Vermilion Energy Inc. announced a significant step in its portfolio repositioning, entering into a definitive agreement to sell its Saskatchewan and Manitoba assets for cash proceeds of $415 million.

The divested assets are currently producing approximately 10,500 barrels of oil equivalent per day (boe/d), with oil and liquids accounting for a substantial 86% of this production. These assets are projected to generate approximately $110 million in annual net operating income at current strip commodity prices. As of December 31, 2024, the assets held Proved Developed Producing reserves of 30 million boe, as evaluated by McDaniel & Associates Consultants Ltd., and carried an estimated $250 million in undiscounted future abandonment liabilities.

The net proceeds from this transaction will be strategically directed towards debt repayment, a move that is expected to significantly de-leverage the company. Based on current strip commodity pricing and operational plans, Vermilion anticipates exiting 2025 with a net debt of $1.5 billion, resulting in a trailing net debt to FFO (Funds from Operations) ratio of 1.4 times. This proactive debt reduction underscores Vermilion's commitment to financial discipline and enhancing shareholder value.

The Transaction, which has an effective date of May 1, 2025, is expected to close in the third quarter of 2025, pending regulatory approvals and the satisfaction of other customary closing conditions. Assuming a mid-Q3 2025 close, Vermilion has updated its full-year 2025 production guidance to an average of between 120,000 to 125,000 boe/d. Capital expenditures for the year are now projected to be in the range of $680 million to $710 million, reflecting an approximate $50 million reduction directly attributable to the divested assets post-closing. The company affirmed its commitment to evaluating capital investment levels amidst increased market volatility, emphasizing its intent to prioritize free cash flow generation over production growth throughout 2025 and 2026.

This divestiture marks a pivotal moment in Vermilion's strategic plan, which commenced three years ago with a clear objective to high-grade its asset portfolio. The company has been steadily shifting its focus towards assets that offer greater longevity, scalability, and a deeper inventory of high-return capital opportunities. Vermilion's liquids-rich gas position in Western Canada, coupled with strategic acquisitions in Europe and notable exploration success in Germany, has been instrumental in reshaping its global gas franchise. This reframed portfolio is poised to deliver sustained value to shareholders for years to come.

Vermilion highlighted that the cash proceeds from this transaction will not only strengthen its balance sheet but also provide enhanced capital allocation flexibility for its core Canadian and European assets.