Advantage Oil & Gas Ltd. (AAV) 2024年年度報告「TSX」.pdf

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1、 2024 ANNUAL REPORT Advantage Energy Ltd.-1 CONTENTS MESSAGE TO SHAREHOLDERS.2 RESERVES.4 CONSOLIDATED MANAGEMENTS DISCUSSION&ANALYSIS.10 CONSOLIDATED FINANCIAL STATEMENTS.57 Independent Auditors Report.58 Consolidated Statements of Financial Position.64 Consolidated Statements of Comprehensive Inco

2、me(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 2

3、024 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 th

4、e 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 Ad

5、vantage 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 res

6、ponse 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

7、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 pro

8、duction 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

9、 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 IP3

10、0 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

11、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%d

12、iscount 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 o

13、f$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

14、)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 additio

15、nal 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,return

16、ing 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

17、2026 and 7%in 2027.Advantage has also hedged approximately 44%of its forecasted crude oil and condensate production in 2025.Looking Forward Advantages corporate strategy continues to focus on maximizing AFF per share without compromising our balance sheet.Our updated three-year plan(announced Decemb

18、er 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

19、 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

20、 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 ma

21、rkets 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

22、 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

23、 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 reconcilia

24、tion 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 Consultan

25、ts 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

26、 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 Advantages oil and gas reserves,including its

27、 reserves on a net interest basis(after royalty burdens and including royalty interests)is included in Advantages Annual Information Form dated March 4,2025 and is available at and www.sedarplus.ca.Highlights Gross Working Interest Reserves December 31 2024 December 31 2023(4)Proved plus probable re

28、serves(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

29、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 outstan

30、ding 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,

31、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)W

32、orking 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 Undev

33、eloped 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 d

34、ate 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 date

35、d 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 SummaryProved Developed ProducingProved Developed Non-producingProved UndevelopedP

36、robableTotal Proved Plus ProbableAdvantage 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 43,5

37、10 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)Advantages light crude oil and medium crude oil,conventional natural gas,shale gas and natural gas liquid rese

38、rves 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 ad

39、ministrative 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 dev

40、elopment.(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

41、 4,229 4,423 202220232024($millions)Net Present Value of Future Net Revenue Before Income Taxes Discounted at 10%Total ProvedProbableTotal Proved Plus ProbableAdvantage Energy Ltd.-7 IQRE Average Forecasts and Assumptions The net present value of future net revenue at December 31,2024 was based upon

42、 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 cont

43、racts.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

44、 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.

45、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%p

46、er 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

47、 the Corporations 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 a

48、sset 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(

49、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

50、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 Co

51、rporations 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)Work

52、ing 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)4,4

53、47.7 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 31,2

54、024 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 25

55、8 983.0 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 1,46

56、3.7 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 49,363.1 325,68

57、1 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 Advantages 2024 capital program.(2)Technical revisions:Total technical revisions are largely driven by positive revisions at existing wells and locations d

58、ue 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 gro

59、ss 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 forec

60、ast 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 rou

61、nding.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(

62、$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 cost

63、s($/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 ca

64、pital($000)1,197,231 1,365,256 Total Mboe,end of year 474,217 685,602 Total Mboe,beginning of year 430,195 608,878 Production,Mboe (25,956)(25,956)Reserve additions,Mboe 69,978 102,680 2024 FD&A costs($/boe)(4)$17.11$13.30 2023 FD&A costs($/boe)(4)$8.79$8.39 Three-year average FD&A costs($/boe)(4)$1

65、2.32$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

66、 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 t

67、he 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 developmen

68、t activities,acquisition and disposition activities and capital cost estimates that reflect McDaniels 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)Specifi

69、ed 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 MANAGEMENTS DISCUSSION&ANALYSIS For the three months and years ended December 31,2024 and 2023 Advantage Energ

70、y Ltd.-11 CONSOLIDATED MANAGEMENTS DISCUSSION&ANALYSIS The following Managements 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 mo

71、nths 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

72、 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

73、 herein forth only include the results of Advantages 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 measure

