Vermilion Energy Inc. Common (Canada)

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Good morning, ladies and gentlemen, and welcome to the Vermilion Q4 2025 conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, March 5, 2026. I would now like to turn the conference over to Dion Hatcher, President and CEO. Please go ahead.

Thank you. Good morning, ladies and gentlemen. I'm Dion Hatcher, President and CEO of Vermilion Energy. With me today are Lars Glemster, Vice President, CFO, Darcy Kerwin, Vice President, International HSE, Randy McQuaid, Vice President, North America, Laura Conrad, Vice President, Business Development, and Travis Thorgensen, Director of Investor Relations and Corporate Planning. Please refer to our advisory and forward-looking statements in our Q4 release. It describes forward-looking information, non-GAAP measures, and oil and gas terms used today, and it relies on risk factors and assumptions relevant to this discussion. Vermilion had an impactful year, positioning herself as a global gas producer with top decile realized gas prices, lower cost structure, and a long-duration asset base capable of delivering sustainable free cash flow for decades to come. In 2025, we delivered record production and marked a pivotal year in our company's history. Through strategic A&D activity, particularly the acquisition of the high-quality assets in our core deep basin area, and the disposition of non-core assets in Saskatchewan and the United States, our portfolio is now focused on liquids-rich gas assets in Canada and premium-priced gas assets in Europe. Building one of the largest land footprints in the deep basin, along with our growing liquids-rich gas business in the Miami, has sharpened our operational focus. This allows us to improve our cost structure and, more importantly, higher profitability in our Canadian portfolio. In Germany, during Q1, we brought online the first well of the deep gas exploration program, Osterheide, and progressed the build-up of infrastructure to facilitate the production from one of our largest European gas discoveries, Bissehorst, which we expect to bring online by mid-2026. In the Netherlands, we successfully drilled two wells with multiple prospective zones and brought them on production in Q4. The long runway of future prospects we've identified in Europe, with funding and development costs of approximately $1.50 Canadian per MCF, represents an opportunity for profitable organic growth in our domestic European gas business. These core assets drove another strong quarter in Q4, both operationally and financially. Production of 121,308 buoys per day was ahead of guidance. This was partially driven by highly productive wells in a deep basin, where three of the most productive gas wells in December were remaining owned and operated. Production also benefited from record volumes in the Montigny, as well as outperformance from the Osterhout well in Germany, which had 40% higher production compared to the third quarter and generated approximately $8 million of free cash flow in Q4 alone. Strong realized gas pricing of 550 per mcf or double the equal benchmark was driven by our direct European gas exposure, where TTF prices averaged $15 per mm BTU in the quarter. Our realized gas prices also benefit from enhanced market diversification in Canada and a sophisticated hedging program. On the operational side, we apply a continuous improvement mindset to the areas within our control. safety, production, and cost management. I am excited about the progress by each team across the business. In Canada, due to the improved operational scale, high quality assets, our unit operating costs are now the lowest in over a decade, which improves our corporate unit costs, now the lowest since 2020. Investments in infrastructure such as the MICA facility and development initiatives in Germany are expected to deliver an increase in excess free cash flow over the next few years. The long duration of our asset base and our commitment to disciplined capital allocation, when combined with only 153 million shares outstanding, positions Vermillion to add meaningful per share value. Moving to reserves, Vermillion's total approved plus probable, or 2P, reserves increased by 36% from the prior year, reaching 592 million BUEs. This growth was driven by a combination of organic development and the deep basin acquisitions. which closed in February 2025, partially offset by the divestment of the United States and Saskatchewan assets in mid-2025. We added 86 million BOEs of approved, developed, producing, or PDP reserves and 201 million BOEs of 2P reserves in 2025. Our average funding development and acquisition costs, including future development costs, were $14.91 per BOE for PDP and $7.71 per BUE for 2P. That's a recycle ratio of 1.8 to 3.5 times respectively. These recycle ratios highlight the capital efficiency and strong returns of our reserve additions. It's also worth noting that PDP reserves do not include any volumes or present value associated with the whistle horse discovery well on the Bomberson license, whereas 2P reserves include approximately 7 million BUE or 43 BCF related to our 64% working interest in the initial discovery. We have identified up to six additional drilling locations on the Balmaston license that currently have no 2P reserves assigned, representing significant further upside for European reserves. We remain on track to spot the first two of these locations in early 2027 with long lead equipment ordered, the drilling rig secured, and permitting progressing as expected. By applying the learnings from the previous program, we anticipate lower costs and faster cycle times resulting in these wells being on production in the second half of 2028. The 2P Reserve Life Index was 14 years, in line with our historical averages. Our internal estimate is that we have 1,700 drilling locations across our 1.3 million net acres of land that's in the Deep Basin and Montney, and only 23% of these are included in our year-end reserves. Also of note, Internal estimates of initial gas in place related to exploration and development prospects in Europe are minimally included in our year-end reserves. We believe there is a significant upside to our European gas reserves, given our 1.4 million net acres land across Germany and the Netherlands, combined with our track record of exploration success. Across our portfolio, the combination of book reserves and additional internally estimated locations provide long-term visibility for future production and cash flow. Our tax net present value of our two pre-reserves discounted at 10%, using the three consultant average pricing as of Jan 1, 2026, and deducting year-end net debt is $23 per basic share, well in excess of our current share price. We'll now pass the letters to discuss the Q4 results and more.