2024 ANNUAL REPORT
Advantage Energy Ltd. - 1
CONTENTS
MESSAGE TO SHAREHOLDERS ...................................................................................................................................... 2
RESERVES ...................................................................................................................................................................... 4
CONSOLIDATED MANAGEMENT’S DISCUSSION & ANALYSIS ...................................................................................... 10
CONSOLIDATED FINANCIAL STATEMENTS .................................................................................................................. 57
Independent Auditor’s Report ............................................................................................................................ 58
Consolidated Statements of Financial Position .................................................................................................. 64
Consolidated Statements of Comprehensive Income (Loss) .............................................................................. 65
Consolidated Statements of Changes in Shareholders’ Equity ........................................................................... 66
Consolidated Statements of Cash Flows ............................................................................................................. 67
Notes to the Consolidated Financial Statements ............................................................................................... 68
ADVISORY .................................................................................................................................................................. 112
Advantage Energy Ltd. - 2
MESSAGE TO SHAREHOLDERS
Advantage Energy Ltd. (“Advantage” or the “Corporation”) is pleased to report 2024 year-end financial and
operating results as well as reserves.
Advantage achieved exceptional results during 2024, with record production, significant liquids growth, strong
reserves results, significantly improved per-share profitability, a highly accretive acquisition and successful
integration of the new assets.
2024 Financial Highlights
Cash provided by operating activities of $217.5 million.
Adjusted funds flow (“AFF”)(a) of $250.0 million or $1.52 per share for Advantage(b).
Recently acquired Charlie Lake assets increased corporate AFF(a) per share by 34% during the second
half of 2024, compared to Advantage assets on a stand-alone basis.
Cash used in investing activities of $697.7 million, including acquisitions and dispositions.
Net capital expenditures(a) were $266.7 million for Advantage(b), excluding acquisitions and dispositions.
Reduced total 2024 development capital spending by $75 million in response to lower gas prices and acquisition
synergies.
Net debt(a) of $625.6 million for Advantage(b), on track to achieve our net debt target in 2025.
2024 Operating Highlights
Record annual average production of 70,918 boe/d (368.0 mmcf/d natural gas, 9,590 bbls/d liquids), an
increase of 17% as a result of the asset acquisition and organic growth in 2023.
Record liquids production of 9,590 bbls/d (5,347 bbls/d crude oil, 1,116 bbls/d condensate, and 3,127
bbls/d NGLs), an increase of 39% over 2023.
In anticipation of low natural gas prices, Advantage cut development spending early in 2024 and kept
dry gas production roughly flat through the year.
Curtailed approximately 1,850 boe/d of dry gas (annualized) during times of very low natural gas prices.
These curtailments reduced depletion without impacting AFF(a).
Delivered exceptional capital efficiencies with 7 of the top 10 Alberta Montney gas wells, based on IP90 rates.
At Glacier, drilled 12 gross (11.8 net) wells. Average IP30 this year were exceptional at 14.1 mmcf/d.
In the Charlie Lake, drilled 9 gross (5.9 net) wells. Four operated wells have now been producing beyond thirty
days, with liquids rates that exceed historical type curves by over 65%. Average IP30 for these wells was 1,004
boe/d (1.4 mmcf/d natural gas, 737 bbls/d crude oil and 29 bbls/d NGLs).
Operating costs in the fourth quarter dropped to $5.19/boe(a), resulting in a full-year average of $4.75/boe(a).
In the first 6 months following the Charlie Lake acquisition, reduced operating costs for the assets by $20 million
annualized (approximately 25% reduction) by executing post-acquisition synergies.
2024 Reserves Highlights
Proved Developed Producing (“PDP”) reserves increased 14%, with finding and development (“F&D”)(a) costs of
$8.48/boe.
Net present value of PDP reserves of $1.4 billion (before tax, 10% discount rate) or $8.63/share.
Total Proved (“1P”) reserves increased 10%, with F&D(a) costs of $9.39/boe.
Net present value of 1P reserves of $3.0 billion (before tax, 10% discount rate) or $17.98/share.
Proved plus Probable (“2P”) reserves increased 13%, with F&D(a) costs of $6.87/boe.
Net present value of 2P reserves of $4.4 billion (before tax, 10% discount rate) or $26.49/share.
PDP reserve additions replaced(a) 183% of production.
Liquids reserves increased 55%, 64% and 61% for PDP, 1P and 2P, respectively.
Recycle ratios(a) were 1.7x, 1.6x and 2.2x for PDP, 1P and 2P, respectively, based on fourth quarter 2024
operating netback(a) of $14.80/boe.
Advantage Energy Ltd. - 3
2024 Corporate Development Highlights
Closed the Charlie Lake/Montney asset acquisition for cash consideration of $445.3 million on June 24,
2024.
Disposed of two non-core assets for net proceeds of $11.4 million. Subsequent to December 31, 2024,
disposed of an additional non-core asset for net proceeds of $4 million.
Acquired a 100 mmcf/d sour gas plant nearby our Conroy Montney asset in Northeast British Columbia.
Repurchased 2.5 million shares, returning $21.7 million to shareholders. Subsequent to year-end,
Advantage purchased an additional 0.3 million shares, returning an additional $2.6 million to
shareholders. Since initiating our buyback program in April 2022, Advantage has repurchased 38.1 million
common shares for a total of $382.6 million.
Marketing Update
Advantage has hedged approximately 41% of its forecasted natural gas production in 2025, as well as 26% in 2026
and 7% in 2027. Advantage has also hedged approximately 44% of its forecasted crude oil and condensate
production in 2025.
Looking Forward
Advantage’s corporate strategy continues to focus on maximizing AFF per share without compromising our balance
sheet. Our updated three-year plan (announced December 10, 2024) emphasizes an extremely efficient capital
program, fully funded at all phases of the commodity price cycle, and minimal investment required in infrastructure.
At strip pricing, Advantage expects to generate in excess of $500 million of free cash flow (“FCF”)(a) during the coming
three years. This would not be possible without exceptional assets and peer-leading execution.
Industry consolidation has significantly reshaped the Montney landscape, reducing the number of publicly traded
producers. High-quality Montney assets have become increasingly scarce. Recognizing this trend, a special
committee has been formed to monitor the markets and identify opportunities that are in the best interest of
Advantage and our shareholders.
Having continued to grow our profitability and enhance the value of our asset base, we are strongly positioned to
benefit from the widely-anticipated resurgence in gas markets and industry consolidation. Our strategy remains
centered on disciplined capital allocation, high-return investments, and measured, sustainable AFF per share
growth. This strategy presents shareholders with a rare and transformative opportunity for long-term value
creation.
Advantage wishes to thank our employees, board of directors and shareholders for their ongoing support.
(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.
(b)
“Advantage” refers to Advantage Energy Ltd. only and excludes its subsidiary Entropy Inc.
Advantage Energy Ltd. - 4
RESERVES
Advantage engaged its independent qualified reserves evaluator McDaniel & Associates Consultants Ltd.
("McDaniel") to evaluate its year-end reserves as of December 31, 2024, in accordance with National Instrument
51-101 – Standards of Disclosure for Oil and Gas Activities ("NI 51-101"), and the Canadian Oil and Gas Evaluation
Handbook ("COGE Handbook").
Reserves and production information included herein is stated on a gross working interest basis (before royalty
burdens and excluding royalty interests) unless noted otherwise. Certain tables may not add due to rounding. In
addition to the information disclosed in this annual report, more detailed information on Advantage’s oil and gas
reserves, including its reserves on a net interest basis (after royalty burdens and including royalty interests) is
included in Advantage's Annual Information Form dated March 4, 2025 and is available at www.advantageog.com
and www.sedarplus.ca.
Highlights – Gross Working Interest Reserves
December 31
2024
December 31
2023(4)
Proved plus probable reserves (mboe)
685,602
608,878
Net Present Value of future net revenue of 2P reserves
discounted at 10%, before tax ($000) (1)
4,422,721
4,229,092
Net Asset Value per Share discounted at 10%, before tax ($) (2)(5)
23.00
25.07
Reserve Life Index (proved plus probable - years) (3)
24.4
24.4
Reserves per share (proved plus probable - boe) (2)
4.11
3.75
Bank indebtedness per boe of reserves (proved plus probable) ($)
0.69
0.35
(1) Assumes that development of each property will occur, without regard to the likely availability to the Corporation of funding required for
that development.
(2) Based on 166.9 million shares outstanding at December 31, 2024 and 162.2 million at December 31, 2023.
(3) Based on fourth quarter average production and Corporation interest reserves.
(4) Reserves based upon an evaluation by Sproule Associates Limited with an effective date of December 31, 2023 contained in a report of
Sproule dated March 1, 2024 using the IQRE average product price forecast effective December 31, 2023.
(5) Specified financial measure which may not be comparable to similar specified financial measures used by other entities. Please see
"Specified Financial Measures".
Advantage Energy Ltd. - 5
Corporation Gross (before royalties) Working Interest Reserves Summary as at December 31, 2024
Light &
Medium
Crude Oil
(Mbbls)
Conventional
Natural Gas
(MMcf)
Shale Gas
(MMcf)
Natural
Gas Liquids
(Mbbls)
Total Oil
Equivalent
(Mboe)
Proved
Developed Producing
10,324
78,240
825,339
10,995
171,916
Developed Non-producing
234
948
29,095
269
5,510
Undeveloped
23,134
144,210
1,367,962
21,628
296,791
Total Proved
33,692
223,399
2,222,396
32,892
474,217
Probable
15,671
102,282
984,922
14,513
211,385
Total Proved Plus Probable
49,363
325,681
3,207,317
47,406
685,602
(1) Reserves based upon an evaluation by Sproule Associates Limited with an effective date of December 31, 2022 contained in a report of
Sproule dated February 22, 2023 using the IQRE average product price forecast effective December 31, 2022.
(2) Reserves based upon an evaluation by Sproule Associates Limited with an effective date of December 31, 2023 contained in a report of
Sproule dated March 1, 2024 using the IQRE average product price forecast effective December 31, 2023.
585,648
608,878
685,602
2022 (1)
2023 (2)
2024
(Mboe)
Total Oil Equivalent Corporation Gross (before royalties)
Working Interest Reserves Summary
Proved Developed Producing
Proved Developed Non-producing
Proved Undeveloped
Probable
Total Proved Plus Probable
Advantage Energy Ltd. - 6
Corporation Net Present Value of Future Net Revenue using IQRE Average price and cost forecasts
(1)(2)(3)
Before Income Taxes Discounted at
($000)
0%
10%
15%
Proved
Developed Producing
2,384,343
1,439,823
1,206,765
Developed Non-producing
89,845
43,510
34,009
Undeveloped
4,399,312
1,517,609
998,537
Total Proved
6,873,499
3,000,942
2,239,311
Probable
4,432,482
1,421,778
981,161
Total Proved Plus Probable
11,305,982
4,422,721
3,220,472
(1) Advantage's light crude oil and medium crude oil, conventional natural gas, shale gas and natural gas liquid reserves were evaluated
using the average of the forecasts ("IQRE Average Forecast") prepared by McDaniel & Associates Consultants Ltd., GLJ Petroleum
Consultants and Sproule Associates Limited effective December 31, 2024, prior to the provision for income taxes, interests, debt services
charges and general and administrative expenses. It should not be assumed that the discounted future net revenue estimated by Sproule
represents the fair market value of the reserves.
(2) Assumes that development of reserves will occur, without regard to the likely availability to the Corporation of funding required for that
development.
(3) Future Net Revenue incorporates Managements' estimates of required abandonment and reclamation costs, including expected timing
such costs will be incurred, associated with all wells, facilities and infrastructure.
(4) Table may not add due to rounding.
3,384
2,951
3,001
1,361
1,278
1,422
4,745
4,229
4,423
2022
2023
2024
($ millions)
Net Present Value of Future Net Revenue
Before Income Taxes Discounted at 10%
Total Proved
Probable
Total Proved Plus Probable
Advantage Energy Ltd. - 7
IQRE Average Forecasts and Assumptions
The net present value of future net revenue at December 31, 2024 was based upon light and medium oil,
conventional natural gas, shale gas and natural gas liquid pricing assumptions, which was computed by using the
IQRE Average Forecast effective December 31, 2024. These forecasts are adjusted for reserves quality,
transportation charges and the provision of any applicable sales contracts. The price assumptions used over the
next seven years are summarized in the table below:
Year
Edmonton
Light Sweet
Crude Oil 40o
API
($Cdn/bbl)
AECO-C
Spot
($Cdn/MMbtu)
Edmonton
Pentanes
Plus
($Cdn/bbl)
Edmonton
Butane
($Cdn/bbl)
Edmonton
Propane
($Cdn/bbl)
Operating
Cost Inflation
Rate
%/year
Capital Cost
Inflation Rate
%/year
Exchange
Rate
($US/$Cdn)(3)
2025
94.79
2.36
100.14
51.15
33.56
-
-
0.712
2026
97.04
3.33
100.72
49.99
32.78
2.0
2.0
0.728
2027
97.37
3.48
100.24
50.16
32.81
2.0
2.0
0.743
2028
99.80
3.69
102.73
51.41
33.63
2.0
2.0
0.743
2029
101.79
3.76
104.79
52.44
34.30
2.0
2.0
0.743
2030
103.83
3.83
106.86
53.49
34.99
2.0
2.0
0.743
2031
105.91
3.91
109.01
54.56
35.69
2.0
2.0
0.743
2032
108.03
3.99
111.19
55.65
36.40
2.0
2.0
0.743
2033
110.19
4.07
113.42
56.76
37.13
2.0
2.0
0.743
2034
112.39
4.15
115.69
57.90
37.87
2.0
2.0
0.743
2035
114.64
4.23
118.00
59.05
38.63
2.0
2.0
0.743
Thereafter
+2% per year
+2% per year
+2% per year
+2% per year
+2% per year
+2% per year
+2% per year
0.743
Net Asset Value using IQRE Average price and cost forecasts (Before Income Taxes)
The following net asset value ("NAV") table shows what is normally referred to as a "produce-out" NAV calculation
under which the current value of the Corporation’s reserves would be produced at forecast future prices and costs.
The value is a snapshot in time and is based on various assumptions including commodity prices and foreign
exchange rates that vary over time.
Before Income Taxes Discounted at
($000, except per share amounts)
0%
10%
15%
Net asset value per share (1) - December 31, 2023
$ 71.55
$ 25.07
$ 17.52
Net present value proved and probable reserves
11,305,982
4,422,721
3,220,472
Undeveloped land (2)
15,172
15,172
15,172
Working capital and other (3)(4)
104,088
104,088
104,088
Bank indebtedness
(470,424)
(470,424)
(470,424)
Convertible debentures (5)
(143,750)
(143,750)
(143,750)
Financing liability
(88,083)
(88,083)
(88,083)
Net asset value - December 31, 2024 (3)
10,722,985
3,839,724
2,637,475
Net asset value per share (1)(3) - December 31, 2024
$ 64.24
$ 23.00
$ 15.80
(1) Based on 166.9 million shares outstanding at December 31, 2024 and 162.2 million at December 31, 2023.
(2) The value of undeveloped land is based on book value.
(3) Specified financial measure which may not be comparable to similar specified financial measures used by other entities. Please see
"Specified Financial Measures".
(4) Working capital excludes the working capital balance incurred by the Corporation’s subsidiary, Entropy. Other is calculated as current
and non-current derivative asset less current and non-current derivative liability.
(5) Represents the principal balance of convertible debentures outstanding as at December 31, 2024.
Advantage Energy Ltd. - 8
Company Gross (before royalties) Working Interest Reserves Reconciliation
FACTORS
Light Crude
Oil and
Medium
Crude Oil
(Mbbls)
Conventional
Natural Gas
(MMcf)
Shale Gas
(MMcf)
Natural Gas
Liquids(5)
(Mbbls)
Total Oil
Equivalent
(Mboe)
GROSS TOTAL PROVED
December 31, 2023
12,621.7
2,337,131
-
28,051.1
430,194.5
Extensions and improved recovery (1)
4,447.7
23,401
65,483
1,512.7
20,774.4
Technical revisions (2)
(169.7)
(2,242,671)
2,292,413
2,890.1
11,010.9
Discoveries
-
-
-
-
-
Acquisitions (3)
18,803.0
112,944
473
2,080.0
39,785.8
Dispositions
-
-
-
-
-
Economic factors (4)
(53.5)
(489)
(8,214)
(88.8)
(1,592.7)
Production
(1,957.0)
(6,917)
(127,759)
(1,552.8)
(25,955.8)
December 31, 2024
33,692.3
223,399
2,222,396
32,892.3
474,217.0
GROSS TOTAL PROBABLE
December 31, 2023
6,794.7
957,328
-
12,333.9
178,683.1
Extensions and improved recovery (1)
(72.3)
(2,014)
15,613
(49.0)
2,145.3
Technical revisions (2)
(686.3)
(909,477)
969,221
1,270.2
10,541.2
Discoveries
-
-
-
-
-
Acquisitions (3)
9,668.9
56,768
258
983.0
20,156.3
Dispositions
-
-
-
-
-
Economic factors (4)
(34.1)
(323)
(171)
(24.9)
(141.3)
Production
-
-
-
-
-
December 31, 2024
15,670.9
102,282
984,922
14,513.2
211,384.6
GROSS TOTAL PROVED PLUS PROBABLE
December 31, 2023
19,416.4
3,294,458
-
40,385.0
608,877.6
Extensions and improved recovery (1)
4,375.4
21,387
81,096
1,463.7
22,919.7
Technical revisions (2)
(856.0)
(3,152,148)
3,261,634
4,160.3
21,552.1
Discoveries
-
-
-
-
-
Acquisitions (3)
28,471.9
169,712
731
3,063.0
59,942.1
Dispositions
-
-
-
-
-
Economic factors (4)
(87.6)
(812)
(8,385)
(113.7)
(1,734.0)
Production
(1,957.0)
(6,917)
(127,759)
(1,552.8)
(25,955.8)
December 31, 2024
49,363.1
325,681
3,207,317
47,405.5
685,601.6
(1) Extensions and improved recovery: Reserves were added from 19.8 net wells brought on production concurrent with Advantage’s 2024 capital program.
(2) Technical revisions: Total technical revisions are largely driven by positive revisions at existing wells and locations due to increased well performance.
Additionally, technical revisions includes the reclassification of Montney gas from conventional natural gas to shale gas effective January 1, 2024, which
resulted in a classification between the product types for 2,337,131 MMcf of gross total proved, 957,328 MMcf of gross total probable and 3,294,458
MMcf of gross total proved plus probable.
(3) Acquisitions: Changes were the result of Charlie Lake and Montney assets acquired in 2024, including the disposal of certain reserves associated with
these acquisitions within the same year.
(4) Economic factors: Changes in forecast pricing for both crude oil and natural gas resulted in minor, negative impact to total reserves. Less than one per
cent of total proved and total proved plus probable reserves were removed due to changes in forecast pricing.
(5) Natural gas liquids include condensate.
(6) Tables may not add due to rounding.
Advantage Energy Ltd. - 9
Company 2024 F&D Cost – Gross (before royalties) Working Interest Reserves Including Future
Development Capital(1)(2)(3)
Proved
Proved
Plus Probable
Advantage net capital expenditures ($000)(4)
700,597
700,597
Acquisitions & dispositions ($000)
(433,853)
(433,853)
Net change in FDC ($000)
16,767
27,006
Total capital ($000)
283,511
293,750
Total Mboe, end of year
474,217
685,602
Total Mboe, beginning of year
430,195
608,878
Acquisitions & dispositions, Mboe
39,786
59,942
Production, Mboe
(25,956)
(25,956)
Reserve additions, Mboe
30,192
42,738
2024 F&D costs ($/boe) (4)
$ 9.39
$ 6.87
2023 F&D costs ($/boe) (4)
$ 8.50
$ 8.17
Three-year average F&D costs ($/boe) (4)
$ 8.34
$ 7.20
Company 2024 FD&A Costs – Gross (before royalties) Working Interest Reserves including FDC(1)(2)(3)
Proved
Proved
Plus Probable
Advantage net capital expenditures ($000)(4)
700,597
700,597
Net change in FDC ($000)
496,634
664,659
Total capital ($000)
1,197,231
1,365,256
Total Mboe, end of year
474,217
685,602
Total Mboe, beginning of year
430,195
608,878
Production, Mboe
(25,956)
(25,956)
Reserve additions, Mboe
69,978
102,680
2024 FD&A costs ($/boe) (4)
$ 17.11
$ 13.30
2023 FD&A costs ($/boe) (4)
$ 8.79
$ 8.39
Three-year average FD&A costs ($/boe) (4)
$ 12.32
$ 10.44
(1) F&D and FD&A costs are calculated by dividing total capital by reserve additions during the applicable period. Total capital includes both
capital expenditures incurred and changes in FDC required to bring the proved undeveloped and probable undeveloped reserves to
production during the applicable period. Reserves additions are calculated as the change in reserves from the beginning to the ending of
the applicable period excluding production. F&D excludes the impact of acquisitions and dispositions while FD&A includes the impact of
acquisitions and dispositions.
(2) The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in
estimated FDC generally will not reflect total finding and development costs related to reserves additions for that year. Changes in forecast
FDC occur annually as a result of development activities, acquisition and disposition activities and capital cost estimates that reflect
McDaniel’s best estimate of what it will cost to bring the proved undeveloped and probable undeveloped reserves on production.
(3) The change in FDC is primarily from incremental undeveloped locations.
(4) Specified financial measure which may not be comparable to similar specified financial measures used by other entities. Please see
"Specified Financial Measures".
Advantage Energy Ltd. - 10
CONSOLIDATED MANAGEMENT’S DISCUSSION & ANALYSIS
For the three months and years ended December 31, 2024 and 2023
Advantage Energy Ltd. - 11
CONSOLIDATED MANAGEMENT’S DISCUSSION & ANALYSIS
The following Management’s Discussion and Analysis ("MD&A"), dated as of March 4, 2025, provides a detailed
explanation of the consolidated financial and operating results of Advantage Energy Ltd. ("Advantage", the
"Corporation", "us", "we" or "our") for the three months and year ended December 31, 2024, and should be read
in conjunction with the December 31, 2024, audited consolidated financial statements. The consolidated financial
statements have been prepared in accordance with International Financial Reporting Standards as issued by the
International Accounting Standards Board ("IFRS Accounting Standards" or "IFRS"), representing generally accepted
accounting principles ("GAAP") for publicly accountable enterprises in Canada. All references in the MD&A and
consolidated financial statements are to Canadian dollars unless otherwise indicated. All dollar per boe figures
herein forth only include the results of Advantage’s natural gas and liquids operations and exclude the results of
Entropy Inc. ("Entropy").
This MD&A contains specified financial measures such as non-GAAP financial measures, non-GAAP ratios, capital
management measures and supplementary financial measures and forward-looking information. Readers are
advised to read this MD&A in conjunction with both the "Specified Financial Measures" and "Forward-Looking
Information and Other Advisories" sections found at the end of this MD&A.
Financial Highlights
Three months ended
December 31
Year ended
December 31
($000, except as otherwise indicated)
2024
2023
2024
2023
Financial Statement Highlights
Natural gas and liquids sales
163,477
147,137
543,295
541,100
Net income and comprehensive income(3)
17,130
41,026
21,719
101,597
per basic share (2)
0.10
0.25
0.13
0.61
per diluted share (2)
0.10
0.24
0.13
0.59
Basic weighted average shares (000)
166,974
163,939
163,955
166,553
Diluted weighted average shares (000)
169,785
168,441
166,821
171,833
Cash provided by operating activities
56,350
89,048
217,533
323,345
Cash provided by (used in) financing activities
22,789
(52,120)
481,077
(70,263)
Cash used in investing activities
(71,202)
(58,846)
(697,725)
(282,761)
Other Financial Highlights
Adjusted funds flow (1)
81,389
82,494
241,396
313,570
per basic share (1)(2)
0.49
0.50
1.47
1.88
per diluted share (1)(2)
0.48
0.49
1.45
1.82
Net capital expenditures (1)
99,162
39,938
736,911
282,796
Free cash flow - surplus (deficit) (1)
(29,194)
42,680
(61,662)
40,933
Bank indebtedness
470,424
212,854
470,424
212,854
Net debt (1)(4)
718,449
235,010
718,449
235,010
(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 and diluted weighted average shares outstanding.
(3)
Net income and comprehensive income attributable to Advantage Shareholders.
(4)
As at December 31, 2024, net debt was $718.4 million, consisting of $625.6 million with Advantage and $92.8 million with Entropy.
Advantage Energy Ltd. - 12
Operating Highlights(1)
Three months ended
December 31
Year ended
December 31
2024
2023
2024
2023
Operating
Production
Crude oil (bbls/d)
7,527
3,254
5,347
2,710
Condensate (bbls/d)
979
1,264
1,116
1,166
NGLs (bbls/d)
3,379
3,345
3,127
3,021
Total liquids production (bbls/d)
11,885
7,863
9,590
6,897
Natural gas (Mcf/d)
389,331
363,124
367,965
322,687
Total production (boe/d)
76,774
68,384
70,918
60,678
Average realized prices (including realized derivatives)
Natural gas ($/Mcf)
2.46
2.84
2.20
3.24
Liquids ($/bbl)
87.84
81.55
85.02
78.35
Operating Netback ($/boe)
Natural gas and liquids sales
23.14
23.39
20.93
24.43
Realized gains on derivatives
2.91
0.98
1.97
1.59
Processing and other income
0.11
0.39
0.21
0.34
Net sales of purchased natural gas
-
-
-
(0.01)
Royalty expense
(2.40)
(1.64)
(2.02)
(1.92)
Operating expense
(5.19)
(3.55)
(4.75)
(3.78)
Transportation expense
(3.77)
(4.08)
(3.90)
(4.09)
Operating netback (2)
14.80
15.49
12.44
16.56
(1)
Operating highlights are for Advantage’s natural gas and liquids operations.
(2)
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.
Advantage Energy Ltd. - 13
Corporate Update
On June 24, 2024, the Corporation closed the acquisition of certain Charlie Lake and Montney assets (the
“Acquisition” or the “Acquired Assets”) for cash consideration of $445.3 million, including closing adjustments. The
Acquisition capitalized on an opportunity to consolidate a high-quality, liquids-weighted asset that is contiguous
with our existing core areas and complementary to our infrastructure platform.
The Acquisition was partially funded by the issuance of 5,910,000 common shares at a price of $11.00 per share (see
“Shareholders’ Equity”) and $143.8 million aggregate principal amount of 5.0% convertible unsecured subordinated
debentures at a price of $1,000 per debenture (see “Convertible Debentures”) for aggregate gross proceeds of
$208.8 million. The remainder was funded from the Corporation’s credit facility which was increased to $650 million
(see “Bank Indebtedness, Credit Facilities and Working Capital”).
In the fourth quarter of 2024, the Corporation disposed of certain non-core assets for proceeds of $11.4 million (see
“Cash Used in Investing Activities and Net Capital Expenditures”).
Advantage 2025 Guidance
On December 10, 2024, the Corporation announced its 2025 budget (see News Release dated December 10, 2024).
Advantage's 2025 capital program continues our focus on growing adjusted funds flow per share via high rate-of-
return development drilling. To maximize shareholder value, all free cash flow from operations will be allocated to
debt reduction though a portion of the proceeds from non-core asset divestitures may be used to buy back shares,
while achieving a net debt target of $450 million towards the end of 2025. On March 4, 2025, the United States
implemented a 25% across-the-board tariff, with a lower 10% tariff implemented on Canadian energy. The full
impact of the implemented tariffs to supply chains is not determinable at this time.
The below table summarizes Advantage’s 2025 guidance:
Forward Looking Information(1)
Guidance(3)
Cash Used in Investing Activities ($ millions) (2)
270 to 300
Production
Total Production (boe/d)
80,000 to 83,000
Natural Gas (%)
84 to 85
Crude Oil and Condensate (%)
11 to 12
NGLs (%)
~4
Expenses
Royalty Rate (%)
8 to 10
Operating Expense ($/boe)(4)
5.20 to 5.90
Transportation Expense ($/boe) (4)
3.95 to 4.25
G&A Expense ($/boe) (4)
0.75 to 0.85
Finance Expense ($/boe) (4)
1.50 to 1.95
(1) Forward-looking statements and information representing Management estimates. Please see "Forward-Looking Information and Other
Advisories".
(2) Cash Used in Investing Activities is the same as Net Capital Expenditures as no change in non-cash working capital is assumed between
years and other differences are immaterial.
(3) Guidance numbers are for Advantage Energy Ltd. only and excludes its subsidiary, Entropy Inc.
(4) $/boe are specified financial measures which may not be comparable to similar specified financial measures used by other entities. Please
see “Specified Financial Measures”.
Advantage Energy Ltd. - 14
Corporate Update (continued)
Advantage 2024 Guidance Comparison
The below table summarizes Advantage’s 2024 guidance compared to actual 2024 financial and operational results:
Original 2024
Guidance(1)(3)
Revised 2024 Guidance(2)(3)
2024
Actual(3)
Net capital expenditures ($ millions)
260 to 290
245 to 275
266.7(4)
Total Production (boe/day)
65,000 to 68,000
70,000 to 73,000
70,918
Liquids Production (%)
~10%
~13%
14%
Royalty Rate (%)
7 to 9
9 to 10
9.7
Operating Expense ($/boe)(5)
3.85
5.00
4.75
Transportation Expense ($/boe) (5)
3.95
3.50
3.90
G&A/Finance Expense ($/boe) (5)
1.90
2.50
2.54
(1)
See December 31, 2023 MD&A dated as of March 4, 2024 for original guidance.
(2)
See June 30, 2024 MD&A dated as of July 25, 2024 and September 30, 2024 MD&A dated as of October 24, 2024 for revised guidance.
(3)
Guidance and actual numbers are for Advantage Energy Ltd. only and excludes its subsidiary, Entropy Inc.
(4)
Excluding acquisitions and dispositions.
(5)
$/boe are specified financial measures which may not be comparable to similar specified financial measures used by other entities.
Please see “Specified Financial Measures”.
Advantage revised its guidance on successful closing of the Acquisition and actual results for 2024 were substantially
within the revised guidance other than as follows:
Operating Expense
The Corporation achieved actual operating cost of $4.75/boe and 5% below the revised guidance as a result of higher
than anticipated operational synergies from the Acquisition, driving down operating costs on a per boe basis.
Transportation Expense
The Corporation’s actual transportation expense was above its revised guidance at $3.90/boe due to the
classification of certain physical transportation agreements acquired from the Acquisition as an expense rather than
a deduction from revenue.
Advantage Energy Ltd. - 15
Production
Three months ended
December 31
%
Year ended
December 31
%
Average Daily Production
2024
2023
Change
2024
2023
Change
Crude oil (bbls/d)
7,527
3,254
131
5,347
2,710
97
Condensate (bbls/d)
979
1,264
(23)
1,116
1,166
(4)
NGLs (bbls/d)
3,379
3,345
1
3,127
3,021
4
Total liquids production (bbls/d)
11,885
7,863
51
9,590
6,897
39
Natural gas (Mcf/d)
389,331
363,124
7
367,965
322,687
14
Total production (boe/d)
76,774
68,384
12
70,918
60,678
17
Liquids (% of total production)
15
11
14
11
Natural gas (% of total production)
85
89
86
89
For the three months and year ended December 31, 2024, Advantage delivered record total production averaging
76,774 boe/d and 70,918 boe/d, respectively, increases of 12% and 17% compared to the same periods of the prior
year. All growth during the second half of 2024 has been directly attributable to the Acquired Assets.
