Vermilion Energy Inc. (TSX:VET) entered into an arrangement agreement to acquire Leucrotta Exploration Inc. (TSXV:LXE) for approximately CAD 500 million on March 28, 2022. The transaction will be accomplished by way of a statutory plan of arrangement under the Business Corporations Act (Alberta). Under the terms of the Arrangement, the holders of Leucrotta Shares will receive CAD 1.73 in cash per Leucrotta Share held, plus 1.0 common share of the newly formed Montney company (ExploreCo) and 0.1917 of one ExploreCo common share purchase warrant. The transaction is self-funded. Concurrent with this transaction, Vermilion will also acquire a 12.5% equity stake of an ExploreCo for CAD 14 million. The Agreement provides that Leucrotta will pay Vermilion a non-completion fee of CAD 20 million under certain circumstances. The closing of the Arrangement is subject to Leucrotta Exploration satisfying certain customary conditions, including, but not limited to: (i) the receipt by Vermilion and Leucrotta of all court, TSX Venture Exchange ("TSXV") and other regulatory approvals, (ii) receipt of the requisite securityholder approvals of Leucrotta regarding the Arrangement and related matters, (iii) no material adverse change having occurred in respect of Leucrotta, (iv) a number of other conditions customary in a transaction of the nature of the Arrangement, (v) the Competition Act Approval has been obtained, (vi) Dissent Rights have not been validly exercised, and not withdrawn, with respect to more than 5% of the issued and outstanding Leucrotta Common Shares, (vii) Vermilion shall have executed and delivered the Registration Rights Agreement, and (viii) the Exchange shall have conditionally approved the listing of 2418573 Alberta shares. The Board of Leucrotta unanimously resolved to recommend that the Leucrotta shareholders vote in favour of the Arrangement. The Agreement has the support of all of Leucrotta's management and directors. Directors, officers and entities exercising control or direction over approximately 41% of Leucrotta's fully diluted shares have entered into support agreements in favour of the Arrangement. Leucrotta shareholders approved the transaction at a special meeting held on May 20, 2022. The Arrangement is expected to close in the second half of May 2022. The Arrangement is expected to close shortly after the meeting of the securityholders of Leucrotta, but in any event no later than July 31, 2022, which is the outside date under the Agreement to complete the Arrangement. As of May 26, 2022, the transaction is expected to close on May 31, 2022.

Royal Bank of Canada (TSX:RY) acted as financial advisor and fairness opinion provider to the Board of Directors of Leucrotta. Frank Sur of Gowling WLG (Canada) LLP acted as legal advisor to Leucrotta. CIBC Capital Markets acted as financial advisor and Stephanie Stimpson and Michael Pedlow of Torys LLP acted as legal advisors to Vermilion Energy Inc. Shawna Bennett, Scott Robertson and Mark Pearson of Stifel Financial Corp. (NYSE:SF) acted as financial advisor to Vermilion.

Vermilion Energy Inc. (TSX:VET) completed the acquisition of Leucrotta Exploration Inc. (TSXV:LXE) on May 31, 2022.