Advantage Energy Ltd · TSX:AAV
Advantage Energy — Investor Presentation (January 2025)
44 slides from Advantage Energy's investor presentation, January 2025
Slide 1: A Progressive Montney Producer for the New Energy Market
A Progressive Montney Producer for the New Energy Market Investor Presentation January 2025
Slide 2: Cautionary Statements / Advisory
Cautionary Statements / Advisory This presentation contains forward looking information and specified financial measures such as non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary financial measures. Readers are advised to read this presentation in conjunctio
Slide 3: Advantage Energy First Principles
Advantage Energy First Principles Convert Energy to Shareholder Wealth by Delivering Exceptional Performance Concentrated High-Quality Assets Exceptional Operational Performance Prudent Financial and Risk Management Carbon Capture and Storage Leaders 3
Slide 4: World-Class Resource Base: the Foundation of our Business
World-Class Resource Base: the Foundation of our Business GORDONDALE CONROY PROGRESS GLACIER ATTACHIE VALHALLA WEMBLEY 335 Sections of Montney Rights Advantage Operated Facility 260 Sections of Charlie Lake Rights Notes 4 • Sections refers to net sections being the sections Advantage has an interest
Slide 5: Financial Foundations
Financial Foundations 6% Market Overview: Capital Structure Market Value of Equity 21% Capital Market Capitalization: $1.7bn Bank Debt + Working Capital Structure Net Debt(1): $0.6bn 73% Convertible Debentures Enterprise Value: $2.3bn Equity: AAV (TSX Listed) Shares Outstanding: 166.9 mm Total share
Slide 6: The Last Three Years: Transformational
The Last Three Years: Transformational Increased Total Production by 52% and Liquids Production by 168% Repurchased ~20% of Shares Outstanding Significantly Increased Well Productivity and Expanded Tier 1 Inventory Highly Accretive, Synergistic Charlie Lake Asset Acquisition In BC, acquired 90 premi
Slide 7: Maximize AFF Per Share Growth Without Compromising Our Balance Sheet
CORPORATE STRATEGY Maximize AFF Per Share(1) Growth Without Compromising Our Balance Sheet Annual Organic Exceptional Production Growth Operational of up to 10% Performance Share Buyback Relentless Cost to Compound Focus Per-Share Growth 7
Slide 8: Advantage Capital Allocation Framework
CORPORATE STRATEGY Maximizing AFF Per Share(1) Growth: Advantage Capital Allocation Framework LOW Growth (<5%) OPTIMIZED Growth (5-10%) HIGH Growth (>10%) (1) (1) Similar FCF in first year, Priority: Maximize FCF via Funding shortfall at bottom-decile pricing but less in mid and long term high-IRR i
Slide 9: Capital Allocation: High Graded for FCF Growth
Capital Allocation: AECO Forwards - CAD/GJ (3) High Graded for FCF Growth (2)(3) $4.00 $3.50 $3.00 Internal Rate of Return (%) $2.50 $2.00 $1.50 $1.00 (3) WTI Crude Oil Futures – USD/bbl $75.00 Mineral tenure retention drill Bubbles indicate onstream date of planned drills vs IRR at strip pricing $7
Slide 10: Tier 1 Half-Cycle Generic Type Wells
Glacier Glacier Glacier Valhalla Wembley Charlie Lake Dry Gas Dry Gas Dry Gas Rich Gas Oil Oil Half-Cycle Generic Type Wells Upper Montney D4 Montney D1 Montney D4 Montney D3 Montney Braeburn Generic Generic Generic Type Liquids Oil & C5+ Type Curve IRR3 Payout4 Well Capital Advantage Energy – Tier
Slide 11: Relentless Cost Focus: Three-Year Lookback
CORPORATE STRATEGY Relentless Cost Focus: Three-Year Lookback Total Capital Efficiency(1) ($k/boe/d) PDP FD&A Costs(1) ($/boe) PDP Recycle Ratio(1) (x) 2021-2023 Average 2021-2023 Average 2021-2023 Average $15 $25 4.0x 3.5x $12 $20 3.0x $9 2.5x $15 2.0x $10 $6 1.5x 1.0x $5 $3 0.5x $- $0 0.0x Source:
Slide 12: Share Buybacks: Continued Commitment to Compounding
