(TSX: AAV)
CALGARY,
AB, April 25, 2024 /CNW/ - Advantage Energy
Ltd. ("Advantage" or the "Corporation") is pleased to report 2024
first quarter financial and operating results.
Advantage continued to execute on its three-year plan in the
first quarter, delivering exceptional well results and expanding
our Tier 1 drilling inventory. Since we exited 2023 with net debt
below our target range, we were able to enhance shareholder returns
in a period of weak commodity pricing with opportunistic,
counter-cyclical share repurchases.
2024 First Quarter Financial Highlights
- Net income of $23.2 million or
$0.14/share
- Cash provided by operating activities of $67.4 million
- Adjusted funds flow ("AFF")(a) of $65.4 million or $0.41/share ($67.0
million Advantage(b))
- Cash used in investing activities was $79.4 million while net capital
expenditures(a) were $80.1
million ($76.2 million
Advantage(b))
- Net debt(a) increased to $280.0 million ($233.1
million Advantage(b))
- Repurchased 2.4 million shares (1.5% of the outstanding shares
at December 31, 2023) at an average
share price of $8.86, returning
$21.3 million to shareholders
2024 First Quarter Operating Highlights
- First quarter average production of 66,020 boe/d (357.4 mmcf/d
natural gas, 6,452 bbls/d liquids), an increase of 14% (18% on a
per-share basis) over the first quarter of 2023.
- Liquids production of 6,452 bbls/d (2,630 bbls/d oil, 1,231
bbls/d condensate, and 2,591 bbls/d NGLs), an increase of 12% (17%
on a per-share basis) over the first quarter of 2023.
- Production through the Glacier Gas Plant achieved design
capacity of 425 mmcf/d for sustained periods during the quarter.
Advantage's operated infrastructure remained reliable through
extremely cold weather in January, though third-party outages
impacted production modestly.
- At Glacier, the most recent two wells delivered a total IP30 of
30.2 mmcf/d. Glacier well performance has continued to exceed
expectations, and as a result, three drilled and completed wells
are currently shut in due to the plant being at capacity.
- Currently drilling a three-well liquids-focused pad at
Wembley targeting two D4 wells and
one D3 well.
(a)
|
Specified financial
measure which is not a standardized measure under International
Financial Reporting Standards ("IFRS") and may not be comparable to
similar specified financial measures used by other entities. Please
see "Specified Financial Measures" for the composition of such
specified financial measure, an explanation of how such specified
financial measure provides useful information to a reader and the
purposes for which Management of Advantage uses the specified
financial measure, and where required, a reconciliation of the
specified financial measure to the most directly comparable IFRS
measure.
|
(b)
|
"Advantage" refers
to Advantage Energy Ltd. only and excludes its subsidiary Entropy
Inc.
|
Marketing Update
Advantage has hedged approximately 22% of its forecast natural
gas production for summer 2024 and has modest hedges through 2025.
Advantage only has approximately 8% exposure to AECO this summer
through a combination of fixed price hedges and physical market
diversification.
Looking Forward
Elevated North American gas supplies and an abnormally warm
winter have resulted in bottom-decile North American natural gas
prices, which are expected to continue through the summer.
Supply/demand balances are likely to improve substantially by
year-end 2024, driving strong contango in the futures curve.
In order to adjust to rapidly changing market dynamics,
Advantage continuously reviews its capital plan. Each well pad is
evaluated for expected shareholder returns at forward pricing,
ensuring all capital spending maximizes AFF per share. Significant
discretion remains in our 2024 capital program. Additionally, since
our well performance continues to exceed expectations, further
capital reductions may be possible without impacting our production
targets. Development of our Progress plant remains on track with
commissioning anticipated mid-year 2025.
To maximize shareholder value, Advantage remains focused on
growing AFF per share(a) while maintaining a net
debt(a) target of $200
million to $250 million.
Advantage's three-year plan is to deliver compounding AFF per share
growth via disciplined capital allocation, with annual spending
between $220 million and $300 million and production growth capped at 10%.
Based on current futures pricing, Advantage estimates capital
spending to be approximately 75% of AFF for 2024 and 2025, and all
free cash flow will be used for share repurchases.
