Good morning, afternoon, evening. My name is Paula, and I will be your conference operator today. At this time, I would like to welcome everyone to the Vermilion Energy 2021 Year-End Earnings Conference Call. Today's call is being recorded. [Operator Instructions] Thank you. Mr. Dion Hatcher, you may begin your conference.

Good morning, ladies and gentlemen. Thank you for joining us. I'm Dion Hatcher, President of Vermilion Energy. With me today are Lars Glemser, Vice President and CFO; Darcy Kerwin, Vice President, International and HSE; Bryce Kremnica, Vice President, North America; Jenson Tan, Vice President, Business Development; and Kyle Preston, Vice President of Investor Relations. We will be referencing a PowerPoint presentation to discuss the Q4 2021 and year-end results we announced this morning. Presentation can be found on our website under Invest with Us and Events and Presentations. Please refer to our advisory on forward-looking statements at the end of the presentation. It describes the forward-looking information, non-GAAP measures and oil and gas terms used today, and outlines the risk factors and assumptions relevant to this discussion. Before I begin the formal part of the presentation, I would like to start off with a comment on the current situation in Ukraine. Invasion in Ukraine by Russia is causing great hardship and tragic outcomes for the Ukrainian people. All of us at Vermilion are saddened by these tragic events. Our hearts, thoughts and prayers are with the Ukrainian people, and our hope is that a negotiated settlement can be achieved quickly. In the near future, Vermilion will be making a donation to support the Ukrainian people. Now I will resume the formal part of the call on Slide 2, with a summary of our Q4 2021 results. We generated record fund flow from operations of $322 million in Q4, which was mainly driven by strong commodity prices. All of the global benchmarks that we have exposure to, increased in the fourth quarter. European natural gas prices were exceptionally strong, increasing approximately 88% compared to the previous quarter. The TPS benchmark averaged approximately CAD 39 per mmbtu during the fourth quarter and…

[Operator Instructions] We'll take our first question from Patrick O'Rourke with ATB Capital Markets. Patrick O’Rourke: Just a few questions for you here this morning. First one is with respect to cash taxability of the business. I know Ireland, for example, is an asset where we never thought it would hit cash taxability. But I don't think we really -- anyone envision sort of prices and netbacks that you're realizing there. I know you do have in and around pre the acquisition here, about $1 billion in capital loss pools. But maybe could you give us the outlook in terms of cash taxability for the business over the next few years? I know it's jurisdictionally complicated.

Thanks, Patrick. I'll pass it over to Lars to talk about that.

Patrick, thanks for the question. In terms of 2022 cash taxability, the way to think about it is a range of approximately 9% to 11% for full year 2022. That includes the pro forma impact of the Corrib acquisition for the full year. We are not forecasting to be cash taxable in Ireland just because of the vast investments that were made historically. In terms of go forward, I think that's an appropriate cash tax range to think about things. Obviously, things are very fluid right now with strip pricing, but that's a good range to think about it in terms of the next few years here. Patrick O’Rourke: Okay. And then in terms of the outlook and the ability from a regulatory, from an operational and a geological perspective, is there any ability to accelerate operations in the Netherlands to kind of cash in on the strong pricing that you're seeing in Europe right now? Or is it going to kind of be steady state? I know that, historically, permitting has been a little bit slower than I think you have hoped for, and obviously a little bit different than we see here in Canada and North America. But is there any ability to accelerate or increase that production in the near term?

