Vermilion Energy Trust reported operating and unaudited financial results for the three and twelve months ended December 31, 2009.
Exceeded full year guidance with average production of 31,395 boe/d in 2009, compared to 32,741 boe/d in 2008. Fourth quarter 2009 production averaged 30,016 boe/d compared to 30,418 boe/d in the third quarter of 2009. The modest year-over-year decrease in production was attributable to natural declines, the full year impact of the shut-in at Harlingen, some voluntary gas shut-ins in western Canada due to low prices, and lower year-over-year capital expenditures (excluding Corrib).
Generated fund flows from operations for the fourth quarter of 2009 of $94.0 million ($1.18 per unit), as compared to $69.3 million ($0.89 per unit) in the third quarter of 2009, due largely to higher relative commodity prices quarter-over-quarter. Full year fund flows from operations in 2009 totalled $317.2 million, down from $574.0 million in 2008, due primarily to a significant decrease in average commodity prices in 2009.
Acquired an 18.5% non-operated working interest in the Corrib natural gas project in Ireland. The project is expected to add approximately 30% to Vermilion's production volumes and over 40% to fund flows from operations when it comes on-stream, currently projected to occur by the end of 2012.
Successfully drilled and completed a four-well program in the Netherlands that is expected to generate in excess of 4,000 boe/d of combined production net to Vermilion. The production will be phased in over the next 3 to 18 months resulting in an average increase of approximately 2,000 boe/d net to Vermilion in 2010, with the remainder coming on-stream mid 2011.
Significantly expanded Vermilion's opportunity base and exposure to certain tight gas reservoirs and the Cardium light oil play in western Canada. Additional mapping, correlated with existing well log and core data analysis in the Drayton Valley region of north central Alberta indicates Vermilion holds more than 300 net prospective Cardium locations and approximately 120 net liquids-rich, tight gas development opportunities across the area.
Added 25.7 million barrels of oil equivalent of proved plus probable reserves in 2009 through drilling and acquisition, replacing 224% of 2009 production and increasing reserves per debt-adjusted unit by 5.5%. Since converting to a trust in 2003, Vermilion has grown its reserve base at an annual average rate of 4.4% on a debt adjusted per-unit basis. Vermilion’s proved plus probable reserve life index at the end of 2009 was approximately 12.6 years.
Reduced net debt to $120.4 million for the year ending December 31, 2009 compared to $207.8 million at the end of 2008. During the fourth quarter, Vermilion completed the issuance of 8.1 million trust units generating net proceeds of $237.5 million. Vermilion also closed the sale of Verenex Energy Inc., for additional net proceeds of $136.5 million.
Generated a positive total return to investors of 37.8% for the year ending December 31, 2009. Over the past five years and since inception of the trust in 2003, Vermilion has generated compound annualized rates of return of 16.5% and 21.9%, respectively, placing Vermilion in the top quartile of its peer group for both periods.