Natural gas production for the three months and year ended December 31, 2024 averaged 389 MMcf/d and 368
MMcf/d, respectively, increases of 7% and 14% compared to the same periods of the prior year. The increase in
natural gas production was due to continued development at Glacier, with 13.8 net wells brought on production
(see "Cash Used in Investing Activities and Net Capital Expenditures"), accompanied with natural gas production
from the Acquired Assets. Advantage has been responsibly managing our natural gas production during periods of
unusually low Alberta natural gas prices during the second half of 2024. Production curtailment levels were
determined on a continuous day-to-day basis to eliminate variable cash costs and defer development capital. The
curtailments were primarily dry gas at Glacier, which is amongst the lowest-cost natural gas assets in North America
and did not materially impact cash flow. The impact of curtailments on natural gas production for the year ended
December 31, 2024 was approximately 11.2 MMcf/d.
Liquids production for the three months and year ended December 31, 2024 averaged 11,885 bbls/d and 9,590
bbls/d, respectively, increases of 51% and 39% compared to the same periods of the prior year, entirely due to
liquids production from the Acquired Assets (see "Cash Used in Investing Activities and Net Capital Expenditures").
The increase in high-quality liquids production has had a dramatic impact on sales during the quarter (see "Natural
Gas and Liquids Sales").
Advantage expects total annual production to increase to between 80,000 and 83,000 boe/d in 2025 based on the
Corporation’s planned 2025 capital program (see "Corporate Update").
5,765
6,355
7,577
7,863
6,452
7,141
12,820
11,885
314
273
340
363
357
356
369
389
0
50
100
150
200
250
300
350
400
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Q1 23
Q2 23
Q3 23
Q4 23
Q1 24
Q2 24
Q3 24
Q4 24
MMcf/d
bbls/d
Average Daily Production
Liquids (bbls/d)
Natural gas (MMcf/d)
Advantage Energy Ltd. - 16
Commodity Prices and Marketing
Three months ended
December 31
%
Year ended
December 31
%
Average Realized Prices(2)
2024
2023
Change
2024
2023
Change
Natural gas
Excluding derivatives ($/Mcf)
2.03
2.64
(23)
1.87
2.92
(36)
Including derivatives ($/Mcf)
2.46
2.84
(13)
2.20
3.24
(32)
Liquids
Crude oil ($/bbl)
93.92
97.89
(4)
95.50
94.35
1
Condensate ($/bbl)
95.02
97.88
(3)
97.25
98.80
(2)
NGLs ($/bbl)
55.11
59.49
(7)
57.05
56.10
2
Total liquids excluding derivatives ($/bbl)
82.98
81.55
2
83.17
78.35
6
Total liquids including derivatives ($/bbl)
87.84
81.55
8
85.02
78.35
9
Average Benchmark Prices
Natural gas (1)
AECO daily ($/Mcf)
1.48
2.30
(36)
1.46
2.64
(45)
AECO monthly ($/Mcf)
1.46
2.66
(45)
1.44
2.93
(51)
Empress daily ($/Mcf)
1.59
2.32
(31)
1.51
2.65
(43)
Henry Hub ($US/MMbtu)
2.42
2.74
(12)
2.25
2.53
(11)
Emerson daily ($US/MMbtu)
1.55
1.99
(22)
1.39
2.20
(37)
Dawn daily ($US/MMbtu)
2.23
2.28
(2)
1.96
2.33
(16)
Chicago Citygate ($US/MMbtu)
2.33
2.29
2
2.13
2.30
(7)
Liquids
WTI ($US/bbl)
70.26
78.26
(10)
75.71
77.57
(2)
MSW Edmonton ($/bbl)
94.88
99.56
(5)
97.64
100.60
(3)
Average Exchange rate ($US/$CAD)
0.7149
0.7346
(3)
0.7301
0.7409
(1)
(1) GJ converted to Mcf on the basis of 1 Mcf = 1.055056 GJ and 1 Mcf = 1 MMbtu.
(2) Average realized prices in this table are considered specified financial measures which may not be comparable to similar specified financial
measures used by other entities. Please see “Specified Financial Measures”.
Natural gas
Advantage’s realized natural gas price excluding derivatives for the three months and year ended December 31,
2024 was $2.03/Mcf and $1.87/Mcf, respectively, decreases of 23% and 36% compared to the same periods of the
prior year. This decrease was attributed to lower natural gas benchmark prices in markets where Advantage
physically delivers natural gas and has market diversification exposure. North American natural gas benchmark
prices have decreased substantially in 2024 largely due to strong North American natural gas production
accompanied by a mild 2023/2024 winter resulting in elevated gas inventories. In particular, natural gas prices at
AECO and Empress fell below Glacier’s variable costs of production at various points in September through early
November whereby Advantage proactively curtailed production determined on a continuous day-to-day basis (see
"Production").
Advantage’s natural gas exposure consists of the AECO, Empress, Emerson, Dawn, and Chicago markets.
Additionally, the Corporation delivers 25,000 MMbtu/d under a long-term natural gas supply agreement whereby
Advantage receives a PJM electricity-based spark-spread price, less Alliance tolls. Advantage incurs additional
transportation expense to deliver production beyond AECO to the Empress, Emerson, Dawn and Chicago markets
(see "Transportation Expense").
Advantage Energy Ltd. - 17
Commodity Prices and Marketing (continued)
The following table outlines the Corporation’s 2025 forward-looking natural gas market exposure, and 2024 actual
natural gas market exposure, excluding hedging.
Forward-looking 2025(2)
2024
Sales Markets
Effective
production
(MMcf/d)(1)
Percentage of Natural
Gas Production
(%)
Actual
production
(MMcf/d) (1)
Percentage of Natural
Gas Production
(%)
AECO
170.8
41%
90.7
25%
AECO Other(4)
28.4
7%
36.8
10%
Empress
88.4
21%
80.1
22%
Emerson
30.9
7%
43.1
12%
Dawn
52.7
13%
52.7
14%
Chicago
17.1
4%
27.1
7%
Ventura
-
-
12.5
3%
PJM electricity price(5)
25.0
6%
25.0
7%
Total
413.2(3)
100%
368.0
100%
(1)
All volumes contracted converted on the basis of 1 Mcf = 1.055056 GJ and 1 Mcf = 1 Mmbtu.
(2)
Natural gas market exposure based on contracts in-place at December 31, 2024.
(3)
Represents the midpoint of our 2025 guidance for natural gas production volumes (see News Release dated December 10, 2024).
(4)
Transactions that are priced at AECO but may include either a premium or discount to AECO as negotiated with counterparties.
(5)
Sales are based upon a spark-spread pricing formula, providing Advantage exposure to PJM electricity prices, back-stopped with a
natural gas price collar.
Liquids
Advantage’s realized liquids price excluding derivatives for the three months and year ended December 31, 2024
was $82.98/bbl and $83.17/bbl, respectively, increases of 2% and 6% compared to the same periods of the prior
year. Realized liquids price excluding derivatives increased slightly in 2024 when compared to 2023 due to a higher
proportion of Advantage’s liquids production being comprised of crude oil, condensate, and pentanes compared to
the prior year due to the impact from the Acquired Assets. The price that Advantage receives for crude oil and
condensate production is largely driven by global supply and demand and the Edmonton light sweet oil and
condensate price differentials. Approximately 80% of our liquids production is comprised of crude oil, condensate
and pentanes, which generally attracts higher market prices than other liquids. The quality of our liquids production
has increased significantly from the prior year due to the Acquired Assets.
Advantage Energy Ltd. - 18
Natural gas and liquids sales
Three months ended
December 31
%
Year ended
December 31
%
($000, except as otherwise indicated)
2024
2023
Change
2024
2023
Change
Crude oil
65,036
29,304
122
186,896
93,330
100
Condensate
8,558
11,382
(25)
39,723
42,047
(6)
NGLs
17,133
18,306
(6)
65,289
61,856
6
Liquids
90,727
58,992
54
291,908
197,233
48
Natural gas
72,750
88,145
(17)
251,387
343,867
(27)
Natural gas and liquids sales
163,477
147,137
11
543,295
541,100
-
per boe
23.14
23.39
(1)
20.93
24.43
(14)
Natural gas and liquids sales for the three months and year ended December 31, 2024, increased by $16.3 million,
or 11%, and $2.2 million, or 0%, respectively, compared to the same corresponding periods of 2023.
For the year ended December 31, 2024, natural gas sales decreased by $92.5 million or 27%, compared to 2023, due
to a 36% decrease in realized gas prices (see "Commodity Prices and Marketing"), partially offset by a 14% increase
in natural gas production volumes (see "Production"). Liquids sales increased by $94.7 million, or 48%, due to a 39%
increase in liquids production volumes (see "Production") and a 6% increase in realized liquids prices (see
"Commodity Prices and Marketing"). The Acquired Assets contributed $113.5 million of natural gas and liquids sales
since closing the Acquisition on June 24, 2024, the majority of which attributed to liquids production (see "Corporate
Update").
For the three months ended December 31, 2024, natural gas sales decreased by $15.4 million or 17%, compared to
the corresponding period in 2023, due to a 23% decrease in realized gas prices (see "Commodity Prices and
Marketing"), partially offset by a 7% increase in natural gas production volumes (see "Production"). Fourth quarter
liquids sales increased by $31.7 million, or 54%, due to a 51% increase in liquids production volumes (see
"Production") and a 2% increase in realized liquids prices (see "Commodity Prices and Marketing").
72%
59%
61%
60%
65%
47%
29%
45%
28%
41%
39%
40%
35%
53%
71%
55%
$146.0
$107.2
$140.7
$147.1
$135.9
$104.1
$139.8
$163.5
Q1 23
Q2 23
Q3 23
Q4 23
Q1 24
Q2 24
Q3 24
Q4 24
($ millions)
Natural Gas and Liquids Sales
Natural gas sales (% of Total)
Liquids sales (% of Total)
Total ($ millions)
Advantage Energy Ltd. - 19
Financial Risk Management
The Corporation’s financial results and condition are impacted primarily by the prices received for natural gas, crude
oil, condensate and NGLs production. Natural gas, crude oil, condensate and NGLs prices can fluctuate widely and
are determined by supply and demand factors, including available access to transportation, weather, general
economic conditions in consuming and producing regions and political factors. Additionally, certain commodity
prices are transacted and denominated in US dollars. Advantage has been proactive in commodity risk management
to reduce the volatility of cash provided by operating activities supporting our organic development by diversifying
sales to different physical markets and entering into financial commodity and foreign exchange derivative contracts.
Advantage’s Credit Facilities (as defined herein) allow us to enter derivative contracts on up to 75% of total
estimated production over the first three years and up to 50% over the fourth and fifth years. In addition, the Credit
Facilities allow us to enter basis swap arrangements to any natural gas price point in North America for up to 100,000
MMbtu/d with a maximum term of seven years. Basis swap arrangements are excluded from hedged production
limits.
The Corporation enters into financial risk management derivative contracts to manage the Corporation’s exposure
to commodity price risk, foreign exchange risk and interest rate risk. A summary of realized and unrealized
derivative gains and losses for the three months and year ended December 31, 2024, and 2023 are as follows:
Three months ended
December 31
Year ended
December 31
($000)
2024
2023
2024
2023
Realized gains (losses) on derivatives
Natural gas
16,169
6,636
47,642
38,184
Crude oil
5,318
-
6,493
-
Foreign exchange
(179)
(27)
(101)
(2,033)
Natural gas embedded derivative
(728)
(469)
(2,907)
(908)
Total
20,580
6,140
51,127
35,243
Unrealized gains (losses) on derivatives
Natural gas
(14,278)
17,264
4,496
6,233
Crude oil
(10,505)
-
7,052
-
Foreign exchange
(1,461)
682
(1,634)
3,090
Natural gas embedded derivative
25,793
12,777
(4,733)
(13,192)
Unsecured debenture derivative
(68)
365
(866)
(5,606)
Total
(519)
31,088
4,315
(9,475)
Gains (losses) on derivatives
Natural gas
1,891
23,900
52,138
44,417
Crude oil
(5,187)
-
13,545
-
Foreign exchange
(1,640)
655
(1,735)
1,057
Natural gas embedded derivative
25,065
12,308
(7,640)
(14,100)
Unsecured debenture derivative
(68)
365
(866)
(5,606)
Total
20,061
37,228
55,442
25,768
Advantage Energy Ltd. - 20
Financial Risk Management (continued)
Natural gas
For the three months and year ended December 31, 2024, Advantage realized net gains on natural gas derivatives
of $16.2 million and $47.6 million, respectively, due to the settlement of contracts with average derivative contract
prices that were above average market prices, which declined significantly throughout 2024.
For the three months and year ended December 31, 2024, Advantage recognized a net unrealized loss on natural
gas derivatives of $14.3 million and an unrealized gain of $4.5 million, respectively. Unrealized gains and losses are
a result of changes in the fair value of the Corporation’s outstanding natural gas derivative contracts accompanied
with the settlement of contracts. For the three months December 31, 2024, the change in the fair value of natural
gas derivative contracts was primarily impacted by realizing gains on outstanding contracts accompanied with new
contracts having a decreased net asset valuation. The unrealized gain for the year ended December 31, 2024, is
primarily due to new natural gas derivative contracts entered into during the year that are in an asset position as at
December 31, 2024.
Crude oil
In conjunction with the Acquisition in the second quarter of 2024, Advantage initiated a disciplined crude oil hedging
program by entering into an increased volume of crude oil derivative contracts. For the three months and year
ended December 31, 2024, Advantage realized gains on crude oil derivatives of $5.3 million and $6.5 million,
respectively, due to the settlement of contracts with average derivative contract prices that were above average
market prices, which declined during the second half of 2024.
Advantage recognized an unrealized loss on crude oil derivatives of $10.5 million and an unrealized gain of $7.1
million for the three months and year ended December 31, 2024, respectively. The unrealized loss is due to rising
forward oil prices and realizing gains on outstanding contracts during the fourth quarter of 2024 while the unrealized
gain is due to the crude oil derivative contracts being in an asset position at year end December 31, 2024.
Foreign exchange
For the three months and year ended December 31, 2024, Advantage realized a loss on foreign exchange derivatives
of $0.2 million and $0.1 million, respectively, while recognizing an unrealized loss of $1.5 million and $1.6 million,
respectively. The unrealized loss for the three months and year ended December 31, 2024 is due to the weakening
of the Canadian dollar versus the US dollar.
Natural gas embedded derivative
Advantage has a long-term natural gas supply agreement under which Advantage will supply 25,000 MMbtu/d of
natural gas for a 10-year period, that commenced in April 2023. Commercial terms of the agreement are based upon
a spark-spread price, providing Advantage exposure to PJM electricity prices, back-stopped with a natural gas price
collar. The contract contains an embedded derivative as a result of the spark-spread price and the natural gas price
collar. The Corporation defined the host contract as a natural gas sales arrangement with a fixed price of
US$2.50/MMbtu. The Corporation will have realized gains (losses) on the embedded derivative when the realized
settlement price differs from US$2.50/MMbtu, resulting in a realized loss of $2.9 million for the year ended
December 31, 2024 (year ended December 31, 2023 – $0.9 million). The Corporation will have unrealized gains
(losses) on the embedded derivative based on movements in the forward curve for PJM electricity prices. For the
three months and year ended December 31, 2024 the Corporation recognized an unrealized gain on the natural gas
embedded derivative of $25.8 million and an unrealized loss of $4.7 million, respectively. The unrealized gain for
the three months ended is due to strengthening PJM electricity prices resulting in an increased asset position of the
derivative compared to the third quarter of 2024. The unrealized loss for the year ended December 31, 2024 is due
to weakening of PJM electricity prices compared with the year end of December 31, 2023 resulting in a lower asset
position of the derivative.
Advantage Energy Ltd. - 21
Financial Risk Management (continued)
Unsecured debentures derivative
The Corporation’s subsidiary Entropy has unsecured debentures outstanding that have exchange features that meet
the definition of a derivative liability, as the exchange features allow the unsecured debentures to be potentially
exchanged for a variable number of Entropy common shares (see "Unsecured Debentures"). The Corporation will
record unrealized gains (losses) as the valuation of the conversion option changes. For the year ended December
31, 2024, the Entropy unsecured debentures derivative liability resulted in an unrealized loss of $0.1 million and
$0.9 million due to the increased value of the conversion option.
The fair value of derivative assets and liabilities is the estimated value to settle the outstanding contracts as at a
point in time. As such, unrealized derivative gains and losses do not impact adjusted funds flow and the actual gains
and losses realized on eventual cash settlement can vary materially due to subsequent fluctuations in commodity
prices, foreign exchange rates and interest rates as compared to the valuation assumptions. Remaining derivative
contracts will settle between January 1, 2025 and March 31, 2028, apart from the Corporation’s natural gas
embedded derivative which is expected to be settled between the years 2025 and 2033.
As at December 31, 2024 and March 4, 2025, the Corporation had the following commodity and foreign exchange
derivative contracts in place:
Description of Derivative
Term
Volume
Price
Natural gas - AECO
Fixed price swap
January 2025 to March 2025
113,738 Mcf/d
$3.13/Mcf
Fixed price swap
April 2025 to October 2025
120,847 Mcf/d $2.66/Mcf(1)
Fixed price swap
November 2025 to March 2026
123,216 Mcf/d
$3.58/Mcf
Fixed price swap
April 2026 to October 2026
66,347 Mcf/d $3.17/Mcf(1)
Fixed price swap
November 2026 to March 2027
71,086 Mcf/d
$3.27/Mcf
Fixed price swap
April 2027 to March 2028
14,217 Mcf/d
$3.23/Mcf
Natural gas - Chicago
Fixed price swap
April 2025 to October 2025
4,739 Mcf/d
$5.10/Mcf(1)
Natural gas - Dawn
Fixed price swap
January 2025 to October 2025
47,391 Mcf/d
$4.04/Mcf
Fixed price swap
November 2025 to March 2026
28,435 Mcf/d
$4.65/Mcf
Fixed price swap
April 2026 to October 2026
28,435 Mcf/d
$4.52/Mcf
Fixed price swap
November 2026 to March 2027
9,478 Mcf/d
$4.25/Mcf
Crude oil - WTI NYMEX
Fixed price swap
January 2025 to June 2025
5,000 bbls/d
US $74.43/bbl
Fixed price swap
July 2025 to December 2025
4,000 bbls/d
US $71.24/bbl(1)
(1) Contains contracts entered into subsequent to December 31, 2024.
Advantage Energy Ltd. - 22
Financial Risk Management (continued)
Description of Derivative
Term
Notional Amount
Rate
Forward rate - CAD/USD
Average rate currency swap January 2025
US $ 5,000,000/month
1.3996
Average rate currency swap February 2025 to June 2025
US $ 4,000,000/month
1.4048
Average rate currency swap July 2025
US $ 3,000,000/month
1.3969
Average rate currency swap August 2025 to December 2025
US $ 1,000,000/month
1.4320
Processing and Other Income
Three months ended
December 31
%
Year ended
December 31
%
($000, except as otherwise indicated)
2024
2023
Change
2024
2023
Change
Advantage processing and other income
746
2,484
(70)
5,557
7,627
(27)
per boe
0.11
0.39
(72)
0.21
0.34
(38)
Entropy engineering services
875
-
nm
1,250
-
nm
Processing and other income
1,621
2,484
(35)
6,807
7,627
(11)
Advantage earns processing income from contracts whereby the Corporation charges third-parties to utilize excess
capacity at its facilities.
For the three months and year ended December 31, 2024, Advantage generated processing and other income of
$0.7 million and $5.6 million, respectively, decreases of 70% and 27% compared to the same periods of the prior
year. The decreases were due to the Acquisition whereby Advantage acquired and now owns the production for
which Advantage was previously charging natural gas processing fees at the Glacier Gas Plant.
Net Sales of Purchased Natural Gas
Three months ended
December 31
%
Year ended
December 31
%
($000, except as otherwise indicated)
2024
2023
Change
2024
2023
Change
Sales of purchased natural gas
-
-
nm
-
3,124
nm
Natural gas purchases
-
-
nm
-
(3,371)
nm
Net sales of purchased natural gas
-
-
nm
-
(247)
nm
per boe
-
-
nm
-
(0.01)
nm
During the year ended December 31, 2023, the Corporation purchased natural gas volumes to satisfy physical sales
commitments during a planned turnaround at the Glacier Gas Plant.
Advantage Energy Ltd. - 23
Royalty Expense
Three months ended
December 31
%
Year ended
December 31
%
($000, except as otherwise indicated)
2024
2023
Change
2024
2023
Change
Royalty expense
16,983
10,302
65
52,471
42,432
24
per boe
2.40
1.64
46
2.02
1.92
5
Royalty rate (%)(1)
10.4
7.0
3.4
9.7
7.8
1.9
(1) Percentage of natural gas and liquids sales.
Advantage pays royalties to the owners of mineral rights from which we have mineral leases. The Corporation has
mineral leases with provincial governments, individuals and other companies. Our current average royalty rates are
determined by various royalty regimes that incorporate factors including well depths, completion data, well
production rates, and commodity prices. Royalties also include the impact of Gas Cost Allowance ("GCA") which is a
reduction of royalties payable to the Alberta Provincial Government (the "Crown") to recognize capital and
operating expenditures incurred by Advantage in the gathering and processing of the Crown’s share of our natural
gas production.
The increase in royalty expense was due to significantly higher liquids production from the Acquired Assets (see
"Production"), partially offset by lower natural gas royalties due to decreased natural gas prices. The average royalty
rate for both the three months and year ended December 31, 2024 is higher due to a higher proportion of sales
being liquids which generally attract higher royalty rates (see "Natural gas and liquids sales").
Advantage expects royalty rates to range from 8% to 10% in 2025.
Operating Expense
Three months ended
December 31
%
Year ended
December 31
%
($000, except as otherwise indicated)
2024
2023
Change
2024
2023
Change
Advantage operating expense
36,677
22,345
64
123,226
83,762
47
per boe
5.19
3.55
46
4.75
3.78
26
Entropy operating expense
859 379
127 2,521 691
265
Operating expense
37,536 22,724 65 125,747
84,453
49
Operating expense for Advantage’s natural gas and liquids operations for the three months and year ended
December 31, 2024, increased by $14.3 million and $39.5 million, increases of 64% and 47%, respectively, compared
to the same periods of the prior year. Operating expense per boe for the three months and year ended December
31, 2024 was $5.19/boe and $4.75/boe, respectively. Higher operating expense as compared to the prior year was
attributed to higher production from the Acquired Assets. The Acquired Assets are liquids-weighted and therefore
have higher operating costs per boe as well as higher operating netbacks. Operating costs per boe for the Acquired
Assets are now approximately 25% lower than expected due to greater-than-anticipated operational synergies
achieved to date. As a result, operating costs per boe are 11% below guidance for the second half of 2024.
Operating expense for Entropy for the three months and year ended December 31, 2024, increased as compared to
the same periods of the prior year due to Glacier Phase 1B being brought online in 2024.
Advantage expects 2025 annual operating expense per boe to be at approximately $5.20 to $5.90/boe (see
"Corporate Update").
Advantage Energy Ltd. - 24
Transportation Expense
Three months ended
December 31
%
Year ended
December 31
%
($000, except as otherwise indicated)
2024
2023
Change
2024
2023
Change
Natural gas transportation expense
22,064
21,337
3
84,264
77,364
9
Liquids transportation expense
4,568
4,327
6
16,875
13,239
27
Transportation expense
26,632
25,664
4
101,139
90,603
12
per boe
3.77
4.08
(8)
3.90
4.09
(5)
Transportation expense represents the cost of transporting our natural gas and liquids production to the sales
points, including associated fuel costs. Transportation expense for the three months and year ended December 31,
2024, increased by $1.0 million and $10.5 million, respectively, increases of 4% and 12% compared to the
corresponding periods in 2023. The increases in transportation expense are a result of additional physical natural
gas transportation to Chicago, additional liquids transportation associated with the new Key Access Pipeline System
(“KAPS”), and higher production primarily attributable to the Acquired Assets (see "Production"). Transportation
expense per boe fell for both the three months and year ended December 31, 2024 as a result of lower fuel costs
when compared to 2023.
Advantage expects 2025 annual transportation expense per boe to be comparable to 2024 and average
approximately $3.95 to $4.25/boe (see "Corporate Update").
Operating Income and Operating Netback
Three months ended
December 31
2024
2023
$000
per boe
$000
per boe
Natural gas and liquids sales
163,477
23.14
147,137
23.39
Realized gains on derivatives
20,580
2.91
6,140
0.98
Processing and other income
746
0.11
2,484
0.39
Royalty expense
(16,983)
(2.40)
(10,302)
(1.64)
Operating expense
(36,677)
(5.19)
(22,345)
(3.55)
Transportation expense
(26,632)
(3.77)
(25,664)
(4.08)
Operating income and operating netback (1)
104,511
14.80
97,450
15.49
Year ended
December 31
2024
2023
$000
per boe
$000
per boe
Natural gas and liquids sales
543,295
20.93
541,100
24.43
Realized gains on derivatives
51,127
1.97
35,243
1.59
Processing and other income
5,557
0.21
7,627
0.34
Net sales of purchased natural gas
-
-
(247)
(0.01)
Royalty expense
(52,471)
(2.02)
(42,432)
(1.92)
Operating expense
(123,226)
(4.75)
(83,762)
(3.78)
Transportation expense
(101,139)
(3.90)
(90,603)
(4.09)
Operating income and operating netback (1)
323,143
12.44
366,926
16.56
(1)
Specified financial measure which may not be comparable to similar specified financial measures used by other entities. Please see
"Specified Financial Measures ".
Advantage Energy Ltd. - 25
Operating Income and Operating Netback (continued)
Operating income and operating netback only include the results of Advantage’s natural gas and liquids operations
and exclude the results of Entropy. For the three months and year ended December 31, 2024, Advantage’s
operating income increased 7% and decreased 12%, respectively. Operating income in 2024 was negatively
impacted by lower natural gas benchmark prices, leading to reduced operating netbacks. However, this decline was
partially offset by increased higher-quality liquids production, particularly from the Acquired Assets, which generate
significantly higher operating netbacks (see "Production" and "Commodity Prices and Marketing"). Additionally,
lower natural gas prices resulted in higher realized gains on derivatives, further mitigating the negative impact (see
"Financial Risk Management"). Liquids production has played a vital role in our business, contributing more than
60% of Advantage’s operating income in 2024.
General and Administrative Expense ("G&A")
Three months ended
December 31
%
Year ended
December 31
%
($000, except as otherwise indicated)
2024
2023
Change
2024
2023
Change
Advantage G&A
7,172
6,605
9
28,498
23,972
19
Capitalized
(1,725)
(1,486)
16
(6,480)
(5,325)
22
Advantage G&A expense
5,447
5,119
6
22,018
18,647
18
per boe
0.77
0.81
(5)
0.85
0.84
1
Entropy G&A expense
3,968
2,082
91
11,066
5,990
85
General and administrative expense
9,415
7,201
31
33,084
24,637
34
Employees at December 31
82
61
34
General and administrative expense for the three months and year ended December 31, 2024, increased by $2.2
million and $8.4 million, respectively, increases of 31% and 34% compared to the same periods of the prior year.
G&A expense increased primarily due to higher staff levels, including additional Advantage employees associated
with the Acquired Assets, although G&A expense per boe remained consistent to the prior year, and new hires to
support the continued growth of the Entropy business and team.
Advantage Energy Ltd. - 26
Share-based Compensation
Three months ended
December 31
%
Year ended
December 31
%
($000, except as otherwise indicated)
2024
2023
Change
2024
2023
Change
Share-based compensation
252
2,281
(89)
4,950
8,788
(44)
Capitalized
(41)
(573)
(93)
(1,058)
(2,242)
(53)
Share-based compensation expense
211
1,708
(88)
3,892
6,546
(41)
per boe
0.03
0.27
(89)
0.15
0.30
(50)
The Corporation’s long-term compensation plan for employees consists of a balanced approach between a cash-
based performance award incentive plan (see "General and Administrative Expense") and a share-based Restricted
and Performance Award Incentive Plan. Under the Corporation’s restricted and performance award incentive plan,
Performance Share Units are granted to service providers of Advantage which cliff vest after three years from grant
date. Capitalized share-based compensation is attributable to personnel involved with the development of the
Corporation’s capital projects.
The Corporation recognized $0.2 million and $3.9 million of share-based compensation expense during the three
months and year ended December 31, 2024, respectively, and capitalized $0.0 million and $1.1 million. For the three
months and year ended December 31, 2024, total share-based compensation decreased by 88% and 41%,
respectively, compared to the same periods of the prior year, as a result of updating the expected performance
multiplier for outstanding awards.
Finance Expense
Three months ended
December 31
%
Year ended
December 31
%
($000, except as otherwise indicated)
2024
2023
Change
2024
2023
Change
Advantage interest expense
14,041
7,134
97
43,925
26,576
65
per boe
1.99
1.13
76
1.69
1.20
41
Advantage accretion expense
1,216
346
251
4,130
1,444
186
Advantage finance expense
15,257
7,480
104
48,055
28,020
72
Entropy finance expense
1,446
550
163
4,365
2,070
111
Finance expense
16,703
8,030
108
52,420
30,090
74
Advantage realized higher interest expense during the three months and year ended December 31, 2024, primarily
as a result of increased average outstanding bank indebtedness compared to the same periods in 2023 (see "Bank
Indebtedness, Credit Facilities and Working Capital"). Advantage’s bank indebtedness interest rates are primarily
based on short-term loans plus fees and determined by net debt to the trailing four quarters earnings before
interest, taxes, depreciation and amortization ("EBITDA") ratio as calculated pursuant to our Credit Facilities.
Additionally, Advantage incurred $1.8 million and $3.9 million, respectively, of interest expense for the three
months and year ended December 31, 2024 in connection with the convertible debentures which were issued to
finance the Acquisition (see "Convertible Debentures"). Accretion expense increased during the three months and
year ended December 31, 2024, largely attributed to additional accretion expense associated with the convertible
debentures issued in the second quarter of 2024.
Entropy finance expense increased during the three months and year ended December 31, 2024, due to an increased
average outstanding aggregate principal amount of unsecured debentures associated with investors financing of
the Glacier Phase 2 project (see "Unsecured Debentures").
Advantage Energy Ltd. - 27
Depreciation and Amortization Expense
Three months ended
December 31
%
Year ended
December 31
%
($000, except as otherwise indicated)
2024
2023
Change
2024
2023
Change
Advantage depreciation
52,428
43,543
20
194,583
148,542
31
per boe
7.42
6.92
7
7.50
6.71
12
Entropy depreciation and amortization
884
198
nm
4,906
355
nm
Depreciation and amortization expense
53,312
43,741
22
199,489
148,897
34
The increase in depreciation and amortization expense during the three months and year ended December 31, 2024,
was attributable to increased production (see "Production") accompanied by increased net book value associated
with property, plant, and equipment. Depreciation and amortization expense per boe increased compared to the
prior periods due to the Acquired Assets having a higher depletion rate per boe typical for liquids-weighted assets
as compared to the Corporation’s pre-existing natural gas-weighted assets.
Income Taxes
Three months ended
December 31
%
Year ended
December 31
%
($000, except as otherwise indicated)
2024
2023
Change
2024
2023
Change
Income tax expense
6,531
16,124
(59)
12,805
35,635
(64)
Effective tax rate (%)
28.1
23.9
4.2
38.9
23.7
15.2
Deferred income taxes arise from differences between the accounting and tax bases of our assets and liabilities. For
the three months and year ended December 31, 2024, the Corporation recognized a deferred income tax expense
of $6.5 million and $12.8 million, respectively. Income tax expense for the year ended December 31, 2024 is a result
of net income before taxes and non-controlling interest of $32.9 million, combined with non-deductible share-based
compensation expense, and valuation allowances applied against Entropy’s non-capital losses. As at December 31,
2024, the Corporation had a deferred income tax liability of $253.2 million.
