Advantage Energy : Consolidated Financial Statements (Advantage Energy Ltd. 2024 12 FS with Opinion SEDAR)
AAV.TO
CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2024 and 2023
Independent auditor's report
To the Shareholders of Advantage Energy Ltd.
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Advantage Energy Ltd. and its subsidiaries (together, the Corporation) as at December 31, 2024 and 2023 and January 1, 2023, and its financial performance and its cash flows for the years ended December 31, 2024 and 2023 in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).
What we have audited
The Corporation's consolidated financial statements comprise:
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Corporation in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.
PricewaterhouseCoopers LLP
Suncor Energy Centre, 111 5th Avenue South West, Suite 3100, Calgary, Alberta, Canada T2P 5L3 T.: +1 403 509 7500, F.: +1 403 781 1825, Fax to mail: [email protected]
"PwC" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2024. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
The impact of proved and probable reserves on property, plant and equipment within natural gas and liquids properties
Refer to note 3 - Material accounting policies, note 4 - Material accounting judgments, estimates and assumptions, and note 11 - Natural gas and liquids properties to the consolidated financial statements
The Corporation has $2,677 million of net property, plant and equipment within natural gas and liquids properties as at December 31, 2024. The related depreciation expense was
$197 million for the year then ended. Property, plant and equipment is depreciated using the units-of-production method by reference to the ratio of production in the period to the related proved and probable reserves, taking into account estimated future development costs necessary to bring those reserves into production. Proved plus probable reserves are determined using key assumptions related to the estimated future cost of developing and extracting those reserves, recovery factors and future natural gas and liquids prices. The proved and probable reserves are estimated by the Corporation's independent qualified reserve evaluator (management's expert).
We considered this a key audit matter due to
Our approach to addressing the matter included the following procedures, among others:
Key audit matter
How our audit addressed the key audit matter
proved plus probable reserves and (ii) a high
o Future natural gas and liquids prices by
degree of auditor judgment, subjectivity and effort
comparing forecasts with other reputable
in performing procedures relating to the key
third-party industry forecasts.
assumptions used by management.
∙ Recalculated the units-of-production rates used
to calculate depreciation expense.
Valuation of property, plant and equipment acquired in a business combination
Our approach to addressing the matter included the following procedures, among others:
Refer to note 3 - Material accounting policies, note 4 - Material accounting judgments, estimates and assumptions, and note 10 - Business combination to the consolidated financial statements.
On June 24, 2024, the Corporation completed the acquisition of certain Charlie Lake and Montney assets for cash consideration of $445 million, including closing adjustments. This transaction was accounted for as a business combination using the acquisition method, which requires that the identifiable assets acquired, and liabilities assumed be measured at their fair values at the acquisition date. The fair value of property, plant and equipment acquired and recorded within natural gas and liquids properties was
$467 million (the acquired PP&E Assets).
Management determined the fair value of the acquired PP&E Assets based on a discounted cashflow model, calculating the present value of the expected future after-tax cash flows derived from the acquired oil and gas reserves.
The assumptions and estimates used to determine the fair value of the acquired PP&E Assets require significant judgment by management and include estimates of oil and gas reserves acquired, production forecasts, production costs, forecast benchmark commodity
Key audit matter
How our audit addressed the key audit matter
prices, timing and amounts of future development
performance of the acquired PP&E
costs and discount rate. The acquired oil and gas
Assets, and whether they were
reserves are prepared by the Corporation's
consistent with evidence obtained in
internal qualified reserve engineers
other areas of the audit; and
(management's internal expert).
o Comparing forecast benchmark
We considered this a key audit matter due to the
commodity prices to third-party industry
forecasts.
significant judgment applied by management,
including the use of management's internal
∙ Professionals with specialized skill and
expert, when determining the fair value of the
knowledge in the field of valuation assisted in
acquired PP&E Assets, including development of
assessing the reasonableness of the discount
assumptions. This, in turn, led to a high degree of
rate
auditor judgment, subjectivity and effort in
performing procedures and evaluating audit
evidence related to the assumptions used by
management. The audit effort also involved the
use of professionals with specialized skill and
knowledge in the field of valuation.
Other information
Management is responsible for the other information. The other information comprises the Management's Discussion and Analysis, which we obtained prior to the date of this auditor's report and the information, other than the consolidated financial statements and our auditor's report thereon, included in the annual report, which is expected to be made available to us after that date.
Our opinion on the consolidated financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the information, other than the consolidated financial statements and our auditor's report thereon, included in the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
Responsibilities of management and those charged with governance for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Corporation's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Corporation or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Corporation's financial reporting process.
Auditor's responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's report is Simon Baker.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants
Calgary, Alberta
March 4, 2025
Advantage Energy Ltd.
