----

| ·   | capital expenditures; |
|--------------------|-----------------------|

| ·   | business strategy and objectives; |
|--------------------|-----------------------------------|

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

| ·   | net revenue; |
|--------------------|--------------|

| ·   | future production levels and rates of average annual production growth; |
|--------------------|-------------------------------------------------------------------------|

| ·   | exploration plans; |
|--------------------|--------------------|

| ·   | development plans; |
|--------------------|--------------------|

| ·   | acquisition and disposition plans and the timing thereof; |
|--------------------|-----------------------------------------------------------|

| ·   | operating and other costs; |
|--------------------|----------------------------|

| ·   | royalty rates; |
|--------------------|----------------|

| ·   | Vermilion's additional` future payment in connection with the Corrib acquisition; |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | the timing of regulatory proceedings and approvals; |
|--------------------|-----------------------------------------------------|

| ·   | the timing of first commercial gas from the Corrib field; |
|--------------------|-----------------------------------------------------------|

| ·   | estimate of Vermilion’s share of the expected gas rates from the Corrib field; and |
|--------------------|------------------------------------------------------------------------------------------|

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

| · | the ability of Vermilion to market oil 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 Vermilion to obtain financing on acceptable terms; |
|--------|-------------------------------------------------------------------|

| · | currency, exchange and interest rates; |
|--------|----------------------------------------|

| · | future oil and natural gas prices; and |
|--------|----------------------------------------|

| ·   | Management’s expectations relating to the timing and results of development activities |
|--------------------|----------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| · | 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 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 authorities. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------|

----

| (“Lorenzo Donadeo”)               | (“Curtis W. Hicks”)                        |
|-----------------------------------------------|--------------------------------------------------------|
|                                          |                                                   |
| Lorenzo Donadeo                          | Curtis W. Hicks                                   |
| President & Chief Executive Officer  | Executive Vice President & Chief Financial Officer |
| March 10, 2011                           |                                                   |

----

----

----

|                                                    |   | 2010   |      |   | 2009   |   |
|---------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| ASSETS                                                  |   |   |      |   |   |   |
| Current                                                 |   |   |      |   |   |   |
| Cash and cash equivalents (Note 16)                     |   | $      | 145,623   |   |   | $      | 99,066 |   |
| Short-term investments                                  |   |   | 15,132    |   |   |   | 15,895 |   |
| Accounts receivable                                     |   |   | 147,329   |   |   |   | 117,051 |   |
| Crude oil inventory                                     |   |   | 10,707    |   |   |   | 5,235 |   |
| Derivative instruments (Note 12)                        |   |   | 10,249    |   |   |   | 8,217 |   |
| Prepaid expenses and other                              |   |   | 11,157    |   |   |   | 11,422 |   |
| Future income taxes (Note 7)                            |   |   | 2,902     |   |   |   | - |   |
|                                                    |   |   | 343,099   |   |   |   | 256,886 |   |
| Derivative instruments (Note 12)                        |   |   | 942       |   |   |   | 7,896 |   |
| Future income taxes (Note 7)                            |   |   | 151,477   |   |   |   | 119,714 |   |
| Long-term investments                                   |   |   | 3,108     |   |   |   | 4,342 |   |
| Goodwill (Note 9)                                       |   |   | 51,589    |   |   |   | 19,840 |   |
| Reclamation fund (Note 5)                               |   |   | -         |   |   |   | 69,003 |   |
| Capital assets (Note 4)                                 |   |   | 2,031,501 |   |   |   | 1,606,995 |   |
|                                                    |   | $      | 2,581,716 |   |   | $      | 2,084,676 |   |
|  LIABILITIES                                       |   |   |      |   |   |   |   |   |
| Current                                                 |   |   |      |   |   |   |   |   |
| Accounts payable and accrued liabilities                |   | $      | 253,086   |   |   | $      | 197,633 |   |
| Dividends or distributions payable                      |   |   | 16,910    |   |   |   | 15,109 |   |
| Derivative instruments (Note 12)                        |   |   | 12,143    |   |   |   | 1,772 |   |
| Income taxes payable                                    |   |   | 58,795    |   |   |   | 2,366 |   |
| Future income taxes (Note 7)                            |   |   | -         |   |   |   | 683 |   |
|                                                    |   |   | 340,934   |   |   |   | 217,563 |   |
| Derivative instruments (Note 12)                        |   |   | 1,767     |   |   |   | - |   |
| Long-term debt (Note 6)                                 |   |   | 302,558   |   |   |   | 159,723 |   |
| Amount due pursuant to acquisition (Note 3)             |   |   | 114,349   |   |   |   | 111,402 |   |
| Asset retirement obligations (Note 5)                   |   |   | 274,560   |   |   |   | 237,110 |   |
| Future income taxes (Note 7)                            |   |   | 246,982   |   |   |   | 218,764 |   |
|                                                    |   |   | 1,281,150 |   |   |   | 944,562 |   |
| Non-controlling interest - exchangeable shares (Note 9) |   |   | -         |   |   |   | 100,824 |   |
|  SHAREHOLDERS’ OR UNITHOLDERS’ EQUITY  |   |   |      |   |   |   |   |   |
| Shareholders’ capital (Note 8)                    |   |   | 1,045,930 |   |   |   | - |   |
| Unitholders’ capital (Note 8)                     |   |   | -         |   |   |   | 711,667 |   |
| Contributed surplus (Note 8)                            |   |   | 39,841    |   |   |   | 30,413 |   |
| Retained earnings                                       |   |   | 214,795   |   |   |   | 297,210 |   |
|                                                    |   |   | 1,300,566 |   |   |   | 1,039,290 |   |
|                                                    |   | $      | 2,581,716 |   |   | $      | 2,084,676 |   |
|                                                    |   |

|                                |
|-------------------------------------|
| APPROVED BY THE BOARD               |
|                                |
| (“W. Kenneth Davidson”) | (“Lorenzo Donadeo”) |
|                                |   |
| W. Kenneth Davidson, Director       | Lorenzo Donadeo, Director |

