TORONTO, ON and CALGARY, AB (JULY 12, 2017): Canada Pension
Plan Investment Board (“CPPIB”) and Vermilion Energy Inc. (“Vermilion”) (TSX,
NYSE: VET) are pleased to announce a strategic partnership in the Corrib Natural
Gas Field in Ireland (“Corrib”), whereby CPPIB will acquire Shell Exploration
Company B.V.’s (“Shell”) 45% interest in the project, with Vermilion operating
the assets after completion of the acquisition. Through its wholly owned
subsidiary, CPP Investment Board Europe S.a.r.l., CPPIB has entered into a
definitive purchase and sale agreement with Shell, to acquire 100% of Shell
E&P Ireland Limited (“SEPIL”), which holds Shell’s 45% interest in Corrib
(the “Acquisition”) for total cash consideration of €830 million, subject to
customary closing adjustments and future contingent value payments based on
performance and realized pricing. The Acquisition, which remains subject to
customary conditions and receipt of all necessary government consents, has an
effective date of January 1, 2017 with closing anticipated in the first half of
2018.

At closing, Vermilion will assume operatorship, and CPPIB
plans to transfer SEPIL along with a 1.5% working interest to Vermilion for
€19.4 million (before closing adjustments).

Following the transfer to Vermilion, ownership in Corrib
would be as follows:

  • CPPIB
    would hold a 43.5% non-operated interest
  • Vermilion
    would hold a 20% operated interest
  • Statoil
    ASA would continue to hold a 36.5% non-operated interest

The transaction also contemplates two contingent payments;
one linked to price and one linked to produced volumes:

  • Up to
    €150 million contingent on NBP prices being above 2.03 Euro cents/kWh on an
    annual basis from 2018 to 2022; and
  • Up to
    €100 million subject to exceeding certain production thresholds through 2025.

Corrib is located 83 kilometers off the northwest coast of
Ireland.  The field has a gross plant
capacity of approximately 350 million cubic feet of natural gas per day,
provides approximately 60% of Ireland’s natural gas consumption and constitutes
approximately 95% of Ireland’s gas production.

Avik Dey, Managing Director and Head of Natural Resources at
CPPIB said
, “Ireland is an attractive destination for a long-term investor like
CPPIB, and through this investment in the Corrib gas field, we are able to
further our strategy of investing in high-quality natural resources assets
alongside highly regarded and experienced operating partners such as Vermilion.
Vermilion has a strong operational track record in both onshore and offshore
projects and we look forward to working with them and are confident that this
investment will benefit the CPP Fund by delivering strong risk-adjusted returns
over the long-term horizon of the Fund.”

Anthony Marino, President and CEO of Vermilion said, “We
welcome CPPIB as a strategic partner in this world-class gas field, and we look
forward to a productive long-term relationship. 
Our ownership in Corrib and investment in Ireland date back to 2009, and
we are proud to be a part of the energy industry in this stable jurisdiction. Our
extensive experience in Europe, North America and Australia over our 23-year
history will serve us well in Corrib. We look forward to working with SEPIL
employees and Corrib stakeholders to implement our best-in-class approach to
safety, environmental protection and strategic community investment.”

Pro forma for the transfer of SEPIL from CPPIB, Vermilion’s
incremental 1.5% ownership of Corrib would represent approximately 850 boe/d at
current production rates and approximately 2.0 million boe of 2P reserves(1)
based on an independent evaluation by GLJ Petroleum Consultants Ltd. with an
effective date of December 31, 2016. Assuming a purchase price of €19.4 million
($28.4 million at current exchange rates), before closing adjustments, the
transaction metrics are estimated at approximately $33,400 per boe per day,
$15.40 per boe of proved plus probable reserves(1) including future development
capital (generating a 2P recycle ratio of 1.9 times based on projected 2017
netbacks), and 3.3  times estimated 2017
operating cash flow(2) using the current forward commodity strip. Vermilion
expects the acquisition to be accretive for all pertinent per share metrics
including production, fund flows from operations(2), reserves and net asset
value. Vermilion intends to fund this acquisition with existing credit
facilities.

The acquisition would significantly increase Vermilion’s
degree of operating control of its asset base. 
Following the assumption of operatorship of Corrib, Vermilion estimates
that it will operate 87% of its production base as compared to 72% currently.

