Advantage Updates H1 2010 Guidance
19 Januar 2010 - 10:01PM
PR Newswire (US)
(TSX: AAV, NYSE: AAV) CALGARY, Jan. 19 /PRNewswire-FirstCall/ --
Advantage Oil & Gas Ltd. ("Advantage" or the "Corporation")
announces that the Board of Directors has approved a capital budget
and updated guidance for the six month period ending June 30, 2010
("H1 2010"). Additional corporate guidance will be provided on or
about mid-year 2010 to address future growth plans at Glacier. H1
2010 Guidance - Capital expenditures are estimated to be
approximately $110 million and will be funded out of funds from
operations. Approximately 80% of the capital program will be
directed to Glacier with the balance allocated to drilling and
enhanced oil recovery projects in our properties at Nevis, Sunset
and Saskatchewan. - Corporate production for H1 2010 is forecast to
average 24,200 to 25,200 boe/d with a natural gas weighting of 68%.
In the second quarter of 2010, corporate production is expected to
increase to approximately 25,500 boe/d concurrent with the ramp-up
of our Montney production at Glacier to a target of 50 mmcfd. This
represents a 15% growth in corporate production when compared to Q3
2009 (excluding production from our 2009 asset disposition program)
which has been driven entirely through successful drilling programs
at Glacier. Glacier will represent approximately one-third of our
corporate production upon the achievement of these targets. -
Operating costs are estimated to average $10.85/boe to $11.50/boe
which represents a decrease of approximately 12% from H1 2009 due
primarily to success in optimizing our operations and cost
structure. Corporate operating costs are anticipated to further
improve as a result of lower cost production from our new 50 mmcfd
gas plant at Glacier which will be commissioned in Q2 2010. -
Royalty rates are estimated at 13% to 16% which includes the impact
of the Alberta royalty incentive programs. - Funds from operations
for the 6 month period ending June 30, 2010 based on the mid-range
of guidance is estimated at $107 million using an average Nymex
natural gas price of $5.53 US/mmbtu ($5.45/mcf Cdn @ AECO), WTI oil
price of $80.46 US/bbl and an $0.98 Cdn/$U.S. exchange rate.
Advantage's commodity price hedging positions have been included in
the funds from operations estimate. Glacier Phase II Development
Program On-Target to 50 MMCFD - Operational activities which
include drilling, completions and facilities expansions are
on-schedule to achieve a production target of 50 mmcfd from our
Glacier property by the second quarter of 2010. - As a result of
bringing on three new Montney horizontal wells since December 2009,
current well production capability significantly exceeds the
existing 25 mmcfd capacity of the gathering system and facilities.
In the interim, several horizontal wells will be constrained until
expansion of our gathering system and construction of our new 50
mmcfd gas plant (Advantage 100% working interest) are completed in
the second quarter of 2010. In addition, Advantage's 50 mmcfd gas
plant will eliminate third party processing fees and is anticipated
to reduce operating costs at Glacier by 67% from $8.25/boe to
$2.75/boe. - To date, 25 gross (17.4 net) Montney horizontal wells
have been drilled since July 2009. An additional 10 gross (10.0
net) Montney horizontal wells are planned to be drilled during H1
2010 which will complete our Phase II drilling program. One gross
(1.0 net) horizontal Nikanassin well will also be drilled in H1
2010. - Montney well tests and initial production rates have
exceeded expectations across the Glacier land block (refer to
Advantage press release dated December 7, 2009). An additional
Advantage 100% working interest horizontal well located near the
southeast area of our land block tested at a rate of 7 mmcfd at a
flowing pressure of 897 psi in late December. Recent successful
third party well tests and increased drilling activity surrounding
our extensive Glacier land block further confirms the significant
Montney resource potential that has been identified. Strong 2010
Hedging Program & Financial Flexibility - Advantage's strong
hedging program significantly enhances our cash flow and ability to
leverage capital spending during this low supply cost environment
and to capitalize on the Alberta Royalty Incentive Programs. The
following table summarizes our 2010 natural gas hedges: Period %
net Natural Gas $Cdn Aeco/mcf Production Hedged H1 2010 67%
$7.58/mcf FY 2010 55% $7.46/mcf Further details available on our
website @ http://www.advantageog.com/ - In addition, Advantage's
recent convertible debenture issue has further improved our
financial flexibility. As of January 1, 2010 we are drawn to
approximately 48% of our $525 million bank credit facility
resulting in an available bank line of approximately $275 million.
