CALGARY, March 3, 2014 /CNW/ – Vermilion Energy Inc. (“Vermilion”, the “Company”, “We” or “Our”) (TSX, NYSE: VET) is pleased to announce summary 2013 year-end reserves and resource information. The estimates of reserves and resources and other oil and gas information contained in this news release has been estimated by GLJ Petroleum Consultants Ltd. (“GLJ”) and prepared in accordance with National Instrument 51-101 “Standards of Disclosure for Oil and Gas Activities” of the Canadian Securities Administrators (“NI 51-101”) and the Canadian Oil and Gas Evaluation Handbook (“COGEH”). For additional information about Vermilion, including Vermilion’s statement of reserves data and other information in Form 51-101F1, report on reserves data by independent qualified reserves evaluator or auditor in Form 51-101F2 and report of management and directors on oil and gas disclosure in Form 51-101F3, please review the Company’s Annual Information Form for the year ended December 31, 2013, to be filed and available on SEDAR at www.sedar.com and on the SEC’s EDGAR system at www.sec.gov.
HIGHLIGHTS
- Total proved (“1P”) reserves increased 23% to 129.0 mmboe, while total proved plus probable (“2P”) reserves increased 20% to 198.6 mmboe.
- In 2013, we added 48.7 mmboe of 2P reserves with 46.3 mmboe (95%) of 2P reserves additions coming from exploration and development (“E&D”) activities and 2.4 mmboe (5%) of 2P reserves additions through acquisitions.
- At the 2P level, we replaced 309% of 2013 production through E&D activities (excluding acquisitions). Excluding Corrib-related expenditures and reserves additions, Vermilion reinvested 68% of fund flows from operations(1) to achieve a finding and development (“F&D”) cost of $16.48/boe for E&D related 2P reserves additions (including future development costs “FDC”) and a recycle ratio of 3.7 times. Including Corrib-related development expenditures and reserves additions, Vermilion reinvested 81% of fund flows from operations to achieve an F&D cost of $16.59/boe for E&D related 2P reserves additions (including FDC costs) and a recycle ratio of 3.6 times.
- At the 2P level, we replaced 325% of 2013 production through all activities (including both E&D activities and acquisitions), at a finding, development and acquisition (“FD&A”) cost of $17.02/boe (including future development costs) and a recycle ratio of 3.6 times. Our 2P FD&A cost for 2013 represents a 27% reduction from our FD&A cost in 2012.
- The GLJ 2013 Resources Assessment (as defined below) estimated contingent resources of 74.4 mmboe (low estimate) to 351.7 mmboe (high estimate), with a best estimate of 233.5 mmboe, and prospective resources of 59.4 mmboe (low estimate) to 818.8 mmboe (high estimate), with a best estimate of 498.7 mmboe.
- At year-end 2013, 2P reserves were comprised of 36% Brent-based light crude, 16% Canadian-based light crude, 7% natural gas liquids, 20% European natural gas and 21% Canadian natural gas.
- Reserve life index increased to 13.3 years for 2P reserves and 8.6 years for 1P reserves based on year-end 2013 reserves and annualized fourth quarter 2013 production of 40,960 boe/d, as compared to 12.5 years for 2P reserves and 8.0 years for 1P reserves at year-end 2012.
- Based on a successful six-well program in 2013, an additional 40 (28.4 net) undeveloped wells were added at the 2P level in the Mannville liquids-rich gas play in Alberta, with average reserves of 650 mboe/well.
- A successful five-well infill and extension drilling program in the Champotran field in the Paris Basin in France added 5.5 mmbbl of 2P reserves.
- The continued strong performance of our existing wells in combination with the results of our successful 2013 two-well drilling program resulted in the addition of 4.7 mmbbl of 2P reserves in Australia in 2013.
| (1) | Additional GAAP Financial Measure. Please see the “Advisories” section of this 2013 Year-end Summary Reserves and Resource Information news release. |
DISCLAIMER
Certain statements included or incorporated by reference in this document may constitute forward looking statements or financial outlooks 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; business strategies and objectives; estimated reserve quantities and the discounted present value of future net cash flows from such reserves; petroleum and natural gas sales; future production levels (including the timing thereof) and rates of average annual production growth; estimated contingent resources and prospective resources; exploration and development plans; 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; the timing of regulatory proceedings and approvals; and the timing of first commercial natural gas and the estimate of Vermilion’s share of the expected natural gas production from the Corrib field.
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.
Although Vermilion believes that the expectations reflected in such forward looking statements and 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 strength 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 and interest rates; 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 Vermilion; and other risks and uncertainties described elsewhere in this document or in Vermilion’s other filings with Canadian securities regulatory authorities.
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.
All oil and natural gas reserve information contained in this document has been prepared and presented in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. The actual oil and natural gas reserves and future production will be greater than or less than the estimates provided in this document. The estimated future net revenue from the production of the disclosed oil and natural gas reserves does not represent the fair market value of these reserves. 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.
Abbreviations
| Oil and Natural Gas Liquids | |
| bbl | Barrel |
| Mbbl | thousand barrels |
| MMbbl | million barrels |
| bbl/d | barrels per day |
| NGLs | natural gas liquids |
| Natural Gas | |
| Mcf | thousand cubic feet |
| MMcf | million cubic feet |
| Mcf/d | thousand cubic feet per day |
| MMcf/d | million cubic feet per day |
| MMBtu | million British Thermal Units |
| Other | |
| API | American Petroleum Institute |
| °API | An indication of the specific gravity of crude oil measured on the API gravity scale. |
| Liquid petroleum with a specified gravity of 28 °API or higher is generally referred to as light crude oil. | |
| boe | barrel of oil equivalent |
| M$ | thousand dollars |
| MM$ | million dollars |
| Mboe | 1,000 barrels of oil equivalent |
| MMboe | million barrels of oil equivalent |
| WTI | West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma for crude oil of |
| standard grade | |
RESERVES, FUTURE NET REVENUE AND OTHER OIL AND GAS INFORMATION
The following is a summary of the oil and natural gas reserves and the value of future net revenue of Vermilion as evaluated by GLJ, independent petroleum engineering consultants in Calgary in a report dated February 4, 2014 with an effective date of December 31, 2013 (the “GLJ 2013 Reserves Evaluation”). The GLJ 2013 Reserves Evaluation was prepared in accordance with National Instrument 51-101 and COGEH.
Reserves and other oil and gas information in this news release is effective December 31, 2013 unless otherwise stated.
All evaluations of future net production revenue set forth in the tables below are stated after overriding and lessor royalties, Crown royalties, freehold royalties, mineral taxes, direct lifting costs, normal allocated overhead and future capital investments, including abandonment and reclamation obligations. Future net production revenues estimated by the GLJ 2013 Reserves Evaluation do not represent the fair market value of the reserves. Other assumptions relating to the costs, prices for future production and other matters are included in the GLJ 2013 Reserves Evaluation. There is no assurance that the future price and cost assumptions used in the GLJ 2013 Reserves Evaluation will prove accurate and variances could be material.
Reserves for Australia, Canada, France, Ireland and the Netherlands are established using deterministic methodology. Total proved reserves are established at the 90 percent probability (P90) level. There is a 90 percent probability that the actual reserves recovered will be equal to or greater than the P90 reserves. Total proved plus probable reserves are established at the 50 percent probability (P50) level. There is a 50 percent probability that the actual reserves recovered will be equal to or greater than the P50 reserves.
Estimates of reserves have been made assuming that development of each property, in respect of which estimates have been made, will occur without regard to the availability of funding required for that development.
With respect to finding and development costs, the aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for that year.
Pricing used in the forecast price estimates is set forth in the table below and referenced in the notes to subsequent tables.
