Vermilion Energy Financial and Operational Overview
VERMILION
ENERGY
EUROPEAN NATURAL GAS PRICING
Vermilion has significant leverage to improving European natural gas
prices (+$1/mmbtu = +$30MM incremental FCF)
European natural gas forward prices are currently in the $6 to
$8/mmbtu range, representing a significant recovery from 2020 lows
Prices are influenced by a number of factors, including the global
LNG market, coal-to-gas switching for power generation, winter
supply risks, carbon prices, and domestic production declines
Declining European domestic production and rising use of gas in the
power sector results in higher dependence on imported supply
In the current high carbon market, coal-to-gas switching provides
support for European gas prices at US$6.00/mmbtu
C$/MMBTU*
GLOBAL NATURAL GAS PRICES
$14
$12
$10
COAL
FLOOR***
FULL-CYCLE
$8
$6
999
$4
69
$2
$0
(C$7.80/mmbtu), albeit prices can trade below this price level during
periods of gas oversupply
HALF-CYCLE
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
Jan-21
Jul-21
Jan-22
Jul-22
Jan-23
Jul-23
-TTF
-NBP
AECO Henry Hub
EUROPEAN NATURAL GAS FORWARD PRICES CONTINUE TO TRADE AT A SIGNFICANT PREMIUM VERSUS NORTH AMERICA
*2011-2019: Actual prices. 2020E - 2023E Forwards as at November 23, 2020. ** Source gas = Henry Hub, Europe refers to the TTF market. Assumptions reflect long-term US LNG export
fundamentals. *** Coal Floor represents the mid-point of NW European switching economics (ie. majority of switching takes place at the midpoint, but also occurs above and below this point).
VET: TSX !
NYSE
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