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Annual Production: 78,267 BOEs per day, highest in company history. Liquids Production Growth: Increased by 28% year over year. Liquids Revenue: Represented 48% of total revenue. Adjusted Funds Flow: $382 million, or $2.29 per share. Debt Reduction: $76 million applied to debt reduction. Development Capital: $287.7 million applied. Recycle Ratio on Proved Reserves: 2.1 times. Free Cash Flow: Supported by strong hedging and diversification. Production Curtailment: Up to 300 million cubic feet per day gas curtailed. Progress Gas Plant: New 75 million cubic feet per day plant on track for Q2 2026 commissioning. Future Production Guidance: Expected to average 90,000 BOEs per day from Q3 2026 through end of 2027. 2026 Capital Budget Reduction: Reduced by $20 million. Debt Target Range: $400 million to $500 million, expected to be reached in the second half of 2026. Glacier Phase 2 CCS Project: Expected completion by mid-2026, fully funded by Brookfield and Canada Growth Fund.

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Release Date: March 06, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Advantage Energy Ltd (AAVVF) achieved record operational performance in 2025, with annual production averaging 78,267 BOEs per day, the highest in its 25-year history. Liquids production grew by 28% year over year, with liquids revenue representing 48% of total revenue, highlighting the high quality and value of their liquid products. The company generated $382 million in adjusted funds flow, with significant allocations towards debt reduction and development capital, demonstrating strong capital efficiency and cost control. Advantage Energy Ltd (AAVVF) successfully diversified its marketing strategy by adding long-term physical transportation service to downstream markets, reducing cash flow volatility. The upcoming commissioning of the new 75 million cubic feet per day Progress gas plant in Q2 2026 is expected to lead to highly efficient capital spending and increased free cash flow.

Negative Points

The company faced a very weak commodity price environment in 2025, described as worse than a bottom decile price environment. Despite strong operational outcomes, the company had to curtail up to 300 million cubic feet per day of gas production due to extremely low gas prices, impacting overall production levels. Advantage Energy Ltd (AAVVF) is still prioritizing debt reduction, with a target range of $400 million to $500 million, indicating ongoing financial constraints. The company reduced its 2026 capital budget by $20 million, which may impact future growth and development plans. Advantage Energy Ltd (AAVVF) is cautious about future growth investments, emphasizing that any growth will be fully funded by cash flow and dependent on a supportive commodity price outlook.

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Q & A Highlights

Q: Can you elaborate on the operational performance and production levels achieved in 2025? A: Michael Belenkie, President and CEO, highlighted that 2025 was marked by record operational performance with average annual production reaching 78,267 BOEs per day, the highest in the company's 25-year history. This was supported by strong well performance across all assets. Liquids production grew by 28% year over year, contributing significantly to revenue despite representing a smaller portion of total production.

Q: How did Advantage Energy manage to generate significant free cash flow despite a weak commodity price environment? A: Michael Belenkie explained that the company generated significant free cash flow through a strong hedging program and diversification into downstream gas markets and high-value liquids. Additionally, Advantage Energy employed price-sensitive production management, curtailing production during periods of extremely low gas prices to optimize cash flow.

Q: What are the strategic plans for 2026 and beyond regarding production and infrastructure? A: The CEO stated that 2026 will be pivotal with the commissioning of a new 75 million cubic feet per day Progress gas plant in Q2. Post-commissioning, production is expected to average 90,000 BOEs per day through the end of 2027. The company plans to focus on efficient capital spending and accelerating free cash flow, with no additional infrastructure spending required at this level.

Q: What is the company's approach to capital allocation and debt reduction? A: Advantage Energy prioritizes disciplined capital allocation, with a focus on debt reduction. The company plans to allocate substantially all free cash flow to debt reduction until reaching a target range of $400 million to $500 million, expected in the second half of 2026. Thereafter, they will balance further debt reduction with opportunistic share buybacks.

Q: Can you provide an update on the Glacier Phase 2 CCS project and its significance? A: Michael Belenkie mentioned that the Glacier Phase 2 CCS project is expected to be completed by mid-2026. This project will significantly decarbonize the Glacier facility and is fully funded by Brookfield and the Canada Growth Fund. Advantage Energy, with a working interest of just under 50%, will benefit from the EBITDA generated by the project.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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