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Vermilion Energy Inc. (VET) SEC Filing 40-F Annual report for the fiscal year ending Saturday, December 31, 2011

Vermilion Energy Inc.

CIK: 1293135 Ticker: VET

 

 

EXHIBIT 99.1

 

VERMILION ENERGY INC.

 

ANNUAL INFORMATION FORM

 

For the Year Ended December 31, 2011

 

Dated March 12, 2012

 

 

 
 

 

Vermilion Energy Inc. AIF for the year ended December 31, 2011

 

TABLE OF CONTENTS

 

GLOSSARY OF TERMS 4
Conventions 6
Abbreviations 6
Conversion 6
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS 7
PRESENTATION OF OIL AND GAS RESERVES AND PRODUCTION INFORMATION 8
NON-GAAP MEASURES 8
VERMILION ENERGY inc. 9
General 9
Organizational Structure of the Company 9
Summary Description of the Business 10
History of Vermilion 10
NARRATIVE DESCRIPTION OF THE BUSINESS 11
Stated Business Objectives 11
Description of Properties 11
STATEMENT OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION 13
Reserves and Future Net Revenue 13
Reconciliations of Changes in Reserves 16
Undeveloped Reserves 20
Timing of Initial Undeveloped Reserves Assignment 20
Future Development Costs 21
Oil and Gas Properties and Wells 22
Costs Incurred 22
Exploration and Development Activities 23
Properties with No Attributed Reserves 24
Abandonment and Reclamation Costs 24
Tax Information 25
Production Estimates 25
Production History 26
Marketing 28
ADDITIONAL INFORMATION RESPECTING VERMILION ENERGY INC. 29
Management 29
Common Shares 30
Cash Dividends 30
Dividend Reinvestment Plan 31
Shareholder Rights Plan 32
AUDIT COMMITTEE MATTERS 35
Audit Committee Charter 35
Composition of the Audit Committee 35
External Audit Service Fees 36
MARKET FOR PRICE RANGE AND TRADING VOLUME OF SECURITIES 36
CREDIT RATINGs 36
CONFLICTS OF INTEREST 37
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS 37
LEGAL PROCEEDINGS 37
MATERIAL CONTRACTS 37
INTERESTS OF EXPERTS 38
TRANSFER AGENT AND REGISTRAR 38

 

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Vermilion Energy Inc. AIF for the year ended December 31, 2011

 

RISK FACTORS 38
Reserve Estimates 38
Volatility of Oil and Natural Gas Prices 38
Changes in Legislation 39
Government Regulations 39
Competition 39
Operational Matters 39
Environmental Concerns 40
Kyoto Protocol 40
Discretionary Nature of Dividends 40
Debt Service 40
Changes in Income Tax Laws 40
Depletion of Reserves 40
Net Asset Value 41
Volatility of Market Price of Common Shares 41
Variations in Interest Rates and Foreign Exchange Rates 41
Increase in Operating Costs or Decline in Production Level 41
Acquisition Assumptions 41
Failure to Realize Anticipated Benefits of Prior Acquisitions 41
Additional Financing 42
Potential Conflicts of Interest 42
GAAP Adjustments 42
Market Accessibility 42
ADDITIONAL INFORMATION 42
SCHEDULE "A" REPORT ON RESERVES DATA BY INDEPENDENT QUALIFIED RESERVES EVALUATOR OR AUDITOR 43 (FORM 51-101F2) 43
SCHEDULE "B" REPORT OF MANAGEMENT AND DIRECTORS ON OIL AND GAS DISCLOSURE (FORM 51-101F3) 44
SCHEDULE "C" AUDIT COMMITTEE TERMS OF REFERENCE 45

 

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Vermilion Energy Inc. AIF for the year ended December 31, 2011

 

GLOSSARY OF TERMS

 

The following are defined terms used in this annual information form:

 

“2003 Arrangement” means the plan of arrangement under the ABCA involving the Trust, Vermilion Resources Ltd., Clear Energy Inc. and Vermilion Acquisition Ltd., which was completed on January 22, 2003;

 

“ABCA” means the Business Corporations Act (Alberta), R.S.A. 2000, c. B-9, as amended, including the regulations promulgated thereunder;

 

“AGCA” means Alberta Gas Cost Allowance;

 

“affiliate” when used to indicate a relationship with a person or company, has the same meaning as set forth in the Securities Act (Alberta);

 

“board of directors” or “board” means the board of directors of Vermilion;

 

“CGU’s” means cash generating units and based on managements’ judgement, represents the lowest level at which there is identifiable cash inflows that are largely independent of the cash inflows of other groups of assets or properties;

 

“common shares” means a common share in the capital of the Company;

 

“control” means, with respect to control of a body corporate by a person, the holding (other than by way of security) by or for the benefit of that person of securities of that body corporate to which are attached more than 50% of the votes that may be cast to elect directors of the body corporate (whether or not securities of any other class or classes shall or might be entitled to vote upon the happening of any event or contingency) provided that such votes, if exercised, are sufficient to elect a majority of the board of directors of the body corporate;

 

“Conversion Arrangement” means the plan of arrangement effected on September 1, 2010 under section 193 of the ABCA pursuant to which the Trust converted from an income trust to a corporate structure;

 

“Depletion units” means groups of assets or properties that are within a specific production area and have similar economic lives. Depletion units represent the lowest level of disaggregation for which Vermilion accumulates costs for the purposes of calculating and recording depletion;

 

“dividend” means a dividend paid by Vermilion in respect of the common shares, expressed as an amount per common share;

 

“Dividend Payment Date” means any date that Dividends are distributed to Shareholders, generally being the 15th day of the calendar month following the determination of a Dividend Record Date;

 

“Dividend Record Date” means the last day of each calendar month or such other date as may be determined from time to time by the Company;

 

“DRIP Plan” means the Dividend Reinvestment Plan adopted by the Company;

 

“GAAP” means Canadian Generally Accepted Accounting Principles, or alternatively IFRS;

 

“GLJ” means GLJ Petroleum Consultants Ltd., independent petroleum engineering consultants of Calgary, Alberta;

 

“GLJ Report” means the independent engineering evaluation of certain oil, NGL and natural gas interests of the Company prepared by GLJ dated February 3, 2012 and effective December 31, 2011;

 

“IFRS” means International Financial Reporting Standards;

 

“Income Tax Act” or “Tax Act” means the Income Tax Act (Canada), R.S.C. 1985, c. 1. (5th Supp.), as amended, including the regulations promulgated thereunder;

 

“Meeting” means the annual meeting of Shareholders of the Company to be held on May 4, 2012 (or, if adjourned, such other date on which the meeting is held);

 

“PNG” means Petroleum and Natural Gas properties and equipment;


“PRRT” means Petroleum Resource Rent Tax, a profit based tax levied on petroleum projects in Australia;

 

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Vermilion Energy Inc. AIF for the year ended December 31, 2011

 

“Rights Plan” means the Shareholder rights plan of the Company;

 

“Senior Unsecured Notes” means the senior unsecured notes of the Company issued February 10, 2011;

 

“Shareholders” means holders from time to time of the Company’s common shares;

 

“Shareholder Rights Plan Agreement” means the Shareholder Rights Plan Agreement dated September 1, 2010 between the Company and Computershare Trust Company of Canada establishing the Rights Plan;

 

“Special Resolution” means a resolution proposed to be passed as a special resolution at a meeting of Shareholders and passed by the affirmative votes of the holders of not less than 66 2/3% of the common shares represented at the meeting and voted on a poll upon such resolution;

 

“Subsidiary” means, in relation to any person, any body corporate, partnership, joint venture, association or other entity of which more than 50% of the total voting power of common shares or units of ownership or beneficial interest entitled to vote in the election of directors (or members of a comparable governing body) is owned or controlled, directly or indirectly, by such person;

 

“TSX” means the Toronto Stock Exchange;

 

“Trust” means Vermilion Energy Trust, an unincorporated open-ended investment trust governed by the laws of the Province of Alberta that was terminated pursuant to the Conversion Arrangement;

 

“Trust Unit” means units in the capital of the Trust;

 

“Unitholders” means former unitholders of the Trust;

 

“Vermilion” or the “Company” means Vermilion Energy Inc. and where context allows, its consolidated business enterprise, except that a reference to “Vermilion” prior to the date of the Conversion Arrangement means the consolidated business enterprise of the Trust, unless otherwise indicated; and

 

“VRL” means Vermilion Resources Ltd.

