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1. Company Snapshot

1.a. Company Description

Vermilion Energy Inc., together with its subsidiaries, engages in the acquisition, exploration, development, and production of petroleum and natural gas in North America, Europe, and Australia.The company owns 81% working interest in 636,714 net acres of developed land and 85% working interest in 301,026 net acres of undeveloped land in Canada; 130,715 net acres of land in the Powder River basin in the United States; 96% working interest in 248,873 net acres of developed land and 86% working interest in 134,160 net acres of undeveloped land in the Aquitaine and Paris Basins in France; 53% working interest in 901,791 net acres of land in the Netherlands; 54,625 net developed acres and 920,723 net undeveloped acres in Germany; 975,375 net acres land in Croatia; 946,666 net acres land in Hungary; and 48,954 net acres land in Slovakia.It also owns 20% interests in the offshore Corrib natural gas field located to the northwest coast of Ireland; and 100% working interest in the Wandoo offshore oil field and related production facilities that covers 59,553 acres located on Western Australia's northwest shelf.


As of December 31, 2021, the company had 401 net producing conventional natural gas wells and 2,132 net producing light and medium crude oil wells in Canada; 167.6 net producing light and medium crude oil wells in the United States; 297.0 net producing light and medium crude oil wells and 3 net producing conventional natural gas wells in France; and 47 net producing natural gas wells in the Netherlands.Vermilion Energy Inc.was founded in 1994 and is headquartered in Calgary, Canada.

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1.b. Last Insights on VET

Vermilion Energy's recent performance was negatively impacted by a decline in oil prices, which led to a decrease in revenue and earnings. The company's Q1 2025 earnings report showed a revenue beat, but EPS lagged expectations. Additionally, CIBC lowered its price target on Vermilion Energy to C$14 from C$17, citing concerns over the pending supply and demand balance. Furthermore, the company's decision to sell its United States assets for $120 million and its Saskatchewan and Manitoba assets for $415 million may indicate a strategic shift, potentially affecting its future performance.

1.c. Company Highlights

2. Vermilion Energy's Q3 2025 Results: Strong Production and Cash Flow

Vermilion Energy reported a robust Q3 2025, with production averaging 119,062 BOE per day, at the upper end of its guidance, and fund flows from operations of $254 million. However, the company's EPS was $0.01651, significantly missing analyst estimates of $0.185. The company's realized gas price was $4.36 per Mcf, outperforming the AECO 5A pricing, and its hedging gains further enhanced its revenue. Free cash flow was $108 million after E&D capital expenditures of $146 million. The company's financial performance was also reflected in its return to shareholders, with $26 million distributed through dividends and share buybacks.

Publication Date: Nov -29

📋 Highlights
  • Production & Fund Flows:: Averaged 119,062 BOE/day (67% gas) and generated $254M in fund flows, with $108M free cash flow after $146M E&D capex.
  • Gas Price Outperformance:: Realized $4.36/Mcf, 7x AECO 5A benchmark, driven by hedging gains in a low-price environment.
  • Shareholder Returns:: Returned $26M to shareholders ($20M dividends, $6M buybacks), with 600,000 shares repurchased in Q3 and 2.5M year-to-date.
  • Capital Efficiency:: Cut 2025 capex by $20M and operating costs by >$10M, while maintaining production growth and debt reduction to under $1.4B.
  • Dividend Growth:: Increased quarterly dividend by 4% to CAD $0.135/share, supported by 1.4x net debt to trailing FFO and $650M net debt reduction since Q1 2025.

Operational Highlights

The company's operational performance was strong, with production growth driven by its gas portfolio. The Q3 drilling program in the Deep Basin exceeded expectations, with 6 of 12 wells testing at over 10 million a day of gas production, and came in under budget. In Germany, the Wisselshorst prospect's discovery well tested at 40 million cubic feet a day, and is expected to be tied in and producing by Q2 2026. The company's European gas exploration and development program is expected to drive production growth, with the Wisselshorst and Osterheide wells expected to add 25 million a day of gas.

2026 Outlook and Valuation

Vermilion Energy's 2026 budget features an exploration and development capital budget of $600 million to $630 million, with approximately 85% allocated to its global gas portfolio. The company expects modest production growth from second-half 2025 levels, with annual average production between 118,000 and 122,000 BOE per day. With a P/E Ratio of -10.76 and an EV/EBITDA of 4.0, the company's valuation multiples suggest a relatively attractive valuation. Additionally, the company's Dividend Yield is 3.95%, providing a stable return to shareholders. Analysts estimate next year's revenue growth at -2.7%, which may impact the company's financial performance.

Balance Sheet Strengthening

Vermilion Energy continued to strengthen its balance sheet, reducing its net debt by over $650 million since Q1 2025, bringing net debt to under $1.4 billion as of September 30. The company's net debt to 4-quarter trailing FFO ratio was 1.4x, reflecting its progress in deleveraging. The company's Free Cash Flow Yield is 7.14%, indicating a healthy cash generation capability.