Advantage expects it will not be subject to cash taxes at current forward commodity prices until at least calendar
2028 due to over $1.6 billion in tax pools. The estimated tax pools available at December 31, 2024 are as follows:
($ thousands)
Canadian development expenses
262,386
Canadian exploration expenses
76,156
Canadian oil and gas property expenses
307,697
Non-capital losses
396,312
Undepreciated capital cost
405,841
Capital losses
135,369
Scientific research and experimental development expenditures
32,506
Other
6,421
1,622,688
Advantage Energy Ltd. - 28
Net Income and Comprehensive Income attributable to Advantage shareholders
Three months ended
December 31
%
Year ended
December 31
%
($000, except as otherwise indicated)
2024
2023
Change
2024
2023
Change
Net income and comprehensive income
attributable to Advantage shareholders
17,130
41,026
(58)
21,719
101,597
(79)
per share - basic
0.10
0.25
(60)
0.13
0.61
(78)
per share - diluted
0.10
0.24
(59)
0.13
0.59
(78)
Advantage recognized net income attributable to Advantage shareholders of $17.1 million and $21.7 million for the
three months and year ended December 31, 2024, respectively. For the three months and year ended December
31, 2024, net income and comprehensive income attributable to Advantage shareholders was lower when
compared to 2023 due to the lower natural gas benchmark prices (see "Commodity Prices and Marketing").
However, this decline was partially offset by increased high-quality liquids production, particularly from the
Acquired Assets, which generate significantly higher operating netbacks (see "Production" and "Commodity Prices
and Marketing"). Additionally, lower natural gas prices resulted in higher gains on derivatives, further mitigating the
negative impact (see "Financial Risk Management").
Advantage Energy Ltd. - 29
Cash Provided by Operating Activities and Adjusted Funds Flow ("AFF")
Three months ended
December 31
Year ended
December 31
($000, except as otherwise indicated)
2024
2023
2024
2023
Cash provided by operating activities
56,350
89,048
217,533
323,345
Expenditures on decommissioning liability
2,071
2,124
3,059
4,043
Changes in non-cash working capital
22,968
(8,678)
20,804
(13,818)
Adjusted funds flow (1)
81,389
82,494
241,396
313,570
per basic share (1)
0.49
0.50
1.47
1.88
per diluted share(1)
0.48
0.49
1.45
1.82
Advantage adjusted funds flow(1)
84,309
84,291
250,031
320,169
per boe (1)
11.94
13.40
9.63
14.46
Entropy adjusted funds flow(1)
(2,920)
(1,797)
(8,635)
(6,599)
(1)
Specified financial measure which may not be comparable to similar specified financial measures used by other entities. Please see
"Specified Financial Measures".
(1)
The change in natural gas and liquids sales related to the change in production is determined by multiplying the prior period realized
price by current period production.
(2)
Other includes net sales of purchased natural gas, G&A expense, interest expense and foreign exchange gain (loss).
(3)
Specified financial measure which may not be comparable to similar specified financial measures used by other entities. Please see
"Specified Financial Measures".
For the three months and year ended December 31, 2024, Advantage realized cash provided by operating activities
of $56.4 million and $217.5 million, respectively, decreases of $32.7 million and $105.8 million when compared to
the same periods of 2023. After adjusting for non-cash changes in working capital and expenditures on
decommissioning liability, the Corporation realized adjusted funds flow of $81.4 million and $241.4 million,
decreases of $1.1 million and $72.2 million when compared to the same periods of 2023. Adjusted funds flow of
$241.4 million for the year ended December 31, 2024 includes $250.0 million or $1.52 per share attributable to
Advantage and $8.6 million of net expenses attributable to Entropy. The decrease in cash provided by operating
activities and adjusted funds flow for the three months and year ended December 31, 2024 was largely due to lower
natural gas benchmark prices (see "Commodity Prices and Marketing"). However, this decline was partially offset
by increased high-quality liquids production, particularly from the Acquired Assets, which generate significantly
higher operating netbacks (see
$313.6
$241.4
$141.8
$10.0
$0.8
$10.5
$41.3
$27.6
$49.3
$77.8
$16.9
$15.9
$-
($ millions)
Change in Adjusted Funds Flow(3)
(Year ended December 31, 2024)
Increase
Decrease
Advantage Energy Ltd. - 30
Cash Provided by Operating Activities and Adjusted Funds Flow ("AFF") (continued)
"Production" and "Commodity Prices and Marketing"). Additionally, lower natural gas prices resulted in higher
realized gains on derivatives, further mitigating the negative impact (see "Financial Risk Management"). Adjusted
funds flow for the three months ended December 31, 2024 has increased significantly as compared to the prior
three quarters of 2024 due to the high liquids production from the Acquired Assets as well as improved natural gas
benchmark prices.
Cash Used in Investing Activities and Net Capital Expenditures
Three months ended
December 31
Year ended
December 31
($000)
2024
2023
2024
2023
Drilling, completions, equipping, and tie-ins
72,366
26,931
174,559
182,157
Facilities and infrastructure
9,986
3,882
64,344
48,175
Corporate(2)
13,356
2,138
27,841
25,696
Exploration and development expenditures
95,708
32,951
266,744
256,028
Asset acquisitions
-
124
445,274
10,159
Asset dispositions
(11,421)
-
(11,421)
-
Net capital expenditures - Advantage(1)
84,287
33,075
700,597
266,187
Carbon capture and storage facilities
14,663
6,397
35,179
15,144
Intangible assets
212
466
1,135
1,465
Net capital expenditures - Entropy(1)
14,875
6,863
36,314
16,609
Net capital expenditures(1)
99,162
39,938
736,911
282,796
Changes in non-cash working capital
(27,960)
18,908
(39,186)
(35)
Cash used in investing activities
71,202
58,846
697,725
282,761
(1)
Specified financial measure which may not be comparable to similar specified financial measures used by other entities. Please see
"Specified Financial Measures".
(2)
Corporate includes workovers, turnaround cost, seismic, capitalized G&A, and office furniture and equipment.
(1)
Specified financial measure which may not be comparable to similar specified financial measures used by other entities. Please see
"Specified Financial Measures".
71%
58%
57%
67%
67%
47%
41%
65%
22%
19%
10%
10%
20%
37%
32%
9%
4%
18%
28%
6%
8%
4%
9%
12%
3%
5%
5%
17%
5%
13%
18%
13%
$116.7
$64.9
$61.2
$39.9
$80.1
$45.4
$66.7
$110.6
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
Q1 23
Q2 23
Q3 23
Q4 23
Q1 24
Q2 24
Q3 24
Q4 24
Millions
Net Capital Expenditures (Excluding Acquisitions & Dispositions)(1)
Drilling, completions, equipping, and tie-ins (% of total)
Facilities and infrastructure (% of total)
Corporate (% of total)
Net capital expenditures - Entropy (% of total)
Net capital expenditures ($000)
Advantage Energy Ltd. - 31
Cash Used in Investing Activities and Net Capital Expenditures (continued)
Asset acquisition
On June 24, 2024, Advantage closed the Acquisition of the Acquired Assets for cash consideration of $445.3 million,
including closing adjustments. The Acquisition capitalized on a rare opportunity to consolidate a high-quality,
liquids-weighted asset that is contiguous with Advantage’s existing core areas and complementary to its
infrastructure platform.
Following a comprehensive review of the Acquired Assets, we initiated our Charlie Lake drilling program in mid-
September. Our preliminary development plan for the Acquired Assets for 2025 and beyond focuses on holding
production levels steady at approximately 14,000 boe/d.
Asset dispositions
In the fourth quarter of 2024, Advantage disposed of select non-core assets, that were purchased through the
Acquisition, for net proceeds of $11.4 million. Subsequent to December 31, 2024, Advantage disposed of non-core
assets for net proceeds of $4.0 million.
Exploration and development expenditures
Advantage incurred $95.7 million and $266.7 million of exploration and development expenditures for the three
months and year ended December 31, 2024.
The following table summarizes wells drilled, completed and on production for the year ended December 31, 2024:
Three months ended
December 31, 2024
Year ended
December 31, 2024
Drilled
Completed
On production
Drilled
Completed
On production
(# of wells)
Gross (Net)
Gross (Net)
Gross (Net)
Gross (Net)
Gross (Net)
Gross (Net)
Glacier
5 (5.0)
4 (4.0)
6 (5.9)
12 (11.8)
16 (15.8)
14 (13.8)
Valhalla
7 (6.9)
4 (4.0)
2 (2.0)
7 (6.9)
4 (4.0)
2 (2.0)
Progress
2 (0.5)
4 (1.0)
4 (1.0)
4 (1.0)
4 (1.0)
4 (1.0)
Wembley
-
-
-
3 (3.0)
3 (3.0)
3 (3.0)
14 (12.4)
12 (9.0)
12 (8.9)
26 (22.7)
27 (23.8)
23 (19.8)
Glacier
2024 was an active year at our Glacier property with 12 gross (11.8 net) wells drilled, 16 gross (15.8 net) wells
completed, and 14 gross (13.8 net) wells placed on production. Raw gas handling capacity at the Glacier Gas Plant
remained at a maximum of 425 MMcf/d with a number of optimization projects completed during the year to
enhance our low operating cost structure.
Well performance continues to be strong with the wells placed on production during the year achieving average
well peak IP30 rates of 14.1 MMcf/d raw natural gas despite being choked back to minimize erosional risks and
impacts on existing nearby wells. Of all Alberta Montney gas wells placed on production in 2024, Advantage had 7
of the top 10 gas producing wells, based on IP90 rates.
Advantage Energy Ltd. - 32
Cash Used in Investing Activities and Net Capital Expenditures (continued)
Valhalla
Activity in Valhalla accelerated following the closing of the acquisition of Charlie Lake assets on June 24, 2024.
Activity consisted of 7 gross (6.9 net) wells drilled, 4 gross (4.0 net) wells completed, and 2 gross (2.0 net) wells
placed on production. Five of the seven wells drilled were Charlie Lake wells with the remaining two being Montney
wells. Subsequent to year end, our first four operated Charlie Lake wells have now been producing beyond thirty
days, with liquids rates that exceed historical type curves by over 65%. Average peak IP30 rates for these wells were
1,004 boe/d (1.4 MMcf/d natural gas, 737 bbls/d crude oil and 29 bbls/d NGLs) confirming the high quality and
production potential of the acquired Charlie Lake assets.
No new Montney wells were placed on production at Valhalla in 2024 due to the raw gas transportation line to the
Glacier Gas Plant being utilized at capacity. However, the two wells drilled in 2023, achieved significant average well
IP30 production rates of 1,936 boe/d (7.5 MMcf/d natural gas, 499 bbls/d condensate and 180 bbls/d NGLs). The
last six wells placed on production in Valhalla have averaged IP30 production rates of 1,431 boe/d (5.7 MMcf/d
natural gas, 354 bbls/d condensate and 121 bbls/d NGLs) despite the wells being choked back to minimize erosional
risks. Strong well results support Management’s view that our Valhalla Montney asset will continue to play a pivotal
role in the Corporation's liquids-rich gas development plan.
Progress
At Progress, site clearing work and pile installation work was completed on our 75 MMcf/d Progress 4-21 gas plant
with the remaining construction deferred to 2026, with no impact to forecasted production. Excess processing
capacity acquired in 2024 will be utilized instead, while reducing 2025 capital and increasing free cash flow by
approximately $35 million.
The completion of this facility will unlock significant synergies from the Acquired Assets through regional
infrastructure and production optimization, resulting in lower operating costs and stronger operating netbacks. The
Progress gas plant will also provide incremental processing capacity for our next phase of low-cost production
growth at Glacier.
Wembley
At Wembley, completion activity on a three well pad took place during the second quarter of 2024 with the wells
placed on production in the third quarter of 2024. The Wembley asset is connected to two major third-party gas
processing facilities and utilizes existing capacity in our 100% owned Wembley compressor site and liquids handling
hub. Advantage plans to resume drilling in Wembley with a 3 well pad spudding in the first quarter of 2025 with
production expected later in the second quarter of 2025.
Conroy
In the fourth quarter of 2024, Advantage acquired an idled 100 MMcf/d sour gas plant and pipeline network in close
proximity to the Corporation’s existing Conroy asset, establishing a direct path to highly efficient future
development. The asset was acquired in exchange for the assumption of the associated decommissioning liability.
Advantage Energy Ltd. - 33
Cash Used in Investing Activities and Net Capital Expenditures (continued)
Entropy net capital expenditures
Net capital expenditures incurred by Entropy are funded through the issuance of unsecured debentures to investors
that have provided Entropy access to $500 million in committed capital, of which $95 million has been drawn as at
December 31, 2024.
Entropy invested $14.9 million and $36.3 million in net capital expenditures during the three months and year ended
December 31, 2024, respectively. Entropy’s expenditures were mainly attributable to front-end engineering and
design cost and procurement of equipment required for construction of the Glacier Phase 2 project.
On June 21, 2024, the CCUS ITC which was included in Bill C-59 received royal assent. Advantage and Entropy have
incurred carbon capture expenditures dating back to January 1, 2022, which once approved by the federal
government, should be eligible expenditures under the CCUS ITC program. The Corporation has completed the
application process for our existing carbon capture projects Glacier Phase 1A and Glacier Phase 1B, including
submission to Natural Resources Canada and is pending approval.
Advantage Energy Ltd. - 34
Commitments and Contractual Obligations
The Corporation has commitments and contractual obligations in the normal course of operations. Such
commitments include operating costs for office leases, natural gas processing costs associated with third-party
facilities, and transportation costs for delivery of our natural gas and liquids (crude oil, condensate and NGLs)
production to sales points. Transportation commitments are required to ensure our production is delivered to sales
markets and Advantage actively manages our portfolio in conjunction with our future development plans ensuring
we are properly diversified to multiple markets. Of our total transportation commitments, $276 million, or 41% is
required for delivery of natural gas and liquids production to Alberta markets. Advantage has proactively committed
to $396 million in additional transportation to diversify natural gas production to the Dawn, Empress, Emerson and
Chicago markets, with the objective of reducing price volatility and achieving higher operating netbacks (see
“Transportation Expense”). Contractual obligations comprise those liabilities to third-parties incurred for the
purpose of financing Advantage’s business and development.
The following table is a summary of the Corporation’s remaining commitments and contractual obligations.
Advantage has no guarantees or off-balance sheet arrangements other than as disclosed.
Payments due by period
($ millions)
Total
2025
2026
2027
2028
2029
Beyond
Building operating cost (1)
2.2
0.8
0.8
0.6
-
-
-
Processing
188.5
24.8
28.1
28.1
28.2
26.4
52.9
Transportation
671.8
102.3
87.0
76.6
47.7
38.5
319.7
Total commitments
862.5
127.9
115.9
105.3
75.9
64.9
372.6
Performance Awards
5.0
1.2
1.4
2.4
-
-
-
Lease liability
3.2
1.2
1.1
0.7
0.1
0.1
-
Financing liability
137.0
13.0
13.0
13.0
13.1
13.0
71.9
Bank indebtedness (2)
- principal
475.0
-
475.0
-
-
-
-
- interest
47.0
31.3
15.7
-
-
-
-
Unsecured debentures (3)
- principal
101.0
-
-
-
-
-
101.0
- interest
71.0
8.1
8.1
8.1
8.1
8.1
30.5
Convertible debentures(4)
- principal
143.8
-
-
-
-
143.8
-
- interest
32.4
7.2
7.2
7.2
7.2
3.6
-
Total contractual obligations
1,015.3
62.0
521.4
31.4
28.5
168.6
203.4
Total future payments
1,877.8
189.9
637.3
136.7
104.4
233.5
576.0
(1) Excludes fixed lease payments which are included in the Corporation’s lease liability.
(2)
As at December 31, 2024 the Corporation’s bank indebtedness was governed by the Credit Facilities, which have a two-year term with
a syndicate of financial institutions. The Credit Facilities are revolving and extendible for a further 364-day period upon an annual review
and at the option of the syndicate. If not extended, the Credit Facilities will mature with any outstanding principal payable at the end of
the two-year term (see "Bank Indebtedness, Credit Facilities and Working Capital").
(3)
The unsecured debentures are a liability of Entropy and are non-recourse to Advantage. The principal balance of unsecured debenture
bears an interest rate of 8%, which can be paid-in-kind (subject to certain limitations) or cash, at the discretion of Entropy (see
"Unsecured Debentures").
(4) The convertible debentures have a maturity date of June 30, 2029 and a coupon rate of 5.0% payable semi-annually.
Advantage Energy Ltd. - 35
Liquidity and Capital Resources
The following table is a summary of the Corporation’s capitalization structure:
($000, except as otherwise indicated)
Year ended
December 31, 2024
Year ended
December 31, 2023
Bank indebtedness
470,424
212,854
Aggregate principal balance of convertible debentures(1)
143,750
-
Aggregate principal balance of unsecured debentures (2)
101,000
40,807
Working capital deficit (surplus)(3)
3,275
(18,651)
Net debt (3)
718,449
235,010
Shares outstanding
166,931,440
162,225,180
Shares closing market price ($/share)
9.86
8.53
Market capitalization
1,645,944
1,383,781
Total capitalization
2,364,393
1,618,791
(1)
The convertible debentures have a maturity date of June 30, 2029 and a coupon rate of 5% payable semi-annually.
(2)
The unsecured debentures are a liability of Entropy and are non-recourse to Advantage. The aggregate principal balance of unsecured
debenture bears an annual interest rate of 8%, which can be paid-in-kind (subject to certain limitations) or cash, at the discretion of
Entropy (see "Unsecured Debentures").
(3)
Specified financial measure which may not be comparable to similar specified financial measures used by other entities. Please see
"Specified Financial Measures".
As at December 31, 2024, net debt for Advantage was $625.6 million and Entropy was $92.8 million. Advantage's
net debt increased in 2024 due to the funding of the Acquisition completed in the second quarter with a combination
of bank indebtedness from the upsized Credit Facilities and the issuance of the convertible debentures. Advantage
has a $650 million Credit Facility of which $169.5 million or 26% was available after deducting outstanding letters
of credit of $5.5 million (see "Bank Indebtedness, Credit Facilities and Working Capital"). Debt to adjusted funds
flow ratio excluding Entropy was 2.5, and if the Corporation included $71.7 million of adjusted funds flow from the
Acquired Assets for the prior six months, the ratio would have been 1.9. Advantage has set a net debt target of
$450 million towards the end of 2025 which would equate to a debt to adjusted funds flow ratio of approximately
1.0. The Corporation’s Credit Facilities and adjusted funds flow were utilized to fund Advantage’s exploration and
development expenditures of $266.7 million and repurchase and cancel 2.5 million common shares for $21.7 million
(see "Shareholders’ Equity"). Entropy’s net capital expenditures of $36.3 million were separately funded through
the issuance of unsecured debentures to investors that have provided Entropy access to an aggregate of up to $500
million in committed capital, of which $95.0 million has been drawn as at December 31, 2024. Unsecured
debentures issued by Entropy are non-recourse to Advantage.
Advantage monitors its capital structure and makes adjustments according to market conditions in an effort to meet
its objectives given the current outlook of the business and industry in general. The capital structure of the
Corporation is composed of working capital, bank indebtedness, convertible debentures, unsecured debentures
issued by Entropy, and share capital. Advantage may manage its capital structure by issuing new common shares,
repurchasing outstanding common shares, obtaining additional financing through bank indebtedness, refinancing
current debt, issuing other financial or equity-based instruments, declaring a dividend, adjusting capital spending,
or disposing of assets. The capital structure is reviewed by Management and the Board of Directors on an ongoing
basis. Management of the Corporation’s capital structure is facilitated through its financial and operational
forecasting processes. Selected forecast information is frequently provided to the Board of Directors. This continual
financial assessment process further enables the Corporation to mitigate risks. The Corporation continues to satisfy
all liabilities and commitments as they come due.
Advantage Energy Ltd. - 36
Bank Indebtedness, Credit Facilities and Working Capital
As at December 31, 2024, Advantage had bank indebtedness outstanding of $470.4 million, an increase of $257.6
million since December 31, 2023. On June 24, 2024, the borrowing base of the Credit Facilities was increased to
$650 million from $350 million. The increased borrowing base was partially used to finance the acquisition of certain
Charlie Lake and Montney assets (see "Corporate Update"). Since completing the Acquisition at the end of the
second quarter, Advantage’s bank indebtedness has decreased $17.6 million, with a continued focus on debt
reduction into 2025. Advantage’s Credit Facilities are collateralized by a $2 billion floating charge demand debenture
covering all assets of the Corporation and has no financial covenants (the "Credit Facilities"). Under the Credit
Facilities, the Corporation must ensure at all times that its Liability Management Rating ("LMR") as determined by
the Alberta Energy Regulator ("AER") is not less than 2.0 which was met at December 31, 2024. The borrowing base
for the Credit Facilities is determined by the banking syndicate through an evaluation of our reserve estimates based
on their independent commodity price assumptions. Revisions or changes in the reserve estimates and commodity
prices can have either a positive or a negative impact on the borrowing base. The Credit Facilities comprise a $60
million extendible revolving operating loan facility from one financial institution and a $590 million extendible
revolving loan facility from a syndicate of financial institutions. The Credit Facility has a term of two years with a
maturity date in June 2026 and is subject to an annual review and extension by the lenders. During the revolving
period, a review of the maximum borrowing amount occurs annually on or before May 31 and semi-annually on or
before November 30. During the term, no principal payments are required until the revolving period matures in
June 2026 in the event of a reduction, or the Credit Facility not being renewed. The Corporation had letters of credit
of $5.5 million outstanding at December 31, 2024 (December 31, 2023 - $12.9 million). The Credit Facilities do not
contain any financial covenants, but the Corporation is subject to various affirmative and negative covenants under
its Credit Facilities. The Corporation was in compliance with all covenants as at December 31, 2024 and December
31, 2023.
The Corporation had a working capital deficit of $3.3 million as at December 31, 2024, a reduction as compared to
a surplus of $18.7 million at December 31, 2023, largely due to the increased in trade and other accrued liabilities
connected to the timing of net capital expenditures and related payments, offset by increased trade and other
receivables related to higher liquids sales volumes. Our working capital includes cash and cash equivalents, trade
and other receivables, prepaid expenses and deposits, trade and other accrued liabilities. Working capital varies
primarily due to the timing of such items, the current level of business activity including our capital expenditure
program, commodity price volatility, and seasonal fluctuations. We do not anticipate any problems in meeting
future obligations as they become due as they can be satisfied with cash provided by operating activities and our
available Credit Facilities.
Convertible Debentures
In June 2024, the Corporation issued $143.8 million principal amount of convertible unsecured subordinated
debentures (the "Debentures") at a price of $1,000 per debenture.
The Debentures will mature and be repayable on June 30, 2029 and will accrue interest at the rate of 5.0% per
annum payable semi-annually in arrears on June 30 and December 31 of each year, commencing December 31,
2024.
Advantage Energy Ltd. - 37
Convertible Debentures (continued)
At the Debenture holder's option, the Debentures may be convertible into Common Shares at any time prior to the
close of business on the earlier of the business day immediately preceding (i) the maturity date, or (ii) if called for
redemption, the date fixed for redemption by the Corporation, (iii) if called for repurchase in the event of a change
of control, the payment date, at a conversion price of $14.58 per Common Share, subject to adjustment in certain
events. This represents a conversion rate of approximately 68.5871 Common Shares for each $1,000 principal
amount of the Debentures, subject to the operation of certain antidilution provisions. In the event of a change of
control of the Corporation or the redemption of the Debentures by Advantage, subject to certain terms and
conditions, holders of the Debentures will be entitled to convert their Debentures and, subject to certain limitations,
receive, in addition to the number of Common Shares they would otherwise be entitled to receive, an additional
number of Common Shares per $1,000 principal amount of the Debentures.
The fair value of the Debentures at December 31, 2024 was $147.3 million using quoted market prices on the
Toronto Stock Exchange (“TSX”).
Unsecured Debentures
The Corporation’s subsidiary Entropy is a party to two investment agreements with investors who provided capital
commitments of $300 million and $200 million, respectively (the "Investment Agreements"). In connection with the
Investment Agreements, Entropy will issue unsecured debentures to fund carbon capture and storage projects that
reach final investment decision as certain predetermined return thresholds are met. Under the terms of the
Investment Agreements, Entropy and the investors have options that provide for the unsecured debentures to be
exchanged for common shares at an exchange price of $10.00 per share and $12.75 per share, respectively, subject
to adjustment in certain circumstances. The investors have the option to exchange the outstanding unsecured
debentures for common shares at any time while Entropy may commence a mandatory exchange of unsecured
debentures for common shares in advance of an Initial Public Offering ("IPO"). The unsecured debentures have a
term of 10 years, if not exchanged for common shares, which are to be repaid at the end of the term in the amount
greater of the principal amount and the investor’s pro rata share of the fair market value of Entropy. Each unsecured
debenture issued by Entropy bears an interest rate of 8% per annum that Entropy can elect to pay in cash or pay-
in-kind, due on a quarterly basis. As at December 31, 2024, Entropy’s unsecured debentures have an outstanding
aggregate principal balance of $101.0 million (including paid-in-kind interest) (December 31, 2023 - $40.8 million).
During 2024, Entropy issued unsecured debentures for gross proceeds of $55.0 million (December 31, 2023 - $15.0
million) and incurred $3.5 million of issuance costs (December 31, 2023 - $1.2 million) associated with investors
financing of the Glacier Phase 2 project. Subsequent to year-end, Entropy issued unsecured debentures for gross
proceeds of $42.0 million.
For the year ended December 31, 2024, Entropy incurred interest of $5.2 million (December 31, 2023 - $2.5 million),
of which none was paid in cash (December 31, 2023 - $1.7 million), and $5.2 million was paid-in-kind (December 31,
2023 - $0.8 million).
Advantage Energy Ltd. - 38
Other Liabilities
The Corporation has a 15-year take-or-pay volume commitment with a 12.5% working interest partner in the
Corporation’s Glacier Gas Plant, with a term due to expire in 2035. The volume commitment agreement is treated
as a financing transaction with an effective interest rate of 9.1%. As at December 31, 2024, the financing liability
was $88.1 million (December 31, 2023 - $92.9 million) and for the year ended December 31, 2024, the Corporation
made cash payments of $13.1 million (December 31, 2023 - $12.8 million) under the agreement.
As at December 31, 2024, Advantage had a decommissioning liability of $126.8 million (December 31, 2023 – $62.2
million) for the future abandonment and reclamation of the Corporation’s natural gas and liquids properties. The
decommissioning liability includes assumptions in respect of actual costs to abandon and reclaim wells and facilities,
the time frame in which such costs will be incurred, annual inflation factors and discount rates. The total estimated
undiscounted, uninflated cash flows required to settle the Corporation’s decommissioning liability was $168.7
million (December 31, 2023 – $82.6 million), with 37% of these costs to be incurred beyond 2050. Actual spending
on decommissioning for the year ended December 31, 2024, was $3.1 million (year ended December 31, 2023 –
$4.0 million). Advantage continues to maintain an industry leading LMR of 20.0, demonstrating that the Corporation
has no issues addressing its abandonment, remediation, and reclamation obligations.
Non-controlling interest ("NCI")
Advantage owns 92% of the common shares of Entropy and therefore consolidates 100% of Entropy while
recognizing a non-controlling interest in shareholders’ equity that represents the carrying value of the 8% common
shares held by outside interests. If the investors in Entropy were to invest their total $500 million capital
commitment for unsecured debentures and the unsecured debentures were subsequently exchanged for common
shares, Advantage would own approximately 35% of the common shares (see "Unsecured Debentures").
For the year ended December 31, 2024, the net loss and comprehensive loss attributed to non-controlling interest
was $1.6 million (December 31, 2023 - $1.3 million).
Shareholders’ Equity
On June 24, 2024, the Corporation closed the Acquisition and issued 5.9 million common shares at $11.00 per share
for gross proceeds of $65.0 million. The Corporation incurred issuance costs of $2.9 million which was charged to
share capital.
On May 9, 2024, the TSX approved the Corporation renewing its normal course issuer bid ("NCIB"). Pursuant to the
NCIB, Advantage may purchase for cancellation, from time to time, as it considers advisable, up to a maximum of
13,835,841 common shares of the Corporation. The NCIB commenced on May 14, 2024 and will terminate on May
13, 2025. For the year ended December 31, 2024, the Corporation purchased 2.5 million common shares for
cancellation at an average price of $8.86 per common share for a total of $21.7 million. Since initiating our buyback
program in April 2022, Advantage has repurchased 37.8 million common shares for a total of $379.9 million to
December 31, 2024. On June 21, 2024, Bill C-59 received royal assent, which, among other things, provides for a 2%
tax on the net value of equity repurchased by certain public corporations and other publicly listed entities. At
December 31, 2024, the Corporation had no liability with respect to the new 2% tax, as the value of the Corporation’s
equity issuances exceeded the value of the equity that has been repurchased.
As at December 31, 2024, a total of 2.3 million Performance Share Units were outstanding under the Corporation’s
Restricted and Performance Award Incentive Plan, which represents 1.4% of Advantage’s total outstanding common
shares.
As at March 4, 2025, Advantage had 166.7 million common shares outstanding.
Advantage Energy Ltd. - 39
Annual Financial Information
The following is a summary of select financial information of the Corporation for the years indicated.
($000, except as otherwise indicated)
Year ended
December 31, 2024
Year ended
December 31, 2023
Year ended
December 31, 2022
Total revenues
553,073
535,187
781,262
Net income attributable to Advantage
shareholders
21,719
101,597
338,667
per share - basic
0.13
0.61
1.81
per share - diluted
0.13
0.59
1.75
Total assets
2,945,958
2,299,028
2,216,958
Total non-current liabilities
1,061,293
599,932
514,447
Advantage Energy Ltd. - 40
Quarterly Performance
(1)
Specified financial measure which may not be comparable to similar specified financial measures used by other entities. Please see
"Specified Financial Measures".
(2)
Based on basic weighted average shares outstanding.
(3)
Net income and comprehensive income attributable to Advantage Shareholders.
The table above highlights the Corporation’s performance for the fourth quarter of 2024 and for the preceding seven
quarters. In 2023 the Corporation achieved a steady increase in production over the year rising from 58,144 boe/d
in the first quarter to 68,384 boe/d in the fourth quarter. Sales and adjusted funds flow were lower in the second
quarter of 2023 due to lower natural gas and liquids benchmark prices and a 17-day turnaround at the Glacier Gas
Plant in May 2023. Sales and adjusted funds improved for the remainder of 2023 with increased production although
natural gas benchmark prices remained weak.