 

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Vermilion Energy Inc. AIF for the year ended December 31, 2011

 

Conventions

 

Unless otherwise indicated, references herein to "$" or "dollars" are to Canadian dollars. All financial information herein has been presented in Canadian dollars in accordance with GAAP.

 

Abbreviations

 

Oil and Natural Gas Liquids
bbl Barrel
Mbbl thousand barrels
bbl/d barrels per day
NGLs natural gas liquids
Natural Gas
Mcf thousand cubic feet
MMcf million cubic feet
Mcf/d thousand cubic feet per day
MMcf/d million cubic feet per day
MMBtu million British Thermal Units
Other
API American Petroleum Institute
°API An indication of the specific gravity of crude oil measured on the API gravity scale. 
  Liquid petroleum with a specified gravity of 28 °API or higher is generally referred to as light crude oil.
boe barrel of oil equivalent
M$ thousand dollars
MM$ million dollars
Mboe 1,000 barrels of oil equivalent
MMboe million barrels of oil equivalent
WTI West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma for crude oil of
  standard grade.

 

Conversion

 

The following table sets forth certain standard conversions from Standard Imperial Units to the International System of Units (or metric units).

 

To Convert From   To   Multiply By
Mcf   Cubic metres   28.174
Cubic metres   Cubic feet   35.494
bbls   Cubic metres   0.159
Cubic metres   bbls oil   6.290
Feet   Metres   0.305
Metres   Feet   3.281
Miles   Kilometres   1.609
Kilometres   Miles   0.621
Acres   Hectares   0.405
Hectares   Acres   2.471

 

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Vermilion Energy Inc. AIF for the year ended December 31, 2011

 

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

 

Certain statements included or incorporated by reference in this annual information form may constitute forward-looking statements under applicable securities legislation. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", or similar words suggesting future outcomes or statements regarding an outlook. Forward looking statements or information in this annual information form may include, but are not limited to:

 

·capital expenditures;
·business strategy and objectives;
·reserve quantities and the discounted present value of future net cash flows from such reserves;
·revenue;
·future production levels and rates of average annual production growth;
·exploration plans;
·development plans;
·acquisition and disposition plans and the timing thereof;
·operating and other costs;
·royalty rates;
·the timing of regulatory proceedings and approvals;
·the timing of first commercial gas from the Corrib field; and
·estimate of Vermilion’s share of the expected gas rates from the Corrib field.

 

Such forward-looking statements or information are based on a number of assumptions all or any of which may prove to be incorrect. In addition to any other assumptions identified in this document, assumptions have been made regarding, among other things:

 

·the ability of the Company to obtain equipment, services and supplies in a timely manner to carry out its activities in Canada and internationally;
·the ability of the Company to market oil and natural gas successfully to current and new customers;
·the timing and costs of pipeline and storage facility construction and expansion and the ability to secure adequate product transportation;
·the timely receipt of required regulatory approvals;
·the ability of the Company to obtain financing on acceptable terms;
·foreign currency exchange rates and interest rates;
·future oil and natural gas prices; and
·Management’s expectations relating to the timing and results of development activities.

 

Although the Company believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward looking statements because the Company can give no assurance that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Company and described in the forward looking statements or information.

 

These risks and uncertainties include but are not limited to:

 

·the ability of management to execute its business plan;
·the risks of the oil and gas industry, both domestically and internationally, such as operational risks in exploring for, developing and producing crude oil and natural gas and market demand;
·risks and uncertainties involving geology of oil and gas deposits;
·risks inherent in the Company's marketing operations, including credit risk;
·the uncertainty of reserves estimates and reserves life;
·the uncertainty of estimates and projections relating to production, costs and expenses;
·potential delays or changes in plans with respect to exploration or development projects or capital expenditures;
·the Company's ability to enter into or renew leases;
·fluctuations in oil and gas prices, foreign currency exchange rates and interest rates;
·health, safety and environmental risks;
·uncertainties as to the availability and cost of financing;
·the ability of the Company to add production and reserves through development and exploration activities;
·general economic and business conditions;
·the possibility that government policies or laws may change or governmental approvals may be delayed or withheld;
·uncertainty in amounts and timing of royalty payments;
·risks associated with existing and potential future law suits and regulatory actions against the Company; and
·other risks and uncertainties described elsewhere in this annual information form or in the Company's other filings with Canadian securities authorities.

 

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Vermilion Energy Inc. AIF for the year ended December 31, 2011

 

The forward-looking statements or information contained in this annual information form are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws.

 

Natural gas volumes have been converted on the basis of six thousand cubic feet of natural gas to one barrel equivalent of oil. Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

 

PRESENTATION OF OIL AND GAS RESERVES AND PRODUCTION INFORMATION

 

All oil and natural gas reserve information contained in this annual information form has been prepared and presented in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). The actual oil and natural gas reserves and future production will be greater than or less than the estimates provided in this annual information form. The estimated future net revenue from the production of the disclosed oil and natural gas reserves does not represent the fair market value of these reserves. The Company has adopted the standard of 6 Mcf:1 bbl when converting natural gas to barrels of oil equivalent. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

 

NON-GAAP MEASURES

 

This annual information form includes non-GAAP measures as further described herein. Management of the Company believes these non-GAAP measures are a useful tool in analyzing operating performance. These measures do not have standardized meanings prescribed by GAAP and, therefore, may not be comparable with the calculations of similar measures for other entities.

 

“Cash dividends per share” represents actual cash dividends paid per share by the Company during the relevant periods.

 

“Netbacks” are per unit of production measures used in operational and capital allocation decisions.

 

“Net dividends” is calculated as dividends declared for a given period less proceeds received by Vermilion pursuant to the dividend reinvestment plan. Dividends both before and after the dividend reinvestment plan are reviewed by management and are also assessed as a percentage of fund flows from operations to analyze how much of the cash that is generated by Vermilion is being used to fund dividends.

 

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Vermilion Energy Inc. AIF for the year ended December 31, 2011

 

VERMILION ENERGY INC.

 

General


Vermilion Energy Inc. is the successor to the Trust, following the completion of the conversion of the Trust from an income trust to a corporate structure by way of a court approved plan of arrangement under the ABCA on September 1, 2010. Pursuant to the Conversion Arrangement, Unitholders exchanged their Trust Units for common shares of the Company on a one-for-one basis and holders of exchangeable shares of VRL received 1.89344 common shares for each exchangeable share held.

 

References to “Vermilion” prior to the date of the Conversion Arrangement are generally references to the consolidated business enterprise of the Trust prior to the date of the Conversion Arrangement, whose business the Company is a successor to as a result of the Conversion Arrangement, as accounted for by “continuity-of-interest” accounting.

