By Adriano Marchese
Vermilion Energy Inc. said Friday that it would focus on debt reduction with most of its free cash flow in 2023 and has made plans to return more capital to its shareholders in the year.
The Calgary, Alberta-based oil and gas producer expects production to be between 87,000 and 91,000 barrels of oil equivalent a day, which at its midpoint represents an increase of 3% increase year-over-year.
Based on forward commodity prices, the company expects to generate about 800 million Canadian dollars ($589.5 million) in free cash flow and has plans to return up to 25% of it to shareholders in 2023.
In this light, it said it would increase its quarterly dividend by 25% to C$0.10 a share, starting with its first-quarter dividend this year, bringing its full-year dividend to C$0.40 a share. It also said it will begin to buy back shares again in the near term.
The rest of the free cash flow would be used to reduce its debt, it said, which the company estimates to be C$1.4 billion or less for 2022.
Vermilion has incurred windfall taxes of about C$550 million in Europe for the years 2022 and 2023.
Additionally, for the year the company as earmarked C$570 million for its capital budget, the lion’s share of which will go toward its North American operations, and C$230 million will be used to invest in its international assets.
Write to Adriano Marchese at adriano.marchese@wsj.com
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