Table 1: Forecast Prices used in Estimates (1)
| Natural Gas | Natural Gas | Natural Gas | Inflation | Exchange | Exchange | |||||||||||||||
| Light and Medium Crude Oil | Crude Oil | Canada | France/Netherlands | Liquids | Rate | Rate | Rate | |||||||||||||
| WTI | Edmonton | Cromer | Brent Blend | National | ||||||||||||||||
| Cushing | Par Price | Medium | FOB | AECO | Balancing | FOB | ||||||||||||||
| Oklahoma | 40˚ API | 29.3˚ API | North Sea | Gas Price | Point | Field Gate | Percent | |||||||||||||
| Year | ($US/bbl) | ($Cdn/bbl) | ($Cdn/bbl) | ($US/bbl) | ($Cdn/MMBtu) | (UK) | ($Cdn/bbl) | Per Year | ($US/$Cdn) | (EUR/$Cdn) | ||||||||||
| 2013 | 97.88 | 93.33 | 88.05 | 108.76 | 3.24 | 10.83 | 68.65 | 1.0 | 1.000 | 1.369 | ||||||||||
| Forecast | ||||||||||||||||||||
| 2014 | 97.50 | 92.76 | 86.27 | 107.50 | 4.03 | 11.32 | 66.66 | 2.0 | 0.950 | 1.420 | ||||||||||
| 2015 | 97.50 | 97.37 | 90.55 | 107.50 | 4.26 | 11.32 | 69.12 | 2.0 | 0.950 | 1.420 | ||||||||||
| 2016 | 97.50 | 100.00 | 93.00 | 105.00 | 4.50 | 11.05 | 70.45 | 2.0 | 0.950 | 1.420 | ||||||||||
| 2017 | 97.50 | 100.00 | 93.00 | 102.50 | 4.74 | 10.79 | 69.83 | 2.0 | 0.950 | 1.420 | ||||||||||
| 2018 | 97.50 | 100.00 | 93.00 | 102.50 | 4.97 | 10.79 | 69.19 | 2.0 | 0.950 | 1.420 | ||||||||||
| Thereafter | 2.0% | 2.0% | 2.0% | 2.0% | 2.0% | 2.0% | 2.0% | 2.0% | 0.950 | 1.420 | ||||||||||
| Note: | |
| (1) | The pricing assumptions used in the GLJ 2013 Reserves Evaluation with respect to net values of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above. The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation. GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101. |
All forecast prices in the table above are provided by GLJ. For 2013, the price of Vermilion’s natural gas in the Netherlands was based on the TTF day-ahead index, as determined on the Title Transfer Facility Virtual Trading Point operated by Dutch TSO Gas Transport Services, plus various fees. GasTerra, a state owned entity purchases all natural gas produced by Vermilion in the Netherlands. Prior to 2013, the natural gas price received by Vermilion in the Netherlands was calculated using a formula based on the trailing average of Dated Brent and natural gas prices from European trading hubs. France natural gas production was benchmarked to National Balancing Point (UK). The benchmark price for Australia and France crude oil was Dated Brent. The benchmark price for Canadian crude oil was Edmonton Par and Canadian natural gas was priced against AECO. For the year ended December 31, 2013, the average realized sales prices before hedging were $119.38 per bbl (Australia), $10.61 per Mcf (Netherlands), $108.55 per bbl (France) for Brent-based crude oil, $89.78 per bbl for Canadian-based crude oil and NGLs and $3.40 per Mcf for Canadian natural gas.
The following table summarizes the capital expenditures made by Vermilion on oil and natural gas properties for the year ended December 31, 2013:
Table 2: Capital Costs Incurred
| Acquisition Costs | |||||||||||||||
| Proved | Unproved | Exploration | Development | Total | |||||||||||
| (M$) | Properties (1) | Properties | Costs (1) | Costs | Costs | ||||||||||
| Australia | – | – | – | 77,931 | 77,931 | ||||||||||
| Canada | – | – | 19,079 | 235,086 | 254,165 | ||||||||||
| France | – | – | 3,899 | 96,479 | 100,378 | ||||||||||
| Ireland | – | – | – | 90,898 | 90,898 | ||||||||||
| Netherlands | 24,124 | – | – | 28,543 | 52,667 | ||||||||||
| Total | 24,124 | – | 22,978 | 528,937 | 576,039 | ||||||||||
| Note: |
| (1) Includes costs of acquiring undeveloped properties. |
The following table sets forth the reserve life index based on total proved and proved plus probable reserve and fourth quarter 2013 production of 40,960 boe/d.
Table 3: Reserve Life Index
| Commodity | Production | Reserve Life Index (years) | |||
| Fourth Quarter 2013 |
Total Proved |
Proved Plus Probable |
|||
| Oil and natural gas liquids (bbl/d) | 27,800 | 7.6 | 11.6 | ||
| Natural gas (mmcf/d) | 78.96 | 10.7 | 16.9 | ||
| Oil Equivalent (boe/d) | 40,960 | 8.6 | 13.3 | ||
The following tables provide reserves data and a breakdown of future net revenue by component and production group using forecast prices and costs. For Canada, the tables following include Alberta gas cost allowance.
The following tables may not total due to rounding.
Table 4: Oil and Gas Reserves – Based on Forecast Prices and Costs (1)
| Light and Medium Oil | Heavy Oil | Natural Gas | Natural Gas Liquids | BOE | BOE | |||||||||||||||||||||||||
| Gross (2) | Net (2) | Gross (2) | Net (2) | Gross (2) | Net (2) | Gross (2) | Net (2) | Gross | Net | |||||||||||||||||||||
| (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (MMcf) | (MMcf) | (Mbbl) | (Mbbl) | (Mboe) | (Mboe) | |||||||||||||||||||||
| Proved Developed Producing (3) (5) (6) | ||||||||||||||||||||||||||||||
| Australia | 12,824 | 12,824 | – | – | – | – | – | – | 12,824 | 12,824 | ||||||||||||||||||||
| Canada | 11,394 | 9,323 | 13 | 12 | 64,246 | 58,142 | 2,804 | 1,920 | 24,919 | 20,945 | ||||||||||||||||||||
| France | 30,895 | 28,741 | – | – | 7,561 | 7,554 | – | – | 32,155 | 30,000 | ||||||||||||||||||||
| Ireland | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||
| Netherlands | – | – | – | – | 22,794 | 22,794 | 44 | 44 | 3,843 | 3,843 | ||||||||||||||||||||
| Total Proved Developed Producing | 55,113 | 50,888 | 13 | 12 | 94,601 | 88,490 | 2,848 | 1,964 | 73,741 | 67,612 | ||||||||||||||||||||
| Proved Developed Non-Producing (3) (5) (7) | ||||||||||||||||||||||||||||||
| Australia | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||
| Canada | 459 | 392 | – | – | 16,330 | 14,633 | 629 | 408 | 3,810 | 3,239 | ||||||||||||||||||||
| France | 686 | 635 | – | – | 3,470 | 3,457 | – | – | 1,264 | 1,211 | ||||||||||||||||||||
| Ireland | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||
| Netherlands | – | – | – | – | 13,956 | 13,956 | 17 | 17 | 2,343 | 2,343 | ||||||||||||||||||||
| Total Proved Developed Non-Producing | 1,145 | 1,027 | – | – | 33,756 | 32,046 | 646 | 425 | 7,417 | 6,793 | ||||||||||||||||||||
| Proved Undeveloped (3) (8) | ||||||||||||||||||||||||||||||
| Australia | 1,200 | 1,200 | – | – | – | – | – | – | 1,200 | 1,200 | ||||||||||||||||||||
| Canada | 8,997 | 7,768 | – | – | 74,385 | 68,950 | 4,734 | 3,671 | 26,129 | 22,931 | ||||||||||||||||||||
| France | 2,810 | 2,665 | – | – | – | – | – | – | 2,810 | 2,665 | ||||||||||||||||||||
| Ireland | – | – | – | – | 105,931 | 105,931 | – | – | 17,655 | 17,655 | ||||||||||||||||||||
| Netherlands | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||
| Total Proved Undeveloped | 13,007 | 11,633 | – | – | 180,316 | 174,881 | 4,734 | 3,671 | 47,794 | 44,451 | ||||||||||||||||||||
| Proved (3) | ||||||||||||||||||||||||||||||
| Australia | 14,024 | 14,024 | – | – | – | – | – | – | 14,024 | 14,024 | ||||||||||||||||||||
| Canada | 20,850 | 17,483 | 13 | 12 | 154,961 | 141,725 | 8,167 | 5,999 | 54,857 | 47,115 | ||||||||||||||||||||
| France | 34,391 | 32,041 | – | – | 11,031 | 11,011 | – | – | 36,230 | 33,876 | ||||||||||||||||||||
| Ireland | – | – | – | – | 105,931 | 105,931 | – | – | 17,655 | 17,655 | ||||||||||||||||||||
| Netherlands | – | – | – | – | 36,750 | 36,750 | 61 | 61 | 6,186 | 6,186 | ||||||||||||||||||||
| Total Proved | 69,265 | 63,548 | 13 | 12 | 308,673 | 295,417 | 8,228 | 6,060 | 128,952 | 118,856 | ||||||||||||||||||||
| Probable (4) | ||||||||||||||||||||||||||||||
| Australia | 5,439 | 5,439 | – | – | – | – | – | – | 5,439 | 5,439 | ||||||||||||||||||||
| Canada | 10,450 | 8,645 | 3 | 3 | 90,663 | 81,662 | 5,685 | 3,942 | 31,249 | 26,200 | ||||||||||||||||||||
| France | 18,394 | 17,178 | – | – | 3,269 | 3,266 | – | – | 18,939 | 17,722 | ||||||||||||||||||||
| Ireland | – | – | – | – | 38,707 | 38,707 | – | – | 6,451 | 6,451 | ||||||||||||||||||||
| Netherlands | – | – | – | – | 44,592 | 44,592 | 99 | 99 | 7,531 | 7,531 | ||||||||||||||||||||
| Total Probable | 34,283 | 31,262 | 3 | 3 | 177,231 | 168,227 | 5,784 | 4,041 | 69,609 | 63,344 | ||||||||||||||||||||
| Proved Plus Probable (3) (4) | ||||||||||||||||||||||||||||||
| Australia | 19,463 | 19,463 | – | – | – | – | – | – | 19,463 | 19,463 | ||||||||||||||||||||
| Canada | 31,300 | 26,128 | 16 | 15 | 245,624 | 223,387 | 13,852 | 9,941 | 86,105 | 73,315 | ||||||||||||||||||||
| France | 52,785 | 49,219 | – | – | 14,300 | 14,277 | – | – | 55,168 | 51,599 | ||||||||||||||||||||
| Ireland | – | – | – | 144,638 | 144,638 | – | – | 24,107 | 24,106 | |||||||||||||||||||||
