Vermilion Energy (VET) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of Westbrick Energy for $1.075 billion expands Deep Basin footprint, adding 50,000 BOE/day production, 770,000 net acres, and valuable infrastructure, supporting production for 15+ years and enhancing operational scale and margins.

• Enhances scale in liquids-rich natural gas, complements high-growth Montney asset and global gas portfolio, and supports high-grading initiative.

• Increases 2P reserves by 60% to 690 million BOE and provides over 700 net future drilling locations.

• Strengthens position as a top Deep Basin producer and enhances portfolio focus on Canadian and high-margin European gas.

• Refocused portfolio with premium-priced international commodity exposure and balanced North American and international operations.

Financial terms and conditions

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

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

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

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

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

Synergies and expected cost savings

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

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

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

• Interconnected infrastructure enables production optimization and lower operating costs.

• Synergies are expected to be realized over time but are not included in the current economic evaluation.