Good morning. My name is Sherine and I will be your conference operator today. At this time, I would like to welcome everyone to Vermilion Energy Inc. Fourth Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Anthony Marino, President and CEO, you may begin your conference.

Thank you, Sherine. Good morning ladies and gentlemen, thank you for joining us. I'm Tony Marino, President and CEO of Vermilion Energy. With me today are Curtis Hicks, Executive Vice President and CFO; Mike Kaluza, Executive Vice President and COO; and Kyle Preston, our Director of Investor Relations. I would first like to refer to the advisory on forward-looking statements contained in today’s news release. These advisories describe the forward-looking information, non-GAAP measures, and oil and gas terms referred to today and outline the risk factors and assumptions relevant to this discussion. During this call, I’ll provide you with an overview of our fourth quarter and full year 2017 financial and operating results and our 2017 year end reserves and resource information, which was announced with our Q4 results this morning. Vermilion's Q4 production increased 8% from the prior quarter to an average of 72,821 boe/d. This increase was primarily driven by growth in Canada and the Netherlands, and the resumption of operations at Corrib, following unplanned downtime last September and early October as previously announced. Q4 production was partially restrained by cold weather in Canada late in the year, a force majeure event on a third-party gas gathering system in our Turner Sands play in Wyoming, and minor maintenance activities in Germany and Australia. Our annual 2017 production volumes increased by 7% or 3% on a per share basis to 68,021 boe/d at the lower end of our revised guidance range of 68,000 to 69,000 boe/d. As you recall we reduced our full year production guidance by 1,000 boe/d at the time of our Q3 release due to the unplanned downtime at Corrib. FFO in Q4, 2017, was $181 million or $1.49 per share, representing an increase of 38% from the previous quarter as a result of higher sales…

[Operator Instructions] Your first question comes from Dennis Fong from Canaccord Genuity. Your line is open.

Hi, good morning, guys. So just with this first well in the Hungary, given some of the relative successful tests, how should we think about the potential acceleration of CapEx in the country or is it maybe a little bit premature? And then secondly, how many wells you have committed via this license agreement that you have as well? Thank you.

Okay, Dennis, thank you for the question. We are really happy with the successful test that we had in Hungary. It will -- we believe generate production a couple of years earlier than we anticipated production beginning for the central and eastern Europe business unit. We have remaining - and answer to the second part of your question, we have remaining on Battonya South one well commitment, probably that well would get drilled in 2019. As part of the acceleration of activity, in Hungary or in the rest of the CEV, we have a lot of good prospects, I feel, in each of these countries. We have this type of gas drilling that we just announced in Hungary, available to us, and again at least one more well on Battonya South. We just, last summer, shot a 3D in Slovakia. This is a place that had very well seismic coverage, really just a few lines of 2D, some discoveries had been made on that very sparse 3D few decades ago, some were tied in, some tested at quite reasonable rates and we are not tied in. And so we felt there was a great deal of potential there as has been observed many times in the past across the world. To shoot a 3D in a place that prior only had 2D, and as I will point out, it was very sparse to the degree than previously in Slovakia. Typically when you do that in a place where it has been success on 2D, 3D before, you can find a lot of new prospects on 3D, and I am very-very optimistic about that program. It’s primarily a relatively Shell gas program most of the targets in 500 meter to 1,200 meter range. We do think from the very preliminary 3D…

Okay, perfect, thank you very much.

Your next question comes from Tom Callaghan from RBC Capital Markets. Your line is open.

Hey, good morning guys. Just wanted to inquire on cash taxes there and specifically any color you may be able to provide around 2018 in terms of what you're expecting?

Sure, Tom. So for 2017, what happened in Q4, there was an administrative change in the Netherlands with respect to how we deal with ARO deductions and we are able in the Netherlands and in France to deduct future ARO on a unit of production basis. So we were able to -- there's a one-time acceleration that happened in Q4. It was about a $10 million positive impact to Vermilion. So that resulted in frankly in a claw back in taxes in Q4. So if we look out to '18, we see some modest increase in tax rates in France, from about 7% in '17 to sort of 10% to 13% in '18, in Australia, a modest increase from about 26% in '17 to sort of 30 to 32% range in '18. And then we see a big impact in the Netherlands. We had a negative tax rate this year because of the ARO deduction and that you know we're going to go 25% to 28% tax rate in '18. And that's a function of two things, the ARO impact that doesn't happen again in '18, but also we've had a significant shift in our production profile in the Netherlands. As we previously discussed, we had some regulatory issues that we dealt with this year, and as a result our production was held back. We see good production gains in 2018. And frankly that's going to be all taxed at the marginal rate because all of our shelter will have been used up with sort of the base production. So those are the two key considerations for why taxes are going up in the Netherlands in 2018. So overall, on a corporate basis, we were just around 5% this year on a cash-taxes basis, and we're going to go from about 11% to 14% range in 2018.

