Vermilion Energy (VET) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of Westbrick Energy for $1.075 billion expands Deep Basin footprint, adding 50,000 boe/d production, 770,000 net acres, and valuable infrastructure, supporting 15+ years of production and over 700 drilling locations.

• Enhances scale in liquids-rich natural gas, supporting free cash flow, ESG-focused growth, and high-grading initiatives.

• Pro forma company becomes the fifth largest Deep Basin producer, with improved inventory quality and quantity.

• Maintains balanced fund flow between North America and international, leveraging premium global pricing and international diversification.

• Strengthens position for long-term production, free cash flow growth, and further international opportunities.

Financial terms and conditions

• Total consideration is $1.075 billion, funded through a $1.35 billion credit facility, a new $250 million term loan (maturing May 2028), and a US$300 million bridge loan.

• Westbrick shareholders may elect to receive up to 1.7 million Vermilion shares (not exceeding $25 million in value).

• Pro forma net debt expected at $2.0 billion at closing, with year-end 2025 net debt of $1.8 billion and a net debt-to-FFO ratio of 1.5x.

• 2025 FFO forecast at $1.2 billion ($7.80/share), with free cash flow of $450 million ($2.80/share), representing a 70%+ increase over 2024.

• Capital expenditures for 2025 expected at $725–775 million, with over 70% allocated to the global gas portfolio.

Synergies and expected cost savings

• Significant operational and financial synergies anticipated, including capital efficiency improvements, infrastructure optimization, and gas marketing opportunities.

• Improved scale enables lower costs and better full-cycle margins in Deep Basin operations.

• Synergies not yet quantified in valuation but expected to be realized over time.

• High grading of inventory and improved drilling/completion designs anticipated.

• Pro forma company expects ~15% higher excess free cash flow per share, supplemented by achievable synergies.