Advantage Energy Ltd · TSX:AAV
Advantage Energy — Investor Presentation (February 2024)
52 slides from Advantage Energy's investor presentation, February 2024
Slide 1: A Progressive Montney Producer for the New Energy Market
A Progressive Montney Producer for the New Energy Market Investor Presentation February 2024
Slide 2: Advantage Corporate Highlights
(1) Advantage Corporate Highlights Market Overview Pure Play Montney Producer Market Capitalization: $1.4 b Decades of top-tier inventory Enterprise Value: $1.6 b Net Debt(2): $196 m (Advantage only) Glacier Gas Plant capacity of 425 mmcf/d Shares Outstanding: 160.4 m TSX 52-week high/low: AAV $10.5
Slide 3: Corporate Strategy – Strength Across the Board
Corporate Strategy – Strength Across the Board Performance Evolving Competitively Entropy Inc. - 10% annual production growth Modular Carbon Capture and StorageTM Net debt(1) target of $200 m to $250 m(2) Advancing liquids development Bought back ~19% of shares and Technical enhancements delivering
Slide 4: 2024 Capital Investment Thesis Maximizes AFF Per Share
2024 Capital Investment Thesis Maximizes AFF Per Share(1)(2) Capital Efficiency (1) Glacier $13,000/boe/d 20 wells (20 net) 24% corporate decline rate (1) Production 65,000 to 68,000 boe/d $260 - $290 Net Debt (1) Target $200 million to $250 million(3) million Wembley Net Capital 3 wells (3 net) Exp
Slide 5: Three-Year Strategic Plan: Investing in Measured Production Growth
Three-Year Strategic Plan: Investing in Measured Production Growth Net Capital Expenditures (1)(2) Production Range (2) $400 80,000 75,000 $300 70,000 Millions $200 65,000 60,000 $100 55,000 $0 50,000 2023 2024 2025 2023 2024 2025 Range 1. See “Specified Financial Measures” in Advantage’s MD&A on pa
Slide 6: Three-Year Strategic Plan: Maximize AFF per Share Growth
Three-Year Strategic Plan: Maximize AFF per Share Growth Adjusted Funds Flow per Share at Strip Pricing(1)(2) 2024 AFF Sensitivity(3) $500 4.00 C$3.50/GJ AECO 3.50 $400 C$3.00/GJ AECO Free Cash Flow Dedicated to 3.00 Shareholder Returns C$2.50/GJ AECO $300 Millions 2.50 C$1.90/GJ AECO 2.00 $200 1.50
Slide 7: World Class Assets, Operational Excellence, Environmental Leadership
World Class Assets, Operational Excellence, Environmental Leadership Disciplined Financial Management PROGRESS GLACIER Self-funded growth with free cash flow (1) Glacier Carbon Capture Prolific Gas Foundation & Storage Asset Free cash flow (1) generation with low declines and cost VALHALLA High Qual
Slide 8: Low-Cost Structure: Key Factor in Free Cash Flow Generation
Low-Cost Structure: Key Factor in Free Cash Flow Generation Op Exp Royalty Exp G&A Int Exp Trans Exp(1) $30 $25 $20 $/boe $15 $10 $5 $0 AAV Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer 1. Transportation expense is not a typical cost as it is generally associated with accessi
Slide 9: Advantage Montney Assets – Multizone Oil, Liquids and Gas Throughout
Advantage Montney Assets – Multizone Oil, Liquids and Gas Throughout Glacier Valhalla Progress Wembley Conroy, BC Doig Upper Montney D4 Middle Montney 300m D3 D2 D1 2024 Targets Lower Advantage Operated HZ Montney Belloy Offset Operator HZ 9
Slide 10: Glacier Core: World-Class Free Cash Flow Engine
Glacier Core: World-Class Free Cash Flow(1) Engine Glacier Production Forecast2 Net Capital Expenditures1 & FCF1 Free Cash Actuals Net Operating Income1,2 Growth Flow1 Net Capital Expenditures [MM$]1,2 04-01: 15.6 MMcf/d Base Cumulative Free Cash Flow [MM$]1,2 Engine Production boe/d3 5 well Avg IP3
Slide 11: Wembley/Pipestone: Premium Oil-Weighted Asset With Room to Run
Wembley/Pipestone: Premium Oil-Weighted Asset With Room to Run Wembley Production Forecast2 Net Capital Expenditures1 & FCF1 Actuals Net Operating Income1,2 Generating Growth Net Capital Expenditures [MM$]1,2 Base Cumulative Free Cash Flow [MM$]1,2 FCF1 Production boe/d3 $70MM+ 04-22: Q2/24 D4 & 2 D
Slide 12: Progress/Valhalla: Integrated, Prolific Liquids-Rich Assets
Progress/Valhalla: Integrated, Prolific Liquids-Rich Assets Progress/Valhalla Production Forecast2 Net Capital Expenditures1 & FCF1 Actuals Net Operating Income1,2 2025 Gas Plant Growth Net Capital Expenditures [MM$]1,2 AAV Pipelines Base Cumulative Free Cash Flow [MM$]1,2 Sets Stage For Production
