EX-99.1 2 ex991.htm ANNUAL INFORMATION FORM

Exhibit 99.1

TABLE OF CONTENTS

GLOSSARY OF TERMS		4
	Conventions	6
	Abbreviations	6
	Conversion	6
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS		7
PRESENTATION OF OIL AND GAS RESERVES AND PRODUCTION INFORMATION		8
	Contingent Resources	8
	Prospective Resources	9
NON-GAAP MEASURES		9
VERMILION ENERGY inc.		9
	General	9
	Organizational Structure of the Company	10
	Summary Description of the Business	10
	Three Year History of Vermilion	11
NARRATIVE DESCRIPTION OF THE BUSINESS		13
	Business Objectives	13
	Description of Properties	13
STATEMENT OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION		16
	Reserves and Future Net Revenue	16
	Reconciliations of Changes in Reserves	21
	Undeveloped Reserves	25
	Timing of Initial Undeveloped Reserves Assignment	25
	Future Development Costs	26
	Oil and Gas Properties and Wells	27
	Costs Incurred	27
	Acreage	28
	Exploration and Development Activities	28
	Properties with No Attributed Reserves	29
	Contingent and Prospective Resources	29
	Abandonment and Reclamation Costs	32
	Tax Information	32
	Production Estimates	33
	Production History	34
	Marketing	36
ADDITIONAL INFORMATION RESPECTING VERMILION ENERGY INC.		37
	Management	37
	Common Shares	38
	Cash Dividends	38
	Dividend Reinvestment Plan	39
	Shareholder Rights Plan	40
AUDIT COMMITTEE MATTERS		43
	Audit Committee Charter	43
	Composition of the Audit Committee	43
	External Audit Service Fees	44
MARKET FOR PRICE RANGE AND TRADING VOLUME OF SECURITIES		44
CREDIT RATINGs		45
	Vermilion Rating	45
CONFLICTS OF INTEREST		45
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS		46
LEGAL PROCEEDINGS		46
MATERIAL CONTRACTS		46
INTERESTS OF EXPERTS		46
TRANSFER AGENT AND REGISTRAR		46

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

RISK FACTORS		46
	Reserve Estimates	46
	Uncertainty of Contingent Resource Estimates	47
	Uncertainty of Prospective Resource Estimates	47
	Volatility of Oil and Natural Gas Prices	47
	Changes in Legislation	47
	Government Regulations	47
	Competition	48
	Operational Matters	48
	Environmental Concerns	48
	Kyoto Protocol and Carbon Tax	48
	Discretionary Nature of Dividends	49
	Debt Service	49
	Changes in Income Tax Laws	49
	Depletion of Reserves	49
	Net Asset Value	50
	Volatility of Market Price of Common Shares	50
	Variations in Interest Rates and Foreign Exchange Rates	50
	Increase in Operating Costs or Decline in Production Level	50
	Acquisition Assumptions	50
	Failure to Realize Anticipated Benefits of Prior Acquisitions	50
	Additional Financing	51
	Potential Conflicts of Interest	51
	Accounting Adjustments	51
	Market Accessibility	51
ADDITIONAL INFORMATION		52

SCHEDULE "A"
	REPORT ON RESERVES DATA BY INDEPENDENT QUALIFIED RESERVES EVALUATOR OR AUDITOR (FORM 51-101F2)	53
	REPORT ON resources DATA BY INDEPENDENT QUALIFIED RESERVES EVALUATOR OR AUDITOR	54

SCHEDULE "B"
	REPORT OF MANAGEMENT AND DIRECTORS ON OIL AND GAS DISCLOSURE (FORM 51-101F3)	55

SCHEDULE "C"
	TERMS OF REFERENCE for the AUDIT COMMITTEE	56

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

GLOSSARY OF TERMS

In addition to terms defined elsewhere in this annual information form, the following are defined terms used in this annual information form:

“2003 Arrangement” means the plan of arrangement under the ABCA involving the Trust, Vermilion Resources Ltd., Clear Energy Inc. and Vermilion Acquisition Ltd., which was completed on January 22, 2003;

“ABCA” means the Business Corporations Act (Alberta), R.S.A. 2000, c. B-9, as amended, including the regulations promulgated thereunder;

“AGCA” means Alberta Gas Cost Allowance;

“AIF” means Annual Information Form;

“affiliate” when used to indicate a relationship with a person or company, has the same meaning as set forth in the Securities Act (Alberta);

“board of directors” or “board” means the board of directors of Vermilion;

“CGU’s” means cash generating units and based on managements’ judgement, represents the lowest level at which there is identifiable cash inflows that are largely independent of the cash inflows of other groups of assets or properties;

“common shares” means a common share in the capital of the Company;

“contingent resources” are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies;

“control” means, with respect to control of a body corporate by a person, the holding (other than by way of security) by or for the benefit of that person of securities of that body corporate to which are attached more than 50% of the votes that may be cast to elect directors of the body corporate (whether or not securities of any other class or classes shall or might be entitled to vote upon the happening of any event or contingency) provided that such votes, if exercised, are sufficient to elect a majority of the board of directors of the body corporate;

“Conversion Arrangement” means the plan of arrangement effected on September 1, 2010 under section 193 of the ABCA pursuant to which the Trust converted from an income trust to a corporate structure;

“Depletion units” means groups of assets or properties that are within a specific production area and have similar economic lives. Depletion units represent the lowest level of disaggregation for which Vermilion accumulates costs for the purposes of calculating and recording depletion;

“dividend” means a dividend paid by Vermilion in respect of the common shares, expressed as an amount per common share;

“Dividend Payment Date” means any date that Dividends are paid to Shareholders, generally being the 15th day of the calendar month following the determination of a Dividend Record Date;

“Dividend Record Date” means the last day of each calendar month or such other date as may be determined from time to time by the Company;

“DRIP Plan” means the amended and restated Dividend Reinvestment Plan of the Company, as amended or supplemented from time to time;

“GLJ” means GLJ Petroleum Consultants Ltd., independent petroleum engineering consultants of Calgary, Alberta;

“GLJ Report” means the independent engineering evaluation of certain oil, NGL and natural gas interests of the Company prepared by GLJ dated February 4, 2014 and effective December 31, 2013;

“IFRS” means International Financial Reporting Standards;

“Income Tax Act” or “Tax Act” means the Income Tax Act (Canada), R.S.C. 1985, c. 1. (5th Supp.), as amended, including the regulations promulgated thereunder;

“Meeting” means the annual meeting of Shareholders of the Company to be held on May 2, 2014 (or, if adjourned, such other date on which the meeting is held);

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

“NYSE” means New York Stock Exchange;

“PNG” means Petroleum and Natural Gas properties and equipment;

“PRRT” means Petroleum Resource Rent Tax, a profit based tax levied on petroleum projects in Australia;

“prospective resources” are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects;

“Rights Plan” means the shareholder rights plan of the Company;

“Senior Unsecured Notes” means the $225 million aggregate principal amount of five year senior unsecured notes of the Company issued February 10, 2011;

“Shareholders” means holders from time to time of the Company’s common shares;

“Shareholder Rights Plan Agreement” means the Shareholder Rights Plan Agreement dated September 1, 2010 between the Company and Computershare Trust Company of Canada establishing the Rights Plan, as amended and restated as of May 1, 2013 and as amended or supplemented from time to time;

“subsidiary” means, in relation to any person, any body corporate, partnership, joint venture, association or other entity of which more than 50% of the total voting power of common shares or units of ownership or beneficial interest entitled to vote in the election of directors (or members of a comparable governing body) is owned or controlled, directly or indirectly, by such person;

“TSX” means the Toronto Stock Exchange;

“Trust” means Vermilion Energy Trust, an unincorporated open-ended investment trust governed by the laws of the Province of Alberta that was dissolved and ceased to exist pursuant to the Conversion Arrangement;

“Trust Unit” means units in the capital of the Trust;

“Unitholders” means former unitholders of the Trust;

“Vermilion” or the “Company” means Vermilion Energy Inc. and where context allows, its consolidated business enterprise, except that a reference to “Vermilion” prior to the date of the Conversion Arrangement means the consolidated business enterprise of the Trust, unless otherwise indicated; and

“VRL” means Vermilion Resources Ltd., previously a subsidiary of the corporation.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Conventions

Unless otherwise indicated, references herein to "$" or "dollars" are to Canadian dollars. All financial information herein has been presented in Canadian dollars in accordance with IFRS.

Abbreviations

*Oil and Natural Gas Liquids*
bbl	Barrel
Mbbl	thousand barrels
bbl/d	barrels per day
NGLs	natural gas liquids
*Natural Gas*
Mcf	thousand cubic feet
MMcf	million cubic feet
Mcf/d	thousand cubic feet per day
MMcf/d	million cubic feet per day
MMBtu	million British Thermal Units
*Other*
API	American Petroleum Institute
°API	An indication of the specific gravity of crude oil measured on the API gravity scale.
	Liquid petroleum with a specified gravity of 28 °API or higher is generally referred to as light crude oil.
boe	barrel of oil equivalent
M$	thousand dollars
MM$	million dollars
Mboe	1,000 barrels of oil equivalent
MMboe	million barrels of oil equivalent
WTI	West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma for crude oil of standard grade.

Conversion

The following table sets forth certain standard conversions from Standard Imperial Units to the International System of Units (or metric units).

To Convert From	To	Multiply By
Mcf	Cubic metres	28.174
Cubic metres	Cubic feet	35.494
bbls	Cubic metres	0.159
Cubic metres	bbls oil	6.290
Feet	Metres	0.305
Metres	Feet	3.281
Miles	Kilometres	1.609
Kilometres	Miles	0.621
Acres	Hectares	0.405
Hectares	Acres	2.471

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

Certain statements included or incorporated by reference in this annual information form may constitute forward looking statements or financial outlooks under applicable securities legislation. Such forward looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", or similar words suggesting future outcomes or statements regarding an outlook. Forward looking statements or information in this annual information form may include, but are not limited to:

•

capital expenditures;

•

business strategies and objectives;

•

estimated reserve quantities and the discounted present value of future net cash flows from such reserves;

•

petroleum and natural gas sales;

•

future production levels (including the timing thereof) and rates of average annual production growth, estimated contingent resources and prospective resources;

•

exploration and development plans;

•

acquisition and disposition plans and the timing thereof;

•

operating and other expenses, including the payment of future dividends;

•

royalty and income tax rates;

•

the timing of regulatory proceedings and approvals;

•

the timing of first commercial gas from the Corrib field; and

•

the estimate of Vermilion’s share of the expected natural gas production from the Corrib field.

Such forward-looking statements or information are based on a number of assumptions all or any of which may prove to be incorrect. In addition to any other assumptions identified in this document, assumptions have been made regarding, among other things:

•

the ability of the Company to obtain equipment, services and supplies in a timely manner to carry out its activities in Canada and internationally;

•

the ability of the Company to market crude oil, natural gas liquids and natural gas successfully to current and new customers;

•

the timing and costs of pipeline and storage facility construction and expansion and the ability to secure adequate product transportation;

•

the timely receipt of required regulatory approvals;

•

the ability of the Company to obtain financing on acceptable terms;

•

foreign currency exchange rates and interest rates;

•

future crude oil, natural gas liquids and natural gas prices; and

•

Management’s expectations relating to the timing and results of development activities.

Although the Company believes that the expectations reflected in such forward looking statements or information are reasonable, undue reliance should not be placed on forward looking statements because the Company can give no assurance that such expectations will prove to be correct. Financial outlooks are provided for the purpose of understanding the Company’s financial strength and business objectives and the information may not be appropriate for other purposes. Forward looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Company and described in the forward looking statements or information. These risks and uncertainties include but are not limited to:

•

the ability of management to execute its business plan;

•

the risks of the oil and gas industry, both domestically and internationally, such as operational risks in exploring for, developing and producing crude oil, natural gas liquids and natural gas;

•

risks and uncertainties involving geology of crude oil, natural gas liquids and natural gas deposits;

•

risks inherent in the Company's marketing operations, including credit risk;

•

the uncertainty of reserves estimates and reserves life and estimates of resources and associated expenditures;

•

the uncertainty of estimates and projections relating to production, costs and expenses;

•

potential delays or changes in plans with respect to exploration or development projects or capital expenditures;

•

the Company's ability to enter into or renew leases on acceptable terms;

•

fluctuations in crude oil, natural gas liquids and natural gas prices, foreign currency exchange rates and interest rates;

•

health, safety and environmental risks;

•

uncertainties as to the availability and cost of financing;

•

the ability of the Company to add production and reserves through exploration and development activities;

•

general economic and business conditions;

•

the possibility that government policies or laws may change or governmental approvals may be delayed or withheld;

•

uncertainty in amounts and timing of royalty payments;

•

risks associated with existing and potential future law suits and regulatory actions against the Company; and

•

other risks and uncertainties described elsewhere in this annual information form or in the Company's other filings with Canadian securities authorities.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

The forward-looking statements or information contained in this annual information form are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws.

PRESENTATION OF OIL AND GAS RESERVES AND PRODUCTION INFORMATION

All oil and natural gas reserve information contained in this annual information form has been prepared and presented in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). The actual oil and natural gas reserves and future production will be greater than or less than the estimates provided in this annual information form. The estimated future net revenue from the production of the disclosed oil and natural gas reserves does not represent the fair market value of these reserves.

Natural gas volumes have been converted on the basis of six thousand cubic feet of natural gas to one barrel of oil equivalent. Barrels of oil equivalent (“boe”) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Vermilion retained GLJ to conduct an independent resource evaluation to assess contingent and prospective resources across all of the Company’s key operating regions with an effective date of December 31, 2013 (the "GLJ Resources Assessment"). All contingent and prospective resources evaluated in the GLJ Resources Assessment were deemed economic at the effective date of December 31, 2013.

The estimates of volumes of, and the net present value of the future net revenue attributable to, contingent resources and prospective resources in this annual information form are derived from the GLJ Resources Assessment. The GLJ Resources Assessment was prepared in accordance with the Canadian Oil and Gas Evaluation Handbook (“COGEH”) and NI 51-101 by GLJ, an independent qualified reserve evaluator.

A range of contingent and prospective resources estimates (low, best and high) were prepared by GLJ. See notes 5 to 8 of the tables in the section entitled “Contingent and Prospective Resources” for a description of low estimate, best estimate and high estimate.

Contingent Resources

"Contingent resources" are not, and should not be confused with, petroleum and natural gas reserves. "Contingent resources" are defined in COGEH as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. It is also appropriate to classify as contingent resource the estimated discovered recoverable quantities associated with a project in the early evaluation stage.

The primary contingencies which currently prevent the classification of Vermilion’s contingent resource as reserves include but are not limited to:

•

preparation of firm development plans, including determination of the specific scope and timing of projects;

•

project sanction;

•

access to capital markets;

•

shareholder and regulatory approvals;

•

access to required services and field development infrastructure;

•

oil and natural gas prices in Canada and internationally in jurisdictions in which Vermilion operates;

•

demonstration of economic viability;

•

future drilling program and testing results;

•

further reservoir delineation and studies;

•

facility design work;

•

limitations to development based on adverse topography or other surface restrictions; and

•

the uncertainty regarding marketing and transportation of petroleum from development areas.

There is no certainty that it will be commercially viable to produce any portion of the contingent resources or that Vermilion will produce any portion of the volumes currently classified as contingent resources. The estimates of contingent resources involve implied assessment, based on certain estimates and assumptions, that the resources described exists in the quantities predicted or estimated and that the resources can be profitably produced in the future. The net present value of the future net revenue from the contingent resources does not necessarily represent the fair market value of the contingent resources. Actual contingent resources (and any volumes that may be reclassified as reserves) and future production therefrom may be greater than or less than the estimates provided herein.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Prospective Resources

Prospective resources are not, and should not be confused with, petroleum and natural gas reserves. "Prospective resources" are defined in COGEH as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects.

There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources or that Vermilion will produce any portion of the volumes currently classified as prospective resources. The estimates of prospective resources involve implied assessment, based on certain estimates and assumptions, that the resources described exists in the quantities predicted or estimated and that the resources can be profitably produced in the future. The net present value of the future net revenue from the prospective resources does not necessarily represent the fair market value of the prospective resources. The recovery and resources estimates provided herein are estimates only. Actual prospective resources (and any volumes that may be reclassified as reserves or contingent resources) and future production from such prospective resources may be greater than or less than the estimates provided herein.

NON-GAAP MEASURES

This annual information form includes non-GAAP measures as further described herein. Management of the Company believes these non-GAAP measures are a useful tool in analyzing operating performance. These measures do not have standardized meanings prescribed by GAAP and, therefore, may not be comparable with the calculations of similar measures for other entities.

“Cash dividends per share” represents actual cash dividends paid per share by the Company during the relevant periods.

“Netbacks” are per boe and per mcf measures used in the analysis of operational activities and are used by management as a basis for decisions on capital allocation. Netbacks are calculated by subtracting royalties, operating expenses and transportation costs from revenues.

“Net dividends” is calculated as dividends declared for a given period less proceeds received by Vermilion pursuant to the dividend reinvestment plan. Dividends both before and after the dividend reinvestment plan are reviewed by management and are assessed as a percentage of fund flows from operations to analyze how much of the cash that is generated by Vermilion is being used to fund dividends.

VERMILION ENERGY INC.

General

Vermilion Energy Inc. is the successor to the Trust, following the completion of the conversion of the Trust from an income trust to a corporate structure by way of a court approved plan of arrangement under the ABCA on September 1, 2010. Pursuant to the Conversion Arrangement, Unitholders exchanged their Trust Units for common shares of the Company on a one-for-one basis and holders of exchangeable shares of VRL received 1.89344 common shares for each exchangeable share held.

References to “Vermilion” prior to the date of the Conversion Arrangement are generally references to the consolidated business enterprise of the Trust prior to the date of the Conversion Arrangement, whose business the Company is a successor to as a result of the Conversion Arrangement, as accounted for by “continuity-of-interest” accounting.

Vermilion Energy Inc. was incorporated on July 21, 2010 pursuant to the provisions of the ABCA for the purpose of facilitating the Conversion Arrangement. On January 1, 2013, Vermilion Energy Inc. completed amalgamations with two of its wholly-owned subsidiaries, 1209974 Alberta Ltd. and Vermilion Resources Ltd. Vermilion Energy Inc. was the resulting entity upon completion of the amalgamations. The registered and head office of Vermilion Energy Inc. is located at Suite 3500, 520 - 3rd Avenue S.W., Calgary, Alberta, T2P 0R3.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Organizational Structure of the Company

The following diagram describes the intercorporate relationships among the Company and each of its material subsidiaries, after giving effect to the amalgamations effective January 1, 2013, where each principal subsidiary was incorporated or formed and the percentage of votes attaching to all voting securities of each subsidiary beneficially owned directly or indirectly by Vermilion. Reference should be made to the appropriate sections of this annual information form for a complete description of the structure of the Company.

Notes:

⁽¹⁾

Subsequent to year-end 2013, Vermilion completed the acquisition of assets in Germany. See “Three Year History of Vermilion”.

⁽²⁾

Vermilion Energy Ireland Limited is the Irish Branch of a Cayman Islands incorporated company.

Summary Description of the Business

Vermilion Energy Inc.

The Company is actively engaged in the business of oil and natural gas exploitation, development, acquisition and production in Australia, Canada, France, Ireland, the Netherlands and in Germany. The Company’s business plan is to expand its portfolio of organic growth opportunities and pursue its strategic plan that targets modest annual average production growth while maintaining a reliable and growing dividend. Vermilion continues to develop new venture initiatives which target the identification and capture of meaningful unconventional resource related exploration exposure in Canada, Europe and Australia. Where possible, the Company will seek to expand its reserve base through the selective addition of high-quality, long-life reserves with low risk development opportunities.

Shareholders receive monthly dividends of the cash flow generated by Vermilion as declared payable by the board of directors of the Company. The Company currently employs a strategy which: (i) provides Shareholders with a competitive annual cash-on-cash yield through monthly cash dividends, (ii) ensures that Vermilion's existing assets are maintained at a level that provides sustainable ongoing cash flow, and (iii) continues to expand the business of the Company through the development of growth opportunities that are intended to provide long-term stable cash flows and be accretive to the existing Shareholders. The Company intends to finance acquisitions through bank financing and, when necessary, the issuance of additional common shares from treasury, while maintaining prudent leverage.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Three Year History of Vermilion

The following describes the development of Vermilion's business over the last three completed financial years.

On February 10, 2011, Vermilion issued $225.0 million of senior unsecured notes at par. The notes bear interest at a rate of 6.5% per annum and will mature on February 10, 2016. As direct senior unsecured obligations of Vermilion, the notes rank pari passu with all other present and future unsecured and unsubordinated indebtedness of the Company. Vermilion may, at its option, prior to February 10, 2014, redeem up to 35% of the notes with net proceeds of equity offerings by the Company at a redemption price equal to 106.5% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to the applicable redemption date. Subsequently, Vermilion may, on or after February 10, 2014, redeem all or part of the notes at fixed redemption prices, plus, in each case, accrued and unpaid interest, if any, to the applicable redemption date.

On November 28, 2011, Vermilion completed an equity financing of 5,370,000 common shares at a price of $49.00 per common share for gross proceeds of approximately $263 million including the partial exercise of the underwriters’ over-allotment option. The net proceeds were used to reduce a certain amount of outstanding indebtedness under the Company’s credit facility, partially fund the Company's development capital program and prospective acquisitions as well as for general purposes.

During 2011, Vermilion completed property acquisitions of various strategic properties that complement existing assets within Vermilion’s core areas. The net cost of these property acquisitions to Vermilion was approximately $50.9 million, of which $38.8 million related to acquisitions in Canada and $12.1 million related to acquisitions in the Netherlands. None of the property acquisitions constituted a “significant acquisition” within the meaning of applicable securities laws.

On January 24, 2012, Vermilion announced that the Company, through its wholly-owned subsidiaries, acquired certain working interests in six producing fields located in the Paris and Aquitaine basins in France. Taking into consideration an effective date of January 1, 2011 and customary closing adjustments, Vermilion paid approximately $106 million cash at closing. Vermilion financed this acquisition indirectly through proceeds received from the November 2011 equity issuance. The acquisition did not constitute a “significant acquisition” within the meaning of applicable securities laws.

