Welcome!

News Feed Item

Advantage Announces 2013 Year End Financial & Operating Results and Glacier Operational Update

(TSX: AAV, NYSE: AAV)

CALGARY, March 27, 2014 /PRNewswire/ - Advantage Oil & Gas Ltd. ("Advantage" or the "Corporation") is pleased to report the unconsolidated financial and operating results (excludes Longview Oil Corp.) for the three months and year ended December 31, 2013. Advantage's remaining non-core assets which had a production rate of approximately 5,600 boe/d were divested on April 30, 2013. As a result, financial and operating results during the second half of 2013 are more representative of our industry leading low cost pure play Montney development at Glacier.

Advantage's 2013 results, achievement of our 135 mmcfe/d Phase VI production target ahead of schedule, and acceleration of our Phase VII drilling program provides a solid foundation for multi-year growth. Advantage's growth strategy is targeted to deliver 100% production per share growth and 190% cash flow per share growth through its three year development plan at its world class Montney resource play at Glacier, Alberta.

      Three months ended   Year ended
Advantage Unconsolidated Results   December 31   December 31
        2013     2012     2013     2012
                           
Financial ($000, except as otherwise indicated)                        
Sales including realized hedging   $   34,304   $ 36,556   $ 142,943   $  126,749
  per boe   $ 20.57    $ 19.15   $ 20.08   $ 15.97
Funds from operations   $ 23,822   $  16,890   $ 85,310   $ 47,046
  per share (2)   $ 0.14   $ 0.10   $ 0.51   $ 0.28
  per boe   $ 14.30   $ 8.85   $ 11.98   $ 5.94
Dividends received from Longview   $ 2,961    $ 3,172    $ 12,479   $  14,350
  per share (2)   $ 0.02   $ 0.02    $ 0.07   $ 0.09
Total capital expenditures   $ 69,512   $  35,849   $  155,370   $ 130,570
Working capital deficit (3)   $ 49,034   $ 35,467   $ 49,034   $ 35,467
Bank indebtedness   $ 153,697   $ 161,630   $ 153,697   $ 161,630
Convertible debentures (face value)   $ 86,250   $ 86,250    $ 86,250   $ 86,250
Shares outstanding at end of period (000)     168,383     168,383     168,383     168,383
Basic weighted average shares (000)     168,383     168,383     168,383     167,509
Operating                        
Daily Production                        
  Natural gas (mcf/d)     108,260     116,929     113,947     122,069
  Crude oil and NGLs (bbls/d)     79     1,261     507     1,337
  Total mcfe/d (4)     108,734     124,495     116,989     130,091
  Total boe/d (4)     18,122     20,749     19,498     21,682
Average prices (including hedging)                        
  Natural gas ($/mcf)   $ 3.39   $ 2.70   $  3.10   $ 2.09
  Crude oil and NGLs ($/bbl)   $ 77.01   $ 65.21    $ 76.01   $ 68.35

(1)  Non-consolidated financial and operating highlights for Advantage excluding Longview.
(2)  Based on weighted average shares outstanding. 
(3)  Working capital deficit includes trade and other receivables, prepaid expenses and deposits, and trade and other accrued liabilities. 
(4)  A boe and mcfe conversion ratio has been calculated using a conversion rate of six thousand cubic feet of natural gas equivalent to one barrel of oil.

 

Increased Funds from Operations driven by Glacier Production, Low Cost Structure and Improved Gas Prices

  • Funds from operations for the fourth quarter of 2013, excluding dividends from Longview Oil Corp. ("Longview"), increased 41% to $23.8 million or $0.14 per share as compared to the fourth quarter of 2012. Funds from operations during 2013 increased 81% to $85.3 million or $0.51 per share as compared to 2012. The increase in funds from operations was supported by a continued reduction in Advantage's cost structure due to development at Glacier and an increase in realized natural gas prices for the quarter and year.

  • The tax free dividend income received from Longview amounted to $3.0 million ($0.02/share) during the fourth quarter of 2013 and $12.5 million ($0.07/share) for 2013 due to Advantage's 45.1% ownership in the common shares of Longview in 2013.

  • Glacier production increased to 135 mmcfe/d (22,500 boe/d) in early March, approximately one month ahead of our Phase VI budget schedule. Production averaged 117.0 mmcfe/d (19,498 boe/d) for 2013 and averaged 108.7 mmcfe/d (18,122 boe/d) during the fourth quarter of 2013. The 2013 average production rate included the non-core assets from January 1 to April 30, 2013. Production during the fourth quarter of 2013 was impacted by minor facility outages at Glacier to accommodate field gathering system work in preparation for the eventual tie-in of new Phase VI Montney wells.

