DBRS Updates Its Report on Vermilion Energy Inc.

DBRS has today updated its report on Vermilion Energy Inc. (Vermilion or the Company). Vermilion has continued to maintain its strong financial metrics while increasing its production volume favourably (approximately 5% per annum) over the past five years. For 2011, total debt-to-capital of 21.9% and debt-to-cash flow of 0.83 times (x) provide strong support for the current rating category.

The current rating incorporates the Company’s future growth prospects. Vermilion has significant future production prospects through its interest in the Corrib operations (Ireland) and the Cardium tight oil development (western Canada). With $375 million budgeted for capital expenditures in 2012, the Company continues to press toward its production goal of 50,000 barrels (gross) of oil equivalent per day (boe/d) by 2015, which DBRS believes to be achievable.

For the more immediate term, production will be increased through the acquisition in January 2012 of interests in six producing fields located in the Paris and Aquitaine basins in France for a total consideration of approximately $107 million. The acquisition further complements Vermilion’s asset base, production mix and growth strategy. For further details, please see the DBRS press release dated December 19, 2011. This transaction comes after an equity issuance on November 28, 2011, for gross proceeds of $263 million, demonstrating the Company’s continued commitment to fund its activities in a prudent manner and maintain adequate financial flexibility for the rating. The Company’s credit profile and key credit ratios continue to remain in line with the current rating after closing of the transaction.

The rating is, however, limited by the relatively small scale of Vermilion’s operations. Although operations are situated in relatively safe international markets, any significant disruption or economic downturn could have detrimental consequences on the results of the consolidated entity.