DBRS Comments on Vermilion Energy Inc.’s Acquisition

DBRS notes that Vermilion Energy Inc. (Vermilion or the Company) has today announced that it has entered into definitive agreements to purchase interests in six producing fields located in the Paris and Aquitaine basins in France from Total S.A. (rated AA with a Stable trend) for a total consideration of approximately $115 million. This transaction, which has an effective date of January 1, 2011, is expected to close in late January 2012.

The acquisition complements Vermilion’s asset base, production mix and growth strategy. The Company’s credit profile and key credit ratios continue to remain in line with the current rating (unsecured notes at BB (low) with a Stable trend) on a pro forma basis.

The acquisition includes five fields in the Paris Basin (and their corresponding working interests) – Itteville (79%), Vert Le Grand (90%), Vert Le Petit (100%), La Croix Blanche (100%) and Dommartin-Lettree (56%, non-operated) – and one field in the Aquitaine Basin, Vic Bilh (73%). As the Company has current operations in these regions, the acquisition will bring its total working interest to 100% for all but the Dommartin-Lettree field.

DBRS views this transaction as consistent with Vermilion’s growth strategy to further strengthen its position as the number one oil producer in France. The acquisition is expected to add incremental production of approximately 2,200 barrels of oil equivalent per day (boe/d), representing approximately 6% of total production (34,711 boe/d) for the nine months ending September 30, 2011.

This transaction comes after an equity issuance on November 28, 2011, for gross proceeds of $263 million. This demonstrates the Company’s continued commitment to fund its activities in a prudent manner and maintain adequate financial flexibility for the assigned rating.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Oil and Gas Companies, which can be found on the DBRS website under Methodologies.