Vermilion Energy Inc. (TSX, NYSE: VET) has entered into a definitive purchase and sale agreement whereby Vermilion, through its wholly owned subsidiary, will acquire interests in several production and exploration assets in Germany from Engie E&P Deutschland GmbH, for total consideration of €33 million ($47.9 million). Vermilion will fund the acquisition through existing credit facilities.
The acquisition includes operated and non-operated interests in five oil and three gas producing fields, along with an operated interest in one exploration license. The assets are located within the North German Basin in northwest Germany and are forecasted to produce approximately 2,000 boe/d in 2016 (50% oil). Proved plus probable reserves are estimated at 9.2 million boe (74% proved developed producing) based on an independent evaluation by GLJ Petroleum Consultants Ltd. with an effective date of December 31, 2015.
The transaction metrics are estimated at approximately $24,000 per boe per day, $5.86 per boe of proved plus probable reserves including future development capital (generating a 2P recycle ratio of 3.5 times based on projected 2016 netbacks), and 3.1 times estimated 2016 operating cash flow using the current forward commodity strip.
Vermilion will assume operatorship of six of the eight producing fields, with the other fields operated by ExxonMobil Production Deutschland (EMPG) and Deutsche Erdoel AG (DEA). The acquisition also includes a 50% operated interest in a 190 km oil pipeline network and a 66.7% operated interest in the Bedekaspel exploration license located in the Permian Rotliegend gas fairway, adding to Vermilion's existing 16.7% interest.
The acquisition has an effective date of January 1, 2016 and is anticipated to close in late Q4 2016, subject to customary closing adjustments.