Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Vermilion Energy's Virtual 2020 Annual General and Special Meeting. Following the formal portion of the meeting, a corporate presentation will be given by Anthony Marino, President and Chief Executive Officer. As a reminder, this event is being broadcast live on the Internet and is being recorded. The archive event will be posted on Vermilion's website under the heading Invest with Us, and subheading Events and Presentations. To participate in the discussion during the formal portion of the meeting or ask a question during our corporate presentation, please select Messaging tab, then type your comment and click the Send button. I would now like to turn the conference call over to Lorenzo Donadeo, Chair of the Board. Please go ahead, Mr. Donadeo.
Thank you. Good afternoon, ladies and gentlemen. With the emergence of COVID-19 and in light of limits on larger gatherings and our concern for the health and safety of our employees and shareholders, as permitted by Vermilion's Bylaw Number 1, our meeting will be held today as a virtual-only shareholder meeting, with participation electronically, as explained in the Proxy Statement and Information Circular, which was mailed to all shareholders on March 24, 2020. I would like to begin by welcoming you to Vermilion's virtual 2020 Annual General and Special Meeting of Shareholders. We will have the formal part of this meeting first, and after that, Anthony Marino, President and CEO, will provide you with an overview of our business and our strategy moving forward.
Because we are not able to be together in person, I would like to review the rules for discussion and debate to facilitate an orderly virtual meeting. The formal meeting will deal with items of business outlined in the Proxy Circular. Once we have completed that work, we will move to the informal part of the meeting. During the formal meeting, each shareholder or proxyholder wishing to address a motion may do so when I have indicated the motion is open for discussion. To participate in the discussion, select the Messaging tab, type your comment, and click the Send button. Each shareholder may take up to five minutes to contribute to the discussion, but I reserve the right to terminate discussion on a matter. All discussion must be courteous and respectful of other participants in the meeting.
All questions for management will be dealt with in the informal part of the meeting after the formal meeting is completed. Thank you in advance for your cooperation. Ladies and gentlemen, the meeting will now come to order. As Chair of the Board of Directors of Vermilion Energy Inc., it is my responsibility and privilege to chair this Annual General and Special Meeting of Shareholders of Vermilion. Bob Engbloom of Norton Rose Fulbright Canada LLP will act as Secretary of the meeting, and Kyle Gould of Computershare Trust Company of Canada will act as the scrutineer. I would like to welcome to the meeting all others participating in the online meeting. At this point, I would like to introduce the other directors of Vermilion electronically attending this meeting today. Larry Macdonald , Lead Director; Carin Knickel, Stephen Larke, Loren Leiker, Timothy Marchant, Robert Michaleski, William Roby, and Catherine Williams.
I would also like to introduce our senior executives participating electronically in the meeting. Anthony Marino, President and CEO, Lars Glemser, VP and CFO, Michael Kaluza, Executive VP and COO, Mona Jasinski, Executive VP, People and Culture, and Jenson Tan, VP, Business Development. The notice calling this meeting of shareholders, the proxy for use at this meeting, and proxy statement and Information Circular were mailed on March 24, 2020 to all shareholders as of the record date for this meeting, being the close of business on March 19, 2020. As part of our ongoing stewardship of the environment and as a cost-saving measure, for the fourth consecutive year, beneficial shareholders received a Voting Instruction Form and a Notice and Access notification, which included a link to the meeting materials consisting of proxy statement and Information Circular and the 2019 Annual Report.
The procedure for the electronic delivery of meeting materials is known as Notice and Access, and, as mentioned, an environmentally friendly alternative, it is now used by a number of companies. As in past years, registered shareholders and those beneficial shareholders that previously requested to receive paper copies continued to receive a printed copy of the meeting materials and a Form of Proxy. I would ask that copies of all such documents be filed with the minutes of the meeting. The quorum for the transaction of business at today's meeting is at least two people present, being registered shareholder or duly appointed proxyholder and representing an aggregate not less than 25% of the total outstanding common shares. According to Vermilion's bylaws, a person participating in today's meeting through the virtual meeting platform for today's meeting is deemed to be present at the meeting.
I am advised by the scrutineer that there is a quorum present. The scrutineer's report is available for inspection, and I ask the Secretary to provide with the minutes of this meeting. I hereby declare this annual general and special meeting of shareholders of Vermilion Energy Inc. to be properly convened and regularly constituted to conduct business. There are various matters of business to be dealt with today. A description of each matter is provided in the Information Circular, a copy of which is available on our website under the heading Invest with Us, subheading Annual General Meeting. In the interest of time, I do not propose to make a detailed presentation of each item. For the purposes of moving the meeting along, shareholders who are representatives of Vermilion, Kyle Preston and Marzena Dalkic, have been asked to move and second the motions to be brought before the meeting.
