Vermilion Energy, a Canada-based energy producer, announced this Monday it has increased its interest in the Corrib natural gas project after acquiring Equinor Energy Ireland Limited, which owns a 36.5% interest in Corrib.
Firstly, the transaction was for a total consideration of US$434 million, and it has an effective date of January 1, 2022. However, the transaction will close around the second half of 2022 after all the closing adjustments and payments reach completion.
Moreover, upon closing, the interest of Vermilion energy in the Corrib project will be 56,6%. Therefore, it will significantly increase the company’s exposure to premium-priced European natural gas.
In fact, on a 2022 full-year pro forma basis, European natural gas will represent approximately 22% of the company’s production and about 42% of funds flow from operations (FFO). Furthermore, the acquisition rebalances Vermilion’s geographical and commodity diversification, strengthening the company’s business model.
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Vermilion energy strengthening portfolio and ESG strategy
In addition, the acquisition will add approximately 23 mmboe of 2P reserves to Vermilion’s portfolio. It will also produce around 7,700 boe/d in 2022. As a result, the investment will generate around $365 million of FFO and $361 million of free cash flows in 2022.
Consequently, and overall, the transaction will serve the company’s shareholders, as it will minimize dilution, maximize per share accretion metrics and enhance its ability to return capital to shareholders.
On the other hand, increasing interest in Corrib aligns with Vermilion’s ESG strategy and further consolidates a portfolio of high margin, low decline, low emission asset portfolio. Consequently, it will generate significant free cash flows to support the company’s sustainability strategy and to grow its dividends.
Finally, Corrib’s natural gas production features a world-class ESG approach, with best-in-class Scope 1 and 2 emissions intensity of 4.2 kgCO2e/boe and a robust plan for long-term biodiversity enhancement.