With modern, low emissions-intensity assets, decades of top-tier
inventory, and the Glacier carbon capture and sequestration asset,
the Corporation continues to proudly deliver clean, reliable,
sustainable energy, contributing to a reduction in global emissions
by displacing high-carbon fuels. Advantage wishes to thank
our employees, Board of Directors and our shareholders for their
ongoing support.
Conference call
Advantage's management team will discuss first-quarter 2024
financial and operational results in a conference call and webcast
presentation on Friday, April 26,
2024 at 8:00 am Mountain Time
(10:00 am Eastern Time).
To participate by phone, please call 1-888-664-6383 (North
American toll-free) or 1-416-764-8650 (International). A recording
of the conference call will be available for replay by calling
1-888-390-0541 and entering the conference replay code 977926#. The
replay will be available until May 3,
2024.
To join the conference call without operator assistance, you may
enter your details and phone number at
https://emportal.ink/3PWpLkq to receive an instant automated
call back. You may also stream the event via webcast at
https://app.webinar.net/Rgk70L75NqO.
Below are complete tables showing financial and operating
highlights.
Financial
Highlights
|
|
Three months
ended
March
31
|
($000, except as
otherwise indicated)
|
|
|
2024
|
2023
|
Financial Statement
Highlights
|
|
|
|
|
Natural gas and liquids
sales
|
|
|
135,897
|
145,999
|
Net income and
comprehensive income(3)
|
|
|
23,163
|
29,719
|
per basic
share (2)(3)
|
|
|
0.14
|
0.18
|
per
diluted share(2)(3)
|
|
|
0.14
|
0.17
|
Basic weighted average
shares (000)
|
|
|
160,444
|
167,311
|
Diluted weighted
average shares (000)
|
|
|
164,129
|
174,328
|
Cash provided by
operating activities
|
|
|
67,374
|
105,955
|
Cash provided by (used
in) financing activities
|
|
|
11,883
|
(58,359)
|
Cash used in investing
activities
|
|
|
(79,427)
|
(85,590)
|
Other Financial
Highlights
|
|
|
|
|
Adjusted funds flow
(1)
|
|
|
65,393
|
96,833
|
per boe
(1)
|
|
|
10.88
|
18.50
|
per basic share
(1)(2)
|
|
|
0.41
|
0.58
|
per diluted share
(1)(2)
|
|
|
0.40
|
0.56
|
Net capital
expenditures (1)
|
|
|
80,134
|
116,700
|
Free cash flow
(negative) (1)
|
|
|
(14,741)
|
(19,867)
|
Working capital surplus
(deficit)(1)
|
|
|
10,408
|
(12,449)
|
Bank
indebtedness
|
|
|
238,578
|
167,260
|
Net debt
(1)
|
|
|
279,963
|
204,709
|
|
|
(1)
|
Specified financial
measure which is not a standardized measure under IFRS and may not
be comparable to similar specified financial measures used by other
entities. Please see "Specified Financial Measures" for the
composition of such specified financial measure, an explanation of
how such specified financial measure provides useful information to
a reader and the purposes for which Management of Advantage uses
the specified financial measure, and/or where required, a
reconciliation of the specified financial measure to the most
directly comparable IFRS measure.
|
(2)
|
Based on basic and
diluted weighted average shares outstanding.
|
(3)
|
Net income and
comprehensive income attributable to Advantage
Shareholders.
