Vermilion Energy Inc. Announces 2013 Year-End Summary Reserves and Resource Information

CALGARY, March 3, 2014 /CNW/ - Vermilion Energy Inc. ("Vermilion", the "Company", "We" or "Our") (TSX, NYSE: VET) is pleased to announce summary 2013 year-end reserves and resource information.  The estimates of reserves and resources and other oil and gas information contained in this news release has been estimated by GLJ Petroleum Consultants Ltd. ("GLJ") and prepared in accordance with National Instrument 51-101 "Standards of Disclosure for Oil and Gas Activities" of the Canadian Securities Administrators ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGEH"). For additional information about Vermilion, including Vermilion's statement of reserves data and other information in Form 51-101F1, report on reserves data by independent qualified reserves evaluator or auditor in Form 51-101F2 and report of management and directors on oil and gas disclosure in Form 51-101F3, please review the Company's Annual Information Form for the year ended December 31, 2013, to be filed and available on SEDAR at www.sedar.com and on the SEC's EDGAR system at www.sec.gov.

HIGHLIGHTS

  • Total proved ("1P") reserves increased 23% to 129.0 mmboe, while total proved plus probable ("2P") reserves increased 20% to 198.6 mmboe.

  • In 2013, we added 48.7 mmboe of 2P reserves with 46.3 mmboe (95%) of 2P reserves additions coming from exploration and development ("E&D") activities and 2.4 mmboe (5%) of 2P reserves additions through acquisitions.

  • At the 2P level, we replaced 309% of 2013 production through E&D activities (excluding acquisitions). Excluding Corrib-related expenditures and reserves additions, Vermilion reinvested 68% of fund flows from operations(1) to achieve a finding and development ("F&D") cost of $16.48/boe for E&D related 2P reserves additions (including future development costs "FDC") and a recycle ratio of 3.7 times.  Including Corrib-related development expenditures and reserves additions, Vermilion reinvested 81% of fund flows from operations to achieve an F&D cost of $16.59/boe for E&D related 2P reserves additions (including FDC costs) and a recycle ratio of 3.6 times.

  • At the 2P level, we replaced 325% of 2013 production through all activities (including both E&D activities and acquisitions), at a finding, development and acquisition ("FD&A") cost of $17.02/boe (including future development costs) and a recycle ratio of 3.6 times. Our 2P FD&A cost for 2013 represents a 27% reduction from our FD&A cost in 2012.

  • The GLJ 2013 Resources Assessment (as defined below) estimated contingent resources of 74.4 mmboe (low estimate) to 351.7 mmboe (high estimate), with a best estimate of 233.5 mmboe, and prospective resources of 59.4 mmboe (low estimate) to 818.8 mmboe (high estimate), with a best estimate of 498.7 mmboe. 

  • At year-end 2013, 2P reserves were comprised  of 36% Brent-based light crude, 16% Canadian-based light crude, 7% natural gas liquids, 20% European natural gas and 21% Canadian natural gas.

  • Reserve life index increased to 13.3 years for 2P reserves and 8.6 years for 1P reserves based on year-end 2013 reserves and annualized fourth quarter 2013 production of 40,960 boe/d, as compared to 12.5 years for 2P reserves and 8.0 years for 1P reserves at year-end 2012.

  • Based on a successful six-well program in 2013, an additional 40 (28.4 net) undeveloped wells were added at the 2P level in the Mannville liquids-rich gas play in Alberta, with average reserves of 650 mboe/well.

  • A successful five-well infill and extension drilling program in the Champotran field in the Paris Basin in France added 5.5 mmbbl of 2P reserves.

  • The continued strong performance of our existing wells in combination with the results of our successful 2013 two-well drilling program resulted in the addition of 4.7 mmbbl of 2P reserves in Australia in 2013.
(1)   Additional GAAP Financial Measure.  Please see the "Advisories" section of this 2013 Year-end Summary Reserves and Resource Information news release.

DISCLAIMER

Certain statements included or incorporated by reference in this document may constitute forward looking statements or financial outlooks under applicable securities legislation.  Such forward looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", or similar words suggesting future outcomes or statements regarding an outlook.  Forward looking statements or information in this document may include, but are not limited to: capital expenditures; business strategies and objectives; estimated reserve quantities and the discounted present value of future net cash flows from such reserves; petroleum and natural gas sales; future production levels (including the timing thereof) and rates of average annual production growth; estimated contingent resources and prospective resources; exploration and development plans; acquisition and disposition plans and the timing thereof; operating and other expenses, including the payment and amount of future dividends; royalty and income tax rates; the timing of regulatory proceedings and approvals; and the timing of first commercial natural gas and the estimate of Vermilion's share of the expected natural gas production from the Corrib field.

Such forward looking statements or information are based on a number of assumptions all or any of which may prove to be incorrect.  In addition to any other assumptions identified in this document, assumptions have been made regarding, among other things: the ability of Vermilion to obtain equipment, services and supplies in a timely manner to carry out its activities in Canada and internationally; the ability of Vermilion to market crude oil, natural gas liquids and natural gas successfully to current and new customers; the timing and costs of pipeline and storage facility construction and expansion and the ability to secure adequate product transportation; the timely receipt of required regulatory approvals; the ability of Vermilion to obtain financing on acceptable terms; foreign currency exchange rates and interest rates; future crude oil, natural gas liquids and natural gas prices; and management's expectations relating to the timing and results of exploration and development activities.

Although Vermilion believes that the expectations reflected in such forward looking statements and information are reasonable, undue reliance should not be placed on forward looking statements because Vermilion can give no assurance that such expectations will prove to be correct.  Financial outlooks are provided for the purpose of understanding Vermilion's financial strength and business objectives and the information may not be appropriate for other purposes.  Forward looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Vermilion and described in the forward looking statements or information.  These risks and uncertainties include but are not limited to: the ability of management to execute its business plan; the risks of the oil and gas industry, both domestically and internationally, such as operational risks in exploring for, developing and producing crude oil, natural gas liquids and natural gas; risks and uncertainties involving geology of crude oil, natural gas liquids and natural gas deposits; risks inherent in Vermilion's marketing operations, including credit risk; the uncertainty of reserves estimates and reserves life and estimates of resources and associated expenditures; the uncertainty of estimates and projections relating to production and associated expenditures; potential delays or changes in plans with respect to exploration or development projects; Vermilion's ability to enter into or renew leases on acceptable terms; fluctuations in crude oil, natural gas liquids and natural gas prices, foreign currency exchange rates and interest rates; health, safety and environmental risks; uncertainties as to the availability and cost of financing; the ability of Vermilion to add production and reserves through exploration and development activities; the possibility that government policies or laws may change or governmental approvals may be delayed or withheld; uncertainty in amounts and timing of royalty payments; risks associated with existing and potential future law suits and regulatory actions against Vermilion; and other risks and uncertainties described elsewhere in this document or in Vermilion's other filings with Canadian securities regulatory authorities.

The forward looking statements or information contained in this document are made as of the date hereof and Vermilion undertakes no obligation to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws.

All oil and natural gas reserve information contained in this document has been prepared and presented in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.  The actual oil and natural gas reserves and future production will be greater than or less than the estimates provided in this document.  The estimated future net revenue from the production of the disclosed oil and natural gas reserves does not represent the fair market value of these reserves.  Natural gas volumes have been converted on the basis of six thousand cubic feet of natural gas to one barrel of oil equivalent.  Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation.  A boe conversion ratio of six thousand cubic feet to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Financial data contained within this document are reported in Canadian dollars, unless otherwise stated.