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
($000, except as otherwise indicated)
Financial Statement Highlights
Natural gas and liquids sales
163,477
139,840
104,081
135,897
147,137
140,724
107,240
145,999
Net income and comprehensive income
(3)
17,130
(6,490)
(12,084)
23,163
41,026
28,314
2,538
29,719
per basic share
(2)
0.10
(0.04)
(0.07)
0.14
0.25
0.17
0.02
0.18
per diluted share
(3)
0.10
(0.04)
(0.07)
0.14
0.24
0.16
0.01
0.17
Basic weighted average shares (000)
166,974
166,972
161,362
160,444
163,939
167,702
167,268
167,311
Diluted weighted average shares (000)
169,785
166,972
161,362
164,129
168,441
172,182
171,815
174,328
Cash provided by operating activities
56,350
46,719
47,090
67,374
89,048
90,376
37,966
105,955
Cash provided by (used in) financing activities
22,789
(1,097)
447,502
11,883
(52,120)
(3,562)
43,778
(58,359)
Cash used in investing activities
(71,202)
(52,765)
(494,331)
(79,427)
(58,846)
(49,886)
(88,439)
(85,590)
Other Financial Highlights
Adjusted funds flow
(1)
81,389
52,260
42,354
65,393
82,494
81,862
52,381
96,833
per basic share
(1)(2)
0.49
0.31
0.26
0.41
0.50
0.49
0.31
0.58
per diluted share
(1)(2)(3)
0.48
0.31
0.26
0.40
0.49
0.48
0.30
0.56
Net capital expenditures
(1)
99,162
66,727
490,888
80,134
39,938
61,234
64,924
116,700
Free cash flow
(1)
(29,194)
(14,668)
(3,059)
(14,741)
42,680
30,663
(12,543)
(19,867)
Bank indebtedness
470,424
469,551
488,008
238,578
212,854
226,127
226,442
167,260
Net debt
(1)
718,449
693,959
674,665
279,963
235,010
236,311
238,493
204,709
Operating Highlights
Production
Crude oil (bbls/d)
7,527
8,144
3,033
2,630
3,254
3,035
2,801
1,731
Condensate (bbls/d)
979
1,055
1,200
1,231
1,264
1,368
871
1,157
NGLs (bbls/d)
3,379
3,621
2,908
2,591
3,345
3,174
2,683
2,877
Total liquids production (bbls/d)
11,885
12,820
7,141
6,452
7,863
7,577
6,355
5,765
Natural gas (mcf/d)
389,331
369,306
355,563
357,410
363,124
339,709
272,919
314,273
Total production (boe/d)
76,774
74,371
66,401
66,020
68,384
64,195
51,842
58,144
Average prices (including realized derivatives)
Natural gas ($/mcf)
2.46
1.65
1.82
2.86
2.84
2.96
2.81
4.42
Liquids ($/bbl)
87.84
85.05
84.58
80.21
81.55
77.91
75.36
77.77
Operating Netback ($/boe)
Natural gas and liquids sales
23.14
20.44
17.22
22.62
23.39
23.83
22.73
27.90
Realized gains (losses) on derivatives
2.91
2.44
1.59
0.70
0.98
1.02
1.07
3.44
Processing and other income
0.11
0.15
0.32
0.30
0.39
0.39
0.22
0.35
Net sales of purchased natural gas
-
-
-
-
-
-
(0.05)
-
Royalty expense
(2.40)
(2.83)
(1.16)
(1.52)
(1.64)
(1.55)
(1.33)
(3.19)
Operating expense
(5.19)
(5.46)
(4.09)
(4.08)
(3.55)
(3.80)
(4.44)
(3.44)
Transportation expense
(3.77)
(3.88)
(3.73)
(4.23)
(4.08)
(3.70)
(4.34)
(4.33)
Operating netback
(1)
14.80
10.86
10.15
13.79
15.49
16.19
13.86
20.73
2023
2024
Advantage Energy Ltd. - 41
Quarterly Performance (continued)
In the first and second quarter of 2024 natural gas and liquids sales and adjusted funds flow declined with lower
natural gas prices from an unseasonably mild winter, strong natural gas supply and resulting high North American
storage levels. The Corporation increased its sales and adjusted funds flow in the third and fourth quarter of 2024
primarily due to increased production and cash flow provided from the Acquired Assets, although significantly weak
natural gas prices persisted and had an adverse offsetting impact. The particularly low natural gas pricing
environment during the second and third quarter resulted in the recognition of net losses. Cash provided by
operating activities experienced greater fluctuations than adjusted funds flow due to changes in non-cash working
capital, which primarily resulted from the amount and timing of trade payable settlements and accounts receivable
collections.
Critical Accounting Estimates
The preparation of financial statements in accordance with IFRS Accounting Standards requires Management to
make certain judgments and estimates. Changes in these judgments and estimates could have a material impact on
the Corporation’s financial results and financial condition.
Management relies on the estimate of reserves as prepared by the Corporation’s independent qualified reserves
evaluator. The process of estimating reserves is critical to several accounting estimates. The process of estimating
reserves is complex and requires significant judgments and decisions based on available geological, geophysical,
engineering and economic data. These estimates may change substantially as additional data from ongoing
development and production activities becomes available and as economic conditions impact natural gas and liquids
prices, operating expense, royalty burden changes, and future development costs. Reserve estimates impact net
income and comprehensive income through depreciation, impairment and impairment reversals of natural gas and
liquids properties. After tax discounted cashflows are used to ensure the carrying amount of the Corporation’s
natural gas and liquids properties are recoverable. The discount rate used is subject to judgement and may impact
the carrying value of the Corporation’s property, plant and equipment. The reserve estimates are also used to assess
the borrowing base for the Credit Facilities. Revision or changes in the reserve estimates can have either a positive
or a negative impact on asset values, net income, comprehensive income and the borrowing base of the
Corporation.
The Corporation’s assets are required to be aggregated into cash generating units ("CGUs") for the purpose of
calculating impairment based on their ability to generate largely independent cash inflows. Factors considered in
the classification include the integration between assets, shared infrastructures, the existence of common sales
points, geography, geologic structure, and the manner in which Management monitors and makes decisions about
its operations. The classification of assets and allocation of corporate assets into CGUs requires significant judgment
and may impact the carrying value of the Corporation’s assets in future periods.
Management’s process of determining the provision for deferred income taxes and the provision for
decommissioning liability costs and related accretion expense are based on estimates. Estimates used in the
determination of deferred income taxes provisions are significant and can include expected future tax rates,
expectations regarding the realization or settlement of the carrying amount of assets and liabilities and other
relevant assumptions. Estimates used in the determination of decommissioning liability cost provisions and
accretion expense are significant and can include proved and probable reserves, future production rates, future
commodity prices, future costs, future interest rates and other relevant assumptions. Revisions or changes in any
of these estimates can have either a positive or a negative impact on asset and liability values, net income and
comprehensive income.
Advantage Energy Ltd. - 42
Critical Accounting Estimates (continued)
In accordance with IFRS Accounting Standards, derivative assets and liabilities are recorded at their fair values at
the reporting date, with gains and losses recognized directly into comprehensive income. The fair value of
derivatives outstanding is an estimate based on pricing models, estimates, assumptions and market data available
at that time. As such, the recognized amounts are non-cash items and the actual gains or losses realized on eventual
cash settlement can vary materially due to subsequent fluctuations in commodity prices as compared to the
valuation assumptions. For embedded derivatives, Management assesses and determines the definition of the host
contract and the separate embedded derivative. The judgements made in determining the host contract can
influence the fair value of the embedded derivative.
In determining the fair value of Entropy’s unsecured debentures, judgments are required related to the choice of a
pricing model, the estimation of share price, share price volatility, timing and probability of an IPO, credit spread,
interest rates, and the expected term of the underlying instruments. Any changes in the estimates or inputs utilized
to determine fair value could result in a significant impact on the Corporation’s future operating results.
Business combinations are accounted for using the acquisition method of accounting. The determination of fair
value often requires Management to make assumptions and estimates about future events. The assumptions and
estimates with respect to determining the fair value of property, plant and equipment and exploration and
evaluation assets acquired generally require the most judgment and include estimates of oil and gas reserves
acquired, forecast benchmark commodity prices and discount rates. Changes in any of the assumptions or estimates
used in determining the fair value of acquired assets and liabilities could impact the amounts assigned to assets,
liabilities and goodwill.
Changes in Accounting Policies
The Corporation has adopted the following accounting policies during the year ended December 31, 2024.
Amendments to IAS 1, Presentation of Financial Statements
On January 1, 2024, the Corporation adopted the amendments to IAS 1 Presentation of Financial Statements, which
addresses the classification of liabilities with covenants as current or non-current in the Statements of Financial
Position. As a result of the amendment, the Unsecured Debentures, which were previously reported as non-current
liabilities, have been reclassified to current liabilities.
Accounting Pronouncements not yet Adopted
A description of additional accounting standards and interpretations that will be adopted in future periods can be
found in the notes to the Consolidated Financial Statements for the year ended December 31, 2024.
Environmental Reporting
Environmental regulations impacting climate-related matters continue to evolve and may have additional disclosure
requirements in the future. The International Sustainability Standards Board published the new IFRS sustainability
disclosure standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and
IFRS S2 Climate-related Disclosures, with the aim to develop an environment sustainability disclosure framework
that is accepted globally. In addition, the Canadian Securities Administrators have proposed National Instrument 51-
107 – Disclosure of Climate-related Matters, with additional climate-related disclosure requirements for certain
reporting issuers in Canada. If the Corporation is unable to meet future sustainability reporting requirements of
regulators or current and future expectations of stakeholders, its business and ability to attract and retain skilled
employees, obtain regulatory permits, licenses, registrations, approvals and authorizations from various
government authorities, and raise capital may be adversely affected. The cost to comply with these standards, and
others that may be developed or evolved over time, has not yet been quantified.
Advantage Energy Ltd. - 43
Evaluation of Disclosure Controls and Procedures
Advantage’s Chief Executive Officer and Chief Financial Officer have designed disclosure controls and procedures
("DC&P"), or caused it to be designed under their supervision, to provide reasonable assurance that material
information relating to the Corporation is made known to them by others, particularly during the period in which
the annual filings are being prepared, and information required to be disclosed by the Corporation in its annual
filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed,
summarized and reported within the time periods specified in securities legislation.
Management of Advantage, including our Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of the Corporation’s DC&P as at December 31, 2024. Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that the DC&P are effective as of the end of the year, in all
material respects.
Evaluation of Internal Controls over Financial Reporting
Advantage’s Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining
internal control over financial reporting ("ICFR"). They have designed ICFR, or caused it to be designed under their
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with IFRS. The control framework Advantage’s officers
used to design the Corporation’s ICFR is the Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations.
Management of Advantage, including our Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of the Corporation’s ICFR as at December 31, 2024. Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that the ICFR are effective as of the end of the year, in all material
respects.
Advantage’s Chief Executive Officer and Chief Financial Officer are required to disclose any change in the ICFR that
occurred during our most recent interim period that has materially affected, or is reasonably likely to materially
affect, the Corporation’s ICFR. No material changes in the ICFR were identified during either the quarter or year
ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our ICFR.
It should be noted that while the Chief Executive Officer and Chief Financial Officer believe that the Corporation’s
design of DC&P and ICFR provide a reasonable level of assurance that they are effective, they do not expect that the
control system will prevent all errors and fraud. A control system, no matter how well conceived or operated, does
not provide absolute, but rather is designed to provide reasonable assurance that the objective of the control system
is met. The Corporation’s ICFR may not prevent or detect all misstatements because of inherent limitations.
Additionally, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions or deterioration in the degree of compliance with the
Corporation’s policies and procedures.
Advantage Energy Ltd. - 44
Specified Financial Measures
Throughout this MD&A and in other documents disclosed by the Corporation, 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 the Corporation’s performance.
Previously, the Corporation’s calculations for operating income, operating netback and adjusted funds flow per boe
included the results of Entropy. Effective December 31, 2024, the Corporation revised the composition of operating
income, operating netback and adjusted funds flow per boe to exclude the results of Entropy, to allow users to
assess the performance of the Corporation’s natural gas and liquids operations. Comparative figures have been
restated to reflect these classifications.
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 December 31
2024
2023
($000)
Advantage
Entropy
Total
Advantage
Entropy
Total
Cash provided by operating activities
62,487
(6,137)
56,350
91,239
(2,191)
89,048
Expenditures on decommissioning liability
2,071
-
2,071
2,124
-
2,124
Changes in non-cash working capital
19,751
3,217
22,968
(9,072)
394
(8,678)
Adjusted funds flow
84,309
(2,920)
81,389
84,291
(1,797)
82,494
Year ended December 31
2024
2023
($000)
Advantage
Entropy
Total
Advantage
Entropy
Total
Cash provided by operating activities
228,965
(11,432)
217,533
331,064
(7,719)
323,345
Expenditures on decommissioning liability
3,059
-
3,059
4,043
-
4,043
Changes in non-cash working capital
18,007
2,797
20,804
(14,938)
1,120
(13,818)
Adjusted funds flow
250,031
(8,635)
241,396
320,169
(6,599)
313,570
Advantage Energy Ltd. - 45
Specified Financial Measures (continued)
Non-GAAP Financial Measures (continued)
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 December 31
2024
2023
($000)
Advantage
Entropy
Total
Advantage
Entropy
Total
Cash used in investing activities
60,083
11,119
71,202
52,684
6,162
58,846
Changes in non-cash working capital
24,204
3,756
27,960
(19,609)
701
(18,908)
Net capital expenditures
84,287
14,875
99,162
33,075
6,863
39,938
Year ended December 31
2024
2023
($000)
Advantage
Entropy
Total
Advantage
Entropy
Total
Cash used in investing activities
667,101
30,624
697,725
268,872
13,889
282,761
Changes in non-cash working capital
33,496
5,690
39,186
(2,685)
2,720
35
Net capital expenditures
700,597
36,314
736,911
266,187
16,609
282,796
Free Cash Flow
Previously, the Corporation’s calculations for free cash flow included the impacts of acquisitions and dispositions.
Effective December 31, 2024, the Corporation revised the composition of free cash flow to exclude the impacts of
acquisitions and dispositions. Comparative figures have been restated to reflect these classifications.
The Corporation computes free cash flow as adjusted funds flow less net capital expenditures excluding the impact
of asset acquisitions and dispositions. The Corporation uses free cash flow as an indicator of the efficiency and
liquidity of the Corporation’s business by measuring its cash available after net capital expenditures, excluding
acquisitions and dispositions, to settle outstanding debt and obligations and potentially return capital to
shareholders by paying dividends or buying back common shares. The Corporation excludes the impact of
acquisitions and dispositions as they are not representative of the free cash flow used in the Corporation’s natural
gas and liquids and carbon capture operations and are financed by means other than adjusted funds flow. A
reconciliation of the most directly comparable financial measure has been provided below:
Three months ended December 31
2024
2023
($000)
Advantage
Entropy
Total
Advantage
Entropy
Total
Cash provided by operating activities
62,487
(6,137)
56,350
91,239
(2,191)
89,048
Cash used in investing activities
(60,083)
(11,119)
(71,202)
(52,684)
(6,162)
(58,846)
Changes in non-cash working capital
(4,453)
(539)
(4,992)
10,537
(307)
10,230
Expenditures on decommissioning liability
2,071
-
2,071
2,124
-
2,124
Acquisitions
-
-
-
124
-
124
Dispositions
(11,421)
-
(11,421)
-
-
-
Free cash flow - surplus (deficit)
(11,399)
(17,795)
(29,194)
51,340
(8,660)
42,680
Advantage Energy Ltd. - 46
Specified Financial Measures (continued)
Non-GAAP Financial Measures (continued)
Year ended December 31
2024
2023
($000)
Advantage
Entropy
Total
Advantage
Entropy
Total
Cash provided by operating activities
228,965
(11,432)
217,533
331,064
(7,719)
323,345
Cash used in investing activities
(667,101)
(30,624)
(697,725)
(268,872)
(13,889)
(282,761)
Changes in non-cash working capital
(15,489)
(2,893)
(18,382)
(12,253)
(1,600)
(13,853)
Expenditures on decommissioning liability
3,059
-
3,059
4,043
-
4,043
Acquisitions
445,274
-
445,274
10,159
-
10,159
Dispositions
(11,421)
-
(11,421)
-
-
-
Free cash flow - surplus (deficit)
(16,713)
(44,949)
(61,662)
64,141
(23,208)
40,933
Operating Income
Operating income is comprised of natural gas and liquids sales, realized gains 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 income provides Management and users with
a measure to compare the profitability of Advantage’s field operations between companies, development areas and
specific wells. The composition of operating income is as follows:
Three months ended
December 31
Year ended
December 31
($000)
2024
2023
2024
2023
Natural gas and liquids sales
163,477
147,137
543,295
541,100
Realized gains on derivatives
20,580
6,140
51,127
35,243
Processing and other income
746
2,484
5,557
7,627
Net sales of purchased natural gas
-
-
-
(247)
Royalty expense
(16,983)
(10,302)
(52,471)
(42,432)
Operating expense
(36,677)
(22,345)
(123,226)
(83,762)
Transportation expense
(26,632)
(25,664)
(101,139)
(90,603)
Operating Income
104,511
97,450
323,143
366,926
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
December 31
Year ended
December 31
($000, except as otherwise indicated)
2024
2023
2024
2023
Adjusted funds flow
81,389
82,494
241,396
313,570
Basic weighted average shares outstanding (000)
166,974
163,939
163,955
166,553
Diluted weighted average shares outstanding (000)
169,785
168,441
166,821
171,833
Adjusted funds flow per basic share ($/share)
0.49
0.50
1.47
1.88
Adjusted funds flow per diluted share ($/share)
0.48
0.49
1.45
1.82
Advantage Energy Ltd. - 47
Specified Financial Measures (continued)
Non-GAAP Ratios
Adjusted Funds Flow per BOE
Adjusted funds flow per boe is derived by dividing adjusted funds flow attributed to Advantage 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
December 31
Year ended
December 31
($000, except as otherwise indicated)
2024
2023
2024
2023
Advantage adjusted funds flow
84,309
84,291
250,031
320,169
Total production (boe/d)
76,774
68,384
70,918
60,678
Days in period
92
92
366
365
Total production (boe)
7,063,208
6,291,328
25,955,805
22,147,470
Adjusted funds flow per BOE ($/boe)
11.94
13.40
9.63
14.46
Operating netback
Operating netback is derived by dividing operating income by the total production in boe for the reporting period.
Operating netback 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
December 31
Year ended
December 31
($000, except as otherwise indicated)
2024
2023
2024
2023
Operating income
104,511
97,450
323,143
366,926
Total production (boe/d)
76,774
68,384
70,918
60,678
Days in period
92
92
366
365
Total production (boe)
7,063,208
6,291,328
25,955,805
22,147,470
Operating netback ($/boe)
14.80
15.49
12.44
16.56
Advantage Energy Ltd. - 48
Specified Financial Measures (continued)
Non-GAAP Ratios (continued)
Debt to Adjusted Funds Flow Ratio
Debt to adjusted funds flow ratio 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, including working capital, and its outstanding
aggregate Convertible Debentures if Advantage devoted all its adjusted funds flow to debt repayment. Debt to
adjusted funds flow is calculated by taking bank indebtedness, inclusive of working capital, plus Convertible
Debentures, and dividing it by adjusted fund flow (for the tailing four quarters) that can be used to satisfy such
borrowings. The Unsecured Debentures, and adjusted funds flow attributed to Entropy are excluded from the
calculation as they are a liability of Entropy and are non-recourse to Advantage.
Year ended
December 31
($000, except as otherwise indicated)
2024
2023
Bank indebtedness
470,424
212,854
Convertible debentures
143,750
-
Advantage working capital deficit (surplus)
11,377
(16,912)
Advantage net debt
625,551
195,942
Advantage adjusted funds flow
250,031
320,169
Debt to adjusted funds flow
2.5
0.6
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
provisions 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.
A summary of working capital as at December 31, 2024 and December 31, 2023 is as follows:
($000, except as otherwise indicated)
December 31
2024
December 31
2023
Cash and cash equivalents
20,146
19,261
Trade and other receivables
83,188
53,378
Prepaid expenses and deposits
10,000
16,618
Trade and other accrued liabilities
(116,609)
(70,606)
Working capital (deficit) surplus
(3,275)
18,651
Advantage Energy Ltd. - 49
Specified Financial Measures (continued)
Capital Management Measures (continued)
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.
A summary of the reconciliation of net debt as at December 31, 2024 and December 31, 2023 is as follows:
($000, except as otherwise indicated)
December 31
2024
December 31
2023
Bank indebtedness
470,424
212,854
Convertible debentures
143,750
-
Unsecured debentures
101,000
40,807
Working capital deficit (surplus)
3,275
(18,651)
Net debt
718,449
235,010
Supplementary Financial Measures
Average Realized Prices
The Corporation discloses multiple average realized prices within the MD&A (see "Commodity Prices and
Marketing"). 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.
Advantage Energy Ltd. - 50
Specified Financial Measures (continued)
Supplementary Financial Measures (continued)
Dollars per BOE figures
Throughout the MD&A, 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 the
MD&A in $ per boe:
Cash finance expense per boe
Depreciation and amortization expense per boe
Finance expense per boe
G&A expense per boe
Natural gas and liquids sales per boe
Net sales of purchased natural gas per boe
Operating expense per boe
Processing and other income per boe
Realized gains (losses) on derivatives per boe
Royalty expense per boe
Share-based compensation expense per boe
Transportation expense per boe
Finding and Development Costs ("F&D")
F&D cost is calculated based on adding net capital expenditures excluding acquisitions and dispositions, and the net
change in future development capital ("FDC"), divided by the change in reserves within the applicable reserves
category for the year from the McDaniel 2024 Reserves Report and Sproule 2023 Reserves Report.
Finding, Development & Acquisition Costs ("FD&A")
FD&A cost is calculated based on adding net capital and the net change in future development capital ("FDC"),
divided by the change in reserves within the applicable reserves category for the year from the McDaniel 2024
Reserves Report and Sproule 2023 Reserves Report.
Recycle Ratio
Recycle ratio is calculated by dividing Advantage’s fourth quarter operating netback by the calculated F&D cost or
FD&A cost of the applicable year and expressed as a ratio. Management uses recycle ratio to relate the cost of
adding reserves to a recent operating netback.
Advantage Energy Ltd. - 51
Oil and Gas information
The term "boe" or barrels of oil equivalent and "Mcfe" or thousand cubic feet equivalent may be misleading,
particularly if used in isolation. A boe or Mcfe conversion ratio of six thousand cubic feet of natural gas equivalent
to one barrel of oil (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. As the value ratio between natural gas and
crude oil based on the current prices of natural gas and crude oil 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.
References in this MD&A to short-term production rates, such as IP30 and IP90, 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.
Production estimates contained herein are expressed as anticipated average production over the calendar year. In
determining anticipated production for the year 2024 Advantage considered historical drilling, completion and
production results for prior years and took into account the estimated impact on production of the Corporation’s
2024 expected drilling and completion activities.
References to natural gas, crude oil and condensate and NGLs production in the MD&A refer to conventional natural
gas and shale gas, light crude oil and medium crude oil and natural gas liquids, respectively, product types as defined
in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities ("NI 51-101").
Advantage Energy Ltd. - 52
Abbreviations
Terms and abbreviations that are used in this MD&A that are not otherwise defined herein are provided below:
bbl(s)
- barrel(s)
bbls/d
- barrels per day
boe
- barrels of oil equivalent (6 Mcf = 1 bbl)
boe/d
- barrels of oil equivalent per day
GJ
- gigajoules
Mcf
- thousand cubic feet
Mcf/d
- thousand cubic feet per day
Mcfe
- thousand cubic feet equivalent (1 bbl = 6 Mcf)
Mcfe/d
- thousand cubic feet equivalent per day
MMbtu
- million British thermal units
MMbtu/d
- million British thermal units per day
MMcf
- million cubic feet
MMcf/d
- million cubic feet per day
Crude oil
- Light Crude Oil and Medium Crude Oil as defined in NI 51-101
"NGLs" & "condensate"
- Natural Gas Liquids as defined in NI 51-101
Natural gas
- Conventional Natural Gas and Shale Gas as defined in NI 51-101
Liquids
- Total of crude oil, condensate and NGLs
AECO
- a notional market point on TransCanada Pipeline Limited’s NGTL system where
the purchase and sale of natural gas is transacted
MSW
- price for mixed sweet crude oil at Edmonton, Alberta
NGTL
- NOVA Gas Transmission Ltd.
WTI
- West Texas Intermediate, price paid in U.S. dollars at Cushing, Oklahoma, for
crude oil of standard grade
CCS
- carbon capture and storage
CCUS
- carbon capture utilization and storage
nm
- not meaningful information
Advantage Energy Ltd. - 53
Forward-Looking Information and Other Advisories
This MD&A contains certain forward-looking statements and forward-looking information (collectively, "forward-
looking statements"), which are based on our current internal expectations, estimates, projections, assumptions
and beliefs. These forward-looking statements relate to future events or our future 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 "seek", "anticipate", "plan", "continue", "estimate", "expect",
"may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "would"
and similar or related expressions. These statements are not guarantees of future performance.
In particular, forward-looking statements in this MD&A include, but are not limited to, statements about our
strategy, plans, objectives, priorities and focus and the benefits to be derived therefrom; the focus of the
Corporation's 2025 capital program; the Corporation's expectations that all free cash flow from operations will be
allocated to debt reduction and that a portion of the proceeds from potential non-core asset divestitures may be
used to buy back shares; the Corporation's net debt target; Advantage's focus on growing adjusted funds flow per
share; the Corporation's 2025 capital guidance including its anticipated cash used in investing activities, total
average production, liquids production (% of total average production), royalty rate, operating expense per boe,
transportation expense per boe and G&A/finance expense per boe; the anticipated costs of the Glacier Phase 2
capture equipment, compression, transportation and storage wells and the installation of the modular power plant
providing power and heat for the Glacier Gas Plant and Entropy's CCS equipment; the Corporation's anticipated total
annual production in 2025; the incurred net capital expenditures that the Corporation estimates that it will recover
under the ITC for CCUS projects on the Glacier Gas Plant Phase 1 CCS project; the Corporation's forecasted 2025
natural gas market exposure including the anticipated effective production rate; the anticipated timing of when the
construction of the Corporation's gas plant at Progress will resume and the expectation that it will not impact
forecasted production; the Corporation's development plan for the Acquired Assets in 2025 and the anticipated
average daily production rate thereof; the Corporation's commodity risk management program and financial risk
management program and the anticipated benefits to be derived therefrom; the terms of the Corporation's
derivative contracts, including their purposes, the timing of settlement of such contracts and the anticipated
benefits to be derived therefrom; the Corporation's estimated tax pools and its expectations that it will not be
subject to cash taxes until calendar 2028; the Corporation's expectations that its Valhalla asset will continue to play
a pivotal role in the Corporation's liquids-rich gas development plan; the Corporation's commitments and
contractual obligations and the anticipated payments in connection therewith and the anticipated timing thereof;
Advantage's ability to actively manage its portfolio in conjunction with its future development plans and its ability
to ensure that the Corporation is properly diversified into multiple markets; that the Corporation will monitor its
capital structure and make adjustments according to market conditions; the Corporation's strategy for managing its
capital structure, including by issuing new common shares, repurchasing outstanding common shares, obtaining
additional financing through bank indebtedness, refinancing current debt, issuing other financial or equity-based
instruments, declaring a dividend or adjusting capital spending; the terms of the Corporation's Credit Facilities,
including the timing of the next review of the Credit Facilities and the Corporation's expectations regarding the
extension of the Credit Facilities at each annual review; the Corporation's ability to satisfy all liabilities and
commitments and meet future obligations as they become due and the means for satisfying such future obligations;
the terms of Entropy's unsecured debentures; the anticipated undiscounted, uninflated cash flows required to settle
the Corporation's decommissioning liability and the anticipated timing that such costs will be incurred; Entropy's
business plan and the anticipated benefits to be derived therefrom; the statements under "critical accounting
estimates" in this MD&A; and other matters.
These forward-looking statements involve substantial known and unknown risks and uncertainties, many of which
are beyond our control, including, but not limited to: the risk that (i) negotiations between the U.S. and Canadian
governments are not successful and one or both of such governments implements announced tariffs, increases the
rate or scope of announced tariffs, or imposes new tariffs on the import of goods from one country to the other,
Advantage Energy Ltd. - 54
including on oil and natural gas, (ii) the U.S. and/or Canada imposes any other form of tax, restriction or prohibition
on the import or export of products from one country to the other, including on oil and natural gas, and (iii) the
tariffs imposed by the U.S. on other countries and responses thereto could have a material adverse effect on the
Canadian, U.S. and global economies, and by extension the Canadian oil and natural gas industry and the
Corporation; risks related to changes in general economic conditions (including as a result of demand and supply
effects resulting from the actions of OPEC and non-OPEC countries) which will, among other things, impact demand
for and market prices of the Corporation’s products, market and business conditions; continued volatility in market
prices for oil and natural gas; the impact of significant declines in market prices for oil and natural gas; stock market
volatility; changes to legislation and regulations and how they are interpreted and enforced; our ability to comply
with current and future environmental or other laws; actions by governmental or regulatory authorities including
increasing taxes, regulatory approvals, changes in investment or other regulations; changes in tax laws, royalty
regimes and incentive programs relating to the oil and gas industry; the effect of acquisitions; our success at
acquisition, exploitation and development of reserves; unexpected drilling results; failure to achieve production
targets on timelines anticipated or at all; changes in commodity prices, currency exchange rates, 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; hazards such as fire,
explosion, blowouts, cratering, and spills, each of which could result in substantial damage to wells, production
facilities, other property and the environment or in personal injury; changes or fluctuations in production levels;
individual well productivity; delays in anticipated timing of drilling and completion of wells; delays in timing of facility
installation; risk on the financial capacity of the Corporation's contract counterparties and potentially their ability
to perform contractual obligations; delays in obtaining stakeholder and regulatory approvals; performance or
achievement could differ materially from those expressed in, or implied by, the forward-looking information; the
risk that the Credit Facilities may not be renewed at each annual review; competition from other producers; the risk
that the Corporation's actual 2025 financial and operating results may not be consistent with its 2025 guidance; the
risk that the Corporation's 2025 annual average production may be less than anticipated the risk that the
Corporation may not have sufficient financial resources to acquire its common shares pursuant to an NCIB in the
future; the lack of availability of qualified personnel or management; ability to access sufficient capital from internal
and external sources; credit risk; that Entropy's existing planned capital projects may not result in completed CCS
projects; the price of and market for carbon credits and offsets; current and future carbon prices and royalty
regimes; the risk that the Corporation's commodity risk management program and financial risk management
program may not achieve the results anticipated; the risk that the Corporation may be subject to cash taxes prior
to calendar 2028; the risk that the costs of the Glacier Phase 2 capture equipment, compression, transportation
and storage wells and the installation of the modular power plant providing power and heat for the Glacier Gas
Plant and Entropy's CCS equipment may be greater than anticipated; the risk that the construction of the
Corporation's gas plant at Progress may not resume when anticipated, or at all, and that it may have a greater impact
on production than anticipated; the risk that the operating results of the Acquired Assets in 2025 may not meet
expectations; the risk that the Corporation's Valhalla asset may not play a pivotal role in the Corporation's liquids-
rich gas development plan; the risk that Advantage may not actively manage its portfolio in conjunction with its
future development plans or ensure that the Corporation is properly diversified into multiple markets; the risk that
the Corporation may not allocate all of its free cash flow in 2025 towards the Corporation’s share buyback program;
the risk that the Corporation may not satisfy all of its liabilities and commitments and meet its future obligations as
they become due; the risk that the undiscounted, uninflated cash flows required to settle the Corporation's
decommissioning liability may be greater than anticipated; the risk that Entropy's future projects may have a greater
capital cost than anticipated; and the risks and uncertainties described in the Corporation’s Annual Information
Form which is available at www.sedarplus.com 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 MD&A, in addition to other assumptions identified
herein, Advantage has made assumptions regarding, but not limited to: that the tariffs that have been publicly
Advantage Energy Ltd. - 55
announced by the U.S. and Canadian governments (but which are not yet in effect) do not come into effect, but that
if such tariffs do come into effect, the potential impact of such tariffs, and that other than the tariffs that have been
announced, neither the U.S. nor Canada (i) increases the rate or scope of such tariffs, or imposes new tariffs, on the
import of goods from one country to the other, including on oil and natural gas, and/or (ii) imposes any other form
of tax, restriction or prohibition on the import or export of products from one country to the other, including on oil
and natural gas current and future prices of oil and natural gas; that the current commodity price and foreign
exchange environment will continue or improve; conditions in general economic and financial markets; effects of
regulation by governmental agencies; receipt of required stakeholder and regulatory approvals; royalty regimes;
future exchange rates; royalty rates; future operating costs; availability of skilled labour; availability of drilling and
related equipment; timing and amount of capital expenditures; the ability to efficiently integrate assets acquired
through acquisitions; the impact of increasing competition; the price of crude oil and natural gas; 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 Entropy's planned capital projects will lead to
completed CCS projects; that the Corporation’s conduct and results of operations will be consistent with its
expectations; that the Corporation will have the ability to develop its crude oil and natural gas properties in the
manner currently contemplated; availability of pipeline capacity; that current or, where applicable, proposed
assumed industry conditions, laws and regulations will continue in effect or as anticipated as described herein; that
the Corporation will have sufficient financial resources to purchase its shares under NCIBs in the future; and that
the estimates of the Corporation’s production, reserves and resources volumes and the assumptions related thereto
(including commodity prices and development costs) are accurate in all material respects.
