Exhibit 99.1



















TABLE
OF CONTENTS

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



2


Vermilion Energy Inc.AIF for the year ended December 31, 2013




|RISK FACTORS           | 46                                                                                            
|---------------------- | ----------------------------------------------------------------------------------------------
|                       | Reserve Estimates                                                                             
|                       | Uncertainty of Contingent Resource Estimates                                                  
|                       | Uncertainty of Prospective Resource Estimates                                                 
|                       | Volatility of Oil and Natural Gas Prices                                                      
|                       | Changes in Legislation                                                                        
|                       | Government Regulations                                                                        
|                       | Competition                                                                                   
|                       | Operational Matters                                                                           
|                       | Environmental Concerns                                                                        
|                       | Kyoto Protocol and Carbon Tax                                                                 
|                       | Discretionary Nature of Dividends                                                             
|                       | Debt Service                                                                                  
|                       | Changes in Income Tax Laws                                                                    
|                       | Depletion of Reserves                                                                         
|                       | Net Asset Value                                                                               
|                       | Volatility of Market Price of Common Shares                                                   
|                       | Variations in Interest Rates and Foreign Exchange Rates                                       
|                       | Increase in Operating Costs or Decline in Production Level                                    
|                       | Acquisition Assumptions                                                                       
|                       | Failure to Realize Anticipated Benefits of Prior Acquisitions                                 
|                       | Additional Financing                                                                          
|                       | Potential Conflicts of Interest                                                               
|                       | Accounting Adjustments                                                                        
|                       | Market Accessibility                                                                          
|ADDITIONAL INFORMATION | 52                                                                                            
|                       |                                                                                               
|SCHEDULE "A"           |                                                                                               
|                       | REPORT ON RESERVES DATA BY INDEPENDENT QUALIFIED RESERVES EVALUATOR OR AUDITOR (FORM 51-101F2)
|                       | REPORT ON resources DATA BY INDEPENDENT QUALIFIED RESERVES EVALUATOR OR AUDITOR               
|                       |                                                                                               
|SCHEDULE "B"           |                                                                                               
|                       | REPORT OF MANAGEMENT AND DIRECTORS ON OIL AND GAS DISCLOSURE (FORM 51-101F3)                  
|                       |                                                                                               
|SCHEDULE "C"           |                                                                                               
|                       | TERMS OF REFERENCE for the AUDIT COMMITTEE                                                    





3


Vermilion Energy Inc.AIF for the year ended December 31, 2013


GLOSSARY
OF TERMS



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

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



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



“AGCA”means Alberta Gas Cost Allowance;



“AIF”means Annual Information Form;



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



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



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



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



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



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



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



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



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



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



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



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



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



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



“IFRS”means International Financial Reporting Standards;



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



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

4


Vermilion Energy Inc.AIF for the year ended December 31, 2013






“NYSE”means New York Stock Exchange;



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



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



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



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



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



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



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



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



“TSX”means the Toronto Stock Exchange;



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



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



“Unitholders”means former unitholders of the Trust;



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



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

5


Vermilion Energy Inc.AIF for the year ended December 31, 2013


Conventions



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



Abbreviations



|Oil
    and Natural Gas Liquids
|-------------------------------
|bbl                            
|Mbbl                           
|bbl/d                          
|NGLs                           
|Natural
    Gas                
|Mcf                            
|MMcf                           
|Mcf/d                          
|MMcf/d                         
|MMBtu                          
|Other                          
|API                            
|°API                           
|                               
|boe                            
|M$                             
|MM$                            
|Mboe                           
|MMboe                          
|WTI                            



Conversion



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



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

6


Vermilion Energy Inc.AIF for the year ended December 31, 2013


SPECIAL
NOTE REGARDING FORWARD LOOKING STATEMENTS

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

| | • | capital
                                         expenditures;
| | - | --------------------------------------------------------------

| | • | business
                                         strategies and objectives;
| | - | ----------------------------------------------------------------------------

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

| | • | petroleum
                                         and natural gas sales;
| | - | -------------------------------------------------------------------------

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

| | • | exploration
                                         and development plans;
| | - | ---------------------------------------------------------------------------

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

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

| | • | royalty
                                         and income tax rates;
| | - | ----------------------------------------------------------------------

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

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

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

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

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

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

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

| | • | the
                                         timely receipt of required regulatory approvals;
| | - | ---------------------------------------------------------------------------------------------

| | • | the
                                         ability of the Company to obtain financing on acceptable terms;
| | - | ------------------------------------------------------------------------------------------------------------

| | • | foreign
                                         currency exchange rates and interest rates;
| | - | --------------------------------------------------------------------------------------------

| | • | future
                                         crude oil, natural gas liquids and natural gas prices; and
| | - | ----------------------------------------------------------------------------------------------------------

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

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

| | • | the
                                         ability of management to execute its business plan;
| | - | ------------------------------------------------------------------------------------------------

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

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

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

| | • | the
                                         uncertainty of reserves estimates and reserves life and estimates of resources and associated
                                         expenditures;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

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

| | • | health,
                                         safety and environmental risks;
| | - | --------------------------------------------------------------------------------

| | • | uncertainties
                                         as to the availability and cost of financing;
| | - | ----------------------------------------------------------------------------------------------------

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

| | • | general
                                         economic and business conditions;
| | - | ----------------------------------------------------------------------------------

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

| | • | uncertainty
                                         in amounts and timing of royalty payments;
| | - | -----------------------------------------------------------------------------------------------

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

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

7


Vermilion Energy Inc.AIF for the year ended December 31, 2013




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

PRESENTATION
OF OIL AND GAS RESERVES AND PRODUCTION INFORMATION



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



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



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



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



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



Contingent
Resources



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



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



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

| | • | project
                                         sanction;
| | - | ----------------------------------------------------------

| | • | access
                                         to capital markets;
| | - | -------------------------------------------------------------------

| | • | shareholder
                                         and regulatory approvals;
| | - | ------------------------------------------------------------------------------

| | • | access
                                         to required services and field development infrastructure;
| | - | ----------------------------------------------------------------------------------------------------------

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

| | • | demonstration
                                         of economic viability;
| | - | -----------------------------------------------------------------------------

| | • | future
                                         drilling program and testing results;
| | - | -------------------------------------------------------------------------------------

| | • | further
                                         reservoir delineation and studies;
| | - | -----------------------------------------------------------------------------------

| | • | facility
                                         design work;
| | - | --------------------------------------------------------------

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

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

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

8


Vermilion Energy Inc.AIF for the year ended December 31, 2013


Prospective
Resources



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



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



NON-GAAP
MEASURES



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



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



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



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



VERMILION
ENERGY INC.



General

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



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



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



9


Vermilion Energy Inc.AIF for the year ended December 31, 2013


Organizational
Structure of the Company



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







Notes:

| | (1) | Subsequent
                                         to year-end 2013, Vermilion completed the acquisition of assets in Germany. See “Three
                                         Year History of Vermilion”.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Vermilion
                                         Energy Ireland Limited is the Irish Branch of a Cayman Islands incorporated company.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------



Summary
Description of the Business

Vermilion Energy Inc.



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



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



10


Vermilion Energy Inc.AIF for the year ended December 31, 2013




Three
Year History of Vermilion



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



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



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



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



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



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



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



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



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



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



11


Vermilion Energy Inc.AIF for the year ended December 31, 2013


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



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



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



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



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



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



12


Vermilion Energy Inc.AIF for the year ended December 31, 2013




NARRATIVE
DESCRIPTION OF THE BUSINESS



Business
Objectives



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



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



Description
of Properties



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



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

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

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

| | • | Netherlands
                                         business unit: Relates to our operations in the Netherlands.
| | - | -----------------------------------------------------------------------------------------------------------------

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



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



Canada
Business Unit



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



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



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



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

13


Vermilion Energy Inc.AIF for the year ended December 31, 2013




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



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



France
Business Unit



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



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



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



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



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



Netherlands
Business Unit



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



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



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



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



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



14


Vermilion Energy Inc.AIF for the year ended December 31, 2013




Australia
Business Unit



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



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



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



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



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



Ireland
Business Unit



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



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

15


Vermilion Energy Inc.AIF for the year ended December 31, 2013


STATEMENT
OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION



Reserves
and Future Net Revenue



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



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



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



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



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



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



The
following tables may not total due to rounding.