74、s 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($00

75、0,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 weig

76、hted 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

77、(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)42,6

78、80 (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

79、 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

80、 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 milli

81、on 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 3,12

82、7 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 Ope

83、rating 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)Transp

84、ortation 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 Advantages 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 meas

85、ures 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 m

86、easure,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 As

87、sets”)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 partiall

88、y 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$2

89、08.8 million.The remainder was funded from the Corporations 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

90、 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).Advantages 2025 capital program continues our focus on growing adjusted funds flow per share via high rate-of-return dev

91、elopment 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,

92、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 Advantages 2025 guidance:Forward Looking Information(1)Guidanc

93、e(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&

94、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 i

95、n 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

96、 other entities.Please see“Specified Financial Measures”.Advantage Energy Ltd.-14 Corporate Update(continued)Advantage 2024 Guidance Comparison The below table summarizes Advantages 2024 guidance compared to actual 2024 financial and operational results:Original 2024 Guidance(1)(3)Revised 2024 Guida

97、nce(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 3.5

98、0 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

99、 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 guid

100、ance 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 operatio

101、nal synergies from the Acquisition,driving down operating costs on a per boe basis.Transportation Expense The Corporations 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

102、 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

103、/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

104、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

105、 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 we

106、lls 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 seco

107、nd 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

108、 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

109、 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).Adv

110、antage expects total annual production to increase to between 80,000 and 83,000 boe/d in 2025 based on the Corporations 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 050100150200250300350400-2,000 4,000 6,000 8,00

111、0 10,000 12,000 14,000Q1 23Q2 23Q3 23Q4 23Q1 24Q2 24Q3 24Q4 24MMcf/dbbls/dAverage Daily ProductionLiquids(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 Chang

112、e 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)

113、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

114、(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

115、.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 Fina

116、ncial Measures”.Natural gas Advantages 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

117、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 resu

118、lting in elevated gas inventories.In particular,natural gas prices at AECO and Empress fell below Glaciers 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)

119、.Advantages 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 incur

120、s 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 Corporations 2025 forward-looking natural gas market ex

121、posure,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%E

122、mpress 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 co

123、ntracts 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

124、 based upon a spark-spread pricing formula,providing Advantage exposure to PJM electricity prices,back-stopped with a natural gas price collar.Liquids Advantages realized liquids price excluding derivatives for the three months and year ended December 31,2024 was$82.98/bbl and$83.17/bbl,respectively

125、,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 Advantages liquids production being comprised of crude oil,condensate,and pentanes compared to the prior ye

126、ar 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 o

127、il,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 ende

128、d 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(

129、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 o

130、f 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 b

131、y$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 maj

132、ority 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

133、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%2

134、9%45%28%41%39%40%35%53%71%55%$146.0$107.2$140.7$147.1$135.9$104.1$139.8$163.5 Q1 23Q2 23Q3 23Q4 23Q1 24Q2 24Q3 24Q4 24($millions)Natural Gas and Liquids SalesNatural gas sales(%of Total)Liquids sales(%of Total)Total ($millions)Advantage Energy Ltd.-19 Financial Risk Management The Corporations finan

135、cial 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

136、,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 support

137、ing our organic development by diversifying sales to different physical markets and entering into financial commodity and foreign exchange derivative contracts.Advantages Credit Facilities(as defined herein)allow us to enter derivative contracts on up to 75%of total estimated production over the fir

138、st 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 produc

139、tion limits.The Corporation enters into financial risk management derivative contracts to manage the Corporations 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 Decembe

140、r 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

141、)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)31,08

142、8 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 En

143、ergy 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

144、 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 re

145、sult of changes in the fair value of the Corporations 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 outstand

146、ing 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 conjunct

147、ion 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 mill

148、ion 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

149、.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

150、 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 unre

151、alized 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 pe

152、riod,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 natur

153、al 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 o

154、f$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 Corporat

155、ion 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 compare

156、d 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)Unsec

157、ured debentures derivative The Corporations 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 comm

