(TSX: AAV)
CALGARY,
AB, June 20, 2023 /CNW/ - Advantage
Energy Ltd. ("Advantage" or the "Corporation") is pleased to
provide an operational update in advance of today's scheduled
analyst presentation. While Glacier well results continue to
achieve new benchmarks, Wembley, Valhalla and Progress have now been
established as top-tier development-ready liquids assets.
Highlights
- At Glacier, the last 14 wells have achieved an average IP30 of
14.3 mmcf/d (see table below), an increase of over 35% compared to
a year ago.
- The Glacier Gas Plant expansion to 425 mmcf/d capacity has now
been completed.
- At Wembley, the last 3 wells
in the D3 bench have achieved an average IP30 of 1,393 boe/d (63%
oil and NGLs - see table below).
- Our first well in Wembley's D4
bench has been on production for 9 days with initial liquids and
gas rates exceeding any of our prior D3 wells.
- At Valhalla, Advantage has
high-graded the D4 bench with our 5 most recent wells achieving
IP30 rates of 1,704 boe/d (6.7 mmcf/d natural gas, 392 bbls/d
condensate, and 196 bbls/d NGLs totalling 33.5% liquids).
- At Progress, all expiry and delineation drilling has been
completed. The D1 bench has been high-graded, with the first well
having recovered over 200,000 bbls total liquids and 2.4 Bcf of gas
in approximately 30 months.
- Prior third-party production constraints at Progress have been
eliminated with commissioning of the new Progress liquids
battery.
- Advantage remains on-track to meet its capital and production
guidance, including 20% annual liquids growth, despite second
quarter production being reduced 2% by wildfires, unplanned
downtime, and third-party pipeline outages.
Recent Pad Results
Glacier
|
Layer
|
Raw Natural Gas
IP30(1) mmcf/d
|
Raw Natural
Gas
IP90(1)
mmcf/d
|
2-32
Pad
|
|
|
|
100/16-21-076-12W6/00
|
UM
|
14.9
|
13.1
|
102/13-31-076-12W6/00
|
UM
|
13.7
|
12.2
|
100/01-28-076-12W6/00
|
UM
|
12.7
|
11.7
|
100/13-31-076-12W6/00
|
D1
|
17.2
|
14.2
|
102/16-21-076-12W6/00
|
D1
|
16.0
|
14.4
|
|
|
|
|
9-32
Pad
|
|
|
|
103/15-06-077-13W6/00
|
D4
|
14.0
|
11.9
|
100/10-06-077-13W6/00
|
UM
|
9.5
|
9.3
|
102/15-06-077-13W6/00
|
UM
|
15.0
|
13.0
|
102/10-06-077-13W6/00
|
D4
|
15.1
|
12.6
|
102/02-06-077-13W6/00
|
UM
|
11.8
|
10.3
|
|
|
|
|
12-33
Pad
|
|
|
|
102/15-06-076-13W6/00
|
D4
|
14.4
|
n/a
|
100/07-06-076-13W6/00
|
D4
|
17.6
|
n/a
|
100/02-06-076-13W6/00
|
D4
|
16.5
|
n/a
|
100/02-07-076-13W6/00
|
D4
|
12.2
|
n/a
|
|
(1) Raw gas
average rate produced once stabilized production has been achieved
for a 30 or 90 day (as applicable) production
period
|
|
|
IP30(2)
|
Wembley
|
Total
Production
boe/d
|
Natural
gas
mmcf/d
|
Crude
oil
bbls/d
|
NGLs
bbls/d
|
% liquids
|
11-25 Pad (D3
Layer)
|
|
|
|
|
|
100/16-29-072-07W6/00
|
1,390
|
3.1
|
487.3
|
384.6
|
62.7
|
100/09-29-072-07W6/00
|
1,559
|
3.5
|
592.2
|
379.6
|
62.3
|
102/09-29-072-07W6/00
|
1,230
|
2.6
|
488.8
|
315.9
|
65.4
|
|
|
|
|
|
|
|
|
IP9(3)
|
Wembley
|
Total
Production
boe/d
|
Natural
gas
mmcf/d
|
Crude
oil
bbls/d
|
NGLs
bbls/d
|
% liquids
|
4-22 Pad (D4
Layer)
|
|
|
|
|
|
103/03-10-073-08W6/00
|
2,808
|
5.6
|
1,447.8
|
418.6
|
66.5
|
|
(2) Average sales volumes produced
once stabilized production has been achieved for a 30 day
production period.
|
(3) Average sales volumes produced
for a 9 day initial production period.
|
Looking Forward
To maximize shareholder value, Advantage remains focused on
growing adjusted funds flow per sharea through organic
growth and share repurchases. Advantage's three-year plan is to
deliver annual production growth of approximately 10% with annual
capital spending between $250 million
and $300 million, including planned
processing capacity expansions. All free cash flowa
is planned to be returned to shareholders via share buybacks. Our
net debta target range remains between $170 million and $230
million.
