Brian Zinchuk is editor and owner of Pipeline Online
Panther Drilling Rig 3 drilling for Vermilion near Alameda on June 18, 2023. Photo by Brian Zinchuk
CALGARY, AB, May 23, 2025 /CNW/ – Vermilion Energy Inc. announced on May 23 that it has entered into a definitive agreement for the sale of its Saskatchewan and Manitoba assets for cash proceeds of $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 release, which did not name who the buyer was. Based on current strip commodity pricing and operational plans, Vermilion expects to exit 2025 with net debt of $1.5 billion, with a trailing net debt to FFO ratio of 1.4 times.
The assets are currently producing approximately 10,500 boepd (86% oil and liquids) and are forecast to generate approximately $110 million of annual net operating income at current strip commodity prices. The assets had Proved Developed Producing reserves of 30 mmboe as evaluated by McDaniel & Associates Consultants Ltd. at December 31, 2024, and approximately $250 million of undiscounted future abandonment liabilities. The Transaction has an effective date of May 1, 2025 and is anticipated to close in Q3 2025, subject to receipt of regulatory approvals and the satisfaction of other customary closing conditions.
Assuming a mid-Q3 2025 close, Vermilion expects full year 2025 production to average between 120,000 to 125,000 boe/d with capital expenditures in the range of $680 to $710 million, reflecting an approximately $50 million reduction associated with the divested Assets post-closing. Vermilion will continue to evaluate capital investment levels during this period of increased volatility and will adjust capital if necessary to prioritize free cash flow over production growth during 2025 and 2026.
The company said, “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. 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. Vermilion would like to sincerely thank our talented and dedicated field teams in Saskatchewan for their commitment to safe and efficient operations over the past 11 years as well as the technical teams, which provided support from Calgary.”
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