Advantage Announces Third Quarter 2013 Results

                Advantage Announces Third Quarter 2013 Results

PR Newswire

CALGARY, Nov. 7, 2013

Glacier Outperforms Budget
Middle Montney Liquids Demonstrate Consistency
Two New Lower Montney Wells Test at Combined Rate of 20 mmcf/d
Strategic Alternatives Update


CALGARY, Nov. 7, 2013 /PRNewswire/ - Advantage Oil & Gas Ltd. ("Advantage" or
the "Corporation") is pleased to announce the unconsolidated financial and
operating results (excludes Longview Oil Corp.) for the three and nine months
ended September 30, 2013. The detailed results are included in Appendix A.

Glacier continues to demonstrate solid  performance as reflected in our  third 
quarter 2013 Corporate  results. This quarter  represents the first  reporting 
period which excludes the non-core assets that were sold in April, 2013.

Advantage Unconsolidated                 Three months ended September 30,
Results ^ (1)                                                       2013  
Operating                          Financial                   
Daily Production                                        $000   per mcfe 
Natural gas (mcf/d)                Petroleum and                          
                           111,518   natural gas sales  $  26,148  $ 2.53
Crude oil and NGLs                 Royalties                              
(bbls/d)                       105                        (1,283)   (0.12)
Total mcfe/d ^ (2)       112,148  Royalty Rate        4.9%         
Total boe/d ^(2)                   Realized gain on                       
                            18,691   derivatives            1,709     0.17
                                  Operating expense    (2,978)   (0.29) 
Average prices (excluding            Operating income  $  23,596
hedging)                             and netback                    $ 2.29 
Natural gas ($/mcf)    $    2.46                             
Crude oil and NGLs                 Total capital                          
($/bbl)                  $   95.13   spending           $  28,001        
                                   Working capital                        
                                     deficit ^ (3)      $  19,836        
                                  Bank indebtedness  $ 139,941         
                                   debentures (face                       
                                     value)             $  86,250        

(1) Non-consolidated operating and financial highlights for             
Advantage excluding Longview.
(2) A boe and mcfe conversion ratio has been calculated using a
conversion rate of six thousand cubic feet of natural gas               
equivalent to one barrel of oil.
(3) Working capital deficit includes trade and other receivables, prepaid    
expenses and deposits, and trade and other accrued liabilities.

  *Glacier working interest production during the third quarter of 2013
    averaged 111.3 mmcfe/d (18,542 boe/d) which exceeded our internal budget
    by 11%. A number of Montney wells continue to exhibit stronger production
    resulting from revised completion techniques which were implemented in
    early 2013.

  *The royalty rate during the third quarter of 2013 was 4.9% which reflects
    the positive impact of the Alberta royalty programs on Montney wells
    drilled at Glacier. We estimate that the royalty rate on an Upper or Lower
    Montney well at Glacier is approximately 5% for its producing life at an
    AECO natural gas price below $6.00 Cdn/mcf.

  *Operating costs averaged $0.29/mcfe ($1.73/boe) during the third quarter
    of 2013 and demonstrates the continued optimization achievements and
    efficiencies at our Glacier Montney development. Operating costs in the
    fourth quarter of 2013 are expected to decrease further due to processing
    of third party natural gas production of approximately 10 mmcf/d during
    October and November 2013. In addition, our new water injection well will
    reduce future water disposal costs.

  *The operating netback of $2.29/mcfe represents 91% of sales due to our
    favorable operating and royalty cost structure and strong natural gas
    hedge position. This demonstrates the solid cash flow generation of our
    Glacier asset as lower natural gas prices prevailed during the third
    quarter of 2013 due to record wide AECO to Nymex differentials. AECO
    prices have improved for the fourth quarter of 2013 as the differentials
    have narrowed to historical levels.

  *Total capital expenditures at Glacier for the three months ended September
    30, 2013 were $28 million. These expenditures resulted from the
    commencement of drilling activities associated with our Phase VI capital
    development program and the purchase of additional Montney lands which
    complement our Middle Montney liquids reserve and resource upside at

  *Advantage's current Montney land holdings increased 52% during the third
    quarter to a total of 125.65 gross (120.35 net) sections comprised of four
    separate contiguous blocks including our Glacier property. In September
    2013, an additional 43.25 sections of 100% working interest Montney lands
    were acquired from the Province of Alberta at a cost of $6.7 million.
    These lands are located southeast of Glacier in a fairway that we believe
    is prospective for Middle Montney natural gas liquids.