|
Operating
Highlights
|
|
Three months
ended
March
31
|
|
|
|
2024
|
2023
|
Operating
|
|
|
|
|
Production
|
|
|
|
|
Crude oil
(bbls/d)
|
|
|
2,630
|
1,731
|
Condensate
(bbls/d)
|
|
|
1,231
|
1,157
|
NGLs
(bbls/d)
|
|
|
2,591
|
2,877
|
Total
liquids (bbls/d)
|
|
|
6,452
|
5,765
|
Natural
gas (Mcf/d)
|
|
|
357,410
|
314,273
|
Total
production (boe/d)
|
|
|
66,020
|
58,144
|
Average realized prices
(including realized derivatives)
|
|
|
|
|
Natural
gas ($/Mcf)
|
|
|
2.86
|
4.42
|
Liquids
($/bbl)
|
|
|
80.21
|
77.77
|
Operating Netback
($/boe) (1)
|
|
|
|
|
Natural
gas and liquids sales
|
|
|
22.62
|
27.90
|
Realized
gains on derivatives
|
|
|
0.70
|
3.44
|
Processing
and other income
|
|
|
0.36
|
0.35
|
Royalty expense
|
|
|
(1.52)
|
(3.19)
|
Operating
expense
|
|
|
(4.17)
|
(3.44)
|
Transportation expense
|
|
|
(4.23)
|
(4.33)
|
Operating
netback
|
|
|
13.76
|
20.73
|
|
|
(1)
|
Specified financial
measure which is not a standardized measure under IFRS and may not
be comparable to similar specified financial measures used by other
entities. Please see "Specified Financial Measures" for the
composition of such specified financial measure, an explanation of
how such specified financial measure provides useful information to
a reader and the purposes for which Management of Advantage uses
the specified financial measure, and/or where required, a
reconciliation of the specified financial measure to the most
directly comparable IFRS measure.
|
The Corporation's unaudited consolidated financial statements
for the three months ended March 31,
2024 together with the notes thereto, and Management's
Discussion and Analysis for the three months ended March 31, 2024 have been filed on SEDAR+ and are
available on the Corporation's website at
https://www.advantageog.com/investors/financial-reports. Upon
request, Advantage will provide a hard copy of any financial
reports free of charge.
Forward-Looking Information Advisory
The information in this press release contains certain
forward-looking statements, including within the meaning of
applicable securities laws. 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 "anticipate", "continue",
"demonstrate", "expect", "may", "can", "will", "believe", "would"
and similar expressions and include statements relating to, among
other things, Advantage's position, strategy and development plans
and the benefits to be derived therefrom; the anticipated timing of
the completion of the Corporation's wells being drilled at Glacier
and Wembley and the anticipated
benefits to be derived therefrom; expectations that
supply/demand balances are likely to improve substantially by
year-end 2024; that the Corporation will review its capital program
to adjust to rapidly changing supply/demand dynamics; the
anticipated timing of when the development of the first phase of
the Corporation's Progress plant will be begin and be commissioned;
the Corporation's net debt target and its expectations that it
will grow its AFF per share while maintaining its net debt
target; the Corporation's three-year plan of delivering compounding
AFF per share growth via careful capital allocation, including its
anticipated production growth and capital spending and its
expectations that all free cash flow will be used for share
repurchases; the Corporation's natural gas hedging program, the
percentage of its natural gas production that is hedged and the
Corporation's expected exposure to AECO; and that the Corporation
will continue to deliver clean, reliable, sustainable energy and
contribute to a reduction in global emissions. 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,
industry and business 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; Advantage's success at acquisition, exploitation and
development of reserves; unexpected drilling results; changes in
commodity prices, currency exchange rates, net 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 risk that the Corporation may not have access to
sufficient capital from internal and external sources; the risk
that the Corporation's wells being drilled at Glacier and
Wembley may not be completed when
anticipated, or at all; the risk that market conditions may
not improve when anticipated, or at all; the risk that Advantage
may not review its capital program to adjust to rapidly changing
supply/demand dynamics; the risk that the Corporation may
not grow its AFF per share while maintaining its net debt target;
the risk that the Corporation's net debt may be greater than
anticipated; the risk that Advantage may not complete or commission
the Progress gas plant when anticipated, or at all; the risk that
the Corporation may not deliver compounding AFF per share growth
via careful capital allocation; the risk that the Corporation's
production may be less than anticipated; the risk the Corporation's
capital spending may be greater than anticipated; the risk that the
Corporation may not use all of its free cash flow to repurchase its
shares; the risk that the Corporation may not have sufficient
financial resources to acquire its shares pursuant to its share
buyback program in the future; and the risk that the Corporation
may not continue to deliver clean, reliable, sustainable energy, or
contribute to a reduction in global emissions. Many of these risks
and uncertainties and additional risk factors are described in the
Corporation's Annual Information Form which is available at
www.sedarplus.ca ("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;
effects of regulation by governmental agencies; current and future
commodity prices and royalty regimes; the Corporation's current and
future hedging program; future exchange rates; royalty rates;
future operating costs; future transportation costs and
availability of product transportation capacity; availability of
skilled labor; availability of drilling and related equipment;
timing and amount of net capital expenditures; the impact of
increasing competition; the price of crude oil and natural gas; the
number of new wells required to achieve the budget objectives; 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; that the Corporation will have sufficient
financial resources to repurchase its shares pursuant to its share
buyback program in the future; 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. Readers are cautioned that
the foregoing lists of factors are not exhaustive.