----

|                                                                |   | 2010   |       |   | 2009   |   |
|---------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| REVENUE                                                             |   |   |       |   |   |   |
| Petroleum and natural gas revenue                                   |   | $      | 727,805    |   |   | $      | 639,751 |   |
| Royalties                                                           |   |   | (83,509    | )      |   |   | (97,632 | ) |
|                                                                |   |   | 644,296    |   |   |   | 542,119 |   |
| EXPENSES AND OTHER EXPENSE (INCOME)                                 |   |   |       |   |   |   |   |   |
| Operating                                                           |   |   | 144,595    |   |   |   | 139,606 |   |
| Transportation                                                      |   |   | 26,698     |   |   |   | 18,939 |   |
| Equity based compensation (Note 10)                                 |   |   | 28,170     |   |   |   | 18,196 |   |
| Loss (gain) on derivative instruments (Note 12)                     |   |   | 3,906      |   |   |   | (4,526 | ) |
| Interest                                                            |   |   | 13,370     |   |   |   | 13,268 |   |
| General and administration                                          |   |   | 42,842     |   |   |   | 31,192 |   |
| Foreign exchange (gain)                                             |   |   | (26,132    | )      |   |   | (39,894 | ) |
| Other expense (income)                                              |   |   | 2,469      |   |   |   | (8,021 | ) |
| Depletion, depreciation and accretion                               |   |   | 271,556    |   |   |   | 248,726 |   |
|                                                                |   |   | 507,474    |   |   |   | 417,486 |   |
| EARNINGS BEFORE INCOME TAXES AND OTHER ITEMS                        |   |   | 136,822    |   |   |   | 124,633 |   |
|                                                                |   |   |       |   |   |   |   |   |
| INCOME TAXES (NOTE 7)                                               |   |   |       |   |   |   |   |   |
| Future                                                              |   |   | (55,383    | )      |   |   | (30,963 | ) |
| Current                                                             |   |   | 72,701     |   |   |   | 29,429 |   |
|                                                                |   |   | 17,318     |   |   |   | (1,534 | ) |
| OTHER ITEMS                                                         |   |   |       |   |   |   |   |   |
| Non-controlling interest - exchangeable shares (Note 9)             |   |   | 8,241      |   |   |   | 17,977 |   |
| (Gain) related to equity method investment (Note 3)                 |   |   | -          |   |   |   | (77,308 | ) |
|                                                                |   |   | 8,241      |   |   |   | (59,331 | ) |
| NET EARNINGS AND COMPREHENSIVE INCOME                               |   |   | 111,263    |   |   |   | 185,498 |   |
| Retained earnings, beginning of year                                |   |   | 297,210    |   |   |   | 280,959 |   |
| Distributions declared (Note 8)                                     |   |   | (122,236   | )      |   |   | (166,385 | ) |
| Dividends declared (Note 8)                                         |   |   | (67,508    | )      |   |   | - |   |
| Equity-settled distributions on vested equity based awards (Note 8) |   |   | (3,934     | )      |   |   | (2,862 | ) |
|                                                                |   |   |       |   |   |   |   |   |
| RETAINED EARNINGS, END OF YEAR                                      |   | $      | 214,795    |   |   | $      | 297,210 |   |
|                                                                |   |   |       |   |   |   |   |   |
| NET EARNINGS PER SHARE OR UNIT (NOTE 11)                            |   |   |       |   |   |   |   |   |
| Basic                                                               |   | $      | 1.34       |   |   | $      | 2.56 |   |
| Diluted                                                             |   | $      | 1.32       |   |   | $      | 2.53 |   |
|                                                                |   |   |       |   |   |   |   |   |
| WEIGHTED AVERAGE SHARES OR UNITS OUTSTANDING (NOTE 11)              |   |   |       |   |   |   |   |   |
| Basic                                                               |   |   | 83,155,116 |   |   |   | 72,405,606 |   |
| Diluted                                                             |   |   | 84,497,279 |   |   |   | 80,569,607 |   |

----

|                                                                                                          |   | 2010   |     |   | 2009   |   |
|---------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
| OPERATING                                                                                                     |   |   |     |   |   |   |
| Net earnings                                                                                                  |   | $      | 111,263  |   |   | $      | 185,498 |   |
| Adjustments:                                                                                                  |   |   |     |   |   |   |   |   |
| Depletion, depreciation and accretion                                                                         |   |   | 271,556  |   |   |   | 248,726 |   |
| Change in unrealized gains and losses and accruals relating to derivative contracts (Note 12)                 |   |   | 17,060   |   |   |   | 863 |   |
| Equity based compensation                                                                                     |   |   | 28,170   |   |   |   | 18,196 |   |
| (Gain) related to equity method investment                                                                    |   |   | -        |   |   |   | (77,308 | ) |
| Unrealized foreign exchange (gain)                                                                            |   |   | (20,509  | )      |   |   | (40,374 | ) |
| Non-controlling interest - exchangeable shares                                                                |   |   | 8,241    |   |   |   | 17,977 |   |
| Change in unrealized gains and losses and accruals included in other expense (income) relating to investments |   |   | 3,089    |   |   |   | (8,052 | ) |
| Proceeds from held for trading investments                                                                    |   |   | -        |   |   |   | 2,674 |   |
| Future income taxes                                                                                           |   |   | (55,383  | )      |   |   | (30,963 | ) |
|                                                                                                          |   |   | 363,487  |   |   |   | 317,237 |   |
| Asset retirement obligations settled (Note 5)                                                                 |   |   | (6,861   | )      |   |   | (10,139 | ) |
| Changes in non-cash operating working capital (Note 13)                                                       |   |   | 64,656   |   |   |   | (76,782 | ) |
| Cash flows from operating activities                                                                          |   |   | 421,282  |   |   |   | 230,316 |   |
|                                                                                                          |   |   |     |   |   |   |   |   |
| INVESTING                                                                                                     |   |   |     |   |   |   |   |   |
| Drilling and development of petroleum and natural gas properties                                              |   |   | (432,182 | )      |   |   | (194,666 | ) |
| Acquisition of petroleum and natural gas properties                                                           |   |   | (6,655   | )      |   |   | (159,536 | ) |
| Proceeds from (purchase of) short-term investments                                                            |   |   | 64,889   |   |   |   | (6,404 | ) |
| Long-term investment (Note 3)                                                                                 |   |   | -        |   |   |   | 136,479 |   |
| Withdrawals from the reclamation fund (Note 5)                                                                |   |   | 812      |   |   |   | - |   |
| Changes in non-cash investing working capital (Note 13)                                                       |   |   | 14,073   |   |   |   | (1,631 | ) |
| Cash flows (used in) investing activities                                                                     |   |   | (359,063 | )      |   |   | (225,758 | ) |
|                                                                                                          |   |   |     |   |   |   |   |   |
| FINANCING                                                                                                     |   |   |     |   |   |   |   |   |
| Increase (decrease) in long-term debt                                                                         |   |   | 142,700  |   |   |   | (37,053 | ) |
| Issue of trust units for cash (Note 8)                                                                        |   |   | -        |   |   |   | 240,178 |   |
| Issue of common shares or trust units pursuant to the dividend or distribution reinvestment plans             |   |   | 40,824   |   |   |   | - |   |
| Cash distributions                                                                                            |   |   | (121,966 | )      |   |   | (164,616 | ) |
| Cash dividends                                                                                                |   |   | (65,977  | )      |   |   | - |   |
| Cash flows (used in) from financing activities                                                                |   |   | (4,419   | )      |   |   | 38,509 |   |
| Foreign exchange (loss) on cash held in foreign currencies                                                    |   |   | (11,243  | )      |   |   | (11,232 | ) |
|                                                                                                          |   |   |     |   |   |   |   |   |
| Net change in cash and cash equivalents                                                                       |   |   | 46,557   |   |   |   | 31,835 |   |
| Cash and cash equivalents, beginning of year                                                                  |   |   | 99,066   |   |   |   | 67,231 |   |
| Cash and cash equivalents, end of year (Note 16)                                                              |   | $      | 145,623  |   |   | $      | 99,066 |   |
|                                                                                                          |   |   |     |   |   |   |   |   |
| Supplementary information - cash payments                                                                     |   |   |     |   |   |   |   |   |
| Interest paid                                                                                                 |   | $      | 13,585   |   |   | $      | 12,301 |   |
| Income taxes paid                                                                                             |   | $      | 16,272   |   |   | $      | 84,686 |   |

