(TSX: AAV)
CALGARY,
AB, Feb. 6, 2024 /CNW/ - Advantage Energy Ltd.
("Advantage", the "Corporation", "us", "we" or "our") is pleased to
provide an operational update.
Advantage had another year of exceptional results in 2023,
including record fourth-quarter production of 68,384 boe/d (363.1
MMcf/d natural gas, 3,254 bbls/d crude oil, 1,264 bbls/d condensate
and 3,345 bbls/d NGLs) and record monthly production of over 70,000
boe/d in December. Thanks in part to exceptional well results,
Advantage will be able to deliver its 2024 program with reduced
capital, trending well below the bottom end of current guidance,
with details of the revised program yet to be finalized.
2023 Year-End Highlights
- Annual production was a record 60,678 boe/d (322.7 MMcf/d
natural gas, 2,710 bbls/d crude oil, 1,166 bbls/d condensate and
3,021 bbls/d NGLs), in-line with budget despite significant
unanticipated externalities including wildfires, third-party
outages and extreme temperatures.
- Net capital expendituresa were $266 millionb (including an
unbudgeted $10 million acquisition at
Conroy), squarely on-budget.
- Year-end net debta was approximately $196 millionb, below our $200 million to $250
million target range.
- Repurchased 13.1 million shares in 2023 at an average price of
$8.96 per share. This represents 7.6%
of the Corporation's outstanding shares as of year-end 2022.
- The most recent Glacier pad delivered an average IP30 of 15.6
mmcf/d (approximately 30% higher than budgeted) across 5
wells.
(References to 2023 operational and financial results are
estimates and have not been reviewed or audited by our independent
auditor. Advantage is expected to release its fourth quarter and
year-end results after markets close on or about March 4, 2024)
_____________________________
|
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" 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 Net capital expenditures
and year-end net debt are for Advantage Energy Ltd. only and
exclude Entropy Inc. Entropy Inc. is financed by independent
investors and is not financed by Advantage.
|
2024 Capital Program Outlook
With commodities prices currently testing bottom-decile levels
due to North American supply growth and an exceptionally warm
winter, Advantage is pursuing meaningful reductions to our capital
program. Capital spending is expected to fall well below the
bottom end of the guidance range (currently $260 million to $290
million) in 2024. With December production at over 70,000
boe/d and our 2024 production guidance range of 65,000 to 68,000
boe/d, we have already been able to reduce our planned well count
without impacting production guidance, and we are reviewing
additional discretionary investments that will not compromise our
long-term adjusted funds flow ("AFF") per
sharea growth focus. Advantage expects to
announce changes to our capital program once they have been
finalized during the first quarter.
Management Retirement and Appointment
Mr. David Sterna, Vice President Marketing and Commercial, has
announced his decision to retire from Advantage effective
May 31, 2024. Mr. Sterna joined
Advantage in early 2018 and has been a key member of the management
team that has stewarded the Corporation through several significant
industry cycles, managed our marketing portfolio and assembled our
diversification strategy. The management team and board of
directors would like to thank Mr. Sterna for his valuable
contributions over the last six years and wish him the best in his
retirement.
Advantage is also pleased to announce the appointment of Mr.
Brian Bagnell to the position of
Vice President, Commodities and Capital Markets, effective
June 1, 2024. Mr. Bagnell joined
Advantage in October 2023 as
Director, Commodities and Capital Markets and has over 15 years of
experience in energy and financial markets. Prior to joining
Advantage, Mr. Bagnell was a Senior Vice President at Macquarie
Group, spanning roles in equity research and commodities.
Looking Forward
To maximize shareholder value, Advantage remains focused on
growing AFF per sharea while maintaining a net debt
target of between $200 million and
$250 million. We are entering
the second year of our three-year plan which was designed to be
resilient through volatile commodities markets; through strong
execution our team has demonstrated improved capital efficiencies
allowing us to optimize shareholder returns. While gas prices
are currently low, supply/demand fundamentals are expected to
become more balanced as we approach the end of 2024.
Since initiating our buyback in April
2022, Advantage has repurchased 19.2% of shares
outstandingc, including 1.5 million shares in January
2024. At least 100% of free cash flow will continue to be
allocated to our buyback program while current market conditions
persist.
With low-cost, low emissions-intensity assets and the Glacier
carbon capture and sequestration asset, 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.