Abbreviations

Oil and Natural Gas Liquids
bbl Barrel
Mbbl thousand barrels
MMbbl million barrels
bbl/d barrels per day
NGLs natural gas liquids
Natural Gas
Mcf thousand cubic feet
MMcf million cubic feet
Mcf/d thousand cubic feet per day
MMcf/d million cubic feet per day
MMBtu million British Thermal Units
Other
API American Petroleum Institute
°API An indication of the specific gravity of crude oil measured on the API gravity scale. 
  Liquid petroleum with a specified gravity of 28 °API or higher is generally referred to as light crude oil.
boe barrel of oil equivalent
M$ thousand dollars
MM$ million dollars
Mboe 1,000 barrels of oil equivalent
MMboe million barrels of oil equivalent
WTI West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma for crude oil of
  standard grade

RESERVES, FUTURE NET REVENUE AND OTHER OIL AND GAS INFORMATION

The following is a summary of the oil and natural gas reserves and the value of future net revenue of Vermilion as evaluated by GLJ, independent petroleum engineering consultants in Calgary in a report dated February 4, 2014 with an effective date of December 31, 2013 (the "GLJ 2013 Reserves Evaluation").  The GLJ 2013 Reserves Evaluation was prepared in accordance with National Instrument 51-101 and COGEH.

Reserves and other oil and gas information in this news release is effective December 31, 2013 unless otherwise stated.

All evaluations of future net production revenue set forth in the tables below are stated after overriding and lessor royalties, Crown royalties, freehold royalties, mineral taxes, direct lifting costs, normal allocated overhead and future capital investments, including abandonment and reclamation obligations.  Future net production revenues estimated by the GLJ 2013 Reserves Evaluation do not represent the fair market value of the reserves.  Other assumptions relating to the costs, prices for future production and other matters are included in the GLJ 2013 Reserves Evaluation.  There is no assurance that the future price and cost assumptions used in the GLJ 2013 Reserves Evaluation will prove accurate and variances could be material.

Reserves for Australia, Canada, France, Ireland and the Netherlands are established using deterministic methodology.  Total proved reserves are established at the 90 percent probability (P90) level.  There is a 90 percent probability that the actual reserves recovered will be equal to or greater than the P90 reserves.  Total proved plus probable reserves are established at the 50 percent probability (P50) level.  There is a 50 percent probability that the actual reserves recovered will be equal to or greater than the P50 reserves.

Estimates of reserves have been made assuming that development of each property, in respect of which estimates have been made, will occur without regard to the availability of funding required for that development.

With respect to finding and development costs, the aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for that year.

Pricing used in the forecast price estimates is set forth in the table below and referenced in the notes to subsequent tables.

Table 1: Forecast Prices used in Estimates (1)

                    Natural Gas   Natural Gas   Natural Gas   Inflation   Exchange   Exchange
    Light and Medium Crude Oil   Crude Oil   Canada   France/Netherlands   Liquids   Rate   Rate   Rate
    WTI   Edmonton   Cromer   Brent Blend       National                
    Cushing   Par Price   Medium   FOB   AECO   Balancing   FOB            
    Oklahoma   40˚ API   29.3˚ API   North Sea   Gas Price   Point   Field Gate   Percent        
Year   ($US/bbl)   ($Cdn/bbl)   ($Cdn/bbl)   ($US/bbl)   ($Cdn/MMBtu)   (UK)   ($Cdn/bbl)   Per Year   ($US/$Cdn)   (EUR/$Cdn)
2013    97.88    93.33    88.05    108.76    3.24    10.83    68.65    1.0    1.000    1.369 
Forecast                                        
2014    97.50    92.76    86.27    107.50    4.03    11.32    66.66    2.0    0.950    1.420 
2015    97.50    97.37    90.55    107.50    4.26    11.32    69.12    2.0    0.950    1.420 
2016    97.50    100.00    93.00    105.00    4.50    11.05    70.45    2.0    0.950    1.420 
2017    97.50    100.00    93.00    102.50    4.74    10.79    69.83    2.0    0.950    1.420 
2018    97.50    100.00    93.00    102.50    4.97    10.79    69.19    2.0    0.950    1.420 
Thereafter   2.0%   2.0%   2.0%   2.0%   2.0%   2.0%   2.0%   2.0%   0.950    1.420 

Note:
(1)  The pricing assumptions used in the GLJ 2013 Reserves Evaluation with respect to net values of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above.  The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation.  GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101.

All forecast prices in the table above are provided by GLJ.  For 2013, the price of Vermilion's natural gas in the Netherlands was based on the TTF day-ahead index, as determined on the Title Transfer Facility Virtual Trading Point operated by Dutch TSO Gas Transport Services, plus various fees. GasTerra, a state owned entity purchases all natural gas produced by Vermilion in the Netherlands.  Prior to 2013, the natural gas price received by Vermilion in the Netherlands was calculated using a formula based on the trailing average of Dated Brent and natural gas prices from European trading hubs.  France natural gas production was benchmarked to National Balancing Point (UK).  The benchmark price for Australia and France crude oil was Dated Brent. The benchmark price for Canadian crude oil was Edmonton Par and Canadian natural gas was priced against AECO.  For the year ended December 31, 2013, the average realized sales prices before hedging were $119.38 per bbl (Australia), $10.61 per Mcf (Netherlands), $108.55 per bbl (France) for Brent-based crude oil, $89.78 per bbl for Canadian-based crude oil and NGLs and $3.40 per Mcf for Canadian natural gas.

The following table summarizes the capital expenditures made by Vermilion on oil and natural gas properties for the year ended December 31, 2013:

Table 2: Capital Costs Incurred

  Acquisition Costs  
      Proved     Unproved     Exploration     Development     Total
(M$)     Properties (1)     Properties     Costs (1)     Costs     Costs
Australia     -     -     -     77,931     77,931
Canada     -     -     19,079     235,086     254,165
France     -     -     3,899     96,479     100,378
Ireland     -     -     -     90,898     90,898
Netherlands     24,124     -     -     28,543     52,667
Total     24,124     -     22,978     528,937     576,039

Note:
(1) Includes costs of acquiring undeveloped properties.

The following table sets forth the reserve life index based on total proved and proved plus probable reserve and fourth quarter 2013 production of 40,960 boe/d.

Table 3: Reserve Life Index

Commodity Production            Reserve Life Index (years)
  Fourth Quarter
2013
  Total
Proved
  Proved Plus
Probable
Oil and natural gas liquids (bbl/d) 27,800   7.6   11.6
Natural gas (mmcf/d) 78.96   10.7   16.9
Oil Equivalent (boe/d) 40,960   8.6   13.3

The following tables provide reserves data and a breakdown of future net revenue by component and production group using forecast prices and costs.  For Canada, the tables following include Alberta gas cost allowance.

The following tables may not total due to rounding.

