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Vermilion Energy Inc. Announces 2017 Year-End Summary Reserves and Resource Information

March 1, 2018

CALGARY, March 1, 2018 /CNW/ - Vermilion Energy Inc. ("Vermilion", the "Company", "We" or "Our") (TSX, NYSE: VET) is pleased to announce summary 2017 year-end reserves and resource information.  The estimates of reserves and resources and other oil and gas information contained in this news release have been estimated by GLJ Petroleum Consultants Ltd. ("GLJ") effective as at December 31, 2017 and prepared in accordance with National Instrument 51-101 "Standards of Disclosure for Oil and Gas Activities" of the Canadian Securities Administrators ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGEH").  For additional information about Vermilion, including Vermilion's statement of reserves data and other information in Form 51-101F1, report on reserves data by independent qualified reserves evaluator or auditor in Form 51-101F2 and report of management and directors on oil and gas disclosure in Form 51-101F3, please review the Company's Annual Information Form for the year ended December 31, 2017, to be filed on March 1, 2018 and available on SEDAR at www.sedar.com and on the SEC's EDGAR system at www.sec.gov/edgar.shtml.

HIGHLIGHTS

  • Total proved ("1P") reserves increased by 0.5% to 176.6 mmboe, while total proved plus probable ("2P") reserves increased 3% to 298.5 mmboe. We replaced 103% and 134% of production at the 1P and 2P levels respectively in 2017.

  • Finding and Development ("F&D")(2) and Finding, Development and Acquisition ("FD&A")(2) costs, including Future Development Capital ("FDC") for 2017 on a 2P basis increased to $10.57/boe and $11.24/boe, compared to $5.57/boe and $6.62/boe in 2016, respectively. Our three-year F&D and FD&A costs, including FDC, on a 2P basis were $8.23/boe and $8.87/boe, respectively. The largest driver of the increase in F&D cost was the strengthening of the Euro relative to the Canadian dollar in GLJ's foreign exchange rate forecast as compared to the previous year, which increased FDC for our European properties. Operating Recycle Ratio(3) (including FDC) was 2.8x in 2017.

  • Proved Developed Producing ("PDP") reserves increased by 1.3% to 123.8 mmboe at an average F&D cost (including FDC) of $12.41/boe resulting in a PDP Operating Recycle Ratio(3) (including FDC) of 2.4x. PDP reserves represent 70% of 1P reserves.

  • At year-end 2017, 2P reserves were comprised of 29% Brent-based light crude, 15% North American-based light crude, 12% natural gas liquids, 19% European natural gas and 25% North American natural gas.

  • We continued to build our strong resource base in our West Pembina area in Alberta. We added 29 (23.9 net) 2P locations in the condensate-rich portion of the Mannville gas play in West Pembina at an average reserves addition per well of approximately 520 mboe. The West Pembina-Mannville reserves are Vermilion's largest resource base, representing over 40% of total Canadian 2P reserves at December 31, 2017.

  • In the Ferrier area of Alberta we added nine (7.1 net) 2P locations in the liquids-rich Mannville gas play at an average reserve addition per well of approximately 1,100 mboe.

  • Our independent GLJ 2017 Resource Assessment(4) indicates risked low, best, and high estimates for contingent resources in the Development Pending category of 107.3(4) mmboe, 176.7(4) mmboe, and 253.6(4) mmboe, respectively. The GLJ 2017 Resource Assessment also indicates risked low, best, and high estimates for contingent resources in the Development Unclarified category of 7.5(4) mmboe, 32.8(4) mmboe, and 46.1(4) mmboe, respectively. Over 80% of our risked contingent resources reside in the Development Pending category. Prospective resources were assessed at risked low, best and high estimates of 51.5(4) mmboe, 153.4(4) mmboe, and 260.4(4) mmboe. Our contingent and prospective resource bases remain a source of reserve additions, with 20.5 mmboe of contingent resources and 1.7 mmboe of prospective resources converted to 2P reserves during 2017.

(1)

As evaluated by GLJ Petroleum Consultants Ltd. ("GLJ") in a report dated February 1, 2018 with an effective date of December 31, 2017.

(2)

F&D (finding and development) and FD&A (finding, development and acquisition) costs are used as a measure of capital efficiency and are calculated by dividing the applicable capital expenditures for the period, including the change in undiscounted future development capital ("FDC"), by the change in the reserves, incorporating revisions and production, for the same period.

(3)

"Operating Recycle Ratio" is a measure of capital efficiency calculated by dividing the Operating Netback by the cost of adding reserves (F&D cost).  "Operating Netback" is calculated as sales less royalties, operating expense, transportation costs, PRRT and realized hedging gains and losses presented on a per unit basis.

(4)

Vermilion retained GLJ to conduct an independent resource evaluation dated February 1, 2018 to assess contingent and prospective resources across all of the Company's key operating regions with an effective date of December 31, 2017 (the "GLJ 2017 Resource Assessment").  The aggregate associated chance of development for each of the low, best and high estimate for contingent resources in the Development Pending category are 84%, 83% and 82%, respectively.  The aggregate associated chance of development for each of the low, best and high estimate for contingent resources in the Development Unclarified category are 56%, 46% and 47%, respectively.  The aggregate associated chance of commerciality for each of the low, best and high estimate for prospective resources in the Prospect category are 23%, 22% and 22%, respectively.  There is uncertainty that it will be commercially viable to produce any portion of the resources.  For further information, see the "Contingent Resources" section of this news release.

 

DISCLAIMER

Certain statements included or incorporated by reference in this news release may constitute forward looking statements or financial outlooks under applicable securities legislation.  Such forward looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", or similar words suggesting future outcomes or statements regarding an outlook.  Forward looking statements or information in this news release may include, but are not limited to:

  • capital expenditures;
  • business strategies and objectives;
  • estimated reserve quantities and the discounted present value of future net cash flows from such reserves;
  • petroleum and natural gas sales;
  • future production levels (including the timing thereof) and rates of average annual production growth, estimated contingent resources and prospective resources;
  • exploration and development plans;
  • acquisition and disposition plans and the timing thereof;
  • operating and other expenses, including the payment of future dividends;
  • royalty and income tax rates;
  • the timing of regulatory proceedings and approvals; and
  • the estimate of Vermilion's share of the expected natural gas production from the Corrib field.

Such forward-looking statements or information are based on a number of assumptions all or any of which may prove to be incorrect.  In addition to any other assumptions identified in this document, assumptions have been made regarding, among other things:

  • the ability of the Company to obtain equipment, services and supplies in a timely manner to carry out its activities in Canada and internationally;
  • the ability of the Company to market crude oil, natural gas liquids and natural gas successfully to current and new customers;
  • the timing and costs of pipeline and storage facility construction and expansion and the ability to secure adequate product transportation;
  • the timely receipt of required regulatory approvals;
  • the ability of the Company to obtain financing on acceptable terms;
  • foreign currency exchange rates and interest rates;
  • future crude oil, natural gas liquids and natural gas prices; and
  • Management's expectations relating to the timing and results of development activities.