----

----

----

----

| a)   | Corrib Acquisition |
|----------------|--------------------|

| Capital assets              |   | $      | 228,898 |   |
|-----------------------------|--------|--------|---------|--------|
| Future income tax assets    |   |   | 86,074  |   |
| Asset retirement obligation |   |   | (9,788  | )      |
| Working capital             |   |   | (57,507 | )      |
| Total consideration         |   | $      | 247,677 |   |

| Cash                                                    |   | $      | 136,832 |   |
|---------------------------------------------------------|--------|--------|---------|--------|
| Present value of estimated future payment due to vendor |   |   | 110,845 |   |
| Total consideration                                     |   | $      | 247,677 |   |

----

|    2010                             |   |   Cost |      |   | Accumulated Depletion, Depreciation and Amortization |   |      |  NetBook Value |   |
|----------------------------------------------------|--------|------------------|-----------|--------|------------------------------------------------------|--------|-----------|---------------------|--------|
| Petroleum and natural gas properties and equipment |   | $                | 3,593,831 |   |                                                 | $      | 1,576,903 |                |   | $ | 2,016,928 |   |
| Furniture and equipment                            |   |             | 25,840    |   |                                                 |   | 11,267    |                |   |   | 14,573 |   |
|                                               |   | $                | 3,619,671 |   |                                                 | $      | 1,588,170 |                |   | $ | 2,031,501 |   |

|    2009                             |   |   Cost |      |   | Accumulated Depletion, Depreciation and Amortization |   |      |  NetBook Value |   |
|----------------------------------------------------|--------|------------------|-----------|--------|------------------------------------------------------|--------|-----------|---------------------|--------|
| Petroleum and natural gas properties and equipment |   | $                | 2,929,311 |   |                                                 | $      | 1,325,568 |                |   | $ | 1,603,743 |   |
| Furniture and equipment                            |   |             | 12,450    |   |                                                 |   | 9,198     |                |   |   | 3,252 |   |
|                                               |   | $                | 2,941,761 |   |                                                 | $      | 1,334,766 |                |   | $ | 1,606,995 |   |

----

| CDN$/BOE                    |   | Canada |   |   | France |   |   | Netherlands |   |   | Australia |   |   | Ireland |   |
|-----------------------------|--------|--------|--------|--------|--------|--------|--------|-------------|--------|--------|-----------|--------|--------|---------|--------|
| 2011                        |   | $      | 49.36  |   |   | $      | 81.01  |        |   | $      | 61.21     |   |   | $       | 90.31  |   |   | $ | - |   |
| 2012                        |   | $      | 52.72  |   |   | $      | 81.21  |        |   | $      | 58.36     |   |   | $       | 90.05  |   |   | $ | - |   |
| 2013                        |   | $      | 55.48  |   |   | $      | 81.89  |        |   | $      | 56.92     |   |   | $       | 90.31  |   |   | $ | 57.13 |   |
| 2014                        |   | $      | 58.52  |   |   | $      | 85.39  |        |   | $      | 58.21     |   |   | $       | 92.35  |   |   | $ | 58.36 |   |
| 2015                        |   | $      | 60.86  |   |   | $      | 88.21  |        |   | $      | 60.25     |   |   | $       | 95.58  |   |   | $ | 60.32 |   |
| 2016                        |   | $      | 62.77  |   |   | $      | 90.34  |        |   | $      | 61.78     |   |   | $       | 98.01  |   |   | $ | 61.79 |   |
| 2017                        |   | $      | 64.85  |   |   | $      | 92.73  |        |   | $      | 63.52     |   |   | $       | 100.78 |   |   | $ | 63.47 |   |
| 2018                        |   | $      | 66.85  |   |   | $      | 94.95  |        |   | $      | 65.11     |   |   | $       | 103.31 |   |   | $ | 65.00 |   |
| 2019                        |   | $      | 69.28  |   |   | $      | 97.36  |        |   | $      | 66.86     |   |   | $       | 106.07 |   |   | $ | 66.68 |   |
| 2020                        |   | $      | 71.55  |   |   | $      | 99.28  |        |   | $      | 68.22     |   |   | $       | 108.23 |   |   | $ | 67.99 |   |
| Average increase thereafter |   |   | 2.0    | %      |   |   | 2.0    | %           |   |   | 2.0       | %      |   |    | 2.0    | % |   |   | 2.0 | % |

|                                                             |   | 2010   |    |   | 2009   |   |
|------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Carrying amount, beginning of year                               |   | $      | 237,110 |   |   | $      | 265,101 |   |
| Increase in liabilities from drilling activities or acquisitions |   |   | 885     |   |   |   | 10,173 |   |
| Liabilities settled                                              |   |   | (6,861  | )      |   |   | (10,139 | ) |
| Changes in estimates                                             |   |   | 36,301  |   |   |   | (24,456 | ) |
| Accretion expense                                                |   |   | 18,152  |   |   |   | 20,255 |   |
| Foreign exchange                                                 |   |   | (11,027 | )      |   |   | (23,824 | ) |
| Carrying amount, end of year                                     |   | $      | 274,560 |   |   | $      | 237,110 |   |

|                                           |   | 2009   |   |
|------------------------------------------------|--------|--------|--------|
| Cash and short term investments, at fair value |   | $      | 22,028 |   |
| Equity and debt securities, at fair value      |   |   | 46,975 |   |
|                                           |   | $      | 69,003 |   |

----

|                                    |   | 2010   |     |   | 2009   |   |
|-----------------------------------------|--------|--------|----------|--------|--------|--------|
| Future income tax liabilities:          |   |   |     |   |   |   |
| Capital assets                          |   | $      | (243,337 | )      |   | $      | (223,918 | ) |
| Derivative contracts                    |   |   | -        |   |   |   | (4,346 | ) |
| Partnership income deferral             |   |   | (6,427   | )      |   |   | - |   |
| Asset retirement obligations            |   |   | (36,810  | )      |   |   | (41,602 | ) |
| Basis difference of investments         |   |   | (777     | )      |   |   | (1,090 | ) |
| Unrealized foreign exchange             |   |   | (19,973  | )      |   |   | (11,305 | ) |
| Future income tax assets:               |   |   |     |   |   |   |   |   |
| Derivative contracts                    |   |   | 708      |   |   |   | - |   |
| Capital assets                          |   |   | 57,654   |   |   |   | 67,403 |   |
| Non-capital losses                      |   |   | 112,442  |   |   |   | 66,145 |   |
| Partnership loss deferral               |   |   | -        |   |   |   | 12,449 |   |
| Other                                   |   |   | 1,894    |   |   |   | 1,298 |   |
| Share issue costs                       |   |   | 2,259    |   |   |   | 2,011 |   |
| Asset retirement obligations            |   |   | 39,764   |   |   |   | 33,222 |   |
| Net future income tax (liability)       |   | $      | (92,603  | )      |   | $      | (99,733 | ) |
| Comprised of:                           |   |   |     |   |   |   |   |   |
| Current future income tax asset         |   | $      | 2,902    |   |   | $      | - |   |
| Non-current future income tax asset     |   |   | 151,477  |   |   |   | 119,714 |   |
| Current future income tax liability     |   |   | -        |   |   |   | (683 | ) |
| Non-current future income tax liability |   |   | (246,982 | )      |   |   | (218,764 | ) |
| Net future income tax (liability)       |   | $      | (92,603  | )      |   | $      | (99,733 | ) |

