Breaking Down Vermilion Energy Inc. (VET) Financial Health: Key Insights for Investors

You're looking at Vermilion Energy Inc. (VET) and trying to cut through the volatility to see the real financial picture, and honestly, the numbers show a company in a significant transition. While the Q3 2025 earnings reported a small loss of $0.02 per share and missed consensus revenue estimates, the underlying cash flow story is defintely stronger. The real opportunity is in their capital discipline and strategic positioning: they forecast generating approximately $400 million in Free Cash Flow (FCF) for the fiscal year, even after committing to a capital expenditure (CapEx) budget of up to $625 million to drive production growth. Here's the quick math: that FCF is fueling a massive balance sheet cleanup, with net debt already reduced by over $650 million since Q1 2025, bringing the total under $1.4 billion. Plus, their global gas portfolio is a critical hedge, with Q2 2025 realized gas prices running about triple the AECO benchmark, which is the kind of diversification that matters when commodity prices get choppy. We need to look past the net income noise and focus on how that cash is being deployed for debt repayment and shareholder returns.

Revenue Analysis

You need to know where Vermilion Energy Inc. (VET) is actually earning its money, not just the top-line number. The direct takeaway is that VET is successfully pivoting to a more gas-weighted portfolio, and its revenue is showing a solid rebound in 2025, largely driven by strategic acquisitions and divestments.

For the trailing twelve months (TTM) ending September 30, 2025, Vermilion Energy Inc.'s revenue was approximately $1.35 billion USD. This TTM figure reflects a year-over-year growth of +6.37% as of the fourth quarter of 2025, which is a defintely positive trend after a decline in the prior year. For a clearer near-term picture, the third quarter of 2025 revenue was $316.8 million USD, marking a strong 13.68% increase compared to the same quarter in 2024.

Primary Revenue Sources: Gas and Global Reach

Vermilion Energy Inc.'s revenue is fundamentally tied to the production and sale of petroleum and natural gas. The company's primary revenue streams are split across two key dimensions: product type and geographic region. The product mix is shifting, which is the most important change to watch.

• Full-year 2025 production is forecast at approximately 119,500 boe/d (barrels of oil equivalent per day).
• The majority of that production-around 65%-is natural gas.
• The company's operations span North America, Europe, and Australia, giving it critical exposure to diverse commodity pricing, like premium European gas markets.

Segment Contribution and Strategic Shifts

The company's revenue profile has seen a significant change in 2025 due to strategic asset repositioning. The acquisition of Westbrick Energy Ltd. in early 2025 dramatically altered the production mix, adding a substantial volume of Deep Basin liquids-rich natural gas. But then, the divestment of Saskatchewan and United States assets in July 2025 further streamlined the focus.

Here's the quick math on the production split, which is the best proxy for revenue contribution by segment:

What this estimate hides is the higher realized prices from the International segment, especially European gas, which means the 25.5% International production likely contributes a disproportionately higher share of the total revenue dollar. The company is leaning into this, with over 90% of go-forward production expected to be from its global gas portfolio. This is a gas-focused story now.

To keep a handle on this shifting revenue base, Finance: draft a sensitivity analysis on the 2026 budget, mapping a 15% swing in European gas prices to total revenue by the end of next week. For a deeper dive into the company's full financial picture, check out the full post: Breaking Down Vermilion Energy Inc. (VET) Financial Health: Key Insights for Investors.

Profitability Metrics

The profitability picture for Vermilion Energy Inc. (VET) in the 2025 fiscal year is a study in stark contrasts: the company is exceptionally efficient at the wellhead, but high non-production costs are eating the gains. Your core takeaway is that VET maintains a superior Gross Profit Margin, but its Operating and Net Profit Margins are currently negative, primarily due to non-cash charges and general overhead.