| Netherlands | – | – | – | – | 81,342 | 81,342 | 160 | 160 | 13,717 | 13,717 | ||||||||||||||||||||
| Total Proved Plus Probable | 103,548 | 94,810 | 16 | 15 | 485,904 | 463,644 | 14,012 | 10,101 | 198,560 | 182,200 | ||||||||||||||||||||
| Notes: | |
| (1) | The pricing assumptions used in the GLJ 2013 Reserves Evaluation with respect to net values of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above. See “Forecast Prices used in Estimates”. The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation. GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101. |
| (2) | “Gross Reserves” are Vermilion’s working interest (operating or non-operating) share before deduction of royalties and without including any royalty interests of Vermilion. “Net Reserves” are Vermilion’s working interest (operating or non-operating) share after deduction of royalty obligations, plus Vermilion’s royalty interests in reserves. |
| (3) | “Proved” reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. |
| (4) | “Probable” reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. |
| (5) | “Developed” reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production. |
| (6) | “Developed Producing” reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty. |
| (7) | “Developed Non-Producing” reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown. |
| (8) | “Undeveloped” reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned. |
Table 5: Net Present Values of Future Net Revenue – Based on Forecast Prices and Costs (1)
| Before Deducting Future Income Taxes Discounted At | After Deducting Future Income Taxes Discounted At | |||||||||||||||||||||||||||||
| (M$) | 0% | 5% | 10% | 15% | 20% | 0% | 5% | 10% | 15% | 20% | ||||||||||||||||||||
| Proved Developed Producing (2) (4) (5) | ||||||||||||||||||||||||||||||
| Australia | 652,521 | 585,705 | 531,671 | 487,436 | 450,743 | 441,525 | 389,286 | 347,679 | 314,159 | 286,801 | ||||||||||||||||||||
| Canada | 917,542 | 732,428 | 611,019 | 526,184 | 463,924 | 917,542 | 732,428 | 611,019 | 526,184 | 463,924 | ||||||||||||||||||||
| France | 1,922,512 | 1,441,270 | 1,169,507 | 995,695 | 874,106 | 1,515,215 | 1,143,202 | 924,201 | 781,406 | 680,775 | ||||||||||||||||||||
| Ireland | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||
| Netherlands | 171,171 | 166,503 | 160,726 | 154,867 | 149,274 | 127,777 | 124,483 | 119,963 | 115,260 | 110,734 | ||||||||||||||||||||
| Total Proved Developed Producing | 3,663,746 | 2,925,906 | 2,472,923 | 2,164,182 | 1,938,047 | 3,002,059 | 2,389,399 | 2,002,862 | 1,737,009 | 1,542,234 | ||||||||||||||||||||
| Proved Developed Non-Producing (2) (4) (6) | ||||||||||||||||||||||||||||||
| Australia | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||
| Canada | 70,195 | 55,001 | 45,425 | 38,749 | 33,807 | 70,195 | 55,001 | 45,425 | 38,749 | 33,807 | ||||||||||||||||||||
| France | 58,478 | 44,933 | 36,291 | 30,396 | 26,117 | 37,859 | 28,837 | 22,976 | 18,988 | 16,109 | ||||||||||||||||||||
| Ireland | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||
| Netherlands | 58,744 | 42,746 | 32,922 | 26,583 | 22,305 | 48,215 | 32,962 | 23,789 | 18,026 | 14,260 | ||||||||||||||||||||
| Total Proved Developed Non-Producing | 187,417 | 142,680 | 114,638 | 95,728 | 82,229 | 156,269 | 116,800 | 92,190 | 75,763 | 64,176 | ||||||||||||||||||||
| Proved Undeveloped (2) (7) | ||||||||||||||||||||||||||||||
| Australia | 60,146 | 46,820 | 36,877 | 29,331 | 23,516 | 27,883 | 19,651 | 13,726 | 9,397 | 6,192 | ||||||||||||||||||||
| Canada | 746,436 | 530,852 | 394,101 | 302,160 | 237,346 | 448,077 | 321,004 | 240,489 | 185,988 | 147,108 | ||||||||||||||||||||
| France | 186,477 | 149,805 | 119,575 | 96,365 | 78,740 | 124,123 | 93,815 | 71,553 | 55,102 | 42,883 | ||||||||||||||||||||
| Ireland | 716,287 | 559,569 | 435,502 | 341,954 | 271,427 | 716,287 | 559,569 | 435,502 | 341,954 | 271,427 | ||||||||||||||||||||
| Netherlands | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||
| Total Proved Undeveloped | 1,709,346 | 1,287,046 | 986,055 | 769,810 | 611,029 | 1,316,370 | 994,039 | 761,270 | 592,441 | 467,610 | ||||||||||||||||||||
| Proved (2) | ||||||||||||||||||||||||||||||
| Australia | 712,667 | 632,525 | 568,548 | 516,767 | 474,259 | 469,408 | 408,937 | 361,405 | 323,556 | 292,993 | ||||||||||||||||||||
| Canada | 1,734,173 | 1,318,281 | 1,050,545 | 867,093 | 735,077 | 1,435,814 | 1,108,433 | 896,933 | 750,921 | 644,839 | ||||||||||||||||||||
| France | 2,167,467 | 1,636,008 | 1,325,373 | 1,122,456 | 978,963 | 1,677,197 | 1,265,854 | 1,018,730 | 855,496 | 739,767 | ||||||||||||||||||||
| Ireland | 716,287 | 559,569 | 435,502 | 341,954 | 271,427 | 716,287 | 559,569 | 435,502 | 341,954 | 271,427 | ||||||||||||||||||||
| Netherlands | 229,915 | 209,249 | 193,648 | 181,450 | 171,579 | 175,992 | 157,445 | 143,752 | 133,286 | 124,994 | ||||||||||||||||||||
| Total Proved | 5,560,509 | 4,355,632 | 3,573,616 | 3,029,720 | 2,631,305 | 4,474,698 | 3,500,238 | 2,856,322 | 2,405,213 | 2,074,020 | ||||||||||||||||||||
| Probable (3) | ||||||||||||||||||||||||||||||
| Australia | 342,887 | 268,934 | 216,210 | 177,749 | 149,013 | 191,359 | 143,212 | 109,895 | 86,417 | 69,505 | ||||||||||||||||||||
| Canada | 1,066,302 | 679,218 | 473,035 | 351,453 | 273,764 | 805,234 | 505,288 | 346,615 | 253,689 | 194,789 | ||||||||||||||||||||
| France | 1,328,916 | 752,046 | 490,337 | 346,386 | 257,336 | 867,907 | 479,851 | 302,221 | 204,717 | 144,824 | ||||||||||||||||||||
| Ireland | 413,592 | 250,341 | 164,931 | 116,333 | 86,526 | 413,592 | 250,341 | 164,931 | 116,333 | 86,526 | ||||||||||||||||||||
| Netherlands | 379,491 | 280,351 | 220,037 | 180,195 | 152,184 | 281,161 | 204,108 | 156,473 | 124,925 | 102,879 | ||||||||||||||||||||
| Total Probable | 3,531,188 | 2,230,890 | 1,564,550 | 1,172,116 | 918,823 | 2,559,253 | 1,582,800 | 1,080,135 | 786,081 | 598,523 | ||||||||||||||||||||
| Proved Plus Probable (2) (3) | ||||||||||||||||||||||||||||||
| Australia | 1,055,554 | 901,459 | 784,758 | 694,516 | 623,272 | 660,767 | 552,149 | 471,300 | 409,973 | 362,498 | ||||||||||||||||||||
| Canada | 2,800,475 | 1,997,499 | 1,523,580 | 1,218,546 | 1,008,841 | 2,241,048 | 1,613,721 | 1,243,548 | 1,004,610 | 839,628 | ||||||||||||||||||||
| France | 3,496,383 | 2,388,054 | 1,815,710 | 1,468,842 | 1,236,299 | 2,545,104 | 1,745,705 | 1,320,951 | 1,060,213 | 884,591 | ||||||||||||||||||||
| Ireland | 1,129,879 | 809,910 | 600,433 | 458,287 | 357,953 | 1,129,879 | 809,910 | 600,433 | 458,287 | 357,953 | ||||||||||||||||||||
| Netherlands | 609,406 | 489,600 | 413,685 | 361,645 | 323,763 | 457,153 | 361,553 | 300,225 | 258,211 | 227,873 | ||||||||||||||||||||
| Total Proved Plus Probable | 9,091,697 | 6,586,522 | 5,138,166 | 4,201,836 | 3,550,128 | 7,033,951 | 5,083,038 | 3,936,457 | 3,191,294 | 2,672,543 | ||||||||||||||||||||
| Notes: | |
| (1) | The pricing assumptions used in the GLJ 2013 Reserves Evaluation with respect to net values of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above. See “Forecast Prices used in Estimates”. The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation. GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101. |
| (2) | “Proved” reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. |
| (3) | “Probable” reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. |
| (4) | “Developed” reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production. |
| (5) | “Developed Producing” reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty. |
| (6) | “Developed Non-Producing” reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown. |
| (7) | “Undeveloped” reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned. |
Table 6: Total Future Net Revenue (Undiscounted) Based on Forecast Prices and Costs (1)
| Future Net | Future Net | |||||||||||||||||||||||
| Capital | Abandonment and | Revenue | Revenue | |||||||||||||||||||||
| Operating | Development | Reclamation | Before | Future | After | |||||||||||||||||||
| (M$) | Revenue | Royalties | Costs | Costs | Costs | Income Taxes | Income Taxes | Income Taxes | ||||||||||||||||
| Proved (2) | ||||||||||||||||||||||||
| Australia | 1,646,523 | – | 694,410 | 201,855 | 37,591 | 712,667 | 243,259 | 469,408 | ||||||||||||||||
| Canada | 3,566,032 | 523,536 | 823,146 | 444,584 | 40,594 | 1,734,172 | 298,358 | 1,435,814 | ||||||||||||||||
| France | 3,825,846 | 255,263 | 1,070,681 | 149,246 | 183,193 | 2,167,463 | 490,266 | 1,677,197 | ||||||||||||||||
