Advantage Energy Ltd. ("Advantage" or the "Corporation"), is pleased to provide updated guidance(a) for 2024 and an updated outlook(a) for 2025.
Highlights of 2024 include:
At Glacier, our gas-focused program has been reduced to 13 wells (previously 18), in response to continued outperformance of our recent wells and to avoid increasing supply while 2024 gas prices remain suppressed.
At Wembley, our oil-focused program remains unchanged at 3 wells.
On the recently acquired assets, the Charlie Lake oil program remains at 8 net wells.
As a result of the reduced gas drilling program, our 2024 capital guidance has been revised lower by $20 million to between $260 million and $290 million. Correspondingly, 2024 free cash flow ("FCF")(b) is expected to increase by approximately $20 million.
Production guidance for 2024 has been revised to between 70,000 and 73,000 boe/d; however, the reduction is entirely from natural gas and there is no change to liquids guidance (13% of corporate production).
Production from the recently acquired assets outperformed expectations during the second quarter of 2024, averaging approximately 15,000 boe/d (42 mmcf/d natural gas, 7,160 bbls/d oil, and 910 bbls/d NGLs).
Outlook for 2025 and Beyond
Through 2025, Advantage will focus on maximizing FCF to accelerate de-levering prior to reverting to a focus on share buybacks. Outlook for 2025 includes the following:
Capital spending is expected to be approximately $300 million, reflecting about 60% of adjusted funds flow ("AFF")(b).
Phase 1 of the Progress Gas Plant remains on-track to be commissioned in the second quarter of 2025.
Production growth is expected to be 16%. The reduced gas drilling program in 2024 is not expected to have a material impact to 2025 production.
AFF per share(b) is expected to grow by approximately 70% versus 2024.
Net debt(b) is expected to approach $450 million by year end.
Strong focus on integration of the acquired assets and realization of cash synergies.
Pursuing sales of smaller non-core/non-producing assets.
Beyond 2025, Advantage's production is expected to maintain a similar pace of growth (up to 10% annually) while spending approximately $300 million per year. However, FCF is anticipated to increase disproportionately due to higher average operating netbacks and our increased gas processing capacity, which will result in the deferral of the Progress Gas Plant Phase 2 expansion (approximately $100 million), previously planned for 2026 and 2027.
Advantage's long-term focus on maximizing AFF per share(b) growth remains unchanged. As a result of the asset acquisition, Advantage now expects to exceed our per-share growth targets, so our strategy will temporarily shift towards moderating organic growth spending and maximizing the pace of de-levering. Based on the larger production base and structurally higher AFF levels, we have adjusted our near-term net debt target to $450 million (0.9x net debt to trailing AFF ratio(b) in 2025 at forward strip pricing).
Advantage would like to thank our board of directors and our shareholders for their continued support as the Corporation continuously adapts to the dynamic energy markets.