Vermilion Energy Inc. Common (Canada)

Good morning, ladies and gentlemen, and welcome to the Vermilion Q2 2026 conference call. At this time, all lines are in this lonely 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 girl for the operator. This call is being recorded on July 30, 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 Vermillion Energy. With me today are Lars Glemser, Vice President and CFO, Darcy Kerwin, Vice President, International and HSE, Brandon McQuaig, Vice President, North America, Laura Conrad, Vice President, Business Development, and Travis Thorgeirson, Director of Investor Relations and Corporate Planning. Please refer to the advisory and forward-looking statements in our Q2 release. 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. The second quarter of 2026 was another strong quarter for Vermillion, with production averaging 125,800 BUs per day, exceeding the top end of our guidance range. Positive results across our portfolio continue to support performance that is trending ahead of our five-year plan that we communicated during Investor Day in December of 2025. With this current performance in mind, and with significant progress in debt reduction, we have increased our return to capital target in a range of 40% to 60% of excess free cash flow, up from 40% previously. Production performance is driven by record output at Mike and Monty, continued strong execution in the Deep Basin, and the state's restart of production in Australia following the back-to-back cyclones earlier this year. Based on operational performance year-to-date, we have increased our full-year production guidance, now 121 to 123,000 V's per day, while maintaining our E&D capital budget range of $600 to $630 million. Our ED capital expenditures and operating expenses are weighted towards the second half of the year, and we expect full-year costs to be within the stated guidance ranges for these items. In the Montney, strong performance from the most recent BC 6-well pad at 835 drove quarterly production at mica up to 18,000 BUs per day. The pad achieved an IP90 of more than 950 BUs per day per well, comprised of 3 million a day of natural gas, Thank you. Thank you. Thank you for joining us. Devolonating the production with a new sales pipeline as well as building the next two wells on this license in 2027. Elsewhere, the Osterhag well continues to perform in line with prior quarter rates with cumulative free cash flow of $43 million since startup. We expect production growth in Germany to be driven by our deep gas exploration program reaching 10,000 views per day by 2030 and given the significant resource, continue to grow into the next decade. Also in Germany, we closed a previously announced full-time acquisition following quarter-end. The transaction adds approximately 1,000 views per day of production, equating 85% to natural gas, as well as ownership of key infrastructure around the ostride well. Adding production from resource, these acquired assets are particularly impactful with the recent rally in European gas prices, currently over $25 per MMVTU through winter 2026. Averyl Schraven, Larissa Marianne Conrad, Tamar Epstein Thank you for joining us. Thank you, Dion. In the second quarter, Vermillion generated fund flows from operations of $231 million.

on E&D capital expenditures of $110 million, resulting in free cash flow of over $120 million. Capital allocation remains focused on disciplined investment, continued balance sheet improvement, and shareholder returns. During the quarter, net debt was reduced by approximately $70 million to $1.22 billion. As of June 30, 2026, net debt to trailing four-quarter fund flows from operations was 1.3 times. Over the past five quarters Vermillion has reduced debt by approximately $840 million, accelerating progress toward our $1 billion net debt target and significantly strengthening the balance sheet. This continued deleveraging has also reduced structural financing costs, with unit interest expense declining approximately 35% from the prior year, and we are on track to reduce full year interest expense by $30 million from 2025. Reflecting this progress, as well as improved visibility to future cash flow and confidence in the sustainability of the business, we have enhanced our return to capital framework. Vermillion now intends to return 40% to 60% of excess free cash flow to shareholders compared to the previous target of 40%. This framework continues to be supported by our base dividend and ongoing share repurchase program. Subsequent to the quarter, we announced the renewal of our NCIB out to July 2027. During the quarter, we returned approximately $26 million to shareholders through dividends of $21 million and $5 million of share repurchases. With the increased return of capital target, we expect the pace of share buybacks to increase. Turning to commodity risk management, Vermillion recognized a gain on hedging during the quarter As a realized loss of $57 million was more than offset by unrealized mark-to-market gains of $174 million on our hedge portfolio. These unrealized gains reflect changes in forward commodity prices relative to our hedge position at March 31, 2026. Our percentage of production hedged will decrease in the second half of 2026 relative to the second quarter levels, which increases our exposure to current elevated commodity prices. Operationally, Canadian production averaged 99,605 BUE per day during the quarter, which included record production from mica. We continued to actively manage eco-exposure and prioritize profitability over production during periods of weaker natural gas pricing. We maintained strong well performance and continued to shift deep basin activity toward liquids-rich opportunities in the Rock Creek, Knighton, and Ellerslie. Several of our wells in Canada, in both the Deep Basin and Maunee, ranked among the most prolific wells brought online during the quarter. In Europe, in addition to our work getting Vissil Horse online and preparing for follow-up drilling, our activity this quarter focused on workovers, maintenance programs, and preparation for drilling activities in the Netherlands during the second half of 2026. These activities, together with production from Vissil Horse and Osterhuis, support the continued development of our European Gas Platform. Looking ahead, we expect third quarter production to average between 116,000 and 118,000 BOE per day, reflecting planned maintenance activities in Ireland, Germany, and Canada. This is consistent with our assumptions at the time of the budget release. We expect Q4 production to be approximately 122,000 BOE per day With European gas production back in line with first half levels. For the full year, production guidance has been increased to 121,000 to 123,000 VOE per day, while E&D capital expenditure guidance remains unchanged at $600 million to $630 million. Both operating expenses and capital expenditures are expected to be weighted toward the second half of the year, as Dion previously noted. The increased production guidance reflects our strong operational performance year-to-date, which has more than offset the impact of back-to-back cyclones in Australia earlier this year. We are confident in the ability of the company to continue to deliver on our investor day outlook. I will now pass it back to Dion.