  • The royalty rate in 2013 was 5.4% as compared to 5.7% during 2012. The reduction in royalty rate reflects the disposition of the non-core assets and increased production from Glacier where royalty rates of approximately 5% are realized on our Montney wells.

  • Operating costs decreased 68% to $0.28/mcfe ($1.66/boe) in the fourth quarter of 2013 compared to the same period in 2012. The decrease in operating costs was due to the divestment of the higher cost non-core assets and the continued improvement in operating efficiencies achieved through our Glacier Montney development. Advantage's operating costs for 2013 which included the non-core assets to April 30, 2013 decreased 47% to $0.48/mcfe ($2.88/boe) compared to 2012.

  • Advantage's operating netback during the fourth quarter of 2013 was $3.00/mcfe which is 93% of our realized natural gas price of $3.21/mcfe. This strong cash margin is due to the industry leading low cost structure at Glacier and is a key success factor in our go forward three year development plan which is targeted to deliver 190% cash flow per share growth at an average natural gas price of $3.75/GJ.

  • Total capital expenditures in the fourth quarter of 2013 were $69.5 million and $155.4 million for the 2013 year which resulted from ongoing activities in our Glacier Phase VI development program.

  • On a pro forma basis after giving consideration to net proceeds of $90 million received from the sale of the Longview common shares, Advantage's bank debt was $63.7 million and total debt was $199.0 million as of December 31, 2013.

  • Advantage's estimated tax pools as of December 31, 2013 are approximately $1.1 billion of which $0.8 billion are categorized as immediately deductible at a rate of 100%.

Glacier Operations On-Track with Three Year Development Plan

Advantage's Glacier three year development plan is targeted to deliver 100% production per share growth and 190% cash flow per share growth. Production is expected to grow to 183 mmcfe/d in 2015, 205 mmcfe/d in 2016 and 245 mmcfe/d in 2017. The three year development plan is supported by continuing strong operational results and a solid financial strategy which includes an improved balance sheet and hedging program. The three year development plan is designed to maintain an average total debt to forward cash flow ratio of 1.5x based on an average natural gas price of AECO Cdn $3.75/GJ. Advantage has hedged an average of 47% of its forecast production through to Q1 2016 at an average price of $3.86/mcf.

Strong Initial Production from New Phase VI Glacier Wells

  • Only nine of the 22 new Phase VI Montney wells were required to ramp production to our 135 mmcfe/d Phase VI target which was achieved approximately one month ahead of schedule. The remaining Phase VI wells will be brought on stream as required to maintain the 135 mmcfe/d production rate through the balance of 2014.

  • Advantage's record Upper Montney well at 05-20-76-12W6 which demonstrated a final production test rate of 21 mmcf/d was initially brought on production at rates of up to 21 mmcf/d and then restricted to approximately 10 mmcf/d for the last 80 days.  The production rate has been restricted to manage the flow back of frac sand through well site equipment which is typical in most higher rate Montney wells. The 05-20-76-12W6 well is still producing at a strong flowing wellhead pressure of 7,620 kpa compared to our average gas gathering system pressure of 3,000 kpa. During the first 80 days of production, the 05-20-76-12W6 well has produced 0.7 bcf.

  • Two Lower Montney wells located at 15-31-75-13W6 and 10-31-75-13W6 were initially brought on production at rates of up to 15 mmcf/d and 11 mmcf/d and then restricted to a rate of 8.0 mmcf/d for each well. The wells have produced for an average of 125 days and each well has produced approximately 1 bcf during this period. These wells, which were completed with slickwater and modified completion techniques, are demonstrating significantly improved performance compared to older Lower Montney wells.

  • Since the winter of 2012, a total of 15 Upper and Lower Montney wells that were completed with slickwater and brought on production are demonstrating performance which is trending at or above our Phase VII budget type curve (based on an average initial 30 day production rate of 6.9 mmcf/d).

  • Advantage's record Middle Montney well located at 12-02-76-12W6 which demonstrated a final production test rate of 13 mmcf/d, including 20 bbl/mmcf of free condensate, was initially brought on production at restricted rates of up to 9.5 mmcf/d. This well has been further rate restricted to approximately 6.0 mmcf/d for the last 20 days to manage the flow back of frac sand and to control the amount of free condensate that our facilities can handle at this time since our Glacier gas plant does not currently have liquid extraction or condensate stabilization processes installed. The 12-02-76-12W6 well is still producing at a strong wellhead pressure of 10,100 kPa compared to our average gas gathering system pressure of 3,000 kpa.