For the trailing twelve months (TTM) ending in Q3 2025, Vermilion Energy Inc.'s Gross Profit Margin stands at a strong 64.6%. This is a signal that the company's core business-getting oil and gas out of the ground-is highly effective. To put this in perspective, the broader Energy Sector average Gross Profit Margin is around 43.3%. Vermilion Energy Inc. is defintely a top-tier operator when it comes to controlling direct production costs and realizing strong prices, especially from its high-netback European gas assets.

Here's the quick math on profitability ratios:

• Gross Profit Margin (TTM Q3 2025): 64.6%.
• Operating Margin (TTM Oct 2025): -0.31%.
• Net Profit Margin (TTM Nov 2025): -42.01%.

The trend in profitability over 2025 shows volatility. While Q2 2025 reported a positive Earnings Per Share (EPS) of $0.48, the Q3 2025 result was a slight loss with an EPS of -$0.02. This swing, combined with the negative TTM operating margin of -0.31%, tells you that once you factor in selling, general, and administrative (SG&A) expenses, depreciation, and non-cash charges-like those related to asset divestments-the company is currently losing money on an accounting basis. The consensus full-year 2025 EPS forecast of $0.90 suggests analysts expect a significant rebound in Q4 to offset the earlier losses, but the current negative margins are a clear risk.

Operational Efficiency and Cost Management

Vermilion Energy Inc.'s operational efficiency is best measured by its corporate operating netback, which is the revenue per barrel of oil equivalent (boe) after royalties and operating expenses. For the 2025 fiscal year, this netback is forecasted at a strong $40 per boe. This metric is a testament to their strategy of leveraging premium-priced European natural gas, which helps offset the lower margins of North American production.

Management is actively focused on cost management, which is a necessary action given the negative operating margin. In Q3 2025, the company announced a reduction in its annual operating cost guidance by over $10 million. This focus on streamlining is crucial for translating that excellent 64.6% gross margin into a positive operating profit. The goal is to close the gap between the high gross margin and the near-zero operating margin.

To be fair, a negative operating margin of -0.31% is a serious issue, especially when peers like Enerplus are running at an operating margin of 34.52%. The market is rewarding companies that can consistently translate high gross margins into strong bottom-line results. You can find more detail on the drivers of this performance in Exploring Vermilion Energy Inc. (VET) Investor Profile: Who's Buying and Why?.

The table below summarizes the critical profitability metrics for a direct comparison:

The action item here is to monitor the Q4 2025 earnings report closely for evidence that the announced $10 million in operating cost reductions are fully realized and that non-cash charges related to asset sales are truly behind them. If not, the current negative margin trend will persist.

Debt vs. Equity Structure

You're looking at Vermilion Energy Inc. (VET) and wondering how they fund their operations-is it mostly debt, or are they relying on shareholder money? Honestly, a company's capital structure (debt versus equity) tells you a lot about its risk tolerance and financial flexibility. For Vermilion Energy Inc., the story in 2025 is one of aggressive debt reduction, which is a big positive.

The company has been laser-focused on deleveraging, which means paying down their debt. Since the first quarter of 2025, Vermilion Energy Inc. has reduced its net debt by over $650 million. This effort brought their total net debt down to under $1.4 billion as of September 30, 2025. That's a significant move, especially following their acquisition of Westbrick Energy Ltd. earlier in the year, which initially pushed net debt up to $2,063 million in Q1 2025.

Debt-to-Equity: The Real Measure

The Debt-to-Equity (D/E) ratio is the cleanest way to see this balance-it measures total liabilities against shareholder equity. For Vermilion Energy Inc., the D/E ratio as of September 30, 2025, sat at approximately 0.49. Here's the quick math: for every dollar of shareholder equity, the company uses about 49 cents of debt to finance its assets.

This is a solid position, but you need context. The average Long-term Debt/Equity for the broader Energy sector is around 40.6% (or 0.41). To be fair, Vermilion Energy Inc.'s ratio of 0.49 is slightly higher than that mean, but it's a vast improvement from past years and is moving toward their long-term net debt target of $1 billion. They are defintely prioritizing balance sheet strength.

