Vermilion Energy : Quarterly Report 2024 Q1 Financials

Disclaimer

Certain statements included or incorporated by reference in this document may constitute forward-looking statements or information under applicable securities legislation. Such forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", or similar words suggesting future outcomes or statements regarding an outlook. Forward looking statements or information in this document may include, but are not limited to: capital expenditures and Vermilion's ability to fund such expenditures; Vermilion's additional debt capacity providing it with additional working capital; statements regarding the return of capital; the flexibility of Vermilion's capital program and operations; business strategies and objectives; operational and financial performance; estimated volumes of reserves and resources; petroleum and natural gas sales; future production levels and the timing thereof, including Vermilion's 2024 guidance, and rates of average annual production growth; the effect of changes in crude oil and natural gas prices, changes in exchange and inflation rates; significant declines in production or sales volumes due to unforeseen circumstances; the effect of possible changes in critical accounting estimates; statements regarding the growth and size of Vermilion's future project inventory, wells expected to be drilled in 2024; exploration and development plans and the timing thereof; Vermilion's ability to reduce its debt; statements regarding Vermilion's hedging program, its plans to add to its hedging positions, and the anticipated impact of Vermilion's hedging program on project economics and free cash flows; the potential financial impact of climate-related risks; acquisition and disposition plans and the timing thereof; operating and other expenses, including the payment and amount of future dividends; royalty and income tax rates and Vermilion's expectations regarding future taxes and taxability; and the timing of regulatory proceedings and approvals.

Such forward looking statements or information are based on a number of assumptions, all or any of which may prove to be incorrect. In addition to any other assumptions identified in this document, assumptions have been made regarding, among other things: the ability of Vermilion to obtain equipment, services and supplies in a timely manner to carry out its activities in Canada and internationally; the ability of Vermilion to market crude oil, natural gas liquids, and natural gas successfully to current and new customers; the timing and costs of pipeline and storage facility construction and expansion and the ability to secure adequate product transportation; the timely receipt of required regulatory approvals; the ability of Vermilion to obtain financing on acceptable terms; foreign currency exchange rates and interest rates; future crude oil, natural gas liquids, and natural gas prices; and management's expectations relating to the timing and results of exploration and development activities; the impact of Vermilion's dividend policy on its future cash flows; credit ratings; hedging program; expected earnings/(loss) and adjusted earnings/(loss); expected earnings/(loss) or adjusted earnings/(loss) per share; expected future cash flows and free cash flow and expected future cash flow and free cash flow per share; estimated future dividends; financial strength and flexibility; debt and equity market conditions; general economic and competitive conditions; ability of management to execute key priorities; and the effectiveness of various actions resulting from the Vermilion's strategic priorities.

Although Vermilion believes that the expectations reflected in such forward looking statements or information are reasonable, undue reliance should not be placed on forward looking statements because Vermilion can give no assurance that such expectations will prove to be correct. Financial outlooks are provided for the purpose of understanding Vermilion's financial position and business objectives, and the information may not be appropriate for other purposes. Forward looking statements or information are based on current expectations, estimates, and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Vermilion and described in the forward looking statements or information. These risks and uncertainties include, but are not limited to: the ability of management to execute its business plan; the risks of the oil and gas industry, both domestically and internationally, such as operational risks in exploring for, developing and producing crude oil, natural gas liquids, and natural gas; risks and uncertainties involving geology of crude oil, natural gas liquids, and natural gas deposits; risks inherent in Vermilion's marketing operations, including credit risk; the uncertainty of reserves estimates and reserves life and estimates of resources and associated expenditures; the uncertainty of estimates and projections relating to production and associated expenditures; potential delays or changes in plans with respect to exploration or development projects; Vermilion's ability to enter into or renew leases on acceptable terms; fluctuations in crude oil, natural gas liquids, and natural gas prices, foreign currency exchange rates, interest rates and inflation; health, safety, and environmental risks; uncertainties as to the availability and cost of financing; the ability of Vermilion to add production and reserves through exploration and development activities; the possibility that government policies or laws may change or governmental approvals may be delayed or withheld; uncertainty in amounts and timing of royalty payments; risks associated with existing and potential future law suits and regulatory actions against or involving Vermilion; and other risks and uncertainties described elsewhere in this document or in Vermilion's other filings with Canadian securities regulatory authorities.

