Strong European gas prices boost Vermilion Energy in 2022
Exposure to strong European natural gas prices pushed Canada’s Vermilion Energy to improved financial results in 2022, with fund flows from operations and free cash flow both reaching record highs and net earnings up 14% from 2021.
“Our exposure to global commodity prices is a key driver of our strong financial results and remains a strategic advantage for Vermilion,” it said. “European gas prices were particularly strong in 2022, averaging nearly $50/mn Btu (at the Dutch Title Transfer Facility) for the year and reaching over $120/mn Btu (TTF) during the summer.”
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Although prices at the TTF have moderated recently, forward prices for the balance of this year and through 2024 remain at about $20/mn Btu, six to seven times forward Canadian AECO prices and four to five times higher than forward NYMEX prices.
Vermilion’s average realised AECO price increased to C$5.25/’000 ft3 in 2022 from C$3.62/’000 ft3 in 2021, while its average realised TTF price jumped to C$48.35/’000 ft3 from C$19.86/’000 ft3.
Net earnings for the year increased to C$1.3bn (US$940mn) from C$1.1bn in 2021, while cash flows from operating activities more than doubled, to C$1.8bn from C$834.5mn, and free cash flow rose to C$1.1bn from C$545.1mn, which was impacted by temporary European windfall tax of C$223mn, which was recorded in the fourth quarter.
Total production was up slightly, to 85,187 barrels of oil equivalent (boe)/day from 85,408 boe/day, with natural gas production increasing to 238.2mn ft3/day from 233.6mn ft3/day.