FAQs

1. How do shareholders benefit from Vermilion's pursuit of an international strategy?

Historically, Vermilion has been able to purchase production internationally at prices significantly below those being paid for similar properties in Western Canada. Vermilion's international diversification has also served to moderate the impact of changes in environmental, regulatory or fiscal policies in the regions in which we operate.  Vermilion's international operations also serve to provide the Company and our stakeholders with exposure to global commodities such as Brent crude oil and European natural gas.

2. Can Vermilion recapture corporate taxes paid in foreign jurisdictions?

Vermilion pays corporate income taxes on its international production that is not recoverable to shareholders. We evaluate the cost of acquiring production internationally and the netbacks generated on those assets on an after-tax basis compared to pre-tax valuations on available Canadian assets. If the comparison is not attractive, we do not pursue the acquisition. Conversely, Vermilion enjoys some advantages in those jurisdictions as we are able to execute tax-effective capital programs.

3. Does Vermilion have set policies on financial leverage, growth targets or payout ratios?

Vermilion aims to keep debt levels at or below 1.5 times forward cash flow, depending on the commodity price environment. At the high end of a commodity price cycle, Vermilion will keep a tighter rein on debt levels. At the bottom end of the cycle, debt may be allowed to exceed these targets to take advantage of attractive acquisition opportunities. Vermilion does not have any specific growth targets, but strives to maintain or grow production and reserves on a per-share basis. Over the past five years, Vermilion has delivered top quartile per-unit or per-share growth in both reserves and production.

4. Does Vermilion have any plans to further increase dividends?

Vermilion Energy Trust paid a steady stream of $0.17 per unit per month for almost five years, before announcing a 12% increase in cash distributions to $0.19 beginning with the January 15, 2008 payment date.  Our objectives are to deliver stable or growing dividends as a corporation, maintain a strong balance sheet, and reinvest capital to maximize production and asset value.

5. What is the anticipated level and taxability of dividends?

All 2010 dividends declared and paid to Canadian resident shareholders following the Conversion have been designated as eligible dividends for purposes of the Canadian Income Tax Act.  As such, Canadian resident shareholders will be entitled to an enhanced dividend tax credit normally applicable to eligible dividends received from a taxable Canadian Corporation.

All 2010 dividends declared and paid by Vermilion will be 100% taxable and included in income as a Qualifying Dividend for United States Federal Tax purposes. 

For full information on 2010 Income Tax Information, please refer to our section on Taxability .

6. What are the key risks facing Vermilion over the next twelve to eighteen months?

Most of the risks facing Vermilion are external risks, including the potential for rising interest rates, lower commodity prices and government policy changes. Oil companies are dependent on policies that allow access to prospective lands, and Vermilion works closely with all its stakeholders to ensure that it maintains environmental practices and procedures that comply with regulatory requirements and industry standards.  For a full discussion of risk factors, please refer to the Risk Factors section in our annual information form.

7. What is Vermilion's policy on hedging commodities and currencies?

The key objective of a hedging program is to manage fluctuations in the prices of crude oil and natural gas to provide a measure of certainty in dividends to shareholders.  We consider our risk management program as a form of insurance to minimize variability in cash flow over a period of time, as well as to protect/support benefits of any accretive acquisitions we may make. Vermilion's board governs and approves the hedging program.

8. What steps does Vermilion take to protect personal information provided by shareholders?

Collection:
Vermilion deems that information provided by shareholders (primarily contact information including but not limited to name, personal addresse(s), personal telephone number(s) and personal e-mail addresse(s)) is provided on a voluntary basis and therefore is provided with deemed consent to the company. Individuals may refuse to consent to the collection, use or disclosure of their personal information by Vermilion or withdraw a previously given consent at any time. Should consent for use and/or disclosure of personal information provided to Vermilion be withdrawn or insufficient in order for Vermilion to manage an ordinary business relationship, Vermilion may be prevented from proceeding with the relationship.

Accuracy:
Vermilion maintains the accuracy of the information it collects and therefore, the type and accuracy of information collected is solely contingent upon what is provided to Vermilion. Notification must be provided to Vermilion to update or make any changes to the personal information.

Use:
Personal information collected by Vermilion will be used solely for the purposes of carrying on ordinary business relationships with employees and third parties.

Disclosure & Retention:
All personal information collected by Vermilion will be stored in a secure manner that restricts the right of access to only those people who have a need to know. Vermilion will NOT disclose, reveal, share or otherwise disseminate any personal information to any one without consent unless the disclosure is

Required by law or within the course of legal undertakings;

Provided by the individual by formal or deemed consent or if the individual has chosen to not opt out if the option has been provided;

Otherwise compliant with privacy legislation.

Vermilion will retain personal information for a reasonable period of time and follow various retention schedules as required to effectively carry out its business in accordance with privacy legislation and other laws. Vermilion will use care in disposing of or destroying personal information to prevent unauthorized parties from gaining access to the information.

Access to information:
Employees and third parties may access personal information pertaining to themselves on record by providing a written request to Vermilion's privacy officer. Vermilion will make every reasonable effort to respond to the request within 45 calendar days of receiving the request. To the extent the individual can demonstrate that any objective information is out-of-date or inaccurate, Vermilion will update or correct it.

For further information regarding the company's privacy policy please contact the Privacy Officer by calling 403-269-4884.