Advantage closes Wembley disposition, accelerates capital return

Canada NewsWire

(TSX: AAV)

CALGARY, AB , Aug. 26, 2026 /CNW/ -- Advantage Energy Ltd. ("Advantage" or the "Corporation") is pleased to announce that it has entered into a definitive agreement (the "Agreement") to sell its assets in the Wembley area (the "Wembley Assets") of Alberta for gross proceeds of $316 million in cash, prior to closing adjustments (the "Transaction").

The Wembley Assets include 32 net sections of Montney lands, 11.8 mmboe of Proved Developed Producing reserves, 27.9 mmboe of Proved Reserves, and 46.1 mmboe of Total Proved Plus Probable reserves. First half 2026 sales volumes were approximately 5,730 boe/d, including 45% liquids (19.0 mmcf/d natural gas, 1,358 bbls/d crude oil, 1,206 bbls/d NGLs).

The purchase price will be subject to adjustments based on an effective date of July 1, 2026. Closing of the Transaction is expected to occur early in the fourth quarter of 2026, subject to regulatory approvals and other closing conditions.

Key Metrics

Transaction Rationale

The Transaction delivers sale metrics that are accretive to Advantage while generating cash proceeds that unlock significant financial and strategic flexibility. The sale crystallizes a before-tax cash return on invested capital (a) of 92% since significant development began in 2019, reflecting the value created through Advantage's disciplined investment and execution with respect to the Wembley Assets.

Wembley was developed organically by Advantage, becoming a highly valued asset in our portfolio with optionality for future liquids-weighted production growth. However, Wembley sits outside of Advantage's core owned and operated infrastructure at our Glacier/Valhalla/Progress complex, and is therefore reliant on third-party processing capacity, which comes with higher unit costs and less control over development. As a result, future growth at Wembley does not compete for capital in comparison to our deep inventory of development opportunities.

Proceeds from the Transaction will be used to reduce Advantage's net debt (a) , providing the Corporation with the ability to accelerate shareholder returns. After closing the Transaction, Advantage expects to enter the fourth quarter with net debt (a) of approximately $245 million, including bank indebtedness of $101 million and convertible debentures of $144 million, both with June 2029 maturity dates. Having achieved a net debt (a) level substantially below our target range of $400 million to $500 million, Advantage will continue to prioritize balance sheet strength, with debt to adjusted funds flow (a) expected to remain below 1.0x even at bottom-decile commodity prices.

Peters & Co. Limited and Scotia Capital Inc. acted as financial advisors to Advantage on the Transaction.

Guidance Update

Advantage's cash costs are expected to fall following the closing of the Transaction as we further concentrate our operations and reduce our net debt (a) . Fourth quarter 2026 operating costs per boe are now expected to be approximately $4.70, general and administrative costs ("G&A") per boe approximately $0.70, and finance costs per boe approximately $0.85. Fourth quarter 2026 production is expected to average between 83,000 boe/d and 84,000 boe/d.

Advantage's full-year 2026 guidance has been updated as follows:

Looking Forward

Following the completion of the Progress Gas Plant in the second quarter, all major infrastructure projects contemplated in our current three-year plan are now complete. Pro forma the Transaction, Advantage plans to sustain production levels from the fourth quarter of 2026 through the end of 2027, supported by owned and operated infrastructure and an efficient capital program designed to maximize free cash flow (a) .

Advantage is focused on maximizing shareholder returns. Subsequent to closing the Transaction, Advantage expects to immediately begin significant share repurchases, including up to 5% of our common shares outstanding in the remainder of 2026 and up to an additional 10% in 2027. Share buybacks remain our main vehicle for direct shareholder returns while our shares are trading below intrinsic value.

Based on current commodity pricing, Advantage expects to retain substantial financial flexibility even after executing on our planned share buybacks. Advantage maintains a strong inventory of liquids-weighted development opportunities within both the Charlie Lake and the Montney at Valhalla and Progress, providing significant future liquids growth potential that will continue to be evaluated through our returns-based framework. Advantage plans to release our formal 2027 budget, along with an updated three-year plan, in early December, 2026.