On November 14, 2012, Vermilion announced that the board of directors approved an increase to its monthly dividend by 5.3% to $0.20 per share from $0.19 per share. The increase became effective for the January 2013 dividend paid on February 15, 2013. The dividend increase was Vermilion’s second increase since initiating a dividend in 2003. Also, on November 14, 2012 Vermilion announced that it had initiated the process with the NYSE Euronext for a secondary listing of the Company's common shares on the NYSE Euronext's New York Stock Exchange (“NYSE”). Vermilion’s common shares were listed and began trading on the NYSE on March 12, 2013 under the ticker symbol "VET".

On December 27, 2012, Vermilion announced that the Company, through its wholly-owned subsidiaries, acquired 100% of the shares of Zaza Energy France S.A.S. Pursuant to the acquisition, Vermilion acquired operating interests covering approximately 24,300 acres with 100% working interests in the Saint Firmin, Chateaurenard, Courtenay, Chuelles, and Charmottes fields in the Paris Basin. Taking into consideration an effective date for the acquisition of October 1, 2012 and customary closing adjustments, Vermilion paid approximately $75 million cash at closing including working capital. Vermilion financed this acquisition through its bank revolving credit facility. The acquisition did not constitute a “significant acquisition” within the meaning of applicable securities laws.

On December 31, 2012, pursuant to the terms of the acquisition agreement whereby Vermilion acquired an 18.5% non-operating working interest in the offshore Corrib gas field, Vermilion made an additional payment to the vendor of $134.3 million (US$135 million).

In order to consolidate its Canadian subsidiaries, on January 1, 2013, Vermilion amalgamated with two of its wholly-owned subsidiaries, 1209974 Alberta Ltd. and Vermilion Resources Ltd. Vermilion Energy Inc. was the resulting entity upon completion of the amalgamations. As a result of the forgoing amalgamations, Vermilion Energy Inc. became the managing partner of Vermilion Resources.

On October 11, 2013, Vermilion announced the completion of the acquisition from Northern Petroleum Plc. of 100% of the shares of its subsidiary Northern Petroleum Nederland B.V. ("NPN") for approximately $27.5 million with an effective date of January 1, 2013. The acquisition included interests in nine concessions, including six onshore licences in production or development, three onshore exploration licenses, and one offshore production license ("P12") in the Netherlands (the "Assets"). Four licenses are located in the northeastern region, in close proximity to Vermilion's existing concessions and the remaining five onshore licenses are located in the southwestern region of the Netherlands. Vermilion assumed operatorship of all the acquired Assets following closing of the Acquisition, with the exception of the offshore license P12 in which Vermilion holds a 23.6% non-operated interest. The Assets cover approximately 298,500 net acres, of which approximately 98 percent is undeveloped.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

On November 6, 2013, Vermilion announced that it had entered into a definitive purchase and sale agreement with GDF SUEZ E&P Deutschland GmbH (“GDF SUEZ”), (an affiliate of GDF SUEZ S.A., a publicly traded, French multinational utility) whereby Vermilion, through its wholly-owned subsidiary, agreed to acquire GDF SUEZ’s 25% interest in four producing natural gas fields and a surrounding exploration license located in northwest Germany with an effective date for the acquisition of January 1, 2013. The acquisition from GDF SUEZ was completed in February 2014, and was funded with cash balances on hand. The acquisition from GDF SUEZ does not constitute a “significant acquisition” within the meaning of applicable securities laws.

On November 7, 2013, Vermilion announced that the board of directors approved a 7.5% increase to its monthly dividend to $0.215 per share from $0.20 per share. The increase became effective for the January 2014 dividend payable on February 18, 2014. This marks the third increase to Vermilion’s monthly dividend, and the second annual increase.

Subsequent to year end 2013, Vermilion was awarded the Ijsselmuiden exploration concession in the Netherlands, which consists of approximately 110,500 net undeveloped acres.

Subsequent to the end of 2013, we were conditionally awarded the Battonya South concession in Hungary, subject to successful execution of a definitive agreement acceptable to both Vermilion and the Hungarian Ministry of National Development. The concession consists of 116,000 gross acres located in the southern part of Hungary. The term of the concession is for 20 years, subject to continuation of development in a manner acceptable to both parties.

In early 2014, we informed the Moroccan government of our intention to relinquish our rights to the Haouz block in central Morocco. Based on our analysis of seismic data, we concluded that due to the structural complexity of the block, we would be unable to pursue a definitive appraisal and exploration program that would fit within the constraints of our predetermined new venture capital and risk parameters. The relinquishment terminates our activities in Morocco after cumulative spending of $0.9 million to evaluate the 2.3 million acre block.

As at January 31, 2014, Vermilion had 462 full time employees of which 179 employees were located in its Calgary head office, 46 employees in its Canadian field offices, 158 employees in France, 45 employees in the Netherlands and 34 employees in Australia.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

NARRATIVE DESCRIPTION OF THE BUSINESS

Business Objectives

The Company is actively engaged in the business of oil and natural gas exploitation, development, acquisition and production in Australia, Canada, and Europe. The Company’s business plan is to expand its portfolio of organic growth opportunities and pursue its strategic plan that targets modest average annual production growth while maintaining a reliable and growing dividend. Vermilion continues to develop new venture initiatives which target the identification and capture of meaningful conventional and unconventional resource related exploration exposure in Canada, Europe and Australia. Where possible, the Company will seek to expand its reserve base through the selective addition of high-quality, long-life reserves with low risk development opportunities.

In reviewing potential participations or acquisitions, Vermilion will consider a number of factors, including: (a) the present value of the future revenue from such properties from the proved producing, total proved and proved plus probable reserves; (b) the amount of potential for additional reservoir development; (c) whether sufficient infrastructure exists in the prospect to provide for increased activity; (d) the cost of any potential development; (e) investments in properties that exhibit medium to long-life reserves and stable production base; and (f) the ability of Vermilion to enhance the value of acquired properties through additional exploitation efforts and additional development drilling. The board of directors of Vermilion may, in its discretion, approve asset or corporate acquisitions or investments that do not conform to these guidelines based upon the board's consideration of the qualitative aspects of the subject properties including risk profile, technical upside, reserve life, asset quality and the Company's business prospects.

Description of Properties

The following is a description of the oil and natural gas properties, facilities and installations in which Vermilion has an interest and that are material to Vermilion's operations and exploration activities. We manage our business through our Calgary head office and our international business unit offices.

•

Canada business unit: Includes revenues and expenditures related directly to our assets in Alberta.

•

France business unit: Relates to our operations in France in the Paris and Aquitaine basins.

•

Australia business unit: Relates to operations on the Wandoo offshore crude oil field.

•

Netherlands business unit: Relates to our operations in the Netherlands.

•

Ireland business unit: Relates to our 18.5% non-operated interest in the offshore Corrib natural gas field.

The production numbers stated refer to Vermilion's working interest share before deduction of Crown, freehold and other royalties. Reserve amounts are stated, before deduction of royalties, as at December 31, 2013, based on forecasted costs and price assumptions as evaluated in the GLJ Report.

Canada Business Unit

Vermilion’s production in Canada is located primarily in three areas, all of which are in Alberta: Drayton Valley, Slave Lake and Central Alberta. Vermilion's main gas producing areas are Drayton Valley and Central Alberta, while Slave Lake and the Cardium light oil play in Drayton Valley are the main oil producing areas.

Vermilion holds an average working interest of 70% in 407,700 (286,800 net) acres of developed land, 644,800 (569,300 net) acres of undeveloped land, 525 (347 net) producing natural gas wells and 464 (307 net) producing oil wells as at December 31, 2013. Vermilion owns and operates four natural gas plants and has an ownership interest in five additional plants, resulting in combined gross processing capacity of over 80 MMcf/d. In addition, Vermilion has capacity of over 20,500 bbl/d of oil in five operated oil batteries including a 15,000 bbl/d oil battery that handles Cardium production. The 15,000 bbl/d oil battery commenced operations August 1, 2011 and as of December 2013 was processing approximately 10,000 bbl/d of oil, of which 74% is Vermilion Cardium oil production.

Risks and uncertainties associated with weather conditions can shorten the winter drilling season and can impact the spring and summer drilling programs, potentially resulting in increased costs or reduced production.

For a discussion of the competitive conditions affecting Vermilion’s business, refer to "Competition" in the Risk Factors section of this AIF.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

For the year ended December 31, 2013, production in Canada averaged approximately 42.4 MMcf/d of natural gas and 10,053 bbl/d of crude oil and NGL. Sales of natural gas in 2013 were approximately $52.6 million (2012 - $34.6 million) and sales from crude oil and NGLs were approximately $329.4 million (2012 - $269.6 million).

The GLJ Report assigned 54,857 Mboe of total proved reserves and 86,105 Mboe of proved plus probable reserves to Vermilion's properties located in Canada.

France Business Unit

Vermilion's main producing areas in France are located in the Aquitaine Basin which is southwest of Bordeaux, France and in the Paris Basin, located just east of Paris. Vermilion's assets in France are primarily oil producing properties. The two major fields in the Paris Basin area are Champotran and Chaunoy. The two major fields in the Aquitaine Basin are Parentis and Cazaux. In January, 2012 Vermilion, through its wholly-owned subsidiaries, acquired certain working interests in six producing fields located in the Paris and Aquitaine basins in France. Pursuant to the acquisition, Vermilion acquired the remaining working interests in three fields in which it previously held interests (Itteville, Vert Le Grand and Vic Bihl) and working interests in three new fields (Vert Le Petit and La Croix Blanche at 100% working interest and Dommartin-Lettrée at 56% working interest). Effective October 1, 2012 Vermilion, through its wholly owned subsidiaries, acquired 100% of the shares of ZEF and operating interests covering approximately 24,300 acres with 100% working interests in the Saint Firmin, Chateaurenard, Courtenay, Chuelles, and Charmottes fields in the Paris Basin. Vermilion operates 13 oil batteries and 12 single well batteries with current throughput of more than 12,000 bbl/d. Given the legacy nature of these assets, the throughput capability of these batteries far exceeds any projected future requirements. Vermilion holds 96% working interest in 218,100 (208,900 net) acres of developed land and 100% working interest in 344,900 (344,900 net) acres of undeveloped land in the Aquitaine and Paris Basins. Vermilion had 327 (316 net) producing oil wells in France as at December 31, 2013.

Risks and uncertainties associated with well approvals can impact the drilling programs, potentially resulting in delays or reduced production.

For a discussion of the competitive conditions affecting Vermilion business, refer to "Competition" in the Risk Factors section of this AIF.

For the year ended December 31, 2013, production in France averaged approximately 10,873 bbl/d of oil and 3.4 MMcf/d of natural gas. Sales from oil in 2013 were approximately $449.9 million (2012 - $374.2 million) and sales from natural gas were approximately $3.4 million (2012 - $14.2 million).

The GLJ Report assigned 36,230 Mboe of total proved reserves and 55,168 Mboe of proved plus probable reserves to Vermilion's properties located in France.

Netherlands Business Unit

Vermilion's Netherlands assets consist of 17 onshore concessions in the northern part of the country, five concessions in the southwestern part of the country, and two offshore concessions following completion of the NPN acquisition in October 2013, pursuant to which Vermilion acquired four concessions in the northern part of the country, five concessions in the southwestern part of the country and a non-operating interest in one offshore concession, covering 298,500 net acres of land (of which 98% is undeveloped). Production consists solely of natural gas with a small amount of related condensate. Vermilion’s total position in the Netherlands covers 1,384,600 (735,700 net) acres at an average 53% working interest, of which 95% is undeveloped, and 57 (43 net) producing gas wells as at December 31, 2013.

Risks and uncertainties associated with drilling and production permits can impact drilling programs and production timing, potentially resulting in increased costs or reduced production.

For a discussion of the competitive conditions affecting Vermilion’s business, refer to "Competition" in the Risk Factors section of this AIF.

For the year ended December 31, 2013, Vermilion's production in the Netherlands averaged 64 bbl/d of NGLs and 35.4 MMcf/d of natural gas. Sales in 2013 of natural gas were approximately $134.7 million (2012 - $121.1 million) and sales from NGLs were approximately $4.9 million (2012 - $2.4 million).

The GLJ Report assigned 6,186 Mboe of total proved reserves and 13,717 Mboe of proved plus probable reserves to Vermilion's properties located in the Netherlands.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Australia Business Unit

Vermilion's Australia assets consist of a 100% operated interest in an offshore oil field located on Western Australia's northwest shelf. The platform has a current producing capacity of 162,000 bbl/d of total fluid. Vermilion holds a 100% working interest in the Wandoo block, which is comprised of 59,600 acres and is considered a production license.

Western Australia’s northwest shelf is subject to seasonal disruptions caused by cyclones. During cyclone season (December to March) the Company may have to reduce production rates at its offshore facilities as a result of the inability to offload to tankers due to bad weather. Cyclones may also cause production shut-ins due to the evacuation of staff or damage to equipment on the platform.

For a discussion of the competitive conditions affecting Vermilion’s business, refer to "Competition" in the Risk Factors section of this AIF.

For the year ended December 31, 2013, Vermilion's production in Australia averaged 6,481 bbl/d of crude oil. Sales in 2013 from crude oil were approximately $298.9 million (2012 - $267.0 million).

The GLJ Report assigned 14,024 Mboe of total proved reserves and 19,463 Mboe of proved plus probable reserves to Vermilion's property located in Australia.

Ireland Business Unit

Vermilion holds an 18.5% non-operating interest in the offshore Corrib gas field located off the northwest coast of Ireland. Production from Corrib is expected to increase Vermilion’s volumes by approximately 58 MMcf (9,700 boe/d) once the field reaches peak production. Vermilion acquired its 18.5% working interest in the project on July 30, 2009, comprised of six offshore wells, both offshore and onshore pipeline segments as well as a natural gas processing facility. At the time of the acquisition most of the key components of the project, with the exception of the onshore pipeline, were either complete or in the latter stages of development. In 2011, approvals and permissions were granted for the onshore gas pipeline and tunneling commenced on December 16, 2012. Vermilion expects to continue to invest capital in this project over the next two years with approximately $90 million budgeted for 2014. The project is anticipated to produce first gas by mid-2015.

The GLJ Report assigned 17,655 Mboe of total proved reserves and 24,106 Mboe of proved plus probable reserves to Vermilion's property located in Ireland.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

STATEMENT OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION

Reserves and Future Net Revenue

The following is a summary of the oil and natural gas reserves and the value of future net revenue of Vermilion as evaluated by GLJ in a report dated February 4, 2014 with an effective date of December 31, 2013. Pricing used in the forecast price evaluations is set forth in the notes to the tables.

Reserves and other oil and gas information contained in this section is effective December 31, 2013 unless otherwise stated.

All evaluations of future net production revenue set forth in the tables below are stated after overriding and lessor royalties, Crown royalties, freehold royalties, mineral taxes, direct lifting costs, normal allocated overhead and future capital investments, including abandonment and reclamation obligations. Future net production revenues estimated by the GLJ Report do not represent the fair market value of the reserves. Other assumptions relating to the costs, prices for future production and other matters are included in the GLJ Report. There is no assurance that the future price and cost assumptions used in the GLJ Report will prove accurate and variances could be material.

Reserves for Australia, Canada, France, Ireland and the Netherlands are established using deterministic methodology. Total proved reserves are established at the 90 percent probability (P90) level. There is a 90 percent probability that the actual reserves recovered will be equal to or greater than the P90 reserves. Total proved plus probable reserves are established at the 50 percent probability (P50) level. There is a 50 percent probability that the actual reserves recovered will be equal to or greater than the P50 reserves.

The Report on Reserves Data by Independent Qualified Reserves Evaluator in Form 51-101F2 and the Report of Management and Directors on Oil and Gas Disclosure in Form 51-101F3 are contained in Schedules "A" and "B", respectively.

The following tables provide reserves data and a breakdown of future net revenue by component and production group using forecast prices and costs. For Canada, the tables following include AGCA.

The following tables may not total due to rounding.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Oil and Gas Reserves - Based on Forecast Prices and Costs ⁽¹⁾

	Light and Medium Oil		Heavy Oil		Natural Gas		Natural Gas Liquids		BOE	BOE
	Gross ⁽²⁾	Net ⁽²⁾	Gross ⁽²⁾	Net ⁽²⁾	Gross ⁽²⁾	Net ⁽²⁾	Gross ⁽²⁾	Net ⁽²⁾	Gross	Net
	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(MMcf)	(MMcf)	(Mbbl)	(Mbbl)	(Mboe)	(Mboe)
Proved Developed Producing^{(3) (5) (6)}
Australia	12,824	12,824	-	-	-	-	-	-	12,824	12,824
Canada	11,394	9,323	13	12	64,246	58,142	2,804	1,920	24,919	20,945
France	30,895	28,741	-	-	7,561	7,554	-	-	32,155	30,000
Ireland	-	-	-	-	-	-	-	-	-	-
Netherlands	-	-	-	-	22,794	22,794	44	44	3,843	3,843
Total Proved Developed Producing	55,113	50,888	13	12	94,601	88,490	2,848	1,964	73,741	67,612
Proved Developed Non-Producing^{(3) (5) (7)}
Australia	-	-	-	-	-	-	-	-	-	-
Canada	459	392	-	-	16,330	14,633	629	408	3,810	3,239
France	686	635	-	-	3,470	3,457	-	-	1,264	1,211
Ireland	-	-	-	-	-	-	-	-	-	-
Netherlands	-	-	-	-	13,956	13,956	17	17	2,343	2,343
Total Proved Developed Non-Producing	1,145	1,027	-	-	33,756	32,046	646	425	7,417	6,793
Proved Undeveloped^{(3) (8)}
Australia	1,200	1,200	-	-	-	-	-	-	1,200	1,200
Canada	8,997	7,768	-	-	74,385	68,950	4,734	3,671	26,129	22,931
France	2,810	2,665	-	-	-	-	-	-	2,810	2,665
Ireland	-	-	-	-	105,931	105,931	-	-	17,655	17,655
Netherlands	-	-	-	-	-	-	-	-	-	-
Total Proved Undeveloped	13,007	11,633	-	-	180,316	174,881	4,734	3,671	47,794	44,451
Proved ⁽³⁾
Australia	14,024	14,024	-	-	-	-	-	-	14,024	14,024
Canada	20,850	17,483	13	12	154,961	141,725	8,167	5,999	54,857	47,115
France	34,391	32,041	-	-	11,031	11,011	-	-	36,230	33,876
Ireland	-	-	-	-	105,931	105,931	-	-	17,655	17,655
Netherlands	-	-	-	-	36,750	36,750	61	61	6,186	6,186
Total Proved	69,265	63,548	13	12	308,673	295,417	8,228	6,060	128,952	118,856
Probable ⁽⁴⁾
Australia	5,439	5,439	-	-	-	-	-	-	5,439	5,439
Canada	10,450	8,645	3	3	90,663	81,662	5,685	3,942	31,249	26,200
France	18,394	17,178	-	-	3,269	3,266	-	-	18,939	17,722
Ireland	-	-	-	-	38,707	38,707	-	-	6,451	6,451
Netherlands	-	-	-	-	44,592	44,592	99	99	7,531	7,531
Total Probable	34,283	31,262	3	3	177,231	168,227	5,784	4,041	69,609	63,344
Proved Plus Probable^{(3) (4)}
Australia	19,463	19,463	-	-	-	-	-	-	19,463	19,463
Canada	31,300	26,128	16	15	245,624	223,387	13,852	9,941	86,105	73,315
France	52,785	49,219	-	-	14,300	14,277	-	-	55,168	51,599
Ireland	-	-	-	-	144,638	144,638	-	-	24,107	24,106
Netherlands	-	-	-	-	81,342	81,342	160	160	13,717	13,717
Total Proved Plus Probable	103,548	94,810	16	15	485,904	463,644	14,012	10,101	198,560	182,200

Notes:

⁽¹⁾

The pricing assumptions used in the GLJ Report with respect to net values of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above. See “Forecast Prices used in Estimates”. The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation. GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101.

⁽²⁾

"Gross Reserves" are Vermilion's working interest (operating or non-operating) share before deduction of royalties and without including any royalty interests of Vermilion. "Net Reserves" are Vermilion's working interest (operating or non-operating) share after deduction of royalty obligations, plus Vermilion's royalty interests in reserves.

⁽³⁾

"Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

⁽⁴⁾

"Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

⁽⁵⁾

"Developed" reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production.

⁽⁶⁾

"Developed Producing" reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.

⁽⁷⁾

"Developed Non-Producing" reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown.