 

Vermilion Energy Inc. was incorporated on July 21, 2010 pursuant to the provisions of the ABCA for the purpose of facilitating the Conversion Arrangement. The registered and head office of Vermilion Energy Inc. is located at Suite 3500, 520 – 3rd Avenue S.W., Calgary, Alberta, T2P 0R3.

 

Organizational Structure of the Company

 

The following diagram describes the intercorporate relationships among the Company and each of its material subsidiaries as at December 31, 2011, where each principal subsidiary was incorporated or formed and the percentage of votes attaching to all voting securities of each subsidiary beneficially owned directly or indirectly by Vermilion. Reference should be made to the appropriate sections of this annual information form for a complete description of the structure of the Company.

 

 

Notes: 

(1)Vermilion Energy Ireland Limited is the Irish Branch of a Cayman Islands incorporated company.

 

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Vermilion Energy Inc. AIF for the year ended December 31, 2011

 

Summary Description of the Business


Vermilion Energy Inc.

 

The Company is actively engaged in the business of oil and natural gas exploitation, development, acquisition and production in Australia, Canada, France, Ireland and the Netherlands. The Company’s business plan is to expands its portfolio of organic growth opportunities and revitalize its strategic plan that targets average annual production growth of 10% while maintaining a stable dividend. Vermilion continues to develop New Growth Initiatives which target the identification and capture of meaningful unconventional resource related exploration exposure in Canada, Europe and Australia. Where possible, the Company will seek to expand its reserve base through the selective addition of high-quality, long-life reserves with low risk development opportunities.

 

Shareholders receive monthly dividends of the cash flow generated by Vermilion as declared payable by the board of directors of the Company. The Company currently employs a strategy which: (i) provides Shareholders with a competitive annual cash-on-cash yield through monthly cash dividends, (ii) ensures that Vermilion's existing assets are maintained at a level that provides sustainable ongoing cash flow, and (iii) continues to expand the business of the Company through the development of growth opportunities that are intended to provide long-term stable cash flows and be accretive to the existing Shareholders. The Company intends to finance acquisitions through bank financing and, when necessary, the issuance of additional common shares from treasury, while maintaining prudent leverage.

 

Vermilion Resources Ltd.

 

Vermilion Energy Inc. is the sole holder of VRL common shares.

 

The head office of VRL is located at Suite 3500, 520 – 3rd Avenue S.W., Calgary, Alberta, T2P 0R3 and its registered office is located at Suite 3700, 400 – 3rd Avenue S.W., Calgary, Alberta, T2P 4H2.

 

History of Vermilion

 

The following describes the development of Vermilion's business over the last three completed financial years.

 

On July 30, 2009, Vermilion completed the acquisition of an 18.5% non-operated interest in the Corrib field located approximately 83 kilometres off the northwest coast of Ireland for an aggregate purchase price comprised of US$100 million paid on closing and an obligation for an additional future payment, the amount of which will vary from an estimated US$300 million to US$135 million, depending on the date when first commercial gas from the Corrib field is achieved. Pursuant to the acquisition agreement governing the Corrib acquisition, Vermilion assumed its share of future capital expenditure obligations in order to reach first commercial gas. On September 29, 2009, Vermilion filed a business acquisition report in connection with the Corrib acquisition, which may be found on SEDAR at www.sedar.com.

 

On October 30, 2009, Vermilion closed an equity financing of 7,282,000 Trust Units at a price $30.90 per Trust Unit for gross proceeds of $225 million. Subsequently, on December 1, 2009, Vermilion announced that the underwriters had exercised the over-allotment option in connection with the offering and Vermilion issued an additional 809,000 Trust Units at a price of $30.90 per Trust Unit for gross proceeds of approximately $25 million. As a result of exercise of the over-allotment option, the aggregate gross proceeds to Vermilion of the equity offering were approximately $250 million.

 

On December 21, 2009, Verenex Energy Inc., a company in which Vermilion held 18,760,540 common shares representing a 41.9% equity ownership position, was sold to a subsidiary of the Libyan Investment Authority for cash consideration of $7.09 per share plus an additional amount per common share of $0.1976 for aggregate consideration of $7.2876 per share representing gross proceeds to Vermilion of approximately $136.7 million. The proceeds were used to pay down debt.

 

On September 1, 2010, Vermilion converted from an income trust to a dividend paying corporation. Approval was granted from the Trust’s Unitholders to the Conversion Arrangement at a special meeting of Unitholders of the Trust held on August 31, 2010.

 

On February 10, 2011, Vermilion issued $225.0 million of senior unsecured notes at par. The notes bear interest at a rate of 6.5% per annum and will mature on February 10, 2016. As direct senior unsecured obligations of Vermilion, the notes rank pari passu with all other present and future unsecured and unsubordinated indebtedness of the Company. Vermilion may, at its option, prior to February 10, 2014, redeem up to 35% of the notes with net proceeds of equity offerings by the Company at a redemption price equal to 106.5% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to the applicable redemption date. Subsequently, Vermilion may, on or after February 10, 2014, redeem all or part of the notes at fixed redemption prices, plus, in each case, accrued and unpaid interest, if any, to the applicable redemption date.

 

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Vermilion Energy Inc. AIF for the year ended December 31, 2011

 

On November 28, 2011, Vermilion completed an equity financing of 5,370,000 common shares at a price of $49.00 per common share for gross proceeds of approximately $263 million including the partial exercise of the underwriters’ over-allotment option. The net proceeds were used to reduce a certain amount of outstanding indebtedness under the Company’s credit facility, partially fund the Company's development capital program and prospective acquisitions and for general purposes.

 

During the year Vermilion completed property acquisitions of various strategic properties that complement existing assets within Vermilion’s portfolio. In 2011, the cost of these property acquisitions to Vermilion was approximately $50.9 million, of which $38.8 million was from Canada and $12.1 million was from the Netherlands. None of the property acquisitions constituted a “significant acquisition” within the meaning of applicable securities laws.

 

On January 24, 2012, Vermilion, through its wholly-owned subsidiaries, acquired certain working interests in six producing fields located in the Paris and Aquitaine basins in France. Taking into consideration an effective date of January 1, 2011 and customary closing adjustments, Vermilion paid approximately $107 million cash at closing. Vermilion financed this acquisition through proceeds received from the November 2011 equity issuance. The acquisition did not constitute a “significant acquisition” within the meaning of applicable securities laws.

 

As at January 31, 2012, Vermilion had 350 full time employees of which 170 employees were located in its head office, 32 employees in its Canadian field offices, 101 employees in France, 16 employees in the Netherlands and 31 employees in Australia.

 

NARRATIVE DESCRIPTION OF THE BUSINESS

 

Stated Business Objectives

 

The Company is actively engaged in the business of oil and natural gas exploitation, development, acquisition and production in Australia, Canada, France, Ireland and the Netherlands. The Company’s business plan is to expands its portfolio of organic growth opportunities and revitalize its strategic plan that targets average annual production growth of 10% while maintaining a stable dividend. Vermilion continues to develop New Growth Initiatives which target the identification and capture of meaningful unconventional resource related exploration exposure in Canada, Europe and Australia. Where possible, the Company will seek to expand its reserve base through the selective addition of high-quality, long-life reserves with low risk development opportunities.

