Advantage Energy Ltd · TSX:AAV
Advantage Energy — Advantage Oil & Gas — Investor Presentation (May 2014)
37 slides from Advantage Energy's investor presentation, May 2014
Slide 1: Pure Play Montney Producer Investor Presentation
“Pure Play Montney Producer with a proven operating team and industry leading cost structure creates a solid foundation for multi-year growth” Investor Presentation TSX, NYSE: AAV May 2014 Page 1
Slide 2: Advantage – At a Glance
Advantage – At a Glance Intermediate Canadian Montney Producer Listed on TSX and NYSE AAV TSX 52-week trading range ($Cdn) $3.55 - $7.06 Shares Outstanding (basic) 169.1 million Current Production 135 mmcfe/d (22,500 boe/d) Market Capitalization (May 13, 2014) $1.1 billion Bank Debt (March 31, 2014)
Slide 3: Industry Leading Pure Play Montney Producer
Industry Leading Pure Play Montney Producer Advantage’s Pure Play Montney holdings are concentrated in the Glacier, Alberta area. We are a highly focused “Montney only” producer with 25 current employees, Glacier 100% owned operatorship of our lands and 77 net Glacier Gas ownership of our facilities
Slide 4: Three Year Fully Funded Glacier Growth Plan
Three Year Fully Funded Glacier Growth Plan : 100% Production per Share and 190% Cash Flow per Share Growth Development Plan (3) Phase VI Phase VII Phase VIII Phase IX Q2’13 to Q2’14 to Q2‘15 to Q2’16 to Q1’14 Q1’15 Q1’16 Q1’17 Current Approved Estimates Estimates Production (mmcfe/d) 12 month avera
Slide 5: Three Year Development Plan – Strong Cash Flow Growth
Three Year Development Plan – Strong Cash Flow Growth Total debt/ forward cash flow decreases as cash flow grows significantly based on an average natural gas price of Cdn $3.75/GJ (2014-2017) The 12 month period post Q2 2017 generates $160 million of free cash flow at Pea a natural gas price of Cdn
Slide 6: Three-Year Growth Plan Reinforced by Solid Financial Strategy
Three-Year Growth Plan Reinforced by Solid Financial Strategy Strengthened Balance Sheet $94 million gross proceeds from Longview share sale $17.5 million from sale of Questfire investments $85 million March 31, 2014 bank debt 3 Year Downside Natural Gas Total Debt/Cash flow 1.5x (1) Protection over
Slide 7: Recent Achievements Support Growth Plans
Recent Achievements Support Growth Plans Track record of production growth and operating cost optimization Glacier production growth has already replaced 2013 non-core asset sales of 33.6 mmcfe/d (5,600 boe/d) Achieved Phase VI Budget production target of 135 mmcfe/d one month ahead of schedule
Slide 8: Proven Operating Performance Since 2008
Proven Operating Performance Since 2008 Advantage has drilled 117 Montney wells across our Glacier land block and developed significant expertise to execute and optimize future capital programs and operations Advantage grew Glacier production from 0 to 100 mmcfe/d during the first three years of dev
Slide 9: Strong Reserves Growth and Replacement Efficiencies
Strong Reserves Growth and Replacement Efficiencies 580% 2P Reserves At Year-end 2013: growth since 2008 3 Year F&D $1.06/mcfe & • Replaced 840% of 2013 Glacier production at a 3 Year Recycle Ratio $1.33/mcfe 2P F&D cost 2.7x • 2P Reserves grew 20% and NGL’s grew 393% (1.62 Tcfe natural gas and 13.0
Slide 10: Delineation Drilling Led to Pentastack Development Plan at Glacier
Delineation Drilling Led to “Pentastack” Development Plan at Glacier Over 1,305 Locations Remain Undrilled Beyond 2017 - Post Development Plan • ~1,400 remaining drilling locations • Five 50 meter intervals are available for development based on four wells per section per layer • Delineation has pro
Slide 11: Pure Play Focus Creates Industry Leading Cost Structure
Pure Play Focus Creates Industry Leading Cost Structure Advantage’s full cycle margin between realized price and cash costs is among the top Montney producers. 2015 liquids production will further increase the realized price and margin. Page 11
Slide 12: Netback and Recycle Ratio Contributes To Strong Drill Economics