----

|                                                                                                                                                  |   | 2010   |    |   | 2009   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Earnings before income taxes and non-controlling interest                                                                                             |   | $      | 136,822 |   |   | $      | 201,941 |   |
| Canadian corporate tax rate                                                                                                                           |   |   | 28.00   | %      |   |   | 29.00 | % |
| Expected tax expense                                                                                                                                  |   |   | 38,310  |   |   |   | 58,563 |   |
| Increase (decrease) in taxes resulting from:                                                                                                          |   |   |    |   |   |   |   |   |
| Income attributable to Unitholders prior to corporate conversion (Note 1)                                                                             |   |   | (34,226 | )      |   |   | (48,252 | ) |
| Tax incentive programs                                                                                                                                |   |   | (1,931  | )      |   |   | (5,645 | ) |
| Foreign tax rate differentials 1                                                                                                                      |   |   | 4,772   |   |   |   | 4,390 |   |
| Equity based compensation expense                                                                                                                     |   |   | 7,888   |   |   |   | 5,277 |   |
| Amended returns and pool estimate variances                                                                                                           |   |   | 2,370   |   |   |   | 137 |   |
| Foreign exchange                                                                                                                                      |   |   | (9,704  | )      |   |   | (11,624 | ) |
| Statutory rate changes and differences in reconciliation rate from the expected rates at reversal for non-capital losses recognized during the period |   |   | 4,796   |   |   |   | 791 |   |
| Other                                                                                                                                                 |   |   | 4,300   |   |   |   | 1,526 |   |
| Adjustment for capitalized interest                                                                                                                   |   |   | 2,197   |   |   |   | 800 |   |
| Adjustment to provisions for tax positions taken                                                                                                      |   |   | (1,454  | )      |   |   | 3,340 |   |
| Non-taxable portion of capital gains                                                                                                                  |   |   | -       |   |   |   | (10,837 | ) |
| Provision for income taxes                                                                                                                            |   | $      | 17,318  |   |   | $      | (1,534 | ) |

| Unitholders’ Capital                                                             | Number of Units |   |        | Amount |   |
|----------------------------------------------------------------------------------------|-----------------|--------|-------------|--------|--------|
| Balance as at December 31, 2008                                                        |            |   | 70,212,769  |   |   | $ | 444,353 |   |
| Issued on conversion of exchangeable shares (Note 9)                                   |            |   | 132,569     |   |   |   | 4,048 |   |
| Unit rights exercised and issuance of units on vesting of trust unit award plan grants |            |   | 945,982     |   |   |   | 2,817 |   |
| Transfer from contributed surplus for unit based awards                                |            |   | -           |   |   |   | 16,846 |   |
| Units issued for bonus plan                                                            |            |   | 23,790      |   |   |   | 635 |   |
| Unit-settled distributions on vested unit based awards                                 |            |   | 116,918     |   |   |   | 2,862 |   |
| Unit issuance                                                                          |            |   | 8,091,000   |   |   |   | 240,106 |   |
| Balance as at December 31, 2009                                                        |            |   | 79,523,028  |   |   | $ | 711,667 |   |
| Distribution reinvestment plan                                                         |            |   | 718,424     |   |   |   | 23,185 |   |
| Issued on conversion of exchangeable shares (Note 9)                                   |            |   | 4,547       |   |   |   | 151 |   |
| Issuance of units on vesting of trust unit award plan grants                           |            |   | 555,459     |   |   |   | 17,733 |   |
| Trust units issued for bonus plan                                                      |            |   | 28,624      |   |   |   | 1,009 |   |
| Unit-settled distributions on vested unit based awards                                 |            |   | 113,527     |   |   |   | 3,934 |   |
| Trust units exchanged pursuant to corporate conversion                                 |            |   | (80,943,609 | )      |   |   | (757,679 | ) |
| Balance as at August 31, 2010                                                          |            |   | -           |   |   | $ | - |   |

----

| Shareholders’ Capital                                                                      | Number of Shares |   |       | Amount |   |
|--------------------------------------------------------------------------------------------------|------------------|--------|------------|--------|--------|
| Balance as at August 31, 2010                                                                    |             |   | -          |   |   | $ | - |   |
| Issuance of common shares for trust units pursuant to corporate conversion                       |             |   | 80,943,609 |   |   |   | 757,679 |   |
| Dividend reinvestment plan                                                                       |             |   | 468,087    |   |   |   | 17,639 |   |
| Issuance of common shares for exchangeable shares pursuant to corporate conversion (Note 9) |             |   | 7,586,546  |   |   |   | 270,612 |   |
| Balance as at December 31, 2010                                                                  |             |   | 88,998,242 |   |   | $ | 1,045,930 |   |

|                                                            |   | 2010   |    |   | 2009   |   |
|-----------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Contributed Surplus                                             |   |   |    |   |   |   |
| Opening balance                                                 |   | $      | 30,413  |   |   | $      | 29,698 |   |
| Equity based compensation expense (excluding bonus plan)        |   |   | 27,161  |   |   |   | 17,561 |   |
| Transfer to shareholders’ capital for equity based awards |   |   | (17,733 | )      |   |   | (16,846 | ) |
| Ending balance                                                  |   | $      | 39,841  |   |   | $      | 30,413 |   |

----

|                                                                         |   | Dec 31, 2010 |       |   | Dec 31, 2009 |   |
|------------------------------------------------------------------------------|--------|--------------|------------|--------|--------------|--------|
| Exchangeable Shares                                                          |   |         |       |   |         |   |
| Opening number of exchangeable shares                                        |   |         | 4,009,253  |   |         |   | 4,085,605 |   |
| Exchanged for trust units (Note 8)                                           |   |         | (2,500     | )      |         |   | (76,352 | ) |
| Exchanged for common shares pursuant to corporate conversion (Notes 1 and 8) |   |         | (4,006,753 | )      |         |   | - |   |
| Ending balance                                                               |   |         | -          |   |         |   | 4,009,253 |   |
| Ending exchange ratio                                                        |   |         | -          |   |         |   | 1.80065 |   |
| Units issuable upon conversion                                               |   |         | -          |   |         |   | 7,219,261 |   |

|                                                                   |   | Dec 31, 2010 |     |   | Dec 31, 2009 |   |
|------------------------------------------------------------------------|--------|--------------|----------|--------|--------------|--------|
| Non-controlling interest, beginning of year                            |   | $            | 100,824  |   |         | $      | 84,523 |   |
| Current year net earnings attributable to the non-controlling interest |   |         | 8,241    |   |         |   | 17,977 |   |
| Reduction of book value for conversion to trust units                  |   |         | (64      | )      |         |   | (1,676 | ) |
| Reduction of book value for conversion to common shares                |   |         | (109,001 | )      |         |   | - |   |
| Non-controlling interest, end of year                                  |   | $            | -        |   |         | $      | 100,824 |   |

| Number of Awards |   | 2010   |      |   | 2009   |   |
|------------------|--------|--------|-----------|--------|--------|--------|
| Opening balance  |   |   | 1,417,314 |   |   |   | 1,208,255 |   |
| Granted          |   |   | 845,199   |   |   |   | 663,113 |   |
| Vested           |   |   | (447,714  | )      |   |   | (382,239 | ) |
| Forfeited        |   |   | (131,023  | )      |   |   | (71,815 | ) |
| Closing balance  |   |   | 1,683,776 |   |   |   | 1,417,314 |   |

