“ Record Low Reserve Addition Costs of PDP $0.84/Mcfe in 2016 Tops Off A Stellar Year of Operating & Financial Results. Development Plan Growth to 316 mmcfe/d (52,670 boe/d) Underway" Investor Presentation TSX / NYSE: AAV April 2017
ADVANTAGE AT A GLANCE TSX, NYSE: AAV TSX 52-week trading range $6.41 - $10.33 Shares Outstanding (basic) 184.7 million 16% Production Growth Annual Production - 2017 Budget 236 mmcfe/d (39,330 boe/d) Market Capitalization @ April 5, 2017 $1.7 billion As of December 31, 2016: Bank Debt (38% drawn on $400 million Credit Facility) $153 million Total Debt (including working capital deficit) $159 million 1.0x Year-end 2016 Total Debt /Trailing Cash Flow View of Glacier Plant Process Train – approximately 1,250 feet long 2
OUR STRATEGY – LONG TERM PROFITABLE & SUSTAINABLE GROWTH (2) 2016 PDP F+D $0.84/mcfe (2) 1P F+D $0.25/mcfe Strong Balance (2) 3 Year 2P F+D $0.46/mcfe Sheet 2017E Total corporate cash 1.0x D/CF 2016 (3) Operating & costs $0.91/mcfe Hedged to Protect Financial Flexibility Future Cash Flow (1) Own & Operate 100% Plant & Industry Leading Infrastructure N.A. Low Cost Gas Supply World Class Montney Asset 1) % of estimated annual future production net of royalties, 45% @ $3.19 Cdn/mcf 2017, 22% @ $3.02 Cdn/mcf 2018 & 18% @ $3.00 Cdn/mcf Q1 2019 2) Finding & Development Cost (“F+D”) including change in Future Development Capital for proved development producing (“PDP”), Proved (“1P”) and Proved Plus Probable (“2P”) reserves based on Sproule 2016 year -end reserves report 3 3) Total corporate cash cost includes royalties, operating costs, gas and liquids transportation, G&A and financing costs
LAST 3 YEARS - A SOLID TRACK RECORD OF VALUE GENERATION THREE-YEAR TOTAL SHAREHOLDER 2016 RETURN ON CAPITAL RETURN (Dec. 31/13 to Dec. 31/16) $/mcfe 98% Natural gas and liquids sales price $2.89 including realized hedging gains (1) Total Corporate Cash Costs $(0.66) (2) Total Capital Costs, PDP F&D $(0.84) 23% 2016 Full Cycle Netback $1.39 2016 Annual Return on Capital 48% 3 Year Average Annual Return on Capital 29% -11% -18% Advantage Advantage Oil & S&P/TSX Composite S&P/TSX Capped S&P/TSX Oil & Gas Oil & Gas Ltd. Gas Ltd. Index Energy Index Exploration & (Total Return) (Total Return) Production GICS Sub 1) Corporate cash costs include natural gas transportation fees as of Nov. 1, 2016. Prior Industry to, fees deducted off revenue as per contractual terms. (Total Return) 2) PDP F&D cost based on Sproule year-end 2016 Reserve Report 4
2017 BUDGET FUNDED THROUGH CASH FLOW INCLUDING UPSIZED GLACIER GAS PLANT EXPANSION TO 400 MMCF/D ($ million) 2017 Highlights (1) $205 $210 16% Annual Production Growth Drill 21 wells $37 23% Cash Flow Per Share Growth (2) 236 MMcfe/d (39,330 Boe/d) Annual Average Complete 24 Production wells $71 $0.91/mcf Total Cash Costs including natural gas transportation of $0.28/mcf Plant Expansion Upsized Glacier Gas Plant Expansion to 400 $71 mmcf/d Other Facilities $12 100% Firm Gas Sales Transportation Service Well Tie-in $9 Land & Other $5 2017 Cash Flow (2) 2017 Capital Estimate 2017 Capital Estimate 2017 Cash Flow… Year-end 2017 Total Debt/Cash Flow 0.7x AECO $2.95/Mcf (1) Midpoint of 2017 Guidance Range. 5 (2) Based on an average AECO Cdn $2.95/mcf ($2.80/GJ) natural gas price for 2017 and Advantage’s current hedge positions