 

In reviewing potential participations or acquisitions, Vermilion will consider a number of factors, including: (a) the present value of the future revenue from such properties from the proved producing, total proved and proved plus probable reserves; (b) the amount of potential for additional reservoir development; (c) whether sufficient infrastructure exists in the prospect to provide for increased activity; (d) the cost of any potential development; (e) investments in properties that exhibit medium to long life reserves and stable production base; and (f) the ability of Vermilion to enhance the value of acquired properties through additional exploitation efforts and additional development drilling. The board of directors of Vermilion may, in its discretion, approve asset or corporate acquisitions or investments that do not conform to these guidelines based upon the board's consideration of the qualitative aspects of the subject properties including risk profile, technical upside, reserve life, asset quality and the Company's business prospects.

 

Description of Properties

 

The following is a description of the oil and natural gas properties, plants, facilities and installations in which Vermilion has an interest and that are material to Vermilion's operations and exploration activities. The production numbers stated refer to Vermilion's working interest share before deduction of Crown, freehold and other royalties. Reserve amounts are stated, before deduction of royalties, as at December 31, 2011, based on forecasted costs and price assumptions as evaluated in the GLJ Report.

 

Canada Assets

 

Vermilion’s production in Canada is located primarily in three areas, all in Alberta: Drayton Valley, Slave Lake and Central Alberta. Vermilion’s main gas producing areas are Drayton Valley and Central Alberta, while Slave Lake and the new Cardium light oil play in Drayton Valley are the main oil producing areas.

 

In Canada, Vermilion holds an average working interest of 68.5% in 395,616 (271,067 net) acres of developed land, 582 (396 net) producing natural gas wells and 319 (198 net) producing oil wells as at December 31, 2011. Vermilion operates five natural gas plants and has an ownership interest in five additional plants, resulting in combined gross processing capacity of over 89 MMcf/d. Vermilion has capacity of over 20,500 bbl/d of oil in five operated oil batteries, including a battery constructed to handle 15,000 bbl/d of Cardium production which was completed in 2011 on time and on budget. The new battery commenced operations August 1, 2011 and as of December, 2011, was processing approximately 6,170 bbl/d of oil which represents 71% of Vermilion’s total Cardium production.

 

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Vermilion Energy Inc. AIF for the year ended December 31, 2011

 

Vermilion sold its interests in the Mitsue field resulting in a decrease in the Canadian well count of 202 (8 net) producing oil wells.

 

Risks and uncertainties associated with weather conditions can shorten the winter drilling season and can impact the spring and summer drilling programs, potentially resulting in increased costs or reduced production.

 

For a discussion of the competitive conditions affecting Vermilion’s business, refer to “Competition” in the Risk Factors section of this AIF.

 

For the year ended December 31, 2011, production in Canada averaged approximately 43 MMcf/d of natural gas and 5,998 bbl/d of oil and NGLs. Revenues from the sale of natural gas were $60.6 million in the year (2010 - $72.7 million) and $199.2 million from oil and NGLs (2010 - $112.5 million).

 

The GLJ Report assigned 38,732 Mboe of total proved reserves and 64,187 Mboe of proved plus probable reserves to Vermilion's properties located in Canada as at December 31, 2011.

 

France Assets

 

Vermilion's main producing areas in France are located in the Aquitaine Basin which is southwest of Bordeaux, France and in the Paris Basin, located just east of Paris. Vermilion's assets in France are primarily oil producing properties. The two major fields in the Paris Basin area are Champotran and Chaunoy. The two major fields in the Aquitaine Basin are Parentis and Cazaux. Vermilion operates eight oil batteries with current producing capacities of 8,100 bbl/d, however, expansion above this, could be easily accommodated. Vermilion holds an 83.6% working interest in 193,017 acres of developed land in the Aquitaine and Paris Basins. Vermilion had 220 (193 net) producing oil wells in France as at December 31, 2011.

 

Risks and uncertainties associated with well approvals can impact the drilling programs, potentially resulting in delays or reduced production.

 

For a discussion of the competitive conditions affecting Vermilion’s business, refer to “Competition” in the Risk Factors section of this AIF.

 

For the year ended December 31, 2011, production in France averaged approximately 8,110 bbl/d of oil and 1.0 MMcf/d of natural gas. Revenues from oil sales were $319.9 million in the year (2010 - $245.7 million) and $4.2 million from the sale of natural gas (2010 - $3.3 million).

 

The GLJ Report assigned 24,226 Mboe of total proved reserves and 36,030 Mboe of proved plus probable reserves to Vermilion's properties located in France.

 

On January 24, 2012, Vermilion, through its wholly-owned subsidiaries, acquired from Total E&P France, certain working interests in six producing fields located in the Paris and Aquitaine basins in France. The assets are expected to average approximately 2,200 boe per day of production in 2012. Vermilion acquired the remaining working interest in three existing fields; Itteville, Vert Le Grand and Vic Bihl. Three new fields were acquired; Vert Le Petit and La Croix Blanche at 100% working interest and Dommartin-Lettrée at 56% working interest.

 

Netherlands Assets

 

Vermilion's Netherlands assets consist of eight onshore concessions and one offshore concession located in the northern part of the country. Production consists solely of natural gas with a small amount of related condensate. The assets include three operated gas treatment centres that have a combined total capacity of 240 MMcf/d. Vermilion holds an approximate 63.4% working interest over the nine concessions in 49,272 (36,485 net) acres of developed land and 53 (40 net) producing gas wells as at December 31, 2011.

 

Risks and uncertainties associated with drilling and production permits can impact drilling programs and production timing, potentially resulting in increased costs or reduced production.

 

For a discussion of the competitive conditions affecting Vermilion’s business, refer to “Competition” in the Risk Factors section of this AIF.

 

For the year ended December 31, 2011, Vermilion's production in the Netherlands averaged 58 bbl/d of NGLs and 33 MMcf/d of natural gas. Revenues from the sale of natural gas were $114.2 million in the year (2010 - $72.8 million) and $2.0 million from NGL sales (2010 - $1.0 million).

 

The GLJ Report assigned 5,512 Mboe of total proved reserves and 11,025 Mboe of proved plus probable reserves to Vermilion's properties located in the Netherlands.

 

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Vermilion Energy Inc. AIF for the year ended December 31, 2011

 

Australia Assets

 

Vermilion's Australia assets consist of a 100% operated interest in an offshore oil field located on Western Australia's northwest shelf. The platform has a current capacity of 162,000 bbl/d of total fluid. Vermilion holds a 100% working interest in the Wandoo block, which is comprised of 59,553 acres and is considered a production license. All acreage therefore is classified as producing.

 

The northwest shelf of Australia is subject to seasonal disruptions caused by cyclones. During cyclone season (December to March) the Company may have to reduce production rates at its offshore facilities as a result of the inability to offload to tankers due to bad weather. Cyclones may also cause production shut-ins due to the evacuation of staff or damage to the equipment on the platform.

 

For a discussion of the competitive conditions affecting Vermilion’s business, refer to “Competition” in the Risk Factors section of this AIF.

 

For the year ended December 31, 2011, Vermilion's production in the Australia averaged 8,168 bbl/d of oil. Revenues from oil sales were $331.4 million in the year (2010 - $219.7 million).

 

The GLJ Report assigned 12,697 Mboe of total proved reserves and 17,497 Mboe of proved plus probable reserves to Vermilion's properties located in Australia.

