A substantial — and growing — portion of the Calgary-based company's (TSX:VET) business is centred around producing natural gas in Europe, where prices are typically more than twice that of North America.
Europe relies heavily on natural gas imported from Russia, via pipelines through Ukraine. Any supply disruptions would have an impact on price on the continent.
"They're unfortunate events, obviously, and we don't wish those on anybody," Lorenzo Donadeo said in an interview.
"But the increased pressure on European gas prices will really give us strong cash flow out of our European business."
Even without the Ukraine-Russia situation, Donadeo said the outlook for the European market is strong.
"We're really bullish long-term on European gas and we're positioning ourselves around that concept," he said.
In Europe, Vermilion is established in the Netherlands and France. The company is working on an offshore project in Ireland, recently made an entry into Germany and has been conditionally awarded a new concession in Hungary.
Vermilion is also active in Western Canada and Australia.
Earlier Monday, the company posted a 78 per cent jump in quarterly profits thanks to higher output and stronger commodity prices, among other factors.
Net earnings were $101.5 million, or $1 per share. During the same period a year earlier, Vermilion brought in earnings of $56.9 million, or 58 cents per share.
Production during the quarter averaged 40,960 barrels of oil equivalent per day, up from 36,265 a year earlier.
For 2014, assuming oil and gas prices remain where they are, Vermilion is expecting production to grow to between 45,000 and 46,000 barrels of oil equivalent per day. Much of that increase is expected to come from its newly acquired assets in Germany and the Netherlands.
Development capital for this year is expected to come in at $555 million.
Vermilion is benefiting from strong international oil and gas prices.
The company said average realized prices for crude oil and natural gas liquids were about $106 during the quarter, versus $96.74 during the same period a year earlier.
Average realized natural gas prices were $7.29, up from $7.15.
"Overall the company's had a stellar year," said Donadeo.
"The future's really bright for the company. We've got some well defined growth. We've got some big cash flow growth over the next several years, so I think we're very well positioned over the longer term to continue to provide strong returns to the shareholders."
Shares in Vermilion closed up more than two per cent to $63.87 in afternoon trading on the TSX.
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