Climate Change Data

Environmental Metrics

ESG Focus Areas

• Governance and Ethics
• Economic Performance
• People
• Health, Safety and Environment
• Communities

Environmental Achievements

• Reduced energy intensity by 8% on a per BOE produced basis.
• Near-elimination of flared and vented solution gas at Southeast Saskatchewan assets (expected savings of approximately 120,000 metric tonnes of CO2e).
• Launched the design of a gas export system at Vic Bilh (Aquitaine Basin), expected to save 23,000 tonnes of CO2.
• Implemented a compressor reconfiguration project at Garijp, reducing power consumption by 35% or 3MWh (estimated reduction of 9,700 tonnes of Scope 2 emissions).

Social Achievements

• Recognized as a Best Workplace by the Great Place to Work Institute in Canada, France, and The Netherlands.
• Voluntary turnover rate of 3.54% (well below the industry average).
• Opened new offices in Amsterdam, Schönefeld, and Denver.
• Extended living quarters on Wandoo platform in Australia.

Governance Achievements

• Received 99% shareholder approval on “Say on Pay” advisory vote.
• Adopted an Anti-Hedging policy, Clawback policy, and “Say on Pay” Policy.
• Updated Vermilion’s Ownership policy to increase share ownership requirements for executives.
• Adopted a Board Diversity Policy.

Climate Goals & Targets

Environmental Challenges

• Significant downturn in commodity prices during the latter half of 2014.
• Battery duration and recharge time for electric vehicles.
• Higher than expected levels of subsidence at Harlingen Upper Cretaceous field.

Mitigation Strategies

• Continued focus on ensuring HSE takes precedence over other factors.
• Exploring solutions to address battery duration and recharge time for electric vehicles.
• Voluntarily shut in Harlingen Upper Cretaceous field in 2008 and contributed to a compensation fund.

Supply Chain Management

Supplier Audits: Ongoing basis; HSE pre-qualification for third-party vendors in Canada.

Responsible Procurement

• Strict requirements for third-party vendors; contractual agreements including details regarding insurances, conduct on location, and Vermilion’s work rules.

Climate-Related Risks & Opportunities

Physical Risks

• Rising sea levels

Transition Risks

• Carbon taxation schemes
• Carbon sequestration requirements

Opportunities

• Development of energy-efficient products and processes; geothermal energy.

Reporting Standards

Frameworks Used: GRI-G4

Certifications: Null

Third-party Assurance: LBG Canada, GLJ Petroleum Consultants, Deloitte

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Great Place to Work Institute awards; CDP ranking; Corporate Register Reporting Awards; Governance Gavel Award; TopGun energy company; Aquitain Company of the Year; Road Safety Award; EPAC Top Canadian-Based International Producer.

Environmental Metrics

ESG Focus Areas

• Health and Safety
• Environment
• Economic Prosperity
• Climate Change
• Community Investment

Environmental Achievements

• Reduced flaring and venting emissions at Southeast Saskatchewan assets by 42% (targeting 50% by 2020)
• Achieved 65% reduction in flaring emissions at a major facility in France through commissioning of a gas export system
• Purchased 100% green power in The Netherlands, exceeding 5% renewable energy target by 2017
• Moved from 60/40 oil-gas production balance to 50/50 split in mid-2016
• Top quartile emissions intensity compared to peer group (based on 2014 data)

Social Achievements

• Recognized as a Best Workplace by the Great Place to Work Institute in all participating jurisdictions
• Avoided downturn-related layoffs
• Low voluntary turnover rate (2.3% in 2015)
• Increased emphasis on employee development and training
• Implemented Fair Culture Policy

Governance Achievements

• Received 99% shareholder approval on “say on pay” advisory vote at 2015 AGM
• Appointed an independent Lead Director
• Amended anti-hedging policy aligned with best governance practices
• Recognized for excellence in governance practices by Globe and Mail

Climate Goals & Targets

Environmental Challenges

• Economic challenges for the energy sector
• Volatility of oil and gas prices
• Potential changes to government regulations and fiscal policies
• Long-term financial implications of climate change
• Public concerns about the oil and gas industry

