Vermilion Energy Trust has reported its interim operating and unaudited financial results for the three and nine month periods ended September 30, 2009.
Third Quarter Highlights:
- Recorded production of 30,418 boe/d in the third quarter of 2009, compared to 32,238 boe/d recorded in the second quarter of 2009. Vermilion shut-in approximately 1,000 boe/d of equivalent production in Canada in response to low natural gas prices which resulted in a 350 boe/d average reduction in third quarter volumes. Unscheduled down time in Australia due to a gas lift compressor failure resulted in a 350 boe/d shortfall in production from the Wandoo field. The remainder of the third quarter production decrease was due to natural declines.
- Generated fund flows from operations of $69.3 million ($0.89 per unit) in the third quarter of 2009 as compared to $85.5 million ($1.10 per unit) in the second quarter of 2009. The decrease in fund flows from operations reflects lower production volumes and the absence of one-time factors that benefitted second quarter results. A significant build in crude oil inventories in Australia during the third quarter resulted in a deferral of fund flows from operations of approximately $0.03 per unit in the quarter.
- Successfully drilled and completed the first of a three well program in the Netherlands. Vermilion has completed sustained tests on the Vinkega #1 well at gross rates in excess of 30 mmcf/d from two separate formations. The well was drilled on the Gorredijk concession in which Vermilion holds a 42.3% interest. A full development and production plan will be submitted for regulatory approval, and production from this well is not expected until late 2010.
- Completed a multi-stage fracture treatment of a horizontal gas well in the Drayton Valley resulting in initial flow rates of approximately 600 boe/d from this 100% working interest well. Vermilion continues to develop a large inventory of tight gas candidates and Cardium oil candidates in the Drayton Valley region.
- Total net debt increased from $236.7 million at the end of the second quarter of 2009 to $440.0 million at the end of the third quarter of 2009, reflecting the initial payment for the Corrib asset acquisition and Vermilion’s share of capital expenditures on this project effective January 1, 2009. Non-Corrib development capital spending totalled $29.0 million in the third quarter.
- Subsequent to the end of the quarter, Vermilion issued 7,282,000 trust units at $30.90 per unit generating net proceeds of $213.8 million. The proceeds of the equity offering will be used to reduce bank indebtedness which will leave Vermilion in a strong financial position to take advantage of future acquisition opportunities.
- Verenex Energy Inc., in which Vermilion holds 18,760,540 common shares representing a 42% equity ownership position (38% on a fully diluted basis), has entered into a definitive arrangement agreement with the Libyan Investment Authority (the "LIA") pursuant to which the LIA, through a subsidiary, has agreed to acquire all of the Verenex shares issued and outstanding upon completion of the transaction at a price per share in cash equal to $7.09 plus any positive net working capital at the time of completion of the transaction. The transaction will be completed by way of plan of arrangement (the "Arrangement"), to be submitted to the holders of Verenex securities (Verenex shares, options and performance warrants) for approval at a meeting scheduled for December 11, 2009.
- Generated a positive total return to investors of 24.2% for the nine month period ended September 30, 2009.