----

|                                                                   |   | 2010   |       |   | 2009   |   |
|------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Net earnings                                                           |   | $      | 111,263    |   |   | $      | 185,498 |   |
| Non-controlling interest - exchangeable shares                         |   |   | -          |   |   |   | 17,977 |   |
| Net earnings for diluted net earnings per share or unit calculation    |   | $      | 111,263    |   |   | $      | 203,475 |   |
|                                                                   |   |   |       |   |   |   |   |   |
| Basic weighted average shares or units outstanding                     |   |   | 83,155,116 |   |   |   | 72,405,606 |   |
| Dilutive impact of units issuable on conversion of exchangeable shares |   |   | -          |   |   |   | 7,279,431 |   |
| Dilutive impact of equity based award plans                            |   |   | 1,342,163  |   |   |   | 884,570 |   |
| Diluted weighted average shares or units outstanding                   |   |   | 84,497,279 |   |   |   | 80,569,607 |   |

----

| Risk Management:  Oil                    | Funded Cost                     | bbls/d                 | US $/bbl                                |
|----------------------------------------------------|---------------------------------|------------------------|-----------------------------------------|
| Collar - WTI                                       |                            |                   |                                    |
| January 2011 to June 2011                          | US $1.00/bbl                    | 2,400                  | $  80.00 - $107.60            |
| January 2011 to June 2011                          | US $1.00/bbl                    | 2,400                  | $  75.00 - $  97.85 |
| January 2011 to December 2011                      | US $1.00/bbl                    | 500                    | $  78.00 - $  96.20 |
| January 2011 to December 2011                      | US $1.00/bbl                    | 500                    | $  78.00 - $  96.25 |
| July 2011 to December 2011                         | US $1.00/bbl                    | 2,400                  | $  80.00 - $110.00            |
| July 2011 to December 2011                         | US $1.00/bbl                    | 2,400                  | $  77.25 - $  98.50 |
| Collar - BRENT                                     |                            |                   |                                    |
| January 2011 to December 2011                      | US $1.00/bbl                    | 1,000                  | $  77.75 - $  96.00 |
| January 2011 to December 2011                      | US $1.00/bbl                    | 1,000                  | $  77.50 - $  96.00 |
| January 2011 to December 2011                      | US $0.00/bbl                    | 750                    | $  77.00 - $  95.40 |
| January 2011 to December 2011                      | US $1.00/bbl                    | 750                    | $  78.00 - $  98.10 |
| January 2011 to December 2011                      | US $1.00/bbl                    | 500                    | $  78.00 - $100.00            |
| January 2011 to December 2011                      | US $1.00/bbl                    | 500                    | $  78.00 - $100.05            |
| January 2011 to December 2011                      | US $1.00/bbl                    | 500                    | $  78.00 - $100.00            |
| January 2012 to June 2012                          | US $1.00/bbl                    | 750                    | $  82.00 - $105.60            |
| January 2012 to June 2012                          | US $1.00/bbl                    | 750                    | $  82.00 - $104.80            |
| January 2012 to June 2012                          | US $1.00/bbl                    | 750                    | $  82.00 - $106.10            |
| Call Spread - BRENT                                |                            |                   |                                    |
| January 2011 to December 2011                      | US $6.08/bbl1                   | 960                    | $  65.00 - $  85.00 |
| January 2011 to December 2011                      | US $5.15/bbl1                   | 600                    | $  65.00 - $  85.00 |
| Risk Management:  Natural Gas            | Funded Cost                     | GJ/d                   | $/GJ                                    |
| SWAP - AECO                                        |                            |                   |                                    |
| January 2011 to October 2011                       | $0.00/GJ                        | 700                    | $5.13                                   |
|  Risk Management:  Foreign Exchange | NotionalPrincipal ($US) / Month | Fixed rate($CDN / $US) |
| US Dollar Forward Sale                             |                            |                   |                                    |
| January 2011 to December 2011                      |                            | $750,000               | $1.07                                   |
| January 2011 to December 2011                      |                            | $750,000               | $1.07                                   |

----

|                                                                                   |   | 2010   |    |   | 2009   |   |
|----------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Fair value of contracts, beginning of year                                             |   | $      | 14,341  |   |   | $      | 15,204 |   |
| Reversal of opening unrealized (gain) on contracts settled during the year             |   |   | (6,842  | )      |   |   | (11,959 | ) |
| Realized gain on contracts settled during the year                                     |   |   | 13,154  |   |   |   | 5,389 |   |
| Unrealized (loss) gain during the year on contracts outstanding at the end of the year |   |   | (10,218 | )      |   |   | 11,096 |   |
| Net (receipt from) counterparties on contract settlements during the year              |   |   | (13,154 | )      |   |   | (5,389 | ) |
| Fair value of contracts, end of year                                                   |   |   | (2,719  | )      |   |   | 14,341 |   |
| Comprised of:                                                                          |   |   |    |   |   |   |   |   |
| Current derivative asset                                                               |   |   | 10,249  |   |   |   | 8,217 |   |
| Current derivative liability                                                           |   |   | (12,143 | )      |   |   | (1,772 | ) |
| Non-current derivative asset                                                           |   |   | 942     |   |   |   | 7,896 |   |
| Non-current derivative liability                                                       |   |   | (1,767  | )      |   |   | - |   |
| Fair value of contracts, end of year                                                   |   | $      | (2,719  | )      |   | $      | 14,341 |   |

|                                                                                   |   | 2010   |    |   | 2009   |   |
|----------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Realized (gain) on contracts settled during the year                                   |   | $      | (13,154 | )      |   | $      | (5,389 | ) |
| Reversal of opening unrealized gain on contracts settled during the year               |   |   | 6,842   |   |   |   | 11,959 |   |
| Unrealized loss (gain) during the year on contracts outstanding at the end of the year |   |   | 10,218  |   |   |   | (11,096 | ) |
| Loss (gain) on derivative instruments                                                  |   | $      | 3,906   |   |   | $      | (4,526 | ) |

|                                                              |   | 2010   |    |   | 2009   |   |
|-------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Accounts receivable                                               |   | $      | (30,278 | )      |   | $      | 6,743 |   |
| Crude oil inventory                                               |   |   | (5,472  | )      |   |   | 6,932 |   |
| Prepaid expenses and other                                        |   |   | 400     |   |   |   | 3,555 |   |
| Accounts payable and accrued liabilities and income taxes payable |   |   | 111,882 |   |   |   | (96,790 | ) |
| Foreign exchange                                                  |   |   | 2,197   |   |   |   | 1,147 |   |
| Changes in non-cash working capital                               |   |   | 78,729  |   |   |   | (78,413 | ) |
|                                                              |   |   |    |   |   |   |   |   |
| Changes in non-cash operating working capital                     |   | $      | 64,656  |   |   | $      | (76,782 | ) |
| Changes in non-cash investing working capital                     |   |   | 14,073  |   |   |   | (1,631 | ) |
| Changes in non-cash working capital                               |   | $      | 78,729  |   |   | $      | (78,413 | ) |