⁽⁸⁾

"Undeveloped" reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Net Present Values of Future Net Revenue - Based on Forecast Prices and Costs ⁽¹⁾

	Before Deducting Future Income Taxes Discounted At					After Deducting Future Income Taxes Discounted At
(M$)	0%	5%	10%	15%	20%	0%	5%	10%	15%	20%
Proved Developed Producing^{(2) (4) (5)}
Australia	652,521	585,705	531,671	487,436	450,743	441,525	389,286	347,679	314,159	286,801
Canada	917,542	732,428	611,019	526,184	463,924	917,542	732,428	611,019	526,184	463,924
France	1,922,512	1,441,270	1,169,507	995,695	874,106	1,515,215	1,143,202	924,201	781,406	680,775
Ireland	-	-	-	-	-	-	-	-	-	-
Netherlands	171,171	166,503	160,726	154,867	149,274	127,777	124,483	119,963	115,260	110,734
Total Proved Developed Producing	3,663,746	2,925,906	2,472,923	2,164,182	1,938,047	3,002,059	2,389,399	2,002,862	1,737,009	1,542,234
Proved Developed Non-Producing^{(2) (4) (6)}
Australia	-	-	-	-	-	-	-	-	-	-
Canada	70,195	55,001	45,425	38,749	33,807	70,195	55,001	45,425	38,749	33,807
France	58,478	44,933	36,291	30,396	26,117	37,859	28,837	22,976	18,988	16,109
Ireland	-	-	-	-	-	-	-	-	-	-
Netherlands	58,744	42,746	32,922	26,583	22,305	48,215	32,962	23,789	18,026	14,260
Total Proved Developed Non-Producing	187,417	142,680	114,638	95,728	82,229	156,269	116,800	92,190	75,763	64,176
Proved Undeveloped^{(2) (7)}
Australia	60,146	46,820	36,877	29,331	23,516	27,883	19,651	13,726	9,397	6,192
Canada	746,436	530,852	394,101	302,160	237,346	448,077	321,004	240,489	185,988	147,108
France	186,477	149,805	119,575	96,365	78,740	124,123	93,815	71,553	55,102	42,883
Ireland	716,287	559,569	435,502	341,954	271,427	716,287	559,569	435,502	341,954	271,427
Netherlands	-	-	-	-	-	-	-	-	-	-
Total Proved Undeveloped	1,709,346	1,287,046	986,055	769,810	611,029	1,316,370	994,039	761,270	592,441	467,610
Proved ⁽²⁾
Australia	712,667	632,525	568,548	516,767	474,259	469,408	408,937	361,405	323,556	292,993
Canada	1,734,173	1,318,281	1,050,545	867,093	735,077	1,435,814	1,108,433	896,933	750,921	644,839
France	2,167,467	1,636,008	1,325,373	1,122,456	978,963	1,677,197	1,265,854	1,018,730	855,496	739,767
Ireland	716,287	559,569	435,502	341,954	271,427	716,287	559,569	435,502	341,954	271,427
Netherlands	229,915	209,249	193,648	181,450	171,579	175,992	157,445	143,752	133,286	124,994
Total Proved	5,560,509	4,355,632	3,573,616	3,029,720	2,631,305	4,474,698	3,500,238	2,856,322	2,405,213	2,074,020
Probable ⁽³⁾
Australia	342,887	268,934	216,210	177,749	149,013	191,359	143,212	109,895	86,417	69,505
Canada	1,066,302	679,218	473,035	351,453	273,764	805,234	505,288	346,615	253,689	194,789
France	1,328,916	752,046	490,337	346,386	257,336	867,907	479,851	302,221	204,717	144,824
Ireland	413,592	250,341	164,931	116,333	86,526	413,592	250,341	164,931	116,333	86,526
Netherlands	379,491	280,351	220,037	180,195	152,184	281,161	204,108	156,473	124,925	102,879
Total Probable	3,531,188	2,230,890	1,564,550	1,172,116	918,823	2,559,253	1,582,800	1,080,135	786,081	598,523
Proved Plus Probable^{(2) (3)}
Australia	1,055,554	901,459	784,758	694,516	623,272	660,767	552,149	471,300	409,973	362,498
Canada	2,800,475	1,997,499	1,523,580	1,218,546	1,008,841	2,241,048	1,613,721	1,243,548	1,004,610	839,628
France	3,496,383	2,388,054	1,815,710	1,468,842	1,236,299	2,545,104	1,745,705	1,320,951	1,060,213	884,591
Ireland	1,129,879	809,910	600,433	458,287	357,953	1,129,879	809,910	600,433	458,287	357,953
Netherlands	609,406	489,600	413,685	361,645	323,763	457,153	361,553	300,225	258,211	227,873
Total Proved Plus Probable	9,091,697	6,586,522	5,138,166	4,201,836	3,550,128	7,033,951	5,083,038	3,936,457	3,191,294	2,672,543

Notes:

⁽¹⁾

⁽²⁾

⁽³⁾

⁽⁴⁾

⁽⁵⁾

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Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Total Future Net Revenue (Undiscounted) Based on Forecast Prices and Costs ⁽¹⁾

					Abandonment	Future Net		Future Net
				Capital	and	Revenue		Revenue
			Operating	Development	Reclamation	Before	Future	After
(M$)	Revenue	Royalties	Costs	Costs	Costs	Income Taxes	Income Taxes	Income Taxes
Proved ⁽²⁾
Australia	1,646,523	-	694,410	201,855	37,591	712,667	243,259	469,408
Canada	3,566,032	523,536	823,146	444,584	40,594	1,734,172	298,358	1,435,814
France	3,825,846	255,263	1,070,681	149,246	183,193	2,167,463	490,266	1,677,197
Ireland	1,186,463	-	217,845	184,480	67,851	716,287	-	716,287
Netherlands	447,859	-	136,074	40,558	41,311	229,916	53,924	175,992
Total Proved	10,672,723	778,799	2,942,156	1,020,723	370,540	5,560,505	1,085,807	4,474,698
Proved Plus Probable^{(2) (3)}
Australia	2,312,683	-	970,836	243,471	42,822	1,055,554	394,787	660,767
Canada	5,666,550	874,308	1,256,300	685,624	49,843	2,800,475	559,427	2,241,048
France	5,992,965	398,363	1,522,445	346,678	229,097	3,496,382	951,278	2,545,104
Ireland	1,676,002	-	293,792	184,480	67,851	1,129,879	-	1,129,879
Netherlands	1,004,424	-	257,731	85,689	51,599	609,405	152,252	457,153
Total Proved Plus Probable	16,652,624	1,272,671	4,301,104	1,545,942	441,212	9,091,695	2,057,744	7,033,951

Notes:

⁽¹⁾

⁽²⁾

⁽³⁾

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Future Net Revenue by Production Group Based on Forecast Prices and Costs ⁽¹⁾

	Future Net Revenue
	Before Income Taxes⁽²⁾
	(Discounted at 10% Per Year)	Unit Value
Proved Developed Producing	(M$)	($/boe)
Light and medium oil⁽³⁾	2,142,591	39.70
Natural gas⁽⁴⁾	328,991	26.45
Non-conventional oil and gas activities	1,341	1.11
Total Proved Developed Producing	2,472,923	36.57
Proved Developed Non-Producing
Light and medium oil⁽³⁾	32,403	28.38
Natural gas⁽⁴⁾	80,346	15.83
Non-conventional oil and gas activities	1,889	3.29
Total Proved Developed Non-Producing	114,638	16.88
Proved Undeveloped
Light and medium oil⁽³⁾	457,303	30.83
Natural gas⁽⁴⁾	524,088	18.93
Non-conventional oil and gas activities	4,664	2.42
Total Proved Undeveloped	986,055	22.18
Proved
Light and medium oil⁽³⁾	2,632,297	37.64
Natural gas⁽⁴⁾	933,425	20.64
Non-conventional oil and gas activities	7,894	2.12
Total Proved	3,573,616	30.07
Probable
Light and medium oil⁽³⁾	1,009,856	29.05
Natural gas⁽⁴⁾	547,769	20.29
Non-conventional oil and gas activities	6,925	4.38
Total Probable	1,564,550	24.70
Proved Plus Probable
Light and medium oil⁽³⁾	3,642,153	34.79
Natural gas⁽⁴⁾	1,481,194	20.51
Non-conventional oil and gas activities	14,819	2.80
Total Proved Plus Probable	5,138,166	28.20

Notes:

⁽¹⁾

⁽²⁾

Other Company revenue and costs not related to a specific production group have been allocated proportionately to production groups. Unit values are based on Company Net Reserves. Net present values of reserves categories are an approximation based on major products.

⁽³⁾

Including solution gas and other by-products.

⁽⁴⁾

Including by-products but excluding solution gas.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Forecast Prices used in Estimates ⁽¹⁾

						Natural Gas
					Natural Gas	France/	Natural Gas	Inflation	Exchange	Exchange
	Light and Medium Crude Oil			Crude Oil	Canada	Netherlands	Liquids	Rate	Rate	Rate
	WTI	Edmonton	Cromer	Brent Blend		National
	Cushing	Par Price	Medium	FOB	AECO	Balancing	FOB
	Oklahoma	40˚ API	29.3˚ API	North Sea	Gas Price	Point	Field Gate	Percent
Year	($US/bbl)	($Cdn/bbl)	($Cdn/bbl)	($US/bbl)	($Cdn/MMBtu)	(UK)	($Cdn/bbl)	Per Year	($US/$Cdn)	(EUR/$Cdn)
2013	97.88	93.33	88.05	108.76	3.24	10.83	68.65	1.0	1.000	1.369
Forecast
2014	97.50	92.76	86.27	107.50	4.03	11.32	66.66	2.0	0.950	1.420
2015	97.50	97.37	90.55	107.50	4.26	11.32	69.12	2.0	0.950	1.420
2016	97.50	100.00	93.00	105.00	4.50	11.05	70.45	2.0	0.950	1.420
2017	97.50	100.00	93.00	102.50	4.74	10.79	69.83	2.0	0.950	1.420
2018	97.50	100.00	93.00	102.50	4.97	10.79	69.19	2.0	0.950	1.420
Thereafter	2.0%	2.0%	2.0%	2.0%	2.0%	2.0%	2.0%	2.0%	0.950	1.420

Note:

⁽¹⁾

The pricing assumptions used in the GLJ Report with respect to net values of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above. The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation. GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101.

All forecast prices in the table above are provided by GLJ. For 2013, the price of Vermilion’s natural gas in the Netherlands was based on the TTF day-ahead index, as determined on the Title Transfer Facility Virtual Trading Point operated by Dutch TSO Gas Transport Services, plus various fees. GasTerra, a state owned entity purchases all natural gas produced by Vermilion in the Netherlands. Prior to 2013, the natural gas price received by Vermilion in the Netherlands was calculated using a formula based on the trailing average of Dated Brent and natural gas prices from European trading hubs. France natural gas production was benchmarked to National Balancing Point (UK). The benchmark price for Australia and France crude oil was Dated Brent. The benchmark price for Canadian crude oil was Edmonton Par and Canadian natural gas was priced against AECO. For the year ended December 31, 2013, the average realized sales prices before hedging were $119.38 per bbl (Australia), $10.61 per Mcf (Netherlands), $108.55 per bbl (France) for Brent-based crude oil, $89.78 per bbl for Canadian-based crude oil and NGLs and $3.40 per Mcf for Canadian natural gas.

Reconciliations of Changes in Reserves

The following tables set forth a reconciliation of the changes in Vermilion's gross light and medium crude oil, heavy oil and associated and non-associated gas (combined) reserves as at December 31, 2013 compared to such reserves as at December 31, 2012 based on the forecast price and cost assumptions set forth in note 3.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Reconciliation of Company Gross Reserves by Principal Product Type - Based on Forecast Prices and Costs

AUSTRALIA	Total Oil			Light and Medium Oil			Heavy Oil			Natural Gas Liquids
			Proved +			Proved +			Proved +			Proved +
Proved Probable P+P^{(1) (2)}	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable
Factors	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)
At December 31, 2012	10,327	6,816	17,143	10,327	6,816	17,143	-	-	-	-	-	-
Discoveries	-	-	-	-	-	-	-	-	-	-	-	-
Extensions & Improved Recovery	3,300	(650)	2,650	3,300	(650)	2,650	-	-	-	-	-	-
Technical Revisions	2,763	(727)	2,036	2,763	(727)	2,036	-	-	-	-	-	-
Acquisitions	-	-	-	-	-	-	-	-	-	-	-	-
Dispositions	-	-	-	-	-	-	-	-	-	-	-	-
Economic Factors	-	-	-	-	-	-	-	-	-	-	-	-
Production	(2,366)	-	(2,366)	(2,366)	-	(2,366)	-	-	-	-	-	-
At December 31, 2013	14,024	5,439	19,463	14,024	5,439	19,463	-	-	-	-	-	-
	Total Gas			Conventional Natural Gas			Coal Bed Methane			BOE
			Proved +			Proved +			Proved +			Proved +
Proved Probable P+P^{(1) (2)}	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable
Factors	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(Mboe)	(Mboe)	(Mboe)
At December 31, 2012	-	-	-	-	-	-	-	-	-	10,327	6,816	17,143
Discoveries	-	-	-	-	-	-	-	-	-	-	-	-
Extensions & Improved Recovery	-	-	-	-	-	-	-	-	-	3,300	(650)	2,650
Technical Revisions	-	-	-	-	-	-	-	-	-	2,763	(727)	2,036
Acquisitions	-	-	-	-	-	-	-	-	-	-	-	-
Dispositions	-	-	-	-	-	-	-	-	-	-	-	-
Economic Factors	-	-	-	-	-	-	-	-	-	-	-	-
Production	-	-	-	-	-	-	-	-	-	(2,366)	-	(2,366)
At December 31, 2013	-	-	-	-	-	-	-	-	-	14,024	5,439	19,463

CANADA	Total Oil			Light and Medium Oil			Heavy Oil			Natural Gas Liquids
			Proved +			Proved +			Proved +			Proved +
Proved Probable P+P^{(1) (2)}	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable
Factors	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)
At December 31, 2012	18,132	14,102	32,234	18,115	14,099	32,214	17	3	20	3,565	2,026	5,591
Discoveries	-	-	-	-	-	-	-	-	-	-	-	-
Extensions & Improved Recovery	1,056	1,487	2,543	1,056	1,487	2,543	-	-	-	3,839	3,256	7,095
Technical Revisions	4,736	(5,136)	(400)	4,736	(5,136)	(400)	-	-	-	1,371	403	1,774
Acquisitions	-	-	-	-	-	-	-	-	-	-	-	-
Dispositions	-	-	-	-	-	-	-	-	-	-	-	-
Economic Factors	-	-	-	-	-	-	-	-	-	-	-	-
Production	(3,061)	-	(3,061)	(3,057)	-	(3,057)	(4)	-	(4)	(608)	-	(608)
At December 31, 2013	20,863	10,453	31,316	20,850	10,450	31,300	13	3	16	8,167	5,685	13,852
	Total Gas			Conventional Natural Gas			Coal Bed Methane			BOE
			Proved +			Proved +			Proved +			Proved +
Proved Probable P+P^{(1) (2)}	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable
Factors	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(Mboe)	(Mboe)	(Mboe)
At December 31, 2012	114,014	65,654	179,668	91,978	53,713	145,691	22,036	11,941	33,977	40,700	27,070	67,770
Discoveries	-	-	-	-	-	-	-	-	-	-	-	-
Extensions & Improved Recovery	41,210	35,959	77,169	41,210	35,959	77,169	-	-	-	11,763	10,736	22,500
Technical Revisions	15,209	(10,950)	4,259	11,942	(9,136)	2,806	3,267	(1,814)	1,453	8,641	(6,558)	2,083
Acquisitions	-	-	-	-	-	-	-	-	-	-	-	-
Dispositions	-	-	-	-	-	-	-	-	-	-	-	-
Economic Factors	-	-	-	-	-	-	-	-	-	-	-	-
Production	(15,472)	-	(15,472)	(14,072)	-	(14,072)	(1,400)	-	(1,400)	(6,248)	-	(6,248)
At December 31, 2013	154,961	90,663	245,624	131,058	80,536	211,594	23,903	10,127	34,030	54,857	31,249	86,105

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

FRANCE	Total Oil			Light and Medium Oil			Heavy Oil			Natural Gas Liquids
			Proved +			Proved +			Proved +			Proved +
Proved Probable P+P^{(1) (2)}	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable
Factors	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)
At December 31, 2012	32,516	14,263	46,779	32,516	14,263	46,779	-	-	-	-	-	-
Discoveries	-	-	-	-	-	-	-	-	-	-	-	-
Extensions & Improved Recovery	3,194	3,910	7,104	3,194	3,910	7,104	-	-	-	-	-	-
Technical Revisions	2,650	221	2,871	2,650	221	2,871	-	-	-	-	-	-
Acquisitions	-	-	-	-	-	-	-	-	-	-	-	-
Dispositions	-	-	-	-	-	-	-	-	-	-	-	-
Economic Factors	-	-	-	-	-	-	-	-	-	-	-	-
Production	(3,969)	-	(3,969)	(3,969)	-	(3,969)	-	-	-	-	-	-
At December 31, 2013	34,391	18,394	52,785	34,391	18,394	52,785	-	-	-	-	-	-
	Total Gas			Conventional Natural Gas			Coal Bed Methane			BOE
			Proved +			Proved +			Proved +			Proved +
Proved Probable P+P^{(1) (2)}	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable
Factors	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(Mboe)	(Mboe)	(Mboe)
At December 31, 2012	1,377	24	1,401	1,377	24	1,401	-	-	-	32,746	14,266	47,012
Discoveries	-	-	-	-	-	-	-	-	-	-	-	-
Extensions & Improved Recovery	3,470	1,290	4,760	3,470	1,290	4,760	-	-	-	3,772	4,125	7,897
Technical Revisions	7,425	1,955	9,380	7,425	1,955	9,380	-	-	-	3,888	548	4,435
Acquisitions	-	-	-	-	-	-	-	-	-	-	-	-
Dispositions	-	-	-	-	-	-	-	-	-	-	-	-
Economic Factors	-	-	-	-	-	-	-	-	-	-	-	-
Production	(1,241)	-	(1,241)	(1,241)	-	(1,241)	-	-	-	(4,176)	-	(4,176)
At December 31, 2013	11,031	3,269	14,300	11,031	3,269	14,300	-	-	-	36,230	18,939	55,168

IRELAND	Total Oil			Light and Medium Oil			Heavy Oil			Natural Gas Liquids
			Proved +			Proved +			Proved +			Proved +
Proved Probable P+P^{(1) (2)}	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable
Factors	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)
At December 31, 2012	-	-	-	-	-	-	-	-	-	-	-	-
Discoveries	-	-	-	-	-	-	-	-	-	-	-	-
Extensions & Improved Recovery	-	-	-	-	-	-	-	-	-	-	-	-
Technical Revisions	-	-	-	-	-	-	-	-	-	-	-	-
Acquisitions	-	-	-	-	-	-	-	-	-	-	-	-
Dispositions	-	-	-	-	-	-	-	-	-	-	-	-
Economic Factors	-	-	-	-	-	-	-	-	-	-	-	-
Production	-	-	-	-	-	-	-	-	-	-	-	-
At December 31, 2013	-	-	-	-	-	-	-	-	-	-	-	-
	Total Gas			Conventional Natural Gas			Coal Bed Methane			BOE
			Proved +			Proved +			Proved +			Proved +
Proved Probable P+P^{(1) (2)}	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable
Factors	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(Mboe)	(Mboe)	(Mboe)
At December 31, 2012	91,954	35,079	127,033	91,954	35,079	127,033	-	-	-	15,326	5,846	21,172
Discoveries	-	-	-	-	-	-	-	-	-	-	-	-
Extensions & Improved Recovery	3,578	929	4,507	3,578	929	4,507	-	-	-	596	155	751
Technical Revisions	10,399	2,699	13,098	10,399	2,699	13,098	-	-	-	1,733	450	2,183
Acquisitions	-	-	-	-	-	-	-	-	-	-	-	-
Dispositions	-	-	-	-	-	-	-	-	-	-	-	-
Economic Factors	-	-	-	-	-	-	-	-	-	-	-	-
Production	-	-	-	-	-	-	-	-	-	-	-	-
At December 31, 2013	105,931	38,707	144,638	105,931	38,707	144,638	-	-	-	17,655	6,451	24,106

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

NETHERLANDS	Total Oil			Light and Medium Oil			Heavy Oil			Natural Gas Liquids
			Proved +			Proved +			Proved +			Proved +
Proved Probable P+P^{(1) (2)}	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable
Factors	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)
At December 31, 2012	-	-	-	-	-	-	-	-	-	62	61	123
Discoveries	-	-	-	-	-	-	-	-	-	-	-	-
Extensions & Improved Recovery	-	-	-	-	-	-	-	-	-	6	3	9
Technical Revisions	-	-	-	-	-	-	-	-	-	7	(20)	(13)
Acquisitions	-	-	-	-	-	-	-	-	-	9	55	64
Dispositions	-	-	-	-	-	-	-	-	-	-	-	-
Economic Factors	-	-	-	-	-	-	-	-	-	-	-	-
Production	-	-	-	-	-	-	-	-	-	(23)	-	(23)
At December 31, 2013	-	-	-	-	-	-	-	-	-	61	99	160
	Total Gas			Conventional Natural Gas			Coal Bed Methane			BOE
			Proved +			Proved +			Proved +			Proved +
Proved Probable P+P^{(1) (2)}	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable
Factors	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(Mboe)	(Mboe)	(Mboe)
At December 31, 2012	36,606	33,277	69,883	36,606	33,277	69,883	-	-	-	6,163	5,607	11,770
Discoveries	-	-	-	-	-	-	-	-	-	-	-	-
Extensions & Improved Recovery	1,445	2,799	4,244	1,445	2,799	4,244	-	-	-	247	470	716
Technical Revisions	7,906	(1,602)	6,304	7,906	(1,602)	6,304	-	-	-	1,325	(287)	1,038
Acquisitions	3,721	10,118	13,839	3,721	10,118	13,839	-	-	-	629	1,741	2,371
Dispositions	-	-	-	-	-	-	-	-	-	-	-	-
Economic Factors	-	-	-	-	-	-	-	-	-	-	-	-
Production	(12,928)	-	(12,928)	(12,928)	-	(12,928)	-	-	-	(2,178)	-	(2,178)
At December 31, 2013	36,750	44,592	81,342	36,750	44,592	81,342	-	-	-	6,186	7,531	13,717

TOTAL COMPANY	Total Oil			Light and Medium Oil			Heavy Oil			Natural Gas Liquids
			Proved +			Proved +			Proved +			Proved +
Proved Probable P+P^{(1) (2)}	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable
Factors	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)
At December 31, 2012	60,975	35,181	96,156	60,958	35,178	96,136	17	3	20	3,627	2,086	5,714
Discoveries	-	-	-	-	-	-	-	-	-	-	-	-
Extensions & Improved Recovery	7,550	4,747	12,297	7,550	4,747	12,297	-	-	-	3,845	3,259	7,104
Technical Revisions	10,149	(5,642)	4,507	10,149	(5,642)	4,507	-	-	-	1,378	383	1,761
Acquisitions	-	-	-	-	-	-	-	-	-	9	56	64
Dispositions	-	-	-	-	-	-	-	-	-	-	-	-
Economic Factors	-	-	-	-	-	-	-	-	-	-	-	-
Production	(9,396)	-	(9,396)	(9,392)	-	(9,392)	(4)	-	(4)	(631)	-	(631)
At December 31, 2013	69,278	34,286	103,564	69,265	34,283	103,548	13	3	16	8,228	5,784	14,012
	Total Gas			Conventional Natural Gas			Coal Bed Methane			BOE
			Proved +			Proved +			Proved +			Proved +
Proved Probable P+P^{(1) (2)}	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable	Proved	Probable	Probable
Factors	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(Mboe)	(Mboe)	(Mboe)
At December 31, 2012	243,951	134,034	377,985	221,915	122,093	344,008	22,036	11,941	33,977	105,262	59,605	164,867
Discoveries	-	-	-	-	-	-	-	-	-	-	-	-
Extensions & Improved Recovery	49,703	40,977	90,680	49,703	40,977	90,680	-	-	-	19,679	14,836	34,514
Technical Revisions	40,939	(7,898)	33,041	37,672	(6,084)	31,588	3,267	(1,814)	1,453	18,350	(6,574)	11,775
Acquisitions	3,721	10,118	13,839	3,721	10,118	13,839	-	-	-	629	1,742	2,371
Dispositions	-	-	-	-	-	-	-	-	-	-	-	-
Economic Factors	-	-	-	-	-	-	-	-	-	-	-	-
Production	(29,641)	-	(29,641)	(28,241)	-	(28,241)	(1,400)	-	(1,400)	(14,967)	-	(14,967)
At December 31, 2013	308,673	177,231	485,904	284,770	167,104	451,874	23,903	10,127	34,030	128,952	69,609	198,560

Notes:

⁽¹⁾

⁽²⁾

⁽³⁾

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Undeveloped Reserves

Proved undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. These reserves have a 90% probability of being recovered. Vermilion's current plan is to develop these reserves in the following three years. The pace of development of these reserves is influenced by many factors, including but not limited to, the outcomes of yearly drilling and reservoir evaluations, changes in commodity pricing, changes in capital allocations, changing technical conditions, regulatory changes and impact of future acquisitions and dispositions. As new information becomes available these reserves are reviewed and development plans are revised accordingly.

