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Operator: Good morning, ladies and gentlemen, and welcome to the Advantage Energy Limited Q3 2025 Results Conference Call. [Operator Instructions] This call is being recorded on Wednesday, October 29, 2025. I would now like to turn the conference over to Brian Bagnell, Vice President. Please go ahead.
Brian Bagnell: Thank you, Joanna, and welcome, everybody, to our conference call to discuss Advantage's third quarter 2025 results. Before we get started, I'd like to refer you to our advisories on forward-looking statements that are contained in the news release as well as advisories contained in Advantage's MD&A and annual information form, both of which are available on SEDAR and on our website. I'm here with Mike Belenkie, President and CEO; and Craig Blackwood, our CFO; as well as other members of our executive team. We'll start by speaking to some of our financial and operational results. Once Mike has finished speaking, we'll pass it back to the operator for questions. And as usual, we'd like to ask that if you have any detailed modeling questions that you follow up with us individually after the call, and finally, I'll note that we have posted an updated corporate presentation on our website. So with that, I'll turn it over to Mike Belenkie. Mike, please go ahead.
Michael Belenkie: Thank you, Brian. And thanks, everyone, for joining us this morning. For Canadian gas producers, the third quarter was clouded by the lowest AECO prices in modern history. However, there were many silver lines for Advantage. We delivered steady results that demonstrated the resilience of our business and our ability to create shareholder value through all phases of the commodity cycle. The average AECO price for the quarter was only $0.60 per GJ, which includes a September average of just $0.24 per GJ with about 1 week of negative prices. Under -- even under these extreme conditions, we generated adjusted funds flow of $72 million or $0.43 per share, fully funding our $72 million capital spending program and keeping our debt level neutral. This is a solid demonstration of our ability to fund an annual capital program of about $300 million in any -- in virtually any price environment. Revenue for the quarter was dominated by liquid sales, which composed 17% of our BOEs, but accounted for 64% of our revenue. The Charlie Lake contributed approximately 40% of our total revenue and 31% of our total operating income on its own. Gas revenues for the quarter were 16% higher than the same quarter last year, despite much lower Canadian gas prices, thanks to a larger contribution from downstream market diversification profits, and our risk management program delivered $34 million in realized hedging gains in the third quarter. Production in the third quarter averaged 71,482 BOEs per day, down 4% year-over-year, and 8% versus the prior quarter. This was driven entirely by price-driven curtailments and maintenance. We curtailed an average of 60 million a day of dry natural gas in the quarter, and at times in September, this was over 300 million cubic feet per day that was shut in, while AECO prices were negative. We've been asked, why Advantage is one of the very few companies in the basin that actively curtailed production during periods of exceptionally weak prices, and we do this for multiple reasons. We refused to waste our precious resource by selling it for no value or worse, paying marketers to take it away. During the third quarter, we mitigated over $5 million of depletion expense, which is another way to say that we avoided wasting $5 million of capital investment. Since our strategy is centered on maximizing AFF per share or cash flow per share, we won't sacrifice cash flow to defend headline production growth numbers, that is simply put, if it isn't profitable to sell it, we shut it in. To manage our physical downstream delivery commitments, which we do have several of, we were able to improve our cash flow by $2 million this quarter by shutting off our own gas and purchasing in a way, third-party gas at negative prices and immediately reselling those volumes in the downstream markets for a tiny profit. Again, that is to say, while we preserved our own resource, somebody else paid us to take away their resource and flow it to downstream markets using our pipeline capacity. We also don't believe that having our volumes financially hedged as a justification for producing uneconomic physical volumes. They are separate and discrete revenue streams. Hedging and marketing gains, broadly speaking, are generated by financial agreements that don't require you to produce the gas. Our shut-in decisions are made based on operating income at the gas -- at the plant gate and everything downstream of that is accounted over separately. So to summarize, our curtailments in Q3 maximized adjusted funds flow, preserved our resource base, reduced our capital depletion and expected capital spending, all while allowing us to fully capture our hedging profits. Now with that behind us, and with AECO prices starting to recover as of earlier this month, production curtailments have ended, and corporate production has been restored to full capacity, positioning Advantage for a strong finish to the year. We expect fourth quarter production to average between 79,000 and 83,000 BOEs per day, resulting in a full year 2025 production of 78,100 to 79,100 BOEs per day. The new well results that we mentioned in the press release yesterday will certainly help our -- keep our production levels high, and it's worth unpacking that a little. Typically, we would not announce well results with less than an IP30, but at Glacier, the shorter well tests to reliably translate into longer-term production expectations, especially given our extensive experience and knowledge of the Montney in the area. In this case, the results of our newest pad in the Northwest corner of Glacier are truly exceptional. The first well produced at 32 million a day of gas over the last 7 days prior to print, and is tracking towards a full 30-day IP just under 30 million a day, although it hasn't had enough time to actually realize that. This is roughly 3x the productivity of the closest offset wells, only 1 kilometer away to the north. In fact, we believe this well to have the highest initial productivity of any well ever drilled in the Alberta, Montney. The second well on the pad produced at a restricted rate of 20 million cubic feet per day of raw gas over the last 7 days -- over the last -- same last 7 days, restricted as a result of the higher rates from the first well, which is already filling a gathering system. The third well on the pad, which targeted the Upper Montney has not been brought on production yet for the same reason, but its cleanup rates looked comparable. This is an outstanding result from our multidisciplinary technical team and a testament to their relentless drive for improvement. Looking ahead into the winter, we see natural gas fundamentals at a positive inflection point, with oversupply conditions easing as we move into winter and as LNG Canada is starting to export meaningful volumes. As gas prices recover, debt repayment -- our debt repayment is expected to accelerate in the coming months. We are -- so we are, therefore, keeping our debt target at $450 million, but introducing a range of plus or minus $50 million, which increases our flexibility around the timing of aggressive share buybacks as we enter 2026. As in the past, when our balance sheet is where we want it, we put everything we have into the buybacks. Our strategy remains focused on maximizing cash flow per share while maintaining balance sheet strength. Thanks to our highly efficient capital program and low-cost structure, Advantage is able to deliver shareholder returns in 2 ways, disciplined production growth and free cash flow generation. Over the next 2 years, production growth is expected to average about 9% per year. And at strip pricing, free cash flow yield is expected to average 10% per year for a total annual return tracking 19%. This outlook is difficult to match. So with that, I'd like to thank our employees for another great quarter with a lot of nimble reactions and high-quality outcomes. And I'd also like to thank our Board and shareholders for their support, and I'll pass it back to Brian for questions.
