Good morning. My name is Amy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Vermilion Energy, Inc. 2018 Fourth Quarter and Year-End 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] I would now like to turn the call over to Mr. Anthony Marino, President and CEO. Please go ahead.

Good morning, ladies and gentlemen. Thank you for joining us. I'm Tony Marino, President and CEO of Vermilion Energy. With me today are Mike Kaluza, Executive Vice President and COO; Lars Glemser, Vice President and CFO; Kyle Preston, our Director of Investor Relations and other members of our management team who may be called upon during the Q&A session if required. We changed the format of this conference call to include a PowerPoint presentation, which is provided in the webcast and can also be found on our website under Invest with Us and Events and Presentations. I will use a slide deck this morning to provide you with an overview of our fourth quarter 2018 financial and operating results as well as our 2018 reserves update, which was included in our Q4 release. Slides 2 and 3 in the presentation refer to our advisory on forward-looking statements. These advisories describe the forward-looking information, non-GAAP measures and oil and gas terms referred to today and outline the risk factors and assumptions relevant to this discussion. Slide 4, Q4 review. We'll start with our Q4 results. We delivered record production of 101,621 boe/d, which represents a 6% increase over the prior quarter, primarily driven by strong quarter-over-quarter growth from our Netherlands, Canadian and US business units. I will talk about the operational results of each business unit later in the presentation. Q4 FFO was $222 million or $1.46 per basic share, which was down 15% from the prior quarter. The decrease was primarily due to lower commodity prices which were partially offset by higher production. The Q4 results included a realized hedging loss of $28 million. So if we normalized for this, we would have produced FFO of approximately $250 million or $1 billion on an annualized basis. Slide 5, 2018 review.…

[Operator Instructions] Your first question today comes from the line of Greg Pardy of RBC Capital Markets.

Thanks. And thanks Tony for running to that presentation. I've got a couple of questions for you. The first one is just a bit open-ended, but what are the priorities for you and just Vermilion this year?

Greg, I'm sorry would you repeat your question please?

Yeah. Sure. It just relates to priorities for the company for 2019.

Yeah. In terms of our priorities I think our -- well certainly our top priority in our Company is actually premier safety and environmental performance. We think this is correlated to financial and market performance and we put our communities and our employee safety and protection of the environment ahead of any other priority. So that is definitely number one. Number two, our intent is with prices where they are at today to execute on the capital program that we've outlined, to more than fund our dividends and that capital program while producing at the targeted production levels. And with the excess cash to further retire debt, we started out at a level that's somewhat below the -- in terms of debt ratio, somewhat below the sector averages and we intend to further delever from there, providing additional safety to our capital markets model and flexibility to the Company. So beyond that we intend to advance certain strategic projects for the longer term. You've heard a few of these discussed in the conference call beginning waterflood activity in Southeast Sask, continuing with the development of last year's acquisitions in Southeast Sask and Wyoming and ramping up our European drilling activity to actually a record level for us. So I guess that would summarize that for you.

Yeah. No, no that's helpful. And maybe just as a follow-up then. You touched on it, but 2019 pretty big year I think on the exploration side I think you touched on the first well in Germany, but could you give us a set-up just on what the exploration program looks like for the year. And I'm talking outside of Slovakia and so forth.

Okay. Outside of the CEE what is the exploration program for the year?

Yes.

Okay. The -- well the first activity is in Germany the semi -- exploratory semi-extensional well at Burgmoor Z5 and Dümmersee-Uchte fairly large prospect area and that well will begin to drill in Q1. I think it will be done by the end of Q2. We intend a two gross, it's approximately one net well program in the Netherlands and those would be considered new pool tests. The other drilling activity that we have in France is really -- it's really development and non-exploration at Champotran. So if we take the CEE out of it that is the exploration program in Europe and in fact in the Company.

That’s perfect. Thanks very much.

[Operator Instructions] Your next question comes from the line of Brian Kristjansen of Macquarie.

Thanks. Tony just had a question about the next Hungarian well spudding in March. When do you expect to have that on? And is there any facility requirements adjacent to that location, I assume that's the Dombiratos is one location?

Yes the Dombiratos and -- I will turn to Mike Kaluza our COO to answer that question.

