(TSX: AAV)
CALGARY,
AB, July 28, 2022 /CNW/ - Advantage
Energy Ltd. ("Advantage" or the "Corporation") is pleased to report
its second quarter 2022 results including record production, record
adjusted funds flow(a) and a surge in profitability,
while debt fell rapidly below our $200
million target. As a result, Advantage will accelerate its
return-of-capital efforts whereby all free cash flow will be
allocated to share buybacks.
Financial Highlights
- Record cash provided by operating activities of $157.4 million
- Record adjusted funds flow ("AFF")(a) of
$187.1 million or $0.98/share
- Free cash flow ("FCF")(a) of $139.5 million (75% of AFF)
- Cash used in investing activities was $80.7 million
- Net capital expenditures(a) were $47.6 million, including $11 million for pre-purchases of equipment to
moderate the impact of inflation
- Net income of $164.2 million or
$0.86/share
- Tax pools of $1.4 billion
continue to provide near-term cash tax deferrals
- Operating expenses remained low at $2.75/boe
- Bank indebtedness decreased $10.8
million to $106.8 million
- Net debt(a) decreased to $44.3 million, significantly below our debt
target of $200 million
- Total share buybacks of $47
million and 4.4 million shares during the quarter
Operational Highlights
- Record quarterly production of 60,374 boe/d (318 MMcf/d natural
gas, 7,378 bbls/d liquids), a 14% increase compared to the first
quarter 2022
- Record quarterly liquids production of 7,378 bbls/d (2,858
bbls/d oil, 1,128 bbls/d condensate, and 3,392 bbls/d NGLs), a 50%
increase compared to the first quarter 2022
- At Glacier, new wells significantly outperformed expectations
including the 16-36 well which achieved 300% payout after just 4
months of production
- Began commissioning the Entropy Modular Carbon Capture and
Storage project at Glacier, enroute to Advantage's 2025 net-zero
emissions target
- At Valhalla, the 14-33 two
well pad delivered total IP30 of 2,837 boe/d (11 MMcf/d natural
gas, 769 bbls/d condensate, and 231 bbls/d NGLs), further
validating the quality of this early-stage asset
- At Wembley, production
averaged 6,293 boe/d (15 MMcf/d natural gas, 2,664 bbls/d oil, and
1,135 bbls/d NGLs) after a successful six-well winter program
(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 made significant strides in isolating the
Corporation from relative AECO weakness, which continues to occur
due to expansion delays, maintenance disruptions and market
inefficiencies on TC Energy's NGTL system. Exposure to AECO
during the second quarter was 42% of production, falling to 32% for
the third quarter and about 25% next summer. The remainder of
Advantage production is delivered into markets outside of AECO
including Empress, Dawn, Chicago
and Ventura.
Advantage has approximately 44% of its forecast natural gas
production hedged for the remainder of this summer at an average of
US$4.23/MMbtu and 34% hedged for this
upcoming winter at US$4.98/MMbtu.
Looking Forward
In order to maximize shareholder returns, Advantage's priority
is growing adjusted funds flow per share(a). To
optimize growth of adjusted funds flow(a), Advantage is
targeting organic growth of between 10% and 15% per year in the
near-term. The capital program for the second half of 2022
will focus on liquids-rich growth which delivers outsized adjusted
funds flow(a) growth per unit of production. Free
cash flow(a) will be allocated to our share buyback
program, with 6 million common shares already purchased at a total
cost of $61 million since inception
on April 13, 2022.
Advantage's 2022 capital guidance has been increased to between
$210 million and $230 million (previously $200 million). This increase is the result
of adding 1.5 net new drills, continued inflation, and increased
frac intensity across all assets. Thanks to strong
operational execution, 2022 production guidance has been increased
to between 53,500 boe/d and 56,500 boe/d (previously 52,000 boe/d
to 55,000 boe/d) with liquids production between 5,800 bbls/d and
6,200 bbls/d (previously 5,400 bbls/d to 5,800 bbls/d).