----

|                              |   | 2010   |      |   | 2009   |   |
|-----------------------------------|--------|--------|-----------|--------|--------|--------|
| Petroleum and natural gas revenue |   |   |      |   |   |   |
| Canada                            |   | $      | 185,241   |   |   | $      | 152,087 |   |
| France                            |   |   | 249,031   |   |   |   | 203,142 |   |
| Netherlands                       |   |   | 73,789    |   |   |   | 68,087 |   |
| Australia                         |   |   | 219,744   |   |   |   | 216,435 |   |
| Ireland                           |   |   | -         |   |   |   | - |   |
|                              |   | $      | 727,805   |   |   | $      | 639,751 |   |
| Net earnings (loss)               |   |   |      |   |   |   |   |   |
| Canada                            |   | $      | (54,394   | )      |   | $      | 25,635 |   |
| France                            |   |   | 92,495    |   |   |   | 69,497 |   |
| Netherlands                       |   |   | 19,149    |   |   |   | 21,319 |   |
| Australia                         |   |   | 60,979    |   |   |   | 73,380 |   |
| Ireland                           |   |   | (6,966    | )      |   |   | (4,333 | ) |
|                              |   | $      | 111,263   |   |   | $      | 185,498 |   |
| Capital expenditures              |   |   |      |   |   |   |   |   |
| Canada                            |   | $      | 242,900   |   |   | $      | 75,973 |   |
| France                            |   |   | 54,965    |   |   |   | 62,457 |   |
| Netherlands                       |   |   | 11,017    |   |   |   | 26,338 |   |
| Australia                         |   |   | 51,457    |   |   |   | 6,739 |   |
| Ireland                           |   |   | 78,498    |   |   |   | 182,695 |   |
|                              |   | $      | 438,837   |   |   | $      | 354,202 |   |
| Total assets                      |   |   |      |   |   |   |   |   |
| Canada                            |   | $      | 906,407   |   |   | $      | 711,435 |   |
| France                            |   |   | 743,119   |   |   |   | 575,426 |   |
| Netherlands                       |   |   | 190,473   |   |   |   | 180,803 |   |
| Australia                         |   |   | 293,691   |   |   |   | 250,780 |   |
| Ireland                           |   |   | 448,026   |   |   |   | 366,232 |   |
|                              |   | $      | 2,581,716 |   |   | $      | 2,084,676 |   |

|               | 2011   | 2012   | 2013   | 2014   | 2015   | Thereafter | Total   |
|--------------------|--------|--------|--------|--------|--------|------------|---------|
| Payments by period | $5,864 | $6,845 | $6,845 | $6,845 | $6,845 | $45,521    | $78,765 |

----

|                                                             |   | 2010   |     |   | 2009   |   |
|------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
| Long-term debt                                                   |   | $      | 302,558  |   |   | $      | 159,723 |   |
| Current liabilities                                              |   |   | 340,934  |   |   |   | 217,563 |   |
| Current assets                                                   |   |   | (343,099 | )      |   |   | (256,886 | ) |
| Net debt [1]                                                     |   | $      | 300,393  |   |   | $      | 120,400 |   |
| Cash flows from operating activities                             |   | $      | 421,282  |   |   | $      | 230,316 |   |
| Changes in non-cash operating working capital                    |   |   | (64,656  | )      |   |   | 76,782 |   |
| Asset retirement obligations settled                             |   |   | 6,861    |   |   |   | 10,139 |   |
| Fund flows from operations [2]                                   |   | $      | 363,487  |   |   | $      | 317,237 |   |
| Ratio of net debt to fund flows from operations ([1] ÷ [2]) |   |   | 0.8      |   |   |   | 0.4 |   |

----

| Class of                    | Location on                                                                |        | Related Income                                                                                                                                                 |   | Carrying Amount and             |     |  Fair Value  |
|-----------------------------|----------------------------------------------------------------------------|-------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|----------|-------------------|
| Financial                   | Consolidated                                                               | Accounting  | or Expense Account                                                                                                                                             |   | Fair Value of Asset (Liability) |     |  Measurement |
| Instruments                 | Balance Sheet                                                              | Designation | on Statement of Earnings                                                                                                                                       |   | as at:                          |     | Hierarchy         |
|                        |                                                                       |        |                                                                                                                                                           |   | Dec 31, 2010                    |     |              | Dec 31, 2009 |   |   |
| Cash                        | Cash and cash equivalents                                                  | HFT-B       | Gains and losses on foreign exchange are included in foreign exchange loss (gain)                                                                              |   | $                               | 145,623  |              |   | $ | 99,066 |   | Level 1 |
| Short-term investments      | Short-term investments                                                     | HFT-A       | Gains and losses on foreign exchange are included in foreign exchange loss (gain)                                                                              |   | $                               | 15,132   |              |   | $ | 15,895 |   | Level 1 |
| Receivables                 | Accounts receivable                                                        | LAR         | Gains and losses on foreign exchange are included in foreign exchange loss (gain).  Impairments are recognized as general and administration expense |   | $                               | 147,329  |              |   | $ | 117,051 |   | Not applicable |
| Derivative assets           | Derivative instruments                                                     | HFT-B       | Loss (gain) on derivative instruments                                                                                                                          |   | $                               | 11,191   |              |   | $ | 16,113 |   | Level 2 |
| Derivative liabilities      | Derivative instruments                                                     | HFT-B       | Loss (gain) on derivative instruments                                                                                                                          |   | $                               | (13,910  | )                 |   | $ | (1,772 | ) | Level 2 |
| Reclamation fundinvestments | Reclamation fund                                                           | HFT-A       | Other income or expense                                                                                                                                   |   | $                               | -        |              |   | $ | 69,003 |   | Level 1 |
| Portfolio investments       | Long-term investments                                                      | HFT-A       | Other income or expense                                                                                                                                        |   | $                               | 3,108    |              |   | $ | 4,342 |   | Level 1 |
| Payables                    | Accounts payable and accrued liabilities.Dividends ordistributions payable | OTH         | Gains and losses on foreign exchange are included in foreign exchange loss (gain)                                                                              |   | $                               | (269,996 | )                 |   | $ | (212,742 | ) | Not applicable |
| Long-term debt              | Long-term debt                                                             | OTH         | Interest                                                                                                                                                       |   | $                               | (302,558 | )                 |   | $ | (159,723 | ) | Not applicable |
| Long-term debt              | Amount due pursuant to acquisition                                         | OTH         | None                                                                                                                                                           |   | $                               | (114,349 | )                 |   | $ | (111,402 | ) | Not applicable |

----

----

|   Due in (from balance sheet date) |  Not later thanone month | Later than onemonth and not laterthan three months | Later than threemonths and notlater than one year | Later than oneyear and not laterthan five years |
|----------------------------------------------|-------------------------------|----------------------------------------------------|---------------------------------------------------|-------------------------------------------------|
| December 31, 2010                            | 89,063                        | 163,110                                            | 17,823                                            | 438,371                                         |
| December 31, 2009                            | 117,911                       | 84,911                                             | 9,920                                             | 302,691                                         |

|  Risk |  Description of change in risk variable | Effect on net earningsbefore tax increase (decrease) |   |
|------------|----------------------------------------------|------------------------------------------------------|--------|

| Currency risk – Euro to Canadian | Increase in strength of the Canadian dollar against theEuro by 5% over the relevant closing rates on December 31, 2010                                            |   | $ | (2,473  | )      |
|----------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---|---------|--------|
|                                   | Decrease in strength of the Canadian dollar against theEuro by 5% over the relevant closing rates on December 31, 2010                                            |   | $ | 2,473   |   |
| Currency risk – US$ to Canadian  | Increase in strength of the Canadian dollar against theUS$ by 5% over the relevant closing rates on December 31, 2010                                             |   | $ | 2,527   |   |
|                                   | Decrease in strength of the Canadian dollar against theUS$ by 5% over the relevant closing rates on December 31, 2010                                             |   | $ | (2,527  | )      |
| Currency risk – AUD$ to Canadian | Increase in strength of the Canadian dollar against theAUD$ by 5% over the relevant closing rates on December 31, 2010                                            |   | $ | 773     |   |
|                                   | Decrease in strength of the Canadian dollar against theAUD$ by 5% over the relevant closing rates on December 31, 2010                                            |   | $ | (773    | )      |
| Commodity price risk                   | Increase in relevant oil reference price at December 31, 2010 by US$5.00/bblwithin option pricing models used to determine the fair value of derivative positions |   | $ | (11,440 | )      |
|                                   | Decrease in relevant oil reference price at December 31, 2010 by US$5.00/bblwithin option pricing models used to determine the fair value of derivative positions |   | $ | 9,950   |   |

