Vermilion Energy NYSE: VET plans to increase spending on European natural gas and Australian oil projects in 2027, while raising its dividend and forecasting higher excess free cash flow despite the larger capital budget.
The company set 2027 exploration and development spending at CAD 675 million to CAD 725 million and production guidance at 122,000 to 126,000 barrels of oil equivalent per day. President and CEO Dion Hatcher said the production outlook represents approximately 2% absolute growth and 5% per-share growth from 2026.
Vermilion also plans to increase its 2027 base dividend by 4% to CAD 0.56 per share annually, marking a sixth consecutive year of increases, Hatcher said.
Quarterly cash flow supports debt reduction
For the third quarter, Vermilion reported CAD 237 million in funds flow from operations and CAD 146 million in exploration and development spending, resulting in more than CAD 90 million in free cash flow, Vice President and CFO Lars Glemser said.
The company paid CAD 21 million in dividends and repurchased CAD 20 million of shares during the quarter. Through the first nine months of 2026, it returned CAD 92 million to shareholders and reduced net debt by nearly CAD 180 million, according to Glemser.
European gas production fell temporarily to 81 million cubic feet per day during the quarter because of planned maintenance in Ireland and non-operated downtime in Germany. Glemser said production has been fully restored, positioning the business for approximately 100 million cubic feet per day in the fourth quarter.
Vermilion expects total fourth-quarter production to average 121,000 barrels of oil equivalent per day and full-year production to reach 122,400 barrels per day on CAD 620 million of exploration and development spending.
International projects drive 2027 spending increase
Vermilion expects to invest approximately CAD 315 million in its international operations in 2027, about 50% more than its 2026 budget. Canadian investment is broadly unchanged, Glemser said.
The 2027 budget includes approximately CAD 150 million in spending forecast to add production starting in 2028, Hatcher said. He expects exploration and development spending to return toward the low CAD 600 million range in 2028 as the projects are completed.
In Germany, Vermilion plans to drill two follow-up wells near its Wisselshorst discovery and build a pipeline to increase takeaway capacity from the original well. The pipeline is scheduled to start construction in early 2027 and enter service late that year, increasing capacity to approximately 15 million to 17 million cubic feet per day, said Darcy Kerwin, vice president of international and HSE.
The two follow-up wells are expected to begin producing by mid-2028 at a combined rate of approximately 15 million to 17 million cubic feet per day, Kerwin said. Their expected output would be limited by processing capacity at the site.
Vermilion also plans to drill two wells in the Netherlands in 2027 and two wells in Australia in the second half of the year. Australian production from the drilling program is expected to begin in early 2028. Kerwin said the company expects growth in Australia in 2028 compared with 2027, helped by the new wells and a return to normal operations after two cyclones disrupted production in 2026.
Montney target delayed
In Canada, Vermilion plans to invest CAD 385 million in its liquids-rich gas business, including drilling in the Deep Basin and development of its Mica Montney assets.
Glemser said revised timing for third-party gas processing infrastructure in Northeast British Columbia is expected to move Vermilion’s target of 28,000 barrels of oil equivalent per day in Montney production to early 2029 from mid-2028. The company is redirecting capital in the meantime to Deep Basin wells that use existing infrastructure.
Hatcher said Vermilion’s five-year excess free cash flow estimate has increased by CAD 200 million to CAD 1.9 billion. The forecast incorporates 2026 performance and prices, the 2027 budget and strip pricing, and the company’s earlier conservative price assumptions for 2028 through 2030.
About Vermilion Energy (NYSE:VET)
Vermilion Energy Inc is a Canadian-based international oil and natural gas producer headquartered in Calgary, Alberta. Founded in 1994, the company explores for, develops, and produces crude oil, condensate, natural gas liquids, and natural gas.
Vermilion operates a geographically diversified portfolio of assets in North America and Europe, with activities in Canada, the United States, France, the Netherlands, Germany, and Croatia. Its production includes conventional and unconventional oil and gas, with operations focused on developing reserves and supplying energy to regional and international markets.
The company's shares trade on the Toronto Stock Exchange and the New York Stock Exchange under the symbol VET.
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