Good morning. My name is Jonathan and I will be your conference operator today. At this time I would like to welcome everyone to Vermilion’s Second Quarter Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions) Thank you. Mr. Donadeo, you may begin your conference.

Thank you, Jonathan. Good morning ladies and gentlemen and thank you for joining us today to discuss our second quarter 2013 financial and operating results. I’m Lorenzo Donadeo, President and CEO of Vermilion. Joining me today are Curtis Hicks, Executive Vice President and CFO, Tony Marino, Executive Vice President and Chief Operating Officer and Dean Morrison, our Director of Investor Relations. Earlier, this morning, we announced record operating results driven by consistent operational execution and strong production and drilling results year-to-date. Thus far in 2013 we’ve achieved growth across all four of our operating areas resulting in record consolidated three and six month production volumes of 42,813 and 20,772 Boes per day respectively. Today in view of our strong operational performance we are further increasing our production guidance for 2013 to between 40,500 and 41,000 Boe per day, up from our previously upwardly two revised guidance of 39,500 to 40,500 Boe per day and original guidance of 39,000 to 40,500 Boe per day. Our strong quarter-over-quarter production growth of 11% was primarily attributable to production additions from our Cardium and Mannville drilling in Canada and high productivity from our two-well sidetrack program in Australia. In Canada we increased Cardium production by 13% to over 9500 Boe per day during the second quarter. Since entering the play in 2009 we’ve drilled 202 gross wells that’s 141 net in the Cardium. Our well performance continues to outpace out of our peers in the area demonstrating the quality of our land position in the West Pembina region. Our lean results reflect our continued efforts to optimize completion technology and well design. We’ve been able to demonstrate consistent production improvement and a significant reduction in per-section costs by drilling long-reach 1.5-mile horizontal wells. And as a result we are now planning on drilling a…

(Operator Instructions). Your first question comes from the line of Greg Pardy with RBC Capital Markets. Your line is open. Greg Pardy – RBC Capital Markets: Thanks. Good morning. Just a couple of questions. First one just on France I mean those assets I guess that acquisition you did I guess was last year has worked out well for you. Do you see any other opportunities acquisitions wise and then secondly is just more of a knit question; just curious as to whether you can give us some guidance on what you expect overall corporate cash taxes to be for 2013? Thanks very much.

Yeah. On the first question, I mean in terms of acquisitions in France there are some that we have kind of been watching. There is I guess nothing that I guess imminent I guess, if we can put it that way. But I mean there are other opportunities there that we’ll be watching closely and determine whether we could execute it in a range that will create value for the company. There was a number of other acquisitions that we are looking at both internationally in our area of focus as well as domestically. The domestic acquisitions that we’re looking at are probably more oil related acquisitions and we’re looking at a number of opportunities again focused on opportunities that we think fit in well with our portfolio and fit in well with our business our growth and income model and at a price that’s complete value for the company. And on the cash tax side, Curtis?

Yeah Greg cash tax is not an absolute number obviously highly dependent on two factors one. The first one is commodity pricing and the second is internal events within various operating companies that impact the tax calculations. But as we sit today assuming sort of current price that going forward we would forecast PRRT, which is the Petroleum Resource Rent Tax in Australia. It’s a total about $50 million to $55 million for the year, which is about double the six months number at $24 million. We would corporate income taxes to come in the $140 million to $150 million range again about double the $72 million that we booked for the first six months. And so, total forecast $205 million but subject obviously to change based on the factors I alluded to earlier. Greg Pardy – RBC Capital Markets: Okay that’s great Curtis. Maybe just to go back just on the acquisitions and one of the questions about Vermilion that does come up is in terms of the acquisitions that you are doing whether you would ever tackle something of significant scale that would increase the size of the company by 50% or something like that big numbers. Is your general orientation then to be doing rifle shot acquisitions, bolt-ons basically asset deals that are still going to in essence not spoil the growth I think that you have got ahead or are you fairly agnostic as you look at potential transactions?

That’s good question, Greg. I think from our perspective if you look at Vermilion historically, we’ve always done deals probably under $500 million and those were the deals that really we feel really are in our niche space and then created lot of value for us as an organization. I mean, I think, we I don’t think, we’ve ever done a deal over that size. I don’t anticipate us doing anything in excess of that size in the near term. And you never say never, if the right opportunity came along but we’re bit reluctant of doing sort of those transformational deals. Greg Pardy – RBC Capital Markets: Okay. And then you said, I think you said CAD$100 million to CAD$500 million?

