The events of 2022 have highlighted the extent to which affordable and accessible energy is essential to our daily lives. At Vermilion, our response is to ask how we can contribute to solutions to an energy transition that is balanced by the energy security needed not just here at home, but by those around the globe.

Responsible Production

We anticipate governments to strengthen support for renewable forms of energy, and we support this. The past 12 months have shown that we must also provide a stable and reliable bridge, via responsibly produced oil and natural gas, to the time when renewable energy can provide the coverage and consistency needed.

Our contribution to the solutions comprises two phases. The first is providing reliable, responsible traditional energy, as our products are part of the domestic supply of energy in many countries where we operate. Reducing emissions is one of the clearest demonstrations of our commitment to responsibility. This includes our aspirational net zero goal and our near-term target: we have reduced Scope 1 emission intensity by 5% in the last two years, on track to reaching our 15 to 20% by 2025 target.

The investment to achieve this is currently part of our operating and maintenance budgets, but this will change as our emission reduction ambitions ramp up. In the meantime, this supports our disciplined capital approach, and our balance between debt reduction and return of capital.

Energy Evolution

Our second phase of support for the energy transition — or, evolution, as we believe that as the emission profiles of traditional fuels, especially natural gas, are reduced, their role as bridge fuels will continue — is exploring emerging technologies and energy sources. To manage the risks involved in early maturity projects, we are emphasizing technologies such as geothermal, biogas and hydrogen that are closely related to our existing operations, including the potential to repurpose existing infrastructure. We are partnering with organizations that have expertise in these areas, and using our project development process to provide careful risk management while these new technologies become implementable and cost-competitive at scale.

Indeed, partnerships reflect our belief that the broad and critical issues of supplying energy require all stakeholders to offer their expertise, support and solutions — along with a spirit of collaboration that recognizes the oil and natural gas industry as committed to solutions: deploying economically and technically feasible options, and researching those on the horizon.

Caring Culture

While climate-related issues are important, we have always believed that our staff and our communities are essential, not just as part of the ESG equation, but as integral elements in our success.

I am very proud of the way these came together in the past year. Our staff contributed to our matching campaign for the Red Cross’s relief efforts for Ukraine, helping us toward a donation of $250,000. And in June, many staff lent helping hands to organizations around our operations, from homeless shelters to food banks, as part of our month of caring. These efforts reinforce our caring culture.

As you read this report, please share any comments or suggestions, including on the energy transition, via our dedicated email. We look forward to sharing the journey with you.

Sincerely,