About Canada Pension Plan Investment Board
Canada Pension Plan Investment Board (CPPIB) is a
professional investment management organization that invests the funds not
needed by the Canada Pension Plan (CPP) to pay current benefits on behalf of 20
million contributors and beneficiaries. In order to build a diversified portfolio of CPP assets, CPPIB invests
in public equities, private equities, real estate, infrastructure and fixed
income instruments. Headquartered in Toronto, with offices in Hong Kong,
London, Luxembourg, Mumbai, New York City, São Paulo and Sydney, CPPIB is
governed and managed independently of the Canada Pension Plan and at arm’s
length from governments. At March 31, 2017, the CPP Fund totalled $316.7
billion.

CPPIB’s Natural Resources group focuses on direct private
investments in the oil and gas, energy midstream, power and renewables, and
metals and mining industries. The team invests directly in companies, strategic
partnerships and direct resource interests with an investment size of $500
million or more.  At March 31, 2017, the
Natural Resources portfolio consisted of nine direct investments valued at $4.3
billion.

For more information about CPPIB, please visit www.cppib.com
or follow us on LinkedIn or Twitter.

About Vermilion
Vermilion is an international energy producer that seeks to
create value through the acquisition, exploration, development and optimization
of producing properties in North America, Europe and Australia. Our business
model emphasizes organic production growth augmented with value-adding
acquisitions, along with providing reliable and increasing dividends to
investors. Vermilion is targeting growth in production primarily through the
exploitation of light oil and liquids-rich natural gas conventional resource
plays in Canada and the United States, the exploration and development of high
impact natural gas opportunities in the Netherlands and Germany, and through
oil drilling and workover programs in France and Australia. Vermilion currently
holds an 18.5% working interest in the Corrib gas field in Ireland. Vermilion
pays a monthly dividend of Canadian $0.215 per share, which provides a current
yield of approximately 6.5%.

Vermilion’s priorities are health and safety, the
environment, and profitability, in that order. Nothing is more important to us
than the safety of the public and those who work with us, and the protection of
our natural surroundings.  We have been
recognized as a top decile performer amongst Canadian publicly listed companies
in governance practices, as a Climate “A” List performer by the CDP,
and a Best Workplace in the Great Place to Work® Institute’s annual rankings in
Canada, France, and the Netherlands. In addition, Vermilion emphasizes
strategic community investment in each of our operating areas.

Employees and directors hold approximately 6.5% of our fully
diluted shares, are committed to consistently delivering superior rewards for
all stakeholders, and have delivered over 20 years of market outperformance.
Vermilion trades on the Toronto Stock Exchange and the New York Stock Exchange
under the symbol VET.

(1) Estimated proved plus probable and proved developed
producing reserves attributable to the Assets as evaluated by GLJ Petroleum
Consultants Ltd. in a report dated February 27, 2017 with an effective date of
December 31, 2016.

(2) Non-standardized and non-GAAP financial measures: This
news release includes references to certain financial measures which do not
have standardized meanings prescribed by International Financial Reporting
Standards (“IFRS”). Fund flows from operations is a non-standardized financial
measure that is calculated as cash flows from operating activities before
changes in non-cash operating working capital and asset retirement obligations
settled. We analyze fund flows from operations both on a consolidated basis and
on a business unit basis in order to assess the contribution of each business
unit and our ability to generate cash necessary to pay dividends, repay debt,
fund asset retirement obligations and make capital investments. Free cash flow
and operating cash flow are non-GAAP financial measures. Free cash flow is
calculated as fund flows from operations less capital expenditures. Operating
cash flow is calculated as fund flows from operations before general and
administration expense, interest and income taxes. We consider free cash flow
and operating cash flow to be key measures as they are used to determine the
funding available for investing and financing activities, including payment of
dividends, repayment of long-term debt, reallocation to existing business
units, and deployment into new ventures. For additional information on
non-standardized and non-GAAP financial measures, please refer to the
Management’s Discussion and Analysis contained in Vermilion’s 2016 Annual
Report for the year ended December 31, 2016 available on SEDAR or at the
Company’s website (www.vermilionenergy.com). 