Advantage's 2023 capital guidance remains between $250 million and $280
million. Development activities during the remainder of 2023
include increased focus on liquids-weighted growth into our
existing facilities at Wembley.
Production guidance for 2023 remains between 59,000 boe/d and
62,500 boe/d, with recent well outperformance partially offset by
unplanned third-party pipeline restrictions. For 2024 and beyond,
our increasing type curves are expected to help us achieve our
growth goals with fewer wells and enhanced economics. Once the
Glacier Gas Plant is filled to 425 mmcf/d, likely by the end
of 2024, approximately 9 wells per year will be required to
maintain production at the asset. By 2025, our growth focus is
expected to shift to the gas and liquids opportunities in
Valhalla, Progress and
Wembley.
With modern, low emissions-intensity assets and ownership of
85%b of Entropy, the Corporation continues to
proudly deliver clean, reliable, sustainable energy, contributing
to a reduction in global emissions by displacing high-carbon fuels.
Advantage wishes to thank our employees, Board of Directors and our
shareholders for their ongoing support.
________________________________
|
a Specified financial measure
which is not a standardized measure under International Financial
Reporting Standards ("IFRS") and may not be comparable to similar
specified financial measures used by other entities. Please see
"Specified Financial Measures" in Advantage's MD&A on page 34
for the year ended December 31, 2022 and page 30 of the 2023 First
Quarter Report for the composition of such specified financial
measure, an explanation of how such specified financial measure
provides useful information to a reader and the purposes for which
management of Advantage uses the specified financial measure, and
where required, a reconciliation of the specified financial measure
to the most directly comparable IFRS measure.
|
b Advantage currently owns 90% of
Entropy's common shares. Assuming Brookfield's currently-held
unsecured debentures are exchanged for commons shares according to
the terms of the investment agreement, Advantage will own 85% of
Entropy's common shares.
|
Forward-Looking Information
and Advisory
The information in this press release contains certain
forward-looking statements, including within the meaning of
applicable securities laws. These statements relate to future
events or our future intentions or performance. All statements
other than statements of historical fact may be forward-looking
statements. Forward-looking statements are often, but not always,
identified by the use of words such as "anticipate", "continue",
"demonstrate", "expect", "may", "can", "will", "believe", "would"
and similar expressions and include statements relating to, among
other things, Advantage's position, strategy and development plans
and the benefits to be derived therefrom; that Advantage
remains on-track to meet its annual capital and production guidance
for 2023; the Corporation's anticipated annual liquids production
growth in 2023; the Corporation's focus on growing adjusted funds
flow per share through organic growth and share repurchases; the
Corporation's net debt target range; the Corporation's anticipated
annual production growth and annual capital spending for the next
three years including its planned processing capacity expansions;
the Corporation's plan to return all free cash flow to its
shareholders via share buybacks; the Corporation's 2023 capital
guidance; that the focus of the Corporation's development
activities during the remainder of 2023 will focus on
liquids-weighted growth and the anticipated benefits to be derived
therefrom; Advantage's expectations of when the Glacier Gas Plant
will be filled and the number of wells per year that will be
required to maintain production at capacity at the plant; the
anticipated focus of Advantage's operations in 2025; the
Corporation's anticipated 2023 average production; and the
Corporation's expectations that it will continue to deliver clean,
reliable, sustainable energy, contributing to a reduction in global
emissions by displacing high-carbon fuels. 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 will transpire or occur or, if any of them do, what
benefits that Advantage will derive from them.
