Advantage Announces Record 2023 Year-End Results, Reserves and Reduced Capital Guidance

(TSX:AAV)

CALGARY, AB, March 4, 2024 /CNW/ – Advantage Energy Ltd. (“Advantage” or the “Corporation”) is pleased to report 2023 year-end financial and operating results as well as year-end 2023 reserves.

Advantage achieved exceptional results during 2023, including record production, improved well results, and significant share buybacks, while ending the year below our net debt target. Additional achievements included an unbudgeted $10 million acquisition of 53 net Montney sections at Conroy and successfully executing a 17-day Glacier plant turnaround.

Following a comprehensive review of our capital program, we have materially reduced our planned 2024 capital expenditures by $40 million to between $220 million and $250 million. Thanks to continued outperformance of our recent development program, we can deliver this reduced capital level without changing our production guidance or compromising our long-term adjusted funds flow (“AFF”) per share focus.

2023 Year-End Financial Highlights

Cash provided by operating activities of $323.3 million
AFF(a) of $313.6 million or $1.88/share ($320.2 million Advantage(b))
Free cash flow (“FCF”)(a) of $30.8 million ($54.0 million Advantage(b))
Cash used in investing activities and net capital expenditures(a) were $282.8 million ($266.2 million Advantage(b))
Net income of $101.6 million or $0.61/share
Operating expenses remained low at $3.81/boe
Net debt(a) increased to $222.0 million ($195.9 million Advantage(b))
Repurchased 13.1 million shares (8% of the outstanding shares at December 31, 2022), returning $117.3 million to shareholders. Subsequent to year-end, Advantage purchased an additional 2.4 million shares, returning an additional $21 million to shareholders

2023 Operating Highlights

Record annual average production of 60,678 boe/d (322.7 mmcf/d natural gas, 6,897 bbls/d liquids), in-line with budget
Liquids production of 6,897 bbls/d (2,710 bbls/d oil, 1,166 bbls/d condensate, and 3,021 bbls/d NGLs), an increase of 13% over 2022
Of all Alberta Montney gas wells drilled in 2023, 13 of the top 16 gas producers were Advantage’s, based on IP90 rates
At Glacier, 18 gross (16.0 net) wells were drilled with exceptional performance driving average well IP30 rates to 13.6 mmcf/d natural gas
At Valhalla, 2 gross (2.0 net) wells were drilled with an average IP30 of 1,936 boe/d (7.5 mmcf/d natural gas, 499 bbls/d condensate and 180 bbls/d NGLs)
At Wembley, 7 gross (7.0 net) wells were drilled with an average IP30 of 1,549 boe/d (3.7 mmcf/d natural gas, 605 bbls/d crude oil and 328 bbls/d NGLs)
Phase 1b of Entropy’s post-combustion integrated carbon capture and storage project at Glacier was commissioned in the fourth quarter of 2023 with costs below budget
Entropy achieved a global first in carbon markets with a $1 billion, 15-year fixed price carbon credit offtake agreement with Canada Growth Fund Inc. (“CGF”) that has the potential to accelerate deployment of carbon capture and storage in Canada

2023 Reserves Highlights

Proved Developed Producing (“PDP”) reserves increased 8%, with finding and development (“F&D”)(a) costs of $7.67/boe.
Net present value of PDP reserves of $1.4 billion (before tax, 10% discount rate) or $8.58/share
Total Proved (“1P”) reserves increased 3%, with F&D(a) costs of $8.50/boe
Net present value of 1P reserves of $3.0 billion (before tax, 10% discount rate) or $18.19/share
Proved plus Probable (“2P”) reserves increased 4%, with F&D(a) costs of $8.17/boe
Net present value of 2P reserves of $4.2 billion (before tax, 10% discount rate) or $26.07/share
PDP reserve additions replaced(a) 151% of production
Liquids reserves increased 26%, 10% and 10% for PDP, 1P and 2P, respectively
3-year recycle ratios(a) were 2.4x for PDP, 2.0x for 1P and 2.2x for 2P based on fourth quarter 2023 operating netback(a) of $15.43/boe

2024 Capital Program Update

Advantage continuously reviews its capital program to adjust to rapidly changing supply/demand dynamics in North America. Our 2024 capital spending guidance has been revised to a range of $220 million to $250 million (from $260 million to $290 million).  Budgetary reductions include at least two fewer wells, the deferral of debottlenecking and reliability projects, and a previously unbudgeted capital recovery. Production guidance remains unchanged, thanks to continued outperformance of our development program.

Significant discretionary capital remains in the budget for the second half of 2024, including a steady one-rig drilling program and the first phase of the 150 mmcf/d Progress gas plant project, currently on-schedule to be commissioned mid-year 2025. In the event that North American supply growth continues to overwhelm demand and create further downward pressure on futures pricing, any discretionary investments that fail to meet threshold metrics may be deferred allowing incremental FCF to be redeployed to the share buyback.

Based on current futures pricing, Advantage estimates capital spending will be approximately 75% of forecasted total AFF for 2024 and 2025, preserving balance sheet flexibility and optionality for opportunistic, counter-cyclical share repurchases.

Marketing Update

Advantage has hedged approximately 20% of its forecast natural gas production for summer 2024, 11% for winter 2024/25, 5% for summer 2025 and 6% for winter 2025/26. Advantage has only approximately 8% exposure to AECO volatility this summer through a combination of fixed price hedges and physical market diversification.

Conference call

Advantage’s management team will host a conference call to discuss the Corporation’s fourth quarter and full-year 2023 results on Tuesday, March 5, 2024 at 8:00 am Mountain Time (10:00 am Eastern Time). Advantage plans to regularly host quarterly earnings calls going forward.

To participate by phone, please call 1-888-664-6383 (North American toll-free) or 1-416-764-8650 (International). A recording of the conference call will be available for replay by calling 1-888-390-0541 and entering the conference replay code 665973#. The replay will be available until March 19, 2024.

To join the conference call without operator assistance, you may enter your details and phone number at https://emportal.ink/3uKt3A7 to receive an instant automated call back. You may also stream the event via webcast at https://app.webinar.net/ojY4L9AL5vb.

Looking Forward

To maximize shareholder value, Advantage remains focused on growing AFF per share(a) while maintaining a net debt(a) target of $200 million to $250 million.  Advantage’s three-year plan is to deliver compounding AFF per share growth via careful capital allocation, with annual spending between $220 million and $300 million and production growth capped at 10%. All excess cash will be returned to shareholders via share buybacks.

With modern, 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.

Below are complete tables showing financial highlights, operating highlights and reserves results.

RESERVES SUMMARY TABLES

Company Gross (before royalties) Working Interest Reserves Summary as at December 31, 2023

Company Net Present Value of Future Net Revenue using the IQRE Average Forecasts (1)(2)(3)($000)

Full story available on Benzinga.com