Financial Highlights
- Cash provided by operating activities of $106.0 million
- Adjusted funds flow (“AFF”)(a) of $96.8 million. AFF per share(a) was $0.58, an increase of 2% year-over-year, although gas prices have declined more than 30% since first quarter of 2022.
- Cash used in investing activities was $85.6 million
- Net capital expenditures(a) were $116.7 million
- Net income of $29.1 million or $0.18 per share
- Operating expenses remained low at $3.44/boe (a)
- Share repurchases continued with $47.3 million spent early in the first quarter for 5.4 million shares. In aggregate, Advantage repurchased 14.5% of our outstanding shares between April 2022 and January 2023.
Operational Highlights and Update
- Quarterly production of 58,144 boe/d (314.3 MMcf/d natural gas, 5,765 bbls/d liquids), a 5% increase compared to fourth quarter 2022, despite an unplanned outage on TC Energy’s NGTL system which limited production by more than 20% for 10 days
- Quarterly liquids production of 5,765 bbls/d (1,731 bbls/d oil, 1,157 bbls/d condensate, and 2,877 bbls/d NGLs), on-track to grow annually by more than 20% compared to 2022
- Well results at Glacier have delivered another step change in productivity, with average IP30 rates now approximately triple to the average rate of four years ago
- Carbon dioxide emissions at the Glacier Gas Plant have fallen approximately 15% as a result of the first phase of Entropy’s carbon capture and storage project. Execution of Phase 2 remains on hold pending functional Canadian carbon policy.
(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. |
Marketing Update
Advantage has hedged approximately 24% of its forecast natural gas production for summer 2023 and 6% for winter 2023/24. As part of our ongoing efforts to expand our natural gas export capacity and reduce concentration risk, Advantage successfully acquired 13 MMcf/d of Alliance Pipeline capacity for winter 2023/24.
Looking Forward
To maximize shareholder value, Advantage remains focused on growing AFF per share(a) through organic growth and share repurchases. Advantage’s three-year plan is to deliver annual production growth of approximately 10% with annual spending between $250 million and $300 million. All free cash flow(a) is planned to be returned to shareholders via share buybacks. In order to provide increased flexibility to this program, our net debt(a) target has been restated as a range, currently between $170 million and $230 million. The normal course issuer bid has been renewed and there are currently 165.2 million shares outstanding.
Advantage’s 2023 capital guidance remains between $250 million and $280 million. Development activities during the remainder of 2023 include expanded focus on liquids-weighted growth, including seven wells at Wembley, two at Progress and two at Valhalla, plus commissioning a new oil battery at the Progress production center.
Production guidance for 2023 remains between 59,000 boe/d and 62,500 boe/d, with recent well outperformance partially offset by unplanned third-party pipeline restrictions. A planned, major 14–day turnaround at the Glacier Gas Plant in May 2023 is expected to reduce second quarter average production by approximately 8%, quarter-over-quarter, before returning to growth in the second half of 2023.
With modern, low emissions-intensity assets and ownership of 85%(b) of Entropy, 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.
(b) |
Advantage currently owns 90% of Entropy’s common shares. Assuming Brookfield’s currently-held unsecured debentures are exchanged for commons shares according to the terms of the investment agreement, Advantage will own 85% of Entropy’s common shares. |
Below are complete tables showing financial and operating highlights.
Financial Highlights |
Three months ended March 31 |
|||
($000, except as otherwise indicated) |
2023 |
2022 |
||
Financial Statement Highlights |
||||
Natural gas and liquids sales |
145,999 |
177,569 |
||
Net income and comprehensive income |
29,114 |
19,496 |
||
per basic share (2) |
0.18 |
0.10 |
||
Basic weighted average shares (000) |
167,311 |
190,829 |
||
Cash provided by operating activities |
105,955 |
109,157 |
||
Cash used in financing activities |
(58,359) |
(50,769) |
||
Cash used in investing activities |
(85,590) |
(76,983) |
||
Other Financial Highlights |
||||
Adjusted funds flow (1) |
96,833 |
108,878 |
||
per boe (1) |
18.50 |
22.85 |
||
per basic share (1)(2) |
0.58 |
0.57 |
||
Net capital expenditures (1) |
116,700 |
86,014 |
||
Free cash flow (1) |
(19,867) |
22,864 |
||
Working capital deficit (1) |
(12,449) |
(19,115) |
||
Bank indebtedness |
167,260 |
117,558 |
||
Net debt (1) |
195,523 |
136,673 |
(1) |
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. |
(2) |
Based on basic weighted average shares outstanding. |
(b) |
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. |
Operating Highlights |
Three months ended March 31 |
|||
2023 |
2022 |
|||
Operating |
||||
Production |
||||
Crude oil (bbls/d) |
1,731 |
997 |
||
Condensate (bbls/d) |
1,157 |
1,057 |
||
NGLs (bbls/d) |
2,877 |
2,854 |
||
Total liquids production (bbls/d) |
5,765 |
4,908 |
||
Natural gas (Mcf/d) |
314,273 |
288,226 |
||
Total production (boe/d) |
58,144 |
52,946 |
||
Average realized prices (including realized derivatives)(2) |
||||
Natural gas ($/Mcf) |
4.42 |
5.04 |
||
Liquids ($/bbl) |
77.77 |
82.48 |
||
Operating Netback ($/boe) (1) |
||||
Natural gas and liquids sales |
27.90 |
37.26 |
||
Realized gains (losses) on derivatives |
3.44 |
(2.19) |
||
Processing and other income |
0.35 |
0.30 |
||
Net sales of purchased natural gas |
– |
0.01 |
||
Royalty expense |
(3.19) |
(3.42) |
||
Operating expense |
(3.44) |
(2.79) |
||
Transportation expense |
(4.33) |
(4.36) |
||
Operating netback (1) |
20.73 |
24.81 |
(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 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, 2023 together with the notes thereto, and Management’s Discussion and Analysis for the three months ended March 31, 2023 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.