Advantage Oil & Gas approves FY17 capital budget, development plan
Advantage Oil & Gas announced that its board has approved a 2017 capital budget and development plan estimates for 2018 and 2019. Advantage's 2017 through 2019 investment will continue with the profitable and sustainable growth of our industry leading low cost Montney natural gas supply. This development will be supported by the corporation's future drilling inventory of 1,100 dry gas and liquids rich Montney locations at Glacier which will remain the primary focus of development through the next decade. Additionally, the strategic expansion of Advantage's 100% owned Glacier gas plant processing capacity has been upsized from 350 mmcf/d to 400 mmcf/d with construction planned to start in the second half of 2017. This will provide optionality for accelerated growth at Glacier and operational flexibility to process a broader spectrum of gas and liquids compositions from Advantage's Montney lands located at Valhalla, Wembley and Progress in the greater Glacier area. Advantage's 2017 capital budget includes an investment of $205M targeted to increase annual production by 17% to 236 mmcfe/d. Annual 2017 funds from operations is estimated to grow 27% on a per share basis to $210M based on an average daily natural gas price of AECO Cdn $2.95/mcf and the corporation's current hedging positions. The upsized Glacier plant expansion has minimal impact on the corporation's 2017 capital expenditure budget due to Advantage's proven expertise in cost efficient facilities engineering design, lower construction costs and fewer required wells to grow and maintain production compared to earlier estimates. As a result, the corporation's increasing cash flow is expected to reduce the total debt to trailing cash flow to 0.8 times at year-end 2017. The corporation's 2017 through 2019 development plan is targeted to increase 2016 annual production by 56% to 316 mmcfe/d in 2019 or 16% on an average annual per share basis.