Probable undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. These reserves have a 50% probability of being recovered. Vermilion's current plan is to develop these reserves over the next five years. In general, development of these reserves requires additional evaluation data to increase the probability of success to an acceptable level for Vermilion. This increases the timeline for the development of these reserves. This timetable may be altered depending on outside market forces, changes in capital allocations and impact of future acquisitions and dispositions.

Timing of Initial Undeveloped Reserves Assignment

Undeveloped Reserves Attributed in Current Year

	Light & Medium Oil		Natural Gas		Coalbed Methane Gas		Natural Gas Liquids		Total Oil Equivalent
	(Mbbl)		(MMcf)		(MMcf)		(Mbbl)		(Mboe)
	First		First		First		First		First
	Attributed ⁽¹⁾	Booked	Attributed ⁽¹⁾	Booked	Attributed ⁽¹⁾	Booked	Attributed ⁽¹⁾	Booked	Attributed ⁽¹⁾	Booked
Proved
Prior to 2011	4,627	6,588	6,454	107,633	4,943	12,958	268	751	6,795	27,438
2011	3,365	8,127	6,246	114,422	-	11,451	156	743	4,562	29,849
2012	3,378	9,062	10,998	121,962	-	10,939	415	1,051	5,626	32,263
2013	4,293	13,007	38,720	167,927	8,191	12,389	3543	4734	15,655	47,793
Probable
Prior to 2011	6,306	12,417	8,106	38,296	2,435	8,066	342	931	8,405	21,075
2011	5,707	15,734	11,191	47,687	-	5,761	280	937	7,852	25,580
2012	3,910	17,536	8,714	75,358	-	8,340	360	1276	5,723	32,762
2013	7,967	17,797	53,927	115,066	5,338	7,085	3742	4,640	21,587	42,795

Note:

⁽¹⁾“First Attributed” refers to reserves first attributed at year-end of the corresponding fiscal year

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Future Development Costs ⁽¹⁾

The table below sets out the future development costs deducted in the estimation of future net revenue attributable to total proved reserves and total proved plus probable reserves (using forecast prices and costs).

		Total Proved	Total Proved Plus Probable
(M$)		Estimated Using Forecast Prices and Costs	Estimated Using Forecast Prices and Costs
Australia
2014	22,500		22,500
2015	68,646		110,262
2016	2,913		2,913
2017	40,963		40,963
2018	64,405		64,405
Remainder	2,428		2,428
Total for all years undiscounted	201,855		243,471
Canada
2014	188,687		196,593
2015	179,314		250,776
2016	55,508		156,334
2017	5,636		65,039
2018	541		541
Remainder	14,899		16,341
Total for all years undiscounted	444,585		685,624
France
2014	38,884		77,422
2015	44,609		126,820
2016	22,923		54,801
2017	7,861		46,171
2018	9,272		15,767
Remainder	25,699		25,697
Total for all years undiscounted	149,248		346,678
Ireland
2014	107,703		107,703
2015	50,832		50,832
2016	3,288		3,288
2017	-		-
2018	-		-
Remainder	22,657		22,657
Total for all years undiscounted	184,480		184,480
Netherlands
2014	1,245		9,236
2015	2,818		5,586
2016	416		2,757
2017	29,072		45,187
2018	433		16,350
Remainder	6,574		6,573
Total for all years undiscounted	40,558		85,689
Total Company
2014	359,020		413,454
2015	346,219		544,277
2016	85,046		220,093
2017	83,532		197,361
2018	74,653		97,064
Remainder	72,253		73,693
Total for all years undiscounted	1,020,723		1,545,942

Note:

⁽¹⁾The pricing assumptions used in the GLJ Report with respect to net values of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above. See “Forecast Prices used in Estimates”. The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation. GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Vermilion expects to source its capital expenditure requirements from internally generated cash flow and, as appropriate, from the existing credit facility, equity or debt financing. It is anticipated that costs of funding the future development costs will not impact development of its properties or Vermilion’s reserves or future net revenue.

Oil and Gas Properties and Wells ^{(1) (2)}

The following table sets forth the number of wells in which Vermilion held a working interest as at December 31, 2013:

	Oil	Oil	Natural Gas	Natural Gas
	Gross Wells⁽³⁾	Net Wells⁽⁴⁾	Gross Wells⁽³⁾	Net Wells⁽⁴⁾
Australia
Producing	18	18	-	-
Non-producing	-	-	-	-
Canada
Producing	464	307	525	347
Non-producing	140	86	292	213
France
Producing	327	316	-	-
Non-producing	91	85	2	2
Ireland
Producing	-	-	-	-
Non-producing	-	-	6	1
Netherlands
Producing	-	-	57	43
Non-producing	-	-	19	14
Total Producing	809	641	582	390
Total Non-producing	231	171	319	230

Notes:

⁽¹⁾

Well counts are based on wellbores.

⁽²⁾

Wells for Australia and Ireland are located offshore.

⁽³⁾

"Gross" refers to the total wells in which Vermilion has an interest, directly or indirectly.

⁽⁴⁾

"Net" refers to the total wells in which Vermilion has an interest, directly or indirectly, multiplied by the percentage working interest owned by Vermilion, directly or indirectly, therein.

Costs Incurred

The following table summarizes the capital expenditures made by Vermilion on oil and natural gas properties for the year ended December 31, 2013:

	Acquisition Costs
	Proved	Unproved	Exploration	Development	Total
(M$)	Properties ⁽¹⁾	Properties	Costs ⁽¹⁾	Costs	Costs
Australia	-	-	-	77,931	77,931
Canada	-	-	19,079	235,086	254,165
France	-	-	3,899	96,479	100,378
Ireland	-	-	-	90,898	90,898
Netherlands	24,124	-	-	28,543	52,667
Total	24,124	-	22,978	528,937	576,039

Note:

⁽¹⁾Includes costs of acquiring undeveloped properties.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Acreage

The following table summarizes the acreage for the year ended December 31, 2013:

	Developed ⁽¹⁾		Undeveloped		Total	Total
(M$)	Gross ⁽²⁾	Net ⁽³⁾	Gross ⁽²⁾	Net ⁽³⁾	Gross ⁽²⁾	Net ⁽³⁾
Australia	20,200	20,200	39,400	39,400	59,600	59,600
Canada	407,700	286,800	644,800	571,900	1,052,500	858,700
France	218,100	208,900	344,900	344,900	563,000	553,800
Ireland	7,200	1,300	-	-	7,200	1,300
Netherlands	68,800	41,300	1,315,800	694,400	1,384,600	735,700
Total	722,000	558,500	2,344,900	1,650,600	3,066,900	2,209,100

Notes:

⁽¹⁾“Developed” means the acreage assigned to productive wells based on applicable regulations.

⁽²⁾“Gross” means the total acreage in which Vermilion has a working interest, directly or indirectly.

⁽³⁾“Net” means the total acreage in which Vermilion has a working interest, directly or indirectly, multiplied by the percentage working interest of Vermilion.

Exploration and Development Activities

The following table sets forth the number of development and exploration wells which Vermilion completed during its 2013 financial year:

	Exploration Wells		Development Wells
	Gross ⁽¹⁾	Net ⁽²⁾	Gross ⁽¹⁾	Net ⁽²⁾
Australia
Oil	-	-	2.0	2.0
Gas	-	-	-	-
Standing	-	-	-	-
Dry Holes	-	-	-	-
Total Completed	-	-	2.0	2.0
Canada
Oil	-	-	65.0	55.2
Gas	2.0	2.0	7.0	3.6
Standing	-	-	-	-
Dry Holes	-	-	1.0	1.0
Total Completed	2.0	2.0	73.0	59.8
France
Oil	-	-	5.0	5.0
Gas	-	-	-	-
Service	-	-	-	-
Standing	-	-	-	-
Dry Holes	-	-	-	-
Total Completed	-	-	5.0	5.0
Ireland
Oil	-	-	-	-
Gas	-	-	-	-
Standing	-	-	-	-
Dry Holes	-	-	-	-
Total Completed	-	-	-	-
Netherlands
Oil	-	-	-	-
Gas	-	-	-	-
Standing	-	-	-	-
Dry Holes	-	-	-	-
Total Completed	-	-	-	-
Total Company
Oil	-	-	72.0	62.2
Gas	2.0	2.0	7.0	3.6
Service	-	-	-	-
Standing	-	-	-	-
Dry Holes	-	-	1.0	1.0
Total Completed	2.0	2.0	80.0	66.8

Notes:

⁽¹⁾ "Gross" refers to the total wells in which Vermilion has an interest, directly or indirectly.

⁽²⁾

"Net" refers to the total wells in which Vermilion has an interest, directly or indirectly, multiplied by the percentage working interest owned by Vermilion, directly or indirectly therein.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Vermilion has initially planned $555 million for its 2014 capital program in Australia, Canada, France, Ireland and the Netherlands, as well as Germany. Key development expenditures in 2014 include increased drilling activity in France and the Netherlands, drilling and completion of two horizontal Duvernay appraisal wells in Canada, and the continued development of our Cardium and Mannville liquids-rich gas opportunities in Canada. In Australia, key development expenditures in 2014 include ongoing facilities maintenance, enhancement and refurbishment along with preparation and permitting activities in advance of our planned 2015 drilling program. In Ireland, construction of the 4.7 kilometre tunnel portion of the onshore pipeline will continue with less than two kilometres of tunneling remaining.

Properties with No Attributed Reserves

The following table sets out Vermilion's properties with no attributed reserves as at December 31, 2013:

	Properties with No Attributed Reserves
Country	Gross Acres⁽¹⁾	Net Acres⁽²⁾
Australia	39,400	39,400
Canada	407,400	362,800
France	344,900	344,900
Ireland	-	-
Netherlands	1,315,800	694,400
Total	2,107,500	1,441,500

Notes:

⁽¹⁾"Gross" refers to the total acres in which Vermilion has an interest, directly or indirectly.

⁽²⁾

"Net" refers to the total acres in which Vermilion has an interest, directly or indirectly, multiplied by the percentage working interest owned by Vermilion, directly or indirectly therein.

Vermilion expects its rights to explore, develop and exploit approximately 63,000 (62,700 net) acres in Canada to expire within one year unless the Company initiates the capital activity necessary to retain the rights. No such rights are expected to expire within one year in respect of the Company’s international properties. Vermilion currently has no material work commitments on these lands.

Contingent and Prospective Resources

The GLJ Resources Assessment estimated contingent resources of 74.4 million boe (low estimate) to 351.7 million boe (high estimate), with a best estimate of 233.5 million boe and prospective resources of 59.4 million boe (low estimate) to 818.8 million boe (high estimate), with a best estimate of 498.7 million boe. Contingent and prospective resources are in addition to reserves estimated in the GLJ Report.

Summary information regarding contingent and prospective resources and net present values of future net revenues from contingent and prospective resources are set forth below.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Company Contingent and Prospective Resources as at December 31, 2013 ⁽¹⁾^{(2) -}Forecast Prices and Costs ^{(3) (4)}

	Gross	Gross						Net
	Reserves	Contingent Resources			Prospective Resources			Contingent Resources			Prospective Resources
	P+P	Low	Best	High	Low	Best	High	Low	Best	High	Low	Best	High
Oil and NGLs	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)
Australia	19,463	1,250	3,900	6,200	-	1,207	3,046	1,250	3,900	6,200	-	1,207	3,046
Canada	45,168	28,377	84,022	128,092	4,607	157,571	295,063	21,140	61,487	92,143	3,711	121,446	222,692
France	52,785	8,463	21,203	33,879	289	3,782	13,584	7,744	19,489	31,364	271	3,171	12,637
Ireland	-	-	-	-	-	-	-	-	-	-	-	-	-
Netherlands	160	13	41	1,112	112	199	389	13	41	1,112	112	199	389
Total	117,576	38,103	109,166	169,283	5,008	162,759	312,082	30,147	84,917	130,819	4,094	126,023	238,764

	Gross	Gross						Net
	Reserves	Contingent Resources			Prospective Resources			Contingent Resources			Prospective Resources
	P+P	Low	Best	High	Low	Best	High	Low	Best	High	Low	Best	High
Natural Gas	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)	(MMcf)
Australia	-	-	-	-	-	-	-	-	-	-	-	-	-
Canada	245,624	204,370	704,875	1,023,206	196,373	1,772,471	2,559,987	188,177	642,287	920,915	184,256	1,648,071	2,370,533
France	14,300	653	816	1,020	-	-	-	653	816	1,020	-	-	-
Ireland	144,638	5,807	18,780	29,587	-	-	-	5,807	18,780	29,587	-	-	-
Netherlands	81,342	6,874	21,627	40,864	130,038	242,939	480,613	6,874	21,627	40,864	130,038	242,939	480,613
Total	485,904	217,704	746,098	1,094,677	326,411	2,015,410	3,040,600	201,511	683,510	992,386	314,294	1,891,010	2,851,146

	Gross	Gross						Net
	Reserves	Contingent Resources			Prospective Resources			Contingent Resources			Prospective Resources
	P+P	Low	Best	High	Low	Best	High	Low	Best	High	Low	Best	High
Total Oil Equivalent	(Mboe)	(Mboe)	(Mboe)	(Mboe)	(Mboe)	(Mboe)	(Mboe)	(Mboe)	(Mboe)	(Mboe)	(Mboe)	(Mboe)	(Mboe)
Australia	19,463	1,250	3,900	6,200	-	1,207	3,046	1,250	3,900	6,200	-	1,207	3,046
Canada	86,105	62,439	201,502	298,626	37,336	452,983	721,727	52,503	168,534	245,629	34,421	396,125	617,781
France	55,168	8,571	21,339	34,049	289	3,782	13,584	7,853	19,625	31,534	271	3,171	12,637
Ireland	24,106	968	3,130	4,931	-	-	-	968	3,130	4,931	-	-	-
Netherlands	13,717	1,159	3,646	7,922	21,785	40,689	80,492	1,159	3,646	7,922	21,785	40,689	80,492
Total	198,560	74,387	233,517	351,728	59,410	498,661	818,849	63,733	198,835	296,216	56,477	441,192	713,956

Summary of Net Present Value of Future Net Revenues as at December 31, 2013 - Forecast Prices and Costs ⁽³⁾

Contingent Resources	Before Income Taxes, Discounted at⁽⁵⁾				After Income Taxes, Discounted at ⁽⁵⁾
(M$)	0%	5%	8%	10%	0%	5%	8%	10%
Low Estimate (C1)⁽⁶⁾
Australia	46,057	30,848	24,342	20,805	10,709	4,554	2,164	950
Canada	1,338,563	750,862	547,973	448,543	1,003,891	535,982	376,779	299,666
France	500,810	299,434	225,931	188,618	328,076	183,183	131,181	105,100
Ireland	23,215	7,833	3,793	2,180	17,411	5,360	2,280	1,081
Netherlands	24,785	13,825	9,362	6,996	13,325	5,213	1,997	325
Total Low Estimate	1,933,430	1,102,802	811,401	667,142	1,373,412	734,292	514,401	407,122
Best Estimate (C2)⁽⁷⁾
Australia	270,083	190,153	155,779	136,973	103,615	67,961	53,278	45,456
Canada	4,757,350	2,548,856	1,810,553	1,455,506	3,567,982	1,841,038	1,268,888	995,788
France	1,219,657	706,205	527,066	438,131	799,382	433,198	307,628	246,078
Ireland	142,895	49,811	25,559	15,511	107,171	35,501	16,748	8,965
Netherlands	105,017	65,145	49,059	40,535	57,271	30,298	19,610	14,023
Total Best Estimate	6,495,002	3,560,170	2,568,016	2,086,656	4,635,421	2,407,996	1,666,152	1,310,310
High Estimate (C3)⁽⁸⁾
Australia	533,218	375,068	307,885	271,318	216,856	146,938	118,024	102,536
Canada	8,520,437	4,598,611	3,337,210	2,738,201	6,390,285	3,371,269	2,405,989	1,949,949
France	2,268,722	1,266,202	939,778	782,450	1,487,408	794,121	570,941	464,372
Ireland	324,184	99,583	52,899	35,341	243,138	73,269	37,734	24,313
Netherlands	287,748	191,967	152,366	131,052	157,267	95,126	69,804	56,317
Total High Estimate	11,934,309	6,531,431	4,790,138	3,958,362	8,494,954	4,480,723	3,202,492	2,597,487

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Prospective Resources	Before Income Taxes, Discounted at⁽⁵⁾				After Income Taxes, Discounted at⁽⁵⁾
(M$)	0%	5%	8%	10%	0%	5%	8%	10%
Low Estimate (Pr1)⁽⁶⁾
Australia	-	-	-	-	-	-	-	-
Canada	492,575	236,916	154,804	116,698	369,217	167,763	104,048	74,831
France	10,422	8,547	7,634	7,097	5,484	4,069	3,398	3,011
Ireland	-	-	-	-	-	-	-	-
Netherlands	848,414	416,721	294,433	239,170	460,342	208,317	135,776	103,074
Total Low Estimate	1,351,411	662,184	456,871	362,965	835,043	380,149	243,222	180,916
Best Estimate (Pr2)⁽⁷⁾
Australia	106,915	64,513	48,429	40,247	43,520	25,183	18,433	15,061
Canada	11,548,288	4,767,690	2,918,816	2,131,682	8,659,120	3,427,761	2,023,953	1,434,147
France	150,457	93,762	72,020	60,756	97,837	55,234	39,133	30,889
Ireland	-	-	-	- ^-	-	-	-	-
Netherlands	2,078,111	1,132,690	848,113	714,874	1,132,370	599,681	438,362	363,004
Total Best Estimate	13,883,771	6,058,655	3,887,378	2,947,559	9,932,847	4,107,859	2,519,881	1,843,101
High Estimate (Pr3)⁽⁸⁾
Australia	334,608	191,460	141,219	116,472	140,264	78,871	57,603	47,208
Canada	27,794,746	11,888,521	7,639,101	5,813,417	20,845,987	8,778,815	5,574,461	4,204,916
France	758,262	428,747	319,835	267,173	496,839	265,350	190,141	154,240
Ireland	-	-	-	- ^-	-	-	-	-
Netherlands	4,736,149	2,635,340	1,989,491	1,684,266	2,585,545	1,421,568	1,062,681	893,256
Total High Estimate	33,623,765	15,144,068	10,089,646	7,881,328	24,068,635	10,544,604	6,884,886	5,299,620

Notes:

⁽¹⁾

The contingent and prospective resource assessments were prepared by GLJ in accordance with the definitions, standards and procedures contained in the COGEH and NI 51-101. Contingent resource is defined in the COGEH as those quantities of petroleum estimated to be potentially recoverable from known accumulations using established technology or technology under development, but which do not currently qualify as reserves or commercially recoverable due to one or more contingencies. See "Presentation of Oil and Gas Reserves and Production Information - Contingent Resources" for the primary contingencies which prevent the classification of the resources as reserves. There is no certainty that it will be commercially viable to produce any portion of the contingent resources or that Vermilion will produce any portion of the volumes currently classified as contingent resources. The estimates of contingent resources involve implied assessment, based on certain estimates and assumptions, that the resources described exists in the quantities predicted or estimated, as at a given date, and that the resources can be profitably produced in the future. The net present value of the future net revenue from the contingent resources does not necessarily represent the fair market value of the contingent resources. Actual contingent resources (and any volumes that may be reclassified as reserves) and future production therefrom may be greater than or less than the estimates provided herein. Prospective resource is defined in the COGEH are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources or that Vermilion will produce any portion of the volumes currently classified as prospective resources. The estimates of prospective resources involve implied assessment, based on certain estimates and assumptions, that the resources described exists in the quantities predicted or estimated and that the resources can be profitably produced in the future. The net present value of the future net revenue from the prospective resources does not necessarily represent the fair market value of the prospective resources. The recovery and resources estimates provided herein are estimates only. Actual prospective resources (and any volumes that may be reclassified as reserves or contingent resources) and future production from such prospective resources may be greater than or less than the estimates provided herein.

⁽²⁾

GLJ prepared the estimates of contingent and prospective resources shown for each property using deterministic principles and methods. Probabilistic aggregation of the low and high property estimates shown in the table might produce different total volumes than the arithmetic sums shown in the table.

⁽³⁾

The forecast price and cost assumptions utilized in the year-end 2013 reserves report were also utilized by GLJ in preparing the contingent resource and prospective resource assessments. See ”GLJ December 31, 2013 Forecast Prices” in this Annual Information Form.

