Advantage Energy Ltd · TSX:AAV
Advantage Energy — Advantage Oil & Gas — Investor Presentation (June 2016)
34 slides from Advantage Energy's investor presentation, June 2016
Slide 1: Investor Presentation June 2016
“Production Growth, Record Low Cash Costs of $0.75/mcfe & Top Quartile Well Results Underpins Glacier Plant Expansion Plans to 350 MMcf/d (58,330 Boe/d)” Investor Presentation TSX / NYSE: AAV June 2016
Slide 2: Advantage at a Glance
ADVANTAGE AT A GLANCE TSX, NYSE: AAV TSX 52-week trading range $5.85 - $8.36 Shares Outstanding (basic) 184.4 million 2016 Annual Production Target 39% Annual Production Growth 200 mmcfe/d (33,300 boe/d) Market Capitalization @ May 30, 2016 $1.4 billion As at March 31, 2016: Bank Debt (45% drawn on
Slide 3: Positioned for Profitable & Sustainable Growth
POSITIONED FOR PROFITABLE & SUSTAINABLE GROWTH… Operating & Financial Flexibility Own & Operate 100% Plant & Lowest Cash Cost Infrastructure Strong Balance Hedged to Protect Montney Producer(3) Future Cash Flow (2) Sheet 1.2x D/CF(1) 2016 World Class Montney Asset (1) Total debt to trailing cash flo
Slide 4: With Operational Flexibility
…WITH OPERATIONAL FLEXIBILITY >90 mmcf/d Completed Standing Well Productivity from 13 Wells(1) 50 mmcf/d Currently Available Glacier Plant Capacity 100 mmcf/d Plant Expansion plan to 350 mmcf/d in progress 200 mmcf/d Additional Sales Gas Pipeline Capacity, Total 400 mmcf/d completed 100% Facilities
Slide 5: Focused on Glacier Development
FOCUSED ON GLACIER DEVELOPMENT ADDITIONAL MONTNEY LANDS PROVIDES FUTURE UPSIDE Current development at Glacier including dry and liquids rich gas drilling with a Progress (Future) future drilling inventory >1,000 locations 100% owned Glacier Gas 9 net Montney New Montney lands at Valhalla, Glacie
Slide 6: Continuous Improvement Has Created Industry Leading Efficiencies
CONTINUOUS IMPROVEMENT HAS CREATED INDUSTRY LEADING EFFICIENCIES… 6
Slide 7: Driving Strong Growth & Financial Flexibility in Our 2016 Budget
…DRIVING STRONG GROWTH & FINANCIAL FLEXIBILITY IN OUR 2016 BUDGET “Surplus ($ million) Cash” $146 $26 2016 Budget Highlights $120 $123 Drill 13 wells 40% Production Growth $35 190 to 210 mmcfe/d Annual Average ~$65 million Production (31,670 – 35,000 Boe/d) in H2 2016 Complete 13 standing wells $41
Slide 8: Industry Leading Low Cost Structure Provides Strong Netbacks
INDUSTRY LEADING LOW COST STRUCTURE PROVIDES STRONG NETBACKS & RECYCLE RATIO EVEN WITHOUT HEDGING “NO HEDGING INCLUDED” Illustrative AECO Cdn Glacier Operating Netback $2.00/mcf Revenue (Realized Price) $1.80 (1) AAV’s Total Cash Costs are ~$1.00 lower than the Royalties ($0.09) average of Cdn gas p
Slide 9: Advantage Development Plan 2015 Through 2017
ADVANTAGE DEVELOPMENT PLAN – 2015 THROUGH 2017(1) Annual Average Production 22% Capital Spending CAGR (2) (mmcfe/d) ($ millions) 18% 235 40% $485 million Total (original 200 estimate $700 million) $200 $165 141 $120 2015 Actual 2016 Budget 2017 Estimate 2015 Actual 2016 Budget 2017 Estimate Cash Flo
Slide 10: Development Plan Sensitivity & Hedging Positions