Although the Company believes that the expectations reflected in such forward looking statements or information are reasonable, undue reliance should not be placed on forward looking statements because the Company can give no assurance that such expectations will prove to be correct.  Financial outlooks are provided for the purpose of understanding the Company's financial strength and business objectives and the information may not be appropriate for other purposes.  Forward looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Company and described in the forward looking statements or information.  These risks and uncertainties include but are not limited to:

  • the ability of management to execute its business plan;
  • the risks of the oil and gas industry, both domestically and internationally, such as operational risks in exploring for, developing and producing crude oil, natural gas liquids and natural gas;
  • risks and uncertainties involving geology of crude oil, natural gas liquids and natural gas deposits;
  • risks inherent in the Company's marketing operations, including credit risk;
  • the uncertainty of reserves estimates and reserves life and estimates of resources and associated expenditures;
  • the uncertainty of estimates and projections relating to production, costs and expenses;
  • potential delays or changes in plans with respect to exploration or development projects or capital expenditures;
  • the Company's ability to enter into or renew leases on acceptable terms;
  • fluctuations in crude oil, natural gas liquids and natural gas prices, foreign currency exchange rates and interest rates;
  • health, safety and environmental risks;
  • uncertainties as to the availability and cost of financing;
  • the ability of the Company to add production and reserves through exploration and development activities;
  • general economic and business conditions;
  • the possibility that government policies or laws may change or governmental approvals may be delayed or withheld;
  • uncertainty in amounts and timing of royalty payments;
  • risks associated with existing and potential future law suits and regulatory actions against the Company; and
  • other risks and uncertainties described elsewhere in the annual information form of the Company for the year ended December 31, 2017 or in the Company's other filings with Canadian securities authorities.

The forward-looking statements or information contained in this news release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws.

RESERVES, FUTURE NET REVENUE AND OTHER OIL AND GAS INFORMATION

The following is a summary of the oil and natural gas reserves and the value of future net revenue of Vermilion as evaluated by GLJ, independent petroleum engineering consultants in Calgary in a report dated February 1, 2018 with an effective date of December 31, 2017 (the "GLJ 2017 Reserves Evaluation").  The GLJ 2017 Reserves Evaluation was prepared in accordance with National Instrument 51-101 and COGEH. 

Reserves and other oil and gas information in this news release is effective December 31, 2017 unless otherwise stated.

All evaluations of future net production revenue set forth in the tables below are stated after overriding and lessor royalties, Crown royalties, freehold royalties, mineral taxes, direct lifting costs, normal allocated overhead and future capital investments, including abandonment and reclamation obligations.  Future net production revenues estimated by the GLJ 2017 Reserves Evaluation do not represent the fair market value of the reserves.  Other assumptions relating to the costs, prices for future production and other matters are included in the GLJ 2017 Reserve Evaluation.  There is no assurance that the future price and cost assumptions used in the GLJ 2017 Reserves Evaluation will prove accurate and variances could be material.

Reserves for Australia, Canada, France, Germany, Ireland, the Netherlands and the United States are established using deterministic methodology.  Total proved reserves are established at the 90 percent probability (P90) level.  There is a 90 percent probability that the actual reserves recovered will be equal to or greater than the P90 reserves.  Total proved plus probable reserves are established at the 50 percent probability (P50) level.  There is a 50 percent probability that the actual reserves recovered will be equal to or greater than the P50 reserves.

Estimates of reserves have been made assuming that development of each property, in respect of which estimates have been made, will occur without regard to the availability of funding required for that development.

With respect to finding and development costs, the aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for that year.

Pricing used in the forecast price estimates is set forth in the table below and referenced in the notes to subsequent tables.

Table 1: Forecast Prices used in Estimates (1)


Light Crude Oil and
& Medium Crude Oil



Crude Oil



Conventional
Natural Gas
Canada



Conventional
Natural Gas
Europe



Natural Gas
Liquids

Inflation
Rate

Exchange
Rate

Exchange
Rate

Year

WTI
Cushing
Oklahoma
($US/bbl)



Edmonton
Par Price
40? API
($Cdn/bbl)



Cromer
Medium
29.3? API
($Cdn/bbl)



Brent Blend
FOB
North Sea
($US/bbl)



AECO
Gas Price
($Cdn/MMBtu)



National Balancing
Point
(UK)
($US/MMBtu)



FOB
Field Gate
($Cdn/bbl)

Percent
Per Year

($US/$Cdn)

($Cdn/EUR)

2017

50.88



62.78



59.90



54.16



2.16



5.63



46.67

1.60

0.77

1.46

Forecast























2018

59.00



70.25



65.34



65.50



2.20



6.25



56.85

2.00

0.79

1.49

2019

59.00



70.25



65.34



63.50



2.54



6.50



53.46

2.00

0.79

1.46

2020

60.00



70.31



65.39



63.00



2.88



6.75



53.18

2.00

0.80

1.44

2021

66.00



72.84



67.74



66.00



3.24



7.00



54.74

2.00

0.81

1.42

2022

69.00



75.61



70.32



69.00



3.47



7.15



56.37

2.00

0.82

1.40

2023

72.00



78.31



72.83



72.00



3.58



7.30



58.31

2.00

0.83

1.39

2024

75.00



81.93



76.19



75.00



3.66



7.45



60.94

2.00

0.83

1.39

2025

78.00



85.54



79.55



78.00



3.73



7.60



63.57

2.00

0.83

1.39

2026

80.33



88.35



82.16



80.33



3.80



7.75



65.61

2.00

0.83

1.39

2027

81.88



90.22



83.90



81.88



3.88



7.90



66.96

2.00

0.83

1.39

Thereafter

+2.0%/yr



+2.0%/yr



+2.0%/yr



+2.0%/yr



+2.0%/yr



+2.0%/yr



+2.0%/yr

+2.0%/yr

0.83

1.39

Note:


(1)

The pricing assumptions used in the GLJ Report with respect to net present value of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above.  The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation.  GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101.

 

All forecast prices in the tables above are provided by GLJ.  For 2017, the price of crude oil in the United States is based on WTI. The benchmark price for Canadian crude oil is Edmonton Par and Canadian natural gas is priced against AECO.  The benchmark price for Australia, France and Germany crude oil is Dated Brent.  The price of our natural gas in Ireland is based on the NBP index.  The price of Vermilion's natural gas in the Netherlands and Germany is based on the TTF day/month-ahead index, as determined on the Title Transfer Facility Virtual Trading Point.   For the year ended December 31, 2017, the average realized sales prices before hedging were $57.64 per bbl (United States) for WTI, $51.36 per bbl for Canadian-based crude oil, condensate and NGLs and $2.34 per Mcf for Canadian natural gas, $73.99 per bbl (Australia), $67.08 per bbl (France) for Brent-based crude oil, $7.19 per Mcf (Ireland), $7.18 per Mcf (Netherlands), and $6.38 per Mcf (Germany).

The following table summarizes the capital expenditures made by Vermilion on oil and gas properties for the year ended December 31, 2017:

Table 2: Capital Costs Incurred


Acquisition Costs





(M$)

Proved
Properties


Unproved
Properties


Exploration
Costs


Development
Costs


Total
Costs

Australia




29,896


29,896

Canada

22,011




148,211


170,222

Croatia



2,764



2,764

France



2,294


69,026


71,320

Germany



3,366


5,710


9,076

Hungary



2,596



2,596

Ireland




544


544

Netherlands



16,468


14,956


31,424

United States

3,403




19,058


22,461

Total

25,414



32,103


287,401


344,918

 

The following table sets forth the reserve life index based on total proved and proved plus probable reserve and fourth quarter 2017 production of 72,821 boe/d.

Table 3: Reserve Life Index

Commodity

Production


Reserve Life Index (years)


Fourth Quarter 2017


Total Proved


Proved Plus Probable

Crude oil, condensate and natural gas liquids (bbl/d)

33,109


8.5


13.8

Natural gas (mmcf/d)

238.27


5.1


9.1

Oil Equivalent (boe/d)

72,821


6.6


11.2

 


 

The following tables provide reserves data and a breakdown of future net revenue by component and production group using forecast prices and costs.  For Canada, the tables following include Alberta gas cost allowance.