• Debt-to-Equity (Q3 2025): 0.49.
• Sector Average (Long-term D/E): 40.6%.
• Net Debt (Q3 2025): Under $1.4 billion.

Recent Debt and Capital Activity

Even while paying down debt, a company needs to manage its maturity schedule. In January 2025, Vermilion Energy Inc. issued US$400 million in senior unsecured notes due in 2033. This was a smart refinancing move, primarily using the proceeds to repay US$277 million of notes that were set to mature in March 2025. This pushes out their debt wall, eliminating near-term debt maturities and giving them more breathing room. S&P Global Ratings affirmed their 'B+' issuer credit rating with a stable outlook in February 2025, which reflects this improved stability.

The balance is struck by using free cash flow to pay down debt first, and then returning capital to shareholders. In Q3 2025 alone, Vermilion Energy Inc. returned $26 million to shareholders. This broke down into $20 million in dividends and $6 million in share buybacks. It shows they are using both debt reduction and equity funding (shareholder returns) to manage their capital, but the focus remains on debt reduction to hit that $1 billion target. You can find more details on their overall financial picture in Breaking Down Vermilion Energy Inc. (VET) Financial Health: Key Insights for Investors.

Liquidity and Solvency

Vermilion Energy Inc. (VET) presents a dual liquidity picture: its core operational cash flow is exceptionally strong, but its traditional short-term ratios are tight, which is common for an exploration and production (E&P) company. The key takeaway is that while the balance sheet is defintely getting stronger, you shouldn't rely on the Current Ratio alone for your short-term risk assessment.

The company's liquidity position, or its ability to meet near-term obligations, is a mixed bag when looking at the standard metrics. As of November 2025, Vermilion Energy Inc.'s Current Ratio stood at approximately 1.25, which is generally acceptable as it means current assets slightly exceed current liabilities. However, the Quick Ratio (acid-test ratio), which strips out less-liquid inventory, was significantly lower at just 0.40. This tells you that without selling some of its stored oil and gas (inventory), the company cannot cover all its immediate bills with pure cash and receivables. This is a crucial distinction for the working capital analysis.

Here's the quick math on short-term coverage:

• Current Ratio: 1.25 (Assets cover liabilities).
• Quick Ratio: 0.40 (Cash/Receivables cover liabilities).
• Total Available Liquidity: Approximately $1 billion (including credit facility).

Still, you must look past the ratios to the cash flow statement, which shows the true engine of the business. Vermilion Energy Inc. has been generating robust Fund Flows from Operations (FFO)-the industry's preferred proxy for operating cash flow. In Q3 2025 alone, FFO hit $254 million. This strong operational cash generation is what allows the company to manage its debt and capital program, even with a low Quick Ratio. The company's focus on debt reduction also helps, as they've cut net debt by over $650 million since Q1 2025, bringing the total net debt down to $1.38 billion as of September 30, 2025.

The cash flow trends for 2025 show a healthy cycle of cash generation and strategic deployment:

The biggest liquidity strength is the combination of high FFO and significant available credit. The company has approximately $1 billion in total liquidity and, critically, no near-term debt maturities, which means they aren't facing a refinancing crunch anytime soon. This financial flexibility is what truly mitigates the risk implied by the low Quick Ratio. If you want a deeper dive into who is betting on this strategy, you should check out Exploring Vermilion Energy Inc. (VET) Investor Profile: Who's Buying and Why?

So, the immediate action for you is to monitor the FFO-to-Net Debt ratio-it was a healthy 1.4 times as of Q3 2025-because that's the real gauge of their solvency and their ability to sustain capital returns, not the Quick Ratio.

Valuation Analysis

You're looking at Vermilion Energy Inc. (VET) and wondering if the market has it right, and honestly, the valuation metrics paint a mixed picture. The short answer is that Vermilion Energy Inc. (VET) appears undervalued on an asset and cash-flow basis but is currently facing a challenge on the earnings front, which is why the analyst consensus is a cautious 'Hold.'

