Advantage Energy Ltd · TSX:AAV
Advantage Energy — Advantage Oil & Gas — Investor Presentation (April 2013)
21 slides from Advantage Energy's investor presentation, Apr 12, 2013
Slide 1: Investor Presentation April 12, 2013
Investor Presentation April 12, 2013 Page 1
Slide 2: Advantage – Pure Play Montney Producer
Advantage – Pure Play Montney Producer Listed on TSX & NYSE AAV Shares Outstanding (basic) 168 million Market Capitalization at April 12, 2013 $653 million Sale of our remaining conventional assets to Questfire Energy Corp. is scheduled to close on April 30, 2013 Advantage will become a pure play
Slide 3: Advantage – Strong Financial Position
Advantage – Strong Financial Position ($ millions) Advantage rationalized through a lengthy asset disposition process resulting in increased operational efficiencies and improved financial flexibility Bank Debt Pro-forma Questfire Closing(1) Bank debt @ March 31, 2013 $165 Cash proceeds from Questfi
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 of Montney rights with 86 wells supporting our historic type curve Sand Montney fo
Slide 5: Glacier – AAV 2012 Core Study
Glacier – AAV 2012 Core Study 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 environm
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 13 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: Glacier – Reserves and Contingent Resources
Glacier – Reserves and Contingent Resources Finding and Development (“F&D”) cost including Future Development Capital (“FDC”): 28% increase in 2012 to 1.4 Tcf Trailing Three 2012 Year Average 2P F&D $0.73/mcf $1.06/mcf Improved production performance led to 2P reserves additions of ~164 bcf in 2012
Slide 10: Resource Analysis by Montney Interval
Glacier Resource Analysis Drilling Locations % of Total Acreage Gross Booked in Interval with Reserves Assigned Locations(1) Reserves Upper 1 77.8% 244 174 Significant reserve 2 2.7% upside from future 330 6 drilling in the liquids rich middle Montney Middle intervals 3 3.6% 330 9 Reserves assigned
Slide 11: Glacier – Middle Montney Liquids Extraction Options
Glacier – Middle Montney Liquids Extraction Options 1. Glacier gas plant (for 140 mmcf/d gas throughput) Install shallow cut extraction ~$25 million Install deep cut extraction ~$75 million Glacier Glacier Gas Plant 2. Alliance – Aux Sable Pipeline system Alliance Pipeline Adjacent to TCPL See
Slide 12: Montney Dry Gas Drilling Economics
Glacier Montney Dry Gas Drilling Economics Significant upside potential with New Completion Techniques Rate of Return(1) Upper Montney type curve 5 mmcf/d & 5 Bcf using old Completion Technique AECO Gas Price - $/mcf(2) (1) Based on $6.0 million per well & no NGL extraction (2) Natural gas prices &
Slide 13: Glacier Production Growth
Glacier Production Growth AAV technical team is finalizing a 2 year drilling program that will increase Glacier throughput to 200 mmcf/d by 2015 Phase VII achieves 195 mmcf/d AAV has prepared the following preliminary by Q2 2015 estimates for the 2 year program Phase VI & VII Drilling Program Phase
Slide 14: Production Growth - Preliminary Guidance
Production Growth - Preliminary Guidance ($ 000’s unless otherwise indicated) Financial Summary April 2013 to April 2014 to April 2015 to Dry Gas Scenario No NGL extraction March 2014 March 2015 March 2016 Daily production rate 100 mmcf/d 135 mmcf/d 195 mmcf/d Natural gas price: Nymex - US$/mmbtu $4
Slide 15: Active Hedging Program, Netbacks and Net Asset Value
Active Hedging Program, Netbacks and Net Asset Value Active Hedging Program Anticipated Net Production Net Asset Value @ December 31, 2012(4) $/mcf mcf/d Production Hedged ($millions) Q2 2013 - Q1 2014 $3.48 39,591 100,000 41.7% 2P Reserves (discounted @ 10%, pre tax) $1,417 Q2 2014 - Q1 2015 $3.82
Slide 16: Advantage Summary
Advantage Summary Pure play entity focused on Montney gas development and growth at Glacier Debt to future cash flow ratio 1.3x Superior cost structure and operational efficiency 2P reserves grew by 28% in 2012 to 1.4 TCFe 3 year average finding cost $1.06/mcf Recycle ratio of 2.5x based on
Slide 17: 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 &
Slide 18: Appendix
Appendix Page 18
Slide 19: Glacier – 2P Recoveries per Interval
Glacier – 2P Recoveries per Interval 2P Recovery # of Gross Hz Wells (bcf/well) Developed Undeveloped Total Developed Undeveloped Interval 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 1 71 73 168 174 239 247 4.2 4.3 4.1 4.7 2 1 3 0 6 1 9 2.5 3.1 0.0 4.0 3 0 3 0 9 0 12 0.0 4.0 0.0 4.3 4 0 1 0 0
Slide 20: 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 21: Advisory
Advisory References in this presentation to initial test production rates, production type curves, initial "productivity", initial "flow" rates, "flush" production rates and "behind pipe production" are useful in confirming the presence of hydrocarbons, however such rates are not determinative of th
Advantage Oil & Gas — Investor Presentation (April 2013) on 6ix