As the world continues to adjust to violent geopolitical
instability and the closely related European energy crisis,
Advantage is proud to deliver clean, reliable, sustainable energy,
while contributing to a reduction in global emissions by displacing
high-carbon fuels.
Financial
Highlights
|
Three months
ended
June
30
|
Six months
ended
June
30
|
($000, except as
otherwise indicated)
|
2022
|
2021
|
2022
|
2021
|
Financial Statement
Highlights
|
|
|
|
|
Natural gas and liquids
sales
|
314,297
|
99,053
|
491,866
|
198,426
|
Net income and
comprehensive income
|
164,234
|
8,725
|
183,730
|
8,300
|
per basic
share (2)
|
0.86
|
0.04
|
0.96
|
0.04
|
Basic weighted average
shares (000)
|
190,415
|
190,501
|
190,621
|
189,313
|
Cash provided by
operating activities
|
157,439
|
57,134
|
266,596
|
108,700
|
Cash used in financing
activities
|
(37,556)
|
(21,480)
|
(88,325)
|
(29,028)
|
Cash used in investing
activities
|
(80,720)
|
(20,834)
|
(157,703)
|
(35,903)
|
Other Financial
Highlights
|
|
|
|
|
Adjusted funds flow
(1)
|
187,056
|
46,266
|
295,934
|
100,244
|
per boe
(1)
|
34.05
|
10.17
|
28.85
|
11.10
|
per basic share
(1)(2)
|
0.98
|
0.24
|
1.55
|
0.53
|
Net capital
expenditures (1)
|
47,570
|
22,482
|
133,584
|
59,667
|
Free cash flow
(1)
|
139,486
|
23,784
|
162,350
|
40,577
|
Working capital surplus
(1)
|
77,858
|
27,595
|
77,858
|
27,595
|
Bank
indebtedness
|
106,776
|
219,856
|
106,776
|
219,856
|
Net debt
(1)
|
44,301
|
192,261
|
44,301
|
192,261
|
(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 weighted
average shares outstanding.
|
Operating
Highlights
|
Three months
ended
June
30
|
Six months
ended
June
30
|
|
2022
|
2021
|
2022
|
2021
|
Operating
|
|
|
|
|
Production
|
|
|
|
|
Crude oil
(bbls/d)
|
2,858
|
1,163
|
1,933
|
1,278
|
Condensate
(bbls/d)
|
1,128
|
637
|
1,093
|
679
|
NGLs
(bbls/d)
|
3,392
|
2,490
|
3,124
|
2,492
|
Total
liquids production (bbls/d)
|
7,378
|
4,290
|
6,150
|
4,449
|
Natural
gas (Mcf/d)
|
317,976
|
274,328
|
303,183
|
272,804
|
Total
production (boe/d)
|
60,374
|
50,011
|
56,681
|
49,916
|
Average realized prices
(including realized derivatives)
|
|
|
|
|
Natural
gas ($/Mcf)
|
6.75
|
2.81
|
5.94
|
2.93
|
Liquids
($/bbl)
|
107.83
|
47.21
|
97.77
|
47.67
|
Operating Netback
($/boe)
|
|
|
|
|
Natural
gas and liquids sales
|
57.21
|
21.76
|
47.94
|
21.96
|
Realized
losses on derivatives
|
(8.50)
|
(2.12)
|
(5.57)
|
(1.50)
|
Processing
and other income
|
0.41
|
-
|
0.36
|
-
|
Net sales
of purchased natural gas
|
-
|
-
|
0.01
|
-
|
Royalty expense
|
(6.17)
|
(1.20)
|
(4.90)
|
(1.17)
|
Operating
expense
|
(2.75)
|
(2.21)
|
(2.77)
|
(2.33)
|
Transportation expense
|
(4.44)
|
(3.72)
|
(4.40)
|
(3.64)
|
Operating
netback (1)
|
35.76
|
12.51
|
30.67
|
13.32
|
(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 and six months ended June 30,
2022 together with the notes thereto, and Management's
Discussion and Analysis for the three and six months ended
June 30, 2022 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
and 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 Corporation's estimated tax pools and the
anticipated benefits to be derived therefrom; Advantage's
anticipated growth per year; that the Corporation will allocate its
free cash flow to its share buyback program; Advantage's net zero
emissions target; the anticipated benefits to be derived from
Advantage's hedging program; the focus of Advantage's capital
program for the second half of 2022; the Corporation's 2022 capital
program guidance; the Corporation's anticipated 2022 average
production; and the Corporation's expectations that it will
continue to deliver clean, reliable, sustainable energy, and
contribute to a reduction in global emissions by displacing
high-carbon fuels. 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, including as a result
