Annual General Meeting May 27, 2015
2014… “A PIVOTAL YEAR FOR ADVANTAGE” 2
WHY PIVOTAL? We needed to demonstrate: Performance as a “Lean, Mean Montney Machine” Industry Leading Low Cost Structure Improved Well Performance & Capital Efficiencies Continued Execution Capability & Delivering Targets Sustainable Development Plan 3
WE ACHIEVED 2014 GOALS & MORE… Production Op. Costs Cash Costs Reserve Adds Debt/Cash Flow Capital Spending Well Results HSE 4
SUCCESSFULLY REPLACED CONVENTIONAL PRODUCTION THROUGH GLACIER MONTNEY GROWTH 40,000 Higher cost Non-Glacier 2014 “First Year as Pure Montney Producer. “ 35,000 production divested 2009-2013 Future Plan growth targeted to exceed Corporate history. 30,000 25,000 Boe/d 20,000 15,000 10,000 5,000 0 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E Non-Glacier Glacier 5
WITH AN INDUSTRY LEADING LOW COST STRUCTURE $6.00 $5.00 TOAL CASH COSTS $/mcfe Reduced Total Cash Costs due to : $4.00 Divestment of conventional assets Streamlined to focus only on Montney $3.00 $2.00 $0.84/mcfe $1.00 $0.00 2008 2009 2010 2011 2012 2013 2014 2015 Q1 6
POSITIONING ADVANTAGE AS THE LOWEST COST PRODUCER A $1 Cdn realized gas price will more than cover Advantage’s production costs, royalties, G&A & interest of $0.89/mcfe 7
WITH STRONG MARGINS ONE OF THE HIGHEST CASH NETBACK MARGINS IN SECTOR Royalties 4% Cash Flow Net Back 74% Operating Costs 11% G&A 5% Interest & Other 6% BASED ON Q1 2015 RESULTS 8
HIGHLY EFFICIENT GLACIER RESERVE ADDITIONS & RECYCLE RATIO Mcfe 2.50 ($1.03) 2P F&D Cost 2.00 ($0.89) Total Cash Cost 2014 2P F&D Cost ($/Mcfe) $1.03 3yr Avg F&D (1) 1.50 2.9x 3yr Avg Recycle Ratio (2) ($1.92) 1.00 Realized Sales Price $4.23 2014 0.50 +$2.31 Full Cycle Return per Mcfe 0.00 2008YE 2009YE 2010YE 2011YE 2012YE 2013YE 2014YE 2P F&D 3 year rolling average 2P F&D (1) Based on 2P Reserves including changes in Future Development Capital 9 (2) Based on glacier operating netbacks. Recycle Ratio = Operating Netbacks (2P) 2P F&D Cost
OUR DRILLING, COMPLETIONS & TECHNICAL EXPERTISE LED TO… 10
WELL “ OUTPERFORMANCE ” IN THE UPPER AND LOWER MONTNEY Recent wells completed with slick water and more frac stages are outperforming our Budget/Plan type curve assumptions - - - Budget Type Curve (IP30 6.9 mmcf/d & 6.9 Bcf) 11 Data: updated to May 2015
AND IN OUR LIQUIDS RICH MIDDLE MONTNEY WELLS… Middle Montney wells have sequentially New 2013 12-2 well started demonstrated improved productivity as production at restricted rate of 9.5 mmcf/d. Currently producing at we optimize frac design. Recent wells 1,000 psi flowing pressure exceeding Budget type curve Middle Montney Budget Type Curve (IP30 4.0 mmcf/d & 4.0 Bcf) 12 Data: updated to May, 2015
CREATED A CURRENT INVENTORY OF WELLS… NONE Required for Production Until July 2015 33 Wells drilled in 2014 program 22 Wells currently completed and tested (“production ready”) 6 Wells initially required to ramp to 183 mmcfe/d July 2015 (post gas plant expansion) 13
Improving Glacier Well Economics >30% ROR @ $2.50/mcf >70% ROR @ $3.50/mcf
2014 RESULTS LED TO $150 MILLION LOWER DEVELOPMENT PLAN CAPITAL WITH UNCHANGED GROWTH TARGETS (1) Production Profile 245 mmcfe/d 205 mmcfe/d 183 mmcfe/d Current production 130 to 135 mmcfe/d 2015 2016 2017 (2) Production Growth 30% 22% average growth per year 18% 18% (1) See Plan details in May 2015 Investor presentation - Appendix page 24 (2) Annual average production growth per Plan 2015 2016 2017 15
MAINTAINING BALANCE SHEET STRENGTH & SUSTAINABILITY (1) Total Debt to Trailing Cash Flow Sensitivity 2.1 2.1 1.9 1.9 1.8 1.8 1.5 1.2 0.8 2015 2016 2017 AECO $3.50/GJ AECO $3.00/GJ AECO $2.50/GJ 16 (1) Based on production growth & Plan details shown in May 2015 Investor presentation – Appendix page 24
STRONG CASH FLOW PER SHARE GROWTH 2017 (1) $1.40/share (1) 2016 $1.10/share (1) 2015 $0.79/share 17 (1) Based on production growth & Plan details shown in May 2015 Investor presentation – Appendix page 24. Aeco Cdn prices assumed at $2.53/GJ in 2015, $3.00/GJ in 2016, $3.30/GJ in 2017
AND GENERATING SURPLUS CASH FLOW IN 2017 Estimated Annual “Surplus Cash Flow” at 245 mmcfe/d: $90 million@$3.00/GJ $135 million@$3.50/GJ 18 (1) Based on Plan details in May 2015 Investor presentation – Appendix pg 24
Plan Requires ONLY 70 New wells By 2017 …that’s just the tip of OUR >1,000 well GLACIER Drill Inventory
WITH ADDITIONAL 100% OWNED MONTNEY LANDS TO DEVELOP IN FUTURE… PROGRESS Future GLACIER Developing VALHALLA Evaluating Additional 56.25 net sections of 100% Montney Lands at Valhalla, Wembley & Progress Providing WEMBLEY Future Potential Future 20 Created in AccuMap™, a product of IHS
…SUPPORTED BY 100% OWNED PLANT + PIPELINE INFRASTRUCTURE Preserves our LOW COST Glacier Gas Plant STRUCTURE and allows CONTROL OF OUR DESTINY Company Land Company Gas Plant TransCanada Pipeline Pembina Pipeline Advantage Pipeline Alliance Pipeline Created in AccuMap™, a product of IHS 21
Downside Price Protection & Financial Flexibility (1) CREDIT HEDGING FACILITY 2015 – 57% @ $3.86 $189 million of 2016 – 46% @ $3.69 $450 million CURRENTLY 2017 Q1 – 42% @ $3.65 AVAILABLE (1) AECO Cdn $/Mcf 22
Clear Vision Financial Strength Proven Expertise
THANK YOU TO OUR STAFF, BOARD AND SHAREHOLDERS 24
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