16


Vermilion Energy Inc.AIF for the year ended December 31, 2013


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



|                                              | Light
    and Medium Oil | Heavy
    Oil | Natural
    Gas | Natural
    Gas Liquids | BOE           | BOE        
|--------------------------------------------- | ------------------------ | ------------- | --------------- | ----------------------- | ------------- | -----------
|                                              | Gross
    (2)            | Net
    (2)   | Gross
    (2)   | Net
    (2)             | Gross
    (2) | Net
    (2)
|                                              | (Mbbl)                   | (Mbbl)        | (Mbbl)          | (Mbbl)                  | (MMcf)        | (MMcf)     
|Proved
    Developed Producing(3) (5) (6)     |                          |               |                 |                         |               |            
|Australia                                     | 12,824                   | 12,824        | -               | -                       | -             | -          
|Canada                                        | 11,394                   | 9,323         | 13              | 12                      | 64,246        | 58,142     
|France                                        | 30,895                   | 28,741        | -               | -                       | 7,561         | 7,554      
|Ireland                                       | -                        | -             | -               | -                       | -             | -          
|Netherlands                                   | -                        | -             | -               | -                       | 22,794        | 22,794     
|Total
    Proved Developed Producing          | 55,113                   | 50,888        | 13              | 12                      | 94,601        | 88,490     
|Proved
    Developed Non-Producing(3) (5) (7) |                          |               |                 |                         |               |            
|Australia                                     | -                        | -             | -               | -                       | -             | -          
|Canada                                        | 459                      | 392           | -               | -                       | 16,330        | 14,633     
|France                                        | 686                      | 635           | -               | -                       | 3,470         | 3,457      
|Ireland                                       | -                        | -             | -               | -                       | -             | -          
|Netherlands                                   | -                        | -             | -               | -                       | 13,956        | 13,956     
|Total
    Proved Developed Non-Producing      | 1,145                    | 1,027         | -               | -                       | 33,756        | 32,046     
|Proved
    Undeveloped(3) (8)                 |                          |               |                 |                         |               |            
|Australia                                     | 1,200                    | 1,200         | -               | -                       | -             | -          
|Canada                                        | 8,997                    | 7,768         | -               | -                       | 74,385        | 68,950     
|France                                        | 2,810                    | 2,665         | -               | -                       | -             | -          
|Ireland                                       | -                        | -             | -               | -                       | 105,931       | 105,931    
|Netherlands                                   | -                        | -             | -               | -                       | -             | -          
|Total
    Proved Undeveloped                  | 13,007                   | 11,633        | -               | -                       | 180,316       | 174,881    
|Proved
    (3)                                |                          |               |                 |                         |               |            
|Australia                                     | 14,024                   | 14,024        | -               | -                       | -             | -          
|Canada                                        | 20,850                   | 17,483        | 13              | 12                      | 154,961       | 141,725    
|France                                        | 34,391                   | 32,041        | -               | -                       | 11,031        | 11,011     
|Ireland                                       | -                        | -             | -               | -                       | 105,931       | 105,931    
|Netherlands                                   | -                        | -             | -               | -                       | 36,750        | 36,750     
|Total
    Proved                              | 69,265                   | 63,548        | 13              | 12                      | 308,673       | 295,417    
|Probable
    (4)                              |                          |               |                 |                         |               |            
|Australia                                     | 5,439                    | 5,439         | -               | -                       | -             | -          
|Canada                                        | 10,450                   | 8,645         | 3               | 3                       | 90,663        | 81,662     
|France                                        | 18,394                   | 17,178        | -               | -                       | 3,269         | 3,266      
|Ireland                                       | -                        | -             | -               | -                       | 38,707        | 38,707     
|Netherlands                                   | -                        | -             | -               | -                       | 44,592        | 44,592     
|Total
    Probable                            | 34,283                   | 31,262        | 3               | 3                       | 177,231       | 168,227    
|Proved
    Plus Probable(3) (4)               |                          |               |                 |                         |               |            
|Australia                                     | 19,463                   | 19,463        | -               | -                       | -             | -          
|Canada                                        | 31,300                   | 26,128        | 16              | 15                      | 245,624       | 223,387    
|France                                        | 52,785                   | 49,219        | -               | -                       | 14,300        | 14,277     
|Ireland                                       | -                        | -             | -               | -                       | 144,638       | 144,638    
|Netherlands                                   | -                        | -             | -               | -                       | 81,342        | 81,342     
|Total
    Proved Plus Probable                | 103,548                  | 94,810        | 16              | 15                      | 485,904       | 463,644    



Notes:

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

| | (2) | "Gross
                                         Reserves" are Vermilion's working interest (operating or non-operating) share before
                                         deduction of royalties and without including any royalty interests of Vermilion. "Net
                                         Reserves" are Vermilion's working interest (operating or non-operating) share after
                                         deduction of royalty obligations, plus Vermilion's royalty interests in reserves.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | "Proved"
                                         reserves are those reserves that can be estimated with a high degree of certainty to
                                         be recoverable. It is likely that the actual remaining quantities recovered will exceed
                                         the estimated proved reserves.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | "Probable"
                                         reserves are those additional reserves that are less certain to be recovered than proved
                                         reserves. It is equally likely that the actual remaining quantities recovered will be
                                         greater or less than the sum of the estimated proved plus probable reserves.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | "Developed"
                                         reserves are those reserves that are expected to be recovered from existing wells and
                                         installed facilities or, if facilities have not been installed, that would involve a
                                         low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves
                                         on production.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | "Developed
                                         Producing" reserves are those reserves that are expected to be recovered from completion
                                         intervals open at the time of the estimate. These reserves may be currently producing
                                         or, if shut-in, they must have previously been on production, and the date of resumption
                                         of production must be known with reasonable certainty.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (7) | "Developed
                                         Non-Producing" reserves are those reserves that either have not been on production,
                                         or have previously been on production, but are shut in, and the date of resumption of
                                         production is unknown.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (8) | "Undeveloped"
                                         reserves are those reserves expected to be recovered from known accumulations where a
                                         significant expenditure (for example, when compared to the cost of drilling a well) is
                                         required to render them capable of production. They must fully meet the requirements
                                         of the reserves classification (proved, probable, possible) to which they are assigned.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17


Vermilion Energy Inc.AIF for the year ended December 31, 2013






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



|                                              | Before
    Deducting Future Income Taxes Discounted At | After
    Deducting Future Income Taxes Discounted At
|--------------------------------------------- | ------------------------------------------------------ | -----------------------------------------------------
|(M$)                                          | 0%                                                     | 5%                                                   
|Proved
    Developed Producing(2) (4) (5)     |                                                        |                                                      
|Australia                                     | 652,521                                                | 585,705                                              
|Canada                                        | 917,542                                                | 732,428                                              
|France                                        | 1,922,512                                              | 1,441,270                                            
|Ireland                                       | -                                                      | -                                                    
|Netherlands                                   | 171,171                                                | 166,503                                              
|Total
    Proved Developed Producing          | 3,663,746                                              | 2,925,906                                            
|Proved
    Developed Non-Producing(2) (4) (6) |                                                        |                                                      
|Australia                                     | -                                                      | -                                                    
|Canada                                        | 70,195                                                 | 55,001                                               
|France                                        | 58,478                                                 | 44,933                                               
|Ireland                                       | -                                                      | -                                                    
|Netherlands                                   | 58,744                                                 | 42,746                                               
|Total
    Proved Developed Non-Producing      | 187,417                                                | 142,680                                              
|Proved
    Undeveloped(2) (7)                 |                                                        |                                                      
|Australia                                     | 60,146                                                 | 46,820                                               
|Canada                                        | 746,436                                                | 530,852                                              
|France                                        | 186,477                                                | 149,805                                              
|Ireland                                       | 716,287                                                | 559,569                                              
|Netherlands                                   | -                                                      | -                                                    
|Total
    Proved Undeveloped                  | 1,709,346                                              | 1,287,046                                            
|Proved
    (2)                                |                                                        |                                                      
|Australia                                     | 712,667                                                | 632,525                                              
|Canada                                        | 1,734,173                                              | 1,318,281                                            
|France                                        | 2,167,467                                              | 1,636,008                                            
|Ireland                                       | 716,287                                                | 559,569                                              
|Netherlands                                   | 229,915                                                | 209,249                                              
|Total
    Proved                              | 5,560,509                                              | 4,355,632                                            
|Probable
    (3)                              |                                                        |                                                      
|Australia                                     | 342,887                                                | 268,934                                              
|Canada                                        | 1,066,302                                              | 679,218                                              
|France                                        | 1,328,916                                              | 752,046                                              
|Ireland                                       | 413,592                                                | 250,341                                              
|Netherlands                                   | 379,491                                                | 280,351                                              
|Total
    Probable                            | 3,531,188                                              | 2,230,890                                            
|Proved
    Plus Probable(2) (3)               |                                                        |                                                      
|Australia                                     | 1,055,554                                              | 901,459                                              
|Canada                                        | 2,800,475                                              | 1,997,499                                            
|France                                        | 3,496,383                                              | 2,388,054                                            
|Ireland                                       | 1,129,879                                              | 809,910                                              
|Netherlands                                   | 609,406                                                | 489,600                                              
|Total
    Proved Plus Probable                | 9,091,697                                              | 6,586,522                                            



Notes:

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

| | (2) | "Proved"
                                         reserves are those reserves that can be estimated with a high degree of certainty to
                                         be recoverable. It is likely that the actual remaining quantities recovered will exceed
                                         the estimated proved reserves.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | "Probable"
                                         reserves are those additional reserves that are less certain to be recovered than proved
                                         reserves. It is equally likely that the actual remaining quantities recovered will be
                                         greater or less than the sum of the estimated proved plus probable reserves.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | "Developed"
                                         reserves are those reserves that are expected to be recovered from existing wells and
                                         installed facilities or, if facilities have not been installed, that would involve a
                                         low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves
                                         on production.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | "Developed
                                         Producing" reserves are those reserves that are expected to be recovered from completion
                                         intervals open at the time of the estimate. These reserves may be currently producing
                                         or, if shut-in, they must have previously been on production, and the date of resumption
                                         of production must be known with reasonable certainty.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | "Developed
                                         Non-Producing" reserves are those reserves that either have not been on production,
                                         or have previously been on production, but are shut in, and the date of resumption of
                                         production is unknown.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (7) | "Undeveloped"
                                         reserves are those reserves expected to be recovered from known accumulations where a
                                         significant expenditure (for example, when compared to the cost of drilling a well) is
                                         required to render them capable of production. They must fully meet the requirements
                                         of the reserves classification (proved, probable, possible) to which they are assigned.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