I would like to take a moment to comment on the voting procedures to be used at today's meeting. Voting for all matters will proceed by way of electronic ballots through the virtual meeting platform. The polls are now open and will remain open till the end of the formal part of the meeting. If you have not voted your shares, please vote now. After each resolution, I will also remind you to vote if you have not already voted. If you have previously voted, you do not need to vote again. By voting again, you will revoke your votes made prior to the voting cutoff, and only the live votes will be counted.
The exact result of the ballot voting on the items of business today, at today's meeting, will be announced tomorrow, Wednesday, April 29, in our press release and in the report of voting results, and will be filed on sedar.com under Vermilion's profile. The first item of business is fixing the number of directors of Vermilion Energy Inc. to be elected at 10. May I have a motion to fix the number of directors to be elected at 10?
My name is Kyle Preston, and I'm a representative of Vermilion and a shareholder. I move that the number of directors of Vermilion Energy Inc. to be elected be fixed at 10.
May I have the motion seconded?
My name is Marzena Dalkic, and I'm a representative of Vermilion and a shareholder. I second the motion.
Is there any discussion? If, if you have not already voted, please complete the electronic ballot for this item of business now through the virtual meeting platform. The next item of business is the election of the directors of Vermilion for the ensuing year or until their successors are elected or appointed. As we have done in previous years, we will be nominating and approving individual directors and not a slate of directors. The Board of Directors has appointed, or pardon me, has adopted a policy stipulating that if a director nominee receives a greater number of votes withheld from the election of that director than votes for the election, the nominee will offer to resign.
Governance and Human Resources Committee will then review the matter and recommend to the Board whether to accept the resignation, and the Board's decision to accept or reject the resignation will be publicly announced within 90 days of the meeting. It is expected that resignations will be accepted, except in situations where exceptional circumstances would warrant that the applicable director continue to serve as a Board member. The number of directors to be elected at the meeting has been fixed at 10. Information with respect to each of the nominees was set forth in the Information Circular for this meeting. I now declare the meeting open for nominations for the Board of Directors of Vermilion Energy Inc. May I have a motion to nominate the Board of Directors of Vermilion Energy Inc.?
I nominate Lorenzo Donadeo, Larry Macdonald , Carin Knickel, Stephen Larke, Loren Leiker, Timothy Marchant, Anthony Marino, Robert Michaleski, William Roby, and Catherine Williams as directors of Vermilion Energy Inc. for the ensuing year.
Thank you. I will now ask Marzena Dalkic to move the resolution electing those individuals nominated as directors of Vermilion Energy Inc. to serve as directors until the close of the next annual meeting of shareholders or until their successors are duly appointed.
... I move that each of the 10 persons nominated be elected as a director of Vermilion Energy Inc., to hold office until the close of the next annual meeting of shareholders, or until a successor is duly elected or appointed.
Will Kyle Preston please second the motion?
I second the motion.
As there is no discussion, as previously stated, the directors should be elected individually and not as a slate. For a nominee to be elected as a director of Vermilion Energy Inc., the votes cast in favor of the election of the director nominee should represent no less than a majority of the votes cast by shareholders represented in person or by proxy at this meeting. If you have not already done so, please complete the electronic ballot for this item of business now through the virtual meeting platform. The next item of business is the appointment of the auditors of Vermilion. Deloitte LLP are Vermilion's current auditors, and have agreed to act as auditors of Vermilion, if appointed. May I have a motion for the appointment of the auditors?
I move that Deloitte LLP be appointed as the auditors of Vermilion to hold office until the next annual meeting of shareholders.
May I have the motion seconded?
I second the motion.
Is there any discussion? If you have not already voted, please complete the electronic ballot for this item of business now through the virtual meeting platform. The next item of business is the consideration of a special resolution to reduce the stated capital of the common shares of Vermilion by CAD 3.7 billion. The full text of the resolution is set forth on page 19 of the Information Circular. Vermilion is authorized to issue an unlimited number of common shares with no par value. It is proposed that the stated capital of the common shares be reduced by CAD 3.7 billion. A corresponding increase will be made to Vermilion's contributed surplus account.
The purpose of reducing the stated capital of common shares is to reduce the aggregate of liabilities and stated capital, and increase the difference between such amount and the realizable value of Vermilion's assets. A reduction of the stated capital of common shares provides Vermilion with additional flexibility to declare or pay dividends and make purchases of common shares under a normal course issuer bid or other form of issuer bid. The proposed reduction of the stated capital of the common shares will have no impact on our day-to-day operations and will not alter our debt arrangements and financial conditions. To be effective, the resolution approving the reduction of stated capital and related matters must be passed by not less than two-thirds of the votes cast by the shareholders who vote in respect to the resolution in person or by proxy at the meeting.
May I have a motion to approve the reduction of stated capital and related matters?
I move that the resolution approving the reduction of stated capital and related matters set forth on page 19 of the Information Circular be approved.