Perfect. Thank you very much.

Yes, you bet.

[Operator Instructions] Your next question comes from Patrick O'Rourke from O'Rourke Capital. Your line is open.

Thanks guys and congratulations on the retirement of Curtis. I'm going to miss you on the call here and thinking on about. Just a couple of quick questions, took a field mine on Hungary, but just curious in terms of specific well costs there, and then in terms of market access for that gas, would you be modeling that as - I know, it's pretty interconnected in Europe. Is that TTF type or German type pricing there?

Patrick, thanks for the question. For that well, probably typical work as the type of drilling we're doing in Hungary now. The cost would be about €2.6 million for the DCET to get it away from drilling to tie in, putting it around CAD 4 million. So they are pretty inexpensive wells for the potential production that is available. The price there is based on TCF, the European market really what the exception maybe if the Iberian Peninsula is very well interconnected. And, so with very minor basis between these various delivery points, the pricing is close to that TTF price. And the European market is one that continues to be very strong; in fact, there have been some very high gas price spikes very recently over the past week to some extraordinarily high levels due to very cold weather on the continent and in some cases due to lower production. So we expect it to continue to be a strong market, it’s a good market to hedge into and it’s a key part of our strategy.

Okay, great. And then just a second question, in terms of the Saskatchewan acquisition that you guys did, looking out there, are there rollup opportunities in the similar sort of size and nature available out there that you will be looking at it as just an asset you want to continue to grow or just strategically how you're looking at it at this point?

Well, I mean, the Saskatchewan in general and southeast Saska, specifically are excellent places to produce. You got good regulation, you have very low provincial loyalties, a lot of incentives to produce, you've got a great work force there, so it’s a desirable area from most perspectives. The light oil, which is by far the dominant product, there is just a little bit of gas, no heavy oil. The light oil in southeast Saska growing at a very high price. It's downstream of any auto mix, so it’s not subject to some of the other proms you get with, for example, WCS pricing in Canada. All these things make the region desirable. It is our next to west-central Alberta. It’s our other core area in Canada. It’s a place that we can very effectively execute our growth and free cash flow model. So we're very happy with the acquisition that we made of that little bit over 1,000 day barrels of very high netback oil that we closed in February. As with our other core areas in Canada and throughout the world, we are open to adding to those positions. We feel that we conduct our M&A activities, evaluation bidding, potentially closing transactions in a very disciplined fashion. So every deal that we would make has to test and has to pass the same set of tests. We don’t use an optimistic price aspect. We use the backward aided strip to evaluate. And then with that, we have the great fuel accretion for our owners, not out of leverage, but out of a real accretion assuming in these evaluations that we would have used all equity to finance. And this rate of return, well in excess of our cost of capital under that backward aided strip and it has to be capable of generating sufficient cash flow to cover its own CapEx stream to grow in any - and its share of any imputed dividends under the strip again. So these are very difficult tests for any asset to meet and they’re intended to ensure that when we make a deal, it adds to the value of the company for the existing owners. So, southeast Saska additions any further additions to the portfolio would be the same as anywhere else in the world. They have to meet those tests and it’s not a very easy set of criteria to meet. Therefore, we are open to it, but I wouldn’t call it likely that we continue to acquire in any particular area. I think it will happen over time. We can’t predict exactly when it would occur, but there’s nothing intending. And the main thing I want to leave you with is that if we were to make another deal there or in any other region, we’d be very confident that it’s adding to the sustainability of our model and to the value of the company for the existing shareholders.

Okay. And final question just very quickly before I hang up and listen here. In terms of Irish, the core of asset performance, I know, natural onset declined. We're sort of expected here in the first part of 2018. Just any change in that view or how the assets performing right now?

We have no change in that view. The core that's performing as we expected, at this point, it outperformed right up to the end of the year, having a significantly longer plateau at the midpoint than our midpoint expectation. And from here, we expect a decline rate that is in line with our previous forecast.

Okay. Thanks for that.

[Operator Instructions] We do not have any questions over the phone line at this time. I will turn the call over to the presenters.

Thank you again for participating in our Q4 and year end conference call. As a reminder, our 2018 AGM presentation will preempt our Q1 2018 conference call. We therefore look forward to speaking with you again after our Q2 2018 release in July.

This concludes today’s conference call. You may now disconnect.