___________________________
|
c Shares outstanding in
April 2022, immediately prior to initiating share
buybacks.
|
Forward-Looking Information 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 anticipated benefits to be derived therefrom; that
Advantage will be able to deliver its 2024 program with reduced
capital, well below the bottom end of its current guidance; the
anticipated timing of when Advantage will release its fourth
quarter and year-end results; the Corporation's annual average
production guidance; that Advantage will review additional
discretionary investments that will not compromise its long-term
AFF per share growth focus; Advantage's expectations that it will
announce changes in its anticipated capital expenditures and the
anticipated timing thereof; Advantage's focus on growing AFF per
share while maintaining a net debt target of approximately
$200 million to $250 million; Advantage's expectations that its
three-year plan will be resilient through volatile commodities
markets; Advantage's expectations that its ability to execute
efficiently and improve capital efficiency will allow it to
increase shareholder returns while staying on track with its
long-term strategy; Advantage's expectations that markets will
become more balanced by the end of 2024; Advantage's expectations
that its share buyback program will remain active and that it will
be funded by at least 100% of its free cash flow; and the
Corporation's expectations that it will continue to deliver clean,
reliable, sustainable energy, and contribute 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; 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; the risk that the Corporation may not have access to
sufficient capital from internal and external sources; the risk
that Advantage may not deliver its 2024 program with reduced
capital below the bottom end of its guidance; the risk that
Advantage may not release its fourth quarter and year-end results
when anticipated; the risk that the Corporation's annual average
production in 2024 may be less than anticipated; the risk that
Advantage may not optimize its capital spending in a way that does
not compromise its long-term AFF per share growth focus; the risk
that Advantage may not announce changes in its anticipated capital
expenditures when anticipated, or at all; the risk that Advantage
may not grow its AFF per share or maintain its net debt target; the
risk that Advantage's three-year plan may not be resilient through
volatile commodities markets; the risk that Advantage may not
execute efficiently, improve capital efficiency, increase
shareholder returns or meet its long-term strategy; the risk that
the markets in which Advantage operates may not become more
balanced by the end of 2024; the risk that the Corporation may not
have sufficient financial resources to acquire its common shares
pursuant to its share buyback program in the future; and the risk
that the Corporation may not continue to deliver clean, reliable,
sustainable energy, or contribute to a reduction in global
emissions. Many of these risks and uncertainties and additional
risk factors are described in the Corporation's Annual Information
Form which is available at
www.sedarplus.ca ("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;
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 have sufficient
financial resources to purchase its shares pursuant to its share
buyback program in the future; that by executing efficiently and
improving its capital efficiencies Advantage will be able to
increase its shareholder returns while staying on track with its
long-term strategy; 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.
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 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,
satisfaction of the solvency tests imposed on the Corporation under
applicable corporate law and receipt of regulatory approvals. There
can be no assurance that the Corporation will buyback any shares of
the Corporation 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 will be able to deliver its 2024
program with reduced capital, well below the bottom end of its
guidance; that Advantage will review additional discretionary
investments that will not compromise its long-term AFF per share
growth focus; Advantage's expectations that it will announce
changes in its anticipated capital expenditures and the anticipated
timing thereof; Advantage's focus on growing AFF per share while
maintaining a net debt target of approximately $200 million to $250
million; Advantage's expectations that its ability to
execute efficiently and improve capital efficiency will allow it to
increase shareholder returns while staying on track with its
long-term strategy; Advantage's expectations that its share buyback
program will remain active and that it will be funded by at least
100% of its free cash flow; 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.
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 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 IP30, are useful in confirming the presence of
hydrocarbons, however such rates are not determinative of the rates
at which such wells will commence production and decline thereafter
and are not indicative of long-term performance 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 production of Advantage.
Specified Financial Measures
Throughout this news release, Advantage discloses certain
measures to analyze financial performance, financial position, and
cash flow. These non-GAAP and other financial measures do not have
any standardized meaning prescribed under IFRS and therefore may
not be comparable to similar measures presented by other entities.
The non-GAAP and other financial measures should not be considered
to be more meaningful than GAAP measures which are determined in
accordance with IFRS, such as net income (loss) and comprehensive
income (loss), cash provided by operating activities, and cash used
in investing activities, as indicators of Advantage's
performance.