Table 4: Oil and Gas Reserves - Based on Forecast Prices and Costs (1)

      Light and Medium Oil   Heavy Oil   Natural Gas   Natural Gas Liquids     BOE     BOE
      Gross (2)     Net (2)     Gross (2)     Net (2)     Gross (2)     Net (2)     Gross (2)     Net (2)     Gross     Net
      (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (MMcf)     (MMcf)     (Mbbl)     (Mbbl)     (Mboe)     (Mboe)
Proved Developed Producing (3) (5) (6)                                                            
Australia     12,824      12,824      -     -     -     -     -     -     12,824      12,824 
Canada     11,394      9,323      13      12      64,246      58,142      2,804      1,920      24,919      20,945 
France     30,895      28,741      -     -     7,561      7,554      -     -     32,155      30,000 
Ireland     -         -     -     -     -     -     -     -      -
Netherlands     -     -     -     -     22,794      22,794      44      44      3,843      3,843 
Total Proved Developed Producing     55,113      50,888      13      12      94,601      88,490      2,848      1,964      73,741      67,612 
Proved Developed Non-Producing (3) (5) (7)                                                            
Australia     -         -     -     -     -     -     -         -
Canada     459      392      -     -     16,330      14,633      629      408      3,810      3,239 
France     686      635      -     -     3,470      3,457      -     -     1,264      1,211 
Ireland     -             -     -     -     -     -     -     -
Netherlands     -     -     -     -     13,956      13,956      17      17      2,343      2,343 
Total Proved Developed Non-Producing     1,145      1,027      -     -     33,756      32,046      646      425      7,417      6,793 
Proved Undeveloped (3) (8)                                                            
Australia     1,200      1,200      -     -     -     -     -     -     1,200      1,200 
Canada     8,997      7,768      -     -     74,385      68,950      4,734      3,671      26,129      22,931 
France     2,810      2,665      -     -     -     -     -     -     2,810      2,665 
Ireland     -     -     -     -     105,931      105,931      -     -     17,655      17,655 
Netherlands     -             -     -     -     -     -     -     -
Total Proved Undeveloped     13,007      11,633      -     -     180,316      174,881      4,734      3,671      47,794      44,451 
Proved (3)                                                            
Australia     14,024      14,024      -     -     -     -     -     -     14,024      14,024 
Canada     20,850      17,483      13      12      154,961      141,725      8,167      5,999      54,857      47,115 
France     34,391      32,041      -     -     11,031      11,011      -     -     36,230      33,876 
Ireland     -     -     -     -     105,931      105,931      -     -     17,655      17,655 
Netherlands     -     -     -     -     36,750      36,750      61      61      6,186      6,186 
Total Proved     69,265      63,548      13      12      308,673      295,417      8,228      6,060      128,952      118,856 
Probable (4)                                                            
Australia     5,439      5,439      -     -     -     -     -     -     5,439      5,439 
Canada     10,450      8,645              90,663      81,662      5,685      3,942      31,249      26,200 
France     18,394      17,178      -     -     3,269      3,266      -     -     18,939      17,722 
Ireland     -     -     -     -     38,707      38,707      -     -     6,451      6,451 
Netherlands     -     -     -     -     44,592      44,592      99      99      7,531      7,531 
Total Probable     34,283      31,262              177,231      168,227      5,784      4,041      69,609      63,344 
Proved Plus Probable (3) (4)                                                            
Australia     19,463      19,463      -     -     -     -     -     -     19,463      19,463 
Canada     31,300      26,128      16      15      245,624      223,387      13,852      9,941      86,105      73,315 
France     52,785      49,219      -     -     14,300      14,277      -     -     55,168      51,599 
Ireland     -     -     -           144,638      144,638      -     -     24,107      24,106 
Netherlands     -     -     -     -     81,342      81,342      160      160      13,717      13,717 
Total Proved Plus Probable     103,548      94,810      16      15      485,904      463,644      14,012      10,101      198,560      182,200 

Notes:
(1)  The pricing assumptions used in the GLJ 2013 Reserves Evaluation with respect to net values of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above.  See "Forecast Prices used in Estimates".  The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation.  GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101.
(2)  "Gross Reserves" are Vermilion's working interest (operating or non-operating) share before deduction of royalties and without including any royalty interests of Vermilion.  "Net Reserves" are Vermilion's working interest (operating or non-operating) share after deduction of royalty obligations, plus Vermilion's royalty interests in reserves.
(3)  "Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable.  It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
(4)  "Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves.  It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
(5)  "Developed" reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production.
(6)  "Developed Producing" reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate.  These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.
(7)  "Developed Non-Producing" reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown.
(8)  "Undeveloped" reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production.  They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned.


Table 5: Net Present Values of Future Net Revenue - Based on Forecast Prices and Costs (1)

      Before Deducting Future Income Taxes Discounted At After Deducting Future Income Taxes Discounted At
(M$)     0%     5%     10%     15%     20%     0%     5%     10%     15%     20%
Proved Developed Producing (2) (4) (5)                                                            
Australia     652,521      585,705      531,671      487,436      450,743      441,525      389,286      347,679      314,159      286,801 
Canada     917,542      732,428      611,019      526,184      463,924      917,542      732,428      611,019      526,184      463,924 
France     1,922,512      1,441,270      1,169,507      995,695      874,106      1,515,215      1,143,202      924,201      781,406      680,775 
Ireland                                        
Netherlands     171,171      166,503      160,726      154,867      149,274      127,777      124,483      119,963      115,260      110,734 
Total Proved Developed Producing     3,663,746      2,925,906      2,472,923      2,164,182      1,938,047      3,002,059      2,389,399      2,002,862      1,737,009      1,542,234 
Proved Developed Non-Producing (2) (4) (6)                                                            
Australia                                        
Canada     70,195      55,001      45,425      38,749      33,807      70,195      55,001      45,425      38,749      33,807 
France     58,478      44,933      36,291      30,396      26,117      37,859      28,837      22,976      18,988      16,109 
Ireland                                        
Netherlands     58,744      42,746      32,922      26,583      22,305      48,215      32,962      23,789      18,026      14,260 
Total Proved Developed Non-Producing     187,417      142,680      114,638      95,728      82,229      156,269      116,800      92,190      75,763      64,176 
Proved Undeveloped (2) (7)                                                            
Australia     60,146      46,820      36,877      29,331      23,516      27,883      19,651      13,726      9,397      6,192 
Canada     746,436      530,852      394,101      302,160      237,346      448,077      321,004      240,489      185,988      147,108 
France     186,477      149,805      119,575      96,365      78,740      124,123      93,815      71,553      55,102      42,883 
Ireland     716,287      559,569      435,502      341,954      271,427      716,287      559,569      435,502      341,954      271,427 
Netherlands                                        
Total Proved Undeveloped     1,709,346      1,287,046      986,055      769,810      611,029      1,316,370      994,039      761,270      592,441      467,610 
Proved (2)                                                            
Australia     712,667      632,525      568,548      516,767      474,259      469,408      408,937      361,405      323,556      292,993 
Canada     1,734,173      1,318,281      1,050,545      867,093      735,077      1,435,814      1,108,433      896,933      750,921      644,839 
France     2,167,467      1,636,008      1,325,373      1,122,456      978,963      1,677,197      1,265,854      1,018,730      855,496      739,767 
Ireland     716,287      559,569      435,502      341,954      271,427      716,287      559,569      435,502      341,954      271,427 
Netherlands     229,915      209,249      193,648      181,450      171,579      175,992      157,445      143,752      133,286      124,994 
Total Proved     5,560,509      4,355,632      3,573,616      3,029,720      2,631,305      4,474,698      3,500,238      2,856,322      2,405,213      2,074,020 
Probable (3)                                                            
Australia     342,887      268,934      216,210      177,749      149,013      191,359      143,212      109,895      86,417      69,505 
Canada     1,066,302      679,218      473,035      351,453      273,764      805,234      505,288      346,615      253,689      194,789 
France     1,328,916      752,046      490,337      346,386      257,336      867,907      479,851      302,221      204,717      144,824 
Ireland     413,592      250,341      164,931      116,333      86,526      413,592      250,341      164,931      116,333      86,526 
Netherlands     379,491      280,351      220,037      180,195      152,184      281,161      204,108      156,473      124,925      102,879 
Total Probable     3,531,188      2,230,890      1,564,550      1,172,116      918,823      2,559,253      1,582,800      1,080,135      786,081      598,523 
Proved Plus Probable (2) (3)                                                            
Australia     1,055,554      901,459      784,758      694,516      623,272      660,767      552,149      471,300      409,973      362,498 
Canada     2,800,475      1,997,499      1,523,580      1,218,546      1,008,841      2,241,048      1,613,721      1,243,548      1,004,610      839,628 
France     3,496,383      2,388,054      1,815,710      1,468,842      1,236,299      2,545,104      1,745,705      1,320,951      1,060,213      884,591 
Ireland     1,129,879      809,910      600,433      458,287      357,953      1,129,879      809,910      600,433      458,287      357,953 
Netherlands     609,406      489,600      413,685      361,645      323,763      457,153      361,553      300,225      258,211      227,873 
Total Proved Plus Probable     9,091,697      6,586,522      5,138,166      4,201,836      3,550,128      7,033,951      5,083,038      3,936,457      3,191,294      2,672,543 

