Vermilion Energy, Inc.: Slightly Soft 2Q26 Results on Realizations; Formally Updating Production Guidance Higher

研报英文原文证据摘录

Vermilion Energy, Inc.: Slightly Soft 2Q26 Results on Realizations; Formally Updating Production Guidance Higher

Tarek Hamid AC North America Credit Research

(1-212) 834-5468 30 July 2026 J P M O R G A N

tarek.x.hamid@jpmorgan.com

EBITDA, which was modestly below the Street estimate of $291 million despite the

production outperformance. We primarily attribute the modestly soft EBITDA to weaker

than expected gas realizations especially in the context of the production outperformance

primarily stemming from Canadian natural gas volumes.

• Increasingly shareholder friendly capital allocation framework. The company

modestly adjusted its capital allocation framework to be increasingly shareholder

friendly. VET now expects to allocation roughly 40-60% of excess free cash flow to

shareholders, compared to just 40% prior. This is admittedly a nitpick as the capital

allocation framework is still balanced given 40-60% will still be allocated to debt

reduction.

OUR TAKE:

• Soft realizations offsetting strong operational execution. Vermilion’s 2Q26

production was above expectations and the company formally raised its 2026 production

guidance to levels inline with prior commentary. However, the company’s 2Q26

EBITDA was modestly below expectations which we primarily attribute to softer gas

realizations. That said, the outlook for Vermilion remains constructive as it is one of the

few E&Ps in the High Yield market that benefits from the exposure to two different

commodities streams that have increased as a result of the conflict in the Middle East. We

expect the company to continue to generate solid free cash flow due to higher TTF and

crude prices as well as its hedgebook. We remain Neutral VETCN as we think bonds are

fairly valued at current levels.