⁽⁴⁾

"Gross” Reserves or Contingent Resources or Prospective Resources are Vermilion's working interest (operating or non-operating) share before deduction of royalties and without including any royalty interests of Vermilion. "Net” Reserves or Contingent Resources or Prospective Resources are Vermilion's working interest (operating or non-operating) share after deduction of royalty obligations, plus Vermilion's royalty interests in Reserves or Contingent Resources or Prospective Resources.

⁽⁵⁾

The net present value of future net revenue attributable to the contingent or prospective resources does not necessarily represent the fair market value of the contingent or prospective resources. Estimated abandonment and reclamation costs have been included in the evaluation.

⁽⁶⁾

Low estimate is considered to be a conservative estimate of the quantity of contingent (C1) or prospective (Pr1) resources that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. Those contingent or prospective resources at the low end of the estimate range have the highest degree of certainty - a 90% confidence level - that the actual quantities recovered will be equal or exceed the estimate.

⁽⁷⁾

Best estimate is considered to be the best estimate of the quantity of contingent (C2) or prospective (Pr2) resources that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. Those contingent or prospective resources that fall within the best estimate have a 50% confidence level that the actual quantities recovered will be equal or exceed the estimate.

⁽⁸⁾

High estimate is considered to be an optimistic estimate of the quantity of contingent (C3) or prospective (Pr3) resources that will actually be recovered. It is unlikely that the actual remaining quantities of contingent or prospective resources recovered will meet or exceed the high estimate. Those contingent or prospective resources at the high end of the estimate range have a lower degree of certainty - a 10% confidence level - that the actual quantities recovered will equal or exceed the estimate.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Abandonment and Reclamation Costs

Vermilion has estimated its abandonment costs by determining amounts for facility decommissioning and reclamation costs (including salvage) by area in Australia, Canada, France, Ireland and the Netherlands. As well, Vermilion has determined abandonment costs (including salvage) and reclamation costs per well, by area and applied this amount to its net wells in each of the countries. The number of net wells to be abandoned is 960 in Canada, 570 in France, 62 in the Netherlands, 20 in Australia and one in Ireland.

The total proved plus probable forecasted costs including future drilling locations, net of salvage, as estimated in the GLJ Report, is set forth in the following table:

Country	Undiscounted (M$)	Discounted at 10% (M$)
Australia	42,822	12,191
Canada	49,843	12,229
France	229,097	38,447
Ireland	67,851	7,359
Netherlands	51,599	25,129
Total	441,212	95,355

Costs associated with abandonment of surface facilities, well site reclamation, pipeline abandonments, non-producing wells, remediation and reclamation costs, not including downhole costs listed above, were estimated by management of the Company as:

Country	Facilities Undiscounted (M$)	Discounted at 10% (M$)
Australia	204,321	33,262
Canada	117,181	22,835
France	195,477	10,634
Netherlands	128,324	65,124
Total	645,303	131,855

In the next three years, as estimated in the GLJ Report, Vermilion expects to pay abandonment and reclamation costs of:

Country	Undiscounted (M$)	Discounted at 10% (M$)
Australia	-	-
Canada	2,498	2,122
France	4,563	3,895
Ireland	-	-
Netherlands	10,963	9,106
Total	18,024	15,123

Tax Information

Vermilion pays current taxes in France, the Netherlands and Australia. Corporate income taxes in France and the Netherlands apply to taxable income after eligible deductions. In France, the French government enacted corporate tax legislation that will lead to increases in current tax for companies operating in France, including a temporary surtax of 10.7% (with the surtax levied as a percent of base corporate income tax payable). The new surtax rate is applicable for companies which have annual revenue in excess of €250 million and would effectively increase the statutory rate applicable to Vermilion’s French operations to 38.0%, with retrospective application to January 1, 2013. The surtax is only applicable to tax years ending up to December 30, 2015 and, as a result, Vermilion’s French operations tax rate will decrease to 34.4% for the tax year 2015. In the Netherlands, taxable income is taxed at a rate of approximately 46%. As a function of the impact of Vermilion’s Canadian tax pools, the Company does not presently pay current taxes in Canada. The Canadian segment includes holding companies that pay current taxes in foreign jurisdictions.

In Australia, current taxes include both corporate income taxes and PRRT. Corporate income taxes are applied at a rate of approximately 30% on taxable income after eligible deductions, which include PRRT. PRRT is a profit based tax applied at a rate of 40% on sales less eligible expenditures, including operating expenses and capital expenditures.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

The following table sets forth Vermilion’s tax pools as at December 31, 2013:

(M$)	Oil and Gas Assets		Tax Losses⁽¹⁾	Other	Total
Australia	217,069	⁽²⁾	-	-	217,069
Canada	856,023	⁽²⁾	385,105	8,110	1,249,238
France	388,549	⁽³⁾	12,144	-	400,693
Ireland	844,761	⁽¹⁾	272,201	-	1,116,962
Netherlands	61,868	⁽⁴⁾	-	-	61,868
Total	2,368,270		669,450	8,110	3,045,830

Notes:

⁽¹⁾

Development expenditures and losses are deductible at 100% against taxable income.

⁽²⁾

Deduction calculated using various declining balance rates.

⁽³⁾

Deduction calculated using a combination of straight-line over the assets life and unit of production method.

⁽⁴⁾

Deduction calculated using a unit of production method.

Production Estimates

The following table sets forth the volume of production estimated for the year ended December 31, 2014 as reflected in the estimates of gross proved reserves and gross proved plus probable reserves:

	Light and Medium Oil	Heavy Oil	Natural Gas	Natural Gas Liquids	BOE
	(bbl/d)	(bbl/d)	(Mcf/d)	(bbl/d)	(boe/d)
Australia
Proved	6,603	-	-	-	6,603
Proved Plus Probable	6,714	-	-	-	6,714
Canada
Proved	8,607	9	46,565	2,467	18,843
Proved Plus Probable	9,351	9	51,256	2,799	20,700
France
Proved	11,047	-	1,822	-	11,351
Proved Plus Probable	11,846	-	2,047	-	12,187
Ireland
Proved	-	-	-	-	-
Proved Plus Probable	-	-	-	-	-
Netherlands
Proved	-	-	31,729	65.3	5,354
Proved Plus Probable	-	-	38,524	76.5	6,497
Total Proved	26,257	9	80,116	2,532	42,150
Total Proved Plus Probable	27,910	9	91,827	2,875	46,098

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Production History

The following table sets forth certain information in respect of production, product prices received, royalties, production costs and netbacks received by Vermilion for each quarter of its most recently completed financial year. Vermilion had no production from its Ireland assets in 2013. Light and medium oil average net prices received in the following table also includes immaterial amounts generated by the sale of heavy oil.

	Three Months Ended	Three Months Ended	Three Months Ended	Three Months Ended
	March 31, 2013	June 30, 2013	September 30, 2013	December 31, 2013
Australia
Average Daily Production
Light and Medium Oil (bbl/d)	5,287	7,363	7,070	6,189
Natural Gas (MMcf/d)	-	-	-	-
Natural Gas Liquids (bbl/d)	-	-	-	-
Average Net Prices Received
Light and Medium Oil ($/bbl)	120.76	111.54	120.95	124.63
Natural Gas ($/Mcf)	-	-	-	-
Natural Gas Liquids ($/bbl)	-	-	-	-
Royalties ⁽¹⁾
Light and Medium Oil ($/bbl)	-	-	-	-
Natural Gas ($/Mcf)	-	-	-	-
Natural Gas Liquids ($/bbl)	-	-	-	-
Production Costs
Light and Medium Oil ($/bbl)	25.61	15.30	20.86	21.25
Natural Gas ($/Mcf)	-	-	-	-
Natural Gas Liquids ($/bbl)	-	-	-	-
Netback Received
Light and Medium Oil ($/bbl)	95.15	96.24	100.09	103.38
Natural Gas ($/Mcf)	-	-	-	-
Natural Gas Liquids ($/bbl)	-	-	-	-
Canada
Average Daily Production
Light and Medium Oil (bbl/d)	7,966	8,885	7,969	8,719
Natural Gas (MMcf/d)	41.04	43.69	43.40	41.43
Natural Gas Liquids (bbl/d)	1,335	1,725	1,897	1,699
Average Net Prices Received
Light and Medium Oil ($/bbl)	88.76	96.64	104.32	90.05
Natural Gas ($/Mcf)	3.33	3.84	2.73	3.70
Natural Gas Liquids ($/bbl)	64.39	63.51	72.20	70.53
Royalties
Light and Medium Oil ($/bbl)	8.31	8.98	10.96	10.5
Natural Gas ($/Mcf)	0.23	0.09	0.17	0.21
Natural Gas Liquids ($/bbl)	18.01	13.39	14.07	11.55
Transportation
Light and Medium Oil ($/bbl)	2.06	2.12	3.18	3.54
Natural Gas ($/Mcf)	0.16	0.17	0.16	0.18
Natural Gas Liquids ($/bbl)	1.56	1.51	1.82	3.72
Production Costs
Light and Medium Oil ($/bbl)	8.77	9.71	7.26	10.7
Natural Gas ($/Mcf)	1.66	1.65	1.53	0.83
Natural Gas Liquids ($/bbl)	11.97	10.05	7.73	9.51
Netback Received
Light and Medium Oil ($/bbl)	69.62	75.83	82.92	65.31
Natural Gas ($/Mcf)	1.28	1.93	0.87	2.48
Natural Gas Liquids ($/bbl)	32.85	38.56	48.58	45.75

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

France
Average Daily Production
Light and Medium Oil (bbl/d)	10,330	10,390	11,625	11,131
Natural Gas (MMcf/d)	4.21	4.19	5.23	-
Natural Gas Liquids (bbl/d)	-	-	-	-
Average Net Prices Received
Light and Medium Oil ($/bbl)	109.54	100.79	110.65	112.84
Natural Gas ($/Mcf)	11.17	9.41	10.08	-
Natural Gas Liquids ($/bbl)	-	-	-	-
Royalties
Light and Medium Oil ($/bbl)	6.24	6.23	7.10	6.70
Natural Gas ($/Mcf)	0.30	0.28	0.30	-
Natural Gas Liquids ($/bbl)	-	-	-	-
Transportation
Light and Medium Oil ($/bbl)	2.57	2.51	2.59	4.71
Natural Gas ($/Mcf)	-	-	-	-
Natural Gas Liquids ($/bbl)	-	-	-	-
Production Costs
Light and Medium Oil ($/bbl)	18.02	17.01	13.33	15.82
Natural Gas ($/Mcf)	1.68	1.55	1.38	-
Natural Gas Liquids ($/bbl)	-	-	-	-
Netback Received
Light and Medium Oil ($/bbl)	82.71	75.04	87.63	85.61
Natural Gas ($/Mcf)	9.19	7.58	8.40	-
Natural Gas Liquids ($/bbl)	-	-	-	-
Netherlands
Average Daily Production
Light and Medium Oil (bbl/d)	-	-	-	-
Natural Gas (MMcf/d)	36.91	38.52	28.78	37.53
Natural Gas Liquids (bbl/d)	96	50	48	62
Average Net Prices Received
Light and Medium Oil ($/bbl)	-	-	-	-
Natural Gas ($/Mcf)	10.09	10.82	10.18	11.24
Natural Gas Liquids ($/bbl)	102.96	84.11	98.86	111.00
Production Costs
Light and Medium Oil ($/bbl)	-	-	-	-
Natural Gas ($/Mcf)	1.19	1.50	1.97	1.79
Natural Gas Liquids ($/bbl)	-	-	-	-
Netback Received
Light and Medium Oil ($/bbl)	-	-	-	-
Natural Gas ($/Mcf)	8.90	9.32	8.21	9.45
Natural Gas Liquids ($/bbl)	102.96	84.11	98.86	111.00
Total
Average Daily Production
Light and Medium Oil (bbl/d)	23,583	26,638	26,664	26,039
Natural Gas (MMcf/d)	82.16	86.40	77.41	78.96
Natural Gas Liquids (bbl/d)	1,431	1,775	1,945	1,761
Average Net Prices Received
Light and Medium Oil ($/bbl)	105.99	101.28	111.51	108.29
Natural Gas ($/Mcf)	6.77	7.22	6	7.29
Natural Gas Liquids ($/bbl)	66.98	64.09	72.87	71.96
Royalties
Light and Medium Oil ($/bbl)	5.34	5.48	6.35	6.24
Natural Gas ($/Mcf)	0.13	0.06	0.11	0.11
Natural Gas Liquids ($/bbl)	16.8	13.02	13.72	11.14
Transportation Costs
Light and Medium Oil ($/bbl)	1.79	1.71	2.07	3.1
Natural Gas ($/Mcf)⁽²⁾	0.3	0.29	0.17	0.14
Natural Gas Liquids ($/bbl)	1.46	1.47	1.78	3.59
Production Costs
Light and Medium Oil ($/bbl)	17.08	14.11	13.53	15.51
Natural Gas ($/Mcf)	1.45	1.58	1.68	1.28
Natural Gas Liquids ($/bbl)	11.17	9.76	7.54	9.17
Netback Received
Light and Medium Oil ($/bbl)	81.78	79.98	89.56	83.44
Natural Gas ($/Mcf)	4.89	5.29	4.04	5.76
Natural Gas Liquids ($/bbl)	37.55	39.84	49.83	48.06

Notes:

⁽¹⁾

Under IFRS, Vermilion accounts for PRRT as an income tax and accordingly, royalty netbacks exclude PRRT. Prior to adopting IFRS, Vermilion included PRRT within royalties.

⁽²⁾

Includes Ireland transportation costs.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Marketing

The nature of Vermilion’s operations results in exposure to fluctuations in commodity prices, interest rates and foreign currency exchange rates. Vermilion monitors and, when appropriate, uses derivative financial instruments to manage its exposure to these fluctuations. All transactions of this nature entered into by Vermilion are related to an underlying financial position or to future crude oil and natural gas production. Vermilion does not use derivative financial instruments for speculative purposes. Vermilion has not obtained collateral or other security to support its financial derivatives as management reviews the creditworthiness of its counterparties prior to entering into derivative contracts.

During the normal course of business, Vermilion may also enter into fixed price arrangements to sell a portion of its production or purchase commodities for operational use.

The following table summarizes Vermilion’s outstanding risk management positions as at December 31, 2013:

	Note	Daily Volume	Strike Price(s)
Crude Oil
WTI - Collar
January 2014 - March 2014		1,000 bbl/d	97.50 - 104.69 USD $
WTI - Swap
January 2014 - March 2014		500 bbl/d	101.22 USD $
January 2014 - March 2014	(1)	250 bbl/d	105.45 USD $
January 2014 - June 2014		250 bbl/d	100.05 USD $
January 2014 - June 2014	(2)	1,000 bbl/d	100.07 USD $
Dated Brent - Collar
January 2014 - March 2014		2,500 bbl/d	104.00 - 110.46 USD $
January 2014 - June 2014		1,250 bbl/d	103.20 - 110.24 USD $
April 2014 - June 2014		1,000 bbl/d	105.00 - 115.00 USD $
April 2014 - September 2014		1,000 bbl/d	105.00 - 112.00 USD $
April 2014 - December 2014		1,000 bbl/d	106.00 - 110.73 USD $
Dated Brent - Swap
January 2014 - March 2014		2,000 bbl/d	107.80 USD $
January 2014 - June 2014		1,000 bbl/d	107.25 USD $
January 2014 - June 2014	(2)	1,500 bbl/d	110.32 USD $
April 2014 - June 2014		1,250 bbl/d	109.74 USD $
January 2014 - December 2014		500 bbl/d	108.28 USD $
MSW - Fixed Price Sale (Physical)
January 2014 - March 2014		1,000 bbl/d	93.37 CAD $
April 2014 - June 2014		1,000 bbl/d	92.85 CAD $
Canadian Natural Gas
AECO - Collar
January 2014 - December 2014		10,000 GJ/d	3.18 - 3.81 CAD $
AECO - Swap
January 2014 - December 2014		5,000 GJ/d	3.71 CAD $
AECO - Collar (Physical)	(3)
April 2012 - March 2014		5,500 GJ/d	2.60 - 3.78 CAD $
June 2012 - March 2014		3,000 GJ/d	2.30 - 3.75 CAD $
European Natural Gas
TTF - Swap
January 2014 - March 2014		16,200 GJ/d	7.88 EUR €
Electricity
AESO - Swap
January 2014 - December 2014		7.2 MWh/d	54.75 CAD $
AESO - Swap (Physical)
January 2013 - December 2015		72.0 MWh/d	53.17 CAD $

Notes:

⁽¹⁾ Prior to the expiration of this swap, the counterparty has the option to extend the swap to June 30, 2014 at the contracted volume and price.

⁽²⁾ Prior to the expiration of this swap, the counterparty has the option to extend the swap to December 31, 2014 at the contracted volume and price.

⁽³⁾ Physical AECO collars have a funded cost of $0.10/GJ.

From time to time Vermilion enters into new risk management positions. Information regarding outstanding risk management positions is available on Vermilion’s website at www.vermilionenergy.com/ir/hedging.cfm.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

ADDITIONAL INFORMATION RESPECTING VERMILION ENERGY INC.

Management

Vermilion’s board of directors currently consists of eight directors. The directors are nominated by the Company and elected annually by Shareholders and hold office until the next meeting of Shareholders (unless otherwise ceasing to act as a director prior to such meeting). As at February 27, 2014, the directors and officers of Vermilion, as a group, beneficially owned, or controlled or directed, directly or indirectly, 4,018,166 common shares representing approximately 3.9% of the issued and outstanding common shares.

The following table sets forth certain information respecting the current directors and officers of Vermilion. References to Vermilion in the following table for dates prior to the Conversion Arrangement refer to VRL and to the Company following the date of the Conversion Arrangement.

Directors Name and Municipality of Residence	Committee(s)	Office Held	Year First Elected or Appointed as Director	Principal Occupation During the Past Five Years
Lorenzo Donadeo Calgary, Alberta Canada		Chief Executive Officer and Director	1994	Since March 2014, Chief Executive Officer of Vermilion 2003 - March 2014, President and Chief Executive Officer of Vermilion
W. Kenneth Davidson Oakville, Ontario Canada	(2) (3)	Director	2005	Since 2000, Director of Millar Western Forest Products Ltd., a private forest products company 2009 to 2011, Director of Realex Properties Corp., a public real estate company
Claudio A. Ghersinich Calgary, Alberta Canada	(2) (5)	Director	1994	Since 2011, Chairman of ArPetrol Energy Inc., a public oil and gas company Since 2010, Director of Valeura Energy Inc., a public oil and gas company Since 2005, President of Carrera Investments Corp., a private investment company
Joseph F. Killi Calgary, Alberta Canada	(2) (3)	Director	1999	Since 2011, Director of Network Capital Management Inc., a private investment management company Since 2008, President and Chief Executive Officer and Director of Wilmington Capital Management Inc., a public investment company Since 1993, President of Rosebridge Capital Corp. Inc., a private real estate investment company January 2011 to December 2011, Executive Chairman of Parkbridge Lifestyle Communities Inc., a private real estate company 2005 to 2011, Vice Chairman and Director of Realex Properties Corp., a public real estate company 2004 to 2011, Executive Chairman and Director of Parkbridge Lifestyle Communities Inc., a public real estate company
Loren M. Leiker Houston, Texas USA	(5)	Director	2012	Since 2012, Director of SM Energy, a public energy company Since 2012, Director of Midstates Petroleum, a public exploration and production company 2008 to 2011, Senior Executive VP Exploration, EOG Resources, a public oil and gas company
Larry J. Macdonald Okotoks, Alberta Canada	(1) (2) (3) (4) (5)	Director and Chairman of the Board	2002	Since 2012, Chairman Northpoint Resources, a private oil and gas company Since 2003, Chairman & Chief Executive Officer and Director of Point Energy Ltd., a private oil and gas company 2003 to 2012, Managing Director of Northpoint Energy Ltd., a private oil and gas company
William F. Madison Sugar Land, Texas USA	(2) (4) (5)	Director	2004	Since 2011, Director of Montana Tech Foundation, an independent, non-profit organization Since 2007, Director of Canadian Oil Recovery and Remediation Enterprise, Inc., a public oil recovery and remediation company
Timothy R. Marchant Calgary, Alberta Canada	(3) (4) (5)	Director	2010	Since 2013, Non-Executive Director of Cub Energy Inc., a public oil and gas company Since 2009, Adjunct Professor of Strategy and Energy Geopolitics, Haskayne School of Business 2011 to 2013, Executive Chair of Anatolia Energy Corp., a public oil and gas company 2007 to 2009, Vice President, Middle East Business Development for BP International
Committees: (1) Chairman of the Board (2) Member of the Audit Committee (3) Member of the Governance and Human Resources Committee (4) Member of the Health, Safety and Environment Committee (5) Member of the Independent Reserves Committee

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Officers

Name and
Municipality of Residence

Office Held

Principal Occupation During the Past Five Years

Anthony (Tony) Marino

Calgary, Alberta

Canada

President &

Chief Operating Officer

Since March 2014, President and Chief Operating Officer of Vermilion

May 2012 - March 2014, Executive Vice President and Chief Operating Officer of Vermilion

2009 to 2012, Director, President & CEO, Baytex Energy Corporation, a public oil and gas company

John D. Donovan

Calgary, Alberta

Canada

Executive Vice President
Business Development

Since 2005, Executive Vice President, Business Development of Vermilion

Curtis W. Hicks

Calgary, Alberta

Canada

Executive Vice President
& Chief Financial Officer

Since 2004, Executive Vice President and Chief Financial Officer of Vermilion

Mona Jasinski

Calgary, Alberta

Canada

Executive Vice President
People

Since 2011, Executive Vice President People of Vermilion

2009 to 2011, Vice President People of Vermilion

2004 to 2009, HR Manager, Shell Onshore Production, North America, a public oil and gas company

Terry Hergott

Calgary, Alberta

Canada

Vice President

Marketing

Since April 2012, Vice President, Marketing of Vermilion

1996 to 2012, Canadian Supply and Trading Manager, Marathon Petroleum Corp.

