ADVANTAGE ENERGY LTD. A Progressive Montney Producer for the New
Energy Market
Investor Presentation | March 2024 |
(1)
Advantage Corporate Highlights
Market Overview
Market Capitalization: $1.6 b
Enterprise Value: $1.8 b
Net Debt(2): $196 m(3) (Advantage only)
Shares Outstanding: 159.8 m
TSX 52-week high/low: AAV $10.50 - $6.79
2024 Guidance (4)
Strategic focus: AFF per share(2) growth
65,000 to 68,000 BOE/d
$220 m to $250 m capital spending
All free cash flow(2) dedicated to buybacks
Pure Play Montney Producer
Decades of top-tier inventory
Glacier Gas Plant capacity of 425 mmcf/d
Operating cost ~$0.64/mcfe
Carbon Capture and Storage Developer
Subsidiary Entropy Inc. financed
by Brookfield and Canada Growth Fund
Developing global scale "pipeline" of projects
Post-combustion CCS project at Glacier is
first-in-kind globally
Ownership of leading solvent and process technologies to drive costs below $40/tonne
- Advantage was recognized by the TSX as one of the top 30 issuers based on 3-yeardividend-adjusted share price performance (www.tsx.com/tsx30).
- See "Specified Financial Measures" in Advantage's MD&A on page 33 for the year ended December 31, 2023 for information relating to these measures, which information is incorporated by reference into this presentation. See "Specified
Financial Measures" in the Advisory of this presentation. | 2 |
- Net debt for Advantage Energy Ltd. as at December 31, 2023, excluding Entropy Inc., a subsidiary of Advantage.
- All 2024 Guidance excludes the financial and operating results of Entropy Inc., a subsidiary of Advantage.
Corporate Strategy - Strength Across the Board
Performance
~10% compound annual production
growth
Net debt(1) target of $200 m to $250 m(2)
Bought back ~20% of shares and
returned $378 million to shareholders(3)
Evolving Competitively
Entropy Inc. -
Modular Carbon Capture and StorageTM
Advancing liquids development
Technical enhancements delivering
superior performance
Top Tier Asset Quality
151% PDP reserve additions replaced(1), PDP F&D(1) cost of $7.67/boe (2023)
3 year recycle ratio(1) of 2.4x for PDP,
2.2x for 2P (2021 to 2023)
Infrastructure dominance facilitating production growth & low cost structure
Foundations in Risk Management
20% to 50% commodity hedges
Diversified gas markets and low relative
commitments
Low abandonment liability and
responsible stewardship
1. | See "Specified Financial Measures" in Advantage's MD&A on page 33 for the year ended December 31, 2023 for information relating to these measures, which information is incorporated by reference into this | |
presentation. See "Specified Financial Measures" in the Advisory of this presentation. | 3 | |
2. | Net debt target excludes Entropy Inc., a subsidiary of Advantage. | |
3. | Shares bought back from April 13, 2022 to February 29, 2024. Percentage based on shares repurchased compared to the 190.8 million shares outstanding on March 31, 2022. |
2024 Capital Investment Thesis Maximizes AFF Per Share(1)(2)
Glacier
18 wells (18 net)
$220 - $250 | |
million | Wembley |
Net Capital | 3 wells (3 net) |
Expenditures (1) |
Phased infrastructure investments pave the path to 500+ mmcf/d operated capacity
Capital Efficiency (1)
$11,600/boe/d
24% corporate decline rate (1)
Production
65,000 to 68,000 boe/d
Net Debt (1) Target
$200 million to $250 million(3)
Maximizing AFF Per Share
Free Cash Flow Allocated to Share Buybacks
Low Cost Structure
Operating expense ~$3.85/boe
1. See "Specified Financial Measures" in Advantage's MD&A on page 33 for the year ended December 31, 2023 for information relating to these measures, which information is incorporated by reference into this presentation. See "Specified Financial Measures" in the Advisory of this presentation.