The following tables may not total due to rounding.

Table 4: Oil and Gas Reserves - Based on Forecast Prices and Costs (1)


Light Crude Oil & Medium
Crude Oil



Heavy Oil



Tight Oil



Conventional Natural Gas


Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)


(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(MMcf)



(MMcf)

Proved Developed Producing (3) (5) (6)























Australia

9,065



9,065













Canada

11,148



10,219











139,772



128,023

France

35,944



33,265











8,619



7,939

Germany

5,008



4,880











29,791



26,881

Ireland













81,803



81,803

Netherlands













37,296



24,721

United States

982



782











1,071



854

Total Proved Developed Producing

62,147



58,211











298,352



270,221


















Shale Gas


Coal Bed Methane


Natural Gas Liquids



BOE


Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)


(MMcf)



(MMcf)



(MMcf)



(MMcf)



(Mbbl)



(Mbbl)



(Mboe)



(Mboe)

Proved Developed Producing (3) (5) (6)

















Australia













9,065



9,065

Canada

60



56



2,330



2,153



11,215



9,102



46,057



41,026

France













37,381



34,588

Germany













9,973



9,360

Ireland













13,634



13,634

Netherlands









137



90



6,353



4,210

United States









147



117



1,308



1,041

Total Proved Developed Producing

60



56



2,330



2,153



11,499



9,309



123,771



112,924










Light Crude Oil & Medium
Crude Oil


Heavy Oil


Tight Oil



Conventional Natural Gas


Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)


(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(MMcf)



(MMcf)

Proved Developed Non-Producing (3) (5) (7)

















Australia

350



350














Canada

878



768











9,420



8,489

France

562



492













Germany

539



521











8,959



8,156

Ireland















Netherlands













21,010



20,482

United States















Total Proved Developed Non-Producing

2,329



2,131











39,389



37,127










Shale Gas



Coal Bed Methane



Natural Gas Liquids



BOE


Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)


(MMcf)



(MMcf)



(MMcf)



(MMcf)



(Mbbl)



(Mbbl)



(Mboe)



(Mboe)

Proved Developed Non-Producing (3) (5) (7)


















Australia













350



350

Canada

1,079



1,025



2,360



2,200



410



309



3,431



3,029

France













562



492

Germany













2,032



1,880

Ireland















Netherlands









56



54



3,558



3,468

United States















Total Proved Developed Non-Producing

1,079



1,025



2,360



2,200



466



363



9,933



9,219










Light Crude Oil & Medium
Crude Oil


Heavy Oil


Tight Oil


Conventional Natural Gas


Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)


(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(MMcf)



(MMcf)

Proved Undeveloped (3) (8)
















Australia

1,500



1,500













Canada

7,634



6,929











91,104



83,603

France

4,140



3,767











64



64

Germany

241



235











2,361



1,939

Ireland















Netherlands













2,620



2,620

United States

3,300



2,693











3,309



2,700

Total Proved Undeveloped

16,815



15,124











99,458



90,926


















Shale Gas


Coal Bed Methane


Natural Gas Liquids


BOE


Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)


(MMcf)



(MMcf)



(MMcf)



(MMcf)



(Mbbl)



(Mbbl)



(Mboe)



(Mboe)

Proved Undeveloped (3) (8)
















Australia













1,500



1,500

Canada





2,023



1,849



8,679



7,689



31,834



28,860

France













4,151



3,778

Germany













635



558

Ireland















Netherlands













437



437

United States









454



370



4,306



3,513

Total Proved Undeveloped





2,023



1,849



9,133



8,059



42,863



38,646










Light Crude Oil & Medium
Crude Oil


Heavy Oil


Tight Oil


Conventional Natural Gas


Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)


(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(MMcf)



(MMcf)

Proved (3)
















Australia

10,915



10,915













Canada

19,660



17,916











240,296



220,115

France

40,646



37,524











8,683



8,003

Germany

5,788



5,636











41,111



36,976

Ireland













81,803



81,803

Netherlands













60,926



47,823

United States

4,282



3,475











4,380



3,554

Total Proved

81,291



75,466











437,199



398,274










Shale Gas



Coal Bed Methane



Natural Gas Liquids



BOE


Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)


(MMcf)



(MMcf)



(MMcf)



(MMcf)



(Mbbl)



(Mbbl)



(Mboe)



(Mboe)

Proved (3)
















Australia













10,915



10,915

Canada

1,139



1,081



6,713



6,202



20,304



17,100



81,322



72,916

France













42,093



38,858

Germany













12,640



11,799

Ireland













13,634



13,634

Netherlands









193



144



10,347



8,115

United States









601



487



5,613



4,554

Total Proved

1,139



1,081



6,713



6,202



21,098



17,731



176,564



160,791













Light Crude Oil & Medium
Crude Oil



Heavy Oil



Tight Oil



Conventional Natural Gas


Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)


(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(MMcf)



(MMcf)

Probable (4)
















Australia

4,650



4,650













Canada

12,885



11,417











181,055



164,336

France

21,786



20,115











1,854



1,769

Germany

3,000



2,931











53,134



47,092

Ireland













51,389



51,389

Netherlands













44,380



35,383

United States

7,073



5,827











7,520



6,194

Total Probable

49,394



44,940











339,332



306,163


















Shale Gas



Coal Bed Methane



Natural Gas Liquids



BOE


Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)


(MMcf)



(MMcf)



(MMcf)



(MMcf)



(Mbbl)



(Mbbl)



(Mboe)



(Mboe)

Probable (4)
















Australia













4,650



4,650

Canada

214



203



3,053



2,846



14,282



12,186



57,887



51,501

France













22,095



20,410

Germany













11,856



10,780

Ireland













8,565



8,565

Netherlands









119



90



7,516



5,987

United States









1,031



849



9,357



7,708

Total Probable

214



203



3,053



2,846



15,432



13,125



121,926



109,601













Light Crude Oil & Medium
Crude Oil



Heavy Oil



Tight Oil



Conventional Natural Gas


Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)


(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(MMcf)



(MMcf)

Proved Plus Probable (3) (4)
















Australia

15,565



15,565













Canada

32,545



29,333











421,351



384,451

France

62,432



57,639











10,537



9,772

Germany

8,788



8,567











94,245



84,068

Ireland













133,192



133,192

Netherlands













105,306



83,206

United States

11,355



9,302











11,900



9,748

Total Proved Plus Probable

130,685



120,406











776,531



704,437










Shale Gas



Coal Bed Methane



Natural Gas Liquids



BOE


Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)



Gross (2)



Net (2)


(MMcf)



(MMcf)



(MMcf)



(MMcf)



(Mbbl)



(Mbbl)



(Mboe)



(Mboe)

Proved Plus Probable (3) (4)
















Australia













15,565



15,565

Canada

1,353



1,284



9,766



9,048



34,586



29,286



139,209



124,416

France













64,188



59,268

Germany













24,496



22,578

Ireland













22,199



22,199

Netherlands









312



234



17,863



14,102

United States









1,632



1,336



14,970



12,263

Total Proved Plus Probable

1,353



1,284



9,766



9,048



36,530



30,856



298,490



270,391



Notes:


(1)

The pricing assumptions used in the GLJ Report with respect to net present value of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth below.  See "Forecast Prices used in Estimates".  The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation.  GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101.

(2)

"Gross Reserves" are Vermilion's working interest (operating or non-operating) share before deduction of royalties and without including any royalty interests of Vermilion.  "Net Reserves" are Vermilion's working interest (operating or non-operating) share after deduction of royalty obligations, plus Vermilion's royalty interests in reserves.

(3)

"Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable.  It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

(4)

"Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves.  It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

(5)

"Developed" reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production.