Glacier Phase VII Glacier Development Program Underway

  • The Glacier Phase VII drilling program was accelerated during the first quarter of 2014 due to lower than anticipated capital expenditures in our Phase VI program.  The lower capital spending resulted from improved drilling and well completion efficiencies which reduced well costs below our original budget estimates.

  • To date, four new Phase VII wells have been rig released. One drilling rig is currently situated on a six well pad that will continue drilling through spring breakup. Two additional rigs will be deployed once weather conditions permit access to new drilling sites. A total of 33 wells are included in our Phase VII drilling program.

  • Engineering design is nearing completion for the expansion of our 100% owned Glacier gas plant. The expansion work is targeted for completion during the second quarter of 2015 and includes the installation of a shallow cut liquids extraction process and increased natural gas processing capacity to accommodate our Phase VII production target of 183 mmcfe/d. The engineering design will allow our Glacier gas plant to ultimately provide 245 mmcfe/d of processing capacity to accommodate our three year development plan through to 2017.

  • Design plans are also underway for increasing the transportation capacity of the sales gas lateral which connects the Glacier gas plant to TransCanada Pipeline's main sales pipeline to accommodate our three year development plan and beyond.

Advantage's strong operating and financial achievements during 2013 combined with simplification of the Corporate structure have positioned the company as an industry leading low cost Montney producer with strong growth. We look forward to reporting results on our progress as we execute Advantage's Glacier three year development plan.

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 relating to, among other things, Advantage's anticipated production per share growth and cash flow per share growth, including the targeted amount and timing of achievement thereof; expectations as to future natural gas prices;  estimated tax pools; expected  increases in production in 2015, 2016 and 2017 resulting from Advantage's Glacier three year development plan; expectations of future debt to cash flow ratios; expectations as to the number of wells in Advantage's Phase VI Program required to provide sufficient production inventory to maintain production at anticipated levels through to the end of 2014; expectations regarding tie-ins of Phase VI wells; expected number of future drilling locations; anticipated drilling plans, including drilling rigs to be deployed and number of wells to be included in Advantage's Phase VIII drilling program; anticipated timing of completion of expansion of Glacier gas plant and effect of engineering design on processing capacity, including the amount of such processing capacity; and the status of design plans to increase transportation capacity of the sales gas lateral which connects the Glacier gas plant to TransCanada Pipeline's main sales pipeline. 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; 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; the effect of acquisitions; 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 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; uncertainties associated with estimating oil and natural gas reserves; 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; and ability to access sufficient capital from internal and external sources. 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 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; effects of regulation by governmental agencies; current 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 crude oil and natural gas properties in the manner currently contemplated; current or, where applicable, proposed assumed industry conditions, laws and regulations will continue in effect or as anticipated; and 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.

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.

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.

References in this press release to final production test rates, initial test production rates, production type curves,  restricted rates and 30 day production rates and other short-term production rates 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 and are not indicative of long term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for Advantage. A pressure transient analysis or well-test interpretation has not been carried out in respect of all wells. Accordingly, the Corporation cautions that the test results should be considered to be preliminary.

The Corporation discloses several financial measures that do not have any standardized meaning prescribed under International Financial Reporting Standards ("IFRS"). These financial measures include operating netbacks and debt to cash flow ratio. Management believes that these financial measures are useful supplemental information to analyze operating performance and provide an indication of the results generated by the Corporation's principal business activities. Investors should be cautioned that these measures should not be construed as an alternative to net income or other measures of financial performance as determined in accordance with IFRS. Advantage's method of calculating these measures 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, including a reconciliation of funds from operations to cash provided by operating activities.

The following abbreviations used in this press release have the meanings set forth below:

         
bbls       barrels
mbbls       thousand barrels
mmbbls       million barrels
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
mboe       thousand barrels of oil equivalent
mmboe       million barrels of oil equivalent
mcf       thousand cubic feet
mmcf       million cubic feet
bcf       Billion cubic feet
tcf       trillion cubic feet
mcfe       thousand cubic feet equivalent on the basis of six thousand
cubic feet of natural gas for one barrel of oil or NGLs
mmcfe/d       million cubic feet equivalent per day
tcfe       trillion cubic feet equivalent

 

 

