Vermilion Energy (NYSE:VET), in its recent Annual Meeting of Shareholders, has reported strong operational results for the first quarter of 2024, surpassing production guidance and achieving a net debt target of $1 billion. The company also highlighted progress in growth projects in Germany and Croatia, as well as successful gas discoveries. With a focus on reducing debt and increasing shareholder returns through buybacks, Vermilion Energy provided a positive outlook for the future, including plans for improved efficiency and significant free cash flow generation.
Key Takeaways
- Vermilion Energy exceeded Q1 2024 production guidance and met its net debt target.
- Growth projects in Germany and Croatia are advancing, with new gas discoveries.
- The company is committed to reducing debt and increasing shareholder returns.
- Operational momentum and financial discipline are key focuses for Vermilion Energy.
Company Outlook
- Vermilion Energy forecasts Q2 production between 83,000 and 85,000 BOE/d.
- The company anticipates $1.3 billion in fund flow and $700 million in free cash flow for 2024.
- Plans to return 50% of capital to investors through robust share buyback programs.
Bearish Highlights
- The company acknowledges the higher-risk prospect of the Wisselshorst well in Germany.
Bullish Highlights
- Successful drilling of the Osterheide well in Germany, with testing planned for Q2.
- Near completion of the SA-10 gas plant in Croatia, expected to add 2,000 BOE/d.
- Progress in the Montney development in North America, with infrastructure capacity set to double.
Misses
- There were no specific misses mentioned in the earnings call.
Q&A Highlights
- Discussion on efficiency improvements in the Montney asset.
- Excitement about the cash flow potential from the Montney development.
- Confirmation of shareholder support for executive compensation and governance measures.
Vermilion Energy's Annual Meeting of Shareholders, led by CEO Dion Hatcher, showcased the company's strong financial and operational performance, alongside a commitment to shareholder value and responsible growth. The company's strategic advancements, particularly in the European market with the German and Croatian projects, coupled with the North American Montney development, position Vermilion Energy to capitalize on its momentum. With a solid balance sheet and a disciplined approach to financial management, the energy firm is poised for profitable growth and sustained shareholder returns.
InvestingPro Insights
Vermilion Energy, with its commitment to operational excellence and shareholder returns, is navigating a dynamic market environment. Here are some insights based on the latest InvestingPro data and tips:
- The company's market capitalization stands at $1.89 billion, reflecting its position in the industry and investor confidence.
- Despite a challenging period, Vermilion Energy has maintained a strong gross profit margin of 65.95% in the last twelve months as of Q1 2024, underscoring its ability to manage costs effectively.
- Investors can take note of the dividend yield of 2.97%, which shows the company's commitment to returning value to its shareholders.
InvestingPro Tips for Vermilion Energy highlight that while the company has not been profitable over the last twelve months, analysts are optimistic, predicting profitability this year. Additionally, the stock has shown a strong return over the last three months, which may interest investors looking for positive momentum in their portfolio.
