An anonymous director reports

ADVANTAGE ANNOUNCES RECORD 2023 YEAR-END RESULTS, RESERVES AND REDUCED CAPITAL GUIDANCE

Advantage Energy Ltd. has released year-end 2023 financial and operating results, as well as year-end 2023 reserves.

Advantage Energy achieved exceptional results during 2023, including record production, improved well results and significant share buybacks, while ending the year below its net debt target. Additional achievements included an unbudgeted $10-million acquisition of 53 net Montney sections at Conroy and executing a 17-day Glacier plant turnaround.

Following a comprehensive review of its capital program, it has materially reduced its planned 2024 capital expenditures by $40-million to between $220-million and $250-million. As a result of continued outperformance of its recent development program, it can deliver this reduced capital level without changing its production guidance or compromising its long-term adjusted-funds-flow-per-share focus.

Year-end 2023 financial highlights:

• Cash provided by operating activities of $323.3-million;
• AFF of $313.6-million or $1.88 per share ($320.2-million Advantage Energy);
• Free cash flow of $30.8-million ($54.0-million Advantage Energy);
• Cash used in investing activities and net capital expenditures were $282.8-million ($266.2-million Advantage Energy);
• Net income of $101.6-million or 61 cents per share;
• Operating expenses remained low at $3.81 per boe;
• Net debt increased to $222.0-million ($195.9-million Advantage Energy);
• Repurchased 13.1 million shares (8 per cent of the outstanding shares at Dec. 31, 2022), returning $117.3-million to shareholders; subsequent to year-end, Advantage Energy purchased an additional 2.4 million shares, returning an additional $21-million to shareholders.

2023 operating highlights:

• Record annual average production of 60,678 barrels of oil equivalent per day (322.7 million cubic feet per day natural gas and 6,897 barrels per day liquids), in line with budget;
• Liquids production of 6,897 bbl/d (2,710 bbl/d oil, 1,166 bbl/d condensate and 3,021 bbl/d natural gas liquids), an increase of 13 per cent over 2022;
• Of all Alberta Montney gas wells drilled in 2023, 13 of the top-16 gas producers were Advantage Energy's, based on IP90 rates;
• At Glacier, 18 gross (16.0 net) wells were drilled with exceptional performance, driving average well IP30 rates to 13.6 million cubic feet per day natural gas;
• At Valhalla, two gross (2.0 net) wells were drilled with an average IP30 of 1,936 boe/d (7.5 MMcf/d natural gas, 499 bbl/d condensate and 180 bbl/d NGLs)
• At Wembley, seven gross (7.0 net) wells were drilled with an average IP30 of 1,549 boe/d (3.7 MMcf/d natural gas, 605 bbl/d crude oil and 328 bbl/d NGLs);
• Phase 1b of Entropy's postcombustion integrated carbon capture and storage project at Glacier was commissioned in the fourth quarter of 2023 with costs below budget;
• Entropy achieved a global first in carbon markets with a $1-billion 15-year fixed-price carbon credit offtake agreement with Canada Growth Fund Inc. that has the potential to accelerate deployment of carbon capture and storage in Canada.

2023 reserves highlights:

• Proven developed producing reserves increased 8 per cent, with finding and development costs of $7.67 per boe;
• Net present value of PDP reserves of $1.4-billion (before tax, 10-per-cent discount rate) or $8.58 per share;
• Total proven reserves increased 3 per cent, with F&D costs of $8.50 per boe;
• Net present value of proven reserves of $3.0-billion (before tax, 10-per-cent discount rate) or $18.19 per share;
• Proven plus probable reserves increased 4 per cent, with F&D costs of $8.17 per boe;
• Net present value of 2P reserves of $4.2-billion (before tax, 10-per-cent discount rate) or $26.07 per share;
• PDP reserve additions replaced 151 per cent of production;
• Liquids reserves increased 26 per cent, 10 per cent and 10 per cent for PDP, 1P and 2P, respectively;
• Three-year recycle ratios were 2.4 times for PDP, 2.0 times for 1P and 2.2 times for 2P based on fourth quarter 2023 operating netback of $15.43 per boe.