----

|  Risk |  Description of change in risk variable | Effect on net earningsbefore tax increase (decrease) |   |
|------------|----------------------------------------------|------------------------------------------------------|--------|

| Currency risk – Euro to Canadian | Increase in strength of the Canadian dollar against theEuro by 5% over the relevant closing rates on December 31, 2009                                            |   | $ | (3,283 | )      |
|----------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---|--------|--------|
|                                   | Decrease in strength of the Canadian dollar against theEuro by 5% over the relevant closing rates on December 31, 2009                                            |   | $ | 3,283  |   |
| Currency risk – US$ to Canadian  | Increase in strength of the Canadian dollar against theUS$ by 5% over the relevant closing rates on December 31, 2009                                             |   | $ | 1,495  |   |
|                                   | Decrease in strength of the Canadian dollar against theUS$ by 5% over the relevant closing rates on December 31, 2009                                             |   | $ | (1,495 | )      |
| Currency risk – AUD$ to Canadian | Increase in strength of the Canadian dollar against theAUD$ by 5% over the relevant closing rates on December 31, 2009                                            |   | $ | (1,190 | )      |
|                                   | Decrease in strength of the Canadian dollar against theAUD$ by 5% over the relevant closing rates on December 31, 2009                                            |   | $ | 1,190  |   |
| Commodity price risk                   | Increase in relevant oil reference price at December 31, 2009 by US$5.00/bblwithin option pricing models used to determine the fair value of derivative positions |   | $ | 1,788  |   |
|                                   | Decrease in relevant oil reference price at December 31, 2009 by US$5.00/bblwithin option pricing models used to determine the fair value of derivative positions |   | $ | (2,264 | )      |

----

|                                                                  |   | 2010   |       |   | 2009   |   |
|-----------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Net earnings and comprehensive income as reported under Canadian GAAP |   | $      | 111,263    |   |   | $      | 185,498 |   |
| Differences having the effect of increasing (decreasing) net earnings |   |   |       |   |   |   |   |   |
| Equity based compensation (a)                                         |   |   | (9,457     | )      |   |   | (10,427 | ) |
| Non-controlling interest adjustment (c)                               |   |   | 8,241      |   |   |   | 17,977 |   |
| Depletion, depreciation and accretion (c and d)                       |   |   | (14,343    | )      |   |   | (284,736 | ) |
| Equity method accounting adjustments (e)                              |   |   | -          |   |   |   | (28,626 | ) |
| Future income tax consequences of U.S. GAAP adjustments (g)           |   |   | 485        |   |   |   | 73,702 |   |
| Net earnings (loss) and comprehensive income (loss) under U.S. GAAP   |   |   | 96,189     |   |   |   | (46,612 | ) |
| Deficit, beginning of year, under U.S. GAAP                           |   |   | (2,110,550 | )      |   |   | (1,377,857 | ) |
| Distributions declared (Canadian and U.S. GAAP)                       |   |   | (122,236   | )      |   |   | (166,385 | ) |
| Dividends declared (Canadian and U.S. GAAP)                           |   |   | (67,508    | )      |   |   | - |   |
| Temporary equity adjustment to deficit (b)                            |   |   | (239,288   | )      |   |   | (519,696 | ) |
| Deficit, end of year, under U.S. GAAP                                 |   | $      | (2,443,393 | )      |   | $      | (2,110,550 | ) |
| Net earnings (loss) per share or unit under U.S. GAAP                 |   |   |       |   |   |   |   |   |
| Basic                                                                 |   | $      | 1.09       |   |   | $      | (0.58 | ) |
| Diluted                                                               |   | $      | 1.07       |   |   | $      | (0.58 | ) |
| Weighted average shares or units outstanding (c)                      |   |   |       |   |   |   |   |   |
| Basic                                                                 |   |   | 88,213,105 |   |   |   | 79,685,037 |   |
| Diluted                                                               |   |   | 89,638,358 |   |   |   | 79,685,037 |   |

|                       |   | 2010     |      |   | 2010      |   |      | 2009     |   |   | 2009      |   |
|----------------------------|--------|----------|-----------|--------|-----------|--------|-----------|----------|--------|--------|-----------|--------|
|                       |   | CDN GAAP |      |   | U.S. GAAP |   |      | CDN GAAP |   |   | U.S. GAAP |   |
| ASSETS                     |   |     |      |   |      |   |      |     |   |   |      |   |
| Current                    |   |     |      |   |      |   |      |     |   |   |      |   |
| Cash and cash equivalents  |   | $        | 145,623   |   |      | $      | 145,623   |     |   | $      | 99,066    |   |   | $ | 99,066 |   |
| Short-term investments     |   |     | 15,132    |   |      |   | 15,132    |     |   |   | 15,895    |   |   |   | 15,895 |   |
| Accounts receivable        |   |     | 147,329   |   |      |   | 147,329   |     |   |   | 117,051   |   |   |   | 117,051 |   |
| Crude oil inventory        |   |     | 10,707    |   |      |   | 10,707    |     |   |   | 5,235     |   |   |   | 5,235 |   |
| Derivative instruments     |   |     | 10,249    |   |      |   | 10,249    |     |   |   | 8,217     |   |   |   | 8,217 |   |
| Prepaid expenses and other |   |     | 11,157    |   |      |   | 11,157    |     |   |   | 11,422    |   |   |   | 11,422 |   |
| Future income taxes        |   |     | 2,902     |   |      |   | 2,902     |     |   |   | -         |   |   |   | - |   |
|                       |   |     | 343,099   |   |      |   | 343,099   |     |   |   | 256,886   |   |   |   | 256,886 |   |
| Derivative instruments     |   |     | 942       |   |      |   | 942       |     |   |   | 7,896     |   |   |   | 7,896 |   |
| Future income taxes (g)    |   |     | 151,477   |   |      |   | 334,903   |     |   |   | 119,714   |   |   |   | 297,132 |   |
| Long-term investments      |   |     | 3,108     |   |      |   | 3,108     |     |   |   | 4,342     |   |   |   | 4,342 |   |
| Goodwill (c)               |   |     | 51,589    |   |      |   | 19,840    |     |   |   | 19,840    |   |   |   | 19,840 |   |
| Reclamation fund           |   |     | -         |   |      |   | -         |     |   |   | 69,003    |   |   |   | 69,003 |   |
| Capital assets (c and d)   |   |     | 2,031,501 |   |      |   | 1,001,060 |     |   |   | 1,606,995 |   |   |   | 780,868 |   |
|                       |   | $        | 2,581,716 |   |      | $      | 1,702,952 |     |   | $      | 2,084,676 |   |   | $ | 1,435,967 |   |

