Vermilion’s acquisition includes 92 million boe of PDP reserves and 256 million boe of 2P reserves, primarily gas. Credit: MacroEcon/Shutterstock.

Vermilion Energy has announced the strategic acquisition of Westbrick Energy, a private oil and gas company with operations in the Deep Basin in Alberta, Canada.

The C$1.075bn ($746.53m) deal is expected to close in Q1 2025, boosting Vermilion’s production by an estimated 50,000 barrels of oil equivalent per day (boepd), with a mix of 75% gas and 25% liquids.

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The production is forecasted to generate more than C$110m in annual free cash flow, assuming current forward commodity prices.

Revenue from the acquired assets will be evenly split between liquids and gas. Vermilion also plans to hedge gas production to manage financial risks.

The acquisition expands Vermilion’s footprint in the Deep Basin with 1.1 million acres of land and four operated gas plants with a capacity of 102 million cubic feet per day (mmcf/d).

It also adds proved developed producing (PDP) and proved plus probable (2P) reserves of 92 million barrels of oil equivalent (mboe) and 256mboe, respectively, with a substantial gas component in both categories.

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These estimates are based on evaluations by McDaniel & Associates Consultants.

Vermilion Energy president and CEO Dion Hatcher said: “The strategic acquisition of Westbrick represents a significant step forward in Vermilion’s North American high-grading initiative to increase operational scale and enhance full-cycle margins in the liquids-rich Deep Basin.

“The Deep Basin is an area Vermilion has been operating in for nearly three decades and is currently the largest producing asset in the company.”

Vermilion will utilise its C$1.35bn revolving credit facility to finance the acquisition.

Additional funding includes a new C$250m term loan with TD Securities and a $300m bridge facility underwritten by Royal Bank of Canada and TD Securities.

Post-acquisition, Vermilion’s net debt is expected to stand at C$2bn, with a net debt to fund flows from operations ratio of 1.5 times and liquidity of around C$500m.