Vermilion Energy has closed the previously announced C$1.07bn ($750m) acquisition of privately held Westbrick Energy in a move to strengthen its position in Alberta’s Deep Basin.
Announced in December 2024, the acquisition expands Vermilion’s production capacity, infrastructure, and drilling inventory while integrating with its existing assets in the region.
The acquisition includes approximately 1.1 million acres of land, with Vermilion holding a net interest in 770,000 acres. It also adds four operated gas plants with a combined processing capacity of 102 million cubic feet per day (mmcf/d).
The acquired assets contribute stable annual production of 50,000 barrels of oil equivalent per day (boe/d), with a production mix of 75% natural gas and 25% liquids.
Vermilion has identified over 700 future drilling locations across formations including Ellerslie, Notikewin, Rock Creek, Falher, Cardium, Wilrich, and Niton.
The company anticipates that the depth and quality of this inventory will support flat production levels for over 15 years while generating free cash flow to enhance its long-term capital return strategy.
The acquisition was financed through a combination of cash on hand, a new C$450m term loan, and Vermilion’s undrawn C$1.35bn revolving credit facility.
As part of the arrangement, Westbrick shareholders had the option to receive up to 1.7 million Vermilion common shares, with a maximum total value of C$25m. Some shareholders elected to receive 1.1 million shares, valued at C$14.2m, while the remainder of the consideration was paid in cash.
The acquired assets are expected to generate more than C$110m in annual free cash flow based on forward commodity prices. Revenue contributions will be evenly split between natural gas and liquids.
Vermilion has outlined plans to hedge a portion of the acquired gas production to manage financial risk and market volatility.
The transaction includes proved developed producing (PDP) reserves of 92 million barrels of oil equivalent (boe) and proved plus probable (2P) reserves of 256 million boe, with approximately 75% of both categories consisting of natural gas.
The acquisition price translates to C$11.7 per boe of PDP reserves, reflecting an implied recycle ratio of 1.3 times based on 2025 forecasted operating netbacks and 1.5 times based on 2026 projections.
Vermilion plans to integrate the newly acquired assets into its existing Deep Basin portfolio, which includes its liquids-rich Montney asset. The company remains focused on operational efficiency, debt reduction, and portfolio high-grading, with potential non-core asset sales under consideration.
The acquisition does not include undeveloped Duvernay rights covering approximately 300,000 acres, which remain with Westbrick shareholders.
Vermilion said that it will continue to pursue international growth opportunities, with recent developments in Germany and Croatia. The company’s near-term focus will be on operational execution, disciplined capital allocation, and enhancing shareholder returns through a strengthened asset base.
