CALGARY, AB, Oct. 27, 2022 /CNW/ – Advantage Energy Ltd. (“Advantage” or the “Corporation”) is pleased to provide third quarter 2022 results, with production, share buybacks, capital spending and leverage targets all on track to achieve corporate goals.
Our corporate focus remains on growing adjusted funds flow per share(a), via highest netback production growth and share count reduction. Production remains on track to grow by approximately 10% year-over-year while delivering strong free cash flow(a). Advantage is committed to continuing our share buyback strategy, with 12.8 million common shares repurchased year-to-date, returning $135 million to our shareholders. Despite this progress, our debt levels remain below the corporate target of $200 million, so in the coming quarters, share repurchases are expected to exceed free cash flow(a) materially.
Financial Highlights
Cash provided by operating activities of $123.2 million
Adjusted funds flow (“AFF”)(a) of $96.7 million or $0.52/share (up 53% versus the same period in 2021)
Free cash flow (“FCF”)(a) of $38.1 million (39% of AFF)
Cash used in investing activities was $42.8 million
Net capital expenditures(a) were $58.5 million
Net income of $40.6 million or $0.22/share
Tax pools of $1.4 billion continue to provide cash tax deferrals
Operating expenses were $3.72/boe, including expenses related to a scheduled major plant turnaround and inflation
Bank indebtedness increased to $113.8 million
Net debt(a) increased to $82.4 million, significantly below our target of $200 million
Total share buybacks of $82 million and 7.7 million shares during the quarter
Oil & Gas Permit Download
Advantage Energy Ltd. Wells Drilled 2022
Operational Highlights
- Quarterly production of 54,168 boe/d (286 MMcf/d natural gas and 6,447 bbls/d liquids). Production remains on track to achieve corporate guidance for 2022 despite having shut-in an average of approximately 2,500 boe/d of AECO-exposed production during extremely low prices.
- Quarterly liquids production of 6,447 bbls/d (2,168 bbls/d oil, 1,049 bbls/d condensate, and 3,230 bbls/d NGLs), an increase of 36% compared to third quarter of 2021.
- At Glacier, two 5-well pads were drilled with the first pad on production and the second pad scheduled to be on-stream before year-end. An additional 4 gross (2 net) wells will be drilled prior to year-end.
- At Valhalla, the 15-01 two-well pad delivered a total IP30 of 1,950 boe/d (8.3 MMcf/d, 348 bbls/d condensate, and 174 bbls/d NGLs). Advantage has now established the prolific nature of this asset in 3 separate benches (D3, D4 and Upper Montney).
- At Wembley, a 3-well pad (50% working interest) with two D3 wells and a lower Montney well is currently being completed and scheduled to be on production in early November.
- Entropy Inc. (“Entropy”, a subsidiary of Advantage) completed the commissioning of the world’s first gas-fired carbon capture and storage project at the Glacier plant, with first carbon dioxide sequestration occurring in August.
Advantage Energy Operational Map (click to access map)
Marketing Update
Natural gas pricing in most of North America was strong through the third quarter of 2022, resulting in elevated sales revenues, partially offset by fixed price hedges that were in place prior to the ramp-up.
Locally, AECO pricing was extremely weak during the quarter as a result of ongoing NGTL expansion delays and a regulated tariff structure that inherently drives high volatility. However, Advantage invests in downstream transportation assets to reduce our overall exposure to the AECO market. In anticipation of ongoing AECO weakness, approximately 13% of production remains exposed to AECO for the summer 2023 season (including hedging). The remainder of Advantage production is exposed to markets outside of AECO including Empress, Dawn, Chicago and Ventura.
Advantage has hedged approximately 33% of its gas production for this winter at an average of US$4.98/MMbtu and 11% for next summer at US$3.35/MMbtu.
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