Notes:
(1)  The pricing assumptions used in the GLJ 2013 Reserves Evaluation with respect to net values of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above.  See "Forecast Prices used in Estimates".  The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation.  GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101.
(2)  "Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable.  It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
(3)  "Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves.  It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
(4)  "Developed" reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production.
(5)  "Developed Producing" reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate.  These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.
(6)  "Developed Non-Producing" reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown.
(7)  "Undeveloped" reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production.  They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned.


Table 6: Total Future Net Revenue (Undiscounted) Based on Forecast Prices and Costs (1)

                                    Future Net           Future Net
                        Capital     Abandonment and     Revenue           Revenue
                  Operating     Development     Reclamation     Before     Future     After
(M$)     Revenue     Royalties     Costs     Costs     Costs     Income Taxes     Income Taxes     Income Taxes
Proved (2)                                                
Australia     1,646,523      -       694,410      201,855      37,591      712,667      243,259      469,408 
Canada     3,566,032      523,536      823,146      444,584      40,594      1,734,172      298,358      1,435,814 
France     3,825,846      255,263      1,070,681      149,246      183,193      2,167,463      490,266      1,677,197 
Ireland     1,186,463      -       217,845      184,480      67,851      716,287          716,287 
Netherlands     447,859      -       136,074      40,558      41,311      229,916      53,924      175,992 
Total Proved     10,672,723      778,799      2,942,156      1,020,723      370,540      5,560,505      1,085,807      4,474,698 
Proved Plus Probable (2) (3)                                                
Australia     2,312,683      -       970,836      243,471      42,822      1,055,554      394,787      660,767 
Canada     5,666,550      874,308      1,256,300      685,624      49,843      2,800,475      559,427      2,241,048 
France     5,992,965      398,363      1,522,445      346,678      229,097      3,496,382      951,278      2,545,104 
Ireland     1,676,002      -       293,792      184,480      67,851      1,129,879          1,129,879 
Netherlands     1,004,424      -       257,731      85,689      51,599      609,405      152,252      457,153 
Total Proved Plus Probable     16,652,624      1,272,671      4,301,104      1,545,942      441,212      9,091,695      2,057,744      7,033,951 

Notes:
(1)  The pricing assumptions used in the GLJ 2013 Reserves Evaluation with respect to net values of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above.  See "Forecast Prices used in Estimates".  The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation.  GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101.
(2)  "Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable.  It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
(3)  "Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves.  It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.


Table 7: Future Net Revenue by Production Group Based on Forecast Prices and Costs (1)

        Future Net Revenue      
        Before Income Taxes (2)      
        (Discounted at 10% Per Year)     Unit Value
Proved Developed Producing       (M$)     ($/boe)
Light and medium oil (3)       2,142,591      39.70 
Natural gas (4)       328,991      26.45 
Non-conventional oil and gas activities       1,341      1.11 
Total Proved Developed Producing       2,472,923      36.57 
Proved Developed Non-Producing              
Light and medium oil (3)       32,403      28.38 
Natural gas (4)       80,346      15.83 
Non-conventional oil and gas activities       1,889      3.29 
Total Proved Developed Non-Producing       114,638      16.88 
Proved Undeveloped              
Light and medium oil (3)       457,303      30.83 
Natural gas (4)       524,088      18.93 
Non-conventional oil and gas activities       4,664      2.42 
Total Proved Undeveloped       986,055      22.18 
Proved              
Light and medium oil (3)       2,632,297      37.64 
Natural gas (4)       933,425      20.64 
Non-conventional oil and gas activities       7,894      2.12 
Total Proved       3,573,616      30.07 
Probable              
Light and medium oil (3)       1,009,856      29.05 
Natural gas (4)       547,769      20.29 
Non-conventional oil and gas activities       6,925      4.38 
Total Probable       1,564,550      24.70 
Proved Plus Probable              
Light and medium oil (3)       3,642,153      34.79 
Natural gas (4)       1,481,194      20.51 
Non-conventional oil and gas activities       14,819      2.80 
Total Proved Plus Probable       5,138,166      28.20 

Notes:
(1)  The pricing assumptions used in the GLJ 2013 Reserves Evaluation with respect to net values of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above.  See "Forecast Prices used in Estimates".  The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation.  GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101.
(2)  Other Company revenue and costs not related to a specific production group have been allocated proportionately to production groups.  Unit values are based on Company Net Reserves.  Net present values of reserves categories are an approximation based on major products.
(3)  Including solution gas and other by-products.
(4)  Including by-products but excluding solution gas.

Reconciliations of Changes in Reserves

The following tables set forth a reconciliation of the changes in Vermilion's gross light and medium crude oil, heavy oil and associated and non-associated gas (combined) reserves as at December 31, 2013 compared to such reserves as at December 31, 2012 based on the forecast price and cost assumptions set forth in note 3.