Slide 13: Compelling Economics Across Multiple Assets
Compelling Economics Across Multiple Assets Generic Generic Generic Type Liquids AAV Tier 1 Half Cycle Production Generic Type Wells3 Type Curve4 IRR1,4 Payout1,4 Well Capital (%) (%) (months) ($MM)3 Glacier D1 Gas 135% 10 $6.8 2% Glacier D4 Gas 130% 10 $6.8 6% Glacier Upper Gas 150% 9 $6.8 2% Valha
Slide 14: Since 2020 - All Wells Have Ranged From 2 to 14 Months Payout
Since 2020 - All Wells Have Ranged From 2 to 14 Months Payout1 2020-2022 Well Payout 1 Performance 2H 2020 average 1x payout: 8 mo 2021 average 2x payout: 19 mo 1x payout: 6 mo 40 2x payout: 11 mo 2022 average 1x payout: 6 mo 30 20 10 0 20 15 10 5 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Slide 15: Advantage Montney Gas Wells Dominated 2022 Alberta Results
Advantage Montney Gas Wells Dominated 2022 Alberta Results Calendar-Day Natural Gas Rate (Mcf/d) 14,000 IP30 Natural Gas Rate (Mcf/d) 12,000 IP90 Natural Gas Rate (Mcf/d) 10,000 8,000 6,000 4,000 2,000 0 Sources: geoSCOUT and Peters & Co. Limited. Data to December 31, 2022. Note: Excludes plant cond
Slide 16: Advantage NEBC Conroy Acquisition – Emerging Liquids-Rich Montney Fairway
Advantage NEBC Conroy Acquisition – Emerging Liquids-Rich Montney Fairway BC AB Conroy T- North • Contiguous 100% WI land base in the Pipeline Conroy liquids-rich Montney trend Conroy Acquisition T-North Ft. Nelson • Acquired at compelling metrics Progress o 33,643 net acres (~53 net sections) NGTL
Slide 17: Deep Inventory of Gas, NGLs and Oil
Deep Inventory of Gas, NGLs and Oil Deep Inventory (1)(2) PROGRESS Tier 1 Inventory – 20 Years | Booked Inventory – 10 Years | Unbooked Inventory - ~50 Years GLACIER 6 Total y 25 ble 2024 Budget em Drill Count W VALHALLA Gla cier WEMBLEY halla 408 Total 855 Total Alberta: 226 Net Sections Val AAV La
Slide 18: Tier Promotion – Wembley Tier 1 Inventory
Tier Promotion – Wembley Tier 1 Inventory 2020 D4 Inventory Map 2023 D4 Inventory Map 2020 Inventory 2023 Inventory D4 Tier 1 D4 Tier 1 D4 Inventory D4 Inventory D4 Drilled D4 Drilled Offset D4 Previous Tier 1 Offset D4 Inventory supported by competitor wells AAV 03-10 2,107 boe/d IP30 (64% Oil and
Slide 19: Well Execution Driving Increased Tier 1 Inventory
Well Execution Driving Increased Tier 1 Inventory Glacier Tier 1 Inventory Valhalla Tier 1 Inventory Wembley Tier 1 Inventory 28% Inventory Growth 19% Inventory Growth 44% Inventory Growth 2020 Inventory Tier 1 Wells Tier 1 2023 Total 2020 Inventory Tier 1 Wells Tier 1 2023 Total 2020 Inventory Tier
Slide 20: Strategic Infrastructure Control, Flexible Pipeline Access
Strategic Infrastructure Control, Flexible Pipeline Access • 425 mmcf/d + 6,800 bbls/d capacity Glacier Gas Plant BC AB TCPL Groundbirch Lateral • 45 mmcf/d + 2,000 bbls/d Valhalla hub • 35 mmcf/d + 5,000 bbls/d Wembley hub – dual connected via AAV Progress Gas AAV Glacier Gas Plant Plant (Sanctione
Slide 21: Natural Gas Market Exposure
Natural Gas Market Exposure Revenue Exposure by Q4/23 Q1/24 Q2/24 Q3/24 Q4/24 2025 27 mmcf/d of TC Market Mainline to Emerson AECO 17% 16% 9% 8% 22% 58% until Nov-32 Empress 22% 22% 22% 23% 22% 13% Emerson 12% 12% 12% 12% 12% 8% Dawn 10% 11% 15% 15% 14% 13% U.S. Midwest 8% 8% 8% 8% 3% 0% Henry Hub (
Slide 22: Celebrating Over 20 Years of Sustainability – Net Zero in View
Celebrating Over 20 Years of Sustainability – NET ZERO IN VIEW(1) Industry Leading Low Emissions Environmental Highlights 8% decrease in $2.2 million spent on abandonment and emission intensity(4) reclamation 13% decrease in 14% reduction in sites under active management methane intensity(4) from 20
Slide 23: Entropy: Commercial Carbon Capture And Storage, Today
Entropy: Commercial Carbon Capture And Storage, Today Clean Tech Pure Play Technology • Dedicated, full-service industrial • Exclusive ownership of world-leading CCS company solvent • Proprietary, innovative technology • Innovative process enhancement and commercial structure technologies • Decades
Slide 24: Entropy Inc – Uniquely Positioned in a Global Market
Entropy Inc – Uniquely Positioned in a Global Market Leading the way globally on post-combustion carbon capture Massive Market Opportunity Positioned For Success TECH CE NO CCS: IEA Net Zero 2050 Pathway1 Pure-play, full-scope CCS offering IEN LO R PE GY 7,600 MTPA EX CCS to play an • Novel carbon c