| Ireland | 1,186,463 | – | 217,845 | 184,480 | 67,851 | 716,287 | – | 716,287 | ||||||||||||||||
| Netherlands | 447,859 | – | 136,074 | 40,558 | 41,311 | 229,916 | 53,924 | 175,992 | ||||||||||||||||
| Total Proved | 10,672,723 | 778,799 | 2,942,156 | 1,020,723 | 370,540 | 5,560,505 | 1,085,807 | 4,474,698 | ||||||||||||||||
| Proved Plus Probable (2) (3) | ||||||||||||||||||||||||
| Australia | 2,312,683 | – | 970,836 | 243,471 | 42,822 | 1,055,554 | 394,787 | 660,767 | ||||||||||||||||
| Canada | 5,666,550 | 874,308 | 1,256,300 | 685,624 | 49,843 | 2,800,475 | 559,427 | 2,241,048 | ||||||||||||||||
| France | 5,992,965 | 398,363 | 1,522,445 | 346,678 | 229,097 | 3,496,382 | 951,278 | 2,545,104 | ||||||||||||||||
| Ireland | 1,676,002 | – | 293,792 | 184,480 | 67,851 | 1,129,879 | – | 1,129,879 | ||||||||||||||||
| Netherlands | 1,004,424 | – | 257,731 | 85,689 | 51,599 | 609,405 | 152,252 | 457,153 | ||||||||||||||||
| Total Proved Plus Probable | 16,652,624 | 1,272,671 | 4,301,104 | 1,545,942 | 441,212 | 9,091,695 | 2,057,744 | 7,033,951 |
| Notes: | |
| (1) | The pricing assumptions used in the GLJ 2013 Reserves Evaluation with respect to net values of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above. See “Forecast Prices used in Estimates”. The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation. GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101. |
| (2) | “Proved” reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. |
| (3) | “Probable” reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. |
Table 7: Future Net Revenue by Production Group Based on Forecast Prices and Costs (1)
| Future Net Revenue | |||||||
| Before Income Taxes (2) | |||||||
| (Discounted at 10% Per Year) | Unit Value | ||||||
| Proved Developed Producing | (M$) | ($/boe) | |||||
| Light and medium oil (3) | 2,142,591 | 39.70 | |||||
| Natural gas (4) | 328,991 | 26.45 | |||||
| Non-conventional oil and gas activities | 1,341 | 1.11 | |||||
| Total Proved Developed Producing | 2,472,923 | 36.57 | |||||
| Proved Developed Non-Producing | |||||||
| Light and medium oil (3) | 32,403 | 28.38 | |||||
| Natural gas (4) | 80,346 | 15.83 | |||||
| Non-conventional oil and gas activities | 1,889 | 3.29 | |||||
| Total Proved Developed Non-Producing | 114,638 | 16.88 | |||||
| Proved Undeveloped | |||||||
| Light and medium oil (3) | 457,303 | 30.83 | |||||
| Natural gas (4) | 524,088 | 18.93 | |||||
| Non-conventional oil and gas activities | 4,664 | 2.42 | |||||
| Total Proved Undeveloped | 986,055 | 22.18 | |||||
| Proved | |||||||
| Light and medium oil (3) | 2,632,297 | 37.64 | |||||
| Natural gas (4) | 933,425 | 20.64 | |||||
| Non-conventional oil and gas activities | 7,894 | 2.12 | |||||
| Total Proved | 3,573,616 | 30.07 | |||||
| Probable | |||||||
| Light and medium oil (3) | 1,009,856 | 29.05 | |||||
| Natural gas (4) | 547,769 | 20.29 | |||||
| Non-conventional oil and gas activities | 6,925 | 4.38 | |||||
| Total Probable | 1,564,550 | 24.70 | |||||
| Proved Plus Probable | |||||||
| Light and medium oil (3) | 3,642,153 | 34.79 | |||||
| Natural gas (4) | 1,481,194 | 20.51 | |||||
| Non-conventional oil and gas activities | 14,819 | 2.80 | |||||
| Total Proved Plus Probable | 5,138,166 | 28.20 |
| Notes: | |
| (1) | The pricing assumptions used in the GLJ 2013 Reserves Evaluation with respect to net values of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above. See “Forecast Prices used in Estimates”. The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation. GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101. |
| (2) | Other Company revenue and costs not related to a specific production group have been allocated proportionately to production groups. Unit values are based on Company Net Reserves. Net present values of reserves categories are an approximation based on major products. |
| (3) | Including solution gas and other by-products. |
| (4) | Including by-products but excluding solution gas. |
Reconciliations of Changes in Reserves
The following tables set forth a reconciliation of the changes in Vermilion’s gross light and medium crude oil, heavy oil and associated and non-associated gas (combined) reserves as at December 31, 2013 compared to such reserves as at December 31, 2012 based on the forecast price and cost assumptions set forth in note 3.
Table 8: Reconciliation of Company Gross Reserves by Principal Product Type – Based on Forecast Prices and Costs
| AUSTRALIA | Total Oil | Light and Medium Oil | Heavy Oil | Natural Gas Liquids | ||||||||||||||||||||||||||||||||
| Proved + | Proved + | Proved + | Proved + | |||||||||||||||||||||||||||||||||
| Proved Probable P+P (1) (2) | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | ||||||||||||||||||||||||
| Factors | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | ||||||||||||||||||||||||
| At December 31, 2012 | 10,327 | 6,816 | 17,143 | 10,327 | 6,816 | 17,143 | – | – | – | – | – | – | ||||||||||||||||||||||||
| Discoveries | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Extensions & Improved Recovery | 3,300 | (650) | 2,650 | 3,300 | (650) | 2,650 | – | – | – | – | – | – | ||||||||||||||||||||||||
| Technical Revisions | 2,763 | (727) | 2,036 | 2,763 | (727) | 2,036 | – | – | – | – | – | – | ||||||||||||||||||||||||
| Acquisitions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Dispositions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Economic Factors | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Production | (2,366) | – | (2,366) | (2,366) | – | (2,366) | – | – | – | – | – | – | ||||||||||||||||||||||||
| At December 31, 2013 | 14,024 | 5,439 | 19,463 | 14,024 | 5,439 | 19,463 | – | – | – | – | – | – | ||||||||||||||||||||||||
| Total Gas | Conventional Natural Gas | Coal Bed Methane | BOE | |||||||||||||||||||||||||||||||||
| Proved + | Proved + | Proved + | Proved + | |||||||||||||||||||||||||||||||||
| Proved Probable P+P (1) (2) | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | ||||||||||||||||||||||||
| Factors | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (Mboe) | (Mboe) | (Mboe) | ||||||||||||||||||||||||
| At December 31, 2012 | – | – | – | – | – | – | – | – | – | 10,327 | 6,816 | 17,143 | ||||||||||||||||||||||||
| Discoveries | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Extensions & Improved Recovery | – | – | – | – | – | – | – | – | – | 3,300 | (650) | 2,650 | ||||||||||||||||||||||||
| Technical Revisions | – | – | – | – | – | – | – | – | – | 2,763 | (727) | 2,036 | ||||||||||||||||||||||||
| Acquisitions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Dispositions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Economic Factors | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Production | – | – | – | – | – | – | – | – | – | (2,366) | – | (2,366) | ||||||||||||||||||||||||
| At December 31, 2013 | – | – | – | – | – | – | – | – | – | 14,024 | 5,439 | 19,463 | ||||||||||||||||||||||||
| CANADA | Total Oil | Light and Medium Oil | Heavy Oil | Natural Gas Liquids | ||||||||||||||||||||||||||||||||
| Proved + | Proved + | Proved + | Proved + | |||||||||||||||||||||||||||||||||
| Proved Probable P+P (1) (2) | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | ||||||||||||||||||||||||
| Factors | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | ||||||||||||||||||||||||
| At December 31, 2012 | 18,132 | 14,102 | 32,234 | 18,115 | 14,099 | 32,214 | 17 | 3 | 20 | 3,565 | 2,026 | 5,591 | ||||||||||||||||||||||||
| Discoveries | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Extensions & Improved Recovery | 1,056 | 1,487 | 2,543 | 1,056 | 1,487 | 2,543 | – | – | – | 3,839 | 3,256 | 7,095 | ||||||||||||||||||||||||
| Technical Revisions | 4,736 | (5,136) | (400) | 4,736 | (5,136) | (400) | – | – | – | 1,371 | 403 | 1,774 | ||||||||||||||||||||||||
| Acquisitions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Dispositions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Economic Factors | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Production | (3,061) | – | (3,061) | (3,057) | – | (3,057) | (4) | – | (4) | (608) | – | (608) | ||||||||||||||||||||||||
| At December 31, 2013 | 20,863 | 10,453 | 31,316 | 20,850 | 10,450 | 31,300 | 13 | 3 | 16 | 8,167 | 5,685 | 13,852 | ||||||||||||||||||||||||
| Total Gas | Conventional Natural Gas | Coal Bed Methane | BOE | |||||||||||||||||||||||||||||||||
| Proved + | Proved + | Proved + | Proved + | |||||||||||||||||||||||||||||||||