2. Forward-looking information. See "Corporate Update" on page 3 in Advantage's MD&A for the year ended December 31, 2023 for an explanation of significant differences in forward-looking information and historical results. | 4 |
Refer to the Advisory in this presentation and Advantage's news releases dated March 4, 2024 and November 30, 2023 including advisories in the press releases for material assumptions and risk factors. | |
3. Net debt target excludes Entropy Inc., a subsidiary of Advantage. |
Three-Year Strategic Plan: Investing in Measured Production Growth
$300
$200
Millions
$100
$0
Net Capital Expenditures (1)(2)
2023 | 2024 | 2025 |
Production Range (2)
80,000
75,000
70,000
65,000
60,000
55,000
50,000
2023 | 2024 | 2025 |
Range
1. See "Specified Financial Measures" in Advantage's MD&A on page 33 for the year ended December 31, 2023 for information relating to these measures, which information is incorporated by reference into this presentation. See
"Specified Financial Measures" in the Advisory of this presentation. | |
2. Forward-looking information. See "Corporate Update" on page 3 in Advantage's MD&A for the year ended December 31, 2023 for an explanation of significant differences in forward-looking information and historical results. Refer to | |
the Advisory in this presentation and Advantage's news releases dated March 4, 2024 and November 30, 2023 including advisories in the press releases for material assumptions and risk factors. 2025 for illustration purposes only and is | 5 |
subject to a number of factors including recent well results. |
Corporate Strategy: Maximize AFF per Share Growth
C$3.50/GJ AECO
Adjusted Funds Flow per Share at Forward Pricing(1)(2)
20242025
Without Share Buybacks | With Share Buybacks | |
Millions
$500
$400
$300
$200
$100
$0
2024 AFF Sensitivity(3)
C$3.50/GJ AECO | Free Cash Flow | |||
Dedicated to | ||||
C$3.00/GJ AECO | ||||
Shareholder Returns | ||||
C$2.50/GJ AECO | ||||
C$2.00/GJ AECO | ||||
C$1.55/GJ AECO | ||||
Capital Spending | ||||
Delivering | ||||
~10% Production | ||||
Growth | ||||
Adjusted Funds Flow | Capital Allocation |
- AFF per share with share buybacks assumes production growth of approximately 10% annually and all FCF dedicated to share buybacks. Without share buybacks analysis assumes that no shares were bought back from April 13, 2022 and net debt reduced and cash accumulated. Advantage expects it will not be subject to cash taxes until calendar 2027 due to its $1.1 billion in high-quality tax pools.
- Forward pricing assumptions: WTI US$/bbl (2024-$76,2025-$71), AECO $CDN/GJ (2024-$2.06,2025-$3.11), FX $CDN/$US (2024-1.35,2025-1.35), includes hedges.
- Other price assumptions include WTI US$75/bbl, AECO/NYMEX Basis range US$0.85-US$1.00/mmbtu, $CAD/$USD 1.35 and hedging.