PRODUCTIVITY & INFRASTRUCTURE SUPPORTING 2017 THROUGH 2019 GROWTH Surplus Completed Well Productivity IP30 Average (1) >75 mmcf/d This group of wells meets our 2017 production requirements Uncompleted Standing Wells (2) contribute to 2018 growth 17 wells 150 mmcf/d Plant Expansion to 400 mmcf/d in progress >180 mmcf/d Additional Sales Gas Pipeline Capacity, Total 400 mmcf/d capacity 308 mmcf/d Total Firm Natural Gas Transportation Service by 2019 Well Pads Planned to 2019 Glacier Gas Plant 100% working interest Current Capacity 250 mmcf/d 6 (1) As of March 31, 2017. Management estimated initial 30 day average well production rate (IP30). (2) As of March 31, 2017
ADVANTAGE’S 2017 THROUGH 2019 GROWTH 2017 thru 2019 Highlights Post 2019 400 mmcfe/d 56% Production Growth (2017 thru 2019) (66,670 boe/d) $625 Million Capital Investment $735 Million Cash Flow @ Average AECO Cdn $2.95/mcf ($2.80/GJ) 0.2x YE 2019 Total Debt/Trailing Cash Flow 2017 thru 2019 Q4 221 to 325 mmcfe/d 2008 to 2016 0-221 mmcfe/d 7
ADVANTAGE GROWTH PLAN 2017 THROUGH 2019 (1) Annual Average Production Capital Spending 16% Cumulative $625 million CAGR (2) (mmcfe/d) ($ millions) 2017-2019 16% 316 15% $210 $210 $205 272 16% 236 203 $128 2016 2017 Budget 2018E 2019E 2016 2017 Budget 2018E 2019E ALL-IN Capital Efficiency (3) Cash Flow per Share Cumulative Cash Flow $11,600/boe/d ($/boe/d) $735 million 2017-2019 Average 2017-2019 $13,000 22% $1.55 $11,800 12% $1.27 23% $10,000 $1.13 $0.92 $7,330 2016 2017 Budget 2018E 2019E 2016 2017 Budget 2018E 2019E Notes : (1) See Appendix pg. 26 for Plan details 8 (2) Compound annual growth rate. (3) Capital Efficiency calculated using 30% per annum decline and includes total annual capital expenditures
CASH SURPLUS REDUCES TOTAL DEBT TO CASH FLOW Year-end Total Debt to Cash Flow (1) Cumulative Cash Surplus (1) Ratio @$2.95/MCF ($2.80/GJ) $80 $110 million surplus 2017-2019 1.0 0.7 $39 0.5 $25 0.2 $5 2016 2017 Budget 2018E 2019E 2016 2017 Budget 2018E 2019E Note: (1) Based on Advantage 2017 Budget and 2018 & 2019 Development Plan estimates assuming an AECO natural gas price of Cdn 9 $2.95/mcf ($2.80/GJ) & the corporation’s hedging positions
HEDGING, TRANSPORTATION AND MARKETS Current Hedges TCPL Transportation Service 100% firm service secured thru 2019. Advantage’s surplus plant & well Production (1) Average AECO capacity provides flexibility to capture high pipeline flow periods. Period Hedged (net) CDN Fixed Price 2017 45% $3.19/mcf 2018 22% $3.02/mcf 2019 Q1 18% $3.00/mcf • Fixed price removes commodity price and basis volatility 2017 2018 2019 2020 • Guarantees cash flow for hedged volumes Sales Gas Target Firm Contracted Service Pending Request IT Service Estimate Alliance Connection Option Market Diversification TCPL • 57% AECO exposure – 2017 Alliance • Henry Hub - 25,000 mcf/d at U.S. Assessing Alliance meter station $0.85/mcf basis 2018 to 2019 connection • Henry Hub - 25,000 mcf/d at U.S. Glacier $0.90/mcf basis 2019 gas plant • Evaluating N.A. market options TCPL Meter Station Possible Alliance Meter Station 10 (1) % of estimated annual future production, net of royalties