Management has included the above summary of assumptions and risks related to forward-looking information
provided in this MD&A 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 MD&A 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.
The future acquisition by the Corporation of the Corporation's common shares pursuant to its share buyback
program (including through an NCIB), 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.
This MD&A 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 expectations that all
free cash flow will be allocated to its share buyback program; the Corporation's net debt target; the Corporation's
2025 capital guidance including its anticipated cash used in investing activities, royalty rate, operating expense per
boe, transportation expense per boe and G&A/finance expense per boe; the anticipated costs of the Glacier Phase
2 capture equipment, compression, transportation and storage wells and the installation of the modular power
plant providing power and heat for the Glacier Gas Plant and Entropy's CCS equipment; the incurred net capital
expenditures that the Corporation estimates that it will recover under the ITC for CCUS projects on the Glacier Gas
Advantage Energy Ltd. - 56
Plant Phase 1 CCS project; the terms of the Corporation's derivative contracts, including their purposes, the timing
of settlement of such contracts and the anticipated benefits to be derived therefrom; the Corporation's estimated
tax pools and its expectations that it will not be subject to cash taxes until calendar 2028; the Corporation's
commitments and contractual obligations and the anticipated payments in connection therewith and the
anticipated timing thereof; the anticipated undiscounted, uninflated cash flows required to settle the Corporation's
decommissioning liability and the anticipated timing that such costs will be incurred; 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 MD&A 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 MD&A was made
as of the date of this MD&A 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 MD&A is not conclusive and is subject to change.
Additional Information
Additional information relating to Advantage can be found on SEDAR+ at www.sedarplus.ca and the Corporation’s
website at www.advantageog.com. Such other information includes the annual information form, the management
information circular, press releases, material change reports, material contracts and agreements, and other financial
reports. The annual information form will be of particular interest for current and potential shareholders as it
discusses a variety of subject matter including the nature of the business, description of our operations, general and
recent business developments, risk factors, reserves data and other oil and gas information.
March 4, 2025
Advantage Energy Ltd. - 57
CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2024 and 2023
PricewaterhouseCoopers LLP
Suncor Energy Centre, 111 5th Avenue South West, Suite 3100, Calgary, Alberta, Canada T2P 5L3
T.: +1 403 509 7500, F.: +1 403 781 1825, Fax to mail: ca_calgary_main_fax@pwc.com
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Independent auditor’s report
To the Shareholders of Advantage Energy Ltd.
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the financial position of Advantage Energy Ltd. and its subsidiaries (together, the Corporation) as at
December 31, 2024 and 2023 and January 1, 2023, and its financial performance and its cash flows for
the years ended December 31, 2024 and 2023 in accordance with IFRS Accounting Standards as issued
by the International Accounting Standards Board (IFRS Accounting Standards).
What we have audited
The Corporation’s consolidated financial statements comprise:
the consolidated statements of financial position as at December 31, 2024 and 2023 and
January 1, 2023;
the consolidated statements of comprehensive income for the years ended December 31, 2024
and 2023;
the consolidated statements of changes in shareholders' equity for the years ended
December 31, 2024 and 2023;
the consolidated statements of cash flows for the years ended December 31, 2024 and 2023; and
the notes to the consolidated financial statements, comprising material accounting policy information
and other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Corporation in accordance with the ethical requirements that are relevant to
our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical
responsibilities in accordance with these requirements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended December 31, 2024. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
The impact of proved and probable reserves
on property, plant and equipment within
natural gas and liquids properties
Refer to note 3 – Material accounting policies,
note 4 – Material accounting judgments,
estimates and assumptions, and note 11 –
Natural gas and liquids properties to the
consolidated financial statements
The Corporation has $2,677 million of net
property, plant and equipment within natural gas
and liquids properties as at December 31, 2024.
The related depreciation expense was
$197 million for the year then ended. Property,
plant and equipment is depreciated using the
units-of-production method by reference to the
ratio of production in the period to the related
proved and probable reserves, taking into
account estimated future development costs
necessary to bring those reserves into
production. Proved plus probable reserves are
determined using key assumptions related to the
estimated future cost of developing and extracting
those reserves, recovery factors and future
natural gas and liquids prices. The proved and
probable reserves are estimated by the
Corporation’s independent qualified reserve
evaluator (management’s expert).
We considered this a key audit matter due to
(i) the judgments by management, including the
use of management’s expert, when estimating the
Our approach to addressing the matter included the
following procedures, among others:
Tested how management determined the total
proved plus probable reserves, which included
the following:
–
The work of management’s expert was used
in performing the procedures to evaluate the
reasonableness of the proved and probable
reserves used to determine depreciation
expense. As a basis for using this work, the
competence, capabilities and objectivity of
management’s expert were evaluated, the
work performed was understood and the
appropriateness of the work as audit
evidence was evaluated. The procedures
performed also included evaluation of the
methods and assumptions used by
management’s expert, tests of the data used
by management’s expert and an evaluation
of their findings.
–
Evaluated the reasonableness of key
assumptions used by management in
developing the estimates, including:
o
Estimates of recovery factors, future
costs of developing and extracting
proved and probable reserves by
considering the past performance of the
Corporation and whether these
assumptions were consistent with
evidence obtained in other areas of the
audit, as applicable; and
Key audit matter
How our audit addressed the key audit matter
proved plus probable reserves and (ii) a high
degree of auditor judgment, subjectivity and effort
in performing procedures relating to the key
assumptions used by management.
o
Future natural gas and liquids prices by
comparing forecasts with other reputable
third-party industry forecasts.
Recalculated the units-of-production rates used
to calculate depreciation expense.
Valuation of property, plant and equipment
acquired in a business combination
Refer to note 3 – Material accounting policies,
note 4 – Material accounting judgments,
estimates and assumptions, and note 10 –
Business combination to the consolidated
financial statements.
On June 24, 2024, the Corporation completed the
acquisition of certain Charlie Lake and Montney
assets for cash consideration of $445 million,
including closing adjustments. This transaction
was accounted for as a business combination
using the acquisition method, which requires that
the identifiable assets acquired, and liabilities
assumed be measured at their fair values at the
acquisition date. The fair value of property, plant
and equipment acquired and recorded within
natural gas and liquids properties was
$467 million (the acquired PP&E Assets).
Management determined the fair value of the
acquired PP&E Assets based on a discounted
cashflow model, calculating the present value of
the expected future after-tax cash flows derived
from the acquired oil and gas reserves.
The assumptions and estimates used to
determine the fair value of the acquired PP&E
Assets require significant judgment by
management and include estimates of oil and gas
reserves acquired, production forecasts,
production costs, forecast benchmark commodity
Our approach to addressing the matter included the
following procedures, among others:
The work of management’s internal expert was
used in performing the procedures to evaluate
the reasonableness of the estimates of oil and
gas reserves acquired. As a basis for using this
work, the competence, capabilities and
objectivity of management’s internal expert were
evaluated, the work performed was understood
and the appropriateness of the work as audit
evidence was evaluated. The procedures
performed also included evaluation of the
methods and assumptions used by
management’s internal expert, and an evaluation
of their findings.
Tested how management determined the fair
value of the acquired PP&E Assets, which
included the following:
–
Evaluated the appropriateness of the method
used by management in determining the fair
value.
–
Tested the underlying data used in the
discounted cash flow model.
–
Evaluated the reasonableness of the
assumptions used in determining the
underlying fair value by:
o
Considering whether production
forecasts, timing and amounts of future
development costs and production costs
were consistent with the actual
Key audit matter
How our audit addressed the key audit matter
prices, timing and amounts of future development
costs and discount rate. The acquired oil and gas
reserves are prepared by the Corporation’s
internal qualified reserve engineers
(management’s internal expert).
We considered this a key audit matter due to the
significant judgment applied by management,
including the use of management’s internal
expert, when determining the fair value of the
acquired PP&E Assets, including development of
assumptions. This, in turn, led to a high degree of
auditor judgment, subjectivity and effort in
performing procedures and evaluating audit
evidence related to the assumptions used by
management. The audit effort also involved the
use of professionals with specialized skill and
knowledge in the field of valuation.
performance of the acquired PP&E
Assets, and whether they were
consistent with evidence obtained in
other areas of the audit; and
o
Comparing forecast benchmark
commodity prices to third-party industry
forecasts.
Professionals with specialized skill and
knowledge in the field of valuation assisted in
assessing the reasonableness of the discount
rate
Other information
Management is responsible for the other information. The other information comprises the Management’s
Discussion and Analysis, which we obtained prior to the date of this auditor’s report and the information,
other than the consolidated financial statements and our auditor’s report thereon, included in the annual
report, which is expected to be made available to us after that date.
Our opinion on the consolidated financial statements does not cover the other information and we do not
and will not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard. When we read the information, other
than the consolidated financial statements and our auditor’s report thereon, included in the annual report,
if we conclude that there is a material misstatement therein, we are required to communicate the matter to
those charged with governance.
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS Accounting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Corporation’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Corporation or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Corporation’s financial reporting
process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Corporation’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Corporation’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Corporation to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business units within the Corporation as a basis for forming an opinion on
the consolidated financial statements. We are responsible for the direction, supervision and review of
the audit work performed for purposes of the group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Simon Baker.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants
Calgary, Alberta
March 4, 2025
Advantage Energy Ltd. - 64
Advantage Energy Ltd.
Consolidated Statements of Financial Position
(Expressed in thousands of Canadian dollars)
Notes
December 31
2024
December 31
2023
January 1
2023
ASSETS
(Note 3)
Current assets
Cash and cash equivalents
6
20,146
19,261
48,940
Trade and other receivables
7
83,188
53,378
92,816
Prepaid expenses and deposits
10,000
16,618
14,613
Derivative asset
12
50,358
31,200
22,357
Total current assets
163,692
120,457
178,726
Non-current assets
Derivative asset
12
78,631
80,048
93,993
Inventory
8
3,537
3,958
-
Intangible assets
9
5,246
5,363
4,011
Natural gas and liquids properties
11
2,694,852
2,089,202
1,940,228
Total non-current assets
2,782,266
2,178,571
2,038,232
Total assets
2,945,958
2,299,028
2,216,958
LIABILITIES
Current liabilities
Trade and other accrued liabilities
116,609
70,606
84,805
Derivative liability
12
8,900
964
2,197
Financing liability
15
5,256
4,813
4,269
Unsecured debentures
16
105,026
46,263
25,444
Provisions and other liabilities
17
14,724
20,054
21,118
Total current liabilities
250,515
142,700
137,833
Non-current liabilities
Derivative liability
12
4,624
-
-
Bank indebtedness
13
470,424
212,854
177,200
Convertible debentures
14
122,583
-
-
Financing liability
15
82,827
88,084
90,436
Provisions and other liabilities
17
127,669
61,937
45,389
Deferred income tax liability
18
253,166
237,057
201,422
Total non-current liabilities
1,061,293
599,932
514,447
Total liabilities
1,311,808
742,632
652,280
SHAREHOLDERS’ EQUITY
Share capital
19
1,989,239
1,952,241
2,105,013
Convertible debentures
14
12,859
-
-
Contributed surplus
194,819
187,034
142,817
Deficit
(561,261)
(582,980)
(684,577)
Total shareholders’ equity attributable to Advantage
shareholders
1,635,656
1,556,295
1,563,253
Non-controlling interest
20
(1,506)
101
1,425
Total shareholders’ equity
1,634,150
1,556,396
1,564,678
Total liabilities and shareholders’ equity
2,945,958
2,299,028
2,216,958
Commitments (note 28)
See accompanying Notes to the Consolidated Financial Statements
On behalf of the Board of Directors of Advantage Energy Ltd.:
Deirdre M. Choate, Director: (signed) "Deirdre M. Choate" Michael Belenkie, Director: (signed) "Michael Belenkie"
Advantage Energy Ltd. - 65
Advantage Energy Ltd.
Consolidated Statements of Comprehensive Income
(Expressed in thousands of Canadian dollars, except per share amounts)
Year ended
December 31
Notes
2024
2023
Revenues
Natural gas and liquids sales
23
543,295
541,100
Sales of purchased natural gas
23
-
3,124
Processing and other income
23
6,807
7,627
Royalty expense
(52,471)
(42,432)
Natural gas and liquids revenue
497,631
509,419
Gains on derivatives
12
55,442
25,768
Total revenues
553,073
535,187
Expenses
Operating expense
125,747
84,453
Transportation expense
101,139
90,603
Natural gas purchases
23
-
3,371
General and administrative expense
24
33,084
24,637
Transaction costs
10
3,276
-
Share-based compensation expense
21
3,892
6,546
Depreciation and amortization expense
9,11
199,489
148,897
Finance expense
25
52,420
30,090
Foreign exchange (gain) loss
(439)
459
Other expenses
8,11,17
1,548
10,223
Total expenses
520,156
399,279
Income before taxes and non-controlling interest
32,917
135,908
Income tax expense
18
(12,805)
(35,635)
Net income and comprehensive income before non-controlling interest
20,112
100,273
Net income (loss) and comprehensive income (loss) attributable to:
Advantage shareholders
21,719
101,597
Non-controlling interest
20
(1,607)
(1,324)
20,112
100,273
Net income per share attributable to Advantage shareholders
Basic
22
0.13
0.61
Diluted
22
0.13
0.59
See accompanying Notes to the Consolidated Financial Statements
Advantage Energy Ltd. - 66
Advantage Energy Ltd.
Consolidated Statements of Changes in Shareholders’ Equity
(Expressed in thousands of Canadian dollars)
Share
capital
Convertible
debentures
Contributed
surplus
Deficit
Non-
controlling
interest
Total
shareholders’
equity
Balance, December 31, 2023
1,952,241
-
187,034
(582,980)
101
1,556,396
Net income and comprehensive income
-
-
-
21,719
(1,607)
20,112
Share-based compensation (note 21(b))
-
-
4,950
-
-
4,950
Issuance of convertible debentures (note 14)
-
12,859
-
-
-
12,859
Settlement of Performance Share Units (note 19)
3,891
-
(4,962)
-
-
(1,071)
Common shares issued (note 19)
62,643
-
-
-
-
62,643
Common shares repurchased (note 19)
(29,536)
-
7,797
-
-
(21,739)
Balance, December 31, 2024
1,989,239
12,859
194,819
(561,261)
(1,506)
1,634,150
Share
capital
Contributed
surplus
Deficit
Non-
controlling
interest
Total
shareholders’
equity
Balance, December 31, 2022
2,105,013
142,817
(684,577)
1,425
1,564,678
Net income and comprehensive income
-
-
101,597
(1,324)
100,273
Share-based compensation (note 21(b))
-
8,788
-
-
8,788
Settlement of Performance Share Units (note 19)
6,509
(6,509)
-
-
-
Common shares repurchased (note 19)
(159,281)
41,938
-
-
(117,343)
Balance, December 31, 2023
1,952,241
187,034
(582,980)
101
1,556,396
See accompanying Notes to the Consolidated Financial Statements
Advantage Energy Ltd. - 67
Advantage Energy Ltd.
Consolidated Statements of Cash Flows
(Expressed in thousands of Canadian dollars)
Year ended
December 31
Notes
2024
2023
Operating Activities
Income before taxes and non-controlling interest
32,917
135,908
Add (deduct) items not requiring cash:
Unrealized losses (gains) on derivatives
12
(4,315)
9,475
Share-based compensation expense
21
3,892
6,546
Depreciation and amortization expense
9,11
199,489
148,897
Accretion expense
14, 16, 17(c)
5,389
2,017
Interest paid-in-kind
16
3,547
504
Other expenses
8,11,17
1,548
10,223
Settlement of Performance Share Units
21(a)
(1,071)
-
Expenditures on decommissioning liability
17(c)
(3,059)
(4,043)
Changes in non-cash working capital
27
(20,804)
13,818
Cash provided by operating activities
217,533
323,345
Financing Activities
Common shares repurchased
19
(21,739)
(117,343)
Common shares issued
19
62,105
-
Increase in bank indebtedness
13
257,570
35,654
Net proceeds from convertible debentures
14
137,268
-
Net proceeds from unsecured debentures
16
51,472
13,833
Net proceeds from financing liability
15
-
2,500
Principal repayment of lease liability
17(b)
(785)
(599)
Principal repayment of financing liability
15
(4,814)
(4,308)
Cash provided by (used in) financing activities
481,077
(70,263)
Investing Activities
Property, plant and equipment additions
11
(301,923)
(272,150)
Exploration and evaluation assets additions
11
-
(9,181)
Intangible assets additions
9
(1,135)
(1,465)
Business combination
10
(445,274)
-
Asset dispositions
11
11,421
-
Changes in non-cash working capital
27
39,186
35
Cash used in investing activities
(697,725)
(282,761)
Increase (decrease) in cash and cash equivalents
885
(29,679)
Cash and cash equivalents, beginning of year
19,261
48,940
Cash and cash equivalents, end of year
20,146
19,261
Cash interest paid
43,324
27,766
Cash income taxes paid
-
-
See accompanying Notes to the Consolidated Financial Statements
Advantage Energy Ltd. - 68
Advantage Energy Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
All tabular amounts expressed in thousands of Canadian dollars, except as otherwise indicated.
1. Business and structure of Advantage Energy Ltd.
Advantage Energy Ltd. and its subsidiaries (together “Advantage” or the “Corporation”) is an energy producer
with a significant position in the Western Canadian Sedimentary Basin. Additionally, the Corporation provides
carbon capture and storage ("CCS") solutions to emitters of carbon dioxide through its subsidiary, Entropy Inc.
("Entropy"). Advantage is domiciled and incorporated in Canada under the Business Corporations Act (Alberta).
Advantage’s head office address is 2200, 440 – 2nd Avenue SW, Calgary, Alberta, Canada. The Corporation’s
common shares are listed on the Toronto Stock Exchange under the symbol “AAV”. The Corporation’s convertible
debentures are listed on the Toronto Stock Exchange under the symbol “AAV.DB”.
2. Basis of preparation
(a) Statement of compliance
The Corporation prepares its consolidated financial statements in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting
Standards" or "IFRS").
The accounting policies applied in these consolidated financial statements are based on IFRS issued and
outstanding as of March 4, 2025, the date the Board of Directors approved the statements.
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis, except as detailed in
the Corporation’s accounting policies in note 3.
The methods used to measure fair values of derivative instruments are discussed in note 12.
(c) Functional and presentation currency
These consolidated financial statements are presented in Canadian dollars, which is the Corporation’s
functional currency.
Advantage Energy Ltd. - 69
3. Material accounting policies
The accounting policies set out below have been applied consistently to all years presented in these financial
statements and notes.
(a) Cash and cash equivalents
Cash consists of balances held with banks, and other short-term highly liquid investments with original
maturities of three months or less from inception.
(b) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Corporation. Control exists when the Corporation has power
to govern the financial and operating policies of the entity so as to obtain benefits from its activities. In
assessing control, potential voting rights that currently are exercisable are taken into account. The
financial statements of subsidiaries are included in the consolidated financial statements from the date
that control commences until the date that control ceases.
These consolidated financial statements include the accounts of the Corporation and all subsidiaries
over which it has control, including Entropy, a private Canadian corporation of which Advantage owns
92% of the outstanding common shares (note 20). All inter-corporate balances, income and expenses
resulting from inter-corporate transactions are eliminated.
(ii) Joint arrangements
A portion of the Corporation’s natural gas and liquids activities involve joint operations. The
consolidated financial statements include the Corporation’s share of these joint operations and a
proportionate share of the relevant revenue and costs.
(c) Financial instruments
Financial instruments are classified as amortized cost, fair value through other comprehensive income or
fair value through profit and loss. The Corporation’s classification of each identified financial instrument is
provided below:
Financial Instrument
Measurement Category
Cash and cash equivalents
Amortized cost
Trade and other receivables
Amortized cost
Derivative assets and liabilities
Fair value through profit and loss
Trade and other accrued liabilities
Amortized cost
Bank indebtedness
Amortized cost
Lease liability
Amortized cost
Financing liability
Amortized cost
Convertible debentures
Amortized cost
Unsecured debentures
Amortized cost
Unsecured debentures – derivative liability
Fair value through profit and loss
Advantage Energy Ltd. - 70
3. Material accounting policies (continued)
(c) Financial instruments (continued)
Derivative assets and liabilities
Derivative instruments executed by the Corporation to manage risk are classified as fair value through profit
and loss and are recorded on the Consolidated Statement of Financial Position as derivatives assets and
liabilities measured at fair value. Gains and losses on derivative instruments are recorded as gains and losses
on derivatives in the Consolidated Statement of Comprehensive Income in the period they occur. Gains and
losses on derivative instruments are comprised of cash receipts and payments associated with periodic
settlement that occurs over the life of the instrument, and non-cash gains and losses associated with
changes in the fair values of the instruments, which are remeasured at each reporting date.
Embedded derivatives are separated from the host contract and accounted for separately if the economic
characteristics, risks of the host contract and the embedded derivative are not closely related; a separate
instrument with the same terms as the embedded derivative would meet the definition of a derivative; and
the combined instrument is not measured at fair value through profit and loss. The Corporation’s unsecured
debentures include an embedded derivative due to the equity conversion features. The unsecured
debentures are initially measured at fair value and are separated out into their liability and derivative
components. The unsecured debentures liability is recorded on the Statement of Financial Position at
amortized cost. The unsecured debentures derivative liability, which represents the equity conversion
feature, is separately valued with changes in fair value recognized through profit and loss.
Convertible debentures
The convertible debentures are a non-derivative financial instrument that creates a financial liability of the
entity and grants an option to the holder of the instrument to convert it into common shares of the
Corporation. The liability component of the convertible debentures is initially recorded at the fair value of
a similar liability that does not have a conversion option. The equity component is recognized initially, net
of deferred income taxes, as the difference between gross proceeds and the fair value of the liability
component. Issuance costs are allocated to the liability and equity components in proportion to the
allocation of proceeds. Subsequent to initial recognition, the liability component of the convertible
debentures is measured at amortized cost using the effective interest method and is accreted each period,
such that the carrying value will equal the principal amount outstanding at maturity. The equity component
is not re-measured. The carrying amounts of the liability and equity components of the convertible
debentures are reclassified to share capital on conversion to common shares.
Impairment of Financial Assets
For the Corporation’s financial assets measured at amortized cost, loss allowances are determined based
on the expected credit loss ("ECL") over the asset’s lifetime. ECLs are a probability-weighted estimate of
credit losses, considering possible default events over the expected life of a financial asset. ECLs are
measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the
Corporation in accordance with the contract and the cash flows that the Corporation expects to receive)
over the life of the financial asset, discounted at the effective interest rate specific to the financial asset.
Advantage Energy Ltd. - 71
3. Material accounting policies (continued)
(d) Property, plant and equipment and exploration and evaluation assets
(i) Recognition and measurement
Exploration and evaluation costs
Pre-license costs are recognized in the Consolidated Statement of Comprehensive Income as incurred.
All exploratory costs incurred subsequent to acquiring the right to explore for natural gas and liquids
before technical feasibility and commercial viability of the area have been established are capitalized.
Such costs can typically include costs to acquire land rights, geological and geophysical costs and
exploration well costs.
Exploration and evaluation costs are not depreciated and are accumulated by well, field or exploration
area and carried forward pending determination of technical feasibility and commercial viability.
The technical feasibility and commercial viability of extracting a mineral resource from exploration and
evaluation assets is considered to be generally determinable when proved or probable reserves are
determined to exist. Upon determination of proved or probable reserves, exploration and evaluation
assets attributable to those reserves are first tested for impairment and then reclassified from
exploration and evaluation assets to property, plant and equipment, net of any impairment loss.
Management reviews and assesses exploration and evaluation assets to determine if technical
feasibility and commercial viability exist. If Management decides not to continue the exploration and
evaluation activity, the unrecoverable costs are charged to exploration and evaluation expense in the
period in which the determination occurs.
Property, plant and equipment
Items of property, plant and equipment are measured at cost less accumulated depreciation and
accumulated impairment losses. Costs include lease acquisition, drilling and completion, production
facilities, decommissioning costs, geological and geophysical costs and directly attributable general and
administrative costs and share-based compensation related to development and production activities,
net of any government incentive programs.
(ii) Subsequent costs
Costs incurred subsequent to development and production that are significant are recognized as natural
gas and liquids properties only when they increase the future economic benefits embodied in the
specific asset to which they relate. All other expenditures are recognized in comprehensive income as
incurred. Such capitalized natural gas and liquids costs generally represent costs incurred in developing
proved and probable reserves and producing or enhancing production from such reserves, and are
accumulated on a field or area basis. The carrying amount of any replaced or sold component is
derecognized in accordance with our policies. The costs of the day-to-day servicing of property, plant
and equipment are recognized in comprehensive income as incurred.
Advantage Energy Ltd. - 72
3. Material accounting policies (continued)
(d) Property, plant and equipment and exploration and evaluation assets (continued)
(iii) Depreciation
A portion of the Corporation’s net carrying value of property, plant, and equipment is depreciated using
the units-of-production ("UOP") method by reference to the ratio of production in the period to the
related proved and probable reserves, taking into account estimated future development costs
necessary to bring those reserves into production. Future development costs are estimated taking into
account the level of development required to produce the reserves.
Significant natural gas processing plants and carbon capture equipment included in property, plant, and
equipment are depreciated using the straight-line method over the expected useful life. The estimated
useful lives for such depreciable assets are as follows:
Natural gas processing plants
50 years
Carbon capture equipment
50 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date by
Management.
(iv) Dispositions
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing
the proceeds from disposition with the carrying amount of property, plant and equipment and are
recognized net within processing and other income (expenses) in the Consolidated Statement of
Comprehensive Income.
(v) Impairment
The carrying amounts of the Corporation’s property, plant and equipment are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists,
the asset’s recoverable amount is estimated. For the purpose of impairment testing of property, plant
and equipment, assets are grouped together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows of other assets or groups
of assets (the "cash-generating unit" or "CGU").
Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine
technical feasibility and commercial viability, or facts and circumstances suggest that the carrying
amount exceeds the recoverable amount. Exploration and evaluation assets are allocated to CGUs or
groups of CGUs for the purposes of assessing such assets for impairment.
The recoverable amount of an asset or a CGU is the greater of its "value-in-use" and its "fair value less
costs of disposition". In assessing value-in-use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset. Value-in-use is generally computed by reference to the
present value of the future cash flows expected to be derived from production of proved and probable
reserves. Fair value less costs of disposition is assessed utilizing market valuation based on an arm’s
length transaction between active participants. In the absence of any such transactions, fair value less
costs of disposition is estimated by discounting the expected after-tax cash flows of the CGUs at an
after-tax discount rate that reflects the risk of the properties in the CGUs. The discounted cash flow
calculation is then increased by a tax-shield calculation, which is an estimate of the amount that a
Advantage Energy Ltd. - 73
3. Material accounting policies (continued)
(d) Property, plant and equipment and exploration and evaluation assets (continued)
prospective buyer of the CGU would be entitled. The carrying value of the CGUs is reduced by the deferred
tax liability associated with its property, plant and equipment.
Impairment losses on property, plant and equipment are recognized in the Consolidated Statement of
Comprehensive Income as an impairment expense and are separately disclosed. An impairment of
exploration and evaluation assets is recognized as exploration and evaluation expense in the Consolidated
Statement of Comprehensive Income.
(e) Business combinations
Business combinations are accounted for using the acquisition method. Identifiable assets acquired and
liabilities assumed in a business combination are measured at their fair values at the acquisition date. The
acquisition date is the closing date of the business combination. Revisions may be made to the initial
recognized amounts determined during the measurement period, which shall not exceed one year after the
acquisition date. The cost of an acquisition is measured as the fair value of the assets transferred, liabilities
incurred, and equity instruments issued. If the cost of the acquisition is greater than the fair value of the
net identifiable assets acquired, the difference is recorded as goodwill on the consolidated balance sheet.
If the cost of the acquisition is less than the fair value of the net identifiable assets acquired, the difference
is recognized immediately in comprehensive income. Transaction costs associated with a business
combination are expensed as incurred.
(f) Decommissioning liability
A decommissioning liability is recognized if, as a result of a past event, the Corporation has a present legal
or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation. Decommissioning liabilities are determined by discounting
the expected future cash flows at a risk-free rate.
(g) Long-term compensation
(i) Share-based compensation
The Corporation accounts for share-based compensation based on the fair value of rights granted under
its share-based compensation plans.
Advantage’s Restricted and Performance Award Incentive Plan provides share-based compensation to
service providers. Awards granted under this plan, Performance Share Units, may be settled in cash or
in shares. As the Corporation generally intends to settle the awards in shares, the plan is considered
and accounted for as "equity-settled". Compensation costs related to Performance Share Units are
recognized as share-based compensation expense over the vesting period at fair value.
Entropy’s Stock Option Plan ("Stock Option Plan") authorizes the Board of Directors of Entropy to grant
Stock Options to service providers, including directors, officers, employees and consultants of
Advantage. Compensation costs related to the Stock Options are recognized as share-based
compensation expense over the vesting period at fair value.
As compensation expense is recognized, contributed surplus is recorded until the Performance Share
Units vest or Stock Options are exercised, at which time the appropriate common shares are then
issued to the service providers and the contributed surplus is transferred to share capital.
Advantage Energy Ltd. - 74
3. Material accounting policies (continued)
(g) Long-term compensation
(ii) Performance Awards
Advantage’s Performance Award Incentive Plan allows the Corporation to grant cash Performance
Awards to service providers. The present value of payments to be made under the Performance Award
Incentive Plan are recognized as general and administrative expense as the corresponding service is
provided by the service provider. A liability is recognized for the amount expected to be paid if the
Corporation has a present legal or constructive obligation to pay this amount, as a result of past service
provided by the service provider, and the obligation can be estimated reliably.
(iii) Deferred Share Units ("DSU")
DSUs are issued to Directors of Advantage. Each DSU entitles participants to receive cash equal to the
price of the Corporation’s common shares, multiplied by the number of DSUs held. All DSUs vest
immediately upon grant and become payable upon retirement of the Director from the Board. A liability
for the expected cash payments is accrued over the life of the DSU using the fair value method based
on the Corporation’s share market price at the end of each reporting period, with the associated
expense charged to general and administrative expense.
(h) Revenue
The Corporation’s revenue is comprised of natural gas and liquids sales to customers under fixed and
variable volume contracts, sales of purchased natural gas, and processing income earned under fixed fee
contracts.
Natural gas and liquids sales and sales of purchased natural gas are recognized at a point in time when the
Corporation has satisfied its performance obligations which occurs upon the delivery of production to the
customer. The transaction price used to determine revenue from natural gas and liquids sales is the market
price, net of any marketing and fractionation fees for sales as specified in the contract. For fixed basis
physical delivery contracts, the Corporation records revenue net of the fixed basis differential.
Processing income is recognized when the Corporation has satisfied its performance obligation which occurs
as each unit of raw gas is handled and processed by Advantage. The transaction price Advantage charges
third-parties is a fixed charge per unit processed.
Payments are normally received from customers within 30 days following the end of the production month.