DISCLAIMER

Certain statements included or incorporated by reference in
this press release may constitute forward-looking statements under applicable
securities legislation. 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 press release may include, but are not limited to:

  • the
    anticipated closing date of the Acquisition;
  • the
    sources of existing production and future development drilling opportunities;
  • the annual
    decline rate of the Assets;
  • the
    number and classification of future development drilling opportunities;
  • the
    pricing received for production, and resulting operating and after-tax cash
    flow netbacks for the Assets;
  • the
    estimate of annualized 2017 production;
  • the anticipated
    acquisition metrics;
  • the
    expectation that the Assets will generate free cash flow positive;
  • the
    expectation that fiscal and regulatory policies in Ireland remain supportive of
    continued investment;
  • development
    plans and strategic objectives.

Statements relating to reserves are deemed to be
forward-looking statements as they involve the implied assessment, based on
certain estimates and assumptions, that the reserves described exist in the
quantities predicted or estimated, and can be profitably produced in the
future. 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:

  • satisfaction
    of all conditions to the proposed Acquisition and receipt of all necessary
    approvals.
  • the
    ability of Vermilion to obtain equipment, services and supplies in a timely
    manner to carry out planned development activities;
  • the
    ability of Vermilion to integrate the Assets in the Company’s current
    operations
  • the
    ability of Vermilion to market oil and natural gas successfully to current and
    new customers;
  • the
    timely receipt of required regulatory approvals;
  • currency,
    exchange and interest rates;
  • future oil
    and natural gas prices; and
  • Management’s
    expectations relating to the timing and results of development activities.

Although Vermilion 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 Vermilion
can give no assurance that such expectations will prove to be correct.
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
Vermilion 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 and
    natural gas and market demand;
  • risks and
    uncertainties involving geology of oil and natural gas deposits;
  • risks
    inherent in Vermilion’s marketing operations, including credit risk;
  • the
    uncertainty of reserves estimates and reserves life;
  • the
    uncertainty of estimates and projections relating to production, costs and
    expenses;
  • potential
    delays or changes in plans with respect to proposed acquisitions (including the
    Acquisition), exploration or development projects or capital expenditures;
  • Vermilion’s
    ability to enter into or renew leases;
  • fluctuations
    in oil 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 Vermilion to add production and reserves through development and
    exploration 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 Vermilion; and
  • other
    risks and uncertainties described elsewhere in this document or in Vermilion’s
    other filings with Canadian securities regulatory authorities.

The forward-looking statements or information contained in
this document are made as of the date hereof and Vermilion 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.

TORONTO, ON and CALGARY, AB (JULY 12, 2017): Canada Pension Plan Investment Board (“CPPIB”) and Vermilion Energy Inc. (“Vermilion”) (TSX, NYSE: VET) are pleased to announce a strategic partnership in the Corrib Natural Gas Field in Ireland (“Corrib”), whereby CPPIB will acquire Shell Exploration Company B.V.’s (“Shell”) 45% interest in the project, with Vermilion operating the assets after completion of the acquisition. Through its wholly owned subsidiary, CPP Investment Board Europe S.a.r.l., CPPIB has entered into a definitive purchase and sale agreement with Shell, to acquire 100% of Shell E&P Ireland Limited (“SEPIL”), which holds Shell’s 45% interest in Corrib (the “Acquisition”) for total cash consideration of €830 million, subject to customary closing adjustments and future contingent value payments based on performance and realized pricing. The Acquisition, which remains subject to customary conditions and receipt of all necessary government consents, has an effective date of January 1, 2017 with closing anticipated in the first half of 2018.

At closing, Vermilion will assume operatorship, and CPPIB plans to transfer SEPIL along with a 1.5% working interest to Vermilion for €19.4 million (before closing adjustments).

Following the transfer to Vermilion, ownership in Corrib would be as follows:

  • CPPIB would hold a 43.5% non-operated interest
  • Vermilion would hold a 20% operated interest
  • Statoil ASA would continue to hold a 36.5% non-operated interest

The transaction also contemplates two contingent payments; one linked to price and one linked to produced volumes:

  • Up to €150 million contingent on NBP prices being above 2.03 Euro cents/kWh on an annual basis from 2018 to 2022; and
  • Up to €100 million subject to exceeding certain production thresholds through 2025.

Corrib is located 83 kilometers off the northwest coast of Ireland.  The field has a gross plant capacity of approximately 350 million cubic feet of natural gas per day, provides approximately 60% of Ireland’s natural gas consumption and constitutes approximately 95% of Ireland’s gas production.

