ADVANTAGE OIL & GAS : Announces Guidance & Plans to Grow Corporate Production 24% / Glacier Phase IV Expansion Approved
Advantage Oil & Gas Ltd. – News ReleaseAdvantage Announces Guidance & Plans to Grow Corporate Production 24% Glacier Phase IV Expansion ApprovedJuly 4, 2011(TSX: AAV, NYSE: AAV)
07/04/2011| 06:35pm US/Eastern
CALGARY, ALBERTA, July 4, 2011 – Advantage Oil and Gas Ltd. (“Advantage” or the “Corporation”) is pleased to announce that the Board of Directors of Advantage has approved a capital and operating budget for the 12 month period ending June 30, 2012. The capital budget is focused on a Phase IV development program at Glacier with two key objectives; i) increase throughput capacity at our Glacier gas plant from 100 mmcfd to 140 mmcfd by Q2 2012 and drill a sufficient number of wells to fill our
Lower Montney formations. In conjunction with the
anticipated production increase at Glacier, corporate production is forecast to grow 24% to a H1 2012 exit rate of approximately 29,000 boed at which time Glacier will represent approximately 80% of total production.
Advantage’s capital budget for the 12 month period ending June 2012 is set at $216 million of which
$200 million (93%)
$155 million will be invested to increase
throughput to 140 mmcfd and $45 million will be directed to further evaluate the Middle and Lower
Montney formations where we believe significant potential for resource and reserve growth exists.
Since 2008, drilling results at Glacier has increased the quality and magnitude of our Montney natural gas resource which is contained in approximately 290 meters of formation in the three major gas layers (and
numerous sub-layers) of the Upper, Middle and Lower Montney. A
total of only
60 net Montney
horizontal wells (51.3 net Upper Montney and 8.7 net Lower Montney) have been drilled on our 80 net
section land block which offers significant opportunity to
further delineate and develop each
Montney layers. Following our review of drilling results to date, Advantage believes our Montney well inventory could be between 900 and 1,150 horizontal wells.
Advantage’s capital budget reinforces our pure play natural gas resource focus which is predicated on investing in economic growth and additional reserve and resource identification, while maintaining a strong balance sheet in the context of prevailing economic conditions. Our go forward capital program will be funded primarily out of cash flow, our undrawn credit facilities and potential divestments of conventional assets. We will continue with a technically focused and financially disciplined approach to create value from our Glacier property which has one of the lowest operating and royalty cost structures in Western Canada.News ReleaseAdvantage Oil & Gas Ltd.Page 1 of 4Phase III Montney Drilling Increased the Upside Potential at Glacier