Netback and Recycle Ratio Contributes To Strong Drill Economics Liquids Rich Gas Netbacks and Recycle Ratios Dry Gas ($/mcfe) ($/mcfe) 2P F&D Average Undeveloped Location (1) $1.10__ . $1.57__ . Glacier Operating Netback (2): Revenue (3) $4.22 Operating $5.76 Netback is Royalties 0.21 89% of 0.29 re
Slide 13: Glacier Montney Well Economics
Glacier Montney Well Economics(1) Dry Gas Liquids Rich Gas Upper and Lower Montney (2) Middle Montney Intervals (3) $10.9 million Rate of Return (%) $10.5 million $8.8 million $7.9 million $6.7 million $4.9 million Frac optimization of 108 Upper and Lower Montney wells Production from 9 MM wells to
Slide 14: Recent Slickwater Frac'd Wells Support Budget Type Curve
Recent Slickwater Frac’d Wells Support Budget Type Curve (data updated to April 30, 2014) High rate wells are Recent Upper and Lower Montney wells completed with slickwater fracs are typically rate outperforming Phase VII Budget type curve which is based on an IP30 6.9 mmcf/d. restricted to avoid sa
Slide 15: Upper Montney: Exceptional Well Performance Across Glacier
Upper Montney: Exceptional Well Performance Across Glacier Production from slickwater fracs exhibiting clean-up after test and shallower declines 21 mmcf/d initial production restricted to 10 mmcf/d 21 mmcf/d 11 mmcf/d record well 10 mmcf/d 11 mmcf/d 13 mmcf/d 11 mmcf/d 15 mmcf/d 10 mmcf/d 10 mmcf/d
Slide 16: Lower Montney: New Wells Confirm Solid Results Across Glacier
Lower Montney: New Wells Confirm Solid Results Across Glacier 12 mmcf/d Production from slickwater fracs initial exhibiting clean-up after test and production shallower declines 7 mmcf/d 10 mmcf/d 5 mmcf/d production for 2 months 43.7 mmcf/d mmcf/d 7 6.8 mmcf/d mmcf/d Previous LM well 16 mmcf/d 3 3.
Slide 17: Recent Middle Montney Wells Support Budget Type Curve
Recent Middle Montney Wells Support Budget Type Curve (data updated to April 30, 2014) Production Rate vs Time New Phase VI 12-2 well started production at restricted rate of Middle Montney wells have 9.5 mmcf/d. Restricted to ~6.5 sequentially demonstrated mmcf/d to manage handling of improved prod
Slide 18: Middle Montney: Results Confirm Liquid Trend and Improved Well Rates
Middle Montney: Results Confirm Liquid Trend and Improved Well Rates • Liquid yields are higher in east Glacier and pervasive through entire land block 9.5 mmcf/d initial production 8 mmcf/d restricted to 6 26 bbl/mmcf 8 mmcf/d mmcf/d due to 8 bbl/mmcf 57 bbl/mmcf high liquid 40 bbl/mmcf 32 bbl/mmcf
Slide 19: Glacier Phase VII – Middle Montney Liquids Extraction Plans
Glacier Phase VII – Middle Montney Liquids Extraction Plans Additional gas compression to be added here Shallow cut liquids extraction process to be installed in Q2 2015 at existing 100% owned Glacier gas plant Phase VII program targets initial 25 mmcf/d of Liquids liquids rich natural gas gener
Slide 20: New Montney Lands – Prospective for Natural Gas Liquids
New Montney Lands – Prospective for Natural Gas Liquids(1) Phase VI drilling results confirm increasing liquids in east Glacier and extends liquids potential to new lands Technical work to date indicates thick Montney formation and multiple layer Glacier potential in the new lands 77 net Montney sec
Slide 21: Approved Glacier Phase VII Budget and Guidance
Approved Glacier Phase VII Budget and Guidance Approved Phase VII Budget and Guidance(1) 12 Months ending March 31, 2015 Average Production (mmcfe/d) 134 to 139 Royalty Rate (%) 5% to 6% Operating Costs ($/mcfe) $0.25 to $0.30 Capital Expenditures ($ million) $260 to $270 Wells Required (net) Dry ga
Slide 22: Advantage Summary – Growing Our Montney at Glacier
Advantage Summary – Growing Our Montney at Glacier Focused on our world class 16 Tcf TPIIP Glacier Montney property and development of its 4.2Tcfe contingent resources and 1.7 Tcfe 2P reserves(1) Additional 43.25 net sections of new undeveloped Montney lands provides further upside Strong Glacier
Slide 23: Appendix
Appendix Bavantage Page 23 Oil & Gas Ltd."
