Advantage Energy Ltd · TSX:AAV
Advantage Energy — Investor Presentation (July 2021)
26 slides from Advantage Energy's investor presentation, July 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 $1.51 to $4.71 Investor Presentation Shares Outstanding (basic) 191 million July 2021 Market Cap / EV ($ Millions) $850 / $1,065
Slide 2: Corporate Strategy – The Path To Growing Shareholder Value
Corporate Strategy – The Path To Growing Shareholder Value Maintain Strong Generate FCF and Enhance Resilience Foundations Return of Capital Moderate Growth(1) and Scale • Reduce net debt/AFF to • Liquids growth to 1x balance gas weighting • Grow production • Diversify into carbon 5-10%/year revenue
Slide 3: 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 4: Strong Foundations Create a Launchpad into the New Energy Markets
Strong Foundations Create a Launchpad into the New Energy Markets Financial Stability Evolving Competitively Recent 2021 guidance revision – Entropy Inc. – Modular Carbon Capture capital down 9%, production up 3%(1) and Storage (MCCS) Moderate growth and FCF generation $8,500/boe/d capital efficienc
Slide 5: 2021 Capital Investment Thesis Generates Significant FCF and Growth
2021 Capital Investment Thesis Generates Significant FCF and Growth (1) Glacier focused, ~10 wells + Capital Efficiency $75 million $8,500/boe/d facilities maintenance costs, Sustaining carbon capture Capital $115 - $135 Production Growth ≈10% to 48,000–51,000 boe/d million Net Capital Expenditures
Slide 6: 2021 Capital Program Fully Funded at Lower Prices with FCF
2021 Capital Program Fully Funded at Lower Prices with FCF (1) Debt Reduction $200 in 2021 $3.00 $180 $70 $160 2021 Budget fully $2.50 funded at $140 Drives 10% $1.92/mcf AECO Production Growth ($ million) $120 $1.92 Sustaining Capital $20 $100 fully funded at $1.63 $30 $1.37/mcf AECO $80 $1.37 $75
Slide 7: Introducing Entropy Inc. – Modular Carbon Capture for $26/Tonne, Today
Introducing Entropy Inc. – Modular Carbon Capture for $26/Tonne, Today • Advantage and ABC Engineering have partnered to develop breakthrough carbon capture technology • Entropy Inc designs, builds and manages Modular CCS projects that are profitable at today’s carbon pricing for large and small ind
Slide 8: First Commercial MCCS Project Underway: Glacier Gas Plant
First Commercial MCCS Project Underway: Glacier Gas Plant PHASE 1 ($27 MILLION INITIAL Net operating income to be ~$2.9 400 mmcf/d of INVESTMENT) Natural Gas million/year based on carbon offset pricing Processing Onstream Q1 2022 forecast of $50/tonne Tonnes CO2/year: 46,000 En route to Levelized co
Slide 9: Environmental Leadership – The Path to Net Zero is Underway
Environmental Leadership – The Path to Net Zero is Underway Glacier Carbon Capture and Storage Montney Peers Reported Emissions Data - 2018 or 2019 (1) Phase 1 Will Eliminate ~25% of Plant Emissions 0.070 0.060 0.050 Tonnes CO2e per boe 0.040 AAV Emissions: 0.030 0.0044 Net 0.0150 Gross 0.020 0.010
Slide 10: Low-Cost Structure – A Key Factor in FCF Generation Capacity
Low-Cost Structure – A Key Factor in FCF Generation Capacity $30 Transport (1) Finance & Other $25 G&A Royalties $20 Operating $15 $10 $5 $- A AAV B C D E G M N F H K I J L Notes: 1. Transportation is not a typical cost as it is generally associated with accessing higher priced markets. Source: Scot
Slide 11: 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 12: 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 2021 Targets Lower Advantage Operated HZ Montney Belloy Offset Operator HZ 12
Slide 13: Glacier – Foundational Asset Setting a New Standard
Glacier – Foundational Asset Setting a New Standard 08-05: 5 well pad Complete Q3 2021 • 14 new wells now onstream, producing >110 mmcf/d • New wells on production include nine D1, three D4 and two Upper wells – early performance exceeding type curve expectations 09-32: Producing • 08-05 pad (two D1
Slide 14: Oil & Liquids Rich Gas – Progress/Wembley/Valhalla
Oil & Liquids Rich Gas – Progress/Wembley/Valhalla AAV Pipelines PROGRESS AAV 2021 Drilling New Third Party • 6 wells on production Drilling/Production • Inventory of acquired pads and licenced locations ready to execute • Progress competitive with Pipestone/Wembley, and higher netbacks PROGRESS VAL
Slide 15: 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; Lateral >130 mmcf/d surplus capacity available • 45 mmcf/d + 2,000 bbl/d Valhalla hub AAV Glacier Gas Plant • 35 mmcf/d + 5,000 bbl/d Wembley hub • 25 mmcf/d + 5,0
Slide 16: Natural Gas Transportation Portfolio
Natural Gas Transportation Portfolio 27 mmcf/d of Prairies Mainline to Nov 2032 27 mmcf/d of Great Lakes PL transport capacity Apr 2021 to Oct 2022 Up to 48 mmcf/d of Empress capacity net of downstream commitments – varying 54 mmcf/d of term durations AECO to Dawn LTFP Capacity to Oct 2027 16
Slide 17: Market Hedging Activities
Market Hedging Activities Physical Flows Q1-21 Q2-21 Q3-21 Q4-21 2022 2023-2027 AECO 30% 37% 30% 38% 41% 30% - 50% Empress 10% 9% 10% 16% 18% 10% - 20% Emerson (TC Prairies Mainline) 10% 0% 0% 0% 1% 10% - 20% Dawn 22% 29% 32% 30% 28% 15% - 20% U.S. Midwest 28% 25% 28% 16% 12% 5% - 20% Current Natura
Slide 18: Invested in the Communities Where We Work
Invested in the Communities Where We Work 39 Employees Working in Calgary & Grande Prairie Contributed >$1 million to community Areas programs/charities Capital & Operating Activities Health & Wellness 25% Generating an Average of 650 Full-Time Jobs per Year Family & Community Education 62% 13% Crea
Slide 19: 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 20: Appendix
Financial Discipline Operationally Nimble Returns Focus APPENDIX
Slide 21: 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 22: 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 23: Advisory
Advisory Management has included the summary of assumptions and risks related to forward-looking information in order to provide shareholders with a more complete perspective on Advantage's future operations and such information may not be appropriate for other purposes. Advantage’s actual results,
Slide 24: 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 25: Advisory
Advisory In presenting such type curves, inputs and economics information and in this presentation generally, Advantage has used a number of oil and gas metrics which do not have standardized meanings and therefore may be calculated differently from the metrics presented by other oil and gas compani
Slide 26: 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 boe barrels of oil equivalent of natural gas, on the basis of one barrel of oil or natural g