For those seeking more comprehensive analysis, there are additional InvestingPro Tips available, including insights into stock price volatility and debt levels. Discover these and more by visiting https://www.investing.com/pro/VET, and use the exclusive coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Full transcript - Vermilion Energy (VET) Q1 2024:
Robert Michaleski: Good afternoon, ladies and gentlemen. I'd like to begin by welcoming you to Vermilion's Annual Meeting of Shareholders. We will complete the formal part of this meeting first, and afterwards, Dion Hatcher, the President and Chief Executive Officer of the company, will provide you an overview of the business and the strategy moving forward. So ladies and gentlemen, the meeting will now come to order. My name is Robert Michaleski, and as Chair of the Board of Directors of Vermilion Energy, it is my responsibility and privilege to chair this Annual General Meeting of the Shareholders of Vermilion. Jamie Gagner of Lawson Lundell LLP will act as secretary of the meeting, and Nazim Nathoo of Odyssey Trust Company will act as scrutineer. In addition to the registered shareholders, I would like to welcome to the meeting all others present here today. At this point, I would like to introduce the other independent directors of Vermilion who are present at the meeting today. James Kleckner, Jr.; Carin Knickel; Stephen Larke; Timothy Marchant; Manjit Sharma; Myron Stadnyk and Judy Steele. William Roby is on the Board, but he is traveling to another meeting today, so unable to be here for this meeting. I would also like to introduce the pencil members of our Executive Committee here today, Dion Hatcher, President and Chief Executive Officer; Lars Glemser, Vice President and Chief Financial Officer; Randy McQuaig, Vice President, North America; and Darcy Kerwin, Vice President, International, Health and Safety and Environment. The notice calling this Annual Meeting of Shareholders, along with the information circular and form of proxy were mailed on March 28, 2024, to all shareholders as of the record date for this meeting, being the close of business on March 13, 2024. As part of an ongoing stewardship of the environment, as a cost-saving measure, for the sixth consecutive year, beneficial shareholders received a voting instruction form and a notice and access notification, which includes a link to the meeting materials consisting of the proxy statement, information circular and the 2023 annual report. This procedure for the electronic delivery of meeting materials is known as notice and access and, as mentioned, is an environmentally friendly alternative that is now used by a number of companies. As in past years, registered shareholders and those beneficial shareholders have previously requested to receive paper copies continue to receive a printed copy of the meeting materials and a form of proxy. I would ask that copies of all such documents to be filed with the minutes of this meeting. A quorum for the transaction of business at today's meeting is at least two people present to hold or represent by proxy at least 25% of our outstanding common shares. I am advised by the scrutineer that there is a quorum present. The scrutineers' report is available for inspection, and I ask that it be filed with the minutes of this meeting. I hereby declare that this Annual General Meeting of Shareholders of Vermilion Energy Inc. be properly convened and regularly constituted to conduct business. Now there are very matters to be dealt with today. A description of each matter is provided in the information circular, a copy of which is available on our website under the heading Invest With Us and subheading Annual General Meeting. In the interest of time, I do not propose to make a detailed presentation on each item. For the purpose of moving the meeting along, shareholders who are representatives of Vermilion have been asked to move and second the motions to be brought before the meeting. All of the matters of business to be covered today will be voted on by ballot. Registered shareholders, meaning their shareholders who do not hold their shares through a broker, who have not previously submitted a form of proxy, and duly appointed proxyholders should have received ballots upon registering for the meeting. If you have already voted, whether by telephone, through the Internet or by completing and returning a proxy card mailed to you with the information circular, your shares will be voted in accordance with your instructions and you're not permitted to vote again by way of ballot. If there is any shareholder or proxyholder who has not received a ballot, please identify yourself to us. The first item of business is fixing the number of directors of Vermilion Energy to be elected at 10. May I have a motion to fix the number of directors to be elected at 10?
Yvonne Jeffery: My name is Yvonne Jeffery, and I'm a representative of Vermilion and a shareholder. I move that the number of Directors of Vermilion Energy Inc. to be elected be fixed at 10.
Robert Michaleski: Thanks, Yvonne. May I have the motion seconded?
Terry Hergott: My name is Terry Hergott. I'm a representative of Vermilion and a shareholder. And I second the motion.