of demand and supply effects resulting from the COVID-19 pandemic;
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; ability to access sufficient
capital from internal and external sources; the Corporation's
estimated tax pools may be less than anticipated; Advantage's
anticipated growth per year may be less than anticipated; that
growth in adjusted funds flow per share may not lead to increased
shareholder returns; that a capital program focused on oil-weighted
growth will deliver outsized adjusted funds flow growth per unit of
production; that the Corporation may not allocate its free cash
flow to its share buyback program; the risk that the Corporation
may not achieve its net zero emissions target in its anticipated
timeframe, or at all; and the Corporation may generate less free
cash flow than anticipated. 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
("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;
the impact and duration thereof that the COVID-19 pandemic will
have on (i) the demand for crude oil, NGLs and natural gas, (ii)
the supply chain including the Corporation's ability to obtain the
equipment and services it requires, and (iii) the Corporation's
ability to produce, transport and/or sell its crude oil, NGLs and
natural gas; 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 growth in adjusted funds
flow per share will lead to increased shareholder returns; that the
Corporation will allocate its free cash flow to its share buyback
program; that a capital program focused on oil-weighted growth will
deliver outsized adjusted funds flow growth per unit of production;
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 common shares pursuant to its share buyback program,
if any, and the level thereof is uncertain. Any decision to acquire
common shares of the Corporation pursuant to the share buyback
program 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 and satisfaction of the solvency tests imposed on the
Corporation under applicable corporate law. There can be no
assurance of the number of common shares of the Corporation that
the Corporation will acquire pursuant to its share buyback program,
if any, 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
news 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 estimated tax pools; the
Corporation's expected growth in adjusted funds flow; and
Advantage's 2022 capital program; 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.
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.
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.
Specified Financial Measures
Throughout this news 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. A reconciliation of the
most directly comparable financial measure has been provided
below:
|
Three months
ended
June
30
|
Six months
ended
June
30
|
($000)
|
2022
|
2021
|
2022
|
2021
|
Cash provided by
operating activities
|
157,439
|
57,134
|
266,596
|
108,700
|
Expenditures on decommissioning liability
|
103
|
328
|
554
|
342
|
Changes in
non-cash working capital
|
29,514
|
(11,196)
|
28,784
|
(8,798)
|
Adjusted funds
flow
|
187,056
|
46,266
|
295,934
|
100,244
|
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. A reconciliation of
the most directly comparable financial measure has been provided
below:
|
Three months
ended
June
30
|
Six months
ended
June
30
|
($000)
|
2022
|
2021
|
2022
|
2021
|
Cash used in investing
activities
|
80,720
|
20,834
|
157,703
|
35,903
|
Changes in
non-cash working capital
|
(33,150)
|
1,625
|
(24,124)
|
3,741
|
Project
funding received
|
-
|
23
|
5
|
20,023
|
Net capital
expenditures
|
47,570
|
22,482
|
133,584
|
59,667
|
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. A reconciliation of the most directly comparable financial
measure has been provided below:
|
Three months
ended
June
30
|
Six months
