2018 Cash Flow Funded Capital Budget Increases Focus on Liquids Development & Growth Driven by Strong Well Results Investor Presentation TSX / NYSE: AAV January 2018
ADVANTAGE AT A GLANCE TSX 52-week trading range 4.84 - 9.29 Shares Outstanding (basic) 186 million Market Capitalization 1.0 billion 2017 Production Estimate (16% Growth) 236 mmcfe/d (39,330 boe/d) 2018 Guidance (10% Growth)…
MONTNEY LAND HOLDINGS PROVIDES GROWTH AND UPSIDE VALUE OPPORTUNITIES FOR DECADES Alberta B.C. Progress (30 sections) 100% owned Glacier Gas Glacier Plant 90 net sections Valhalla Glacier Development will (36 sections)…
OUR STRATEGY VALUE CREATION THROUGH DISCIPLINED CAPITAL INVESTMENT World Class Montney Asset Operating & Own & Operate 100% Financial Flexibility Plant & Infrastructure VALUE CREATION Strong Balance Industry Leading Low…
RETURN ON AVERAGE CAPITAL EMPLOYED COMPARISON 5-YEAR AVERAGE (2013 TO 2017 ESTIMATE) Advantage Montney Development After tax 5.6% Before tax 7.9% Peers Average 1.4% Comparative data is shown Cdn Large Caps Average 5.2% on an…
2018 CASH FLOW FUNDED BUDGET FOCUSES ON LIQUIDS GROWTH & RETAINS FLEXIBLITY ( million) 30 145 2018 Highlights (1) (2) 175 to 200 Million Cash Flow & Positive Income Glacier Valhalla, Wembley, Progress 1.0 to 1.3x Year-end 2018…
2018 BUDGET AT A GLANCE Annual Average Production Liquids Production Capital (mmcfe/d) (bbls/d) ( million) 10% 2,400 240 260 -27% 236 1,900 203 16% 50% 175 32% 128 1,250 950 2016 2017E 2018E 2016 2017E 2018E 2018Exit 2016…
STRONG NATURAL GAS FIXED PRICE HEDGES /Mcf Cdn 61% 3.18 5% % of estimated natural gas 52% 3.11 4.42 production , net of royalties 1% 4.42 37% 3.21 56% 12% 51% 3.08 3.67 3.07 17% 2.89 25% 2% 2.99 15% 4.01 2.71…
MARKET & REVENUE DIVERSIFICATION - 28% REVENUE EXPOSURE TO AECO PRICES IN 2018 ADVANTAGES 2018 TOTAL REVENUE IS 28% EXPOSED TO AECO PRICES 19% 28% 39% 11% 6% 17% AECO 15% 8% Henry Hub 11% 18% Liquids 53% 19% Dawn 40%…
SIGNIFICANT OPTIONALITY FOR 2018 AND BEYOND PROVIDED THROUGH OPERATIONAL FLEXIBILITY & LOW COSTS 12 standing completed & 18 standing uncompleted wells (50% liquids rich Middle Montney) supports 2018 and beyond Drilling plans in H2…
MAINTENANCE CAPITAL AND SURPLUS CASH FLOW SENSITIVITY ILLUSTRATIVE AT 280 MMCFE/D (Q4 2018) (NO HEDGING INCLUDED) 3 Year Cumulative Surplus 300 million Surplus Cash Flow Above 215 Million 1.20/mcf Cash Surplus MAINTENANCE CASH…
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…
NATURAL GAS TRANSPORTATION SERVICE SECURED TCPL Transportation Service 363 mmcf/d as of April, 2020 Increasing firm service secured to 2020 Ability to reduce future total service commitments through evergreen contract renewals…
ONGOING VALUE CREATION FROM OUR HIGH QUALITY ASSETS THROUGH OPERATIONAL EXCELLENCE 14
ADVANTAGES LAND BLOCKS ARE IN A LIQUIDS RICH MONTNEY FAIRWAY Glacier Progress Valhalla Wembley Progress Upper Montney (Dry at Glacier to C3+ 40 bbls/mmcf at Valhalla) Glacier Middle Montney (C3+ 20 to 100 bbls/mmcf. 50% to…