The future acquisition by the Corporation of the
Corporation's shares pursuant to a share buyback program, if any,
and the level thereof is uncertain. Any decision to implement a
share buyback program or acquire shares of the Corporation will be
subject to the discretion of the board of directors of the
Corporation and may depend on a variety of factors, including,
without limitation, the Corporation's business performance,
financial condition, financial requirements, growth plans, expected
capital requirements and other conditions existing at such future
time including, without limitation, contractual restrictions,
satisfaction of the solvency tests imposed on the Corporation under
applicable corporate law and receipt of regulatory approvals. There
can be no assurance that the Corporation will buyback any shares of
the Corporation in the future.
Management has included the above summary of assumptions and
risks related to forward-looking information above and in its
continuous disclosure filings on SEDAR+ in order to provide
shareholders with a more complete perspective on Advantage's future
operations and such information may not be appropriate for other
purposes. Advantage's actual results, performance or achievement
could differ materially from those expressed in, or implied by,
these forward-looking statements and, accordingly, no assurance can
be given that any of the events anticipated by the forward-looking
statements will transpire or occur, or if any of them do so, what
benefits that Advantage will derive there from. 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 information that may be
considered a financial outlook under applicable securities laws
about the Corporation's potential financial position, including,
but not limited to: the Corporation's net debt target and that the
Corporation will grow its AFF per share while maintaining its net
debt target; the Corporation's three-year plan of delivering
compounding AFF per share growth via careful capital allocation,
including its anticipated capital spending and its expectations
that all free cash flow will be used for share repurchases; all of
which are subject to numerous assumptions, risk factors,
limitations and qualifications, including those set forth in the
above paragraphs. The actual results of operations of the
Corporation and the resulting financial results will vary from the
amounts set forth in this press release and such variations may be
material. This information has been provided for illustration only
and with respect to future periods are based on budgets and
forecasts that are speculative and are subject to a variety of
contingencies and may not be appropriate for other purposes.
Accordingly, these estimates are not to be relied upon as
indicative of future results. Except as required by applicable
securities laws, the Corporation undertakes no obligation to update
such financial outlook. The financial outlook contained in this
press release was made as of the date of this press release and was
provided for the purpose of providing further information about the
Corporation's potential future business operations. Readers are
cautioned that the financial outlook contained in this press
release is not conclusive and is subject to change.
Oil and Gas Information
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 short-term production
rates, such as IP30, 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. Additionally, such rates may also include recovered "load
oil" fluids used in well completion stimulation. While encouraging,
readers are cautioned not to place reliance on such rates in
calculating the aggregate production of Advantage.
This press release contains several oil and gas metrics,
including, operating netback, which is described below under
"Specified Financial Measures". Such oil and gas metrics have been
prepared by management and 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. Management uses these oil and gas
metrics for its own performance measurements and to provide
shareholders with measures to compare the Corporation'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.
Specified Financial Measures
Throughout this press release, Advantage discloses certain
measures to analyze financial performance, financial position, and
cash flow. These non-GAAP and other financial measures do not have
any standardized meaning prescribed under IFRS and therefore may
not be comparable to similar measures presented by other entities.
The non-GAAP and other financial measures should not be considered
to be more meaningful than GAAP measures which are determined in
accordance with IFRS, such as net income (loss) and comprehensive
income (loss), cash provided by operating activities, and cash used
in investing activities, as indicators of Advantage's
performance.