18


Vermilion Energy Inc.AIF for the year ended December 31, 2013


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



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



Notes:

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

| | (2) | "Proved"
                                         reserves are those reserves that can be estimated with a high degree of certainty to
                                         be recoverable. It is likely that the actual remaining quantities recovered will exceed
                                         the estimated proved reserves.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | "Probable"
                                         reserves are those additional reserves that are less certain to be recovered than proved
                                         reserves. It is equally likely that the actual remaining quantities recovered will be
                                         greater or less than the sum of the estimated proved plus probable reserves.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

19


Vermilion Energy Inc.AIF for the year ended December 31, 2013


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



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



Notes:

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

| | (2) | Other
                                         Company revenue and costs not related to a specific production group have been allocated
                                         proportionately to production groups. Unit values are based on Company Net Reserves.
                                         Net present values of reserves categories are an approximation based on major products.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Including
                                         solution gas and other by-products.
| | --- | --------------------------------------------------------------------------------------

| | (4) | Including
                                         by-products but excluding solution gas.
| | --- | ------------------------------------------------------------------------------------------

20


Vermilion Energy Inc.AIF for the year ended December 31, 2013


Forecast
Prices used in Estimates(1)



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



Note:

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



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



Reconciliations
of Changes in Reserves

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



21


Vermilion Energy Inc.AIF for the year ended December 31, 2013


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



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





|CANADA                             | Total
    Oil | Light
    and Medium Oil     | Heavy
    Oil        | Natural
    Gas Liquids
|---------------------------------- | ------------- | ---------------------------- | -------------------- | -----------------------
|                                   |               |                              | Proved
    +         |                        
|Proved
    Probable P+P(1) (2)     | Proved        | Probable                     | Probable             | Proved                 
|Factors                            | (Mbbl)        | (Mbbl)                       | (Mbbl)               | (Mbbl)                 
|At
    December 31, 2012           | 18,132        | 14,102                       | 32,234               | 18,115                 
|Discoveries                        | -             | -                            | -                    | -                      
|Extensions
    & Improved Recovery | 1,056         | 1,487                        | 2,543                | 1,056                  
|Technical
    Revisions            | 4,736         | (5,136)                      | (400)                | 4,736                  
|Acquisitions                       | -             | -                            | -                    | -                      
|Dispositions                       | -             | -                            | -                    | -                      
|Economic
    Factors               | -             | -                            | -                    | -                      
|Production                         | (3,061)       | -                            | (3,061)              | (3,057)                
|At
    December 31, 2013           | 20,863        | 10,453                       | 31,316               | 20,850                 
|                                   | Total
    Gas | Conventional
    Natural Gas | Coal
    Bed Methane | BOE                    
|                                   |               |                              | Proved
    +         |                        
|Proved
    Probable P+P(1) (2)     | Proved        | Probable                     | Probable             | Proved                 
|Factors                            | (MMcf)        | (MMcf)                       | (MMcf)               | (MMcf)                 
|At
    December 31, 2012           | 114,014       | 65,654                       | 179,668              | 91,978                 
|Discoveries                        | -             | -                            | -                    | -                      
|Extensions
    & Improved Recovery | 41,210        | 35,959                       | 77,169               | 41,210                 
|Technical
    Revisions            | 15,209        | (10,950)                     | 4,259                | 11,942                 
|Acquisitions                       | -             | -                            | -                    | -                      
|Dispositions                       | -             | -                            | -                    | -                      
|Economic
    Factors               | -             | -                            | -                    | -                      
|Production                         | (15,472)      | -                            | (15,472)             | (14,072)               
|At
    December 31, 2013           | 154,961       | 90,663                       | 245,624              | 131,058                



22


Vermilion Energy Inc.AIF for the year ended December 31, 2013






|FRANCE                             | Total
    Oil | Light
    and Medium Oil     | Heavy
    Oil        | Natural
    Gas Liquids
|---------------------------------- | ------------- | ---------------------------- | -------------------- | -----------------------
|                                   |               |                              | Proved
    +         |                        
|Proved
    Probable P+P(1) (2)     | Proved        | Probable                     | Probable             | Proved                 
|Factors                            | (Mbbl)        | (Mbbl)                       | (Mbbl)               | (Mbbl)                 
|At
    December 31, 2012           | 32,516        | 14,263                       | 46,779               | 32,516                 
|Discoveries                        | -             | -                            | -                    | -                      
|Extensions
    & Improved Recovery | 3,194         | 3,910                        | 7,104                | 3,194                  
|Technical
    Revisions            | 2,650         | 221                          | 2,871                | 2,650                  
|Acquisitions                       | -             | -                            | -                    | -                      
|Dispositions                       | -             | -                            | -                    | -                      
|Economic
    Factors               | -             | -                            | -                    | -                      
|Production                         | (3,969)       | -                            | (3,969)              | (3,969)                
|At
    December 31, 2013           | 34,391        | 18,394                       | 52,785               | 34,391                 
|                                   | Total
    Gas | Conventional
    Natural Gas | Coal
    Bed Methane | BOE                    
|                                   |               |                              | Proved
    +         |                        
|Proved
    Probable P+P(1) (2)     | Proved        | Probable                     | Probable             | Proved                 
|Factors                            | (MMcf)        | (MMcf)                       | (MMcf)               | (MMcf)                 
|At
    December 31, 2012           | 1,377         | 24                           | 1,401                | 1,377                  
|Discoveries                        | -             | -                            | -                    | -                      
|Extensions
    & Improved Recovery | 3,470         | 1,290                        | 4,760                | 3,470                  
|Technical
    Revisions            | 7,425         | 1,955                        | 9,380                | 7,425                  
|Acquisitions                       | -             | -                            | -                    | -                      
|Dispositions                       | -             | -                            | -                    | -                      
|Economic
    Factors               | -             | -                            | -                    | -                      
|Production                         | (1,241)       | -                            | (1,241)              | (1,241)                
|At
    December 31, 2013           | 11,031        | 3,269                        | 14,300               | 11,031                 





|IRELAND                            | Total
    Oil | Light
    and Medium Oil     | Heavy
    Oil        | Natural
    Gas Liquids
|---------------------------------- | ------------- | ---------------------------- | -------------------- | -----------------------
|                                   |               |                              | Proved
    +         |                        
|Proved
    Probable P+P(1) (2)     | Proved        | Probable                     | Probable             | Proved                 
|Factors                            | (Mbbl)        | (Mbbl)                       | (Mbbl)               | (Mbbl)                 
|At
    December 31, 2012           | -             | -                            | -                    | -                      
|Discoveries                        | -             | -                            | -                    | -                      
|Extensions
    & Improved Recovery | -             | -                            | -                    | -                      
|Technical
    Revisions            | -             | -                            | -                    | -                      
|Acquisitions                       | -             | -                            | -                    | -                      
|Dispositions                       | -             | -                            | -                    | -                      
|Economic
    Factors               | -             | -                            | -                    | -                      
|Production                         | -             | -                            | -                    | -                      
|At
    December 31, 2013           | -             | -                            | -                    | -                      
|                                   | Total
    Gas | Conventional
    Natural Gas | Coal
    Bed Methane | BOE                    
|                                   |               |                              | Proved
    +         |                        
|Proved
    Probable P+P(1) (2)     | Proved        | Probable                     | Probable             | Proved                 
|Factors                            | (MMcf)        | (MMcf)                       | (MMcf)               | (MMcf)                 
|At
    December 31, 2012           | 91,954        | 35,079                       | 127,033              | 91,954                 
|Discoveries                        | -             | -                            | -                    | -                      
|Extensions
    & Improved Recovery | 3,578         | 929                          | 4,507                | 3,578                  
|Technical
    Revisions            | 10,399        | 2,699                        | 13,098               | 10,399                 
|Acquisitions                       | -             | -                            | -                    | -                      
|Dispositions                       | -             | -                            | -                    | -                      
|Economic
    Factors               | -             | -                            | -                    | -                      
|Production                         | -             | -                            | -                    | -                      
|At
    December 31, 2013           | 105,931       | 38,707                       | 144,638              | 105,931                