SIGNIFICANT AND GROWING LIQUIDS & DRY GAS DRILLING INVENTORY Multi-Layer Montney Development 1,200 Future Potential across Advantage Land Blocks Drilling Locations (1) Drilled(3) Wells by Layer Valhalla Undrilled Upper…
PROGRESS, WEMBLEY AND VALHALLA LAND BLOCKS ADVANTAGE DELINEATION DRILLING & COMPLETIONS UNDERWAY Pipestone/Wembley (waiting on well results) Progress (waiting on well results) Valhalla CNQ KELT CNQ (recent 4 well pad exceeded…
LIQUIDS RICH EXPERTISE DEVELOPED AT GLACIER WILL BENEFIT ALL ADVANTAGE LAND BLOCKS Recent Glacier Middle Montney Well Results (1) Increased frac stages & customized completion designs continue to 8.4 mmcf/d improve well…
LIQUIDS RICH GLACIER MIDDLE MONTNEY WELL PERFORMANCE IMPROVEMENTS SINCE 2011 Recent well initial production test rate 2015+ Middle Montney wells with frac design changes including 20 frac stages & numerous mechanical systems to be…
DRY GAS EXPERTISE CONTINUES TO IMPROVE WELL ECONOMIC THRESHOLDS AT GLACIER 8 WELL PILOT PAD ON-PROD 2016 1.3 year payout at Cdn Wells producing at 10mmcf/d after 365 2.00/mcf gas price days exceeding type curve Top Tier LM wells…
DRY GAS GLACIER UPPER AND LOWER MONTNEY WELLS - IMPROVING PERFORMANCE SINCE 2008 Production restrictions Budget Type Curve (IP30 7.5 mmcf/d & 7.5 Bcf) Data: updated to December, 2017 21
LIQUIDS RICH EAST GLACIER MIDDLE MONTNEY WELL ECONOMIC (1) SENSITIVITY Middle Montney at 50 bbls/mmcf C3+ (2) Break-even below 1.50 Cdn gas price at U.S. 55/bbl WTI (3) (1) Management estimates. NPV 10% pre-tax. (2)…
DRY GAS GLACIER UPPER & LOWER MONTNEY WELL ECONOMIC SENSITIVITY(1) Upper & Lower Montney Dry Gas (2) Break-even approximately 1.50/mcf Cdn with top tier Glacier dry gas wells (3) (1) Management estimates. NPV 10%…
GLACIER DRY GAS VS LIQUIDS RICH WELL ECONOMIC COMPARISON(1) Dry Gas vs Liquids Rich (2)…
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 Beyond 400 mmcf/d Expanding…
ADVANTAGE - LEADING LOW COST NATURAL GAS SUPPLY Select Montney and Marcellus Natural Gas Producers Cash Costs 2018 Estimates (Cdn/mcfe) 2.77 Cdn /Mcfe 2.56 1.10 (1) (2) (3) AAV Montney Marcellus Operating costs &…
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APPENDIX
2018 BUDGET & GUIDANCE RANGE Average Annual Production 255 to 265 mmcfe/d (42,500 to 44, 170 boe/d) Liquids Annual 1,900 bbls/d Liquids Exit 2,400 bbls/d Royalty Rate 3% to 5% Operating Costs (/mcfe) 0.25 to 0.29 Transportation Costs…
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…
UPPER & LOWER MONTNEY WELL PRODUCTION CONTINUES TO IMPROVE New wells are normally restricted to Production Average (33 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…
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…
CONTINUOUS IMPROVEMENT HAS CREATED INDUSTRY LEADING EFFICIENCIES Production restrictions 34
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…
MARKET DIVERSIFICATION IN-PLACE ADVANTAGE HAS EXPOSURE TO MULTIPLE MARKETS TO MANAGE COMMODITY PRICE RISK 32% 44% 53% 3% AECO 14% 7% 4% Henry Hub 9% 9% 5% Liquids 51% 17% Dawn 36% Fixed Price 16% 2017 Q4 2018 2019…
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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