ended
June
30
|
($000)
|
2022
|
2021
|
2022
|
2021
|
Cash provided by
operating activities
|
157,439
|
57,134
|
266,596
|
108,700
|
Cash used in investing
activities
|
(80,720)
|
(20,834)
|
(157,703)
|
(35,903)
|
Changes in non-cash working
capital
|
62,664
|
(12,821)
|
52,908
|
(12,539)
|
Expenditures on decommissioning
liability
|
103
|
328
|
554
|
342
|
Project
funding received
|
-
|
(23)
|
(5)
|
(20,023)
|
Free cash
flow
|
139,486
|
23,784
|
162,350
|
40,577
|
Operating Netback
Operating netback is comprised of natural gas and liquids
sales, realized gains (losses) on derivatives, processing and other
income, net sales of purchased natural gas, 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
June
30
|
Six months
ended
June
30
|
($000)
|
2022
|
2021
|
2022
|
2021
|
Natural gas and liquids
sales
|
314,297
|
99,053
|
491,866
|
198,426
|
Realized losses on
derivatives
|
(46,679)
|
(9,626)
|
(57,122)
|
(13,527)
|
Processing and other
income
|
2,277
|
-
|
3,715
|
-
|
Net sales of purchased
natural gas
|
-
|
-
|
70
|
-
|
Royalty
expense
|
(33,924)
|
(5,456)
|
(50,221)
|
(10,543)
|
Operating
expense
|
(15,088)
|
(10,071)
|
(28,381)
|
(21,056)
|
Transportation
expense
|
(24,378)
|
(16,918)
|
(45,131)
|
(32,918)
|
Operating
netback
|
196,505
|
56,982
|
314,796
|
120,382
|
Non-GAAP Ratios
Adjusted Funds Flow per Share
Adjusted funds flow per share is derived by dividing adjusted
funds flow by the basic weighted average shares outstanding of the
Corporation. Management believes that adjusted funds flow per share
provides investors an indicator of funds generated from the
business that could be allocated to each shareholder's equity
position.
|
Three months
ended
June
30
|
Six months
ended
June
30
|
($000, except as
otherwise indicated)
|
2022
|
2021
|
2022
|
2021
|
Adjusted funds
flow
|
187,056
|
46,266
|
295,934
|
100,244
|
Weighted average shares
outstanding (000)
|
190,415
|
190,501
|
190,621
|
189,313
|
Adjusted funds flow per
share ($/share)
|
0.98
|
0.24
|
1.55
|
0.53
|
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
June
30
|
Six months
ended
June
30
|
($000, except as
otherwise indicated)
|
2022
|
2021
|
2022
|
2021
|
Adjusted funds
flow
|
187,056
|
46,266
|
295,934
|
100,244
|
|
|
|
|
|
Total production
(boe/d)
|
60,374
|
50,011
|
56,681
|
49,916
|
Days in
period
|
91
|
91
|
181
|
181
|
Total production
(boe)
|
5,494,034
|
4,551,001
|
10,259,261
|
9,034,796
|
Adjusted funds flow per
BOE ($/boe)
|
34.05
|
10.17
|
28.85
|
11.10
|
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
June
30
|
Six months
ended
June
30
|
($000, except as
otherwise indicated)
|
2022
|
2021
|
2022
|
2021
|
Operating
netback
|
196,505
|
56,982
|
314,796
|
120,382
|
|
|
|
|
|
Total production
(boe/d)
|
60,374
|
50,011
|
56,681
|
49,916
|
Days in
period
|
91
|
91
|
181
|
181
|
Total production
(boe)
|
5,494,034
|
4,551,001
|
10,259,261
|
9,034,796
|
Operating
netback per BOE ($/boe)
|
35.76
|
12.51
|
30.67
|
13.32
|
Payout Ratio
Payout ratio is calculated by dividing net capital
expenditures by adjusted funds flow. Advantage uses payout ratio 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.
|
Three months
ended
June
30
|
Six months
ended
June
30
|
($000, except as
otherwise indicated)
|
2022
|
2022
|
2022
|
2021
|
Net capital
expenditures
|
47,570
|
22,482
|
133,584
|
59,667
|
Adjusted funds
flow
|
187,056
|
46,266
|
295,934
|
100,244
|
Payout
ratio
|
0.3
|
0.5
|
0.5
|
0.6
|
Net Debt to Adjusted Funds Flow Ratio
Net debt to adjusted funds flow is calculated by dividing net
debt by adjusted fund flow for the previous four quarters. Net debt
to adjusted funds flow is a coverage ratio that provides Management
and users the ability to determine how long it would take the
Corporation to repay its bank indebtedness if it devoted all its
adjusted funds flow to debt repayment.
