(TSX: AAV)
CALGARY, AB, Aug. 31, 2021 /CNW/ - Advantage Energy Ltd.
("Advantage" or the "Corporation") is pleased to announce an
increase of $20 million to the 2021
capital guidance range, now set at $140
million to $150 million.
The Corporation's 2021 development program is two months ahead of
schedule and capital to-date is below budget, creating an
opportunity to optimize fourth quarter operations and deliver
higher production into winter markets. Commodity prices remain
robust while Advantage's free cash flow(a) has
increased significantly, supported by well performance that has
exceeded expectations.
Highlights of the increased program:
- The incremental spending in fourth quarter is expected to
generate $25 million incremental cash
provided by operating activities and 1,965 boe/d incremental
production during 2022.
- At Glacier, the completion and equipping of four wells has been
accelerated into fourth quarter 2021 from first quarter 2022. The
wells are expected to come on-stream early in first quarter
2022.
- At Wembley, the drilling of
three wells has been accelerated into fourth quarter 2021 from
first quarter 2022. The wells are expected to be completed and
on-stream during first quarter 2022.
- Certain pipeline activities within our oil assets have been
accelerated from January 2022 into
December 2021
On average, the last 14 wells drilled at Glacier have achieved
full payout after eight months on-stream, and Advantage expects the
remaining two pads in the program to achieve payout within seven
months on-stream. Production will be processed using existing
capacity, incurring low incremental operating costs, low
carbon-intensity and negligible flaring.
2021 Guidance Update
Advantage's 2021 capital guidance range has now been set at
$140 million to $150 million versus the previous range of
$115 million to $135 million. Although 2021 spending is
expected to be 8% less than 2020 spending, annual production is
expected to grow by approximately 10% to record levels. Since
none of the accelerated wells are expected to be onstream until
2022, our 2021 production guidance remains between 48,000 to 51,000
boe/d.
a.
|
Non-GAAP Financial
Measure which may not be comparable to similar non-GAAP financial
measures used by other entities. Please see Advisory for
reconciliations to the nearest measure calculated in accordance
with GAAP.
|
Bolstered by the fourth quarter 2021 acceleration, Advantage
plans to deliver up to 10% production growth in 2022 which requires
approximately $105 million of
optimized development spending. Excess free cash
flow(a) will be used for debt reduction, cash-generating
infrastructure investments, acquisitions and development of the
Progress and Wembley oil assets.
Formal 2022 budget guidance is expected to be provided during the
fourth quarter of 2021.
Advisory
The information in this press release contains certain
forward-looking statements and forward looking information,
including within the meaning of applicable securities laws
(collectively, "forward-looking information"). These statements
relate to future events or our future intentions or performance.
All statements other than statements of historical fact may be
forward-looking statements. Forward-looking statements are often,
but not always, identified by the use of words such as "guidance",
"anticipate", "continue", "demonstrate", "expect", "may", "can",
"will", "believe", "would" and similar expressions and include
statements relating to, among other things, Advantage's focus,
strategy and development plans; timing for wells to come on-stream
at Glacier and Wembley;
anticipated 2021 capital spending; Advantage's ability to grow 2021
cash provided by operating activities due to incremental capital
spending; the timing of when payout will be achieved on the
remaining two pads in the program; Advantage's 2021 production
guidance; that Advantage will use its excess free cash flow for
debt reduction, cash-generating infrastructure investments,
acquisition and development of the Progress and Wembley oil assets; Advantage's anticipated
production growth and capital spending for 2022; and the timing of
when Advantage's formal 2022 budget guidance will be available.
Advantage's actual decisions, activities, results, performance or
achievement could differ materially from those expressed in, or
implied by, such forward-looking statements and accordingly, no
assurances can be given that any of the events anticipated by the
forward-looking statements will transpire or occur or, if any of
them do, what benefits that Advantage will derive from
them.
These statements involve substantial known and unknown risks
and uncertainties, certain of which are beyond Advantage's control,
including, but not limited to: changes in general economic, market
and business conditions; industry conditions, including as a result
of demand and supply effects resulting from the COVID-19 pandemic;
actions by governmental or regulatory authorities including
increasing taxes and changes in investment or other regulations;
changes in tax laws, royalty regimes and incentive programs
relating to the oil and gas industry; Advantage's success at
acquisition, exploitation and development of reserves; unexpected
drilling results; changes in commodity prices, currency exchange
rates, capital expenditures, reserves or reserves estimates and
debt service requirements; the occurrence of unexpected events
involved in the exploration for, and the operation and development
of, oil and gas properties, including hazards such as fire,
explosion, blowouts, cratering, and spills, each of which could
result in substantial damage to wells, production and processing
facilities, other property and the environment or in personal
injury; changes or fluctuations in production levels; delays in
anticipated timing of drilling and completion of wells; individual
well productivity; competition from other producers; the lack of
availability of qualified personnel or management; credit risk;
changes in laws and regulations including the adoption of new
environmental laws and regulations and changes in how they are
interpreted and enforced; our ability to comply with current and
future environmental or other laws; stock market volatility and
market valuations; liabilities inherent in oil and natural gas
operations; competition for, among other things, capital,
acquisitions of reserves, undeveloped lands and skilled personnel;
incorrect assessments of the value of acquisitions; geological,
technical, drilling and processing problems and other difficulties
in producing petroleum reserves; ability to obtain required
approvals of regulatory authorities; the ability to access
sufficient capital from internal and external sources; that
Advantage will not use its excess free cash in the manner
contemplated; and that Advantage's 2022 budget guidance will not be
available when expected. Many of these risks and uncertainties and
additional risk factors are described in the Corporation's Annual
Information Form which is available at www.sedar.com ("SEDAR") and
www.advantageog.com. Readers are also referred to risk factors
described in other documents Advantage files with Canadian
securities authorities.
