Strong Production Growth, Top Quartile Well Results and Lowest Corporate Cash Costs in the Montney Underpins Glacier Plant Expansion Plans to 350 MMcf/d (58,330 Boe/d) Investor Presentation TSX / NYSE: AAV July 2016
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 June 30,…
FOCUSED ON GLACIER DEVELOPMENT SINCE 2008 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…
ADVANTAGES GROWTH & ACHIEVEMENTS 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) 58,330 Boe/d 0.82/mcfe Total Cash Costs…
CREATED A PROFITABLE & SUSTAINABLE GROWTH MODEL 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…
WITH OPERATIONAL FLEXIBILITY 70 mmcf/d Surplus Well Productivity from 10 Completed Standing 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…
CONTINUOUS IMPROVEMENT HAS CREATED INDUSTRY LEADING EFFICIENCIES 7
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…
STRONG NETBACKS & RECYCLE RATIOS ARE ACHIEVABLE EVEN WITHOUT HEDGING Select Montney Natural Gas Producers NO HEDGING INCLUDED Total Corporate Cash Cost Structure - Q1 2016 Illustrative Illustrative /Mcfe 3.50 AECO Cdn AECO Cdn AAVs…
MAINTENANCE CAPITAL AND SURPLUS CASH FLOW SENSITIVITY Surplus Cash Flow Above AECO 2.00/Mcf (NO HEDGING INCLUDED) Based on average well type curve (1) 110 million 200 million 155 million Based 110 million on top 90 million…
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…
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…
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 supports future growth (1) 297…
OPERATIONAL EXCELLENCE 14
IMPROVING WELL PERFORMANCE AND LOWER WELL COSTS THROUGH DRILLING & COMPLETION TECHNOLOGY Recent TOP Quartile Wells (1) Well Costs Reduced ( millions) Increasing frac count has improved long term production performance in all layers…
UPPER & LOWER MONTNEY WELLS OUTPERFORM LONG TERM PRODUCTION EXPECTATIONS New wells are normally restricted to 10 mmcf/d for frac sand flowback control during initial 6 months Wells tested, not on-production. 13 recent wells are…
IMPROVING LIQUIDS RICH MIDDLE MONTNEY WELL PERFORMANCE AT GLACIER 10 New MM wells could exceed type curve Wells tested, not on-production New 12-3 well (2014) cumulative production 1.4 Bcf in 8 months (restricted) 12-2 well…
ROBUST UPPER & LOWER MONTNEY DRY GAS WELL ECONOMICS Upper & Lower Montney Middle Montney (Dry Gas) (50 bbls/mmcf C3+, 45% C5+) 89% Advantage achieved 20% 81% DC & E well cost reduction & despite increasing frac count 59%…
GROWTH BEYOND 350 MMCF/D CAN BE ACCOMMODATED ON EXISTING PLANT SITE 100% Owned Glacier Gas Plant Positioned for R14 R13 R12 R11 R10 R9 R8 R7W6 T78 T78 Production Ramp-up Advantage Gas Plant T77 T77 Room for Additional…
Clear Vision for Growth Financial Strength Proven Expertise
APPENDIX 21
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…
UPPER AND LOWER MONTNEY WELLS - IMPROVING PERFORMANCE SINCE 2008 Budget Type Curve (IP30 7.2 mmcf/d & 7.2 Bcf) Data: updated to June 2016 23
(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%…
STRONG EAST GLACIER MIDDLE MONTNEY WELL (1) ECONOMICS Middle Montney at 50 bbls/mmcf C3+ (2) 45% Budget type curve. Some recent MM wells are exceeding type curve. (3) (1) Management estimates. NPV 10% pre-tax (2)…
2014 MIDDLE MONTNEY PROGRAM FOCUSED ON HIGHER LIQUID CONTENT IN EAST GLACIER Glacier C5+ 57 Middle Montney wells to MM wells drilled in 2014 date illustrate higher liquid content(1) from west to east deg API 10 program at Glacier…
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…
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…
2012 CORE AND COMPLETION STUDIES: INCREASED RESOURCE AND IMPROVED WELL RESULTS Core study determined original density porosity logs have to be re- calibrated IP30s on open hole Re-calibration aligned log to actual wells improved by…
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