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|                                               |   | 2010     |      |   | 2010      |   |       | 2009     |   |   | 2009      |   |
|----------------------------------------------------|--------|----------|-----------|--------|-----------|--------|------------|----------|--------|--------|-----------|--------|
|                                               |   | CDN GAAP |      |   | U.S. GAAP |   |       | CDN GAAP |   |   | U.S. GAAP |   |
| LIABILITIES                                        |   |     |      |   |      |   |       |     |   |   |      |   |
| Current                                            |   |     |      |   |      |   |       |     |   |   |      |   |
| Accounts payable and accrued liabilities           |   | $        | 253,086   |   |      | $      | 253,086    |     |   | $      | 197,633   |   |   | $ | 197,633 |   |
| Unit based compensation liability (a)              |   |     | -         |   |      |   | -          |     |   |   | -         |   |   |   | 23,772 |   |
| Dividends or distributions payable                 |   |     | 16,910    |   |      |   | 16,910     |     |   |   | 15,109    |   |   |   | 15,109 |   |
| Derivative instruments                             |   |     | 12,143    |   |      |   | 12,143     |     |   |   | 1,772     |   |   |   | 1,772 |   |
| Income taxes payable                               |   |     | 58,795    |   |      |   | 58,795     |     |   |   | 2,366     |   |   |   | 2,366 |   |
| Future income taxes                                |   |     | -         |   |      |   | -          |     |   |   | 683       |   |   |   | 683 |   |
|                                               |   |     | 340,934   |   |      |   | 340,934    |     |   |   | 217,563   |   |   |   | 241,335 |   |
| Derivative instruments                             |   |     | 1,767     |   |      |   | 1,767      |     |   |   | -         |   |   |   | - |   |
| Long-term debt                                     |   |     | 302,558   |   |      |   | 302,558    |     |   |   | 159,723   |   |   |   | 159,723 |   |
| Amount due pursuant to acquisition                 |   |     | 114,349   |   |      |   | 114,349    |     |   |   | 111,402   |   |   |   | 111,402 |   |
| Asset retirement obligations                       |   |     | 274,560   |   |      |   | 274,560    |     |   |   | 237,110   |   |   |   | 237,110 |   |
| Unit based compensation liability (a)              |   |     | -         |   |      |   | -          |     |   |   | -         |   |   |   | 9,737 |   |
| Future income taxes (g)                            |   |     | 246,982   |   |      |   | 148,305    |     |   |   | 218,764   |   |   |   | 174,586 |   |
|                                               |   |     | 1,281,150 |   |      |   | 1,182,473  |     |   |   | 944,562   |   |   |   | 933,893 |   |
| Non-controlling interest - exchangeable shares (c) |   |     | -         |   |      |   | -          |     |   |   | 100,824   |   |   |   | - |   |
| Temporary equity (b and c)                         |   |     | -         |   |      |   | -          |     |   |   | -         |   |   |   | 2,612,624 |   |
|                                               |   |     |      |   |      |   |       |     |   |   |      |   |   |   |   |   |
| SHAREHOLDERS’ OR UNITHOLDERS’ EQUITY   |   |     |      |   |      |   |       |     |   |   |      |   |   |   |   |   |
| Shareholders’ capital (b)                    |   |     | 1,045,930 |   |      |   | 2,923,146  |     |   |   | -         |   |   |   | - |   |
| Unitholders’ capital (b)                     |   |     | -         |   |      |   | -          |     |   |   | 711,667   |   |   |   | - |   |
| Contributed surplus (a)                            |   |     | 39,841    |   |      |   | 40,726     |     |   |   | 30,413    |   |   |   | - |   |
| Retained earnings (deficit)                        |   |     | 214,795   |   |      |   | (2,443,393 | )        |   |   | 297,210   |   |   |   | (2,110,550 | ) |
|                                               |   |     | 1,300,566 |   |      |   | 520,479    |     |   |   | 1,039,290 |   |   |   | (2,110,550 | ) |
|                                               |   | $        | 2,581,716 |   |      | $      | 1,702,952  |     |   | $      | 2,084,676 |   |   | $ | 1,435,967 |   |

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| DIRECTORS Larry J. Macdonald 1, 2, 3, 4, 5Chairman & CEO, Point Energy Ltd.Calgary, Alberta W. Kenneth Davidson 2, 3Toronto, Ontario Lorenzo DonadeoCalgary, Alberta Claudio A. Ghersinich 2, 4, 5Executive Director, Carrera Investments Corp.Calgary, Alberta Joseph F. Killi 2, 3Chairman,Parkbridge Lifestyle Communities Inc.Vice Chairman, Realex Properties Corp.Calgary, Alberta William F. Madison 2, 4, 5Sugar Land, Texas Timothy R. Marchant 3, 4, 5Calgary, Alberta 1 Chairman of the Board2 Audit Committee3 Governance and Human Resources Committee4 Health, Safety and Environment Committee5 Independent Reserves Committee ANNUAL GENERAL MEETING May 6, 2011 at 10:00 a.m.The BallroomMetropolitan Centre333 – 4th Avenue S.W.Calgary, Alberta  | OFFICERS AND KEY PERSONNEL CANADALorenzo Donadeo, P.Eng.President & Chief Executive Officer John D. Donovan, F.C.A.Executive Vice President Business Development Curtis W. Hicks, C.A.Executive Vice President & CFO G. R. (Bob) Mac Dougall, P.Eng.Executive Vice President & COO Paul L. BeiqueVice President Capital Markets Mona Jasinski, M.B.A., C.H.R.P.Vice President People Raj C. Patel, P.Eng.Vice President Marketing Daniel Goulet, P.Eng.Director Production and Operations Cameron A. Hercus, MScDirector Exploitation and New Growth Dean N. Morrison, CFADirector Investor Relations Gerardo RiveraDirector Commercial Robert (Bob) J. Engbloom, LL.BCorporate Secretary EUROPEPeter Sider, P.Eng.Vice President European Operations David Burghardt, P.Eng.Director Exploitation Scott Ferguson, P.Eng.Director European Operations AUSTRALIABruce D. Lake, P.Eng.Managing DirectorVermilion Oil & Gas Australia Pty Ltd.   | AUDITORSDeloitte & Touche LLPCalgary, Alberta BANKERSThe Toronto-Dominion BankCalgary, Alberta Bank of MontrealCalgary, Alberta BNP Paribas (Canada)Toronto, Ontario Royal Bank of CanadaCalgary, Alberta The Bank of Nova ScotiaCalgary, Alberta Alberta Treasury BranchesCalgary, Alberta Canadian Imperial Bank of CommerceCalgary, Alberta Citibank N.A., Canadian BranchCalgary, Alberta EVALUATION ENGINEERSGLJ Petroleum Consultants Ltd.Calgary, Alberta LEGAL COUNSELMacleod Dixon LLPCalgary, Alberta TRANSFER AGENTComputershare Trust Company of Canada STOCK EXCHANGE LISTINGToronto Stock ExchangeSymbol:     VETUS OTCSymbol:     VEMTF INVESTOR RELATIONS CONTACTPaul L. Beique, Vice President Capital MarketsDean Morrison, Director Investor Relations403.269.4884 TEL403.476.8100 FAX1.866.895.8101 TOLL FREEinvestor_relations@vermilionenergy.com |
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