The Corporation does not have any long-term contracts with unfulfilled performance obligations and does
not disclose information about remaining performance obligations with an original expected duration of 12
months or less.
Advantage Energy Ltd. - 75
3. Material accounting policies (continued)
(i) Income tax
Income tax expense or recovery comprises current and deferred income tax. Income tax expense or
recovery is recognized in income or loss except to the extent that it relates to items recognized directly in
shareholders’ equity.
Current income tax is the expected tax payable on the taxable income for the year, using tax rates enacted
or substantively enacted at the reporting date, and any adjustment to income tax payable in respect of
previous years.
Deferred income tax is recognized using the liability method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
taxation purposes. Deferred income tax is not recognized on the initial recognition of assets or liabilities in
a transaction that is not a business combination, and at the time of the transaction, affects neither
accounting income nor taxable income and does not give rise to equal taxable and deductible temporary
differences. Deferred income tax is measured at the tax rates that are expected to be applied to temporary
differences when they reverse, based on the laws that have been enacted or substantively enacted by the
reporting date.
A deferred income tax asset is recognized to the extent that it is probable that future taxable profits will be
available against which the temporary difference can be utilized. Deferred income tax assets are reviewed
at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit
will be realized. Deferred income tax assets and liabilities are only offset when they are within the same
legal entity and same tax jurisdiction. Deferred income tax assets and liabilities are presented as non-
current.
(j) Net income per share attributable to Advantage shareholders
Basic net income per share is calculated by dividing the net income attributable to common shareholders of
Advantage by the weighted average number of common shares outstanding during the period. Diluted net
income per share is determined by adjusting the net income attributable to common shareholders and the
weighted average number of common shares outstanding for the effects of potential dilutive instruments
such as Performance Share Units and convertible debentures.
(k) Share capital
Financial instruments issued by the Corporation are classified as equity only to the extent that they do not
meet the definition of a financial liability or financial asset. Incremental costs directly attributable to the
issue of shares and share options are recognized as a deduction from equity. Common shares repurchased
by the Corporation are treated as a reduction of share capital based on the average carrying value of the
common shares, with the difference between the repurchase price and average carrying value recognized
as contributed surplus.
Advantage Energy Ltd. - 76
3. Material accounting policies (continued)
(l) Government grants and investment tax credits
The Corporation may receive government grants which provide financial assistance for capital expenditures
or expenses to be incurred. Government grants are recognized when there is reasonable assurance that the
Corporation will comply with conditions attached to them and the grants will be received. The Corporation
recognizes government grants in the Consolidated Statement of Comprehensive Income or the Consolidated
Statement of Financial Position on a systematic basis and in line with recognition of the expenditure that
the grants are intended to compensate.
Investment tax credits relating to Scientific Research and Experimental Development claims are considered
an income tax credit and are offset against our income tax expense when they become probable of
realization.
Under the Government of Canada’s refundable investment tax credit for Carbon Capture, Utilization and
Storage ("CCUS") program, the Corporation is eligible to recover a portion of its capital expenditures on
qualified CCUS projects. Investment tax credits under this program are recorded as a reduction to property,
plant, and equipment. Claims for investment tax credits are accrued upon the Corporation attaining
reasonable assurance of collections from the Canada Revenue Agency.
(m) Segment reporting
An operating segment is a component of the Corporation that engages in business activities from which it
may earn revenues and incur expenses, including revenues and expenses that relate to transactions with
any of the Corporation’s other operating segments. All operating segment’s operating results are reviewed
regularly by the management teams of Advantage and Entropy, including the Chief Executive Officers
("CEOs"), Chief Financial Officers ("CFOs") and other Vice Presidents ("VPs") to make decisions and assess
its performance for which discrete financial information is available.
(n) New accounting policies
On January 1, 2024, the Corporation adopted the amendments to IAS 1 “Presentation of Financial
Statements”, whereby the classification of certain non-current liabilities needs to be reclassified as current.
Under the previous IAS 1 requirements, companies classified a liability as current when they did not have
an unconditional right to defer settlement for at least 12 months after the reporting date. The IASB removed
the requirement for a right to be unconditional and instead now requires that a right to defer settlement
must exist at the reporting date and have substance. This amendment is retrospective and requires
reclassification for the periods ended December 31, 2023 and January 1, 2023.
Due to the change in policy, there is a retrospective impact on the comparative Consolidated Statements of
Financial position at December 31, 2023 and January 1, 2023, as Entropy had unsecured debentures. In the
case of the debentures, the conversion features can be triggered at any time and Entropy would not have
the right to defer the settlement of the liability in exchange for Entropy common shares for at least 12
months. As such, the liability is impacted by the revised policy. Entropy reclassified $46.3 million and $25.4
million from non-current liabilities to current liabilities for the periods ended December 31, 2023, and
January 1, 2023, respectively. See note 16 for further details on the unsecured debentures.
Advantage Energy Ltd. - 77
3. Material accounting policies (continued)
(o) Future accounting pronouncements
IFRS 18 Presentation and Disclosure in Financial Statements
On April 9, 2024, the IASB issued IFRS 18, “Presentation and Disclosure in Financial Statements” (“IFRS 18”),
which will replace Internation Accounting Standard 1, “Presentation of Financial Statements”. IFRS 18 will
establish a revised structure for the Consolidated Statements of Comprehensive Income and improve
comparability across entities and reporting periods.
IFRS 18 is effective for annual periods beginning on or after January 1, 2027. The standard is to be applied
retrospectively, with certain transition provisions. The Corporation is currently evaluating the impact of
adopting IFRS 18 on the Consolidated Financial Statements.
Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures
On May 30, 2024, the IASB issued targeted amendments to IFRS 9, ‘Financial Instruments’, and IFRS 7,
‘Financial Instruments: Disclosures’. The amendments include new requirements not only for financial
institutions but also for corporate entities which include clarifying the date of recognition and derecognition
of some financial assets and liabilities, with a new exception for some financial liabilities settled through an
electronic cash transfer system. These new requirements will apply from January 1, 2026, with early
application permitted.
4. Material accounting judgments, estimates and assumptions
The preparation of consolidated financial statements in conformity with IFRS requires Management to make
judgments, estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates, and
differences could be material. Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the year in which the estimates are revised and in any
future years affected. Material estimates and judgments made in the preparation of the consolidated financial
statements are outlined below.
(a) Reserves base
A portion of the Corporation’s property, plant, and equipment is depreciated on a UOP basis at a rate
calculated by reference to proved and probable reserves determined in accordance with National
Instrument 51-101 "Standards of Disclosure for Oil and Gas Activities" and incorporating the estimated
future cost of developing and extracting those reserves. Proved plus probable reserves are estimated by an
independent qualified reserve evaluator and determined using recovery factors and future natural gas and
liquids prices. Future development costs are estimated using assumptions as to the number of wells
required to produce the reserves, the cost of such wells and associated production facilities and other
capital costs.
(b) Determination of cash generating unit
The Corporation’s assets are required to be aggregated into CGUs for the purpose of calculating impairment
based on their ability to generate largely independent cash inflows. Factors considered in the classification
include the integration between assets, shared infrastructure, the existence of common sales points,
geography and geologic structure. The classification of assets and allocation of corporate assets into CGUs
requires significant judgment and may impact the carrying value of the Corporation’s assets in future
periods.
Advantage Energy Ltd. - 78
4. Material accounting judgements, estimates and assumptions (continued)
(c) Indicators of impairment and calculation of impairment
At each reporting date, Advantage assesses whether there are circumstances that indicate a possibility that
the carrying values of exploration and evaluation assets and property, plant and equipment are not
recoverable, or impaired. Such circumstances include, but are not limited to, incidents of physical damage,
deterioration of commodity prices, changes in the regulatory environment, a reduction in estimates of
proved and probable reserves, or significant increases to expected costs to produce and transport reserves.
When Management judges that circumstances indicate potential impairment, property, plant, and
equipment are tested for impairment by comparing the carrying values to their recoverable amounts. The
recoverable amounts of CGUs are determined based on the higher of value-in-use calculations and fair
values less costs of disposition. These calculations require the use of estimates and assumptions, that are
subject to change as new information becomes available including information on future commodity prices,
expected production volumes, quantities of reserves, discount rates, future development costs and
operating costs.
(d) Derivative assets and liabilities
Derivative assets and liabilities are recorded at their fair values at the reporting date, with gains and losses
recognized directly into comprehensive income in the same period. The fair value of derivatives outstanding
is an estimate based on pricing models, estimates, assumptions, and market data available at that time. As
such, the recognized amounts are non-cash items and the actual gains or losses realized on eventual cash
settlement can vary materially due to subsequent fluctuations in market prices as compared to the valuation
assumptions. For embedded derivatives, Management determines the definition of the host contract and
the separate embedded derivative. The judgments made in determining the host contract can influence the
fair value of the embedded derivative.
(e) Unsecured debentures
Determining the fair value of unsecured debentures requires judgments related to the choice of a pricing
model, the estimation of share price, timing and probability of an IPO, credit spread, volatility, interest rates,
and the expected term of the underlying instruments. Any changes in the estimates or inputs utilized to
determine fair value could result in a significant impact on the Corporation’s future operating results.
(f) Share-based compensation
The Corporation’s share-based compensation expense is subject to measurement uncertainty as a result of
estimates and assumptions related to the expected performance multiplier, forfeiture rates, expected life,
market-based vesting conditions and underlying volatility of the price of the Corporation’s common shares.
(g) Decommissioning liability
Decommissioning costs will be incurred by the Corporation at the end of the operating life of the
Corporation’s facilities and properties. The ultimate decommissioning liability is uncertain and can vary in
response to many factors including changes to relevant legal requirements, the emergence of new
restoration techniques, experience at other production sites, or changes in the risk-free discount rate. The
expected timing and amount of expenditure can also change in response to changes in reserves or changes
in laws and regulations or their interpretation. As a result, there could be significant adjustments to the
provisions established which would affect future financial results.
Advantage Energy Ltd. - 79
4. Material accounting judgments, estimates and assumptions (continued)
(h) Income taxes
Income tax laws and regulations are subject to change. Deferred tax liabilities that arise from temporary
differences between recorded amounts on the statement of financial position and their respective tax bases
will be payable in future periods. Deferred tax assets that arise from temporary differences between
recorded amounts on the statement of financial position and their respective tax bases are recognized to
the extent that it is probable that future taxable profit will be available against which the deductible
temporary differences and the carryforward of unused tax losses can be utilized. The amount of a deferred
tax asset or liability is subject to Management’s best estimate of when a temporary difference will reverse
and expected changes in income tax rates. These estimates by nature involve significant measurement
uncertainty.
(i) Business combinations
Business combinations are accounted for using the acquisition method of accounting. The determination of
fair value often requires management to make assumptions and estimates about future events. Identifiable
assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their acquisition date fair values. The fair value of the property, plant and equipment and
exploration and evaluation assets were based on a discounted cash flow model, calculating the present
value of the expected future after-tax cash flows derived from the acquired oil and gas reserves as prepared
by our internal qualified reserve engineers. The assumptions and estimates with respect to determining the
fair value of property, plant and equipment and exploration and evaluation assets acquired generally require
the most judgment and include estimates of oil and gas reserves acquired, production forecasts, timing and
amounts of future development costs, production costs, forecast benchmark commodity prices and
discount rate. Changes in any of the assumptions or estimates used in determining the fair value of acquired
assets and liabilities could impact the amounts assigned to assets, liabilities and goodwill. Future net
earnings can be affected as a result of changes in future depreciation, asset impairment or goodwill
impairment.
Advantage Energy Ltd. - 80
5. Segmented reporting
The Corporation has the following two key reportable operating segments, being Advantage and Entropy, based
on the nature of each entity’s business activities.
Advantage (natural gas and liquids producer)
Advantage is engaged in the business of natural gas, crude oil and liquids production from it Montney and Charlie
Lake resource plays in Alberta and B.C.
Entropy (carbon capture and storage)
Entropy provides carbon capture and storage solutions to emitters of carbon dioxide and is pursuing a global
business strategy. Entropy currently captures and sequesters carbon at Advantage’s Glacier Gas Plant.
The segments were identified by the differences in products and services that each entity creates and sells to
customers. Additionally, Advantage and Entropy are separately financed segments, with the unsecured
debentures held by Entropy being non-recourse to Advantage. Inter-segment sales and expenses are recorded
at prevailing market prices at the date of transaction and are eliminated on consolidation in order to arrive at
net income in accordance with IFRS.
Adjusted funds flow
The Corporation considers adjusted funds flow to be a useful measure of the Corporation’s ability to generate
cash from its operations, 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. Adjusted funds flow does not have any standardized meaning prescribed under IFRS
and therefore may not be comparable to similar measures presented by other entities. A reconciliation of the
most directly comparable financial measure has been provided below:
Year ended
December 31
($000)
2024
2023
Cash provided by operating activities
217,533
323,345
Expenditures on decommissioning liability
3,059
4,043
Changes in non-cash working capital
20,804
(13,818)
Adjusted funds flow
241,396
313,570
The Corporation’s chief operating decision makers regularly reviews adjusted funds flow generated by each of
the Corporation’s operating segments. Adjusted funds flow is a measure of profit or loss that provides the chief
operating decision makers with the ability to assess the profitability of each operating segment.
Advantage Energy Ltd. - 81
5. Segmented reporting (continued)
The following table is a summary of the segmented results:
For the year ended December 31, 2024
Advantage
Entropy
Inter-
Segment
Eliminations
Consolidated
Total assets
2,872,532
117,724
(44,298)
2,945,958
Total liabilities
1,198,052
116,825
(3,069)
1,311,808
Cash provided by (used in) operating activities
228,965
(11,432)
-
217,533
Cash provided by financing activities
429,764
51,313
-
481,077
Cash used in investing activities
(667,101)
(30,624)
-
(697,725)
Net capital expenditures
700,597
36,314
-
736,911
Net debt
625,551
92,898
-
718,449
Segmented adjusted funds flow
Natural gas and liquids sales
543,295
-
-
543,295
Processing and other income
5,557
4,467
(3,217)
6,807
Royalty expense
(52,471)
-
-
(52,471)
Realized gains on derivatives
51,127
-
-
51,127
Total revenues (excluding unrealized gains and losses)
547,508
4,467
(3,217)
548,758
Operating expense
(123,226)
(2,521)
-
(125,747)
Transportation expense
(101,139)
-
-
(101,139)
General and administrative expense
(22,018)
(11,066)
-
(33,084)
Transaction costs
(3,276)
-
-
(3,276)
Interest (expense) income
(43,925)
441
-
(43,484)
Other (expenses) income
(3,893)
44
3,217
(632)
Adjusted funds flow
250,031
(8,635)
-
241,396
Reconciliation to net income (loss)
Adjusted funds flow
250,031
(8,635)
-
241,396
Unrealized gains (losses) on derivatives
5,181
(866)
-
4,315
Share-based compensation expense
(3,665)
(227)
-
(3,892)
Depreciation and amortization expense
(194,583)
(6,031)
1,125
(199,489)
Interest paid-in-kind
-
(3,547)
-
(3,547)
Accretion expense
(4,130)
(1,259)
-
(5,389)
Settlement of performance share units in cash
1,071
-
-
1,071
Other expenses
(1,548)
-
-
(1,548)
Income tax expense
(12,805)
-
-
(12,805)
Net income (loss)
39,552
(20,565)
1,125
20,112
Advantage Energy Ltd. - 82
5. Segmented reporting (continued)
For the year ended December 31, 2023
Advantage
Entropy
Inter-
Segment
Eliminations
Consolidated
Total assets
2,268,881
74,849
(44,702)
2,299,028
Total liabilities
691,369
53,611
(2,348)
742,632
Cash provided by (used in) operating activities
331,064
(7,719)
-
323,345
Cash provided by (used in) financing activities
(84,096)
13,833
-
(70,263)
Cash used in investing activities
(268,872)
(13,889)
-
(282,761)
Net capital expenditures
266,187
16,609
-
282,796
Net debt
195,942
39,068
-
235,010
Segmented adjusted funds flow
Natural gas and liquids sales
541,100
-
-
541,100
Processing and other income
7,627
1,094
(1,094)
7,627
Sales of purchased natural gas
3,124
-
-
3,124
Royalty expense
(42,432)
-
-
(42,432)
Realized gains on derivatives
35,243
-
-
35,243
Total revenues (excluding unrealized gains and losses)
544,662
1,094
(1,094)
544,662
Operating expense
(83,762)
(691)
-
(84,453)
Transportation expense
(90,603)
-
-
(90,603)
Natural gas purchases
(3,371)
-
-
(3,371)
General and administrative expense
(18,647)
(5,990)
-
(24,637)
Interest expense
(26,577)
(992)
-
(27,569)
Other expenses
(1,533)
(20)
1,094
(459)
Adjusted funds flow
320,169
(6,599)
-
313,570
Reconciliation to net income (loss)
Adjusted funds flow
320,169
(6,599)
-
313,570
Unrealized losses on derivatives
(3,869)
(5,606)
-
(9,475)
Share-based compensation expense
(6,414)
(132)
-
(6,546)
Depreciation and amortization expense
(148,542)
(918)
563
(148,897)
Interest paid-in-kind
-
(504)
-
(504)
Accretion expense
(1,436)
(581)
-
(2,017)
Other expenses
(10,223)
-
-
(10,223)
Income tax expense
(35,635)
-
-
(35,635)
Net income (loss)
114,050
(14,340)
563
100,273
Advantage Energy Ltd. - 83
6. Cash and cash equivalents
December 31
2024
December 31
2023
Cash at financial institutions
20,146
19,261
Cash at financial institutions earn interest at floating rates based on daily deposit rates. As at December 31, 2024
cash at financial institutions included US$0.2 million (December 31, 2023 - US$5.2 million). The Corporation only
deposits cash with major financial institutions of high-quality credit ratings. Included in cash and cash equivalents
as at December 31, 2024 is $14.5 million held by Entropy (December 31, 2023 - $5.3 million).
7. Trade and other receivables
December 31
2024
December 31
2023
Trade receivables
79,561
49,604
Receivables from joint venture partners
3,627
3,774
83,188
53,378
8. Inventory
Balance at December 31, 2022
-
Additions
4,842
Revaluation
(884)
Balance at December 31, 2023
3,958
Revaluation
199
Sale of linefill
(620)
Balance at December 31, 2024
3,537
During the year ended December 31, 2024, Advantage sold $0.6 million of linefill inventory for $0.5 million and
recognized a loss on sale of $0.1 million in other income.
9. Intangible assets
Cost
Balance at December 31, 2022
4,011
Additions
1,465
Balance at December 31, 2023
5,476
Additions
1,135
Balance at December 31, 2024
6,611
Accumulated amortization
Balance at December 31, 2022
-
Amortization
113
Balance at December 31, 2023
113
Amortization
1,252
Balance at December 31, 2024
1,365
Net book value
At December 31, 2023
5,363
At December 31, 2024
5,246
Intangible assets consist of intellectual property, trade secrets and relevant knowledge of Entropy’s CCS
technologies, solvent and process development cost, internally developed software, and patents.
Advantage Energy Ltd. - 84
10. Business combination
On June 24, 2024, the Corporation closed the acquisition of certain Charlie Lake and Montney assets for cash
consideration of $445.3 million, including closing adjustments. The Corporation completed the acquisition to
increase the scale and efficiency in our core operating areas and provide oil-weighted production and drilling
inventory. The acquisition of the Charlie Lake and Montney assets has been accounted for as a business
combination under IFRS 3.
The acquisition of the acquired assets contributed natural gas and liquids revenue of $113.5 million and natural
gas and liquids revenue less royalties, transportation and operating expenses of $57.4 million from June 24,
2024 to December 31, 2024. Had the acquisition of these assets closed on January 1, 2024, estimated
contributed natural gas and liquids revenue would have been $252.9 million and natural gas and liquids revenue
less royalties, transportation and operating expenses would have been $133.8 million for the twelve months
ended December 31, 2024.
The Corporation incurred transaction costs of $3.3 million in relation to the business combination.
The following table summarizes the determination of the purchase price, based on Management’s preliminary
estimate of fair values:
Consideration
Cash consideration
445,274
Net assets acquired
Right-of-use assets (note 11)
272
Property, plant and equipment (note 11)
466,705
Exploration and evaluation assets (note 11)
6,838
Lease liability (note 17(b))
(272)
Decommissioning liability (note 17 (c))
(28,269)
Total net assets acquired
445,274
Advantage Energy Ltd. - 85
11. Natural gas and liquids properties
Cost
Right-of-
use assets
Exploration
and
evaluation
assets
Property, plant
and equipment
Total
Balance at December 31, 2022
2,977
15,791
3,198,459
3,217,227
Additions
412
9,181
272,150
281,743
Capitalized share-based compensation (note 21(b))
-
-
2,242
2,242
Capitalized interest paid-in-kind (note 16)
-
-
303
303
Changes in decommissioning liability (note 17(c))
-
-
13,911
13,911
Transfers
-
(8,570)
8,570
-
Lease expiries
-
(441)
-
(441)
Expired right-of-use assets
(136)
-
-
(136)
Balance at December 31, 2023
3,253
15,961
3,495,635
3,514,849
Additions
1,366
-
301,923
303,289
Business combination (note 10)
272
6,838
466,705
473,815
Asset Dispositions(1)
-
-
(11,421)
(11,421)
Capitalized share-based compensation (note 21(b))
-
-
1,058
1,058
Capitalized interest paid-in-kind (note 16)
-
-
1,646
1,646
Changes in decommissioning liability (note 17(c))
-
-
37,247
37,247
Transfers
-
(5,879)
5,879
-
Lease expiries
-
(1,747)
-
(1,747)
Expired right-of-use assets
(73)
-
-
(73)
Balance at December 31, 2024
4,818
15,173
4,298,672
4,318,663
Accumulated depreciation
Balance at December 31, 2022
1,133
-
1,275,866
1,276,999
Depreciation
526
-
148,258
148,784
Expired right-of-use assets
(136)
-
-
(136)
Balance at December 31, 2023
1,523
-
1,424,124
1,425,647
Depreciation
823
-
197,414
198,237
Expired right-of-use assets
(73)
-
-
(73)
Balance at December 31, 2024
2,273
-
1,621,538
1,623,811
Net book value
At December 31, 2023
1,730
15,961
2,071,511
2,089,202
At December 31, 2024
2,545
15,173
2,677,134
2,694,852
(1) During the fourth quarter of 2024, Advantage disposed of non-core assets, that were acquired through the business combination, for
net proceeds of $11.4 million. These assets were removed from property, plant and equipment with no gain or loss recognized.
During the year ended December 31, 2024, Advantage capitalized general and administrative expenditures
directly related to development activities of $6.5 million, included in additions (year ended December 31, 2023
- $5.3 million).
Advantage included future development costs of $2.8 billion (December 31, 2023 - $2.1 billion) in natural gas
and liquids properties costs subject to depreciation.
During the year ended December 31, 2024, Entropy capitalized borrowing costs that were paid-in-kind, directly
related to funding CCS development activities of $1.6 million (year ended December 31, 2023 – $0.2 million paid
in cash and $0.3 million paid-in-kind included in additions).
Advantage Energy Ltd. - 86
11. Natural gas and liquids properties (continued)
Included in additions to property, plant and equipment is $35.2 million incurred by Entropy (year ended
December 31, 2023 - $15.1 million) and the total net book value of Entropy’s property, plant and equipment
included at December 31, 2024 is $73.4 million (year ended December 31, 2023 - $39.6 million).
For the year ended December 31, 2024, the Corporation evaluated its property, plant and equipment and
exploration and evaluation assets for indicators of any potential impairment. As a result of this assessment, no
indicators were identified, and no impairment test was performed.
12. Financial risk management
Financial assets and liabilities recorded or disclosed at fair value in the statements of financial position are
categorized based on the level associated with the inputs used to measure their fair value.
Fair value is determined following a three-level hierarchy:
Level 1: Quoted prices in active markets for identical assets and liabilities. The Corporation does not have
any financial assets or liabilities that require Level 1 inputs.
Level 2: Inputs other than quoted prices included within Level 1 that are observable, either directly or
indirectly. Such inputs can be corroborated with other observable inputs for substantially the complete term
of the contract.
Derivative assets and liabilities are categorized as Level 2 in the fair value hierarchy and measured at fair
value on a recurring basis. For derivative assets and liabilities, pricing inputs include quoted forward prices
for commodities, foreign exchange rates, interest rates, volatility, and risk-free rate discounting, all of which
can be observed or corroborated in the marketplace. The actual gains and losses realized on eventual cash
settlement can vary materially due to subsequent fluctuations as compared to the valuation assumptions.
Level 3: Fair value is determined using inputs that are not observable.
The Corporation’s business combination is categorized as Level 3 in the fair value hierarchy as certain key
assumptions used to determine fair values of net assets acquired were not based on observable market
data, but rather, Management's best estimates.
The Corporation’s natural gas embedded derivative is categorized as Level 3 in the fair value hierarchy as
the volatility derived from historic PJM electricity prices and the long-term portion of the PJM electricity
forward price are unobservable inputs.
The Corporation’s unsecured debentures – derivative liability is categorized as Level 3 in the fair value
hierarchy as multiple inputs such as volatility, probability of a future change of control event and share price
are unobservable inputs.
The Corporation’s activities expose it to a variety of financial risks that arise as a result of its exploration,
development, production, and financing activities such as:
•
credit risk;
•
liquidity risk;
•
commodity price risk;
•
interest rate risk; and
• foreign exchange risk.
Advantage Energy Ltd. - 87
12. Financial risk management (continued)
The Corporation enters into financial risk management derivative contracts to manage the Corporation’s
exposure to commodity price risk and foreign exchange risk. The table below summarizes the realized gains
(losses) and unrealized gains (losses) on derivatives recognized in net income.
Year ended
December 31
2024
2023
Realized gains (losses) on derivatives
Natural gas
47,642
38,184
Crude oil
6,493
-
Foreign exchange
(101)
(2,033)
Natural gas embedded derivative
(2,907)
(908)
Total
51,127
35,243
Unrealized gains (losses) on derivatives
Natural gas
4,496
6,233
Crude oil
7,052
-
Foreign exchange
(1,634)
3,090
Natural gas embedded derivative
(4,733)
(13,192)
Unsecured debentures – derivative liability
(866)
(5,606)
Total
4,315
(9,475)
Gains (losses) on derivatives
Natural gas
52,138
44,417
Crude oil
13,545
-
Foreign exchange
(1,735)
1,057
Natural gas embedded derivative
(7,640)
(14,100)
Unsecured debentures – derivative liability
(866)
(5,606)
Total
55,442
25,768
The fair value of financial risk management derivatives has been allocated to current and non-current assets
and liabilities based on the expected timing of cash settlements. The following table summarizes the estimated
fair market value of the Corporation’s outstanding financial risk management derivative contracts.
December 31
2024
December 31
2023
Derivative type
Natural gas derivative asset
27,204
22,708
Crude oil derivative asset
7,052
-
Foreign exchange derivative asset (liability)
(741)
893
Natural gas embedded derivative asset
81,950
86,683
Unsecured debentures (note 16)
(40,344)
(18,444)
Net derivative asset
75,121
91,840
Consolidated statement of financial position classification
Current derivative asset
50,358
31,200
Non-current derivative asset
78,631
80,048
Current derivative liability
(8,900)
(964)
Non-current derivative liability
(4,624)
-
Unsecured debentures (note 16)
(40,344)
(18,444)
Net derivative asset
75,121
91,840
Advantage Energy Ltd. - 88
12. Financial risk management (continued)
(a) Credit risk
Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, which arises principally from the Corporation’s
receivables from natural gas and liquids marketers and companies with whom we enter into derivative
contracts. The maximum exposure to credit risk is as follows:
December 31
2024
December 31
2023
Trade and other receivables
83,188
53,378
Deposits
5,713
12,600
Derivative assets
128,989
111,248
217,890
177,226
Trade and other receivables, deposits, and derivative assets are subject to credit risk exposure and the
carrying values reflect Management’s assessment of the associated maximum exposure to such credit risk.
Advantage mitigates such credit risk by closely monitoring significant counterparties and dealing with a
broad selection of counterparties that diversify risk within the sector. The majority of the Corporation’s
deposits are due from the Alberta Provincial government and are viewed by Management as having minimal
associated credit risk. To the extent that Advantage enters derivatives to manage commodity price risk and
foreign exchange risk, it may be subject to credit risk associated with counterparties with which it contracts.
Credit risk is mitigated by entering contracts with only stable, creditworthy parties and through frequent
reviews of exposures to individual entities. The Corporation only enters derivative contracts with major
banks and international energy firms to further mitigate associated credit risk. In addition, the Corporation
has an embedded derivative with a US power company with a remaining term of 8 years (note 12(c)).
Substantially all of the Corporation’s trade and other receivables are due from customers concentrated in
the North American oil and gas industry. As such, trade and other receivables are subject to normal industry
credit risks. As at December 31, 2024, $1.2 million of trade and other receivables are outstanding for 90
days or more (December 31, 2023 – $0.5 million). The Corporation believes the entire balance is collectible,
and in some instances can mitigate risk through withholding production or offsetting payables with the
same parties. At December 31, 2024, the average expected credit loss for trade and other receivables was
1.09% (December 31, 2023 – 0.55%).
(b) Liquidity risk
The Corporation is subject to liquidity risk attributed from trade and other accrued liabilities, derivative
liabilities, lease liabilities, performance awards, deferred share units, financing liabilities, convertible
debentures, unsecured debentures and bank indebtedness. Trade and other accrued liabilities are all due
within one year of the Consolidated Statement of Financial Position date. The Corporation’s Performance
Awards are all payable within one to three years of the Consolidated Statement of Financial Position date.
The Corporation’s deferred share units become payable on retirement of a director from the Board. The
Corporation’s lease liability and financing liability are settled in a systematic basis over their respective
terms and will be settled over the next six and twelve years, respectively. Advantage does not anticipate
any problems in satisfying these obligations from cash provided by operating activities and the existing
credit facilities.
Advantage Energy Ltd. - 89
12. Financial risk management (continued)
The Corporation’s convertible debentures have an aggregate principal amount of $143.8 million and will
mature and be repayable on June 30, 2029. The convertible debentures will accrue interest at the rate of
5.0% per annum payable semi-annually in arrears on June 30 and December 31 of each year, which
commenced on December 31, 2024. Advantage does not anticipate any liquidity issues with regards to
settling the semi-annual interest payments, and the principal balance of the convertible debentures at time
of maturity. Advantage also has the option to settle the principal and interest of the convertible debentures
in shares subject to the terms of the convertible debenture indenture.
The Corporation’s bank indebtedness is subject to $650 million of credit facility agreements. Although the
credit facilities are a source of liquidity risk, the facilities also mitigate liquidity risk by enabling Advantage
to manage interim cash flow fluctuations. The terms of the credit facilities are such that they provide
Advantage adequate flexibility to evaluate and assess liquidity issues if and when they arise. Additionally,
the Corporation regularly monitors liquidity related to obligations by evaluating forecasted cash flows,
optimal debt levels, capital spending activity, working capital requirements, and other potential cash
expenditures. This continual financial assessment process further enables the Corporation to mitigate
liquidity risk.
The unsecured debentures held by Entropy are non-recourse to Advantage and are to be repaid by Entropy
at the end of the 10-year terms, if not exchanged for common shares. Debentures issued by Entropy bear
an interest rate of 8% per annum due on a quarterly basis, which can be paid-in-kind or cash, at the
discretion of Entropy.
To the extent that Advantage enters derivatives to manage commodity price risk, it may be subject to
liquidity risk as derivative liabilities become due. While the Corporation has elected not to follow hedge
accounting, derivative instruments are not entered for speculative purposes and Management closely
monitors existing commodity risk exposures. As such, liquidity risk is mitigated since any losses realized are
offset by increased cash flows realized from the higher commodity price environment.