DEVELOPMENT PLAN SENSITIVITY & HEDGING POSITIONS (1) Current hedging program reduces downside risk and maintains upside torque Production(2) Average Period Hedged (net) AECO Floor Price 2016 52% $3.62/mcf 2017 36% $3.24/mcf 2018 13% $3.10/mcf Notes: (1) Includes Advantage’s current hedges (2) % of e
Slide 11: Maintenance Capital and Cash Flow Sensitivity
MAINTENANCE CAPITAL AND CASH FLOW SENSITIVITY “Surplus Cash Flow Above AECO $2.00/Mcf” (NO HEDGING INCLUDED) Based on average well type curve (1) $115 million $200 million Based $155 million on top $115 million quartile $90 million type well (2) Maintenance Capital at Cash Flow at AECO Cash Flow at
Slide 12: Operational Excellence
OPERATIONAL EXCELLENCE 12
Slide 13: Improving Well Performance Through Drilling & Completion Technology
IMPROVING WELL PERFORMANCE THROUGH DRILLING & COMPLETION TECHNOLOGY Recent “TOP Quartile” Wells (1) Well Costs Reduced ($ millions) (Increasing frac count has improved long term production performance) UPPER MONTNEY $5.5 $4.5 2014 2016 (18 fracs) (25 fracs) 9 mmcf/d MIDDLE MONTNEY LOWER MONTNEY 10 m
Slide 14: Significant Drilling Inventory at Glacier
SIGNIFICANT DRILLING INVENTORY INCLUDES DRY AND LIQUIDS RICH NATURAL GAS LOCATIONS AT GLACIER Capable of maintaining 245 mmcfe/d (40,830 boe/d) for >50 years (1) >1,000 Future Drill Locations at Glacier support future growth (1) 297 undeveloped locations booked in 2P reserves Year End 2015 (2)
Slide 15: Robust Upper & Lower Montney Dry Gas Well Economics
ROBUST UPPER & LOWER MONTNEY DRY GAS WELL ECONOMICS Upper & Lower Montney Middle Montney (Dry Gas) (50 bbls/mmcf C3+, 45% C5+) 83% Advantage achieved >20% DC & E well cost reduction 33% 55% 20% Type Higher IP Curve & & EUR Case Higher IP Cost Type & EUR Curve & Case Cost 7.2/7.2 @ $4.8MM 9/9 @ $4.8M
Slide 16: 2013 Upper & Lower Montney Wells Outperform Long Term Expectations
2013 UPPER & LOWER MONTNEY WELLS OUTPERFORM LONG TERM PRODUCTION EXPECTATIONS. 2014 WELLS JUST STARTED… New wells are normally restricted to ≤10 mmcf/d for frac sand flowback control during initial 6 months Ten wells from our 2014 program are demonstrating strong performance Production from 22 previ
Slide 17: Improving Liquids Rich Middle Montney Well Performance at Glacier
IMPROVING LIQUIDS RICH MIDDLE MONTNEY WELL PERFORMANCE AT GLACIER 10 New MM wells could exceed type curve Production Test Rate On-production Rate New 8-35 well (2014) cumulative production > 1.4 Bcf in 8 months (restricted) 12-2 well (2013) cumulative production > 3.0 Bcfe (restricted) with current
Slide 18: Growth Beyond 350 MMcf/d Can Be Accommodated on Existing Plant Site
GROWTH BEYOND 350 MMCF/D CAN BE ACCOMMODATED ON EXISTING PLANT SITE R14 R13 R12 R11 R10 R9 R8 R7W6 100% Owned Glacier Gas Plant – Positioned for T78 T78 Advantage Gas Plant Production Ramp-up T77 T77 Alliance Sales Gas Line TCPL Sales Potential Area Expansion to Potential Area Expansion to Meter Sta
Slide 19: Clear Vision for Growth, Financial Strength, Proven Expertise
Clear Vision for Growth Financial Strength Proven Expertise
Slide 20: Appendix
APPENDIX 20
Slide 21: Fully Funded Glacier Growth Plan Details