Table 8: Reconciliation of Company Gross Reserves by Principal Product Type - Based on Forecast Prices and Costs

AUSTRALIA   Total Oil   Light and Medium Oil   Heavy Oil   Natural Gas Liquids
                  Proved +                 Proved +                 Proved +                 Proved +
Proved Probable P+P (1) (2)     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable
Factors     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)
At December 31, 2012     10,327      6,816      17,143      10,327      6,816      17,143                         
Discoveries                                                
Extensions & Improved Recovery     3,300      (650)     2,650      3,300      (650)     2,650                         
Technical Revisions     2,763      (727)     2,036      2,763      (727)     2,036                         
Acquisitions                                                
Dispositions                                                
Economic Factors                                                
Production     (2,366)         (2,366)     (2,366)         (2,366)                        
At December 31, 2013     14,024      5,439      19,463      14,024      5,439      19,463                         
                                                                         
    Total Gas   Conventional Natural Gas   Coal Bed Methane   BOE
                  Proved +                 Proved +                 Proved +                 Proved +
Proved Probable P+P (1) (2)     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable
Factors     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (Mboe)     (Mboe)     (Mboe)
At December 31, 2012                                         10,327      6,816      17,143 
Discoveries                                                
Extensions & Improved Recovery                                         3,300      (650)     2,650 
Technical Revisions                                         2,763      (727)     2,036 
Acquisitions                                                
Dispositions                                                
Economic Factors                                                
Production                                         (2,366)         (2,366)
At December 31, 2013     -     -     -     -     -     -     -     -     -     14,024      5,439      19,463 
                                                                         
CANADA   Total Oil   Light and Medium Oil   Heavy Oil   Natural Gas Liquids
                  Proved +                 Proved +                 Proved +                 Proved +
Proved Probable P+P (1) (2)     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable
Factors     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)
At December 31, 2012     18,132      14,102      32,234      18,115      14,099      32,214      17          20      3,565      2,026      5,591 
Discoveries                                                
Extensions & Improved Recovery     1,056      1,487      2,543      1,056      1,487      2,543              -     3,839      3,256      7,095 
Technical Revisions     4,736      (5,136)     (400)     4,736      (5,136)     (400)             -     1,371      403      1,774 
Acquisitions                                                
Dispositions                                                
Economic Factors                                                
Production     (3,061)         (3,061)     (3,057)         (3,057)     (4)         (4)     (608)         (608)
At December 31, 2013     20,863      10,453      31,316      20,850      10,450      31,300      13          16      8,167      5,685      13,852 
                                                                         
  Total Gas   Conventional Natural Gas   Coal Bed Methane   BOE
                  Proved +                 Proved +                 Proved +                 Proved +
Proved Probable P+P (1) (2)     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable
Factors     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (Mboe)     (Mboe)     (Mboe)
At December 31, 2012     114,014      65,654      179,668      91,978      53,713      145,691      22,036      11,941      33,977      40,700      27,070      67,770 
Discoveries                                                
Extensions & Improved Recovery     41,210      35,959      77,169      41,210      35,959      77,169                  11,763      10,736      22,500 
Technical Revisions     15,209      (10,950)     4,259      11,942      (9,136)     2,806      3,267      (1,814)     1,453      8,641      (6,558)     2,083 
Acquisitions                                                
Dispositions                                                
Economic Factors                                                
Production     (15,472)         (15,472)     (14,072)         (14,072)     (1,400)         (1,400)     (6,248)         (6,248)
At December 31, 2013     154,961      90,663      245,624      131,058      80,536      211,594      23,903      10,127      34,030      54,857      31,249      86,105 
                                                                         
FRANCE   Total Oil   Light and Medium Oil   Heavy Oil   Natural Gas Liquids
                  Proved +                 Proved +                 Proved +                 Proved +
Proved Probable P+P (1) (2)     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable
Factors     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)
At December 31, 2012     32,516      14,263      46,779      32,516      14,263      46,779                         
Discoveries                                                
Extensions & Improved Recovery     3,194      3,910      7,104      3,194      3,910      7,104                         
Technical Revisions     2,650      221      2,871      2,650      221      2,871                         
Acquisitions                                                
Dispositions                                                
Economic Factors                                                
Production     (3,969)         (3,969)     (3,969)         (3,969)                        
At December 31, 2013     34,391      18,394      52,785      34,391      18,394      52,785      -     -     -     -     -     -
                                                                         
  Total Gas   Conventional Natural Gas   Coal Bed Methane BOE
                  Proved +                 Proved +                 Proved +                 Proved +
Proved Probable P+P (1) (2)     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable
Factors     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (Mboe)     (Mboe)     (Mboe)
At December 31, 2012     1,377      24      1,401      1,377      24      1,401                  32,746      14,266      47,012 
Discoveries                                                
Extensions & Improved Recovery     3,470      1,290      4,760      3,470      1,290      4,760                  3,772      4,125      7,897 
Technical Revisions     7,425      1,955      9,380      7,425      1,955      9,380                  3,888      548      4,435 
Acquisitions                                                
Dispositions                                                
Economic Factors                                                
Production     (1,241)         (1,241)     (1,241)         (1,241)                 (4,176)         (4,176)
At December 31, 2013     11,031      3,269      14,300      11,031      3,269      14,300      -     -     -     36,230      18,939      55,168 
                                                                         
IRELAND   Total Oil   Light and Medium Oil   Heavy Oil   Natural Gas Liquids
                  Proved +                 Proved +                 Proved +                 Proved +
Proved Probable P+P (1) (2)     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable
Factors     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)
At December 31, 2012                                                
Discoveries                                                
Extensions & Improved Recovery                                                
Technical Revisions                                                
Acquisitions                                                
Dispositions                                                
Economic Factors                                                
Production                                                
At December 31, 2013     -     -     -     -     -     -     -     -     -     -     -     -
                                                                         
  Total Gas   Conventional Natural Gas   Coal Bed Methane   BOE
                  Proved +                 Proved +                 Proved +                 Proved +
Proved Probable P+P (1) (2)     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable
Factors     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (Mboe)     (Mboe)     (Mboe)
At December 31, 2012     91,954      35,079      127,033      91,954      35,079      127,033                  15,326      5,846      21,172 
Discoveries                                                
Extensions & Improved Recovery     3,578      929      4,507      3,578      929      4,507                  596      155      751 
Technical Revisions     10,399      2,699      13,098      10,399      2,699      13,098                  1,733      450      2,183 
Acquisitions                                                
Dispositions                                                
Economic Factors                                                
Production                                                
At December 31, 2013     105,931      38,707      144,638      105,931      38,707      144,638      -     -     -     17,655      6,451      24,106 
                                                                         
NETHERLANDS   Total Oil   Light and Medium Oil   Heavy Oil   Natural Gas Liquids
                  Proved +                 Proved +                 Proved +                 Proved +
Proved Probable P+P (1) (2)     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable
Factors     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)
At December 31, 2012                                         62      61      123 
Discoveries                                                
Extensions & Improved Recovery                                                
Technical Revisions                                             (20)     (13)
Acquisitions                                             55      64 
Dispositions                                                
Economic Factors                                                
Production                                         (23)         (23)
At December 31, 2013                 -     -     -     -     -     -     61      99      160 
                                                                       
  Total Gas   Conventional Natural Gas   Coal Bed Methane   BOE
                  Proved +                 Proved +                 Proved +                 Proved +
Proved Probable P+P (1) (2)     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable
Factors     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (Mboe)     (Mboe)     (Mboe)
At December 31, 2012     36,606      33,277      69,883      36,606      33,277      69,883                  6,163      5,607      11,770 
Discoveries                                                
Extensions & Improved Recovery     1,445      2,799      4,244      1,445      2,799      4,244                  247      470      716 
Technical Revisions     7,906      (1,602)     6,304      7,906      (1,602)     6,304                  1,325      (287)     1,038 
Acquisitions     3,721      10,118      13,839      3,721      10,118      13,839                  629      1,741      2,371 
Dispositions                                                
Economic Factors                                                
Production     (12,928)         (12,928)     (12,928)         (12,928)                 (2,178)         (2,178)
At December 31, 2013     36,750      44,592      81,342      36,750      44,592      81,342      -     -     -     6,186      7,531      13,717 
                                                                         
