Vermilion Energy Raises Annual Production Guidance
The energy producer increased its full-year production target to a range of 121,000 to 123,000 boe/d
Vermilion Energy Inc. (VET), an energy producer, raised its annual production guidance to 121,000 to 123,000 boe/d, with natural gas expected to comprise approximately 70% of that volume. The company said this update follows first-half performance that exceeded expectations, representing a roughly 2% increase over previous guidance while exploration and development capital expenditures remain unchanged at $600 million to $630 million.
Production averaged 125,789 boe/d in the second quarter of 2026, which exceeded the top end of the company's guidance. This result was supported by record production at the Mica Montney asset and a staged restart of production in Australia following repairs necessitated by cyclones. In Canada, production averaged 99,605 boe/d during the quarter, while international operations averaged 26,182 boe/d. Year-to-date, production per share grew 6% compared to 2025.
Financial results for the second quarter included net income of $134 million, or 0.88 a share. The company generated $231 million in fund flows from operations and $122 million in free cash flow. These flows fully funded $110 million in exploration and development capital expenditures. Vermilion realized an average natural gas sales price of $5.08/mcf, which the company said was more than triple the AECO benchmark.
Vermilion reduced its net debt by approximately $70 million during the quarter to $1.22 billion. This brought the total net debt reduction to $840 million over the previous 15 months. The company said this debt reduction led to a structural improvement in unit interest expense, which fell approximately 35% from the prior year.
Following the debt reduction and improved visibility into future cash flows, the company updated its return of capital framework to target 40% to 60% of excess free cash flow to shareholders, up from a previous 40% target. In the second quarter, Vermilion returned $26 million to shareholders, consisting of $21 million in dividends and $5 million in share repurchases.
In Europe, the company achieved first production in July 2026 from the Wisselshorst well, which it described as its largest discovery in Europe to date. Vermilion also closed an acquisition in Germany that added approximately 1,000 boe/d of production and ownership of gathering infrastructure. The company expects production from the Wisselshorst discovery to expand over the next two years through infrastructure investments and drilling starting in early 2027.