 

Ireland Assets

 

Vermilion holds an 18.5% non-operating interest in the offshore Corrib gas field located off the northwest coast of Ireland. Production from Corrib is expected to increase Vermilion’s volumes by approximately 54 MMcf (9,000 boe/d) once the field reaches peak production. Vermilion acquired its 18.5% working interest in the project on July 30, 2009, which comprised of seven offshore wells, both offshore and onshore pipeline segments as well as a significant natural gas processing facility. At the time of the acquisition most of the key components of the project, with the exception of the onshore pipeline, were either complete or in the latter stages of development. In 2011, approvals and permissions were granted for the onshore gas pipeline and construction has commenced with tunnelling expected to begin in the fourth quarter of 2012. Vermilion expects to continue significant capital investment on this project over the next two years and currently expects to achieve initial gas production from this field in late 2014.

 

The GLJ Report assigned 15,332 Mboe of total proved reserves and 17,493 Mboe of proved plus probable reserves to Vermilion’s property in Ireland.

 

STATEMENT OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION

 

Reserves and Future Net Revenue

 

The following is a summary of the oil and natural gas reserves and the value of future net revenue of Vermilion as evaluated by GLJ in a report dated February 3, 2012. Pricing used in the forecast price evaluations is set forth in the notes to the tables.

 

Information contained in this section is effective December 31, 2011 unless otherwise stated.

 

All evaluations of future net production revenue set forth in the tables below are stated after overriding and lessor royalties, Crown royalties, freehold royalties, mineral taxes, direct lifting costs, normal allocated overhead and future capital investments, including abandonment and reclamation obligations. It should not be assumed that the discounted future net production revenue estimated by the GLJ Report represents the fair market value of the reserves. Other assumptions relating to the costs, prices for future production and other matters are included in the GLJ Report. There is no assurance that the future price and cost assumptions used in the GLJ Report will prove accurate and variances could be material.

 

Reserves for Australia, Canada, France, Ireland and the Netherlands are established using deterministic methodology. Total proved reserves are established at the 90 percent probability (P90) level. There is a 90 percent probability that the actual reserves recovered will be equal to or greater than the P90 reserves. Total proved plus probable reserves are established at the 50 percent probability (P50) level. There is a 50 percent probability that the actual reserves recovered will be equal to or greater than the P50 reserves.

 

The Report on Reserves Data by Independent Qualified Reserves Evaluator in Form 51-101F2 and the Report of Management and Directors on Oil and Gas Disclosure in Form 51-101F3 are contained in Schedules "A" and "B", respectively.

 

The following tables provide reserves data and a breakdown of future net revenue by component and production group using forecast prices and costs. For Canada, the tables following include AGCA.

 

13
 

 

Vermilion Energy Inc. AIF for the year ended December 31, 2011

 

The following tables may not total due to rounding.

 

Oil and Gas Reserves - Based on Forecast Prices and Costs(8)

 

   Light and Medium Oil   Heavy Oil   Natural Gas   Natural Gas Liquids   BOE 
   Gross(1)   Net(1)   Gross(1)   Net(1)   Gross(1)   Net(1)   Gross(1)   Net(1)   Gross   Net 
   (Mbbl)   (Mbbl)   (Mbbl)   (Mbbl)   (MMcf)   (MMcf)   (Mbbl)   (Mbbl)   (Mboe)   (Mboe) 
Proved Developed Producing(2)(5)                                                  
Australia   12,697    12,697    -    -    -    -    -    -    12,697    12,697 
Canada   8,343    6,874    19    18    76,082    67,727    2,519    1,669    23,562    19,849 
France   22,748    21,020    -    -    596    566    -    -    22,847    21,114 
Ireland   -    -    -    -    -    -    -    -    -    - 
Netherlands   -    -    -    -    22,023    22,023    30    30    3,701    3,701 
Total Proved Developed Producing   43,789    40,590    19    18    98,701    90,317    2,549    1,700    62,808    57,361 
Proved Developed Non-Producing(2)(6)                                                  
Australia   -    -    -    -    -    -    -    -    -    - 
Canada   526    454    -    -    6,447    5,952    96    67    1,696    1,512 
France   335    300    -    -    -    -    -    -    335    300 
Ireland   -    -    -    -    -    -    -    -    -    - 
Netherlands   -    -    -    -    10,745    10,745    21    21    1,811    1,811 
Total Proved Developed Non-Producing   861    753    -    -    17,192    16,697    116    87    3,843    3,623 
Proved Undeveloped(2)(7)                                                  
Australia   -    -    -    -    -    -    -    -    -    - 
Canada   7,083    6,216    -    -    33,881    31,833    743    603    13,473    12,125 
France   1,043    1,006    -    -    -    -    -    -    1,043    1,006 
Ireland   -    -    -    -    91,991    91,991    -    -    15,332    15,332 
Netherlands   -    -    -    -    -    -    -    -    -    - 
Total Proved Undeveloped   8,127    7,221    -    -    125,873    123,824    743    603    29,849    28,462 
Proved(2)                                                  
Australia   12,697    12,697    -    -    -    -    -    -    12,697    12,697 
Canada   15,953    13,543    19    18    116,411    105,512    3,358    2,339    38,732    33,485 
France   24,127    22,325    -    -    596    566    -    -    24,226    22,419 
Ireland   -    -    -    -    91,991    91,991    -    -    15,332    15,332 
Netherlands   -    -    -    -    32,768    32,768    51    51    5,512    5,512 
Total Proved   52,777    48,565    19    18    241,766    230,837    3,409    2,390    96,499    89,446 
Probable(3)                                                  
Australia   4,800    4,800    -    -    -    -    -    -    4,800    4,800 
Canada   14,035    11,759    3    3    58,525    53,712    1,663    1,218    25,455    21,932 
France   11,801    11,581    -    -    19    18    -    -    11,804    11,584 
Ireland   -    -    -    -    12,968    12,968    -    -    2,161    2,161 
Netherlands   -    -    -    -    32,741    32,741    56    56    5,513    5,513 
Total Probable   30,636    28,140    3    3    104,253    99,439    1,719    1,275    49,733    45,990 
Proved Plus Probable(2)(3)                                                  
Australia   17,497    17,497    -    -    -    -    -    -    17,497    17,497 
Canada   29,988    25,302    22    21    174,936    159,224    5,020    3,558    64,187    55,418 
France   35,928    33,906    -    -    615    584    -    -    36,030    34,003 
Ireland   -    -    -    -    104,959    104,959    -    -    17,493    17,493 
Netherlands   -    -    -    -    65,508    65,508    107    107    11,025    11,025 
Total Proved Plus Probable   83,413    76,705    22    21    346,019    330,276    5,128    3,665    146,232    135,436 

 

14
 

 

Vermilion Energy Inc. AIF for the year ended December 31, 2011

 

Net Present Values of Future Net Revenue - Based on Forecast Prices and Costs(8)

 