(6)

"Developed Producing" reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate.  These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.

(7)

"Developed Non-Producing" reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown.

(8)

"Undeveloped" reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production.  They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned.

 

Table 5: Net Present Values of Future Net Revenue - Based on Forecast Prices and Costs (1)


Before Deducting Future Income Taxes Discounted At


After Deducting Future Income Taxes Discounted At

(M$)

0%


5%


10%


15%


20%


0%


5%


10%


15%


20%

Proved Developed Producing (2) (4) (5)




















Australia

(17,017)


90,880


132,474


146,048


147,713


77,180


124,390


136,979


136,121


130,383

Canada

929,867


770,860


647,843


559,708


494,964


929,867


770,860


647,843


559,708


494,964

France

1,791,774


1,315,070


1,030,403


849,032


725,407


1,473,144


1,091,894


858,839


708,168


604,390

Germany

276,577


249,619


206,965


174,876


151,703


276,578


249,619


206,965


174,876


151,703

Ireland

389,204


376,115


346,327


316,408


290,143


389,204


376,115


346,327


316,408


290,143

Netherlands

48,794


60,781


66,245


68,260


68,404


48,793


60,781


66,245


68,260


68,404

United States

44,617


34,550


28,272


24,106


21,170


44,619


34,550


28,272


24,106


21,170

Total Proved Developed Producing

3,463,816


2,897,875


2,458,529


2,138,438


1,899,504


3,239,385


2,708,209


2,291,470


1,987,647


1,761,157

Proved Developed Non-Producing (2) (4) (6)











Australia

28,079


24,122


20,869


18,180


15,942


28,079


24,122


20,869


18,180


15,942

Canada

60,804


42,405


32,416


26,238


22,048


60,804


42,405


32,417


26,238


22,048

France

10,082


8,113


6,095


4,559


3,438


6,848


5,499


3,953


2,763


1,896

Germany

49,825


37,600


27,510


20,411


15,501


32,059


29,369


23,502


18,374


14,426

Ireland










Netherlands

70,140


70,244


67,599


63,916


59,989


53,099


54,167


52,375


49,452


46,205

United States










Total Proved Developed Non-Producing

218,930


182,484


154,489


133,304


116,918


180,889


155,562


133,116


115,007


100,517

Proved Undeveloped (2) (7)











Australia

54,981


43,263


34,175


27,105


21,564


25,101


18,532


13,890


10,524


8,032

Canada

524,830


354,396


246,584


175,252


126,009


397,236


281,016


202,741


148,193


108,836

France

177,851


128,923


96,156


73,638


57,592


127,650


88,876


63,091


45,660


33,460

Germany

17,161


11,696


8,012


5,495


3,737


12,154


8,910


6,412


4,551


3,166

Ireland










Netherlands

10,559


8,825


7,405


6,255


5,323


7,921


6,405


5,174


4,189


3,401

United States

110,911


64,500


39,231


24,394


15,111


105,425


62,306


38,295


23,973


14,912

Total Proved Undeveloped

896,293


611,603


431,563


312,139


229,336


675,487


466,045


329,603


237,090


171,807

Proved (2)












Australia

66,043


158,265


187,518


191,333


185,219


130,360


167,044


171,738


164,825


154,357

Canada

1,515,501


1,167,661


926,843


761,198


643,021


1,387,907


1,094,281


883,001


734,139


625,848

France

1,979,707


1,452,106


1,132,654


927,229


786,437


1,607,642


1,186,269


925,883


756,591


639,746

Germany

343,563


298,915


242,487


200,782


170,941


320,791


287,898


236,879


197,801


169,295

Ireland

389,204


376,115


346,327


316,408


290,143


389,204


376,115


346,327


316,408


290,143

Netherlands

129,493


139,850


141,249


138,431


133,716


109,813


121,353


123,794


121,901


118,010

United States

155,528


99,050


67,503


48,500


36,281


150,044


96,856


66,567


48,079


36,082

Total Proved

4,579,039


3,691,962


3,044,581


2,583,881


2,245,758


4,095,761


3,329,816


2,754,189


2,339,744


2,033,481

Probable (3)












Australia

154,459


149,732


125,619


102,719


84,652


93,591


88,478


72,912


58,670


47,633

Canada

1,363,584


814,347


539,091


384,014


288,722


1,003,602


592,655


390,429


278,355


210,521

France

1,200,008


673,205


431,159


299,927


219,972


879,913


477,377


292,831


193,985


134,663

Germany

414,585


244,149


151,416


100,767


70,641


293,314


172,157


104,603


68,306


47,063

Ireland

350,695


246,321


182,785


141,844


114,117


350,695


246,321


182,785


141,844


114,117

Netherlands

197,136


167,242


141,871


121,179


104,496


130,277


108,388


89,527


74,196


61,980

United States

353,649


198,078


124,603


84,897


61,103


278,493


157,846


100,547


69,404


50,591

Total Probable

4,034,116


2,493,074


1,696,544


1,235,347


943,703


3,029,885


1,843,222


1,233,634


884,760


666,568

Proved Plus Probable (2) (3)












Australia

220,502


307,997


313,137


294,052


269,871


223,951


255,522


244,650


223,495


201,990

Canada

2,879,085


1,982,008


1,465,934


1,145,212


931,743


2,391,509


1,686,936


1,273,430


1,012,494


836,369

France

3,179,715


2,125,311


1,563,813


1,227,156


1,006,409


2,487,555


1,663,646


1,218,714


950,576


774,409

Germany

758,148


543,064


393,903


301,549


241,582


614,105


460,055


341,482


266,107


216,358

Ireland

739,899


622,436


529,112


458,252


404,260


739,899


622,436


529,112


458,252


404,260

Netherlands

326,629


307,092


283,120


259,610


238,212


240,090


229,741


213,321


196,097


179,990

United States

509,177


297,128


192,106


133,397


97,384


428,537


254,702


167,114


117,483


86,673

Total Proved Plus Probable

8,613,155


6,185,036


4,741,125


3,819,228


3,189,461


7,125,646


5,173,038


3,987,823


3,224,504


2,700,049

Notes:

(1)    

The pricing assumptions used in the GLJ Report with respect to net present value of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth below.  See "Forecast Prices used in Estimates". The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation. GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101.

(2)

"Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable.  It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

(3)

"Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves.  It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

(4)

"Developed" reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production.

(5)

"Developed Producing" reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate.  These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.

(6)

"Developed Non-Producing" reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown.

(7)

"Undeveloped" reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production.  They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned.

 

Table 6: Total Future Net Revenue (Undiscounted) Based on Forecast Prices and Costs (1)

(M$)

Revenue


Royalties


Operating
Costs


Capital
Development
Costs


Abandonment
and
Reclamation
Costs


Future Net
Revenue
Before
Income Taxes


Future
Income Taxes


Future Net
Revenue
After
Income Taxes

Proved (2)














Australia

978,200



564,074


100,883


247,200


66,043


(64,317)


130,360

Canada

3,488,501


344,924


1,118,811


412,323


96,942


1,515,501


127,594


1,387,907

France

3,591,175


272,788


997,961


125,874


214,845


1,979,707


372,065


1,607,642

Germany

853,470


44,503


298,194


20,409


146,801


343,563


22,772


320,791

Ireland

643,435



170,325


18,907


64,999


389,204



389,204

Netherlands

546,125


104,158


203,425


28,166


80,883


129,493


19,680


109,813

United States

404,551


112,559


65,468


66,993


4,003


155,528


5,484


150,044

Total Proved

10,505,457


878,932


3,418,258


773,555


855,673


4,579,039


483,278


4,095,761

Proved Plus Probable (2) (3)














Australia

1,432,958



775,932


166,801


269,723


220,502


(3,449)


223,951

Canada

6,224,592


647,349


1,828,575


744,672


124,911


2,879,085


487,576


2,391,509

France

5,718,238


433,546


1,481,349


346,196


277,432


3,179,715


692,160


2,487,555

Germany

1,672,382


105,662


507,204


104,899


196,469


758,148


144,043


614,105

Ireland

1,113,630



270,554


38,178


64,999


739,899



739,899

Netherlands

950,074


180,041


296,854


53,369


93,181


326,629


86,539


240,090

United States

1,137,518


308,001


166,074


145,966


8,300


509,177


80,640


428,537

Total Proved Plus Probable

18,249,392


1,674,599


5,326,542


1,600,081


1,035,015


8,613,155


1,487,509


7,125,646

Notes:

(1)

The pricing assumptions used in the GLJ Report with respect to net present value of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth below.  See "Forecast Prices used in Estimates". The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation. GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101.