Gerard Schut

Den Haag

The Netherlands

Vice President

European Operations

Since July 2012, Vice President European Operations of Vermilion

August 2006 to May 2012, General Manager, Chevron Exploration and Production Netherlands, a subsidiary of Chevron Corporation, a public oil and gas company

Robert J. Engbloom, Q.C.

Calgary, Alberta

Canada

Corporate Secretary

Since January 1, 2012, partner with and Deputy Chair of Norton Rose Fullbright Canada LLP, a law firm

1999 to 2011, partner with Macleod Dixon LLP, a law firm

Common Shares

Each common share entitles the holder to receive notice of and to attend all meetings of Shareholders and to one vote at any such meeting. The holders of common shares are, at the discretion of the board and subject to applicable legal restrictions, entitled to receive any dividends declared by the board on the common shares. The holders of common shares will be entitled to share equally in any distribution of the assets of the Company upon the liquidation, dissolution, bankruptcy or winding-up of the Company or other distribution of its assets among the Shareholders for the purpose of winding-up the Company’s affairs.

Cash Dividends

The Company expects to pay dividends on a monthly basis. All decisions with respect to the declaration of dividends on the common shares will be made by the board on the basis of the Company's net earnings, financial requirements and other conditions existing at such future time, planned acquisitions, income tax payable by the Company, crude oil and natural gas prices and access to capital markets, as well as the satisfaction of solvency tests imposed by the ABCA on corporations for the declaration and payment of dividends. It is expected that the dividends will be "eligible dividends" for income tax purposes and thus qualify for the enhanced gross-up and tax credit regime for certain Shareholders.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Record of Cash Dividends

The following table sets forth the amount of cash distributions per Unit for the specified periods declared by the Trust since the completion of the 2003 Arrangement on January 22, 2003 and the cash dividends per common share for the specified periods declared by the Company since the completion of the Conversion Arrangement on September 1, 2010. Dividends are generally paid on the 15th day of the month following the month of declaration. Until the December 14, 2007 distribution announcement, Vermilion had paid distributions of $0.17 per Trust Unit per month. From the January 15, 2008 payment date and onwards, Vermilion paid distributions of $0.19 per Trust Unit and dividends of $0.19 per common share, in each case per month (as applicable). In January 2013, Vermilion increased its dividend to $0.20 per common share effective for the January 2013 dividend paid on February 15, 2013. In November 2013, Vermilion announced that its board had approved a 7.5% increase in the monthly dividend to $0.215 per common share per month effective for the January 2014 dividend paid on February 18, 2014.

Period	Distribution Amount for Period per Trust Unit
As Vermilion Energy Trust
2003 - January 22 to December 31	$1.87
2004 - January to December	$2.04
2005 - January to December	$2.04
2006 - January to December	$2.04
2007 - January to December	$2.06
2008 - January to December	$2.28
2009 - January to December	$2.28
2010 - January to September⁽¹⁾	$1.71
Period	Dividend Amount for Period per Common Share
As Vermilion Energy Inc.
2010 - September to December⁽¹⁾	$0.57
2011 - January to December	$2.28
2012 - January to December	$2.28
2013 - January to December	$2.40
2014 - January to February	$0.415
Total cash dividends since January 22, 2003	$24.265

Note:

⁽¹⁾

Total cash dividends paid out in 2010 by Vermilion and the Trust to a holder of a common share who was a former holder of a Trust Unit equals $2.28.

Dividend Reinvestment Plan

The Company has established a DRIP Plan. The DRIP Plan is only available to registered Shareholders who are residents of Canada.

Under the DRIP Plan, eligible Shareholders may, at their option, reinvest their cash dividends to purchase additional common shares (the "DRIP common shares") by directing the Plan Agent (as defined below) to apply dividends on their existing common shares to the purchase of DRIP common shares. Computershare Trust Company of Canada in its capacity as plan agent (the "Plan Agent") will apply cash dividends towards the purchase of DRIP common shares from the Company from treasury (subject to certain limitations) or, at the discretion of Vermilion, through the facilities of the TSX. DRIP common shares will be acquired either at the average market price at which DRIP common shares are acquired through the facilities of the TSX or, if issued from treasury, will based on the weighted average price of common shares traded on the TSX on the 10 trading days preceding the applicable Dividend Payment Date. Participants in the DRIP Plan receive additional common shares equal to 5% of the DRIP common shares purchased with their reinvested dividends. Participants do not have to pay any brokerage fees or service charges in connection with the purchase of DRIP common shares.

Eligible Shareholders may, after electing to participate in the DRIP Plan, terminate their participation by written notice to the Plan Agent. That notice, if received by the Plan Agent no later than five (5) business days prior to a Dividend Record Date, will have effect for the dividend to be made on the following Dividend Payment Date. Thereafter, dividends to those Shareholders will be in cash. The Company may amend, suspend or terminate the DRIP Plan at any time upon not less than 30 days prior written notice (sent by mail to DRIP Plan participants at the most recent address), provided that any amendment to the DRIP Plan must be approved by the TSX and no amendment, modification or suspension shall have retroactive effect if it would prejudice the interests of the participants. The Company is not required to issue common shares into any jurisdiction where the issuance would be contrary to applicable laws.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Shareholder Rights Plan

A unitholder rights plan was first implemented in 2003 in conjunction with the 2003 Arrangement. At each of the annual and special meetings of holders of Trust Units held in 2006 and 2009, the unitholders rights plan was renewed and approved by holders of the Trust Units. In conjunction with the Conversion Arrangement, the Rights Plan for the Company was approved. In 2013, Shareholders approved the amendment and restatement of the Rights Plan and ratified the continuation of the Shareholder Rights Plan Agreement for another three years. The objectives of the Rights Plan are to ensure, to the extent possible, that all Shareholders are treated equally and fairly in connection with any takeover bid for the Company. Takeover bids may be structured to be coercive or may be initiated at a time when the board of directors of Vermilion will have a difficult time preparing an adequate response to the offer. Accordingly, such offers do not always result in Shareholders receiving equal or fair treatment or full or maximum value for their investment. Under current Canadian securities legislation, a takeover bid is required to remain open for 35 days, a period of time which may be insufficient for the directors to:

(a)

evaluate a takeover bid (particularly if it includes share or trust unit consideration);

(b)

explore, develop and pursue alternatives which are superior to the takeover bid and which could maximize Shareholder value; and

(c)

make reasoned recommendations to the Shareholders.

The Rights Plan discourages discriminatory, coercive or unfair takeovers of the Company and gives the board of directors of Vermilion time if, in the circumstances, the board of directors determines it is appropriate to take such time, to pursue alternatives to maximize Shareholder value in the event an unsolicited takeover bid is made for all or a portion of the outstanding common shares of the Company. As set forth in detail below, the Rights Plan discourages coercive hostile takeover bids by creating the potential that any common shares which may be acquired or held by such a bidder will be significantly diluted. The potential for significant dilution to the holdings of such a bidder can occur as the Rights Plan provides that all holders of common shares who are not related to the bidder will be entitled to exercise rights issued to them under the Rights Plan and to acquire common shares at a substantial discount to prevailing market prices. The bidder or the persons related to the bidder will not be entitled to exercise any Rights under the Rights Plan. Accordingly, the Rights Plan will encourage potential bidders to make takeover bids by means of a Permitted Bid (as defined below) or to approach the board of directors of Vermilion to negotiate a mutually acceptable transaction. The Permitted Bid provisions of the Rights Plan are designed to ensure that, in any takeover bid for outstanding common shares of the Company, all Shareholders are treated equally and are given adequate time to properly assess such takeover bid on a fully-informed basis.

The Rights Plan was not proposed in response to, or in anticipation of, any pending, threatened or proposed acquisition or takeover bid. The board of directors did not adopt the Rights Plan to prevent a takeover of the Company, to secure the continuance of management or the directors of the Company in their respective offices or to deter fair offers for the Common Shares of the Company.

Summary of the Plan

The following summary of terms of the Rights Plan is qualified in its entirety by reference to the text of the Shareholder Rights Plan Agreement. A copy of the Shareholder Rights Plan Agreement is available on SEDAR at www.sedar.com.

Term

The Rights Plan will remain in effect until termination of the annual meeting of Shareholders of the Company in 2016 unless the continuation of the Shareholder Rights Plan Agreement for another three years is ratified by resolution of Shareholders.

Issue of Rights

One right (a "Right") has been issued by the Company pursuant to the Shareholder Rights Plan Agreement in respect of each common share of the Company outstanding at the close of business on September 1, 2010 (the "Record Time"). One Right will also be issued for each additional common share issued after the Record Time and prior to the earlier of the Separation Time (as defined below) or the date that a majority of the Shareholders vote against the continued existence of the Shareholder Rights Plan Agreement.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Rights Exercise Privilege

The Rights will separate from the voting common shares to which they are attached and become exercisable at the time (the "Separation Time") which is 10 trading days following the date a person becomes an Acquiring Person (as defined below) or announces an intention to make a takeover bid that is not an acquisition pursuant to a takeover bid permitted by the Rights Plan (a "Permitted Bid").

Any transaction or event in which a person (an "Acquiring Person"), including associates and affiliates and others acting in concert, acquires (other than pursuant to an exemption available under the Rights Plan or a Permitted Bid) Beneficial Ownership (as defined in the Rights Plan) of 20% or more of the voting securities of the Company is referred to as a "Flip-in Event". Any Rights held by an Acquiring Person on or after the earlier of the Separation Time or the first date of public announcement by the Company or an Acquiring Person that an Acquiring Person has become such, will become void and the Rights (other than those held by the Acquiring Person) will permit the holder to purchase common shares at a substantial discount to their prevailing market price at the time.

The issuance of the Rights is not dilutive and will not affect reported earnings or cash flow per common share until the Rights separate from the underlying common shares and become exercisable or until the exercise of the Rights. The issuance of the Rights will not change the manner in which Shareholders currently trade their common shares.

Permitted Lock-Up Agreement

A person will not become an Acquiring Person by virtue of having entered into an agreement (a "Permitted Lock-Up Agreement") with a Shareholder whereby the Shareholder agrees to deposit or tender voting common shares to a takeover bid made by such person, provided that the agreement meets certain requirements including:

(a)

the terms of the agreement are publicly disclosed and a copy of the agreement is publicly available;

(b)

the Shareholder who has agreed to tender voting common shares to the takeover bid (the "Lock-Up Bid") made by the other party to the agreement is permitted to terminate its obligation under the agreement in order to tender voting common shares to another takeover bid or transaction where: (i) the offer price or value of the consideration payable under the other takeover bid or transaction is greater than the price or value of the consideration per common share at which the Shareholder has agreed to deposit or tender voting common shares to the Lock-Up Bid or is equal to or greater than a specified minimum which is not more than 7% higher than the offer price under the Lock-Up Bid; and (ii) if the number of voting common shares offered to be purchased under the Lock-Up Bid is less than all of the voting common shares held by Shareholders (excluding common shares held by the offeror), the number of voting common shares offered to be purchased under the other takeover bid or transaction (at an offer price not lower than in the Lock-Up Bid) is greater than the number of voting common shares offered to be purchased under the Lock-Up Bid or is equal to or greater than a specified number which is not more than 7% higher than the number of voting common shares offered to be purchased under the Lock-Up Bid; and

(c)

no break-up fees or other penalties that exceed in the aggregate the greater of 2.5% of the price or value of the consideration payable under the Lock-Up Bid and 50% of the increase in consideration resulting from another takeover bid or transaction shall be payable by the Shareholder if the Shareholder fails to deposit or tender voting common shares to the Lock-Up Bid.

Certificates and Transferability

Prior to the Separation Time, the Rights will be evidenced by a legend imprinted on certificates for common shares issued from and after the effective date (the "Effective Date") of the Shareholder Rights Plan Agreement (being the later of the date of the Shareholder Rights Plan Agreement and the receipt by the Company of all regulatory approvals with respect to the Shareholder Rights Plan Agreement). Rights are also attached to common shares outstanding on the Effective Date, although certificates issued prior to the Effective Date will not bear such a legend. Shareholders are not required to return their certificates in order to have the benefit of the Rights. Prior to the Separation Time, Rights will trade together with the Company common shares and will not be exercisable or transferable separately from the common shares. From and after the Separation Time, the Rights will become exercisable, will be evidenced by Rights Certificates and will be transferable separately from the common shares.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Permitted Bid Requirements

The requirements of a "Permitted Bid" include the following:

(a)

the takeover bid must be made by means of a takeover bid circular;

(b)

the takeover bid is made to all holders of voting common shares as registered on the books of the Company, other than the offeror;

(c)

the takeover bid contains a provision that no voting common shares will be taken up or paid for pursuant to the takeover bid prior to the close of business on the date that is no earlier than the later of 35 days after the date of the takeover bid and 60 days following the date of the takeover bid and only if at such date more than 50% of the voting common shares held by independent Shareholders shall have been deposited or tendered pursuant to the takeover bid and not withdrawn;

(d)

the takeover bid contains a provision that unless the takeover bid is withdrawn, voting common shares may be deposited pursuant to such takeover bid at any time during the period of time between the date of the takeover bid and the date on which voting common shares may be taken up and paid for and that any voting common shares deposited pursuant to the takeover bid may be withdrawn until taken up and paid for; and

(e)

the takeover bid contains a provision that if, on the date on which voting common shares may be taken up and paid for, more than 50% of the voting common shares held by independent Shareholders have been deposited pursuant to the takeover bid and not withdrawn, the offeror will make a public announcement of that fact and the takeover bid will be extended to remain open for deposits and tenders of voting common shares for not less than ten business days from the date of such public announcement.

The Rights Plan allows for a competing Permitted Bid (a "Competing Permitted Bid") to be made while a Permitted Bid is in existence. A Competing Permitted Bid must satisfy all of the requirements of a Permitted Bid and include a provision that no voting shares will be taken up or paid for pursuant to the takeover bid prior to the close of business on the date that is earlier than the later of 35 days after the date of the takeover bid constituting the Competing Permitted Bid and 60 days following the date on which the earliest Permitted Bid or Competing Permitted Bid which preceded the Competing Permitted Bid was made.

Waiver and Redemption

If a potential offeror does not desire to make a Permitted Bid, it can negotiate with, and obtain the prior approval of, the board of directors to make a takeover bid by way of a takeover bid circular sent to all holders of voting common shares on terms which the board of directors considers fair to all Shareholders. In such circumstances, the board of directors may waive the application of the Rights Plan thereby allowing such bid to proceed without dilution to the offeror. Any waiver of the application of the Rights Plan in respect of a particular takeover bid shall also constitute a waiver of any other takeover bid which is made by means of a takeover bid circular to all holders of voting common shares while the initial takeover bid is outstanding. The board of directors may also waive the application of the Rights Plan in respect of a particular Flip-in Event that has occurred through inadvertence, provided that the Acquiring Person that inadvertently triggered such Flip-in Event reduces its beneficial holdings to less than 20% of the outstanding voting common shares of the Company within 14 days or such earlier or later date as may be specified by the board. With the prior consent of the holders of voting common shares, the board of directors may, prior to the occurrence of a Flip-in Event that would occur by reason of an acquisition of voting common shares otherwise than pursuant to the foregoing, waive the application of the Rights Plan to such Flip-in Event.

The board of directors may, with the prior consent of the holders of voting common shares, at any time prior to the occurrence of a Flip-in Event, elect to redeem all but not less than all of the then outstanding Rights at a redemption price of $0.00001 per Right. Rights are deemed to be redeemed following completion of a Permitted Bid, a Competing Permitted Bid or a takeover bid in respect of which the board of directors has waived the application of the Rights Plan.

Exemptions for Investment Advisors

Investment advisors (for client accounts), trust companies (acting in their capacity as trustees or administrators), statutory bodies whose business includes the management of funds (for employee benefit plans, pension plans, or insurance plans of various public bodies) and administrators or trustees of registered pension plans or funds acquiring greater than 20% of the voting common shares are exempted from triggering a Flip-in Event, provided they are not making, either alone or jointly or in concert with any other person, a takeover bid.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Board of Directors

The adoption of the Rights Plan does not in any way lessen or affect the duty of the board of directors to act honestly and in good faith with a view to the best interests of the Company. The board of directors, when a takeover bid or similar offer is made, will continue to have the duty and power to take such actions and make such recommendations to Shareholders as are considered appropriate.

Amendment

The Company may, with the prior approval of Shareholders (or the holders of Rights if the Separation Time has occurred), supplement, amend, vary or delete any of the provisions of the Shareholder Rights Plan Agreement. The Company may make amendments to the Shareholder Rights Plan Agreement at any time to correct any clerical or typographical error or, subject to confirmation at the next meeting of Shareholders, make amendments which are required to maintain the validity of the Shareholder Rights Plan Agreement due to changes in any applicable legislation, regulations or rules.

AUDIT COMMITTEE MATTERS

Audit Committee Charter

Vermilion has established an audit committee (the "Audit Committee") to assist the board of directors in carrying out its oversight responsibilities with respect to, among other things, financial reporting, internal controls and the external audit process of the Company. The Audit Committee Terms of Reference are set out in Schedule "C" to this annual information form.

Composition of the Audit Committee

The following table sets forth the name of each current member of the Audit Committee, whether pursuant to applicable securities legislation, such member is considered independent, whether pursuant to applicable securities legislation, such member is considered financially literate and the relevant education and experience of such member.

Name	Independent	Financially Literate	Relevant Education and Experience
W. Kenneth Davidson (Chair)	Yes	Yes	Mr. Davidson holds Bachelor of Science degrees in Mathematics and Business from Concordia University and a Masters in Business Administration degree from McMaster University. Mr. Davidson has obtained significant financial experience and exposure to accounting including internal controls and procedures for financial reporting and complex financial issues as a director, officer or consultant to a number of companies involved in the banking and securities areas of the financial services sector.
Claudio A. Ghersinich	Yes	Yes	Mr. Ghersinich holds a B.Sc. Civil Engineering degree from the University of Manitoba. Mr. Ghersinich has obtained financial experience and exposure to accounting and financial issues in a role as a founder of Vermilion Resources Ltd. in 1994 and as an audit committee member of other public companies.
Joseph F. Killi	Yes	Yes	Mr. Killi holds a Bachelor of Science degree in Biochemistry from Loyola Collage, a Bachelor of Commerce degree from Concordia University and a Chartered Accountant designation. As a Chartered Accountant, Mr. Killi attained experience in preparing, auditing, analyzing and evaluating financial statements including internal controls and procedures for financial reporting. Mr. Killi has an understanding of the accounting principles used by the Company as well as the implications of those accounting principles on the Company's financial results. Mr. Killi has also obtained significant financial experience and exposure to accounting and financial issues in a number of senior positions with Parkbridge Lifestyle Communities Inc., Realex Properties Corp. and Trizec Corporation and in his role as a director and audit committee member of other public and private companies.
Larry J. Macdonald	Yes	Yes	Mr. Macdonald holds a Bachelor of Science degree in Geology from University of Alberta. In 2005, Mr. Macdonald attended a financial literacy course at the University of Toronto's Rotman's School of Management in conjunction with the Institute of Corporate Directors. In addition, Mr. Macdonald has obtained financial experience and exposure to accounting and financial issues in a number of senior officer positions with Point Energy Ltd., Pointwest Energy Inc., and Anderson Exploration Ltd. and as a director, audit committee member and officer of a number of other public and private companies as well as not-for-profit organizations.
William F. Madison	Yes	Yes	Mr. Madison holds a Bachelor of Science in Petroleum Engineering from Montana Tech. Mr. Madison has completed the Harvard Program for Management Development. Mr. Madison has obtained financial experience and exposure to accounting and financial issues as the Chairman of Montana Tech Foundation of the University of Montana System and as a senior executive of Marathon Oil Company and as a director, audit committee member and officer of other public and private companies.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

External Audit Service Fees

Prior to the commencement of any work, fees for all audit and non-audit services provided by the Company’s auditors must be approved by the Audit Committee.

During the years ended December 31, 2013 and 2012, Deloitte LLP, the auditors of the Company, received the following fees from the Company:

Item	2013	2012
Audit fees⁽¹⁾	$1,565,927	$1,298,619
Audit-related fees⁽²⁾	$150,830	$74,375
Tax fees⁽³⁾	$43,901	$-

Notes:

⁽¹⁾

Audit fees consisted of professional services rendered by Deloitte LLP for the audit of the Company's financial statements for the years ended December 31, 2013 and 2012.

⁽²⁾

Audit-related fees consist of fees for the review of the quarterly financial statements, services provided in connection with statutory and regulatory filings or engagements and fees for review services. Fees also may include services related to review of accounting research and accounting publications.

⁽³⁾

Tax fees consist of fees for tax compliance services.

MARKET FOR PRICE RANGE AND TRADING VOLUME OF SECURITIES

The outstanding Common Shares of the Company are listed and posted for trading on the TSX under the symbol VET. The following table sets forth the closing price range and trading volume of the Common Shares for the periods indicated:

2013	High	Low	Close	Volume
January	$52.50	$50.26	$51.16	4,706,164
February	$53.39	$50.55	$53.37	2,881,906
March	$53.53	$51.39	$52.60	4,078,665
April	$52.99	$45.78	$51.70	6,147,560
May	$53.40	$49.85	$52.24	4,366,412
June	$52.96	$48.80	$51.41	2,785,071
July	$56.14	$50.21	$55.09	2,848,305
August	$58.70	$55.34	$56.59	3,923,776
September	$57.67	$55.56	$56.62	5,148,125
October	$58.50	$56.10	$57.31	4,003,019
November	$60.15	$56.80	$58.81	3,233,886
December	$63.09	$58.49	$62.35	3,307,122
2014	High	Low	Close	Volume
January	$63.91	$60.50	$61.32	3,437,629
February	$63.93	$59.10	$62.50	3,867,446

Awards (entitling the holder thereof to receive common shares) have been issued under the Vermilion Incentive Plan. See the note regarding equity compensation plans in Vermilion's annual financial statements for further details regarding the amount and value of such awards.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

CREDIT RATINGS

The following information relating to the Company's credit ratings is provided as it relates to the Company's financing costs, liquidity and operations. Specifically, credit ratings affect the Company's ability to obtain short-term and long-term financing and the cost of such financing. Additionally, the ability of the Company to engage in certain collateralized business activities on a cost effective basis depends on the Company's credit ratings. A reduction in the current rating on the Company's debt by its rating agencies, particularly a downgrade below current ratings, or a negative change in the Company's ratings outlook could adversely affect the Company's cost of financing and its access to sources of liquidity and capital. In addition, changes in credit ratings may affect the Company's ability to, and the associated costs of, (i) entering into ordinary course derivative or hedging transactions and may require the Company to post additional collateral under certain of its contracts, and (ii) entering into and maintaining ordinary course contracts with customers and suppliers on acceptable terms.

