Calgary – November 04, 2026 -- Vermilion Energy Inc. (TSX: VET, NYSE: VET) set a 2027 exploration and development (E&D) budget of $675 million to $725 million and targets a 4% quarterly dividend increase to $0.14 per share, after generating $237 million of fund flows from operations (FFO) in the third quarter of 2026.
Q3 free cash flow tops $90 million and net debt falls to $1.17 billion
FFO of $1.55 per basic share fully funded $146 million of E&D capital spending and left more than $90 million of free cash flow. Net debt dropped by roughly $60 million to $1.17 billion at September 30. That brings the reduction to about $900 million over the past 18 months, following the largest cash acquisition in the company's history. Production per share has grown about 50% over the same period.
Vermilion returned $41 million to shareholders in the quarter: $21 million in dividends and $20 million in share repurchases. The buyback was twice the amount repurchased in the first half of 2026. Over nine months the company returned $92 million and cut net debt by nearly $180 million, equal to $1.76 per basic share of combined debt reduction and shareholder returns. Its return-of-capital framework of 40% to 60% of excess free cash flow remains in place.
Derivative mark-to-market losses push Q3 into a $35 million net loss
The company reported a net loss of $35 million ($0.23 per basic share). Unrealized derivative losses drove the result, reflecting sharp rises in forward oil and European gas prices during the quarter. Vermilion said those higher forward prices depress reported earnings through hedge valuations while improving its revenue and FFO outlook.
Gas price of $5.60/mcf runs more than triple the AECO benchmark
Vermilion realized an average natural gas price of $5.60 per mcf, citing exposure to premium international markets. Month-ahead TTF averaged $25 per MMBtu in the quarter, and prices in key European gas markets remain elevated. Fourth-quarter FFO is forecast to be significantly higher than Q3, helped by restored production, higher European gas and liquids volumes, and those prices.
Third-quarter production averaged 117,349 boe/d (71% natural gas), reflecting planned maintenance in Ireland, Germany and Canada. The 32-day Ireland turnaround finished on time and on budget, with output fully restored in September. Q4 production is guided to 121,000 boe/d, with full-year output of about 122,400 boe/d on roughly $620 million of E&D spending. In Canada, Vermilion is deferring several well start-ups and restricting gas output to align with expected higher pricing later in Q4.
2027 budget targets 122,000-126,000 boe/d with 5% per-share growth
The Board approved the $675 million to $725 million E&D budget. It targets average production of 122,000 to 126,000 boe/d, about 71% natural gas, which equals 2% absolute growth and 5% growth per share from 2026. Of the 2027 spending, $150 million is forecast to add production starting in 2028.
Vermilion plans to invest about $385 million in its liquids-rich gas assets in the Montney and Deep Basin:
- Deep Basin: 41 gross wells (36.3 net) under a steady three-rig program, with minimal infrastructure requirements.
- Montney: 13 wells (13.0 net), alongside continued expansion of owned infrastructure.
International spending rises more than 50% from 2026 to about $315 million. Germany gets two follow-up Wisselshorst wells (1.3 net) plus infrastructure investment. The Netherlands gets two wells (1.0 net) targeting larger structures than recent programs. Australia starts a two-well (2.0 net) campaign in the second half of 2027.
Germany acquisition and Deep Basin wells lift operating outlook
Vermilion completed its German asset acquisition and brought the Wisselshorst Z1a well (0.64 net) on stream in July. Together they support German production of about 7,500 boe/d in Q4 2026. The company expects European gas output of about 100 mmcf/d in Q4.
In the Deep Basin, a condensate-rich well produced 12.6 mmcf/d of gas and more than 400 bbl/d of condensate in August. Vermilion also drilled an Upper Mannville well to nearly 7,800 metres, which it describes as the longest drilled in that formation by industry. A four-well Montney pad piloting a completion approach designed to reduce sand and water recovery has been hit by third-party downtime that extends into Q4.
Canadian unit operating expenses fell about 10% year over year. General and administration and interest expenses are down roughly 30%.
Dividend rises to $0.14 per share from the Q1 2027 payment
Vermilion declared a quarterly dividend of $0.135 per share, payable December 31, 2026, to holders of record on December 15. The targeted increase to $0.14 applies to the Q1 2027 dividend payable March 31, 2027, subject to Board approval in March 2027.