Robert Michaleski: Thanks, Terry. Is there any discussion? Voting on the election of directors will be conducted by way of ballot. The blue ballot is to be used for this matter of business. If you have not yet received one, please raise your hand. If you have already completed but not – if you have not already completed your ballot and deposited it with a scrutineer, please complete the ballot now and sign your name clearly at the bottom of the ballot. Please raise your hand if you have a ballot to be collected, and the scrutineer will collect the ballots. Thank you. Based on preliminary voting results for this matter, it is expected that this resolution will be carried. We will continue with the remainder of this meeting's business while the scrutineer tabulates the results of the ballot voting and advises us as to the final results prior to the termination of this meeting. The next item of business is the election of the directors of Vermilion for the ensuing year or until their successors are elected or appointed. As we have done in previous years, we will be nominating and approving individual directors and not a slate of directors. The Board of Directors has adopted a policy stipulating that if a director nominee receives a greater number of votes withheld from the election of that director than votes for the election, the nominee will offer to resign. The Governance and Human Resources Committee will then review the matter and recommend to the Board whether to accept the resignation and, the Board's decision to accept or reject the resignation will be publicly announced within 90 days of the meeting. It is expected that the resignations will be accepted except in situations where exceptional circumstances would warrant that the applicable director continue to serve as a Board member. The Board of Directors has also adopted Bylaw number two, providing for advanced notice of director nominations. I have been advised that no director nominations were received by the company, and accordingly, the nominees for election as a director are the nominees set forth in the information circular for this meeting. The number of directors to be elected at the meeting has been fixed at 10. Information with respect to each of the nominees was set forth in the information circular for this meeting. May I have a motion to nominate each of the nominees as a director of Vermilion Energy Inc.?
Averyl Schraven: My name is Averyl Schraven, and I'm a representative of Vermilion and a shareholder. I nominate each of the following to act as a director for the ensuing year: Dion Hatcher; Robert Michaleski; James Kleckner, Jr.; Carin Knickel; Steve Larke; Timothy Marchant; William Roby; Manjit Sharma; Myron Stadnyk; and Judy Steele.
Robert Michaleski: Thanks, Averyl. I will now ask to move the resolution electing those individuals nominated as directors of Vermilion Energy to serve as directors until the close of the next Annual Meeting of the Shareholders or until their successors are duly appointed.
Geoff MacDonald: My name is Geoff MacDonald, and I'm a representative of Vermilion and a shareholder. I move that each of the 10 persons nominated be elected as a director of Vermilion Energy Inc. to hold office until the close of the next Annual Meeting of Shareholders or until a successor is duly elected or appointed.
Robert Michaleski: Thanks, Geoff. May I have the motion seconded?
Kyle Preston: My name is Kyle Preston, and I'm a representative of Vermilion and a shareholder. And I second the motion.
Robert Michaleski: Thanks, Kyle. As previously stated, the directors will be elected individually and not as a slate. For a nominee to be elected as a director of Vermilion Energy Inc., the votes cast in favor of the election of the director nominee should represent no less than a majority of the votes cast by shareholders represented in person or by proxy at this meeting. Is there any discussion? Voting on the election of directors will be conducted by way of ballot. The white ballot is to be used for this matter of business. If you have not yet received one, please raise your hand. If you have not already completed your ballot and deposited it with the scrutineer, please complete the ballot now and sign your name clearly at the bottom of the ballot. Please raise your hand if you have a ballot to be collected, and the scrutineer will collect the ballots. Based on preliminary voting results for this matter, it is expected that this resolution will be carried. We will continue with the remainder of the meeting's business while the scrutineer tabulates and provides the results of the ballots prior to the termination of the meeting. The next item of business is the appointment of the auditors of Vermilion. Deloitte LLP are Vermilion's current auditors and have agreed to act upon – act as auditors of Vermilion if appointed. May I have a motion for the appointment of auditors?
Kyle Preston: I move that Deloitte LLP be appointed as the auditors of Vermilion to hold office until the next Annual Meeting of Shareholders.
Robert Michaleski: Thanks, Kyle. May I have the motion – second the motion?
Averyl Schraven: I second the motion.