The Senior Unsecured Notes have a rating of BB (low)/Stable from DBRS Limited ("DBRS") and BB- from Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies (Canada) Corporation ("S&P").

DBRS rates long-term debt instruments by rating categories ranging from a high of "AAA" to a low of "D". All rating categories other than AAA and D also contain subcategories "(high)" and "(low)". The absence of either a "(high)" or "(low)" designation indicates the rating is in the middle of the category. A rating of "BB" is characterized by DBRS to be speculative, non-investment-grade credit quality. The capacity for the payment of financial obligations is uncertain and vulnerable to future events. The "BB" category is the fifth highest of the ten available categories.

S&P rates long-term debt instruments by rating categories ranging from a high of "AAA" to a low of "D". The ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories. An obligation rated "BB" is characterized as less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions, which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation. The "BB" category is the fifth highest of the ten available categories.

Vermilion Rating

DBRS Limited has provided a corporate credit rating of Vermilion of “BB (low”). A rating of “BB” is characterized by DBRS Limited to be speculative, non-investment-grade credit quality. The capacity for the payment of financial obligations is uncertain and vulnerable to future events.

S&P has assigned a corporate credit rating of Vermilion of “BB-” with a stable outlook. An obligor rated “BB” is characterized by S&P as less vulnerable in the near term than other lower-rated obligors. However, it faces major ongoing uncertainties and exposure to adverse business, financial or economic conditions, which could lead to the obligor’s inadequate capacity to meet its financial commitments. The plus (+) or minus (-) modifiers indicate the relative standing within the assigned category. In addition, S&P may add a rating outlook of “positive”, “negative” or “stable” which assesses the potential direction of a long-term credit rating over the intermediate term (typically six months to two years).

Credit ratings are intended to provide investors with an independent measure of the credit quality of an issuer of securities. The credit ratings accorded to the Senior Unsecured Notes and the Company are not recommendations to purchase, hold or sell such securities and are not a comment upon the market price of the Company's securities or their suitability for a particular investor. There is no assurance that any rating will remain in effect for any given period of time or that any rating will not be revised or withdrawn entirely by a rating agency in the future if, in its judgment, circumstances so warrant. A revision or withdrawal of a credit rating could have a material adverse effect on the pricing or liquidity of the Senior Unsecured Notes or the Common Shares in any secondary markets. Vermilion does not undertake any obligation to maintain the ratings or to advise holders of the Senior Unsecured Notes or the Common Shares of any change in ratings. Each agency's rating should be evaluated independently of any other agency's rating.

CONFLICTS OF INTEREST

The directors and officers of Vermilion are engaged in and will continue to engage in other activities in the oil and natural gas industry and, as a result of these and other activities, the directors and officers of Vermilion may become subject to conflicts of interest. The ABCA provides that in the event that a director has an interest in a contract or proposed contract or agreement, the director shall disclose his interest in such contract or agreement and shall refrain from voting on any matter in respect of such contract or agreement unless otherwise provided under the ABCA. To the extent that conflicts of interest arise, such conflicts will be resolved in accordance with the provisions of the ABCA.

As at the date hereof, Vermilion is not aware of any existing or potential material conflicts of interest between Vermilion and a director or officer of Vermilion.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

No director or officer of the Company, nor any other insider of the Company, nor their associates or affiliates has or has had, at any time within the three most recently completed financial years ending December 31, 2013, any material interest, direct or indirect, in any transaction or proposed transaction that has materially affected or would materially affect the Company.

LEGAL PROCEEDINGS

The Company is not party to any significant legal proceedings as of March 7, 2014.

MATERIAL CONTRACTS

The Company has not entered into any material contracts outside its normal course of business.

INTERESTS OF EXPERTS

As at the date hereof, principals of GLJ, the independent engineers for the Company, personally disclosed in certificates of qualification that they neither had nor expect to receive any common shares. The principals of GLJ and their employees (as a group) beneficially own less than one percent of any of the Company’s securities. Deloitte LLP is the auditor of the Company and is independent within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of Alberta.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Company’s common shares is Computershare Trust Company of Canada at its principal offices in Calgary, Alberta and Toronto, Ontario.

RISK FACTORS

The following is a summary of certain risk factors relating to the business of the Company. The following information is a summary only of certain risk factors and is qualified in its entirety by reference to, and must be read in conjunction with, the detailed information appearing elsewhere in this annual information form. Additional risks and uncertainties not currently known to Vermilion that it currently views as immaterial may also materially and adversely affect its business, financial condition and/or results of operations. Shareholders and potential Shareholders should consider carefully the information contained herein and, in particular, the following risk factors.

Reserve Estimates

There are numerous uncertainties inherent in estimating quantities of proved and probable reserves and future net revenues to be derived therefrom, including many factors beyond the Company's control. The reserve and future net revenue information set forth in this annual information form represents estimates only. The reserves and estimated future net cash flow from the Company's properties have been independently evaluated by GLJ with an effective date of December 31, 2013. These evaluations include a number of assumptions relating to factors such as initial production rates, production decline rates, ultimate recovery of reserves, timing and amount of capital expenditures, marketability of production, future prices of crude oil and natural gas, operating costs, well abandonment and salvage values, royalties and other government levies that may be imposed over the producing life of the reserves. These assumptions were based on prices in use at the date the GLJ Report was prepared, and many of these assumptions are subject to change and are beyond the Company's control. Actual production and cash flow derived therefrom will vary from these evaluations, and such variations could be material.

Estimates with respect to reserves that may be developed and produced in the future are often based upon volumetric calculations, probabilistic methods and upon analogy to similar types of reserves, rather than upon actual production history. Estimates based on these methods generally are less reliable than those based on actual production history. Subsequent evaluation of the same reserves based upon production history will result in variations, which may be material, in the estimated reserves.

Reserve estimates may require revision based on actual production experience. Such figures have been determined based upon assumed commodity prices and operating costs.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

The present value of estimated future net revenue referred to in this annual information form should not be construed as the fair market value of estimated crude oil and natural gas reserves attributable to the Company's properties. The estimated discounted future revenue from reserves are based upon price and cost estimates which may vary from actual prices and costs and such variance could be material. Actual future net revenue will also be affected by factors such as the amount and timing of actual production, supply and demand for crude oil and natural gas, curtailments or increases in consumption by purchasers and changes in governmental regulations and taxation.

Uncertainty of Contingent Resource Estimates

Information regarding quantities of contingent resources included in this Annual Information Form are estimates only. References to “contingent resources” do not constitute, and should be distinguished from, references to “reserves”. The same uncertainties inherent in estimating quantities of reserves apply to estimating quantities of contingent resources. In addition, there are contingencies that prevent resources from being classified as reserves. There is no certainty that it will be commercially viable to produce any portion of the contingent resources due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. Actual results may vary significantly from these estimates and such variances could be material.

Uncertainty of Prospective Resource Estimates

Information regarding quantities of prospective resources included in this Annual Information Form are estimates only. References to “prospective resources” do not constitute, and should be distinguished from, references to “reserves”. References to “prospective resources” do not constitute, and should be distinguished from, references to “contingent resources”. The same uncertainties inherent in estimating quantities of reserves apply to estimating quantities of prospective resources. In addition, prospective resources are undiscovered which prevents resources from being classified as reserves. Also, in the event of discovery, there may be contingencies that prevent resources from being classified as reserves. There is no certainty of discovery and is there is no certainty that it will be commercially viable to produce any portion of the prospective resources. Actual results may vary significantly from these estimates and such variances could be material.

Volatility of Oil and Natural Gas Prices

The Company's operational results and financial condition are dependent on the prices received for oil and natural gas production. Oil and natural gas prices have fluctuated materially during recent years and are determined by supply and demand factors, including weather and general economic conditions as well as conditions in other oil and natural gas regions. Any decline in oil and natural gas prices could have an adverse effect on Vermilion's cash flow which could have the effect of decreasing dividends.

Changes in Legislation

There can be no assurance that income tax laws and government incentive programs relating to the oil and gas industry in Canada and the foreign jurisdictions in which the Company operates, will not be changed in a manner which adversely affects the Company.

The Government of Alberta receives royalties on production of natural resources from lands in which it owns the mineral rights. A change in the royalty regime resulting in an increase in royalties would reduce Vermilion's net earnings and could make future capital expenditures or Vermilion's operations uneconomic and could, in the event of a material increase in royalties, make it more difficult to service and repay outstanding debt or impair Vermilion’s ability to declare dividends. Any material increase in royalties would also significantly reduce the value of the Company's associated assets.

Government Regulations

Vermilion's operations are governed by many levels of government, including municipal, state, provincial and federal governments in Canada, France, the Netherlands, Australia and Ireland. Vermilion is subject to laws and regulations regarding environment, health and safety issues, lease interests, taxes and royalties, among others. Failure to comply with the applicable laws can result in significant increases in costs, penalties and even losses of operating licences. The regulatory process involved in each of the countries in which Vermilion operates is not uniform and regulatory regimes vary as to complexity, timeliness of access to, and response from, regulatory bodies and other matters specific to each jurisdiction. If regulatory approvals or permits are delayed or not obtained, there can also be delays or abandonment of projects, decreases in production and increases in costs, and Vermilion may not be able to fully execute its strategy. Governments may also amend or create new legislation and regulatory bodies may also amend regulations or impose additional requirements which could result in increased capital, operating and compliance costs.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Competition

Vermilion actively competes for reserve acquisitions, exploration leases, licences and concessions and skilled industry personnel with a substantial number of other oil and gas companies, some of which have significantly greater financial resources than Vermilion. Vermilion's competitors include major integrated oil and natural gas companies and numerous other independent oil and natural gas companies and individual producers and operators.

Vermilion's ability to successfully bid on and acquire additional property rights, to discover reserves, to participate in drilling opportunities and to identify and enter into commercial arrangements with customers will be dependent upon developing and maintaining close working relationships with its future industry partners and joint operators and its ability to select and evaluate suitable properties and to consummate transactions in a highly competitive environment.

Operational Matters

The operation of oil and gas wells and facilities involves a number of operating and natural hazards which may result in blowouts, environmental damage and other unexpected or dangerous conditions resulting in damage to Vermilion and possible liability to regulators and third parties. Vermilion will maintain liability insurance, where available, in amounts consistent with industry standards. Business interruption insurance may also be purchased for selected operations, to the extent that such insurance is commercially viable. Vermilion may become liable for damages arising from such events against which it cannot insure or against which it may elect not to insure because of high premium costs or other reasons. Costs incurred to repair such damage or pay such liabilities may impair Vermilion's ability to satisfy its debt obligations or declare dividends.

Continuing production from a property, and to some extent the marketing of production, are largely dependent upon the ability of the operator of the property. To the extent the operator fails to perform these functions properly, revenue may be reduced. Payments from production generally flow through the operator and there is a risk of delay and additional expense in receiving such revenues if the operator becomes insolvent. Although satisfactory title reviews are generally conducted in accordance with industry standards, such reviews do not guarantee or certify that a defect in the chain of title may not arise to defeat the claim of Vermilion or its subsidiaries to certain properties. Such circumstances could impair Vermilion's ability to satisfy its debt obligations or declare dividends.

In addition to the usual delays in payment by purchasers of oil and natural gas to the operators of the properties, and by the operator to Vermilion, payments between any of such parties may also be delayed by restrictions imposed by lenders, delays in the sale or delivery of products, delays in the connection of wells to a gathering system, blowouts or other accidents, recovery by the operator of expenses incurred in the operation of the properties or the establishment by the operator of reserves for such expenses.

Environmental Concerns

The oil and natural gas industry is subject to environmental regulation pursuant to local, provincial and federal legislation. A breach of such legislation may result in the imposition of fines, the issuance of clean up orders in respect of Vermilion or its assets, or the loss or suspension of regulatory approvals. Such legislation may be changed to impose higher standards and potentially more costly obligations on Vermilion. There can be no assurance that the Company will be able to satisfy its actual future environmental and reclamation obligations.

Kyoto Protocol and Carbon Tax

Australia, Canada, France, Ireland and the Netherlands are signatories to the United Nations Framework Convention on Climate Change and have all ratified the Kyoto Protocol established thereunder. Australia, France, Ireland and the Netherlands, as Annex B parties to the Kyoto Protocol, and Ireland, France and Netherlands as members of the European Union, are required to reduce their nation-wide emissions of carbon dioxide, methane, nitrous oxide and other greenhouse gases. Canada formally withdrew from the Kyoto Protocol effective 2012. The Canadian federal government has indicated an intention to regulate the emissions of greenhouse gases from a range of industries and has outlined a number of policies to reduce the greenhouse gas emissions intensity of regulated facilities (the "Federal Plan"). The Federal Plan also includes proposed requirements to be implemented by the Canadian federal government which would govern the emission of industrial air pollutants. At present, the status of the Federal Plan with respect to the oil and gas industry is unclear. The Canadian federal government has repeatedly stated that it intends to align Canada's greenhouse gas emissions reduction policies with those of the United States, and it appears willing to wait until the United States has developed its framework before implementing any further policies in Canada. As such, it is unclear when, or in what form, the Federal Plan will be implemented or what impact it may have on Vermilion.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

On July 1 2012, the Australian government established a carbon price for emissions of the following greenhouse gases - carbon dioxide, methane, nitrous oxide and certain perfluorocarbons attributable to aluminium smelting. The price is levied per tonne of carbon dioxide equivalent (CO₂e) emissions⁽¹⁾. The carbon price is fixed at AUD $23 per tonne of CO₂e in 2013, AUD $24.15 in 2013 / 2014 and AUD $25.40 in 2014 / 2015. From July 1, 2015, the price will be set by the market. A price ceiling will be in place from July 1, 2015 to June 30, 2018, and will be initially set at AUD$20 above the expected international price. The price ceiling will then rise in real terms at five percent per year. The carbon price applies where direct CO₂e emissions exceed a threshold of 25,000 tonnes per annum. After June 30, 2018, the price ceiling will no longer exist and the price will be dictated entirely by the market. Vermilion continues to evaluate and monitor emissions in Australia and expects costs to be approximately AUD $1.2 million per year.

Vermilion's exploration and production facilities and other operations and activities in Canada, Australia, France, Ireland and the Netherlands will emit a small amount of greenhouse gasses which may subject Vermilion to legislation regulating emissions of greenhouse gases and which may include a requirement to reduce emissions or emissions intensity from Vermilion's operations and facilities. As such, Vermilion continues to evaluate and monitor regulatory initiatives and overall trends so that it is aware of potential developments that could affect its business and operations. It is possible that future international, national, or provincial emissions reduction requirements in jurisdictions that Vermilion operates in may require further reductions of emissions or emissions intensity. The direct or indirect costs of complying with emissions regulations may adversely affect the business of Vermilion in Canada, Australia, France, Ireland and the Netherlands.

⁽¹⁾

The carbon dioxide (CO₂) equivalent of any greenhouse gas is the amount of carbon dioxide that would cause the same amount of global warming. For example, methane has a global warming effect 21 times stronger than CO₂. Therefore 1 tonne of methane is equivalent to 21 tonnes of CO₂.

Discretionary Nature of Dividends

The declaration and payment (including the amount thereof) of future cash dividends, if any, is subject to the discretion of the board of directors of the Company and may vary depending on a variety of factors and conditions existing from time to time, including fluctuations in commodity prices, production levels, capital expenditure requirements, debt service requirements, operating costs, royalty burdens, foreign exchange rates and the satisfaction of the liquidity and solvency tests under the ABCA for the declaration and payment of dividends. Depending on these and other factors considered relevant to the declaration and payment of dividends by the board of directors and management of the Company (some or all of which may be beyond the control of the board of directors and management of the Company), the Company may change its dividend policy from time to time. Any reduction of dividends may adversely affect the market price or value of Common Shares.

Debt Service

Vermilion may, from time to time, finance a significant portion of its operations through debt. Amounts paid in respect of interest and principal on debt incurred by Vermilion may impair Vermilion's ability to satisfy its other obligations. Variations in interest rates and scheduled principal repayments could result in significant changes in the amount required to be applied to debt service before payment by Vermilion of its debt obligations. Ultimately, this may result in lower levels of cash flow for the Company.

Lenders may be provided with security over substantially all of the assets of Vermilion and its Subsidiaries. If Vermilion becomes unable to pay its debt service charges or otherwise commits an event of default such as bankruptcy, a lender may be able to foreclose on or sell the assets of Vermilion and/or its Subsidiaries.

Changes in Income Tax Laws

Income tax laws and administrative policies may be changed in a manner which adversely affects the Company and/or Shareholders.

Depletion of Reserves

The Company has certain unique attributes which differentiate it from other oil and gas industry participants. Dividends paid from cash flow generated in respect of properties, absent commodity price increases or cost effective acquisition and development activities, may decline over time in a manner consistent with declining production from typical oil, natural gas and natural gas liquids reserves. Accordingly, absent capital expenditures or acquisitions of additional oil and gas properties, Vermilion's current production levels and reserves will decline.

Vermilion's future oil and natural gas reserves and production, and therefore its cash flows, will be highly dependent on Vermilion's success in exploiting its reserve base and acquiring additional reserves. Without reserve additions through acquisition or development activities, Vermilion's reserves and production will decline over time as reserves are exploited.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Net Asset Value

The net asset value of the assets of the Company from time to time will vary dependent upon a number of factors beyond the control of management, including oil and gas prices. The trading prices of the common shares from time to time is also determined by a number of factors which are beyond the control of management and such trading prices may be greater than the net asset value of the Company's assets.

Volatility of Market Price of Common Shares

The market price of the Common Shares may be volatile. The volatility may affect the ability of Shareholders to sell the Common Shares at an advantageous price. Market price fluctuations in the Common Shares may be due to the Company’s operating results failing to meet the expectations of securities analysts or investors in any quarter, downward revision in securities analysts’ estimates, governmental regulatory action, adverse change in general market conditions or economic trends, acquisitions, dispositions or other material public announcements by the Corporation or its competitors, along with a variety of additional factors, including, without limitation, those set forth under “Forward-Looking Statements” in this annual information form. In addition, the market price for securities in the stock markets, including the TSX, has experienced significant price and trading fluctuations in recent years. These fluctuations have resulted in volatility in the market prices of securities that often has been unrelated or disproportionate to changes in operating performance. These broad market fluctuations may adversely affect the market price of the Common Shares.

Variations in Interest Rates and Foreign Exchange Rates

An increase in interest rates could result in a significant increase in the amount the Company pays to service debt, potentially impacting dividends to shareholders.

In addition, an increase in the exchange rate for the Canadian dollar versus the U.S. dollar would result in the receipt by the Company of fewer Canadian dollars for its production which may affect future dividends. The Company monitors and, when appropriate, uses derivative financial instruments to manage its exposure to currency exchange rate risks. The increase in the exchange rate for the Canadian dollar and future Canadian/United States exchange rates may impact future dividends and the future value of the Company's reserves as determined by independent evaluators.

Increase in Operating Costs or Decline in Production Level

An increase in operating costs or a decline in Vermilion’s production level could have an adverse effect on Vermilion’s cash flow and, therefore, could reduce dividends to Shareholders and affect the market price of the common shares. The level of production may decline at rates greater than anticipated due to unforeseen circumstances, many of which are beyond Vermilion's control. A significant decline in production could result in materially lower revenues and cash flow and, therefore, could reduce dividends to Shareholders and affect the market price of the common shares.

Acquisition Assumptions

When making acquisitions, Vermilion estimates future performance of the assets to be acquired that may prove to be inaccurate.

Acquired assets are subject to inherent risks associated with predicting the future performance of those assets. Vermilion makes certain estimates and assumptions respecting the economic potential of the assets it acquires which may not be realized over time. As such, assets acquired may not possess the value Vermilion attributed to them, which could adversely impact cash flow.

Failure to Realize Anticipated Benefits of Prior Acquisitions

Vermilion has completed several acquisitions to strengthen its position in the oil and natural gas industry and to create the opportunity to realize certain benefits, including, among other things, potential cost savings. In order to achieve the benefits of these and future acquisitions, Vermilion will be dependent upon its ability to successfully consolidate functions and integrate operations, procedures and personnel in a timely and efficient manner and to realize the anticipated growth opportunities and synergies from combining the acquired assets and operations with those of the Company. The integration of acquired assets and operations requires the dedication of management effort, time and resources, which may divert management's focus and resources from other strategic opportunities and from operational matters during the process. The integration process may result in the disruption of ongoing business and customer relationships that may adversely affect Vermilion's ability to achieve the anticipated benefits of such prior acquisitions.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

Additional Financing

Vermilion’s credit facility and any replacement credit facility may not provide sufficient liquidity. The amounts available under Vermilion's credit facility may not be sufficient for future operations, or Vermilion may not be able to obtain additional financing on attractive economic terms, if at all. Any failure to obtain financing may have a material adverse effect on Vermilion's business, and dividends to Shareholders may be reduced, suspended or eliminated.

To the extent that external sources of capital, including the issuance of additional common shares, become limited or unavailable, Vermilion's ability to make the necessary capital investments to maintain or expand its oil and natural gas reserves will be impaired. To the extent the Company is required to use cash flow to finance capital expenditures or property acquisitions, the level of cash available that may be declared payable as dividends will be reduced.

Potential Conflicts of Interest

Circumstances may arise where members of the board of directors or officers of Vermilion are directors or officers of corporations which are in competition to the interests of Vermilion. No assurances can be given that opportunities identified by such persons will be provided to Vermilion.

Accounting Adjustments

The presentation of financial information in accordance with IFRS requires that management apply certain accounting policies and make certain estimates and assumptions which affect reported amounts in Vermilion’s consolidated financial statements. The accounting policies may result in non-cash charges to net income and write-downs of net assets in the consolidated financial statements. Such non-cash charges and write-downs may be viewed unfavourably by the market and may result in an inability to borrow funds and/or may result in a decline in the Common Share price.

