CALGARY,
AB, May 31, 2022 /CNW/ - Vermilion Energy Inc.
("Vermilion", "We", "Our", "Us" or the "Company") (TSX: VET) (NYSE:
VET) is pleased to announce that we have closed the acquisition of
Leucrotta Exploration Inc. ("Leucrotta") pursuant to the terms of
the previously announced arrangement agreement (the "Arrangement"
or the "Leucrotta Acquisition") dated March
28, 2022, as amended, among Vermilion, Leucrotta and
Coelacanth Energy Inc. ("Coelacanth").
The primary asset acquired pursuant to the Leucrotta Acquisition
is the Mica property, comprised of 81,000 gross (77,000 net)
contiguous acres of Montney
mineral rights in the Peace River Arch straddling the Alberta and British
Columbia borders. We have conservatively identified 275
multi-zone, extended reach, drilling prospects to date,
representing an expected two decades or more of low-risk,
self-funding, high-deliverability drilling inventory with strong
rates of return. Over the past two months since time of deal
announcement, North American gas prices have strengthened, as
illustrated by the 35% increase to 2023 AECO strip further
reinforcing the profitability of the Mica property. We believe
there is meaningful upside in other zones, which could add
significant inventory to this land base and the optionality for
cube development. The multi-zone development nature of these assets
is a natural extension of the multi-zone development that our
Canadian Business Unit has been focused on in West Central Alberta
for over a decade. Integrating these assets into our Canadian asset
base allows us to high-grade our North American portfolio and
is expected to add decades of inventory while continuing to develop
and grow our international portfolio with the goal of maximizing
free cash flow for shareholders over the near and long-term. We
look forward to integrating the Mica assets into our portfolio, and
our experienced team has the operating, technical and financial
capability to deliver synergies and maximize the value of this
fully delineated, multi-decade free cash flow(1)
generating asset.
Prior to the completion of the Arrangement, Vermilion had
ownership, control or direction over 7,536,800 common shares
("Leucrotta Shares") of Leucrotta, representing approximately
2.9% of the outstanding Leucrotta Shares, and no common shares
("Coelacanth Shares") of Coelacanth. As a result of the
Arrangement, we acquired: (A) all of the outstanding shares of
Leucrotta for $1.73 per Leucrotta
Share paid to the former holders of Leucrotta Shares (other than
Vermilion) and approximately $0.76
per Leucrotta Share "flow-though" purchase warrant paid to the
former holders of Leucrotta Share "flow-though" purchase warrants;
and (B) 53,303,668 Coelacanth Shares for aggregate cash
consideration of $14.3 million (or
$0.27 per Coelacanth Share) paid to
Coelacanth. Additionally, as part of the Arrangement, Coelacanth
issued an aggregate of approximately 289,792,341 Coelacanth Shares
and an aggregate of approximately 55,553,192 Coelacanth Share
purchase warrants ("Coelacanth Warrants") to the former holders of
Leucrotta Shares, including 7,536,800 Coelacanth Shares and
1,444,804.56 Coelacanth Warrants to Vermilion. The Coelacanth
Warrants are exercisable at a price of $0.27 per Coelacanth Share and will be
exercisable in whole or in part at any time until 5:00 p.m. (Calgary time) on June
30, 2022. Vermilion has hence acquired 18.0% of the
outstanding Coelacanth Shares on a partially diluted basis.
The purpose of the Arrangement was to enable Vermilion to
acquire all of the outstanding voting shares of Leucrotta and to
acquire an ownership position in Coelacanth. Following delisting of
the Leucrotta Shares from the TSX Venture Exchange, we will cause
Leucrotta to apply to cease to be a reporting issuer or equivalent
in each of the provinces of Canada. Subject to applicable law and
compliance with the terms of the ASPP (as defined below), Vermilion
will continue to review its holdings of Coelacanth's securities,
and depending on market conditions, general economic conditions and
industry conditions, Coelacanth's business and financial condition
and prospects and/or other relevant factors, may increase or
decrease its investment in the securities of Coelacanth or pursue
any of the actions listed in paragraphs (a) through (k) of
Vermilion's early warning report filed under Coelacanth's profile
on SEDAR (www.sedar.com) dated May 31,
2022. Vermilion has also entered into an automatic share
purchase plan with a designated broker (the "ASPP") in order to
mitigate the impact of dilution caused by the exercise, from time
to time, of convertible securities of Coelacanth and/or to increase
Vermilion's overall ownership position in Coelacanth.
