CALGARY, AB, July 6, 2022 /CNW/ – Advantage Energy Ltd. (“Advantage” or the “Corporation”) is pleased to provide an operational update for the second quarter of 2022 and an outlook through 2023.
As a result of continued outperformance at Glacier, Wembley and Valhalla, production during the second quarter of 2022 increased to average approximately 60,000 boe/d (89% natural gas, 5% natural gas liquids and 6% light and medium crude oil). This outperformance resulted from several new wells being delivered ahead of schedule and new well productivity exceeding forecasts. Net capital expenditures(a) for the second quarter of 2022 are estimated to be $46 million, including casing and other equipment that was pre-purchased for future quarters to reduce costs and secure supply given the current inflationary environment.
Advantage is pleased to announce that the Glacier Gas Plant will be expanded to 425 mmcf/d from the current capacity of 400 mmcf/d. One inlet compressor will be added early in the second quarter of 2023 at a cost of approximately $12 million. By virtue of this highly efficient expansion, the existing processing capacity will be maximized at a very low incremental cost per unit of production. At no additional cost to Advantage, the new compressor will be equipped with Integrated Carbon Capture and Storage (“iCCSTM“), developed and funded by Entropy Inc., which will be the first deployment of this technology in the world. While this expansion will extend Advantage’s runway for production growth, it will also be a positive step towards our target of achieving net-zero emissions by 2025.
The Corporation has completed its semi-annual redetermination of its credit facilities effective June 17, 2022, with no change to the $350 million borrowing base. As a part of this process, the lending syndicate has removed fixed limits on share buybacks (previously $50 million) and replaced them with a liquidity-based limit that is significantly higher than Advantage’s current net debt(a) target of $200 million.
In order to maximize shareholder returns, Advantage’s priority is growing adjusted funds flow (“AFF”) per share(a), through organic growth and share buybacks. The quantum of share buybacks will be approximately equal to free cash flow(a) plus the amount required to achieve our $200 million net debt(a) target.
The capital program for the second half of 2022 is focused on oil-weighted growth which delivers outsized AFF(a) per unit of production. Strong production results from the first half of 2022 are expected to result in annual production levels approaching the high end of our 2022 guidance range (52,000 to 55,000 boe/d).
Although the budget has not been set for 2023, Advantage intends to deliver organic growth of between 10% and 15%, and capital spending is expected to be between $225 million and $275 million, dependent upon the commodity price environment. Advantage’s formal 2023 budget will be announced late in 2022.
With modern, low emissions-intensity assets, the commissioning of Entropy Inc.’s first carbon capture and storage project at Glacier, and a plan to achieve net-zero emissions by 2025, the Corporation is proud to deliver clean, reliable, sustainable energy, while contributing to a reduction in global emissions by displacing high-carbon fuels.
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