(2)

"Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable.  It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

(3)

"Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves.  It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

 

Table 7: Future Net Revenue by Production Group Based on Forecast Prices and Costs (1)


Future Net Revenue
Before Income Taxes (2)
(Discounted at 10% Per Year)


Unit Value

Proved Developed Producing

(M$)


($/boe)

Light Crude Oil & Medium Crude Oil (3)

1,764,235


27.51

Heavy Oil (3)


Conventional Natural Gas (4)

693,722


14.33

Shale Gas

122


8.56

Coal Bed Methane

450


1.25

Total Proved Developed Producing

2,458,529


21.77

Proved Developed Non-Producing




Light Crude Oil & Medium Crude Oil (3)

43,821


18.44

Heavy Oil (3)


Conventional Natural Gas (4)

108,904


17.4

Shale Gas

984


4.54

Coal Bed Methane

780


2.13

Total Proved Developed Non-Producing

154,489


16.76

Proved Undeveloped




Light Crude Oil & Medium Crude Oil (3)

273,008


14.16

Heavy Oil (3)


Conventional Natural Gas (4)

158,318


8.31

Shale Gas


Coal Bed Methane

237


0.77

Total Proved Undeveloped

431,563


12.04

Proved




Light Crude Oil & Medium Crude Oil (3)

2,081,064


24.35

Heavy Oil (3)


Conventional Natural Gas (4)

960,944


12.92

Shale Gas

1,106


4.58

Coal Bed Methane

1,467


1.36

Total Proved

3,044,581


18.94

Probable




Light Crude Oil & Medium Crude Oil (3)

1,031,625


19.21

Heavy Oil (3)


Conventional Natural Gas (4)

663,113


11.98

Shale Gas

238


5.49

Coal Bed Methane

1,568


3.31

Total Probable

1,696,544


15.48

Proved Plus Probable




Light Crude Oil & Medium Crude Oil (3)

3,112,689


22.47

Heavy Oil (3)


Conventional Natural Gas (4)

1,624,057


12.42

Shale Gas

1,344


4.85

Coal Bed Methane

3,035


1.92

Total Proved Plus Probable

4,741,125


17.53

Notes:

(1) 

The pricing assumptions used in the GLJ Report with respect to net present value of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth below.  See "Forecast Prices used in Estimates". The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation. GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101.

(2)

Other Company revenue and costs not related to a specific product type have been allocated proportionately to the specified product types.  Unit values are based on Company net reserves.  Net present value of reserves categories are an approximation based on major products.

(3)

Including solution gas and other by-products.

(4)  

Including by-products but excluding solution gas.

Reconciliations of Changes in Reserves

The following tables set forth a reconciliation of the changes in Vermilion's gross light and medium crude oil, heavy oil and associated and non-associated gas (combined) reserves as at December 31, 2017 compared to such reserves as at December 31, 2016.

Table 8: Reconciliation of Company Gross Reserves by Principal Product Type - Based on Forecast Prices and Costs (3)

AUSTRALIA

Total Oil (4)


Light Crude Oil &
Medium Crude Oil


Heavy Oil


Tight Oil


Proved Probable P+P (1) (2)

Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable


Factors

(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)


At December 31, 2016

12,418



4,650



17,068



12,418



4,650



17,068














Discoveries
























Extensions & Improved Recovery
























Technical Revisions

603





603



603





603














Acquisitions
























Dispositions
























Economic Factors
























Production

(2,106)





(2,106)



(2,106)





(2,106)














At December 31, 2017

10,915



4,650



15,565



10,915



4,650



15,565















Total Gas (4)


Conventional Natural Gas


Coal Bed Methane (5)


Shale Gas (5)


Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable


Factors

(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)


At December 31, 2016
























Discoveries
























Extensions & Improved Recovery
























Technical Revisions
























Acquisitions
























Dispositions
























Economic Factors
























Production
























At December 31, 2017

























Natural Gas Liquids


BOE














Proved


Probable


Proved +
Probable


Proved


Probable


Proved +
Probable













Factors

(Mbbl)


(Mbbl)


(Mbbl)


(Mboe)


(Mboe)


(Mboe)













At December 31, 2016







12,418



4,650



17,068














Discoveries
























Extensions & Improved Recovery
























Technical Revisions







603





603














Acquisitions
























Dispositions
























Economic Factors
























Production







(2,106)





(2,106)














At December 31, 2017







10,915



4,650



15,565














 

CANADA

Total Oil (4)



Light Crude Oil &
Medium Crude Oil



Heavy Oil



Tight Oil


Proved Probable P+P (1) (2)

Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable


Factors

(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)


At December 31, 2016

21,974



14,105



36,079



21,962



14,103



36,065









12



2



14


Discoveries
























Extensions & Improved Recovery

594



302



896



594



302



896














Technical Revisions

(681)



(1,542)



(2,223)



(670)



(1,540)



(2,210)









(11)



(2)



(13)


Acquisitions

16



4



20



16



4



20














Dispositions
























Economic Factors

(48)



16



(32)



(48)



16



(32)














Production

(2,195)





(2,195)



(2,194)





(2,194)









(1)





(1)


At December 31, 2017

19,660



12,885



32,545



19,660



12,885



32,545















Total Gas (4)


Conventional Natural Gas


Coal Bed Methane (5)


Shale Gas (5)



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable


Factors

(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)


At December 31, 2016

226,530



156,668



383,198



217,098



151,707



368,805



8,061



4,677



12,738



1,371



284



1,655


Discoveries
























Extensions & Improved Recovery

58,040



29,520



87,560



57,075



28,977



86,052



965



543



1,508








Technical Revisions

1,696



372



2,068



1,057



378



1,435



799



64



863



(160)



(70)



(230)


Acquisitions

3,452



1,113



4,565



2,686



872



3,558



766



241



1,007








Dispositions

(2,182)



(2,150)



(4,332)



(576)



(231)



(807)



(1,606)



(1,919)



(3,525)








Economic Factors

(3,658)



(1,201)



(4,859)



(2,497)



(648)



(3,145)



(1,161)



(553)



(1,714)








Production

(35,730)





(35,730)



(34,547)





(34,547)



(1,111)





(1,111)



(72)





(72)


At December 31, 2017

248,148



184,322



432,470



240,296



181,055



421,351



6,713



3,053



9,766



1,139



214



1,353



Natural Gas Liquids


BOE














Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable














Factors

(Mbbl)



(Mbbl)



(Mbbl)



(Mboe)



(Mboe)



(Mboe)














