Vermilion Energy Inc. (TSX: VET) has reported interim operating and unaudited financial results for the three months ended March 31, 2011.
First Quarter Production Highlights
Recorded production of 34,234 BOE/d in the first quarter of 2011, compared to 35,302 BOE/d in the fourth quarter of 2010 and to 30,184 BOE/d in the first quarter of 2010. The lower production in the first quarter as compared to the fourth quarter of 2010 was primarily due to cyclone related downtime in Australia. Production in March 2011 averaged 35,471 BOE/d. Full year 2011 production guidance remains at a range of between 35,000 BOE/d and 36,000 BOE/d with exit rates approaching 38,000 BOE/d.
Generated fund flows from operations for the first quarter of 2011 of $101.8 million ($1.14 per share), as compared to $98.2 million ($1.11 per share) in the fourth quarter of 2010. Improved operating netbacks due to higher oil prices were offset by lower production volumes in Australia and an increase in Australian inventories.
Cardium Operations
The first quarter saw continued development of Vermilion’s Cardium light oil play in western Canada and construction of a 15,000 BOE/d battery, which is scheduled to be commissioned in August 2011.
Vermilion purchased rights to additional Cardium lands in the first quarter, drilled 11 (9.4 net) new operated wells and participated in 18 (6.1 net) non-operated wells. Cardium oil production is expected to remain between 3,000 and 3,500 BOE/d until the battery comes on stream in the third quarter 2011. Vermilion completed five new Cardium wells in the first quarter with water based frac treatments. The resulting performance of these wells will be evaluated against oil based frac treatments over the coming months to assist in determining the optimum completion method.
Other Highlights
Crude oil and liquids production increased by 16.8% in the first quarter of 2011 as compared to the same period in 2010 despite the curtailment of Australia oil production during the first quarter 2011. This reflects Vermilion’s increasing focus on oil and liquids based development opportunities.
The company received key approvals for the Corrib onshore pipeline project including approval by An Bord Pleanala, the Department of Communications, Energy and Natural Resources and the Foreshore Unit, Department of the Environment, Heritage & Local Government. Preliminary construction has begun at the tunneling site for this project.
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