As of November 2025, the company's valuation ratios suggest a disconnect. On a price-to-book (P/B) basis, the stock trades at just 0.66. This means you are paying only 66 cents for every dollar of the company's net assets, which is a classic sign of being undervalued. Plus, its enterprise value-to-EBITDA (EV/EBITDA) ratio is a low 2.61, indicating its operating cash flow (earnings before interest, taxes, depreciation, and amortization) is cheap relative to its total value.

Here's the quick math on the earnings issue: The trailing twelve months (TTM) price-to-earnings (P/E) ratio is a negative -7.46. A negative P/E ratio simply means the company had negative net earnings over the past year, which is a major red flag for profitability. However, analysts are forecasting a significant turnaround for the full 2025 fiscal year, with the estimated forward P/E ratio jumping to 50. That's a huge shift, but it's based on future projections, not current reality.

The stock price trend over the last 12 months reflects this uncertainty. While the NYSE: VET stock traded as low as $5.14 and as high as $10.85, the closing price around November 20, 2025, was approximately $9.00. Overall, the stock has delivered a negative return of about -12.72% over the past year. It's been a rough ride, but the stock is currently trading closer to its 52-week high than its low.

The dividend is a key part of the investment thesis. Vermilion Energy Inc. (VET) offers a current dividend yield of about 4.1%, with a quarterly dividend of C$0.13 per share. What this estimate hides, though, is the payout ratio. Because of the recent negative earnings per share (EPS), the reported payout ratio is negative, which is defintely not sustainable. Still, some models suggest the dividend is covered by cash flow, which is a more relevant metric for energy companies.

The analyst community is clearly hesitant, assigning a consensus rating of Hold. Of the seven analysts covering the NYSE: VET stock, the breakdown is typically two 'Buy' recommendations, four 'Hold' recommendations, and one 'Sell' recommendation. The average 12-month price target is approximately C$13.67, suggesting a substantial upside if the company hits its earnings targets.

• P/E (TTM): -7.46 (Signals recent unprofitability)
• P/B: 0.66 (Suggests assets are undervalued)
• EV/EBITDA: 2.61 (Indicates cheap cash flow)

For a deeper dive into who is making these calls and why, you should check out Exploring Vermilion Energy Inc. (VET) Investor Profile: Who's Buying and Why?

Your action here is to watch the next quarter's earnings report closely. The market is waiting to see if that projected P/E of 50 is realistic, and if management can stabilize the dividend with free cash flow, not net income.

Risk Factors

You're looking at Vermilion Energy Inc. (VET) and seeing strong cash flow, but you need to know what could derail that momentum. The reality is, even with a diversified asset base, the energy sector is inherently risky. The biggest near-term risks for Vermilion Energy Inc. are a mix of macro-level volatility and specific operational bottlenecks that could cap their growth.

Commodity price swings are the perennial external risk for any oil and gas producer. While Vermilion Energy Inc. benefits from premium European natural gas prices, a sudden drop in global energy markets would hit their Fund Flows from Operations (FFO) hard. In the third quarter of 2025, the company still generated C$254 million in FFO and C$108 million in Free Cash Flow (FCF), but this was in a challenging commodity price environment, and they even missed consensus revenue estimates.

Here's the quick math on their financial risk management:

• Commodity Hedging: Vermilion Energy Inc. has actively hedged approximately 30% of its expected 2025 production (net of royalties) to stabilize cash flow.
• Debt Management: They've made significant progress on their balance sheet, reducing net debt by over $650 million since Q1 2025, bringing the total net debt to under $1.4 billion as of September 30, 2025. That's a strong move to de-risk the balance sheet.

Still, their operational risks are concrete and visible in the recent filings. You can't ignore the production issues that directly impact cash flow.

The company has faced specific operational and strategic headwinds this year. For example, in Q3 2025, they had a temporary shut-in of a portion of their Deep Basin gas production, which impacted output by roughly 3,000 barrels of oil equivalent per day (BOE/d). Plus, they are dealing with bottlenecking issues in their high-margin German operations, which management expects to restrict production until 2027. That's a long-term drag on their European gas premium story.

