CALGARY, AB – Advantage Energy Ltd. (“Advantage” or the “Corporation”) is pleased to report its third quarter 2021 results including record production, record free cash flow(a) and accelerated debt reduction.
Operational performance of our summer development program exceeded expectations, with many of our new wells ranking amongst the best producers in our history. With elevated commodity prices presiding through much of the quarter and excess plant capacity available for new volumes, the average payout of new wells fell to less than 7 months from the on-stream date.
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Operating and Financial Highlights for the Quarter
- Cash provided by operating activities of $47.0 million
- Record adjusted funds flow (“AFF”)(a) of $63.4 million ($0.33 per share)
- Record free cash flow (“FCF”)(a) of $32.0 million
- Record total production of 50,025 boe/d (271.8 mmcf/d natural gas, 4,724 bbls/d liquids), up 13% over Q3 2020
- Liquids production of 4,724 bbls/d (1,038 bbls/d oil, 1,002 bbls/d condensate, and 2,684 bbls/d NGLs)
- Cash used in investing activities was $36.9 million while net capital expenditures(a) were $31.4 million
- Net debt(a) decreased to $167.9 million while net debt to AFF(a) ratio fell to 0.9x
- Operating costs remained low at $2.38/boe
Operational Update
- At Glacier, a five-well pad was brought onstream and delivered an average IP30 of 10 mmcf/d per well (post-cleanup). Three of Advantage’s four best Glacier multi-well pads have been drilled in the last 18 months.
- Two wells were completed in central Valhalla, ranking as the first and seventh best wells Advantage has ever drilled, with wellhead IP30s of 2,410 boe/d (10.3 mmcf/d natural gas and 693 bbls/d condensate) and 1,964 boe/d (9.4 mmcf/d natural gas and 426 bbls/d condensate), respectively. Frac designs were 1.5 tonnes/meter, typical of our 2021 program.
- A new, Advantage-operated joint venture was established at Glacier where lands were pooled with a third-party, increasing the inventory of 2 mile long top-tier wells by 24 gross wells (12 net). Drilling of four 50% working interest wells on these lands has begun with targeted onstream dates early in the first quarter of 2022. Benefits of the joint venture include operational efficiencies and ancillary revenue from approximately 10 mmcf/d of additional third-party processing in 2022.
- All major equipment for the Glacier Gas Plant Carbon Capture and Storage project (Phase I) is under construction; expected on-stream date remains April 2022.
Marketing Update
Advantage has hedged approximately 36% of its natural gas production for fourth quarter 2021 and 10% for 2022. These hedges are fixed price swaps denominated at AECO, Henry Hub, Dawn and Chicago, reflective of the market exposures in our natural gas diversification strategy.
Looking Forward
Capital guidance for 2021 remains at $140 to $150 million and the mid-point of production guidance remains at 49,500 boe/d. With drilling results continuing to exceed expectations, annual production per share growth is now likely to be approximately 10%. Advantage plans to announce 2022 guidance before year-end, with a focus on optimizing balance sheet strength, acquisition opportunities, moderate gas production growth, and increasing oil production to balance commodity exposure.
Advantage will continue to fortify its balance sheet and maximize returns for its shareholders by executing on its strategy to:
- Continue to deliver moderate (approximately 10%) production growth for gas-weighted assets utilizing existing capacity at our Glacier Gas Plant
- Enhance corporate resilience and scale using several tactics:
- growing our liquids assets to balance our exposure to gas pricing
- pursue revenue-generating cleantech investments through the Corporation’s subsidiary Entropy Inc. (“Entropy”) that will leverage our carbon capture and sequestration technology and expertise
- pursue acquisitions that create efficiencies, resilience and scale
- Potentially return capital to shareholders
Advantage appreciates the contributions of our staff that led to strong performance this quarter, and the support of our board of directors and investors; we look forward to progressing the Corporation’s strategy through the dynamic markets ahead.
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