Avik Dey, Managing Director and Head of Natural Resources at CPPIB said, “Ireland is an attractive destination for a long-term investor like CPPIB, and through this investment in the Corrib gas field, we are able to further our strategy of investing in high-quality natural resources assets alongside highly regarded and experienced operating partners such as Vermilion. Vermilion has a strong operational track record in both onshore and offshore projects and we look forward to working with them and are confident that this investment will benefit the CPP Fund by delivering strong risk-adjusted returns over the long-term horizon of the Fund.”

Anthony Marino, President and CEO of Vermilion said, “We welcome CPPIB as a strategic partner in this world-class gas field, and we look forward to a productive long-term relationship.  Our ownership in Corrib and investment in Ireland date back to 2009, and we are proud to be a part of the energy industry in this stable jurisdiction. Our extensive experience in Europe, North America and Australia over our 23-year history will serve us well in Corrib. We look forward to working with SEPIL employees and Corrib stakeholders to implement our best-in-class approach to safety, environmental protection and strategic community investment.”

Pro forma for the transfer of SEPIL from CPPIB, Vermilion’s incremental 1.5% ownership of Corrib would represent approximately 850 boe/d at current production rates and approximately 2.0 million boe of 2P reserves(1) based on an independent evaluation by GLJ Petroleum Consultants Ltd. with an effective date of December 31, 2016. Assuming a purchase price of €19.4 million ($28.4 million at current exchange rates), before closing adjustments, the transaction metrics are estimated at approximately $33,400 per boe per day, $15.40 per boe of proved plus probable reserves(1) including future development capital (generating a 2P recycle ratio of 1.9 times based on projected 2017 netbacks), and 3.3  times estimated 2017 operating cash flow(2) using the current forward commodity strip. Vermilion expects the acquisition to be accretive for all pertinent per share metrics including production, fund flows from operations(2), reserves and net asset value. Vermilion intends to fund this acquisition with existing credit facilities.

The acquisition would significantly increase Vermilion’s degree of operating control of its asset base.  Following the assumption of operatorship of Corrib, Vermilion estimates that it will operate 87% of its production base as compared to 72% currently.

About Canada Pension Plan Investment Board
Canada Pension Plan Investment Board (CPPIB) is a professional investment management organization that invests the funds not needed by the Canada Pension Plan (CPP) to pay current benefits on behalf of 20 million contributors and beneficiaries. In order to build a diversified portfolio of CPP assets, CPPIB invests in public equities, private equities, real estate, infrastructure and fixed income instruments. Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, São Paulo and Sydney, CPPIB is governed and managed independently of the Canada Pension Plan and at arm's length from governments. At March 31, 2017, the CPP Fund totalled $316.7 billion.

CPPIB’s Natural Resources group focuses on direct private investments in the oil and gas, energy midstream, power and renewables, and metals and mining industries. The team invests directly in companies, strategic partnerships and direct resource interests with an investment size of $500 million or more.  At March 31, 2017, the Natural Resources portfolio consisted of nine direct investments valued at $4.3 billion.

For more information about CPPIB, please visit www.cppib.com or follow us on LinkedIn or Twitter.

About Vermilion
Vermilion is an international energy producer that seeks to create value through the acquisition, exploration, development and optimization of producing properties in North America, Europe and Australia. Our business model emphasizes organic production growth augmented with value-adding acquisitions, along with providing reliable and increasing dividends to investors. Vermilion is targeting growth in production primarily through the exploitation of light oil and liquids-rich natural gas conventional resource plays in Canada and the United States, the exploration and development of high impact natural gas opportunities in the Netherlands and Germany, and through oil drilling and workover programs in France and Australia. Vermilion currently holds an 18.5% working interest in the Corrib gas field in Ireland. Vermilion pays a monthly dividend of Canadian $0.215 per share, which provides a current yield of approximately 6.5%.

Vermilion's priorities are health and safety, the environment, and profitability, in that order. Nothing is more important to us than the safety of the public and those who work with us, and the protection of our natural surroundings.  We have been recognized as a top decile performer amongst Canadian publicly listed companies in governance practices, as a Climate "A" List performer by the CDP, and a Best Workplace in the Great Place to Work® Institute's annual rankings in Canada, France, and the Netherlands. In addition, Vermilion emphasizes strategic community investment in each of our operating areas.