At December 31, 2016

17,363



12,907



30,270



77,092



53,123



130,215














Discoveries
























Extensions & Improved Recovery

5,669



1,235



6,904



15,936



6,457



22,393














Technical Revisions

(271)



95



(176)



(668)



(1,386)



(2,054)














Acquisitions

351



113



464



942



303



1,245














Dispositions

(3)



(1)



(4)



(367)



(359)



(726)














Economic Factors

(184)



(67)



(251)



(842)



(251)



(1,093)














Production

(2,621)





(2,621)



(10,771)





(10,771)














At December 31, 2017

20,304



14,282



34,586



81,322



57,887



139,209














 

FRANCE

Total Oil (4)



Light Crude Oil &
Medium Crude Oil



Heavy Oil



Tight Oil

Proved Probable P+P (1) (2)

Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable

Factors

(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)

At December 31, 2016

42,044



21,933



63,977



42,044



21,933



63,977













Discoveries























Extensions & Improved Recovery

1,688



1,879



3,567



1,688



1,879



3,567













Technical Revisions

1,086



(1,912)



(826)



1,086



(1,912)



(826)













Acquisitions

 























Dispositions























Economic Factors

(126)



(114)



(240)



(126)



(114)



(240)













Production

(4,046)





(4,046)



(4,046)





(4,046)













At December 31, 2017

40,646



21,786



62,432



40,646



21,786



62,432














Total Gas (4)



Conventional Natural Gas



Coal Bed Methane (5)



Shale Gas (5)


Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable

Factors

(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)

At December 31, 2016

5,482



892



6,374



5,482



892



6,374













Discoveries























Extensions & Improved Recovery























Technical Revisions

3,239



968



4,207



3,239



968



4,207













Acquisitions























Dispositions























Economic Factors

(37)



(6)



(43)



(37)



(6)



(43)













Production

(1)





(1)



(1)





(1)













At December 31, 2017

8,683



1,854



10,537



8,683



1,854



10,537














Natural Gas Liquids



BOE















Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable














Factors

(Mbbl)



(Mbbl)



(Mbbl)



(Mboe)



(Mboe)



(Mboe)














At December 31, 2016







42,958



22,082



65,040














Discoveries
























Extensions & Improved Recovery







1,688



1,879



3,567














Technical Revisions







1,625



(1,751)



(126)














Acquisitions
























Dispositions
























Economic Factors







(132)



(115)



(247)














Production







(4,046)





(4,046)














At December 31, 2017







42,093



22,095



64,188














 

GERMANY

Total Oil (4)


Light Crude Oil &
Medium Crude Oil


Heavy Oil


Tight Oil

Proved Probable P+P (1) (2)

Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable

Factors

(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)

At December 31, 2016

5,288



2,279



7,567



5,288



2,279



7,567













Discoveries























Extensions & Improved Recovery

300



275



575



300



275



575













Technical Revisions

699



480



1,179



699



480



1,179













Acquisitions























Dispositions























Economic Factors

(112)



(34)



(146)



(112)



(34)



(146)













Production

(387)





(387)



(387)





(387)













At December 31, 2017

5,788



3,000



8,788



5,788



3,000



8,788














Total Gas (4)


Conventional Natural Gas


Coal Bed Methane (5)


Shale Gas (5)


Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable

Factors

(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)

At December 31, 2016

41,481



54,284



95,765



41,481



54,284



95,765













Discoveries























Extensions & Improved Recovery

117



108



225



117



108



225













Technical Revisions

6,590



(1,027)



5,563



6,590



(1,027)



5,563













Acquisitions























Dispositions























Economic Factors



(231)



(231)





(231)



(231)













Production

(7,077)





(7,077)



(7,077)





(7,077)













At December 31, 2017

41,111



53,134



94,245



41,111



53,134



94,245














Natural Gas Liquids


BOE














Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable














Factors

(Mbbl)



(Mbbl)



(Mbbl)



(Mboe)



(Mboe)



(Mboe)














At December 31, 2016







12,202



11,326



23,528














Discoveries
























Extensions & Improved Recovery







320



293



613














Technical Revisions







1,797



310



2,107














Acquisitions
























Dispositions
























Economic Factors







(112)



(73)



(185)














Production







(1,567)





(1,567)














At December 31, 2017







12,640



11,856



24,496














 

IRELAND

Total Oil (4)


Light Crude Oil &
Medium Crude Oil


Heavy Oil


Tight Oil

Proved Probable P+P (1) (2)

Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable

Factors

(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)

At December 31, 2016























Discoveries























Extensions & Improved Recovery























Technical Revisions























Acquisitions























Dispositions























Economic Factors























Production























At December 31, 2017
























Total Gas (4)


Conventional Natural Gas


Coal Bed Methane (5)


Shale Gas (5)


Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable

Factors

(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)

At December 31, 2016

99,575



50,787



150,362



99,575



50,787



150,362













Discoveries























Extensions & Improved Recovery























Technical Revisions

3,553



602



4,155



3,553



602



4,155













Acquisitions























Dispositions























Economic Factors























Production

(21,325)





(21,325)



(21,325)





(21,325)













At December 31, 2017

81,803



51,389



133,192



81,803



51,389



133,192














Natural Gas Liquids


BOE














Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable














Factors

(Mbbl)



(Mbbl)



(Mbbl)



(Mboe)



(Mboe)



(Mboe)














At December 31, 2016







16,596



8,465



25,061














Discoveries
























Extensions & Improved Recovery
























Technical Revisions







592



100



692














Acquisitions
























Dispositions
























Economic Factors
























Production







(3,554)





(3,554)














At December 31, 2017







13,634



8,565



22,199














 

NETHERLANDS

Total Oil (4)


Light Crude Oil &
Medium Crude Oil


Heavy Oil


Tight Oil

Proved Probable P+P (1) (2)

Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable

Factors

(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)

At December 31, 2016























Discoveries























Extensions & Improved Recovery























Technical Revisions























Acquisitions























Dispositions























Economic Factors























Production























At December 31, 2017
























Total Gas (4)


Conventional Natural Gas


Coal Bed Methane (5)


Shale Gas (5)


Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable

Factors

(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)

At December 31, 2016

62,350



43,184



105,534



62,350



43,184



105,534













Discoveries























Extensions & Improved Recovery

8,163



7,807



15,970



8,163



7,807



15,970













Technical Revisions

5,232



(6,579)



(1,347)



5,232



(6,579)



(1,347)













Acquisitions























Dispositions























Economic Factors

(22)



(32)



(54)



(22)



(32)



(54)













Production

(14,797)





(14,797)



(14,797)





(14,797)













At December 31, 2017

60,926



44,380



105,306



60,926



44,380



105,306














Natural Gas Liquids


BOE














Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable














Factors

(Mbbl)



(Mbbl)



(Mbbl)



(Mboe)



(Mboe)



(Mboe)














At December 31, 2016

81



63



144



10,473



7,260



17,733














Discoveries
























Extensions & Improved Recovery

30



21



51



1,391



1,322



2,713














Technical Revisions

115



35



150



986



(1,061)



(75)














Acquisitions
























Dispositions
























Economic Factors







(4)



(5)



(9)














Production

(33)





(33)



(2,499)





(2,499)














At December 31, 2017

193



119



312



10,347



7,516



17,863














 

UNITED STATES

Total Oil (4)


Light Crude Oil &
Medium Crude Oil


Heavy Oil


Tight Oil

Proved Probable P+P (1) (2)

Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable

Factors

(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)

At December 31, 2016

3,169



5,727



8,896



3,169



5,727



8,896













Discoveries























Extensions & Improved Recovery

1,413



1,483



2,896



1,413



1,483



2,896













Technical Revisions

(49)



(133)



(182)



(49)



(133)