TOTAL COMPANY   Total Oil   Light and Medium Oil   Heavy Oil   Natural Gas Liquids
                  Proved +                 Proved +                 Proved +                 Proved +
Proved Probable P+P (1) (2)     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable
Factors     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)     (Mbbl)
At December 31, 2012     60,975      35,181      96,156      60,958      35,178      96,136      17          20      3,627      2,086      5,714 
Discoveries                                                
Extensions & Improved Recovery     7,550      4,747      12,297      7,550      4,747      12,297              -     3,845      3,259      7,104 
Technical Revisions     10,149      (5,642)     4,507      10,149      (5,642)     4,507              -     1,378      383      1,761 
Acquisitions                                             56      64 
Dispositions                                                
Economic Factors                                                
Production     (9,396)         (9,396)     (9,392)         (9,392)     (4)         (4)     (631)         (631)
At December 31, 2013     69,278      34,286      103,564      69,265      34,283      103,548      13          16      8,228      5,784      14,012 
                           
  Total Gas   Conventional Natural Gas   Coal Bed Methane   BOE
                  Proved +                 Proved +                 Proved +                 Proved +
Proved Probable P+P (1) (2)     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable     Proved     Probable     Probable
Factors     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (MMcf)     (Mboe)     (Mboe)     (Mboe)
At December 31, 2012     243,951      134,034      377,985      221,915      122,093      344,008      22,036      11,941      33,977      105,262      59,605      164,867 
Discoveries                                                
Extensions & Improved Recovery     49,703      40,977      90,680      49,703      40,977      90,680                  19,679      14,836      34,514 
Technical Revisions     40,939      (7,898)     33,041      37,672      (6,084)     31,588      3,267      (1,814)     1,453      18,350      (6,574)     11,775 
Acquisitions     3,721      10,118      13,839      3,721      10,118      13,839                  629      1,742      2,371 
Dispositions                                                
Economic Factors                                                
Production     (29,641)         (29,641)     (28,241)         (28,241)     (1,400)         (1,400)     (14,967)         (14,967)
At December 31, 2013     308,673      177,231      485,904      284,770      167,104      451,874      23,903      10,127      34,030      128,952      69,609      198,560 

Notes:
(1) "Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable.  It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
(2)  "Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves.  It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
(3) The pricing assumptions used in the GLJ 2013 Reserves Evaluation with respect to net values of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above.  See "Forecast Prices used in Estimates".  The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation.  GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101.

The table below sets out the future development costs deducted in the estimation of future net revenue attributable to total proved reserves and total proved plus probable reserves (using forecast prices and costs).

Table 9: Future Development Costs (1)

  Total Proved Total Proved Plus Probable
(M$) Estimated Using Forecast Prices and Costs       Estimated Using Forecast Prices and Costs
Australia    
2014  22,500  22,500 
2015  68,646  110,262 
2016  2,913  2,913 
2017  40,963  40,963 
2018  64,405  64,405 
Remainder 2,428  2,428 
Total for all years undiscounted 201,855  243,471 
Canada    
2014  188,687  196,593 
2015  179,314  250,776 
2016  55,508  156,334 
2017  5,636  65,039 
2018  541  541 
Remainder 14,899  16,341 
Total for all years undiscounted 444,585  685,624 
France    
2014  38,884  77,422 
2015  44,609  126,820 
2016  22,923  54,801 
2017  7,861  46,171 
2018  9,272  15,767 
Remainder 25,699  25,697 
Total for all years undiscounted 149,248  346,678 
Ireland    
2014  107,703  107,703 
2015  50,832  50,832 
2016  3,288  3,288 
2017 
2018 
Remainder 22,657  22,657 
Total for all years undiscounted 184,480  184,480 
Netherlands    
2014  1,245  9,236 
2015  2,818  5,586 
2016  416  2,757 
2017  29,072  45,187 
2018  433  16,350 
Remainder 6,574  6,573 
Total for all years undiscounted 40,558  85,689 
Total Company    
2014  359,020  413,454 
2015  346,219  544,277 
2016  85,046  220,093 
2017  83,532  197,361 
2018  74,653  97,064 
Remainder 72,253  73,693 
Total for all years undiscounted 1,020,723  1,545,942 

Note:
(1)  The pricing assumptions used in the GLJ 2013 Reserves Evaluation with respect to net values of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above.  See "Forecast Prices used in Estimates".  The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation.  GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101.

Vermilion expects to source its capital expenditure requirements from internally generated cash flow and, as appropriate, from the existing credit facility, equity or debt financing.  It is anticipated that costs of funding the future development costs will not impact development of its properties or Vermilion's reserves or future net revenue.

CONTINGENT AND PROSPECTIVE RESOURCES

Vermilion retained GLJ to conduct an independent resource evaluation to assess contingent and prospective resources across all of the Company's key operating regions with an effective date of December 31, 2013 (the "GLJ 2013 Resources Assessment").  All contingent and prospective resources evaluated in the GLJ 2013 Resources Assessment were deemed economic at the effective date of December 31, 2013.

The estimates of volumes of, and the net present value of the future net revenue attributable to, contingent resources and prospective resources in this news release are derived from the GLJ 2013 Resources Assessment.  The GLJ 2013 Resources Assessment was prepared in accordance with COGEH and NI 51-101 by GLJ, an independent qualified reserve evaluator.

A range of contingent and prospective resources estimates (low, best and high) were prepared by GLJ.  See notes 5 to 8 of following Table 11 in this section for a description of low estimate, best estimate and high estimate.

Contingent Resources

"Contingent resources" are not, and should not be confused with, petroleum and natural gas reserves. "Contingent resources" are defined in COGEH as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. It is also appropriate to classify as contingent resource the estimated discovered recoverable quantities associated with a project in the early evaluation stage.

The primary contingencies which currently prevent the classification of Vermilion's contingent resource as reserves include but are not limited to:

  • preparation of firm development plans, including determination of the specific scope and timing of projects;
  • project sanction;
  • access to capital markets;
  • shareholder and regulatory approvals;
  • access to required services and field development infrastructure;
  • oil and natural gas prices in Canada and internationally in jurisdictions in which Vermilion operates;
  • demonstration of economic viability;
  • future drilling program and testing results;
  • further reservoir delineation and studies;
  • facility design work;
  • limitations to development based on adverse topography or other surface restrictions; and
  • the uncertainty regarding marketing and transportation of petroleum from development areas.

There is no certainty that it will be commercially viable to produce any portion of the contingent resources or that Vermilion will produce any portion of the volumes currently classified as contingent resources. The estimates of contingent resources involve implied assessment, based on certain estimates and assumptions, that the resources described exists in the quantities predicted or estimated and that the resources can be profitably produced in the future.  The net present value of the future net revenue from the contingent resources does not necessarily represent the fair market value of the contingent resources.  Actual contingent resources (and any volumes that may be reclassified as reserves) and future production therefrom may be greater than or less than the estimates provided herein.

Prospective Resources

Prospective resources are not, and should not be confused with, petroleum and natural gas reserves. "Prospective resources" are defined in COGEH as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects.

