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Advantage Oil & Gas Talks Q1 Ops, Results; Production Up 14% QOQ

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   |    Monday,April 05,2021

Advantage Oil & Gas Ltd. has provided an ops update following its conclusion of its winter drilling program.

For the first quarter of 2021, Advantage achieved record average production of approximately 49,700 boe/d (270.6 mmcf/d natural gas, 2,155 bbls/d crude oil and condensate, and 2,445 bbls/d NGLs), an increase of 14% over the previous quarter. All 14 new wells completed at Glacier have exceeded Management’s expectations, and adjusted funds flow (“AFF”)(a) is expected to exceed capital by over 40% in the quarter. This strong start to 2021 is consistent with the recently increased annual guidance which included a 3% increase in production (48,000 – 51,000 boe/d) and a 9% reduction in net capital expenditures(a)($115 – $135 million).

Operational Highlights:

  • For the fourteen wells brought onstream at Glacier since July 2020, the average IP30 has been 10 mmcf/d of natural gas
  • Five additional Glacier wells were drilled and cased but remain behind pipe with completion and tie-in planned for third quarter 2021
  • An additional fourteen wells are scheduled to be drilled in the second half of 2021 with the primary focus remaining at Glacier
  • The northwest segment of the Glacier gas gathering system has been expanded and will be placed into operation in early April, increasing capacity and eliminating restrictions on several new well pads
  • Total gas sales were strategically increased in February and March enabled by the high well productivities and available Glacier Gas Plant capacity, capitalizing on higher gas prices driven by the extreme cold weather
  • Liquids production has been stable for the last four quarters at approximately 4,600 bbls/d despite our focus on gas development with no new oil wells drilled

Successful “Tuck-in” Acquisitions

  • Completed two complementary asset acquisitions consisting of 12.4 net sections of highly prospective Doig/Montney rights contiguous to our existing land base
  • Increases our Doig/Montney land position to 228 net sections and enhances our deep inventory of over 1,400 drill locations
  • The acquisitions were facilitated by Advantage’s dominant infrastructure position in the area, and acquisition costs are already captured within the 2021 capital guidance
  • Total production of the assets was 130 boe/d (0.8 mmcf/d natural gas, 0 bbls/d crude oil and condensate, and 5 bbls/d NGLs), which is already tied into the Glacier Gas Plant

Advancing Corporate Strategy

Advantage believes that disciplined investment and balance sheet strength are crucial to maximize returns for our shareholders. As announced recently, the Corporation issued revised 2021 guidance with lower capital and higher production. In conjunction with strong first quarter results, Advantage’s estimated net debt to AFF(a) ratio is expected to be approximately 1x in 2021 while delivering close to 10% annual production growth and approximately $70 million free cash flow(a).  This financial strength will provide the basis to:

  • Continue to deliver moderate production growth (between 5% and 10%) utilizing existing capacity at our Glacier Gas Plant
  • Enhance corporate resilience and scale through:
  • balancing our high exposure to gas pricing by growing our liquids production at Progress and Wembley
  • revenue-generating cleantech investments through Entropy Inc. that will leverage our carbon capture and sequestration technology and expertise
  • acquisitions that create efficiencies and scale
  • Potentially return capital to shareholders

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