Advantage Energy Ltd · TSX:AAV
Advantage Energy — Advantage Oil & Gas — Investor Presentation (December 2019)
30 slides from Advantage Energy's investor presentation, December 2019
Slide 1: Disciplined Liquids Development in Four Prolific Core Areas
“Disciplined Liquids Development in Four Prolific Core Areas” Investor Presentation TSX: AAV December 2019
Slide 2: Advantage at a Glance
ADVANTAGE AT A GLANCE TSX 52-week trading range $1.35 - $2.57 Shares Outstanding (basic) 187 million Market Capitalization $0.4 billion Enterprise Value $0.7 billion Advantage Montney Assets 2019 Guidance (1) Total Production 43,500 to 46,500 boe/d Liquids Production 2,900 to 3,200 bbls/d Progre
Slide 3: Building on Foundational Assets, Transitioning to Top-Tier Liquids
BUILDING ON FOUNDATIONAL ASSETS, TRANSITIONING TO TOP-TIER LIQUIDS Solid Today Solid Tomorrow Reinvest in Our High Return Free Cash Generating Asset Liquids Assets Retain Competitive Edge with Ultra-Low Costs Commanding Infrastructure Minimal Commitments and Self- Financial Strength & Flexibility Fu
Slide 4: Commitment to Environmental Leadership and Sustainability
COMMITMENT TO ENVIRONMENTAL LEADERSHIP AND SUSTAINABILITY “A Proud Clean Energy Producer – The World Needs More of Our Energy” CO2 Sequestration Plant Flared Volumes as Percent of (tonnes CO2e accredited) Production 90,367 Improved operating efficiencies and 0.34% 90,000 tonnes CO2e equates to 0.30%
Slide 5: Liquids Development Program Objectives
LIQUIDS DEVELOPMENT PROGRAM OBJECTIVES Total Revenue Diversification Value Enhancement (1) >50% Liquids by 2021 • Transition to >50% liquids revenue (condensate/light oil) 20% Liquids 39% Midwest US • Double digit Adjusted Funds Flow 9% 53% (“AFF”) per share growth Dawn 12% Fixed Price • Double digi
Slide 6: Liquids Development Underpinned by Top Tier Assets
LIQUIDS DEVELOPMENT UNDERPINNED BY TOP TIER ASSETS (1) Condensate & Light Oil Focused 6 miles • Glacier asset generating free cash Progress • Significant oil pool discovery at Progress Glacier • Liquids development underway ‘The Foundation’ in all land blocks Valhalla • Utilize 3rd party gas process
Slide 7: Operations Overview – Shifting to Middle Montney Liquids
OPERATIONS OVERVIEW – SHIFTING TO MIDDLE MONTNEY LIQUIDS Deep Liquids-Rich Inventory (1)(2)(3) Booked Undeveloped Unbooked Upside Progress TOTAL future location inventory Glacier ~1,400 to 1,500 697 Valhalla 70 Pipestone/ 216 244 129 11 Wembley <25 bbls/mmcf 25-100 bbls/mmcf >100 bbls/mmcf • Total o
Slide 8: Advantage Montney – Multizone Development Throughout
ADVANTAGE MONTNEY – MULTIZONE DEVELOPMENT THROUGHOUT Wembley primary target Valhalla liquids appraisal targets Glacier liquids zones New oil pool discovery Advantage Operated HZ Offset Operator HZ 8
Slide 9: Wembley/Valhalla (Pipestone) Liquids Rich Development
WEMBLEY/VALHALLA (PIPESTONE) LIQUIDS RICH DEVELOPMENT • 71 net sections in the premium, multi- Recently completed D3 Well layer, liquids fairway 30% liquids (IP30) • Valhalla wells are tied into AAV Glacier Plant to the West Valhalla • Wembley wells will flow South to New 5 well pad Tidewater and Ke
Slide 10: Significant Light Oil Pool Discovery at Progress
SIGNIFICANT LIGHT OIL POOL DISCOVERY AT PROGRESS Kelt Oil Wells Tourmaline Oil Wells Up to 153,000 bbls CTD Up to 152,000 bbls CTD 13-31 Montney D1 (2017) • 50 net sections assembled at low cost over 5 years • Appraisal drilling began in 2017 • 4 Advantage wells drilled to date • Recent advancement
Slide 11: Liquids-Rich Middle Montney at Glacier Stepping Up
LIQUIDS-RICH MIDDLE MONTNEY AT GLACIER STEPPING UP • Early development was in Upper and Lower Q1 2019 10 Well Middle Montney Pad – Montney (lean gas) Average Final Rate 422 bbls/d (73 bbls/mmcf) • Recent focus on Middle Montney, where liquids range from 25 to 80 bbls/mmcf • 89 net sections • 750 wel
Slide 12: Strategic Infrastructure Control, Flexible Pipeline Access
STRATEGIC INFRASTRUCTURE CONTROL, FLEXIBLE PIPELINE ACCESS 100% Owned Glacier Gas Plant – 400 mmcf/d Raw Gas + 6,800 bbls/d C3+ Liquids Extraction TCPL Groundbirch Lateral BC AB Advantage Glacier Gas Plant Future AAV Progress Liquids Hub AAV Liquids Handling Hub Keyera 2,000 bbls/d Pipestone Plant •
Slide 13: 2019 Guidance and Estimates