Robert Michaleski: Thanks, Averyl. Is there any discussion? Voting on the election of the directors will be conducted by way of ballot. The pink ballot will be used for this matter of business. If you have not yet received one, please raise your hand. If you have not already completed your ballot and deposited it with the scrutineer, please complete your ballot now and sign your name clearly at the bottom of the ballot. Please raise your hand if you have a ballot to be collected, and the scrutineer will collect the ballots. Based on preliminary voting results for this matter, it is expected that this resolution will be carried. We will continue with the remainder of this meeting's business while the scrutineer tabulates and provides the results of the ballot voting prior to the termination of the meeting. The next item of business is the confirmation approval of Bylaw number two, which, as previously mentioned, requires advance notice of director nominations. Bylaw number two was adopted as part of Vermilion's commitment to facilitating an orderly and efficient process for shareholders' meetings as shareholders receive adequate notice and sufficient information regarding director nominees and allowing shareholders to register an informed vote. Further information with respect to Bylaw number two is set forth in the information circular for this meeting. May I have a motion for the confirmation and approval of Bylaw number two?
Geoff MacDonald: I move that the ordinary resolution to confirm and approve Bylaw number two as a bylaw of the company, the full text of which is set out on Page 22 of the information circular accompanying the notice of this meeting, be approved.
Robert Michaleski: Thanks, Geoff. May I have the motion seconded?
Averyl Schraven: I second the motion.
Robert Michaleski: Thanks, Averyl. Is there any discussion? Voting on confirmation and approval of Bylaw number two will be conducted by way of ballot. The green ballot is to be used for this matter of business. If you have not received – yet received one, please raise your hand. If you have not already completed your ballot and deposited it with the scrutineer, please complete the ballot now and sign your name clearly at the bottom of the ballot. Please raise your hand if you have a ballot to be collected. Based on preliminary voting results for this matter, it is expected that this resolution will be carried. We will continue with the remainder of this meeting's business while the scrutineer tabulates and provides the results of the ballot voting prior to termination of the meeting. The next item of business is the advisory vote on executive compensation. As part of Vermilion's ongoing commitment to strong corporate governance practices, we continue to hold a nonbinding advisory vote on the approach to executive compensation, commonly referred to as say-on-pay. In 2023, 93.25% of shareholders supported our say-on-pay vote. In respect to this meeting, two leading independent third-party proxy advisory firms, ISS and Glass Lewis, have both recommended that shareholders vote for the approval of the proposed say-on-pay vote at this meeting. May I have a motion for the say-on-pay advisory vote?
Averyl Schraven: I move that on an advisory basis and not to diminish the roles and responsibilities of the Board of Directors that the shareholders accept Vermilion's approach to executive compensation disclosed in the information circular accompanying the notice of this meeting.
Robert Michaleski: May I have the motion seconded?
Yvonne Jeffery: I second the motion.
Robert Michaleski: Thanks, Yvonne. Is there any discussion? Voting on the say-on-pay advisory vote will be conducted by way of ballot. The yellow ballot is to be used for this matter of business. If you have not yet received them, please raise your hand. If you have not already completed your ballot and deposited it with the scrutineer, please complete the ballot now and sign your name clearly at the bottom of the ballot. Please raise your hand if you have a ballot to be collected, and the scrutineer will collect the ballots. Based on preliminary voting results for this matter, it is expected that this resolution will be carried. We will continue with the remainder of the meeting's business while the scrutineer tabulates and provides the results of the ballot voting prior to the termination of the meeting. The next item of business is to table the consolidated audited financial statements of Vermilion for the year ended December 31, 2023, and the report of the auditors thereon. These financial statements were included in Vermilion's annual report, which is mailed to those shareholders who requested the financial statements, along with the Notice of Meeting and the information circular. For your ease of reference, links to Vermilion's annual report, which includes the financial statements, are available on our website under the heading Invest With Us, subheadings Reports & Filings. Are there any questions regarding the financial statements? I have the results of the voting on the ballot. On the matter of fixing the number of directors of Vermilion Energy at 10, I'm advised