Vermilion Energy Reverses 1H 2018 Loss
Canada’s Vermilion Energy, active throughout Europe, said July 29 it had 1H 2019 net earnings of C$41.55mn (US$31.56mn), reversing a loss of C$36.62mn in the same period a year ago.
Total production averaged 103,203 boe/day, up from 75,425 boe/day in 1H 2018, while natural gas production jumped to 276.77mn ft3/day from 235.34mn ft3/day.
Net earnings in 2Q 2019 fell sequentially from 1Q 2019, to C$2.0mn from C$39.55mn, but were up from the C$61.36mn loss reported in 2Q 2018. Fund flows from operations (FFO) in 2Q 2019, at C$222.74mn, was also off sequentially from 1Q 2019 but an improvement from 2Q 2018 FFO of C$195.19mn. FFO in 2Q 2019, the company said, was negatively impacted by a third-party refinery outage in France and by weaker natural gas prices in Europe and North America, which reduced FFO by C$33mn.
“We were able to mitigate a portion of this pricing variance through our hedging program, particularly in European gas, realizing a C$14mn pre-tax gain during the quarter,” Vermilion said, noting that European gas prices weakened this summer due to increased LNG deliveries.
Still, the company said it had locked in pricing on about 70% of its summer European gas at prices “significantly higher” than prevailing spot prices.
During 2Q 2019, Vermilion said it conducted the most active European exploration program in its history, with one successful non-operated natural gas exploration well in Germany that tested at 8.8mn ft3/day and five exploration wells in its Central and Eastern European (CEE) business unit, three of which found natural gas in Hungary and one which found natural gas in Croatia.