SOURCE Advantage Oil & Gas Ltd.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
DevOps tends to focus on the relationship between Dev and Ops, putting an emphasis on the ops and application infrastructure. But that’s changing with microservices architectures. In her session at DevOps Summit, Lori MacVittie, Evangelist for F5 Networks, will focus on how microservices are changing the underlying architectures needed to scale, secure and deliver applications based on highly distributed (micro) services and why that means an expansion into “the network” for DevOps.
WebRTC is bringing significant change to the communications landscape that will bridge the worlds of web and telephony, making the Internet the new standard for communications. Cloud9 took the road less traveled and used WebRTC to create a downloadable enterprise-grade communications platform that is changing the communication dynamic in the financial sector. In his session at @ThingsExpo, Leo Papadopoulos, CTO of Cloud9, discussed the importance of WebRTC and how it enables companies to focus o...
A critical component of any IoT project is what to do with all the data being generated. This data needs to be captured, processed, structured, and stored in a way to facilitate different kinds of queries. Traditional data warehouse and analytical systems are mature technologies that can be used to handle certain kinds of queries, but they are not always well suited to many problems, particularly when there is a need for real-time insights.
Providing secure, mobile access to sensitive data sets is a critical element in realizing the full potential of cloud computing. However, large data caches remain inaccessible to edge devices for reasons of security, size, format or limited viewing capabilities. Medical imaging, computer aided design and seismic interpretation are just a few examples of industries facing this challenge. Rather than fighting for incremental gains by pulling these datasets to edge devices, we need to embrace the i...
Web Real-Time Communication APIs have quickly revolutionized what browsers are capable of. In addition to video and audio streams, we can now bi-directionally send arbitrary data over WebRTC's PeerConnection Data Channels. With the advent of Progressive Web Apps and new hardware APIs such as WebBluetooh and WebUSB, we can finally enable users to stitch together the Internet of Things directly from their browsers while communicating privately and securely in a decentralized way.
All organizations that did not originate this moment have a pre-existing culture as well as legacy technology and processes that can be more or less amenable to DevOps implementation. That organizational culture is influenced by the personalities and management styles of Executive Management, the wider culture in which the organization is situated, and the personalities of key team members at all levels of the organization. This culture and entrenched interests usually throw a wrench in the work...
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...
@DevOpsSummit at Cloud taking place June 6-8, 2017, at Javits Center, New York City, is co-located with the 20th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long developm...
"We're bringing out a new application monitoring system to the DevOps space. It manages large enterprise applications that are distributed throughout a node in many enterprises and we manage them as one collective," explained Kevin Barnes, President of eCube Systems, in this SYS-CON.tv interview at DevOps at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
In his General Session at 17th Cloud Expo, Bruce Swann, Senior Product Marketing Manager for Adobe Campaign, explored the key ingredients of cross-channel marketing in a digital world. Learn how the Adobe Marketing Cloud can help marketers embrace opportunities for personalized, relevant and real-time customer engagement across offline (direct mail, point of sale, call center) and digital (email, website, SMS, mobile apps, social networks, connected objects).
SYS-CON Events announced today that Catchpoint, a leading digital experience intelligence company, has been named “Silver Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Catchpoint Systems is a leading Digital Performance Analytics company that provides unparalleled insight into your customer-critical services to help you consistently deliver an amazing customer experience. Designed for digital business, C...
A look across the tech landscape at the disruptive technologies that are increasing in prominence and speculate as to which will be most impactful for communications – namely, AI and Cloud Computing. In his session at 20th Cloud Expo, Curtis Peterson, VP of Operations at RingCentral, will highlight the current challenges of these transformative technologies and share strategies for preparing your organization for these changes. This “view from the top” will outline the latest trends and developm...
When you focus on a journey from up-close, you look at your own technical and cultural history and how you changed it for the benefit of the customer. This was our starting point: too many integration issues, 13 SWP days and very long cycles. It was evident that in this fast-paced industry we could no longer afford this reality. We needed something that would take us beyond reducing the development lifecycles, CI and Agile methodologies. We made a fundamental difference, even changed our culture...
@ThingsExpo has been named the ‘Top WebRTC Influencer' by iTrend. iTrend processes millions of conversations, tweets, interactions, news articles, press releases, blog posts - and extract meaning form them and analyzes mobile and desktop software platforms used to communicate, various metadata (such as geo location), and automation tools. In overall placement, @ThingsExpo ranked as the number one ‘WebRTC Influencer' followed by @DevOpsSummit at 55th.
The 20th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held June 6-8, 2017, at the Javits Center in New York City, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Containers, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal ...