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1. Company Snapshot

1.a. Company Description

Advantage Energy Ltd., together with its subsidiaries, acquires, exploits, develops, and produces crude oil, natural gas, and natural gas liquids in the Province of Alberta, Canada.The company focuses on the development and production of oil and natural gas resource that includes 228 net sections covering an area of 145,920 net acres of Doig/Montney rights in Glacier, Valhalla, Progress, and Pipestone/Wembley.It provides natural gas, oil, and natural gas liquids primarily through marketing companies.


The company was formerly known as Advantage Oil & Gas Ltd.and changed its name to Advantage Energy Ltd.in May 2021.


Advantage Energy Ltd.was founded in 2001 and is headquartered in Calgary, Canada.

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1.b. Last Insights on AAV

Advantage Energy Ltd.'s recent performance is driven by several positive factors. The company's Entropy subsidiary has entered into a definitive agreement to purchase strategic carbon storage assets for $20 million, with potential contingent payments of approximately $15 million. This acquisition is expected to enhance Advantage's capabilities in carbon management and provide a new revenue stream. Additionally, the company's participation in the 30th Annual EnerCom Denver - The Energy Investment Conference, where it will have one-on-one meetings with investors, is likely to generate interest in the company's growth prospects. The conference will provide a platform for Advantage to showcase its capabilities and build relationships with potential investors.

1.c. Company Highlights

2. Advantage Energy Limited Delivers Steady Q3 2025 Performance Amidst Low AECO Prices

Advantage Energy Limited reported adjusted funds flow of $72 million or $0.43 per share, and an actual EPS of $0.2575, slightly below estimates of $0.275. Revenue was dominated by liquids sales, accounting for 64% of revenue despite comprising only 17% of BOEs. The company's production averaged 71,482 BOEs per day, down 4% year-over-year. The earnings report highlights the company's ability to maintain a neutral debt level and fund its $72 million capital spending program, demonstrating its resilience in a low-price environment.

Publication Date: Nov -26

📋 Highlights

Operational Performance

The company's operational performance was impacted by price-driven curtailments and maintenance, resulting in an 8% decrease in production compared to the prior quarter. Advantage curtailed an average of 60 million cubic feet per day of dry natural gas, mitigating over $5 million of depletion expense. New well results from Glacier are exceptional, with the first well producing at 32 million cubic feet per day.

Outlook and Guidance

Advantage expects fourth-quarter production to average between 79,000 and 83,000 BOEs per day, resulting in a full-year 2025 production of 78,100 to 79,100 BOEs per day. The company is introducing a debt target range of $450 million, plus or minus $50 million, allowing for flexibility in share buybacks. Production growth is expected to average about 9% per year over the next two years, and free cash flow yield is expected to average 10% per year, for a total annual return of 19%. Analysts estimate next year's revenue growth at 34.1%.

Valuation and Metrics

With a P/E Ratio of 37.75 and an EV/EBITDA of 7.44, the company's valuation appears to be reasonable considering its growth prospects. The P/S Ratio is 3.01, indicating a moderate revenue multiple. The company's ROE is 3.31%, and ROIC is 2.13%, suggesting room for improvement in returns. The Net Debt / EBITDA ratio is 1.89, indicating a manageable debt burden. As the company accelerates debt repayment and positions itself for a strong finish to the year, investors may want to keep an eye on these metrics to assess the company's progress. As per the staff, "New well results from Glacier are exceptional, with the first well producing at 32 million cubic feet per day and tracking towards a 30-day IP of almost 30 million cubic feet per day."

3. NewsRoom

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Does Advantage Energy’s Strong Q3 Efficiency Overcome Low Gas Prices for TSX:AAV’s Growth Story?

Nov -04

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RBC Raises Tamarack's Price Target, Maintains Estimates for Advantage Energy, Headwater

Oct -31

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Advantage Energy Sector-Perform Rating and $12.00 Price Target Confirmed at RBC on Q3 Results

Oct -29

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Advantage Energy (AAVVF) Reports Break-Even Earnings for Q3

Oct -28

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Advantage Energy: Q3 Earnings Snapshot

Oct -28

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Advantage Announces Third Quarter 2025 Financial and Operating Results

Oct -28

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'The worst September': Natural gas prices fall below zero, forcing production closures

Sep -27

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Advantage Energy Independent Director Acquires 53% More Stock

Aug -22

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (11.04%)

6. Segments

Natural Gas

Expected Growth: 12%

Advantage Energy Ltd.'s 12% growth in natural gas is driven by increased production from its Montney and Glacier assets, improved well efficiencies, and a favorable pricing environment. Additionally, the company's focus on cost reduction and operational optimization has also contributed to the growth.