  *Our credit facility borrowing base was recently increased to $300 million
    as a result of our lender's regular semi-annual review in October 2013. As
    of September 30, 2013, Advantage's bank indebtedness was $140 million
    which represents an undrawn credit facility of 53%. The next credit
    facility review will be in June 2014 when Glacier production is targeted
    to be 135 mmcfe/d.

  *In addition to Glacier, Advantage's other major assets include a 45.1%
    ownership in the shares of Longview Oil Corp. ("Longview") valued at
    approximately $136 million as at September 30, 2013, a $32.6 million
    Questfire Debenture and 1,500,000 Questfire Class B Shares. Advantage
    received tax-free dividend income from Longview of $3.2 million ($0.02 per
    share) during the third quarter of 2013.

  *Advantage's estimated tax pools as of September 30, 2013 are approximately
    $1.1 billion of which approximately $800 million are immediately
    deductible at a rate of 100%.

Middle Montney Wells Demonstrate Consistent Liquid Yields

  *As referenced in our press release dated September 30, 2013, our
    103/1-9-76-12w6 and 102/13-29-76-12w6 Middle Montney wells demonstrated
    free condensate ("C5+") yields of 50 bbls/mmcf and 24 bbls/mmcf
    respectively, during initial production testing. Follow-up liquid gas
    ratio tests on 103/1-9-76-12w6 indicate consistent liquid yields. The
    102/13-29-76-12w6 well will be tested this winter when ground conditions
    permit access to this wellsite.

  *Additionally, monitoring of the total free C5+ yield at our Glacier gas
    plant has been consistent since the 103/1-9-76-12w6 and 102/13-29-76-12w6
    Middle Montney wells were brought on-stream in the second quarter of 2013.
    Our Glacier gas plant does not currently have a liquid extraction process
    installed. However, individual re-testing of wells and monitoring of our
    total free C5+ volumes provides us with an indication of the liquid
    content trend.

  *The calculated shallow cut propane plus (C3+) liquid extraction yields
    based on the initial production tests were 76 bbls/mmcf and 57 bbls/mmcf
    for 103/1-9-76-12W6 and 102/13-29-76-12W6, respectively.

  *Our evaluation of liquids extraction options at Glacier is progressing.
    External discussions have been held with several parties and comparative
    economics are currently underway to determine a development plan which
    delivers long term operational flexibility and maximizes our return on
    investment. We anticipate providing further details in the near future.

Two New Glacier Lower Montney Wells Tested at a Combined Rate of 20 mmcf/d

  *As part of our Phase VI Glacier capital development program, two new Lower
    Montney wells located in the southwest portion of our Glacier land block
    were completed in October 2013. These wells were completed with a high
    rate slickwater frac utilizing an open hole packer system and confirmed
    strong productivity based on this completion design. These two new wells
    are the southernmost horizontal wells we have drilled in the Lower Montney
    and illustrate that the southern portion of our Glacier land block is also
    highly productive in the Lower Montney formation.

  *The new 100/15-31-75-13w6 Lower Montney well was production tested for 72
    hours and demonstrated a final gas flow rate at the end of the test of 9.8
    mmcf/d at a final flowing pressure of 7,778 kpa. The final gas flow rate
    normalized to our gas gather system average pressure of 3,000 kpa is 10.6

  *The new 100/10-31-75-13w6 Lower Montney well was production tested for 57
    hours and demonstrated a final gas flow rate at the end of the test of 8.8
    mmcf/d at a final flowing pressure of 7,067 kpa. The final gas flow rate
    normalized to our gas gather system average pressure of 3,000 kpa is 9.4

  *These two new Lower Montney wells were completed with a similar frac
    design to the technique utilized for our 100/7-7-76-13w6 Lower Montney
    well which was completed in early 2013 and showed superior results. The
    100/7-7-76-13w6 well was brought on production at 12 mmcf/d and has
    produced 1.7 bcf compared to an average of 0.6 bcf per well from older
    offset Lower Montney wells after seven months of production.

Phase VI Glacier Capital Development Program On-Track

  *Our Phase VI Glacier capital development program which is designed to ramp
    Advantage production to 135 mmcfe/d by Q2 2014 is progressing on-track
    with three drilling rigs.

  *To date, 10 of the total 22 wells in the program have been rig released.
    Of the 10 wells drilled, five are Lower Montney wells, two are Middle
    Montney wells and three are Upper Montney wells.

  *We anticipate additional well completion information, including new Middle
    and Upper Montney wells, will be available in December 2013.