Advantage wishes to thank our employees, board of directors, and shareholders for their ongoing support.

Forward-Looking Information Advisory

The information in this press release contains certain forward-looking statements, including within the meaning of applicable securities laws. These statements relate to future events or our future intentions or performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "continue", "demonstrate", "expect", "may", "can", "will", "believe", "would" and similar expressions and include statements relating to, among other things, Advantage's position, strategy and development plans and the benefits to be derived therefrom; the terms of the Transaction, the anticipated timing of completing the Transaction and the anticipated benefits thereof; Advantage's expectations with respect to future growth with respect to the Wembley Assets; Advantage's anticipated use of the proceeds of the Transaction; Advantage's expected net debt and net debt target range; that Advantage will continue to prioritize balance sheet strength and Advantage's expectations regarding its debt to adjusted funds flow; Advantage's expectations that cash costs will fall following closing of the Transaction; Advantage's expected production for the fourth quarter of 2026; Advantage's expected costs for the fourth quarter of 2026, including Advantage's operating costs per boe, G&A costs per boe, finance costs per boe; Advantage's guidance for full year 2026, including its production and proportion thereof by product type, and Advantage's royalty rate, operating expense per boe, transportation expense per boe, G&A expense per boe and finance expense per boe; Advantage's belief that its owned and operated infrastructure and efficient capital program will maximize free cash flow; that Advantage is focused on maximizing shareholder returns; Advantage's beliefs regarding its current share price; that Advantage expects to immediately begin significant share repurchases, including the anticipated amounts thereof; that share buybacks will remain Advantage's main vehicle for direct shareholder returns while our shares are trading below intrinsic value; that Advantage expects to retain substantial financial flexibility; that Advantage maintains a strong inventory of liquids-weighted development opportunities and the anticipated benefits thereof; and Advantage's anticipated timing for its formal 2027 budget and updated three-year plan. Advantage's actual decisions, activities, results, performance or achievement could differ materially from those expressed in, or implied by, such forward-looking statements and accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do, what benefits that Advantage will derive from them.

These statements involve substantial known and unknown risks and uncertainties, certain of which are beyond Advantage's control, including, but not limited to: changes in general economic, market, industry and business conditions; the risk that (i) the U.S. tariffs that are currently in effect on goods exported from or imported into Canada continue in effect for an extended period of time, the tariffs that have been threatened are implemented, that tariffs that are currently suspended are reactivated, the rate or scope of tariffs are increased, or new tariffs are imposed, including on oil and natural gas, (ii) the U.S. and/or Canada imposes any other form of tax, restriction or prohibition on the import or export of products from one country to the other, including on oil and natural gas, and (iii) the tariffs imposed or threatened to be imposed by the U.S. on other countries and retaliatory tariffs imposed or threatened to be imposed by other countries on the U.S., will trigger a broader global trade war which could have a material adverse effect on the Canadian, U.S. and global economies, and by extension the Canadian oil and natural gas industry and the Corporation, including by decreasing demand for (and the price of) oil and natural gas, disrupting supply chains, increasing costs, causing volatility in global financial markets, and limiting access to financing; risks associated with the refusal of the U.S. to renew the Canada-United States-Mexico Agreement ("CUSMA") by the July 1, 2026 deadline, including the risk that the U.S. ultimately withdraws from CUSMA, which could result in a significant increase in trade barriers, which could in turn have a material adverse effect on the Canadian and U.S. economies, and by extension the Canadian oil and natural gas industry and Advantage; actions by governmental or regulatory authorities including increasing taxes and changes in investment or other regulations; changes in tax laws, royalty regimes and incentive programs relating to the oil and gas industry; Advantage's success at acquisition, exploitation and development of reserves; unexpected drilling results; changes in commodity prices, currency exchange rates, net capital expenditures, reserves or reserves estimates and debt service requirements; the occurrence of unexpected events involved in the exploration for, and the operation and development of, oil and gas properties, including hazards such as fire, explosion, blowouts, cratering, and spills, each of which could result in substantial damage to wells, production and processing facilities, other property and the environment or in personal injury; changes or fluctuations in production levels; delays in anticipated timing of drilling and completion of wells; individual well productivity; competition from other producers; the lack of availability of qualified personnel or management; credit risk; changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced; our ability to comply with current and future environmental or other laws; stock market volatility and market valuations; liabilities inherent in oil and natural gas operations; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; geological, technical, drilling and processing problems and other difficulties in producing petroleum reserves; ability to obtain required approvals of regulatory authorities; the risk that the Corporation may not have access to sufficient capital from internal and external sources; the risk that Advantage's future production may be less than anticipated; the risk that the Progress Gas Plant may not result in the anticipated benefits; the risk that the Corporation may not buy back shares in the anticipated amounts or on the anticipated timeline; the risk that the Corporation may not have sufficient financial resources to acquire its common shares pursuant to its share buyback program in the future; the risk that Advantage does not complete the Transaction on the anticipated timeline or at all; the risk that the Transaction doesn't result in the anticipated benefits thereof; and the risk that Advantage does not realize the anticipated benefits of maintaining its strong inventory of liquids-weighted development opportunities. Many of these risks and uncertainties and additional risk factors are described in the Corporation's Annual Information Form which is available at www.sedarplus.ca ("SEDAR+") and www.advantageog.com . Readers are also referred to risk factors described in other documents Advantage files with Canadian securities authorities.