Crude Oil

Expected Growth: 11%

Advantage Energy Ltd.'s 11% growth in Crude Oil is driven by increased production from its Montney and Glacier assets, improved operational efficiency, and strategic hedging. Additionally, the company's focus on cost reduction and capital discipline has enabled it to maintain a competitive edge in the market.

Natural Gas and Liquids

Expected Growth: 10%

Advantage Energy Ltd.'s 10% growth in Natural Gas and Liquids is driven by increased drilling activities, improved well productivity, and enhanced oil recovery techniques. Additionally, strategic acquisitions, favorable commodity pricing, and efficient cost management contribute to the growth. Furthermore, the company's focus on developing its high-quality asset base and optimizing operations also support the growth momentum.

Royalty

Expected Growth: 9%

Advantage Energy Ltd.'s 9% royalty growth is driven by increased oil and gas production, favorable commodity prices, and strategic acquisitions. Additionally, the company's focus on cost optimization, efficient operations, and exploration of new resources have contributed to its growth momentum.

Condensate

Expected Growth: 8%

Advantage Energy Ltd.'s condensate growth is driven by increasing demand from refineries, strong operational efficiency, and strategic partnerships. Additionally, the company's focus on horizontal drilling and multi-well pad development in the Montney formation has led to improved productivity and reduced costs, further supporting growth.

Processing and Other

Expected Growth: 7%

Advantage Energy Ltd.'s 7% growth in Processing and Other is driven by increased natural gas processing volumes, higher realized prices, and improved operational efficiencies. Additionally, strategic acquisitions and investments in infrastructure expansion have contributed to the growth. Furthermore, the company's focus on cost optimization and reduction in operating expenses has also supported the segment's growth.

Purchased Natural Gas

Expected Growth: 6%

The 6% growth in purchased natural gas from Advantage Energy Ltd. is driven by increasing demand from industrial customers, favorable weather conditions, and strategic supply agreements. Additionally, Advantage Energy's operational efficiency and cost savings initiatives have enabled it to offer competitive pricing, further boosting sales.

7. Detailed Products

Drilling and Completions

Advantage Energy Ltd. provides drilling and completions services to oil and gas operators, including well design, drilling, and completion operations.

Production Optimization

Advantage Energy Ltd. offers production optimization services to maximize oil and gas production, including well surveillance, production forecasting, and optimization strategies.

Reservoir Modeling

Advantage Energy Ltd. provides reservoir modeling services to help operators understand and optimize their reservoirs, including geological modeling, simulation, and forecasting.

Data Analytics

Advantage Energy Ltd. offers data analytics services to help operators make data-driven decisions, including data integration, visualization, and machine learning.

Consulting Services

Advantage Energy Ltd. provides consulting services to oil and gas operators, including strategy development, operational improvement, and technical support.

8. Advantage Energy Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Advantage Energy Ltd. is medium due to the availability of alternative energy sources such as wind and solar power.

Bargaining Power Of Customers

The bargaining power of customers for Advantage Energy Ltd. is low due to the lack of alternative energy providers in the region.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Advantage Energy Ltd. is medium due to the presence of multiple suppliers of energy equipment and services.

Threat Of New Entrants

The threat of new entrants for Advantage Energy Ltd. is high due to the increasing demand for renewable energy and the ease of entry into the market.

Intensity Of Rivalry

The intensity of rivalry for Advantage Energy Ltd. is high due to the presence of several established energy companies in the region.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 18.47%
Debt Cost 10.82%
Equity Weight 81.53%
Equity Cost 10.82%
WACC 10.82%
Leverage 22.65%

11. Quality Control: Advantage Energy Ltd. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Advantage Energy

A-Score: 5.2/10

Value: 6.0

Growth: 5.8

Quality: 5.0

Yield: 0.0

Momentum: 8.0

Volatility: 6.3

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SilverBow Resources

A-Score: 4.9/10

Value: 8.8

Growth: 7.2

Quality: 6.5

Yield: 0.0

Momentum: 5.0

Volatility: 2.0

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Kelt Exploration

A-Score: 4.8/10

Value: 6.6

Growth: 5.0

Quality: 6.1

Yield: 0.0

Momentum: 5.0

Volatility: 6.3

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Vermilion Energy

A-Score: 4.6/10

Value: 8.6

Growth: 2.4

Quality: 3.8

Yield: 6.0

Momentum: 2.5

Volatility: 4.3

1-Year Total Return ->

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Obsidian Energy

A-Score: 4.5/10

Value: 8.5

Growth: 5.6

Quality: 3.0

Yield: 0.0

Momentum: 6.0

Volatility: 4.0

1-Year Total Return ->

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Pine Cliff Energy

A-Score: 4.3/10

Value: 6.3

Growth: 3.3

Quality: 3.5

Yield: 8.0

Momentum: 0.5

Volatility: 4.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

12.69$

Current Price

12.69$

Potential

-0.00%

Expected Cash-Flows