   Before Deducting Future Income Taxes Discounted At   After Deducting Future Income Taxes Discounted At 
(M$)  0%   5%   10%   15%   20%   0%   5%   10%   15%   20% 
Proved Developed Producing(2)(5)                                                  
Australia   839,270    736,208    656,026    592,341    540,804    395,196    345,463    306,882    276,336    251,697 
Canada   662,170    530,000    444,686    385,426    341,960    662,170    530,000    444,686    385,426    341,960 
France   1,355,615    992,545    796,523    673,831    589,227    981,952    726,431    586,200    497,381    435,623 
Ireland   -    -    -    -    -    -    -    -    -    - 
Netherlands   128,327    117,842    109,178    101,932    95,795    97,650    88,557    81,135    75,002    69,872 
Total Proved Developed Producing   2,985,382    2,376,595    2,006,414    1,753,530    1,567,786    2,136,968    1,690,450    1,418,904    1,234,146    1,099,151 
Proved Developed Non-Producing(2)(6)                                                  
Australia   -    -    -    -    -    -    -    -    -    - 
Canada   44,983    34,180    27,830    23,548    20,442    44,983    34,180    27,830    23,548    20,442 
France   15,689    12,380    10,326    8,898    7,827    10,291    7,908    6,437    5,424    4,674 
Ireland   -    -    -    -    -    -    -    -    -    - 
Netherlands   89,596    64,352    48,369    37,724    30,323    69,135    47,642    34,436    25,893    20,114 
Total Proved Developed Non-Producing   150,267    110,912    86,525    70,170    58,592    124,409    89,730    68,703    54,866    45,230 
Proved Undeveloped(2)(7)                                                  
Australia   -    -    -    -    -    -    -    -    -    - 
Canada   319,009    210,213    140,679    93,994    61,362    319,009    210,213    140,679    93,994    61,362 
France   64,858    40,470    28,264    20,767    15,710    42,539    24,830    16,000    10,680    7,183 
Ireland   568,171    388,065    263,654    175,714    112,306    568,171    388,065    263,654    175,714    112,306 
Netherlands   -    -    -    -    -    -    -    -    -    - 
Total Proved Undeveloped   952,038    638,748    432,597    290,475    189,378    929,719    623,108    420,333    280,388    180,851 
Proved(2)                                                  
Australia   839,270    736,208    656,026    592,341    540,804    395,196    345,463    306,882    276,336    251,697 
Canada   1,026,162    774,393    613,195    502,969    423,764    1,026,162    774,393    613,195    502,969    423,764 
France   1,436,161    1,045,395    835,114    703,496    612,764    1,034,782    759,169    608,637    513,485    447,480 
Ireland   568,171    388,065    263,654    175,714    112,306    568,171    388,065    263,654    175,714    112,306 
Netherlands   217,923    182,193    157,547    139,656    126,118    166,785    136,198    115,571    100,896    89,986 
Total Proved   4,087,687    3,126,255    2,525,536    2,114,175    1,815,757    3,191,096    2,403,288    1,907,939    1,569,400    1,325,233 
Probable(3)                                                  
Australia   309,824    215,620    156,662    118,330    92,485    137,528    94,817    68,080    50,740    39,099 
Canada   829,395    502,392    328,517    227,122    163,662    644,241    394,797    262,077    184,016    134,539 
France   901,599    511,090    336,881    242,553    184,809    591,453    329,010    211,860    148,683    110,307 
Ireland   120,336    82,228    58,108    42,299    31,604    120,336    82,228    58,108    42,299    31,604 
Netherlands   299,235    208,221    157,460    126,287    105,620    185,512    122,472    89,346    69,970    57,599 
Total Probable   2,460,389    1,519,551    1,037,627    756,590    578,180    1,679,070    1,023,324    689,471    495,708    373,148 
Proved Plus Probable(2)(3)                                                  
Australia   1,149,094    951,829    812,688    710,670    633,289    532,724    440,280    374,962    327,076    290,796 
Canada   1,855,558    1,276,785    941,711    730,091    587,426    1,670,403    1,169,190    875,272    686,985    558,303 
France   2,337,761    1,556,485    1,171,994    946,048    797,573    1,626,235    1,088,178    820,497    662,168    557,787 
Ireland   688,507    470,293    321,762    218,013    143,910    688,507    470,293    321,762    218,013    143,910 
Netherlands   517,158    390,414    315,007    265,943    231,738    352,298    258,670    204,917    170,866    147,585 
Total Proved Plus Probable   6,548,076    4,645,806    3,563,163    2,870,765    2,393,937    4,870,166    3,426,611    2,597,410    2,065,107    1,698,381 

 

Total Future Net Revenue (Undiscounted) Based on Forecast Prices and Costs(8)

 

(M$)  Revenue   Royalties  

Operating

Costs

  

Capital

Development

Costs

  

Abandonment

Costs

  

 Future Net

Revenue

Before

Income

Taxes

  

Future
Income

Taxes 

  

Future Net

Revenue

After

Income

Taxes

 
Proved(2)                                        
Australia   1,337,692    -    437,203    24,602    36,618    839,270    444,074    395,196 
Canada   2,628,213    364,823    867,576    335,511    34,140    1,026,162    -    1,026,162 
France   2,517,926    187,241    725,903    98,820    69,800    1,436,161    401,379    1,034,782 
Ireland   1,002,775    -    185,936    239,901    8,766    568,171    -    568,171 
Netherlands   352,826    -    110,522    11,532    12,850    217,923    51,137    166,785 
Total Proved   7,839,432    552,064    2,327,141    710,366    162,175    4,087,687    896,591    3,191,096 
Proved Plus Probable(2)(3)                                        
Australia   1,877,536    -    655,870    32,602    39,970    1,149,094    616,370    532,724 
Canada   4,707,012    666,874    1,463,176    675,286    46,117    1,855,558    185,154    1,670,403 
France   3,836,836    212,280    1,000,304    198,738    87,753    2,337,761    711,526    1,626,235 
Ireland   1,150,073    -    211,152    241,472    8,942    688,507    -    688,507 
Netherlands   731,337    -    175,111    24,372    14,696    517,158    164,860    352,298 
Total Proved Plus Probable   12,302,792    879,154    3,505,613    1,172,470    197,479    6,548,076    1,677,910    4,870,166 

 

15
 

 

Vermilion Energy Inc. AIF for the year ended December 31, 2011

 

Future Net Revenue by Production Group Based on Forecast Prices and Costs(8)

 

   Net Present Value of Future 
Net Revenue Before Income Taxes
(Discounted at 10% Per Year)
   Unit Value 
   (M$)   ($/boe) 
Proved(2)          
Light and medium oil   1,941,451    36.48 
Heavy oil   826    30.05 
Associated gas and non-associated gas   566,144    17.53 
Non-conventional oil and gas activities   17,114    4.38 
Total Proved   2,525,536    28.24 
Proved Plus Probable(2)(3)          
Light and medium oil   2,714,643    31.63 
Heavy oil   921    28.99 
Associated gas and non-associated gas   822,449    18.62 
Non-conventional oil and gas activities   25,150    4.63 
Total Proved Plus Probable   3,563,163    26.31 

 

Forecast Prices used in Estimates(8)

 

   Light and Medium Crude Oil   Crude Oil   Natural Gas  

Natural Gas

Netherlands

  

Natural Gas

Liquids

  

Inflation

Rate

  

Exchange

Rate

 
Year 

WTI
Cushing

Oklahoma

($US/bbl)

  

Edmonton

Par Price

40o API

($Cdn/bbl)

  

Cromer

Medium

29.3o API

($Cdn/bbl)

  

Brent Blend

FOB

North Sea

 ($US/bbl)

  

AECO

Gas Price

($Cdn/MMBtu)

  

TTF

Gas Price

($Cdn/Mcf)

  

FOB

Field Gate

($Cdn/bbl)

  

Percent

Per Year

   ($US/$Cdn) 
2011   94.83    95.15    87.57    110.63    3.68    9.52    77.15    2.0    1.012 
Forecast                                             
2012   97.00    97.96    90.12    105.00    3.49    10.06    80.98    2.0    0.980 
2013   100.00    101.02    92.94    105.00    4.13    10.23    82.50    2.0    0.980 
2014   100.00    101.02    91.93    102.00    4.59    10.41    81.49    2.0    0.980 
2015   100.00    101.02    91.93    100.00    5.05    10.71    81.49    2.0    0.980 
2016   100.00    101.02    91.93    100.00    5.51    10.71    81.49    2.0    0.980 
Thereafter   2.0%   2.0%   2.0%   2.0%   2.0%   2.0%   2.0%   2.0%   0.980 

* All prices above from GLJ except Netherlands 2011 which is Vermilion’s realized price.

