2009-08-05-2009-08-01

To acquire 18.5% nonoperated interest in Corrib Field offshore Ireland, gaining 17.5 MMBOE.

Vermilion Energy Trust, Calgary, (Toronto: VET.UN) plans to acquire an 18.5% nonoperated interest in Corrib Field offshore Ireland from Marathon Oil Corp., Houston, (NYSE: MRO) for an initial payment of US$100 million. Vermilion will make an additional payment of approximately $235 million and $400 million depending on the date when first commercial gas is achieved. Currently, first gas is expected by year-end 2011, and the expected additional payment due would be between US$190 and $200 million. Corrib Field, approximately 83 kilometers off the northwest coast of Ireland, is expected to produce gross volumes in excess of 300 million cubic feet per day for two to four years before experiencing natural declines of 20%. Net production to Vermilion is initially anticipated at approximately 9,000 barrels of oil equivalent per day. Current net reserves according to Vermilion from Corrib Field are estimated at 17.5 million barrels equivalent as at Jan. 1. Marathon estimated total net proved reserves associated with the Corrib development as of year-end 2008 as 98 billion cubic feet of gas (16.4 million barrels of oil equivalent). The field is estimated to contain approximately 1 trillion cubic feet of gas in place. It lies in 350 meters of water. Shell E&P Ireland Ltd. is operator with 45%. StatoilHydro holds 36.5%. Vermilion will assume its share of future capital expenditure obligations in order to reach first gas, which are anticipated to range up to $300 million net to the acquired interest. These capital costs are primarily for the completion of the facilities necessary to bring this gas onstream. Vermilion says the deal structure, with a deferred payment, will help mitigate some of the risks associated with first gas timing. "Given the advanced stage of the project, the risk of major cost overruns is considered manageable. The transaction structure also increases Vermilion's flexibility to finance the acquisition from available cash flow and thereby maximizing the accretion metrics." The effective date is Jan. 1, 2009. Closing is expected by year end. Vermilion focuses on development and optimization of mature producing properties in Western Canada, Western Europe and Australia. Marathon operates in the U.S, Angola, Canada, Equatorial Guinea, Gabon, Indonesia, Libya, Norway and the U.K.