Vermilion Energy Projects 40% Free Cash Flow Gain, 2028 Inflection
Vermilion Energy forecasts a cash flow inflection in 2028 using $70 WTI, $3.50 AECO and CAD13 TTF, driven by ramp-ups in German volumes and Montney output and a potential 40% rise in free cash flow. It is roughly 50% hedged for 2026 and expects Australian production to normalize by Q2.
1. Cash Flow Inflection Drivers
Vermilion Energy expects a material cash flow inflection in 2028 based on price assumptions of $70 per barrel WTI, $3.50 per MMBtu AECO and CAD13 per MWh TTF. This inflection is driven by ramp-ups in Germany gas volumes and increased Montney oil production.
2. Hedging Strategy
The company entered 2026 roughly 50% hedged on European gas, 53% on oil and 45% on North American gas, using participating structures to benefit from price rallies. Management signals flexibility to increase hedges up to 70% if prices rise significantly.
3. Australian Production Outlook
Operations in Australia faced a Category 3 cyclone and maintenance issues but exported over 300,000 barrels post-repairs. Production is forecast to normalize by Q2 2026 with conservative estimates for the first quarter.
4. Reserve Revisions and Portfolio Focus
Technical revisions to 1P and 2P reserves reflect high-grading through M&A, replacing lower-value locations with better opportunities and yielding a net positive. The company remains active in M&A, targeting further consolidation in Canada and Europe.