by the scrutineer that greater than a majority of the votes cast have been voted in favor of this resolution. Therefore, I declare that this motion is carried. On the matter of electing directors of Vermilion Energy Inc., I am advised by the scrutineer that for each of the director nominees, greater than a majority of the votes cast have been voted in favor of election of each director. Therefore, I declare that this motion is carried and each of the nominees for election as director has been elected. On the matter of appointing Deloitte LLP as auditors of Vermilion to hold office until the next Annual Meeting of Shareholders, I'm advised by the scrutineer that greater than a majority of the votes cast have been voted in favor of the resolution. Therefore, I declare that this motion is carried. On the matter of approving the confirmation and approval of Bylaw number 2, I'm advised by the scrutineer that greater than a majority of the votes cast have been voted in favor of this resolution. Therefore, I declare that this motion is carried. On the matter of the approval of the say-on-pay advisory vote, I'm advised by the scrutineer that greater than a majority of the votes cast have been voted in favor of this resolution. Therefore, I declare that this motion is carried. Now is there any further business? As there is no further business to be brought before this meeting, the meeting is concluded. I will now turn it over to Dion Hatcher, President and Chief Executive Officer of Vermilion, to provide you with an update on our business and strategy moving forward. If you have any questions at the end of the presentation, a microphone will be made available to you. We would like to also welcome the people who have just joined us by webcast. Questions can also be addressed from our webcast audience after the presentation is complete. Over to you Dion?
Dion Hatcher: Thanks, Bob. Good afternoon, everyone, on this snowy, feels like winter day. We'll start with the informal part of the presentation, and we'll just take a few minutes to talk about our Q1 results and the outlook for 2024 and beyond. Before we do that, just to remind you, we will be referencing a presentation that can be found on our website under Invest With Us and Events & Presentations as well. The disclaimer, the advisory information on forward-looking statements is at the end of the presentation, describes the forward-looking information, non-GAAP measures and oil and gas terms used today, and it outlines the risk factors and assumptions relevant to this discussion. So 2024 is actually a key milestone year for the company. It was in 1994 that we were a small junior oil and gas company. Through the vision of our founders, Lorenzo, Claudio and [Jeff] that we started this company, they had a differentiated strategy to be an E&P company, one that grew globally through a series of acquisitions. Those acquisitions started in 1997 with France. That was our first international acquisition. After that, we followed up with other acquisitions in Europe, in France as well as – which was key in 1997, but then in Australia as well as the U.S. This global diversification has several strategic advantages. It provides Vermilion with exposure to premium-priced global products, which helps to provide that outsized netback. It provides us opportunity for capital-efficient, often underexploited conventional assets. And it provides access to high-return international acquisition opportunities. Vermilion is unique in this strategy. Because of this advantaged business model, we've been able to return a significant portion of our capital to the investors over the years, over $40 a share in dividends. Past four years have been some of the more challenging years in the company's history, and we've taken a relentless effort on reducing debt and high-grading the asset base. We have made significant progress on these measures, as we'll talk today, but we do recognize there's still more work to do. I do believe the company is much, much better positioned today with a stronger balance sheet and a stronger asset base, and we are much more resilient. I'm extremely proud of all the hard work our team has done through achieving these goals and repositioning the company for the next 30 years. Well, the first quarter of 2024 was another strong quarter for Vermilion. We delivered strong operational results, which was above the upper end of our production guidance. Those are really driven by Germany and the U.S. We generated $431 million of fund flows, we invested $190 million of A&D capital, and we generated $241 million of free cash flow for the quarter. This free cash flow helped us to reduce debt by another $134 million and achieve our net debt target of $1 billion during the quarter. We finished the quarter with a net debt of $944 million, which is the lowest in over a decade. Reaching our net debt target was a key milestone and allowed us to accelerate our return of capital strategy, and we increased our allocation to 50% of excess free cash flow. This was announced in Q4, and immediately after this announcement, we significantly increased the pace of our shareholder