Vermilion sells US assets for $120 million to cut debt

CALGARY, AB - Vermilion Energy Inc. (TSX: VET) (NYSE: VET), a global gas producer with a market capitalization of $1.03 billion, announced today the sale of its United States oil and gas assets for $120 million in cash. The divestiture aligns with the company’s strategy to focus on its core operations in Canada and Europe and to reduce its debt. According to InvestingPro data, the company currently operates with a total debt of $1.35 billion and a debt-to-equity ratio of 0.67.

The assets sold include approximately 5,500 barrels of oil equivalent per day (boe/d), 81% of which are oil and liquids. The proven developed producing reserves are estimated at 10 million barrels of oil equivalent, as evaluated by McDaniel & Associates Consultants Ltd. as of December 31, 2024. The transaction, effective January 1, 2025, is expected to close in the third quarter of 2025, pending customary closing conditions.

Vermilion plans to direct the proceeds from the sale toward repaying debt, accelerating deleveraging efforts, and strengthening its balance sheet. The company anticipates ending 2025 with a net debt of $1.3 billion and a net debt to funds from operations (FFO) ratio of 1.3 times, based on current strip commodity pricing and operational plans. InvestingPro analysis indicates the company’s current ratio stands at 0.71, suggesting short-term obligations exceed liquid assets. The company’s shares currently trade below their Fair Value, according to InvestingPro’s valuation models.

In addition to the asset sale, Vermilion has updated its 2025 guidance, reducing its capital budget to $630 to $660 million, a decrease of about $100 million from previous estimates. This reduction reflects the divestiture of the United States and Saskatchewan assets. The company now expects its full-year 2025 production to be between 117,000 and 122,000 boe/d, with 68% natural gas-weighted in the second half of the year. Over 90% of production is expected to come from its global gas portfolio, with more than 80% of capital allocated to these assets.

Wells Fargo served as the exclusive financial advisor, with Citi acting as the strategic advisor for the transaction. Legal advice was provided by Torys LLP and Davis Graham & Stubbs LLP.

This sale completes Vermilion’s exit from the United States, following the disposal of its East Finn assets in 2023. The company has expressed gratitude to its field teams in Wyoming for their dedication over the last 11 years.

The information in this article is based on a press release statement from Vermilion Energy Inc.

In other recent news, Vermilion Energy has been the subject of significant developments. JPMorgan analysts have downgraded Vermilion Energy’s stock rating from Overweight to Underweight, adjusting the price target from Cdn$16.00 to Cdn$12.00. The downgrade was influenced by a comparative analysis with peers and concerns over potential shifts in the energy landscape, particularly if Russian gas flows to Europe resume in the near future. This change in rating reflects a less favorable valuation for Vermilion Energy compared to its peers.

Additionally, Vermilion Energy has filed a Form 6-K report with the Securities and Exchange Commission (SEC), indicating a significant corporate development. While the specifics of this material change have not been disclosed publicly, the filing underscores the company’s regulatory compliance and commitment to transparency. The report, signed by Vermilion Energy’s Vice President and Chief Financial Officer, is crucial for investors as it may contain information impacting the company’s financial position. Investors and market watchers are encouraged to review the full report for further insights into Vermilion Energy’s latest corporate developments.

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