we did have some minor negative technicals in the Netherlands, Germany and France. This is really to do with, again, shifting development plans between wells as well as our capital allocation decisions, prioritizing drilling in Canada and the Deep Basin and Montney and in Germany over development opportunities in France. Just really making sure that our reserves book matches our long-term plans as an organization.

[Darcy Kerwin, VP of International & HSE at Vermilion Energy]

Okay. That makes a lot of sense. It's mostly locations that have been taking out, not really production performance on existing wells. Is that fair?

[Laura Conrad, Vice President, Business Development at Vermilion Energy]

That's correct. Yeah.

[Darcy Kerwin, VP of International & HSE at Vermilion Energy]

Okay. Okay, sounds great. Thank you.

[Operator]

Your next question comes from Jeremy McCrea with BMO Capital Markets. Your line is now open.

[Jeremy McCrea, Oil & Gas Analyst at BMO Capital Markets]

Yeah. Hi, guys. Maybe this is probably back to Laura here. Can you give me a sense of what the M&A market looks like here now, just in terms of how many deals have you potentially looked at? Is there more deals potentially to come, you think? I got one more, follow-up question here as well.

[Dion Hatcher, President and CEO at Vermilion Energy]

Thanks, Jeremy. Just general M&A, where are we? Maybe, Laura, do you wanna provide a commentary there?

[Laura Conrad, Vice President, Business Development at Vermilion Energy]

For sure. you know, we've got a really great portfolio when it comes to looking at M&A opportunities, especially on the back of the Westbrick acquisition. I think whenever you do a rejig of your portfolio, it opens up further opportunities. you know, I'll give the standard M&A response. We look at everything, and when we have something to talk to, we'll let you know. I do think there's gonna be some interesting opportunities both in Canada and in Europe. you know, you've seen us core up the portfolio. Vermilion has done some divests recently, which is, you know, a little bit different than historically, but we're really trying to create that focused portfolio. M&A will be part of that when we see the right opportunities.

[Jeremy McCrea, Oil & Gas Analyst at BMO Capital Markets]

Okay. Okay. Maybe just a bit more follow-up with Amir's question here earlier. When these better wells were coming out of the Deep Basin, was there anything, I know you talked about, like, the geology looks good and you have a lot of tier one, but was there anything different that you did on the drill or completion design that led to the better results, or was it just almost 100% geology?

[Dion Hatcher, President and CEO at Vermilion Energy]

I'll just give the quick answer and pass it to Randy if he wants to elaborate. No, I think it's the rock, Jeremy. You know, as you know, the history is we've developed our legacy land position over the years, and I think teams did a great job of working that land base harder. In fact, now they've got a bunch of new inventory and high quality, and you put the, I would say, the high-performing teams of Vermilion and Westbrick together, and that brain trust has found a lot of opportunities, ability to extend wells and again, just make things happen. You know, I think it's really the rock quality we're seeing. Randy, anything I missed there or?

[Randy McQuaig, VP of North America at Vermilion Energy]

The only other thing I would add is the ability that, you know, the combination of our two land bases plus all the deals we've done, we've done lots of swaps and crown land sales that have created a bit more of land, so we're able to drill optimal locations as opposed to previous where we weren't. I would say on the drilling completions, nothing different than what we've done. We've continued to perform. Costs come in where we expect them to come in, so that's all good. It really comes down to geology and optimal from the land position.

[Dion Hatcher, President and CEO at Vermilion Energy]

Thanks, Randy.

[Jeremy McCrea, Oil & Gas Analyst at BMO Capital Markets]

Okay. Thanks, guys.

[Dion Hatcher, President and CEO at Vermilion Energy]

Thanks, Jeremy.

[Operator]

Your next question comes from Dennis Fong with CIBC World Markets. Your line is now open.

[Dennis Fong, Equity Research Analyst at CIBC World Markets]

Hi. Good morning, and thanks for taking my question. My first one is just around Osterheide. Obviously, that's fantastic to see the incremental uplift in terms of the production. As I recall, there was, I think from your Investor Day, you highlighted a little bit about infrastructure and local gathering constraints. Can you talk towards, we'll call it the durability of the higher throughput, and kind of what some of the considerations happen to be?