(182)













Acquisitions























Dispositions























Economic Factors

(9)



(4)



(13)



(9)



(4)



(13)













Production

(242)





(242)



(242)





(242)













At December 31, 2017

4,282



7,073



11,355



4,282



7,073



11,355














Total Gas (4)


Conventional Natural Gas


Coal Bed Methane (5)


Shale Gas (5)


Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable

Factors

(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)

At December 31, 2016

2,969



5,481



8,450



2,969



5,481



8,450













Discoveries























Extensions & Improved Recovery

1,328



1,554



2,882



1,328



1,554



2,882













Technical Revisions

231



489



720



231



489



720













Acquisitions























Dispositions























Economic Factors

(5)



(4)



(9)



(5)



(4)



(9)













Production

(143)





(143)



(143)





(143)













At December 31, 2017

4,380



7,520



11,900



4,380



7,520



11,900














Natural Gas Liquids


BOE














Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable














Factors

(Mbbl)



(Mbbl)



(Mbbl)



(Mboe)



(Mboe)



(Mboe)














At December 31, 2016

412



760



1,172



4,076



7,401



11,477














Discoveries
























Extensions & Improved Recovery

182



213



395



1,816



1,955



3,771














Technical Revisions

28



59



87



18



7



25














Acquisitions
























Dispositions
























Economic Factors

(1)



(1)



(2)



(11)



(6)



(17)














Production

(20)





(20)



(286)





(286)














At December 31, 2017

601



1,031



1,632



5,613



9,357



14,970














 

TOTAL COMPANY

Total Oil (4)


Light Crude Oil &
Medium Crude Oil


Heavy Oil


Tight Oil

Proved Probable P+P (1) (2)

Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable

Factors

(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)



(Mbbl)

At December 31, 2016

84,893



48,694



133,587



84,881



48,692



133,573









12



2



14

Discoveries























Extensions & Improved Recovery

3,995



3,939



7,934



3,995



3,939



7,934













Technical Revisions

1,658



(3,107)



(1,449)



1,669



(3,105)



(1,436)









(11)



(2)



(13)

Acquisitions

16



4



20



16



4



20













Dispositions























Economic Factors

(295)



(136)



(431)



(295)



(136)



(431)













Production

(8,976)





(8,976)



(8,975)





(8,975)









(1)





(1)

At December 31, 2017

81,291



49,394



130,685



81,291



49,394



130,685














Total Gas (4)


Conventional Natural Gas


Coal Bed Methane (5)


Shale Gas (5)


Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable

Factors

(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)



(MMcf)

At December 31, 2016

438,387



311,296



749,683



428,955



306,335



735,290



8,061



4,677



12,738



1,371



284



1,655

Discoveries























Extensions & Improved Recovery

67,648



38,989



106,637



66,683



38,446



105,129



965



543



1,508







Technical Revisions

20,541



(5,175)



15,366



19,902



(5,169)



14,733



799



64



863



(160)



(70)



(230)

Acquisitions

3,452



1,113



4,565



2,686



872



3,558



766



241



1,007







Dispositions

(2,182)



(2,150)



(4,332)



(576)



(231)



(807)



(1,606)



(1,919)



(3,525)







Economic Factors

(3,722)



(1,474)



(5,196)



(2,561)



(921)



(3,482)



(1,161)



(553)



(1,714)







Production

(79,073)





(79,073)



(77,890)





(77,890)



(1,111)





(1,111)



(72)





(72)

At December 31, 2017

445,051



342,599



787,650



437,199



339,332



776,531



6,713



3,053



9,766



1,139



214



1,353


Natural Gas Liquids


BOE














Proved



Probable



Proved +
Probable



Proved



Probable



Proved +
Probable














Factors

(Mbbl)



(Mbbl)



(Mbbl)



(Mboe)



(Mboe)



(Mboe)














At December 31, 2016

17,856



13,730



31,586



175,815



114,307



290,122














Discoveries
























Extensions & Improved Recovery

5,881



1,469



7,350



21,151



11,906



33,057














Technical Revisions

(128)



189



61.49



4,953



(3,781)



1,172














Acquisitions

351



113



464



942



303



1,245














Dispositions

(3)



(1)



(4)



(367)



(359)



(726)














Economic Factors

(185)



(68)



(253)



(1,101)



(450)



(1,551)














Production

(2,674)





(2,674)



(24,829)





(24,829)














At December 31, 2017

21,098



15,432



36,530.49



176,564



121,926



298,490














Notes:

(1)

"Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable.  It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

(2)

"Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves.  It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

(3)

The pricing assumptions used in the GLJ Report with respect to net present value of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above.  See "Forecast Prices used in Estimates".  The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation. GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101.

(4)

For reporting purposes, "Total Oil" is the sum of Light Crude oil and Medium Crude Oil, Heavy Oil and Tight Oil.  For reporting purposes, "Total Gas" is the sum of Conventional Natural Gas, Coal Bed Methane and Shale Gas.

(5)

"Coal Bed Methane" and "Shale Gas" were considered "Unconventional Natural Gas" in previous years. NI 51-101 no longer differentiates between conventional and unconventional activities.

 

The table below sets out the future development costs deducted in the estimation of future net revenue attributable to total proved reserves and total proved plus probable reserves (using forecast prices and costs).

Table 9: Future Development Costs(1)

(M$)

Total Proved
Estimated Using Forecast Prices and Costs


Total Proved Plus Probable
Estimated Using Forecast Prices and Costs

Australia




2018

11,565


11,565

2019

70,052


70,052

2020

3,026


3,026

2021

3,140


58,821

2022

3,164


3,164

Remainder

9,936


20,173

Total for all years undiscounted

100,883


166,801

Canada



2018

136,499


150,107

2019

142,540


155,186

2020

110,461


139,784

2021

20,828


119,929

2022

622


114,329

Remainder

1,373


65,337

Total for all years undiscounted

412,323


744,672

France



2018

30,969


52,162

2019

34,118


84,258

2020

19,848


100,335

2021

26,017


59,875

2022

4,289


24,707

Remainder

10,633


24,859

Total for all years undiscounted

125,874


346,196

Germany



2018

2,116


5,381

2019

11,172


17,742

2020

3,162


10,590

2021

3,185


29,808

2022

124


38,918

Remainder

650


2,460

Total for all years undiscounted

20,409


104,899

Ireland



2018


2019

1,855


1,855

2020


19,271

2021


2022


Remainder

17,052


17,052

Total for all years undiscounted

18,907


38,178

Netherlands



2018

3,205


9,569

2019

12,253


13,923

2020

6,181


14,170

2021

324


4,909

2022

326


4,921

Remainder

5,877


5,877

Total for all years undiscounted

28,166


53,369

United States



2018

3,797


11,392

2019

28,082


39,224

2020

35,114


46,818

2021


48,532

2022


Remainder


Total for all years undiscounted

66,993


145,966

Total Company



2018

188,151


240,176

2019

300,072


382,240

2020

177,792


333,994

2021

53,494


321,874

2022

8,525


186,039

Remainder

45,521


135,758

Total for all years undiscounted

773,555


1,600,081

Note:

(1)

The pricing assumptions used in the GLJ Report with respect to net present value of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above.  See "Forecast Prices used in Estimates".  The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation. GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101.

 

Vermilion expects to source its capital expenditure requirements from internally generated cash flow and, as appropriate, from Vermilion's existing credit facility or equity or debt financing.  It is anticipated that costs of funding the future development costs will not impact development of its properties or Vermilion's reserves or future net revenue.