CORPORATE STRATEGY $MM MM Shares Cumulative Share Buybacks 400 60 Share Buybacks: Continued Dollars Shares Commitment to Compounding 300 45 200 30 2022 to 2024 100 15 Advantage Allocated $379mm to Share Repurchases - - Over Three Years (~37.8mm Shares) Charlie Lake and Montney Acquisition Resulted i
Slide 13: 2025 Budget Guidance
2025 Budget Guidance (2) Cash Used in Investing Activities ($ millions) $270 to $300 Total Production (boe/d) 80,000 to 83,000 Natural Gas (%) 84% to 85% Crude Oil and Condensate (%) 11% to 12% NGLs (%) ~4% (1) Expenses Royalty Rate (%) 8% to 10% Operating Expense ($/boe) $5.20 to $5.90 Transportati
Slide 14: Three-Year Strategic Plan: Implementing our Corporate Strategy
Three-Year Strategic Plan: Implementing our Corporate Strategy (1)(2) (2) Net Capital Expenditures ($MM) Production Range (boe/d) 350 +/- $20mm +/- $25mm 95,000 300 +/- $15mm 250 90,000 200 85,000 150 80,000 100 75,000 50 0 70,000 2025 2026 2027 2025 2026 2027 Glacier Plant Turnaround in 2026: 425 m
Slide 15: Strategic Outlook at Strip Pricing: FCF Exceeds $500mm Over 3 Years
Strategic Outlook at Strip Pricing: FCF Exceeds $500mm Over 3 Years (1)(2) Strong Free Cash Flow Growth, Exceptional Adjusted Funds Flow Disciplined Reinvestment per Share Growth 70% 2.0x 250 100% 60% Free Cash Flow ($mm) 200 1.5x Reinvestment Ratio 75% 50% AFFPS Growth 150 40% ND / CF Target ND/AFF
Slide 16: Commodity Price Sensitivity Analysis
Commodity Price Sensitivity Analysis (1)(2) (1)(2) 2025 AFF - Factor Sensitivities 2025 AFF - Scenario Analysis $90 Natural Gas Price +/- $85 $0.50/mcf $80 Liquids Prod +/- 10% $75 WTI ( US$/bbl) $70 Gas Prod +/- 10% $65 $60 WTI +/- $10/bbl $55 $50 FX +/- $0.01 $45 $40 -50 -30 -10 10 30 50 $1.00 $1.
Slide 17: Discretionary Free Cash Flow Enhancements
Discretionary Free Cash Flow Enhancements (1) Capital reductions and non-core divestitures support de-levering, return to buybacks AB Non-Core Dispositions ~$15 MM Expected to include ~500 boe/d of low netback production Progress Phase 1 Deferral $35 MM BC Montney Disposition Discretionary Non-Opera
Slide 18: Asset Portfolio Spanning the Development Life Cycle
Asset Portfolio Spanning the Development Life Cycle Wembley Quality/Availability Data Confidence Glacier Charlie Lake Conroy Valhalla Progress Bubble sizes indicate relative Attachie scale of total drilling inventory Exploration Delineation Development Exploitation Play Evolution 18
Slide 19: Glacier – Development Matched to Infrastructure Capacity
Glacier – Development Matched to Infrastructure Capacity Net Capital Expenditures & FCF Glacier Sales Production (BOE/d) 01-06: 3 well pad Net Operating Income [MM$]1,2,7 75,000 Spud Q3 2025 Net Capital Expenditures [MM$]1,2,6 2024 Cumulative Free Cash Flow [MM$]1,2,7 60,000 12-03: 3 well pad Spud Q
Slide 20: Wembley – Activity Tailored to Available Capacity
Wembley – Activity Tailored to Available Capacity Net Capital Expenditures & FCF Wembley Sales Production (BOE/d) 10,000 Net Operating Income [MM$]1,2,7 Net Capital Expenditures [MM$]1,2 2024 Cumulative Free Cash Flow [MM$]1,2,7 8,000 100 6,000 2025 50 4,000 2026 $mm 05-15: Onstream Q2 2025 2 D4 / 1
Slide 21: Valhalla & Progress – Stage set for Glacier Complex Expansion
Valhalla & Progress – Stage set for Glacier Complex Expansion Net Capital Expenditures & FCF Valhalla/Progress Sales Production (BOE/d) Net Operating Income [MM$]1,2,7 12,000 Net Capital Expenditures [MM$]1,2,6 AAV Pipelines Cumulative Free Cash Flow [MM$]1,2,7 10,000 2024 2025 Locations Upper Montn
Slide 22: Charlie Lake Acquisition Delivering Results
Charlie Lake Acquisition Delivering Results NRM GORDONDALE Significant capital and cost synergies already realized; further optimization expected in 2025 and 2026 CNRL 01-01 Focused on development drilling, targeting the most capital-efficient locations 16-29 BATTERY No potential benefits from highe
