Advantage Announces Disposition of Non-core Assets, Glacier Montney Update, Appointment of Financial Advisors and Natural Gas

 Advantage Announces Disposition of Non-core Assets, Glacier Montney Update,
      Appointment of Financial Advisors and Natural Gas Hedging for 2013

PR Newswire

CALGARY, Feb. 5, 2013


CALGARY, Feb. 5, 2013 /PRNewswire/ - Advantage Oil & Gas Ltd. ("Advantage" or
the "Corporation") (TSX/NYSE: AAV) is pleased to provide the following

Disposition of Non-Core Assets

  *Since the commencement of our non-core asset disposition process,
    Advantage has closed four separate sales transactions and recently signed
    a definitive agreement with a fifth party which, on a combined basis,
    constitute the sale of substantially all of our non-core assets.
  *Four transactions representing a total of approximately 420 boe/d provided
    total net cash proceeds of $27.8 million. The first two transactions
    closed during Q3 2012 for net cash proceeds of $10.9 million, the third
    transaction closed during Q4 2012 for $3.0 million and the fourth
    transaction closed during Q1 2013 for $13.9 million.
  *A definitive agreement (the "Transaction") has been signed with Questfire
    Energy Corp. (a TSX-V listed company) for the sale of approximately 5,900
    boe/d for consideration consisting of $55 million of cash, $27 million
    Convertible Senior Secured Debentures (the "Debentures") and 1.5 million
    Class B shares. All customary closing adjustments between the effective
    date of November 1, 2012 and the closing date will be applied to the
    Debenture. The Transaction is anticipated to close by the end of Q1 2013
    and is subject to satisfaction of customary closing conditions.
  *The net cash proceeds from all five transactions will be used to reduce
    outstanding bank indebtedness.
  *Advantage's credit facility will be revised due to the non-core asset
    dispositions and is currently under review. Advantage's current credit
    facilities are $300 million and total bank debt outstanding is anticipated
    to be approximately $110 to $115 million at the end of Q1 2013 assuming
    the Transaction closes by then.
  *Upon closing of the non-core asset dispositions, Advantage's major assets
    will be our signature Glacier Montney property, with production of 90 to
    100 mmcf/d (15,000 to 16,600 boe/d), operating costs of approximately
    $0.30/mcf ($1.80/boe) and a royalty rate of 5%, and our 45% interest in
    Longview Oil Corp.

Glacier Montney Update - Revised Completion Techniques Improve Well Results &
Expands Resource Potential

Middle Montney -  New Wells Demonstrate  Higher Test Rates  & Validate  Liquid 

  *During the spring of 2012, 5 gross (5 net) initial Middle Montney
    horizontal wells were drilled into three separate sub-layers of the Middle
    Montney formation (see Advantage press release dated March 15, 2012).
    Four of these five wells were completed and production tested at rates of
    1.1 to 4.4 mmcf/d at flowing pressures of 0.4 mpa to 3.9 mpa and flow
    times of 60 hours to 144 hours utilizing our standard completion design.
    The remaining Middle Montney well is expected to be completed before
    spring break-up.
  *In order to further assess the extent of the liquids rich fairway at
    Glacier and to investigate the impact of alternative completion techniques
    on well productivity, we drilled three additional evaluation wells in Q4
    2012 all of which targeted the same Middle Montney sub-layer.
  *Two of these new wells have been completed and tested with the third new
    well undergoing completion operations at this time. A combination of
    slick water and binary frac fluids were utilized with modified completion
  *The test results show significant improvement with the first Middle
    Montney well testing at a production rate of 7.5 mmcf/d at a flowing
    pressure of 8.6 mpa at the end of a 66 hour flow period. The second
    Middle Montney well was production tested at a rate of 3.7 mmcf/d at a
    flowing pressure of 3.3 mpa at the end of a 120 hour flow period. Both
    wells flowed free condensate during the test and gas compositions confirm
    our earlier estimates of natural gas liquid yields (see Advantage press
    release dated March 15, 2012). The average test rate of these two Middle
    Montney wells was 5.6 mmcf/d representing a 115% improvement compared to
    the average of the initial 4 wells that were production tested during the
    spring of 2012.
  *Production from our earlier Middle Montney wells continue to exhibit
    shallow declines, consistent natural gas liquids content and confirm that
    a large resource potential exists for future development.
  *We are very encouraged with the improved well test productivities and we
    believe that there is potential for further completion optimization as we
    continue to collect data and analyze the frac results.
  *To date, a total of 8 Middle Montney wells have been drilled on our 80
    section (net) Glacier land block with the potential for development
    drilling of up to 4 individual sub layers within the Middle Montney