There is no certainty that any portion of the prospective resources will be discovered.  If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources or that Vermilion will produce any portion of the volumes currently classified as prospective resources. The estimates of prospective resources involve implied assessment, based on certain estimates and assumptions, that the resources described exists in the quantities predicted or estimated and that the resources can be profitably produced in the future. The net present value of the future net revenue from the prospective resources does not necessarily represent the fair market value of the prospective resources. The recovery and resources estimates provided herein are estimates only.  Actual prospective resources (and any volumes that may be reclassified as reserves or contingent resources) and future production from such prospective resources may be greater than or less than the estimates provided herein.

Summary information regarding contingent and prospective resources and net present values of future net revenues from contingent and prospective resources are set forth below

Table 10: Company Gross and Net Contingent and Prospective Resources as at December 31, 2013 (1) (2) - Forecast Prices and Costs (3) (4)

  Gross   Gross   Net
  Reserves   Contingent Resources Prospective Resources   Contingent Resources Prospective Resources
  P+P   Low Best High Low Best High   Low Best High Low Best High
Oil and NGLs (Mbbl)   (Mbbl) (Mbbl) (Mbbl) (Mbbl) (Mbbl) (Mbbl)   (Mbbl) (Mbbl) (Mbbl) (Mbbl) (Mbbl) (Mbbl)
Australia 19,463    1,250  3,900  6,200  1,207  3,046    1,250  3,900  6,200  1,207  3,046 
Canada 45,168    28,377  84,022  128,092  4,607  157,571  295,063    21,140  61,487  92,143  3,711  121,446  222,692 
France 52,785    8,463  21,203  33,879  289  3,782  13,584    7,744  19,489  31,364  271  3,171  12,637 
Ireland -    
Netherlands 160    13  41  1,112  112  199  389    13  41  1,112  112  199  389 
Total 117,576    38,103  109,166  169,283  5,008  162,759  312,082    30,147  84,917  130,819  4,094  126,023  238,764 
                               
  Gross   Gross   Net
  Reserves   Contingent Resources Prospective Resources   Contingent Resources Prospective Resources
  P+P   Low Best High Low Best High   Low Best High Low Best High
Natural Gas (MMcf)   (MMcf) (MMcf) (MMcf) (MMcf) (MMcf) (MMcf)   (MMcf) (MMcf) (MMcf) (MMcf) (MMcf) (MMcf)
Australia    
Canada 245,624    204,370  704,875  1,023,206  196,373  1,772,471  2,559,987    188,177  642,287  920,915  184,256  1,648,071  2,370,533 
France 14,300    653  816  1,020    653  816  1,020 
Ireland 144,638    5,807  18,780  29,587    5,807  18,780  29,587 
Netherlands 81,342    6,874  21,627  40,864  130,038  242,939  480,613    6,874  21,627  40,864  130,038  242,939  480,613 
Total 485,904    217,704  746,098  1,094,677  326,411  2,015,410  3,040,600    201,511  683,510  992,386  314,294  1,891,010  2,851,146 
                               
  Gross   Gross   Net
  Reserves   Contingent Resources Prospective Resources   Contingent Resources Prospective Resources
  P+P   Low Best High Low Best High   Low Best High Low Best High
Total Oil Equivalent (Mboe)   (Mboe) (Mboe) (Mboe) (Mboe) (Mboe) (Mboe)   (Mboe) (Mboe) (Mboe) (Mboe) (Mboe) (Mboe)
Australia 19,463    1,250  3,900  6,200  1,207  3,046    1,250  3,900  6,200  1,207  3,046 
Canada 86,105    62,439  201,502  298,626  37,336  452,983  721,727    52,503  168,534  245,629  34,421  396,125  617,781 
France 55,168    8,571  21,339  34,049  289  3,782  13,584    7,853  19,625  31,534  271  3,171  12,637 
Ireland 24,106    968  3,130  4,931    968  3,130  4,931 
Netherlands 13,717    1,159  3,646  7,922  21,785  40,689  80,492    1,159  3,646  7,922  21,785  40,689  80,492 
Total 198,560    74,387  233,517  351,728  59,410  498,661  818,849    63,733  198,835  296,216  56,477  441,192  713,956 

Table 11: Summary of Net Present Value of Future Net Revenues as at December 31, 2013 - Forecast Prices and Costs (3)

Contingent Resources Before Income Taxes, Discounted at (5) After Income Taxes, Discounted at (5)
(M$) 0% 5% 8% 10% 0% 5% 8% 10%
Low Estimate (C1) (6)                
Australia 46,057  30,848  24,342  20,805  10,709  4,554  2,164  950 
Canada 1,338,563  750,862  547,973  448,543  1,003,891  535,982  376,779  299,666 
France 500,810  299,434  225,931  188,618  328,076  183,183  131,181  105,100 
Ireland 23,215  7,833  3,793  2,180  17,411  5,360  2,280  1,081 
Netherlands 24,785  13,825  9,362  6,996  13,325  5,213  1,997  325 
Total Low Estimate 1,933,430  1,102,802  811,401  667,142  1,373,412  734,292  514,401  407,122 
Best Estimate (C2) (7)                
Australia 270,083  190,153  155,779  136,973  103,615  67,961  53,278  45,456 
Canada 4,757,350  2,548,856  1,810,553  1,455,506  3,567,982  1,841,038  1,268,888  995,788 
France 1,219,657  706,205  527,066  438,131  799,382  433,198  307,628  246,078 
Ireland 142,895  49,811  25,559  15,511  107,171  35,501  16,748  8,965 
Netherlands 105,017  65,145  49,059  40,535  57,271  30,298  19,610  14,023 
Total Best Estimate 6,495,002  3,560,170  2,568,016  2,086,656  4,635,421  2,407,996  1,666,152  1,310,310 
High Estimate (C3) (8)                
Australia 533,218  375,068  307,885  271,318  216,856  146,938  118,024  102,536 
Canada 8,520,437  4,598,611  3,337,210  2,738,201  6,390,285  3,371,269  2,405,989  1,949,949 
France 2,268,722  1,266,202  939,778  782,450  1,487,408  794,121  570,941  464,372 
Ireland 324,184  99,583  52,899  35,341  243,138  73,269  37,734  24,313 
Netherlands 287,748  191,967  152,366  131,052  157,267  95,126  69,804  56,317 
Total High Estimate 11,934,309  6,531,431  4,790,138  3,958,362  8,494,954  4,480,723  3,202,492  2,597,487 
                 