With respect to forward-looking statements contained in this press release, Advantage has made assumptions regarding, but not limited to: conditions in general economic and financial markets; the duration and impact of tariffs that are currently in effect on goods exported from or imported into Canada, and that other than the tariffs that are currently in effect, neither the U.S. nor Canada (i) increases the rate or scope of such tariffs, reenacts tariffs that are currently suspended, or imposes new tariffs, on the import of goods from one country to the other, including on oil and natural gas, and/or (ii) imposes any other form of tax, restriction or prohibition on the import or export of products from one country to the other, including on oil and natural gas; effects of regulation by governmental agencies; current and future commodity prices and royalty regimes; the Corporation's current and future hedging program; future exchange rates; royalty rates; future operating costs; future transportation costs and availability of product transportation capacity; availability of skilled labor; availability of drilling and related equipment; timing and amount of net capital expenditures; the impact of increasing competition; the price of crude oil and natural gas; the number of new wells required to achieve the budget objectives; that the Corporation will have sufficient cash flow, debt or equity sources or other financial resources required to fund its capital and operating expenditures and requirements as needed; that the Corporation's conduct and results of operations will be consistent with its expectations; that the Corporation will have the ability to develop the Corporation's properties in the manner currently contemplated; current or, where applicable, proposed assumed industry conditions, laws and regulations will continue in effect or as anticipated; that the Corporation will have sufficient financial resources to purchase its shares pursuant to its share buyback program in the future; and the estimates of the Corporation's production and reserves volumes and the assumptions related thereto (including commodity prices and development costs) are accurate in all material respects. Readers are cautioned that the foregoing lists of factors are not exhaustive.

The future acquisition by the Corporation of the Corporation's shares pursuant to a share buyback program, if any, and the level thereof is uncertain. Any decision to implement a share buyback program or acquire shares of the Corporation will be subject to the discretion of the board of directors of the Corporation and may depend on a variety of factors, including, without limitation, the Corporation's business performance, financial condition, financial requirements, growth plans, expected capital requirements and other conditions existing at such future time including, without limitation, contractual restrictions, satisfaction of the solvency tests imposed on the Corporation under applicable corporate law and receipt of regulatory approvals. There can be no assurance that the Corporation will buyback any shares of the Corporation in the future.