23


Vermilion Energy Inc.AIF for the year ended December 31, 2013






|NETHERLANDS                        | Total
    Oil | Light
    and Medium Oil     | Heavy
    Oil        | Natural
    Gas Liquids
|---------------------------------- | ------------- | ---------------------------- | -------------------- | -----------------------
|                                   |               |                              | Proved
    +         |                        
|Proved
    Probable P+P(1) (2)     | Proved        | Probable                     | Probable             | Proved                 
|Factors                            | (Mbbl)        | (Mbbl)                       | (Mbbl)               | (Mbbl)                 
|At
    December 31, 2012           | -             | -                            | -                    | -                      
|Discoveries                        | -             | -                            | -                    | -                      
|Extensions
    & Improved Recovery | -             | -                            | -                    | -                      
|Technical
    Revisions            | -             | -                            | -                    | -                      
|Acquisitions                       | -             | -                            | -                    | -                      
|Dispositions                       | -             | -                            | -                    | -                      
|Economic
    Factors               | -             | -                            | -                    | -                      
|Production                         | -             | -                            | -                    | -                      
|At
    December 31, 2013           | -             | -                            | -                    | -                      
|                                   | Total
    Gas | Conventional
    Natural Gas | Coal
    Bed Methane | BOE                    
|                                   |               |                              | Proved
    +         |                        
|Proved
    Probable P+P(1) (2)     | Proved        | Probable                     | Probable             | Proved                 
|Factors                            | (MMcf)        | (MMcf)                       | (MMcf)               | (MMcf)                 
|At
    December 31, 2012           | 36,606        | 33,277                       | 69,883               | 36,606                 
|Discoveries                        | -             | -                            | -                    | -                      
|Extensions
    & Improved Recovery | 1,445         | 2,799                        | 4,244                | 1,445                  
|Technical
    Revisions            | 7,906         | (1,602)                      | 6,304                | 7,906                  
|Acquisitions                       | 3,721         | 10,118                       | 13,839               | 3,721                  
|Dispositions                       | -             | -                            | -                    | -                      
|Economic
    Factors               | -             | -                            | -                    | -                      
|Production                         | (12,928)      | -                            | (12,928)             | (12,928)               
|At
    December 31, 2013           | 36,750        | 44,592                       | 81,342               | 36,750                 



|TOTAL
    COMPANY                  | Total
    Oil | Light
    and Medium Oil     | Heavy
    Oil        | Natural
    Gas Liquids
|---------------------------------- | ------------- | ---------------------------- | -------------------- | -----------------------
|                                   |               |                              | Proved
    +         |                        
|Proved
    Probable P+P(1) (2)     | Proved        | Probable                     | Probable             | Proved                 
|Factors                            | (Mbbl)        | (Mbbl)                       | (Mbbl)               | (Mbbl)                 
|At
    December 31, 2012           | 60,975        | 35,181                       | 96,156               | 60,958                 
|Discoveries                        | -             | -                            | -                    | -                      
|Extensions
    & Improved Recovery | 7,550         | 4,747                        | 12,297               | 7,550                  
|Technical
    Revisions            | 10,149        | (5,642)                      | 4,507                | 10,149                 
|Acquisitions                       | -             | -                            | -                    | -                      
|Dispositions                       | -             | -                            | -                    | -                      
|Economic
    Factors               | -             | -                            | -                    | -                      
|Production                         | (9,396)       | -                            | (9,396)              | (9,392)                
|At
    December 31, 2013           | 69,278        | 34,286                       | 103,564              | 69,265                 
|                                   | Total
    Gas | Conventional
    Natural Gas | Coal
    Bed Methane | BOE                    
|                                   |               |                              | Proved
    +         |                        
|Proved
    Probable P+P(1) (2)     | Proved        | Probable                     | Probable             | Proved                 
|Factors                            | (MMcf)        | (MMcf)                       | (MMcf)               | (MMcf)                 
|At
    December 31, 2012           | 243,951       | 134,034                      | 377,985              | 221,915                
|Discoveries                        | -             | -                            | -                    | -                      
|Extensions
    & Improved Recovery | 49,703        | 40,977                       | 90,680               | 49,703                 
|Technical
    Revisions            | 40,939        | (7,898)                      | 33,041               | 37,672                 
|Acquisitions                       | 3,721         | 10,118                       | 13,839               | 3,721                  
|Dispositions                       | -             | -                            | -                    | -                      
|Economic
    Factors               | -             | -                            | -                    | -                      
|Production                         | (29,641)      | -                            | (29,641)             | (28,241)               
|At
    December 31, 2013           | 308,673       | 177,231                      | 485,904              | 284,770                



Notes:

| | (1) | "Proved"
                                         reserves are those reserves that can be estimated with a high degree of certainty to
                                         be recoverable. It is likely that the actual remaining quantities recovered will exceed
                                         the estimated proved reserves.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | "Probable"
                                         reserves are those additional reserves that are less certain to be recovered than proved
                                         reserves. It is equally likely that the actual remaining quantities recovered will be
                                         greater or less than the sum of the estimated proved plus probable reserves.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | The
                                         pricing assumptions used in the GLJ Report with respect to net values of future net revenue
                                         (forecast) as well as the inflation rates used for operating and capital costs are set
                                         forth above. See “Forecast Prices used in Estimates”. The NGL price is an
                                         aggregate of the individual natural gas liquids prices used in the Total Proved plus
                                         Probable evaluation. GLJ is an independent qualified reserves evaluator appointed pursuant
                                         to NI 51-101.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

24


Vermilion Energy Inc.AIF for the year ended December 31, 2013


Undeveloped
Reserves



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



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



Timing
of Initial Undeveloped Reserves Assignment



Undeveloped
Reserves Attributed in Current Year



|                  | Light
    & Medium Oil | Natural
    Gas | Coalbed
    Methane Gas | Natural
    Gas Liquids | Total
    Oil Equivalent
|----------------- | ---------------------- | --------------- | ----------------------- | ----------------------- | ------------------------
|                  | (Mbbl)                 | (MMcf)          | (MMcf)                  | (Mbbl)                  | (Mboe)                  
|                  | First                  |                 | First                   |                         | First                   
|                  | Attributed
    (1)     | Booked          | Attributed
    (1)      | Booked                  | Attributed
    (1)      
|Proved            |                        |                 |                         |                         |                         
|Prior
    to 2011 | 4,627                  | 6,588           | 6,454                   | 107,633                 | 4,943                   
|2011              | 3,365                  | 8,127           | 6,246                   | 114,422                 | -                       
|2012              | 3,378                  | 9,062           | 10,998                  | 121,962                 | -                       
|2013              | 4,293                  | 13,007          | 38,720                  | 167,927                 | 8,191                   
|Probable          |                        |                 |                         |                         |                         
|Prior
    to 2011 | 6,306                  | 12,417          | 8,106                   | 38,296                  | 2,435                   
|2011              | 5,707                  | 15,734          | 11,191                  | 47,687                  | -                       
|2012              | 3,910                  | 17,536          | 8,714                   | 75,358                  | -                       
|2013              | 7,967                  | 17,797          | 53,927                  | 115,066                 | 5,338                   



Note:

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

25


Vermilion Energy Inc.AIF for the year ended December 31, 2013


Future
Development Costs(1)



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



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



Note:

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

26


Vermilion Energy Inc.AIF for the year ended December 31, 2013




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



Oil
and Gas Properties and Wells (1) (2)



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



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



Notes:

| | (1) | Well
                                         counts are based on wellbores.
| | --- | ----------------------------------------------------------------------------

| | (2) | Wells
                                         for Australia and Ireland are located offshore.
| | --- | ----------------------------------------------------------------------------------------------

| | (3) | "Gross"
refers to the total wells in which Vermilion has an interest, directly or indirectly.
| | --- | ---------------------------------------------------------------------------------------------

| | (4) | "Net"
                                         refers to the total wells in which Vermilion has an interest, directly or indirectly,
                                         multiplied by the percentage working interest owned by Vermilion, directly or indirectly,
                                         therein.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Costs
Incurred



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



|            | Acquisition
    Costs |           
|----------- | --------------------- | ----------
|            | Proved                | Unproved  
|(M$)        | Properties
    (1)    | Properties
|Australia   | -                     | -         
|Canada      | -                     | -         
|France      | -                     | -         
|Ireland     | -                     | -         
|Netherlands | 24,124                | -         
|Total       | 24,124                | -         



Note:

(1)Includes
costs of acquiring undeveloped properties.



27


Vermilion Energy Inc.AIF for the year ended December 31, 2013


Acreage



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



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



Notes:

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

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

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



Exploration
and Development Activities



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



|                    | Exploration
    Wells | Development
    Wells
|------------------- | --------------------- | ---------------------
|                    | Gross
    (1)         | Net
    (2)          
|Australia           |                       |                      
|Oil                 | -                     | -                    
|Gas                 | -                     | -                    
|Standing            | -                     | -                    
|Dry
    Holes       | -                     | -                    
|Total
    Completed | -                     | -                    
|Canada              |                       |                      
|Oil                 | -                     | -                    
|Gas                 | 2.0                   | 2.0                  
|Standing            | -                     | -                    
|Dry
    Holes       | -                     | -                    
|Total
    Completed | 2.0                   | 2.0                  
|France              |                       |                      
|Oil                 | -                     | -                    
|Gas                 | -                     | -                    
|Service             | -                     | -                    
|Standing            | -                     | -                    
|Dry
    Holes       | -                     | -                    
|Total
    Completed | -                     | -                    
|Ireland             |                       |                      
|Oil                 | -                     | -                    
|Gas                 | -                     | -                    
|Standing            | -                     | -                    
|Dry
    Holes       | -                     | -                    
|Total
    Completed | -                     | -                    
|Netherlands         |                       |                      
|Oil                 | -                     | -                    
|Gas                 | -                     | -                    
|Standing            | -                     | -                    
|Dry
    Holes       | -                     | -                    
|Total
    Completed | -                     | -                    
|Total
    Company   |                       |                      
|Oil                 | -                     | -                    
|Gas                 | 2.0                   | 2.0                  
|Service             | -                     | -                    
|Standing            | -                     | -                    
|Dry
    Holes       | -                     | -                    
|Total
    Completed | 2.0                   | 2.0                  



