Advantage Energy Ltd · TSX:AAV
Advantage Energy — Investor Presentation (December 2021)
30 slides from Advantage Energy's investor presentation, December 2021
Slide 1: A Progressive Montney Producer for the New Energy Market
A Progressive Montney Producer for the New Energy Market TSX: AAV 52-week trading $1.67 to $8.37 Investor Presentation Shares Outstanding (basic) 191 million December 2021 Market Cap / EV ($ billions) $1.4 / $1.6
Slide 2: Corporate Strategy – Surge in Profitability Creating Generational Opportunity
Corporate Strategy – Surge in Profitability Creating Generational Opportunity Maintain Strong Free Cash Beyond Enhance Resilience Foundations Expectations Plus and Scale Moderate Growth • Reduce net debt/AFF • Net-zero by 2025 towards zero • Liquids growth to • Grow production balance gas weighting
Slide 3: Corporate Strategy – Strength Across the Board
Corporate Strategy – Strength Across the Board Financial Stability Evolving Competitively Entropy Inc. - Unprecedented profitability Modular Carbon Capture and Storage Debt reduction ahead of expectations Advancing liquids development and acquisitions Capital investment driving significant Technical
Slide 4: 2022 Capital Investment Thesis Generates Significant Revenue Growth
2022 Capital Investment Thesis Generates Significant Revenue Growth (1) Glacier focused program $75 million (9 wells), maintenance All-in Capital Efficiency capital, corporate costs $11,800/boe/d Sustaining 24% base decline rate Capital Production Growth ~$80 million Wembley, Valhalla & Progress 52,
Slide 5: 2022 Capital Program: Profit Margins at Generational Highs
2022 Capital Program: Profit Margins at Generational Highs(1) $400 • Deleveraging $350 US$4.00/mcf • Acquisitions $300 US$3.50/mcf $250 US$3.00/mcf ($ million) $200 US$2.59/mcf $30 $150 US$2.36/mcf $80 $100 $50 US$1.74/mcf $75 $- (1) Adjusted Funds Flow Sustaining Liquids-Focused Cash-Generating Fre
Slide 6: World Class Assets, Operational Excellence, Environmental Leadership
World Class Assets, Operational Excellence, Environmental Leadership PROGRESS Disciplined Financial Management GLACIER Self funded growth with free cash flow Glacier Carbon Capture & Storage Asset Prolific Gas Foundation Free cash generation with lowest declines and cost VALHALLA High Quality Light
Slide 7: Low-Cost Structure: A Key Factor in FCF Generation Capacity
Low-Cost Structure: A Key Factor in FCF Generation Capacity (1) Op Exp Royalty Exp G&A Int Exp Trans Exp $30 $25 $20 $15 $10 $5 $0 Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer 12 Peer 13 Peer 14 Peer 15 AAV Notes: 1. Transportation is not a typical cost as it i
Slide 8: Track Record of Enhancing Efficiency and Performance
Track Record of Enhancing Efficiency and Performance Pacesetter Drill Rates per Day Relentless Drilling, Completion, & Tie-In Cost Efficiency 600 $12,000 500 $10,000 Meters/Day (Spud to RR) 400 $8,000 $/Tonne 300 $6,000 200 $4,000 100 $2,000 0 $0 Latest AAV Upper & Lower Drilled Wells 2008/ 2009/ 20
Slide 9: Advantage Montney Assets – Multizone Oil, Liquids and Gas Throughout
Advantage Montney Assets – Multizone Oil, Liquids and Gas Throughout Glacier Valhalla Progress Wembley Doig Upper Montney D4 Middle Montney 300m D3 D2 D1 Current Drilling and 2022 Targets Lower Advantage Operated HZ Montney Belloy Offset Operator HZ 9
Slide 10: Glacier: Prolific Low-Cost Gas on Path to Net Zero
Glacier: Prolific Low-Cost Gas on Path to Net Zero 08-05: Producing • Phase 1 CCS construction at Glacier facility underway 09-32: 2 D4, 3 UM • 9 wells to be drilled and completed in 2022 02-32: 2 D1, 2 UM • 2021 program achieving average 7-month well payouts 09-35: Producing Q1 2022 • 02-32 pad app
Slide 11: Wembley: Driving Corporate Liquids Growth in the Pipestone Play
Wembley: Driving Corporate Liquids Growth in the Pipestone Play AAV Pipelines Locations • 6 drills and 9 completions planned for 2022 2021 Activity Montney D3 • Prolific D3 zone primary target – 65% liquids 4-22: 3 well pad • Keyera tie-in underway 3-1 Battery • 40 mmcf/d firm service processing cap
Slide 12: Progress/Valhalla: Integrated Assets, Prolific Liquids-Rich Wells
Progress/Valhalla: Integrated Assets, Prolific Liquids-Rich Wells PROGRESS – Expanding infrastructure footprint 15-17: Drill 3 AAV Pipelines D2 Wells • 15-17 pad: build out liquids rich inventory Locations D4 Montney D2 Montney • 4-21 compressor installation allows gas volumes to be sent 2021 Drilli
Slide 13: Robust Montney Type Curve Economics
Robust Montney Type Curve Economics AAV Tier 1 Half Cycle Production Type Curves C$3.50/GJ & Rate of Payout2 NPV10 ($MM) US$70/bbl WTI1 Return (%) (months) Glacier D1 - 7 month payout Glacier UM – 9 month payout Glacier D1 Gas 247 7 12.8 Wembley D3 – 7 month payout Glacier Upper Gas 176 9 10.7 Cumul
Slide 14: Strategic Infrastructure Control, Flexible Pipeline Access