Employees and directors hold approximately 6.5% of our fully diluted shares, are committed to consistently delivering superior rewards for all stakeholders, and have delivered over 20 years of market outperformance. Vermilion trades on the Toronto Stock Exchange and the New York Stock Exchange under the symbol VET.

(1) Estimated proved plus probable and proved developed producing reserves attributable to the Assets as evaluated by GLJ Petroleum Consultants Ltd. in a report dated February 27, 2017 with an effective date of December 31, 2016.

(2) Non-standardized and non-GAAP financial measures: This news release includes references to certain financial measures which do not have standardized meanings prescribed by International Financial Reporting Standards (“IFRS”). Fund flows from operations is a non-standardized financial measure that is calculated as cash flows from operating activities before changes in non-cash operating working capital and asset retirement obligations settled. We analyze fund flows from operations both on a consolidated basis and on a business unit basis in order to assess the contribution of each business unit and our ability to generate cash necessary to pay dividends, repay debt, fund asset retirement obligations and make capital investments. Free cash flow and operating cash flow are non-GAAP financial measures. Free cash flow is calculated as fund flows from operations less capital expenditures. Operating cash flow is calculated as fund flows from operations before general and administration expense, interest and income taxes. We consider free cash flow and operating cash flow to be key measures as they are used to determine the funding available for investing and financing activities, including payment of dividends, repayment of long-term debt, reallocation to existing business units, and deployment into new ventures. For additional information on non-standardized and non-GAAP financial measures, please refer to the Management's Discussion and Analysis contained in Vermilion's 2016 Annual Report for the year ended December 31, 2016 available on SEDAR or at the Company's website (www.vermilionenergy.com). 

DISCLAIMER

Certain statements included or incorporated by reference in this press release may constitute forward-looking statements under applicable securities legislation. 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 press release may include, but are not limited to:

  • the anticipated closing date of the Acquisition;
  • the sources of existing production and future development drilling opportunities;
  • the annual decline rate of the Assets;
  • the number and classification of future development drilling opportunities;
  • the pricing received for production, and resulting operating and after-tax cash flow netbacks for the Assets;
  • the estimate of annualized 2017 production;
  • the anticipated acquisition metrics;
  • the expectation that the Assets will generate free cash flow positive;
  • the expectation that fiscal and regulatory policies in Ireland remain supportive of continued investment;
  • development plans and strategic objectives.

Statements relating to reserves are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated, and can be profitably produced in the future. 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:

  • satisfaction of all conditions to the proposed Acquisition and receipt of all necessary approvals.
  • the ability of Vermilion to obtain equipment, services and supplies in a timely manner to carry out planned development activities;
  • the ability of Vermilion to integrate the Assets in the Company’s current operations
  • the ability of Vermilion to market oil and natural gas successfully to current and new customers;
  • the timely receipt of required regulatory approvals;
  • currency, exchange and interest rates;
  • future oil and natural gas prices; and
  • Management's expectations relating to the timing and results of development activities.

Although Vermilion 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 Vermilion can give no assurance that such expectations will prove to be correct. 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 Vermilion 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 and natural gas and market demand;
  • risks and uncertainties involving geology of oil and natural gas deposits;
  • risks inherent in Vermilion's marketing operations, including credit risk;
  • the uncertainty of reserves estimates and reserves life;
  • the uncertainty of estimates and projections relating to production, costs and expenses;
  • potential delays or changes in plans with respect to proposed acquisitions (including the Acquisition), exploration or development projects or capital expenditures;
  • Vermilion's ability to enter into or renew leases;
  • fluctuations in oil 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 Vermilion to add production and reserves through development and exploration 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 Vermilion; and
  • other risks and uncertainties described elsewhere in this document or in Vermilion's other filings with Canadian securities regulatory authorities.

The forward-looking statements or information contained in this document are made as of the date hereof and Vermilion 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.

Article Contacts

For More Information:

CPPIB:

Dan Madge
Senior Manager, Media Relations
T: +1 416 868 8629
dmadge@cppib.com

Mei Mavin
Director, Corporate Communications
T: +1 646 564 4920
mmavin@cppib.com

Vermilion:

Anthony Marino
President & CEO

Curtis W. Hicks
C.A., Executive VP & CFO

and/or

Kyle Preston
Director Investor Relations

T: +1 (403) 269 4884
Investor Relations Toll Free 1-866-895-8101
investor_relations@vermilionenergy.com
www.vermilionenergy.com