[Dion Hatcher, President and CEO at Vermilion Energy]

Thanks, Dennis. I mean, I'll give the quick answer then pass it to Darcy to elaborate. I mean, I think the guys, you know, have positioned it well, where we've got the well set up to be able to deliver, and we've seen higher demand, which again, probably no surprise with the situation in Europe, and it's been pretty steady here into the new year as well. Darcy, what am I missing there?

[Darcy Kerwin, VP of International & HSE at Vermilion Energy]

Yeah, I think that covers it. The only I would add, Dennis, the kinda infrastructure constraints that we had assumed are probably not as negative as we assumed initially. We expect that the production rates that we have seen as of late will continue flat kinda through 2026. There is some day-to-day kinda market variation depending on who's buying and sending gas to different points. Overall, I think there is more capacity in that part of the system than we had assumed, and the market seems to have a desire for that gas. I think we expect that that will stay flat.

[Dennis Fong, Equity Research Analyst at CIBC World Markets]

Okay, great. Does that also bode well then for some of the opportunities you were discussing around Wisselshorst?

[Darcy Kerwin, VP of International & HSE at Vermilion Energy]

Yeah, I think it does. Now, it's not, it's not a direct, same kinda tie-in point, but I think we.

[Dennis Fong, Equity Research Analyst at CIBC World Markets]

Mm-hmm.

[Darcy Kerwin, VP of International & HSE at Vermilion Energy]

We were, again, quite conservative on our assumptions on both the infrastructure and what the market in that area would take. I think directionally it's going in the right direction and yeah, I think we hope to see the same results on

[Dion Hatcher, President and CEO at Vermilion Energy]

Kind of Wisselshorst takeaway as we've seen in Wietze.

[Dennis Fong, Equity Research Analyst at CIBC World Markets]

Great. My second question, really we're shifting focus to the Netherlands. It's obviously great to see that you received the permits there, helping kinda confirm the timing of your drilling in the region later this year. Maybe more broadly, obviously understanding it's still incredibly early stage, can you talk to any shifts in terms of regulatory government discussions and discussions around kind of permitting timelines? I know that's been, we'll call it a not point of friction, but a bit of a bottleneck in terms of the pace of activity that you guys were looking to pursue in some of these regions. How has it been shifting? How has that been evolving through time? Has there been kind of an uptick even this past week?

[Dion Hatcher, President and CEO at Vermilion Energy]

Yeah. I'll pass it back to Darcy to walk you through.

[Darcy Kerwin, VP of International & HSE at Vermilion Energy]

Yeah, I think, Dennis, certainly the messages that we're constantly trying to send out about the benefits of domestic production in Europe is maybe falling on more open ears all of a sudden, so that can only be good for us. You asked specifically about regulators sticking to timelines. You know, I think we have seen and heard commitments, especially from the Dutch regulator, about sticking to their own timelines. We've had been quite successful lately in building up a nice pipeline of opportunities, both in the Netherlands and Germany. Just as a reminder, you know, we drilled two wells in the Netherlands, in Oppenhuizen in Q3 of last year. We discovered 16 Bcf of gas there at F&D cost less than $1.50. Then we brought those wells on production in Q4, right?

[Darcy Kerwin, VP of International & HSE at Vermilion Energy]

It was a pretty quick cycle time. You know, we brought Osterheide on as planned in 2025. As you mentioned, that continues to have strong production volumes and had record volumes for us in Q4. We’re progressing well on Wisselshorst with gas plant installation and the pipeline tie-in. We’re still on schedule to start up mid this year. You know, that’s again a significant discovery. Our net share is 43 Bcf there. On plan to drill 2 additional wells in the Netherlands in 2026. Plans to spud two more wells in Germany in early 2027. You know, I think probably one of the biggest differences, and you would have saw that in the investor day, is the opportunities that we’re drilling, and, you know, they’re more step-out exploration type opportunities. They’re bigger.