Well, thanks, Patrick. And this is Dion. I'll take this one. I mean, those discussions, I think, were occurring before the current situation. We work closely with regulatory bodies and work through the established, well-established permitting process. If you look at our plans for the near term, we've got 2 wells planned for Netherlands in the midyear, and we like that area. There's some additional targets out of those wellbores as well as it's an area we've had some success with some larger discoveries. And then we've got 3 wells that are in the later stages of permitting, which we would hope to drill in the first half of 2023. As a reminder, in CEE, we do have the 2 wells there that tested at 15 million and 17 million a day, and we're working to get that infrastructure in place. We've shot 3 seismic there, and we plan to drill 2 more wells on that permit, which is to follow up on those successful gas wells. So I think the conversation continues to evolve. It's quite fluid right now, but security of supply is something that is prevalent. And I think these discussions will continue as we go forward. So no near-term changes that I can speak to, but I think the conversations and, again, the need for security supply are likely going to increase in the upcoming weeks and months. Patrick O’Rourke: Okay. And then a final question here, and then I'll hang up and listen. But in terms of the return of capital mechanism, I think you guys had some really good metrics and disclosure here about pro forma where the balance sheet gets to by the end of this year. Payout ratio on that dividend is pretty small. Can you maybe give us your thoughts on how you're thinking of potential return of capital mechanism? Whether it be dividend increases, how the kind of trajectory and cadence of that would look and/or special or variable dividends or buybacks?

I'll pass this one to Lars, again.

Yes. Patrick, Lars here, again. And just a bit of background as well in terms of why our priorities are in the order that they are. The priority today is to continue allocating free cash flow beyond that base dividend to debt reduction. And that will be until we reach that next debt target of $1.2 billion. That debt target is fully burdened with the acquisitions that we announced in 2021. We did in excess of $700 million of acquisitions while we deleveraging, and we did that without issuing any shares. And I think that's something with hindsight now that was very key to our success in 2021, and we want to continue on that and make sure that we're in a position to be opportunistic when compelling acquisitions are available. Now as we get to that $1.2 billion target, we will look to augment the return of capital to shareholders. Right now, what we're contemplating are increases to the fixed dividend. To put it into perspective, a 10% increase to that dividend would equate to about $4 million per annum of increased dividend. And then I think when we want to return capital beyond that, we'll look at some of the variable structures. At this point, share buybacks are screening very high in terms of what that next mechanism would be just based on the valuation that we're seeing here. So I think that as we have line of sight to that $1.2 billion target second half of this year, you can look to us to augment that return of capital through those methods.

And moving on, we'll go to Greg Pardy with RBC Capital Markets.

So I wanted -- well, I guess the first thing I should be doing is just wishing absolute best wishes to Lorenzo in his next adventure. So it's been great to work with him. But, Dion, you've talked about security and supply. I guess, question is, have you already been approached either by politicians or regulators or what have you, because you're, again, one of the very few onshore gas players in Europe in terms of either -- not so much in terms of accelerating activity, but even being incentivized to start to grow production? Or do you think it's too early with where we sit today for those types of messages to be sent?

Thanks, Greg, for the question. I think it's too early. I mean the situation is very, very fluid. And so at this point, our plan is to work on our inventory. We're actually adding some staff in the Netherlands unit to further enhance our technical capabilities, which are already strong, but it's just too early. And so we're ready and prepared for those discussions when they do occur. And again, no easy answers here, unfortunately, given the current situation.

Okay. Okay. And then just 2 quick ones. I just want to make sure I heard Lars correctly then. So when you hit the $1.2 billion, are you going to look to increase the dividend and then go to a share buyback? Or is everything on the table at the same time? I just want to make sure I got it straight.

Yes. I would say at that point, Greg, everything is on the table. The one thing that we are going to do with the fixed dividend is maintain a sense of discipline there in terms of not exceeding 5% to 10% of cash flows at that mid-cycle price deck. So we think that, that's going to instill a level of discipline. And then when there is capital to return above and beyond that, that's when we would look at some of the variable structures. And right now, we feel that buybacks would scream the highest of those opportunities.

Okay. Okay. Great. And the last question for me is, it's a small chunk of production, but what is the profile, what does the production profile look like with Australia? You mentioned the planned turnaround in the fourth quarter and so forth. But how does that -- how does that production look shape wise over the course of this year?