Non-GAAP Financial Measures
Adjusted Funds Flow
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, support future capital expenditures plans, or
return capital to shareholders. 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 our low liability. Additionally, the
Corporation discloses adjusted funds flow by legal entity
(Advantage and Entropy) to allow users to assess the performance of
each entity on a standalone basis. A reconciliation of the most
directly comparable financial measure by legal entity has been
provided below:
|
|
Three months
ended
March 31,
2024
|
($000)
|
|
Advantage
|
Entropy
|
Consolidated
|
Cash provided by
operating activities
|
|
69,284
|
(1,910)
|
67,374
|
Expenditures on decommissioning liability
|
|
67
|
-
|
67
|
Changes in
non-cash working capital
|
|
(2,320)
|
272
|
(2,048)
|
Adjusted funds
flow
|
|
67,031
|
(1,638)
|
65,393
|
|
|
Three months
ended
March 31,
2023
|
($000)
|
|
Advantage
|
Entropy
|
Consolidated
|
Cash provided by
operating activities
|
|
107,400
|
(1,445)
|
105,955
|
Expenditures on decommissioning liability
|
|
453
|
-
|
453
|
Changes in
non-cash working capital
|
|
(9,682)
|
107
|
(9,575)
|
Adjusted funds
flow
|
|
98,171
|
(1,338)
|
96,833
|
Net Capital Expenditures
Net capital expenditures include total capital expenditures
related to property, plant and equipment, exploration and
evaluation assets and intangible assets. Management considers this
measure reflective of actual capital activity for the period as it
excludes changes in working capital related to other periods and
excludes cash receipts on government grants. Additionally, the
Corporation discloses net capital expenditures by legal entity
(Advantage and Entropy) to allow users to assess the performance of
each entity on a standalone basis. A reconciliation of the most
directly comparable financial measure by legal entity has been
provided below:
|
|
Three months
ended
March 31,
2024
|
($000)
|
|
Advantage
|
Entropy
|
Consolidated
|
Cash used in investing
activities
|
|
75,481
|
3,946
|
79,427
|
Changes in
non-cash working capital
|
|
695
|
12
|
707
|
Net capital
expenditures
|
|
76,176
|
3,958
|
80,134
|
|
|
Three months
ended
March 31,
2023
|
($000)
|
|
Advantage
|
Entropy
|
Consolidated
|
Cash used in investing
activities
|
|
82,827
|
2,763
|
85,590
|
Changes in
non-cash working capital
|
|
30,517
|
593
|
31,110
|
Net capital
expenditures
|
|
113,344
|
3,356
|
116,700
|
Free Cash Flow
Advantage computes free cash flow as adjusted funds flow less
net capital expenditures. Advantage uses free cash flow as an
indicator of the efficiency and liquidity of Advantage's business
by measuring its cash available after net capital expenditures to
settle outstanding debt and obligations and potentially return
capital to shareholders by paying dividends or buying back common
shares. Additionally, the Corporation discloses free cash flow by
legal entity (Advantage and Entropy) to allow users to assess the
performance of each entity on a standalone basis. A reconciliation
of the most directly comparable financial measure by legal entity
has been provided below:
|
|
Three months
ended
March 31,
2024
|
($000)
|
|
Advantage
|
Entropy
|
Consolidated
|
Cash provided by
operating activities
|
|
69,284
|
(1,910)
|
67,374
|
Cash used in investing
activities
|
|
(75,481)
|
(3,946)
|
(79,427)
|
Changes in non-cash working
capital
|
|
(3,015)
|
260
|
(2,755)
|
Expenditures on decommissioning
liability
|
|
67
|
-
|
67
|
Free cash flow
(negative)
|
|
(9,145)
|
(5,596)
|
(14,741)
|
|
|
Three months
ended
March 31,
2023
|
($000)
|
|
Advantage
|
Entropy
|
Consolidated
|
Cash provided by
operating activities
|
|
107,400
|
(1,445)
|
105,955
|
Cash used in investing
activities
|
|
(82,827)
|
(2,763)
|
(85,590)
|
Changes in non-cash working
capital
|
|
(40,199)
|
(486)
|
(40,685)
|
Expenditures on decommissioning
liability
|
|
453
|
-
|
453
|
Free cash flow
(negative)
|
|
(15,173)
|
(4,694)
|
(19,867)
|
Operating Netback
Operating netback is comprised of sales revenue and realized
gains (losses) on derivatives, net of expenses resulting from field
operations, including royalty expense, operating expense and
transportation expense. Operating netback provides Management and
users with a measure to compare the profitability of field
operations between companies, development areas and specific wells.