May I have the motion seconded?
I second the motion.
Is there any discussion? If you have not already voted, please complete the electronic ballot for this item of business now through the virtual meeting platform. The next item of business is the advisory vote on executive compensation as part of Vermilion's ongoing commitment to strong corporate governance practices. The Board has determined that it would be appropriate to hold a non-binding advisory vote at this meeting on the approach to executive compensation, commonly referred to as a Say on Pay advisory vote. This is the seventh year we're holding a Say on Pay advisory vote, with an average 94% shareholder support over the last six years. A detailed discussion of our approach to executive compensation is set forth in the executive compensation section of Information Circular. may I have a motion for the Say on Pay advisory vote?
I move that on an advisory basis, and not to diminish the role and responsibilities of the Board of Directors , that the shareholders accept the approach to executive compensation disclosed in the Information Circular accompanying the notice of this meeting.
May I have the motion, seconded?
I second the motion.
Is there any discussion? If you have not already voted, please complete the electronic ballot for this item of business now through the virtual meeting platform. Receipt of financial statements. The next item of business is to be able - is to table the consolidated audited financial statements of Vermilion for the year ended December 31, 2019, and the report of the auditors thereon. These financial statements were included in Vermilion's Annual Report , which was mailed to those shareholders who, who requested the financial statements, along with the notice of this meeting and the Information Circular. For your ease of reference, links to Vermilion's Annual Report , which includes the financial statements, are available on our website under the heading Invest with Us, subheading Reports and Filings. Are there any questions regarding the financial statements? At this time, the voting is closed on all items of business.
Please allow us a few moments to tally the votes and collect the scrutineer's report. As mentioned at the beginning of the meeting, the exact results of the ballot voting on the items of business at today's meeting will be disclosed in the voting results report and our press release, which will be filed tomorrow, Wednesday, April 29, 2020. The scrutineers have provided their preliminary report of the results of voting at today's voting. On the matter of fixing the number of directors of Vermilion Energy Inc. to be elected at 10, I'm advised by the scrutineer that greater than a majority of the votes cast have been voted in favor of this resolution. Therefore, I declare the motion to fix the number of directors is carried.
On the matter of electing directors of Vermilion Energy Inc., I'm advised by the scrutineer that for each of the director nominees, greater than a majority of the votes cast have been voted in favor of the election of each director. Therefore, I declare that this motion is carried, and each of the nominees for election as director has been elected. On the matter of appointing auditors, Deloitte LLP, to hold office until the close of the next annual meeting of shareholders or until their successors are appointed, I am advised by the scrutineer that greater than a majority of the votes cast have been voted in favor of the appointment of Deloitte as auditors. Therefore, I declare that this motion is carried.
On the matter of the approval of the reduction of stated capital, I'm advised by the scrutineer that greater than two-thirds of the votes cast have been voted in favor of the reduction of stated capital. Therefore, I declare that this motion is carried. On the matter of the approval of the Say on Pay advisory vote, I am advised by the scrutineer that greater than a majority of the votes cast have been voted in favor of this resolution. Therefore, I declare that this motion is carried. Is there any further business? As there is no further business to be brought before this meeting, the meeting is concluded. I will now turn it over to Anthony Marino, President and Chief Executive Officer, to provide you with an update on our business and our strategy moving forward. Questions will be addressed at the end of our presentation. Thank you.
Okay, thank you very much, and thank you to all of our virtual AGM attendees. So, I'm gonna give a presentation that covers three topics, and after that, we'll have time for Q&A for the questions that are sent in. So, our first topic is gonna be a review of our Q1 results. Secondly, our response to the pandemic, and then thirdly, the adaptation of our business model to the current environment. So, let me start with, first of all, our review of Q1 results. Here on slide 17, we're making a comparison of Q1 results to the previous quarter.
First of all, with respect to production, it was essentially flat, quarter-over-quarter, where our the capital program that we executed in Q1, with the results to date and the tie-in of wells to date has basically offset decline. FFO, or, or cash flow, was down about 20% over Q4, and that was a result of the lower prices that we had. Lower commodity prices emerged in the middle of Q1 with the pandemic hurting demand, and then were exacerbated by the OPEC+ price war that began in March. In response to the commodity environment, we reduced our monthly dividend by 50% in March, and also announced an $80-$100 million reduction in our 2020 capital program.
We do expect to hit the high end of that range of reductions, and we'll keep pressing for additional CapEx cuts as we go through the year. After we made that initial announcement, commodity prices continued to deteriorate, particularly, once OPEC+ started the increased supplies from their price war, and we ultimately suspended the dividend in April. We executed a significant capital program in Q1, a front-loaded program that was designed to avoid the weather problems that we hit in the 2019 program. We think it's been a very effective program in Q1, and we think it's gonna put us in good shape with a great deal of production capacity to weather this storm that has been created by the pandemic.