These statements involve substantial known and unknown risks
and uncertainties, certain of which are beyond Advantage's control,
including, but not limited to: changes in general economic, market
and business conditions; industry conditions, including as a result
of demand and supply effects resulting from the COVID-19 pandemic;
actions by governmental or regulatory authorities including
increasing taxes and changes in investment or other regulations;
changes in tax laws, royalty regimes and incentive programs
relating to the oil and gas industry; Advantage's success at
acquisition, exploitation and development of reserves; unexpected
drilling results; 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 such as fire,
explosion, blowouts, cratering, and spills, each of which could
result in substantial damage to wells, production and processing
facilities, other property and the environment or in personal
injury; changes or fluctuations in production levels; delays in
anticipated timing of drilling and completion of wells; individual
well productivity; competition from other producers; the lack of
availability of qualified personnel or management; credit risk;
changes in laws and regulations including the adoption of new
environmental laws and regulations and changes in how they are
interpreted and enforced; our ability to comply with current and
future environmental or other laws; stock market volatility and
market valuations; liabilities inherent in oil and natural gas
operations; competition for, among other things, capital,
acquisitions of reserves, undeveloped lands and skilled personnel;
incorrect assessments of the value of acquisitions; geological,
technical, drilling and processing problems and other difficulties
in producing petroleum reserves; ability to obtain required
approvals of regulatory authorities; ability to access sufficient
capital from internal and external sources; the risk that the
Corporation may not meet its capital or production guidance for
2023; the risk that the Corporation's annual liquids production
growth in 2023 may be less than anticipated; the risk that the
Corporation may not grow its adjusted funds flow per share through
organic growth and share repurchases; the risk that the
Corporation's annual production for the next three years may be
less than anticipated; the risk that the Corporation may not meet
its net debt target range; the risk that the Corporation's annual
spending for the next three years may be greater than anticipated;
the risks and assumptions used in estimating Advantage's financial
and operating results for the calendar years 2023 to 2025,
including commodity prices, timing of expenditures and the focus of
such expenditures, may change from current expectations; the risk
that the Corporation does not achieve the anticipated increases to
production and/or other estimated financial results; the risk that
the Corporation may not complete its planned processing capacity
expansions when anticipated, or at all; the risk that all of the
Corporation's free cash flow may not be returned to its
shareholders via share buybacks; the risk that the Corporation's
focus on liquids-weighted growth may not optimize Advantage's
existing facilities as Wembley;
the risk that the Glacier Gas Plant may not be filled when
anticipated; the risk that the Corporation's 2023 average
production may be less than anticipated; the risk that the
Corporation may not have sufficient financial resources to purchase
its shares pursuant to its share buyback program in the future; and
the risk that the Corporation may not deliver clean, reliable,
sustainable energy, contributing to a reduction in global emissions
by displacing high-carbon fuels. Many of these risks and
uncertainties and additional risk factors are described in the
Corporation's Annual Information Form which is available at
www.sedar.com ("SEDAR") and www.advantageog.com. Readers are also
referred to risk factors described in other documents Advantage
files with Canadian securities authorities.
With respect to forward-looking statements contained in this
press release, Advantage has made assumptions regarding, but not
limited to: conditions in general economic and financial markets;
the impact and duration thereof that the COVID-19 pandemic will
have on (i) the demand for crude oil, NGLs and natural gas, (ii)
the supply chain including the Corporation's ability to obtain the
equipment and services it requires, and (iii) the Corporation's
ability to produce, transport and/or sell its crude oil, NGLs and
natural gas; effects of regulation by governmental agencies;
current and future commodity prices and royalty regimes; the
Corporation's current and future hedging program; future exchange
rates; royalty rates; future operating costs; future transportation
costs and availability of product transportation capacity;
availability of skilled labor; availability of drilling and related
equipment; timing and amount of net capital expenditures; the
impact of increasing competition; the price of crude oil and
natural gas; the number of new wells required to achieve the budget
objectives; that the Corporation will have sufficient cash flow,
debt or equity sources or other financial resources required to
fund its capital and operating expenditures and requirements as
needed; that the Corporation's conduct and results of operations
will be consistent with its expectations; that the Corporation will
have the ability to develop the Corporation's properties in the
manner currently contemplated; current or, where applicable,
proposed assumed industry conditions, laws and regulations will
continue in effect or as anticipated; that the Corporation will
complete its planned processing capacity expansion when
anticipated; that increased focus on liquids-weighted growth will
optimize Advantage's existing facilities at Wembley; that the Corporation will have
sufficient financial resources to purchase its shares pursuant to
its share buyback program in the future; and the estimates of the
Corporation's production and reserves volumes and the assumptions
related thereto (including commodity prices and development costs)
are accurate in all material respects. Readers are cautioned that
the foregoing lists of factors are not exhaustive.
This press release contains additional forward-looking
statements which are estimates of Advantage's annual production
growth and annual capital spending for the next three years and net
debt target range. The foregoing estimates are based on various
assumptions and are provided for illustration only and are based on
budgets and forecasts that have not been finalized and are subject
to change and a variety of contingencies including prior years'
results. In addition, the foregoing estimates and assumptions
underlying the 2024 and 2025 forecasts are management prepared only
and have not been approved by the Board of Directors of Advantage.
