CALGARY - Vermilion Energy Inc. (TSX:VET) has made its first foray south of the border and though it may be small at $11 million, a company executive said there could be meaningful growth ahead.
Last week, Vermilion revealed an acquisition in northeastern Wyoming's "prolific" Powder River Basin. The transaction, with an unidentified seller, covers about 27,500 hectares of land, 98 per cent of which is undeveloped.
The land includes a 70 per cent operated working interest in a tight oil project in an area called the Turner Sand.
"The most important part about it is that we got a start in what we think is potentially a meaningful, very promising tight light oil development in the Turner Sand," said Tony Marino, president and chief operating officer, in a recent interview.
Around the time the transaction was being completed, a well was drilled, producing about 220 barrels of oil per day in its fourth month of production.
While those results were "very promising," Marino said "we think we can probably do quite a bit better than that over time."
"As we go through and apply different fracturing techniques each time, we've learned how to complete the wells better," he said.
In addition to its U.S. foothold, Vermilion's operations span Western Canada, Australia, Germany, Ireland, the Netherlands and France.
Vermilion hasn't firmed up its 2015 capital budget yet as it waits to see where oil prices are heading. U.S. benchmark crude is at about US$75 per barrel, down from above US$100 in the summer. Brent crude, the international benchmark, is at about US$79.
"We want to just be able to see if there is some additional clarity that can be gained over the next month or so before we put out that '15 guidance on capex and production," said Marino.
"It just gives us a bit more time to observe this oil market. There's been a lot of changes, quite rapid changes, over the past couple of months."
There's no immediate pressure to develop its land in Alberta's emerging Duvernay shale, which has attracted much attention in recent years. So Vermilion will be taking it slow in that region.
"I think we're in a pretty unusual position there to be able to just really learn form the industry without having to put large amounts of cash into it."