Final point on the Q1 results is that we were very gratified to learn that for the third straight year, we made the CDP Climate Leadership list at the A-minus level. As I'm gonna point out later on, we're not gonna back up on this sustainability effort that we've engaged in the last few years, despite the impact of the pandemic. I'll move to the second portion, beginning on slide 19, which discusses our responses to the pandemic. Start off with HSE. We've always set health and safety as our top priority above any other considerations in the company, including profitability. I feel that we have had a very effective health and safety response to the pandemic.
To me, it has illustrated the effectiveness of our decentralized business unit model. We took a corporate framework, which we already had in place, a pandemic and infectious disease plan. It was adapted in its implementation in each of our business units. I'd point out that a number of these business units, especially in Western Europe, were among the hardest hit places in the world during the early stages of the pandemic. We took into account the local cultures, the local pandemic conditions, advice given by national health authorities and government requirements.
And from those, we fashioned a response that has, you know, effectively delivered, I think, as much as possible, health and safety for our employees and for the community, and it's given us a very high level of business continuity, which I'll touch on again in a minute. The result is that to date, we have had no confirmed COVID-19 cases anywhere in our global workforce, about nearly 1,000 employees and contractors. We're very thankful for this. We're very fortunate, and we hope that that continues as we make our way all the way through the pandemic. So turning to slide 20, I'll discuss more specifically our operational responses.
So, in every site that we have, whether office or field, we implemented a set of social or physical distancing protocols. We made adjustments to our level of staffing. We adjusted work schedules where necessary, including in our offshore operation, where our workforce has implemented a much longer set of shifts to minimize the turnover of personnel out on our platform and to also comply with quarantine requirements within Australia. We have gone to remote working in all of our offices. And again, as I mentioned before, most importantly, we feel that this has achieved a successful result in health and safety for our workforce and their families and the community in general in all of our jurisdictions.
The outbreak has had, I would say, only a moderate impact on our operations. We're proud to note that there has been really no Vermilion-induced or remotely Vermilion-controlled off time as a result of the pandemic. The impacts that we have had to date, aside from some delays in execution due to this reduction of the number of personnel that we're using, also putting in place some of these COVID-19 protocols in several of our business units that made modest delays to the capital program. Beyond that, the main impacts have been in third-party services. In France, we lost the ability to have third-party well servicing, you know, rig work done beginning in mid-March.
More importantly, there is an outage at the Grandpuits Refinery in the Paris Basin. Ultimately, this outage is due to reduced market for the products during the restrictions that have been put in place in France and then really throughout Europe. We expect that that refinery will remain idle until mid-July. That's had an impact on the majority of our Paris Basin production. If you put that together with the other lack of third-party services in France and some of these delays in various business units, the impact is estimated at present to be a little bit less than 2,000 BOED for our company as a whole.
But again, no Vermilion-controlled or Vermilion-induced downtime in any of our operations, which I think is a great testament to the way that our staff has adapted to and persevered through the pandemic. On Slide 21, we illustrate the change in the oil markets due to COVID-19. The top curve, shown in orange, is the WTI forward curve as of the first trading session of 2020. At this time, our dividend was intact, and we were projecting, based on that curve, a 95% total payout ratio, including both dividends and CapEx, and expected to be retiring debt with that projection at the beginning of the year.
With the reduction in demand due to the pandemic and the oversupply, which was enhanced by the OPEC+ price war, we've ended up with the blue curve. That's as of a week ago, that was on April twenty-second, the date of the negative pricing event for WTI, substantially lower. We're significantly protected by our hedging program, and we have taken cost out of a large part of our operations. And as a result, even under that curve, we would project being FCF positive for the last three quarters of this year.
But certainly a dramatic impact on the global economy, particularly felt in commodities, and most of all, I would say, in the oil industry, and as a result, it called for a number of changes to our plans. These are outlined on Slide 22 at a summary level. First of all, as I mentioned earlier, we have suspended our dividend. The cash impact of that on an annualized basis would be CAD 420 million. That is a run rate basis for the next 12 months. In addition, we reduced outlays for CapEx by CAD 100 million, and we are seeking more than that number. Thirdly, we have reduced OpEx, G&A, ARO expenses by CAD 35 million.
That's the amount that we already identified that we can secure, and that number goes up each day. We seek to add to that degree of savings, and I appreciate the work by our staff in generating that in response to the economic environment that we're in. If you put these three items together with where we are at today, it would be over a $550 million reduction in total cash outlays. We do see that we would be free cash flow positive for the rest of this year at strip pricing.
As I'm gonna underscore several times in the last part of the presentation, we do all of this to ensure the financial strength of the company when we do emerge from the pandemic conditions. So, in this third part, which really begins on slides 23 and 24 of the presentation deck, I wanna talk about Vermilion's model, its flexibility, how it's been adapted to the significant change in conditions that we have in the economy and in our industry today. So slide 24 summarizes our operating, organizational, geographic, and capital markets models.
