Vermilion Energy Inc. (VET) Cash Flow Statement

The gap between net income and operating cash flow is stark: in 2025Q4, net income was -$437.3M while OCF was $133.2M, implying significant non-cash charges such as impairments and deferred taxes. Conversely, 2026Q2 shows OCF/NI of 1.27, suggesting a partial normalization, but the volatility across quarters indicates that reported earnings are not a reliable proxy for cash generation. Investors should monitor whether the positive 2026Q2 net income is sustainable or if further one-time charges will recur.

The trajectory of FCF is highly erratic, with 2025Q3's robust $242.8M contrasting sharply with 2025Q4's deficit. This volatility is driven by price realizations and one-time tax levies, as evidenced by the 2025Q4 impairment-driven net loss. While 2026Q2 shows a modest recovery to $61.3M, the lack of consistent positive FCF suggests that the company's cash generation is not yet stable. The 2026Q1 FCF of $93.5M, despite a net loss, underscores the importance of non-cash adjustments in assessing true cash flow.

The capital expenditure pattern shows a significant outlier in 2024Q4, with CapEx/Revenue reaching 121.8%, which aligns with the full acquisition of Equinor's interest in Corrib. This elevated spending likely includes both growth and maintenance components, but the subsequent quarters' CapEx/Revenue ratios (21-45%) suggest ongoing high capital intensity to offset natural declines in mature assets. The 2025Q4 CapEx of $191.6M, despite negative FCF, indicates that management is prioritizing investment over near-term cash returns, which may strain liquidity if commodity prices remain weak.

The working capital adjustments are substantial and erratic, with 2025Q3's positive $149.0M contribution contrasting with 2025Q2's -$110.8M drag. This volatility likely stems from the timing of liftings in Australia and changes in receivables/payables, which can obscure underlying cash generation. The negative working capital changes in 2025Q4 and 2026Q2 suggest that cash outflows for payables or inventory are outpacing collections, potentially indicating operational stress. Investors should adjust for these swings to assess the true cash-generative ability of the business.

Capital deployment has been conservative, with dividends stable around $20M per quarter and buybacks varying from $4.7M to $46.6M. However, the $1.1B acquisition outflow in 2025Q1 for the Corrib stake dwarfs these returns, suggesting that management is prioritizing growth and consolidation over returning cash to shareholders. The modest buyback activity, especially in 2026, may indicate a lack of confidence in the stock's valuation or a need to preserve cash for decommissioning liabilities. Given the negative net income in several quarters, the sustainability of dividends depends on commodity prices and the success of the Corrib integration.

The cumulative gap between net income and operating cash flow is striking: net income sums to roughly -$711M, while OCF is $2.3B, implying that reported losses are largely non-cash. This divergence is typical for E&Ps with significant impairments and ARO adjustments, but the magnitude here suggests that the company's underlying cash generation is far stronger than earnings suggest. However, the negative net income in 2025Q4 and 2026Q1, despite positive OCF, indicates that impairments are recurring, which may signal deteriorating asset values. Investors should focus on OCF as a more reliable indicator of financial health, but also monitor whether these non-cash charges reflect real economic decline.