Vermilion has shut-in approximately 1,000 boe/d of production in the Harlingen area of the Netherlands as it investigates the accuracy of recent surface subsidence measurements. Vermilion’s approved production licence at Harlingen contains surface subsidence limitations. Measurements are routinely taken over a representative area of the field. Recent measurements suggest subsidence may be greater than expected and questions the accuracy of Vermilion’s subsidence forecast model. Vermilion, in full cooperation with regulators, has agreed to voluntarily halt production in the affected areas until further study can be completed to better understand the subsidence in question and to more accurately predict future subsidence.

Other Vermilion production in the Netherlands will not be affected, nor are the future drilling plans. Vermilion is taking a strong, proactive approach to address this situation. Vermilion expects to submit a revised production plan for approval for certain parts of the field in the fourth quarter of 2008. Vermilion will reinstate the production in question once we have full approval from regulators which will not occur until the issue surrounding subsidence is understood by all impacted parties and a revised production permit has been approved. We believe a portion of the production could be reinstated by year-end 2008 with the timing regarding the balance unknown at this point.

Operational Activities

Activities in the Netherlands focused on permitting new wells for the 2009 drilling program. Subject to receipt of all approvals, Vermilion hopes to drill 4 to 5 wells in the Netherlands next year beginning in the second quarter.