Advantage Announces 2013 Year End Financial & Operating Results and Glacier Operational Update

 Advantage Announces 2013 Year End Financial & Operating Results and Glacier                               Operational Update  PR Newswire  CALGARY, March 27, 2014  (TSX: AAV, NYSE: AAV)  CALGARY, March 27, 2014 /PRNewswire/ -  Advantage Oil & Gas Ltd.  ("Advantage"  or the "Corporation") is  pleased to report  the unconsolidated financial  and  operating results (excludes Longview Oil Corp.) for the three months and  year  ended December 31,  2013. Advantage's  remaining non-core assets  which had  a  production rate of approximately 5,600 boe/d were divested on April 30,  2013.  As a result, financial  and operating results during  the second half of  2013  are more representative  of our industry  leading low cost  pure play  Montney  development at Glacier.  Advantage's 2013 results, achievement of our 135 mmcfe/d Phase VI production target ahead of schedule, and acceleration of our Phase VII drilling program provides a solid foundation for multi-year growth. Advantage's growth strategy is targeted to deliver 100% production per share growth and 190% cash flow per share growth through its three year development plan at its world class Montney resource play at Glacier, Alberta.                                Three months ended         Year ended Advantage Unconsolidated         December 31              December 31 Results                              2013      2012        2013       2012                                                                  Financial ($000, except                                         as otherwise indicated)                                                Sales including realized                                        hedging                     $  34,304    $  36,556    $  142,943   $ 126,749      per boe              $    20.57  $   19.15   $    20.08  $    15.97 Funds from operations      $   23,822   $ 16,890   $   85,310  $   47,046      per share ^ (2)      $     0.14   $    0.10   $     0.51  $     0.28      per boe              $    14.30   $    8.85   $    11.98  $     5.94 Dividends received from                                         Longview                    $    2,961   $   3,172   $   12,479   $  14,350      per share ^ (2)      $     0.02   $    0.02  $     0.07  $     0.09 Total capital                                                   expenditures                $   69,512    $ 35,849    $ 155,370   $  130,570 Working capital deficit ^                                       (3)                         $   49,034    $  35,467    $   49,034   $   35,467 Bank indebtedness          $  153,697   $ 161,630   $  153,697  $  161,630 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     167,509 Operating                                                          Daily Production                                                        Natural gas (mcf/d)    108,260    116,929     113,947    122,069      Crude oil and NGLs                                              (bbls/d)                     79       1,261          507       1,337      Total mcfe/d ^ (4)     108,734    124,495     116,989    130,091      Total boe/d ^ (4)       18,122     20,749      19,498     21,682 Average prices (including                                       hedging)                                                                    Natural gas ($/mcf)  $     3.39   $    2.70   $    3.10  $     2.09      Crude oil and NGLs                                              ($/bbl)               $    77.01    $   65.21   $    76.01   $    68.35  (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.    Increased Funds from Operations driven by Glacier Production, Low Cost Structure and Improved Gas Prices    *Funds from operations for the fourth quarter of 2013, excluding dividends     from Longview Oil Corp. ("Longview"), increased 41% to $23.8 million or     $0.14 per share as compared to the fourth quarter of 2012. Funds from     operations during 2013 increased 81% to $85.3 million or $0.51 per share     as compared to 2012. The increase in funds from operations was supported     by a continued reduction in Advantage's cost structure due to development     at Glacier and an increase in realized natural gas prices for the quarter     and year.    *The tax free dividend income received from Longview amounted to $3.0     million ($0.02/share) during the fourth quarter of 2013 and $12.5 million     ($0.07/share) for 2013 due to Advantage's 45.1% ownership in the common     shares of Longview in 2013.    *Glacier production increased to 135 mmcfe/d (22,500 boe/d) in early March,     approximately one month ahead of our Phase VI budget schedule. Production     averaged 117.0 mmcfe/d (19,498 boe/d) for 2013 and averaged 108.7 mmcfe/d     (18,122 boe/d) during the fourth quarter of 2013. The 2013 average     production rate included the non-core assets from January 1 to April 30,     2013. Production during the fourth quarter of 2013 was impacted by minor     facility outages at Glacier to accommodate field gathering system work in     preparation for the eventual tie-in of new Phase VI Montney wells.    *The royalty rate in 2013 was 5.4% as compared to 5.7% during 2012. The     reduction in royalty rate reflects the disposition of the non-core assets     and increased production from Glacier where royalty rates of approximately     5% are realized on our Montney wells.    *Operating costs decreased 68% to $0.28/mcfe ($1.66/boe) in the fourth     quarter of 2013 compared to the same period in 2012. The decrease in     operating costs was due to the divestment of the higher cost non-core     assets and the continued improvement in operating efficiencies achieved     through our Glacier Montney development. Advantage's operating costs for     2013 which included the non-core assets to April 30, 2013 decreased 47% to     $0.48/mcfe ($2.88/boe) compared to 2012.    *Advantage's operating netback during the fourth quarter of 2013 was     $3.00/mcfe which is 93% of our realized natural gas price of $3.21/mcfe.     This strong cash margin is due to the industry leading low cost structure     at Glacier and is a key success factor in our go forward three year     development plan which is targeted to deliver 190% cash flow per share     growth at an average natural gas price of $3.75/GJ.    *Total capital expenditures in the fourth quarter of 2013 were $69.5     million and $155.4 million for the 2013 year which resulted from ongoing     activities in our Glacier Phase VI development program.    *On a pro forma basis after giving consideration to net proceeds of $90     million received from the sale of the Longview common shares, Advantage's     bank debt was $63.7 million and total debt was $199.0 million as of     December 31, 2013.    *Advantage's estimated tax pools as of December 31, 2013 are approximately     $1.1 billion of which $0.8 billion are categorized as immediately     deductible at a rate of 100%.  Glacier Operations On-Track with Three Year Development Plan  Advantage's Glacier three year  development plan is  targeted to deliver  100%  production per share growth and 190% cash flow per share growth. Production is expected to grow to 183 mmcfe/d in  2015, 205 mmcfe/d in 2016 and 245  mmcfe/d  in 2017. The  three year development  plan is supported  by continuing  strong  operational results and a solid financial strategy which includes an  improved  balance sheet and hedging program. The three year development plan is designed to maintain an average total debt to forward cash flow ratio of 1.5x based  on  an average natural  gas price of  AECO Cdn $3.75/GJ.  Advantage has hedged  an  average of 47% of  its forecast production  through to Q1  2016 at an  average  price of $3.86/mcf.  Strong Initial Production from New Phase VI Glacier Wells    *Only nine of the 22 new Phase VI Montney wells were required to ramp     production to our 135 mmcfe/d Phase VI target which was achieved     approximately one month ahead of schedule. The remaining Phase VI wells     will be brought on stream as required to maintain the 135 mmcfe/d     production rate through the balance of 2014.    *Advantage's record Upper Montney well at 05-20-76-12W6 which demonstrated     a final production test rate of 21 mmcf/d was initially brought on     production at rates of up to 21 mmcf/d and then restricted to     approximately 10 mmcf/d for the last 80 days. The production rate has     been restricted to manage the flow back of frac sand through well site     equipment which is typical in most higher rate Montney wells. The     05-20-76-12W6 well is still producing at a strong flowing wellhead     pressure of 7,620 kpa compared to our average gas gathering system     pressure of 3,000 kpa. During the first 80 days of production, the     05-20-76-12W6 well has produced 0.7 bcf.    *Two Lower Montney wells located at 15-31-75-13W6 and 10-31-75-13W6 were     initially brought on production at rates of up to 15 mmcf/d and 11 mmcf/d     and then restricted to a rate of 8.0 mmcf/d for each well. The wells have     produced for an average of 125 days and each well has produced     approximately 1 bcf during this period. These wells, which were completed     with slickwater and modified completion techniques, are demonstrating     significantly improved performance compared to older Lower Montney wells.    *Since the winter of 2012, a total of 15 Upper and Lower Montney wells that     were completed with slickwater and brought on production are demonstrating     performance which is trending at or above our Phase VII budget type curve     (based on an average initial 30 day production rate of 6.9 mmcf/d).    *Advantage's record Middle Montney well located at 12-02-76-12W6 which     demonstrated a final production test rate of 13 mmcf/d, including 20     bbl/mmcf of free condensate, was initially brought on production at     restricted rates of up to 9.5 mmcf/d. This well has been further rate     restricted to approximately 6.0 mmcf/d for the last 20 days to manage the     flow back of frac sand and to control the amount of free condensate that     our facilities can handle at this time since our Glacier gas plant does     not currently have liquid extraction or condensate stabilization processes     installed. The 12-02-76-12W6 well is still producing at a strong wellhead     pressure of 10,100 kPa compared to our average gas gathering system     pressure of 3,000 kpa.  Glacier Phase VII Glacier Development Program Underway    *The Glacier Phase VII drilling program was accelerated during the first     quarter of 2014 due to lower than anticipated capital expenditures in our     Phase VI program. The lower capital spending resulted from improved     drilling and well completion efficiencies which reduced well costs below     our original budget estimates.    *To date, four new Phase VII wells have been rig released. One drilling rig     is currently situated on a six well pad that will continue drilling     through spring breakup. Two additional rigs will be deployed once weather     conditions permit access to new drilling sites. A total of 33 wells are     included in our Phase VII drilling program.    *Engineering design is nearing completion for the expansion of our 100%     owned Glacier gas plant. The expansion work is targeted for completion     during the second quarter of 2015 and includes the installation of a     shallow cut liquids extraction process and increased natural gas     processing capacity to accommodate our Phase VII production target of 183     mmcfe/d. The engineering design will allow our Glacier gas plant to     ultimately provide 245 mmcfe/d of processing capacity to accommodate our     three year development plan through to 2017.    *Design plans are also underway for increasing the transportation capacity     of the sales gas lateral which connects the Glacier gas plant to     TransCanada Pipeline's main sales pipeline to accommodate our three year     development plan and beyond.  Advantage's strong operating and financial achievements during 2013 combined with simplification of the Corporate structure have positioned the company as an industry leading low cost Montney producer with strong growth. We look forward to reporting results on our progress as we execute Advantage's Glacier three year development plan.  Advisory 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,  Advantage's anticipated production per  share growth and  cash flow per  share  growth, including  the  targeted amount  and  timing of  achievement  thereof;  expectations as to future natural gas prices; estimated tax pools;  expected  increases in  production in  2015, 2016  and 2017  resulting from  Advantage's  Glacier three year development plan; expectations of future debt to cash  flow  ratios; expectations as to the number of wells in Advantage's Phase VI Program required to provide sufficient production inventory to maintain production  at  anticipated levels through to the end of 2014; expectations regarding  tie-ins  of Phase VI wells; expected  number of future drilling locations;  anticipated  drilling plans, including drilling rigs to be deployed and number of wells  to  be included in Advantage's Phase VIII drilling program; anticipated timing  of  completion of expansion of Glacier gas plant and effect of engineering  design  on processing capacity, including the amount of such processing capacity;  and  the status of design  plans to increase transportation  capacity of the  sales  gas lateral which  connects the  Glacier gas plant  to TransCanada  Pipeline's  main  sales  pipeline.  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 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, including 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;  ability to obtain 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 www.sedar.com  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; 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.  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.  References in this press release to final production test rates, initial  test  production rates,  production  type  curves,  restricted  rates  and  30  day  production  rates  and  other  short-term  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  and are  not indicative  of long  term performance  or  of  ultimate recovery.  While  encouraging, readers  are  cautioned not  to  place  reliance on such rates in calculating the aggregate production for  Advantage.  A pressure transient analysis or well-test interpretation has not been carried out in respect of  all wells. Accordingly, the  Corporation cautions that  the  test results should be considered to be preliminary.  The Corporation  discloses several  financial measures  that do  not have  any  standardized  meaning  prescribed  under  International  Financial   Reporting  Standards ("IFRS"). These  financial measures include  operating netbacks  and  debt to cash flow ratio. 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 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   www.sedar.com  and   www.advantageog.com  for   additional  information about  these financial  measures,  including a  reconciliation  of  funds from operations to cash provided by operating activities.  The following abbreviations used in this press release have the meanings set forth below:             bbls       barrels mbbls      thousand barrels mmbbls     million barrels boe        barrels of oil equivalent of natural gas, on the basis of one               barrel of oil or NGLs for six thousand cubic feet of natural gas mboe       thousand barrels of oil equivalent mmboe      million barrels of oil equivalent mcf        thousand cubic feet mmcf       million cubic feet bcf        Billion cubic feet tcf        trillion cubic feet mcfe       thousand cubic feet equivalent on the basis of six thousand               cubic feet of natural gas for one barrel of oil or NGLs mmcfe/d    million cubic feet equivalent per day tcfe       trillion cubic feet equivalent      SOURCE Advantage Oil & Gas Ltd.  Contact:  Investor Relations Toll free: 1-866-393-0393  Advantage Oil & Gas Ltd. 300, 440 - 2^nd Avenue SW Calgary, Alberta T2P 5E9 Phone: (403) 718-8000 Fax: (403) 718-8332 Web Site:www.advantageog.com E-mail:ir@advantageog.com