Slide 23: Additional Synergies Expected in 2025 and Beyond
Additional Synergies Expected in GORDONDALE 2025 and Beyond (2) Progress Phase 1 Deferral to 2Q26 ($35mm) Progress Phase 2 Deferral ($100mm) PROGRESS GLACIER Non-core Infrastructure Monetization Area Pipelines AAV Further Optimization of Existing NGTL Owned & Regional infrastructure VALHALLA Progres
Slide 24: Charlie Lake – Efficient Liquids-Weighted Development
Charlie Lake – Efficient Liquids-Weighted Development Net Capital Expenditures & FCF Charlie Lake Sales Production (BOE/d) 13-26: Q4 2025 AAV Pipelines 20,000 Net Operating Income [MM$]1,2,7 Locations Net Capital Expenditures [MM$]1,2 Cumulative Free Cash Flow [MM$]1,2,7 2024 2025 Program 15,000 202
Slide 25: Since 2021: Payouts Less Than Year for >80% of Wells
Since 2021: Payouts Less Than 1 Year for >80% of Wells 2021 to 2023 Well Payout (1) Performance Months Onstream 1x PO Glacier 2x PO Glacier 3x PO Glacier 1x PO Valhalla 2x PO Valhalla 3x PO Valhalla 1x PO Wembley 2x PO Wembley 3x PO Wembley 1x PO Progress 2x PO Progress 3x PO Progress 2021 average 1
Slide 26: Deep Inventory of Drilling Locations Across Commodities
Charlie Lake Inventory: 264 Wells Deep Inventory of Drilling Locations 2025 Net Drills: 14* *Includes 4.4 Non-Op Wells ~10 Years of Charlie Lake Tier 1 Inventory Across Commodities Within 1 mile of existing producer >20 Years of Montney >4mbbls/section OOIP Tier 1 Inventory mapped Two miles fr
Slide 27: Exceptional Execution Driving Higher Tier 1 Inventory
Exceptional Execution Driving Higher Tier 1 Inventory Glacier Tier 1 Inventory Valhalla Tier 1 Inventory Wembley Tier 1 Inventory + 47% + 26% + 69% 2020 Tier 1 Wells Tier 1 2024 Total 2020 Tier 1 Wells Tier 1 2024 Total 2020 Tier 1 Wells Tier 1 2024 Total Inventory Drilled Promotions Inventory Inven
Slide 28: Dominant Infrastructure Position
Dominant Infrastructure Position GORDONDALE Foundation for Operational Excellence, Cost Control Progress plant deferred until 2Q 2026 – no production impact PROGRESS Further major infrastructure spending not required in 3-year plan Raw Gas Processing Capacity (mmcf/d) 650 GLACIER Major Pipelines KAP
Slide 29: Market Diversification Snapshot: Empress Provides Optionality
(2) Natural Gas Price Exposures Market Diversification Snapshot: Empress Provides Optionality 7% 6% 6% 5% 4% 4% 4% 4% Power 27 mmcf/d to 3% Generation 10% 7% 9% Emerson until 8% Nov-32 7% Nymex (Basis) 6% 12% 21% 19% U.S. Midwest 12% 26% Dawn 20% 21% 32% Emerson Empress Capacity: 12% 150 to 180 mmcf
Slide 30: Three-Year Plan Enhanced by Natural Gas Hedging
200 60% Gas Hedged (CAD/mcf) Three-Year Plan Enhanced by Natural Gas Hedging % of production 150 45% Improving Fundamentals mmcf/d 100 30% $3.34 $3.74 $3.51 $3.06 $3.06 WCSB Gas Market Moving From Oversupplied to Undersupplied 50 15% $3.55 $3.55 $3.43 $3.36 $3.23 $3.23 $3.23 0 0% 600 Alberta Storage
Slide 31: Commercial Carbon Capture and Storage
Ownership Structure Commercial Proprietary CCS Technology Carbon Capture Advantage 62% and Storage Implied net valuation >$300 million(9) Today Exclusive ownership of world- leading solvent with innovative Upon $500m deployment ($137m deployed to-date), process enhancement technologies Advantage exp
Slide 32: Environmental, Safety, and Stewardship
Environmental, Safety, and Stewardship Scope 1 and 2 Total Emissions 20,887 tCO2e carbon captured and Scope 1 and 2 Total Emissions Intensity sequestered in 2023 16% $4 million spent on abandonment and reduction 400 0.020 from 2021 reclamation in 2023, exceeding 5 times our 350 regulatory requiremen
Slide 33: Footnotes
Footnotes 1. Specified financial measure which is not a standardized measure under IFRS Accounting Standards and may not be comparable to similar specified financial measures used by other entities. Please see "Specified Financial Measures" for the composition of such specified financial measure, an