 

Reconciliations of Changes in Reserves


The following tables set forth a reconciliation of the changes in Vermilion's company gross light and medium crude oil, associated and non-associated gas (combined) reserves as at December 31, 2011 against such reserves as at December 31, 2010 based on the forecast price and cost assumptions set forth in note 8 under the heading "Statement of Reserves Data and Other Oil and Gas Information - Future Net Revenue by Production Based on Forecast Prices and Costs".

 

16
 

 

Vermilion Energy Inc. AIF for the year ended December 31, 2011

 

Reconciliation of Company Gross Reserves by Principal Product Type - Based on Forecast Prices and Costs

 

AUSTRALIA  Total Oil   Light and Medium Oil   Heavy Oil   Natural Gas Liquids 
Proved (2) Probable (3) P+P (2)(3)
Factors
 

Proved

(Mbbl)

   Probable
(Mbbl)
  

Proved Plus

Probable

(Mbbl)

  

Proved

(Mbbl)

  

Probable

(Mbbl)

  

Proved Plus

Probable

(Mbbl)

  

Proved

(Mbbl)

  

Probable

(Mbbl)

  

Proved Plus

Probable

(Mbbl)

   Proved
(Mbbl)
  

 

Probable
(Mbbl)

   Proved Plus
Probable
(Mbbl)
 
At December 31, 2010   13,198    6,500    19,698    13,198    6,500    19,698    -    -    -    -    -    - 
Discoveries   -    -    -    -    -    -    -    -    -    -    -    - 
Extensions & Improved Recovery   100    (100)   -    100    (100)   -    -    -    -    -    -    - 
Technical Revisions   2,380    (1,600)   780    2,380    (1,600)   780    -    -    -    -    -    - 
Acquisitions   -    -    -    -    -    -    -    -    -    -    -    - 
Dispositions   -    -    -    -    -    -    -    -    -    -    -    - 
Economic Factors   -    -    -    -    -    -    -    -    -    -    -    - 
Production   (2,981)   -    (2,981)   (2,981)   -    (2,981)   -    -    -    -    -    - 
At December 31, 2011   12,697    4,800    17,497    12,697    4,800    17,497    -    -    -    -    -    - 

 

   Total Gas   Conventional Natural Gas   Coal Bed Methane   BOE 
Proved (2) Probable (3) P+P (2)(3)
Factors
 

Proved

(MMcf)

  

Probable

(MMcf)

  

Proved Plus

Probable

(MMcf)

  

Proved

(MMcf)

  

Probable

(MMcf)

  

Proved Plus

Probable

(MMcf)

  

Proved

(MMcf)

  

Probable

(MMcf)

  

Proved Plus

Probable

(MMcf)

   Proved
(Mboe)
  

 

Probable
(Mboe)

   Proved Plus
Probable
(Mboe)
 
At December 31, 2010   -    -    -    -    -    -    -    -    -    13,198    6,500    19,698 
Discoveries   -    -    -    -    -    -    -    -    -    -    -    - 
Extensions & Improved Recovery   -    -    -    -    -    -    -    -    -    100    (100)   - 
Technical Revisions   -    -    -    -    -    -    -    -    -    2,380    (1,600)   780 
Acquisitions   -    -    -    -    -    -    -    -    -    -    -    - 
Dispositions   -    -    -    -    -    -    -    -    -    -    -    - 
Economic Factors   -    -    -    -    -    -    -    -    -    -    -    - 
Production   -    -    -    -    -    -    -    -    -    (2,981)   -    (2,981)
At December 31, 2011   -    -    -    -    -    -    -    -    -    12,697    4,800    17,497 

 

CANADA  Total Oil   Light and Medium Oil   Heavy Oil   Natural Gas Liquids 
Proved (2) Probable (3) P+P (2)(3)
Factors
 

Proved

(Mbbl)

   Probable
(Mbbl)
  

Proved Plus

Probable

(Mbbl)

  

Proved

(Mbbl)

  

Probable

(Mbbl)

  

Proved Plus

Probable

(Mbbl)

  

Proved

(Mbbl)

  

Probable

(Mbbl)

  

Proved Plus

Probable

(Mbbl)

   Proved
(Mbbl)
  

 

Probable
(Mbbl)

   Proved Plus
Probable
(Mbbl)
 
At December 31, 2010   11,876    8,703    20,579    11,855    8,701    20,556    21    2    23    3,614    1,684    5,298 
Discoveries   -    -    -    -    -    -    -    -    -    -    -    - 
Extensions & Improved Recovery   5,960    5,394    11,354    5,960    5,394    11,354    -    -    -    317    220    537 
Technical Revisions   (18)   23    5    (22)   22    -    4    1    5    (100)   (242)   (341)
Acquisitions   -    -    -    -    -    -    -    -    -    -    -    - 
Dispositions   (130)   (82)   (212)   (130)   (82)   (212)   -    -    -    -    -    - 
Economic Factors   -    -    -    -    -    -    -    -    -    -    -    - 
Production   (1,716)   -    (1,716)   (1,710)   -    (1,710)   (6)   -    (6)   (473)   -    (473)
At December 31, 2011   15,972    14,038    30,010    15,953    14,035    29,988    19    3    22    3,358    1,662    5,020 

 

   Total Gas   Conventional Natural Gas   Coal Bed Methane   BOE 
Proved (2) Probable (3) P+P (2)(3)
Factors
 

Proved

(MMcf)

  

Probable

(MMcf)

  

Proved Plus

Probable

(MMcf)

  

Proved

(MMcf)

  

Probable

(MMcf)

  

Proved Plus

Probable

(MMcf)

  

Proved

(MMcf)

  

Probable

(MMcf)

  

Proved Plus

Probable

(MMcf)

   Proved
(Mboe)
  

 

Probable
(Mboe)

   Proved Plus
Probable
(Mboe)
 
At December 31, 2010   114,766    49,826    164,592    83,950    37,717    121,667    30,816    12,109    42,925    34,618    18,691    53,309 
Discoveries   -    -    -    -    -    -    -    -    -    -    -    - 
Extensions & Improved Recovery   12,140    9,353    21,493    12,140    9,353    21,493    -    -    -    8,301    7,172    15,473 
Technical Revisions   8,888    1,576    10,464    10,706    2,759    13,464    (1,818)   (1,183)   (3,001)   1,363    45    1,408 
Acquisitions   -    -    -    -    -    -    -    -    -    -    -    - 
Dispositions   -    -    -    -    -    -    -    -    -    (130)   (82)   (212)
Economic Factors   (3,550)   (2,230)   (5,780)   (1,600)   (1,065)   (2,665)   (1,950)   (1,165)   (3,115)   (592)   (371)   (963)
Production   (15,833)   -    (15,833)   (13,702)   -    (13,702)   (2,131)   -    (2,131)   (4,828)   -    (4,828)
At December 31, 2011   116,411    58,525    174,936    91,494    48,764    140,257    24,918    9,761    34,679    38,732    25,455    64,187 

 

17
 

 

Vermilion Energy Inc. AIF for the year ended December 31, 2011

 

FRANCE  Total Oil   Light and Medium Oil   Heavy Oil   Natural Gas Liquids 
Proved (2) Probable (3) P+P (2)(3)
Factors
 

Proved

(Mbbl)

   Probable
(Mbbl)
  

Proved Plus

Probable

(Mbbl)