158、on 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

159、 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

160、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 Corporations natural g

161、as 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

162、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

163、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 20

164、26 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

165、/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 cur

166、rency 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,exc

167、ept 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 in

168、come 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

169、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 Dec

170、ember 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

171、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,

172、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,individual

173、s 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 pa

174、yable to the Alberta Provincial Government(the Crown)to recognize capital and operating expenditures incurred by Advantage in the gathering and processing of the Crowns share of our natural gas production.The increase in royalty expense was due to significantly higher liquids production from the Acq

175、uired 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

176、(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

177、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 Advantages natural gas and liquids operations for the three months and year ended December 31,2024,increased by$14.3 million and$39.5 mi

178、llion,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 f

179、rom 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 a

180、chieved 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.Ad

181、vantage 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

182、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 product

183、ion 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

184、 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

185、 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 end

186、ed 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)Tran

187、sportation 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 ot

188、her 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

189、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 Advantages

190、 natural gas and liquids operations and exclude the results of Entropy.For the three months and year ended December 31,2024,Advantages operating income increased 7%and decreased 12%,respectively.Operating income in 2024 was negatively impacted by lower natural gas benchmark prices,leading to reduced

191、 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

192、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 Advantages operating income in 2024.General and Administrative Expense(G&A)Three months ended December

193、 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 2,0

194、82 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

195、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 b

196、usiness 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 c

197、ompensation expense 211 1,708(88)3,892 6,546(41)per boe 0.03 0.27(89)0.15 0.30(50)The Corporations 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 P

198、erformance Award Incentive Plan.Under the Corporations 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 w

199、ith the development of the Corporations 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 Dec

200、ember 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 ot

201、herwise 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 16

202、3 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,C

203、redit Facilities and Working Capital).Advantages 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

204、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 increa

205、sed 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

206、 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 ot

207、herwise 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 depr

208、eciation 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 t

209、he prior periods due to the Acquired Assets having a higher depletion rate per boe typical for liquids-weighted assets as compared to the Corporations pre-existing natural gas-weighted assets.Income Taxes Three months ended December 31%Year ended December 31%($000,except as otherwise indicated)2024

210、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

211、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,a

212、nd valuation allowances applied against Entropys 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 bill

213、ion 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

214、,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 Chan

215、ge 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 mil

216、lion 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 Co

217、mmodity 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 r

218、esulted 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 2

219、024 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

220、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 othe

221、r 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 ex

222、pense 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 a

223、ctivities 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 mi

224、llion 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 Entr

225、opy.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

226、 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)IncreaseDecreaseAdvantage Energy Ltd.-30 Cash Provided b

227、y 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

228、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 Dec

229、ember 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 Asse

230、t 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 16,60

231、9 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 enti

232、ties.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 Finan

233、cial 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$120.0Q1 23Q2 23Q3 23Q4 23Q1 24Q2 24Q3 24Q4 24MillionsNet Capital Expenditures(Excluding Acquisitions&Dispositions)(1)Drilling,com

234、pletions,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

235、,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 Advantages existing core areas and comple

236、mentary 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,

237、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 de

238、velopment 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 De

239、cember 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

240、(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 Gl

241、acier 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

242、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 Activi

243、ties 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.Fiv

244、e 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 t

245、hese 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

246、 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

247、 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 Managements view that our Valhalla Montney asset will continue to play a pivotal role in the Corporations liquids-rich gas deve

248、lopment 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 r

249、educing 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

250、 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.T

251、he 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 expe

252、cted 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 Corporations existing Conroy asset,establishing a direct path to highly efficient future development.The asset was acquir

253、ed 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 d

254、ebentures 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.Entro

255、pys 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 captu

256、re 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 submis

257、sion 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 c

258、osts 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

259、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

260、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-pa

261、rties incurred for the purpose of financing Advantages business and development.The following table is a summary of the Corporations remaining commitments and contractual obligations.Advantage has no guarantees or off-balance sheet arrangements other than as disclosed.Payments due by period($million

262、s)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

263、.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.

