Vermilion Energy Farms in New Agreement in Germany

Source: www.gulfoilandgas.com 7/28/2015, Location: Europe

Vermilion Energy Inc. is pleased to announce that we have entered into a farm-in agreement (the "Farm-in" or the "Agreement") with Mobil Erdgas-Erd?l GmbH ("MEEG") and BEB Erdgas und Erd?l GmbH & Co.KG ('BEB"). MEEG is 100% held by ExxonMobil and BEB is jointly held by ExxonMobil and Royal Dutch Shell. ExxonMobil Production Deutschland GmbH ('EMPG") currently operates and manages both MEEG's and BEB's interests in the exploration licenses involved in the Farm-in. The Agreement, signed July 27th, 2015 and with an anticipated closing date of January 1, 2016, remains subject to customary conditions and regulatory approvals.

The Farm-in will provide Vermilion participating interest in 19 onshore exploration licenses in northwest Germany, comprising approximately 850,000 net acres of oil and gas rights (100% undeveloped) (the "Assets"). Under the terms of the Agreement, Vermilion will acquire the Assets (which represent 50% of MEEG's and BEB's current interests in these licenses) in exchange for committing to the financial carry of the remaining 50% of MEEG's and BEB's interests in 11 gross (6 net) exploratory wells over the next five years. At present, approximately 75 exploratory and semi-exploratory leads and prospects have been identified in the Rotliegend, Carboniferous, Triassic and Zechstein formations on these Assets.

Eleven of the 19 licenses are currently operated by EMPG, which will transfer operatorship for the exploration phase to Vermilion. The Agreement also grants Vermilion proportional ownership to EMPG proprietary data spanning the Assets. No existing oil or gas production is being acquired by Vermilion in the Farm-in.

The Farm-in provides Vermilion with a very large, nearly contiguous land block in the heart of the North German Basin. This basin has cumulative production of more than 2 billion barrels of oil and 34 trillion cubic feet of natural gas since its discovery, representing approximately 97% of Germany's historical onshore production. We believe that the Assets are prospective for both oil and natural gas.

The Farm-in follows our entry in early 2014 into the exploration and production business in Germany, a jurisdiction with a long history of oil and gas development activity, a consistent fiscal framework and low political risk. The Farm-in is consistent with our growing European focus, and will increase our exposure to the strong fundamentals and pricing of the European natural gas market. The Assets are a natural and synergistic expansion to our existing German and Netherlands portfolios, and share the same subsurface genre and development approach. We believe that our capability in conventional oil and gas exploration and production in onshore Europe, coupled with our track record of accretive European consolidation, positions us for future development and expansion opportunities in both Germany and the greater European region.


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Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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