These forecasts are made as of the date of this press release and
except as required by applicable securities laws, Advantage
undertakes no obligation to update such forecasts. In addition to
the assumptions listed above, Advantage has made the following
assumptions with respect to the 2023-2025 forecasts contained in
this press release, unless otherwise specified:
- Production growth of approximately 10% annually.
- Net capital expenditures of $250
million to $300 million
annually.
- Commodity prices utilizing strip pricing assumptions: WTI
US$/bbl (2023–$73, 2024–$67, 2025–$65), AECO $CDN/GJ (2023–$2.36,
2024–$2.81, 2025–$3.49), FX $US/$CDN (2023–0.74, 2024–0.74,
2025–0.74)
- Current hedges (See note 8 "Financial risk management" in
Advantage's Condensed Consolidated Financial Statements for the
three months ended March 31,
2023).
- Net debt target range remains between $170 million and $230
million.
The future acquisition by the Corporation of the
Corporation's common shares pursuant to its share buyback program,
if any, and the level thereof is uncertain. Any decision to acquire
common shares of the Corporation pursuant to the share buyback
program will be subject to the discretion of the board of directors
of the Corporation and may depend on a variety of factors,
including, without limitation, the Corporation's business
performance, financial condition, financial requirements, growth
plans, expected capital requirements and other conditions existing
at such future time including, without limitation, contractual
restrictions and satisfaction of the solvency tests imposed on the
Corporation under applicable corporate law. There can be no
assurance of the number of common shares of the Corporation that
the Corporation will acquire pursuant to its share buyback program,
if any, in the future.
Management has included the above summary of assumptions and
risks related to forward-looking information above and in its
continuous disclosure filings on SEDAR 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, performance or achievement
could differ materially from those expressed in, or implied by,
these forward-looking statements and, accordingly, no assurance can
be given that any of the events anticipated by the forward-looking
statements will transpire or occur, or if any of them do so, what
benefits that Advantage will derive there from. Readers are
cautioned that the foregoing lists of factors are not exhaustive.
These forward-looking statements are made as of the date of this
news release and Advantage disclaims any intent or obligation to
update publicly any forward-looking statements, whether as a result
of new information, future events or results or otherwise, other
than as required by applicable securities laws.
This press release 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, that Advantage remains on-track to meet its
annual capital and production guidance for 2023; the Corporation's
focus on growing adjusted funds flow per share through organic
growth and share repurchases; the Corporation's net debt target
range; the Corporation's anticipated annual capital spending for
the next three years; the Corporation's plan to return all free
cash flow to shareholders via share buybacks; the Corporation's
2023 capital guidance; all of which are subject to numerous
assumptions, risk factors, limitations and qualifications,
including those set forth in the above paragraphs. The actual
results of operations of the Corporation and the resulting
financial results will vary from the amounts set forth in this
press release and such variations may be material. This information
has been provided for illustration only and with respect to future
periods are based on budgets and forecasts that are speculative and
are subject to a variety of contingencies and may not be
appropriate for other purposes. Accordingly, these estimates are
not to be relied upon as indicative of future results. Except as
required by applicable securities laws, the Corporation undertakes
no obligation to update such financial outlook. The financial
outlook contained in this press release was made as of the date of
this press release and was provided for the purpose of providing
further information about the Corporation's potential future
business operations. Readers are cautioned that the financial
outlook contained in this press release is not conclusive and is
subject to change.
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 equivalent to one barrel of oil. A boe and mcfe
conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. Given that the
value ratio based on the current price of crude oil as compared to
natural gas is significantly different from the energy equivalency
of 6:1, utilizing a conversion on a 6:1 basis may be misleading as
an indication of value.
References in this press release to short-term production
rates, such as IP9, IP30 and IP90, are useful in confirming the
presence of hydrocarbons, however such rates, and historical
increases in such rates, are not determinative of the rates at
which such wells or future wells will commence production and
decline thereafter and are not indicative of long-term performance
rates of future wells or of ultimate recovery. Additionally, such
rates may also include recovered "load oil" fluids used in well
completion stimulation. While encouraging, readers are cautioned
not to place reliance on such rates in calculating the aggregate or
future production of Advantage.
References to natural gas, crude oil and condensate and NGLs
production in this press release refer to conventional natural gas,
light crude oil and medium crude oil and natural gas liquids,
respectively, product types as defined in National Instrument
51–101 – Standards of Disclosure for Oil and Gas
Activities.
SOURCE Advantage Energy Ltd.