buybacks. We repurchased 1 million shares in the month of March, bringing the total for Q1 to 2.4 million shares. We've continued this pace into April, and we bought back another 1 million shares in the month of April as well. In addition to delivering strong production and financial results, we've also advanced all of our key growth projects, in particular in the Montney, the liquids-rich gas development, deep gas project in Germany and our Croatia gas development. I'll expand on each of these projects in the following slides. So starting with our international operations. Production came in at 32,546 BOEs per day. In Germany, we successfully drilled our first deep gas exploration well and discovered gas in the targeted zone. We plan to commence drilling the second well in Q2. We also made several discoveries in Croatia where we encountered hydrocarbons in multiple zones in the first three of the four wells we've drilled to date. Investments in these programs are quite key as they're intended to support the longer-term free cash flow generation of the business, and we're excited to test the results of these wells in Germany and Croatia in the second quarter. Also in Croatia, construction of our gas plant on the SA-10 block is nearing completion and is on schedule for midyear start-up. This will allow us to bring on 2,000 BOEs a day of gas that's behind pipe that will help immediately increase our free cash flow. In Australia, we continue to see strong performance from that unit as well as strong pricing in Wandoo. We generated the highest netback of our asset base with a $65 BOE netback. Now as a reminder, we have over 700,000 net acres of land in Germany. We're targeting these deep gas exploration projects. And these prospects that we see, they're on trend with Netherlands. We've been in the Netherlands for almost two decades. We've drilled wells during that period, and we have a success rate of about 70%. So we're quite excited to apply those skills as we work on Germany. The first well as noted was successful, Osterheide, and we're targeting that – while it was targeting the existing gas field, the well was drilled to a total depth of 5,000 meters where we discovered gas in the targeted zone. This is the deepest well that we've ever drilled in Germany and in Europe, for that fact, and it shows the strong operational team that we have in Europe. We're very pleased with these initial results, and we plan to test the well in the second quarter as we're preparing for tie-in operations and getting that well on in early 2025. We'll now start planning and drilling the second well, which is Wisselshorst. Now this well is a higher risk as we're targeting a large prospect that we see on seismic. It's going to take three or four months to drill, and we have a 60% working interest in the second well to help to manage the risk and capital associated with exploration drilling. We are in the early innings in Germany where we're quite excited about the outlook and the opportunity we have in front of us. We have identified at least nine individual prospects, and many of these prospects are large enough to have multiple follow-up drilling associated with them. So with success, we see the ability to more than double our Germany business unit over time. In Croatia, construction of the gas plant on the SA-10 block is nearing completion. The team is currently testing that facility and conducting the pre-commissioning start-up activities in preparation for a midyear start-up. On start-up, this unit will add 2,000 BOEs a day of European gas, which again is exposed to premium pricing in Europe. We expect it to have a netback over $50 per BOE. Initial production, as a reminder, is from the two successful exploration we drill – wells we drilled before. These wells were tested at 15 million and 17 million cubic feet per day previously. So we're very excited to be nearing the point where we can get these wells on production. Also in Croatia, we drilled two of our four-well program in Q1, and subsequent to the quarter, we drilled our third well. All three of these wells in discrete structures have discovered hydrocarbon in multiple zones. We've had both oil and gas shows in the zones, and it looks very promising given the thickness of some of these zones. We don't know the full extent of the development. We're still early days as we'll be testing these wells in the next quarter. But having consecutive exploratory success is very exciting on this block, and we're awaiting the test results of these wells as we move into the second quarter. Production from our North American operations averaged 52,959 BOEs a day in Q1. Most of that capital was allocated to the Montney development. We've drilled 13 and completed 13 wells, and we brought nine wells on production. As well in the U.S., even though we didn't have operated wells this quarter, we did participate in some non-operated wells in a formation called a Parkman. That's an oil zone. Those wells came online in the quarter and helped to grow production in our U.S. business unit quarter-over-quarter. Construction of the BC Montney battery is progressing as per plan as