Advantage Energy Ltd · TSX:AAV
Advantage Energy — Advantage Oil & Gas — Shareholder Meeting (May 2015)
28 slides from Advantage Energy's shareholder meeting presentation, May 27, 2015
Slide 1: Annual General Meeting
Annual General Meeting May 27, 2015
Slide 2: 2014… A Pivotal Year for Advantage
2014… “A PIVOTAL YEAR FOR ADVANTAGE” 2
Slide 3: Why Pivotal?
WHY PIVOTAL? We needed to demonstrate: Performance as a “Lean, Mean Montney Machine” Industry Leading Low Cost Structure Improved Well Performance & Capital Efficiencies Continued Execution Capability & Delivering Targets Sustainable Development Plan 3
Slide 4: We Achieved 2014 Goals & More
WE ACHIEVED 2014 GOALS & MORE… Production Op. Costs Cash Costs Reserve Adds Debt/Cash Flow Capital Spending Well Results HSE 4
Slide 5: Successfully Replaced Conventional Production Through Glacier Montney Growth
SUCCESSFULLY REPLACED CONVENTIONAL PRODUCTION THROUGH GLACIER MONTNEY GROWTH 40,000 Higher cost Non-Glacier 2014 “First Year as Pure Montney Producer. “ 35,000 production divested 2009-2013 Future Plan growth targeted to exceed Corporate history. 30,000 25,000 Boe/d 20,000 15,000 10,000 5,000 0 2008
Slide 6: With an Industry Leading Low Cost Structure
WITH AN INDUSTRY LEADING LOW COST STRUCTURE $6.00 $5.00 TOAL CASH COSTS $/mcfe Reduced Total Cash Costs due to: $4.00 Divestment of conventional assets Streamlined to focus only on Montney $3.00 $2.00 $0.84/mcfe $1.00 $0.00 2008 2009 2010 2011 2012 2013 2014 2015 Q1 6
Slide 7: Positioning Advantage as the Lowest Cost Producer
POSITIONING ADVANTAGE AS THE LOWEST COST PRODUCER A $1 Cdn realized gas price will more than cover Advantage’s production costs, royalties, G&A & interest of $0.89/mcfe 7
Slide 8: With Strong Margins
WITH STRONG MARGINS ONE OF THE HIGHEST CASH NETBACK MARGINS IN SECTOR Royalties 4% Cash Flow Net Back 74% Operating Costs 11% G&A 5% Interest & Other 6% BASED ON Q1 2015 RESULTS 8
Slide 9: Highly Efficient Glacier Reserve Additions & Recycle Ratio
HIGHLY EFFICIENT GLACIER RESERVE ADDITIONS & RECYCLE RATIO Mcfe 2.50 ($1.03) 2P F&D Cost 2.00 ($0.89) Total Cash Cost 2014 2P F&D Cost ($/Mcfe) $1.03 3yr Avg F&D (1) 1.50 2.9x 3yr Avg Recycle Ratio (2) ($1.92) 1.00 $4.23 Realized 2014 Sales Price 0.50 +$2.31 Full Cycle Return 0.00 per Mcfe 2008YE 20
Slide 10: Our Drilling, Completions & Technical Expertise Led To…
OUR DRILLING, COMPLETIONS & TECHNICAL EXPERTISE LED TO… 10
Slide 11: Well Outperformance in the Upper and Lower Montney
WELL “OUTPERFORMANCE” IN THE UPPER AND LOWER MONTNEY Recent wells completed with slick water and more frac stages are outperforming our Budget/Plan type curve assumptions - - - Budget Type Curve (IP30 6.9 mmcf/d & 6.9 Bcf) Data: updated to May 2015 11
Slide 12: And in Our Liquids Rich Middle Montney Wells
AND IN OUR LIQUIDS RICH MIDDLE MONTNEY WELLS… New 2013 12-2 well started Middle Montney wells have sequentially production at restricted rate of 9.5 demonstrated improved productivity as mmcf/d. Currently producing at we optimize frac design. Recent wells 1,000 psi flowing pressure exceeding Budget
Slide 13: Created a Current Inventory of Wells
CREATED A CURRENT INVENTORY OF WELLS… NONE Required for Production 33 Wells drilled in 2014 program Until July 2015 22 Wells currently completed and tested (“production ready”) 6 Wells initially required to ramp to 183 mmcfe/d July 2015 (post gas plant expansion) 13
Slide 14: Improving Glacier Well Economics
Improving Glacier Well Economics >30% ROR @ $2.50/mcf >70% ROR @ $3.50/mcf
Slide 15: 2014 Results Led to $150 Million Lower Development Plan Capital
