Advantage Energy Ltd · TSX:AAV
Advantage Energy — Investor Presentation (March 2025)
45 slides from Advantage Energy's investor presentation, March 2025
Slide 1: A Progressive Montney Producer for the New Energy Market
A Progressive Montney Producer for the New Energy Market Investor Presentation March 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 321 Sections of Montney Rights Advantage Operated Facility 258 Sections of Charlie Lake Rights Notes 4 • Sections refers to net sections being the sections Advantage has an interest
Slide 5: Dominant Infrastructure Position
GORDONDALE Dominant Infrastructure Position Strategic Assets Valued at Over $1 billion(1) Progress plant deferred until 2Q 2026 – no production impact Further major infrastructure spending not required in 3-year plan PROGRESS Raw Gas Processing Capacity (mmcf/d) 650 GLACIER Major Pipelines KAPS 600
Slide 6: Financial Foundations
Financial Foundations 6% Market Overview: Capital Structure Market Value of Equity 21% Capital Market Capitalization: $1.6bn Bank Debt + Working Capital Structure Net Debt(1): $0.6bn 73% Convertible Debentures Enterprise Value: $2.2bn Equity: AAV (TSX Listed) Shares Outstanding: 166.7 mm Total share
Slide 7: The Last Three Years: Transformational
The Last Three Years: Transformational Increased Total Production by 54% and Liquids Production by 172% 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 8: 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 Capped at 10% Performance Share Buyback Relentless Cost to Compound Focus Per-Share Growth 8
Slide 9: 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 10: 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 Internal Rate of Return (%) $3.00 $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 $7
Slide 11: Economics Sensitivities
Advantage Tier 1 Half-Cycle Generic Type Wells Glacier - Dry Gas Glacier - Dry Gas Glacier - Dry Gas Valhalla – Rich Gas Wembley - Oil Charlie Lake - Oil Upper Montney D4 Montney D1 Montney D4 Montney D3 Montney Braeburn Generic Generic Generic Type Well Liquids Oil & C5+ Type Wells: Gas Type Curve
Slide 12: Relentless Cost Focus: Three-Year Lookback
CORPORATE STRATEGY Relentless Cost Focus: Three-Year Lookback Total Capital Efficiency(1) ($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 13: Share Buybacks: Continued Commitment to Compounding
CORPORATE STRATEGY $MM MM Shares Cumulative Share Buybacks 400 60 Dollars Share Buybacks: Continued Shares 300 45 Commitment to Compounding 200 30 100 15 ► Advantage Allocated $383mm to Share - - 2022 to 2024 Repurchases Over Three Years (~38.1mm Shares) ► Charlie Lake and Montney Acquisition Result
Slide 14: 2025 Budget Guidance
2025 Budget Guidance (2) Cash Used in Investing Activities ($ 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 $5.90 Transportati
Slide 15: Three-Year Strategic Plan: Implementing our Corporate Strategy
Three-Year Strategic Plan: Implementing our Corporate Strategy (1)(2) (2) Net Capital Expenditures ($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 16: Strategic Outlook at Strip Pricing: FCF Exceeds $500mm Over 3 Years
(1)(2) Strategic Outlook at Strip Pricing: FCF Exceeds $500mm Over 3 Years Strong Free Cash Flow Growth, Exceptional Adjusted Funds Flow Disciplined Reinvestment per Share Growth 70% 2.0x 250 100% 60% Free Cash Flow ($mm) 200 1.5x Reinvestment Ratio 75% 50% AFFPS Growth ND / CF 150 40% Target ND/AFF
Slide 17: Commodity Price Sensitivity: Fully Funded at Very Low Prices
Commodity Price Sensitivity: Fully Funded at Very Low Prices (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 -3
Slide 18: 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 600 500 Progress Phase 1 Deferral $35 MM 400 300 BC Montney Disposition Discretionary 200 Non-Operated Infrastructure Monetization 100 D
Slide 19: Asset Portfolio Spanning the Development Life Cycle
Chart Title Chart ChartTitle Chart Title Title Asset Portfolio 1.2 1.2 1.2 1.2 Spanning the Development Life Cycle 1.2 1 Chart Title 111 1 1.2 Wembley 0.8 0.8 0.8 1 0.8 0.8 Quality/Availability Data Confidence Glacier 0.8 0.6 0.6 0.6 0.6 Charlie Lake 0.6 Conroy 0.6 Valhalla 0.4 0.4 0.4 0.4 0.4 Progr