Notes:

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

| | (2) | "Net"
                                         refers to the total wells in which Vermilion has an interest, directly or indirectly,
                                         multiplied by the percentage working interest owned by Vermilion, directly or indirectly
                                         therein.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

28


Vermilion Energy Inc.AIF for the year ended December 31, 2013






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



Properties
with No Attributed Reserves

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



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



Notes:

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

| | (2) | "Net"
                                         refers to the total acres in which Vermilion has an interest, directly or indirectly,
                                         multiplied by the percentage working interest owned by Vermilion, directly or indirectly
                                         therein.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



Contingent
and Prospective Resources



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



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



29


Vermilion Energy Inc.AIF for the year ended December 31, 2013


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



|                         | Gross    |  | Gross                    |                           | Net      
|------------------------ | -------- |  | ------------------------ | ------------------------- | ---------
|                         | Reserves |  | Contingent
    Resources | Prospective
    Resources |          
|                         | P+P      |  | Low                      | Best                      | High     
|Oil
    and NGLs         | (Mbbl)   |  | (Mbbl)                   | (Mbbl)                    | (Mbbl)   
|Australia                | 19,463   |  | 1,250                    | 3,900                     | 6,200    
|Canada                   | 45,168   |  | 28,377                   | 84,022                    | 128,092  
|France                   | 52,785   |  | 8,463                    | 21,203                    | 33,879   
|Ireland                  | -        |  | -                        | -                         | -        
|Netherlands              | 160      |  | 13                       | 41                        | 1,112    
|Total                    | 117,576  |  | 38,103                   | 109,166                   | 169,283  
|                         |          |  |                          |                           |          
|                         | Gross    |  | Gross                    |                           | Net      
|                         | Reserves |  | Contingent
    Resources | Prospective
    Resources |          
|                         | P+P      |  | Low                      | Best                      | High     
|Natural
    Gas          | (MMcf)   |  | (MMcf)                   | (MMcf)                    | (MMcf)   
|Australia                | -        |  | -                        | -                         | -        
|Canada                   | 245,624  |  | 204,370                  | 704,875                   | 1,023,206
|France                   | 14,300   |  | 653                      | 816                       | 1,020    
|Ireland                  | 144,638  |  | 5,807                    | 18,780                    | 29,587   
|Netherlands              | 81,342   |  | 6,874                    | 21,627                    | 40,864   
|Total                    | 485,904  |  | 217,704                  | 746,098                   | 1,094,677
|                         |          |  |                          |                           |          
|                         | Gross    |  | Gross                    |                           | Net      
|                         | Reserves |  | Contingent
    Resources | Prospective
    Resources |          
|                         | P+P      |  | Low                      | Best                      | High     
|Total
    Oil Equivalent | (Mboe)   |  | (Mboe)                   | (Mboe)                    | (Mboe)   
|Australia                | 19,463   |  | 1,250                    | 3,900                     | 6,200    
|Canada                   | 86,105   |  | 62,439                   | 201,502                   | 298,626  
|France                   | 55,168   |  | 8,571                    | 21,339                    | 34,049   
|Ireland                  | 24,106   |  | 968                      | 3,130                     | 4,931    
|Netherlands              | 13,717   |  | 1,159                    | 3,646                     | 7,922    
|Total                    | 198,560  |  | 74,387                   | 233,517                   | 351,728  



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



|Contingent
    Resources  | Before
    Income Taxes, Discounted at(5) | After
    Income Taxes, Discounted at (5)
|------------------------- | ----------------------------------------- | -----------------------------------------
|(M$)                      | 0%                                        | 5%                                       
|Low
    Estimate (C1)(6)  |                                           |                                          
|Australia                 | 46,057                                    | 30,848                                   
|Canada                    | 1,338,563                                 | 750,862                                  
|France                    | 500,810                                   | 299,434                                  
|Ireland                   | 23,215                                    | 7,833                                    
|Netherlands               | 24,785                                    | 13,825                                   
|Total
    Low Estimate    | 1,933,430                                 | 1,102,802                                
|Best
    Estimate (C2)(7) |                                           |                                          
|Australia                 | 270,083                                   | 190,153                                  
|Canada                    | 4,757,350                                 | 2,548,856                                
|France                    | 1,219,657                                 | 706,205                                  
|Ireland                   | 142,895                                   | 49,811                                   
|Netherlands               | 105,017                                   | 65,145                                   
|Total
    Best Estimate   | 6,495,002                                 | 3,560,170                                
|High
    Estimate (C3)(8) |                                           |                                          
|Australia                 | 533,218                                   | 375,068                                  
|Canada                    | 8,520,437                                 | 4,598,611                                
|France                    | 2,268,722                                 | 1,266,202                                
|Ireland                   | 324,184                                   | 99,583                                   
|Netherlands               | 287,748                                   | 191,967                                  
|Total
    High Estimate   | 11,934,309                                | 6,531,431                                



30


Vermilion Energy Inc.AIF for the year ended December 31, 2013






|Prospective
    Resources  | Before
    Income Taxes, Discounted at(5) | After
    Income Taxes, Discounted at(5)
|-------------------------- | ----------------------------------------- | ----------------------------------------
|(M$)                       | 0%                                        | 5%                                      
|Low
    Estimate (Pr1)(6)  |                                           |                                         
|Australia                  | -                                         | -                                       
|Canada                     | 492,575                                   | 236,916                                 
|France                     | 10,422                                    | 8,547                                   
|Ireland                    | -                                         | -                                       
|Netherlands                | 848,414                                   | 416,721                                 
|Total
    Low Estimate     | 1,351,411                                 | 662,184                                 
|Best
    Estimate (Pr2)(7) |                                           |                                         
|Australia                  | 106,915                                   | 64,513                                  
|Canada                     | 11,548,288                                | 4,767,690                               
|France                     | 150,457                                   | 93,762                                  
|Ireland                    | -                                         | -                                       
|Netherlands                | 2,078,111                                 | 1,132,690                               
|Total
    Best Estimate    | 13,883,771                                | 6,058,655                               
|High
    Estimate (Pr3)(8) |                                           |                                         
|Australia                  | 334,608                                   | 191,460                                 
|Canada                     | 27,794,746                                | 11,888,521                              
|France                     | 758,262                                   | 428,747                                 
|Ireland                    | -                                         | -                                       
|Netherlands                | 4,736,149                                 | 2,635,340                               
|Total
    High Estimate    | 33,623,765                                | 15,144,068                              



Notes:

| | (1) | The
                                         contingent and prospective resource assessments were prepared by GLJ in accordance with
                                         the definitions, standards and procedures contained in the COGEH and NI 51-101. Contingent
                                         resource is defined in the COGEH as those quantities of petroleum estimated to be potentially
                                         recoverable from known accumulations using established technology or technology under
                                         development, but which do not currently qualify as reserves or commercially recoverable
                                         due to one or more contingencies. See "Presentation of Oil and Gas Reserves and
                                         Production Information - Contingent Resources" for the primary contingencies which
                                         prevent the classification of the resources as reserves. There is no certainty that it
                                         will be commercially viable to produce any portion of the contingent resources or that
                                         Vermilion will produce any portion of the volumes currently classified as contingent
                                         resources. The estimates of contingent resources involve implied assessment, based on
                                         certain estimates and assumptions, that the resources described exists in the quantities
                                         predicted or estimated, as at a given date, and that the resources can be profitably
                                         produced in the future. The net present value of the future net revenue from the contingent
                                         resources does not necessarily represent the fair market value of the contingent resources.
                                         Actual contingent resources (and any volumes that may be reclassified as reserves) and
                                         future production therefrom may be greater than or less than the estimates provided herein.
                                         Prospective resource is defined in the COGEH are those quantities of petroleum estimated,
                                         as of a given date, to be potentially recoverable from undiscovered accumulations by
                                         application of future development projects. There is no certainty that any portion of
                                         the prospective resources will be discovered. If discovered, there is no certainty that
                                         it will be commercially viable to produce any portion of the prospective resources or
                                         that Vermilion will produce any portion of the volumes currently classified as prospective
                                         resources. The estimates of prospective resources involve implied assessment, based on
                                         certain estimates and assumptions, that the resources described exists in the quantities
                                         predicted or estimated and that the resources can be profitably produced in the future.
                                         The net present value of the future net revenue from the prospective resources does
                                         not necessarily represent the fair market value of the prospective resources. The
                                         recovery and resources estimates provided herein are estimates only. Actual prospective
                                         resources (and any volumes that may be reclassified as reserves or contingent resources)
                                         and future production from such prospective resources may be greater than or less than
                                         the estimates provided herein.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | GLJ
                                         prepared the estimates of contingent and prospective resources shown for each property
                                         using deterministic principles and methods. Probabilistic aggregation of the low and
                                         high property estimates shown in the table might produce different total volumes than
                                         the arithmetic sums shown in the table.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | The
                                         forecast price and cost assumptions utilized in the year-end 2013 reserves report were
                                         also utilized by GLJ in preparing the contingent resource and prospective resource assessments.
                                         See ”GLJ December 31, 2013 Forecast Prices” in this Annual Information Form.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | "Gross” Reserves or Contingent Resources
or Prospective Resources are Vermilion's working interest (operating or non-operating) share before deduction of royalties and
without including any royalty interests of Vermilion. "Net” Reserves or Contingent Resources or Prospective Resources
are Vermilion's working interest (operating or non-operating) share after deduction of royalty obligations, plus Vermilion's royalty
interests in Reserves or Contingent Resources or Prospective Resources.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | The
                                         net present value of future net revenue attributable to the contingent or prospective
                                         resources does not necessarily represent the fair market value of the contingent or prospective
                                         resources. Estimated abandonment and reclamation costs have been included in the evaluation.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | Low
                                         estimate is considered to be a conservative estimate of the quantity of contingent (C1)
                                         or prospective (Pr1) resources that will actually be recovered. It is likely that the
                                         actual remaining quantities recovered will exceed the low estimate. Those contingent
                                         or prospective resources at the low end of the estimate range have the highest degree
                                         of certainty - a 90% confidence level - that the actual quantities recovered will be
                                         equal or exceed the estimate.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (7) | Best
                                         estimate is considered to be the best estimate of the quantity of contingent (C2) or
                                         prospective (Pr2) resources that will actually be recovered. It is equally likely that
                                         the actual remaining quantities recovered will be greater or less than the best estimate.
                                         Those contingent or prospective resources that fall within the best estimate have a 50%
                                         confidence level that the actual quantities recovered will be equal or exceed the estimate.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (8) | High
                                         estimate is considered to be an optimistic estimate of the quantity of contingent (C3)
                                         or prospective (Pr3) resources that will actually be recovered. It is unlikely that the
                                         actual remaining quantities of contingent or prospective resources recovered will meet
                                         or exceed the high estimate. Those contingent or prospective resources at the high end
                                         of the estimate range have a lower degree of certainty - a 10% confidence level - that
                                         the actual quantities recovered will equal or exceed the estimate.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

31


Vermilion Energy Inc.AIF for the year ended December 31, 2013




Abandonment
and Reclamation Costs



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



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



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



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



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



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



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



Tax
Information



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



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

32


Vermilion Energy Inc.AIF for the year ended December 31, 2013






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



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



Notes:

| | (1) | Development
                                         expenditures and losses are deductible at 100% against taxable income.
| | --- | ---------------------------------------------------------------------------------------------------------------------------

| | (2) | Deduction
                                         calculated using various declining balance rates.
| | --- | ----------------------------------------------------------------------------------------------------

| | (3) | Deduction
                                         calculated using a combination of straight-line over the assets life and unit of production
                                         method.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Deduction
                                         calculated using a unit of production method.
| | --- | ------------------------------------------------------------------------------------------------



Production
Estimates

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



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



33


Vermilion Energy Inc.AIF for the year ended December 31, 2013




Production
History

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



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

34


Vermilion Energy Inc.AIF for the year ended December 31, 2013




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



Notes:

| | (1) | Under
                                         IFRS, Vermilion accounts for PRRT as an income tax and accordingly, royalty netbacks
                                         exclude PRRT. Prior to adopting IFRS, Vermilion included PRRT within royalties.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Includes
                                         Ireland transportation costs.
| | --- | -------------------------------------------------------------------------------

35


Vermilion Energy Inc.AIF for the year ended December 31, 2013


Marketing



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



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



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



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



Notes:

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

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

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



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

36


Vermilion Energy Inc.AIF for the year ended December 31, 2013


ADDITIONAL
INFORMATION RESPECTING VERMILION ENERGY INC.



Management



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



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



|DirectorsName andMunicipality ofResidence                                                                                                                                                                                                                      | Committee(s)            | Office
    Held                                                                                             | Year
    FirstElected or Appointedas Director | Principal
    Occupation During the Past Five Years                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------- | ----------------------------------------------------------------------------------------------------------- | --------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Lorenzo
                                         DonadeoCalgary, Alberta
        Canada                                                                                                                                                                        |                         | Chief
                                         Executive Officer
        and
        Director               | 1994                                          | Since
                                         March 2014, Chief Executive Officer of Vermilion
        2003
        - March 2014, President and Chief Executive Officer of Vermilion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|W.
                                         Kenneth Davidson Oakville, Ontario
        Canada                                                                                                                                                                  | (2)
    (3)             | Director                                                                                                    | 2005                                          | Since
                                         2000, Director of Millar Western Forest Products Ltd., a private forest products company
        
        2009
        to 2011, Director of Realex Properties Corp., a public real estate company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Claudio
                                         A. GhersinichCalgary, Alberta
        Canada                                                                                                                                                                  | (2)
    (5)             | Director                                                                                                    | 1994                                          | Since
                                         2011, Chairman of ArPetrol Energy Inc., a public oil and gas company
        Since
        2010, Director of Valeura Energy Inc., a public oil and gas company
        Since
        2005, President of Carrera Investments Corp., a private investment company                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Joseph
                                         F. KilliCalgary, Alberta
        Canada                                                                                                                                                                        | (2)
    (3)             | Director                                                                                                    | 1999                                          | Since
                                         2011, Director of Network Capital Management Inc., a private investment management company
        Since
        2008, President and Chief Executive Officer and Director of Wilmington Capital Management Inc., a public investment company
        Since
        1993, President of Rosebridge Capital Corp. Inc., a private real estate investment company
        
        January
        2011 to December 2011, Executive Chairman of Parkbridge Lifestyle Communities Inc., a private real estate company2005 to 2011, Vice Chairman and Director of Realex Properties Corp., a public real estate company2004 to 2011, Executive Chairman and Director of Parkbridge Lifestyle Communities Inc., a public
        real estate company
|Loren
                                         M. LeikerHouston, Texas
        USA                                                                                                                                                                             | (5)                     | Director                                                                                                    | 2012                                          | Since
                                         2012, Director of SM Energy, a public energy company
        Since
        2012, Director of Midstates Petroleum, a public exploration and production company
        
        2008
        to 2011, Senior Executive VP Exploration, EOG Resources, a public oil and gas company                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Larry
                                         J. MacdonaldOkotoks, Alberta
        Canada                                                                                                                                                                     | (1)
    (2) (3) (4) (5) | Director
                                         and
        Chairman
        of
        the
        Board | 2002                                          | Since
                                         2012, Chairman Northpoint Resources, a private oil and gas company
        Since
        2003, Chairman & Chief Executive Officer and Director of Point Energy Ltd., a private oil and gas company
        
        2003
        to 2012, Managing Director of Northpoint Energy Ltd., a private oil and gas company                                                                                                                                                                                                                                                                                                                                                                                                                         
|William
                                         F. MadisonSugar Land, Texas
        USA                                                                                                                                                                       | (2)
    (4) (5)         | Director                                                                                                    | 2004                                          | Since
                                         2011, Director of Montana Tech Foundation, an independent, non-profit organization
        Since
        2007, Director of Canadian Oil Recovery and Remediation Enterprise, Inc., a public oil recovery and remediation company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Timothy
                                         R. MarchantCalgary, Alberta
        Canada                                                                                                                                                                    | (3)
    (4) (5)         | Director                                                                                                    | 2010                                          | Since
                                         2013, Non-Executive Director of Cub Energy Inc., a public oil and gas company
        Since
        2009, Adjunct Professor of Strategy and Energy Geopolitics, Haskayne School of Business
        
        2011
        to 2013, Executive Chair of Anatolia Energy Corp., a public oil and gas company2007 to 2009, Vice President, Middle East Business Development for BP International                                                                                                                                                                                                                                                                                                                                                 
|Committees:
        (1)	Chairman
        of the Board(2) 	Member of the Audit Committee(3) 	Member of the Governance and Human Resources Committee(4) 	Member of the Health, Safety and Environment Committee(5) 	Member of the Independent Reserves Committee |                        
|                                                                                                                                                                                                                                                               |                         |                                                                                                             |                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



37


Vermilion Energy Inc.AIF for the year ended December 31, 2013






|Officers
        Name
        andMunicipality of Residence                                                        | Office
        Held                                                                          | Principal
        Occupation During the Past Five Years                                                                                                                                                                                                                                                                                
|----------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Anthony
                                         (Tony) Marino
        Calgary,
        Alberta
        Canada    | President
                                         &
        Chief
        Operating Officer | Since
                                         March 2014, President and Chief Operating Officer of Vermilion
        May
        2012 - March 2014, Executive Vice President and Chief Operating Officer of Vermilion
        2009
        to 2012, Director, President & CEO, Baytex Energy Corporation, a public oil and gas company
|John
                                         D. Donovan
        Calgary,
        Alberta
        Canada          | Executive
    Vice PresidentBusiness Development                                             | Since
    2005, Executive Vice President, Business Development of Vermilion                                                                                                                                                                                                                                                            
|Curtis
                                         W. Hicks
        Calgary,
        Alberta
        Canada          | Executive
    Vice President& Chief Financial Officer                                        | Since
    2004, Executive Vice President and Chief Financial Officer of Vermilion                                                                                                                                                                                                                                                      
|Mona
                                         Jasinski
        Calgary,
        Alberta
        Canada            | Executive
    Vice PresidentPeople                                                           | Since
                                         2011, Executive Vice President People of Vermilion
        
        2009
        to 2011, Vice President People of Vermilion
        
        2004
        to 2009, HR Manager, Shell Onshore Production, North America, a public oil and gas company                                   
|Terry
                                         Hergott
        Calgary,
        Alberta
        Canada            | Vice
                                         President
        Marketing                    | Since
                                         April 2012, Vice President, Marketing of Vermilion
        
        1996
        to 2012, Canadian Supply and Trading Manager, Marathon Petroleum Corp.                                                                                                                                 
|Gerard
                                         Schut
        Den
        Haag
        The
        Netherlands    | Vice
                                         President
        European
        Operations  | Since
                                         July 2012, Vice President European Operations of Vermilion
        
        August
        2006 to May 2012, General Manager, Chevron Exploration and Production Netherlands, a subsidiary of Chevron Corporation,
        a public oil and gas company                                 
|Robert
                                         J. Engbloom, Q.C.
        Calgary,
        Alberta
        Canada | Corporate
    Secretary                                                                      | Since
                                         January 1, 2012, partner with and Deputy Chair of Norton Rose Fullbright Canada LLP,
                                         a law firm
        
        1999
        to 2011, partner with Macleod Dixon LLP, a law firm                                                              



Common
Shares



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



Cash
Dividends



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

38


Vermilion Energy Inc.AIF for the year ended December 31, 2013


Record
of Cash Dividends



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



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



Note:

| | (1) | Total
                                         cash dividends paid out in 2010 by Vermilion and the Trust to a holder of a common share
                                         who was a former holder of a Trust Unit equals $2.28.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Dividend Reinvestment Plan



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

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

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

39


Vermilion Energy Inc.AIF for the year ended December 31, 2013




Shareholder
Rights Plan



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



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



| | (b) | explore,
                                         develop and pursue alternatives which are superior to the takeover bid and which could
                                         maximize Shareholder value; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | make
                                         reasoned recommendations to the Shareholders.
| | --- | -------------------------------------------------------------------------------------------



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



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



Summary
of the Plan



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



Term



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



Issue
of Rights



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



40


Vermilion Energy Inc.AIF for the year ended December 31, 2013




Rights
Exercise Privilege



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



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



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



Permitted
Lock-Up Agreement



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



| | (a) | the
                                         terms of the agreement are publicly disclosed and a copy of the agreement is publicly
                                         available;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



Certificates
and Transferability



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



41


Vermilion Energy Inc.AIF for the year ended December 31, 2013




Permitted
Bid Requirements



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



| | (a) | the
                                         takeover bid must be made by means of a takeover bid circular;
| | --- | -----------------------------------------------------------------------------------------------------------



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



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



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



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



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



Waiver
and Redemption



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



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



Exemptions
for Investment Advisors



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



42


Vermilion Energy Inc.AIF for the year ended December 31, 2013




Board
of Directors



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



Amendment



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



AUDIT
COMMITTEE MATTERS



Audit
Committee Charter



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



Composition
of the Audit Committee



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





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







43


Vermilion Energy Inc.AIF for the year ended December 31, 2013




External
Audit Service Fees



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



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



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



Notes:

| | (1) | Audit
                                         fees consisted of professional services rendered by Deloitte LLPfor the audit of the Company's financial statements for the years ended December
                                         31, 2013 and 2012.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Audit-related
                                         fees consist of fees for the review of the quarterly financial statements, services provided
                                         in connection with statutory and regulatory filings or engagements and fees for review
                                         services. Fees also may include services related to review of accounting research and
                                         accounting publications.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Tax
                                         fees consist of fees for tax compliance services.
| | --- | ----------------------------------------------------------------------------------------------



MARKET
FOR PRICE RANGE AND TRADING VOLUME OF SECURITIES



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



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



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



44


Vermilion Energy Inc.AIF for the year ended December 31, 2013




CREDIT
RATINGS



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



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



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

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

Vermilion
Rating



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



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



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



CONFLICTS
OF INTEREST



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



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

45


Vermilion Energy Inc.AIF for the year ended December 31, 2013




INTEREST
OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS



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



LEGAL
PROCEEDINGS



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



MATERIAL
CONTRACTS



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



INTERESTS
OF EXPERTS



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



TRANSFER
AGENT AND REGISTRAR

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



RISK
FACTORS



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



Reserve
Estimates



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



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



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



46


Vermilion Energy Inc.AIF for the year ended December 31, 2013




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



Uncertainty
of Contingent Resource Estimates



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



Uncertainty
of Prospective Resource Estimates



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



Volatility
of Oil and Natural Gas Prices



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



Changes
in Legislation



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



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



Government
Regulations



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



47


Vermilion Energy Inc.AIF for the year ended December 31, 2013




Competition



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



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



Operational Matters



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



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



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



Environmental
Concerns



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



Kyoto
Protocol and Carbon Tax



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



48


Vermilion Energy Inc.AIF for the year ended December 31, 2013




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



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



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



Discretionary
Nature of Dividends



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



Debt
Service



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



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



Changes
in Income Tax Laws



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



Depletion
of Reserves



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



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



49


Vermilion Energy Inc.AIF for the year ended December 31, 2013




Net
Asset Value



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



Volatility
of Market Price of Common Shares



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



Variations
in Interest Rates and Foreign Exchange Rates



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



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



Increase
in Operating Costs or Decline in Production Level



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



Acquisition
Assumptions



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



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



Failure
to Realize Anticipated Benefits of Prior Acquisitions



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



50


Vermilion Energy Inc.AIF for the year ended December 31, 2013




Additional
Financing



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



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



Potential
Conflicts of Interest



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



Accounting
Adjustments



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



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



Market
Accessibility



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



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



51


Vermilion Energy Inc.AIF for the year ended December 31, 2013




ADDITIONAL
INFORMATION



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

52


Vermilion Energy Inc.AIF for the year ended December 31, 2013


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



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



| | 1. | We
                                         have evaluated the Company’s reserves data as at December 31, 2013. The reserves
                                         data are estimates of proved reserves and probable reserves and related future net revenue
                                         as at December 31, 2013, estimated using forecast prices and costs.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | The
                                         reserves data are the responsibility of the Company’s management. Our responsibility
                                         is to express an opinion on the reserves data based on our evaluation.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| | 3. | Those
                                         standards require that we plan and perform an evaluation to obtain reasonable assurance
                                         as to whether the reserves data are free of material misstatement. An evaluation also
                                         includes assessing whether the reserves data are in accordance with principles and definitions
                                         presented in the COGE Handbook.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | The
                                         following table sets forth the estimated future net revenue (before deduction of income
                                         taxes) attributed to proved plus probable reserves, estimated using forecast prices and
                                         costs and calculated using a discount rate of 10 percent, included in the reserves data
                                         of the Company evaluated by us for the year ended December 31, 2013, and identifies the
                                         respective portions thereof that we have audited, evaluated and reviewed and reported
                                         on to the Company's board of directors:
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                              |                                 | Location
    of Reserves | Net
    Present Value of Future Net Revenue      
|----------------------------- | ------------------------------- | ------------------------ | -------------------------------------------------
|Independent
    Qualified     | Description
    and Preparation | (Country
    or Foreign  | (before
    income taxes, 10% discount rate - M$)
|Reserves
    Evaluator        | Date
    of Evaluation Report   | Geographic
    Area)     | Audited                                          
|GLJ
    Petroleum Consultants | February
    4, 2014            | Australia                | -                                                
|GLJ
    Petroleum Consultants | February
    4, 2014            | Canada                   | -                                                
|GLJ
    Petroleum Consultants | February
    4, 2014            | France                   | -                                                
|GLJ
    Petroleum Consultants | February
    4, 2014            | Ireland                  | -                                                
|GLJ
    Petroleum Consultants | February
    4, 2014            | Netherlands              | -                                                
|Total                         |                                 |                          | -                                                



| | 5. | In
                                         our opinion, the reserves data respectively evaluated by us have, in all material respects,
                                         been determined and are in accordance with the COGE Handbook, consistently applied.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. | We
                                         have no responsibility to update our reports referred to in paragraph 4 for events and
                                         circumstances occurring after their respective preparation dates.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 7. | Because
                                         the reserves data are based on judgements regarding future events, actual results will
                                         vary and the variations may be material.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



EXECUTED
as to our reports referred to above:

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





|“Jodi
                           L. Anhorn”
                           Jodi
                           L. Anhorn, M.Sc., P.Eng.
                           
                           Executive
                           Vice President & COO | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 













53


Vermilion Energy Inc.AIF for the year ended December 31, 2013


REPORT
ON RESOURCES DATA BY INDEPENDENT QUALIFIED RESERVES EVALUATOR OR AUDITOR



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



| | 1. | We
                                         have evaluated the Company’s resources data as at December 31, 2013. The resources
                                         data are estimates of low, best and high estimates of contingent resources and prospective
                                         resources and related future net revenue as at December 31, 2013, estimated using forecast
                                         prices and costs.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | The
                                         resources data are the responsibility of the Company’s management. Our responsibility
                                         is to express an opinion on the resources data based on our evaluation.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| | 3. | Those
                                         standards require that we plan and perform an evaluation to obtain reasonable assurance
                                         as to whether the resources data are free of material misstatement. An evaluation also
                                         includes assessing whether the resources data are in accordance with principles and definitions
                                         presented in the COGE Handbook.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | The
                                         following table sets forth the estimated future net revenue of the Company (before deduction
                                         of income taxes) attributed to best estimate contingent resources and prospective resources
                                         estimated using forecast prices and costs and calculated using a discount rate of 10
                                         percent, evaluated by us for the year ended December 31, 2013, and identifies the respective
                                         portions thereof that we have audited, evaluated and reviewed and reported on to the
                                         Company's board of directors:
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Contingent
Resources

|                              |                                 | Location
    of Reserves | Net
    Present Value of Future Net Revenue      
|----------------------------- | ------------------------------- | ------------------------ | -------------------------------------------------
|Independent
    Qualified     | Description
    and Preparation | (Country
    or Foreign  | (before
    income taxes, 10% discount rate - M$)
|Reserves
    Evaluator        | Date
    of Evaluation Report   | Geographic
    Area)     | Audited                                          
|GLJ
    Petroleum Consultants | February
    4, 2014            | Australia                | -                                                
|GLJ
    Petroleum Consultants | February
    4, 2014            | Canada                   | -                                                
|GLJ
    Petroleum Consultants | February
    4, 2014            | France                   | -                                                
|GLJ
    Petroleum Consultants | February
    4, 2014            | Ireland                  |                                                  
|GLJ
    Petroleum Consultants | February
    4, 2014            | Netherlands              | -                                                
|Total                         |                                 |                          | -                                                

Prospective
Resources

|                              |                                 | Location
    of Reserves | Net
    Present Value of Future Net Revenue      
|----------------------------- | ------------------------------- | ------------------------ | -------------------------------------------------
|Independent
    Qualified     | Description
    and Preparation | (Country
    or Foreign  | (before
    income taxes, 10% discount rate - M$)
|Reserves
    Evaluator        | Date
    of Evaluation Report   | Geographic
    Area)     | Audited                                          
|GLJ
    Petroleum Consultants | February
    4, 2014            | Australia                | -                                                
|GLJ
    Petroleum Consultants | February
    4, 2014            | Canada                   | -                                                
|GLJ
    Petroleum Consultants | February
    4, 2014            | France                   | -                                                
|GLJ
    Petroleum Consultants | February
    4, 2014            | Ireland                  |                                                  
|GLJ
    Petroleum Consultants | February
    4, 2014            | Netherlands              | -                                                
|Total                         |                                 |                          | -                                                



| | 5. | In
                                         our opinion, the resources data evaluated by us have, in all material respects, been
                                         determined and are in accordance with the COGE Handbook, consistently applied.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. | We
                                         have no responsibility to update our reports referred to in paragraph 4 for events and
                                         circumstances occurring after their respective preparation dates.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 7. | Because
                                         the resources data are based on judgements regarding future events, actual results will
                                         vary and the variations may be material.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 8. | These
                                         resource estimates are not classified as reserves at this time, pending further reservoir
                                         delineation, project application, facility and reservoir design work. Contingent resources
                                         entail commercial risk not applicable to reserves, which have not been included in the
                                         net present valuation. Prospective resources entail discovery risk and commercial risk
                                         not applicable to reserves, neither of which have been included in the net present valuation.
                                         There is no certainty that it will be commercially viable to produce any portion of the
                                         resources.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



EXECUTED
as to our reports referred to above:

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





|“Jodi
                           L. Anhorn”
                           Jodi
                           L. Anhorn, M.Sc., P.Eng.
                           
                           Executive
                           Vice President & COO | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 









54


Vermilion Energy Inc.AIF for the year ended December 31, 2013






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



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



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



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



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



| | (a) | reviewed
                                         the Company's procedures for providing information to the independent qualified reserves
                                         evaluators;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| | (c) | reviewed
                                         the reserves data with Management and the independent qualified reserves evaluators.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------



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



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



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



| | (c) | the
                                         content and filing of this report.
| | --- | -------------------------------------------------------------------------------



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



|“Lorenzo
                                         Donadeo” | 
|---------------------------------------------------------- | 
|Lorenzo Donadeo, Chief Executive Officer                   | 







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







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























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



55


Vermilion Energy Inc.AIF for the year ended December 31, 2013


SCHEDULE
"C"TERMS OF REFERENCE FOR THE AUDIT COMMITTEE

| | I. | PURPOSE
| | -- | -------

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

| | A. | the
                                         integrity of the Company’s financial statements;
| | -- | ---------------------------------------------------------------------------------------------



| | B. | the
                                         Company’s compliance with legal and regulatory requirements;
| | -- | ---------------------------------------------------------------------------------------------------------



| | C. | the
                                         independent auditors’ qualifications and independence;
| | -- | ---------------------------------------------------------------------------------------------------



| | D. | the
                                         financial information that will be provided to the shareholders and others;
| | -- | ------------------------------------------------------------------------------------------------------------------------



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



| | F. | the
                                         performance of the Company’s audit processes; and
| | -- | ----------------------------------------------------------------------------------------------



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



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

| | II. | COMPOSITION
                                         AND OPERATIONS
| | --- | -------------------------------------------------------------------

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

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

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

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

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

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

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



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

| | [2] | The
                                         Board has adopted the NI 52-110 definition of "financial literacy", which
                                         is an individual is financially literate if he or she has the ability to read and understand
                                         a set of financial statements that present a breadth and level of complexity of accounting
                                         issues that are generally comparable to the breadth and complexity of the issues that
                                         can reasonably be expected to be raised by the issuer's financial statements.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



56









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

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

| | I. | The
                                         Committee shall meet at least four times each year.
| | -- | ------------------------------------------------------------------------------------------------

| | III. | DUTIES
                                         AND RESPONSIBILITIES
| | ---- | --------------------------------------------------------------------

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

| | A. | Financial
                                         Statements and Other Financial Information
| | -- | ---------------------------------------------------------------------------------------------

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

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

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

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

| | iv) | review
                                         the Annual Information Form and any Prospectus/Private Placement Memorandums.
| | --- | -----------------------------------------------------------------------------------------------------------------------------

Review,
and where appropriate, discuss:

| | v) | the
                                         appropriateness of critical accounting policies and financial reporting practices used
                                         by the Company;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

| | xvi) | accounting,
                                         tax and financial aspects of the operations of the Company as the Committee considers
                                         appropriate.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

57


Vermilion Energy Inc.AIF for the year ended December 31, 2013








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



| | B. | Risk
                                         Management, Internal Control and Information Systems
| | -- | --------------------------------------------------------------------------------------------------



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

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



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

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

| | C. | External
                                         Audit
| | -- | -------------------------------------------------------

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

| | i) | review
                                         and recommend to the Board, for shareholder approval, the appointment of the external
                                         auditor;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | a) | engagement
                                         letter between the external auditor and financial management of the Company;
| | -- | --------------------------------------------------------------------------------------------------------------------------------

| | b) | objectives
                                         and scope of the external audit work;
| | -- | -----------------------------------------------------------------------------------------

| | c) | procedures
                                         for quarterly review of financial statements;
| | -- | -------------------------------------------------------------------------------------------------

| | d) | materiality
                                         limit;
| | -- | -----------------------------------------------------------

| | e) | areas
                                         of audit risk;
| | -- | -------------------------------------------------------------

| | f) | staffing;
| | -- | ---------

| | g) | timetable;
                                         and
| | -- | -------------------------------------------------------

| | h) | compensation
                                         and fees to be paid by the Company to the external auditor.
| | -- | -----------------------------------------------------------------------------------------------------------------

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

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

| | a) | the
                                         resolution of any disagreements between management and the external auditor regarding
                                         financial reporting;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | any
                                         significant accounting or financial reporting issue;
| | -- | -------------------------------------------------------------------------------------------------

| | c) | the
                                         auditors' evaluation of the Company's system of internal controls, procedures and documentation;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------

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

| | e) | any
                                         other matters the external auditor brings to the Committee's attention; and
| | -- | ------------------------------------------------------------------------------------------------------------------------

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

| | v) | review
                                         the auditor's report on all material subsidiaries;
| | -- | --------------------------------------------------------------------------------------------------

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

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

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

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

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

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

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

| | x) | meet
                                         periodically, and at least annually, with the external auditor without management present.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------

58


Vermilion Energy Inc.AIF for the year ended December 31, 2013




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



| | D. | Compliance
| | -- | ----------



The
Committee shall:

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

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

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

| | a) | the
                                         independence of each Committee member relative to regulatory requirements for audit committees;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

| | E. | Other
| | -- | -----

The
Committee shall:

| | i) | establish
                                         and periodically review procedures for:
| | -- | ------------------------------------------------------------------------------------------

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

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

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

| | iii) | review
                                         insurance coverage of significant business risks and uncertainties;
| | ---- | -------------------------------------------------------------------------------------------------------------------

| | iv) | review
                                         material litigation and its impact on financial reporting;
| | --- | ----------------------------------------------------------------------------------------------------------

| | v) | review
                                         policies and procedures for the review and approval of officers' expenses and perquisites;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

| | IV. | ACCOUNTABILITY
| | --- | --------------

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

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



59


Vermilion Energy Inc.AIF for the year ended December 31, 2013