Vermilion acquires additional stake in Corrib gas project in Ireland

Dec. 6, 2021

Vermilion Energy Inc. has agreed to acquire Equinor ASA’s wholly owned subsidiary Equinor Energy Ireland Ltd., which owns a 36.5% interest in the Vermillion-operated Corrib gas project in Ireland, for $434 million, before closing adjustments and contingent payment.

Corrib lies 83 km off Ireland’s northwest coast in water depths of 350 m. Production began in 2015. Equity gas volumes to Equinor for 2021 are estimated at 58 million standard cu f/d. The field reached peak production of 350 MMcfd of gas, (60,000 boe/d) in 2016.

The initial development comprises six subsea wells, and gas is transported through an 83 km pipeline to an onshore gas processing terminal. Gas is exported via the Bord Gais Eireann linkline to the existing Irish gas grid.

As part of the transaction, Vermilion and Equinor agreed to hedge about 70% of the production for 2022 and 2023 and have also agreed a contingent payment up to $25 million to be paid on a portion of the revenue if European gas prices exceed a given floor level.

The acquisition will add about 23 MMboe of 2P reserves and is expected to produce about 7,700 boe/d in 2022, Vermilion said in a release Nov. 29.

Vermillion’s ownership in Corrib will increase to 56.5% upon closing, expected in second-half 2022 subject to approval by partners, government, and regulatory bodies. Equinor will no longer have an active business presence in Ireland. The remaining partner in the gas project is Nephin Energy with 43.5%.

2022 budget and production guidance

Vermilion’s board approved an exploration and development capital budget of $425 million for 2022, which is expected to deliver annual average production of 83,000-85,000 boe/d, before taking into account the Corrib acquisition.

In North America, Vermilion expects to invest about $215 million of capital, a decrease of 3% compared to 2021. The program will include drilling of 50 (46.3 net) wells, comprised of 12 (12.0 net) Mannville condensate-rich natural gas wells in Alberta, 31 (28.1 net) light oil wells in southeast Saskatchewan, and seven (6.2 net) light oil wells in Wyoming. The Wyoming program includes four (3.2 net) two-mile lateral wells and includes three (3.0 net) wells on recently acquired acreage.

Internationally, the company plans to invest about $210 million, an increase of 36% compared to 2021. The increase is primarily related to Australia where the company expects to drill two (2.0 net) offshore wells in second-quarter 2022. In Europe, the plan is to drill ten (9.1 net) wells comprised of two (1.1 net) wells in the Netherlands, three (3.0 net) in Germany, three (3.0 net) in Hungary, and two (2.0 net) in Croatia.

Additionally, the company expects to execute its standard workover program in France, construct the gas plant on SA-10 block in Croatia, and continue with its 3D seismic campaign to support future development.