Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Production during the second quarter averaged 84,974 boes per day, which was at the top end of the guidance range.
- Vermilion Energy Inc (VET, Financial) reduced net debt by $38 million to $907 million and increased share buybacks significantly.
- The company achieved key operational milestones with the start-up of the Mica Montney battery in British Columbia and the SA-10 gas plant in Croatia.
- European natural gas production grew by over 15% over the past two years, with strong pricing in Croatia.
- The company increased its annual production guidance to 83,000 to 86,000 boe per day while maintaining its capital budget guidance.
Negative Points
- Free cash flow of $126 million was lower than Q1, mainly due to lower realized commodity hedge gains.
- Production from international operations was affected by scheduled maintenance, impacting output.
- The second exploration well in Germany is a higher-risk prospect, which could pose financial risks if unsuccessful.
- Approximately 800 boe a day of dry gas production in Alberta was curtailed due to low gas prices.
- The company faces downtime during periods of high temperatures, which could affect production levels.
Q & A Highlights
Q: Can you provide an overview of Vermilion Energy's production performance in Q2 2024?
A: Dion Hatcher, President & CEO, reported that production averaged 84,974 boes per day, at the top end of the guidance range. This was mainly due to the early start-up of the BC Montney battery. Year-over-year, production increased by 2% or 6% on a per share basis.
Q: How did Vermilion Energy perform financially in Q2 2024?
A: Lars Glemser, CFO, stated that the company generated $237 million of fund flows and $126 million of free cash flow. Net debt was reduced by $38 million to $907 million. The company also increased its pace of share buybacks, repurchasing 2.8 million shares for $47 million and paying $19 million in dividends.
Q: What are the key operational milestones achieved by Vermilion Energy in Q2 2024?
A: Dion Hatcher highlighted the start-up of the Mica Montney battery in British Columbia and the SA-10 gas plant in Croatia. Additionally, five successful exploration wells were drilled in Europe during the first half of the year.
Q: What is the outlook for Vermilion Energy's European natural gas production?
A: Dion Hatcher mentioned that the company has grown its European natural gas production by over 15% in the past two years. The SA-10 asset in Croatia is expected to support this growth, with both wells on production and ramping up through the third quarter.
Q: How is Vermilion Energy planning to enhance shareholder returns?
A: Lars Glemser explained that the company has increased its return of capital allocation to 50% of excess free cash flow on an annual basis. This includes dividends, share buybacks, and debt reduction. The company has repurchased and canceled 6.1 million shares so far this year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