| Proved Probable P+P (1) (2) | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | ||||||||||||||||||||||||
| Factors | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (Mboe) | (Mboe) | (Mboe) | ||||||||||||||||||||||||
| At December 31, 2012 | 114,014 | 65,654 | 179,668 | 91,978 | 53,713 | 145,691 | 22,036 | 11,941 | 33,977 | 40,700 | 27,070 | 67,770 | ||||||||||||||||||||||||
| Discoveries | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Extensions & Improved Recovery | 41,210 | 35,959 | 77,169 | 41,210 | 35,959 | 77,169 | – | – | – | 11,763 | 10,736 | 22,500 | ||||||||||||||||||||||||
| Technical Revisions | 15,209 | (10,950) | 4,259 | 11,942 | (9,136) | 2,806 | 3,267 | (1,814) | 1,453 | 8,641 | (6,558) | 2,083 | ||||||||||||||||||||||||
| Acquisitions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Dispositions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Economic Factors | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Production | (15,472) | – | (15,472) | (14,072) | – | (14,072) | (1,400) | – | (1,400) | (6,248) | – | (6,248) | ||||||||||||||||||||||||
| At December 31, 2013 | 154,961 | 90,663 | 245,624 | 131,058 | 80,536 | 211,594 | 23,903 | 10,127 | 34,030 | 54,857 | 31,249 | 86,105 | ||||||||||||||||||||||||
| FRANCE | Total Oil | Light and Medium Oil | Heavy Oil | Natural Gas Liquids | ||||||||||||||||||||||||||||||||
| Proved + | Proved + | Proved + | Proved + | |||||||||||||||||||||||||||||||||
| Proved Probable P+P (1) (2) | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | ||||||||||||||||||||||||
| Factors | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | ||||||||||||||||||||||||
| At December 31, 2012 | 32,516 | 14,263 | 46,779 | 32,516 | 14,263 | 46,779 | – | – | – | – | – | – | ||||||||||||||||||||||||
| Discoveries | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Extensions & Improved Recovery | 3,194 | 3,910 | 7,104 | 3,194 | 3,910 | 7,104 | – | – | – | – | – | – | ||||||||||||||||||||||||
| Technical Revisions | 2,650 | 221 | 2,871 | 2,650 | 221 | 2,871 | – | – | – | – | – | – | ||||||||||||||||||||||||
| Acquisitions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Dispositions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Economic Factors | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Production | (3,969) | – | (3,969) | (3,969) | – | (3,969) | – | – | – | – | – | – | ||||||||||||||||||||||||
| At December 31, 2013 | 34,391 | 18,394 | 52,785 | 34,391 | 18,394 | 52,785 | – | – | – | – | – | – | ||||||||||||||||||||||||
| Total Gas | Conventional Natural Gas | Coal Bed Methane | BOE | |||||||||||||||||||||||||||||||||
| Proved + | Proved + | Proved + | Proved + | |||||||||||||||||||||||||||||||||
| Proved Probable P+P (1) (2) | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | ||||||||||||||||||||||||
| Factors | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (Mboe) | (Mboe) | (Mboe) | ||||||||||||||||||||||||
| At December 31, 2012 | 1,377 | 24 | 1,401 | 1,377 | 24 | 1,401 | – | – | – | 32,746 | 14,266 | 47,012 | ||||||||||||||||||||||||
| Discoveries | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Extensions & Improved Recovery | 3,470 | 1,290 | 4,760 | 3,470 | 1,290 | 4,760 | – | – | – | 3,772 | 4,125 | 7,897 | ||||||||||||||||||||||||
| Technical Revisions | 7,425 | 1,955 | 9,380 | 7,425 | 1,955 | 9,380 | – | – | – | 3,888 | 548 | 4,435 | ||||||||||||||||||||||||
| Acquisitions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Dispositions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Economic Factors | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Production | (1,241) | – | (1,241) | (1,241) | – | (1,241) | – | – | – | (4,176) | – | (4,176) | ||||||||||||||||||||||||
| At December 31, 2013 | 11,031 | 3,269 | 14,300 | 11,031 | 3,269 | 14,300 | – | – | – | 36,230 | 18,939 | 55,168 | ||||||||||||||||||||||||
| IRELAND | Total Oil | Light and Medium Oil | Heavy Oil | Natural Gas Liquids | ||||||||||||||||||||||||||||||||
| Proved + | Proved + | Proved + | Proved + | |||||||||||||||||||||||||||||||||
| Proved Probable P+P (1) (2) | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | ||||||||||||||||||||||||
| Factors | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | ||||||||||||||||||||||||
| At December 31, 2012 | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Discoveries | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Extensions & Improved Recovery | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Technical Revisions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Acquisitions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Dispositions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Economic Factors | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Production | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| At December 31, 2013 | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Total Gas | Conventional Natural Gas | Coal Bed Methane | BOE | |||||||||||||||||||||||||||||||||
| Proved + | Proved + | Proved + | Proved + | |||||||||||||||||||||||||||||||||
| Proved Probable P+P (1) (2) | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | ||||||||||||||||||||||||
| Factors | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (Mboe) | (Mboe) | (Mboe) | ||||||||||||||||||||||||
| At December 31, 2012 | 91,954 | 35,079 | 127,033 | 91,954 | 35,079 | 127,033 | – | – | – | 15,326 | 5,846 | 21,172 | ||||||||||||||||||||||||
| Discoveries | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Extensions & Improved Recovery | 3,578 | 929 | 4,507 | 3,578 | 929 | 4,507 | – | – | – | 596 | 155 | 751 | ||||||||||||||||||||||||
| Technical Revisions | 10,399 | 2,699 | 13,098 | 10,399 | 2,699 | 13,098 | – | – | – | 1,733 | 450 | 2,183 | ||||||||||||||||||||||||
| Acquisitions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Dispositions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Economic Factors | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Production | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| At December 31, 2013 | 105,931 | 38,707 | 144,638 | 105,931 | 38,707 | 144,638 | – | – | – | 17,655 | 6,451 | 24,106 | ||||||||||||||||||||||||
| NETHERLANDS | Total Oil | Light and Medium Oil | Heavy Oil | Natural Gas Liquids | ||||||||||||||||||||||||||||||||
| Proved + | Proved + | Proved + | Proved + | |||||||||||||||||||||||||||||||||
| Proved Probable P+P (1) (2) | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | ||||||||||||||||||||||||
| Factors | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | ||||||||||||||||||||||||
| At December 31, 2012 | – | – | – | – | – | – | – | – | – | 62 | 61 | 123 | ||||||||||||||||||||||||
| Discoveries | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Extensions & Improved Recovery | – | – | – | – | – | – | – | – | – | 6 | 3 | 9 | ||||||||||||||||||||||||
| Technical Revisions | – | – | – | – | – | – | – | – | – | 7 | (20) | (13) | ||||||||||||||||||||||||
| Acquisitions | – | – | – | – | – | – | – | – | – | 9 | 55 | 64 | ||||||||||||||||||||||||
| Dispositions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Economic Factors | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Production | – | – | – | – | – | – | – | – | – | (23) | – | (23) | ||||||||||||||||||||||||
| At December 31, 2013 | – | – | – | – | – | – | – | – | – | 61 | 99 | 160 | ||||||||||||||||||||||||
| Total Gas | Conventional Natural Gas | Coal Bed Methane | BOE | |||||||||||||||||||||||||||||||||
| Proved + | Proved + | Proved + | Proved + | |||||||||||||||||||||||||||||||||
| Proved Probable P+P (1) (2) | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | ||||||||||||||||||||||||
| Factors | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (Mboe) | (Mboe) | (Mboe) | ||||||||||||||||||||||||
| At December 31, 2012 | 36,606 | 33,277 | 69,883 | 36,606 | 33,277 | 69,883 | – | – | – | 6,163 | 5,607 | 11,770 | ||||||||||||||||||||||||
| Discoveries | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Extensions & Improved Recovery | 1,445 | 2,799 | 4,244 | 1,445 | 2,799 | 4,244 | – | – | – | 247 | 470 | 716 | ||||||||||||||||||||||||
| Technical Revisions | 7,906 | (1,602) | 6,304 | 7,906 | (1,602) | 6,304 | – | – | – | 1,325 | (287) | 1,038 | ||||||||||||||||||||||||
| Acquisitions | 3,721 | 10,118 | 13,839 | 3,721 | 10,118 | 13,839 | – | – | – | 629 | 1,741 | 2,371 | ||||||||||||||||||||||||