APPENDIX A
CONTINGENT RESOURCES

Summary information regarding contingent resources and net present value of future net revenues from contingent resources are set forth below and are derived, in each case, from the GLJ Resources Assessment. The GLJ Resources Assessment was prepared in accordance with COGEH and NI-51-101 by GLJ, an independent qualified reserve evaluator. All contingent resources evaluated in the GLJ Resources Assessment were deemed economic at the effective date of December 31, 2017. Contingent resources are in addition to reserves estimated in the GLJ Report.

A range of contingent resources estimates (low, best and high) were prepared by GLJ.  See notes 6 to 8 of the tables below for a description of low estimate, best estimate and high estimate.

The GLJ Resources Assessment estimated gross risked contingent resources with a project maturity subclass of "Development Pending" of  107.3 million boe (low estimate) to 253.6 million boe (high estimate), with a best estimate of 176.7 million boe. Contingent resources are in addition to reserves estimated in the GLJ Report.

The GLJ Resources Assessment estimated gross risked contingent resources with a project maturity subclass of "Development Unclarified" of 7.5 million boe (low estimate) to 46.1 million boe (high estimate), with a best estimate of 32.8 million boe.

An estimate of risked net present value of future net revenue of contingent resources is preliminary in nature and is provided to assist the reader in reaching an opinion on the merit and likelihood of the company proceeding with the required investment. It includes contingent resources that are considered too uncertain with respect to the chance of development to be classified as reserves. There is uncertainty that the risked net present value of future net revenue will be realized.

Table 10: Summary of Risked Oil and Gas Contingent Resources as at December 31, 2017 (1) (2) - Forecast Prices and Costs (3) (4)

Resources

Light Crude Oil &
Medium Crude Oil


Conventional
Natural Gas


Coal Bed
Methane


Natural Gas
Liquids


BOE


Unrisked
BOE

Project


























Maturity

Gross


Net


Gross


Net


Gross


Net


Gross


Net


Gross


Net


Chance
of Dev.


Gross


Net

Sub-Class

(Mbbl)


(Mbbl)


(MMcf)


(MMcf)


(MMcf)


(MMcf)


(Mbbl)


(Mbbl)


(Mboe)


(Mboe)


% (9)


(Mboe)


(Mboe)

Contingent (1C) - Low Estimate







































Development Pending (10)







































Australia


























Canada

11,918



10,818



217,576



200,317



2,081



1,977



17,879



15,803



66,407



60,337



82

%


80,740



73,403


France

13,677



12,798



940



940











13,834



12,955



87

%


15,923



14,908


Germany





19,342



16,795











3,224



2,799



77

%


4,187



3,635


Ireland


























Netherlands

61



61



4,647



4,647







1



1



837



837



81

%


1,038



1,038


USA

17,651



14,699



17,643



14,693







2,416



2,104



23,008



19,252



90

%


25,567



21,391


Total

43,307



38,376



260,148



237,392



2,081



1,977



20,296



17,908



107,310



96,180



84

%


127,453



114,375


Contingent (2C) - Best Estimate







































Development Pending (10)







































Australia (11)

2,440



2,440















2,440



2,440



80

%


3,050



3,050


Canada (12)

19,312



17,209



352,291



322,162



2,520



2,394



27,354



23,739



105,801



95,041



81

%


131,380



118,063


France (13)

27,054



25,229



1,245



1,245











27,262



25,437



85

%


32,027



29,891


Germany (14)





33,721



29,267











5,620



4,878



77

%


7,299



6,335


Ireland


























Netherlands (15)

121



121



13,995



13,995







8



8



2,462



2,462



78

%


3,170



3,169


USA (16)

25,289



21,060



25,924



21,589







3,554



2,960



33,164



27,618



90

%


36,849



30,687


Total

74,216



66,059



427,176



388,258



2,520



2,394



30,916



26,707



176,749



157,876



83

%


213,775



191,195


Contingent (3C) - High Estimate

































Development Pending (10)

































Australia

3,280



3,280















3,280



3,280



80

%


4,100



4,100


Canada

24,079



21,133



488,328



443,399



2,943



2,796



37,617



31,953



143,575



127,452



80

%


179,355



159,116


France

43,275



40,278



1,618



1,618











43,545



40,548



84

%


51,613



48,043


Germany





62,480



54,212











10,413



9,035



77

%


13,523



11,734


Ireland


























Netherlands

242



242



27,237



27,237







16



16



4,798



4,798



79

%


6,100



6,097


USA

36,411



30,320



38,218



31,826







5,240



4,363



48,021



39,987



90

%


53,356



44,430


Total

107,287



95,253



617,881



558,292



2,943



2,796



42,873



36,332



253,632



225,100



82

%


308,047



273,520


 

Resources

Light Crude Oil &
Medium Crude Oil


Conventional
Natural Gas


Coal Bed
Methane


Natural Gas
Liquids


BOE


Unrisked
BOE

Project


























Maturity

Gross


Net


Gross


Net


Gross


Net


Gross


Net


Gross


Net


Chance
of Dev.


Gross


Net

Sub-Class

(Mbbl)


(Mbbl)


(MMcf)


(MMcf)


(MMcf)


(MMcf)


(Mbbl)


(Mbbl)


(Mboe)


(Mboe)


% (9)


(Mboe)


(Mboe)

Contingent (1C) - Low Estimate


























Development Unclarified (17)


























Australia


























Canada





30,844



27,821







531



439



5,672



5,076



60

%


9,463



8,474


France

1,302



1,235















1,302



1,235



41

%


3,212



3,049


Germany


























Ireland


























Netherlands





3,120



3,120











520



520



70

%


743



743


USA


























Total

1,302



1,235



33,964



30,941







531



439



7,494



6,831



56

%


13,418



12,266


Contingent (2C) - Best Estimate


























Development Unclarified (17)


























Australia


























Canada (18)





60,273



53,873



60,886



57,652



6,641



5,995



26,834



24,583



46

%


58,404



53,558


France (19)

2,539



2,410















2,539



2,410



45

%


5,690



5,404


Germany





1,496



1,190











249



198



35

%


711



566


Ireland


























Netherlands (20)





18,678



18,104







32



16



3,145



3,033



51

%


6,134



5,912


USA


























Total

2,539



2,410



80,447



73,167



60,886



57,652



6,673



6,011



32,767



30,224



46

%


70,939



65,440


Contingent (3C) - High Estimate


























Development Unclarified (17)


























Australia


























Canada





78,561



69,281



77,410



72,283



10,104



8,744



36,099



32,338



46

%


78,918



70,761


France

3,825



3,632















3,825



3,632



46

%


8,250



7,828


Germany





2,327



1,850











388



308



35

%


1,109



880


Ireland


























Netherlands





34,682



33,807







48



24



5,828



5,659



54

%


10,743



10,441


USA


























Total

3,825



3,632



115,570



104,938



77,410



72,283



10,152



8,768



46,140



41,937



47

%


99,020



89,910


 

Table 11: Summary of Risked Net Present Value of Future Net Revenues as at December 31, 2017 - Forecast Prices and Costs (3)

 

Resources Project




Maturity Sub-Class

Before Income Taxes, Discounted at (5)


 After Income Taxes, Discounted at (5)

(M$)

0%


5%


10%


15%


20%


0%


5%


10%


15%


20%

Contingent (1C) - Low Estimate (6)




















Development Pending (10)




















Australia




















Canada

1,324,088



692,454



384,479



223,327



133,827



968,246



491,682



261,417



143,098



78,999


France

646,356



356,990



207,518



125,059



77,334



475,460



249,755



136,639



76,160



42,380


Germany

25,368



15,606



8,171



2,911



(697)



15,012



7,957



2,377



(1,574)



(4,234)


Ireland