Canada’s Advantage sees modest Q3 earnings decline

Canadian Montney producer Advantage Energy said October 27 net income in Q3 2022 slipped modestly, to C$40.6mn (US$29.8mn) from C$43.1mn a year ago, which it attributed to higher income tax expense, but noted adjusted funds flow and free cash flow that were both higher year-over-year.

Adjusted funds flow rose to C$96.6mn from C$63.4mn, while free cash flow increased to C$38.1mn from C$32mn.

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Total production increased to 54,168 barrels of oil equivalent (boe)/day, from 50,025 boe/day in Q3 2021, with natural gas production accounting for much of the increase, climbing to 286mn ft³/day from 272mn ft³/day.

Advantage realised an average natural gas price of $4.61/’000 ft³ in the third quarter, up from $3.48/’000 ft³ the previous year. The increase – which was net of derivative losses of C$2.05/’000 ft³ – reflected higher benchmark prices in all markets where Advantage physically delivers natural gas.

The third quarter, however, was particularly volatile with respect to pricing at the AECO hub in Alberta, where annual maintenance activities on TC Energy’s Nova Gas Transmission Limited (NGTL) system kept summer prices low and volatility is kept high by a regulated tariff structure. 

“In anticipation of ongoing AECO weakness, approximately 13% of production remains exposed to AECO for the summer 2023 season (including hedging),” Advantage said. “The remainder of Advantage production is exposed to markets outside of AECO, including Empress, Dawn, Chicago and Ventura.”