| Dispositions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Economic Factors | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Production | (12,928) | – | (12,928) | (12,928) | – | (12,928) | – | – | – | (2,178) | – | (2,178) | ||||||||||||||||||||||||
| At December 31, 2013 | 36,750 | 44,592 | 81,342 | 36,750 | 44,592 | 81,342 | – | – | – | 6,186 | 7,531 | 13,717 | ||||||||||||||||||||||||
| TOTAL COMPANY | Total Oil | Light and Medium Oil | Heavy Oil | Natural Gas Liquids | ||||||||||||||||||||||||||||||||
| Proved + | Proved + | Proved + | Proved + | |||||||||||||||||||||||||||||||||
| Proved Probable P+P (1) (2) | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | ||||||||||||||||||||||||
| Factors | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | ||||||||||||||||||||||||
| At December 31, 2012 | 60,975 | 35,181 | 96,156 | 60,958 | 35,178 | 96,136 | 17 | 3 | 20 | 3,627 | 2,086 | 5,714 | ||||||||||||||||||||||||
| Discoveries | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Extensions & Improved Recovery | 7,550 | 4,747 | 12,297 | 7,550 | 4,747 | 12,297 | – | – | – | 3,845 | 3,259 | 7,104 | ||||||||||||||||||||||||
| Technical Revisions | 10,149 | (5,642) | 4,507 | 10,149 | (5,642) | 4,507 | – | – | – | 1,378 | 383 | 1,761 | ||||||||||||||||||||||||
| Acquisitions | – | – | – | – | – | – | – | – | – | 9 | 56 | 64 | ||||||||||||||||||||||||
| Dispositions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Economic Factors | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Production | (9,396) | – | (9,396) | (9,392) | – | (9,392) | (4) | – | (4) | (631) | – | (631) | ||||||||||||||||||||||||
| At December 31, 2013 | 69,278 | 34,286 | 103,564 | 69,265 | 34,283 | 103,548 | 13 | 3 | 16 | 8,228 | 5,784 | 14,012 | ||||||||||||||||||||||||
| Total Gas | Conventional Natural Gas | Coal Bed Methane | BOE | |||||||||||||||||||||||||||||||||
| Proved + | Proved + | Proved + | Proved + | |||||||||||||||||||||||||||||||||
| Proved Probable P+P (1) (2) | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | Proved | Probable | Probable | ||||||||||||||||||||||||
| Factors | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (Mboe) | (Mboe) | (Mboe) | ||||||||||||||||||||||||
| At December 31, 2012 | 243,951 | 134,034 | 377,985 | 221,915 | 122,093 | 344,008 | 22,036 | 11,941 | 33,977 | 105,262 | 59,605 | 164,867 | ||||||||||||||||||||||||
| Discoveries | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Extensions & Improved Recovery | 49,703 | 40,977 | 90,680 | 49,703 | 40,977 | 90,680 | – | – | – | 19,679 | 14,836 | 34,514 | ||||||||||||||||||||||||
| Technical Revisions | 40,939 | (7,898) | 33,041 | 37,672 | (6,084) | 31,588 | 3,267 | (1,814) | 1,453 | 18,350 | (6,574) | 11,775 | ||||||||||||||||||||||||
| Acquisitions | 3,721 | 10,118 | 13,839 | 3,721 | 10,118 | 13,839 | – | – | – | 629 | 1,742 | 2,371 | ||||||||||||||||||||||||
| Dispositions | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Economic Factors | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Production | (29,641) | – | (29,641) | (28,241) | – | (28,241) | (1,400) | – | (1,400) | (14,967) | – | (14,967) | ||||||||||||||||||||||||
| At December 31, 2013 | 308,673 | 177,231 | 485,904 | 284,770 | 167,104 | 451,874 | 23,903 | 10,127 | 34,030 | 128,952 | 69,609 | 198,560 | ||||||||||||||||||||||||
| Notes: | |
| (1) | “Proved” reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. |
| (2) | “Probable” reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. |
| (3) | The pricing assumptions used in the GLJ 2013 Reserves Evaluation with respect to net values of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above. See “Forecast Prices used in Estimates”. The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation. GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101. |
The table below sets out the future development costs deducted in the estimation of future net revenue attributable to total proved reserves and total proved plus probable reserves (using forecast prices and costs).
Table 9: Future Development Costs (1)
| Total Proved | Total Proved Plus Probable | |
| (M$) | Estimated Using Forecast Prices and Costs | Estimated Using Forecast Prices and Costs |
| Australia | ||
| 2014 | 22,500 | 22,500 |
| 2015 | 68,646 | 110,262 |
| 2016 | 2,913 | 2,913 |
| 2017 | 40,963 | 40,963 |
| 2018 | 64,405 | 64,405 |
| Remainder | 2,428 | 2,428 |
| Total for all years undiscounted | 201,855 | 243,471 |
| Canada | ||
| 2014 | 188,687 | 196,593 |
| 2015 | 179,314 | 250,776 |
| 2016 | 55,508 | 156,334 |
| 2017 | 5,636 | 65,039 |
| 2018 | 541 | 541 |
| Remainder | 14,899 | 16,341 |
| Total for all years undiscounted | 444,585 | 685,624 |
| France | ||
| 2014 | 38,884 | 77,422 |
| 2015 | 44,609 | 126,820 |
| 2016 | 22,923 | 54,801 |
| 2017 | 7,861 | 46,171 |
| 2018 | 9,272 | 15,767 |
| Remainder | 25,699 | 25,697 |
| Total for all years undiscounted | 149,248 | 346,678 |
| Ireland | ||
| 2014 | 107,703 | 107,703 |
| 2015 | 50,832 | 50,832 |
| 2016 | 3,288 | 3,288 |
| 2017 | – | – |
| 2018 | – | – |
| Remainder | 22,657 | 22,657 |
| Total for all years undiscounted | 184,480 | 184,480 |
| Netherlands | ||
| 2014 | 1,245 | 9,236 |
| 2015 | 2,818 | 5,586 |
| 2016 | 416 | 2,757 |
| 2017 | 29,072 | 45,187 |
| 2018 | 433 | 16,350 |
| Remainder | 6,574 | 6,573 |
| Total for all years undiscounted | 40,558 | 85,689 |
| Total Company | ||
| 2014 | 359,020 | 413,454 |
| 2015 | 346,219 | 544,277 |
| 2016 | 85,046 | 220,093 |
| 2017 | 83,532 | 197,361 |
| 2018 | 74,653 | 97,064 |
| Remainder | 72,253 | 73,693 |
| Total for all years undiscounted | 1,020,723 | 1,545,942 |
| Note: | |
| (1) | The pricing assumptions used in the GLJ 2013 Reserves Evaluation with respect to net values of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above. See “Forecast Prices used in Estimates”. The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation. GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101. |
Vermilion expects to source its capital expenditure requirements from internally generated cash flow and, as appropriate, from the existing credit facility, equity or debt financing. It is anticipated that costs of funding the future development costs will not impact development of its properties or Vermilion’s reserves or future net revenue.
CONTINGENT AND PROSPECTIVE RESOURCES
Vermilion retained GLJ to conduct an independent resource evaluation to assess contingent and prospective resources across all of the Company’s key operating regions with an effective date of December 31, 2013 (the “GLJ 2013 Resources Assessment”). All contingent and prospective resources evaluated in the GLJ 2013 Resources Assessment were deemed economic at the effective date of December 31, 2013.
The estimates of volumes of, and the net present value of the future net revenue attributable to, contingent resources and prospective resources in this news release are derived from the GLJ 2013 Resources Assessment. The GLJ 2013 Resources Assessment was prepared in accordance with COGEH and NI 51-101 by GLJ, an independent qualified reserve evaluator.
A range of contingent and prospective resources estimates (low, best and high) were prepared by GLJ. See notes 5 to 8 of following Table 11 in this section for a description of low estimate, best estimate and high estimate.
Contingent Resources
“Contingent resources” are not, and should not be confused with, petroleum and natural gas reserves. “Contingent resources” are defined in COGEH as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. It is also appropriate to classify as contingent resource the estimated discovered recoverable quantities associated with a project in the early evaluation stage.
The primary contingencies which currently prevent the classification of Vermilion’s contingent resource as reserves include but are not limited to:
- preparation of firm development plans, including determination of the specific scope and timing of projects;
- project sanction;
- access to capital markets;
- shareholder and regulatory approvals;
- access to required services and field development infrastructure;
- oil and natural gas prices in Canada and internationally in jurisdictions in which Vermilion operates;
- demonstration of economic viability;
- future drilling program and testing results;
- further reservoir delineation and studies;
- facility design work;
- limitations to development based on adverse topography or other surface restrictions; and
- the uncertainty regarding marketing and transportation of petroleum from development areas.