Management has included the above summary of assumptions and risks related to forward-looking information above and in its continuous disclosure filings on SEDAR+ in order to provide shareholders with a more complete perspective on Advantage's future operations and such information may not be appropriate for other purposes. Advantage's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Advantage will derive therefrom. Readers are cautioned that the foregoing lists of factors are not exhaustive. These forward-looking statements are made as of the date of this press release and Advantage disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

This press release contains information that may be considered a financial outlook under applicable securities laws about the Corporation's potential financial position, including, but not limited to, Advantage's net debt and net debt target range; Advantage's expected debt to adjusted funds flow; Advantage's expectation that share buybacks will be the main vehicle for direct shareholder returns while our shares are trading below intrinsic value and the anticipated amounts of such share buybacks; Advantage's expected fourth quarter 2026 production, operating costs per boe, G&A costs per boe and finance costs per boe; and Advantage's updated guidance for 2026 including anticipated royalty rate, operating expense per boe, transportation expense per boe, G&A expense per boe, and finance expense per boe; all of which are subject to numerous assumptions, risk factors, limitations and qualifications, including those set forth in the above paragraphs. The actual results of operations of the Corporation and the resulting financial results will vary from the amounts set forth in this press release and such variations may be material. This information has been provided for illustration only and with respect to future periods are based on budgets and forecasts that are speculative and are subject to a variety of contingencies and may not be appropriate for other purposes. Accordingly, these estimates are not to be relied upon as indicative of future results. Except as required by applicable securities laws, the Corporation undertakes no obligation to update such financial outlook. The financial outlook contained in this press release was made as of the date of this press release and was provided for the purpose of providing further information about the Corporation's potential future business operations. Readers are cautioned that the financial outlook contained in this press release is not conclusive and is subject to change.

Oil and Gas Information

Barrels of oil equivalent (boe) and thousand cubic feet of natural gas equivalent (mcfe) may be misleading, particularly if used in isolation. Boe and mcfe conversion ratios have been calculated using a conversion rate of six thousand cubic feet of natural gas equivalent to one barrel of oil. A boe and mcfe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

McDaniel & Associates Consultants Ltd. ("McDaniel") was engaged as an independent qualified reserve evaluator to evaluate Advantage's year-end reserves as of December 31, 2025 ("McDaniel 2025 Reserves Report") in accordance with National Instrument 51-101 ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook"). The net present value of future net revenue of reserves at December 31, 2025 was based upon light and medium crude oil, conventional natural gas, shale gas and natural gas liquid pricing assumptions, which were computed by using the IQRE Average Forecast effective December 31, 2025. Reserves are stated on a gross (before royalties) working interest basis unless otherwise indicated. It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves. There are numerous uncertainties inherent in estimating quantities of reserves and the future cash flows attributed to such reserves. Additional details are provided in our Annual Information Form which is available on SEDAR+ and at www.advantageog.com .

This press release contains several oil and gas metrics which are described below under "Specified Financial Measures". Such oil and gas metrics have been prepared by management and do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included herein to provide readers with additional measures to evaluate the Corporation's performance; however, such measures are not reliable indicators of the future performance of the Corporation and future performance may not compare to the performance in previous periods and therefore such metrics should not be unduly relied upon. Management uses these oil and gas metrics for its own performance measurements and to provide shareholders with measures to compare the Corporation's operations over time. Readers are cautioned that the information provided by these metrics, or that can be derived from the metrics presented in this press release, should not be relied upon for investment or other purposes.

Specified Financial Measures

Throughout this press release, Advantage discloses certain measures to analyze financial performance, financial position, and cash flow. These non-GAAP and other financial measures do not have any standardized meaning prescribed under IFRS and therefore may not be comparable to similar measures presented by other entities. The non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS, such as net income and comprehensive income, cash provided by operating activities, and cash used in investing activities, as indicators of Advantage's performance.

Non-GAAP Financial Measures

Adjusted Funds Flow

The Corporation considers adjusted funds flow to be a useful measure of Advantage's ability to generate cash from the production of natural gas and liquids, which may be used to settle outstanding debt and obligations, support future capital expenditures plans, or return capital to shareholders. Changes in non-cash working capital are excluded from adjusted funds flow as they may vary significantly between periods and are not considered to be indicative of the Corporation's operating performance as they are a function of the timeliness of collecting receivables and paying payables. Expenditures on decommissioning liabilities are excluded from the calculation as the amount and timing of these expenditures are unrelated to current production and are partially discretionary due to the nature of our low liability.