Slide 20: Exceptional Operational Performance: 2024 Alberta Montney Gas Wells
Exceptional Operational Performance: 2024 Alberta Montney Gas Wells 20,000 IP30 Natural Gas Rate Calendar-Day Natural Gas Rate (Mcf/d) IP90 Natural Gas Rate 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - Source: Peters & Co. Peers include: ARC, Birchcliff, Canadian Natural, Whitecap Ad
Slide 21: Glacier – World Class Generational Asset
Glacier – World Class Generational Asset Net Capital Expenditures & FCF Glacier Sales Production (BOE/d) 01-06: 3 well pad Net Operating Income [MM$]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 Q2 2025 300 45,00
Slide 22: Wembley – FCF Engine With Low Maintenance Capital
Wembley – FCF(1) Engine With Low Maintenance Capital 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 $mm 05-15: Drilling 2 D4 / 1 D3 w
Slide 23: Valhalla & Progress – Expanding Our Infrastructure Dominance
Valhalla & Progress – Expanding Our Infrastructure Dominance Net Capital Expenditures & FCF Combined Sales Production (BOE/d) Net Operating Income [MM$]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 Montney 8,000 5
Slide 24: Charlie Lake – Exceeding Historical Liquids Type Curve by >65%
Charlie Lake – Exceeding Historical Liquids Type Curve by >65% Net Capital Expenditures & FCF Charlie Lake Sales Production (BOE/d) 13-26: Q4 2025 AAV Pipelines Net Operating Income [MM$]1,2,7 20,000 Net Capital Expenditures [MM$]1,2 Locations Cumulative Free Cash Flow [MM$]1,2,7 2024 2025 Program 1
Slide 25: Acquisition Delivering 44% Higher AFF Per Share in First Twelve Months
Acquisition Delivering 44% Higher AFF Per Share(1)(2) in First Twelve Months Accretion: First 12 Months Following Acquisition AFF (1)(2) Significant capital and cost synergies already realized; further optimization expected in 2025 and 2026 $364 mm $244 mm Focused on development drilling, targeting
Slide 26: Additional Synergies Expected in 2025 and Beyond
GORDONDALE Additional Synergies Expected in 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 27: 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 28: Deep Inventory of Drilling Locations Across Commodities
Charlie Lake Inventory: 272 Wells Deep Inventory of 2025 Net Drills: 14* *Includes 4.4 Non-Op Wells Drilling Locations ~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 29: 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 30: Market Diversification Snapshot: Empress Provides Optionality
(2) Natural Gas Price Exposures Market Diversification Snapshot: Empress Provides Optionality 7% 7% 6% 6%6% 6% 5% 5% 4% 4%4% 4% 4% 4% Power 4% 4% 27 mmcf/d to 3% 3% Generation 10% 7% 7% 9% 9% Emerson until 9% 8% 8% Nov-32 7% Nymex (Basis) 7% 6% 6% 12% 12% 21% 21% 19% U.S. Midwest 19% 12% 12% 26%26%
Slide 31: 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% $2.96 $2.96 $3.39 $3.48 $3.78 WCSB Gas Market Moving From Oversupplied to Undersupplied $3.58 $3.58 $3.46 50 15% $3.39 $3.23 $3.23 $3.23 Alberta Storage (bcf) (2
Slide 32: Commercial Carbon Capture and Storage
Ownership Structure Commercial Proprietary CCS Technology Carbon Capture Advantage 62% and Storage Implied net valuation >$300 million(9) Exclusive ownership of world- Today leading solvent with innovative Upon $500m deployment ($137m deployed to-date), process enhancement technologies Advantage exp
Slide 33: 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 34: 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 35: 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 36: 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 37: 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 38: 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 39: 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 40: 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 41: 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 42: 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 43: 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 44: 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 45: 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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