Vermilion Energy Production Rises 22% Amid Derivative Losses
The energy producer reported a net loss of $146 million for the first quarter of 2026, driven by a $286 million unrealized loss on derivative instruments.
Vermilion Energy Inc. (VET), an oil and natural gas exploration and production company, reported a net loss of $145.5 million, or 0.95 a share, for the first quarter of 2026,. The result followed net earnings of $15 million in the first quarter of 2025.
The company said the loss was primarily driven by a $286 million unrealized loss on derivative instruments. This non-cash, price-related loss resulted from significant increases in spot and forward oil and European gas prices caused by geopolitical events. These losses were partially offset by gains on AECO hedges.
Production averaged 125,618 boe/d, representing a 22% increase from the 103,115 boe/d recorded in the first quarter of 2025,. The growth was attributed to new wells in the Montney and Deep Basin, as well as assets acquired in February 2025. Canadian operations contributed 99,746 boe/d, while international assets averaged 25,872 boe/d. The international segment saw a 14% decline from the previous quarter due to natural declines in Europe and cyclone-related downtime in Australia.
In the Montney, the company brought on six liquids-rich gas wells ahead of schedule. These wells delivered drill, complete, equip and tie-in costs of $8.2 million per well, lower than the planned $8.5 million. In the Deep Basin, the company maintained a three-rig drilling program, drilling 9.3 net wells and bringing 18.0 net wells onto production,.
Fund flows from operations reached $232 million, though this was a decrease from $256 million in the first quarter of 2025,. The company attributed the decline to lower North American gas pricing and a $15.9 million loss on derivative contracts. However, the company realized an average natural gas sales price of $5.41/mcf, which was more than double the AECO benchmark.
Vermilion reduced its controllable cost structure—comprising operating, transportation, G&A, and interest expense per boe—by 25% compared to the first quarter of 2025,. The company said this reduction reflected recent asset repositioning and a focus on operational excellence.
Free cash flow for the quarter was $98 million. The company used $135 million for exploration and development capital expenditures and returned $27 million to shareholders through $21 million in dividends and the repurchase of 0.4 million shares. Net debt was reduced by $50 million to $1.29 billion as of March 31, 2026.
Full-year production is trending toward the higher end of the annual guidance range of 118,000 to 122,000 boe/d,. The company maintains a net debt target of $1.0 billion.