6
World Class Assets, Operational Excellence, Environmental Leadership
PROGRESS
GLACIER
Glacier Carbon Capture
& Storage Asset
VALHALLA
WEMBLEY
Alberta Core Assets
224 Net Montney Sections
AAV Lands
AAV Facilities
Disciplined Financial Management
Self-funded growth with free cash flow (1)
Prolific Gas Foundation
Free cash flow (1) generation with low declines and cost
High Quality Light Oil
Deep inventory of high quality resource
Clean Sustainable Energy
State of the art emissions engineering
Low-Cost Owned Infrastructure
Controlled, efficient, innovative
Invested in Alberta's Communities
Generating employment and giving back
1. See "Specified Financial Measures" in Advantage's MD&A on page 33 for the year ended December 31, 2023 for information relating to these measures, which information is incorporated by reference into this | 7 |
presentation. See "Specified Financial Measures" in the Advisory of this presentation. |
Low-Cost Structure: Key Factor in Free Cash Flow Generation
Op Exp | Royalty Exp | G&A | Int Exp | Trans Exp |
$/boe
$25
$20
$15
$10
$5
$0
Peer | AAV | Peer | Peer | Peer | Peer | Peer | Peer | Peer | Peer | Peer | Peer | Peer | Peer | Peer |
1. Excludes transportation expense as transportation is not a typical cost as it is generally associated with accessing higher priced markets. | 8 |
2. Source: Scotiabank, November 20, 2023. Cash costs for nine months ended September 30, 2023. |
Advantage Montney Assets - Multizone Oil, Liquids and Gas Throughout
Doig
Upper
Montney
Middle
Montney
300m
Glacier | Valhalla | Progress | Wembley | Conroy, BC |
D4
D3
D2
D1
2024 Targets
Lower | Advantage Operated HZ | |
Montney | ||
Belloy | Offset Operator HZ | |
9 | ||
Glacier Core: World-Class Free Cash Flow(1) Engine | |||||||||||||
Glacier Production Forecast2 | Net Capital Expenditures1,4 & FCF1 | ||||||||||||
Actuals | Free Cash | ||||||||||||
Net Operating Income | 1,2 | Flow1 | |||||||||||
Growth | 1,2 | ||||||||||||
04-01: 15.6 MMcf/d | Net Capital Expenditures [MM$] | Engine | |||||||||||
Base | |||||||||||||
3 | Cumulative Free Cash Flow [MM$] | 1,2 | |||||||||||
5 well average IP30 | boe/d | ||||||||||||
09-32: Q4/24 | |||||||||||||
$350MM+ | |||||||||||||
2-32: Frac clean up | Production | ||||||||||||
08-17: Q3/24 | |||||||||||||
2023 | 2024 | 2025 | 2023 | 2024 | 2025 | ||||||||
05-21: Q1/24 | |||||||||||||
Planned Turnaround | |||||||||||||
IP180 Comparison vs Peers | |||||||||||||
13-12: Q4/24 | |||||||||||||
→ | P10 | ||||||||||||
Probability | |||||||||||||
13-28: Q2/24 | Newest AAV wells | ||||||||||||
Peer 2 | Peer 1 | AAV | |||||||||||
P50 | |||||||||||||
AAV Pipelines | Cumulative | Median AAV Wells | |||||||||||
04-22: On production | 2024 Locations | ||||||||||||
Significantly Outperform Peers | |||||||||||||
Upper Montney | |||||||||||||
P90 | |||||||||||||
Montney D4 | |||||||||||||
Montney D1 | Higher Well Productivity | ||||||||||||
2023 wells | |||||||||||||
Cum. 180 day BCF/100m |
- See "Specified Financial Measures" in Advantage's MD&A on page 33 for the year ended December 31, 2023 for information relating to these measures, which information is incorporated by reference into this presentation. See "Specified Financial Measures" in the Advisory of this presentation.
- Forward-lookinginformation. See "Corporate Update" on page 3 in Advantage's MD&A for the year ended December 31, 2023 for an explanation of significant differences in forward-looking information and historical results. Refer to the Advisory in this presentation and Advantage's news releases dated March 4, 2024 and November 30, 2023 including advisories in the press releases for material assumptions and risk factors. 2025 is for illustration purposes only and is subject to a number of factors including recent well results. Economic calculations based on forward pricing assumptions: WTI US$/bbl
(2023-$78,2024-$76,2025-$71), AECO $CDN/GJ (2023-$2.50,2024-$2.06,2025-$3.11), FX $CDN/$US (2023-1.35,2024-1.35,2025-1.35). | 10 |
- Production rates are Advantage working interest sales volumes.
- Excludes Progress Gas Plant net capital expenditures as associated with the Greater Glacier Area.
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Advantage Oil & Gas Ltd. published this content on 04 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 March 2024 22:44:41 UTC.
