French connection

It’s not uncommon for diners to place their trust in a bottle of French wine.

Vermilion Energy equipment operating near Drayton Valley in the oil-rich Cardium formation.

Vermilion Energy equipment operating near Drayton Valley in the oil-rich Cardium formation.

It’s not uncommon for diners to place their trust in a bottle of French wine.

Lorenzo Donadeo and his business partners put their faith in French oil.

In 1997, Donadeo, Claudio Ghersinich and Jeff Boyce negotiated the purchase of 150 oil wells in France from ExxonMobil Corp. for $42 million. It was a big step for their Calgary-based company, Vermilion Energy Inc. (TSX: VET), which at the time was producing only a fraction of the approximately 3,500-barrels-per-day output of the French properties.

“We were looking domestically, but the problem was at that point in time the prices were starting to increase and it was getting very expensive to buy properties,” said Donadeo, Vermilion’s president and CEO, and a former Red Deer resident.

Not only was France a less competitive market to buy into, but Donadeo, Ghersinich and Boyce liked the idea of buying a non-core asset of a major operator. They reasoned that Exxon probably had not considered all the ways it might add value to its relatively small play in Europe.

“We started out just talking to the people who work there,” said Donadeo, noting that the suggestions they provided helped boost production.

One particularly useful conversation occurred while the deal was still being negotiated. A senior manager told the Canadians about a well-stocked wine cellar that was among Exxon’s French assets.

“We said, if they ask us to go to a higher number, we’ll tell them that we’ll meet them half way but we want them to throw in the wine cellar,” recalled Donadeo.

The opportunity came during a subsequent phone conversation with Exxon officials.

“When we suggested that, the phone line just went dead,” said Donadeo, adding that Exxon ultimately agreed.

In the years that followed, Vermilion expanded its presence in France. It also acquired assets in the Netherlands and Ireland, as well as Australia.

Today, the company produces about 35,000 barrels of oil-equivalent energy commodities a day, with this number expected to approach 55,000 barrels over the next several years as new assets in Ireland go into production. Vermilion’s market capitalization is around $4.5 billion and it has about 500 employees and contractors.

With oil currently trading at about $110 a barrel, and expected to rise, Donadeo is bullish about his company’s future.

“About 80 per cent of our revenues are tied to oil,” he pointed out.

“We’re in pretty good shape.”

Donadeo is also excited about the potential of new technologies like horizontal drilling and multi-stage fracturing to boost production from the company’s mature fields in Europe and Canada.

To some extent, Vermilion’s success is rooted in the coal mines of west-Central Alberta. Donadeo’s father Antonio toiled there in the 1950s after emigrating from Italy.

“It was a terrible place to work,” said Donadeo. “They worked about a thousand feet underground in really terrible working conditions.”

Antonio eventually settled in Red Deer, where he joined Border Paving and worked his way up to a foreman’s position. Donadeo’s mother Victoria, meanwhile, toiled as a cleaning lady at Alberta School Hospital — which later became Michener Centre.

Donadeo said he and his sisters Lina (Wedderburn), Luciana (Daniluck) and Lydia (Hrabec) learned the importance of hard work, perseverance and education while growing up.

“All of us have benefited from the hardships of my parents.”

After graduating from Camille J. Lerouge School, Donadeo earned an engineering degree from the University of Alberta. In 1981, he went to work for Hudson’s Bay Oil and Gas Co., which a few months later was purchased by Dome Petroleum Ltd. In 1988, Amoco Canada Petroleum Co. Ltd. acquired Dome.

Donadeo served as a facilities engineer and production engineer before moving into the company’s head office in Calgary.

In 1993, Donadeo and Ghersinich — a fellow engineer at Amoco — started their own natural gas marketing firm under the name Vista Nuova Energy Inc. Through a number of small acquisitions they accumulated about 300 barrels a day in producing assets.

Vista Nuova went public in 1995 by way of a reverse takeover of junior capital pool company Vermilion Resources Ltd. Boyce came on board at that time.

With about three-quarters of its production coming from international operations, Vermilion has become adept at working on foreign soil. For instance, said Donadeo, the company has learned to plan farther ahead to compensate for slower regulatory systems and fewer oilfield service providers.

It’s also developed an understanding of the mentalities of the people in the various countries it’s active in, he added.

“They all have different quirks, jut like Canadians do.”