Slide 25: Global Emissions Are Predominantly Post-Combustion
Global Emissions Are Predominantly Post-Combustion Commercial Post-Combustion Carbon Capture is necessary for large-scale decarbonization Post-Combustion Emissions Canada’s Emissions – Breakdown Pre-Combustion Emissions 670 MT CO2 in 2021 • CO2 emissions from “burning fuel” • Byproduct of chemical,
Slide 26: World Map Of Active Commercial CCS Projects
World Map Of Active Commercial CCS Projects CCS projects are widely referenced and based on known technology; however… • Coloured by year in operation, sized by TPA • ~40 MTPA from existing commercial CCS projects MTPA <0.1 7 Year In Operation 1972 1995 2005 2015 2030 Based on known projects current
Slide 27: World Map Of Active Post-Combustion CCS Projects
World Map Of Active POST-COMBUSTION CCS Projects …only four operating commercial CCS projects on post-combustion emissions • Glacier (natural gas) by Entropy • Boundary Dam (coal) by SaskPower • Petra Nova (coal) by JX Nippon • Taizhou Power Plant (coal) by China Energy Investment Group Natural Gas
Slide 28: Global Post-Combustion Capture Project Comparisons
Global Post-Combustion Capture Project Comparisons Operational Glacier Phase 1A Glacier Phase 1 CE: $660/TPA Average Annual Abatement Rate: 47,000 TCO2e Capture vs Design: 90-100%1 Public Funding: C$20MM Alberta Government Capital Cost: C$31MM On Stream Date: July 2022 Storage Type: Saline Aquifer C
Slide 29: Post-Combustion CCS: Reversing the Impact of Traditional Energy Extraction
Post-Combustion CCS: Reversing the Impact of Traditional Energy Extraction Geoscientists Identify Resource Car Drilling Operations bo n Resource Production Ca Resource Processing ptu Transport to Market re Energy Carbon Captured at Source Carbon Processed/Purified Geoscientists Identify Storage Ex D
Slide 30: Brookfield + Canada Growth Fund: Entropy Strategic Investment
Brookfield + Canada Growth Fund: Entropy Strategic Investment Funding of $500 million and price certainty up to 1 million TPA CO2 Creating value through emissions reduction projects with de-risked financing Transition Strategy $200 Million $300 Million Strategic Investment2 Strategic Investment1 Ent
Slide 31: Canada Growth Fund Strategic Investment
Canada Growth Fund Strategic Investment1 Establishing Canada as a world-leading CCS market CGF Strategic Investment and Carbon Credit Offtake with CGF Mandate Entropy: CGF is a $15 billion arm’s length public investment vehicle that will help This strategic growth partnership represents an important
Slide 32: Our Business Creating Value by Reducing Emissions
Our Business Creating Value by Reducing Emissions Emitter Full-service CCS Return on • Industrial Point • Steady State Offering to Emitters Investment tal Source Ca pi rb • Environmental • Carbon Credits • Clean-burning • Jurisdiction a Attributes on oC Ca • Clean Fuel Regulation • CCS Refundable Ac
Slide 33: Measuring Performance
Measuring Performance GJ/t is the Key Success Factor in determining project efficiency Solvent Carbon Capture Heat Duty Entropy23TM vs. MEA Energy/Tonne CO2 Energy inputs costs, 5 ~3.85x lower heat duty operating costs 66% higher absorption rate Equipment size and cost Typical MEA Performance Range
Slide 34: Glacier Phase 1 – World’s First Gas-Fired CCS Project, From Concept to Reality
Glacier Phase 1 – World’s First Gas-Fired CCS Project, From Concept to Reality Absorber tower for one compressor engine Regeneration Module 34
Slide 35: Introducing EntropyIQ – Data Management and Reporting for CCS
Introducing EntropyIQTM – Data Management and Reporting for CCS Proprietary Data Capture and Analysis Software ENTROPYIQ • Integration of all control systems and emissions information • Proprietary algorithms project GHG abatement levels and timing • Customizable design can be optimized for any CCS
Slide 36: Reverse Entropy Storage Using Deep Aquifers – The Local Solution Is Often Best
Reverse Entropy Storage™ Using Deep Aquifers – The Local Solution Is Often Best Emitters Much of North America has suitable deep saline Tonnes CO2/year (000s) geological storage potential for permanent <10 10 100 1000 >1000 sequestration Deep Saline Storage Deposition - Millions of Years Ago In-Hous
Slide 37: Developing Two Alberta Global-Scale Storage Hubs