Hi Brian, this is Mike. Yes in Hungary, the Dombiratos yes that is the -- the first of the four wells will be drilling in there that will be spudding in the March timeframe. That's actually pretty close to the -- pretty close infrastructure is very similar to the well we drilled last year. So the typically timeframes are probably four to six months to get the permits and get the construction done and get that online. So roads like about Q3 on production date for that. Following that we'll move directly over to that the second well at [indiscernible]; we got the permit and hence that -- we'll be drilling that. And then we'll follow up to our third and fourth wells. So kind of continuous drilling program out there maybe a slight break between the third and fourth wells, but those are all relatively quick permits and tie-ins and on-production dates.

Perfect. Thanks.

[Operator Instructions] Your next question comes from the line of Tom James a Private Investor. Your line is open.

Hello. I see that last year you lost a $111 million in hedging program. I came online a little bit late, so I was just wondering if you could discuss the current hedging program and your outlook for oil prices in 2019.

Okay, thank you Mr. Jones. The current hedging program is outlined in our corporate presentation, not the smaller deck that we use for this call, but the complete IR deck on the website. That is slides 43 for an annual average and 44 for a quarterly reflection for 2019 and 2020. So we at present are -- for 2019, we are 27% hedged on a boe/d basis. It varies by product. For oil, we are 21% hedged. For European gas we are 66% hedged. And for North American gas which is a much more minor product for us, not a big part of our cash flow mix we are 14% hedged. The hedge position is a little bit heavier in the case of oil at the beginning of the year and lower as we go forward. We are not particularly espousing a view about oil prices at this point; you can kind of see with just the numerical percent volatility in oil price it's really something that is probably impossible for anybody in the world to predict. In general, we did would say that prices in the range where they're at today on an average basis maybe too slightly higher probably represents appropriate reflection of the kind of cost curve that would be required to meet growing demand for the next few years. While that seems to be roughly correct average price for us, the volatility -- and you've seen us tremendously over the past year, up -- down radically in Q4 and then quite a rebound already in Q1, it is very possible. And I guess our basic internal view is that these prices can be very volatile with short cycles of high amplitude perhaps producing an average that is somewhere in the range of today's prices or perhaps…

Thank you very much.

Thank you.

Your next question comes from the line of David Popowich of CIBC. Your line is open.

Yes, thanks for taking my question guys. I guess I just wanted to ask about your booking practices for the Spartan energy reserves. I noticed in your updated presentation you guys have decreased the number of book Frac'd Midale and Open Hole Frobisher locations in your presentation. So, for instance, you're saying -- at the time of your Investor Day, you were saying you had about 432 Midale wells in inventory, now it's about 370 and you said you had about 850 Frobisher locations, but now you have about 540. So, I just want to get some clarification on how your views on that asset may or may not have changed over the past few months. Thank you.

Yes, Dave our views on the asset with respect to primary development locations have gone up and up and up actually since we've had it. In general, as I stated in the call, we see -- originally, we saw about 1,000 primary locations and didn't count on any waterflood at the time we made the Spartan deal and we now see it in the range of 1,500 primary locations. This would include all the play types there and interest gaps one that we have mainly Frac'd Midale and Open Hole Mississippian and Frobisher-Alida, Tilston, but it would also include a small amount for the Viking assets in Southwest Sask that we got with Spartan. So that has gone up. In addition, we were quite optimistic about the water floods as I mentioned. So that's our development activity view of Spartan. When we heard your question there we couldn't -- we can't quite trace through the well count numbers that you were talking about. They do reflect -- they should reflect only what is on the reserve and resource reports with the Spartan we have updated that slide. And we'll just have to check with you and get back to you on the well counts because they are -- our view of the assets is the activity or the development inventory that is available has gone up and will clarify with you the exact counts there.

Sure. I will send -- it's in the drilling project slide, slide 27 in March 29th of your presentation so.

Yes, we're looking at it here and portion of the Spartan would be in the other drilling projects because we did not, for example, list -- I don't know, it's on the order of 100 Viking so that might be part of the difference here and we'll just trace through this and get back to you but I can assure you that absolutely the primary project availability has gone up significantly on Spartan along with -- as a result of the activity we've had to date and the additional time that we've had to own those assets.

Sure. Thanks. I appreciate the answer and I'll follow up with Kyle shortly. Thanks Tony.

Thank you, Dave.

And this concludes our Q&A portion for today. I will now turn the call back over to Mr. Marino for any closing remarks.

Thank you, again, for participating in our Q4 2018 conference call. We look forward to speaking with you again after our Q1 2019 results are reported in April.

This concludes today's conference call. You may now disconnect.