Advantage Energy Ltd · TSX:AAV

Advantage Energy — Advantage Oil & Gas — Investor Presentation (June 2015)

33 slides from Advantage Energy's investor presentation, June 2015

  1. Slide 1: Investor Presentation June 2015

    “Glacier Montney Outperformance Improves Capital Efficiencies, Lowers Capital Requirements and Maintains Future Production Growth. Q1 2015 results reaffirms 36% growth to 183 mmcfe/d in July 2015.” Investor Presentation TSX / NYSE: AAV June 2015

  2. Slide 2: Advantage: At a Glance

    ADVANTAGE: AT A GLANCE Canadian Pure Play Montney Producer Listed on TSX and NYSE AAV TSX 52-week trading range $4.51 - $7.89 Shares Outstanding (basic) 170.3 million Glacier Q1 2015 production 134 mmcfe/d (22,326 boe/d) Market Capitalization @ June 5, 2015 $1.3 billion Bank Debt @ March 31, 2015 (5

  3. Slide 3: Focused on Montney Growth & Value Creation

    FOCUSED ON MONTNEY GROWTH & VALUE CREATION World Class Glacier Montney Asset Growth Plan & Operational Financial Excellence Strength 2015-2017 Development Plan 22% Average Annual Production Growth 245 mmcfe/d in 2017 (40,830 boe/d) 27 Employees 3

  4. Slide 4: Glacier Outperformance Improves Capital Efficiencies

    GLACIER OUTPERFORMANCE IMPROVES CAPITAL EFFICIENCIES “Growth Maintained Improved Well with Lower Capital” Performance $110 Million (1) Reduction in 2015 Capital Expenditures Industry Leading Low Cost 18% (1) 2015 Annual Production Growth Structure UNCHANGED 100% Owned 2.1 (2) 2015 Total Debt / Cash

  5. Slide 5: Q1 2015 Results Sets Stage for 36% Growth in July 2015

    Q1 2015 RESULTS SETS STAGE FOR 36% GROWTH IN JULY 2015 8% Production per share Growth & 13% Reduction in Industry Leading Low Cost Structure  Production on-track at 134 mmcfe/d (Guidance 130 – 135 mmcfe/d H1 2015)  Total cash costs $0.84/mcfe including operating costs of $0.35/mcfe Existing Wells

  6. Slide 6: Plan Growth Maintained with $150 Million Lower Capital

    PLAN GROWTH MAINTAINED WITH $150 MILLION LOWER CAPITAL Production Profile 245 mmcfe/d Plan Summary 2015 to 2017 (1) 205 mmcfe/d 245 mmcfe/d (40,830 boe/d) in 2017 183 mmcfe/d 1 $545 million Capital Expenditures 70 New Montney wells Current production 130 to 135 mmcfe/d $2.95/GJ AECO Cdn average Plan

  7. Slide 7: Growth Plan Leads to Significant Free Cash Flow

    GROWTH PLAN LEADS TO SIGNIFICANT FREE CASH FLOW IN EARLY 2017 $300 Cash flow significantly exceeds 245 mmcfe/d @ $3.50/gj generates maintenance capital each year $130 million free annual cash flow $250 $200 Capital Capital required to Millions $ required grow to 245 to grow to mmcfe/d $150 Capital 2

  8. Slide 8: 2015 Through 2017 – Growth Plan Price Sensitivity

    2015 THROUGH 2017 – GROWTH PLAN PRICE SENSITIVITY Downside gas price mitigation while retaining torque to upside 8

  9. Slide 9: Focused on Montney Development at Glacier

    FOCUSED ON MONTNEY DEVELOPMENT AT GLACIER  Current development at Glacier including dry and liquids rich gas drilling Progress  Glacier future drilling inventory >1,000 100% owned locations 9 net Montney Glacier Glacier Gas  New Montney lands at Vahalla, 77 net Plant sections acquired sections 20

  10. Slide 10: Industry Leading Cost Structure & Margin

    INDUSTRY LEADING COST STRUCTURE & MARGIN Junior E&P 2015e Cost Structure – Intermediate/Mid Cap Natural Gas Producers Ranked by Margin (including distributions) Advantage’s full cycle margin is among the top Montney producers today. 10