This document contains references to sustainability/ESG data and performance that reflect metrics and concepts that are commonly used in such frameworks as the Global Reporting Initiative, the Task Force on Climate-related Financial Disclosures, and the Sustainability Accounting Standards Board. Vermilion has used best efforts to align with the most commonly accepted methodologies for ESG reporting, including with respect to climate data and information on potential future risks and opportunities, in order to provide a fuller context for our current and future operations. However, these methodologies are not yet standardized, are frequently based on calculation factors that change over time, and continue to evolve rapidly. Readers are particularly cautioned to evaluate the underlying definitions and measures used by other companies, as these may not be comparable to Vermilion's. While Vermilion will continue to monitor and adapt its reporting accordingly, the Company is not under any duty to update or revise the related sustainability/ESG data or statements except as required by applicable securities laws.

Vermilion Energy Inc. ■ Page 1 ■ 2024 First Quarter Financial Statements

The forward looking statements or information contained in this document are made as of the date hereof and Vermilion undertakes no obligation to update publicly or revise any forward looking statements or information, whether as a result of new information, future events, or otherwise, unless required by applicable securities laws.

This document contains metrics commonly used in the oil and gas industry. These oil and gas metrics do not have any standardized meaning or standard methods of calculation and therefore may not be comparable to similar measures presented by other companies where similar terminology is used and should therefore not be used to make comparisons. Natural gas volumes have been converted on the basis of six thousand cubic feet of natural gas to one barrel of oil equivalent. Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Financial data contained within this document are reported in Canadian dollars, unless otherwise stated.

Vermilion Energy Inc. ■ Page 2 ■ 2024 First Quarter Financial Statements

Consolidated Interim Financial Statements

Consolidated Balance Sheet

thousands of Canadian dollars, unaudited

Assets	Note	March 31, 2024	December 31, 2023
Current		254,651
Cash and cash equivalents	11	141,456
Accounts receivable		365,155	242,926
Crude oil inventory		32,409	57,333
Derivative instruments		160,248	313,792
Prepaid expenses		73,905	68,007
Total current assets		886,368	823,514
Derivative instruments		59,921	76,107
Investments	3	80,297	73,261
Deferred taxes		157,566	182,051
Exploration and evaluation assets	5	208,446	198,379
Capital assets	4	4,932,001	4,882,509
Total assets		6,324,599	6,235,821
Liabilities
Current		406,319
Accounts payable and accrued liabilities		380,370
Dividends payable	9	19,183	16,227
Derivative instruments		9,495	732
Income taxes payable		332,192	298,745
Total current liabilities		767,189	696,074
Derivative instruments		31,301	21,050
Long-term debt	8	933,506	914,015
Lease obligations		28,916	33,001
Asset retirement obligations	6	1,209,674	1,159,063
Deferred taxes		371,790	380,970
Total liabilities		3,342,376	3,204,173
Shareholders' Equity		4,080,272
Shareholders' capital	9	4,142,566
Contributed surplus		48,866	43,348
Accumulated other comprehensive income		107,646	109,302
Deficit		(1,254,561)	(1,263,568)
Total shareholders' equity		2,982,223	3,031,648
Total liabilities and shareholders' equity		6,324,599	6,235,821
Approved by the Board
(Signed "Manjit Sharma")		(Signed "Dion Hatcher")
Manjit Sharma, Director		Dion Hatcher, Director