Slide 24: Montney Siltstone Supports High Reserve Recoveries
Montney Siltstone Supports High Reserve Recoveries Shale Silt Sand 84 gross (77 net) sections - Historic type curve based on 86 wells with an average of 11.5 fracs per well The Montney formation is a siltstone and sand matrix which leads to better permeability and higher recovery factors than pure s
Slide 25: Glacier – Major Pipeline Access
Glacier – Major Pipeline Access Page 25
Slide 26: 2012 Core and Completion Studies – Increased Resource and Improved Well Results
2012 Core and Completion Studies – Increased Resource and Improved Well Results Core study determined original density porosity logs have to be re-calibrated Re-calibration aligned log to actual IP30’s on open hole core porosities evident through wells improved by 1.6x First year cumulative entire 2
Slide 27: Summary of Well Tests Referenced in Presentation Slides
Summary of Well Tests Referenced in Presentation Slides Final Gas Final Flow Normalized Estimated Test Rate Test Period Pressure Final Gas Test Rate (1) C3+ liquid yield Well Formation (mmcf/d) (hrs) (kpa) (mmcf/d) (bbls/mmcf) (2) 00/01-27-76-13W6-Horizontal Upper Montney 11.2 78 4,601 11.4 - 02/10-
Slide 28: Glacier Drilling Economics and 2P Recoveries per Interval
Glacier Drilling Economics and 2P Recoveries per Interval ($ millions unless otherwise indicated) Glacier Drilling Economics – PV’s @ 10% Discount(1) Dry Gas(3) Liquids Rich Gas(4) AECO C natural gas price ($/mcf)(2) $3.00 $4.00 $5.00 $3.00 $4.00 $5.00 IP30’s and 2P Reserves: 4 mmcf/d & 4 Bcf N/A N/
Slide 29: Glacier March 31, 2013 Contingent and Prospective Resource Assessment
Glacier March 31, 2013 Contingent and Prospective Resource Assessment Advantage engaged our independent qualified reserves evaluator Sproule Associates Ltd. (“Sproule”) to update the resource analysis and provide a 2C evaluation (“Sproule 2C Contingent Resource Evaluation”) at Glacier as of March 31
Slide 30: Glacier Contingent and Prospective Resource Assessment
Glacier Contingent and Prospective Resource Assessment Low Best High UPIIP (AAV Working Interest, Sales) (3) Estimate Estimate Estimate Natural Gas Prospective Resources (Tcf) 0.342 0.556 0.776 Unrecoverable UPIIP (Tcf) 1.561 1.347 1.127 Natural Gas Liquids Prospective Resources (mbbls) 7,381 11,691
Slide 31: Glacier Contingent and Prospective Resource Assessment
Glacier Contingent and Prospective Resource Assessment 2C (Best Estimate) Contingent Resources Net Present Values Before Income Taxes Gross 2C Recoverable ($ millions) Gross Number of Hz Resources per Location Interval Well Locations (Raw – Bcf per Well) 0% 10% 15% 1 60 3.425 777 46 13 2 286 4.035 6
Slide 32: Glacier Contingent and Prospective Resource Assessment
Glacier Contingent and Prospective Resource Assessment Other Notes about Resource Estimates: TPIIP, DPIIP and UPIIP have been estimated using a zero percent porosity cut-off (sandstone log scale). The Montney formation is approximately 300 meters thick. Sproule’s analysis utilized 6 potential laye
Slide 33: Appendix — Reserve and Resource Definitions
Appendix — Reserve and Resource Definitions Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on the analysis of drilling, geological, geophysical and engineering data; the use o
Slide 34: Advisory
Advisory Certain statements contained in this presentation constitute forward-looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but n
Slide 35: Advisory
Advisory Advantage's actual decisions, activities, results, performance or achievement could differ materially from those expressed in, or implied by, such forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements wil
Slide 36: Advisory
Advisory The following abbreviations used in this press release, including in the appendices hereto, have the meanings set forth below: bbls barrels mcf thousand cubic feet bbls/d barrels per day mmcf million cubic feet mmcf/d million cubic feet per day mbbls thousand barrels bcf billion cubic feet
Slide 37: Advantage Contact Information
Advantage Contact Information Investor Relations 1.866.393.0393 ir@advantageog.com Andy Mah, P.Eng. Director, President & Chief Executive Officer Craig Blackwood, C.A. VP Finance & Chief Financial Officer Advantage 100% W.I. Glacier Gas Plant www.advantageog.com Listed on NYSE and TSX: AAV Advantage
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