- Vermilion (TSX:VET) generated over $1B in FFO, delivered record production, and cut net debt by $700M, while returning $116M to shareholders
- Full‑year and Q4 net losses were tied to asset sales and impairments, with no impact on cash flow or ongoing operations
- The company expects up to 124,000 boe/d in Q1 2026, reaffirmed full‑year guidance, and increased its dividend for the fifth straight year
- Vermilion Energy stock (TSX:VET) last traded at C$15.76
Vermilion Energy (TSX:VET) reported its operating and condensed financial results for the year ended December 31, 2025, highlighting record production, strengthened balance sheet metrics, and substantial cash generation despite a full‑year net loss driven by non‑cash impairments and discontinued operations.
The company generated C$1.01 billion in fund flows from operations (FFO), equal to C$6.58 per basic share, and produced C$375 million in free cash flow (FCF). Vermilion fully funded C$635 million in exploration and development (E&D) spending while also reducing debt and returning cash to shareholders.
Vermilion continued to improve its financial position throughout 2025, reducing net debt by more than C$700 million since Q1 and ending the year at C$1.34 billion. The company’s net debt‑to‑trailing‑FFO ratio improved to 1.4×, well below covenant thresholds.
Shareholder returns totalled C$116 million, split between C$80 million in dividends and the repurchase and cancellation of 3.1 million shares through its normal course issuer bid.
Net loss driven by discontinued operations and impairments
Despite strong operational performance, Vermilion posted a net loss of C$654 million for the year, or C$4.25 per share. The loss was attributed to:
- Discontinued operations associated with the sale of Saskatchewan and U.S. assets
- Non‑cash, price‑related impairments on mature assets in Australia, France, and Ireland
The company emphasized that these charges did not affect 2025 FFO, liquidity, or ongoing operations.
Record production and premium pricing
Vermilion delivered record average production of 119,919 boe/d, up 46 per cent year over year on a per‑share basis. Natural gas represented 65 per cent of output.
Production by region:
- North America: 90,062 boe/d
- International assets: 29,857 boe/d
The company realized an average natural gas price of C$6.01/mcf, more than triple the AECO benchmark, reflecting Vermilion’s exposure to high‑value European and international gas markets.
Reserves growth and valuation
Year‑end 2P reserves rose 36 per cent to 592 million boe, providing a 14‑year reserve life index and a reserves replacement ratio over 450 per cent.
Key reserve metrics included:
- PDP FD&A cost: C$14.91/boe
- 2P FD&A cost: C$7.71/boe
- Operating recycle ratio: 1.8× (PDP) and 3.5× (2P)
The before‑tax NPV10 of 2P reserves was estimated at C$4.8 billion, or C$23 per share after deducting net debt. Only 23 per cent of Vermilion’s identified Deep Basin and Montney inventory is included in the 2P valuation.
Q4 2025: Strong operational quarter despite net loss
In the fourth quarter, Vermilion generated C$241 million in FFO and C$49 million in free cash flow, fully funding C$192 million in E&D spending. Net debt fell by C$42 million, and the company returned C$26 million to shareholders.
Q4 production averaged 121,308 boe/d, with 69 per cent natural gas. Key operational highlights included:
Deep Basin and Montney
- Multiple high‑performance Deep Basin wells were brought online, including deferred wells timed for optimal economics.
- The Mica Montney asset set a production record, exceeding 16,000 boe/d.
- Drilling efficiencies and cost improvements continued across the Montney program.
Europe
- Netherlands: Two conventional gas wells (1.2 net) were brought online; permitting progressed for 2026 drilling.
- Germany: Construction advanced at the Wisselshorst site ahead of mid‑2026 first gas; the Osterheide well averaged 10 mmcf/d, a 45 per cent increase from Q3.
Corporate operating costs averaged C$11.86/boe, the lowest since 2020, driven largely by Canadian operational scale and cost controls.
The quarter also included a C$438 million net loss from continuing operations, tied to non‑cash impairments with no effect on cash flow.
2026 outlook
Vermilion expects:
- Q1 2026 production: 122,000–124,000 boe/d (70 per cent natural gas)
- Full‑year 2026 production: 118,000–122,000 boe/d (70 per cent natural gas)
- 2026 E&D spending: C$600–C$630 million
The company declared a $0.135 per‑share quarterly dividend, payable March 31, 2026—its fifth consecutive annual dividend increase.
Vermilion Energy Inc. is an international oil and gas producing company. It engages in full-cycle exploration and production programs that focus on the acquisition, exploration, development, and optimization of producing properties in North America, Europe, and Australia. Most of Vermilion’s revenue has derived from the production and sale of petroleum and natural gas.
Vermilion Energy stock (TSX:VET) last traded at C$15.76 and has risen more than 42 per cent since this time last year.
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