Vermilion Energy Inc. ■ Page 3 ■ 2024 First Quarter Financial Statements

Consolidated Statements of Net Earnings and Comprehensive Income

thousands of Canadian dollars, except share and per share amounts, unaudited

		Three Months Ended
Revenue	Note	Mar 31, 2024	Mar 31, 2023
	508,035
Petroleum and natural gas sales		552,698
Royalties		(48,553)	(67,344)
Sales of purchased commodities		38,370	49,012
Petroleum and natural gas revenue		497,852	534,366
Expenses		38,370
Purchased commodities		49,012
Operating		149,311	136,825
Transportation		22,962	23,050
Equity based compensation		5,518	23,525
Gain on derivative instruments		(31,871)	(107,028)
Interest expense		18,392	21,875
General and administration		23,703	19,889
Foreign exchange loss		19,770	20,249
Other income		(46)	(3,059)
Accretion	6	17,934	20,051
Depletion and depreciation	4, 5	178,434	148,131
Gain on business combination		-	(432,550)
Loss on disposition		-	226,828
		442,477	146,798
Earnings before income taxes		55,375	387,568
Income tax expense (recovery)		16,645
Deferred		(36,466)
Current		36,425	22,262
Windfall taxes		-	21,440
		53,070	7,236
Net earnings		2,305	380,332
Other comprehensive income		(1,085)
Currency translation adjustments		24,681
Hedge accounting reserve, net of tax		1,632	2,155
Fair value adjustment on investment in securities, net of tax	3	(2,203)	(5,733)
Comprehensive income		649	401,435
Net earnings per share		0.01
Basic		2.34
Diluted		0.01	2.27
Weighted average shares outstanding ('000s)		161,221
Basic		162,585
Diluted		163,648	167,857

Vermilion Energy Inc. ■ Page 4 ■ 2024 First Quarter Financial Statements

Consolidated Statements of Cash Flows

thousands of Canadian dollars, unaudited

		Three Months Ended
Operating	Note	Mar 31, 2024	Mar 31, 2023
	2,305
Net earnings		380,332
Adjustments:		17,934
Accretion	6	20,051
Depletion and depreciation	4, 5	178,434	148,131
Gain on business combination		-	(432,550)
Loss on disposition		-	226,828
Unrealized loss (gain) on derivative instruments		188,744	(92,698)
Equity based compensation		5,518	23,525
Unrealized foreign exchange loss		21,641	15,478
Unrealized other expense		137	536
Deferred tax expense (recovery)		16,645	(36,466)
Asset retirement obligations settled	6	(4,975)	(2,554)
Changes in non-cash operating working capital		(72,088)	138,016
Cash flows from operating activities		354,295	388,629
Investing		(182,298)
Drilling and development	4	(153,328)
Exploration and evaluation	5	(8,144)	(1,492)
Acquisitions, net of cash acquired	4	(379)	(134,225)
Acquisition of securities	3	(9,373)	(1,476)
Dispositions	4	-	182,152
Changes in non-cash investing working capital		18,851	(326)
Cash flows used in investing activities		(181,343)	(108,695)
Financing		-
Net repayments on the revolving credit facility	8	(146,591)
Repurchases of senior unsecured notes	8	(3,969)	-
Payments on lease obligations		(4,102)	(4,399)
Repurchase of shares	9	(36,409)	(30,141)
Cash dividends	9	(16,227)	(13,058)
Cash flows used in financing activities		(60,707)	(194,189)
Foreign exchange gain on cash held in foreign currencies		950	263
Net change in cash and cash equivalents		113,195	86,008
Cash and cash equivalents, beginning of period		141,456	13,836
Cash and cash equivalents, end of period		254,651	99,844
Supplementary information for cash flows from operating activities		13,652
Interest paid		17,271
Income taxes paid		2,978	14,307