Ye something under $500 million yeah. Greg Pardy – RBC Capital Markets: Okay, okay. Very good. Thanks a lot guys.

Yeah. Thank you.

Your next question comes from the line of Dirk Lever with AltaCorp Capital. Your line is open. Dirk Lever – AltaCorp Capital: Good morning. Congratulations on some great results. I wanted to focus on the Netherlands. Last year you had a couple of very good well as you have done some debottlenecking, you stated that you will not be running production at full capacity in order to maximize your economics long-term and monitoring the wells. But I’m wondering if you can give us some guidance on what you are looking at longer-term of expansion of capacity if you are saying that you have got an organic growth business in the Netherlands that does underlie that you will be expanding capacity as you go. So, what kind of rates can we look at? Would it be 5% to 7% or is it something a little bit larger than that?

Okay, Dirk. The overall consolidated organic growth target for the company is in that 5% to 7% range that you quoted I think that over time and it will take, it will take a few years to develop this substantial inventory of wells to tie-in each year and to avoid any kind of ups and downs to the production profile as a result of certain big wells declining. But overtime after so doing, I think that the Netherlands has the capability to – had a minimum grow in line with our corporate 5% to 7% organic target and potentially at higher growths rates than that. We actually see a great deal of potential in the Netherlands land base. We had a very large number of prospect leads even before adding the last three concessions over the past, over about the past year. And even thought not only – not all those leads are going to progress to drillable projects. I think a lot of them will. I expect that we’ll generate a lot of prospects on the new lands and as a result I think it’s a quite a long-term profile of growth and getting back to your question probably one that supports growth rates at or above the consolidated corporate organic target. Dirk Lever – AltaCorp Capital: Thank you. And then when you are looking at the Netherlands obviously the economics that are there are very strong. When you compare the economics in the Netherlands compared to Canada, what stands out as generating greater returns? Obviously they can grow at the same pace but when you are just looking at it on a project-by-project basis, which stands out higher?

The fact is that there is a set of very high rate of return projects in a number of places in the company. Netherlands offers very, very high rates of return. There is French development, which we have embarked on with the Champotran drilling program probably offers comparable rates of return. The Mannville in Canada with the well results that we have been getting also offers very high rates of return in the actually just in terms of IRR part of the Australian wells and probably the higher we have in the portfolio. In addition to that, we have the ongoing Cardium program that has been very successful and I think actually getting some of the most consistent strong results you would find anywhere in the Cardium play. So, we have a whole set of choices. We’re going to do some of each and any of those top five projects in the company offer – offer very competitive investment results. It’s very difficult to characterize any one of those five as being substantially better than the others. Dirk Lever – AltaCorp Capital: Thanks very much, Tony.

Your next question comes from the line of Patrick Bryden with Scotia Bank. Your line is open. Patrick Bryden – Scotia Bank: Good morning gentlemen. Just firstly on the Duvernay I’m curious if you can provide a little bit of elaboration in terms of the well profile that you would be looking at say if we are looking at questions like length and number of stages and then the well cost that might be anticipated for that? And I guess, in addition to that, I’m just wondering what your view is on the pace at which you would be looking to go there as industry is also de-risking and what you might learn from them?

So, let’s see the, the first question would be well length. And as we move to drill this first well for us in a play. We are looking at drilling just about a mile maybe a short of a mile on the first well. The, we’re still determining the number of stages to pump but spacing of the stages will probably be in the range of 100 meters per stage, which if we, if we drilled up to a mile or close to it preliminarily that would suggest perhaps a 14 stage job. And again, we are still determining that based on the current technical work. The cost to the well, when we’re doing is evaluation wells like this first one. We’re going to be higher than they would be in a – on a pad drilling development scenario. So, I would say the initial wells, the initial well that we’re going to drill probably would be in the range of $13 million or $14 million. We do think that in a pad drilling development program, we can get that down a lot. I would think probably to less than $10 million a well project proceeds to full development. In answer to the part of the question about the philosophy about to what degree we watch the rest of the industry activity. We began acquiring these leases and all these licenses in 2011 so we have been watching the industry for over two years now by the time we drilled well probably of about 30 months of industry data there is more that comes in all the time, and we think that that’s a sufficient period to get a good idea of how we want to go about drilling in that and completing this first well. Before we do further…

Yeah Pat, so as we sort of run that model and then we got annual guidance at 40,541,000 so if you marry that up with our first half production really that production in the second half will be pretty consistent with first half production at somewhere between the guidance number is 40.541,000 barrels a day and. And we see Q3-Q4 production being pretty consistent. Patrick Bryden – Scotia Bank: (Inaudible) appreciate it. Thanks very much.