Non-GAAP Financial Measures
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
excludes changes in working capital related to other periods and
excludes cash receipts on government grants. The results of the
Corporation's subsidiary Entropy Inc. are also excluded from the
below calculation to provide users with the ability to assess
Advantage's results from its oil and gas operations. A
reconciliation of the most directly comparable financial measure
has been provided below:
|
|
Year
ended
December
31
|
($000)
|
|
|
2023
|
2022
|
Cash used in investing
activities
|
|
|
268,872
|
265,769
|
Changes in
non-cash working capital
|
|
|
(2,685)
|
(27,853)
|
Project
funding received
|
|
|
-
|
5
|
Net capital
expenditures - Advantage
|
|
|
266,187
|
237,921
|
Adjusted Funds Flow ("AFF")
The Corporation considers adjusted funds flow to be a useful
measure of Advantage's ability to generate cash from the production
of natural gas and liquids, which may be used to settle outstanding
debt and obligations, support future capital expenditures plans, or
return capital to shareholders. Changes in non-cash working capital
are excluded from adjusted funds flow as they may vary
significantly between periods and are not considered to be
indicative of the Corporation's operating performance as they are a
function of the timeliness of collecting receivables and paying
payables. Expenditures on decommissioning liabilities are excluded
from the calculation as the amount and timing of these expenditures
are unrelated to current production and are partially discretionary
due to the nature of our low liability.
Free Cash Flow
Advantage computes free cash flow as adjusted funds flow less
net capital expenditures. Advantage uses free cash flow as an
indicator of the efficiency and liquidity of Advantage's business
by measuring its cash available after net capital expenditures to
settle outstanding debt and obligations and potentially return
capital to shareholders by paying dividends or buying back common
shares.
Non-GAAP Ratios
Adjusted Funds Flow per Share
Adjusted funds flow per share is derived by dividing adjusted
funds flow by the basic weighted average shares outstanding of the
Corporation. Management believes that adjusted funds flow per share
provides investors an indicator of funds generated from the
business that could be allocated to each shareholder's equity
position.
Capital Management Measures
Working Capital
Working capital is a capital management financial measure
that provides Management and users with a measure of the
Corporation's short-term operating liquidity. By excluding short
term derivatives and the current portion of provision and other
liabilities, Management and users can determine if the
Corporation's energy operations are sufficient to cover the
short-term operating requirements. The results of the Corporation's
subsidiary Entropy Inc. are also excluded from the below
calculation to provide users with the ability to assess Advantage's
results from its oil and gas operations. Working capital is not a
standardized measure and therefore may not be comparable with the
calculation of similar measures by other entities.
A summary of working capital as at December 31, 2023 and 2022 is as follows:
|
|
December
31
2023
|
December
31
2022
|
|
Cash and cash
equivalents
|
|
13,982
|
36,886
|
Trade and other
receivables
|
|
54,592
|
92,222
|
|
Prepaid expenses and
deposits
|
|
14,848
|
14,562
|
|
Trade and other accrued
liabilities
|
|
(66,518)
|
(82,220)
|
Working capital surplus
- Advantage
|
|
16,904
|
61,450
|
|
|
|
|
|
|
|
|
|
|
Net Debt
Net debt is a capital management financial measure that
provides Management and users with a measure to assess the
Corporation's liquidity. The results of the Corporation's
subsidiary Entropy Inc. are also excluded from the below
calculation to provide users with the ability to assess Advantage's
results from its oil and gas operations. Net debt is not a
standardized measure and therefore may not be comparable with the
calculation of similar measures by other entities.
A summary of the reconciliation of net debt as at
December 31, 2023 and 2022 is as
follows:
|
|
December
31
2023
|
December
31
2022
|
Bank indebtedness
(non-current)
|
|
212,854
|
177,200
|
Working capital
surplus
|
|
(16,904)
|
(61,450)
|
Net debt -
Advantage
|
|
195,950
|
115,750
|
The following abbreviations used in this press release
have the meanings set forth below:
bbl
|
one
barrel
|
bbls
|
barrels
|
bbls/d
|
barrels per
day
|
boe
|
barrels of oil
equivalent of natural gas, on the basis of one barrel of oil or
NGLs for six thousand cubic feet of natural gas
|
boe/d
|
barrels of oil
equivalent of natural gas per day
|
mbbl
|
thousand
barrels
|
mboe
|
thousand barrels of
oil equivalent of natural gas
|
mcf
|
thousand cubic
feet
|
mcf/d
|
thousand cubic feet
per day
|
mcfe
|
thousand cubic feet
equivalent on the basis of six thousand cubic feet of natural gas
for one barrel of oil or NGLs
|
mmcf
|
million cubic
feet
|
mmcf/d
|
million cubic feet
per day
|
mmbtu
|
million British
thermal units
|
mmcfe/d
|
million cubic feet
equivalent per day
|
tcf
|
trillion cubic
feet
|
Liquids
|
Includes NGLs,
condensate and crude oil
|
NGLs and
condensate
|
Natural Gas Liquids
as defined in National Instrument 51-101
|
Natural
Gas
|
Conventional Natural
Gas as defined in National Instrument 51-101
|
Crude
Oil
|
Light Crude Oil and
Medium Crude Oil as defined in National Instrument
51-101
|
SOURCE Advantage Energy Ltd.