  11. Slide 11: Strong Netbacks Provide Sustainability

    STRONG NETBACKS PROVIDE SUSTAINABILITY Q1 2015 Illustrative Glacier Operating Netback ($/mcfe) $2.50/mcfe Revenue (99% gas production Q1 2015) $3.32 (1) $2.50 Royalties ($0.13) ($0.13) Operating Costs ($0.35) ($0.35) Q1 2015 Operating Operating Netback Netback is 86% of $2.84 $2.02 revenue Recycle R

  12. Slide 12: Upper and Lower Montney Well Performance

    UPPER AND LOWER MONTNEY WELL PERFORMANCE Recent wells completed with slick water and more frac stages are outperforming expectations. No 2014/2015 wells have been brought on-production to date. - - - Budget Type Curve (IP30 6.9 mmcf/d & 6.9 Bcf) Data: updated to May 2015 12

  13. Slide 13: 2013 Slickwater Wells Outperform Long Term Production Expectations

    2013 SLICKWATER WELLS OUTPERFORM LONG TERM PRODUCTION EXPECTATIONS Recent Upper and Lower Montney wells completed with slickwater fracs are outperforming longer term production expectations. Graph illustrates production from 21 recent Upper & Lower Montney wells Budget Type Curve (IP30 6.9 mmcd/d &

  14. Slide 14: Exceptional Upper Montney Well Economics

    (1) EXCEPTIONAL UPPER MONTNEY WELL ECONOMICS Upper Montney Dry Gas (2) Recent average Upper Montney well performance exceeding 7 mmcf/d IP30 (3) (1) Management estimates. NPV 10% pre-tax (2) Based on $5.5 million per well with 18 frac stages (3) Natural gas prices and costs escalated at 2%. Average

  15. Slide 15: Exceptional Lower Montney Well Economics

    (1) EXCEPTIONAL LOWER MONTNEY WELL ECONOMICS Lower Montney at 11 bbls/mmcf C3+(2) Recent Lower Montney wells are at or above 7 mmcf/d IP 30 AECO Gas Price $/mcf (3) (1) Management estimates. NPV 10% pre-tax (2) Based on $5.8 million per well with 18 frac stages and C3+ NGL yields of 11 bbls/mmcf raw

  16. Slide 16: East Glacier Contains Higher Middle Montney Liquid Content

    EAST GLACIER CONTAINS HIGHER MIDDLE MONTNEY LIQUID CONTENT Middle Montney wells to date Glacier C5+ 57 illustrate higher liquid content(1) deg API from west to east across Glacier 26 57 31 63 No 30 Wells Drilled bbl/mmcf 10 bbl/mmcf vertical well 40 76 76 27 Record Well 30 100/12-2-76- 12w6  Result

  17. Slide 17: Improving Liquids Rich Middle Montney Well Performance at Glacier

    IMPROVING LIQUIDS RICH MIDDLE MONTNEY WELL PERFORMANCE AT GLACIER New 2013 12-2 well started Middle Montney wells have sequentially production at restricted rate of 9.5 demonstrated improved productivity as mmcf/d. Currently producing at we optimize frac design. Recent wells 1,000 psi flowing pressu

  18. Slide 18: Strong East Glacier Middle Montney Well Economics

    STRONG EAST GLACIER MIDDLE MONTNEY WELL (1) ECONOMICS Middle Montney at 50 bbls/mmcf C3+ (2) Recent wells are exceeding Budget Type Curve of 4 mmcf/d IP 30 (3) (1) Management estimates. NPV 10% pre-tax (2) Based on $6.4 million per well with 18 frac stages and C3+ NGL yields of 50 bbls/mmcf raw gas

  19. Slide 19: Pentastack Development with Decades of Drilling Inventory at Glacier

    “PENTASTACK” DEVELOPMENT WITH DECADES OF DRILLING INVENTORY AT GLACIER Five Development Intervals Containing >1,000 Future Locations after 2017  292 undeveloped locations booked in Dec 31, 2014 Reserve Report  65% of unbooked future locations are in the liquids rich Middle Montney intervals 2, 3 a