Shareholders Rights Plan - Advantage also announces that its Board
of Directors has approved certain non-substantive changes to the
Shareholders Rights Plan Agreement approved by shareholders on July
9, 2009. The changes, among other things, correct typographical
errors and update references to reflect changes in legislation. A
copy of the Amended and Restated Shareholders Rights Plan Agreement
will be available for review on SEDAR at http://www.sedar.com/ and
on Advantage's website at http://www.advantageog.com/. Advisory The
information in this press release contains certain forward-looking
statements, including within the meaning of the United States
Private Securities Litigation Reform Act of 1995. 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 "seek",
"anticipate", "plan", "continue", "estimate", "demonstrate",
"expect", "may", "will", "project", "predict", "potential",
"targeting", "intend", "could", "might", "should", "believe",
"would" and similar expressions and include statements in the press
release relating to, among other things, resource estimates, timing
of drilling, completion and testing of certain wells, expected
results of the use of horizontal well and multi-frac technology,
expected economics of development with respect to the Nikanassin
formation, expected production and operating costs with respect to
our Glacier Phase II Development Program and guidance and hedging.
These statements involve substantial known and unknown risks and
uncertainties, certain of which are beyond Advantage's control,
including: the impact of general economic conditions; industry
conditions; changes in laws and regulations including the adoption
of new environmental laws and regulations and changes in how they
are interpreted and enforced; fluctuations in commodity prices and
foreign exchange and interest rates; stock market volatility and
market valuations; volatility in market prices for oil and natural
gas; liabilities inherent in oil and natural gas operations;
uncertainties associated with estimating oil and natural gas
reserves and resources; competition for, among other things,
capital, acquisitions, of reserves, undeveloped lands and skilled
personnel; incorrect assessments of the value of acquisitions;
changes in income tax laws or changes in tax laws and incentive
programs relating to the oil and gas industry and income trusts;
geological, technical, drilling and processing problems and other
difficulties in producing petroleum reserves; and obtaining
required approvals of regulatory authorities. 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. Except as required
by law, Advantage undertakes no obligation to publicly update or
revise any forward-looking statements. For additional risk factors
in respect of Advantage and its business, please refer to Advantage
Energy Income Fund's (as predecessor to Advantage) Annual
Information Form dated March 18, 2009 which is available on SEDAR
at http://www.sedar.com/. References in this press release to test
production rates, initial productivity, initial flow rates and
average flowing pressure are useful in confirming the presence of
hydrocarbons, however such rates are not determinative of the rates
at which such wells will commence production and decline
thereafter. While encouraging, readers are cautioned not to place
reliance on such rates in calculating the aggregate production for
the Advantage. Barrels of oil equivalent (boe) may be misleading,
particularly if used in isolation. A boe conversion ratio has been
calculated using a conversion rate of six thousand cubic feet of
natural gas to one barrel. Such conversion rate is based on an
energy equivalency conversion method application at the burner tip
and does not represent an economic value equivalency at the
wellhead. DATASOURCE: Advantage Oil & Gas Ltd. CONTACT:
Investor Relations, Toll free: 1-866-393-0393, ADVANTAGE OIL &
GAS LTD., 700, 400 - 3rd Avenue SW, Calgary, Alberta, T2P 4H2,
Phone: (403) 718-8000, Fax: (403) 718-8300, Web Site:
http://www.advantageog.com/, E-mail:
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