I wanna touch just briefly on each of these elements, and ultimately talk about the way the capital markets model has been adapted to the COVID-19 world. So, with respect to the organization, I spoke earlier about our decentralized business unit model. I think it did prove very effective, most importantly, in securing health and safety, and also in maintaining business continuity despite this wide range of operating jurisdictions that we are in. We started with what we felt was a low OpEx and G&A base. We've made a number of reductions over the past number of years to cut those unit costs.
Of course, that gave us higher margins to begin with, and so when we have a reduction in prices, we see less of a shrinkage in margins than we would otherwise have. We spoke earlier about our focus on ESG and environmental sustainability. We're very proud of that record. It's a simple part of our strategy, and we're not gonna back off on that despite the turmoil in the economy and the industry due to COVID-19. Most importantly, we have a strong corporate culture. Everybody has pitched in in the company to meet these challenges, and that is ultimately why I believe we will emerge from this period a stronger company than before. With respect to the operation, we spoke about HSE earlier.
We do have a conventional and semi-conventional asset base, as opposed to one that is focused in the ultra-tight rocks. These give us lower costs, better capital efficiencies, and very importantly, lower base declines, meaning we have to employ less CapEx to maintain production. We start with low operating leverage due to our lower costs, but also due to being in premium product markets for both gas and oil. And again, that gives us a bit more room to cope with the decline in prices. We think that our geographic model in the three regions that we are in is a significant advantage. We've got the commodity diversification.
We can see that all the commodities don't move up and down together, and that modulates the variability in cash flows more so than it would be if we were focused in a single product. We also have the diversification of both our projects and jurisdictions, and that just means that all of our eggs aren't in one basket when it comes to selecting and implementing a capital slate. If you put this all together, it means that we have, I think, a very flexible capital markets model. It's been one that has been very focused on paying dividends historically.
We made the change in the dividend, ultimately suspending it because it was not economically warranted in this kind of environment, and yet we will still be very focused on free cash flow generation, which will be applied to debt reduction. As you're gonna see in a minute, we have a highly termed out debt structure. It has very low interest rates. That, coupled with our comprehensive risk management program, otherwise known as a hedging program, across these diverse commodities that we have in the mix, means that again, we've been able to modulate or reduce the impact of the price changes on our overall corporate cash flow.
Turning to slide 24, excuse me, slide 25, we have a map of our three regions, and the pie charts illustrate the contribution in production and cash flow from each of these areas. One thing I'd like to point out as an example of the advantage that we have in being globally diversified would be the contribution of Australia. Relatively small part of the production base at 5%, but it is a premium price product that generates more than 2.5 times that in terms of FFO contribution.
So I do think the global model, while challenging to run, has proved to be very effective, and our ability to manage that operation and respond to such a, you know, life-changing global event is illustrated by the business continuity that we've been able to achieve. On slide 26, we show our commodity mix. In terms of production, we're about 55% oil, 45% gas. All of those products, including North American gas, are contributors to our FFO profile in this environment. I think North American gas is another great example of our diversification. Heretofore, it had been mainly a byproduct for the last few years.
We find that North American gas today is a contributor to our FFO or cash flow profile, and North American gas is likely to be one of the first markets to rebalance as we come out of the COVID-19 shutdown. Turning to slide 27. On this slide, we illustrate in the blue bar chart, which goes with the left scale or left Y-axis, our growth in production over the past 17 years since we began paying our monthly distributions in 2003. It's been a growing profile throughout, more rapid growth the last number of years. This year, our production will not increase.
We will be down due to the lower capital program and what we would expect to be the impacts of COVID-19, which I've outlined, the ones to date, earlier. Importantly, if you look at the yellow dots, which is the E&D CapEx level in millions of dollars, which goes with the right scale or the right Y-axis, that E&D CapEx level, $350 million, for this year, is in fact lower than it was a decade ago. So even though the company has more than tripled its production base, we actually have a smaller capital program. This improvement in capital efficiency was brought about by- a improved product slate over time, excuse me, improved project slate over time.
Secondly, the learning curve as we executed each of those types of projects year after year. And thirdly, certainly we've benefited on the CapEx side as a result of the decreases in services prices. In combination, that means that our capital intensity, as posted in the numerical values below each of the years there, is down to about one quarter of what it was a decade ago. This is, you know, a very important metric in a capital-intensive industry to be able to reduce that need for capital per unit of production. The financial impact of this is reflected on slide 28. There are two panels on this slide. On the left, we have FFO or cash flow.
You can see really three complete cycles in this plot. The first one was truncated in 2008 as a result of the financial crisis, the second in 2014, as a result of the commodity crash that year, and the third one now, truncated by the COVID-19 pandemic. Each time we have rebuilt our cash flow profile, and we intend to do that again. Very importantly, if you turn to the right panel there, free cash flow, as we define it, FFO minus E&D CapEx, shown just for the corporate era here, not for the earlier trust era. We are actually at a record level of FCF last year.