There is no certainty that it will be commercially viable to produce any portion of the contingent resources or that Vermilion will produce any portion of the volumes currently classified as contingent resources. The estimates of contingent resources involve implied assessment, based on certain estimates and assumptions, that the resources described exists in the quantities predicted or estimated and that the resources can be profitably produced in the future. The net present value of the future net revenue from the contingent resources does not necessarily represent the fair market value of the contingent resources. Actual contingent resources (and any volumes that may be reclassified as reserves) and future production therefrom may be greater than or less than the estimates provided herein.
Prospective Resources
Prospective resources are not, and should not be confused with, petroleum and natural gas reserves. “Prospective resources” are defined in COGEH as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects.
There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources or that Vermilion will produce any portion of the volumes currently classified as prospective resources. The estimates of prospective resources involve implied assessment, based on certain estimates and assumptions, that the resources described exists in the quantities predicted or estimated and that the resources can be profitably produced in the future. The net present value of the future net revenue from the prospective resources does not necessarily represent the fair market value of the prospective resources. The recovery and resources estimates provided herein are estimates only. Actual prospective resources (and any volumes that may be reclassified as reserves or contingent resources) and future production from such prospective resources may be greater than or less than the estimates provided herein.
Summary information regarding contingent and prospective resources and net present values of future net revenues from contingent and prospective resources are set forth below
Table 10: Company Gross and Net Contingent and Prospective Resources as at December 31, 2013 (1) (2) – Forecast Prices and Costs (3) (4)
| Gross | Gross | Net | |||||||||||||
| Reserves | Contingent Resources | Prospective Resources | Contingent Resources | Prospective Resources | |||||||||||
| P+P | Low | Best | High | Low | Best | High | Low | Best | High | Low | Best | High | |||
| Oil and NGLs | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | ||
| Australia | 19,463 | 1,250 | 3,900 | 6,200 | – | 1,207 | 3,046 | 1,250 | 3,900 | 6,200 | – | 1,207 | 3,046 | ||
| Canada | 45,168 | 28,377 | 84,022 | 128,092 | 4,607 | 157,571 | 295,063 | 21,140 | 61,487 | 92,143 | 3,711 | 121,446 | 222,692 | ||
| France | 52,785 | 8,463 | 21,203 | 33,879 | 289 | 3,782 | 13,584 | 7,744 | 19,489 | 31,364 | 271 | 3,171 | 12,637 | ||
| Ireland | – | – | – | – | – | – | – | – | – | – | – | – | – | ||
| Netherlands | 160 | 13 | 41 | 1,112 | 112 | 199 | 389 | 13 | 41 | 1,112 | 112 | 199 | 389 | ||
| Total | 117,576 | 38,103 | 109,166 | 169,283 | 5,008 | 162,759 | 312,082 | 30,147 | 84,917 | 130,819 | 4,094 | 126,023 | 238,764 | ||
| Gross | Gross | Net | |||||||||||||
| Reserves | Contingent Resources | Prospective Resources | Contingent Resources | Prospective Resources | |||||||||||
| P+P | Low | Best | High | Low | Best | High | Low | Best | High | Low | Best | High | |||
| Natural Gas | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | (MMcf) | ||
| Australia | – | – | – | – | – | – | – | – | – | – | – | – | – | ||
| Canada | 245,624 | 204,370 | 704,875 | 1,023,206 | 196,373 | 1,772,471 | 2,559,987 | 188,177 | 642,287 | 920,915 | 184,256 | 1,648,071 | 2,370,533 | ||
| France | 14,300 | 653 | 816 | 1,020 | – | – | – | 653 | 816 | 1,020 | – | – | – | ||
| Ireland | 144,638 | 5,807 | 18,780 | 29,587 | – | – | – | 5,807 | 18,780 | 29,587 | – | – | – | ||
| Netherlands | 81,342 | 6,874 | 21,627 | 40,864 | 130,038 | 242,939 | 480,613 | 6,874 | 21,627 | 40,864 | 130,038 | 242,939 | 480,613 | ||
| Total | 485,904 | 217,704 | 746,098 | 1,094,677 | 326,411 | 2,015,410 | 3,040,600 | 201,511 | 683,510 | 992,386 | 314,294 | 1,891,010 | 2,851,146 | ||
| Gross | Gross | Net | |||||||||||||
| Reserves | Contingent Resources | Prospective Resources | Contingent Resources | Prospective Resources | |||||||||||
| P+P | Low | Best | High | Low | Best | High | Low | Best | High | Low | Best | High | |||
| Total Oil Equivalent | (Mboe) | (Mboe) | (Mboe) | (Mboe) | (Mboe) | (Mboe) | (Mboe) | (Mboe) | (Mboe) | (Mboe) | (Mboe) | (Mboe) | (Mboe) | ||
| Australia | 19,463 | 1,250 | 3,900 | 6,200 | – | 1,207 | 3,046 | 1,250 | 3,900 | 6,200 | – | 1,207 | 3,046 | ||
| Canada | 86,105 | 62,439 | 201,502 | 298,626 | 37,336 | 452,983 | 721,727 | 52,503 | 168,534 | 245,629 | 34,421 | 396,125 | 617,781 | ||
| France | 55,168 | 8,571 | 21,339 | 34,049 | 289 | 3,782 | 13,584 | 7,853 | 19,625 | 31,534 | 271 | 3,171 | 12,637 | ||
| Ireland | 24,106 | 968 | 3,130 | 4,931 | – | – | – | 968 | 3,130 | 4,931 | – | – | – | ||
| Netherlands | 13,717 | 1,159 | 3,646 | 7,922 | 21,785 | 40,689 | 80,492 | 1,159 | 3,646 | 7,922 | 21,785 | 40,689 | 80,492 | ||
| Total | 198,560 | 74,387 | 233,517 | 351,728 | 59,410 | 498,661 | 818,849 | 63,733 | 198,835 | 296,216 | 56,477 | 441,192 | 713,956 | ||
Table 11: Summary of Net Present Value of Future Net Revenues as at December 31, 2013 – Forecast Prices and Costs (3)
| Contingent Resources | Before Income Taxes, Discounted at (5) | After Income Taxes, Discounted at (5) | ||||||
| (M$) | 0% | 5% | 8% | 10% | 0% | 5% | 8% | 10% |
| Low Estimate (C1) (6) | ||||||||
| Australia | 46,057 | 30,848 | 24,342 | 20,805 | 10,709 | 4,554 | 2,164 | 950 |
| Canada | 1,338,563 | 750,862 | 547,973 | 448,543 | 1,003,891 | 535,982 | 376,779 | 299,666 |
| France | 500,810 | 299,434 | 225,931 | 188,618 | 328,076 | 183,183 | 131,181 | 105,100 |
| Ireland | 23,215 | 7,833 | 3,793 | 2,180 | 17,411 | 5,360 | 2,280 | 1,081 |
| Netherlands | 24,785 | 13,825 | 9,362 | 6,996 | 13,325 | 5,213 | 1,997 | 325 |
| Total Low Estimate | 1,933,430 | 1,102,802 | 811,401 | 667,142 | 1,373,412 | 734,292 | 514,401 | 407,122 |
| Best Estimate (C2) (7) | ||||||||
| Australia | 270,083 | 190,153 | 155,779 | 136,973 | 103,615 | 67,961 | 53,278 | 45,456 |
| Canada | 4,757,350 | 2,548,856 | 1,810,553 | 1,455,506 | 3,567,982 | 1,841,038 | 1,268,888 | 995,788 |
| France | 1,219,657 | 706,205 | 527,066 | 438,131 | 799,382 | 433,198 | 307,628 | 246,078 |
| Ireland | 142,895 | 49,811 | 25,559 | 15,511 | 107,171 | 35,501 | 16,748 | 8,965 |
| Netherlands | 105,017 | 65,145 | 49,059 | 40,535 | 57,271 | 30,298 | 19,610 | 14,023 |
| Total Best Estimate | 6,495,002 | 3,560,170 | 2,568,016 | 2,086,656 | 4,635,421 | 2,407,996 | 1,666,152 | 1,310,310 |
| High Estimate (C3) (8) | ||||||||
| Australia | 533,218 | 375,068 | 307,885 | 271,318 | 216,856 | 146,938 | 118,024 | 102,536 |
| Canada | 8,520,437 | 4,598,611 | 3,337,210 | 2,738,201 | 6,390,285 | 3,371,269 | 2,405,989 | 1,949,949 |
| France | 2,268,722 | 1,266,202 | 939,778 | 782,450 | 1,487,408 | 794,121 | 570,941 | 464,372 |
| Ireland | 324,184 | 99,583 | 52,899 | 35,341 | 243,138 | 73,269 | 37,734 | 24,313 |
| Netherlands | 287,748 | 191,967 | 152,366 | 131,052 | 157,267 | 95,126 | 69,804 | 56,317 |
| Total High Estimate | 11,934,309 | 6,531,431 | 4,790,138 | 3,958,362 | 8,494,954 | 4,480,723 | 3,202,492 | 2,597,487 |
| Prospective Resources | Before Income Taxes, Discounted at (5) | After Income Taxes, Discounted at (5) | ||||||
| (M$) | 0% | 5% | 8% | 10% | 0% | 5% | 8% | 10% |
| Low Estimate (Pr1) (6) | ||||||||
| Australia | – | – | – | – | – | – | – | – |
| Canada | 492,575 | 236,916 | 154,804 | 116,698 | 369,217 | 167,763 | 104,048 | 74,831 |
| France | 10,422 | 8,547 | 7,634 | 7,097 | 5,484 | 4,069 | 3,398 | 3,011 |
| Ireland | – | – | – | – | – | – | – | – |
| Netherlands | 848,414 | 416,721 | 294,433 | 239,170 | 460,342 | 208,317 | 135,776 | 103,074 |
| Total Low Estimate | 1,351,411 | 662,184 | 456,871 | 362,965 | 835,043 | 380,149 | 243,222 | 180,916 |
| Best Estimate (Pr2) (7) | ||||||||
| Australia | 106,915 | 64,513 | 48,429 | 40,247 | 43,520 | 25,183 | 18,433 | 15,061 |
| Canada | 11,548,288 | 4,767,690 | 2,918,816 | 2,131,682 | 8,659,120 | 3,427,761 | 2,023,953 | 1,434,147 |
| France | 150,457 | 93,762 | 72,020 | 60,756 | 97,837 | 55,234 | 39,133 | 30,889 |
| Ireland | – | – | – | – | – | – | – | – |
| Netherlands | 2,078,111 | 1,132,690 | 848,113 | 714,874 | 1,132,370 | 599,681 | 438,362 | 363,004 |
| Total Best Estimate | 13,883,771 | 6,058,655 | 3,887,378 | 2,947,559 | 9,932,847 | 4,107,859 | 2,519,881 | 1,843,101 |
| High Estimate (Pr3) (8) | ||||||||
| Australia | 334,608 | 191,460 | 141,219 | 116,472 | 140,264 | 78,871 | 57,603 | 47,208 |