Mitigation Strategies

• Disciplined, long-term growth strategy
• Integrated Sustainability as a key business driver
• Regular review of risks and mitigation strategies by Board of Directors and Executive team
• Proactive addressing of external risks
• Climate Change Policy development, Science-based Target Setting analysis, and Sustainability Reporting Review

Supply Chain Management

Supplier Audits: Ongoing inspections and field audits

Responsible Procurement

• Strict requirements for third-party vendors
• Alignment with Vermilion's values

Climate-Related Risks & Opportunities

Physical Risks

• Rising sea levels
• Climate change impacts

Transition Risks

• Carbon taxation schemes
• Carbon sequestration requirements

Opportunities

• Development of energy-efficient products and processes
• Geothermal energy

Reporting Standards

Frameworks Used: GRI G4

Certifications: ISO 14064-3 (Scope 1 and 2 emissions)

Third-party Assurance: LBG Canada, GLJ Petroleum Consultants, Deloitte

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Climate Disclosure Leadership award (CDP)
• Best Workplace (Great Place to Work Institute)
• Governance Gavel Award
• TopGun energy company

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reported CO2e emissions to the CDP and received a Climate Leadership level (A-) performer. One of only 18 Energy Sector companies globally to receive a leadership score (Top 4%).
• Published Corporate Sustainability Report with emphasis on improving energy efficiency, greenhouse gas emissions reduction and water efficiency optimization.
• Managed waste products by reducing, recycling and recovering.

Social Achievements

• Maintained clear priorities around 5 key focus areas of HSE Culture, Communication and Knowledge Management, Technical Safety Management, Incident Prevention and Operational Stewardship & Sustainability.
• Rolled out “Vermilion High 5”, an individual safety awareness initiative aimed at keeping front line workers safe.
• Conducted a company wide review of contractor management, field supervision selection and onboarding, management of new and inexperienced workers, work procedures around mobile equipment.

Governance Achievements

• Received the Finance and Sustainability Initiative's (“FSI”) award for Best Sustainability Report in the Non-Renewable Resources - Oil and Gas category for 2018, relating to our 2016 Sustainability Report.
• Ranked fourth within the oil and gas sector, and among the top quartile of companies in the S&P/TSX Composite Index in the Globe and Mail Board Games for 2017.

Climate Goals & Targets

Environmental Challenges

• Permitting delays significantly reduced Netherlands production volumes in 2017.
• An unplanned 31-day downtime period at Corrib late in Q3 2017 reduced annual corporate production by approximately 900 boe/d.
• Western Canadian natural gas and heavy oil prices continued to be pressured due to various egress issues, resulting in steeply discounted pricing relative to global prices.

Mitigation Strategies

• Netherlands production recovered to near record levels during the fourth quarter following the receipt of permits on several pools.
• Diversified commodity mix, including more than a one-third cash flow contribution from relatively high-priced European natural gas, gives us unusual flexibility in managing our individual commodity exposures.
• Hedging to manage commodity price exposures and increase the stability of cash flows.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI

Awards & Recognition

• Finance and Sustainability Initiative's (“FSI”) award for Best Sustainability Report
• CDP Climate Leadership Level rating of (A-)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Energy Efficiency
• Greenhouse Gas Emissions Reduction
• Water Efficiency Optimization
• Waste Management
• Health and Safety
• Governance

Environmental Achievements

• Reduced gross emissions by 15,000 tonnes CO2e while increasing production (through 40 projects)
• Decreased emissions intensity on a per unit of production basis due to energy efficiency programs and emission reduction initiatives
• ISO 5001 certification for the German Business Unit energy management program
• Reduced long-term environmental liabilities through decommissioning, abandoning and reclaiming well leases and facilities
• Implementation of various water management programs to reduce reliance on fresh water sources

Social Achievements

• Maintained clear priorities around 5 key focus areas of HSE Culture, Communication and Knowledge Management, Technical Safety Management, Incident Prevention and Operational Stewardship & Sustainability
• Completed and gained regulatory acceptance of the Corrib Production Safety Case
• Implemented “Vermilion High 5”, an individual safety awareness initiative aimed at keeping front line workers safe
• Expanded company-wide HSE leadership training program to improve hazard identification and risk reduction
• Work to build long-term relationships with environmental stakeholders and communities