Strategic Infrastructure Control, Flexible Pipeline Access BC AB TCPL Groundbirch • 400 mmcf/d + 6,800 bbl/d capacity Glacier Gas Plant; >130 Lateral mmcf/d surplus capacity available • 45 mmcf/d + 2,000 bbl/d Valhalla hub AAV Glacier Gas Plant AAV Progress Liquids Hub 5,000 bbls/d - planned • 35 mm
Slide 15: Natural Gas Transportation Portfolio
Natural Gas Transportation Portfolio 27 mmcf/d of Prairies Mainline to Nov 2032, currently underpinning Great Lakes service Empress • Total Empress capacity of 125 – 130 mmcf/d between 2022 & 2025 • 43 – 49 mmcf/d is open exposure to Empress TC LTFP • 55 mmcf/d of TC Long-term Fixed Price (LTFP) cap
Slide 16: Market Diversification and Hedging Activities
Market Diversification and Hedging Activities Revenue Exposure by Markets Q1/22 Q2/22 Q3/22 Q4/22 2023 2024-2025 AECO 42% 49% 47% 53% 42% 46% - 48% Empress 18% 16% 16% 15% 15% 15% - 16% Emerson 0% 0% 0% 3% 8% 7% - 9% Dawn 29% 26% 27% 20% 17% 16% - 19% U.S. Midwest 11% 9% 10% 9% 10% 0% - 8% Gas Suppl
Slide 17: Celebrating 20 Years of Sustainability – NET ZERO in 2025
Celebrating 20 Years of Sustainability – NET ZERO in 2025 Industry Leading Low Emissions Low Fresh Water Usage Emissions Intensity tCO2e/boe (Scope 1 and 2) Fresh Water Intensity m3/boe 0.017 0.005 Peer Peer Peer AAV Peer Peer Peer Peer Peer Peer Peer Peer AAV Peer Peer Peer Peer Peer Peer Peer Peer
Slide 18: Entropy Carbon Capture and Storage – Our Role in the Energy Transition
Entropy Carbon Capture and Storage – Our Role in the Energy Transition Leader in the development and commercialization of carbon capture and storage PROPRIETARY CARBON CAPTURE TECHNOLOGY • Exclusive ownership of world class patent-pending solvent, Entropy23TM • Proven, low-risk process technologies
Slide 19: Notes: Forward-looking information
(1) (1) Notes: 19 (1) Forward-looking information. Refer to Advisory for material assumptions and risk factors.
Slide 20: Entropy Modular CCS: Lowest Cost, Most Efficient Technology
Entropy Modular CCS: Lowest Cost, Most Efficient Technology While MCCS is suitable for all project sizes, Entropy is developing multiple projects exceeding 1 mtpa in several industrial sectors Canadian Facility GHG Reporting (2019)(1) Carbon Capture Solvent Performance 0.6 500 Absorption Parameter 4
Slide 21: North American CCS: Scalable Growth and Plentiful Storage
North American CCS: Scalable Growth and Plentiful Storage Emitters Tonnes CO2/year (000s) • Canada: Federal carbon tax <10 10 100 1000 >1000 and imminent tax incentives Deep Saline Storage • USA: 45Q CCS tax incentive Deposition - Millions of Years Ago • Throughout North America, 570 5 emitters are
Slide 22: Advantage Contact Information
Advantage Contact Information Investor Relations 1.866.393.0393 ir@advantageog.com www.advantageog.com Listed on TSX: AAV Advantage Energy Ltd. Suite 2200, 440 – 2nd Avenue SW Calgary, Alberta T2P 5E9 Main: 403.718.8000 Facsimile: 403.718.8332 Advantage Glacier Gas Plant Andy Mah, P.Eng. Director, C
Slide 23: Appendix
Financial Discipline Operationally Nimble Focus on Profitability APPENDIX
Slide 24: Area Overview – Deep Inventory of Gas, NGLs and Oil
Area Overview – Deep Inventory of Gas, NGLs and Oil PROGRESS Deep Inventory (1)(2)(3) GLACIER Booked Undeveloped Unbooked Upside TOTAL future location VALHALLA inventory ~1,400 to 1,500 743 WEMBLEY 89 301 176 125 228 Net <25 bbls/mmcf 25-100 bbls/mmcf >100 bbls/mmcf Sections AAV Lands • Total of ~22
Slide 25: Advisory
Advisory 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 o
Slide 26: Advisory
Advisory and other terms; availability of government initiatives to Entropy; the price of and market for carbon credits and offsets; the anticipated amount of carbon dioxide captured, stored and offset; that Entropy will have sufficient cash flow, debt or equity sources or other financial resources
Slide 27: Advisory
Advisory These forward-looking statements are made as of the date of this presentation and Advantage disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicab
Slide 28: Advisory
Advisory Market, Independent Third Party and Industry Data Certain market, independent third party and industry data contained in this presentation is based upon information from government or other independent industry publications and reports or based on estimates derived from such publications an
Slide 29: Advisory
Advisory Oil and Gas Information Barrels of oil equivalent ("boe") and thousand cubic feet of natural gas equivalent ("mcfe") may be misleading, particularly if used in isolation. Boe and mcfe conversion ratios have been calculated using a conversion rate of six thousand cubic feet of natural gas eq
Slide 30: Advisory
Advisory Abbreviations The following abbreviations used in this presentation have the meanings set forth below. bbl barrel bbl/d barrel per day bbls/d barrels per day bbls/mmcf barrels per million cubic feet Bcf billion cubic feet boe barrels of oil equivalent of natural gas, on the basis of one bar
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