Net Capital Expenditures

Net capital expenditures include total capital expenditures related to property, plant and equipment, exploration and evaluation assets and intangible assets. Management considers this measure reflective of actual capital activity for the period as it excludes changes in working capital related to other periods, investment in associates, and excludes cash receipts on government grants.

Free Cash Flow

The Corporation computes free cash flow as adjusted funds flow less net capital expenditures excluding the impact of asset acquisitions and dispositions, and investments in other assets. The Corporation uses free cash flow as an indicator of the efficiency and liquidity of the Corporation's business by measuring its cash available after net capital expenditures, excluding acquisitions and dispositions, to settle outstanding debt and obligations and potentially return capital to shareholders by paying dividends or buying back the Corporation's common shares ("Common Shares"). The Corporation excludes the impact of acquisitions and dispositions, and investments in other assets as they are not representative of the free cash flow generated and used in the Corporation's natural gas and liquids and carbon capture operations.

Operating Income

Operating income for Advantage's natural gas and liquids operations is comprised of natural gas and liquids sales, realized gains (losses) on derivatives, net sales of purchased natural gas, less expenses resulting from field operations including royalty expense, operating expense and transportation expense. Operating income provides Management and users with a measure to compare the profitability of Advantage's field operations across companies, development areas and specific wells.

Non-GAAP Ratios

Debt to Adjusted Funds Flow Ratio

Debt to adjusted funds flow ratio is a coverage ratio that provides Management and users the ability to determine how long it would take the Corporation to repay its bank indebtedness, including working capital, and its outstanding Convertible Debentures if Advantage devoted all its adjusted funds flow to debt repayment. Debt to adjusted funds flow is calculated by taking the total of bank indebtedness, working capital, and Convertible Debentures, and dividing it by adjusted funds flow (for the trailing four quarters) that can be used to satisfy such borrowings. The Unsecured Debentures, and adjusted funds flow attributed to Entropy are excluded from the calculation as they are a liability of Entropy and are non‐recourse to Advantage.

Before-Tax Cash Return on Invested Capital

Before-tax cash return on invested capital is calculated as the sum of operating income generated since inception and the gross proceeds from disposition divided by the net capital expenditures invested since inception. Management utilizes the cash return on invested capital measure to provide a measure of how much cash was generated from the Wembley Assets, relative to the net capital expenditures invested in the Wembley Assets, excluding the impact of discounting, taxes and general and administrative costs. The cash return on invested capital from the sale of Wembley of 92% was calculated as operating income since inception of $335.6 million plus gross proceeds from the disposition, divided by the net capital expenditures invested since inception of $338.4 million.

Capital Management Measures

W orking Capital

Working capital is a capital management financial measure that provides Management and users with a measure of the Corporation's short-term operating liquidity. By excluding short term derivatives, financing liability, provisions and other liabilities and unsecured debentures, Management and users can determine if the Corporation's operations are sufficient to cover the short-term operating requirements. Working capital is not a standardized measure and therefore may not be comparable with the calculation of similar measures by other entities.

Net Debt

Net debt is a capital management financial measure that provides Management and users with a measure to assess the Corporation's liquidity. Net debt is not a standardized measure and therefore may not be comparable with the calculation of similar measures by other entities.

Supplementary financial measures

"Operating expense per boe" is comprised of operating expense, as determined in accordance with IFRS, divided by the Corporation's total production.

"Royalty expense per boe" is comprised of royalty expense, as determined in accordance with IFRS, divided by the Corporation's total production.

"Transportation expense per boe" is comprised of transportation expense, as determined in accordance with IFRS, divided by the Corporation's total production.

"G&A expense per boe" is comprised of general and administrative expense, as determined in accordance with IFRS, divided by the Corporation's total production.

"Finance expense per boe" is comprised of finance expense, as determined in accordance with IFRS, divided by the Corporation's total production.

The following abbreviations used in this press release have the meanings set forth below:

SOURCE Advantage Energy Ltd.

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Canada Newswire

August 26, 2026 - 4:00 PM PDT

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