2019 GUIDANCE AND ESTIMATES (1)(2) Average production (boe/day) 43,500 - 46,500 Gas production (mmcf/d) 244 to 260 Liquids production (bbls/d) 2,900 to 3,200 % Liquids / % Condensate/light oil 7% / 76% Royalties ($/boe) and Royalty Rate (%) $0.40 (3%) Operating Cost ($/boe) $2.00 Transportation Cost
Slide 14: Three Year Development Plan – Liquids Transition
THREE YEAR DEVELOPMENT PLAN – LIQUIDS TRANSITION(1) Total Production (boe/d) Liquids Production and 14,000 bbls/d Exit Composition (bbls/d) 10,500 to 48,500 to 46,000 to 52,500 11,500 43,500 to 48,000 46,500 22% 6,500 to 7% 15% 7,500 2,900 to C5+ / 78% light oil 3,200 76% 76% 2019G 2020E 2021E 2019G
Slide 15: Development Plan Price Sensitivity
DEVELOPMENT PLAN PRICE SENSITIVITY(1) Gas Price Sensitivity Oil Price Sensitivity Total Debt to Adjusted Funds Flow (2) Total Debt to Adjusted Funds Flow (2) AECO $1.30/mcf AECO $1.70/mcf WTI US$50.00/bbl WTI US$70.00/bbl (@ WTI US$58/bbl Flat) (@ AECO Cdn$1.65/mcf Flat) 2.0 1.8 1.8 1.9 1.6 1.6 1.6
Slide 16: Strong Hedges and Transportation In-Place
STRONG HEDGES AND TRANSPORTATION IN-PLACE (1) Current Hedging Transactions (MMcf/d) Hedging Strategy 140 90% • Summer 2019 AECO hedges mitigate AECO ($Cdn/Mcf) volatility 80% 120 $2.87 $2.87 Dawn ($US/Mmbtu) • Expect to hedge both liquids and natural 70% gas in future periods 100 $3.01 % of AECO Exp
Slide 17: Financial Discipline, Operationally Nimble, Returns Focus
Financial Discipline Operationally Nimble Returns Focus
Slide 18: Appendix
APPENDIX 18
Slide 19: Glacier – Located in the Heart of the Montney Resource Play
GLACIER – LOCATED IN THE HEART OF THE MONTNEY RESOURCE PLAY BC AB Glacier Pipestone Liquids Fairway Source: Geoscout, Corporate Presentations Montney Siltstone Comparison: • 700 times more permeability • 4x more formation thickness • Very low clay content • Liquids & Improved well efficiencies stron
Slide 20: Continuous Improvement Has Led to Exceptional Efficiencies
CONTINUOUS IMPROVEMENT HAS LED TO EXCEPTIONAL EFFICIENCIES 20
Slide 21: Middle Montney Production Continues to Increase
MIDDLE MONTNEY PRODUCTION CONTINUES TO INCREASE 2018/19 11 wells Gen 6: Slickwater, OH Packers, Stage • 2017+ Middle Montney wells with frac design changes completions Avg 33 frac stages including >30 frac stages & numerous mechanical systems evaluated 2016/17 6 Wells • 39 total Middle Montney wells
Slide 22: Glacier Montney Assigned 2P EUR per Well & Interval
GLACIER MONTNEY ASSIGNED 2P EUR PER WELL & INTERVAL Glacier - 2P Recoveries per Interval(1) # of Gross HZ Wells 2P Recovery [bcf/well] Developed Undeveloped Total Developed Undeveloped Total Interval YE YE YE YE YE YE YE YE YE YE YE YE YE YE YE YE YE YE 2016 2017 2018 2016 2017 2018 2016 2017 2018 2
Slide 23: Wembley Montney Assigned 2P EUR per Well & Interval
WEMBLEY MONTNEY ASSIGNED 2P EUR PER WELL & INTERVAL Wembley Montney Assigned 2P EUR Per Well & Interval(1) # of Gross HZ Wells 2P Gas & Free Liquids Recovery [bcf/well mstb/well] Interval Developed Undeveloped Total Developed Undeveloped Total YE YE YE YE YE YE YE YE YE YE YE YE 2017 2018 2017 2018
Slide 24: 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 25: 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 26: 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 27: Advisory
ADVISORY Advantage has presented certain type curves and well economics for its Montney areas. The type curves presented are based on Advantage's historical production. Such type curves and well economics are useful in understanding management's assumptions of well performance in making investment d
Slide 28: Advisory
ADVISORY Non-GAAP Measures The Corporation discloses several financial and performance measures that do not have any standardized meaning prescribed under International Financial Reporting Standards ("IFRS" or “GAAP”). These financial and performance measures include “net capital expenditures”, “adj
Slide 29: Advisory – Abbreviations
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
Slide 30: Advantage Contact Information
ADVANTAGE CONTACT INFORMATION Investor Relations 1.866.393.0393 ir@advantageog.com www.advantageog.com Listed on TSX: AAV Advantage Oil & Gas Ltd. Suite 2200, 440 – 2nd Avenue SW Calgary, Alberta T2P 5E9 Main: 403.718.8000 Facsimile: 403.718.8332 Advantage 100% W.I. Glacier Gas Plant Andy Mah, P.Eng
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