Vermilion Energy Cuts Controllable Expenses 25% in First Quarter
The energy producer reduced net debt by $50 million to $1.29 billion as of March 31, 2026.
Vermilion Energy Inc. (VET), an oil and gas producer, reduced its cost structure of controllable expenses by 25% in the first quarter of 2026 compared to the same period in 2025. The company attributed this decrease to recent asset repositioning and a focus on operational excellence.
Production averaged 125,618 boe/d during the quarter, which represented a 4% increase from the previous quarter and a 22% increase from the first quarter of 2025. Natural gas made up 72% of this volume. The output consisted of 99,746 boe/d from Canadian assets and 25,872 boe/d from international assets. The company said several of its Deep Basin wells were among the most prolific new wells in Alberta during the period.
The company generated $232 million of fund flows from operations, or 1.52 a share, and $98 million of free cash flow. These results funded $135 million in exploration and development capital expenditures. Vermilion returned $27 million to shareholders through dividends and share buybacks, which included $21 million in dividends and the cancellation of 0.4 million shares.
Financial results were impacted by geopolitical events in the first quarter of 2026, which led to significant increases in spot and forward oil and European gas prices. This resulted in a $286 million unrealized loss on derivative instruments. These losses were partially offset by gains on AECO hedges, but the company still reported a net loss of $146 million, or 0.95 a share.
Diversification in the portfolio allowed the company to realize an average natural gas sales price of $5.41/mcf. This figure was more than double the AECO benchmark, which the company attributed to structural exposure to premium international gas markets.
Net debt fell by $50 million to $1.29 billion at March 31, 2026. This brought the total net debt reduction to $770 million over the preceding 12 months.
Full-year production is trending toward the higher end of the annual guidance range.