Vermilion Energy Inc. ■ Page 5 ■ 2024 First Quarter Financial Statements

Consolidated Statements of Changes in Shareholders' Equity

thousands of Canadian dollars, unaudited

		Three Months Ended
Shareholders' capital	Note	March 31, 2024	March 31, 2023
9	4,142,566
Balance, beginning of period		4,243,794
Equity based compensation		-	10,280
Repurchase of shares		(62,294)	(40,960)
Balance, end of period		4,080,272	4,213,114
Contributed surplus	9	43,348
Balance, beginning of period		35,409
Equity based compensation		5,518	13,245
Balance, end of period		48,866	48,654
Accumulated other comprehensive income		109,302
Balance, beginning of period		123,505
Currency translation adjustments		(1,085)	24,681
Hedge accounting reserve		1,632	2,155
Fair value adjustment on investment in securities, net of tax	3	(2,203)	(5,733)
Balance, end of period		107,646	144,608
Deficit		(1,263,568)
Balance, beginning of period		(1,001,650)
Net earnings		2,305	380,332
Dividends declared		(19,183)	(16,226)
Repurchase of shares	9	25,885	10,819
Balance, end of period		(1,254,561)	(626,725)
Total shareholders' equity		2,982,223	3,779,651

Vermilion Energy Inc. ■ Page 6 ■ 2024 First Quarter Financial Statements

Description of equity reserves

Shareholders' capital

Represents the recognized amount for common shares issued (net of equity issuance costs and deferred taxes) less the weighted-average carrying value of shares repurchased. The price paid to repurchase common shares is compared to the carrying value of the shares and the difference is recorded against deficit.

Contributed surplus

Represents the recognized value of unvested equity based awards that will be settled in shares. Once vested, the value of the awards are transferred to shareholders' capital.

Accumulated other comprehensive income

Represents currency translation adjustments, hedge accounting reserve and fair value adjustments on investments.

Currency translation adjustments result from translating the balance sheets of subsidiaries with a foreign functional currency to Canadian dollars at period-end rates. These amounts may be reclassified to net earnings if there is a disposal or partial disposal of a subsidiary.

The hedge accounting reserve represents the effective portion of the change in fair value related to cash flow and net investment hedges recognized in other comprehensive income, net of tax and reclassified to the consolidated statement of net earnings in the same period in which the transaction associated with the hedged item occurs.

Fair value adjustment on investment in securities, net of tax, are a result of changes in the fair value of investments that have been elected to be subsequently measured at fair value through other comprehensive income.

Deficit

Represents the cumulative net earnings less distributed earnings and surplus of the price paid to repurchase common shares of Vermilion Energy Inc. over the weighted-average carrying value of the shares repurchased.

Vermilion Energy Inc. ■ Page 7 ■ 2024 First Quarter Financial Statements

Notes to the Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2024 and 2023

tabular amounts in thousands of Canadian dollars, except share and per share amounts, unaudited

1. Basis of presentation

Vermilion Energy Inc. (the "Company" or "Vermilion") is a corporation governed by the laws of the Province of Alberta and is actively engaged in the business of crude oil and natural gas exploration, development, acquisition, and production.

These condensed consolidated interim financial statements are in compliance with International Accounting Standard ("IAS") 34, "Interim Financial Reporting". These condensed consolidated interim financial statements have been prepared using the same accounting policies and methods of computation as Vermilion's consolidated financial statements for the year ended December 31, 2023.

These condensed consolidated interim financial statements should be read in conjunction with Vermilion's consolidated financial statements for the year ended December 31, 2023, which are contained within Vermilion's Annual Report for the year ended December 31, 2023 and are available on SEDAR+ at www.sedarplus.caor on Vermilion's website at www.vermilionenergy.com.

These condensed consolidated interim financial statements were approved and authorized for issuance by the Board of Directors of Vermilion on May 1, 2024.