Your next question comes from the line of Gordon Tait with BMO Capital Markets. Your line is open. Gordon Tait – BMO Capital Markets: Good morning. Just a couple of questions, back on France, you mentioned that you drilled about 4 to 5 infill wells in Champotran; just wondering what the potential there is? How many more infill wells or how much of the acreage there would be amenable to infill drilling?

Okay, yeah in this initial drilling program that we did in Champotran are actually picking up drilling at previously Vermilion had drilled the field a number of years ago. We drilled four infill wells actually and then we had the extension well at the south a 2 kilometer extension test. In terms of the drilling that’s developed by gas or the potential number of locations that are opened up by having these quite successful pad wells it’s one the order of 20 plus potential locations and those would be directly related to the success of this year’s five well program there are other concepts that we have in this quite large field and that would over a period of time lead to potentially another significant number of locations beyond that approximately 20 that I’m contributing to the results of this year’s drilling program. Gordon Tait – BMO Capital Markets: And then with France, it seems to me it was an area that generated a lot of cash flow, pretty light reinvestment rate; I think it was 30% or 35% but now it sounds like you’re going to turn into some – you’re looking for some growth prospects there. So can we assume a, a higher level of reinvestment in France and then b, also maybe higher decline levels as you grow up more of the property there?

If you’re defining me reinvestment in terms of a percentage of FFO we would say or our guess would be at this point we haven’t set our 2014 budget, but our guess would be that we’ll see a comparable percentage of reinvestment to of FFO to what we had in the past, that’s said the level of FFO was rising and as a result we would end up with growing capital programs in the country greater level of investment in the country year-after-year actually well still generating higher levels of free cash flow as well. Gordon Tait – BMO Capital Markets: Okay, so about the same percentages. Then lastly, with the strength in oil prices, are you looking at more hedges for next year?

Gordon, and I think the answer is no, we’re going to stick with our previously stated strategy we’re hedging 50% of our volumes net of royalties we’ll continue with that strategy through the first gas at Korab that which time we’ll reevaluate whether we want to hedge in itself to what extent we want to hedge. So I think you can – you’ll see us consistently hedge at that 50% level. Gordon Tait – BMO Capital Markets: Okay, thanks.

Your next question comes from the line of Travis Wood from TD Securities. Your line is open. Travis Wood – TD Securities: Yeah, good morning guys. Just a question on the Cardium. You’ve mentioned that you’re starting to focus a bit more on the longer reach wells; so have you seen a step function or an impact on the IP rate basis and do you think GLJ will reevaluate the program that you did this year and look at the EOR bookings? Then a second question just in the same area; drilling the Mannville we’ve seen some pretty strong rates coming from the Ellerslie; so are you beginning to think about, just as you did when you started to ramp up the Cardium, some infrastructure expansion from that play and then what type of capacity are you thinking about if you are?

Okay, the first question on the Mannville performance of the longer wells are one and a half versus one mile. The wells do generate a higher IP, we when we do this measurement or this comparison of what the longer wells to the original one mile wells we always make an adjustment or the reservoir quality specifically on what we call fiage or porosity thickness product we compare what a one mile well did or would have done in that area versus our actually one, our actual one and a half mile performance. And the typical ratio that we’ve been getting is about 1.4 times the productivity of the one mile long well taken as adjustment for the porosity height product in each section that we drill. The EUR performance actually may be slightly better than that because we’re seeing a little bit lower declines on the one and half mile long wells. By the way, on that we are going to begin to drill some two mile long wells in the Cardium later on this year and we believe we can achieve some further capital efficiency improvements by doing that, by moving from one and a half to two mile long wells just as we have in moving from the one to the one and a half mile long wells again keeping in mind that when we made that first move from one to one and a half miles we only generated about a 25% increase in capital cost. The second part of that Cardium question about the reserve bookings really all we could say there is, since it is an independent assessment by GLJ is that, we’re, we know that that will take into account the higher rate performance and presumably that lower decline performance that we’ve seen…

Your next question comes from the line of Jason Frew with Credit Suisse. Your line is open. Jason Frew – Credit Suisse: Hi, there. I notice the UK government appears to have shifted towards incentives for building the shale gas industry. I guess first, do you see this development providing an opportunity for Vermilion. And second, could you comment a little more broadly on shale gas industry development in Europe?