Governance Achievements

• Establishment of a Sustainability Committee by the Board of Directors
• Top quartile ranking for industry sector in RobecoSAM's annual Corporate Sustainability Assessment
• Top of peer group in Sustainalytics ESG rankings
• MSCI ESG rating of A for the second consecutive year
• ISS QualityScore decile ratings of 1 for Environmental and 2 for Social

Climate Goals & Targets

Environmental Challenges

• Increased pricing of GHG emissions (e.g., carbon tax)
• Enhanced emissions reporting obligations
• Mandates on and regulation of existing products and services
• Changes in emissions regulations
• Changes in temperature extremes
• Changes in precipitation patterns and extreme variability in weather patterns
• Rising sea levels
• Increased severity of extreme weather events (e.g., cyclones and floods)
• Changing customer behavior

Mitigation Strategies

• Carbon Liability Assessment Tool
• Annual assessment of risk and implementation of mitigation measures
• Diversified asset base
• Integrated Sustainability as a strategic objective
• Enterprise Risk Matrix
• Insurance
• Water management programs
• Multi-well pads
• Emergency response capabilities
• Protocols for monitoring and preparing for cyclones
• Operational changes to prioritize worker health and safety, environmental protection, and asset protection
• Commitment to health and safety, environmental protection, and economic prosperity
• Contributions to the UN SDGs

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Changes in temperature extremes
• Changes in precipitation patterns and extreme variability in weather patterns
• Rising sea levels
• Increased severity of extreme weather events

Transition Risks

• Increased pricing of GHG emissions
• Enhanced emissions reporting obligations
• Changes in emissions regulations
• Mandates on and regulation of existing products and services

Opportunities

• Participation in carbon market
• Shift toward decentralized energy generation

Reporting Standards

Frameworks Used: CDP

Certifications: ISO 5001

Awards & Recognition

• CDP Climate Leadership Level (A-)
• Finance and Sustainability Initiative's award for Best Sustainability Report

Environmental Metrics

ESG Focus Areas

• Emissions Reductions
• Community Investment
• Health and Safety
• Corporate Governance

Environmental Achievements

• Ranked at the top of peer group in SAM Corporate Sustainability Assessment (CSA) and selected for The Sustainability Yearbook 2021 (top 15% of industry)
• Maintained MSCI ESG rating of AA
• ISS decile ratings of 1 for Environmental and Social QualityScores (lowest risk)
• Submitted first CDP Water report
• Continued submitting CDP Climate report
• Reduced long-term environmental liabilities through decommissioning, abandoning and reclaiming well leases and facilities
• Managed waste products by reducing, recycling and recovering

Social Achievements

• Invested over $7.4 million and 10,800 hours of volunteer time in strategic community partnerships over the past five years
• Days of Caring program supporting social and environmental agencies

Governance Achievements

• Strong corporate governance practices, complying with Canadian Securities Administrators and Toronto Stock Exchange guidelines
• Board of Directors and senior management analyzed results of robust scenario analysis based on World Economic Forum reporting
• Consistently strong results and rankings from external ESG agencies

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impacting global economy and commodity prices
• Natural decline in North American and International production
• Grandpuits refinery closure in France disrupting crude oil transportation
• Climate-related risks (extreme weather, regulatory changes)
• Changes in customer behavior and consumer preferences

Mitigation Strategies

• Reduced 2020 capital program, suspended dividend, reduced annualized cash outflows by over $550 million
• Management changes and global organizational review to improve profitability and long-term sustainability
• Disciplined and balanced E&D capital budget of $300 million for 2021
• Production guidance of 83,000 to 85,000 boe/d for 2021
• Focus on maximizing returns and FCF for debt reduction and liquidity preservation
• Developing a comprehensive, long-term ESG strategy with clear objectives and emissions reduction targets
• Resumed drilling activity in Alberta, planned resumption in Saskatchewan and Wyoming
• Successfully completed planned maintenance turnaround in Australia
• Secured authorization for trucking light crude oil to other refineries in France
• Commodity hedging program to manage price exposures and increase cash flow stability
• Integrated Sustainability as a strategic objective to manage climate-related risks and opportunities
• Robust asset integrity program and insurance to mitigate extreme weather risks
• Focus on producing energy responsibly and attracting sustainability-conscious investors