3. NewsRoom

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Vermilion Energy Inc. to Host Investor Day on December 10, 2025

Nov -26

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RBC Names Suncor Energy, Canadian Natural Resources as Top Picks in Integrated Oil, Exploration and Production Cos

Nov -24

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There May Be Underlying Issues With The Quality Of Vermilion Energy's (TSE:VET) Earnings

Nov -13

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Does Vermilion Energy's (TSX:VET) Dividend Boost Reveal Strength or Conceal Profit Pressures?

Nov -07

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A Look at Vermilion Energy’s (TSX:VET) Valuation Following Q3 Results: Rising Revenue, Falling Profitability

Nov -07

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Vermilion Energy Inc (VET) Q3 2025 Earnings Call Highlights: Strong Cash Flow and Strategic ...

Nov -06

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Vermilion Energy (VET) Reports Q3 Loss, Misses Revenue Estimates

Nov -06

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Vermilion: Q3 Earnings Snapshot

Nov -06

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.61%)

6. Segments

Crude Oil and Condensate

Expected Growth: 2.5%

Vermilion Energy Inc.'s 2.5% growth in Crude Oil and Condensate is driven by increased production from its Corrib gas field in Ireland, successful drilling campaigns in Canada, and strategic acquisitions in North America. Additionally, improved operational efficiencies, cost savings, and a favorable commodity price environment contribute to the growth.

Natural Gas

Expected Growth: 2.8%

Vermilion Energy Inc.'s 2.8% natural gas growth is driven by increased production from its Corrib gas field in Ireland, successful drilling programs in Canada, and strategic acquisitions. Additionally, improved operational efficiencies, higher commodity prices, and a favorable regulatory environment contribute to the growth.

Royalties

Expected Growth: 2.2%

Vermilion Energy Inc.'s 2.2% royalty growth is driven by increasing oil and gas production, improved pricing, and strategic acquisitions. Rising demand for energy, particularly in Europe, and Vermilion's diversified asset base also contribute to this growth. Additionally, the company's focus on operational efficiency and cost management enables it to capitalize on higher commodity prices.

Purchased Commodities

Expected Growth: 2.9%

Vermilion Energy Inc.'s 2.9% growth in purchased commodities is driven by increasing global demand for energy, improved operational efficiency, and strategic acquisitions. Additionally, favorable commodity prices, particularly in oil and natural gas, have contributed to this growth. Furthermore, Vermilion's diversified asset base and strong financial position have enabled the company to capitalize on opportunities and invest in growth initiatives.

Natural Gas Liquid

Expected Growth: 2.6%

Vermilion Energy Inc.'s 2.6% growth in Natural Gas Liquid (NGL) is driven by increased drilling activities in its core areas, improved well productivity, and strategic acquisitions. Additionally, favorable market conditions, including strong demand and higher prices, contribute to the growth. The company's focus on operational efficiency and cost reduction also supports the upward trend.

7. Detailed Products

Crude Oil

Vermilion Energy Inc. produces high-quality crude oil from its operations in North America, Europe, and Australia.

Natural Gas

Vermilion Energy Inc. extracts natural gas from its operations in North America, Europe, and Australia.

Natural Gas Liquids (NGLs)

Vermilion Energy Inc. produces NGLs, including ethane, propane, and butane, from its operations in North America.

Petroleum Products

Vermilion Energy Inc. refines crude oil into various petroleum products, including gasoline, diesel fuel, and jet fuel.

Drilling and Exploration Services

Vermilion Energy Inc. provides drilling and exploration services to support its own operations and those of other energy companies.

8. Vermilion Energy Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Vermilion Energy Inc. is medium due to the availability of alternative energy sources such as solar and wind power.

Bargaining Power Of Customers

The bargaining power of customers for Vermilion Energy Inc. is low due to the company's diversified customer base and lack of concentration.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Vermilion Energy Inc. is medium due to the presence of several suppliers in the market, but the company's large scale of operations gives it some bargaining power.

Threat Of New Entrants

The threat of new entrants for Vermilion Energy Inc. is low due to the high barriers to entry in the energy industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Vermilion Energy Inc. is high due to the competitive nature of the energy industry, with many established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 23.57%
Debt Cost 13.22%
Equity Weight 76.43%
Equity Cost 17.48%
WACC 16.48%
Leverage 30.84%

11. Quality Control: Vermilion Energy Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Growth: 8.0

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Vermilion Energy

A-Score: 4.6/10

Value: 8.6

Growth: 2.4

Quality: 3.8

Yield: 6.0

Momentum: 2.5

Volatility: 4.3

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A-Score: 4.3/10

Value: 6.3

Growth: 3.3

Quality: 3.5

Yield: 8.0

Momentum: 0.5

Volatility: 4.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

12.51$

Current Price

12.51$

Potential

-0.00%

Expected Cash-Flows