Vermilion Energy Inc Announces Results for the Three and Nine Months Ended September 30, 2022.

CALGARY, AB: Vermilion Energy Inc. ("Vermilion", "We", "Our", "Us" or the "Company") (TSX: VET) (NYSE: VET) is pleased to report operating and condensed financial results for the three and nine months ended September 30, 2022.

The unaudited interim financial statements and management discussion and analysis for the three and nine months ended September 30, 2022 will be available on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com, on EDGAR at www.sec.gov/edgar.shtml, and on Vermilion's website at www.vermilionenergy.com.

Highlights

Q3 2022 fund flows from operations ("FFO")(1) was $508 million ($3.10/basic share)(2), an increase of 12% from the prior quarter, driven by higher European natural gas prices.

Free cash flow ("FCF")(3) was $324 million ($1.98/basic share)(4), a decrease of 5%, due to higher capital expenditures primarily related to the offshore drilling campaign in Australia. Cash flow from operating activities was $448 million in Q3 2022, including the impact from asset retirement obligations settled and changes in non-cash operating working capital.

Pro forma Q3 2022 FFO and FCF incorporating the incremental 36.5% ownership in Corrib was $611 million ($3.73/basic share) and $426 million ($2.60/basic share), respectively. As a reminder, all FCF from the Corrib acquisition accrues to Vermilion as at January 1, 2022 and will be netted off the final purchase price at the time of closing, which we now expect to occur in Q1 2023 due to administrative delays.

Net earnings were $271 million ($1.65/basic share) for the quarter ended September 30, 2022.

Long-term debt and net debt(5) were $1.4 billion at September 30, 2022, resulting in a net debt to trailing FFO ratio(6) of 0.8 times, which is at the lowest level in over ten years.

Cash flow used in investing activities totaled $168 million in the third quarter of 2022, including exploration and development ("E&D") capital expenditures(7) of $184 million.

In early July 2022, we announced the approval of a normal course issuer bid ("NCIB") for the purchase of up to 16 million common shares, representing approximately 10% of Vermilion's public float as at June 22, 2022. To date, we have repurchased 2.3 million common shares for $72 million.

In conjunction with our Q3 2022 release, we announced a quarterly cash dividend of $0.08 CDN per share, payable on January 16, 2023 to shareholders of record on December 30, 2022. Including dividends and share buybacks, we returned $85 million to shareholders in Q3 2022, representing 26% of Q3 2022 FCF.

Production in Q3 2022 averaged 84,237 boe/d(8) a decrease of 1% from the previous quarter, primarily due to fire-related downtime in France and third-party downtime in Canada.

Production from our International operations averaged 27,095 boe/d(8) in Q3 2022, an increase of 1% from the prior quarter, primarily due to higher production in Australia and Germany, which more than offset fire-related downtime in France and natural decline in the other jurisdictions.

In Australia, we successfully drilled the B17 and B18 wells into oil-bearing formations in the Wandoo field. The wells have produced over 300,000 barrels cumulative to date and generated approximately $30 million of operating cash flow, recovering 40% of the invested capital in the first two months on production.

Production from our North American operations averaged 57,142 boe/d(8) in Q3 2022, a decrease of 2% from the prior quarter, primarily due to third-party downtime in Canada and delayed start-up of our Turner wells in the United States.

During the quarter, we completed the 6-well Montney pad that was drilled in Q2 2022 and are in the process of finishing construction of the initial build-out of the facility and bringing these wells on production.

Late in the third quarter, the European Union ("EU") announced the approval of a temporary windfall tax measure aimed at EU companies with activities in the hydrocarbon sector. Based on preliminary information currently available, we estimate Vermilion's exposure to the EU windfall tax could be in the range of $250 to $350 million for 2022.

($M except as indicated)

Q3 2022

Q2 2022

Q3 2021

YTD 2022

YTD 2021

Financial

Petroleum and natural gas sales

964,678

858,844

538,530

2,633,701

1,313,846

Cash flows from operating activities

447,608

530,364

211,548

1,319,025

584,101

Fund flows from operations (1)

507,876

452,901

262,696

1,350,645

597,689

Fund flows from operations ($/basic share) (2)

3.10

2.75

1.62

8.25

3.72

Fund flows from operations ($/diluted share) (2)

3.01

2.68

1.59

8.01

3.65

Net earnings (loss)

271,079

362,621

(147,130)

917,654

804,108

Net (loss) earnings ($/basic share)

1.65

2.20

(0.91)

5.61

5.00

Cash flows used in investing activities

168,275

612,634

162,930

891,239

334,827

Capital expenditures (7)

184,015

113,153

66,450

382,512

228,989

Acquisitions

6,220

522,223

94,420

535,155

107,332

Asset retirement obligations settled

10,386

4,300

5,142

21,006

15,486

Cash dividends ($/share)

0.08

0.06

--

0.20

--

Dividends declared

13,031

9,913

--

32,711

--

% of fund flows from operations (9)

3 %

2 %

-- %

2 %

-- %

Payout (10)

207,432

127,366

71,592

436,229

244,475

% of fund flows from operations (10)

41 %

28 %

27 %

32 %

41 %

Free cash flow (3)

323,861

339,748

196,246

968,133

368,700

Long-term debt

1,409,507

1,527,217

1,760,342

1,409,507

1,760,342

Net debt (5)

1,412,052

1,588,668

1,778,052

1,412,052

1,778,052

Net debt to four quarter trailing fund flows from operations (6)

0.8

1.1

2.4

0.8

2.4

Operational

Production (8)

Crude oil and condensate (bbls/d)

37,315

36,783

38,777

37,064

38,777

NGLs (bbls/d)

7,901

8,113

8,068

8,117

8,279

Natural gas (mmcf/d)

234.12

239.83

226.73

239.51

232.12

Total (boe/d)

84,237

84,868

84,633

85,099

85,742

Average realized prices

Crude oil and condensate ($/bbl)

123.02

138.55

87.05

127.34

79.40

NGLs ($/bbl)

44.64

51.86

35.55

47.82

30.03

Natural gas ($/mcf)

24.68

16.50

9.20

19.50

6.63

Production mix (% of production)

% priced with reference to WTI

38 %

39 %

39 %

38 %

38 %

% priced with reference to Dated Brent

17 %

16 %

18 %

17 %

18 %

% priced with reference to AECO

30 %

29 %

28 %

29 %

29 %

% priced with reference to TTF and NBP

15 %

16 %

15 %

16 %

15 %

Netbacks ($/boe)

Operating netback (11)

78.42

72.57

36.17

70.20

29.30

Fund flows from operations ($/boe) (12)

67.07

58.82

33.27

58.86

25.75

Operating expenses

16.64

14.89

13.21

15.37

12.93

General and administration expenses

1.90

2.04

1.56

1.93

1.53

Average reference prices

WTI (US $/bbl)

91.56

108.41

70.56

98.09

64.82

Dated Brent (US $/bbl)

100.85

113.78

73.47

105.35

67.73

AECO ($/mcf)

4.16

7.24

3.60

5.38

3.28

TTF...