Supply Chain Management

Responsible Procurement

• Respectful and fair treatment of staff, contractors, partners and suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events (cyclones, floods)
• Rising sea levels

Transition Risks

• Carbon taxes (Canada, Australia, Netherlands)
• Emissions reporting obligations
• Changes in emissions regulations
• Changing customer behavior
• Changes in consumer preferences

Opportunities

• Access to new markets (low-sulphur crude oil)
• Participation in carbon markets
• Shift toward decentralized energy generation
• Development of new products and services through R&D and innovation
• Increased demand for natural gas due to reduced coal-fired power generation

Reporting Standards

Frameworks Used: TCFD, SASB

Awards & Recognition

• Top ranking in SAM's 2020 CSA
• Selected for The Sustainability Yearbook 2021

Environmental Metrics

ESG Focus Areas

• Climate Change
• Water Stewardship
• Biodiversity
• Community Relations
• Health and Safety
• Human Rights
• Supply Chain Management
• Governance

Environmental Achievements

• Reduced Scope 1 emission intensity to 0.017 tCO2e/operated boe, reflecting a 10% reduction over the 2019 baseline and on track to achieve the 2025 target of 15-20%
• Generated 59,144 MWh of renewable geothermal energy annually in France from four sites (exceeding the target)
• Reduced absolute emissions by approximately 186,231 tCO2e (55%) and absolute methane emissions by 78,189 tCO2e (57%) in Canada compared to the 2018 baseline

Social Achievements

• Provided over $2 million in community investment donations
• Committed $1.2 million over seven years to Inn from the Cold
• Achieved Best Workplaces designation in Canada, Germany, the United States, and Australia

Governance Achievements

• Maintained AAA MSCI ESG rating
• Achieved decile rating of “1” for Environmental and “2” for Social practices in ISS ESG QualityScore
• Linked executive and employee compensation to climate concerns by adding targets for emission intensity reduction and Asset Retirement Obligation (ARO) liability reduction to the LTIP scorecard

Climate Goals & Targets

Environmental Challenges

• Increased pricing of GHG emissions (carbon tax)
• Enhanced emissions and other ESG reporting obligations
• Changes in mandates/regulations regarding products
• Shareholder divestment
• Changes in customer behavior and legal challenges
• Increased costs related to capital and financing
• Increased severity of extreme weather events
• Substitution of existing products with lower emissions options

Mitigation Strategies

• Provincial responses to carbon tax (Alberta's TIER, Saskatchewan's OBPS)
• Emission reduction targets and ongoing efforts
• Monitoring and complying with taxation requirements
• Automating emissions data gathering and calculation processes
• Non-technical Risk Management Policy and framework
• Lobbying policy
• Careful and deliberate approach to new technology adoption
• Sustainability project criteria and opportunity development process
• Insurance to mitigate financial impact of severe weather events
• Robust asset integrity program
• Exploring new technologies and processes for alternative and renewable energy production
• Scenario analysis to identify potential opportunities

Supply Chain Management

Supplier Audits: Number not specified, but all suppliers with >$1MM spend undergo a global supply chain risk assessment.

Responsible Procurement

• Strict requirements for third-party vendors
• Alignment with Vermilion's core values
• HSE pre-qualification
• Monitoring of vendor compliance

Climate-Related Risks & Opportunities

Physical Risks

• Increased severity of extreme weather events (cyclones, floods)
• Rising sea levels
• Changes in temperature extremes
• Changes in precipitation patterns

Transition Risks

• Increased pricing of GHG emissions
• Enhanced ESG reporting obligations
• Changes in mandates/regulations
• Shareholder divestment
• Changes in customer behavior
• Increased costs related to capital and financing
• Substitution of existing products

Opportunities

• Development of new products and services (geothermal, biogas, hydrogen)
• Access to new markets
• Ability to diversify business activities
• Participation in carbon market

Reporting Standards

Frameworks Used: GRI, SASB, TCFD, ISSB

Certifications: ISO 14001, ISO 50001, Equitable Origin responsible gas producer certification, AFNOR CSR Committed label, Business Working Responsibly mark

Third-party Assurance: GLJ Petroleum Consultants (reserves), Deloitte (financial), Jacobs (Scope 1, 2, and 3 emissions), NSAI (Germany Business Unit’s environmental management system)

UN Sustainable Development Goals

• Goal 7
• Goal 13
• Goal 16
• Goal 3
• Goal 5
• Goal 8
• Goal 12
• Goal 14
• Goal 15
• Goal 17

Alignment with SDGs is described throughout the report.