Advantage Energy Ltd. - 90
12. Financial risk management (continued)
(b) Liquidity risk (continued)
The timing of undiscounted cash outflows and contractual maturities relating to financial liabilities as at
December 31, 2024 and 2023 are as follows:
December 31, 2024
Undiscounted
cash flows(3)
Less than
one year
One to
three years
Beyond
Trade and other accrued liabilities
116,609
116,609
-
-
Deferred Share Units
4,869
4,869
-
-
Derivative liability
13,524
8,900
4,624
-
Performance Awards
4,995
1,187
3,808
-
Lease liability
3,252
1,195
1,946
111
Financing liability
137,041
13,050
39,185
84,806
Convertible debentures - principal
143,750
-
-
143,750
- interest
32,334
7,188
21,582
3,564
Bank indebtedness - principal
475,000
-
475,000
-
- interest (1)
46,955
31,303
15,652
-
Unsecured debentures - principal(2)
101,000
-
-
101,000
- interest (2)
70,974
8,080
24,240
38,654
1,150,303
192,381
586,037
371,885
December 31, 2023
Undiscounted
cash flows(3)
Less than
one year
One to
three years
Beyond
Trade and other accrued liabilities
70,606
70,606
-
-
Deferred Share Units
4,579
4,579
-
-
Derivative liability
964
964
-
-
Performance Awards
9,676
5,917
3,759
-
Lease liability
2,409
585
1,466
358
Financing liability
150,164
13,086
39,150
97,928
Bank indebtedness - principal
215,000
-
215,000
-
- interest (1)
26,961
17,974
8,987
-
Unsecured debentures - principal (2)
40,807
-
-
40,807
- interest (2)
28,021
3,200
9,600
15,221
549,187
116,911
277,962
154,314
(1)
Interest on bank indebtedness was calculated assuming conversion of the revolving credit facility to a one-year term facility
at the next annual facility review.
(2)
The unsecured debentures are a liability of Entropy and are non-recourse to Advantage. The principal balance of unsecured
debentures bears an interest rate of 8%, which can be paid-in-kind, or cash, at the discretion of Entropy.
(3)
The undiscounted cash flows equal the carrying value, with the exception of performance awards, lease liability, financing
liability, convertible debentures, and unsecured debentures.
The Corporation’s bank indebtedness is governed by credit facility agreements with a syndicate of financial
institutions (note 13). The Credit Facility has a tenor of two years with a maturity date in June 2026 and is
subject to an annual review and extension by the lenders. During the revolving period, a review of the
maximum borrowing amount occurs annually on or before May and semi-annually on or before November.
There can be no assurance that the Credit Facilities will be renewed at the current borrowing base level at
that time. During the term, no principal payments are required until the revolving period matures in June
2026 in the event of a reduction, or the Credit Facility not being renewed. Management fully expects that
the facilities will be extended at each annual review.
Advantage Energy Ltd. - 91
12. Financial risk management (continued)
(c) Commodity price risk
Advantage’s derivative assets and liabilities are subject to price risk as their fair values are based on
assumptions regarding forward market prices. The Corporation enters into non-financial derivatives to
manage price risk exposure relative to actual commodity production and does not utilize derivative
instruments for speculative purposes. Changes to price assumptions can have a significant effect on the fair
value of the derivative assets and liabilities and thereby impact earnings. The estimated impact to net
income for the year ended December 31, 2024 resulting from a 10% change to significant price assumptions
is as follows:
Net Income Impact
($ millions)
Price Assumptions
+10%
(10)%
Forward AECO natural gas price
(16.3)
16.3
Forward Dawn natural gas price
(9.6)
9.6
Forward PJM electricity price
9.2
(10.5)
Forward WTI price
(14.7)
14.7
As at December 31, 2024 and March 4, 2025, the Corporation had the following commodity derivative
contracts in place:
Description of derivative
Term
Volume
Price
Natural gas - AECO
Fixed price swap
January 2025 to March 2025
113,738 Mcf/d $3.13/Mcf
Fixed price swap
April 2025 to October 2025
120,847 Mcf/d $2.66/Mcf(1)
Fixed price swap
November 2025 to March 2026
123,216 Mcf/d $3.58/Mcf
Fixed price swap
April 2026 to October 2026
66,347 Mcf/d $3.17/Mcf(1)
Fixed price swap
November 2026 to March 2027
71,086 Mcf/d $3.27/Mcf
Fixed price swap
April 2027 to March 2028
14,217 Mcf/d $3.23/Mcf
Natural gas - Chicago
Fixed price swap
April 2025 to October 2025
4,739 Mcf/d $5.10/Mcf(1)
Natural gas - Dawn
Fixed price swap
January 2025 to October 2025
47,391 Mcf/d $4.04/Mcf
Fixed price swap
November 2025 to March 2026
28,435 Mcf/d $4.65/Mcf
Fixed price swap
April 2026 to October 2026
28,435 Mcf/d $4.52/Mcf
Fixed price swap
November 2026 to March 2027
9,478 Mcf/d $4.25/Mcf
Crude oil - WTI NYMEX
Fixed price swap
January 2025 to June 2025
5,000 bbls/d US $74.43/bbl
Fixed price swap
July 2025 to December 2025
4,000 bbls/d US $71.24/bbl(1)
(1) Contains contracts entered into subsequent to December 31, 2024
Advantage Energy Ltd. - 92
12. Financial risk management (continued)
(c) Commodity price risk (continued)
Natural Gas - Embedded Derivative
Commencing in 2023, Advantage began selling natural gas under a long-term natural gas supply agreement,
delivering 25,000 MMbtu/d of natural gas for a 10-year period. Commercial terms of the agreement are
based upon a spark-spread pricing formula, providing Advantage exposure to PJM electricity prices, back-
stopped with a natural gas price collar. The contract contains an embedded derivative as a result of the
spark-spread pricing formula and the natural gas price collar. The Corporation defined the host contract as
a natural gas sales arrangement with a fixed price of US $2.50/MMbtu. The Corporation will realize
derivative gains or losses when the price received under the contract deviates from US $2.50/MMbtu. As at
December 31, 2024 the fair value of the natural gas embedded derivative resulted in an asset of $82.0
million (December 31, 2023 – $86.7 million).
The Corporation determines the fair value of the embedded derivative contract by utilizing an observable
5-year PJM electricity forecast. The remaining unobservable period beyond 5-years is estimated using the
implied inflation rate in the 5-year PJM electricity forecast. At December 31, 2024, the implied inflation rate
in the 5-year PJM power forecast averaged 0% per year. If the implied inflation rate in the 5-year PJM
electricity forecast changed by 1%, the fair value of the embedded derivative would change by $0.4 million.
(d) Interest rate risk
Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest
rates. The interest charged on the outstanding bank indebtedness fluctuates with the interest rates posted
by the lenders. The Corporation is exposed to interest rate risk and may enter into fixed interest rate swaps
to mitigate interest rate risk. As at December 31, 2024, the Corporation had no outstanding interest rate
hedges in place. Had the borrowing rate been different by 100 basis points throughout the year ended
December 31, 2024, net income and comprehensive income would have changed by $2.8 million (December
31, 2023 – $1.5 million) based on the average debt balance outstanding during the year.
(e) Foreign exchange risk
Foreign exchange risk is the risk that future cash flows will fluctuate as a result of changes in the CAD/USD
exchange rate. While the majority of the Corporation’s natural gas and liquids sales are settled in Canadian
dollars, certain natural gas and oil prices where the Corporation markets its natural gas and liquids
production are denominated in US dollars. Additionally, the Corporation may enter derivative contracts to
manage the commodity risk associated with such sales and which may also settle in US dollars. The
Corporation has entered into average rate currency swaps to mitigate the Corporation’s exposure to foreign
exchange risk. Had the CAD/USD foreign exchange rate been different by $0.02 throughout the year ended
December 31, 2024, net income and comprehensive income would have changed by $8.5 million (December
31, 2023 – $9.2 million).
Advantage Energy Ltd. - 93
12. Financial risk management (continued)
(e) Foreign exchange risk (continued)
As at December 31, 2024, the Corporation had the following foreign exchange derivative contracts in place:
Description of
Derivative
Term
Notional Amount
Rate
Forward rate - CAD/USD
Average rate currency swap
January 2025
US $ 5,000,000/month
1.3996
Average rate currency swap
February 2025 to June 2025
US $ 4,000,000/month
1.4048
Average rate currency swap
July 2025
US $ 3,000,000/month
1.3969
Average rate currency swap
August 2025 to December 2025
US $ 1,000,000/month
1.4320
As at December 31, 2024 the fair value of the foreign exchange derivatives outstanding resulted in a liability
of $0.7 million (December 31, 2023 – $0.9 million asset).
(f) Capital management
The Corporation manages its capital with the following objectives:
To ensure sufficient financial flexibility to achieve the ongoing business objectives including
replacement of production, funding of future growth opportunities, and pursuit of accretive
acquisitions; and
To maximize shareholder return through enhancing the share value.
Advantage monitors its capital structure and makes adjustments according to market conditions in an effort
to meet its objectives given the current outlook of the business and industry in general. The capital structure
of the Corporation is composed of working capital (cash and cash equivalents, trade and other receivables,
prepaid expenses and deposits and trade and other accrued payables), financing liabilities, bank
indebtedness, unsecured debentures, convertible debentures and share capital. Advantage may manage its
capital structure by issuing new shares, repurchasing outstanding shares, obtaining additional financing
through bank indebtedness, refinancing current debt, issuing other financial or equity-based instruments,
declaring a dividend, adjusting capital spending, or disposing of assets. The capital structure is reviewed by
Management and the Board of Directors on an ongoing basis.
Advantage Energy Ltd. - 94
12. Financial risk management (continued)
(f) Capital management (continued)
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
Management and users can determine if the Corporation’s 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.
A summary of working capital as at December 31, 2024 and December 31, 2023 is as follows:
December 31
2024
December 31
2023
Cash and cash equivalents
20,146
19,261
Trade and other receivables
83,188
53,378
Prepaid expenses and deposits
10,000
16,618
Trade and other accrued liabilities
(116,609)
(70,606)
Working capital surplus (deficit)
(3,275)
18,651
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.
A summary of the reconciliation of net debt as at December 31, 2024 and December 31, 2023 is as follows:
December 31
2024
December 31
2023
Bank indebtedness (note 13)
470,424
212,854
Convertible debentures (note 14)
143,750
-
Unsecured debentures (note 16)
101,000
40,807
Working capital (surplus) deficit
3,275
(18,651)
Net debt
718,449
235,010
Advantage’s capital structure as at December 31, 2024 and December 31, 2023 is as follows:
December 31
2024
December 31
2023
Shares outstanding (note 19)
166,931,440
162,225,180
Share closing market price ($/share)
9.86
8.53
Market capitalization
1,645,944
1,383,781
Net debt
718,449
235,010
Total capitalization
2,364,393
1,618,791
Advantage Energy Ltd. - 95
13. Bank indebtedness
December 31
2024
December 31
2023
Revolving credit facility
475,000
215,000
Discount on bankers’ acceptance and other fees
(4,576)
(2,146)
Balance, end of year
470,424
212,854
As at December 31, 2024, the Corporation had credit facilities with a borrowing base of $650 million. The Credit
Facilities are comprised of a $60 million extendible revolving operating loan facility from one financial institution
and a $590 million extendible revolving loan facility from a syndicate of financial institutions.
On June 24, 2024, the borrowing base of the Credit Facilities was increased to $650 million from $350 million.
The increased borrowing base was partially used to finance the acquisition of certain Charlie Lake and Montney
assets (note 10). The Credit Facility has a term of two years with a maturity date in June 2026 and is subject to
an annual review and extension by the lenders. During the revolving period, a review of the maximum borrowing
amount occurs annually on or before May 31 and semi-annually on or before November 30. During the term, no
principal payments are required until the revolving period matures in June 2026 in the event of a reduction, or
the Credit Facilities not being renewed. The borrowing base is determined based on, among other things, a
thorough evaluation of Advantage's reserve estimates based upon the lender’s commodity price assumptions.
Revisions or changes in the reserve estimates and commodity prices can have either a positive or a negative
impact on the borrowing base. In the event that the lenders reduce the borrowing base below the amount drawn
at the time of redetermination, the Corporation has 60 days to eliminate any shortfall by repaying amounts in
excess of the new re-determined borrowing base.
Amounts borrowed under the Credit Facilities bear interest at rates ranging from interest at Canadian bank prime
plus 2.5% to 5.0% per annum, and Canadian prime or US base rate plus 1.5% to 5.0% per annum, in each case,
depending on the type of borrowing and the Corporation’s debt to Earnings Before Interest, Taxes, Depreciation
and Amortization ("EBITDA") ratio.
Undrawn amounts under the Credit Facilities bear a standby fee ranging from 0.625% to 1.500% per annum,
dependent on the Corporation’s debt to EBITDA ratio. Repayments of principal are not required prior to maturity
provided that the borrowings under the Credit Facilities do not exceed the authorized borrowing base and the
Corporation is in compliance with all covenants, representations and warranties.
The Credit Facilities prohibit the Corporation from entering into any derivative contract, excluding basis swaps,
where the term of such contract exceeds five years. Further, the aggregate of such contracts cannot hedge
greater than 75% of total estimated natural gas and liquids production over the first three years and 50% over
the fourth and fifth years. In addition, the Credit Facilities allow us to enter into basis swap arrangements to any
natural gas price point in North America for up to 100,000 MMbtu/day with a maximum term of seven years.
Basis swap arrangements and the Corporation’s embedded derivative do not count against the limitations on
hedged production.
Advantage Energy Ltd. - 96
13. Bank indebtedness (continued)
The Credit Facilities contain standard commercial covenants for credit facilities of this nature. The Corporation
did not have any financial covenants at December 31, 2024 and 2023, but the Corporation is subject to various
affirmative and negative covenants under its Credit Facilities. Under the Credit Facilities, the Corporation must
ensure at all times that its Liability Management Rating ("LMR") is not less than 2.0. As at December 31, 2024 the
Corporation had a 20.06 LMR (December 31, 2023 – 27.7 LMR). All other applicable non-financial covenants were
met at December 31, 2024 and 2023. Breach of any covenant will result in an event of default in which case the
Corporation has 30 days to remedy such default. If the default is not remedied or waived, and if required by the
lenders, the administrative agent of the lenders has the option to declare all obligations under the credit facilities
to be immediately due and payable without further demand, presentation, protest, days of grace, or notice of
any kind. The Credit Facilities are collateralized by a $2 billion floating charge demand debenture covering all
assets. For the year ended December 31, 2024, the average effective interest rate on the outstanding amounts
under the facilities was approximately 6.6% (December 31, 2023 – 8.4%). The Corporation had letters of credit
of $5.5 million outstanding at December 31, 2024 (December 31, 2023 – $12.9 million).
14. Convertible debentures
Convertible
Debentures
(# of Debentures)
Liability
Component
Equity
Component
Balance, December 31, 2023
-
-
-
Issuance of convertible debentures
143,750
126,261
17,489
Issuance costs
-
(5,694)
(788)
Deferred income tax liability
-
-
(3,842)
Accretion of discount
-
2,016
-
Balance, December 31, 2024
143,750
122,583
12,859
On June 18, 2024, the Corporation issued $143.8 million aggregate principal amount of convertible unsecured
subordinated debentures (the "Debentures") at a price of $1,000 per debenture. The Debentures will mature
and be repayable on June 30, 2029 and will accrue interest at the rate of 5.0% per annum payable semi-annually
in arrears on June 30 and December 31 of each year, commencing December 31, 2024.
At the holder's option, the Debentures may be convertible into Common Shares at any time prior to the close of
business on the earlier of the business day immediately preceding (i) the maturity date, (ii) if called for
redemption, the date fixed for redemption by the Corporation, or (iii) if called for repurchase in the event of a
change of control, the payment date, at a conversion price of $14.58 per Common Share, subject to adjustment
in certain events. This represents a conversion rate of approximately 68.5871 Common Shares for each $1,000
principal amount of the Debentures, subject to the operation of certain antidilution provisions. In the event of a
change of control of the Corporation, subject to certain terms and conditions, holders of the Debentures will be
entitled to convert their Debentures and, subject to certain limitations, receive, in addition to the number of
Common Shares they would otherwise be entitled to receive, an additional number of Common Shares
per $1,000 principal amount of the Debentures.
Advantage Energy Ltd. - 97
14. Convertible debentures (continued)
The Debentures may not be redeemed by the Corporation prior to June 30, 2027, except in certain limited
circumstances following a change of control. On or after June 30, 2027 and prior to June 30, 2028, the
Debentures may be redeemed by the Corporation, in whole or in part, from time to time, on not more than 60
days and not less than 30 days prior notice at a redemption price equal to their principal amount plus accrued
and unpaid interest, if any, up to but excluding the date set for redemption, provided that the current market
price of the Common Shares on the Toronto Stock Exchange (the "TSX") is not less than 130% percent of the
Conversion Price. If the Debentures are redeemed by the Corporation prior to June 30, 2028, a holder of
Debentures who elects to convert such Debentures into Common Shares during the period from, and including,
the date on which the Corporation sends notice of such redemption to, and including, the last business day
immediately preceding the date of redemption will, subject to TSX approval, be entitled to receive additional
Common Shares on such conversion as a make-whole premium. On or after June 30, 2028 and prior to the final
maturity date, the Debentures may be redeemed by Advantage, in whole or in part from time to time, on not
more than 60 days' and not less than 30 days' prior written notice, at a redemption price equal to the principal
amount thereof plus accrued and unpaid interest thereon.
The liability component of the Debentures was initially recognized at the fair value of a similar liability which
does not contain an equity conversion option, based on an estimated market interest rate of 8.0%. The difference
between the $143.8 million principal amount of the Debentures and the fair value of the liability component was
recognized in Shareholders' equity, net of deferred income taxes. Total transaction costs directly attributable to
the offering of $6.5 million were allocated proportionately to the liability and equity components of the
Debentures.
The fair value of the Debentures at December 31, 2024 was $147.3 million using quoted market prices on the
TSX.
15. Financing liability
The Corporation has a take-or-pay volume commitment with a 12.5% working interest partner in the
Corporation’s Glacier Gas Plant, with a term due to expire in 2035. The volume commitment agreement is treated
as a financing transaction with an effective interest rate associated with the financing transaction of 9.1%.
A reconciliation of the financing liability is provided below:
Year ended
December 31, 2024
Year ended
December 31, 2023
Balance, beginning of the year
92,897
94,705
Additions
-
2,500
Interest expense
8,272
8,452
Financing payments
(13,086)
(12,760)
Balance, end of year
88,083
92,897
Current financing liability
5,256
4,813
Non-current financing liability
82,827
88,084
Advantage Energy Ltd. - 98
16. Unsecured debentures
The Corporation’s subsidiary, Entropy, is a party to two Investment Agreements with investors who provided
capital commitments of $300 million and $200 million. In connection with the Investment Agreements, Entropy
will issue unsecured debentures to fund carbon capture and storage projects that reach final investment decision
as certain predetermined return thresholds are met.
Under the terms of the agreements, Entropy and the investors have options that provide for the unsecured
debentures to be exchanged for commons shares at an exchange price of $10.00 per share and $12.75 per share,
respectively, subject to adjustment in certain circumstances. The investors have the option to exchange the
outstanding unsecured debentures for common shares at any time while Entropy may commence a mandatory
exchange of unsecured debentures for common shares in advance of an Initial Public Offering ("IPO"). The
unsecured debentures have a term of 10 years, if not exchanged for common shares, which are to be repaid at
the end of the term in the amount greater of the principal amount and the investor’s pro rata share of the fair
market value of Entropy. Each debenture issued by Entropy bears an interest rate of 8% per annum that Entropy
can elect to pay in cash or pay-in-kind, due on a quarterly basis. Any paid-in-kind interest is added to the
aggregate principal, subject to certain limitations. The unsecured debentures are non-recourse to Advantage.
During 2024, Entropy issued unsecured debentures for gross proceeds of $55.0 million (December 31, 2023 -
$15.0 million) and incurred $3.5 million of issuance costs (December 31, 2023 - $1.2 million). Subsequent to year-
end, Entropy issued unsecured debentures for gross proceeds of $42.0 million.
For the year ended December 31, 2024, Entropy incurred interest of $5.2 million (December 31, 2023 - $2.5
million), of which none was paid in cash (December 31, 2023 - $1.7 million), and $5.2 million was paid-in-kind
(December 31, 2023 - $0.8 million).
The exchange features of the unsecured debentures meet the definition of a derivative liability, as the exchange
features allow the unsecured debentures to be potentially exchanged for a variable amount of common shares
in certain situations, and as such does not meet the fixed-for-fixed criteria for equity classification. The unsecured
debenture - derivative liability is classified as Level 3 within the fair value hierarchy.
The following table provides a summary of the outstanding aggregate principal balance of unsecured debentures:
Year ended
December 31, 2024
Year ended
December 31, 2023
Aggregate principal balance, beginning of the year
40,807
25,000
Unsecured debentures issued
55,000
15,000
Interest paid-in-kind
5,193
807
Aggregate principal balance, end of year
101,000
40,807
The following tables disclose the components associated with the unsecured debentures at initial recognition.
The changes in the unsecured debentures are as follows:
Year ended
December 31, 2024
Year ended
December 31, 2023
Balance, beginning of the year
27,819
15,700
Issuances
39,159
12,713
Issuance costs
(3,528)
(1,167)
Accretion expense
1,232
573
Balance, end of year
64,682
27,819
Advantage Energy Ltd. - 99
16. Unsecured debentures (continued)
The changes in the unsecured debentures - derivative liability related to the exchange features are as follows:
Year ended
December 31, 2024
Year ended
December 31, 2023
Balance, beginning of the year
18,444
9,744
Issuances
21,034
3,094
Revaluation
866
5,606
Balance, end of year
40,344
18,444
The Corporation determined the value of the conversion feature using a probability weighted Black-Scholes
calculation. Unobservable inputs used to determine the valuation at December 31, 2024 includes estimated
share price, estimated timing and probability of an IPO, share price volatility and credit spread. The below table
provides the impact to the valuation of the derivative liability by adjusting the inputs below:
$ millions
Increase
(Decrease)
$1 change in estimated share price
9.1
(9.1)
1% change in credit spread
2.2
(2.2)
1 year change in estimated timing of an IPO
3.6
(3.4)
17. Provisions and other liabilities
Year ended
December 31, 2024
Year ended
December 31, 2023
Performance Awards (note 21(c))
2,312
6,687
Deferred Share Units (note 21(d))
4,869
4,579
Deferred revenue (a)
5,639
6,603
Lease liability (b)
2,820
1,967
Decommissioning liability (c)
126,753
62,155
Balance, end of year
142,393
81,991
Current provisions and other liabilities
14,724
20,054
Non-current provisions and other liabilities
127,669
61,937
(a) Deferred revenue
Deferred revenue represents an advance payment received by Advantage in consideration for the future
sales of natural gas. Deferred revenue is recognized over the course of the term of the agreements (note 12
(c)).
Year ended
December 31, 2024
Year ended
December 31, 2023
Balance, beginning of the year
6,603
6,603
Additions
240
-
Recognized in natural gas and liquids sales
(1,204)
-
Balance, end of period
5,639
6,603
Current deferred revenue
852
6,603
Non-current deferred revenue
4,787
-
Advantage Energy Ltd. - 100
17. Provisions and other liabilities (continued)
(b) Lease liability
The Corporation incurs lease payments related to office space and other miscellaneous equipment. The
Corporation has recognized a lease liability in relation to all lease arrangements measured at the present
value of the remaining lease payments.
A reconciliation of the lease liability is provided below:
Year ended
December 31, 2024
Year ended
December 31, 2023
Balance, beginning of the year
1,967
2,154
Additions
1,366
412
Leases acquired (note 10)
272
-
Interest expense
160
92
Lease payments
(945)
(691)
Balance, end of year
2,820
1,967
Current lease liability
929
522
Non-current lease liability
1,891
1,445
(c) Decommissioning liability
The Corporation’s decommissioning liability results from net ownership interests in natural gas and liquids
assets including well sites, gathering systems and facilities, all of which will require future costs of
decommissioning under environmental legislation. These costs are expected to be incurred between 2025
and 2075. A risk-free rate of 3.30% (December 31, 2023 - 3.02%) and an inflation factor of 2.0% (December
31, 2023 - 2.0%) were used to calculate the fair value of the decommissioning liability at December 31, 2024.
As at December 31, 2024, the total estimated undiscounted, uninflated cash flows required to settle the
Corporation’s decommissioning liability was $168.7 million (December 31, 2023 – $82.6 million).
A reconciliation of the decommissioning liability is provided below:
Year ended
December 31, 2024
Year ended
December 31, 2023
Balance, beginning of the year
62,155
41,945
Accretion expense
2,141
1,444
Liabilities incurred(3)
12,229
4,472
Liabilities acquired (note 10)
28,269
-
Revaluation of liabilities acquired(1)
24,694
-
Liabilities disposed
(1,990)
-
Change in estimates
4,647
2,263
Change in estimates expensed(2)
-
8,898
Effect of change in risk-free rate
(2,333)
7,176
Liabilities settled
(3,059)
(4,043)
Balance, end of year
126,753
62,155
Current decommissioning liability
7,000
3,000
Non-current decommissioning liability
119,753
59,155
(1) Relates to the revaluation of acquired decommissioning liabilities using a risk-free discount rate. At the date of
acquisition, acquired decommissioning liabilities are required to be fair valued at the credit-adjusted risk rate.
(2) Increased cost estimates which were expensed as the cost estimate relates to a legacy non-core area whereby
the Corporation has no future plans to pursue any development activities.
(3) A portion of the liabilities incurred relate to the assumption of the associated decommissioning liability for an
idled sour gas plant acquired in close proximity to the Corporation’s existing Conroy asset.
Advantage Energy Ltd. - 101
18. Income taxes
The provision for income taxes is as follows:
Year ended
December 31, 2024
Year ended
December 31, 2023
Current income tax expense
-
-
Deferred income tax expense
12,805
35,635
Income tax expense
12,805
35,635
The provision for income taxes varies from the amount that would be computed by applying the combined
federal and provincial income tax rates for the following reasons:
Year ended
December 31, 2024
Year ended
December 31, 2023
Income before taxes and non-controlling interest
32,917
135,908
Combined federal and provincial income tax rates
23.0%
23.0%
Expected income tax expense
7,571
31,259
Increase (decrease) in income taxes resulting from:
Non-deductible expenses
895
1,520
Valuation allowance
4,678
3,266
Other
(340)
(409)
Income tax expense
12,805
35,635
Effective tax rate
38.9%
26.2%
The movement in deferred income tax assets and liabilities without taking into consideration the offsetting of
balances within the same tax jurisdiction is as follows:
At
December 31
2023
Credited
(charged)
to income
Credited
(charged)
to equity
At
December 31
2024
Deferred income tax assets:
Decommissioning liability
14,293
14,860
-
29,153
Non-capital losses
74,639
9,398
-
84,037
Financing liability
20,791
(532)
-
20,259
Other
21,175
(616)
538
21,097
130,898
23,110
538
154,546
Deferred income tax liabilities:
Property, plant and equipment
(342,176)
(35,167)
-
(377,343)
Derivative asset/liability
(25,365)
(1,192)
-
(26,557)
Other
(414)
444
(3,842)
(3,812)
(367,955)
(35,915)
(3,842)
(407,712)
Deferred income tax liability
(237,057)
(12,805)
(3,304)
(253,166)
Advantage Energy Ltd. - 102
18. Income taxes (continued)
At December 31, 2022
Credited (charged)
to income
At December 31, 2023
Deferred income tax assets:
Decommissioning liability
10,161
4,132
14,293
Non-capital losses
93,805
(19,166)
74,639
Financing liability
20,632
159
20,791
Other
22,239
(1,064)
21,175
146,837
(15,939)
130,898
Deferred income tax liabilities:
Property, plant and equipment
(321,427)
(20,749)
(342,176)
Derivative asset/liability
(26,255)
890
(25,365)
Other
(577)
163
(414)
(348,259)
(19,696)
(367,955)
Deferred income tax liability
(201,422)
(35,635)
(237,057)
The estimated tax pools available at December 31, 2024 are as follows:
Canadian development expenses
262,386
Canadian exploration expenses
76,156
Canadian oil and gas property expenses
307,697
Non-capital losses
396,312
Undepreciated capital cost
405,841
Capital losses
135,369
Scientific research and experimental development expenditures
32,506
Other
6,421
1,622,688
The non-capital loss carry forward balances expire no earlier than 2029.
No deferred tax asset has been recognized for capital losses of $135 million (December 31, 2023 – $135 million).
Recognition is dependent on the realization of future taxable capital gains.
Advantage Energy Ltd. - 103
19. Share capital
(a) Authorized
The Corporation is authorized to issue an unlimited number of shares without nominal or par value.
Common Shares
(# of shares)
Share capital
($000)
Balance at December 31, 2022
171,652,768
2,105,013
Shares issued on Performance Share Unit settlements (note 21 (a))
3,675,083
-
Contributed surplus transferred on Performance Share Unit settlements
-
6,509
Shares purchased and cancelled under NCIB
(13,102,671)
(159,281)
Balance at December 31, 2023
162,225,180
1,952,241
Issuance of common shares
5,910,000
62,643
Shares issued on Performance Share Unit settlements (note 21 (a))
1,251,060
-
Contributed surplus transferred on Performance Share Unit settlements
-
3,891
Shares purchased and cancelled under NCIB
(2,454,800)
(29,536)
Balance at December 31, 2024
166,931,440
1,989,239
(b) Issued
On June 24, 2024, the Corporation issued 5.9 million common shares at $11.00 per share for gross proceeds
of $65.0 million. The Corporation incurred issuance costs of $2.4 million, net of deferred taxes, which was
charged to share capital.
For the year ended December 31, 2024, the Corporation issued 1.3 million common shares in connection with
Corporation’s Performance Award Incentive Plan (note 21(a)).
(c) Normal Course Issuer Bid ("NCIB")
For the year ended December 31, 2024, the Corporation purchased 2.5 million common shares for
cancellation for a total of $21.7 million. Share capital was reduced by $29.5 million while contributed surplus
was increased by $7.8 million, representing the excess average carrying value of the common shares over the
purchase price.
On April 6, 2023, the TSX approved the renewal of the NCIB. Pursuant to the NCIB, Advantage was approved
to purchase for cancellation, from time to time, as it considered advisable, up to a maximum of 16,201,997
common shares of the Corporation. The NCIB commenced on April 13, 2023 and terminated on April 12, 2024.
On May 9, 2024, the TSX approved the renewal of the NCIB. The NCIB commenced on May 14, 2024 and will
terminate on May 13, 2025. Pursuant to the NCIB, Advantage was approved to purchase for cancellation,
from time to time, as it considered advisable, up to a maximum of 13,835,841 common shares of the
Corporation.
Purchases pursuant to the NCIB are made on the open market through the facilities of the TSX or alternative
trading systems. The price that Advantage paid for its common shares under the NCIB was the prevailing
market price on the TSX at the time of such purchase, including commissions. All common shares acquired
under the NCIB were cancelled.
Advantage Energy Ltd. - 104
20. Non-controlling interest ("NCI")
A reconciliation of the NCI, representing the carrying value of the 8% shareholding of Entropy (note 5) held by
outside interests is provided below:
Year ended
December 31
2024
2023
Balance, beginning of the year
101
1,425
Net loss and comprehensive loss attributable to NCI
(1,607)
(1,324)
Balance, end of year
(1,506)
101
21. Long-term compensation plans
(a) Restricted and Performance Award Incentive Plan – Performance Share Units
Under the Restricted and Performance Award Incentive Plan, service providers can be granted two types of
equity incentive awards: Restricted Share Units and Performance Share Units. As at December 31, 2024, no
Restricted Share Units have been granted. Performance Share Units vest on the third anniversary of the
grant date and are subject to a Payout Multiplier that is determined based on the achievement of corporate
performance measures during that three-year period, as approved by the Board of Directors.