FULLY FUNDED GLACIER GROWTH PLAN DETAILS: 22% ANNUAL AVERAGE PRODUCTION GROWTH FOR 2015 TO 2017 Annual Average Production Development Plan (1) (2) (mmcfe/d) 2014 2015 2016 2017 235 Pro Forma Actual Actual Budget Estimate 200 Production Annual average (mmcfe/d) 132 141 200 235 growth (3) 26% 7% 39% 1
Slide 22: Upper and Lower Montney Wells - Improving Performance Since 2008
UPPER AND LOWER MONTNEY WELLS - IMPROVING PERFORMANCE SINCE 2008 Budget Type Curve (IP30 7.2 mmcf/d & 7.2 Bcf) Data: updated to March 2016 22
Slide 23: Exceptional Upper & Lower Montney Well Economics
(1) EXCEPTIONAL UPPER & LOWER MONTNEY WELL ECONOMICS Upper & Lower Montney Dry Gas (2) Budget Type Curve. Some recent Upper & Lower Montney wells are outperforming type curve (3) (1) Management estimates. NPV 10% pre-tax (2) Capital of $5.1 million per well based on management’s estimate of Capital
Slide 24: Strong East Glacier Middle Montney Well Economics
STRONG EAST GLACIER MIDDLE MONTNEY WELL (1) ECONOMICS Middle Montney at 50 bbls/mmcf C3+ (2) Budget type curve. Some recent MM wells are exceeding type curve. (3) (1) Management estimates. NPV 10% pre-tax (2) Capital of $5.8 million per well based on management’s estimate of Capital Cost for our nex
Slide 25: 2014 Middle Montney Program Focused on Higher Liquid Content
2014 MIDDLE MONTNEY PROGRAM FOCUSED ON HIGHER LIQUID CONTENT IN EAST GLACIER Glacier C5+ 57 Middle Montney wells to date illustrate higher liquid content(1) from west to east deg API 10 MM wells drilled in 2014 program at Glacier across Glacier East Glacier 30 to 83 bbls/mmcf 8 Wells completed & sta
Slide 26: Glacier Montney Assigned 2P EUR Per Well & Interval
GLACIER MONTNEY ASSIGNED 2P EUR PER WELL & INTERVAL 2P Recoveries per Interval(1) # of Gross HZ Wells 2P Recovery [bcf/well] Interval Developed Undeveloped TOTAL Developed Undeveloped TOTAL YE YE YE YE YE YE YE YE YE YE YE YE YE YE YE YE YE YE YE YE YE YE YE YE 2012 2013 2014 2015 2012 2013 2014 201
Slide 27: 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 Up to 83 bbls/MMcf 27
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
Slide 29: Advantage Compared to North American Gas Weighted Producers
ADVANTAGE COMPARED TO NORTH AMERICAN GAS WEIGHTED PRODUCERS 16E/15E Production Growth (%) 2016E Total Cash Costs (Cdn $/boe) $12.78 $12.43 38% 17% $4.48 13% AAV Canadian E&P US E&P AAV Canadian E&P US E&P (Gas Weighted) (Gas Weighted) (Gas Weighted) (Gas Weighted) 2016E Capital/Cash Flow (%) 2016E D
Slide 30: Advantage's Growth & Milestones
ADVANTAGE’S GROWTH & MILESTONES 2016+ Record Low Cash Costs $0.75/mcfe Gen 4 Fracs (ports, 25+ frac stages) 350 mmcf/d Plant expansion plan in progress 2014 - 2015 30% Well IP30 + EUR(1) $0.82/mcfe Total Cash Costs 250 mmcf/d Plant expansion 2012 - 2013 Middle Montney Liquids Gen 3 Fracs (16-18 fra
Slide 31: 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 32: Advisory
ADVISORY 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. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for Ad
Slide 33: 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 34: 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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