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    Canada’s Vermilion Energy sees improved Q1


Higher earnings reflect asset high-grading.

by: Dale Lunan

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Natural Gas & LNG News, Americas, Corporate, Financials, News By Country, Australia, Canada, Ireland

Canada’s Vermilion Energy sees improved Q1

Vermilion Energy, active in Europe, Australia and North America, said May 3 it had Q1 2023 net earnings of C$380.3mn (US$279.5mn), down sequentially from the previous quarter but up year-on-year from C$283.9mn.

It said the improvement was largely driven by acquisition and disposition activity during the quarter, including the closing of the Corrib acquisition in Ireland and the sale of certain non-core assets in southeast Saskatchewan.

“These asset high-grading initiatives serve to position Vermilion for long-term success by increasing our exposure to premium-priced European gas, redirecting capital to higher rate of return projects, and reducing our operating cost structure and asset retirement obligations,” Vermilion said.

While average realised natural gas prices, at C$10.77/’000 ft3, were off from both Q1 2022 and Q4 2022, Vermilion said they were still three times higher than the average AECO benchmark index price for the quarter, reflecting the fact that 32% of its gas production had direct exposure to European gas prices.

“With the Corrib Natural Gas Project acquisition in Ireland now closed, approximately 40% of our gas is now priced off of European gas benchmarks,” it said.

Cash flow from operations increased to C$388.6mn from C$341.1mn in Q1 2022, while free cash flow fell to C$98.3m from C$304.5mn, reflecting higher capital expenditures and acquisition expenditures.

Natural gas production averaged 247.6mn ft3/day, up from 244.7mn ft3/day a year ago, but liquids production was down, largely due to unplanned downtime in Australia.