Vermilion intends to exercise the Coelacanth Warrants as soon as
possible.
(1)
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This document
references free cash flow which is not specified, defined, or
determined under International Financial Reporting Standards
("IFRS") and is therefore considered non-GAAP financial measures
and may not be comparable to similar measures presented by other
issuers. Free cash flow represents fund flows from operations in
excess of capital expenditures and is used to determine the funding
available for investing and financing activities, including payment
of dividends, repayment of long-term debt, reallocation to existing
business units, and deployment into new ventures.
|
About Vermilion
Vermilion is an international energy producer that seeks to
create value through the acquisition, exploration, development and
optimization of producing assets in North
America, Europe and
Australia. Our business model
emphasizes free cash flow generation and returning capital to
investors when economically warranted, augmented by value-adding
acquisitions. Vermilion's operations are focused on the
exploitation of light oil and liquids-rich natural gas conventional
resource plays in North America
and the exploration and development of conventional natural gas and
oil opportunities in Europe and
Australia.
Vermilion's priorities are health and safety, the environment,
and profitability, in that order. Nothing is more important to us
than the safety of the public and those who work with us, and the
protection of our natural surroundings. We have been recognized by
leading ESG rating agencies for our transparency on and management
of key environmental, social and governance issues. In addition, we
emphasize strategic community investment in each of our operating
areas.
Employees and directors hold approximately 4% of our outstanding
shares and are committed to delivering long-term value for all
stakeholders. Vermilion trades on the Toronto Stock Exchange and
the New York Stock Exchange under the symbol VET.
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: the number of drilling prospects
in respect of the acquired Mica assets and the attributes and
expected performance of such assets'; Vermilion's plans with
respect to Leucrotta and its investment in Coelacanth; and
Vermilion's' business strategies and objectives.
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 or 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 position 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 or realize
anticipated benefits from the Arrangement; 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, including with respect to indigenous
consultation; uncertainty regarding the impact and potential delays
that might result from the June 29,
2021 BC Supreme Court ruling in Blueberry River First
Nations (Yahey) v. Province of British
Columbia on British
Columbia and/or federal laws or policies affecting resource
development in British Columbia
and potential outcomes of the ongoing negotiations between
Blueberry River First Nations and the Government of British Columbia; 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.
Financial data contained within this document are reported in
Canadian dollars unless otherwise stated.
Estimates of Drilling Locations: Unbooked drilling locations are
the internal estimates of Vermilion based on Vermilion's
prospective acreage and an assumption as to the number of wells
that can be drilled per section based on industry practice and
internal review. Unbooked locations do not have attributed reserves
or resources (including contingent and prospective). Unbooked
locations have been identified by Vermilion's management as an
estimation of Vermilion's multi-year drilling activities based on
evaluation of applicable geologic, seismic, engineering, production
and reserves information. There is no certainty that Vermilion will
drill all unbooked drilling locations and if drilled there is no
certainty that such locations will result in additional oil and
natural gas reserves, resources or production. The drilling
locations on which Vermilion will actually drill wells, including
the number and timing thereof is ultimately dependent upon the
availability of funding, regulatory approvals, seasonal
restrictions, oil and natural gas prices, costs, actual drilling
results, additional reservoir information that is obtained and
other factors. While a certain number of the unbooked drilling
locations have been de-risked by Leucrotta drilling existing wells
in relative close proximity to such unbooked drilling locations,
other unbooked drilling locations are farther away from existing
wells where management of Vermilion has less information about the
characteristics of the reservoir and therefore there is more
uncertainty whether wells will be drilled in such locations and if
drilled there is more uncertainty that such wells will result in
additional oil and gas reserves, resources or production.
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SOURCE Vermilion Energy Inc.