The composition of operating netback is as follows:
|
Three months
ended
March
31
|
($000)
|
2024
|
2023
|
Natural gas and liquids
sales
|
135,897
|
145,999
|
Realized gains on
derivatives
|
4,206
|
18,025
|
Processing and other
income
|
2,184
|
1,820
|
Royalty
expense
|
(9,135)
|
(16,702)
|
Operating
expense
|
(25,082)
|
(18,003)
|
Transportation
expense
|
(25,397)
|
(22,647)
|
Operating
netback
|
82,673
|
108,492
|
Non-GAAP Ratios
Adjusted Funds Flow per basic share and diluted share
Adjusted funds flow per basic share and diluted share is
derived by dividing adjusted funds flow by the basic and diluted
weighted average shares outstanding of the Corporation. Management
believes that adjusted funds flow per basic share and diluted share
provides investors an indicator of funds generated from the
business that could be allocated to each shareholder's equity
position.
|
Three months
ended
March
31
|
($000, except as
otherwise indicated)
|
2024
|
2023
|
Adjusted funds
flow
|
65,393
|
96,833
|
Weighted basic average
shares outstanding (000)
|
160,444
|
167,311
|
Weighted diluted
average shares outstanding (000)
|
164,129
|
194,328
|
Adjusted funds flow per
basic share ($/share)
|
0.41
|
0.58
|
Adjusted funds flow per
diluted share ($/share)
|
0.40
|
0.56
|
Adjusted Funds Flow per boe
Adjusted funds flow per boe is derived by dividing adjusted
funds flow by the total production in boe for the reporting
period. Adjusted funds flow per boe is a useful ratio that
allows users to compare the Corporation's adjusted funds flow
against other competitor corporations with different rates of
production.
|
Three months
ended
March
31
|
($000, except as
otherwise indicated)
|
2024
|
2023
|
Adjusted funds
flow
|
65,393
|
96,833
|
|
|
|
Total production
(boe/d)
|
66,020
|
58,144
|
Days in
period
|
91
|
90
|
Total production
(boe)
|
6,007,820
|
5,232,960
|
Adjusted funds flow per
boe ($/boe)
|
10.88
|
18.50
|
Operating netback per boe
Operating netback per boe is derived by dividing each
component of the operating netback by the total production in boe
for the reporting period. Operating netback per boe provides
Management and users with a measure to compare the profitability of
field operations between companies, development areas and specific
wells against other competitor corporations with different rates of
production.
|
Three months
ended
March
31
|
($000, except as
otherwise indicated)
|
2024
|
2023
|
Operating
netback
|
82,673
|
108,492
|
Total production
(boe/d)
|
66,020
|
58,144
|
Days in
period
|
91
|
90
|
Total production
(boe)
|
6,007,820
|
5,232,960
|
Operating
netback per boe ($/boe)
|
13.76
|
20.73
|
Capital Management Measures
Working Capital
Working capital is a capital management financial measure
that provides Management and users with a measure of the
Corporation's short-term operating liquidity. By excluding short
term derivatives and the current portion of provision and other
liabilities, Management and users can determine if the
Corporation's energy operations are sufficient to cover the
short-term operating requirements. Working capital is not a
standardized measure and therefore may not be comparable with the
calculation of similar measures by other entities.