Lower oil and gas prices increase the risk of write-downs of Vermilion’s oil and gas property investments. Under IFRS, PNG depletion units are aggregated into groups known as CGU’s for impairment testing. CGUs are reviewed for indicators that the carrying value of the CGU may exceed its recoverable amount. If an indication of impairment exists, the CGU’s recoverable amount is then estimated. A CGU’s recoverable amount is defined as the higher of the fair value less costs to sell and its value in use. If the carrying amount exceeds its recoverable amount an impairment loss is recorded to net earnings in the period to reduce the carrying value of the CGU to its recoverable amount. While these impairment losses would not affect cash flow, the charge to net earnings could be viewed unfavourably in the market.

Market Accessibility

A decline in Vermilion’s ability to market oil and natural gas production could have a material adverse effect on its production levels or on the price that Vermilion receives for production which, in turn, could reduce dividends to its Shareholders and the trading price of the common shares.

Vermilion’s business depends in part upon the availability, proximity and capacity of natural gas gathering systems, pipelines and processing facilities. Canadian federal and provincial, as well as United States federal and state, regulation of oil and gas production, processing and transportation, tax and energy policies, general economic conditions, and changes in supply and demand could adversely affect Vermilion’s ability to produce and market oil and natural gas. If market factors change and inhibit the marketing of Vermilion production, overall production or realized prices may decline, which could reduce dividends to Shareholders.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

ADDITIONAL INFORMATION

Additional information relating to the Company may be found on SEDAR at www.sedar.com. Additional information related to the remuneration and indebtedness of the directors and officers of the Company, and the principal holders of common shares and Rights to purchase common shares and securities authorized for issuance under the Company's equity compensation plans, where applicable, are contained in the information circular of the Company in respect of its most recent annual meeting of Shareholders involving the election of directors. Additional financial information is provided in the Company's audited financial statements and management's discussion and analysis for the year ended December 31, 2013.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

SCHEDULE "A"
REPORT ON RESERVES DATA BY INDEPENDENT QUALIFIED RESERVES EVALUATOR OR AUDITOR (FORM 51-101F2)

To the Board of Directors of Vermilion Energy Inc. (the "Company"):

We have evaluated the Company’s reserves data as at December 31, 2013. The reserves data are estimates of proved reserves and probable reserves and related future net revenue as at December 31, 2013, estimated using forecast prices and costs.

The reserves data are the responsibility of the Company’s management. Our responsibility is to express an opinion on the reserves data based on our evaluation.

We carried out our evaluation in accordance with standards set out in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") prepared jointly by the Society of Petroleum Evaluation Engineers (Calgary Chapter) and the Canadian Institute of Mining, Metallurgy & Petroleum (Petroleum Society).

Those standards require that we plan and perform an evaluation to obtain reasonable assurance as to whether the reserves data are free of material misstatement. An evaluation also includes assessing whether the reserves data are in accordance with principles and definitions presented in the COGE Handbook.

The following table sets forth the estimated future net revenue (before deduction of income taxes) attributed to proved plus probable reserves, estimated using forecast prices and costs and calculated using a discount rate of 10 percent, included in the reserves data of the Company evaluated by us for the year ended December 31, 2013, and identifies the respective portions thereof that we have audited, evaluated and reviewed and reported on to the Company's board of directors:

		Location of Reserves	Net Present Value of Future Net Revenue
Independent Qualified	Description and Preparation	(Country or Foreign	(before income taxes, 10% discount rate - M$)
Reserves Evaluator	Date of Evaluation Report	Geographic Area)	Audited	Evaluated	Reviewed	Total
GLJ Petroleum Consultants	February 4, 2014	Australia	-	784,759	-	784,759
GLJ Petroleum Consultants	February 4, 2014	Canada	-	1,523,580	-	1,523,580
GLJ Petroleum Consultants	February 4, 2014	France	-	1,815,709	-	1,815,709
GLJ Petroleum Consultants	February 4, 2014	Ireland	-	600,433	-	600,433
GLJ Petroleum Consultants	February 4, 2014	Netherlands	-	413,685	-	413,685
Total			-	5,138,166	-	5,138,166

In our opinion, the reserves data respectively evaluated by us have, in all material respects, been determined and are in accordance with the COGE Handbook, consistently applied.

We have no responsibility to update our reports referred to in paragraph 4 for events and circumstances occurring after their respective preparation dates.

Because the reserves data are based on judgements regarding future events, actual results will vary and the variations may be material.

EXECUTED as to our reports referred to above:

GLJ Petroleum Consultants Ltd., Calgary, Alberta, Canada, February 4, 2014

“Jodi L. Anhorn”

Jodi L. Anhorn, M.Sc., P.Eng.

Executive Vice President & COO

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

REPORT ON RESOURCES DATA BY INDEPENDENT QUALIFIED RESERVES EVALUATOR OR AUDITOR

To the board of directors of Vermilion Energy Inc. (the "Company"):

We have evaluated the Company’s resources data as at December 31, 2013. The resources data are estimates of low, best and high estimates of contingent resources and prospective resources and related future net revenue as at December 31, 2013, estimated using forecast prices and costs.

The resources data are the responsibility of the Company’s management. Our responsibility is to express an opinion on the resources data based on our evaluation.

Those standards require that we plan and perform an evaluation to obtain reasonable assurance as to whether the resources data are free of material misstatement. An evaluation also includes assessing whether the resources data are in accordance with principles and definitions presented in the COGE Handbook.

The following table sets forth the estimated future net revenue of the Company (before deduction of income taxes) attributed to best estimate contingent resources and prospective resources estimated using forecast prices and costs and calculated using a discount rate of 10 percent, evaluated by us for the year ended December 31, 2013, and identifies the respective portions thereof that we have audited, evaluated and reviewed and reported on to the Company's board of directors:

Contingent Resources

		Location of Reserves	Net Present Value of Future Net Revenue
Independent Qualified	Description and Preparation	(Country or Foreign	(before income taxes, 10% discount rate - M$)
Reserves Evaluator	Date of Evaluation Report	Geographic Area)	Audited	Evaluated	Reviewed	Total
GLJ Petroleum Consultants	February 4, 2014	Australia	-	136,973	-	136,973
GLJ Petroleum Consultants	February 4, 2014	Canada	-	1,455,506	-	1,455,506
GLJ Petroleum Consultants	February 4, 2014	France	-	438,131	-	438,131
GLJ Petroleum Consultants	February 4, 2014	Ireland		15,511		15,511
GLJ Petroleum Consultants	February 4, 2014	Netherlands	-	40,535	-	40,535
Total			-	2,086,656	-	2,086,656

Prospective Resources

		Location of Reserves	Net Present Value of Future Net Revenue
Independent Qualified	Description and Preparation	(Country or Foreign	(before income taxes, 10% discount rate - M$)
Reserves Evaluator	Date of Evaluation Report	Geographic Area)	Audited	Evaluated	Reviewed	Total
GLJ Petroleum Consultants	February 4, 2014	Australia	-	40,247	-	40,247
GLJ Petroleum Consultants	February 4, 2014	Canada	-	2,131,682	-	2,131,682
GLJ Petroleum Consultants	February 4, 2014	France	-	60,756	-	60,756
GLJ Petroleum Consultants	February 4, 2014	Ireland		-		-
GLJ Petroleum Consultants	February 4, 2014	Netherlands	-	714,874	-	714,874
Total			-	2,947,560	-	2,947,560

In our opinion, the resources data evaluated by us have, in all material respects, been determined and are in accordance with the COGE Handbook, consistently applied.

We have no responsibility to update our reports referred to in paragraph 4 for events and circumstances occurring after their respective preparation dates.

Because the resources data are based on judgements regarding future events, actual results will vary and the variations may be material.

These resource estimates are not classified as reserves at this time, pending further reservoir delineation, project application, facility and reservoir design work. Contingent resources entail commercial risk not applicable to reserves, which have not been included in the net present valuation. Prospective resources entail discovery risk and commercial risk not applicable to reserves, neither of which have been included in the net present valuation. There is no certainty that it will be commercially viable to produce any portion of the resources.

EXECUTED as to our reports referred to above:

GLJ Petroleum Consultants Ltd., Calgary, Alberta, Canada, February 4, 2014

“Jodi L. Anhorn”

Jodi L. Anhorn, M.Sc., P.Eng.

Executive Vice President & COO

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

SCHEDULE "B"
REPORT OF MANAGEMENT AND DIRECTORS ON OIL AND GAS DISCLOSURE (FORM 51-101F3)

Terms to which a meaning is ascribed in National Instrument 51-101 have the same meaning herein.

Management of Vermilion Energy Inc. (the "Company") are responsible for the preparation and disclosure, or arranging for the preparation and disclosure of information with respect to the Company's oil and gas activities in accordance with securities regulatory requirements. This information includes reserves data, which are estimates of proved reserves and probable reserves and related future net revenue as at December 31, 2013, estimated using forecast prices and costs.

Independent qualified reserves evaluators have evaluated the Company's reserves data. The report of the independent qualified reserves evaluators is presented in Schedule A to the Annual Information Form of the Company for the year ended December 31, 2013.

The Independent Reserves Committee of the Board of Directors of the Company has:

(a)

reviewed the Company's procedures for providing information to the independent qualified reserves evaluators;

(b)

met with the independent qualified reserves evaluators to determine whether any restrictions affected the ability of the independent qualified reserves evaluators to report without reservation; and

(c)

reviewed the reserves data with Management and the independent qualified reserves evaluators.

The Independent Reserves Committee of the Board of Directors has reviewed the Company's procedures for assembling and reporting other information associated with oil and gas activities and has reviewed that information with Management. The Board of Directors has, on the recommendation of the Audit and Independent Reserves Committees, approved:

(a)

the content and filing with securities regulatory authorities of Form 51-101F1 containing reserves data and other oil and gas information;

(b)

the filing of Form 51-101F2 which is the report of the independent qualified reserves evaluators on the reserves data; and

(c)

the content and filing of this report.

Because the reserves data are based on judgements regarding future events, actual results will vary and the variations may be material. However, any variations should be consistent with the fact that reserves are categorized according to the probability of their recovery.

“Lorenzo Donadeo”
Lorenzo Donadeo, Chief Executive Officer

“Curtis Hicks”
Curtis W. Hicks, Executive Vice President and Chief Financial Officer

“Larry J. Macdonald”
Larry J. Macdonald, Director and Chairman of the Board

“Claudio A. Ghersinich”
Claudio A. Ghersinich, Director

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

SCHEDULE "C"
TERMS OF REFERENCE FOR THE AUDIT COMMITTEE

PURPOSE

The primary function of the Audit Committee (the "Committee") is to assist the Board in fulfilling its oversight responsibilities with respect to the Company’s accounting and financing reporting processes and the audit of the Company’s financial statements, including oversight of:

the integrity of the Company’s financial statements;

the Company’s compliance with legal and regulatory requirements;

the independent auditors’ qualifications and independence;

the financial information that will be provided to the shareholders and others;

the Company’s systems of disclosure controls and internal controls regarding finance, accounting, legal compliance and ethics, which management and the Board have established;

the performance of the Company’s audit processes; and

such other matters required by applicable laws and rules of any stock exchange on which the Company’s shares are listed for trading.

While the Committee has the responsibilities and powers set forth in its terms of reference, it is not the duty of the Committee to prepare financial statements, plan or conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with International Financial Reporting Standards and applicable rules and regulations. Primary responsibility for the financial reporting, information systems, risk management, and disclosure controls and internal controls of the Company is vested in management.

II.

COMPOSITION AND OPERATIONS

The Committee shall be composed of not fewer than three directors and not more than five directors, all of whom are “independent”^[1] under the requirements or guidelines for audit committee service under applicable securities laws and rules of any stock exchange on which the Company’s shares are listed for trading.

All Committee members shall be "financially literate,"^[2] and at least one member shall have "accounting or related financial expertise" as such terms are interpreted by the Board in its business judgment in light of, and in accordance with, the requirements or guidelines for audit committee service under applicable securities laws and rules of any stock exchange on which the Company’s shares are listed for trading. The Committee may include a member who is not financially literate, provided he or she attains this status within a reasonable period of time following his or her appointment and providing the Board has determined that including such member will not materially adversely affect the ability of the Committee to act independently.

No Committee member shall serve on the audit committees of more than two other public issuers without prior determination by the Board that such simultaneous service would not impair the ability of such member to serve effectively on the Committee.

The Committee shall operate in a manner that is consistent with the Committee Guidelines outlined in Tab 8 of the Board Manual.

The Company's auditors shall be advised of the names of the Committee members and will receive notice of and be invited to attend meetings of the Committee, and to be heard at those meetings on matters relating to the auditor's duties.

The Committee may request any officer or employee of the Company, or the Company’s legal counsel, or any external or internal auditors to attend a meeting of the Committee to provide such pertinent information as the Committee requests or to meet with any members of, or consultants to the Committee. The Committee has the authority to communicate directly with the internal and external auditors as it deems appropriate to consider any matter that the Committee or auditors determine should be brought to the attention of the Board or shareholders.

The Committee shall have the authority to select, retain, terminate and approve the fees and other retention terms of special independent legal counsel and other consultants or advisers to advise the Committee, as it deems necessary or appropriate, at the Company’s expense.

^[1]	Committee members must be “independent”, as defined in Sections 1.4 and 1.5 of National Instrument 52-110 and ‘‘independent’’ under the requirements of Rule 10A-3 of the Securities Exchange Act of 1934, as amended, and Section 303A.06 of the NYSE Listed Company Manual.

^[2]

The Board has adopted the NI 52-110 definition of "financial literacy", which is an individual is financially literate if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the issuer's financial statements.

SCHEDULE "C"
TERMS OF REFERENCE FOR THE AUDIT COMMITTEE (CONTINUED)

The Company shall provide for appropriate funding, as determined by the Committee, for payment of (i) compensation to the independent auditors engaged for the purpose of preparing or issuing an audit report or performing other audit review or attest services for the Company, (ii) compensation to any advisers employed by the Committee and (iii) ordinary administrative expenses of the Committee that are necessary or appropriate for carrying out its duties.

The Committee shall meet at least four times each year.

III.

DUTIES AND RESPONSIBILITIES

Subject to the powers and duties of the Board, the Committee will perform the following duties:

Financial Statements and Other Financial Information

The Committee will review and recommend for approval to the Board financial information that will be made publicly available. This includes the responsibility to:

review and recommend approval of the Company's annual financial statements, MD&A and earnings press release and report to the Board of Directors before the statements are approved by the Board of Directors;

ii)

review and recommend approval for release the Company's quarterly financial statements, MD&A and press releases, as well as financial information and earnings guidance provided to analysts and rating agencies;

iii)

satisfy itself that adequate procedures are in place for the review of the public disclosure of financial information extracted or derived from the Company's financial statements, other than the public disclosure referred to in items (i) and (ii) above, and periodically assess the adequacy of those procedures; and

iv)

review the Annual Information Form and any Prospectus/Private Placement Memorandums.

Review, and where appropriate, discuss:

the appropriateness of critical accounting policies and financial reporting practices used by the Company;

vi)

major issues regarding accounting principles and financial statement presentations, including any significant proposed changes in financial reporting and accounting principles, policies and practices to be adopted by the Company and major issues as to the adequacy of the Company’s internal controls and any special audit steps adopted in light of material control deficiencies;

vii)

analyses prepared by management or the external auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative International Financial Reporting Standards (“IFRS”) methods on the financial statements of the Company and any other opinions sought by management from an independent or other audit firm or advisor with respect to the accounting treatment of a particular item;

viii)

any management letter or schedule of unadjusted differences provided by the external auditor and the Company’s response to that letter and other material written communication between the external auditor and management;

ix)

any problems, difficulties or differences encountered in the course of the audit work including any disagreements with management or restrictions on the scope of the external auditor’s activities or on access to requested information and management’s response thereto;

any new or pending developments in accounting and reporting standards that may affect the Company;

xi)

the effect of regulatory and accounting initiatives, as well as any off-balance sheet structures on the financial statements of the Company and other financial disclosures;

xii)

any reserves, accruals, provisions or estimates that may have a significant effect upon the financial statements of the Company;

xiii)

the use of special purpose entities and the business purpose and economic effect of off balance sheet transactions, arrangements, obligations, guarantees and other relationships of Company and their impact on the reported financial results of the Company;

xiv)

the use of any “pro forma” or “adjusted” information not in accordance with generally accepted accounting principles;

xv)

any litigation, claim or contingency, including tax assessments, that could have a material effect upon the financial position of the Company, and the manner in which these matters may be, or have been, disclosed in the financial statements; and

xvi)

accounting, tax and financial aspects of the operations of the Company as the Committee considers appropriate.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

SCHEDULE "C"
TERMS OF REFERENCE FOR THE AUDIT COMMITTEE (CONTINUED)

Risk Management, Internal Control and Information Systems

The Committee will review and discuss with management, and obtain reasonable assurance that the risk management, internal control and information systems are operating effectively to produce accurate, appropriate and timely management and financial information. This includes the responsibility to:

review the Company's risk management controls and policies with specific responsibility for Credit & Counterparty, Market & Financial, Political and Strategic & Repatriation risks;

ii)

obtain reasonable assurance that the information systems are reliable and the systems of internal controls are properly designed and effectively implemented through separate and periodic discussions with and reports from management, the internal auditor and external auditor; and

iii)

review management steps to implement and maintain appropriate internal control procedures including a review of policies.

External Audit

The external auditor is required to report directly to the Committee, which will review the planning and results of external audit activities and the ongoing relationship with the external auditor. This includes:

review and recommend to the Board, for shareholder approval, the appointment of the external auditor;

ii)

review and approve the annual external audit plan, including but not limited to the following:

engagement letter between the external auditor and financial management of the Company;

objectives and scope of the external audit work;

procedures for quarterly review of financial statements;

materiality limit;

areas of audit risk;

staffing;

timetable; and

compensation and fees to be paid by the Company to the external auditor.

iii)

meet with the external auditor to discuss the Company's quarterly and annual financial statements and the auditor's report including the appropriateness of accounting policies and underlying estimates;

iv)

maintain oversight of the external auditor's work and advise the Board, including but not limited to:

the resolution of any disagreements between management and the external auditor regarding financial reporting;

any significant accounting or financial reporting issue;

the auditors' evaluation of the Company's system of internal controls, procedures and documentation;

the post audit or management letter containing any findings or recommendation of the external auditor, including management's response thereto and the subsequent follow-up to any identified internal control weaknesses;

any other matters the external auditor brings to the Committee's attention; and

evaluate and assess the qualifications and performance of the external auditors for recommendation to the Board as to the appointment or reappointment of the external auditor to be proposed for approval by the shareholders, and ensuring that such auditors are participants in good standing pursuant to applicable regulatory laws.

review the auditor's report on all material subsidiaries;

vi)

review and discuss with the external auditors all significant relationships that the external auditors and their affiliates have with the Company and its affiliates in order to determine the external auditors' independence, including, without limitation:

requesting, receiving and reviewing, on a periodic basis, a formal written statement from the external auditors, including a list of all relationships between the external auditor and the Company that may reasonably be thought to bear on the independence of the external auditors with respect to the Company;

discussing with the external auditors any disclosed relationships or services that the external auditors believe may affect the objectivity and independence of the external auditors; and

recommending that the Board take appropriate action in response to the external auditors' report to satisfy itself of the external auditors' independence.

vii)

annually request and review a report from the external auditor regarding (a) the external auditor’s quality-control procedures, (b) any material issues raised by the most recent quality-control review, or peer review, of the external auditor, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm, and (c) any steps taken to deal with any such issues;

viii)

review and pre-approve any non-audit services to be provided to the Company or any affiliates by the external auditor's firm or its affiliates (including estimated fees), and consider the impact on the independence of the external audit;

ix)

review the disclosure with respect to its pre-approval of audit and non-audit services provided by the external auditors; and

meet periodically, and at least annually, with the external auditor without management present.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013

SCHEDULE "C"
TERMS OF REFERENCE FOR THE AUDIT COMMITTEE (CONTINUED)

Compliance

The Committee shall:

Ensure that the external auditor's fees are disclosed by category in the Annual Information Form in compliance with regulatory requirements;

ii)

Disclose any specific policies or procedures adopted for pre-approving non-audit services by the external auditor including affirmation that they meet regulatory requirements;

iii)

Assist the Governance and Human Resources Committee with preparing the Company's governance disclosure by ensuring it has current and accurate information on:

the independence of each Committee member relative to regulatory requirements for audit committees;

the state of financial literacy of each Committee member, including the name of any member(s) currently in the process of acquiring financial literacy and when they are expected to attain this status; and

the education and experience of each Committee member relevant to his or her responsibilities as Committee member.

iv)

Disclose, if required, if the Company has relied upon any exemptions to the requirements for committees under applicable securities laws and rules of any stock exchange on which the Company’s shares are listed for trading.

Other

The Committee shall:

establish and periodically review procedures for:

the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters; and

the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters or other matters that could negatively affect the Company, such as violations of the Code of Business Conduct and Ethics.

ii)

review and approve the Company's hiring policies regarding partners, employees and former partners and employees of the present and former external auditor;

iii)

review insurance coverage of significant business risks and uncertainties;

iv)

review material litigation and its impact on financial reporting;

review policies and procedures for the review and approval of officers' expenses and perquisites;

vi)

review the policies and practices concerning the expenses and perquisites of the Chairman, including the use of the assets of the Company;

vii)

review with external auditors any corporate transactions in which directors or officers of the Company have a personal interest; and

viii)

review the terms of reference for the Committee at least annually and otherwise as it deems appropriate, and recommend changes to the Board as required. The Committee shall evaluate its performance with reference to the terms of reference annually.

IV.

ACCOUNTABILITY

The Committee Chair has the responsibility to make periodic reports to the Board, as requested, on financial and other matters considered by the Committee relative to the Company.

The Committee shall report its discussions to the Board by maintaining minutes of its meetings and providing an oral report at the next Board meeting.

Vermilion Energy Inc.

AIF for the year ended December 31, 2013