CALGARY, Dec. 19, 2016 /CNW/ – Vermilion Energy Inc. (“Vermilion”, “We” or “Our”) (TSX, NYSE: VET) is pleased to announce that we have completed the previously announced acquisition of interests in production and exploration assets in Germany (the “Acquisition”) from Engie E&P Deutschland GmbH, for total consideration of €33 million ($46.2 million), based on the effective date of January 1, 2016. After adjustments for cash flows between the effective date and closing date, Vermilion’s cash cost for the Acquisition is projected to be approximately €28.3 million ($39.6 million).
The Acquisition includes operated and non-operated interests in five oil and three gas producing fields, along with an operated interest in one exploration license (the “Assets”). Vermilion will assume operatorship of six of the eight producing fields, with the other fields operated by ExxonMobil Production Deutschland (EMPG) and Deutsche Erdoel AG (DEA).
Production from the Assets has averaged 2,000 boe/d (51% oil) in 2016 through the end of October. We expect to increase production by approximately 10% in 2017 based on budgeted capital investment of €3.6 million ($5.1 million). Using the current forward strip, we forecast fund flows from operations(1) of approximately €17.6 million ($24.9 million) from the Assets in 2017.
The Acquisition provides us with our first operated producing properties in Germany, and advances our objective of developing a material business unit in this country. Germany has a long history of oil and natural gas development, and a consistent fiscal framework with low political risk. The Assets are expected to be complementary with our existing European portfolio, offering similar subsurface characteristics and development opportunities.
Vermilion is an international energy producer that seeks to create value through the acquisition, exploration, development and optimization of producing properties in North America, Europe and Australia. Our business model targets annual organic production growth, along with providing reliable and increasing dividends to investors. Vermilion is targeting growth in production primarily through the exploitation of light oil and liquids-rich natural gas conventional resource plays in Canada and the United States, the exploration and development of high impact natural gas opportunities in the Netherlands and Germany, and oil drilling and workover programs in France and Australia. Vermilion also holds an 18.5% working interest in the Corrib gas field in Ireland. Vermilion pays a monthly dividend of Canadian $0.215 per share, which provides a current yield of approximately 4.5%.
Vermilion’s priorities are health and safety, the environment, and profitability, in that order. Nothing is more important to us than the safety of the public and those who work with us, and the protection of our natural surroundings. We have been recognized as a top decile performer amongst Canadian publicly listed companies in governance practices, as a Climate “A” List performer by the CDP, and a Best Workplace in the Great Place to Work® Institute’s annual rankings in Canada, France, the Netherlands and Germany. In addition, Vermilion emphasizes strategic community investment in each of our operating areas.
Management and directors of Vermilion hold approximately 5% of the outstanding shares, are committed to consistently delivering superior rewards for all stakeholders, and have delivered over 20 years of market outperformance. Vermilion trades on the Toronto Stock Exchange and the New York Stock Exchange under the symbol VET.