  20. Slide 20: Glacier 100% Owned Gas Plant & Pipeline Access

    GLACIER 100% OWNED GAS PLANT & PIPELINE ACCESS R14 R13 R12 R11 R10 R9 R8 R7W6 T78 T78 Glacier Gas Plant – Positioned for Production Ramp-up T77 T77 Advantage Gas Plant 250 MMcf/d Capacity TCPL Sales Gas Line July 2015 Potential Area Expansion to Potential Area Expansion to Alliance Sales Gas Line 50

  21. Slide 21: 2015 Guidance

    2015 GUIDANCE 2015 Guidance(1) Average Production (mmcfe/d) 150-160 % Annual Production growth 18% Exit Production (mmcfe/d) 180-190 Royalty Rate (%) 4.5% to 5.5% Operating costs ($/mcfe) $0.32 to $0.37 Capital Expenditures ($ Million) $145 to $175 # Wells Drilled (10 in Q1 2015, 5 Remaining) 15 (1)

  22. Slide 22: Advantage Summary: Growing Our Montney at Glacier

    ADVANTAGE SUMMARY: GROWING OUR MONTNEY AT GLACIER Focused on World Class Glacier Montney development  Improved capital efficiencies lowers capital with unchanged production growth 2015 through 2017 Plan Grows Production to 245 mmcfe/d (40,830 boe/d)  22% Average Annual Production growth(1), 1.6x A

  23. Slide 23: Appendix

    APPENDIX 23

  24. Slide 24: Fully Funded Glacier Growth Plan Details

    FULLY FUNDED GLACIER GROWTH PLAN DETAILS: 22% ANNUAL AVERAGE PRODUCTION GROWTH FOR 2015 TO 2017 Development Plan (1) Production Profile 2014 2015 2016 2017 245 mmcfe/d Completed Current Estimate Estimate Production Calendar average (mmcfe/d) 132 155 201 237 205 mmcfe/d 1/31/2015 growth (2) 26% 18%

  25. Slide 25: Glacier – Located in the Heart of the Montney Resource Play

    GLACIER – LOCATED IN THE HEART OF THE MONTNEY RESOURCE PLAY Montney Siltstone Comparison: • 700 times more permeability • 4x more formation thickness • Very low clay content • Liquids & Improved well efficiencies strong economics 25

  26. Slide 26: Track Record of Operating Performance

    TRACK RECORD OF OPERATING PERFORMANCE 0.50 $472,400/frac stage 77% Reduction in cost per frac in Upper Montney Production Growth to 135 mmcfe/d & Average number of frac stages from 7 to 17 Completion Costs/Frac ($MM/frac) Operating Cost Reduction to ~$0.32/mcfe 0.40 0.30 0.20 $107,300/frac stage 0.1

  27. Slide 27: Highly Efficient 2014 Montney Reserves Additions

    HIGHLY EFFICIENT 2014 MONTNEY RESERVES ADDITIONS  321% Reserves Replacement (1) 803% Growth 2P Reserves  33% Increase in PDP (2) reserves to 279 Bcfe  11% Increase in Proven reserves to 1.2 Tcfe  6% Increase in Proven plus Probable (“2P”) reserves to 1.8 Tcfe 53% Reduction in 3 year average 2P F

  28. Slide 28: 2012 Core and Completion Studies

    2012 CORE AND COMPLETION STUDIES: INCREASED RESOURCE AND IMPROVED WELL RESULTS Core study determined original density porosity logs have to be re- calibrated IP30’s on open hole Re-calibration aligned log to actual wells improved by core porosities evident through entire 1.6x 290 meters of Montney f

  29. Slide 29: 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) Middle Montney AECO C natural gas price Upper Montney Layer 1(6) Lower Montney Layer 5(3) Liquids Rich Gas (East Glacier)(4) ($/mcf)(2) $3.00 $4.00 $5

  30. Slide 30: 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

  31. Slide 31: 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

  32. Slide 32: 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

  33. Slide 33: Advantage Contact Information

    ADVANTAGE CONTACT INFORMATION Investor Relations 1.866.393.0393 [email protected] www.advantageog.com Listed on NYSE and TSX: AAV Advantage Oil & Gas Ltd. Suite 300, 440 – 2nd Avenue SW Calgary, Alberta T2P 5E9 Main: 403.718.8000 Facsimile: 403.718.8332 Advantage 100% W.I. Glacier Gas Plant Andy Ma

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