I'll just talk a little bit to our corporate first, and I can pass it over to Darcy to talk about ABU. I mentioned earlier, those Mannville wells, we did get a good jump on the North American program in which we kicked off the 14 drills and 9 completions last year, so that allowed us to bring those wells on early in Q1. So I think what you're going to see, from a North American point of view, some good production there. Internationally, we did have strong production on that Netherlands Nijega well as well as strong run rates in Ireland, and finally, the Australia. We do budget for cyclones there, and we haven't seen that to date. So I think Q1 is trending well, Greg. As a reminder, we do schedule a lot of our planned turnaround activity in Q2 and to some degree in Q3. So I think you'll see us on the upper end of the range in Q1 and potentially on the lower end range in Q2 just with those planned activities that we want to do outside of the weather season to get those done. In the second half of the year before I pass it to Darcy, I think what you'll see is with our U.S. program kicking off in April, that's really a second half volume. Sas kicks off June 1. So again, second half volume and then these Australia wells, which are very impactful wells that typically in excess of 1,500 BOEs a day, again, that volume would contribute in the second half of the year. But with that, I'll pass it over to Darcy to talk about the ABU profile.

So, Greg, as you know, we have planned a 2-well drilling program in Australia this year. We've got a jack-up rig contracted for that program. That rig will mobilize from [Indiscernible], which is the closest port to our Wandoo facility. So we're first in line for that rig. The cyclone season in Australia kind of runs out to March, end of March. And as soon as we get past that kind of cycle and season and see a good weather window, we'll mobilize that rig out to the field to kick off that drilling program. So that would mean first production from those wells coming on kind of early Q2 right there -- sorry, late Q2, the kind of June, end of June in our summer. Like Don said, they're high-grade great wells. We hope those wells will be capable of producing kind of over 1,500 barrels a day IPs, and we'll restrict that to optimize our crude marketing agreements and then that program has quite robust economics. So you can expect to see the Australian production kind of ramp up towards the second half of the year.

And just a reminder, that crude is we're actually -- the premium has actually increased to $14. It's been a good market for us. With that, we'll open it up to the next question.

[Operator Instructions] Next, we'll go to Menno Hulshof with TD Securities.

I might have misheard this, but I thought I heard you say that you did a $95 per mmbtu gas swap. Can you just -- if I heard that correctly, can you just elaborate on how that was structured and whether you're seeing other opportunities to strike those sorts of deals?

No, you heard that correct, Menno. We did layer in a $90-plus hedge for the summer. But I'm going to maybe pass it over to Lars. We've been doing a lot of work on this. We have a plan in place, but Lars can elaborate a little more on our strategy with respect to these volatility and, obviously, high prices we're seeing Europe right now.

Yes. So Menno, just to recap as well. We're about 55% hedged for European gas full year 2022. What we did as an executive team and then a subset of that is we met about a month ago to ensure that we were ready to be prepared for any kind of volatility in that European gas market. What we have concluded internally is we would be comfortable going up to a 75% hedge position on European gas. So the transaction that Dion alluded to was a piece of that. What we're looking to do is not be overly speculative in terms of trying to time the top of the market. But what we would like to do is layer in with some hedges that we are comfortable with that align with what we want to achieve from a financial priority perspective. So the summer '22 hedge at CAD 95 mmbtu, that was done as an outright swap and is part of the execution of that strategy.

Terrific. That's super helpful. And I'll just pivot over to Hungary and Slovakia since they bump right up against the Ukraine. Can you just remind us of your work commitments for this region? I'm pretty sure you're not doing a whole lot this year, but maybe over the next several years, and I think they're pretty small, but if you could confirm that, that would be great. And then more generally, how are you thinking about managing geopolitical risk for that part of the portfolio?

Sorry, Menno, I might have missed the last part of the question. How do you plan to --

Yes, how are you thinking about managing geopolitical risk for Hungary and Slovakia specifically?