With respect to forward-looking statements contained in this
press release, Advantage has made assumptions regarding, but not
limited to: conditions in general economic and financial markets;
the impact and duration thereof that the COVID-19 pandemic will
have on (i) the demand for crude oil, NGLs and natural gas, (ii)
the supply chain including the Corporation's ability to obtain the
equipment and services it requires, and (iii) the Corporation's
ability to produce, transport and/or sell its crude oil, NGLs and
natural gas; effects of regulation by governmental agencies;
current and future commodity prices and royalty regimes; future
exchange rates; royalty rates; future operating costs; availability
of skilled labor; availability of drilling and related equipment;
timing and amount of capital expenditures; the impact of increasing
competition; the price of crude oil and natural gas; that the
Corporation will have sufficient cash flow, debt or equity sources
or other financial resources required to fund its capital and
operating expenditures and requirements as needed; that the
Corporation's conduct and results of operations will be consistent
with its expectations; that the Corporation will have the ability
to develop the Corporation's properties in the manner currently
contemplated; current or, where applicable, proposed assumed
industry conditions, laws and regulations will continue in effect
or as anticipated; the estimates of the Corporation's production
and reserves volumes and the assumptions related thereto (including
commodity prices and development costs) are accurate in all
material respects; and that Advantage will use its excess free cash
flow in the manner contemplated. Readers are cautioned that the
foregoing lists of factors are not exhaustive. These
forward-looking statements are made as of the date of this press
release and Advantage disclaims any intent or obligation to update
publicly any forward-looking statements, whether as a result of new
information, future events or results or otherwise, other than as
required by applicable securities laws.
This press release contains a number of oil and gas and
finance metrics, including payouts, which do not have standardized
meanings or standard methods of calculation and therefore such
measures may not be comparable to similar measures used by other
companies and should not be used to make comparisons. Such metrics
have been included herein to provide readers with additional
measures to evaluate the Corporation's performance; however, such
measures are not reliable indicators of the future performance of
the Corporation and future performance may not compare to the
performance in previous periods and therefore such metrics should
not be unduly relied upon. Payouts means the anticipated duration
of production from a well expected to recoup its initial capital
investment. Management uses these oil and gas and finance metrics
for its own performance measurements and to provide securityholders
with measures to compare Advantage's operations over time. Readers
are cautioned that the information provided by these metrics, or
that can be derived from the metrics presented in this press
release, should not be relied upon for investment or other
purposes.
Non-GAAP Financial Measures
In this press release, the Corporation makes reference to the
term "free cash flow", which is a non-GAAP financial measure and is
not a standardized financial measure under International Financial
Reporting Standards ("IFRS"). Such term should not be considered as
an alternative to, or more meaningful than the terms ["net income",
"comprehensive income", "cash provided by operating activities" or
"cash used in investing activities"] presented within the
Corporation's consolidated financial statements as determined in
accordance with IFRS. Free cash flow is determined by the
Corporation as adjusted funds flow less net capital expenditures
and is considered a useful measure of Advantage's ability to settle
outstanding debt and obligations. The Corporation considers
adjusted funds flow to be a useful measure of Advantage's ability
to generate cash from the production of natural gas and liquids,
which may be used to settle outstanding debt and obligations, and
to support future capital expenditures plans. Changes in non-cash
working capital are excluded from adjusted funds flow as they may
vary significantly between periods and are not considered to be
indicative of the Corporation's operating performance as they are a
function of the timeliness of collecting receivables and paying
payables. Expenditures on decommissioning liabilities are excluded
from the calculation as the amount and timing of these expenditures
are unrelated to current production and are partially discretionary
due to the nature of the Corporation's low liability. Net capital
expenditures include total capital expenditures related to
property, plant and equipment and exploration and evaluation assets
incurred during the period. Management considers this measure
reflective of actual capital activity for the period as it excludes
changes in working capital related to other periods. Management
believes that the reference to free cash flow provides an
indication of the results to be generated by the Corporation's
principal business activities and provides useful supplemental
information for analysis of the Corporation's operating performance
and liquidity. Advantage's method of calculating free cash flow,
including the components of such calculation, may differ from other
companies, and accordingly, they may not be comparable to similar
measures used by other companies. Please see the Corporation's most
recent Management's Discussion and Analysis, which is available
at www.sedar.com and www.advantageog.com, for additional
information about these financial measures.
The following terms and abbreviations used in this press
release have the meanings set forth below:
boe
|
barrels of oil
equivalent of natural gas, on the basis of one barrel of oil or
NGLs for six thousand cubic feet of natural gas
|
boe/d
|
barrels of oil
equivalent of natural gas per day
|
Barrels of oil equivalent (boe) and thousand cubic feet of
natural gas equivalent (mcfe) may be misleading, particularly if
used in isolation. Boe and mcfe conversion ratios have been
calculated using a conversion rate of six thousand cubic feet of
natural gas equivalent to one barrel of oil. A boe and mcfe
conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. Given that the
value ratio based on the current price of crude oil as compared to
natural gas is significantly different from the energy equivalency
of 6:1, utilizing a conversion on a 6:1 basis may be misleading as
an indication of value.
SOURCE Advantage Energy Ltd.