Advantage Energy Ltd · TSX:AAV
Advantage Energy — Advantage Oil & Gas — Investor Presentation (May 2013)
32 slides from Advantage Energy's investor presentation, May 24, 2013
Slide 1: Investor Presentation
Investor Presentation May 24, 2013
Slide 2: Advantage – Pure Play Montney Producer
Advantage – Pure Play Montney Producer Listed on TSX & NYSE AAV Shares Outstanding (basic) 168.4 million Market Capitalization - May 24, 2013 @ $4.56/share $768 million Sale of our remaining conventional assets to Questfire Energy Corp. closed on April 30, 2013 Advantage is now a pure play entity
Slide 3: Advantage – Strong Financial Position
Advantage – Strong Financial Position Advantage rationalized through a lengthy asset disposition process resulting in increased operational efficiencies and improved financial flexibility Bank Debt Pro-forma Questfire Closing ($ millions) Bank debt @ March 31, 2013 $165 Cash proceeds from Questfire
Slide 4: Montney Siltstone Supports High Reserve Recoveries
Montney Siltstone Supports High Reserve Recoveries Unconventional Marcellus Shale Shale Horn River Barnett “Shaley” silts Silt Haynesville Sand Silt Glacier Montney “Tight” sand Conventional 84 gross (77 net) sections - Historic type curve based on 86 wells with an average of 11.5 fracs per Sand wel
Slide 5: Upper Glacier – AAV 2012 Core Study
Glacier – AAV 2012 Core Study The Montney formation is approximately 250 meters thick, comprised of Upper 1 five 50 meter intervals which are present across the Glacier land block The formation was deposited over a span of 10 million years which lead to distinct variations in the depositional envi
Slide 6: Core Study Findings
Glacier Core Study Findings Average porosities of 3% to Interval 1 3.5% in the liquids rich Middle Upper Montney intervals 50 METER DEVELOPMENT Montney Interval 2 Traditional well logs INTERVALS Middle Montney have limited effectiveness in Interval 3 measuring Middle Middle Interval 4 Montney porosi
Slide 7: Glacier – 2012 Completion Study
Glacier – 2012 Completion Study Scope of Completion Study Comprehensive review of completion design and fracture stimulation techniques included 135 Montney wells and ~1,500 fracs Consulted external completion specialists familiar with U.S. & Canada Compared frac fluids (poly CO2, slickwater,
Slide 8: Glacier – Completion Study Findings & Drilling Results
Glacier – Completion Study Findings & Drilling Results AAV utilized a range of frac techniques on 11 wells completed in the 2012/13 winter drilling program IP30’s on open hole wells Frac types included open hole, cluster, and plug & perf methods improved by 1.6x Frac pump rates varied from 3.5 t
Slide 9: Production Results – New Techniques vs. Old Method
Glacier Production Results – New Techniques vs. Old Method Production restricted due Daily Gas Production per well - (mmcf/d) to liquids loading Production restricted due Production restricted to to high line pressure reduce sand flow-back Days on Production Page 9
Slide 10: Glacier Reserve Update
Glacier Reserve Update Dry Gas(1) Liquids Rich Gas(1) ($/mcfe) ($/mcfe) 46% increase 2P Finding and Development Cost since 2011 including FDC: 1 year $0.73 . $1.73 . 3 year average $1.06 . $1.73 . Glacier Operating Netback (2): Revenue $3.28 $5.09 Royalties 0.16 0.26 Operating Costs 0.30 . 0.30 . Ne
Slide 11: Reserve Assignments and Future Drilling Locations
Glacier Reserve Assignments and Future Drilling Locations Drilling Locations Percentage of Future Drilling Locations Gross Booked in Interval With Reserves Assigned Locations(1) Reserves Upper 1 73% 238 174 8.6% Significant reserve 327 28 2 upside from future drilling in the liquids rich Middle Mont
Slide 12: Glacier – Updated Contingent Resource Assessment
Glacier – Updated Contingent Resource Assessment Total 2P Reserves plus 2C Contingent Resources Reserves plus Contingent Resources (Tcfe) (Advantage Working Interest) 95% increase to 5.8 Tcfe due Low Best High to Core Study and improved Estimate Estimate Estimate well performance from new completion
Slide 13: Glacier – Middle Montney Liquids Extraction Options
Glacier – Middle Montney Liquids Extraction Options 1. Glacier gas plant (for 200 mmcf/d gas throughput) Cost to install shallow cut extraction $44 million Glacier 2 Glacier Alliance Pipeline 2. Alliance – Aux Sable Pipeline system Gas Plant Adjacent to TCPL Seek commercial arrangement with Aux
Slide 14: Montney Drilling Economics
Glacier Montney Drilling Economics(1) Significant upside potential with New Rate of Return (%) Completion Techniques Strong economics on dry gas driven by industry A 4 Bcf liquids rich leading cost structure well is equal to a 5 Bcf dry gas well AECO Gas Price $/mcf (4) (1) Management estimates (2)
Slide 15: Active Hedging Program, Netbacks and Net Asset Value
Active Hedging Program, Netbacks and Net Asset Value Active Hedging Program Anticipated Production Net Production Net Asset Value @ March 31, 2013(4) $/mcf mcf/d (mcfe/d) Hedged ($millions) Q2 2013 - Q1 2014 $3.48 35,100 113,000 33% 2P Reserves (discounted @ 10%, pre tax) $1,749 Q2 2014 - Q1 2015 $3