A summary of working capital as at March 31, 2024 and December 31 2023 is as follows:
|
March
31
2024
|
|
December
31
2023
|
|
Cash and cash
equivalents
|
|
19,091
|
19,261
|
|
Trade and other
receivables
|
51,499
|
|
53,378
|
|
Prepaid expenses and
deposits
|
14,641
|
16,618
|
|
Trade and other accrued
liabilities
|
|
(74,823)
|
(70,606)
|
|
Working capital
surplus
|
|
10,408
|
18,651
|
|
|
|
|
|
|
|
Net Debt
Net debt is a capital management financial measure that
provides Management and users with a measure to assess the
Corporation's liquidity. Net debt is not a standardized measure and
therefore may not be comparable with the calculation of similar
measures by other entities. Additionally, the Corporation discloses
net debt by legal entity (Advantage and Entropy) to allow users to
assess the performance of each entity on a standalone
basis.
Previously, the Corporation included the unsecured
debentures, excluding the unsecured debentures derivative liability
in the composition of net debt. Effective March 31, 2024, the Corporation revised the
composition of net debt to include the aggregate principal balance
of unsecured debentures, which provides users the balance that is
either due at the end of the term, or that may be converted into
common shares of Entropy. Comparative figures have been restated to
reflect the reclassification.
A summary of the reconciliation of net debt as at
March 31, 2024 and December 31, 2023 is as follows:
|
|
March 31,
2024
|
($000)
|
Advantage
|
Entropy
|
Consolidated
|
Bank
indebtedness
|
238,578
|
-
|
238,578
|
Aggregate principal
balance of unsecured debentures
|
-
|
51,793
|
51,793
|
Working capital
surplus
|
(5,451)
|
(4,957)
|
(10,408)
|
Net debt
|
233,127
|
46,836
|
279,963
|
|
|
December 31,
2023
|
($000)
|
Advantage
|
Entropy
|
Consolidated
|
Bank
indebtedness
|
212,854
|
-
|
212,854
|
Aggregate principal
balance of unsecured debentures
|
-
|
40,807
|
40,807
|
Working capital
surplus
|
(16,912)
|
(1,739)
|
(18,651)
|
Net debt
|
195,942
|
39,068
|
235,010
|
Supplementary financial measures
"Average realized prices (including realized derivatives)
natural gas" is comprised of natural gas sales, as determined in
accordance with IFRS, divided by the Corporation's natural gas
production.
"Average realized prices (including realized derivatives)
liquids" is comprised of crude oil, condensate and NGL's sales, as
determined in accordance with IFRS, divided by the Corporation's
crude oil, condensate and NGL's production.
"Natural gas and liquids sales per boe" is comprised of
natural gas sales and liquids sales, as determined in accordance
with IFRS, divided by the Corporation's total natural gas and
liquids production.
"Operating expense per boe" is comprised of operating
expense, as determined in accordance with IFRS, divided by the
Corporation's total production.
"Processing and other income per boe" is comprised of
processing and other income, as determined in accordance with IFRS,
divided by the Corporation's total production.
"Realized gains on derivatives per boe" is comprised of
realized losses on derivatives, as determined in accordance with
IFRS, divided by the Corporation's total production.
"Royalty expense per boe" is comprised of royalty expense, as
determined in accordance with IFRS, divided by the Corporation's
total production.
"Transportation expense per boe" is comprised of
transportation expense, as determined in accordance with IFRS,
divided by the Corporation's total production.
The following abbreviations used in this press release
have the meanings set forth below:
bbl
|
one
barrel
|
bbls
|
barrels
|
bbls/d
|
barrels per
day
|
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
|
mcf
|
thousand cubic
feet
|
mcf/d
|
thousand cubic feet
per day
|
mcfe
|
thousand cubic feet
equivalent on the basis of six thousand cubic feet of natural gas
for one barrel of oil or NGLs
|
mmcf
|
million cubic
feet
|
mmcf/d
|
million cubic feet
per day
|
Liquids
|
Includes NGLs,
condensate and crude oil
|
NGLs and
condensate
|
Natural Gas Liquids
as defined in National Instrument 51-101
|
Natural
Gas
|
Conventional Natural
Gas as defined in National Instrument 51-101
|
Crude
Oil
|
Light Crude Oil and
Medium Crude Oil as defined in National Instrument
51-101
|
IP30
|
Average initial
production rate over 30 consecutive days
|
SOURCE Advantage Energy Ltd.