We have projected forward here, based on a $30 WTI price for the just keeping it flat for the rest of the year. And at that level, for 2020, we still would generate free cash flow. So this is the advantage of being able to bring down that CapEx per unit. You can maintain free cash flow even in a time of very much reduced commodity prices and FFO generation. If we turn to slide 29, I wanna speak about the dividend. What we show here on this graph is the cumulative dividends paid per share since both distributions really in the trust era and dividends in the corporate era with the switch from trust to corporation in 2010.
Totaling, over the history of the company, CAD 40 per share, more than we had ever issued in equity. It, it has been a very successful model. We very much believe that it's the right thing to do to return cash to the owners of the company. We always said, though, that the dividend would only be paid when it was economically warranted. With the sea change in economic and industry conditions that occurred with the pandemic, that was, it was no longer the case, that the dividend was economically warranted. So, at, we suspended it, and at this point, we're going to dedicate, you know, our abilities to generate free cash flow to debt reduction.
On slide 30, we show the payout ratio over the history of the company, since it began making those monthly distribution and dividend payments to shareholders. On this plot, the black dashed line represents 100% of the available cash flow. The blue segments represent dividends, and the red segment represents E&D CapEx. Projected forward, again, at $30 for the rest of the year for WTI, we would have a payout ratio for the year of 2020 as a whole that exceeds 100%. When we do this on a pro forma basis, a run rate basis with the dividend suspended, we end up at a payout ratio less than 100%. Speaking about the balance sheet, on slide 31.
So this is composed of a $2.1 billion covenant-based bank facility and a $300 million USD long-term notes issue. That long-term notes issue would equate to about CAD 400 million. We exited Q1 2020 with about $500 million of unused liquidity on our bank facility and well within the financial covenants. Even at these extremely low commodity prices, as we spoke about earlier, we generate more FFO under the strip than we employ in capital for the remainder of 2020. That free cash flow is going to be used to de-lever over the remainder of the year.
This near-term funding status that we have, and the fact that we have no debt maturities inside the remaining four-year term of the credit facility, put us in a good financial position to navigate the low commodity price environment. Our hedging program is shown on slide 32. In aggregate, for, as you look across the main products represented here, oil, European gas, and North American gas, they're all quite strong hedging positions. And in aggregate, during Q2, we would have about 75% of our BOEs covered by a hedge position. There's a wide variety here. There are time spreads, swaps, and the collars of various types.
If you put that in terms of what we already have in place for the year as a whole, that would be 56% of our oil equivalent production hedged. The highest hedging percentages that we have ever had in the company's history. So I'm gonna close here with 3 slides relating to sustainability and company culture. I'll start on slide 33. As I think I mentioned a couple of times here, the effort that we have made on environmental sustainability is central to our strategy. We're not going to back up on this at all, despite the turmoil that currently exists in the industry.
We think it's an important thing to do, we think it's the right thing to do, and we think it's good for the business. We know that we're in the midst of an energy transition, we support the transition, and we're a part of it. We do think that if you are a concerned citizen or investor, you should turn to the best-in-class companies, as we consider ourselves at Vermilion, to have the most positive impact possible during the transition. We align our strategies with the UN's SDGs. We've been recognized for very strong sustainability performance, really, throughout the spectrum of assessments, whether you're looking strictly at environmental performance.
For example, our A, A-minus rating for the last three years by the CDP, or whether you're looking more broadly at governance and overall ESG performance, we're highly ranked in each of these independent assessments. You know, I would say in summary, we think that SRI-oriented investors ought to be able to benefit in a couple of ways by turning to Vermilion. We think that this sustainability focus that we have reduces our input costs, makes us more efficient, therefore gives us better operating performance, and ultimately we feel that should translate into better TSR performance. And we think you can also achieve some alpha as a as an SRI investor as a result of putting your capital to work with companies like Vermilion.
On slide 34, I wanna briefly address a element that contributes a lot to our company culture. That is what we call strategic community investment. So Vermilion, throughout its 25, 26-year history now, has been very effective in this area. In each of our locations that we have a significant presence, and I'm not just talking about our Calgary or regional headquarters, but also in our field operating areas, we make an assessment of the critical needs that exist in the community, and we try to direct our financial contributions, and more importantly, our employee volunteer time, to making a real difference in those areas of need. And again, I wanna stress that we do this in our field operating areas as well.
This leads to a significant donation of time by our employee group. It pulls us together as a team, and I think it's a very important part of our culture that benefits us as a company and the communities that we are present in. I'll finish in this area by turning to slide 35 and make a statement about the overall corporate culture in the company. I think this has been the reason that the company has weathered so many of the economic cycles in the past. And I think it's the reason that we've been effective in maintaining health and safety and business continuity and reducing costs due to this unexpected pandemic-induced downturn.
As evidence of the corporate culture, we're gonna use a measuring stick here called Great Place to Work annual ranking. The Great Place to Work Institute assesses the culture of the company. A significant part of this is an independent employee survey that they conduct. In Canada, we have made the Great Place to Work list for the last 11 years. This year, for the first time, we were elevated to the large company category, and we placed in the top 40. Only energy company to place on this list at any company size in Canada. In addition, we received a top 10 ranking in our industry specialty group in the German ranking.
Culture is central to the company, and it's been central to our response to the pandemic. Just to conclude on slide 36, I feel we've had a very effective response to the pandemic, and very grateful to our employees and our community partners for doing this. We did put HSE first, health and safety, really, of the workforce and the community first in approaching the pandemic. We adjusted our operating practices in our diverse set of operations. Again, I feel that we've maintained business continuity in all of them. We have cut our CapEx profile, expense levels, and we made the adjustment to ultimately suspending the dividend to reduce outlays in response to the pandemic. I think the organizational models we discussed previously has been effective during this crisis.
The balance sheet remains our top priority. We adjusted the model, so that when we exit the COVID-19 downturn, we'll be in a position of financial strength. We remain focused on free cash flow, as we have always been in this company, and at this point, it's gonna be allocated to debt reduction. We remain strong proponents of returning capital to shareholders, but it has to be in appropriate market conditions, and that's why we made the difficult decisions that we did to reduce and ultimately suspend the dividend. I think that the strength of our asset base with characteristics we discussed, the strength of our organization, really it's the strength of our people and our culture that leave us well positioned for the future.
So, on behalf of the Board of Directors and Vermilion management, I want to express our deep gratitude to our employees, communities, and shareholders for your support during the crisis. Together, we will prevail. We'll emerge from this crisis healthier and stronger than before. So thank you, and God bless you, and we will take questions that you have sent in. So, I will begin to read these questions, and I'll, I hope I'll take them in the order that they were that they were sent in. So, I would like to hear about the intent of this move on stated capital. Is it share buybacks? And, I think for that, I'd like to turn to Lars Glemser, our CFO.
Yeah, thanks, Tony. You know, I think what I'll just reiterate is the reduction of the stated capital of common shares will provide Vermilion with additional flexibility to declare or pay dividends, as well as make purchases of shares going forward in the future. I think the thing we're trying to emphasize there as well, the economic conditions do need to be supportive of such actions. I'll maybe just take a chance as well to remind you that the reduction provides this additional future flexibility for these types of activities. It will not have an impact on the day-to-day operations or financial condition of the company. In addition, there is no immediate Canadian income tax consequences to shareholders of this reduction.
And what I would also point out, too, the amount of the stated capital reduction that was approved during the AGM, it reflects the distributions and dividends that Vermilion has paid over the history of the company. So, just to provide some clarity there as well.
So, thank you, Lars, for that answer, and I'm gonna take next question in the list. How will Vermilion respond to the shortage of global storage capacity, currently expected? So, as the questioner correctly points out, there's been a huge imbalance between oil supply and demand that has developed since early March, and that has been filling up storage fairly rapidly. Different depending on the location. Cushing, where WTI futures contracts are slated for delivery, has a particularly, I would say, limited amount of storage, and that has had an impact, I think, on WTI prices and given us a great contango curve.
You know, as you look at the other crude locations, Dated Brent in particular, that we sell our Australian and European oil based on has a much more diverse set of storage opportunities. It can be effectively stored on the water. It can be stored right at the coast, where a number of the refineries are. It can be transported by pipeline inland. Furthermore, there's a very large storage network for other Brent-linked crudes throughout the world. So Brent doesn't face quite the difficulty that WTI Cushing does. And of course, there are opportunities to bypass Cushing as well, as you get that oil to the coast, the U.S. Gulf Coast, and to other U.S. on land locations.
So, in terms of our response, one of the things that we're very focused on in the company right now is taking advantage of the storage that exists in our producing operations. There's quite a bit of what I think I would call secondary storage that we hold in our various field locations and battery locations. And, you know, one of our responses is going to be to use that storage to the maximum extent that we can to just hold oil for sale at a later date. It allows us to produce those barrels now, have them available for us, and pump them out of these tanks as we get to a higher oil price down the line, as indicated in the contango curve.
That is, you know, one way that we significantly do intend to, you know, mitigate the storage difficulties that we see developing in the world oil market.
You know, with the recovery in demand that is basically certain, I would say, to occur as the various economies reopen, and with the cutbacks by OPEC+, and the general deferrals and shut-ins of production, and actually very significantly, just the lack of capital investment, which is already going to lead to declining production capacity in the world, we think that there will be a point, I don't wanna place an exact prediction for when it will be, but there will be a point in kind of the medium term, where storage crests and begins a draw of that inventory. The next question is: Have any countries in which Vermilion operates provided COVID-19 operating loan guarantees to Vermilion?
