Lowering Natural Gas Production & Increasing Liquids Rich Drilling. Liquids Production Could Reach 13% or More of Total Production in 2020 Investor Presentation TSX / NYSE: AAV May 2018
ADVANTAGE AT A GLANCE TSX 52-week trading range 3.48 - 9.24 Shares Outstanding (basic) 186 million Market Capitalization 0.8 billion 2018 Guidance 240 to 255 mmcfe/d Liquids Production (50% Increase over 2017) 1,800 bbls/d…
OUR DISCIPLINED STRATEGY CREATED A SOLID FOUNDATION TO GENERATE LONG TERM VALUE World Class Montney Assets Operational Excellence, Significant Inventory of Innovation, Opportunity Dry & Liquids Rich Gas capture Locations…
RECENT LIQUIDS DRILLING SUCCESSES ENHANCES UPSIDE POTENTIAL ON 200 NET MONTNEY SECTIONS (128,000 NET ACRES) Alberta Only 4% of our liquids B.C. East Glacier Middle Montney rich lands have been 50-80 bbls/mmcf C5+ drilled…
2018 PLAN UPDATED TO INCREASE FUTURE LIQUIDS PRODUCTION(1) LOWERING NATURAL GAS, INCREASING LIQUIDS Reallocating budgeted capital to drill more liquids rich wells at Valhalla & East Glacier in 2018 (maintain 175 million capital…
INCREASING LIQUIDS STRENGTHENS REVENUE & NETBACKS(1)(2) (SENSITIVITIES + IMPACTS) 1% Liquids Liquids Production 10% - 15% 3% - 5% of Total Revenue Impact % of Total Production 6% - 8% 5% - 6% 4.4% 2018 Guidance 2018 Exit 2019…
2018 UPDATED PLAN SUMMARY ( million) 45 130 2018 SUMMARY (1) (2) 155 to 165 Million Cash Flow 1.5x Year-end 2018 Total Debt/Cash Flow Glacier Valhalla, Wembley, Progress 240 to 255 mmcfe/d Annual Production Range 50% Annual…
MARKET & REVENUE DIVERSIFICATION…
NATURAL GAS TRANSPORTATION SERVICE IN PLACE ACCESSING SEVERAL HUBS 500 AECO Transportation Service 393 mmcf/d (mmcf/d) as of April, 400 2021 Increasing firm service secured to 2021 300 Ability to reduce future total service…
MAINTENANCE CAPITAL AND SURPLUS CASH FLOW SENSITIVITY ILLUSTRATIVE AT 280 MMCFE/D (Q4 2018) (NO HEDGING INCLUDED) CASH FLOW Annual Surplus Cash of 100 million 215 Million MAINTENANCE 100 Million CAPITAL CASH FLOW 115 Million…
ONGOING VALUE CREATION FROM OUR HIGH QUALITY ASSETS THROUGH OPERATIONAL EXCELLENCE 11
ADVANTAGES LAND BLOCKS ARE IN A LIQUIDS RICH MONTNEY FAIRWAY CONFIRMATION THROUGH RECENT DRILLING SUCCESSES Multi-Layer Montney Development Potential across Advantage Land Blocks Progress Glacier Valhalla Wembley Upper…
LIQUIDS RICH MIDDLE MONTNEY RESOURCE PLAY EVOLUTION Early 2013 - Advantage 2017/18 AAV Confirms MM High Liquids Discovers MM liquids in Area Yields & Wellhead (Free) C5+/Oil on New Land Blocks First AAV Progress well (LM) Initial…
WEMBLEY/PIPESTONE ULTRA RICH LIQUIDS PRODUCTION R9 R8 R7 Oil Production Rate (bbl/d) Volatile oil area 625 bopd production IP30 - Oil T73 AAV First Wembley Well 12-25 Mid Montney 1,312 boe/d 624 bbls/d free C5+/Oil 819…
PROGRESS FIRST DELINEATION WELL C3+ LIQUIDS YIELD OF 63 BBLS/MMCF R10 R9 R8 On 2016/08 Advantages First Delineation Cum Oil: 101,000 bbls to Well 13-31-77-9W6 Kelt CNRL 2017/12 T78 Oilwells (17 months) Gaswells Lateral Length…
AREA INFRASTRUCTURE Alberta B.C. Progress 100% owned Glacier Gas Plant, 400 mmcf/d Glacier & 6,800 bbls/d liquids 16km (10 miles) New Compressor and Valhalla Liquids Handling AAV 100% owned Facility (Q4 2018) existing…
SIGNIFICANT AND GROWING LIQUIDS & DRY GAS DRILLING INVENTORY Proved Developed Multi-Layer Montney Development Wells by Layer(3) Potential across Advantage Land Blocks TOTAL 197 Lower Middle 51 31 Upper 115 337 2P Reserves…
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 10 mmcf/d after 365 2.00/mcf gas price days exceeding type curve Top Tier LM…
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…
Clear Vision for Growth Financial Strength Proven Expertise
APPENDIX
2018 GUIDANCE UPDATED (APRIL 2018) Average Annual Production 240 to 255 mmcfe/d (40,000 to 42,500 boe/d) Liquids Annual 1,800 bbls/d Liquids Exit 2,400 bbls/d Royalty Rate 3% to 5% Operating Costs (/mcfe) 0.28 to 0.33 Transportation…
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…
ADVANTAGE - LEADING LOW COST NATURAL GAS SUPPLY Select Montney and Marcellus Natural Gas Producers Cash Costs 2018 Estimates (Cdn/mcfe) 2.82 2.39 1.18 (1) (2) (3) AAV Montney Marcellus Operating costs & transportation…
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…
INDUSTRY LEADING LOW COSTS GENERATES STRONG NETBACK MARGINS AMONGST DRY OR LIQUIDS RICH GAS PRODUCERS 2017 Total Cash Costs Including PDP FD&A 2017 Netbacks Percentage of Revenue 6.00 5.00 73% 66% 4.00 58% /mcfe 51% 52%…
CONTINUOUS IMPROVEMENT HAS CREATED INDUSTRY LEADING EFFICIENCIES Production restrictions 30
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 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 32
GLACIER MONTNEY ASSIGNED 2P EUR PER WELL & INTERVAL Glacier - 2P Recoveries per Interval(1) of Gross HZ Wells 2P Recovery [bcf/well] Developed Undeveloped Total Developed Undeveloped Total Interval YE YE YE YE YE YE YE YE YE YE YE…
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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