Commodity Hedging Program Reduces Cash Flow Volatility

  *Advantage has entered into a number of natural gas hedges in support of
    our two year Glacier development plan. Our natural gas hedges will reduce
    the volatility of future cash flows through to March 2016. Our hedging
    positions are summarized in the following table:

                        Average        Net Forecast    Average Price
Period             Production Hedged Production Hedged  $Cdn. AECO
Q3 2013 & Q4 2013     38.1 mmcf/d           39%          $3.45/mcf
Q1 2014 to Q4 2014    50.2 mmcf/d           39%          $3.81/mcf
Q1 2015 to Q4 2015    45.0 mmcf/d           27%          $3.91/mcf
Q1 2016               42.7 mmcf/d           23%          $3.90/mcf

  *Additional details on our hedging program are available at our website at

Strategic Alternatives Process Update

  *As previously announced, the Corporation's financial advisors, FirstEnergy
    Capital Corp. and RBC Capital Markets, commenced a broad global marketing
    effort to solicit interest in a sale of the Corporation or another
    transaction to maximize value for all shareholders. The process is
    ongoing. Scheduled technical presentations have been completed, interested
    parties have received their bid instruction packages and a bid date has
    been set.

  *There can be no assurance that this process will result in an acceptable

Looking Forward

  *The operating netback during the third quarter of 2013 was impacted by
    lower natural gas prices due to record wide AECO to Nymex differentials.
    AECO prices have improved in the fourth quarter of 2013 as the
    differentials have narrowed to historical levels. This will significantly
    improve the operating netback at Glacier due to the strong leverage to
    natural gas prices driven by the low cost structure at our signature

  *The Phase VI capital development program was approved by our Board of
    Directors on May 21, 2013 with the following guidance:

                                 April to       January to   12 Months ending
                             December 2013 ^(1)  March 2014   March 2014 ^(1)
Production (Mmcfe/d)           106.8 - 109.2    128.4 - 130.8  111.0 - 113.4
Exit Production Rate                 -                             135.0
(Mmcfe/d)                                             -
Royalty Rate (%)                    4.9%            4.5%            4.8%
Operating Costs ($/mcfe)           $0.40            $0.30          $0.37
Capital Expenditure ($              $106                            $170
million)                                             $64

Notes:^(1) ^Includes the operating and financial results for the month of
            April 2013 from non-core assets sold to
            Questfire Energy Corp. on April 30, 2013.

  *We are currently reviewing the available options for extracting the
    natural gas liquids present in the Middle Montney. Further details on the
    chosen extraction method and the timing of increasing production from the
    Middle Montney will be provided in the near future.

Interim Consolidated Financial Statements and MD&A

  *This press release should be read in conjunction with Advantage's
    unaudited interim consolidated financial statements for the three and nine
    months ended September 30, 2013 together with the notes thereto, and
    Management's Discussion and Analysis for the three and nine months ended
    September 30, 2013 which have been prepared in accordance with
    International Financial Reporting Standards ("IFRS") and posted on our
    website at and filed under our profile on SEDAR at

Appendix A -Advantage's Three and Nine Months Ended
September 30, 2013 Results

                                Three months ended     Nine months ended
Advantage Unconsolidated          September 30
Results                                                    September 30
                                 2013     2012        2013        2012
Financial ($000, except as                                       
otherwise indicated)                                                   
Sales including realized     $           $           $           $
hedging                          27,857      29,219     108,639      90,193
      per boe               $   16.20  $   15.26  $   19.93  $   14.97
Funds from operations        $  16,516  $  10,343  $  61,488  $  30,156
      per share ^ (2)       $    0.10  $    0.06  $    0.37  $    0.18
      per boe               $    9.61  $    5.40  $   11.27  $    5.01
Dividends received from      $           $           $           $
Longview                          3,172       3,173       9,518      11,178
      per share ^ (2)       $    0.02  $    0.02  $    0.06  $    0.07
Total capital expenditures   $  28,001  $  23,537  $  85,858  $  94,721
Working capital deficit ^    $           $           $           $
(3)                              19,836      30,813      19,836      30,813
Bank indebtedness            $ 139,941  $ 152,877  $ 139,941  $ 152,877
Convertible debentures (face $           $           $           $
value)                           86,250      86,250      86,250      86,250
Shares outstanding at end of                                     
period (000)                    168,383     168,383     168,383     168,383
Basic weighted average                                           
shares (000)                    168,383     168,383     168,383     167,216
Daily Production                                                   
      Natural gas (mcf/d)     111,518    117,462    115,863    123,795
      Crude oil and NGLs                                         
       (bbls/d)                    105       1,235         651        1,363
      Total mcfe/d ^ (4)      112,148    124,872    119,769    131,973
      Total boe/d ^ (4)        18,691     20,812     19,962     21,995
Average prices (including                                        
      Natural gas ($/mcf)   $    2.63  $    2.04  $    3.01  $    1.90
      Crude oil and NGLs                                        $
       ($/bbl)               $   95.13   $   63.34   $   75.97        69.33