  

Proved

(Mbbl)

  

Probable

(Mbbl)

  

Proved Plus

Probable

(Mbbl)

  

Proved

(Mbbl)

  

Probable

(Mbbl)

  

Proved Plus

Probable

(Mbbl)

   Proved
(Mbbl)
  

 

Probable
(Mbbl)

   Proved Plus
Probable
(Mbbl)
 
At December 31, 2010   26,310    12,992    39,302    26,310    12,992    39,302    -    -    -    -    -    - 
Discoveries   -    -    -    -    -    -    -    -    -    -    -    - 
Extensions & Improved Recovery   243    241    484    243    241    484    -    -    -    -    -    - 
Technical Revisions   534    (1,432)   (898)   534    (1,432)   (898)   -    -    -    -    -    - 
Acquisitions   -    -    -    -    -    -    -    -    -    -    -    - 
Dispositions   -    -    -    -    -    -    -    -    -    -    -    - 
Economic Factors   -    -    -    -    -    -    -    -    -    -    -    - 
Production   (2,960)   -    (2,960)   (2,960)   -    (2,960)   -    -    -    -    -    - 
At December 31, 2011   24,127    11,801    35,928    24,127    11,801    35,928    -    -    -    -    -    - 

 

   Total Gas   Conventional Natural Gas   Coal Bed Methane   BOE 
Proved (2) Probable (3) P+P (2)(3)
Factors
 

Proved

(MMcf)

  

Probable

(MMcf)

  

Proved Plus

Probable

(MMcf)

  

Proved

(MMcf)

  

Probable

(MMcf)

  

Proved Plus

Probable

(MMcf)

  

Proved

(MMcf)

  

Probable

(MMcf)

  

Proved Plus

Probable

(MMcf)

   Proved
(Mboe)
  

 

Probable
(Mboe)

   Proved Plus
Probable
(Mboe)
 
At December 31, 2010   2,481    74    2,555    2,481    74    2,555    -    -    -    26,724    13,004    39,728 
Discoveries   -    -    -    -    -    -    -    -    -    -    -    - 
Extensions & Improved Recovery   -    -    -    -    -    -    -    -    -    243    241    484 
Technical Revisions   (1,537)   (55)   (1,592)   (1,537)   (55)   (1,592)   -    -    -    277    (1,441)   (1,164)
Acquisitions   -    -    -    -    -    -    -    -    -    -    -    - 
Dispositions   -    -    -    -    -    -    -    -    -    -    -    - 
Economic Factors   -    -    -    -    -    -    -    -    -    -    -    - 
Production   (348)   -    (348)   (348)   -    (348)   -    -    -    (3,018)   -    (3,018)
At December 31, 2011   596    19    615    596    19    615    -    -    -    24,226    11,804    36,030 

 

IRELAND  Total Oil   Light and Medium Oil   Heavy Oil   Natural Gas Liquids 
Proved (2) Probable (3) P+P (2)(3)
Factors
 

Proved

(Mbbl)

   Probable
(Mbbl)
  

Proved Plus

Probable

(Mbbl)

  

Proved

(Mbbl)

  

Probable

(Mbbl)

  

Proved Plus

Probable

(Mbbl)

  

Proved

(Mbbl)

  

Probable

(Mbbl)

  

Proved Plus

Probable

(Mbbl)

   Proved
(Mbbl)
  

 

Probable
(Mbbl)

   Proved Plus
Probable
(Mbbl)
 
At December 31, 2010   -    -    -    -    -    -    -    -    -    -    -    - 
Discoveries   -    -    -    -    -    -    -    -    -    -    -    - 
Extensions & Improved Recovery   -    -    -    -    -    -    -    -    -    -    -    - 
Technical Revisions   -    -    -    -    -    -    -    -    -    -    -    - 
Acquisitions   -    -    -    -    -    -    -    -    -    -    -    - 
Dispositions   -    -    -    -    -    -    -    -    -    -    -    - 
Economic Factors   -    -    -    -    -    -    -    -    -    -    -    - 
Production   -    -    -    -    -    -    -    -    -    -    -    - 
At December 31, 2011   -    -    -    -    -    -    -    -    -    -    -    - 

 

   Total Gas   Conventional Natural Gas   Coal Bed Methane   BOE 
Proved (2) Probable (3) P+P (2)(3)
Factors
 

Proved

(MMcf)

  

Probable

(MMcf)

  

Proved Plus

Probable

(MMcf)

  

Proved

(MMcf)

  

Probable

(MMcf)

  

Proved Plus

Probable

(MMcf)

  

Proved

(MMcf)

  

Probable

(MMcf)

  

Proved Plus

Probable

(MMcf)

   Proved
(Mboe)
  

 

Probable
(Mboe)

   Proved Plus
Probable
(Mboe)
 
At December 31, 2010   91,997    12,965    104,962    91,997    12,965    104,962    -    -    -    15,333    2,161    17,494 
Discoveries   -    -    -    -    -    -    -    -    -    -    -    - 
Extensions & Improved Recovery   -    -    -    -    -    -    -    -    -    -    -    - 
Technical Revisions   (6)   3    (3)   (6)   3    (3)   -    -    -    (1)   -    (1)
Acquisitions   -    -    -    -    -    -    -    -    -    -    -    - 
Dispositions   -    -    -    -    -    -    -    -    -    -    -    - 
Economic Factors   -    -    -    -    -    -    -    -    -    -    -    - 
Production   -    -    -    -    -    -    -    -    -    -    -    - 
At December 31, 2011   91,991    12,968    104,959    91,991    12,968    104,959    -    -    -    15,332    2,161    17,493 

 

18
 

 

Vermilion Energy Inc. AIF for the year ended December 31, 2011

 

NETHERLANDS  Total Oil   Light and Medium Oil   Heavy Oil   Natural Gas Liquids 
Proved (2) Probable (3) P+P (2)(3)
Factors
 

Proved

(Mbbl)

   Probable
(Mbbl)
  

Proved Plus

Probable

(Mbbl)

  

Proved

(Mbbl)

  

Probable

(Mbbl)

  

Proved Plus

Probable

(Mbbl)

  

Proved

(Mbbl)

  

Probable

(Mbbl)

  

Proved Plus

Probable

(Mbbl)

   Proved
(Mbbl)
  

 

Probable
(Mbbl)

   Proved Plus
Probable
(Mbbl)
 
At December 31, 2010   -    -    -    -    -    -    -    -    -    56    48    104 
Discoveries   -    -    -    -    -    -    -    -    -    1    1    1 
Extensions & Improved Recovery   -    -    -    -    -    -    -    -    -    -    -    - 
Technical Revisions   -    -    -    -    -    -    -    -    -    16    7    23 
Acquisitions   -    -    -    -    -    -    -    -    -    -    -    - 
Dispositions   -    -    -    -    -    -    -    -    -    -    -    - 
Economic Factors   -    -    -    -    -    -    -    -    -    -    -    - 
Production   -    -    -    -    -    -    -    -    -    (21)   -    (21)
At December 31, 2011                                                51    56    107 

 

   Total Gas   Conventional Natural Gas   Coal Bed Methane   BOE 
Proved (2) Probable (3) P+P (2)(3)
Factors
 

Proved

(MMcf)

  

Probable

(MMcf)

  

Proved Plus

Probable

(MMcf)

  

Proved

(MMcf)

  

Probable

(MMcf)

  

Proved Plus

Probable

(MMcf)

  

Proved

(MMcf)

  

Probable

(MMcf)

  

Proved Plus

Probable

(MMcf)