How much cash does Vermilion really make, and what is a share of it worth?

The words on this page

Real cash (true cash)

What was left in the bank each year after every bill, every tax payment and every well drilled. Not profit, and not "cash flow" as companies usually quote it, which leaves the drilling out. The strictest number there is.

Required return

The yearly return you insist on for taking the risk. A dollar promised in ten years is worth less than a dollar today; this rate says how much less. 9% is a common professional figure for a large Canadian producer; the reserve engineers use 10%.

Well life (reserve life)

How long the wells keep producing. After the life you choose, nothing is counted. Year-end 2025 reserves were 368 MMboe proved and 592 MMboe proved plus probable. Against 2026 guidance of about 122,000 boe/d (44.5 MMboe a year) that is roughly 8 years proved and 13 years on the 2P book.

What a share is worth

Every future year's cash, shrunk back to today's dollars at your required return, added up, less the debt, less the cost of cleaning up the wells, divided by the number of shares. Pay less than this and you earn more than your required return; pay more and you earn less.

Where the default growth comes from

The default 2 percent tracks Vermilion's 2026 guidance of 121,000 to 123,000 boe/d, about two percent above the 119,919 boe/d averaged in 2025, on an unchanged capital budget.

The arithmetic, step by step

1. Count the real cash each past year: cash generated by operations as reported, plus interest paid put back, minus rent on leases, minus every dollar spent on wells and plants. Buying and selling assets is shown separately.
2. Project it. The starting cash you choose (an average of the history, or the latest year) grows at your growth dial for ten years, then at the long-run rate for as long as the wells keep producing. Nothing is counted after the well life ends.
3. Bring it back to today. Each year's cash is shrunk by your required return, counted at mid-year because cash arrives through the year rather than on 31 December.
4. Turn it into a share value. Add up the shrunk cash; take off net debt of C$1,220M; take off the C$960M cost of cleaning up the wells if that switch is on; divide by 152.9M shares.
5. Work it backwards. "The growth today's price assumes" is the ten-year growth rate at which this start is worth exactly the share price.

Where the numbers come from

• The four true cash lines (operating cash flow, interest paid, lease payments and capital spending) were hand-checked line by line for all ten years against the audited statements of cash flows in Vermilion's own annual reports. The one aggregator error found, 2025 lease payments of $19.1 million against the filed $13.4 million, has been corrected here.
• Acquisition figures are cash amounts net of disposition proceeds. Before 2021 they are shown as zero: Vermilion's big 2018 purchase of Spartan Energy was paid in shares, which is why the share count jumps that year, and remaining pre-2021 cash deals were small. 2025 nets the $1,089 million Westbrick price against $484 million of asset sales.
• Lease payments in 2024 show an unusually large $101.5 million, as filed; most years run near $20 million.
• Net debt in the table is borrowings less cash and leaves out lease liabilities and working capital. Vermilion's own measure includes working capital, so the company quotes $1,342 million for year-end 2025 where this table shows $1,283 million; the current figure of $1,220 million at 30 June 2026 is the company's measure.
• Dividends are cash actually paid, net of shares issued under the dividend reinvestment plan in the years it operated. The dividend was suspended in 2020 and restarted smaller in 2022.
• Net income swings wildly with accounting writedowns and deferred tax on the European assets (a $1.5 billion loss in 2020, a $654 million loss in 2025); cash flow is the steadier line to read.
• Analyst targets: average C$20.45 across 11 analysts (stockanalysis.com analyst consensus, 2026-08-30).

For the technically minded

The method is the one used to evaluate capital projects, from Ted Lawrence, The Business Guide to Economic Evaluations: Projects, Leases, Tariffs and Acquisitions (2017). "Real cash" is the book's project cash flow (chapter 3) with depreciation, debt servicing and debt-like leases restructured out (chapters 4, 5 and 19); short operating leases stay in as a cost of producing, a chapter 19 judgment. The value per share follows the share-purchase evaluation of chapter 20: present value of the company's cash flows at the cost of capital (chapter 10), mid-year discounting (chapter 12), plus non-required assets, less net debt and the decommissioning liability. "What you gain or lose" is the bid-curve NPV of chapter 20; "when you get your money back" is the discounted payout of chapter 13; the bars follow the project profile of chapter 6. The reverse solve on growth is a plain reverse DCF.

Discount-rate anchors: 9% is a common cost-of-equity figure for a large Canadian producer and 10% is the reserve-report convention (PV10). The long-run rate defaults to 0% here: a depleting resource should not be assumed to grow forever, so anything above zero is a judgment you make with the dial.