Slide 16: Glacier Production Growth
Glacier Production Growth AAV Board of Directors has approved our Phase VI capital budget which is designed to increase Glacier production to 135 mmcfe/d by Q1 2014 Phase VII achieves 195 mmcf/d AAV Technical Team has prepared a by Q2 2015 preliminary Phase VII program that reflects an increase in G
Slide 17: Preliminary Guidance – Dry Gas Scenario Only
Preliminary Guidance – Dry Gas Scenario Only ($ 000’s unless otherwise indicated) Financial Summary April 2013 to April 2014 to April 2015 to Dry Gas Scenario No NGL extraction March 2014(1) March 2015(2) March 2016(2) Daily production rate 113 mmcfe/d 135 mmcfe/d 195 mmcfe/d Natural gas price(3): N
Slide 18: Advantage Summary
Advantage Summary Focused on world class Montney gas resource development at Glacier, Alberta Total Petroleum Initially in Place of 16.0 Tcf 2P Reserves plus 2C Contingent Resources of 5.8 Tcfe 2C Contingent Resources of 4.2 Tcfe; of which 72% is contained in the liquids rich Middle Montney in
Slide 19: Appendix
Appendix Page 19
Slide 20: Glacier Drilling Economics – PV's @ 10% Discount
Glacier Drilling Economics – PV’s @ 10% Discount(1) ($ millions unless otherwise indicated) 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/A N/A $2.8 $4.9 $7.1 5 mmcf/d & 5 Bcf $1.8 $4.6 $7.4 $5.2
Slide 21: Glacier – 2P Recoveries per Interval
Glacier – 2P Recoveries per Interval(1) 2P Recovery # of Gross Hz Wells (bcf/well) Developed Undeveloped Total Developed Undeveloped Interval 2012 Q1 2013 2012 Q1 2013 2012 Q1 2013 2012 Q1 2013 2012 Q1 2013 1 73 79 174 174 247 253 4.3 4.4 4.7 4.7 2 5 6 16 28 21 34 2.7 3.9 4.0 4.6 3 1 1 0 31 1 32 2.5
Slide 22: Appendix A – Glacier Contingent & Prospective Resource Assessment
Appendix A – Glacier Contingent & Prospective Resource Assessment Advantage engaged our independent qualified reserves evaluator Sproule Associates Ltd. (“Sproule”) to update the resource analysis at Glacier as of March 31, 2013 in accordance to the Canadian Oil and Gas Evaluation Handbook (COGEH) r
Slide 23: Appendix A – Glacier Contingent & Prospective Resource Assessment
Appendix A – Glacier Contingent & Prospective Resource Assessment Reserves & Contingent Resources (AAV working interest, Sales) (1) (2) Low Estimate Best Estimate High Estimate Natural Gas Reserves (Tcf) (3) (4) 1.027 1.626 1.870 Contingent Resources (Tcf) (5) (7) 2.316 3.540 4.898 Total Reserves Pl
Slide 24: Appendix A – Glacier Contingent & Prospective Resource Assessment
Appendix A – Glacier Contingent & Prospective Resource Assessment Prospective Resources (AAV working interest, Sales) (1) (2) (3) Low Estimate Best Estimate High Estimate Natural Gas (Tcf) 0.342 0.556 0.776 Natural Gas Liquids (mbbls) 7,381 11,691 16,274 Total Natural Gas & Natural Gas Liquids (Tcfe
Slide 25: Appendix B – Advantage Corporate Reserve Summary
Appendix B – Advantage Corporate Reserve Summary Advantage engaged our independent qualified reserves evaluator Sproule Associates Ltd. (“Sproule”) to update the reserves analysis for the Company (the “Sproule Report”) as at March 31, 2013 in accordance with National Instrument 51-101 (“NI 51-101”)
Slide 26: Appendix B – Advantage Corporate Reserve Summary
Appendix B – Advantage Corporate Reserve Summary Present Value of Future Net Revenue using Sproule price and cost forecasts (1)(2)(3) ($000) Before Income Taxes Discounted at 0% 10% 15% Proved Developed Producing $710,513 $391,814 $326,099 Developed Non-producing 122,586 71,051 58,607 Undeveloped 2,
Slide 27: Appendix B – Advantage Corporate Reserve Summary
Appendix B – Advantage Corporate Reserve Summary Net Asset Value using Sproule price and cost forecasts (Before Income Taxes) The following net asset value ("NAV") table shows what is normally referred to as a "produce-out" NAV calculation under which the current value of the Company’s reserves woul
Slide 28: Appendix B – Advantage Corporate Reserve Summary
Appendix B – Advantage Corporate Reserve Summary Sproule Price Forecasts The present value of future net revenue at March 31, 2013 was based upon crude oil and natural gas pricing assumptions prepared by Sproule effective March 31, 2013. These forecasts are adjusted for reserve quality, transportati
Slide 29: Appendix C — Reserve and Resource Definitions
APPENDIX C — 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
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
Slide 31: 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 32: Advantage Contact Information
Advantage Contact Information Investor Relations 1.866.393.0393 [email protected] Andy Mah, P.Eng. Director, President & Chief Executive Officer Kelly Drader, C.A. Director & Chief Financial Officer Advantage 100% W.I. Glacier Gas Plant www.advantageog.com Listed on NYSE & TSX: AAV Advantage Oil &
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