Slide 34: Advisories
Advisories Forward-Looking Information and Statements The information in this presentation contains certain forward-looking information and forward-looking statements (collectively, "forward-looking statements") within the meaning of applicable securities laws relating to the Corporation's plans and
Slide 35: Advisories (continued)
Advisories (continued) This presentation contains forward-looking statements which are estimates of Advantage's three-year plan, including average annual production range (corporately and by location), net capital expenditures (corporately and by location), net operating income (corporately and by l
Slide 36: Advisories (continued)
Advisories (continued) The future acquisition by the Corporation of the Corporation's shares pursuant to a share buyback program, if any, and the level thereof is uncertain. Any decision to implement a share buyback program or acquire shares of the Corporation will be subject to the discretion of th
Slide 37: Advisories (continued)
Advisories (continued) Oil and Gas Metrics This presentation contains a number of oil and gas and finance metrics, including "PDP FD&A", "recycle ratio", "payout", "internal rate of return (IRR)", "IP30", "IP90" and "IP180" which do not have standardized meanings or standard methods of calculation a
Slide 38: Advisories (continued)
Advisories (continued) Net Capital Expenditures Net capital expenditures include total capital expenditures related to property, plant and equipment, exploration and evaluation assets and intangible assets. Management considers this measure reflective of actual capital activity for the period as it
Slide 39: Advisories (continued)
Advisories (continued) Reinvestment Ratio Reinvestment ratio is calculated by dividing net capital expenditures by adjusted funds flow. Advantage uses reinvestment ratio as an indicator of the efficiency and liquidity of Advantage's business by measuring its cash available after net capital expendit
Slide 40: Advisories (continued)
Advisories (continued) Supplementary Financial Measures Internal Rate of Return ("IRR") Internal rate of return means the rate of return of a well or the discount rate required to arrive at a net present value (“NPV”) equal to zero. Capital Efficiency Capital efficiency is calculated by dividing net
Slide 41: Advisories (continued)
Advisories (continued) Production estimates contained herein are expressed as anticipated average production over the calendar year. In determining anticipated production for the three-year plan, Advantage considered historical drilling, completion and production results for prior years and took int
Slide 42: Advisories (continued)
Advisories (continued) Advantage has presented certain type curves and well economics for its Glacier, Valhalla, Wembley and Charlie Lake areas. The type curves presented with respect to Glacier, Vahalla and Wembley are Management estimates based on Advantage's historical production, and with respec
Slide 43: Abbreviations
Abbreviations The following abbreviations used in this presentation have the meanings set forth below. AECO A notational market point on TransCanada Pipeline Limited's NGTL system where the purchase and sale of natural gas is transacted b or bn billion bbl barrel bbl/d or bbls/d barrel(s) per day bb
Slide 44: Head Office, Investor Relations, Security Information
Michael Belenkie Craig Blackwood Neil Bokenfohr Darren Tisdale Geoff Keyser John Quaife Brian Bagnell President and Chief Chief Financial Senior Vice President VP, Geosciences VP, Corporate VP, Finance VP, Commodities Executive Officer Officer Development and Capital Markets Investor Relations Head
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