| Canada | 27,794,746 | 11,888,521 | 7,639,101 | 5,813,417 | 20,845,987 | 8,778,815 | 5,574,461 | 4,204,916 |
| France | 758,262 | 428,747 | 319,835 | 267,173 | 496,839 | 265,350 | 190,141 | 154,240 |
| Ireland | – | – | – | – | – | – | – | – |
| Netherlands | 4,736,149 | 2,635,340 | 1,989,491 | 1,684,266 | 2,585,545 | 1,421,568 | 1,062,681 | 893,256 |
| Total High Estimate | 33,623,765 | 15,144,068 | 10,089,646 | 7,881,328 | 24,068,635 | 10,544,604 | 6,884,886 | 5,299,620 |
| Notes: | |
| (1) | The contingent and prospective resource assessments were prepared by GLJ in accordance with the definitions, standards and procedures contained in the COGEH and NI 51-101. Contingent resource is defined in the COGEH as those quantities of petroleum estimated to be potentially recoverable from known accumulations using established technology or technology under development, but which do not currently qualify as reserves or commercially recoverable due to one or more contingencies. See “Presentation of Oil and Gas Reserves and Production Information – Contingent Resources” for the primary contingencies which prevent the classification of the resources as reserves. There is no certainty that it will be commercially viable to produce any portion of the contingent resources or that Vermilion will produce any portion of the volumes currently classified as contingent resources. The estimates of contingent resources involve implied assessment, based on certain estimates and assumptions, that the resources described exists in the quantities predicted or estimated, as at a given date, and that the resources can be profitably produced in the future. The net present value of the future net revenue from the contingent resources does not necessarily represent the fair market value of the contingent resources. Actual contingent resources (and any volumes that may be reclassified as reserves) and future production therefrom may be greater than or less than the estimates provided herein. Prospective resource is defined in the COGEH are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources or that Vermilion will produce any portion of the volumes currently classified as prospective resources. The estimates of prospective resources involve implied assessment, based on certain estimates and assumptions, that the resources described exists in the quantities predicted or estimated and that the resources can be profitably produced in the future. The net present value of the future net revenue from the prospective resources does not necessarily represent the fair market value of the prospective resources. The recovery and resources estimates provided herein are estimates only. Actual prospective resources (and any volumes that may be reclassified as reserves or contingent resources) and future production from such prospective resources may be greater than or less than the estimates provided herein. |
| (2) | GLJ prepared the estimates of contingent and prospective resources shown for each property using deterministic principles and methods. Probabilistic aggregation of the low and high property estimates shown in the table might produce different total volumes than the arithmetic sums shown in the table. |
| (3) | The forecast price and cost assumptions utilized in the year-end 2013 reserves report were also utilized by GLJ in preparing the contingent resource and prospective resource assessments. See “GLJ December 31, 2013 Forecast Prices” in this Annual Information Form. |
| (4) | “Gross” Reserves or Contingent Resources or Prospective Resources are Vermilion’s working interest (operating or non-operating) share before deduction of royalties and without including any royalty interests of Vermilion. “Net” Reserves or Contingent Resources or Prospective Resources are Vermilion’s working interest (operating or non-operating) share after deduction of royalty obligations, plus Vermilion’s royalty interests in Reserves or Contingent Resources or Prospective Resources. |
| (5) | The net present value of future net revenue attributable to the contingent or prospective resources does not necessarily represent the fair market value of the contingent or prospective resources. Estimated abandonment and reclamation costs have been included in the evaluation. |
| (6) | Low estimate is considered to be a conservative estimate of the quantity of contingent (C1) or prospective (Pr1) resources that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. Those contingent or prospective resources at the low end of the estimate range have the highest degree of certainty – a 90% confidence level – that the actual quantities recovered will be equal or exceed the estimate. |
| (7) | Best estimate is considered to be the best estimate of the quantity of contingent (C2) or prospective (Pr2) resources that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. Those contingent or prospective resources that fall within the best estimate have a 50% confidence level that the actual quantities recovered will be equal or exceed the estimate. |
| (8) | High estimate is considered to be an optimistic estimate of the quantity of contingent (C3) or prospective (Pr3) resources that will actually be recovered. It is unlikely that the actual remaining quantities of contingent or prospective resources recovered will meet or exceed the high estimate. Those contingent or prospective resources at the high end of the estimate range have a lower degree of certainty – a 10% confidence level – that the actual quantities recovered will equal or exceed the estimate. |
ABOUT VERMILION
Vermilion is an oil-leveraged producer that adheres to a value creation strategy through the execution of full cycle exploration and production programs focused on the acquisition, exploration, development and optimization of producing properties in Western Canada, Europe and Australia. Our business model targets annual organic production growth of approximately 5% along with providing reliable and increasing dividends to investors. Vermilion is targeting growth in production primarily through the exploitation of conventional resource plays in Western Canada, including Cardium light oil and liquids rich natural gas, the exploration and development of high impact natural gas opportunities in the Netherlands and through drilling and workover programs in France and Australia. Vermilion also holds an 18.5% working interest in the Corrib gas field in Ireland. In addition, Vermilion pays a monthly dividend of Canadian $0.215 per share, which provides a current yield in excess of 4%. Management and directors of Vermilion hold approximately 8% of the outstanding shares and are dedicated to consistently delivering superior rewards for all stakeholders, featuring an 20-year history of market outperformance. Vermilion trades on the Toronto Stock Exchange and the New York Stock Exchange under the symbol VET.
ADVISORIES
Natural gas volumes have been converted on the basis of six thousand cubic feet of natural gas to one barrel equivalent of oil. Barrels of oil equivalent (“boe”) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas 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.
Fund flows from operations is considered an additional GAAP financial measure, recycle ratio and Netbacks are non-GAAP financial measures. These are measures (as defined herein) that do not have standardized meanings prescribed by International Financial Reporting Standards (“IFRS”) and therefore are unlikely to be comparable with similar measures for other issuers. We define fund flows from operations as cash flows from operating activities before changes in non-cash operating working capital and asset retirement obligations settled. Management believes that by excluding the temporary impact of changes in non-cash operating working capital, fund flows from operations provides a measure of our ability to generate cash (that is not subject to short-term movements in non-cash operating working capital) necessary to pay dividends, repay debt, fund asset retirement obligations and make capital investments. As we have presented fund flows from operations in the “Segmented Information” note of our audited consolidated financial statements for the year ended December 31, 2013, we consider fund flows from operations to be an additional GAAP financial measure. “Recycle Ratio” means a measure of capital efficiency calculated by dividing the operating netback of production by the cost of adding reserves. “Netbacks” are per boe and per mcf measures used in the analysis of operational activities.
SOURCE Vermilion Energy Inc.
For further information:
Anthony Marino, President & COO;
Curtis W. Hicks, Executive VP & CFO; and/or
Dean Morrison, Director Investor Relations
TEL (403) 269-4884
IR TOLL FREE 1-866-895-8101
investor_relations@vermilionenergy.com
www.vermilionenergy.com