Lower Montney - New Well Test Rates Rank Among Best Wells at Glacier

  *Two Lower Montney wells that were drilled in our 2011/2012 winter program
    were also completed utilizing modified completion techniques. These wells
    were completed with a combination of slick water and binary fluids and
    demonstrated tremendous improvement in well productivity compared to our
    earlier Lower Montney wells.
  *The first Lower Montney well was production tested at a rate of 12.5
    mmcf/d at a flowing pressure of 8.2 mpa after 66 hours. The second Lower
    Montney well production tested at a rate of 14.6 mmcf/d at a flowing
    pressure of 10.0 mpa after 51 hours.
  *The average test rate of these two Lower Montney wells represent a 490%
    improvement over the average test rate of our earlier Lower Montney wells
    and rank among the top quartile of our Upper Montney well test rates.
  *These test results demonstrate the potential for further development of
    the Lower Montney formation across our land block which could lead to a
    significant increase in production, reserves and contingent resources at
  *To date, only 14 gross (10.7 net) Lower Montney wells have been drilled on
    our 80 section Glacier land block.

Upper Montney - Continued Strong Results Maintain Production

  *As a result of low natural gas prices during the first half of 2012 we
    decided to defer the completion of 11 gross (11 net) Upper Montney wells
    that were drilled in our 2011/2012 winter program and maintain production
    at Glacier between 90 mmcf/d to 100 mmcf/d. Since July 2012, a total of 5
    of these Upper Montney wells have been completed to maintain production
    with a further 6 wells remaining in inventory. We estimate that production
    at Glacier can be maintained between 90 mmcf/d to 100 mmcf/d to the fourth
    quarter of 2013 with our combined inventory of Upper, Middle and Lower
    Montney wells.
  *Production test results in the Upper Montney continue to be strong with an
    average test rate of 7 mmcf/d at 6.5 mpa after 66 hours of flow based on
    Upper Montney wells drilled during our 2011/2012 winter program.
  *Our current plans include the utilization of modified completion
    techniques on 6 gross (6 net) existing Upper Montney wells. Results from
    these completions are anticipated prior to spring break-up and will be
    reported in the coming months.
  *To date, a total of 79 gross (73 net) Upper Montney wells have been
    drilled on our 80 net section land block at Glacier.

Appointment of Financial Advisors to Initiate Strategic Alternatives Process

  *Advantage has retained FirstEnergy Capital Corp. and RBC Capital Markets
    as co-advisors to provide advice as we initiate the review of our
    strategic alternatives. The Board continues to believe that our core
    Glacier asset is materially undervalued in the context of the
    Corporation's current market valuation and we are committed to evaluating
    all options to maximize shareholder value.
  *As part of this process, we expect that an additional update to our
    year-end 2012 reserves report (expected to be released during the latter
    half of March 2013) will be prepared to reflect well results subsequent to
    December 31, 2012. In addition, an updated Glacier resource assessment
    will be completed which incorporates all of our well results and core
    analysis that have been conducted since our last report was prepared on
    February 29, 2012.
  *It is the Corporation's current intention not to disclose developments
    with respect to this process until the Board of Directors has approved a
    specific transaction or otherwise determines that disclosure is necessary
    or appropriate. The Corporation cautions that there are no assurances or
    guarantees that this process will result in any transactions or, if any
    transactions are undertaken the terms or timing of any such transactions.

Hedging Update

  *Advantage has entered into the following natural gas hedges for 2013:

Term of Contract              Volume       Fixed Price
Natural Gas - AECO                                  
January 2013 to December 2013 14,217 mcf/d   $3.51/mcf
April 2013 to October 2013    9,478 mcf/d    $3.14/mcf
April 2013 to October 2013    9,478 mcf/d    $3.17/mcf
April 2013 to October 2013    4,739 mcf/d    $2.95/mcf
July 2013 to September 2013   4,739 mcf/d    $3.22/mcf

  *The natural gas hedges amount to a 2013 annual average of approximately
    29,300 mcf/day at an average price of $3.30/mcf.
  *As part of the Transaction with Questfire Energy Corp. Advantage has
    agreed to enter into the following commodity hedges which will be assumed
    by the purchaser upon closing:

Term of Contract              Volume       Fixed Price
Natural Gas - AECO                                  
March 2013 to December 2013   13,269 mcf/d   $3.22/mcf
January 2014 to December 2014 7,583 mcf/d    $3.54/mcf
Crude Oil - WTI Canadian                            
March 2013 to December 2013   250 bbls/d    $97.25/bbl
January 2014 to December 2014 200 bbls/d    $94.80/bbl