The following table is a continuity of Performance Share Units:
Performance Share Units
Balance at December 31, 2022
3,982,946
Granted
956,920
Settled
(2,012,178)
Forfeited
(108,274)
Balance at December 31, 2023
2,819,414
Granted
882,858
Settled
(1,191,708)
Forfeited
(178,864)
Balance at December 31, 2024
2,331,700
On March 28, 2024, 1.2 million Performance Share Units vested, of which, 0.9 million were settled with the
issuance of 1.3 million common shares, while 0.3 million were settled in cash. Contributed surplus was
reduced by $1.1 million related to the cash settlement of Performance Share Units, representing the share-
based compensation expense accumulated in contributed surplus.
Advantage Energy Ltd. - 105
21. Long-term compensation plans (continued)
(b) Share-based compensation expense
Share-based compensation expense after capitalization for the years ended December 31, 2024 and 2023
are as follows:
Year ended
December 31
2024
2023
Total share-based compensation
4,950
8,788
Capitalized (note 11)
(1,058)
(2,242)
Share-based compensation expense
3,892
6,546
(c) Performance Award Incentive Plan - Performance Awards
Under the Performance Award Incentive Plan, service providers can be granted cash Performance Awards.
Such grants vest on the third anniversary of the grant date and are subject to a Payout Multiplier that is
determined based on the achievement of corporate performance measures during that three-year period,
as approved by the Board of Directors. Performance Awards are expensed to general and administrative
expense with the recording of a current and non-current liability (note 17) until eventually settled in cash.
The following table is a continuity of the Corporation’s liability related to outstanding Performance Awards:
Year ended
December 31, 2024
Year ended
December 31, 2023
Balance, beginning of the year
6,687
9,277
Performance Award expense
543
3,822
Interest expense
61
43
Performance Awards settled
(4,979)
(6,455)
Balance, end of year
2,312
6,687
Current
1,074
5,350
Non-current
1,238
1,337
(d) Deferred Share Units ("DSU")
Deferred Share Units are issued to Directors of the Corporation. Each DSU entitles participants to receive
cash equal to the Corporation’s common shares, multiplied by the number of DSUs held. All DSU’s vest
immediately upon grant and become payable upon retirement of the Director from the Board.
The following table is a continuity of Deferred Share Units:
Deferred Share Units
Balance at December 31, 2022
689,310
Granted
52,218
Settled
(204,848)
Balance at December 31, 2023
536,680
Granted
69,627
Settled
(112,498)
Balance at December 31, 2024
493,809
Advantage Energy Ltd. - 106
21. Long-term compensation plans (continued)
(d) Deferred Share Units (continued)
The expense related to Deferred Share Units is calculated using the fair value method based on the
Corporation’s share price at the end of each reporting period and is charged to general and administrative
expense. The following table is a continuity of the Corporation’s liability related to outstanding Deferred
Share Units:
Year ended
December 31, 2024
Year ended
December 31, 2023
Balance, beginning of the year
4,579
6,528
Granted
672
449
Revaluation of outstanding Deferred Share Units
576
(663)
Settled
(958)
(1,735)
Balance, end of year
4,869
4,579
22. Net income per share attributable to Advantage shareholders
The calculations of basic and diluted net income per share are derived from both net income attributable to
Advantage shareholders and weighted average shares outstanding, calculated as follows:
Year ended
December 31
2024
2023
Net income attributable to Advantage shareholders
Basic and diluted
21,719
101,597
Weighted average shares outstanding
Basic
163,954,619
166,552,941
Performance Share Units
2,866,217
5,279,869
Diluted
166,820,836
171,832,810
Net income per share attributable to Advantage shareholders
Basic ($/share)
0.13
0.61
Diluted ($/share)
0.13
0.59
In computing diluted per share amounts at December 31, 2024, the common shares potentially issuable on the
conversion of the convertible debentures (note 14) were excluded as they were determined to be anti-dilutive.
In computing diluted per share amounts at December 31, 2024, the Entropy common shares potentially issuable
on the conversion of the unsecured debentures were excluded as they were determined to be anti-dilutive. If
the aggregate principal balance of unsecured debentures were converted at December 31, 2024, Advantage's
ownership would have been 68% (December 31, 2023 – 87%).
Advantage Energy Ltd. - 107
23. Revenues
(a) Natural gas and liquids sales
Advantage’s revenue is comprised of natural gas, crude oil, condensate and NGLs sales to multiple
customers. For the years ended December 31, 2024 and 2023, natural gas and liquids sales were as follows:
Year ended
December 31
2024
2023
Crude oil
186,896
93,330
Condensate
39,723
42,047
NGLs
65,289
61,856
Liquids
291,908
197,233
Natural Gas
251,387
343,867
Natural gas and liquids sales
543,295
541,100
At December 31, 2024, receivables from contracts with customers, which are included in trade and other
receivables, were $63.2 million (December 31, 2023 - $42.4 million).
Advantage markets its natural gas and liquids production to major North American marketers, four of which
each account for greater than 10% of natural gas and liquids sales. These customers account for 26%, 22%,
18%, and 10%, respectively, of the Corporation’s total natural gas and liquids sales.
(b) Sales of purchased natural gas
Year ended
December 31
2024
2023
Sales of purchased natural gas
-
3,124
Natural gas purchases
-
(3,371)
Net sales of purchased natural gas
-
(247)
(c) Processing and other income
Year ended
December 31
2024
2023
Processing income
5,467
7,612
Other
1,340
15
Total processing and other income
6,807
7,627
Advantage Energy Ltd. - 108
24. General and administrative expense
Year ended
December 31
2024
2023
Personnel
31,027
24,066
Revaluation of outstanding Deferred Share Units (note 21(d))
576
(663)
Professional fees
1,895
1,739
Information technology cost
3,023
2,253
Office rent and administration cost
3,043
2,567
Total general and administrative
39,564
29,962
Capitalized (note 11)
(6,480)
(5,325)
General and administrative expense
33,084
24,637
25. Finance expense
Year ended
December 31
2024
2023
Interest on bank indebtedness (note 13)
32,329 18,932
Interest income
(1,198) (1,446)
Interest on financing liability (note 15)
8,272
8,452
Interest on provisions and other liabilities (note 17(b), 21(c))
221
135
Interest on unsecured debentures (note 16)
-
1,693
Interest paid-in-kind on unsecured debentures (note 16)
5,193 807
Interest on convertible debentures (note 14)
3,860
-
Accretion on convertible debentures (note 14)
2,016
-
Accretion on decommissioning liability (note 17(c))
2,141
1,444
Accretion on unsecured debentures (note 16)
1,232 573
Capitalized borrowing cost (note 11)
(1,646) (500)
Total finance expense
52,420 30,090
26. Related party transactions
(a) Key management compensation
The compensation paid or payable to officers and directors is as follows:
Year ended
December 31
2024
2023
Salaries, director fees and short-term benefits
8,428
5,594
Share-based compensation and Performance Awards (1)
3,481
6,602
11,909
12,196
(1)
Represents that total share-based compensation expense, before capitalization, for key management personnel.
As at December 31, 2024, there is a commitment of $8.5 million (December 31, 2023 – $5.3 million) related
to change of control or termination of employment of officers.
Advantage Energy Ltd. - 109
27. Supplementary cash flow information
Changes in non-cash working capital is comprised of:
Year ended
December 31
2024
2023
Source (use) of cash:
Trade and other receivables
(29,810)
39,438
Prepaid expense and deposits
6,618
(2,005)
Trade and other accrued liabilities
46,003
(14,199)
Inventory
620
(4,842)
Deferred revenue
(964)
-
Performance Awards
(4,375)
(2,590)
Deferred Share Units
290
(1,949)
18,382
13,853
Related to operating activities
(20,804)
13,818
Related to investing activities
39,186
35
18,382
13,853
The following table provides a detailed breakdown of the cash and non-cash changes in financing liabilities
arising from financing activities:
Year ended
December 31
2024
2023
Cash flows
Common shares repurchased (note 19)
(21,739)
(117,343)
Common shares issued (note 19)
65,010
-
Issuance costs on shares issued (note 19)
(2,905)
-
Draws on credit facility (note 13)
735,000
140,000
Repayment of credit facility (note 13)
(475,000)
(105,000)
Bankers’ acceptance and other fees (note 13)
(15,128)
(17,448)
Proceeds from unsecured debentures (note 16)
55,000
15,000
Issuance costs on unsecured debentures (note 16)
(3,528)
(1,167)
Proceeds from convertible debentures (note 14)
143,750
-
Issuance costs on convertible debentures (note 14)
(6,482)
-
Proceeds from financing liability (note 15)
-
2,500
Financing payments (note 15)
(13,086)
(12,760)
Lease payments (note 17(b))
(945)
(691)
Total cash flows
459,947
(96,909)
Non-cash changes
Amortization of bankers’ acceptance and other fees (note 13)
12,698
18,102
Lease interest expense (note 17(b))
160
92
Financing liability interest expense (note 15)
8,272
8,452
Total non-cash changes
21,130
26,646
Cash provided by (used in) financing activities
481,077
(70,263)
Advantage Energy Ltd. - 110
28. Commitments
At December 31, 2024 Advantage had commitments relating to building operating costs of $2.2 million,
processing commitments of $188.5 million and transportation commitments of $671.8 million. The estimated
remaining payments are as follows:
Payments due by period
($ millions)
Total
2025
2026
2027
2028
2029
Beyond
Building operating cost (1)
2.2
0.8
0.8
0.6
-
-
-
Processing
188.5
24.8
28.1
28.1
28.2
26.4
52.9
Transportation
671.8
102.3
87.0
76.6
47.7
38.5
319.7
Total commitments
862.5
127.9
115.9
105.3
75.9
64.9
372.6
(5)
Excludes fixed lease payments which are included in the Corporation’s lease liability.
Advantage Energy Ltd. - 111
Advantage Energy Ltd.
Supplemental Financial Information
Exhibit to the December 31, 2024 Consolidated Financial Statements
The following ratio has been calculated on a consolidated basis for the twelve-month period ended December 31,
2024. This ratio is based on Advantage Energy Ltd.’s Consolidated Financial Statements that are prepared in
accordance with International Financial Reporting Standards as issued by the International Accounting Standards
Board.
Twelve months ended
December 31, 2024
Earnings Coverage Ratio(1)(2)
1.6x
(1) Calculated as net income (loss) and comprehensive income (loss) attributed to Advantage shareholders, before finance expense and
income tax expense divided by finance expense (including capitalized interest).
(2) As a result of the Corporation’s acquisition of Charlie Lake and Montney assets (the “Acquired Assets”), results from June 24, 2024 to
December 31, 2024 include results from the Acquired Assets. Financial information prior to the acquisition from January 1, 2024 to June
23, 2024 does not reflect results from the Acquired Assets.
Advantage Energy Ltd. - 112
ADVISORY
Forward-Looking Information and Other Advisories
This document contains certain forward-looking statements and forward-looking information (collectively,
"forward-looking statements"), which are based on our current internal expectations, estimates, projections,
assumptions and beliefs. These forward-looking statements relate to future events or our future 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 "seek", "anticipate", "plan", "continue",
"estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might",
"should", "believe", "would" and similar or related expressions. These statements are not guarantees of future
performance.
In particular, forward-looking statements in this document include, but are not limited to, statements about our
strategy, plans, objectives, priorities and focus and the benefits to be derived therefrom; the focus of the
Corporation's 2025 capital program; Advantage's corporate strategy of maximizing its AFF per share without
compromising its balance sheet; the focus of the Corporation's updated three-year plan and the anticipated benefits
to be derived therefrom; the anticipated amount of free cash flow that the Corporation will generate over the next
three years; expectations that the Corporation is strongly positioned to benefit from an anticipated resurgence in
gas markets and industry consolidation; the Corporation's expectations that all free cash flow from operations will
be allocated to debt reduction and that a portion of the proceeds from potential non-core asset divestitures may
be used to buy back shares; the Corporation's net debt target and the expectation that the Corporation is on track
to achieve its net debt target in 2025; Advantage's focus on growing adjusted funds flow per share; the Corporation's
2025 capital guidance including its anticipated cash used in investing activities, total average production, liquids
production (% of total average production), royalty rate, operating expense per boe, transportation expense per
boe and G&A/finance expense per boe; the anticipated costs of the Glacier Phase 2 capture equipment,
compression, transportation and storage wells and the installation of the modular power plant providing power and
heat for the Glacier Gas Plant and Entropy's CCS equipment; the Corporation's anticipated total annual production
in 2025; the incurred net capital expenditures that the Corporation estimates it will recover under the ITC for CCUS
projects on the Glacier Gas Plant Phase 1 CCS project; the Corporation's forecasted 2025 natural gas market
exposure including the anticipated effective production rate; the anticipated timing of when the construction of the
Corporation's gas plant at Progress will resume and the expectation that it will not impact forecasted production;
the Corporation's development plan for the Acquired Assets in 2025 and the anticipated average daily production
rate thereof; the Corporation's commodity risk management program and financial risk management program and
the anticipated benefits to be derived therefrom; the terms of the Corporation's derivative contracts, including their
purposes, the timing of settlement of such contracts and the anticipated benefits to be derived therefrom; the
Corporation's estimated tax pools and its expectations that it will not be subject to cash taxes until calendar 2028;
the Corporation's expectations that its Valhalla asset will continue to play a pivotal role in the Corporation's liquids-
rich gas development plan; the Corporation's commitments and contractual obligations and the anticipated
payments in connection therewith and the anticipated timing thereof; Advantage's ability to actively manage its
portfolio in conjunction with its future development plans and its ability to ensure that the Corporation is properly
diversified into multiple markets; that the Corporation will monitor its capital structure and make adjustments
according to market conditions; the Corporation's strategy for managing its capital structure, including by issuing
new common shares, repurchasing outstanding common shares, obtaining additional financing through bank
indebtedness, refinancing current debt, issuing other financial or equity-based instruments, declaring a dividend or
adjusting capital spending; the terms of the Corporation's Credit Facilities, including the timing of the next review
of the Credit Facilities and the Corporation's expectations regarding the extension of the Credit Facilities at each
annual review; the Corporation's ability to satisfy all liabilities and commitments and meet future obligations as they
Advantage Energy Ltd. - 113
become due and the means for satisfying such future obligations; the terms of Entropy's unsecured debentures; the
anticipated undiscounted, uninflated cash flows required to settle the Corporation's decommissioning liability and
the anticipated timing that such costs will be incurred; Entropy's business plan and the anticipated benefits to be
derived therefrom; statements related to reserves; the statements under "critical accounting estimates" in the
MD&A; and other matters.
These forward-looking statements involve substantial known and unknown risks and uncertainties, many of which
are beyond our control, including, but not limited to: the risk that (i) the U.S. and/or Canadian governments
implement, maintain or increase the rate or scope of new tariffs, (ii) the U.S. and/or Canada imposes any other form
of tax, restriction or prohibition on the import or export of products from one country to the other, including on oil
and natural gas, and (iii) the tariffs imposed by the U.S. on other countries and responses thereto could have a
material adverse effect on the Canadian, U.S. and global economies, and by extension the Canadian oil and natural
gas industry and the Corporation; risks related to changes in general economic conditions (including as a result of
demand and supply effects resulting from the actions of OPEC and non-OPEC countries) which will, among other
things, impact demand for and market prices of the Corporation’s products, market and business conditions;
continued volatility in market prices for oil and natural gas; the impact of significant declines in market prices for oil
and natural gas; stock market volatility; changes to legislation and regulations and how they are interpreted and
enforced; our ability to comply with current and future environmental or other laws; actions by governmental or
regulatory authorities including increasing taxes, regulatory approvals, changes in investment or other regulations;
changes in tax laws, royalty regimes and incentive programs relating to the oil and gas industry; the effect of
acquisitions; our success at acquisition, exploitation and development of reserves; unexpected drilling results;
failure to achieve production targets on timelines anticipated or at all; changes in commodity prices, currency
exchange rates, 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;
hazards such as fire, explosion, blowouts, cratering, and spills, each of which could result in substantial damage to
wells, production facilities, other property and the environment or in personal injury; changes or fluctuations in
production levels; individual well productivity; delays in anticipated timing of drilling and completion of wells; delays
in timing of facility installation; risk on the financial capacity of the Corporation's contract counterparties and
potentially their ability to perform contractual obligations; delays in obtaining stakeholder and regulatory approvals;
performance or achievement could differ materially from those expressed in, or implied by, the forward-looking
information; the risk that the Credit Facilities may not be renewed at each annual review; competition from other
producers; the risk that the Corporation may not maximize its AFF per share without compromising its balance
sheet; the risk that the Corporation may not achieve its three-year plan or realize the benefits anticipated therefrom;
the risk that the Corporation may not benefit from a resurgence in gas markets or industry consolidation; the risk
that the Corporation's actual 2025 financial and operating results may not be consistent with its 2025 guidance; the
risk that the Corporation may not achieve its net debt target in 2025, or at all; the risk that the Corporation's 2025
annual average production may be less than anticipated; the risk that the Corporation may not have sufficient
financial resources to acquire its common shares pursuant to an NCIB in the future; the lack of availability of qualified
personnel or management; ability to access sufficient capital from internal and external sources; credit risk; that
Entropy's existing planned capital projects may not result in completed CCS projects; the price of and market for
carbon credits and offsets; current and future carbon prices and royalty regimes; the risk that the Corporation's
commodity risk management program and financial risk management program may not achieve the results
anticipated; the risk that the Corporation may be subject to cash taxes prior to calendar 2028; the risk that the costs
of the Glacier Phase 2 capture equipment, compression, transportation and storage wells and the installation of the
modular power plant providing power and heat for the Glacier Gas Plant and Entropy's CCS equipment may be
greater than anticipated; the risk that the construction of the Corporation's gas plant at Progress may not resume
when anticipated, or at all, and that it may have a greater impact on production than anticipated; the risk that the
Advantage Energy Ltd. - 114
operating results of the Acquired Assets in 2025 may not meet expectations; the risk that the Corporation's Valhalla
asset may not play a pivotal role in the Corporation's liquids-rich gas development plan; the risk that Advantage may
not actively manage its portfolio in conjunction with its future development plans or ensure that the Corporation is
properly diversified into multiple markets; the risk that the Corporation may not allocate all of its free cash flow in
2025 towards the Corporation’s share buyback program; the risk that the Corporation may not satisfy all of its
liabilities and commitments and meet its future obligations as they become due; the risk that the undiscounted,
uninflated cash flows required to settle the Corporation's decommissioning liability may be greater than anticipated;
the risk that Entropy's future projects may have a greater capital cost than anticipated; and the risks and
uncertainties described in the Corporation’s Annual Information Form which is available at www.sedarplus.ca 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 document, in addition to other assumptions identified
herein, Advantage has made assumptions regarding, but not limited to: the potential impact of tariffs that may be
implemented by the U.S. and Canadian governments, and that neither the U.S. nor Canada (i) increases the rate or
scope of such tariffs, or imposes new tariffs, on the import of goods from one country to the other, including on oil
and natural gas, and/or (ii) imposes any other form of tax, restriction or prohibition on the import or export of
products from one country to the other, including on oil and natural gas; that the current commodity price and
foreign exchange environment will continue or improve; conditions in general economic and financial markets;
effects of regulation by governmental agencies; receipt of required stakeholder and regulatory approvals; royalty
regimes; future exchange rates; royalty rates; future operating costs; availability of skilled labour; availability of
drilling and related equipment; timing and amount of capital expenditures; the ability to efficiently integrate assets
acquired through acquisitions; the impact of increasing competition; the price of crude oil and natural gas; 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 Entropy's planned capital projects will lead to
completed CCS projects; that the Corporation’s conduct and results of operations will be consistent with its
expectations; that the Corporation will have the ability to develop its crude oil and natural gas properties in the
manner currently contemplated; availability of pipeline capacity; that current or, where applicable, proposed
assumed industry conditions, laws and regulations will continue in effect or as anticipated as described herein; that
the Corporation will have sufficient financial resources to purchase its shares under NCIBs in the future; and that
the estimates of the Corporation’s production, reserves and resources volumes and the assumptions related thereto
(including commodity prices and development costs) are accurate in all material respects and that such reserves
exist in the quantities predicted or estimated and can be profitably produce in the future.
In addition to the assumptions listed above, Advantage has made the following assumptions with respect to the
three-year plan contained in this document, unless otherwise specified:
Production growth of approximately 16% in 2025 and a long-term average production growth rate of up to
10% through 2027;
Proportion of liquids representing approximately 15% to 16% for 2025 to 2027;
Capital spending is expected to average around $300 million per year for 2025 to 2027;
Commodity prices utilizing forward pricing assumptions at November 21, 2024: WTI US$/bbl (2025–$69,
2026–$66, 2027–$65), AECO $CDN/GJ (2025–$2.25, 2026–$2.95, 2027–$3.00), FX $CDN/$US (2025–1.39,
2026–1.37, 2027–1.36);
Current hedges; and
No cash income taxes within the three-year plan due to over $1 billion in high-quality tax pools (See note
18 “Income taxes” in Advantage’s Consolidated Financial Statements for the year ended December 31, 2024
Advantage Energy Ltd. - 115
for estimated tax pools available). Tax pools are increased for net capital expenditures and reduced for tax
pools used to reduce taxable income in a specific year.
Management has included the above summary of assumptions and risks related to forward-looking information
provided in this document 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 document 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.
The future acquisition by the Corporation of the Corporation's common shares pursuant to its share buyback
program (including through an NCIB), 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.
This document 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 anticipated amount of free
cash flow that the Corporation will generate over the next three years; the Corporation's expectations that all free
cash flow will be allocated to its share buyback program; the Corporation's net debt target and the expectation that
the Corporation is on track to achieve its net debt target in 2025; the Corporation's 2025 capital guidance including
its anticipated cash used in investing activities, royalty rate, operating expense per boe, transportation expense per
boe and G&A/finance expense per boe; the anticipated costs of the Glacier Phase 2 capture equipment,
compression, transportation and storage wells and the installation of the modular power plant providing power and
heat for the Glacier Gas Plant and Entropy's CCS equipment; the incurred net capital expenditures that the
Corporation estimates that it will recover under the ITC for CCUS projects on the Glacier Gas Plant Phase 1 CCS
project; the terms of the Corporation's derivative contracts, including their purposes, the timing of settlement of
such contracts and the anticipated benefits to be derived therefrom; the Corporation's estimated tax pools and its
expectations that it will not be subject to cash taxes until calendar 2028; the Corporation's commitments and
contractual obligations and the anticipated payments in connection therewith and the anticipated timing thereof;
the anticipated undiscounted, uninflated cash flows required to settle the Corporation's decommissioning liability
and the anticipated timing that such costs will be incurred; 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
document 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 document was made as of the
date of this document and was provided for the purpose of providing further information about the Corporation's
Advantage Energy Ltd. - 116
potential future business operations. Readers are cautioned that the financial outlook contained in this document
is not conclusive and is subject to change.
Oil and Gas Information
The term "boe" or barrels of oil equivalent and "Mcfe" or thousand cubic feet equivalent may be misleading,
particularly if used in isolation. A boe or Mcfe conversion ratio of six thousand cubic feet of natural gas equivalent
to one barrel of oil (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. As the value ratio between natural gas and
crude oil based on the current prices of natural gas and crude oil 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.
This document contains metrics commonly used in the oil and natural gas industry which have been prepared by
management such as "operating income", "operating netback", "net asset value", "net asset value per share",
"reserve additions", "reserves per share", "reserve life index" and "F&D costs" which are described herein and below
under "Specified Financial Measures" and under "Specified Financial Measures" in the MD&A (the MD&A forms part
of this document). These terms do not have standard meaning and may not be comparable to similar measures
presented by other companies and, therefore, should not be used to make such comparisons. Management uses
these oil and natural gas metrics for its own performance measurements, and to provide shareholders with
measures to compare Advantage’s operations overtime. Readers are cautioned that the information provided by
these metrics, or that can be derived from metrics presented in this document, should not be relied upon for
investment or other purposes.
References in this document to short-term production rates, such as IP30 and IP90, 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.
Production estimates contained herein are expressed as anticipated average production over the calendar year. In
determining anticipated production for the year 2025 Advantage considered historical drilling, completion and
production results for prior years and took into account the estimated impact on production of the Corporation’s
2025 expected drilling and completion activities.
McDaniel was engaged as an independent qualified reserve evaluator to evaluate Advantage’s year-end reserves as
of December 31, 2024 in accordance with NI 51-101 and the COGE Handbook. Reserves are stated on a gross (before
royalties) working interest basis unless otherwise indicated. Additional reserve information as required under NI 51-
101 are included in our Annual Information Form which is available at www.sedarplus.ca and
www.advantageog.com. Advantage’s year-end reserves as of December 31, 2023 and December 31, 2022 disclosed
in this document were evaluated by Sproule Associates Limited in accordance with NI 51-101 and the COGE
Handbook and using the IQRE average product price forecast effective December 31, 2023 and December 31, 2022,
respectively. The recovery and reserve estimates of reserves provided in this document are estimates only, and
there is no guarantee that the estimated reserves will be recovered. Actual reserves may eventually prove to be
greater than, or less than, the estimates provided herein. It should not be assumed that the discounted future net
revenue estimated by Sproule and disclosed herein represents the fair market value of the reserves.
References to natural gas, crude oil and condensate and NGLs production in this document refer to conventional
natural gas, shale gas, light crude oil and medium crude oil and natural gas liquids, respectively, product types as
defined in NI 51-101.
Specified Financial Measures
Throughout this document and in other documents disclosed by the Corporation, Advantage discloses certain
measures to analyze financial performance, financial position, and cash flow. These specified 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 specified 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. Refer to "Specified Financial Measures" in the MD&A for additional
information about certain financial measures, including reconciliations to the nearest GAAP measures, as applicable.
The Corporation has additional specified financial measures, not included in the Corporation’s MD&A that have
been disclosed in this document, as follows:
Net Asset Value
Net asset value is a supplementary financial measure that includes the net present value of the future revenue of
its proved plus probable reserves (before income taxes, discounted at 0%, 10% and 15%), working capital (including
derivatives), financing liability and bank indebtedness. Additionally, the Corporation discloses net asset value per
share, which is determined by dividing net asset value by the basic weighted average shares outstanding of the
Corporation. Management believes that net asset value and net asset value per share assist users in assessing the
long-term fair value of Advantage’s underlying reserves assets after settling its outstanding financial obligations.
Reserve Additions Replaced
Reserve additions replaced is a supplementary financial measure that is calculated by dividing reserves net volume
additions by the current annual production and expressed as a percentage. Management uses this measure to
determine the relative change of its reserves base over a period of time.
Reserves Life Index
Reserves life index is a supplementary financial measure that is calculated by dividing the total volume of reserves
by the fourth quarter production rate and expressed in years.
Additional Information
Additional information relating to Advantage can be found on SEDAR+ at www.sedarplus.ca and the Corporation’s
website at www.advantageog.com. Such other information includes the annual information form, the management
information circular, press releases, material change reports, material contracts and agreements, and other financial
reports. The annual information form will be of particular interest for current and potential shareholders as it
discusses a variety of subject matter including the nature of the business, description of our operations, general and
recent business developments, risk factors, reserves data and other oil and gas information.
March 25, 2025
Advantage Energy Ltd. - 117
Advantage Energy Ltd. - 118
ABBREVIATIONS
Crude Oil and Natural Gas Liquids
Natural Gas
bbl
barrel
Mcf
thousand cubic feet
bbls
barrels
MMcf
million cubic feet
Mbbls
thousand barrels
bcf/d
billion cubic feet per day
NGLs
natural gas liquids
Mcf/d
thousand cubic feet per day
BOE or boe
barrel of oil equivalent
MMcf/d
million cubic feet per day
Mboe
thousand barrels of oil
equivalent
Mcfe
thousand cubic feet of natural gas equivalent, using the
ratio of 6 Mcf of natural gas being equivalent to one
bbl of oil
MMboe
million barrels of oil equivalent
MMcfe/d
million cubic feet of natural gas equivalent per day
boe/d
barrels of oil equivalent per day MMbtu
million British Thermal Units
bbls/d
barrels of oil per day
MMbtu/d
million British Thermal Units per day
GJ/d
Gigajoules per day
Other
AECO
a notional market point on the NGTL system, located at the AECO ‘C’ hub in Alberta, where the
purchase and sale of natural gas is transacted
CCS
carbon capture and storage
Henry Hub
a central delivery location, located near Louisiana’s Gulf Coast connecting several intrastate and
interstate pipelines, that serves as the official delivery location for futures contracts on the NYMEX
MSW
Mixed Sweet Blend, the reference price paid for conventionally produced light sweet crude oil at
Edmonton, Alberta
NCIB
normal course issuer bid
PJM
a regional transmission organization that coordinates the movement of wholesale electricity in the
Mid Atlantic region of the US
WTI
West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma for the
crude oil standard grade
Crude oil
"Light Crude Oil and Medium Crude Oil" as defined in National Instrument 51-101
Natural gas
"Conventional Gas" and "Shale Gas" as defined in National Instrument 51-101
"NGLs" &
"condensate"
"Natural Gas Liquids" as defined in National Instrument 51-101
Liquids
Total of crude oil, condensate and NGLs
Advantage Energy Ltd. - 119
Directors (5)
Jill T. Angevine (1)(3)(4)
Stephen E. Balog (2)(4)
Michael Belenkie
Deirdre M. Choate (1)(2)(3)(4)
Donald M. Clague (1)(2)(3)(4)
John L. Festival (1)(2)(3)
Norman W. MacDonald (2)(3)(4)
Andy J. Mah (2)
Janine J. McArdle (1)(4)
David G. Smith (1)(4)
(1) Member of Audit Committee
(2) Member of Reserves and Health, Safety and Environment
Committee
(3) Member of Compensation Committee
(4) Member of Governance & Sustainability Committee
(5) Directors as of March 4, 2025, the approval date of the 2024
reserves and financial statements.
Officers
Michael Belenkie, President and CEO
Craig Blackwood, CFO
Neil Bokenfohr, Senior Vice President
John Quaife, Vice President, Finance
Darren Tisdale, Vice President, Geosciences
Geoff Keyser, Vice President, Corporate Development
Corporate Secretary
Jay P. Reid, Partner
Burnet, Duckworth and Palmer LLP
Auditors
PricewaterhouseCoopers LLP
Bankers
The Bank of Nova Scotia
National Bank of Canada
Royal Bank of Canada
Canadian Imperial Bank of Commerce
ATB Financial
The Toronto – Dominion Bank
Business Development Bank of Canada
Canadian Western Bank
Wells Fargo Bank N.A., Canadian Branch
Independent Reserve Evaluators
McDaniels & Associates Consultants Ltd.
Legal Counsel
Burnet, Duckworth and Palmer LLP
Transfer Agent
Computershare Trust Company of Canada
Corporate Office
2200, 440 – 2nd Avenue SW
Calgary, Alberta T2P 5E9
(403) 718-8000
Contact Us
Toll free: 1-866-393-0393
Email: ir@advantageog.com
Visit our website at www.advantageog.com
Toronto Stock Exchange Trading Symbols
AAV: Common Shares
AAV.DB: Debentures
Brian Bagnell, Vice President, Commodities and Capital Markets
Advantage Energy Ltd. - 120
Corporate Office
2200, 440 – 2nd Avenue SW
Calgary, Alberta T2P 5E9
(403) 718-8000
Contact Us
Toll free: 1-866-393-0393
Email: ir@advantageog.com
Visit our website at www.advantageog.com