Brian Bagnell: Thanks, Mike. I'll pass it back to Joanna for any questions on the phone line first.
Operator: [Operator Instructions] And the first question on the phone comes from Amir Arif at ATB.
Laique Ahmad Amir Arif: Just a couple of quick questions. First, on those new wells that you brought on, those are terrific rates on those 3-mile wells. Just -- I know it's early days, but just curious how you think this can improve the corporate capital efficiency for your drilling in Glacier and whether you plan to introduce more 3-mile laterals as you develop the Glacier, just given your land block in the area can allow for longer laterals?
Michael Belenkie: Yes. I mean, obviously, good news story. These are not unusually designed wells for us. These are well executed, great rock and really capitalized on all the team's technical advancements over the years with a few new ones. So really, what does that mean? Well, it probably means if we drill in this area, and certainly we have other areas that we expect to have similar outcomes, that means we drill fewer wells and therefore, less capital. Now I think broadly speaking, our Glacier program is typically somewhere around a dozen wells per year, and those wells tend to cost, I'm going to say, $7 million to $9 million dependently. This probably allows us to reduce the number of wells per year, which means maybe you save a few wells per year, but the program is already so efficient that's not going to be a massive swing in total capital per year, just a nice little -- induces our ability to save a little extra cash and put more work on debt repayment and buybacks. So modest impact, but positive for sure.
Laique Ahmad Amir Arif: That's helpful. But could you quantify it in terms of capital efficiency on a 3-miler versus your typical 2-milers?
Michael Belenkie: So if I understand your question correctly, you're looking to understand how much more productivity per $1 million spent. And I think we're probably looking at a sort of a 15% increase in cost for the well versus the shorter well. And the productivity probably goes up by more like 25% to 30%. So you can see these are nice little juicers, but this is what we're talking about here is only a few million dollars of extra spending for a sizable increase. So it's all small adds to our program, small increases in efficiency, which -- and not in isolation either, just that in this case here, everything came together for the outlier result. The program itself won't change materially. I just get a little bit stronger.
Laique Ahmad Amir Arif: Okay. No, I appreciate that color. And then the second question is just more on your net debt target range. As you pay down debt faster, if cash prices are strong, it sounds like you might be willing to start a structured buyback program sooner at the $500 million level versus $450 million. Just curious what would change that to the lower end of the range in terms of waiting for debt to get to $400 million instead of the $500 million?
Michael Belenkie: You bet. So the way that we try to explain this is, the last thing we want to do is only be buying shares back at the top of the market and not be buying shares back at the bottom of the market. This is, of course, a volatile business. $100 million of elasticity in the system allows us to buy countercyclically. And, of course, if we're solving for Max cash flow per share, well at times where our share price is lowest gives us the best return. So what we're looking to do is forecast whether we buy earlier, like sooner or later, at lower or higher prices, and with our outlook currently based on AECO, which is in a strong contango environment, our cash flow is expected to rise quickly through the coming year or so. If you use that model, it says you probably want to get back to work earlier. Well, having more elasticity on the top end of the debt range as we delever allows us to get back to work more aggressively earlier, okay? So hopefully, that's enough. We won't tell people exactly when we're going to buy because that would, of course, not be very good trading strategy, but think of it as a useful guidance.
Operator: [Operator Instructions] Next question comes from Luke Davis at Raymond James.
Luke Davis: Just wanted to get some background on how you're thinking about shareholder returns and specifically buybacks in the context of sort of your looser debt policy?
Michael Belenkie: Sure. So shareholder returns, of course, I did sort of refer to that in my -- in one of the last comments, which is we see shareholder returns in 2 ways, production growth and free cash flow. Now the use of that free cash flow is always up for debate, and everyone has a different perspective on the best use of free cash flow. For us, there's -- you have to start from all options, which are debt repayment, share buybacks, and dividends. Now dividends, of course, in our case, with high cost of equity and us being a growth company, dividends are the least efficient way for us to redeploy that free cash. We have stated that we want to get to the range of $400 million, $500 million on debt, and that's a priority. So there's almost a mathematical order of priorities, which is delever, and then once you get to a spot where you have material amounts of free cash to redeploy, there's a question. Do you spend that on drilling a well? Do you delever further? Or do you buy back shares? And every penny or every tranche of share buybacks is subject to that same test. And what we're looking to do is solve for Max cash flow per share in that as a quotient, and that can change over time. So we won't be too specific, but hopefully that helps you with the framework.
Operator: No further questions on the phone. I will turn the call back over to Brian Bagnell.
Brian Bagnell: Okay. Thank you, everybody, for joining our call, and I look forward to catching up with you individually. That concludes the call today.
Michael Belenkie: Thanks, everybody.
Operator: Ladies and gentlemen, that concludes today's conference call. We thank you for participating, and we ask that you please disconnect your lines.