2014 RESULTS LED TO $150 MILLION LOWER DEVELOPMENT PLAN CAPITAL WITH UNCHANGED GROWTH TARGETS (1) Production Profile 245 mmcfe/d 205 mmcfe/d 183 mmcfe/d Current production 130 to 135 mmcfe/d 2015 2016 2017 (2) Production Growth 30% 22% average growth per year 18% 18% (1) See Plan details in May 2015
Slide 16: Maintaining Balance Sheet Strength & Sustainability
MAINTAINING BALANCE SHEET STRENGTH & SUSTAINABILITY (1) Total Debt to Trailing Cash Flow Sensitivity 2.1 2.1 1.9 1.9 1.8 1.8 1.5 1.2 0.8 2015 2016 2017 AECO $3.50/GJ AECO $3.00/GJ AECO $2.50/GJ (1) Based on production growth & Plan details shown in May 2015 Investor presentation – Appendix page 24 1
Slide 17: Strong Cash Flow Per Share Growth
STRONG CASH FLOW PER SHARE GROWTH 2017 (1) $1.40/share (1) 2016 $1.10/share (1) 2015 $0.79/share (1) Based on production growth & Plan details shown in May 2015 Investor presentation – Appendix page 24. 17 Aeco Cdn prices assumed at $2.53/GJ in 2015, $3.00/GJ in 2016, $3.30/GJ in 2017
Slide 18: And Generating Surplus Cash Flow in 2017
AND GENERATING SURPLUS CASH FLOW IN 2017 Estimated Annual “Surplus Cash Flow” at 245 mmcfe/d: $90 million@$3.00/GJ $135 million@$3.50/GJ (1) Based on Plan details in May 2015 Investor presentation – Appendix pg 24 18
Slide 19: Only 70 New Wells
ONLY Plan Requires 70New wells By 2017 …that’s just the tip of OUR >1,000 well GLACIER Drill Inventory
Slide 20: With Additional 100% Owned Montney Lands to Develop in Future
WITH ADDITIONAL 100% OWNED MONTNEY LANDS TO DEVELOP IN FUTURE… R14 R13 R12 R11 R10 R9 R8 R7W6 T78 T78 T77 PROGRESS T77 Future GLACIER Developing T76 VALHALLA T75 Evaluating T74 Additional 56.25 net sections of 100% Montney Lands at Valhalla, Wembley & Progress Providing T73 Future Potential WEMBLEY
Slide 21: Supported by 100% Owned Plant + Pipeline Infrastructure
…SUPPORTED BY 100% OWNED PLANT + PIPELINE INFRASTRUCTURE R14 R13 R12 R11 R10 R9 R8 R7W6 78 T78 77 T77 Preserves our Glacier Gas Plant T76 LOW COST T75 STRUCTURE T74 and allows T73 CONTROL OF OUR DESTINY Company Land Company Gas Plant TransCanada Pipeline T72 Pembina Pipeline Advantage Pipeline Allia
Slide 22: Hedging and Credit Facility
Downside Price Protection & Financial Flexibility (1) HEDGING CREDIT FACILITY 2015 – 57% @ $3.86 $189 million of 2016 – 46% @ $3.69 $450 million 2017 Q1 – 42% @ $3.65 CURRENTLY AVAILABLE (1) AECO Cdn $/Mcf 22
Slide 23: Clear Vision, Financial Strength, Proven Expertise
Clear Vision Financial Strength Proven Expertise
Slide 24: Thank You to Our Staff, Board and Shareholders
THANK YOU TO OUR STAFF, BOARD AND SHAREHOLDERS 24
Slide 25: Advisory
ADVISORY Certain statements contained in this presentation constitute forward-looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but n
Slide 26: Advisory
ADVISORY Advantage's actual decisions, activities, results, performance or achievement could differ materially from those expressed in, or implied by, such forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements wil
Slide 27: Advisory
ADVISORY The following abbreviations used in this press release, including in the appendices hereto, have the meanings set forth below: bbls barrels mcf thousand cubic feet bbls/d barrels per day mmcf million cubic feet mmcf/d million cubic feet per day mbbls thousand barrels bcf billion cubic feet
Slide 28: Advantage Contact Information
ADVANTAGE CONTACT INFORMATION Investor Relations 1.866.393.0393 ir@advantageog.com www.advantageog.com Listed on NYSE and TSX: AAV Advantage Oil & Gas Ltd. Suite 300, 440 – 2nd Avenue SW Calgary, Alberta T2P 5E9 Main: 403.718.8000 Facsimile: 403.718.8332 Advantage 100% W.I. Glacier Gas Plant Andy Ma