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    Canada’s Advantage O&G Reverses Q4 Loss

Summary

Capital discipline will continue in 2021

by: Dale Lunan

Posted in:

Complimentary, Corporate, Financials, News By Country, Canada

Canada’s Advantage O&G Reverses Q4 Loss

Canada’s Advantage Oil & Gas, which is active primarily in the condensate and light oil-rich Montney Glacier-Pipestone fairway in northwestern Alberta, reported Q4 2020 net income of C$24.2 (US$19)mn on February 25, reversing a C$1.84mn loss in Q4 2019.

Despite the quarterly turnaround, the company reported a full-year loss of C$284mn, largely reflecting a non-cash impairment charge of C$361mn it took on its reserves in Q1.

“Results from Advantage’s 2020 drilling program have exceeded expectations both in costs and well performance, positively impacting our 2020 reserves, financial outlook and 2021 guidance,” the company said. “Drilling in 2020 was entirely gas-focused at Glacier, with the first wells drilled in July and brought onstream in November.”

The remaining seven wells in Advantage’s 13-well drilling program in 2020 were brought on-stream in early 2021, when natural gas commodity prices were escalating. Five wells drilled in Q1 this year will be completed after spring break-up and should begin producing in Q3.

Responding to uncertain market conditions – including a global oil price war early in the year and the economic fallout from the Covid-19 pandemic – Advantage cut net capital expenditures in 2020 to C$157.9mn from C$185mn in 2019, and expects to continue that capital discipline in 2021. Current capital guidance for the year is in the C$115-$135mn range.

“Advantage believes that disciplined investment and balance sheet strength are crucial to maximize returns for our shareholders,” the company said. “Significant flexibility remains in the capital spending plan, with optionality to throttle capital between oil-weighted and gas-weighted assets and strategic investments.”

Total production averaged a record 44,922 barrels of oil equivalent (boe)/day in 2020, comprised of record liquids production of 4,408 b/d, up from 2,700 b/d in 2019, and natural gas production of 243.1mn ft3/day, down from 249.8mn ft3/day the previous year.