Sustainable Products & Innovation

• Geothermal energy from produced water
• Biogas
• Hydrogen

Awards & Recognition

• 2013 Circular Economy Award (France)
• 2020 Community Impact Workplace Excellence Award (United Way)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Emissions Reduction
• Water Stewardship
• Biodiversity
• Safety
• Community Relations
• Governance

Environmental Achievements

• Reduced Scope 1 emission intensity to just below 0.017 tCO2e/operated boe, reflecting a 12% reduction from 2019 baseline.
• Reduced spill count by 30% between 2022 and 2023 (particular focus in Canada).
• Invested approximately $57 million in asset retirement obligation expenditures, including abandonment activity on some 250 wells.
• Divested approximately 4,860 wells (gross; 3,250 net) via the sale of non-core assets in southeast Saskatchewan.

Social Achievements

• Provided over $2 million in community investment donations.
• Third year of a $1.2 million commitment to Inn from the Cold in Calgary.
• Best Workplace certification in Australia, Canada, Germany, Netherlands, and the United States.

Governance Achievements

• Implemented Lobbying policy in 2023.
• Implemented Non-technical Risk Management Policy and framework in 2023.

Climate Goals & Targets

Environmental Challenges

• Increased pricing of GHG emissions (carbon tax).
• Enhanced emissions and other ESG reporting obligations.
• Changes in mandates/regulations re products.
• Shareholder divestment due to sustainability concerns.
• Changes in customer behavior and legal challenges.
• Technology limitations in emission reduction projects.
• Increased costs related to capital and financing.
• Increased severity of extreme weather events.
• Rising sea levels impacting Netherlands assets.
• Changes in temperature extremes, precipitation patterns, and weather variability.
• Substitution of existing products with lower emissions options.

Mitigation Strategies

• Provincial responses to carbon tax (Alberta's TIER, OBPS).
• Ongoing efforts to reduce energy and emissions intensity.
• Monitoring and complying with taxation requirements.
• Automating emissions data gathering and calculation processes.
• Proactive engagement with stakeholders on emissions reporting.
• Monitoring regulatory and market changes.
• Providing feedback to governments on proposed regulations.
• Allocating resources for operational changes.
• Setting emission-related targets and an ARO target.
• Developing a climate strategy for sustainability-linked financing.
• Maintaining insurance to reduce financial impact of severe weather.
• Robust asset integrity program.
• Protocols for monitoring and preparing for cyclones.
• Investment in emergency response capabilities.
• Careful and deliberate approach to new technology adoption.
• Sustainability project criteria and opportunity development process.
• Leveraging technical expertise and partnerships for alternative energy projects.
• Accessing local markets and exploring regions to expand operations.
• Independent assessments of operations by third parties.
• Evaluating potential for certified offset credits.

Supply Chain Management

Responsible Procurement

• Clear requirements for third-party contractors.
• HSE pre-qualification screening and auditing.

Climate-Related Risks & Opportunities

Physical Risks

• Increased severity of extreme weather events (cyclones, floods)
• Rising sea levels
• Changes in temperature extremes, precipitation patterns, and weather variability

Transition Risks

• Increased pricing of GHG emissions
• Enhanced ESG reporting obligations
• Changes in mandates/regulations re products
• Shareholder divestment
• Changes in customer behavior
• Technology limitations
• Increased costs related to capital and financing
• Substitution of existing products

Opportunities

• Development of new products and services (geothermal, biogas, hydrogen)
• Access to new markets (low-sulfur crude oil, LNG)
• Ability to diversify business activities
• Shift in consumer preferences towards premium energy products
• Shift towards decentralized energy generation and domestic energy sources

Reporting Standards

Frameworks Used: GRI, SASB, TCFD, CDP

Certifications: ISO 14001, ISO 50001

Third-party Assurance: Jacobs (limited assurance)

Sustainable Products & Innovation

• Geothermal energy from produced water
• Biogas production
• Hydrogen production

Awards & Recognition

• 2013 Circular Economy Award (France)