2024 capital program update

Advantage Energy continuously reviews its capital program to adjust to rapidly changing supply/demand dynamics in North America. Its 2024 capital spending guidance has been revised to a range of $220-million to $250-million (from $260-million to $290-million). Budgetary reductions include at least two fewer wells, the deferral of debottlenecking and reliability projects, and a previously unbudgeted capital recovery. Production guidance remains unchanged, as a result of continued outperformance of its development program.

Significant discretionary capital remains in the budget for the second half of 2024, including a steady one-rig drilling program and the first phase of the 150 MMcf/d Progress gas plant project, currently on schedule to be commissioned midyear 2025. In the event that North American supply growth continues to overwhelm demand and create further downward pressure on futures pricing, any discretionary investments that fail to meet threshold metrics may be deferred, allowing incremental FCF to be redeployed to the share buyback.

Based on current futures pricing, Advantage Energy estimates capital spending will be approximately 75 per cent of forecasted total AFF for 2024 and 2025, preserving balance sheet flexibility and optionality for opportunistic, countercyclical share repurchases.

Marketing update

Advantage Energy has hedged approximately 20 per cent of its forecast natural gas production for summer 2024, 11 per cent for winter 2024/25, 5 per cent for summer 2025 and 6 per cent for winter 2025/2026. Advantage Energy has only approximately 8-per-cent exposure to AECO volatility this summer through a combination of fixed-price hedges and physical market diversification.

Conference call

Advantage Energy's management team will host a conference call to discuss the corporation's fourth quarter and full-year 2023 results on Tuesday, March 5, 2024, at 8 a.m. Mountain Time (10 a.m. Eastern Time). Advantage Energy plans to regularly host quarterly earnings calls going forward.

To participate by phone, please call 1-888-664-6383 (North American toll-free) or 1-416-764-8650 (international). A recording of the conference call will be available for replay by calling 1-888-390-0541 and entering the conference replay code 665973 followed by the number sign. The replay will be available until March 19, 2024.

To join the conference call without operator assistance, you may enter your details and phone number to receive an instant automated callback. You may also stream the event by webcast.

Looking forward

To maximize shareholder value, Advantage Energy remains focused on increasing AFF per share while maintaining a net debt target of $200-million to $250-million. Advantage Energy's three-year plan is to deliver compounding AFF per-share growth through careful capital allocation, with annual spending between $220-million and $300-million and production growth capped at 10 per cent. All excess cash will be returned to shareholders through share buybacks.

With modern, low-emission-intensity assets and the Glacier carbon capture and sequestration asset, the corporation continues to proudly deliver clean, reliable, sustainable energy, contributing to a reduction in global emissions by displacing high-carbon fuels. Advantage Energy wishes to thank its employees, board of directors and its shareholders for their continuing support.

Attached are complete tables showing financial highlights, operating highlights and reserves results.

IQRE average forecasts

The net present value of future net revenue at Dec. 31, 2023, was based upon light and medium oil, conventional natural gas, and natural gas liquids pricing assumptions, which were computed by using the average of the forecasts prepared by McDaniel & Associates Consultants Ltd., GLJ Petroleum Consultants and Sproule, effective Dec. 31, 2023. 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 herein.

The reserves by category and year-over-year changes compared with 2022 are indicated herein.

The total number of 2P future well locations booked in the Sproule 2023 reserves report is illustrated herein.

The corporation's audited consolidated financial statements for the fiscal year ended Dec. 31, 2023, together with the notes thereto, and management's discussion and analysis for the year ended Dec. 31, 2023, have been filed on SEDAR+ and are available on the corporation's website. The corporation's audited consolidated financial statements for the fiscal year ended Dec. 31, 2023, are also available on the corporation's website. Upon request, Advantage Energy will provide a hard copy of any financial reports free of charge.

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