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Advantage Oil & Gas sells interest in plant for $100M

Energy
TSX:AAV
13 April 2020 10:03 (EDT)
Advantage Oil & Gas Ltd., - CEO, Andy Mah

Source: YouTube (EnerComInc)

Advantage Oil & Gas (TSX:AAV) is selling a 12.5 per cent interest in its Glacier Gas Plant in British Columbia.

The company will make the sale to an undisclosed third party, for C$100 million in cash.

In exchange, Advantage will guarantee the buyer 50 million cubic feet of raw gas at $0.66 per thousand cubic feet.

National Bank Financial Inc acted as a financial advisor in the deal, which should close around July this year.

Advantage initially commissioned the plant in 2010. By 2018, it was processing 400 million cubic feet of raw gas and 6,800 barrels of oil per day.

The unexpectedly difficult oil market, which emerged in the last few months, motivated Advantage to arrange the purchase.

The ongoing COVID-19 pandemic, coupled with historically low oil prices, have created a challenging environment for oil and gas companies.

Advantage has stated that this lucrative deal will further strengthen its balance sheet, at a time of great volatility.

Amid this challenging environment, the company also announced its outlook for the second half of 2020.

Advantage had previously cut its discretionary spending at Wembley and Progress, to retain liquidity.

The company is now planning to revise this spending, as it moves into its second half of the year. As of yet, it has not announced any hard figures.

However, Advantage did state its key objectives for the second half of its financial year. The objectives centred around opportunistic investing and optimising returns.

Advantage is also aiming to hit a net debt to an adjusted cashflow ratio of around two through 2021.

At Thursday’s market close, Advantage Oil & Gas (AAV) was trading for $1.64 per share, with a $306.52 million market cap.

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