Prospective Resources Before Income Taxes, Discounted at (5) After Income Taxes, Discounted at (5)
(M$) 0% 5% 8% 10% 0% 5% 8% 10%
Low Estimate (Pr1) (6)                
Australia - -
Canada 492,575  236,916  154,804  116,698  369,217  167,763  104,048  74,831 
France 10,422  8,547  7,634  7,097  5,484  4,069  3,398  3,011 
Ireland - -
Netherlands 848,414  416,721  294,433  239,170  460,342  208,317  135,776  103,074 
Total Low Estimate 1,351,411  662,184  456,871  362,965  835,043  380,149  243,222  180,916 
Best Estimate (Pr2) (7)                
Australia 106,915  64,513  48,429  40,247  43,520  25,183  18,433  15,061 
Canada 11,548,288  4,767,690  2,918,816  2,131,682  8,659,120  3,427,761  2,023,953  1,434,147 
France 150,457  93,762  72,020  60,756  97,837  55,234  39,133  30,889 
Ireland -
Netherlands 2,078,111  1,132,690  848,113  714,874  1,132,370  599,681  438,362  363,004 
Total Best Estimate 13,883,771  6,058,655  3,887,378  2,947,559  9,932,847  4,107,859  2,519,881  1,843,101 
High Estimate (Pr3) (8)                
Australia 334,608  191,460  141,219  116,472  140,264  78,871  57,603  47,208 
Canada 27,794,746  11,888,521  7,639,101  5,813,417  20,845,987  8,778,815  5,574,461  4,204,916 
France 758,262  428,747  319,835  267,173  496,839  265,350  190,141  154,240 
Ireland -
Netherlands 4,736,149  2,635,340  1,989,491  1,684,266  2,585,545  1,421,568  1,062,681  893,256 
Total High Estimate 33,623,765  15,144,068  10,089,646  7,881,328  24,068,635  10,544,604  6,884,886  5,299,620 

Notes:
(1)  The contingent and prospective resource assessments were prepared by GLJ in accordance with the definitions, standards and procedures contained in the COGEH and NI 51-101. Contingent resource is defined in the COGEH as those quantities of petroleum estimated to be potentially recoverable from known accumulations using established technology or technology under development, but which do not currently qualify as reserves or commercially recoverable due to one or more contingencies.  See "Presentation of Oil and Gas Reserves and Production Information - Contingent Resources" for the primary contingencies which prevent the classification of the resources as reserves. There is no certainty that it will be commercially viable to produce any portion of the contingent resources or that Vermilion will produce any portion of the volumes currently classified as contingent resources. The estimates of contingent resources involve implied assessment, based on certain estimates and assumptions, that the resources described exists in the quantities predicted or estimated, as at a given date, and that the resources can be profitably produced in the future. The net present value of the future net revenue from the contingent resources does not necessarily represent the fair market value of the contingent resources. Actual contingent resources (and any volumes that may be reclassified as reserves) and future production therefrom may be greater than or less than the estimates provided herein.   Prospective resource is defined in the COGEH are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects.  There is no certainty that any portion of the prospective resources will be discovered.  If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources or that Vermilion will produce any portion of the volumes currently classified as prospective resources. The estimates of prospective resources involve implied assessment, based on certain estimates and assumptions, that the resources described exists in the quantities predicted or estimated and that the resources can be profitably produced in the future. The net present value of the future net revenue from the prospective resources does not necessarily represent the fair market value of the prospective resources. The recovery and resources estimates provided herein are estimates only.  Actual prospective resources (and any volumes that may be reclassified as reserves or contingent resources) and future production from such prospective resources may be greater than or less than the estimates provided herein.
(2) GLJ prepared the estimates of contingent and prospective resources shown for each property using deterministic principles and methods. Probabilistic aggregation of the low and high property estimates shown in the table might produce different total volumes than the arithmetic sums shown in the table.
(3)  The forecast price and cost assumptions utilized in the year-end 2013 reserves report were also utilized by GLJ in preparing the contingent resource and prospective resource assessments. See "GLJ December 31, 2013 Forecast Prices" in this Annual Information Form.
(4) "Gross" Reserves or Contingent Resources or Prospective Resources are Vermilion's working interest (operating or non-operating) share before deduction of royalties and without including any royalty interests of Vermilion.  "Net" Reserves or Contingent Resources or Prospective Resources are Vermilion's working interest (operating or non-operating) share after deduction of royalty obligations, plus Vermilion's royalty interests in Reserves or Contingent Resources or Prospective Resources.
(5)  The net present value of future net revenue attributable to the contingent or prospective resources does not necessarily represent the fair market value of the contingent or prospective resources. Estimated abandonment and reclamation costs have been included in the evaluation.
(6)  Low estimate is considered to be a conservative estimate of the quantity of contingent (C1) or prospective (Pr1) resources that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate.  Those contingent or prospective resources at the low end of the estimate range have the highest degree of certainty - a 90% confidence level - that the actual quantities recovered will be equal or exceed the estimate.
(7)  Best estimate is considered to be the best estimate of the quantity of contingent (C2) or prospective (Pr2) resources that will actually be recovered.  It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate.  Those contingent or prospective resources that fall within the best estimate have a 50% confidence level that the actual quantities recovered will be equal or exceed the estimate.
(8)  High estimate is considered to be an optimistic estimate of the quantity of contingent (C3) or prospective (Pr3) resources that will actually be recovered. It is unlikely that the actual remaining quantities of contingent or prospective resources recovered will meet or exceed the high estimate. Those contingent or prospective resources at the high end of the estimate range have a lower degree of certainty - a 10% confidence level - that the actual quantities recovered will equal or exceed the estimate.

ABOUT VERMILION

Vermilion is an oil-leveraged producer that adheres to a value creation strategy through the execution of full cycle exploration and production programs focused on the acquisition, exploration, development and optimization of producing properties in Western Canada, Europe and Australia. Our business model targets annual organic production growth of approximately 5% along with providing reliable and increasing dividends to investors.  Vermilion is targeting growth in production primarily through the exploitation of conventional resource plays in Western Canada, including Cardium light oil and liquids rich natural gas, the exploration and development of high impact natural gas opportunities in the Netherlands and through drilling and workover programs in France and Australia. Vermilion also holds an 18.5% working interest in the Corrib gas field in Ireland. In addition, Vermilion pays a monthly dividend of Canadian $0.215 per share, which provides a current yield in excess of 4%.  Management and directors of Vermilion hold approximately 8% of the outstanding shares and are dedicated to consistently delivering superior rewards for all stakeholders, featuring an 20-year history of market outperformance. Vermilion trades on the Toronto Stock Exchange and the New York Stock Exchange under the symbol VET.

ADVISORIES

Natural gas volumes have been converted on the basis of six thousand cubic feet of natural gas to one barrel equivalent of oil.  Barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation.  A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Fund flows from operations is considered an additional GAAP financial measure, recycle ratio and Netbacks are non-GAAP financial measures.  These are measures (as defined herein) that do not have standardized meanings prescribed by International Financial Reporting Standards ("IFRS") and therefore are unlikely to be comparable with similar measures for other issuers. We define fund flows from operations as cash flows from operating activities before changes in non-cash operating working capital and asset retirement obligations settled.  Management believes that by excluding the temporary impact of changes in non-cash operating working capital, fund flows from operations provides a measure of our ability to generate cash (that is not subject to short-term movements in non-cash operating working capital) necessary to pay dividends, repay debt, fund asset retirement obligations and make capital investments. As we have presented fund flows from operations in the "Segmented Information" note of our audited consolidated financial statements for the year ended December 31, 2013, we consider fund flows from operations to be an additional GAAP financial measure.  "Recycle Ratio" means a measure of capital efficiency calculated by dividing the operating netback of production by the cost of adding reserves.  "Netbacks" are per boe and per mcf measures used in the analysis of operational activities. 

 

SOURCE Vermilion Energy Inc.

For further information:

Anthony Marino, President & COO;
Curtis W. Hicks, Executive VP & CFO; and/or
Dean Morrison, Director Investor Relations
TEL (403) 269-4884
IR TOLL FREE 1-866-895-8101
investor_relations@vermilionenergy.com
www.vermilionenergy.com