Solid Cash Flow with Increased Production and Lower Costs Maintains Balance Sheet at 1.0x D/CF at End of Q3 2017. H2 2017 Investment Will Set the Stage for 2018 and Beyond Investor Presentation TSX / NYSE: AAV November 2017
ADVANTAGE AT A GLANCE TSX 52-week trading range 6.57 - 10.10 Shares Outstanding (basic) 186 million Market Capitalization 1.3 billion 2017 Production 16% Production Growth 236 mmcfe/d (39,330 boe/d) 2017 Budget Guidance Range…
OUR STRATEGY LONG TERM PROFITABLE & SUSTAINABLE GROWTH (2) 0.87/mcfe Total Corp Cash Cost 184 net Sections Total, 0.25/mcfe Operating Costs Strong Balance 30 Sections added YTD 2017 Sheet (see page 17) Operating & Hedging & Market…
A SOLID TRACK RECORD OF VALUE GENERATION 2016 RETURN ON CAPITAL /mcfe Natural gas and liquids sales price including realized hedging gains 2.89 (1) Total Corporate Cash Costs (0.66) (2) Total Capital Costs, PDP F&D (0.84)…
2017 BUDGET INCREASED 29 MILLION FOR LAND ACQUISITIONS AND DELINEATION DRILLING AT PROGRESS, VALHALLA AND WEMBLEY ( million) 29 million 2017 Highlights (1) increase 235 16% Annual Production Growth Additional Delineation, 22 14%…
NEXT 3 YEARS - 2017 THROUGH 2019 DEVELOPMENT PLAN 2017 thru 2019 Highlights(1) 56% Production Growth (2017 thru 2019) 654 Million Capital Investment Post 2019 720 Million Cash Flow 400 mmcfe/d Average 3yr AECO Cdn 2.80/mcf (2.65/GJ)…
ADVANTAGE GROWTH PLAN 2017 THROUGH 2019(1) Annual Average Production 16% Capital Spending Cumulative 654 million CAGR (2) (mmcfe/d) ( millions) 2017-2019 16% 234 316 15% 210 210 16% 272 236 203 128 2016 2017 Budget 2018E…
STRONG NATURAL GAS FIXED PRICE HEDGES /Mcf Cdn 61% 3.34 56% 3.27 % of estimated natural gas 5% 4.38 production , net of royalties 2% 4.38 37% 3.32 54% 56% 12% 3.24 3.25 3.64 16% 3.02 25% 2% 3.15 14% 3.98 2.86…
MARKET DIVERSIFICATION AND HEDGING SUPPORTS DEVELOPMENT PLAN ADVANTAGE HAS EXPOSURE TO MULTIPLE MARKETS TO MANAGE COMMODITY PRICE RISK 27% 44% 4% 55% 15% AECO 7% 4% Henry Hub 9% 8% 6% Liquids 54% 16% Dawn 36% 15% Fixed…
NATURAL GAS TRANSPORTATION SERVICE SECURED TCPL Transportation Service 363 mmcf/d 100% firm service aligned to as of April, 2020 production targets secured to 2020 Advantages 100% ownership of its plant and infrastructure…
DEVELOPMENT PLAN IS RESILIENT TO NATURAL GAS PRICE VOLATILITY & RETAINS UPSIDE TORQUE Cash Flow per Share Total Debt to Trailing Cash Sensitivity (1) Flow Sensitivity (1) 1.86 1.5 1.4 AECO 1.49 1.58 1.1 2.00/mcf 1.1 1.0 1.32…
ATTRACTIVE NETBACKS & RECYCLE RATIOS ARE ACHIEVABLE WITHOUT HEDGING AAVs industry leading low costs generates a top tier profit margin NO HEDGING INCLUDED amongst dry or rich gas producers Illustrative Illustrative 7.00 50% AECO…
ADVANTAGE - LEADING LOW COST NATURAL GAS SUPPLY Select Montney and Marcellus Natural Gas Producers Cash Costs 2018 Estimates 2.85 Cdn /Mcfe 2.19 0.99 (1) (2) (3) AAV Montney Marcellus Operating costs & transportation…
MAINTENANCE CAPITAL AND SURPLUS CASH FLOW SENSITIVITY ILLUSTRATIVE AT 325 MMCFE/D 3 Year Cumulative 3 Year Cumulative (NO HEDGING INCLUDED) Surplus Surplus 525 million 690 million 360 Million 305 Million Surplus Cash Flow Above…
HIGH QUALITY MONTNEY ASSETS, OPERATIONAL EXCELLENCE 15
GLACIER SUPPORTS GROWTH THROUGH NEXT DECADE, NEW MONTNEY LANDS PROVIDES ADDITIONAL UPSIDE Progress (30 sections) 100% owned Glacier Gas Glacier Plant 90 net sections Valhalla (36 sections) Successfully assembled 94 net…