well as we tied in the six wells on the first pad in our Montney position. The slide on – picture on Slide 20 shows this battery. It's a 16,000-BOE/d battery that we're currently constructing. It is nearing the completion, and we're expecting to start this unit up in late Q2. This battery will more than double our infrastructure capacity in the Montney, and we look to fill that capacity in the upcoming years. Further expansions will be required as we debottleneck this facility by adding compression. Ultimately, we are targeting a production rate of 28,000 BOEs per day on our Montney asset. We recently tied in the first six wells as noted, and we're flowing those wells through our existing bottleneck infrastructure. But the early results of the wells are quite encouraging, in line with the strong wells that we drilled in 2023, which you can see the results on this slide. We'll be able to produce those wells at higher rates once we are able to get our battery up and running. In summary, these results are very positive, and we continue to validate the quality of our BC acreage in the Montney. We've also drilled the next five wells of our program. We'll look to frac those, complete them in the next quarter and bring them online in Q3. On the cost side, we continue to optimize our drilling and completion activities, which has resulted in cost savings per well of 50%. This is compared to our 2023 program. Our 2024 program used 17% less water, which reduces cost, but it also reduces the environmental impact. As well, we're further optimizing our well design and our completion activities. In addition to this, we are piloting different completion strategies, and we're also piloting tighter well spacing. We think the combination of these learnings will allow us to improve the efficiency in which we operate and develop this asset for decades to come. In summary, it's a very key year for us in the Montney as we get the infrastructure in place, start up this next pad, and we're quite excited about the cash flow that this asset will generate for us for decades to come. On the outlook side, we expect to see continued operational momentum as we go into Q2. We'll remain focused on these key growth projects that we've talked about earlier. That's completion of the start-up of the BC Montney battery, completion and commissioning of the SA-10 gas plant in Croatia as well as testing the successful wells that we drilled in Germany and Croatia. Full-year guidance remains intact for production, and we expect Q2 production to be in the 83,000 to 85,000 BOE a day range. Commodity prices as well continue to be supportive, and our financial outlook remains very strong. Looking at the financial forecast for 2024. We're currently forecasting approximately $1.3 billion of fund flow and free cash flow of approximately $700 million. We've also included our preliminary 2025 outlook, which anticipates modest production growth and with fund flows based on backwardation and strip pricing. As well as adjusting for lower hedge gains relative to 2024, we're forecasting about $1.1 billion of fund flow for 2025. But as you can see as well, those red bars will continue to reduce debt and continue to strengthen the balance sheet through 2024 and 2025 as we continue to reduce debt and return 50% of our capital to our investors. With that accelerated return of capital payout target of 50% of our excess free cash flow, we would expect to have a robust share buyback program for the balance of the year. Based on the current forecast, we're projecting the return of approximately 10% of our market cap to shareholders. And that will be through a combination of fixed base dividend and the share buybacks, which we're currently undertaking. Well, we've made a lot of progress over the past few years. I'm actually very excited that – we're looking at the company as we go forward, we've got a very strong balance sheet now. We've got the lowest debt to cash flow in over a decade. We continue to build operational momentum with another strong quarter in Q1. We've got strong run times in our legacy assets, and we've talked about the Australia unit, which is back online, performing quite well. And we continue to progress our key growth projects in the Montney, in Croatia and in Germany. Our near-term return on capital framework provides investors with a growing base dividend and meaningful share buybacks, which we look to augment with modest production growth and opportunistic international acquisitions. We will continue to focus on operational excellence and executing our 2024 plan while maintaining financial discipline. We believe this will set the future for profitable growth as we position the company for the next 30 years. We look forward to providing updates on these key growth projects in the months ahead.
Q -:
Dion Hatcher: So in closing, I would like to thank our shareholders for your continued confidence in Vermilion. And thank you to our Board of Directors. Thank you to our employees, our contractors and our service providers for helping us execute our strategy and for your contributions.
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