Donadeo and his wife Donna — whom he also credits for his success — make frequent trips to Red Deer and spend much of their summers in Sylvan Lake. A big chunk of Vermilion’s shareholder base is also in Central Alberta, noted Donadeo, who lists his father and his brother-in-law Ray Keith as among his company’s biggest local boosters.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

A vial of the Medicago vaccine sits on a surface. CARe Clinic, located in Red Deer, has been selected to participate in the third phase of vaccine study. (Photo courtesy
Red Deer clinical research centre participating in plant-based COVID-19 vaccine trial

A Red Deer research centre has been selected to participate in the… Continue reading

Asymptomatic testing will now be available for "priority groups" who are most likely to spread the COVID-19 virus to vulnerable or at-risk populations. File photo by THE CANADIAN PRESS
Red Deer jumps to 449 active COVID-19 cases on Sunday

1,516 new cases identified in Alberta

The QEII was closed Sunday morning due to a pole fire. (Photo courtesy City of Red Deer)
UPDATE: QEII near Red Deer reopens

The QEII has been reopened after being closed due to a pole… Continue reading

Innisfail RCMP are investigating a single-vehicle crash that happened west of Bowden on March 21, 2021. (File photo by Advocate staff)
Bashaw RCMP investigate fatal collision in central Alberta

Bashaw RCMP are investigating after a fatal collision Saturday afternoon. Police were… Continue reading

A damaged unicorn statue is shown in a field outside of Delia, Alta. in this undated handout photo. It's not often police can report that a unicorn has been found, but it was the truth Saturday when RCMP said a stolen, stainless-steel statue of the mythical beast had been located in a field not far from where he'd been taken. THE CANADIAN PRESS/HO, RCMP *MANDATORY CREDIT*
Mounties get their unicorn; stolen statue of mythical beast found in Alberta field

DELIA, Alta. — It’s not often police can report that a unicorn… Continue reading

Investigators from the Vancouver Police Department were in Chilliwack Saturday, collecting evidence connected to a double homicide. (file photo)
Police investigate shooting death of man outside downtown Vancouver restaurant

Vancouver police say one man was killed in what they believe was… Continue reading

Dr. E. Kwok administers a COVID-19 vaccine to a recipient at a vaccination clinic run by Vancouver Coastal Health, in Richmond, B.C., Saturday, April 10, 2021. THE CANADIAN PRESS/Jonathan Hayward
B.C. to start registering people 18 years and older for COVID-19 vaccines

VICTORIA — The British Columbia government says it’s inviting people 18 years… Continue reading

San Jose's Tomas Hertl, center, celebrates with teammates Patrick Marleau, left, and Rudolfs Blacers, right, after Hertl scored a goal during the first period of an NHL hockey game against the Minnesota Wild, Friday, April 16, 2021, in St. Paul, Minn. (AP Photo/Stacy Bengs)
Patrick Marleau set to break Gordie Howe’s games record

For Patrick Marleau, the best part about Monday night when he is… Continue reading

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, speaks during a press briefing at the White House, Tuesday, April 13, 2021, in Washington. (AP Photo/Patrick Semansky)
Half of U.S. adults have received at least one COVID-19 shot

WASHINGTON — Half of all adults in the U.S. have received at… Continue reading

People are shown at a COVID-19 vaccination site in Montreal, Sunday, April 18, 2021, as the COVID-19 pandemic continues in Canada and around the world. THE CANADIAN PRESS/Graham Hughes
Federal government to send health-care workers to Ontario, Trudeau says

MONTREAL — Prime Minister Justin Trudeau says federal departments and some Canadian… Continue reading

People cross a busy street in the shopping district of Flushing on Tuesday, March 30, 2021, in the Queens borough of New York. Access to the COVID-19 vaccine in the United States is growing by the day. THE CANADIAN PRESS/AP-Kathy Willens
Despite COVID-19 vaccines, Americans in D.C. not feeling celebratory — or charitable

WASHINGTON — This might make Canadians jealous of their American cousins for… Continue reading

A man pays his respects at a roadside memorial in Portapique, N.S. on Thursday, April 23, 2021. RCMP say at least 22 people are dead after a man who at one point wore a police uniform and drove a mock-up cruiser, went on a murder rampage in Portapique and several other Nova Scotia communities. THE CANADIAN PRESS/Andrew Vaughan
Memorial service in Nova Scotia marks one year since mass shooting started

TRURO, N.S. — A memorial service is planned for today in central… Continue reading

In this April 23, 2016, photo, David Goethel sorts cod and haddock while fishing off the coast of New Hampshire. To Goethel, cod represents his identity, his ticket to middle class life, and his link to one the country's most historic industries, a fisherman who has caught New England's most recognized fish for more than 30 years. (AP Photo/Robert F. Bukaty)
‘It’s more than just a fish:’ Scientists worry cod will never come back in N.L.

ST. JOHN’S, N.L. — The latest assessment of Atlantic cod stocks, whose… Continue reading

Most Read