Our Approach
Vermilion at a Glance
Our Focus
Founded in 1994, Vermilion is a publicly traded, widely held, international energy producer headquartered in Calgary, Canada. We seek to create value through the acquisition, exploration, development and optimization of producing properties in North America, Europe and Australia — regions noted for their stable, well-developed fiscal and regulatory policies related to energy exploration and development.
Our Purpose
At the core of our business is our purpose: To responsibly produce essential energy while delivering long-term value to our people, shareholders, customers, partners and communities. We believe that providing energy to the many people and businesses around the world that rely on it to meet their daily needs and sustain their quality of life is both a great privilege and a great responsibility.
Our Priorities
We prioritize health and safety, the environment, and profitability, in that order. Nothing is more important to us than the safety of the public and those who work with us, and the protection of our natural surroundings. Our energy transition strategy focuses on reducing environmental impacts of traditional oil and natural gas production while developing renewable energy projects closely related to our core competencies.
Economic & Operational Highlights
Our Operations
Vermilion’s operations are focused on the exploitation of light oil and liquids-rich natural gas conventional and unconventional resource plays in North America and the exploration and development of conventional natural gas and oil opportunities in Europe and Australia.
In 2021, Vermilion produced 36.7 million operated boe of oil and natural gas, thereby investing:
- $188 million in wages and benefits to our employees
- $232 million in taxes and royalties in our operating jurisdictions
- $1.16 million in community support
- $53 million in protecting our environment, and
- $818 million to the 9,200+ entities in our supply chain 102-7, 201-1
Vermilion’s 2022 guidance:
- 86,000 - 88,000 boe/d production1
- $500 million in capital expenditures
Our Business Model
Vermilion’s business model relies on our five long-standing core business principles, which are based on a conservative, long-term focus on balance sheet strength and capital discipline to generate strong returns. They include:
- Maintaining a strong balance sheet with low leverage
- Managing a total payout ratio of less than 100%
- Consistently delivering results that meet or exceed expectations
- Protecting equity to minimize dilution, and
- Maintaining a strong corporate culture.
In the past 12 months, we’ve made two key acquisitions:
- 2022: Acquired Leucrotta Exploration Inc., providing us with 77,000 net acres of Montney mineral rights with an expected 20+ years of low-risk, self-funding, high-deliverability drilling inventory
- 2021: Entered into an agreement to acquire Equinor Energy Ireland Limited, which will increase our operated interest in Corrib to 56.5% upon closing, expected in H2 2022
Management and Evaluation
Vermilion’s Strategic Plan includes six Matters of Importance, with strategic objectives that guide the Company’s business plans to 2030:
- Extraordinary People and Culture
- Health, Safety and Environment
- Financial Discipline
- Robust and Profitable Portfolio
- Integrated Sustainability
- Business and Operational Excellence
These objectives provide short, mid- and long term targets for the company and our people. We set annual commitments within each, and track our achievements quarterly, reporting to the senior management team and our Board of Directors. Progress is reported on annually in our Information Circular, and is also tracked using key performance indicators within our Short and Long Term Scorecards to assess company and individual performance, which is linked directly to compensation.
In addition to economic and investment metrics, our strategic objectives are guided by feedback from our external stakeholder, including external recognition (listed in detail in the Awards section of this report), voting results at our Annual General Meeting, and input from governance, investment and sustainability analysts, our communities, and our people.
Our Value Chain
Our supply chain encompasses a wide range of inputs, including specialized field expertise and technology, supplies ranging from drilling mud to event facilities, and expert consultant advice. It is extremely important to us that our suppliers not only deliver a sound financial investment in their goods and services, but operate in a manner that aligns with the values that guide our own corporate culture. As a result, we have strict requirements for third-party vendors who do business with Vermilion. 102-29
Our asset base comprises a diversified product and project portfolio that receives premium advantage pricing. This increases the stability of our cash flows and our flexibility in allocating our exploration and development capital. exposure to robust end markets that include:
- North American-based midstream and downstream refiners
- Asia Pacific-based refining and lubricant markets
- European downstream refiners, and
- Key aggregators and utilities.102-6