Vermilion Energy sees 2023 capital budget $570M, raises dividend 25%

Vermilion Energy is pleased to announce its 2023 budget and guidance, a 25% dividend increase, and the resumption of its share buyback program. Highlights: 2023 capital budget of C$570M reflects consistent investment levels in North America and increased capital allocation to continental European gas drilling. 2023 production guidance of 87,000 – 91,000 boe/d represents a year-over-year increase of approximately 3% at the midpoint. This production guidance assumes a March 31, 2023, closing of the Corrib Acquisition, as well as the optimization of our Montney development to minimize incremental Alberta infrastructure due to recent progress obtaining permits on our British Columbia lands. Obtained formal Irish government consent for the Corrib Acquisition, which is another key milestone towards completing the transaction. Forecast 2023 free cash flow of approximately C$800M based on forward commodity prices and including the impact of temporary windfall taxes and hedging losses Expect to return up to 25% of FCF to shareholders in 2023 through base dividend and resumption of share buybacks, with the balance allocated to debt reduction. Quarterly cash dividend increased by 25% to C$0.10 per share, effective with the Q1 2023 dividend Vermilion remains well positioned to generate strong FCF in the years ahead which will support our future development plans and return of capital strategy. "We expect the primary method of returning capital beyond the base dividend to be through share buybacks in the near-term. As a result of the unexpected windfall tax, our current debt levels are higher than we anticipated. As such, we believe it is prudent to remain focused on debt reduction in 2023. We are targeting net debt of $1 billion which represents an undrawn credit facility. This debt target will govern the pace of which we return capital to shareholders. At this time, we expect to allocate up to 25% of FCF to shareholder returns primarily through our base dividend and share buybacks, with the balance going to debt reduction. While this return of capital allocation is lower than what we outlined in August 2022, prior to learning of the European windfall tax, we believe lower debt levels are in the best interest of our shareholders over the long-term. Every dollar of debt reduction translates to an increase in equity value while also improving the resiliency of the company. As debt levels decrease, we plan to increase the allocation of capital returned to shareholders."