(1) Non-consolidated financial and operating highlights for            
     Advantage excluding Longview.
(2)  Based on weighted average shares outstanding                      
(3) Working capital deficit includes trade and other receivables, prepaid  
     expenses and deposits,
    and trade and other accrued liabilities                           
(4) A boe and mcfe conversion ratio has been calculated using a            
     conversion rate of six thousand
    cubic feet of natural gas equivalent to one barrel of oil.         

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, but not limited to,
anticipated timing of the next review of the Corporation's credit facility;
estimated tax pools as at September 30, 2013; anticipated effect of future
optimization of completion techniques on well results; the Corporation's
anticipated drilling and completion plans; anticipated timing of completion
results from drilling rigs at Glacier; expected effect of natural gas hedges
on volatility of future cash flows; the Corporation's development plan to
increase production at Glacier and the anticipated production levels and
timing thereof; anticipated production and forecast production levels, royalty
rates, operating costs and capital expenditures under the Corporation's Phase
VI capital development program; anticipated effect of new water injection well
on water disposal costs; the Corporations plans to review options to
facilitate the extraction of natural gas liquids; and status of the
Corporation's strategic alternatives process. 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, but
not limited to: changes in  general economic, market and business  conditions; 
industry  conditions;  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;  the  effect of  acquisitions; 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; 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; 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; failure  to 
realize the anticipated  benefits of  the sale of  the Corporation's  non-core 
assets; ability  to  obtain  required  approvals  of  regulatory  authorities; 
ability to access sufficient capital  from internal and external sources;  and 
failure to complete  an acceptable transaction  pursuant to the  Corporation's 
strategic alternatives  process. 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:  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; the
impact of increasing competition; the price of crude oil and natural gas; 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 crude oil  and 
natural gas properties in the manner currently contemplated; current or, where
applicable, proposed assumed  industry conditions, laws  and regulations  will 
continue in effect or as anticipated;  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.

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.

References in this  press release  to initial production  test rates,  initial 
"productivity", initial "flow"  rates, "flush" production  rates, C5+  yields, 
C3+ yields,  "liquid  yields"  and  "behind pipe  production"  are  useful  in 
confirming the presence of hydrocarbons, however such rates and yields are not
determinative of  the rates  and  yields at  which  such wells  will  commence 
production and  decline  thereafter  and  are  not  indicative  of  long  term 
performance or of ultimate recovery. While encouraging, readers are  cautioned 
not to place reliance  on such rates and  yields in calculating the  aggregate 
production for Advantage.

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  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.

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

mcf    thousand cubic feet
mcfe   thousand cubic feet of natural gas equivalent, using the ratio of 6 mcf
       of natural gas to 1 bbl of oil
mmcfe  million cubic feet of natural gas equivalent, using the ratio of 6 mcf
       of natural gas to 1 bbl of oil
mmcf   million cubic feet
mmcf/d million cubic feet per day
bbl    barrel
NGLs   natural gas liquids
Boe/d  barrles of oil equivalent per day

The Corporation  discloses several  financial measures  that do  not have  any 
standardized meaning prescribed under  IFRS. These financial measures  include 
funds from operations and operating  netbacks. Management believes that  these 
financial measures are  useful supplemental information  to analyze  operating 
performance and  provide  an  indication  of  the  results  generated  by  the 
Corporation's principal  business activities.  Investors should  be  cautioned 
that these measures should not be  construed as an alternative to net  income, 
cash  provided  by  operating  activities  or  other  measures  of   financial 
performance as  determined  in accordance  with  IFRS. Advantage's  method  of 
calculating these measures may differ  from other companies, and  accordingly, 
they may not be comparable to similar measures used by other companies. Please
see the Corporation's most recent Management's Discussion and Analysis,  which 
is  available  at  and  for   additional 
information about  these financial  measures,  including a  reconciliation  of 
funds from operations to cash provided by operating activities.

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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