Consolidated Statements of Financial Position
(Expressed in thousands of Canadian dollars)
December 31
December 31
January 1
Notes
2024
2023
2023
ASSETS
(Note 3)
Current assets
Cash and cash equivalents
6
20,146
19,261
48,940
Trade and other receivables
7
83,188
53,378
92,816
Prepaid expenses and deposits
10,000
16,618
14,613
Derivative asset
12
50,358
31,200
22,357
Total current assets
163,692
120,457
178,726
Non-current assets
Derivative asset
12
78,631
80,048
93,993
Inventory
8
3,537
3,958
-
Intangible assets
9
5,246
5,363
4,011
Natural gas and liquids properties
11
2,694,852
2,089,202
1,940,228
Total non-current assets
2,782,266
2,178,571
2,038,232
Total assets
2,945,958
2,299,028
2,216,958
LIABILITIES
Current liabilities
Trade and other accrued liabilities
116,609
70,606
84,805
Derivative liability
12
8,900
964
2,197
Financing liability
15
5,256
4,813
4,269
Unsecured debentures
16
105,026
46,263
25,444
Provisions and other liabilities
17
14,724
20,054
21,118
Total current liabilities
250,515
142,700
137,833
Non-current liabilities
Derivative liability
12
4,624
-
-
Bank indebtedness
13
470,424
212,854
177,200
Convertible debentures
14
122,583
-
-
Financing liability
15
82,827
88,084
90,436
Provisions and other liabilities
17
127,669
61,937
45,389
Deferred income tax liability
18
253,166
237,057
201,422
Total non-current liabilities
1,061,293
599,932
514,447
Total liabilities
1,311,808
742,632
652,280
SHAREHOLDERS' EQUITY
Share capital
19
1,989,239
1,952,241
2,105,013
Convertible debentures
14
12,859
-
-
Contributed surplus
194,819
187,034
142,817
Deficit
(561,261)
(582,980)
(684,577)
Total shareholders' equity attributable to Advantage
1,635,656
1,556,295
1,563,253
shareholders
Non-controlling interest
20
(1,506)
101
1,425
Total shareholders' equity
1,634,150
1,556,396
1,564,678
Total liabilities and shareholders' equity
2,945,958
2,299,028
2,216,958
Commitments (note 28)
See accompanying Notes to the Consolidated Financial Statements
On behalf of the Board of Directors of Advantage Energy Ltd.:
Deirdre M. Choate, Director: (signed) "Deirdre M. Choate"
Michael Belenkie, Director: (signed) "Michael Belenkie"
Advantage Energy Ltd. - 7
Advantage Energy Ltd.
Consolidated Statements of Comprehensive Income
(Expressed in thousands of Canadian dollars, except per share amounts)
Year ended
December 31
Notes
2024
2023
Revenues
Natural gas and liquids sales
23
543,295
541,100
Sales of purchased natural gas
23
-
3,124
Processing and other income
23
6,807
7,627
Royalty expense
(52,471)
(42,432)
Natural gas and liquids revenue
497,631
509,419
Gains on derivatives
12
55,442
25,768
Total revenues
553,073
535,187
Expenses
Operating expense
125,747
84,453
Transportation expense
101,139
90,603
Natural gas purchases
23
-
3,371
General and administrative expense
24
33,084
24,637
Transaction costs
10
3,276
-
Share-based compensation expense
21
3,892
6,546
Depreciation and amortization expense
9,11
199,489
148,897
Finance expense
25
52,420
30,090
Foreign exchange (gain) loss
(439)
459
Other expenses
8,11,17
1,548
10,223
Total expenses
520,156
399,279
Income before taxes and non-controlling interest
135,908
32,917
Income tax expense
18
(12,805)
(35,635)
Net income and comprehensive income before non-controlling interest
20,112
100,273
Net income (loss) and comprehensive income (loss) attributable to:
Advantage shareholders
21,719
101,597
Non-controlling interest
20
(1,607)
(1,324)
20,112
100,273
Net income per share attributable to Advantage shareholders
Basic
22
0.13
0.61
Diluted
22
0.13
0.59
See accompanying Notes to the Consolidated Financial Statements
Advantage Energy Ltd. - 8
Advantage Energy Ltd.
Consolidated Statements of Changes in Shareholders' Equity
(Expressed in thousands of Canadian dollars)
Non-
Total
Share
Convertible
Contributed
controlling
shareholders'
capital
debentures
surplus
Deficit
interest
equity
Balance, December 31, 2023
1,952,241
-
187,034
(582,980)
101
1,556,396
Net income and comprehensive income
-
-
-
21,719
(1,607)
20,112
Share-based compensation (note 21(b))
-
-
4,950
-
-
4,950
Issuance of convertible debentures (note 14)
-
12,859
-
-
-
12,859
Settlement of Performance Share Units (note 19)
3,891
-
(4,962)
-
-
(1,071)
Common shares issued (note 19)
62,643
-
-
-
-
62,643
Common shares repurchased (note 19)
(29,536)
-
7,797
-
-
(21,739)
Balance, December 31, 2024
1,989,239
12,859
194,819
(561,261)
(1,506)
1,634,150
Non-
Total
Share
Contributed
controlling
shareholders'
capital
surplus
Deficit
interest
equity
Balance, December 31, 2022
2,105,013
142,817
(684,577)
1,425
1,564,678
Net income and comprehensive income
-
-
101,597
(1,324)
100,273
Share-based compensation (note 21(b))
-
8,788
-
-
8,788
Settlement of Performance Share Units (note 19)
6,509
(6,509)
-
-
-
Common shares repurchased (note 19)
(159,281)
41,938
-
-
(117,343)
Balance, December 31, 2023
1,952,241
187,034
(582,980)
101
1,556,396
See accompanying Notes to the Consolidated Financial Statements
Advantage Energy Ltd. - 9
Disclaimer
Advantage Energy Ltd. published this content on March 04, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on March 04, 2025 at 22:52:12.984.