Developing Two Alberta Global-Scale Storage Hubs The hubs provide strategic access to develop multiple projects in Alberta 10,000 TPA 9,000,000 TPA Natural Gas Processing Facilities Thermal Oil Facilities Power Plants Grande Prairie Net Zero Gateway 1 • • Joint venture: NorthRiver Midstream Inc. and
Slide 38: Entropy Standardized Designs
Entropy Standardized Designs iCCS Recip™ iCCS Thermal™ iCCS Turbine™ Capture on reciprocating Capture on boilers/steam Capture on simple or combined engines, commonly used for generation cycle gas turbines, commonly gas compression used for power generation Commercial Project: Pre-FID Projects: Pre-
Slide 39: Taking Action Today to De-risk Tomorrow
Taking Action Today to De-risk Tomorrow FIRST-OF-KIND SCALE UP 20 mtpa1 Reciprocating Engines Gas Plants GLACIER 200k tpa 40 ITC mtpa1 Carbon Price Thermal Oil Production OTSGs (Boilers) LEISMER 440k tpa Certainty (Other Industrial Applications) Value Gap (IRA), SIF, other 50 mtpa1 Gas Turbines & In
Slide 40: Path to Value Creation
Path to Value Creation Path to IPO(4) and value recognition for AAV involves progressing 2-3 more projects to Commercial Operations and demonstrating a robust pipeline of opportunities at earlier stages of development. Project Value Evolution MOU1 Exclusivity LOI2 FID3 Commercial IPO Ready • Abundan
Slide 41: 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 Mike Belenkie, P.Eng. Direct
Slide 42: Appendix
Financial Discipline Operationally Nimble Focus on Profitability APPENDIX
Slide 43: Track Record of Enhancing Efficiency and Performance
Track Record of Enhancing Efficiency and Performance $12,000 Relentless Drilling, Completion, & Tie-In Cost Efficiency 2008-2022 Wells Drilled MD 7000 Relentless Drilling, Completion, & Tie-In Cost Efficiency $10,000 6000 $8,000 5000 $/Tonne Drilled Length 4000 $6,000 3000 $4,000 2000 $2,000 1000 $0
Slide 44: 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 45: Advisory
Advisory strategic plan; that the Corporation will have sufficient financial resources required to fund its capital and operating expenditures and requirements as needed; timing and amount of net capital expenditures; the impact of increasing competition; that the Corporation’s conduct and results o
Slide 46: Advisory
Advisory changes in commodity prices, currency exchange rates, net capital expenditures, reserves or reserves estimates and debt service requirements; the occurrence of unexpected events involved in the exploration for, and the operation and development of, oil and gas properties, including hazards
Slide 47: Advisory
Advisory Financial Outlook This presentation contains information that may be considered a financial outlook under applicable securities laws about the Corporation's potential financial position, including, but not limited to, Advantage's 2023 and 2024 guidance, including its anticipated AFF per sha
Slide 48: Advisory
Advisory Information Regarding Public Issuer Counterparties Certain information contained in this presentation relating to the Corporation's public issuer counterparties and the nature of their respective businesses is taken from and based solely upon information published by such issuers. None of A
Slide 49: Advisory
Advisory Non-GAAP Financial Measures Operating Netback Operating netback is comprised of sales revenue and realized gains (losses) on derivatives, net of expenses resulting from field operations, including royalty expense, operating expense and transportation expense. Operating netback provides Mana
Slide 50: Advisory
Advisory Supplementary Financial Measures Corporate Decline Rate Corporate decline rate is calculated by identifying the actual or forecasted production of all the wells onstream at the start of the year, then tracking their cumulative decline by the end of the year, expressed as a percentage. Royal
Slide 51: 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 52: Advisory
Advisory Historical Production See “Production” on page 6 in Advantage’s MD&A for the year ended December 31, 2022 and page 3 for the three and nine months ended September 30, 2023, for historical production disclosure by product type. Abbreviations The following abbreviations used in this presentat
Advantage Energy — Investor Presentation (February 2024) on 6ix