($000, except as
otherwise indicated)
|
|
|
June
30
2022
|
June
30
2021
|
Net Debt
|
|
|
44,301
|
192,261
|
Adjusted funds flow
(prior four quarters)
|
|
|
430,514
|
155,553
|
Net debt to adjusted
funds flow ratio
|
|
|
0.1
|
1.2
|
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. In 2022, the Corporation reclassified deferred
share units which were previously included in trade and other
accrued liabilities, to provisions and other liabilities.
Management determined that by reclassifying the deferred share
units to provisions and other liabilities, users can better assess
the Corporation's short-term operating requirements. Comparative
figures have been restated to reflect the reclassification.
A summary of working capital as at June 30, 2022 and December
31, 2021 is as follows:
|
|
June
30
2022
|
December
31
2021
|
Cash and cash
equivalents
|
|
45,806
|
25,238
|
Trade and other
receivables
|
|
106,934
|
54,769
|
Prepaid expenses and
deposits
|
|
6,912
|
3,483
|
Trade and other accrued
liabilities
|
|
(81,794)
|
(76,625)
|
Working capital
surplus
|
|
77,858
|
6,865
|
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. Comparative figures have been restated
to reflect the reclassification of deferred share units in trade
and other accrued liabilities which affects net debt.
A summary of the reconciliation of net debt as at
June 30, 2022 and December 31, 2021 is as follows:
|
|
June
30
2022
|
December
31
2021
|
Bank
indebtedness
|
|
106,776
|
167,345
|
Unsecured
debentures
|
|
15,383
|
-
|
Working capital
surplus deficit
|
|
(77,858)
|
(6,865)
|
Net
debt
|
|
44,301
|
160,480
|
Supplementary Financial Measures
Average Realized Prices
The Corporation discloses multiple average realized prices
within this press release. The determination of these prices are as
follows:
"Natural gas excluding derivatives" is comprised of natural
gas sales, as determined in accordance with IFRS, divided by the
Corporation's natural gas production.
"Natural gas including derivatives" is comprised of natural
gas sales, including realized gains (losses) on natural gas
derivatives, as determined in accordance with IFRS, divided by the
Corporation's natural gas production.
"Crude Oil" is comprised of crude oil sales, as determined in
accordance with IFRS, divided by the Corporation's crude oil
production.
"Condensate" is comprised of condensate sales, as determined
in accordance with IFRS, divided by the Corporation's condensate
production.
"NGLs" is comprised of NGLs sales, as determined in
accordance with IFRS, divided by the Corporation's NGLs
production.
"Total liquids excluding derivatives" is
comprised of crude oil, condensate and NGLs sales, as determined in
accordance with IFRS, divided by the Corporation's crude oil,
condensate and NGLs production.
"Total liquids including derivatives" is
comprised of crude oil, condensate and NGLs sales, including
realized gains (losses) on crude oil derivatives as determined in
accordance with IFRS, divided by the Corporation's crude oil,
condensate and NGLs production.
Dollars per BOE figures
Throughout this press release, the Corporation presents
certain financial figures, in accordance with IFRS, stated in
dollars per boe. These figures are determined by dividing the
applicable financial figure as prescribed under IFRS by the
Corporation's total production for the respective period. Below is
a list of figures which have been presented in this press release
in $ per boe:
- Cash finance expense per boe
- Depreciation expense per boe
- Finance expense per boe
- General and administrative expense per boe
- Natural gas and liquids sales per boe
- Operating expense per boe
- Realized losses on derivatives per boe
- Royalty expense per boe
- Net sales of purchased natural gas per boe
- Processing and other income per boe
- Share-based compensation expense per boe
- Transportation expense per boe
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
|
mmbtu
|
million British
thermal units
|
mmcfe/d
|
million cubic feet
equivalent 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.