DEVELOPMENT PLAN NATURAL GAS PRICE SENSITIVITY – CFPS & D/CF Cash Flow per Share Total Debt to Trailing Cash Sensitivity (1) Flow Sensitivity (1) $1.86 1.4 1.3 AECO $1.58 1.2 $1.49 $2.00/mcf 1.0 0.9 $1.32 AECO 0.8 $2.50/mcf $1.20 $1.30 0.7 0.6 $1.12 0.5 AECO $1.12 $3.00/mcf $1.03 $1.02 $0.94 AECO $0.92 0.3 0.1 $3.50/mcf - 2017 2018 2019 2017 2018 2019 (1) Includes Advantage’s current hedge positions 11
MAINTENANCE CAPITAL AND SURPLUS CASH FLOW SENSITIVITY ILLUSTRATIVE AT 325 MMCFE/D 3 Year Cumulative 3 Year Cumulative (NO HEDGING INCLUDED) Surplus Surplus $525 million $690 million $360 Million $305 Million “Surplus Cash Flow Above $1.45/mcf ” Cash Cash Surplus Surplus $175 million $230 million per Year per Year $130 Million Based on average well $130 million type curve (1) $110 Based million on top quartile type well (2) Mantenance Capital Cash Flow at AECO Cash Flow at AECO Cash Flow at AECO at 325 mmcfe/d Q4 $1.45/Mcf $3.00/Mcf $3.50/Mcf 2019 Notes 12 (1) Assumes 7.5 mmcf/d /7.5 Bcf for Upper/Lower Montney wells and 5.0 mmcf/d /5.0 Bcf for Middle Montney wells (2) Assumes 9 mmcf/d /9 Bcf for Upper/Lower Montney wells and 6 mmcf/d /6 Bcf for Middle Montney wells
ATTRACTIVE NETBACKS & RECYCLE RATIOS ARE ACHIEVABLE WITHOUT HEDGING Select Montney Natural Gas Producers “NO HEDGING INCLUDED” Total Cost Structure – Q4 2016 $/Mcfe Illustrative Illustrative $4.50 AECO Cdn AECO Cdn AAV - $0.83/mcfe Lowest Total Glacier Netbacks $2.00/mcf $3.00/mcf $4.00 Corporate Cash Cost Montney Average of Peers (1) Revenue (Realized Price) $2.15 $3.17 Producer (includes gas transportation) $3.50 $2.43/mcfe Royalties ($0.10) ($0.15) $3.00 Operating Costs ($0.25) ($0.25) $2.50 (2) Transportation Costs ($0.35) ($0.35) Operating Netback $1.45 $2.42 $2.00 $1.50 G&A ($0.09) ($0.09) Finance Expense & other ($0.08) ($0.08) $1.00 Cash Flow Netback $1.28/mcfe or $2.25/mcfe or $0.50 $7.68/boe $13.50/boe $- Recycle Ratio based on 2.8x 4.9x AAV TOU PPY BIR CR ARX VII NVA KEL POU 3 Year Average Interest & other ($/mcfe) G&A ($/mcfe) 2P F&D @ $0.46/mcfe (3) Royalties incl. GCA adjustments ($/mcfe) Operating costs & transportation ($/mcfe) Source : RBC Capital Markets, Public Disclosures and Advantage Q4 2016 reported actual results (1) Natural Gas & Liquids revenue includes adjustments for heat value. 13 (2) Includes liquids transportation costs of $0.04/mcfe, gas transportation costs of $0.27/mcfe, and gas fuel costs of $0.04/mcfe. (3) 2P F&D includes Future Development Capital and is based on Sproule’s 2014, 2015 and 2016 year-end 2P reserves reports.
HIGH QUALITY MONTNEY ASSETS, OPERATIONAL EXCELLENCE 14
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