Yeah, the specific answer to that question is that there really are none that are providing financing for the oil and gas industry, at least at our company size and our company financial structure. There has been one announced for by the federal government in Canada via BDC, but it really applies at this point only to those companies that have reserve-based loans. We have a covenant-based facility, and perhaps there could be such a government program for the more of the intermediate-sized companies that have similar financing structures to us. But there hasn't been any at present. And, although there are some...
There's some business assistance for just companies in the general economy in several of the countries that we work in. There also has not been an operating loan guarantee program to us in any country outside of Canada. We know Canadian provinces are working on ways to streamline the industry's operations and reduce the administrative costs and other initiatives that would improve the operating status of the companies. But, I, I wouldn't say any significant program has been announced at this point. So the next question was: What was the loss per share for Q1 attributed to?
Primarily due to an impairment, I think it would be better for if we have Lars Glemser again address that question.
Yeah, so we, we provided disclosure in the Q1 report related to the loss. I would say the primary driver of the inflated loss for the first quarter was impairment. We took a charge of about CAD 1.6 billion pre-tax, CAD 1.2 billion after you take the tax impact into consideration. I'll, I'll just reinforce that it is a non-cash charge that we took in the quarter. The primary driver behind that impairment that we took was the very quick and material drop in oil pricing. So we, we have factored that into our assessment from an impairment perspective, and we have outlined the cash generating units that were impacted during the quarter, and that would be the primary contributor to the Q1 loss.
So, next question on the list: How do you see the dividend being reinstated? Will it be back to the CAD 0.23 per month levels, or do you see a gradual increase? When do you see this happening, based on where you see oil prices going? So, you know, let me, let me start off by saying that we, we took the decision to suspend the dividend very seriously. We, we are very proud of the record that the company has had in returning capital to shareholders. We think dividends are the right thing to do. It's one of the reasons the company has been so efficient with its capital in the past.
So, as I mentioned in the presentation, we have always had the proviso on the dividend that it has to be economically warranted, and it would only have been changed if there was a structural change in commodity prices. That's what we have, at least for the duration of the COVID-19 pandemic. So, with respect to looking forward, what I do wanna say is that we are gonna be putting our free cash flow into debt reduction. I think there are just way too many permutations about what could happen to the prices for the various commodities that we produce, to make any prediction about when it would be reinstated or at what level, or what the trajectory would be.
So, my answer on this is gonna be that, it's suspended until further notice, and, we're going to be putting our excess cash flow, our free cash flow into debt reduction at this point. So, the next question is: Is Vermilion looking to make any acquisitions in the energy space in Canada or abroad? So, the answer to this one is, you know, at present, we aren't doing much organizational work on acquisitions. You know, we're really quite focused at the moment on cutting costs out of our operations to maximize cash flow despite the lower prices. I just don't have any acquisitions in mind at the moment.
And, we had said previously that, in particular, we were pretty comfortable with the, property set that we had and the, project inventory set that we already have had. So, I don't think that acquisitions would be a priority for us at present. The last question that we have at this point is: What do you expect your debt position to be at end 2020 and end 2021, should strip prices be correct? And what debt to cash flow level is Vermilion ultimately targeting? So for that one, I would turn to Lars Glemser again.
Yeah, so, within the presentation here, what we're looking to emphasize is the termed-out nature of the balance sheet. The other comment that I think that I'll just walk back towards as well relates to kind of the, the financial position pre the commodity downturn that we're experiencing right now. When we put out guidance, original guidance for 2020, we were targeting and looking to delever to a 1.5 times point from a debt to cash flow perspective. When the dividend was intact, we were producing excess free cash in the early part of 2020. Now that we have had commodity prices fall to the levels that we are at, we have taken out $550 million of costs out of the system.
That is being contributed through the dividend, the reductions on the CapEx side, as well as reductions on the operating expense and expense side of the equation. So essentially, what we have done now is we are completely focused on maintaining debt levels in terms of not letting them increase during this time of commodity price volatility. And that will be our focus for the rest of the year. As we articulated in the Q1 release, we do have excess cash in excess of the CapEx program for the last nine months of 2020. That will be directed to the balance sheet. I think at this time, it's a little bit early to provide guidance on 2021 debt levels, but what you've seen us do here is stick to that payout ratio of 100% or lower.
We've pulled a lot of levers here in the first four months of 2020 to accomplish that, and I think that's a guiding principle you can see us adhering to as we move forward as well.
Okay. Thanks, Lars. So with that, I want to again thank all the attendees of the AGM and look forward to our discussion again in a year. And best to you and your families and your communities through the remainder of this pandemic situation. Goodbye.
This concludes today's conference call. You may now disconnect.