Vermilion to Sell Saskatchewan, Manitoba Assets

Vermilion Energy Inc. has entered into a definitive agreement for the sale of its Saskatchewan and Manitoba assets for cash proceeds of $302 million (CAD 415 million).

Net proceeds from the transaction will be directed towards debt repayment to accelerate deleveraging efforts and strengthen Vermilion’s balance sheet, the company said in a news release.

The transaction has an effective date of May 1 and is anticipated to close in the third quarter, subject to receipt of regulatory approvals and the satisfaction of other customary closing conditions, according to the release.

Vermilion said the assets are currently producing approximately 10,500 barrels of oil equivalent per day (boepd), consisting of 86 percent oil and liquids. The company noted that the assets are projected to generate approximately CAD 110 million of annual net operating income at current strip commodity prices.

The assets had proved developed producing reserves of 30 million barrels of oil equivalent (MMboe) and approximately CAD 250 million of undiscounted future abandonment liabilities, the company said.

Vermilion said it expects full-year 2025 production to average between 120,000 to 125,000 boepd with capital expenditures in the range of CAD 680 to 710 million, reflecting an approximately CAD 50 million reduction associated with the divested assets post-closing.

“The transaction marks another significant step in our strategic plan to high-grade the asset portfolio that began three years ago, shifting our focus toward long-duration, scalable assets with deep inventory of high return on capital opportunities,” Vermilion said.

“Our liquids-rich gas position in Western Canada, combined with strategic acquisitions in Europe and significant exploration success in Germany have reframed Vermilion’s global gas franchise that will serve shareholders for years to come. Cash proceeds from the Transaction will strengthen Vermilion’s balance sheet and provide further capital allocation flexibility for core Canadian and European assets,” the company added.

For the first quarter, Vermilion said its production averaged 103,115 boepd, composed of 73,760 boepd from its North American assets and 29,355 boepd from its international assets. The quarter includes approximately one month of production associated with the Westbrick acquisition, the company said in its most recent earnings release.

In March, the company closed its acquisition of Westbrick Energy Ltd. and its assets in Canada’s Deep Basin. The company said that the acquisition adds stable annual production of 50,000 boepd, consisting of 75 percent gas and 25 percent liquids, and approximately 1.1 million, or 770,000 net, acres of land in the southeast portion of the Deep Basin trend in Alberta, Canada.

The acquisition includes four operated gas plants with a total capacity of 102 million cubic feet per day (MMcfpd).

“The integration of the Westbrick assets and personnel is progressing ahead of plan as we continue to identify operational and development synergies that will further enhance the long-term value of our larger, more concentrated position in the Alberta Deep Basin,” Vermilion CEO Dion Hatcher said in an earlier statement.

“With the Westbrick acquisition closed and the [first-quarter] drilling program complete, [second-quarter] production is expected to average between 134,000 to 136,000 boepd, including full contribution from the Westbrick assets,” Hatcher added.

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