What this estimate hides is the potential for cost overruns on their capital program. They did, however, reduce the upper range of their 2025 Exploration & Development (E&D) capital expenditures guidance by $20 million, now targeting between $630 million and $640 million, due to improved capital efficiency. That's a small win, but it shows they are watching their spending. They are also anticipating higher maintenance spending in 2026, including a planned 32-day turnaround in Ireland.

To be fair, the company's strategy of asset diversification across North America, Europe, and Australia is a built-in mitigation plan against localized regulatory or market risks. Their focus on returning capital, with a plan to return 40% of excess free cash flow to shareholders in 2025 through dividends and share buybacks, shows confidence in their future FCF generation.

For a deeper dive into the valuation and strategic framework, check out the full post: Breaking Down Vermilion Energy Inc. (VET) Financial Health: Key Insights for Investors.

Your action item: Monitor the Q4 2025 report for updates on the German bottleneck and any changes to the 2026 maintenance budget.

Growth Opportunities

You're looking for a clear map of where Vermilion Energy Inc. (VET) is headed, and the story for 2025 is simple: it's about strategic asset consolidation, disciplined capital spending, and a relentless focus on high-margin European gas. Their path to growth isn't a massive production surge, but a calculated increase in per-share value driven by debt reduction and premium-priced natural gas assets.

The core growth driver is a shift toward a more focused, longer-duration asset base, which was cemented by the Westbrick Energy Ltd. acquisition earlier this year. This move, plus the divestment of certain Saskatchewan and United States assets, means Vermilion Energy Inc. is concentrating its capital on its most profitable regions: the North American Montney and Deep Basin, and its European gas portfolio. This is a smart, targeted strategy.

• Focus capital on high-netback gas assets.
• Reduce debt to improve financial flexibility.
• Increase shareholder returns via dividends and buybacks.

Targeted Production and Financial Projections for 2025

The company's growth isn't about chasing volume at any cost; it's about increasing cash flow per barrel of oil equivalent (boe). Full-year 2025 production is projected to average approximately 119,500 boe/d, with a significant 65% weighting toward natural gas. This gas focus is a key competitive advantage, as their European production realizes prices significantly higher than North American benchmarks.

Here's the quick math on the financial outlook, based on current analyst consensus for the full fiscal year 2025. What this estimate hides is the potential upside from continued high European gas prices, but it provides a solid baseline.

The capital expenditure (E&D) guidance of $630 million to $640 million (CAD) reflects a disciplined approach, with a mid-year reduction of $20 million without impacting production guidance. This is capital defintely being spent on the right wells: specifically, new drilling in the Deep Basin and the high-potential deep gas exploration in Germany.

Strategic Levers: Debt and Shareholder Returns

The most compelling financial story for Vermilion Energy Inc. in 2025 is the rapid deleveraging (reducing debt). Net debt has been reduced by over $650 million since Q1 2025, bringing the net debt down to $1.38 billion as of September 30, 2025. This is a massive improvement, and it directly translates to a stronger balance sheet and more flexibility.

This debt reduction is the engine for their shareholder return policy. As the balance sheet strengthens, the company is increasing its base dividend and continuing its share buyback program. They increased the quarterly cash dividend by 8% at the start of the year, to C$0.13 per share, and have a planned 4% increase for Q1 2026. They've also been actively reducing the share count, repurchasing over 9 million shares in 2024 alone, which directly drives up your ownership percentage in the company.

The primary competitive advantage is their market and commodity diversification. Their international operations, particularly the European natural gas assets, provide a crucial hedge against volatile North American pricing. This allows them to maintain peer-leading netbacks (the profit margin on a barrel of oil equivalent) and generate stable fund flows from operations (FFO) and free cash flow (FCF) even when local gas prices are weak.

If you want to dive deeper into who is capitalizing on this strategy, you should check out Exploring Vermilion Energy Inc. (VET) Investor Profile: Who's Buying and Why?