PROGRESS, WEMBLEY AND VALHALLA LAND BLOCKS ADVANTAGE DRILLED 6 DELINEATION WELLS Q3 2017, COMPLETION RESULTS PENDING Pipestone/Wembley Licensed Locations Advantage Lands Progress KELT CNQ CNQ Valhalla KELT TOU ENCANA SAN…
ONLY 7% OF GLACIERS FUTURE WELL INVENTORY REQUIRED FOR 2017 THRU 2019 DEVELOPMENT Only 83 of our 1,100 Future Drill Locations at Glacier is required to achieve growth to 316 mmcfe/d average 2019 Only 307 undeveloped locations booked…
ADVANTAGES TECHNICAL EXPERTISE & KNOWLEDGE GAINS WILL FURTHER OPTIMIZE FUTURE DEVELOPMENT Wells are still producing at 10mmcf/d after 300 days of production Budget Type Curve (IP30 7.5 mmcf/d & 7.5 Bcf) Budget Type Curve…
UPPER & LOWER MONTNEY WELL PRODUCTION CONTINUES TO IMPROVE New wells are normally restricted to Production Average (29 wells) 10 mmcf/d for frac sand flowback control during initial 6 months Budget Type Curve (IP30 7.5 mmcf/d & 7.5…
GLACIER MIDDLE MONTNEY WELLS EXCEEDING AVERAGE BUDGET TYPE CURVE Wells are exceeding current type curves Ongoing delineation identifies sweet spots within different Middle Montney layers. Frac designs are tailored to further optimize…
ROBUST GLACIER MONTNEY WELL ECONOMICS Upper & Lower Montney Middle Montney (Dry Gas) (50 bbls/mmcf (1) C3+, 45% C5+) ROR% HC 108% HC 106% FC 94% FC 93% HC 76% HC 75% FC 67% FC 66% Type Curve Higher IP Type Curve Higher IP &…
GROWTH BEYOND 400 MMCF/D CAN BE ACCOMMODATED ON EXISTING PLANT SITE 100% Owned Glacier Gas Plant Positioned for Production Ramp-up Advantage Gas Plant Alliance Sales Gas Line Room for Additional Expansion To be expanded from Beyond…
Clear Vision for Growth Financial Strength Proven Expertise
APPENDIX
GLACIER GROWTH PLAN DETAILS 16% ANNUAL AVERAGE PRODUCTION GROWTH 2017 THRU 2019 Annual Average Production (mmcfe/d) 316 272 236 203 2016 2017 Budget 2018E 2019E Annual Average Production Growth 16% average growth per year…
CONTINUOUS IMPROVEMENT HAS CREATED INDUSTRY LEADING EFFICIENCIES 27
UPPER AND LOWER MONTNEY WELLS - IMPROVING PERFORMANCE SINCE 2008 Newer wells restricted for frac sand flow back Budget Type Curve (IP30 7.5 mmcf/d & 7.5 Bcf) Data: updated to July, 2017 28
LIQUIDS RICH MIDDLE MONTNEY WELL PERFORMANCE IMPROVEMENTS SINCE 2011 2015/16 Middle Montney wells with frac design changes including 20 frac stages and cemented ports to be evaluated 2015-16 1 Well Slickwater, OH Packers 20 total…
MOST RECENT LOWER MONTNEY WELLS WITH UP TO 30 FRAC STAGES (OPEN-HOLE PACKERS AND CEMENTED PORTS) Additional Lower Montney wells with longer laterals, reduced frac spacing Wells restricted to 10mmcf/d for frac sand and cemented ports…
EXCEPTIONAL(1)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.…
EXCEPTIONAL(1)EAST GLACIER MIDDLE MONTNEY WELL 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) Capitalof…
GLACIER MONTNEY ASSIGNED 2P EUR PER WELL & INTERVAL Glacier - 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…
CANADIAN NATURAL GAS TRANSPORTATION & MARKETS - AVAILABLE & GROWING TCPL Oil Sands, Transportation & Markets N.Montney Power Gen +1.4 bcf/d Increasing take-away options N.A. Natural gas demand growth 9 Enbridge TCPL Mainline +1.4 Bcf/d…
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 Open Hole Composite Porosity Log (1) Core Corrected Open (2.65 Grain Density Sandstone Scale) Hole Porosity Log (1) Core study determined original density…
ADVANTAGE CONTACT INFORMATION Investor Relations 1.866.393.0393 iradvantageog.com www.advantageog.com Listed on NYSE and TSX: AAV Advantage Oil & Gas Ltd. Suite 300, 440 2nd Avenue SW Calgary, Alberta T2P 5E9 Main:…
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