Vermilion Energy Inc. ■ Page 8 ■ 2024 First Quarter Financial Statements

2. Segmented information

				Three Months Ended March 31, 2024
	Canada	USA	France	Netherlands	Germany	Ireland	Australia	Corporate	Total
Drilling and development	124,282	12,227	11,015	4,598	20,410	3,093	6,171	502	182,298
Exploration and evaluation	-	-	-	-	3,618	-	-	4,526	8,144
Crude oil and condensate sales	128,488	31,666	88,996	1,274	8,477	-	74,826	-	333,727
NGL sales	17,333	4,570	-	-	-	-	-	-	21,903
Natural gas sales	29,224	1,975	-	33,692	22,707	64,464	-	343	152,405
Sales of purchased commodities	-	-	-	-	-	-	-	38,370	38,370
Royalties	(22,555)	(11,325)	(13,052)	(217)	(1,355)	-	-	(49)	(48,553)
Revenue from external customers	152,490	26,886	75,944	34,749	29,829	64,464	74,826	38,664	497,852
Purchased commodities	-	-	-	-	-	-	-	(38,370)	(38,370)
Transportation	(10,954)	(379)	(5,363)	-	(3,192)	(3,074)	-	-	(22,962)
Operating	(60,458)	(8,214)	(21,440)	(10,610)	(10,761)	(10,604)	(26,786)	(438)	(149,311)
General and administration	(12,997)	(3,266)	(5,189)	(1,938)	(2,572)	(2,170)	(1,738)	6,167	(23,703)
PRRT	-	-	-	-	-	-	(10,783)	-	(10,783)
Corporate income taxes	(1)	-	(5,825)	(11,011)	(4,372)	(451)	(841)	(3,141)	(25,642)
Interest expense	-	-	-	-	-	-	-	(18,392)	(18,392)
Realized gain on derivative instruments	-	-	-	-	-	-	-	220,615	220,615
Realized foreign exchange gain	-	-	-	-	-	-	-	1,871	1,871
Realized other income	-	-	-	-	-	-	-	183	183
Fund flows from operations	68,080	15,027	38,127	11,190	8,932	48,165	34,678	207,159	431,358
				Three Months Ended March 31, 2023
	Canada	USA	France	Netherlands	Germany	Ireland	Australia	Corporate	Total
Drilling and development	101,850	14,220	11,685	10,382	7,716	2,058	5,132	285	153,328
Exploration and evaluation	-	-	-	1	448	-	-	1,043	1,492
Crude oil and condensate sales	182,783	25,826	64,466	484	13,344	2	-	-	286,905
NGL sales	21,639	4,108	-	-	-	-	-	-	25,747
Natural gas sales	59,675	2,321	-	68,597	58,128	49,485	-	1,840	240,046
Sales of purchased commodities	-	-	-	-	-	-	-	49,012	49,012
Royalties	(32,896)	(8,603)	(7,091)	(14,829)	(2,903)	-	-	(1,022)	(67,344)
Revenue from external customers	231,201	23,652	57,375	54,252	68,569	49,487	-	49,830	534,366
Purchased commodities	-	-	-	-	-	-	-	(49,012)	(49,012)
Transportation	(13,114)	(67)	(6,200)	-	(2,764)	(905)	-	-	(23,050)
Operating	(69,667)	(6,552)	(16,547)	(12,912)	(10,663)	(4,618)	(15,331)	(535)	(136,825)
General and administration	(23,537)	(2,516)	(4,833)	(2,111)	(2,741)	(1,277)	(1,735)	18,861	(19,889)
PRRT	-	-	-	-	-	-	-	-	-
Corporate income taxes	(1)	-	(1,210)	(6,694)	(13,082)	-	(629)	(646)	(22,262)
Windfall tax	-	-	-	-	-	-	-	(21,440)	(21,440)
Interest expense	-	-	-	-	-	-	-	(21,875)	(21,875)
Realized gain on derivative instruments	-	-	-	-	-	-	-	14,330	14,330
Realized foreign exchange loss	-	-	-	-	-	-	-	(4,771)	(4,771)
Realized other income	-	-	-	-	-	-	-	3,595	3,595
Fund flows from operations	124,882	14,517	28,585	32,535	39,319	42,687	(17,695)	(11,663)	253,167

Vermilion Energy Inc. ■ Page 9 ■ 2024 First Quarter Financial Statements