Yeah. I think in terms of the UK that’s something that fits into our area of focus. Our European focus, we are doing some work there, we’re not sure whether it fits sort of what we’re looking for but we are going to right now and doing the technical work on that. It seems like we’re having some – they have government support but maybe not so much support from the public. So, I guess there is some challenges there but I think in general I think shale gas in Europe, in France they have a frac ban on right now and we’re working closely with the government there just try and get them more comfortable with shale gas in France. I think that’s probably if you would ask me last year what I thought if I would have said is probably four to five years old that they may look at it and I think that windows maybe getting tighter now it’s maybe I would say two to three years old. So I think that there is a good chance they’ll allow it. I think they want to do their work in France and they want to do their technical work and make sure that, that could be done safely in an environmentally friendly way. I think they see it as an asset that can create a lot of employment, create a lot of investment foreign direct investment that will be beneficial and a big resource that they have that they want to get value for. So, I’m hopeful that over the next two to three years we’ll see something there. In terms of the rest of the Europe, the boons come off and grows on some of the areas like Poland and some of those areas. There is still other areas that we’re looking at in, in the European area we think still look perspective and we have our international new ventures team that’s focused on that. And we’re trying to capture early stage opportunities where we can get in there low cost and recapture large blocks of land. So we’re progressing that and we’re quite happy with the progress we’re making there but it does take time. We see sort of that part of our business is being something that we’re really not looking for it to really do anything for us till the end of the decade really. We want to get in there early, low cost progressing at a slower pace and then look for it add – we’re success in that production at the end of the decade. Jason Frew – Credit Suisse: Okay. Thanks for those color.

Yeah. Thank you.

(Operator Instructions). Your next question comes from the line of Cristina Lopez with Macquarie. Your line is open. Cristina Lopez – Macquarie: Hi, gentlemen. Congratulations on the quarter. Just a quick question. Most of mine have been answered and I apologize if this one was already asked. With respect to the infill drilling program in France, can you address per well drilling costs in the area?

Yes. Those infill wells cost about €3.5 million a well. So, we would be looking at around $4.5 million per well. Cristina Lopez – Macquarie: And then what’s the timeframe for permitting the wells?

It varies, we do a very complete stakeholder consultation. France has a very strict and I think effective and efficient regulatory system that we work in. And it’s difficult to characterize the exact permitting time because it varies with the target if we’re drilling off an existing pad and we do try to build our pads with some capability to expand. But typically I think to use a rough number we would say that we can usually get authorization to drill within a year of initiating a project. Cristina Lopez – Macquarie: And then, in the Netherlands now with the debottlenecking complete, do you have – and obviously understanding that you’ve been restricting production there. Do you have sufficient capacity now for the 3-well program that’s expected to be drilled and what potential rates might be coming from those wells?

With the expansion of the Garijp gas gathering system and some of the related compression, we do have capability for all of our wells that we intend to drill later this year. And we haven’t disclosed projections of productivity on those wells, typically the Netherlands wells are quite prolific given that these are conventional really high permeability sandstones that we’re targeting. Cristina Lopez – Macquarie: And last question with respect to Australia. Given the rates that you’ve been able to produce test these latest two sidetrack wells, is that now a possibility that you can even push the drilling program further than the two-year window that you’ve been using or will you just keep up with that two-year window?

Those are very prolific wells a lot better than probably we expected certainly the best wells that we drilled in our drilling campaigns to-date. The – to some degree doing to 2015 which is about a – 2015 probably for a base plan is a bit of a lengthening from the schedule that we had previously talked about of drilling about every one and a half years. So, for a rough longer range plan I still think it’s reasonable that we would want to drill in 2015. Cristina Lopez – Macquarie: Perfect. That’s all I have. Thank you so much.

(Operator Instructions). There are no further questions at this time. Mr. Donadeo, I’ll turn the call back over to you.

Thank you, operator. And thank you everyone for participating in our conference call this morning.