Vermilion Energy Inc. Common (Canada)

Good morning, my name is Jess and I will be your conference operator today. At this time, I would like to welcome everyone to the Vermilion Energy Q4 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star one on your telephone keypad. If you would like to withdraw your question, please press star two. Mr. Dion Hatcher, you may begin your conference.

Thank you, Jess. Well, good morning, ladies and gentlemen.

Thank you for joining us today. I'm Dion Hatcher, President and CEO of Vermillion Energy. With me today are Lars Glemser, Vice President and CFO, Darcy Kerwin, Vice President International and HSE, Bryce Kramnica, Vice President North America, Jetson Tan, Vice President Business Development, and Kyle Preston, Vice President of Investor Relations. We'll be referencing a PowerPoint presentation to discuss the Q4 full-year 2022 results. Presentation can be found on our website under Invest With Us and Events and Presentations. Please refer to our advisory and forward-looking statements at the end of the presentation. It describes forward-looking information, non-GAAP measures, and oil and gas terms used today, and outlines the risk factors and assumptions relevant to this discussion. In 2022, we delivered on our strategic priorities and continue to reposition Vermillion for long-term success. We remained focused on financial discipline and reduced net debt by another 300 million. We benefited from strong European gas prices as a result of our international diversified asset base. We advanced the core of acquisition to significantly enhance our Euro gas exposure, which is planned to close on March 31st of this year. and we completed the strategic acquisition of La Crotta Exploration, marking Vermillion's entry into the prolific Montney Resource Play, which has significantly increased the depth and quality of our drilling inventory. Looking at our financial results, Vermillion generated record fund flows of $1.6 billion and record free cash flow of $1.1 billion in 2022, representing a year-over-year increase of 78% and 99% respectively. These results were achieved despite a $406 million of realized hedging losses and $223 million of temporary European windfall taxes. This free cash flow allows us to fund over $500 million of strategic acquisitions, reduce net debt by over $300 million, and return over $100 million to our shareholders through dividends and share buybacks. We launched a return of capital framework in 2022, which included a reinstated quarterly dividend in Q1, and the commencement of a share buyback program in Q3, returning a total of 11% of our free cash flow during the year. We exited the year with net debt of $1.3 billion and a resulting net debt to fund flow ratio of 0.8 times, which is the lowest leverage in over 10 years.