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Vermilion Energy Inc. Announces 2021 Budget CALGARY , AB , Jan. 18 , 2021 / CNW / - Vermilion Energy Inc. ( " Vermilion " , " We " , " Our " , " Us " or the " Company " ) ( TSX , NYSE : VET ) is pleased to announce its 2021 exploration and development ( " E & D " ) capital budget and associated production guidance . Highlights • E & D capital budget of $ 300 million is a balanced and disciplined budget focused on maximizing returns and free cash flow ( " FCF " ) ( 1 ) to facilitate debt reduction . • Annual average production guidance of 83,000 to 85,000 boe / d reflects a transition to a more efficient , level - loaded capital program . • At the midpoint of production guidance and using the January 13 , 2021 commodity strip , Vermilion expects to generate in excess of $ 200 million of free cash flow with a payout ratio less than 65 % , including the impact from existing hedges . • E & D capital budget is fully funded at a WTI oil price of approximately $ 37 / bbl on an unhedged basis , assuming all other commodity prices held at the January 13 , 2021 commodity strip . • Additional capital projects will be considered for drilling later in the year if market conditions are supportive . 2021 Budget and Production Guidance Vermilion's Board of Directors has approved an E & D capital budget of $ 300 million for 2021 , representing a 17 % reduction from 2020. The Company's primary focus for 2021 is to preserve liquidity and reduce debt while positioning the Company for long - term sustainability . As a result , the capital budget was designed to maximize returns and free cash flow while retaining the flexibility to adjust investment levels depending on commodity prices . In addition , following a review of our global asset base , we have reorganized the business and reporting lines into two core regions , North America and International . The allocation of capital in 2021 will be more level - loaded compared to recent years . While the transition to a more level - loaded capital program will result in lower annual average production for 2021 , it is expected to deliver better overall capital efficiencies and lead to a more manageable production base going forward . Approximately 31 % of the 2021 capital budget will be invested during the first quarter , compared to approximately 65 % in 2020. This $ 300 million capital program is expected to deliver annual average production of 83,000 to 85,000 boe / d . During the budgeting process , close attention was paid to the return and payback period of each individual project under various commodity price scenarios . Given the strong recovery in European and North American natural gas prices throughout the second half of 2020 and into 2021 , Vermilion's condensate - rich natural gas projects in Alberta and conventional natural gas projects in the Netherlands provided the strongest return profiles . As a result , the majority of the first half 2021 drilling program will be allocated to these projects . Vermilion's light oil projects in southeast Saskatchewan , Wyoming and France also screened well under strip pricing at the time of evaluation , however the size of the program has been scaled back in 2021. With the recent strengthening of global oil prices , the economics of these oil projects has further improved and additional drilling will be considered during the second half of the year if market conditions remain supportive .