The  information  in  this  press  release  contains  certain  forward-looking 
statements,  including  within  the  meaning  of  the  United  States  Private 
Securities Litigation Reform Act  of 1995. 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  "seek",   "anticipate",  "plan",   "continue",   "estimate", 
"demonstrate", "expect",  "may",  "will", "project",  "predict",  "potential", 
"targeting", "intend",  "could",  "might", "should",  "believe",  "would"  and 
similar expressions and include statements relating to, among other things the
terms of non-core property dispositions  and anticipated timing of  completion 
thereof;  strategic  alternatives   process  and   the  anticipated   benefits 
therefrom; anticipated review of the Corporations Credit Facility expected use
of proceeds from non-core property dispositions; expected production from  the 
Glacier area  and for  the Corporation  as  a whole;  test rates;  our  future 
operating and financial results; supply and  demand for crude oil and  natural 
gas; projections  of  royalty rates  and  operating costs;  the  Corporation's 
drilling and completion plans; plans for development of the Upper, Middle  and 
Lower Montney;  the  Corporation's business  strategy  and it  plans  for  its 
assets; and the  Corporation's expectations regarding  its ability to  protect 
Advantage's business  in the  current industry  and economic  environment.  In 
addition, statements relating to  "reserves" or "resources"  are deemed to  be 
forward-looking statements, as they involve  the implied assessment, based  on 
certain estimates and assumptions, that  the resources and reserves  described 
can be profitably produced in the future.

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 

These  statements   involve   substantial   known  and   unknown   risks   and 
uncertainties, certain of which are beyond Advantage's control, including: the
impact of general economic conditions; the intended use of the net proceeds of
any disposition of non-core assets might  change if the board of directors  of 
Advantage determines that it  would be in the  best interests of Advantage  to 
deploy the proceeds for some other  purpose; failure to complete the  non-core 
property dispositions,  failure to  realize the  benefits from  or complete  a 
transaction  pursuant   to  the   strategic  alternative   process;   industry 
conditions;  actions  by  governmental  or  regulatory  authorities  including 
increasing taxes, 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, 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;
hazards such  as fire,  explosion, blowouts,  cratering, and  spills, each  of 
which could  result in  substantial damage  to wells,  production  facilities, 
other  property  and  the  environment  or  in  personal  injury;  changes  or 
fluctuations in production  levels; competition from  other producers;  credit 
risk; individual well productivity; changes in laws and regulations  including 
the adoption of new environmental laws and regulations and changes in how they
are interpreted and  enforced; fluctuations  in commodity  prices and  foreign 
exchange and interest  rates; stock market  volatility and market  valuations; 
liabilities  inherent  in  oil  and  natural  gas  operations;   uncertainties 
associated with  estimating oil  and natural  gas reserves;  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; obtaining required  approvals of  regulatory 
authorities and  ability  to  access  sufficient  capital  from  internal  and 
external sources. Many of  these risks and  uncertainties and additional  risk 
factors are described in  the Corporation's Annual  Information Form which  is 
available at and 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  among other  things: conditions  in 
general economic and financial markets; effects of regulation by  governmental 
agencies; current commodity prices and royalty regimes; future exchange rates;
royalty  rates;  future  operating  costs;  availability  of  skilled   labor; 
availability of drilling and related  equipment; timing and amount of  capital 
expenditures; and the impact of increasing competition.

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.

Barrels of oil  equivalent (boe) may  be misleading, particularly  if used  in 
isolation. A boe conversion ratio has been calculated using a conversion  rate 
of six  thousand cubic  feet  of natural  gas  to one  barrel  of oil.  A  boe 
conversion ratio of 6 mcf:1 bbls 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.

Any references  in  this  press  release  to  initial  and/or  final  test  or 
production rates  are  useful  in confirming  the  presence  of  hydrocarbons, 
however, such rates  are not determinative  of the rates  at which such  wells 
will commence production and decline  thereafter. These test results are  not 
necessarily indicative of long-term  performance or ultimate recovery.  While 
encouraging, readers are  cautioned not  to place  reliance on  such rates  in 
calculating the aggregate production for the Corporation.

SOURCE Advantage Oil & Gas Ltd.


Investor Relations
Toll free: 1-866-393-0393

Advantage Oil & Gas Ltd.
700, 400 - 3^rd Avenue SW
Calgary, Alberta
T2P 4H2
Phone: (403) 718-8000
Fax: (403) 718-8300
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