264、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 Corporations lease liability.(2)As at December 31,2024 the Corporations bank indebtedness was gover

265、ned 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 outst

266、anding 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-i

267、n-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 sum

268、mary of the Corporations 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)101,00

269、0 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

270、 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 limitati

271、ons)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 Ent

272、ropy was$92.8 million.Advantages 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 w

273、hich$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 Ac

274、quired 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 Corporations Credit Facilities and adjusted funds flow were utilized to f

275、und Advantages exploration and development expenditures of$266.7 million and repurchase and cancel 2.5 million common shares for$21.7 million(see Shareholders Equity).Entropys net capital expenditures of$36.3 million were separately funded through the issuance of unsecured debentures to investors th

276、at 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 marke

277、t 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 m

278、anage 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

279、.The capital structure is reviewed by Management and the Board of Directors on an ongoing basis.Management of the Corporations capital structure is facilitated through its financial and operational forecasting processes.Selected forecast information is frequently provided to the Board of Directors.T

280、his 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 ban

281、k 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

282、 and Montney assets(see Corporate Update).Since completing the Acquisition at the end of the second quarter,Advantages bank indebtedness has decreased$17.6 million,with a continued focus on debt reduction into 2025.Advantages Credit Facilities are collateralized by a$2 billion floating charge demand

283、 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 a

284、t 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 o

285、r 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 year

286、s 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 u

287、ntil 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 th

288、e 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 compa

289、red 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 capita

290、l 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 volatil

291、ity,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

292、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,commenci

293、ng December 31,2024.Advantage Energy Ltd.-37 Convertible Debentures(continued)At the Debenture holders 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 f

294、or 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

295、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 entit

296、led 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 wa

297、s$147.3 million using quoted market prices on the Toronto Stock Exchange(“TSX”).Unsecured Debentures The Corporations 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 c

298、onnection 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 tha

299、t 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 tim

300、e 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 pri

301、ncipal amount and the investors 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,Entropys unsecured debentures have

302、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$3.5 million of issuance costs(December 31,2023-$

303、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 p

304、aid 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 Corporations Glacier Gas Plant,with a term due

305、 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 o

306、f$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 Corporations natural gas and liquids properties.The decommissioning liab

307、ility 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 Corporations decommissioning

308、 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.

309、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

310、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 app

311、roximately 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 is

312、sued 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

313、 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 cancel

314、lation 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 t

315、hings,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 Corporations equity issuances exceeded the value of the equity th

316、at has been repurchased.As at December 31,2024,a total of 2.3 million Performance Share Units were outstanding under the Corporations Restricted and Performance Award Incentive Plan,which represents 1.4%of Advantages total outstanding common shares.As at March 4,2025,Advantage had 166.7 million comm

317、on 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 To

318、tal 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 Qu

319、arterly 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

320、 Shareholders.The table above highlights the Corporations 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

321、.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 benchm

322、ark prices remained weak.Q4Q3Q2Q1Q4Q3Q2Q1($000,except as otherwise indicated)Financial Statement HighlightsNatural gas and liquids sales163,477 139,840 104,081 135,897 147,137 140,724 107,240 145,999 Net income and comprehensive income(3)17,130 (6,490)(12,084)23,163 41,026 28,314 2,538 29,719 per ba

323、sic 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 17

324、1,815 174,328 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 activities22,789 (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)(88,4

325、39)(85,590)Other Financial HighlightsAdjusted 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

326、,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 indebtedness470,424 469,551 488,008 238,578 212,854 226,127 226,442 167,260 Net debt(1)718,449 693,959 674,665 279,963 235,010 236,311 238,493 204,709 Operating HighlightsProduction Crude oi

327、l(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)389,331 369,306 355,5

328、63 357,410 363,124 339,709 272,919 314,273 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 Ne

329、tback($/boe)Natural gas and liquids sales23.14 20.44 17.22 22.62 23.39 23.83 22.73 27.90 Realized gains(losses)on derivatives2.91 2.44 1.59 0.70 0.98 1.02 1.07 3.44 Processing and other income0.11 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

330、)(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 20232024Advantage Energy Ltd.-41 Quarterly Performance(conti

331、nued)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

332、 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

333、 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 wit