[Randy McQuaig, VP of North America at Vermilion Energy]

If we look at kind of the last 30 wells that we drilled in Europe versus the next 30, they’re kind of 2.5x to 3x the size of what we’ve drilled over what was a pretty successful decade of exploration drilling there with a 70% success rate. We’ll continue to work with the regulators and stakeholders to develop support for additional domestic gas production. We think it’s a strong message. It has security of supply implications that I think people are starting to listen more and more to. Darcy.

[Dennis Fong, Equity Research Analyst at CIBC World Markets]

Great. Really appreciate the color. I'll turn it back. Thanks.

[Dion Hatcher, President and CEO at Vermilion Energy]

Thanks, Dennis.

[Operator]

Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Josef Schachter with Shcachter Energy Research. Your line is now open.

[Josef Schachter, President at Schachter Energy Research]

Good morning, everyone, and thanks for taking my questions. Congratulations on Germany and Netherlands. I'm wondering about Ireland. Have you done any more work there, and is there much opportunity to maybe do some future drilling there? Then maybe if you can give us some idea of Croatia, if there's any further work that you're doing that might open up some opportunities in, you know, late 2026 or 2027 for growth in those areas.

[Dion Hatcher, President and CEO at Vermilion Energy]

Thanks, Josef. I'll just give the high level on Ireland, and Darcy, please fill in the blanks. Quick answers, you know, we don't see any drilling activity in Ireland. You know, Darcy just talked about, in particular, Germany, those prospects that are 30 Bcf, they're onshore. It's about $1.50/Mcf to drill those from a cap. What that means, Josef, like, when we look at it from a capital allocation, we really like Germany, and it just screams so well. You know, Ireland's a great asset. The team's optimizing. It's super steady and generates strong Free Cash Flow. You know, no plans internally to allocate capital to drilling in Ireland, just given the strong opportunities that we have in Germany. Yeah, there we go.

[Darcy Kerwin, VP of International & HSE at Vermilion Energy]

Yeah. I think, Joseph, you know, our focus certainly in Ireland has been on the existing well stock that we have and making sure that that plant is as efficient as possible, and we have the highest recovery as we can out of those the wells that are currently drilled.

[Dion Hatcher, President and CEO at Vermilion Energy]

With our activity over the last couple years here and the coring up, you know, we are progressing the potential divestment of some of the assets in Croatia. I know we can't say a lot, but Laura, any color to add to Croatia or CEE?

[Laura Conrad, Vice President, Business Development at Vermilion Energy]

Yeah. I think, I mean, we announced that we'll be exiting those areas. For Croatia in specific, there are nice drilling opportunities there. We just decided, as Dion just said, we really like Germany. You have to make tough decisions around where you're gonna focus your portfolio. From a Croatia perspective, I think there are some lovely opportunities, but they're not opportunities for us, and that's why we're divesting and focusing elsewhere.

[Dion Hatcher, President and CEO at Vermilion Energy]

Thanks, Laura.

[Josef Schachter, President at Schachter Energy Research]

Thanks for the color.

[Dion Hatcher, President and CEO at Vermilion Energy]

Okay. Thanks, Josef.

[Operator]

That are all for the questions at this time. I will now turn the call over to Dion for closing remarks.

[Dion Hatcher, President and CEO at Vermilion Energy]

With that, thank you again for participating in our Q4 call. Enjoy the rest of your day.

[Operator]

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Participants

Executives

• Darcy Kerwin, VP of International & HSE
• Dion Hatcher, President and CEO
• Lars Glemser, VP and CEO
• Laura Conrad, Vice President, Business Development
• Randy McQuaig, VP of North America

Analysts

• Amir Arif, Managing Director of E&P Research at ATB Capital Markets
• Dennis Fong, Equity Research Analyst at CIBC World Markets
• Jeremy McCrea, Oil & Gas Analyst at BMO Capital Markets
• Josef Schachter, President at Schachter Energy Research
• Menno Hulshof, Managing Director of Institutional Equity Research at TD Cowen