Thank you. Okay. For our CEE business unit, if you look at our activities planned for 2022, I'll start with Croatia. We have the 2 wells that we plan to drill and follow up to you, those mentioned earlier where we tested 2 wells at 15 million and 17 million a day. Our activities in well are focused on the gas plant, which is physically moved to Croatia, and we're doing the necessary permitting and regulatory work to -- just to get that installed and bring it online in 2022. So from a Croatia point of view, that's proceeding. Our Hungary plans, we've got 3 wells planned, 2 of them are in a permit what we call Kadarkút, which is an oil play. We've shot 3D seismic over that region. We're north of a 10,000 barrel a day production that's on trend with us. So we like the prospectivity of those 2 wells. In addition, we have 1 well in which we plan to test a shallow gas concept. So relatively cheap just over $1 million, but it's something that works, and we think it will, but there's always some risk with these type of wells. But if it works, again, we would see some running rate for that as an opportunity to bring more European gas into the portfolio. So the future years, if you look to '23, '24 onward, I think it will be partially contingent on our results this year. But again, we're quite excited with the prospectivity of what we see, especially in light of the additional 3D seismic work that we did. Maybe, Darcy, do you want to comment on the geopolitical risk and any potential impact on our business?

Yes, sure. Thanks, Dion. Menno, as you correctly stated, both Hungary and Slovakia share borders with the Ukraine, we don't really have any activities planned in Slovakia in the near term, Hungary, we got a couple of wells planned this year. I would say -- I'd point out that, Hungary, where we do have some activity planned is a NATO country. I think the kind of noise that’s coming from that country today is that they are aligned with the rest of Europe on condemning the actions of Russia. So I think the geopolitical risk of this overspilling into Hungary probably no different than any other NATO country today. We do hear a bit of a humanitarian crisis at the border of -- all the Ukrainian borders, including Hungary, but I don't see that that has really any impact to our current small operations in Hungary, with 1 gas flow there that's producing at small rate, so I don't really see any issues for us. Something we'll have to continue to monitor though as we move through the year and as the situation continues to evolve.

Moving on. We'll go to Josef Schachter with Schachter Energy Research.

First one I wanted to ask was about Ukraine. You were doing some work there. Did you have employees in country, either expats or locals? And have you been able to get them out of the country if you did have any working for you?

We -- just to clarify, we do not have operations in Ukraine. We did have a permit there at one point, and we relinquished it quite a while ago. So no lands, no permits and no staff in Ukraine.

Okay, super. The second question for me. France, with the operations you have there, you've talked about some of the other countries and that will take some time for them to realize they need to speed up any potential for domestic increases. Are there any big upsides in terms of your operations in France that could be reactivated or move forward if Biden and NATO decide to cut off exports from Russia of oil and products going forward?

Thanks, Josef. I would say not at this time. I mean we continue to meet frequently with our -- again, like all the jurisdictions which we operate in. But at this point, there's been no plans to further enhance development. 2040 is a long way out, and so we have, we believe, sufficient time to produce those reserves, and we have some opportunities to drill. Our focus right now has been on workovers, waterflood management. It's a very low decline asset for us and generates significant free cash flow. So at this point, that's the role play in our portfolio. As we every year go through the budgeting process, we would look to allocate capital to our highest rate of return projects fundamentally. And so France will be one of those considerations. But at this point, no changes to the plans instated by those governments with respect to 2040.

And one last one, if I can. Corrib in Ireland, is there a land in the area that you've done seismic on, that potentially might give you some potential for more drilling and extension of the life of the project?

Yes. Thanks, Josef. It's Darcy here. I'll take your question. So in Corrib, I'll start with the existing assets. We do see and are working on some optimization potential within the existing Corrib field both with the gas plant part of the assets or looking at compression optimization, trying to lower the inlet pressure to that plant to be able to extend the field life there. We also see some workover opportunities within that field that the team is currently looking at, some potential by patch pay and a couple of the wells that we would look to activate again we think extending the life of that field. Thirdly, this is something that's a little bit further out, but the team will be looking at it is, within our existing Corrib acreage, there are some other targets that have some seismic that we will look at. And again, the idea there would be to extend the life and the increase of production from that field. And then, finally, there's some acreage around us that's owned by other operators that if they have success, could potentially tie in and then further extend the life of the infrastructure there.

And that does conclude the question-and-answer session. I'd like to turn it back to the presenters for any additional or closing comments.

Well, I want to thank everyone for participating in our Q4 '21 results conference call. And with that, i will just -- enjoy the rest of your day.

Thank you. And that does conclude today's call. We'd like to thank everyone for their participation. You may now disconnect.